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Insurers' annual IT bill to triple to $9 Bn by 2012: Study
By siliconindia
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Thursday, 07 February 2008, 02:28 IST
New Delhi: Making a departure from the traditional ways of doing business, insurance companies are now embracing information technology in a big way. With this, the IT expenses of these companies are expected to rise three-fold to over nine billion dollar by 2012.
The Indian insurance companies would spend close to three billion dollars on IT in 2008, with life insurers alone accounting for nearly 2.6 billion dollars, according to a new report by global consultancy firm Celent.
In its report titled 'Insurance market in India: Market and IT Overview,' Celent said that companies need to invest heavily on technology in coming years as they would need to replace their core systems.
According to the study, a big portion of the budget would go for hardware and software. The sector would see 34 percent and 31 percent of the total IT budget, while telecom and staff would see 14 percent each. Services would attract seven percent.
Celent said that average spending on maintenance and new projects would be in ratio of 70:30.
Indian insurers face the challenge of building IT infrastructure in order to support the explosive growth in users and policy counts. "With a population of 1.2 billion, in which middle class accounts for almost half, insurers in India will have to cope with volumes of data and transactions never seen before," Celent noted.
With the country experiencing unprecedented economic growth in the past decade, the insurance industry has seen a 25 percent increase in premium income over 2005.
According to the report, scale and skills are the challenges of the insurer. The company board must be clear about growth plans and overall business strategy if IT is to be a support in the future.
