As long as there are large businesses with an appetite for expansion, we will always have deals such as the one between Accenture and Duck Creek Technologies. Through this acquisition, Accenture is making a major effort to establish its name in the p&c policy admin market and in particular with the middle tier of insurance carriers.
Novarica recently published its outlook on the insurance software market and identified plenty of players on both sides of the ball.
"[These deals] seem to herald a period of increased activity in this marketplace," says Matt Josefowicz, partner and managing director of Novarica.
Indeed, Novarica lists no fewer than 13 companies as "the portfolio players" in its report. Accenture is among that group along with the usual suspects in the market such as Oracle, LexisNexis, StoneRiver, Vertafore and others.
One can't forget the large technology companies, either. Companies such as Microsoft, IBM, and SAP all have a presence in the insurance world and won't pass up an excellent opportunity when they see one.
Karen Furtado of Strategy Meets Action pointed out two reasons the policy administration market in particular will be a prime target for M&A activity. First, there are about 40 companies selling PA systems to the p&c crowd and no one can really be described as being No. 1. One reason for this is that even though they all fall under the same heading, many of the carriers are looking for niche products.
Second, you have what is called the home run effect. The price tag for some of these implementations can run into the millions. Couple that with the fact legacy system replacement is at the top of the list for hundreds of carriers and you can see why aggressive companies such as Accenture are on the prowl.
I spoke to Josefowicz, Furtado, and Craig Weber of Celent about this subject and all three agree: The time is right for M&A activity in the insurance software market.
"Everyone is looking to stir the pot as the checkbooks get unleashed in terms of buyers," says Weber.
The dominos may not start falling right away, but I guarantee people will be looking over their shoulders in what can be described as a grown-up version of the game of tag. You're it!
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