Insurance deal activity for North American property & casualty software vendors increased as more investments were made in infrastructure, according to Celent, which released its “North American Insurance Software Deal Trends 2013.”

Celent analyzes deal data provided by software vendors active in insurance inNorth America. A close look at overall 2011 and 2012 deals that fall into each metacategory and subcategory shows that insurance carriers have continued with their sluggish purchases of software, but 2012 shows a glimmer of hope for a turnaround in the market.

Deals for property/casualty software were flat compared to the last report, but a like-on-like comparison to the last two years' results shows that many vendors saw a decrease in deals each year since 2010. The infrastructure and financial metacategory was a key driver of this report's volume, as insurers increased their purchases of data mastery tools. When compared with the previous report, deal volume in this category rose by nearly six percent.

Property & casualty results:

The infrastructure and financial metacategory was a key driver of this report's volume as insurers increased their purchases of data mastery tools. When compared with the previous report, the deal volume in the category rose by nearly six percent.
The core processing and document/content management metacategories saw decreases in deal volume over the time period, while the distribution category rose.

“Continued investment in core systems renewal was clearly reflected in the property & casualty deal data,” says Mike Fitzgerald, senior analyst with Celent's Insurance Group and coauthor of the report. “There was also an increase in data mastery tools, with P&C carriers competing in pricing and risk analytics. Once nice-to-haves, advanced analytics are becoming table stakes. Package software activity indicates that insurers are using specific applications such as rules engines and front-end solutions to surround legacy administration systems.”

This report breaks down deal activity by carrier size, type of deal, four metacategories (core processing, distribution, infrastructure and financial, and document/content management), and a number of subcategories. Data from previous Deal Trends reports are used to look at longer-term trends, and leading vendors for each metacategory are identified.

Key findings of the reports include:

Celent collected data on 1,475 deals between insurers and software vendors that occurred in 2011 and 2012. Of this total, 64 percent of the deals involved property & casualty insurers, and 36 percent involved life/annuity/health insurers.
Because different vendors participate in different years, Celent also performs a like-on-like comparison of veteran vendors from the 2012 report (deals done in the time period 2010 to 2011) and the 2013 report (2011/2012 deals). These 33 like-on-like vendors represent 82 percent of the deal volume across both lines, so Celent feels their experience is representative of overall deal activity for the industry.
Overall, insurers of all sizes were purchasing packaged software. It was also noted that Tier 1 and 2 insurer deal volume increased over last year.
The data, for the first time in four years, shows insurers are more willing to develop relationships with new vendors. Not since 2008 have new deals accounted for greater than one-third of the deals. Insurers still tend to expand relationships with vendors with whom they already have relationships, but new relationships are now being built as well.

Special Reports /

&lsquo;Glimmer of Hope&rsquo; Seen with Celent&rsquo;s P&C Insurance Software Deals Report

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‘Glimmer of Hope’ Seen with Celent’s P&C Insurance Software Deals Report