Property/casualty insurance companies plan to boost spending on information technology by 7.4 percent this year over last, well over the 0.2 percent increase planned for 2009 according to a new survey by Gartner Inc. and the Property Casualty Insurers Association of America.
The spending increase is a sharp turn from the 1.6 percent decrease in IT spending from 2008 to 2009. Next year spending will bump up 3.4 percent over this year's level, according to the data.
The survey, now in its fifth year, is the most comprehensive IT expense statistics study in the property casualty insurance industry, said Scott Joyner, the association's IT vice president, in a media statement. The 21 study participants average $639 million in revenue and and each have an average 511 employees.
Of the planned IT spending for 2010, 63 percent will go toward "lights-on" support, slightly higher than the 59 percent share reported last year, with the remainder going toward supporting business growth and transformation. The higher spending on operational IT could indicate firms are catching up on delayed maintenance, according to Gartner.
"P&C insurers are still struggling with reducing operational costs and justifying the replacement of aging legacy systems," Gartner Analyst Kimberly Harris-Ferrante said in a press statement. "With rising costs of maintenance, it is imperative that companies begin a more aggressive approach to legacy replacement in order to shift IT spending to more strategic projects, which will promote business growth and transformation."