Deal Trends and Predictions in the Life Insurance Policy Administration Solutions Market: 2012 North American Edition

by Craig Weber,  Karen Monks, February 14, 2012
Product Trends/ Reviews
North America

Abstract

Celent sees a cautiously optimistic outlook for new policy administration deals in North America. New players and upgrades of older systems buoy the market.

New deal activity for established players of life, annuity, and pension administration systems in North America has declined since 2009 (down 12.8% since Celent published its 2009 ABCD Vendor View report). However, the entry of vendors for stand-alone systems has increased deal volume. The outlook for the North American policy administration system market is expected to be cautiously upbeat over the next three years, with a compound annual growth rate of 10.2%.

In a new report, Deal Trends and Predictions in the Life Insurance Policy Administration Solutions Market: 2012 North American Edition, Celent analyzes deal activity for new policy administration systems in North America using data from 16 vendor solutions, and considers the potential implications for new deals.

"The North American market is made up of many established players with large client bases. The age of some of these client systems means that revenue from upgrades will remain a large portion of the policy administration market over the next few years,” says Karen Monks, Analyst with Celent’s Insurance group and coauthor of the report.

“The industry is slowly breaking its bad habit of living with severe legacy system constraints,” says Craig Weber, Celent's CEO and coauthor of the report. “There is no mad dash to replace every legacy platform, but rather a thoughtful, measured approach by many carriers to refreshing their system portfolios.”

This report reviews market sizing, client implementations, and vendor positioning and explores some of the potential implications for the market up until 2014.

Trends and data discussed in this report reflect Celent’s experience of the market based on ongoing discussions with the industry, and vendor RFIs submitted as part of Celent’s 2009 and 2011 policy administration system reports for North America.

Celent is a research and advisory firm dedicated to helping financial institutions formulate comprehensive business and technology strategies. Celent publishes reports identifying trends and best practices in financial services technology and conducts consulting engagements for financial institutions looking to use technology to enhance existing business processes or launch new business strategies. With a team of internationally based analysts, Celent is uniquely positioned to offer strategic advice and market insights on a global basis. Celent is a member of the Oliver Wyman Group, which is part of Marsh & McLennan Companies [NYSE: MMC].

Media Contacts

North America (Boston)
Erica Ferguson
eferguson@celent.com
Tel.: +1 617 262 8225

Europe (London)
Chris Williams
cwilliams@celent.com
Tel: +44 (0)208 870 7875

Asia (Tokyo)
Yumi Nagaoka
ynagaoka@celent.com
Tel.: +81.3.3500.3023

Table of Contents

Executive Summary

3

Overview

5

Cautious Upward Trend

5

Report Approach

6

Market Size Estimates

7

 

IT Spending by North American Insurers

7

 

Implementation by Size of Insurer

8

 

Definition of Deal Sizes

9

 

Projecting PAS Deals

10

 

Projecting PAS Upgrades

11

 

Projecting Overall PAS Deal Value

12

 

Revenue Split

13

Vendor View

15

 

Established Vendor Market

15

 

Size of Vendor Client Base Varies

16

A More Competitive Market

19

 

Reflecting on the Past

19

 

Next Phase of M&A

20

Conclusions

21

 

Advice for PAS Vendors

21

 

Advice for Insurers

21

Leveraging Celent’s Expertise

22

 

Support for Financial Institutions

22

 

Support for Vendors

22

Related Celent Research

23

Sign in to download reports and access personalized information