The economy appears to be in recovery, posing a dilemma for insurance decision makers: To achieve growth, should there be more investments in new people, or more investments in technology?
Leaders of the property/casualty insurance industry believe the worst of the financial crisis is over, according to a survey conducted by the Insurance Information Institute at its recent annual Property/Casualty Insurance Joint Industry Forum. Ninety-four percent of executives in the property/casualty industry expect an improvement in profitability in 2011.
The natural reflex in past recoveries was to staff up to meet the new growth demands. Are insurers staffing up for this one? Well, sort of.
Dr. Robert Hartwig of the Insurance Information Institute dissected the latest data (December 2010) out of the US. Labor Department’s Bureau of Labor Statistics (BLS), and says there has been an uptick in employment among P&C carriers, but not a very impressive one.
“In December, except for health insurance carriers, more people were working in insurance than in November. P/C carrier employment rose to 462,300—up 700 from November but otherwise the lowest P&C carrier employment level in over 20 years,” Hartwig reports. He adds that reinsurers added 800 jobs, and life insurers added 400 jobs. Health insurers, on the other hand, lost 1,000 jobs in December and are down by 17,000 from the year before.
The slow growth in industry employment represents cautious growth, but not the kind of growth needed to catch the next economic wave. Are insurers relying more on information technology to support new growth initiatives? It’s very likely.
But, interestingly, IT spending within the insurance industry appears to be more muted than overall. For example, while IDC reports seeing 8% year-over-year growth in IT spending, Novarica estimates insurance IT spending is within historically average range of 2% to 4%.
Novarica concludes that this year will be another of “doing a lot more with a little more.” This appears to be the case with both technology and staffing. But as the economy continues to heat up, many insurance decision makers will find themselves at a crossroads of where to put more investment.
Joe McKendrick is an author, consultant, blogger and frequent INN contributor specializing in information technology.
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