Insurance IT Trends in Eastern Europe (CEE5)

November 24, 2004

Abstract

New York, NY, USA November 24, 2004

Insurance IT Trends in Eastern Europe (CEE5)

CEE5 insurers are expected to spend US$543 million on IT in 2004. Over the next two years, this number will grow slowly: Celent anticipates that in 2006, CEE5 insurers will spend US$569 million on IT initiatives.

The CEE5 is the "Central and Eastern European Five": Poland, Hungary, the Czech Republic, Slovakia, and Slovenia. The insurance market in these countries is growing quickly and reaping profits. Each sub-market is dominated by a handful of major, mostly foreign-owned players and a former state-owned monopolist. Other carriers in the market are usually subscale and are not poised for dramatic expansion.

Although much has been written about the potential growth of these markets, little attention has been paid to the IT strategy issues that will support (or inhibit) this growth, and the potential role that Western IT services providers may play in this newly open market.

Insurance IT Trends in Eastern Europe

provides an overview of the current environment, key IT strategy issues, current and future IT priorities, and overall IT spending in the CEE5 market.

"The IT environment in these countries is generally relatively advanced, and companies have access to a highly skilled technical labor force," said

Matthew Josefowicz, manager of Celent痴 insurance group and author of the report. "This relatively high skill level coincides with a relatively low salary level compared to Western Europe. Accordingly, many companies opt for internal IT solutions instead of vendor solutions on the basis of price and skill availability."

On the vendor side, the market is dominated by the major Western players; their role is supported by their relationships with the Western parents of CEE5 insurers. Local players also have a minor role. Celent expects that the few local vendors with a specialization in insurance-specific functions will have to either team up with their Western competitors or focus on niche markets.

Most of the current IT investment in the CEE5 is focused primarily on distribution, which is not surprising given the market痴 focus on growth. However, Celent believes that CEE5 insurers are making a mistake by under-investing in the infrastructure necessary to support that growth over the long term. Many of the smaller players in the market are supporting their niche-player strategies by focusing their IT spending on improving profitability.

The 25-page report contains 11 figures and 6 tables. A table of contents is available here.

of Celent Communications' Property/Casualty Insurance and Life/Health Insurance research services can download the report electronically by clicking on the icon to the left.  Non-members should contact info@celent.com for more information.

        

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Celent is a research and advisory firm dedicated to helping financial institutions formulate comprehensive business and technology strategies. Celent publishes reports identifying trends and best practices in financial services technology and conducts consulting engagements for financial institutions looking to use technology to enhance existing business processes or launch new business strategies. With a team of internationally based analysts, Celent is uniquely positioned to offer strategic advice and market insights on a global basis. Celent is a member of the Oliver Wyman Group, which is part of Marsh & McLennan Companies [NYSE: MMC].

Media Contacts

North America (Boston)
Tylor Tourville
ttourville@celent.com
Tel.: +1 617 424 3284

Europe (London)
Chris Williams
cwilliams@celent.com
Tel: +44 (0)208 870 7875

Asia (Tokyo)
Yumi Nagaoka
ynagaoka@celent.com
Tel.: +81.3.3500.3023

Table of Contents

 

New York, NY, USA November 24,  2004

Insurance IT Trends in Eastern Europe (CEE5)

Return to report Abstract

 

EXECUTIVE SUMMARY 3
INTRODUCTION 4
MARKET SIZE AND GROWTH 5
  The Central and Eastern European Accession States 5
  Insurance Market Structure 6
COMPETITIVE ENVIRONMENT FOR INSURERS 9
  Overview 9
  Foreign Penetration 11
  Consolidated Oversight 13
CROSS-INDUSTRY IT TRENDS IN THE CEE5 14
  Total IT Spending in the CEE5 14
  Technology Statistics by Country 15
  Enterprise IT in the CEE5 15
INSURANCE TECHNOLOGY IN THE CEE5 16
  Total IT Spending in Insurance 16
  Growing Budgets for Larger Companies 16
  Budget Allocations 17
  IT Infrastructure and Technology 18
  Internet Adoption is Widespread 18
  Role of Local Vendors 18
  Current Level of Automation and Potential for Improvement 19
  Strategic IT Targets 20
  Agenda and Size 21
CONCLUSIONS 22
  For Insurers 22
  For IT Solution Providers 22
OBJECTIVITY & METHODOLOGY 24

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