Insurers invest tremendous resources in core technologies; after all, they’re a core part of the business. Whether it’s an individual component or a complete suite, replacing a core system is a serious undertaking. Both sides—vendors and carriers—stand to benefit from understanding how many deals are being made by their peers and with whom those deals are being made.
On the one hand, insurers can use this type of information to benchmark against their peers’ major IT investments, while solution providers want to know what size and type of carrier may be most receptive to their product offerings. In our recent report on insurance core system market activity, we provide an overview of activity in the market and dive into some of the factors that vendors and carriers should consider.
Counting With Complexity
By its very nature, information about the number of deals made, the size of deals, and who makes those deals is highly sensitive; no one wants to tip their hand to their competitors. How then can someone count the number of deals? With our longstanding relationships built on trust and mutual benefit, we’re able to ask questions like that. When enough vendors are willing to share that information, we can combine it with other, publicly available data to derive meaningful, actionable information.
Selecting a Solution
For IT executives at carriers, especially midsized carriers, core system replacements may occur only a handful of times during their career and can take anywhere from 12 to 24 months to complete. Such a monumental task isn’t to be taken lightly, and a carrier would be right to ask if their peers are making major IT investments as often, less often, or more often than they are. The list of considerations for major IT infrastructure investments is long, covering business goals, customer needs, cost, security, scalability, and more. An easy question to start with may simply be, “How often are other carriers of our size buying new core systems?”
Connecting With Carriers
For solution providers, resource limitations are the unfortunate reality of doing business; it just isn’t realistic to try to dedicate full teams to every opportunity. Instead, each opportunity should be evaluated for fit before investing too many resources. Each carrier may have different needs or expectations for a vendor partner. Some may be willing to take a risk on cutting-edge technology, and some will prefer a solution with a proven record of success. One carrier might be comfortable partnering with a vendor to launch a new line of business in a new state while another may prefer a vendor who has already gone live with that line in the selected state. Before investing resources to answer those questions, it’s worth answering a deceptively simple question first: “Do carriers like this one buy from vendors like us?”
It is essential that both insurers and solution providers understand the extent and type of activity within the market. While obtaining that information can be challenging due to its sensitive nature, combining public data with trusted relationships can create meaningful and actionable insights. To learn more about activity in the insurance core systems market, read our report Insurance Core System Market Activity: Deal Count Estimates and Trends for Core Components and Suites or reach out to me at [email protected]. You can also view our recent webinar, where a panel of Aite-Novarica Insurance experts discussed the findings of this study in detail.
