Insurance: Tech Spending Aimed At New Products, Faster Claims Processing
Companies use Web services and business intelligence tools to cut costs and spot fraudulent claims
Insurance companies that specialize in property and casualty policies have struggled in the wake of last year's hurricane season, but those focused on health and life insurance enjoyed a profitable year. Both camps are using technology to cut costs, meet regulatory requirements, improve customer service, and deliver new products.
The industry's total IT spending as a percentage of revenue rose from 3.0% last year to 3.4% in 2006, yet it still remains below the 4% of revenue spent in 2002. A majority of insurers--64%--plan to increase their IT budgets, according to the InformationWeek 500 survey.
Much of the tech spending is aimed at deploying more nimble service-oriented architectures, Web services, and business intelligence tools. Some 69% of insurers have widely deployed Web services, and 79% have done the same with BI tools. Such tools can help cut costs through predictive modeling and digital dashboards that let claims managers identify processes that are slow and spot potentially fraudulent transactions, says Gartner analyst Annemarie Earley.
Insurers increasingly are working to differentiate their offerings, and 79% plan to develop new products and services this year. Look for creative products, such as Geico's mechanical breakdown insurance policy that protects policyholders after a car's warranty expires. Says Earley, "You're going to see more innovative products from this industry as companies strive to set themselves apart."
Top ranked company in this sector is Cigna, at No. 17.
of Industry's Annual Revenue Devoted to IT
of IT Budget Devoted to New Projects
of Companies Expecting 2006 IT Spending to Exceed 2005
Creating New Products/Services for Customers in 2006
with Global Supply Chain
Deploying Business Intelligence Tools to Raise Productivity
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