Introduction
 
The US Insurance industry has fully emerged from a rough patch at the early part of the decade. Both life and non-life carriers are currently experiencing a period of relative stability, and have engaged in a reassessment of their technology opportunities. This report examines how US insurance technology strategies have evolved over the past 18-24 months.
 

 
Scope
 
Examination of IT spending in insurance through 2008, segmented by Life, non-Life and highlighting source, activity, and external market spend
 
Identification of business drivers and current technology strategies
 
Identification of current vendor strategies in US Insurance technology
 
Highlights
 
Claims processing will continue to be the focal point of IT spend for non-life insurers through 2008. Overall spending growth will moderate around 2007 as the bulk of costly system rationalization and standardization efforts will be either underway by then.
 

 
Policy processing will remain the largest spend area for Life insurers. Spending on distribution activities, including internet and intermediary integration will grow faster for life carriers than for non-life as competition and market concentration increase, and as US bancassurance grows.
 

 
External spending will grow more quickly over the period and outpace total internal spending by 2008. This will be driven by the adoption of web-based architectures, which are beginning to generate significant interest in the US insurance industry.
 

 
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TABLE OF CONTENTS
 
ABOUT DATAMONITOR 2
 
CHAPTER 1 EXECUTIVE SUMMARY 3
 
Key findings 3
 
CHAPTER 2 INTRODUCTION 8
 
About this report 8
 
CHAPTER 3 MARKET CONTEXT 9
 
Introduction 9
 
US Insurance 11
 
Regulation 11
 
What happened to the “financial super-market?” 12
 
US Life 13
 
US Non-Life 15
 
Premium Growth 16
 
Breaking the underwriting cycle? 16
 
Technology Issues in US Insurance 18
 
IT spending drivers 18
 
Drivers dictate IT mindset 19
 
Infrastructure improvements are being addressed 20
 
Key spend areas by subsector – Claims and Policy Administration systems remain top-of-mind 21
 
Enterprise Architecture – Emerging IT focus 27
 
IT decision-making process becoming more streamlined 29
 
CHAPTER 4 COMPETITIVE DYNAMICS 32
 
Introduction 32
 
Emerging trends in the vendor space 33
 
Architecture-centric solutions: Delivering on the “one-to-many” promise 34
 
CHAPTER 5 THE FUTURE DECODED 36
 
Key findings 36
 
Overall insurance IT growth will dip only slightly from robust rate of last year, but the next four years will be characterized by divergence in Life and non-Life spending growth 37
 
Internal spending on IT levels off as more sophisticated and effciency-conscious IT organizations increase external spend 39
 
The reliance on outside expertise and the emergence of outsourcing as a viable business option fuel external spend 40
 
IT activity spend by will follow familiar patterns in life and non-life 41
 
Back-office functions continue to dominate spending across activity areas, and the largest areas of back office spend, not surprisingly, will represent the largest market opportunities going forward. 41
 
Spending on policy administration is largest opportunity in Life, while intermediary integration and processing will experience faster overall growth. 43
 
CHAPTER 6 APPENDIX 45
 
IT activity definitions 45
 
Additional readings 48
 
SPP writing team 48
 
How to contact experts in your industry 49