Race to the Finish Line
Robert Regis Hyle | April 24, 2017
Mergers and acquisitions are a part of every industry, particularly those where profits are steady and increasing. It’s a healthy sign that companies are willing to invest, particularly in a niche market such as insurance technology.
Before all the news about insurtech took over nearly every insurance technology conversation this year, the subject of M&A activity among solution providers—particularly in the core system space—had many observers looking both ways to see what was coming next.
As part of the June issue of ITA Pro magazine, we interviewed CEOs from five of the leading insurance technology companies operating in North America and each felt certain the pattern of the last six months would continue, albeit at a slightly slower pace.
Jeffrey Glazer, CEO of Insurity, explained his company’s strategy. He looks at it like a checkerboard and each square on the board should be filled with one or more solutions to the issues that face insurers.
All agree with the view that there is no such thing as an average insurer. No one is willing to say any of the carriers in the market are unique, but there are differences that need to be addressed. One size does not necessarily fit all when it comes to insurance and insurance technology solutions.
Many solution providers look for prestige names to add to their client list, but the mid-tier and smaller market is where the true competition takes place among solution providers. The sheer number of insurance companies that fall under those two headings demands competition—and not just from core solution providers.
Inevitably, insurtech became a part of the conversation as well and this is where Glazer’s checkerboard theory plays out. In the last two decades, solution providers have served as the R&D departments for most insurance companies. Today, insurtech companies—with a wide variety of products—are stepping into that role, which makes them targets for the larger players in the market.
Distribution, underwriting, and claims management tools are entering the market at a pace never seen before. Obviously not all the companies working on such solutions will be successful and the viability of their products will be in question until proven otherwise, but the opportunity for larger, well-established solution providers to enhance their existing products is a lure that cannot be ignored.
Insurance carriers want the best solutions possible and if their solution providers aren’t finding new and better ways to enhance what’s already available, they are not being the partners they promised to be when both sides sat down and signed their initial contracts.
The race is on among the solution providers and carriers are serving as jockeys, spurring on their partners to get to the finish line first. Of course, another race will be starting shortly after that. It’s a never-ending story, after all.
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The Email Chat is a regular feature of the ITA Pro magazine and website. We send a series of questions to an insurance IT leader in search of thought-provoking responses on important issues facing the insurance industry.
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