Australian Insurers to Spend $5.2 Billion on IT in 2012: Gartner

Australian insurance companies will spend A$5.2 billion on IT products and services in 2012, an increase of 2.8 percent over 2011, according to technology research firm Gartner, Inc. This forecast includes spending by insurers on internal IT (including personnel), hardware, software, external IT services and telecommunications. The fastest growing industries for IT spending in Australia in 2012 will be the communications, media and services sector (4.1 percent) followed by the utilities sector (4.0 percent).

Telecommunications represents the biggest spending category for insurers, forecast to reach $1.5 billion in 2012. However, spending on software is expected to grow the fastest in 2012, up 9.2 percent over 2011.

Gartner principal research analyst Derry Finkeldey said Australian insurers are faced with an opportunity to transform significant aspects of their operations via technology, particularly in the areas of distribution and customer interaction.

“These operational areas can benefit from applications based in the cloud and context-aware computing, social and mobile technology,” said Ms Finkeldey. “External factors, such as regulatory change, uncertain economic conditions and the increasing frequency of catastrophic events, are forcing insurers to reassess their approaches to business processes and the IT applications that enable them to derive greater efficiency and achieve more with less.”

According to Gartner vice president and distinguished analyst Kimberly Harris-Ferrante, the converging factors of an acutely competitive environment and the consumerisation of technology (for example, the impact of social networking), are leading insurers to focus intently on knowing their customers to serve them better and win their business.

“Insurers are looking for ways to streamline their processes from the front office to the back office, and are investing in the next generation of core solutions to help them do that,” said Ms Harris-Ferrante. “These solutions often integrate business process management (BPM) and analytics capabilities, or are offered in an "as a service" model.”

Ms Harris-Ferrante will discuss insurance sector technology trends at Gartner Symposium/ITxpo on the Gold Goast, 14-17 November 2011. ‘Industry perspectives’ sessions will be held on Monday 14 November, focusing on specific issues in the financial services, government, defence, higher education, energy and utilities sectors.

Further information on insurance sector IT spending is available in the Gartner report: ‘Forecast: Enterprise IT Spending by Vertical Industry Market, Worldwide, 2009-2015, 2Q11 Update’, available at http://www.gartner.com/resId=1746317. This vertical industries forecast provides total enterprise IT spending, including internal spending and multiple lines of detail for spending on hardware, software, IT services, and telecommunications for vertical industries and 43 countries within seven geographies.

About Gartner Symposium/ITxpoGartner Symposium/ITxpo is the industry's largest and most important annual gathering of CIOs and senior IT executives. This event delivers independent and objective content with the authority and weight of the world's leading IT research and advisory organisation, and provides access to the latest solutions from key technology providers. Gartner's annual Symposium/ITxpo events are key components of attendees' annual planning efforts. They rely on Gartner Symposium/ITxpo to gain insight into how their organisations can use IT to address business challenges and improve operational efficiency.