Matt Josefowicz isn't seeing anything particularly new forinsurance technology spending in 2011.

“We're seeing a continuation of what we've seen previously,” says Josefowicz, head of the insurancepractice at Novarica. “With the exception of the largest companiesover $1.0 billion in direct written premium—those companies aremost likely to keep their budgets relatively flat—by and large mostcompanies are expecting to increase their budgets somewhat,” hesays. “Companies below $100 million in premium on the P&C sidewe see more of a split. Some are expanding and some arecontracting. It's fairly even for that very small segment.”

Josefowicz explains the large carriers on both theproperty/casualty and life/annuity sides don't feel the pressure tospend more on technology.

“They already have a lot of resources so they have moreopportunity to find efficiencies and redeploy existing resources,”he says. “Smaller companies, in order to create the businesscapabilities they need—have to make additional investments.”

Priorities Listed

Growth and competitive parity are the major issues companies arelooking to support their strategies in 2011, explainsJosefowicz.

“Some companies also are looking at organization-wide expensereduction and operational effectiveness as major drivers,” he says.“Other than some of the larger life/annuity companies, we're notseeing compliance or investment-market losses driving a lot ofaction. At some of the larger companies we are seeing pressure toreduce IT expenses which we take to mean redeploying moreeffectively as a big priority.”

Competitive Parity

Josefowicz believes when it comes to distributor service andcustomer service, carriers always are looking for ways to providethe best service they can and are not being lapped bycompetitors.

When we look at specific business capabilities we seedistributor and customer ease of doing business, support fordistribution channels, speed to market for product and BI and dataanalytics are showing a high response in terms of companies andtheir top three project lists,” he says

Satisfaction

Carriers can't afford to be satisfied with their performancethese days. Josefowicz feels continuous improvement is the keyphrase.

“One of the challenges for senior executives on the businessside is they say they've invested in IT and feel they are done,” hesays. “You're never done. There is continuous advancement. Nocompany is able to solve its IT-related challenges in any givenyear. There always are new things coming up, whether it is newcapabilities on the business side, new demands on the distributionchannel, or new capabilities that are enabled by technologyadvancements like mobile, virtualization, cloud or anything onthose lines. There is always change.”

Mobile Technology

In a lot of cases it's building off the work already done toenable real-time transactions and information through the Web. Theinterface or delivery layer may differ, but all the investmentsdone to enable that real time, outside the firewalls delivery canbe leveraged in mobile. When we look at what companies are spendingon their IT budgets for mobile, the average is less than 2 percentof their total IT budget around mobile initiatives, and thatincludes mobile-enabling their internal staff. There is a lot offocus around consumer smartphone apps, a lot of productivityenhancements and benefits will be in enabling company staff,whether it is marketing, claims adjusters or others with tabledevices and other mobile platforms.

Core Systems

It definitely continues to be a major area of focus. We see for2011 more than half p/c companies and more than 30 percent of l/acompanies list PA projects in their top three projects. The onlything that approaches it in terms of the top priorities are agentportal on the p/c side and BI overall and commissions on the largel/a side. One of the interesting things about our survey was howdiverse the top three priorities are. There are very few areas thatshow up as the top three for more than a quarter of the companiesat any given time. They are very diverse. Over all, core system anddistributor systems and BI generally are the top three prioritiesfor the industry, but any given company may have solved two ofthose at the time being and is working on another two things.

Continuity and focus on solving core problems and deliveringcore business capabilities continue to be the focus. We don't seeanybody running off in one direction chasing something at the endof the hype cycle. The problems are well known and the solutionsare not easy. People are working on them.

Cloud Computing

The thing about cloud is it's going to have a strong effect onthings like the development environment and testing. It's beingused in ancillary areas like HR. There is a lot of adoption ofhosted CRM so there already is a lot of remote-system usage ininsurance. The various evolutions of remote-systems usage now knownas cloud will mostly be internal IT things. One of the biggestchallenges around cloud will be business executives reading thegeneral media and coming back and asking what our cloud strategyis. Cloud means something we don't own. It's similar in a lot ofways to SOA because people would come in and ask what the SOAstrategy is because the general trade media write about it. It'ssomething they have to take into consideration.