Approximately 20 percent of all policy administration systems in use today are “modern” systems licensed or hosted by vendors, and the other 80 percent may include homegrown systems or legacy vendor systems, according to a new report from Celent.
In its report, “Deal Trends and Predictions in the Life Insurance Policy Administration Market,” the research and advisory firm analyzes deal activity for new policy administration systems in North America using data from 22 vendors selling policy administration solutions to North American life insurers.
Celent estimates that approximately 65 percent of insurers do not own a vendor’s policy administration solution. However, in any given year, approximately 4 percent of North American insurers buy a new policy administration system from a vendor, according to the report. Therefore, Celent sees an upward trend in North American policy administration sales when upgrades are added to the equation.
“As insurers continue to upgrade or replace their older systems and buy new systems for new products, we see the trend toward implementing modern PAS systems creating momentum that should continue into the future as life insurance sales pick up,” the report says.
Celent estimates that the 2013 market for policy administration systems will be $195.6 million, and in 2014, the total value of the market is estimated at $214.2 million, rising $271.5 million in 2016, an 11.5-percent compound annual growth rate (CAGR) over three years. Upgrades account for approximately 27 percent and 39 percent of the market value in 2013 and 2016, respectively, according to the report
No new vendor mergers have been executed since Celent’s last report, and no vendor is the clear-cut market leader, so insurers should proceed with traditional vendor evaluation processes as necessary, Celent says.
In November 2013, Celent released a
