Boston-based consulting firm Celent (a part of Oliver Wyman) has been assessing the “subtle but important differences in how insurers from various countries” respond to the issues facing the industry. It has just released a new report, “Insurance in France 2010: The CIO Perspective.”
Key findings of the report included the following:
— The French insurance market is the fourth largest in the world after the United States, Japan, and the United Kingdom, but before Germany and Italy. Three-quarters of premiums are generated by the life insurance sector, which experienced a strong decrease in premium of almost 9 percent in 2008. due to the financial crisis and the economic downturn. Around two-thirds of the life market is traditional endowment business. Unit-linked business represents less than a quarter of total premium income. Nonlife insurance has better resisted the impact of the economic turmoil and continues to grow.
— Following the financial crisis, some French insurers had to launch specific actions to respond to the economic downturn. French insurers have frozen investments, implemented cost-cutting programs, and shifted priorities in terms of investment portfolio. Small insurers are even having a hard time raising capital to grow their business. Of course, IT has also been impacted by these measures.
— Typically, a French insurer spends on average 2-3 percent of premium on IT. French insurers differ from their US and UK counterparts, spending on average approximately equally on maintenance and new projects (50 percent each), while UK and US insurers spend 60 percent on maintenance.
— Celent does not expect IT spending to increase drastically in 2011 because French CIOs tend to remain relatively conservative. In addition, we believe that the recovery will be slow, and we do not expect a real return to growth for the insurance sector in France, notably the life sector, before the second half of 2011. Altogether, we think that 2012 will be the year when French insurers’ IT budgets will see an increase boosted by a concrete market rebound in the second half of 2011.
— For 2010, the main theme is finding the right mix in terms of distribution and trying to leverage low-cost channel opportunities, especially the Internet. Other important topics are finding new ways to grow the business and meeting regulatory requirements, particularly around risk management to prepare for Solvency II.
— French CIOs want to leverage Web 2.0 technologies and are launching initiatives around social networks. Another important issue triggering IT initiatives in 2010 is getting a better understanding of customers. Finally, French insurers are planning to invest more in tools allowing improved risk management.
— Investments in core systems are also expected to help insurers respond to key questions around distribution, growth, and improvement of services delivered to clients.
More information is available from the full press release at: http://www.celent.com/124_2818.htm
The full report may be obtained by contacting Celent at: www.celent.com.
Source: Celent
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