IDC Projects IT Spending by Insurance Companies to Return to Normal Growth by 2007
FRAMINGHAM, MA – MAY 22, 2003 – 2002 proved to be another tough year in the insurance industry, riddled with unprecedented events and scandals. A new report from IDC reveals that U.S. insurance companies spent approximately $19.7 billion on IT in 2002, which represents an 8% decrease from 2001, with hardware taking the largest hit. The outlook for 2003 is indicative of the fact that this group of companies is in recovery mode – 2003 growth is forecasted at only 1.6%.
"This is an industry that has been troubled with uncertainty for the past year and a half; and it will take time for the profits and market to stabilize, and even longer for significant IT investments to be made," said Jessica Goepfert, program manager, United States IT Opportunity: Financial Services. "However, barring any unforeseeable catastrophes, the groundwork is laid for more favorable IT spending. We expect the insurance sector to slowly return to normal growth over the five-year forecast."
Life and health insurance represents the greatest area of spending throughout the forecast period and has a slightly higher than average overall compound annual growth rate (CAGR). Although health insurance companies faired well in 2002, the life insurance industry, particular those companies in variable annuities, was rocked by the shaky stock markets. Property and Casualty (P&C) represents the second-largest area of spending in the insurance industry. For 2003, IDC predicts essentially flat growth. Although this segment saw healthy overall revenue growth, it is still recovering from the events of September 11, 2001.
IT projects most likely to gain funding will be those that help the companies run more efficiently (like outsourcing), drive profitability (like improved underwriting capabilities), or those that help these companies achieve differentiation in a crowded market (like enabling brokers and agents to improve service.) Data from IDC's Enterprise Technology Trends Survey supports these beliefs, indicating that industry-specific, B2B, and collaborative solutions are among the top investment areas in 2003 for insurance companies.
In the study, U.S. Insurance IT Spending Forecast 2003-2007: Investment Priorities and IT Spending by Line (IDC #29383), IDC presents its best estimates for IT spending by the U.S. insurance industry for the years 2003-2007. Investment priorities and trends are discussed and spending is broken out by hardware, software and services, as well as by insurance line. To purchase this document, call IDC's sales hotline at 508-988-7988 or email firstname.lastname@example.org.
For additional information about IDC's United States IT Opportunity: Financial Services, please contact Virginia Lehr at 508-935-4188 or email@example.com.
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