Insurance Industry Leads Recovery in 2011 IT Spending
Stereotyped as a laggard adopter of technology, the insurance industry is in the vanguard of a recovery in operational and capital IT spending.JUNE 22, 2011
@AnthODonnellHere's an antidote for those tired of the truism that the insurance industry is technologically laggard: the insurance industry leads a revival in IT spending according to IT research and advisory firm Computer Economics' newly released report IT Spending and Staffing Benchmarks 2011/2012. From a Computer Economics statement:
The study finds that median spending on IT operations is rising 5% in this sector, which is not only a substantial year-over-year improvement but also well above the median 2% growth for organizations across all sectors in the U.S. and Canada.
The wholesale distribution, discrete manufacturing, and high-tech sectors also have better-than-average improvements in IT operational spending, with median growth rates of 4.5%, 3.8%, and 3.5% respectively, the study finds.
The research firm's president, Frank Scavo says that while operational and capital IT spending are weak and uneven from sector to sector, "we are finally seeing new systems, upgrades, and infrastructure improvements back at the top of IT spending priorities."
Now, one could argue that insurers are playing catch-up to a certain extent, but I think one might make a couple of other observations: if insurers are able to bounce back quicker, it is in part because of the financial strength of the industry. However, it's also a sign that insurers are reaching a new mastery of IT in an information-driven business. I recall a few suppressed laughs when Al Gore characterized the insurance industry was a technology leader during his keynote address at the IASA show in Nashville earlier this month. I suspect the former Vice President's words will seem prophetic within a few year's time.
Throughout these poor economic times, the insurance industry has shown extreme financial stability. As a result, although we may be playing a catch-up game in certain areas of technology, isn't it promising to see the industry working on its area of opportunity and actually leading in IT revival? This has major implications for the health of insurance companies as this opens the doors for an increase in jobs, and the increase of money flowing back into the economy. As a result of this type of business spending, the industry is showing business confidence and this trickles through the economy and will continue to help strengthen it, all the while improving functionality with new technology.
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