Analysis: Cover-All's Bid to Compete as Componentized Suite System Vendor

Cover-All Technologies' (Fairfield, N.J.) late Dec. 2011 acquisition of Honolulu-based BlueWave Technologies affirmed the insurance software trend toward "componentized suite" core systems offerings. The acquisition puts Cover-All on the map as a componentized-suite competitor, but the vendor's success in that character depends on overcoming limited name recognition, among other challenges.

Upon the announcement of the acquisition, Cover-All said the BlueWave PipelineClaims browser-based claims administration software solution would be marketed both as a standalone solution as well as a fully integrated component within Cover-All's existing insurance system offerings. Cover-All characterized the acquisition as positioning the vendor to deliver additional value and achieve significant competitive advantage through what it terms a fully integrated component within Cover-All's existing policy administration and business intelligence products.

"Insurance software buyers are increasingly looking for solution providers to be able to provide pre-integrated but separable components for policy, billing and claims," comments Matthew Josefowicz, partner and managing director, Novarica (New York). "We expect to see more consolidation in this space this year."

Even those insurance carriers who are looking for a single component, be it policy administration, billing or claims, often will look more favorably at a vendor that has a complete, end-to-end suite, remarks Donald Light, a Palo Alto, Calif.-based senior analyst with Celent. The reason, he says, is that the insurer may have a road map that calls for replacement of several other element sin its application portfolios over the next three to five years.

"This tendency is especially true for midsized and smaller insurers," Light notes. "The largest Tier One insurers tend to fall into the best-of-breed or 'build-it-yourself' camps."

Prior to the BlueWave acquisition, Cover-All had what Light calls "important pieces" of a core system suite in the vendor's NexGen Policy policy and rating solution, and its NexGen Business Intelligence.

"Cover-All has also announced that NexGen Billing is in development," adds Light. "Clearly the vendor is well on its way to positioning itself as an attractive end-to-end player."

As a user of BlueWave's PipelineClaims system, Mike Anselmo, CIO, Narragansett Bay Insurance Company (NBIC; Pawtucket, R.I.; $115 million in 2011 written premium), regards Cover-All's acquisition of the claims system vendor a positive development.

"BlueWave put its investment book out in the summer of 2011," Anselmo recalls. "They were very open and honest with us during the process, during which I had to think about potential alternatives to our existing claims system, including replacing and performing in-house development, hiring the offshore team already working on it, or collaborating with another BlueWave customer."

Anselmo says that in the wake of the deal, NBIC is enjoying continued full support of the BlueWave PipelineClaims system in addition to the reassurance provided by the backing of the vendor's new owner.

"It helps to have a large company supporting the product and committed to growing it and selling it to other insurers," Anselmo says.

Cover-All plans to integrate BlueWave and release NexGen Billing within the coming year, according to Stamford, Conn.-based research firm Gartner. "If they can accomplish this, they stand to significantly improve their ability to compete," comments Jeff Haner, principal research analyst.

A Gartner research note questions whether Cover-All's focus on integration may limit development of functionality in the standalone BlueWave claims module. The researcher also notes that Cover-All's customer base is focused in commercial lines, which may be a concern for multiline insurers considering a componentized suite. Finally, while BlueWave and Cover-All are more suitable for Tier 2 and Tier 3 insurers, Gartner opines, both brands have low recognition in that market.

Cover-All CEO John Roblin expects the acquisition of BlueWave and the launch of NexGen Billing to increase brand awareness, along with the hiring of Aaron Herman as a sales executive for BlueWave based in the Northeast. Cover-All has already built out personal lines capabilities in Puerto Rico, according to Roblin.

"As customers are looking for personal lines, we'll build it out," he says.

Roblin notes that within a year of acquiring Moore Stephens Business Solutions, Cover-All was able to productize that firm's assets in Next Gen Business Intelligence.

"If you see what we've released over the past year and what we'll be releasing within the next six months, you'll see that we're geared up to deliver quickly," Roblin adds.

Anthony O'Donnell has covered technology in the insurance industry since 2000, when he joined the editorial staff of Insurance & Technology. As an editor and reporter for I&T and the InformationWeek Financial Services of TechWeb he has written on all areas of information ... View Full Bio