The Tier 1 Dilemma: Is There a Life/Annuity System for Us?

by Tom Scales, August 25, 2014
Product Trends/ Reviews
North America

Abstract

Insurers are back in the market for policy administration systems. The insurers’ systems are old and difficult to maintain, and nowhere is this more evident than in larger insurers.

In the report The Tier 1 Dilemma, Celent looks at the offerings in the vendor marketplace. Based on extensive research, including our vendor comparison reports, CIO surveys, and deal trends reports, we take a high-level look at the capabilities of the systems and categorize their value to a large company. The report discusses the largest insurers, but the material and concepts apply to insurers of all sizes.

The market is clearly ready to buy. The vendors are ready to sell. The issue is matching insurers’ needs to vendors’ capabilities. Considerable funds are available for vendor investment.

“Our research shows that insurers are back in the market for systems after backing away during the financial crisis,” says Tom Scales, Research Director with Celent’s Insurance group and author of the report. “This report focuses on the big open question: What would they buy?”

This report examines the size of the market, but also insurance carrier size. It reviews the key vendors and their capabilities. It concludes with a discussion of insurer needs and how they can be met in the current vendor environment.

Celent is a research and advisory firm dedicated to helping financial institutions formulate comprehensive business and technology strategies. Celent publishes reports identifying trends and best practices in financial services technology and conducts consulting engagements for financial institutions looking to use technology to enhance existing business processes or launch new business strategies. With a team of internationally based analysts, Celent is uniquely positioned to offer strategic advice and market insights on a global basis. Celent is a member of the Oliver Wyman Group, which is a wholly-owned operating unit of Marsh & McLennan Companies [NYSE: MMC].

Media Contacts

North America
Michele Pace
mpace@celent.com
Tel: +1 212 345 1366

Europe (London)
Chris Williams
cwilliams@celent.com
Tel: +44 (0)782 448 3336

Asia (Tokyo)
Yumi Nagaoka
ynagaoka@celent.com
Tel.: +81 3 3500 3023

Table of Contents

Executive Summary

1

Introduction

2

Problem Statement

3

 

History

3

 

Challenges

3

State of the Market

5

 

Market Size

5

 

System Age

5

Vendors in the Market

7

So What Does a Tier 1 Company Do?

9

 

Do Nothing

9

 

Go with an Aging, But Heavily Used System

10

 

Choose a Newer or Refreshed Offering

10

 

Bet on a New and Unproven System

10

Conclusion

11

Leveraging Celent’s Expertise

12

 

Support for Financial Institutions

12

 

Support for Vendors

12

Related Celent Research

13

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