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TowerGroup: Four Key Trends Poised to Reshape Insurance Industry's Approach to Sales and Services

Needham, MA, July 12, 2006 - Recent trends and statistics on how we live, communicate, and work today point to significant changes poised to reshape how U.S. insurance carriers respond in areas such as products, services, and the use of technology. TowerGroup believes that over the next few years, the leading insurance companies will embrace these changes and use their scale, financial strength, and flexibility to maintain a sustainable advantage.

According to TowerGroup, four important macro trends will affect the way an insurance company does business over the next few years:

• The Aging Populace: Insurers must make the aging populace a critical component of their near-term strategic planning. Within the next five years, more individuals will reach traditional retirement age than ever before, which will significantly affect insurers' business operations, distribution, and workforce capacity planning.

• Mobile Technology: TowerGroup estimates that insurers are increasing their spending for mobile technology at a compound annual growth rate of 18%, despite the fact that the year-over-year increase in their total IT spend is only 3%. The proliferation of Internet use and mobile technology will improve the experience of insurance producers, customers, and employees by simplifying complex interactions and automating routine tasks.

• Service-Oriented Architecture: Leading insurers are committing money, time, and energy at the senior level of their organizations to pursue the benefits of service-oriented architecture (SOA). It is an evolution in technology that will provide transparency into business and IT decision-making and the total cost of ownership.

• Workforce Motivation: The need for complex problem solvers is the fastest-growing area of demand in the US labor market. TowerGroup believes that insurers should focus on better use of technology to facilitate complex interactions and create a more adaptive, responsive, and satisfied workforce.

A new TowerGroup report titled, "Four Macro Trends: How Will the Surrounding Environment Affect the Insurance Business?," by Cynthia Saccocia, research area director of the Insurance practice at TowerGroup, presents perspectives on the four macro trends and examines key statistical information expected to drive imminent changes in the expectations of insurance customers, producers and employees. The research also advises insurance industry leaders to continue to find innovative means amidst these changes to capitalize on their strong business fundamentals to be demonstratively innovative so that competitive differentiation is absolute.

This report is available to qualified members of the press for review. To request a copy or to arrange an interview with Ms. Saccocia, please contact Jorge Lavina at +1.212.455.8041 or jlavina@cooperkatz.com.

At TowerGroup, Saccocia specializes in distribution and services, but also covers a wide range of other topics in business strategy and technology investment both within and beyond the Insurance industry. Earlier this year, she published a report titled, "Insurance Industry Perspectives: What's New in Business Strategies and IT Spending."

About TowerGroup

TowerGroup is the leading advisory research and consulting firm focused on the global financial services industry. A respected source for trusted information and advice, TowerGroup brings many of the world's leading financial institutions, technology companies, and professional services firms a deeper understanding of the business and technology issues impacting their organizations. Headquartered near Boston in Needham, Massachusetts, and with offices in North America, Europe, and the Asia-Pacific region, TowerGroup serves a global client base. Visit www.towergroup.com for more information.