Celent Projects Growth in IT Spending
NU Online News Service, Feb. 17, 11 :37 a.m. EDT?New York-based Celent Communications predicts that U.S. insurers will spend $28.8 billion on information technology (IT) in 2005?a figure that it says will grow to $42 billion in 2010.
Celent said its newest insurance reports, "U.S. L/H Insurer IT Spending 2005?2010" and "U.S. P-C [property-casualty] Insurer IT Spending 2005?2010," project modest growth over the next five years. The reports break projected spending down among maintenance and new projects, hardware, software, staff, and a number of different functional areas.
"U.S. insurers spend between 2.5 percent and 3 percent of premium on IT," said Matthew Josefowicz, manager of Celent's insurance group and author of the report. "Celent believes that over the next five years, this will increase to between 3 percent and 3.5 percent as IT becomes even more essential to insurance company operations and consumes a larger portion of operating ratios. As overall premium grows modestly over the next five years, IT spending will essentially keep pace."
P-c insurance IT spending is expected to grow from $13.2 billion in 2005 to $20.8 billion in 2010, said Celent. Over that time, new project spending will shift slightly away from policy administration and claims and toward product design and distribution.
Life/health insurance IT spending is expected to grow from U$15.6 billion in 2005 to $21.2 billion in 2010, the researcher noted. Over that time, new project spending will shift slightly away from policy administration, underwriting, and IT infrastructure and toward product design, distribution, claims, and billing.
Earlier this month, Needham, Mass.-based TowerGroup said U.S. IT spending in insurance would remain "relatively flat," with total spending moving from an estimated $35.3 billion in 2004 to $36.4 billion in 2005.
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