While insurance companies around the world are still feeling theeffects of the financial crisis on their IT budgets, almost halfexpect to ramp up spending in 2012, according to Ovum.

In a new report, the independent technology analyst revealsfindings of a global survey of insurance CIOs, which shows thattheir IT spending is set to soar next year.

“While the CIOs we surveyed had mixed feelings about their ITbudgets in 2011, confidence for 2012 is much higher,” says BarryRabkin, Ovum’s insurance technology principal analyst. “Forty-sevenper cent expect their IT budgets to increase, and some bysignificant amounts.”

Two-thirds of the CIOs Ovum surveyed voted CRM systems as thearea most likely to benefit from increased investment, according toRabkin.

“This commitment to increase spending on CRM systems shows thatthe insurance industry is getting to grips with the need tounderstand customers better,” he says.

Ovum’s survey also revealed that almost half of insurancecompanies have experimented with private cloud computing since2010, or plan to begin so in 2011.

“The insurance industry has a justified reputation as one thatis generally slow to adopt new technologies, so our survey findingsare surprising and encouraging,” says Rabkin. “The fact that manyhave already begun to take the first steps in the private cloudcomputing arena shows they have grasped the potential benefits itcan bring.”

However, the survey also showed that many insurers areuncomfortable with business process outsourcing (BPO), andtechnology vendors offering these types of outsourcing solutionsneed to deliver a more compelling proposition to encourage them totake the plunge. Slightly more than half of the insurance CIOssurveyed by Ovum felt comfortable using BPO, according toRabkin.

“For an industry that is fundamentally very traditional andslow-moving, adopting BPO requires a big shift in attitude,” hesays. “What our survey findings tell us is that outsourcing vendorsare not doing enough to convince insurers that potential benefitssuch as cost savings make it worth taking the BPO plunge.”