The popular conception is the insurance industry is light-years behind all others when it comes to technology, but one analyst believes the last five years tell a different tale.

Before joining TowerGroup as an insurance practice leader, Deborah Smallwood was a partner with KPMG and spent a lot of time in the late 1990s visiting insurers to research their readiness for Y2K and analyze risk assessment reports. Smallwood wasnt particularly impressed with what she saw. [Insurers] didnt have documented IT strategies, they didnt understand their [software] portfolios, and they didnt have a handle on their environment, she says. Since then, though, she reports the progress the industry has made has been significant. Between Y2K, the market crashing, and the business side not wanting to stand on the sidelines anymore, [insurers] have put some strong processes in place and some discipline. They have matured in the last five years, she says.

Smallwoods observations come from a recent study conducted at TowerGroup, entitled Bridging the Competitive Gap: The Value of IT as the Insurance Business Transforms. The study took a detailed look at five property/casualty insurersthree public companies and two mutual companies. Four of the five have written premium above $8 billion with the fifth being a mid-tier insurer with written premium of more than $200 million.A recent trend in the industry has been to take mutual companies into public companies, she notes. The reason often cited is public companies have easier access to investment funds. I think its still safe to say the public companies have more of a sense of urgency and are more mindful of costs, expenses, and the bottom line than the mutual companies, says Smallwood. Of the companies she studied, the insurer that scored the best in areas that included IT strategy, governance, organization, business applications, and architecture was a public company that, she says, is trying to do some aggressive things.