Insurance Trends 2.0
Posted by riskmaster on May 25, 2007
Source: Report by Celent,”Top 10 Trends in Insurance e-Business Today and Tomorrow”
Celent predicts that total insurance IT spending devoted to e-business is about US$1.6 billion today and will grow cautiously at about 5 percent per year over the next two years.
Celent’s new reports, Top 10 Trends in P/C Insurance E-Business Today and Tomorrow and Top 10 Trends in L/H E-Business Today and Tomorrow, present 10 key trends in each sector of the insurance industry. These trends have been observed by Celent over the course of its ongoing research and supported by data from its recent online survey of more than 65 insurance executives.
“In 2001, when Celent first examined the role of the Internet in the insurance industry, fewer than half of US insurers had any significant e-business systems,” said Matthew Josefowicz, manager of Celent’s insurance group and author of the reports. “But over the past three years, the Internet has become so integral to the way insurers conduct business that it is starting to fade as a distinct category and merge into the overall IT environment as a general enabling technology.”
The trends presented in the reports are:
| Property/Casualty | Life/Health |
| 1. E-business accounts for 5 to 15 percent of P/C IT spending. 2. Most e-business systems are homegrown or built from components, not software packages. 3. P/C e-business means agent e-business. 4. Insurers look to agent e-business to differentiate themselves from close competitors. 5. Most agents, especially high-value ones, are active portal users. 6. The value of agent e-business is in speed and cost savings. 7. Policyholder portals are for parity, not advantage. 8. Policyholder portal use is limited, but growing. 9. Policyholder portals are for reputation and retention, even more than cost savings. 10. Investment in e-business for prospects is minimal. |
1. E-business accounts for 3 to 15 percent of IT spending. 2. Most e-business systems are homegrown, not software packages. 3. E-business is tilted toward agents, but policyholder portals are important and growing. 4. Agent portal use is strong and creating value. 5. Portal-using agents are higher-value agents. 6. Agent e-business is about cost savings and service levels. 7. Policyholder portals are a source of competitive advantage. 8. Policyholder portal use is limited, but growing, especially among higher-value customers. 9. Policyholder portals deliver cost savings as well as improved brand and service. 10. Investment in e-business for prospects is minimal. |
Total insurance IT spending devoted to e-business is estimated at about US$1.6 billion today and will likely grow 5 percent yearly for the next two years. In both sectors, most IT budgets are devoted to agent/ distributor systems, but life/health insurers devote almost double the amount to policyholder portals that property/casualty insurers do. This reflects the greater strategic value of policyholder portals in life/health, where they are more widely viewed as a potential competitive advantage rather than as a parity play.
