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Targeting Information and Service Industries Iowa has established a strong presence in the “information and service” cluster of industries.
For many decades Iowa has been widely recognized as a major center for the insurance and
financial services industry. These industries are substantial consumers of information services.
In surveys conducted for the state by SRI International, information technology services
represented between 30 and 40 percent of the external expenditures for financial service firms.
Consequently, information services firms flourish in Iowa as part of the insurance and financial
industries supply chains. Iowa Area Development Group (IADG) is working with its partners and the state economic
development department to create business opportunities that recognize these industry linkages.
Our target industries include financial services, insurance, finance, banking, brokerage,
communications, computer hardware and software development, data programming and
processing and other computer-related services. Why is Iowa considered such a good fit for information and service industries? - Existing critical mass. Iowa has a high concentration of insurance companies to anchor
information and service companies. - Favorable regulations and supportive government-industry relationships. Iowa has a
business-friendly regulatory environment for the insurance industry and provides training
support, industry development and investment assistance to the firms in this cluster. - Good telecom infrastructure. Iowa's major cities have an established telecom
infrastructure and the state-wide fiber optics network links rural communities. These
serve as the backbone for this cluster. - High demand from other cluster industries. Iowa companies are seeking high-tech
solutions to improve their competitiveness. In the process they are creating a growing
demand for information technology products and services. - Excellent workforce. Firms in this cluster depend upon easily trained, knowledge and
service oriented workers. Iowa's outstanding K-12 school system, business-driven
vocational-tech schools and private colleges and universities supply well-trained
professionals. - Positive university-industry relationships. Universities and community colleges in Iowa
offer cooperative programs specifically tailored to the needs of information and service
industries. - Strong basic support services. Iowa's financial industry has access to a range of local
support services including customer service call centers, information fulfillment and data
processing. What has been the experience of these firms in Iowa? - Employment in home offices of life insurance companies in Iowa accounts for 3.7 times
as large a percentage of state employment as the percentage share of the nation's
employment. Economists say that Iowa's workforce is 3.7 times as concentrated in this
sector. - Iowa's workforce has a concentration ratio in the computer processing and data services
industry of 3.2 times the nation. - Since 1980, information and service company employment has grown by 71% in Iowa,
compared to 40% for the nation. - Since 1990, employment in the insurance industry has grown by 30% in Iowa, compared
to 11% for the nation. - From 1992-2000, The number of firms producing prepackaged software in Iowa grew
from 45 to 87 and employment grew 114%. - Over that same eight year period, the number of computer processing and data
preparation firms grew from 133 to 295 and their employment grew by 322% to over
10,000. What does Iowa's information and service cluster look like? - Members: the community consists of more than 8,000 firms employing more than
124,000 workers with an annual payroll in excess of $4.2 billion. The cluster consists of
three subclusters: 1) the communications industry, which accounts for about 19,000
workers in 839 firms; 2) the financial services industry, which employs about 88,000 in
nearly 6,500 firms; and 3) the computers services industry, which employs about 18,000
in 844 firms. Clearly the largest portion of this cluster is in the financial services industry. - Size: nine of the eleven firms in this cluster, which employ 1,000 or more workers, are in
the financial services industry. - They are Principal Financial Group and Principal Capital Management
(11,000), Aegon USA (2,000), Seabury & Smith (2,000), Allied Insurance
(1,700) the multi-state Wellmark Blue Cross/Blue Shield (1,400), Farm
Bureau Financial Services (1,200), EMC Insurance Group and
Employers Mutual Casualty Co. (2,100). - One computer software manufacturer exceeds 1,000 employees:
NCS/Pierson (1,300). And one communications services firm, McLeod
USA, employed 4,000 in 2002. Another 161 firms in this cluster
employed more than 100 workers each. - Wages: The average for all Iowa wages for employees in the information and services
industries was $38,905 in 2000. The average wage figure was heavilty influenced by
insurance company executive pay. - Tenure: 57 of the information firms in Iowa have been in business for more than a
century. Another 58 firms have been in business more than 50 years. Again, this
demonstrates that even in this transient sector of the economy, Iowa firms stay in
business and stay in Iowa. - Sales: one firm had annual sales in excess of $1 billion; four more had sales in excess of
$500 million. Another 22 firms had sales in excess of $100 million. Who are some of the current members of this community? How does Iowa's strong insurance sector benefit other firms in the information cluster? - Iowa is the home office state for 2,630 insurance and related firms, employing 41,137 in
2000. - The insurance industry in Iowa had an annual payroll in excess of $1.6 billion in 2000.
That was 5% of the total payroll for all Iowa employees. - Des Moines is the second largest insurance city in the United States.
- In addition to Des Moines, Cedar Rapids, Mason City, Grinnell and Waverly are
communities with a high concentration of this business. How does Iowa's favorable regulatory environment and government programs benefit firms in this cluster? - Iowa is in the process of lowering its insurance premium tax rate over a period of four
years from 2% to 1% - it will be one of the lowest rates in the country. This will make
Iowa an even more attractive place for insurance companies headquartered in the state. - The Iowa Insurance Division has historically balanced a pro-industry perspective with
their mandate to protect the interest of consumers. - Iowa's lawmakers have always taken the lead in proposing responsive, timely and
innovative approaches to insurance regulation. How does Iowa's telecom infrastructure benefit the industry? - Iowa currently has 7,585 miles of private fiber optics cabling installed.
- As of September 2001, 47% of Iowa's rural communities and 61% of its non-rural
communities had “high-speed” internet access, according to a study mandated by the
Legislature. An additional 8% of the rural communities indicated that they would have
such access by September 2002. Why do we believe that Iowa's strong financial industry attracts data industry suppliers? What advantage does Iowa's productive workforce offer to service and information firms? - Iowa's workers provide $5.62 in value-added labor per dollar of wages.
- Iowa consistently is in the top ranks in college entrance exam scores.
- Iowa students have an 84 percent high school graduation rate, placing Iowa among the
top five states. - Iowa has the lowest new employer unemployment insurance rate and the ninth lowest
workers' compensation rate in the nation. How do the universities in Iowa support the information and service industries? - The Kelly Insurance Center at Drake University in Des Moines provides professional
development and continuing education programs tailored to the needs of the insurance
industry. - In addition, Drake University offers an insurance concentration and an actuarial science
major to prepare business students to enter careers in the insurance and risk
management industry. - The University of Iowa has the second oldest actuarial science program in the nation. It
offers graduate and undergraduate degrees in actuarial science, including the doctoral
degree. - St. Ambrose University in Davenport offers an innovative continuing education program
for the insurance industry. Their program is available in the classroom, by self-study and
online or on CD-Rom. What basic support services are already in place in Iowa? - Iowa has a strong mix of support services such as credit reporting, customer support,
information fulfillment and data processing. - In 2000, Iowa had 83 firms in the computer processing and data preparation industry,
employing more than 10,000. The concentration ratio for this industry in Iowa was 3.2
times what it was for the nation. - Iowa had 71 firms in the credit reporting and collection industries, with a workforce of
over 1,000. - The 2003 edition of the Harris Selectory for Iowa lists 35 telemarketing bureaus or
telephone call centers with 20 or more employees and 30 customer service or fulfillment
centers and 11 specialty direct mail advertising firms with 20 or more employees each. - Software and Information Technology of Iowa (SITI), a non-profit trade association for the
software industry, provides a forum for information exchange. Are Iowa businesses online and on top of technology?
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