Bad News on the Street: Insurance IT Strategy and the Financial Crisis

by Donald Light,  Michael Fitzgerald, October 9, 2008

Abstract

Boston, MA, USA October 9, 2008

A new Celent report looks at the global financial crisis and what it means for insurers’ IT strategies.

A tidal wave of bad news has swept Wall Street and Main Street, and debris is coming ashore across the globe. This crisis is sure to affect insurers the world over for years to come. Celent believes that the unprecedented breadth and intensity of issues currently facing the insurance industry will severely constrain future growth but also provide an opportunity for carriers that position themselves correctly.

A new report, , examines the fundamentals of the crisis and highlights the likely impact on insurance carriers across several critical dimensions.

This report examines how the current economic crisis will impact the insurance industry’s financial results, capitalization, and competitive positions. It describes how insurers’ operational strategies may shift, and how those shifts make this the right time to reexamine the tactical and strategic value that current and new IT initiatives will provide.

"The world has changed, but not ended," says Donald Light, senior analyst with Celent’s insurance practice and coauthor of the report. "Insurers, their technology groups, and technology vendors need to recognize this change and adapt to it."

"Adapting includes an examination of implementation plans and budgets with an eye toward short-term, tactical payback," says Mike Fitzgerald, senior analyst with Celent’s insurance practice and coauthor of the report.

The report is 22  pages and contains four tables and one figure. A table of contents is available online.

Members of Celent's Life/Health Insurance and Property/Casualty Insurance research services can download the report electronically by clicking on the icon to the left.  Non-members should contact info@celent.com for more information.

 

Celent is a research and advisory firm dedicated to helping financial institutions formulate comprehensive business and technology strategies. Celent publishes reports identifying trends and best practices in financial services technology and conducts consulting engagements for financial institutions looking to use technology to enhance existing business processes or launch new business strategies. With a team of internationally based analysts, Celent is uniquely positioned to offer strategic advice and market insights on a global basis. Celent is a member of the Oliver Wyman Group, which is a wholly-owned subsidiary of Marsh & McLennan Companies [NYSE: MMC].

Media Contacts

North America
Michele Pace
mpace@celent.com
Tel: +1 212 345 1366

Europe (London)
Chris Williams
cwilliams@celent.com
Tel: +44 (0)782 448 3336

Asia (Tokyo)
Yumi Nagaoka
ynagaoka@celent.com
Tel.: +81 3 3500 3023

Table of Contents

Boston, MA, USA October 9, 2008

Bad News on the Street: Insurance IT Strategy  and the Financial Crisis

 

Executive Summary 3
Introduction 4
The Birth of a Crisis 5
Assessing the Impact 7
Financial Results 7
Capital Levels and Solvency 9
Losses 9
Soft Market 10
  Market Consolidation 10
  Regulation and Rating Agencies 10
Global Insurance Impact 11
Rethinking Operational and IT Strategies 13
Specific IT Initiatives 15
  IT Spending Projections 16
Conclusion 18
  What Insurers Should Do 19
  What Technology Vendors Should Do 19

 

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