Ninety-one percent of executives for life insurance companies in North America plan to increase or hold their IT budgets steady in 2011, according to a survey conducted by LOMA and SMA Strategy Meets Action.
The report, “Riding the Wave: Insurer Technology Spending, Drivers, and Approaches,” focuses on the technology spending trends among life and annuity insurers in North America. It analyzes where insures are spending money, and what is driving technology investment decisions. The study examined insurers by tier, uncovering significant differences in business drivers, IT spending patterns and development philosophies based on organizational characteristics. The report is part of a series of studies conducted by SMA to examine the insurance ecosystem and investigate the alignment of technology spending and solutions.
"The study is consistent with what we are hearing from our members," said Jeff Hasty, FLMI, ACS, SVP of LOMA. "Information technology will continue to play a key role for insurers, with more IT spending shifting to the strategic use of technology to better understand customers and markets, improve products and increase cross-selling and up-selling opportunities."
The survey found that the 79% of executives say their companies are growing, or are in the process of transforming the business. SMA analysis points to a rate of spending that is increasing slightly, despite the pressure on insurers to control budgets and significant financial challenges in some areas of the business.
"As the life and annuities industry emerges from this difficult period, many companies are positioning for the next wave of growth," notes Mark Breading, SMA partner. "Over the past two years, insurers have taken a conservative approach to the business, working to strengthen their capital position, contain exposure to certain risks and minimize their expense base. SMA analysis indicates that while insurers are optimistic about growth opportunities, most think it prudent to expand IT investments with a measured pace, at least in the short term."
The full report, part of SMA's Life and Annuities Insurance Ecosystem Research Series, is available through SMA.