Aite Group released an interesting study this week: "Insurance Technology Vendors and P&C Carriers: Alignments and Disconnects." The research, based on a survey of 23 insurance technology vendors at this year's ACORD/LOMA and IASA trade shows, identified three areas where the vendor community's offerings and insurers' perceived needs are aligned. At the same time, though, research elucidated three areas where offerings and needs clash.
Where is the alignment? First, core systems: Policy administration and claims solutions saturate the marketplace. And it's no surprise that vendors are concentrating their efforts there given the massive amount of replacement activity that's going on in the marketplace. In addition, business intelligence capabilities are offered by 83% of all vendors, satiating insurers' appetite for big data analytics.
But Aite Group also found that risk management is only offered by 23% of vendors. "Quite a surprise... because P&C carriers consistently rank improvement and innovation in risk management among their highest priorities," the study says.
In addition, while 74% of vendors say that next-generation technology is likely to have "a lot" of impact on their business, only 41% offer solutions in the category. This means that carriers are turning to companies outside the pure-play insurance technology industry to meet needs for things like telematics and mobility.
Perhaps this isn't such a bad thing: Insurance tech vendors should logically be concentrating on core insurance processes and systems. But as I've been writing in this space often, technological disruption is a fact of life for insurance companies. The vendors of core systems must adapt just as much as the carriers themselves to this new reality and be prepared to offer solutions that fit the needs of the rapidly changing marketplace.
In fact, noting a more than 20% difference between the amount of vendors identifying innovation as the greatest value they add to insurers and the amount of vendors who say that innovation will have "a lot" of impact on their business over the next few years, Aite suggests that "many of these vendors pay only lip service to helping carriers with innovation and understand the marketing value of the terminology" in the report.
Report writer Stephen Applebaum referred to other research he conducted on "10 young and highly innovative insurance technology companies that are helping P&C carriers achieve real transformation in claims operations." None of the solutions, he says, were developed by established insurance technology vendors.
"Insurance technology vendors should seize these opportunities now, before they permanently cede them to new market entrants," the report says.
Nathan Golia is senior editor of Insurance & Technology. He joined the publication in 2010 as associate editor and covers all aspects of the nexus between insurance and information technology, including mobility, distribution, core systems, customer interaction, and risk ... View Full Bio