NU Online News Service, Nov. 14, 2003, 12:47 p.m. EST – Midsize insurers are cutting life insurance information technology budgets faster than bigger life insurers, but life processing costs are growing faster at the midsize insurers than at the bigger insurers, according to results of an informal, voluntary survey conducted by TCi Consulting & Research, Cresskill, N.J.
TCi found that total life insurance IT expenses are down 3.5% at the bigger companies this year but down 11% at the midsize companies.
Even though the midsize life insurers that participated in the TCi survey have pruned life IT budgets, they are spending 59% more on total processing expense per in-force policy, mainly because the operations cost is $43.59 per policy at the midsize companies and only $19.39 at the big companies, TCi says.
The midsize survey participants are devoting 78% of their processing expenditures to operations, while the big companies are devoting only 55% of processing expenditures to operations.
The cost of processing new life business is $448.14 per application for the midsize companies that participated in the TCi survey and $449.25 at the big companies.
At annuity operations, total IT expenses are up 11% at the midsize companies and up 1.4% at the big companies.
The midsize companies are spending 20% more than the big companies are spending on total processing expenses per in-force annuity contract, and the midsize companies are spending 36% more on processing each new contract, TCi says.