UK Annuities: Market Trends and Key Technology Issues
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, . 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.Members of Celent's Life/Health Insurance research services can download the report electronically by clicking on the icon to the left. Non-members should contact email@example.com for more information.