Consolidation Within Insurance Technology Vendor Ranks Isn’t New -- But Still Creates Customer Anxiety

Chalk it up to a combination of jet lag (following a lovely vacation in Italy), culture shock (traveling from Rome to New Jersey to Las Vegas over the course of two days) and industry malaise (where should I start?), but I sensed a less-than-celebratory mood at last month's ACORD LOMA Insurance Systems Forum. It had nothing to do with the priorities of these prominent industry groups or the conference agenda. On the contrary, it's no longer difficult to make a persuasive business case for implementation of industry standards. In fact, it was clear from talking to exhibitors and attendees that the industry is moving into a next phase of standards strategies that is increasingly sophisticated, business-oriented and Web 2.0-focused.

That said, it seemed to me that standards were not necessarily the top-of-mind issue at the conference. Instead, the buzz was largely about the two big technology company mergers that were announced the week of the Forum -- Oracle's plan to acquire AdminServer, and HP's intention to acquire EDS (see related analysis of both deals, page 11). Apart from opinions as to whether or not these transactions make sense and will succeed, merger announcements always generate angst, and these two deals are no different. No matter what is publicly stated about preserving brands and human capital, there inevitably are many legitimate concerns: among employees of all the merger participants about job security and professional growth prospects; among customers about service, support, pricing and product continuity; among competitors about the viability of independence; and among industry observers (including analysts, investors and, of course, media) about the prospects for growth and innovation in an industry that is experiencing some significant consolidation.

Vendor (or, for that matter, carrier) consolidation certainly is nothing new in this business. The vendor landscape has been reshaped many times in the past 20 years. This time around, however, there is the broader context of the global credit crisis and the upheaval in the investment banking segment -- related developments that are going to result in some significant regulatory, competitive and management changes across the entire financial services industry. Factor in the looming economic recession, and it's no surprise that caution trumped enthusiasm at the ACORD LOMA event. As always in tough times, the challenge for industry leaders will be to find ways to grow and innovate even while the climate seems to call for sitting things out.

Katherine Burger is Editorial Director of Bank Systems & Technology and Insurance & Technology, members of UBM TechWeb's InformationWeek Financial Services. She assumed leadership of Bank Systems & Technology in 2003 and of Insurance & Technology in 1991. In addition to ... View Full Bio