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Celent CIO Survey Shows Focus Shifting to Growth

The consultancy has identified a "new normal" business environment, but finds within that carriers looking for opportunities to add to the bottom line.

Boston-based Celent's 2011 US Insurance CIO Survey finds carriers embracing growth strategies and modestly increasing IT budgets even as they recognize a "new normal," senior analyst Donald Light said at Celent's CIO Roundtable event.

"Things are different now from three-plus years ago — whatever it is, it's not a rapid bounce-back," Light says. "However, we're actually seeing that rebirth in interest/orientation toward growth."

Survey respondents included 24 P&C carrier CIOs and eight in the life, health and annuity segment. Celent views the responses as indicative of trends and developments, but not a statistical sample of any segment, Light notes.

IT budgets are poised to rise about 5%, Celent's research finds. However, small (less than $250 million in premium) and midsize ($250 million to $1 billion in premium) carriers report plans to up IT budgets about 7%.

"That may imply their spigots were turned off during tough times," Light explains. "Midsize companies aren't bogged down by complexity of IT systems, and still have resources to devote to new development."

Microsoft .NET and Windows are gaining market share, and most companies report use of SOA and web services as well, according to Celent. Policy administration is the No. 1 initiative carriers report planning in the next year.

"In terms of total spend, PAS is the big-ticket item," Light says. "Data mastery and analytics can challenge it."

On the sourcing side, insurers' top two strategies are internally developing applications or selecting best-of-breed solutions regardless of vendor, Celent found. Outsourcing is popular for life, health, and annuity carriers for infrastructure, testing, maintenance and development; while P&C companies use it mostly for custom development, package implementation and maintenance.

"The end-to-end suites were not stronger for the smaller companies [especially], who preferred internal development," Light says. "Startups like to outsource, and large companies all have outsourcing in place."

Nathan Golia is senior editor of Insurance & Technology. He joined the publication in 2010 as associate editor and covers all aspects of the nexus between insurance and information technology, including mobility, distribution, core systems, customer interaction, and risk ... View Full Bio

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