The French insurance market, which has been on a growth spurt, still has more potential despite some signs of slowing, according to a consulting firm report.

Boston-based Celent said France's insurance market, the fourth largest in the world, has experienced an average growth rate of 8 percent during the last five years.

French insurance companies, Celent said, have already adopted information technology at a high level, but there are some domains where adjustments and initiatives could add value to organizations.

Although expansion of the market is slowing, Celent reported, there remains potential for expanding the nation's premium per capita figure, which currently is just above $4,000, or 10 percent of the gross domestic product.

In the United Kingdom, it was noted the per capita figure is over $7,000 with a penetration of more than 15 percent. Celent said it believes the French insurance market stagnation in 2007 is a sign of a lower growth rate for the future, but the firm expects premiums to resume their upward trend.

According to Celent, property and life insurance sectors in 2007 accounted for EUR 196 billion ($290 billion) compared with EUR197 billon ($291.5 billion) in 2006.

Life, which represents nearly 80 percent of the market, accounted for the decline, dropping from EUR154 billion ($228 billion) to EUR152 billion ($225 billion).

The Celent report said average IT budget in terms of a percentage of premium is approximately 4.1 percent of gross written premium, and this proportion is slightly higher in the life business (4.3 percent) in comparison to the non-life insurance sector (3.8 percent).

French insurers' IT spending, the report said, is slightly higher than the average European insurance company (3.4 percent). French insurers' IT budgets, it found, go mainly to maintenance (54 percent) rather than new IT projects (46 percent).

Considering the market's weakening growth, IT budgets should not increase drastically in the next five years, Celent projected. The firm said it expects the proportion of IT spending-versus-premium to increase slightly, by 1 percent a year over the next five-year period.

The report, "Insurance in France: Market and IT Overview," is available to Celent clients on a subscription basis.

Special Reports /

Celent Sees French Insurance Sector Expansion Continuing

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