Posted on 10 Dec 2009
According to Deb Smallwood, founder of Strategy Meets Action (SMA), if the results of a survey of North American property/casualty insurers hold true, 2010 should be a year of growth for the industry.
Results from the survey conducted by SMA show three quarters of carriers surveyed believe their enterprise either will grow or sustain their position next year. “Insurers are really looking at growth strategies [for 2010],” said Smallwood. “They plan to spend aggressively on technology solutions.”
Smallwood and two of her partners at SMA, Karen Furtado and Mark Breading, presented the results of the survey and their analysis in a Web seminar: “Riding the Wave: Insurer Technology Spending, Drivers, and Approaches for 2010 and Beyond.” The Webinar was conducted by Tech Decisions and National Underwriter P&C.
In looking at the top drivers for technology spending, Furtado reported business growth was cited as the top driver by 66 percent of respondents. This was followed by both business process optimization and cost containment/expense reduction, each of which was cited by 56 percent of respondents.
“These drivers reflect the need to strengthen processes and stay competitive,” said Furtado.
The survey indicated 37 percent of insurers will increase IT spending in 2010, with 36 percent expecting IT budgets to remain flat. Twenty-one percent reported their IT spending will decrease, with four percent expecting a significant decrease in spending of 10 percent or more, and one percent reporting a significant increase in spending of 10 percent or more.
“This indicates a belief technology investment is essential to remaining competitive in today’s marketplace,” said Furtado. “The health of the [IT] market shows the industry is very strong.”
Furtado indicated the trend revealed in this survey is marketing and product development will be the top priority for 2010 and beyond. Investments in this area include the purchase of external data and the use of predictive analytics and business intelligence tools.
“Competitors are finding ways to attract customers, whether through price or service,” said Furtado. “Brand loyalty is not what it was in the past.”
Smallwood’s message for insurers is IT spending is an investment—not just a cost—but there is no room for missteps. She also advised carriers to develop a strategic plan for the business, including a road map.
“[A road map] needs to be for three or five years,” she said. “It has to go beyond just legacy replacement.”
As for IT solution providers, Smallwood believes the industry is “crying for solutions that are easy to implement and easy to integrate.”