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May 30 2019 | Karen Furtado

Of all the software sold within the insurance industry, core systems continue to be the dominant purchase for hundreds of insurers. And just when you think it might slow down – that every last insurer has bought the system that they will need to support their business – we see another cycle of buying begin. 2016 was a “low point” in core systems buying, with the lowest number of policy, billing, and claims systems purchased in several years. Questions started to arise. Was the market finally saturated? Were these needs now filled? Would insurers start to move on to other projects?   

2019 core dealsAs of this writing – and from looking at the insurer and MGA buying trends over the past two years – we see that this could not be further from the truth. Buying has been on the upswing since 2016, increasing by 13% in 2017 and 11% in 2018. And I have been asked a myriad of questions: What is hot? And what is not? Are more suites being purchased than components? Or are we entering a new era of component buying? What lines of business are insurers looking to support with core systems? Will insurers really buy systems that are operating in a cloud environment?

At the same time these questions crop up, we see an industry that has embraced the transformation journey. Many are looking to change their business models, create new products that respond to new and changing risks, and transform their organizations for the workforce of the future. As insurers look at their business needs and the technology that is required to support these needs, they find themselves looking at aging systems – not constructed for the technology era in which we now operate.

The fact is that we are living in changing times. The technology that supported us through the Y2K world is not necessarily the software that will sustain us in a world where transformational technologies such as AI, serverless computing, microservices, and APIs are becoming more and more prevalent – and where software that operates in the cloud is a mandate.

This new era of computing is making its impact throughout the insurance ecosystem. All must respond – insurers and vendors alike. As we look at our latest research report, P&C Core System Purchasing Trends: Foundational Technology to Fuel the Transformation Journey, we see an industry in the beginning phases of the change.

A few years ago, I wrote a blog at the beginning of the baseball season. I said that I believed we were in the 7th inning of the ball game that was in play. But we were already getting the idea that maybe there was a new game starting. From the trends we are observing today, we believe that a new game has begun, and we are just in the early innings of this game. The new digital era we are living in, with the capabilities provided through the new era of computing, has changed the game. So, ask yourselves: Which game are you in? What systems are you buying to support it? Are they from the game that is just finishing? Or are they solutions that will support you in the new digital game that is beginning now?


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To learn more, please contact:
Karen Furtado
Partner
Strategy Meets Action
978.239.2741