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04:15 PM
Kathy Burger
Kathy Burger
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Market Shifts

There were few surprises at this year's ACORD LOMA Insurance Systems Forum in Las Vegas, which was wrapping up as I&T went to press, but there was evidence of some interesting trends.

There were few surprises at this year's ACORD LOMA Insurance Systems Forum in Las Vegas, which was wrapping up as I&T went to press, but there was evidence of some interesting trends. The focus was on architecture (especially the services-oriented variety), leveraging legacy systems, standardizing and improving business processes, and making things easier for the agent channel. These clearly are among the priorities for insurance executives from both the technology and business arenas.

But when people on the show floor weren't talking about SOA, standards or the unavoidable long lines everywhere in Las Vegas, they were talking about a new report from Celent. Just before the show, the industry analyst released "The Coming Wave of Consolidation in Insurance Software," which forecasts significant realignment within the insurance software community -- new ownership for some established players, aggressive vertical (insurance) strategies from some traditionally horizontally focused companies and a new generation of industry-leading providers (including some India-based IT services firms). Overall, what currently is an approximately $10 billion industry will grow to nearly $15 billion by 2011, according to Celent.

As Celent points out, consolidation in the global insurance software industry isn't new. One need only compare the exhibitor lists from any trade show this year -- ACORD or the upcoming IASA Conference & Business Show -- with the comparable rosters from just five years ago. Some familiar names are gone, and some unfamiliar names have joined the list. It's the inevitable remaking of any industry as a plethora of factors -- economics, talent, regulation, politics, luck, to name a few -- provide opportunities as well as death knells for its various participants.

Celent cites the "lifting" of the "dot-com/post-Y2K hangover" as the key development spurring the latest realignment. As insurers seek to balance growth with efficiency and transparent resource management, the need for solutions and technology partners becomes more acute. Of course, with any realignment there will be winners and losers, not only among the vendor community, but also among the customers -- the insurers that have placed bets on particular solutions partners. Will this mean that an already long and complex technology buying process will become even longer as carriers wait for the dust to settle? Meet me on the show floor next year to find 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

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