Benchmark data can provide support for spending and budgeting decisions, explains Josefowicz, and can highlight potential areas of concern that may not be noticeable without external reference points.

The Novarica report presents an analysis of responses to the Novarica insurance technology research council's quick benchmarking poll, which takes a supply and demand approach to IT rather than focusing exclusively on spending levels.

According to Josefowicz, the approach contextualizes spending levels (supply) against company size, new project volume, and current state of the organization, technology infrastructure, and product volume and complexity (demand).

Josefowicz reports average IT budgets have gone up from 2009 to 2010 for almost every group of insurers except midsize life/annuity insurers.

The report also states:

? Most insurers spend more than 20 percent of their IT budgets on enterprise hardware and software maintenance fees, compared to only 10 to 15 percent on new enterprise hardware and software.

? Internal IT staff averages 10 to 15 percent of total headcount, but including external IT FTEs can increase that by two to 10 percentage points.

"It is important that benchmarking data be presented and understood within the context of the variation between peer circumstances and business needs," says Josefowicz. "No insurance company ever became more successful than its peers by spending less than them on information technology. The path to competitive advantage lies in spending appropriately to create and support necessary business capabilities."

Special Reports /

Novarica Report Shows Benchmark Data on Insurance IT Budgets

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