The marketplace for vendor partnerships, and mergers and acquisitions remains very active, according to George Grieve, CEO of CastleBay Consulting. The author of the Shop Talk column featured in Tech Decisions magazine believes activity in general is higher than it was last year and in 2008.
Grieve spoke with Bob Hyle, editor-in-chief of Tech Decisions for a podcast on the state of the vendor market. To listen to the full interview, click this link.
Partnership activity is spirited, according to Grieve. "There are a lot of vendors who for one reason or another are actively in negotiations with other vendors to form meaningful ongoing partnerships," he says. "These would be examples such as a vendor who plays very actively in one segment of the marketplace and looking to have a solution in another segment of the marketplace."
In terms of M&A activity, Grieve believes there are too many vendors in the insurance software marketplace.
"In the P&C policy administration space, there are somewhere between 45 and 50 separate vendors in the market and three to five new entrants every year," says Grieve. "That is simply too many vendors for what is a niche market, albeit a very large niche market."
Those vendors that have the capital and the backing to want to grow are looking to other vendors as acquisition targets in order to increase market share, he explains.
As for who benefits in such a volatile situation, Grieve believes it depends on the character of the acquisition that occurs as to whether or not carriers actually benefit.
"Should a larger, more well-funded vendor buy a smaller vendor there could be potential benefits there in terms of better and more modern software and delivered services," says Grieve.
As for research and development of insurance software, Grieve believes the vast majority is done by the vendor community, but some are getting help.
"Universities are actively involved in software development and there are universities that have departments that specialize in insurance," he says.
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