In 2004 the insurance industry is expected to spend $19 bln on IT products and services, including telecom services and equipment, applications/software, computer hardware, network hardware, IT personnel, and outsourcing/hosting. This is expected to grow at an average annual growth rate of about 3%. Insurance firms are increasing the need for areas in IT such as connectivity, storage, and security. This being said, it is not surprising that insurance firms spend thousands of dollars on information technology every year. In-Stat/MDR estimates that the average insurance firm will spend roughly $85 thousand on information technology in 2004. In-Stat/MDR expects growth in per-firm IT spending in the insurance industry to escalate slowly with small business and middle market firms expected to increase their expenditures more significantly in the future.