In two recent reports, Celent breaks down the claims vendor space and claims fraud. In the report “Claims System Vendors: North American P&C Insurance 2013.” Celent evaluates dozens of claims system vendors and their offerings, noting that “in the past 10 years, nearly every core claims solution has migrated to a modern .NET or JEE framework—or was built from the group up on one or the other.”

A homogenization has also marked the market, as nearly all solutions are noted as offering the 14 basic kinds of functionality, as well as many of the 11 kinds of advanced and additional functionalities—e.g. advanced rules capabilities; work flow capabilities such as a graphic design environment with automated background code generation; automated scores for potential fraud, subrogation and salvage; and portals for claimant, producers and supply chain partners.

The report also contends that corporate objectives for making a claims system purchase fall into three categories: Getting bigger by growing the top line and focusing on policyholder retention and producer satisfaction; getting leaner through higher productivity (including task automation and self-service) and expense control; and getting smarter by correctly pricing risks, making better underwriting decisions, and adjusting claims more accurately.

In its report, “The Market Dynamics of Claims Fraud Detection: Deal, Functionality and Technology Trends,” Celent notes the current importance of claims—and preventing claims fraud: “Given the tough economic environment, it’s more difficult for insurance companies to generate underwriting profits, and therefore they have to improve their combined ratio. In this context, identifying and fighting fraudulent claims is a key lever to improve loss ratios.” Thus, a prediction is made that insurers will greatly increase investments in claims fraud detection in the next three to five years. The pace of importance, according to the report, depends only on insurers’ ability to recognize the importance of “analyzing data using modern technologies, including big data infrastructure.”

In response, Celent expects vendors to push to enrich the data types insurers can leverage, improve usability, look for partnerships that will help them gain competitive advantage in the vendor space, and improve their ability to help insurers integrate external data sources.

While the report claims that insurers of all sizes will be investing more in claims fraud resources, insurers investing in more sophisticated technology thus far have been mid- to top-tier companies, according to the report; indeed, roughly a quarter of the deals declared by IT vendors in 2012 were with insurers generating less than $500 million in premium annually.

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