Oracle Launches Insurance Vertical Industry Division

Leveraging its recent acquisitions of prominent insurance industry software vendors Skywire Software and AdminServer, today Oracle officially launched its Oracle Insurance vertical industry division as a provider of a full range of insurance processing software.

Until now, Oracle's posture in the insurance industry has been that of a vendor of horizontal enterprise software, with a sidelight on insurance-specific applications sold through the vendor's financial services industry vertical group. With the launch of Oracle Insurance, that posture has been inverted, making core insurance solutions the unit's center of gravity, according to Chuck Johnston, vice president of strategy and alliances, Oracle Insurance.

"We have had solutions that spoke to core insurance problems, such as claims and distribution management; the major difference is that now we have actually gone and purchased best-of-breed solutions specifically for the core part of insurance business and we have made them the nucleus of a complete application architecture," Johnston comments.

By acquiring insurance-specific software vendors rather than developing solutions from the ground up, Oracle has given itself a leg up in the insurance market, which combined with its existing presence will constitute a significant competitive advantage, according to Johnston. "Oracle is basically doubling down the bet on the insurance industry," he comments.

Oracle Insurance will market separate solutions — such as the AdminServer policy administration platform — as well as suites of pre-configured solutions that in their most comprehensive form could be described as an "insurance-in-a-box" package.

Chad Hersh, a principal at Novarica, says that Oracle's formal entry into the insurance vertical represents a new level in the vendor consolidation trend that has hit the industry. "Given that Oracle is unlikely to stop at AdminServer and Skywire, the heat may be on for potential acquirers to quickly pick their targets," Hersh suggests. "We expect that both vendors and private equity players will move more quickly to create larger entities with greater resources. This is where carriers may benefit. Though less choice may not be ideal, increased R&D spending and a larger pool of implementation resources are sorely needed."

The vendor will also market integration tools to connect both Oracle and non-Oracle solutions. The vendor says that its new Application Integration Architecture (AIA) Foundation Pack for Insurance will enable carriers to accelerate application integration between Siebel CRM Claims and PeopleSoft Enterprise or Oracle E-Business Suite Financials. Other capabilities are planned for later versions.

"We have some of the best integration tools on the planet, but the piece that has always been missing is a very strong framework, artifacts and data objects, etc., that would allow you to integrate very quickly and easily," Johnston comments.

AIA Foundation Pack can also help insurers to minimize the cost and risk associated with integration efforts involving other vendors' products, while hastening related business process reengineering, according to Johnston.

"You would have to do a little more work, because you may have to build your own side of that process integration package to talk to those other systems," Johnston remarks. "We're encouraging our partners to actually create heterogeneous integrations so that our product can be integrated into existing architectures."

Johnston says that Oracle Insurance aims to market to carriers of all sizes but sees the greatest opportunities for its pre-configured solutions at smaller and midtier carriers domestically and a variety of companies globally. "Our focus is to increase our dominance within North American insurance companies, but we are very focused on global growth and that is one of the yardsticks that you can use to measure our success," says Johnston.

To handle the demands of implementation, the vendor also plans to forge alliances with consulting firms. While Oracle Insurance has a services arm with rich insurance industry experience, Johnston claims, "Our goal is to sell software, so we are very, very focused on working with the major systems integrators both in North America and globally, and also establishing regional partnerships."

When it comes to selling software, Oracle Insurance has the combination of capabilities to enable it to succeed amid an expanded set of competitors, including the top vendors in the vertical, Johnston believes.

"We don't think anybody else has all the pieces that we do in the market space," Johnston submits. "When you combine the technology infrastructure, the horizontal applications and the core insurance solutions, we can deploy pretty much an entire insurance company."

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