After Opening Day of baseball season last week and the release of SMA’s new report on core systems buying trends, I realized that you could equate the progress being made in core modernization with that of a baseball game. Could it be that we have entered the seventh inning stretch of this phase of the core modernization journey? Are we preparing to start a new game?
Our latest research, published in Core Systems Purchasing Reaches the Tipping Point: What’s Hot – And What’s Not, has identified a definite slowdown in the purchase of core systems in the US market. P&C insurers purchased 38% fewer new core systems in 2016 as compared to the year before. The flurry of new purchases that we saw in earlier “innings” (over the past 5-7 years) is wrapping up as insurers focus on implementing those new systems, improving their existing core environments, and looking ahead to understand the new requirements driven by the changing insurance market.
The changes throughout and around insurance are pressing the industry toward a new perspective: a new ball game. This game is just beginning and will play out over 3-5 years as the trends we are studying in InsurTech and emerging technologies take hold. Insurers must evolve to promote the ever-expanding interaction with external data, investment in a more engaging customer experience, and new product constructs shaped by the shared economy. This creates a set of capabilities from core systems that are considered the “future ready” MatureTech solutions for the industry.
Each insurer needs to assess how their products and services align to the shifting market and the advances they will have to make to respond to the new opportunities. We are witnessing changes that are substantial enough to advance the capabilities that insurers require from in their core systems. And in the world of core systems, as in the industry at large, we need to start preparing for this new game.
This blog entry has been reprinted with permission from SMA.
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