In software buys that have risen fairly steadily over the past eight quarters, core systems appear to be carriers' priority, according to a report released by Celent Communications Inc., Boston.Celent's goal in conducting its research, "Insurance Software Deal Trends 2003-2004," was to find out what types of insurers (by size and lines of business) purchased application and infrastructure packaged software during that time period. The study also looked at the business processes supported by these deals, as well as some of the broad trends in terms of deal activity.

Celent's report, released in April, reflects data collected from 974 insurance software deals that occurred in 2003 and 2004. Of these deals, 475 involved life/health insurers (16% health and 33% life/annuity carriers), while 499 (52%) involved property/casualty insurers.

Across all business lines, core processing (including services) comprised insurers' most popular buy during the 2003-2004 time period, followed by document management, distribution, and infrastructure. Distribution and core processing combined made up more than half of the deal flow.

Insurance carriers are now starting to act on opportunities to improve their core technologies, after a long slowdown induced by the tepid business climate of 2001-2002, says Celent senior analyst and author of the report Craig Weber.

"Activity really is picking up," he says. "We've clearly emerged from the hunkered down environment of several years ago, where carriers were focused on minimizing spending to help offset bad investment results and generally poor sales."

Celent expects this level of deal activity to continue throughout 2005, with carriers of all sizes opening their pocketbooks in a renewed effort to derive competitive advantage from technology investments, notes Weber.

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