The financial crisis that started in the U.S. and spread to the rest of the world affected businesses round the world, especially the insurance industry. Many major companies such as AIG saw big slumps in their growth. However, the good news is that all this is changing. The global insurance industry has made a big comeback as is evident in its operations. These companies have moved from a cost-cutting mode to a surge in IT spending. A recent research conducted by Ovum (News - Alert) shows that the IT budgets of global insurance companies are on the rise and it is expected to top $100 billion by 2017. This accounts for about 6.5 percent compound annual growth rate (CAGR).
This robust growth will be led by insurance companies in the Asia-Pacific region which is expected to grow at a rate of 11.6 percent CAGR until 2017. This will be followed by Europe and North America. It is not a surprise that the Asia-Pacific region will lead the way because this region has the most number of developing countries today. As the population of these countries become more affluent, they go in for more and more insurance products and this results in higher growth for the insurance companies that operate in this region.
Keeping in tune with this growth, the spending areas of Asia-Pacific companies will be different from their European counterparts. According to Ovum's report, a good amount of this IT budget will be spent to improve customer satisfaction. The insurance companies in the Asia Pacific region will be spending money to strengthen their core processing capabilities needed to handle the growing population. The European companies, on the other hand, will mostly focus on reducing operating costs and improving fraud detection systems.
All this is good news for both the insurance companies as well as the IT providers.