By CYRIL TUOHY, managing editor of Risk & Insurance®
The top three insurance IT projects in 2010 will include modernizing core systems, improving agent portals and upgrading underwriter workflows.
That's the good news. The other bit of good news is that 2010 budgets are faring a little better than in 2009, as P/C carriers managed to get through the recession in relatively good shape compared with their life insurance counterparts and the nation's largest banks.
"Overall, budgets are up slightly," said Matthew Josefowicz, principal of the insurance consultancy Novarica, which hosted a webinar on the topic Wednesday. "Growth and operational effectiveness are the business drivers."
The webinar was based on a report titled "Insurer IT Budgets and Plans for 2009-2010," which was an updated version of similar research issued earlier this year.
As a rule, the larger property/casualty carriers are "trying to hold ground" in IT infrastructure spending, with higher IT spending growth in 2010 coming from the midsize carriers, said Josefowicz.
Forty-four percent of respondents said that policy administration was a "top-three" IT project for 2010. The largest carriers have also shown an interest in better analytics, said Josefowicz.
IT spending on underwriting workflow improvements and agent portals is also expected to fare relatively well in 2010, as insurers find themselves competing with banks and mutual funds for customers.
Other sectors of the financial services industry have developed their portals as they try to reach a new generation of consumers, many of whom have only known the Internet as a means to conduct business.
Josefowicz said life carriers in particular were seeking parity with banks and other financial services companies in the development of Internet portals. The portals are coming in handy for carriers looking to explain big changes expected under health insurance reform.
Portals are also an advanced sales tools for companies as they reach out directly to consumers for products and services. These trends, said Josefowicz, have put more pressure on life insurance companies.
Carriers looking to upgrade portals were interested in doing so by adopting so-called "rich Internet applications," said Josefowicz.
P/C BETTER OFF THAN OTHERS
A separate study of members of the Chartered Property Casualty Underwriters Society issued in August by Accenture found CPCU members believed that, while their systems were functioning effectively, they were supporting outmoded underwriting practices.
Josefowicz also confirmed that billing issues, which were given some prominence at the Insurance Accounting and Systems Association trade show in June, had captured the attention of insurance IT managers.
"We're seeing a good number of billing evaluations, starting mostly in the mid-tier," said Josefowicz.
Last year was a difficult year for property/casualty insurance companies, which saw net income plunge to $2.4 billion from $62.5 billion in 2007, leaving less money for IT projects.
Still, the property/casualty sector fared better than banks and the life insurance sector, and those results came out in the survey.
"Life companies were much more shaken by recent events compared with the property/casualty sector," said Josefowicz, and as a result, the pressure to cut expenses was far more pronounced among life insurers than it was among property/casualty counterparts.
September 2, 2009
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