According to Financial Insights, IT spending is expected to grow in the period from 2004 to 2009 at a compound annual growth rate (CAGR) of 3.4%, making the insurance industry one of the most important markets for IT vendors and their products. The regions that are going to show the highest growth rates are the Nordics and Spain. In terms of segments, life insurance has an increasing role in driving IT spending.
IT services are expected to drive the IT spending growth, accounting for over 55% of the total IT spending in Benelux. In France, packaged software is expected to grow at a CAGR of 4.6% because insurance will adopt external packages to enhance costs and claims management. IT services will suffer the lack of a strong commitment toward outsourcing. IT spending in the German insurance industry is expected to grow at a 2.4% CAGR in the period from 2004 to 2009, which is a growth rate much lower than the Western European average. Software packages are expected to drive the IT spending growth, accounting for about 20% of the total IT spending. In Italy, the expected poor economic performance for 2005 will slightly impact insurance IT budgets. Italian insurance companies will still keep IT spending under control. The major role in IT spending will be covered by packaged software. The CAGR for the forecast period will be 3.8%. In Scandinavia, insurance IT spending is expected to be healthier than in the rest of Western Europe. The growth rate for 2004-2005 is expected to reach 3.4%, while the overall CAGR for 2004-2009 will be around 4.3%. IT spending in the Spanish insurance sector is expected to grow substantially more than in the rest of Europe. The growth rate of 2005 spending over 2004 will be 4.6%, while the CAGR for 2004-2009 is expected to bounce to 6%.