Big life insurers may hold information technology spending relatively steady in 2009, despite all of the economic turmoil.
Analysts at Datamonitor, London, and Novarica, New York, give that assessment in new reports.
When Datamonitor surveyed 200 “global insurers” in the first half of 2008, 47% of the participating life insurers said they were planning to increase investments in risk management and compliance systems in 2009, and 50% said they were planning to increase investments in online sales and servicing systems, the firm says.
Overall, “IT budgets should be more stable than those in the banking sector, with neither robust spending [nor] dramatic budget cuts likely to materialize,” Datamonitor says.
Some insurers will be looking for outsourcing partners with compliance expertise, but only if the outsourcing partners can deliver a smooth transition and good service, Datamonitor says.
Meanwhile, researchers at Novarica say they have surveyed 40 members of the Novarica Insurance Technology Research Council in the past few weeks.
The economic crisis has affected life and annuity IT planning more than property-casualty IT planning, but “its effects are not likely to be crippling in either case,” Novarica says.
Operational effectiveness issues and support for growth strategies should have a stronger impact on 2009 IT planning than concern about the investment markets or the economic crisis will, Novarica says.
Any delays likely will affect infrastructure systems and back-office systems more than they affect the systems that customers see, the firm says.
“Although the coming situation is likely to be even more challenging than the 2001-2002 trough, early signs indicate that insurers are unlikely to react with the hard pull-back in IT investments that characterized that period,” says Matthew Josefowicz, director of the Novarica insurance practice.