While insurance companies around the world are still feeling the effects of the financial crisis on their IT budgets, almost half expect to ramp up spending in 2012, according to Ovum.

In a new report, the independent technology analyst reveals findings of a global survey of insurance CIOs, which shows that their IT spending is set to soar next year.

“While the CIOs we surveyed had mixed feelings about their IT budgets in 2011, confidence for 2012 is much higher,” says Barry Rabkin, Ovum’s insurance technology principal analyst. “Forty-seven per cent expect their IT budgets to increase, and some by significant amounts.”

Two-thirds of the CIOs Ovum surveyed voted CRM systems as the area most likely to benefit from increased investment, according to Rabkin.

“This commitment to increase spending on CRM systems shows that the insurance industry is getting to grips with the need to understand customers better,” he says.

Ovum’s survey also revealed that almost half of insurance companies have experimented with private cloud computing since 2010, or plan to begin so in 2011.

“The insurance industry has a justified reputation as one that is generally slow to adopt new technologies, so our survey findings are surprising and encouraging,” says Rabkin. “The fact that many have already begun to take the first steps in the private cloud computing arena shows they have grasped the potential benefits it can bring.”

However, the survey also showed that many insurers are uncomfortable with business process outsourcing (BPO), and technology vendors offering these types of outsourcing solutions need to deliver a more compelling proposition to encourage them to take the plunge. Slightly more than half of the insurance CIOs surveyed by Ovum felt comfortable using BPO, according to Rabkin.

“For an industry that is fundamentally very traditional and slow-moving, adopting BPO requires a big shift in attitude,” he says. “What our survey findings tell us is that outsourcing vendors are not doing enough to convince insurers that potential benefits such as cost savings make it worth taking the BPO plunge.”

Special Reports /

Half of Insurance Carriers to Increase IT Spending: Ovum Report

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