For insurers, 2010 should be a year of "getting back to business." Insurers will be actively preparing for a flurry of investments, with an eye toward meeting future challenges.
In a new report, “Escaping the Annus Horribilis: Insurer Views on IT and Business Strategies Moving Forward,” Boston-based Celent looks back on 2009 and reviews how insurers' attitudes and behaviors changed over the four quarters. The report, the final in a series of four tracking perceptions during 2009, is based on a Celent survey that examined how insurers are responding to changing market conditions and their expectations about the impact of the crisis.
As the depth of the recession became clearer as the year unfolded, so did the severity of the insurers' responses. "In Q1 2009, most respondents thought changing strategies and large-scale staff reductions were unlikely," says Catherine Stagg-Macey, senior analyst with Celent's Insurance Group and coauthor of the report. "But when the severity of the crisis set in, many companies had to make hard decisions. Now on reflection, and with some better insight as to where we are in the economic recovery, it is apparent that most companies bit the bullet and made the hard decisions mid-year."
The report says that insurers were bullish about their own companies' strategies, including competing effectively and job security. Many insurers have implemented strategies to position their companies to ride out the storm. Most have made significant and painful changes to their operations. Staff cuts and salary reductions are largely complete, as are the divestment of assets.
"If there is a single lesson for insurers from 2009, it's the importance of an agile and flexible IT operation that supports rapid response to unpredictable operating conditions," says Craig Weber, SVP of Celent's Insurance Group and coauthor of the report. "The legacy drag effect was felt by many, and this undoubtedly helped support renewed vigor in IT investment programs."
In addition to looking at insurer views on the current quarter and a year out along several categories, such as job security, the report looks in some detail at the investment hot spots for 2010 and IT budgets. For example, survey respondents were overwhelmingly more optimistic about the industry at the start of 2010 than they were at the start of 2009. Areas of noticeable improvement in confidence are the company's ability to deliver on the current business strategy (23% change), and to compete effectively for new business. (18% change). Hot areas for IT investment include data mining, claims and infrastructure.
This article can also be found at InsuranceNetworking.com.
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