Insurance is the most important vertical to 15 vendors operating in the larger financial services arena, yet their domain expertise (policy administration, underwriting) leaves something to be desired, according to Boston-based Aite Group.
The market position of 15 IT services vendors that provide to life, property/casualty insurance and health insurance companies is the subject of an Aite Group report, which provides a view of where each vendor fits in terms of domain expertise, service areas and geographic scope, and also highlights ways in which participants behave similarly or are obviously unique in their approach to servicing insurance carriers.
The report is based on Aite Group's 2009 global survey of 26 providers of IT services to the financial services industry. Of these, 15 offer services to the insurance industry: Cognizant, CSC, Exigen, HCL, Infosys, Logica, Mastek, Neoris, NS Solutions, Patni, Polaris, SunGard, Syntel, Unisys and Wipro.
The report reveals that core policy administration replacement and modernization are critical areas of engagement for IT services vendors servicing the insurance vertical.
"By and large, IT services vendors are currently better differentiated by IT offerings (advanced IT services, basic IT services, etc.) than by insurance domain expertise (policy administration, underwriting, etc.)," says Gwenn Bézard, research director with Aite Group and co-author of this report. "Vendors need to focus on building domain expertise differentiation; a lack of it will impede their ability to move up the value chain, forcing them to compete on relationships and price."
While, North America is the most important market in terms of frequency of client engagements for insurance IT services providers, most IT services vendors surveyed have considerable room to grow their presence with insurance firms in the Asia-Pacific region and Latin America, notes Bézard. North America accounts for 42% of the client engagement frequency reported by our panel, followed by EMEA at 32%, the Asia-Pacific at 23%, and Latin America at 3%.
“That breakdown largely reflects the insurance industry’s level of maturity and size in those regions,” says Bézard. “While the Asia-Pacific region beckons because of the sheer scale of its actual and potential markets, Latin America is wide open for a firm to claim first-mover advantage, and offers relative linguistic and cultural homogeneity.”
Aite qualified the 15 IT services providers that were included in the study’s analysis:
Large IT services vendors—Cognizant, CSC, HCL, Infosys, Logica, Unisys and Wipro
Mid-size IT services vendors—Exigen, Mastek, Neoris, NS Solutions, Patni, Polaris and Syntel
(One software vendor was identified: SunGard)
“Large IT services providers tend to have higher client engagement frequency in IT services within the insurance vertical than midsize IT services do,” notes Bézard.
Their frequency of client engagement may be an indicator of their market presence, but not necessarily their revenue success, notes the report.
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