The numbers are not looking very good….As we go deeper into a soft market (falling underwriting results) coupled with the deteriorating investments, the US P&C industry continues to see falling net income – 57.4% to $13.9 billion in the first half of 2008 compared to $32.7 billion in the first half of 2007. Another leading metric is the combined ration – a measurement of losses and expenses per dollar of premium is 102.1 for the first half of the year, compared to 92.7 in the first half of 2007. (The data was released by the Jersey City, N.J.-based Insurance Services Office and the Property Casualty Insurers Association of America (PCI), Des Plaines, Ill.)
As I look into the crystal ball of 2009 IT spend projections, I begin to think is this a replay of 2002 - - -where IT decisions were stalled, spending shrunk and there was a direct impact new spend. But in the last 7 years, the linkage between implementing business strategies for profitable, growth, operational efficiency, and improving customer services has become so tightly coupled and dependant with business and IT projects and initiatives.
Insurers have proven that the use of technologies tightly integrated with business processes improvements are impacting the top and bottom lines.
Technologies that enable precisions pricing (predictive analytics, scoring and use of internal & external data), straight thru processing (workflows, rules, rating and underwriting solutions), business intelligence (data integration, operational data stores, and tools) and portals (self service capabilities and automatic submissions) are essential in today’s marketplace. Ease of doing business, linking the right price to the right risk and reducing overall expenses - - are all essential to compete.
Given all of this - right now, I see the IT spend for 2009 remaining flat – with these expectations:
·Do more with less - - -finding new ways to reduce costs
·More due diligence on the ROI - - -slowing down the decision making process, making people more accountable for successful results
·Shifting more dollars from maintenance - - - to new development
·Tightly up the governance process & oversight of projects
We will continue to track these projections….and keep you all posted.
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