Growth in planned spending among property-casualty insurers for information technology will be down through next year, according to a new survey.
Stamford, Conn.-based information technology research and advisory firm Gartner Worldwide and the Property Casualty Insurers Association of America (PCI), Des Plaines, Ill., released their third annual joint Information Technology (IT) spending survey yesterday.
"This study is the most comprehensive IT expense statistics study in the property and casualty industry," said Scott Joyner, vice president, information technology, based in PCI's Malvern, Penn. office. "The 30 PCI member companies participating in the study averaged $691 million in revenue and 1,116 employees."
The survey found that the planned IT spending increase from 2007 to 2008 was 8.1 percent and the planned increase from 2008 to 2009 is 1.9 percent. This is down from the increase of 11 percent from 2005 to 2006, the announcement said.
"The slowdown in spending is likely the result of [declining] revenue growth. Revenues for these companies increased by an average of 5.1 percent from 2005 to 2006 and 1 percent from 2006 to 2007. IT spending as a percentage of previous year's revenue was 3.6 percent in 2008 and 3.0 percent in 2007, indicating that IT spending still outpaced the change in revenue," the companies noted.
The report said that for 2008, 60 percent of IT spending is dedicated to "lights-on" support, while the remainder of the IT investments are dedicated to support business growth and transformation.
"This is down from 65 percent in 2006, indicating that these companies are able to invest in the future in a tough economy because they have become more productive in their day-to-day operations," stated Eric Stegman, Gartner research director.
According to Stephen Forte, research director with Gartner's Insurance Industry Advisory Service, "The report validates what we have seen in the market. P&C insurers have made progress in shifting their IT spending to growth, characterized by expanding market share–for example, mergers and acquisitions, and transformational projects such as changes to the business model, the product or the definition of the market."
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