US insurance companies will spend $28.8 bln on IT in 2005

Celent Communications predicts that US insurers will spend $28.8 bln on information technology in 2005. The market will grow to $42 bln in 2010. US insurers spend between 2.5% and 3% of premium on IT. Celent believes that over the next five years, this will increase to between 3% and 3.5% as IT becomes even more essential to insurance company operations and consumes a larger portion of operating ratios. P-c insurance IT spending is expected to grow from $13.2 bln in 2005 to $20.8 bln in 2010.

Life/health insurance IT spending is expected to grow from $15.6 bln in 2005 to $21.2 bln in 2010. TowerGroup said US IT spending in insurance would remain flat with total spending moving from an estimated $35.3 bln in 2004 to $36.4 bln in 2005.