Over 75 insurers participated in sample group. Results published in aggregate and in 12 peer groupings of 4-9 insurers.
April 3, 2012 (BOSTON) – A benchmarking study of insurer IT operations shows little direct correlation between insurers’ complexity or technology-enabled capabilities and their spending levels. The study, published by research and advisory firm Novarica was based on survey responses from more than 75 US insurer CIOs.
“While most insurers continue to spend 2-5% of their direct written premium on IT, the business capabilities they get for that spending vary widely,” said Matthew Josefowicz, managing director of Novarica and lead researcher for the Quick IT Benchmarks project, which is in its second year. “There is little direct correlation between operational complexity and IT expense levels. Companies can support complexity by operating efficiently or by increasing their expense levels, and there is an active mix of both approaches throughout the industry.”
The 2012 Quick IT Benchmark reports were published in 13 volumes, including an analysis of overall averages, and 12 groupings of 4-9 comparable companies:
- Life/Annuity Insurers, 1,000+ Employees
- Life/Annuity Insurers, 250+ Employees
- Life/Annuity Insurers, < 250 Employees
- Multi-line P/C Insurers, 2,000+ Employees
- Multi-line P/C Insurers, 1,000+ Employees
- Multi-line P/C Insurers, 500+ Employees
- Multi-line P/C Insurers, 200+ Employees
- Multi-line P/C Insurers, 100+ Employees
- Multi-line P/C Insurers, < 100 Employees
- Personal Lines Insurers
- Mono-line Workers Comp Insurers
- Small Specialty P/C Insurers
Novarica’s Quick IT Benchmarks for US Insurers research uses the firm’s “Supply and Demand” methodology rather than focusing exclusively on spending levels. The Supply and Demand approach contextualizes spending levels (Supply) against company size, new project volume, and current state of the organization, technology infrastructure, and product volume and complexity (Demand).
“It is important that benchmarking data be presented and understood within the context of the variation between peer circumstances and business needs,” Josefowicz noted. “No insurance company ever became more successful than its peers by spending less than them on information technology. The path to competitive advantage lies in spending appropriately to create and support necessary business capabilities.”
Reports were provided free to participants, and are available online at www.novarica.com/QuickITBenchmarks/.
Novarica provides information, insights, and perspective on markets, operations, and technology to financial services and insurance executives and project teams. The company delivers its service through published research, retained advisory services, and project-based consulting. For more information, visit http://www.novarica.com.