We will soon publish our third report is a series that has been tracking insurer responses to the economic crisis. This report focuses on changes between responses in quarter two and quarter three of 2009. It is based on a Celent survey that examines how insurers are responding to changing market conditions, and their expectations about the impact of the crisis.
The global financial crisis continues to have a significant impact on insurers. Since the fall of 2008, insurers across the globe have been keeping a close eye on economic indicators, their investment portfolios, their sales results, and potential regulatory changes. Some insurers have made changes to their business or IT strategies, while others have essentially stood still. But serious questions loom. How long will the economic recovery take?
What is clear from the data is that insurers have broadly made the hard and difficult decisions. Businesses have been sold, staff made redundant and strategies have been changed. IT has made its own hard decisions with similar changes in staff, heavy renegotiations with suppliers and broad changes in project portfolios. With the actions from difficult decisions underway or completed, insurers are also undertaking some aggressive options such as launching new products or new channels.
As the year progresses, insurers are becoming increasingly optimistic about the next quarter, and also the view a year out. They remain bullish about their own company’s strategies, including competing effectively and job security.
IT investment projects have been impacted through 2009, but the impact seems to be lessening. Cuts and reprioritisation has been made, and now the focus in back on delivery. Since last year, areas attracting increased investment include claims, infrastructure and data mining. Much of this investment is driven by cost reduction and regulation. Strong interest in data mining is particularly related to the financial crisis, increased regulatory scrutiny as a result, and impending Solvency II. Policy administration system replacement continues, with over half of the respondents having this on their action list. Investment in new business/underwriting has shifted to the low category in the last year.
As the year draws to a close, and new budgets and plans are revised for 2010, it’s clear there is much work to be done in IT department. It’s time to re-focus and get on with the job.
This blog has been reprinted with permission from Celent. Catherine Stagg-Macey is a senior analyst in Celent's insurance practice, and can be reached at email@example.com.
The opinions of bloggers on www.insurancenetworking.com do not necessarily reflect those of Insurance Networking News.
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