About 2 percent of insurance premiums are spent on Information Technology spending, which in Portuguese companies account for around 8 euros per policy, a study found today by the Portuguese Insurance Association (APS), conducted jointly with Accenture. The data refer to 2002 and the study counted on the collaboration of 14 insurance companies, aiming to make a reference and a comparison of technology costs and identifying opportunities for improvement of IT services.
According to the report, five insurance companies with annual IT costs in excess of 5 million euros have 22 million euros in average annual expenses that year. In other three, with annual costs between 1 million euros and 5 million euros, the average was four million euros of investment in IT.
In the total of these eight companies, half of the amounts are spent on hardware, software and communications, with the remainder being invested in human resources. In six other companies with annual costs of less than 1 million euros, expenses amounted to 350 thousand euros, 70 percent of which are spent on hardware, software and communications.
On average, the resources of internal origin in Information Technologies, vary between 70 and 90 percent. It means that total IT costs represent between 1.5 and 2.7 percent of premiums, values in line with the benchmark European.
According to Miguel Rio-Tinto, President of the APS Technical Commission for Innovation and Development, «this study provides companies with a set of metrics on information systems that will allow identifying the functions with the greatest potential for improvement». And he adds, «the results revealed the potential benefits that insurance companies will be able to obtain if they implement this instrument as a recurring work tool».
It is estimated that, in the five insurers mentioned above, about 58 percent of the IT budget is spent on supporting the existing business. In the second set of the three companies, this figure is 53 percent and in the remaining six, around 75 percent. The differences reflect the different investment policies in the sector.
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