Its nearly impossible to find any unqualified good news in the financial arena when it comes to the coming year. Given the uncertainties in the economic and political climates, forecasters not surprisingly cant seem to agree on whats coming. A study conducted earlier this year by researchers at TowerGroup, a Needham, Mass.-based consultancy, predicted IT spending for property/casualty insurers would rise six percent in 2003 from $13.1 billion this year to $13.9 billion next. But the Boston research group Celent Communications, in its recent report, claims IT spending for both life/health and property/casualty will rise from $18 billion to $19.3 billion in 2003. Considering Celent claims 51 percent of insurance IT spending occurs on the life/health side, it would seem the numbers from the two reports dont match up very well. Still, both indicate some amount of upward trending expenditures.

Analysts are cautious in their predictions as well. Each positive point they make is followed by a caveat their predictions could turn 180 degrees without much warning. For instance, Kimberly Harris, research director for Stamford, Conn.-based Gartner, Inc., predicts the insurance industry will improve by the second quarter of 2003 but quickly adds political problems could change any optimistic outlook. Howard Rubin, executive vice president at META Group, based in Stamford, Conn., says IT spending in insurance will go up percentage-wise but notes thats because revenues are down, and IT budgets have already been scaled back as far as they can go. Jack Gohsler, senior vice president at Hartford, Conn.-based Conning Corporation, sums it up best: Its really hard to get a thread simply because you have a lot of companies in a lot of different positions.

Harris doesnt see a great deal of improvement very soon in the financial services field. Its our belief that, if anything, well see small increases in IT spending and the economy within financial services and [the environment] becoming better in the second quarter, she says. How much better? Its very minimal at this point. Within that limited IT budget we see a shifting of resources and investments. What Im projecting for the insurance industry next year is strategy reassessment and realignment.