IT Spending for P/C Insurers Higher than Expected in 2010

Gartner and the Property Casualty Insurers Association of America's (PCI) fifth annual joint Information Technology (IT) spending survey found that the planned IT spending increase from 2009 to 2010 is 7.4 percent. This is much higher than 0.2 percent increase survey respondents had planned for last year, but in line with a projected revenue increase of 5.3 percent. The planned spending increase is a sharp turnaround from the 1.6 percent decrease from 2008 to 2009. Based on the data collected the planned increase in spending from 2010 to 2011 will only be around 3.4 percent.

Source: Source: PCI | Published on October 5, 2010

"This study is the most comprehensive IT expense statistics study in the property and casualty industry,” said Scott Joyner, vice president, information technology for PCI. “The 21 PCI member companies that participate in the study averaged $639 million in revenue and 511 employees.”

Companies responded that for 2010, 63 percent of IT spending is dedicated to “lights-on” support, while the remainder of the IT investments are dedicated to support business growth and transformation. “This number is up slightly from 59 percent 2009 indicating that some of the spending increase may have been due to delayed maintenance” stated Eric Stegman, research director, Gartner.

According to Kimberly Harris-Ferrante, a vice president and distinguished analyst with Gartner’s Insurance Industry Advisory Service, “P&C insurers are still struggling with reducing operational costs and justifying the replacement of aging legacy systems. With rising costs of maintenance, it is imperative that companies begin a more aggressive approach to legacy replacement in order to shift IT spending to more strategic projects which will promote business growth and transformation.”

Gartner, Inc. is the world's leading information technology research and advisory company. Gartner delivers the technology-related insight necessary for its clients to make the right decisions, every day. From CIOs and senior IT leaders in corporations and government agencies, to business leaders in high-tech and telecom enterprises and professional services firms, to technology investors, Gartner is the indispensable partner to 60,000 clients in 10,000 distinct organizations. Through the resources of Gartner Research, Gartner Consulting and Gartner Events, Gartner works with every client to research, analyze and interpret the business of IT within the context of their individual role. Founded in 1979, Gartner is headquartered in Stamford, Connecticut, U.S.A., and has 4,000 associates, including 1,200 research analysts and consultants in 80 countries. For more information, visit www.gartner.com.

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