London, United Kingdom
18 July 2007 UK
Annuities: Market Trends
and Key Technology Issues
Report Published by Celent
Celent projects steady growth rates in the
UK annuities market, from £9 billion in 2007 to £16 billion by 2011. IT
will play a key role in this growth.
The UK annuity market is set to grow over
the coming years, but the growth will pose a number of IT challenges to
existing annuity providers, according to a new Celent report, UK
annuities: Market Trends and Key Technology Issues. Celent found that
legacy systems will present the biggest IT issue.
“The UK annuities market is characterised
by increased need for product innovation, increased competition, and tight
regulatory scrutiny,’’ says Catherine
Stagg-Macey, senior insurance analyst at Celent and author of the
report. "And this raises some key challenges for the CIO. The legacy
systems will be what keeps them awake at night."
Many annuity providers are supporting the
business with bespoke administration systems that are decades old. These
legacy systems are a major headache for CIOs; they impact areas such as
time to market and product innovation and add a significant layer of
processing costs to the policy. Annuities are low-margin products that
depend on low costs of capital and efficient business process. Given the
hypercompetitive nature of the market, annuity providers that do not
update their core systems while also supporting a more demanding
distribution force will face significant challenges.
Celent estimates that UK annuity writers
will spend a total of £318 million on IT in 2007, growing to almost £556
million by 2011. Of the 2007 total, Celent estimates that roughly 50% will
be spent on software and services for new strategic projects, including
product management, other core system enhancements, distribution systems,
and policyholder service.
The report reviews the state of the UK
annuities market and the drivers of the growth and outlines IT strategies
for annuities providers.
The 17-page report contains four figures
and tables of market data, as well as IT spending estimates. A table of contents is
available online.
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