Core Systems Buying Game: Are We in the Late Innings of Yesterday’s Game or in a Brand New Digital Game?
New SMA Blog by Karen Furtado, Partner, Strategy Meets Action —
Of all the software sold within the insurance industry, core systems continue to be the dominant purchase for hundreds of insurers. And just when you think it might slow down – that every last insurer has bought the system that they will need to support their business – we see another cycle of buying begin. 2016 was a “low point” in core systems buying, with the lowest number of policy, billing, and claims systems purchased in several years. Questions started to arise. Was the market finally saturated? Were these needs now filled? Would insurers start to move on to other projects?
As of this writing – and from looking at the insurer and MGA buying trends over the past two years – we see that this could not be further from the truth. Buying has been on the upswing since 2016, increasing by 13% in 2017 and 11% in 2018. And I have been asked a myriad of questions: What is hot? And what is not? Are more suites being purchased than components? Or are we entering a new era of component buying? What lines of business are insurers looking to support with core systems? Will insurers really buy systems that are operating in a cloud environment?
At the same time these questions crop up, we see an industry that has embraced the transformation journey. Many are looking to change their business models, create new products that respond to new and changing risks, and transform their organizations for the workforce of the future. As insurers look at their business needs and the technology that is required to support these needs, they find themselves looking at aging systems – not constructed for the technology era in which we now operate.
The fact is that we are living in changing times. The technology that supported us through the Y2K world is not necessarily the software that will sustain us in a world where transformational technologies such as AI, serverless computing, microservices, and APIs are becoming more and more prevalent – and where software that operates in the cloud is a mandate.
This new era of computing is making its impact throughout the insurance ecosystem. All must respond – insurers and vendors alike. As we look at our latest research report, P&C Core System Purchasing Trends: Foundational Technology to Fuel the Transformation Journey, we see an industry in the beginning phases of the change.
A few years ago, I wrote a blog at the beginning of the baseball season. I said that I believed we were in the 7th inning of the ball game that was in play. But we were already getting the idea that maybe there was a new game starting. From the trends we are observing today, we believe that a new game has begun, and we are just in the early innings of this game. The new digital era we are living in, with the capabilities provided through the new era of computing, has changed the game. So, ask yourselves: Which game are you in? What systems are you buying to support it? Are they from the game that is just finishing? Or are they solutions that will support you in the new digital game that is beginning now?
About the Report
P&C Core Systems Purchasing Trends: Foundational Technology to Fuel the Transformation Journey analyzes P&C insurers’ core systems buying decisions in 2018 and identifies critical trends on insurers’ investments in their core systems environments.
The report focuses on P&C personal and commercial lines in North America. Key areas covered in the report include the type of core solution configuration of policy, billing, and claims systems (individual components, suite, two components purchased together); the major lines of business supported by the new systems purchased; and the level of cloud adoption for these new systems. The report also addresses the impact of the new era of computing represented by AI, microservices, and the connected world.
Click here for the table of contents or to purchase the report.
About The Author
Karen Furtado, a Partner at Strategy Meets Action, is a well-known authority on insurance technology and how it fuels transformation within insurance companies. Her focus is helping insurers prepare for the future of the industry through the decisions they make today. Karen’s deep understanding of how to effect change guides insurers in the development and implementation of their transformation roadmaps. Her comprehensive knowledge stretches across core systems, the implications of InsurTech, and enhancing adaptability and flexibility in a changing market. Her commitment to promoting innovation, encouraging the exploration and adoption of new technologies, and developing proactive ways to plan for the future draws those seeking an edge. In a highly competitive world, Karen brings exceptional knowledge and experience to the challenges of connecting solutions to business and IT requirements.
During her career in the insurance industry, Karen has leveraged her business and technical experience to enable insurers to meet a wide variety of challenges. Many insurers have benefited from her advice that spans a broad field of expertise including enterprise application strategies and implementations, the influence of a rapidly changing business and technology landscape, and outsourcing services.
Karen’s opinions on insurance, technology, and transformation are highly regarded and often sought after by the press. She contributes to a number of insurance trade journals and is also a frequent keynote speaker at major industry conferences.
About SMA
Exclusively serving the insurance industry, Strategy Meets Action (SMA) is an advisory services firm offering retainers, research, consulting, events, and innovation offerings to both insurance companies and solution providers. Learn more about SMA at www.strategymeetsaction.com.
SOURCE: Strategy Meets Action (SMA)