Anticipating a wave of life insurance systems consolidation, Accenture has stated its intention to acquire Edison, N.J.-based NaviSys, a privately owned provider of software and services whose customers include 17 of the top 20 North American life insurance carriers. Accenture plans to maintain and enhance NaviSys' existing offerings as well as leveraging the acquisition to provide a target platform for new insurance business process outsourcing services for the North American market.
Accenture, which has traditionally focused on building custom solutions for its insurance carrier clients, is looking to provide options for increasing numbers of life insurers that the consultant believes will be looking to invest in newer-technology systems in order to take cost and complexity out of their insurance processing.
"Our guess is that roughly 80% of [top 40 North American life insurers] have begun or will begin a major platform consolidation by 2007," says David Hollander, senior executive of Accenture's insurance practice. "We see a trend of carriers migrating blocks of business onto new, more rules-based systems, and also of their looking to move closed blocks of business to handle them more effectively in an outsourced fashion."
Hollander says that Accenture currently operates a "data migration factory" that has processed roughly 30 million policies, mostly based in the United Kingdom and Continental Europe. "We're going be using that factory to do data migration for our North American clients, and then bridge to the NaviSys software as a target platform," Hollander explains.
From NaviSys' perspective, the deal is the occasion for a "natural evolution to take the business to the next level," according to Mike Roe, founder, chairman and CEO of NaviSys. "As a smaller company it is always a challenge to invest at the level you would like to, and being a part of a larger organization will help us to be less encumbered in that respect," he says. "We hope to further extend our leadership position by continuing and perhaps increasing the investment in our solutions, and also, from a growth perspective, we will have access to a wealth of talent that exists within Accenture."
Accenture's Hollander says the NaviSys product name will continue to be used, though the company will be likely branded within Accenture within about a year. Hollander says that Roe will continue to act as CEO and that NaviSys' management team and personnel will remain intact. "We're looking to take what Mike has built and just add to it and make it stronger," he says. "We're going to try to link that in with our BPO offerings and expand the options for our clients."
If Accenture's predictions of consolidation activity turn out to be even roughly accurate, it will represent a sea change in the industry's ongoing struggle with the problems associated with legacy systems, according to Todd Eyler, Gartner (Stamford, Conn.). "If that's going to happen, then Accenture will need to have a full menu of services to address it," he comments. "The traditional systems integration business isn't going like it once was, so the large professional services firms are making very large bets on BPO as their growth engine of the future."
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