The political and financial upheaval that now define much of the Europe, Middle East and Africa is reflected in the reticence of insurers to invest in new core systems, a new study from Celent finds.
The report, “Deal Trends in Life, Pensions, & Annuities Policy Administration Solutions, 2011 EMEA Edition,” examines the size and dynamics of the policy administration solution markets across the EMEA region. Authored by Celent senior analysts Jamie Macgregor and Nicolas Michellod, the report tracked 96 policy administration system deals between January 2009 and June 2011 and used the period of January 2007 to June 2009 as a basis for comparison. “Using this data and adjusting for overlaps, an overall downward trajectory has been seen of 19 percent to date,” the report states. “Large deals experienced the biggest drop of 42 percent.”
For the Western European markets, Celent attributes the shrinkage to a variety of factors including battered economies across the region, and insurers prioritizing change investment towards regulatory change, such as Solvency II. “Celent believes that the market for new sales in policy administration systems in Europe will be relatively flat up until 2014 (when 53 deals are predicted), while insurers focus on directing their capital expenditure towards addressing the impact on sales of reduced consumer confidence resulting from the regional financial crisis, and focusing effort toward meeting local regulatory objectives.”
Celent expects more, albeit smaller deals elsewhere. “Elsewhere, emerging markets in Eastern Europe, Africa, and some parts of the Middle East will see a steady growth as insurers look to enhance their core proposition capability,” the report states. “Each deal is likely to be small in value, reflecting the size of insurer acquiring new systems and competitive local market conditions.”
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