Deal activity among insurers and software vendors slowed in both property/casualty and life/health/annuity, according to a new report.
Data indicates that current economic conditions are reinforcing the status quo for insurers, according to the report.
"Insurers have created long-term relationships with their software vendors," said Karen Monks, Celent Insurance Group Analyst and co-author of the report. “We see insurers purchasing the majority of their software from vendors with whom they already have a relationship. Our data shows vendors slowly expanding relationships with their clients, proving that attentive account management and cross-selling efforts can be very effective."
In 2010 and 2011, the survey found that deals were taking longer to close because the economy put a strain on IT department budgets. This year’s analysis reflects the same extended time frame coupled with a downward trend in the number of deals being closed.
Volume within life/health/annuity increased by 60 percent during the second quarter of 2011 but in the last two quarters of the year, the number of deals dropped to 69, the third lowest volume of deals for the two-year period across all meta categories.
Meta categories include core processing, distribution, infrastructure and financial, and document/content management. When compared to previous years, deal volume in core processing decreased by 13 percent in 2012. The distribution and document/content management meta categories also saw declines over the time period compared to a rise in deal volume in the infrastructure and financial categories.
"Continued investment in core systems renewal was clearly reflected in the property/casualty deal data," said Mike Fitzgerald, Celent Insurance Group Senior Analyst and co-author of the report. "Insurers are feeling market pressures from consumers to deliver functionality such as Web inquiry and electronic document presentment. Hence, updated core systems have moved from a nice-to-have to table stakes."
