Insurance Firms Eyeing CRM
The insurance industry is increasing its investment in CRM, according to a new report by Aberdeen Group. The report also finds that many insurance firms opt to build out their own CRM systems rather than purchase CRM suites.
More than 80 percent of survey respondents said their budgets for CRM were less than $500,000 in 2002--a notoriously slow year for IT spending. However, 45 percent indicated that in 2003 their CRM spending would increase. In addition 37 said spending on CRM had a higher priority than other areas of IT spending.
Many insurance firms said they chose to build CRM rather than buy it, because until very recently most CRM suites were mostly horizontal applications. These suites did not address the specific need of the vertical, the report notes.
"A real lack of applications on the market and a low degree of domain expertise built into customer facing applications were two of the reasons many insurance companies chose to write their own applications, rather than rely on vendors," says Denis Pombriant, vice president and research director for Aberdeen's CRM division. He is the author of the report, "CRM and the Insurance Industry."
"Some of the responses we received said they had vertical applications installed years ago, but these are in no way as complex as the ones available today," Pombriant adds, noting that it is still too early to tell if the vertically focused suites from vendors will have a marked effect on spending patterns.
According to the report, 24.5 percent of respondents said their reasons for electing to build rather than buy CRM had to do with price. Most said that in their opinion, the available software lacked the specificity or domain expertise the industry requires. Data suggested that enhanced support of sales and marketing business processes is the first order of business as the industry begins spending on technology again. Most surveyed companies were relatively satisfied with their systems.