January 2021 - This brief examines market dynamics in M&A activity in the insurance software space from the perspective of the potential effect on insurer technology strategies.

The insurance software space is the focus of investor attention due to several recent IPOs, private equity investments, and strategic acquisitions by major tech and data firms. The venture-driven activity in the adjacent InsureTech marketplace has also drawn interest to the space.

For insurer technology leaders, understanding the dynamics of the market and how current or potential partners are likely to fare is an important part of any comprehensive enterprise technology strategy.

Key Points and Findings

• Dominant insurance software vendors are solidifying their position via M&A, either via IPO or PE funds, but history shows it is possible for new or outside players to challenge the leaders.
• The fragmented nature of insurance means growth depends on breadth. Large software players must continually expand their offerings, making M&A a feature of the vertical.
• Insurer technologists should prepare for change in their key vendors’ strategies and teams, as buyers incorporate new products and sellers incorporate new leaders. Insurers should understand the strategic position of their key vendors and game out various scenarios.