In what industry observers are describing as a “significant deal,” Accenture announces that it has entered into an agreement to acquire privately-held Duck Creek Technologies, which specializes in software solutions for the property & casualty insurance industry. Terms of the transaction, which is expected to close within the next 30 days, were not disclosed.

Karen Furtado, a partner in Strategy Meets Action, reports the industry has been waiting for some type of acquisition to take place over the last 12 months.

“There have been so many rumors, so it is interesting that something finally happened,” she says.

In a news release, Accenture explains the acquisition will strengthen its capabilities to support p&c insurers of all sizes.

Furtado believes this is significant.

“They would seem to make a very good fit from looking at their portfolios and capabilities of service,” she says. “It’s a nice compliment for Duck Creek to be able to tap into the system integration capabilities of Accenture. There was a gap in Accenture’s application. They have an underwriting solution and a claims solution, but they had a void in that p&c policy and billing space. To take one of the market leaders like Duck Creek—a great brand and a great product—and bring it in helps complete their portfolio.”

The purchase also increases Accenture’s exposure to more markets than before, according to Matt Josefowicz, partner and managing director for Novarica. 

“Accenture’s purchase of Duck Creek gives them a well-accepted and proven asset in p&c rating and policy administration, as well as a large footprint among midsize p&c companies,” says Josefowicz. He points to a recent deal Accenture completed on the life side as a signal of the company’s intent to compete more aggressively in the midtier U.S. insurance market. Furtado agrees that this deal will expand Accenture’s face in the software market.

“Accenture is very dominant with tier one and tier two carriers, but doesn’t have a footprint in tier three or four—companies below $1 billion,” she says. “Duck Creek spans all tiers, but they really service [the middle market].”

Furtado describes Duck Creek as a market leader in the p&c policy administration space, but she points out the number of companies operating in that space makes it a challenge for all participants.

“This market has well over 40 admin systems and it’s not going to drastically shrink by M&A,” she says. “There’s not a particular market leader. There are a lot of entrants that serve niche aspects of the business.”

It’s easy to see why Duck Creek was a target for acquisition, though.

“The money that is being spent in policy administration today is incredible,” says Furtado. “It’s the number one project for insurers and the highest spend. So many companies are looking to bring [policy system upgrades] into their portfolio.”

Craig Weber, senior vice president and head of the insurance practice at Celent, was not particularly surprised by the announcement.

“There are a lot of software vendors we are tracking that we think are interesting acquisition candidates,” he says. “The market is ripe for that kind of activity right now. Certainly the market is freshening up for buyers and as market dynamics shift that always creates these kinds of opportunities.”

When asked if this will spark a flurry of M&A activity, Weber declined to put a timeframe on it, but admitted he expects to see more activity.

“There are a number of reasons for that, but chief among those is companies are returning to growth mode after a couple of years of fairly flat results,” he says. “Everyone is looking to stir the pot as the checkbooks get unleashed in terms of buyers.”

The acquisition will complement Accenture’s existing p&c, component-based software platforms and will give Accenture a suite of software with a comprehensive spectrum of processing capabilities for the p&c insurance market, according to John DelSanto, global managing director of Accenture’s insurance practice.

“Duck Creek is a leader in the p&c policy administration market as demonstrated by its customer base and its sales momentum,” says DelSanto. “This acquisition further demonstrates Accenture’s ongoing commitment to providing differentiated software platforms for the insurance industry, supported by valuable and cost-effective software maintenance and upgrade services. It also will reinforce our presence in the marketplace while expanding our offerings to significantly more clients, including in the mid-market.”

Colin Davies, global managing director of Accenture Software, points out Duck Creek’s solutions are built upon the same Microsoft .NET technology as Accenture’s existing p&c software platforms, which will facilitate rapid integration of the applications.”

Duck Creek was founded in 2000 in Bolivar, Missouri, and has grown to serve more than 60 clients in North America and the UK, processing commercial, personal, and specialty lines of business. Duck Creek also has offices in Columbia, S.C.; Farmington, Conn.; and Surrey, United Kingdom.

“The combination of Duck Creek’s and Accenture’s p&c software will create one of the most robust and comprehensive platforms available in the market,” says Steve Hall, president and CEO of Duck Creek. “The two companies will bring together a powerful set of industry skills, technology services, and implementation capabilities for p&c insurance clients, who will also benefit from additional experience, scale and r&d investment. By joining Accenture, we will bolster our continued commitment to our customers and the insurance industry.”

 When asked what would become of the Duck Creek brand, an Accenture spokesman replied via email that the company will keep the Duck Creek product brand for at least one year to leverage existing momentum in the market place. 

Furtado and Weber disagree on the effect the loss of a respected brand will have long term.

“What tends to happen in these kinds of deals is that the industry remembers from whence the product came for a long time,” says Weber. “Even if you call it by one name, most people will think of it as another, particularly if that name comes from a position of strength, which I think is true here. It’s the ‘artist formerly know as Prince syndrome.’”

Furtado believes Accenture should be cognizant that the Duck Creek brand names took years to develop in this market.

“If anyone is good at branding it’s Accenture,” she says. “Accenture has a lot of visibility and spent a lot of money on branding and marketing. But it is going to require a different kind of marketing for Accenture to get downstream. Everyone knows Accenture, but they may not make the connection that Accenture has something for the smaller insurer.”