One of the more unfortunate byproducts of the 2008 financial crisis was diminished investment in new technology by the insurance industry. This decline, while perhaps understandable, has been blamed for the sector falling behind other service industries in the use of technology and lagging with important new applications like big data and social media.
Now that trend appears to be reversing, especially with regard to policy admin and other core systems. A new study by Celent finds that deal volume between insurers and software vendors is up 47 percent in 2014 compared to 2013. Since 2009, the industry researcher reports, the number of deals had declined each year until 2012, when it rose for the first time in three years by 6 percent.
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The market researcher drew its conclusions based on 2,164 deals struck between insurers and software providers in 2012 and 2013. Based on the results, the study’s authors say, “It appears that the impact of the Great Recession has worked its way through the market.”
The accompanying charts show how these deals break down by technology category (metacategory), application and deployment method. This last data point is particularly revealing, because it shows that insurers that used to insist on running all their applications themselves are beginning to embrace third-party hosting and the cloud-based SaaS model in particular.
