Insurance IT leaders and analysts have thrown the often used and by now very familiar word caution to the wind for their spending forecast for 2006, focusing instead on an optimistic view technology projects will pave the way for improved performance over the next 12 months. “I think 2006 looks a lot like 2005, and 2005 was a very welcome change from 2002 and 2003,” says Matt Josefowicz, group manager in the insurance practice for Celent.

Budgets in the early years of this century proved to be tight before the environment began easing up in 2004. “Things started to open up a little bit more in 2004, and 2005 was a lot more open,” comments Josefowicz. “I think 2006 will continue that trend. The Y2K/dot-com boom is not coming back, but insurers are continuing to improve their infrastructures and their systems, and they understand there is no way to achieve competitive advantage without corresponding systems investment.”

At Grange Insurance, CIO Charlie Carter indicates the carrier is not increasing its IT budget a large amount, but it is not going backward, either. “We are making some major investments heading into 2006,” he says. Among those are initiatives in business intelligence and business continuity–areas insurers only dreamed about three years ago but didn't have the resources to invest in.