This is the sixth year of a soft insurance market during which premiums have declined an average of about 9% per year, according to TowerGroup, a research firm focused on financial services.

In the course of this prolonged decline in premiums, the industry has realized it has to do more than quick-fix cost-cutting and do some long-term restructuring. In the past, insurance companies in a slowdown would just "fire a whole bunch of people," says Karen Pauli, research director in TowerGroup's insurance practice.

Instead, smart CIOs continue to spend on IT-based process efficiency projects that reduce paperwork, increase standardization, and automate decision-making, Pauli says. These can be expensive, multiyear commitments. But insurers have had the benefit of relatively light catastrophe seasons--hurricanes and other storms--the past three to four years, so the smart ones have used this period to fund long-term productivity-enhancing projects.

Evidence of this can be found in the InformationWeek 500. Only 10% of insurers expect to cut their IT budgets this year, compared with 20% for all industries; 62% of insurers have higher IT budgets than last year, compared with 57% for all industries.

At insurer USAA, the push for better productivity and better service came together with its new Deposit@Mobile service, an app that lets people deposit a check by taking a picture of it with an iPhone or Android-based smartphone. (BlackBerry is in the works.)

USAA is an insurer and a bank, but it has no branches and primarily serves military personnel. It first let customers deposit checks using home scanners; the smartphone app grew from that. CIO Greg Schwartz says Deposit@Mobile delivers cost savings because it cuts the amount of mail that USAA handles. Just as important, the app "has clearly broken down barriers for members who were reluctant to do branchless banking," he says.

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