The Impact of Information Technology Management Practices on the Performance of Life Insurance Companies

Life insurance firms are increasingly reliant on information technology (IT) to maintain and enhance operating efficiency as well as to purse new strategies such as direct delivery, customer segmentation, and product innovation. The size of the commitment to IT by the average life insurance company is staggering: one study estimates that life insurance companies spent as much as 5% of premium income on IT in 1996 (Bell, 1998) and that IT represented over 50% of insurance company capital expenditure throughout the 1980s (Francalanci and Hossum, 1998). As one observer succinctly stated, “today you can’t do anything in a life insurance company without technology” (Harnett, 1997).

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