NU Online News Service, Nov. 28, 3:23 p.m.EST

Insurers can expect competition to remain intense forpolicy-administration systems without a major vendor to choose fromin the near future, says Celent, a major consulting service.

In a 20 page report, "Deal Trends in Property/CasualtyPolicy Administration Solutions: North American Edition 2010,"Celent says insurers are served by 52 vendors offering 55policy-administration system solutions, making it a highlycompetitive marketplace.

"The market for policy-administration systems in North Americashould remain reasonably strong for several more years," saysDonald Light, senior analyst with Celent's insurance group and leadauthor of the report. "The features, functions, and usability of abroad range of packages will continue to present strong price,value and risk metrics to many insurers."

The report notes that there were 229 deals forpolicy-administration systems during a two year period, 2009 and2010. Celent says it estimates the level of "deals will increaseslowly" from 117 this year to 127 by 2014.

The majority of these deals are small, approximately $2 million;that includes licenses, maintenance and out-of-pocket expense fromthe carrier to the vendor or third party implementation firm.

The majority of the purchasers are small carriers. A total of 45percent were carriers with under $100 million in premium, while 3percent of the purchasers were on the high end with $5 billion ormore in premium.

The report notes the reason for this imbalance is that largercarriers are more apt to build their own systems or adapt theirlegacy systems for continued use.

With the expected competition, Celent recommends insurers have a"clear understanding" of their goals and strategies in why they arepurchasing the system. The consulting service also says it isimportant to have a clear understanding with whom they are dealingwith.