Celent projects that US insurers will spend US$28.8 billion on IT in 2005-a figure that will grow to US$42 billion in 2010.
Celent’s latest insurance reports, “US L/H Insurer IT Spending 2005-2010” and “US P/C Insurer IT Spending 2005-2010,” project modest proportional growth over the next five years. The reports break projected spending down among maintenance and new projects, hardware/software/staff/services/telecom/ other, and 11 different functional areas.
“US insurers spend between 2.5 percent and 3 percent of premium on IT,” says Matthew Josefowicz, manager of Celent’s insurance group and author of the report. “Celent believes that over the next five years, this will increase to between 3 percent and 3.5 percent as IT becomes even more essential to insurance company operations and consumes a larger portion of operating ratios. As overall premium grows modestly over the next five years, IT spending will essentially keep pace.”
P/C insurance IT spending is expected to grow from US$13.2 billion in 2005 to US$20.8 billion in 2010. Over that time, new project spending will shift slightly away from policy administration and claims and toward product design and distribution.
L/H insurance IT spending is expected to grow from US$15.6 billion in 2005 to US$21.2 billion in 2010. Over that time, new project spending will shift slightly away from policy administration, underwriting, and IT infrastructure and toward product design, distribution, claims, and billing.