The insurance IT world never may return to the glory days of the late 1990s, but things finally are progressing beyond the cautious optimism that marked spending forecasts of the past few years. Increased spending in the range of five to seven percent may not signal a complete turnaround, but it is ample for an industry that has been searching for good signs in the last three years.By Robert Regis Hyle

Its been a while since insurance carriers have shown great confidence in the technology market. But IT departments, which have been focused on keeping the lights on for most of this decade rather than investing strategically, finally may be coming around to some important investments. What were really seeing is property/casualty lines have a pent-up demand for buying some new applications to streamline operations, explains Cynthia Saccocia, senior analyst in the insurance segment of TowerGroup. Edward Blomquist, insurance industry analyst for Datamonitor, supports that view. The driver for investment seems to be shifting a little bit, he says. Weve seen cost cutting be a predominant rationale for IT investment over the last few years. As spending has increased, weve seen an increase in the drivers behind it, shifting more to efficiency and revenue growth from cost cutting. We saw a big shift this time around.

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