The insurance industry is indicating growing interest in buying and implementing customer relationship management (CRM) technology, particularly in the areas of sales and marketing, according to a new report by Aberdeen Group, a leading IT market analysis and consulting firm.

More than 80 percent of survey respondents said their budgets for CRM were less than $500,000 in 2002 – a notoriously slow year for IT spending. However, 44.9 percent indicated that in 2003, their CRM spending would increase. In addition, 37.4 percent said spending on CRM had a higher priority than other areas of IT spending.

Aberdeen's report also indicates that insurance users do not always feel that available CRM suites offer the functionality and flexibility they require – the reason many still prefer to build rather than buy customer- facing applications.

"Until recently, a lack of applications on the market and a low degree of domain expertise built into customer facing applications were two of the reasons many insurance companies chose to write their own applications, rather than rely on vendors," said Denis Pombriant, Vice President and Research Director for Aberdeen's Customer Relationship Management division and author of the report, “CRM and the Insurance Industry.” "Most organizations have a blend of packaged and in-house developed customer facing applications and their decisions about whether to build or buy customer facing applications have less to do with cost and much more to do with flexibility and functionality."

According to the report, 24.5 percent of respondents said their reasons for electing to build rather than buy CRM had to do with price. Most said that in their opinion, the available software lacked the specificity or domain expertise the industry requires. Data suggested that enhanced support of sales and marketing business processes is the first order of business as the industry begins spending on technology again. Most surveyed companies were relatively satisfied with their systems.

“CRM and the Insurance Industry” can be downloaded at no charge by registering on Aberdeen's Web site. Please visit www.aberdeen.com for more information.

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