IT Spending for Property and Casualty Insurers Flat through 2010: PCI

CHICAGO – September 28, 2009 – Gartner and the Property Casualty Insurers Association of America�s (PCI) fourth annual joint Information Technology (IT) spending survey found that the planned IT spending increase from 2008 to 2009 is 1.6 percent. This is very close to Gartner�s prediction of 1.9 percent from last year. It is however sharply down from the 8.1 percent planned increase from 2007 to 2008. Based on the data collected the planned increase in spending from 2009 to 2010 will only be around 0.2 percent. This slight increase is expected despite the fact that companies are on average predicting a decrease in revenue of 3.7 percent from 2008 to 2009.

“This study is the most comprehensive IT expense statistics study in the property and casualty industry,” said Scott Joyner, vice president, information technology for PCI. “The 22 PCI member companies that participate in the study averaged $400 million in revenue and 474 employees.”

Companies responded that for 2008, 59 percent of IT spending is dedicated to “lights-on” support, while the remainder of the IT investments are dedicated to support business growth and transformation. “This pattern of holding steady from 2008 indicates that even with a tough economy, these companies are still making some investment in the future,” stated Eric Stegman, research director, Gartner.

According to Stephen Forte, a research director with Gartner�s Insurance Industry Advisory Service, “With IT costs per policy and claim at $69 and $58 USD respectively, this validates the trend of property and casualty insurers replacing core legacy administration systems for among numerous reasons, reducing costs. Obtaining measurable business outcomes remains a key initiative even during the current economic malaise.”

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About PCI

PCI is composed of more than 1,000 member companies, representing the broadest cross-section of insurers of any national trade association. PCI members write over $180 billion in annual premium, 37.4 percent of the nation�s property casualty insurance. Member companies write 44 percent of the U.S. automobile insurance market, 30.7 percent of the homeowners market, 35.1 percent of the commercial property and liability market, and 41.7 percent of the private workers compensation market.