The Coming Wave of Insurance Software Consolidation

May 17, 2006


New York, NY, USA May 17, 2006

The Coming Wave of Consolidation in Insurance Software

Celent expects M&A volume among insurance software companies to more than double in the next five years.

The insurance software market is large and growing. Celent estimates that annual enterprise software spending by insurers in North America, Europe, Japan, and China stands at roughly US$10 billion in 2006 and will grow to nearly US$15 billion in 2011. In the US alone, there are over 150 firms serving this market, and Celent believes that the industry is ripe for consolidation. Celent’s new report The Coming Wave of Consolidation in Insurance Software provides an overview of the market, the reasons for this upcoming consolidation, and projections for what the space will look like in 2011.

"Consolidation in the insurance software industry is nothing new. What is new is that the dot-com/post-Y2K hangover has finally lifted and that significant new players are about to make themselves felt in the market, which was long the exclusive provenance of the 'big four'— CSC, Fiserv, SunGard, and CGI," says Matthew Josefowicz, manager of Celent's insurance group and lead author of the report.

The new players include a group of what Celent terms "aspiring majors"—companies like ChoicePoint/ Insurity, i-flex, some of the Indian IT services firms, and others. "In addition to these, the sleeping technology giants like SAP, Microsoft, IBM, and Oracle are finally awakening to the potential of insurance enterprise software," adds Chad Hersh, senior analyst in Celent's insurance group and a report co-author. "In addition, private equity firms are also making their presence felt."

Celent expects the hottest sectors to be P/C policy administration and claims. Other sectors will include billing, life policy administration, illustrations, business intelligence, and possibly document management. Celent also expects substantial acquisitions in Europe and China.

"There are over 30 policy administration vendors in Europe," comments Catherine Schmitt, senior insurance analyst in Celent's London office. "But few have more than 10 clients. We've already started to see acquisitions in this market."

By 2011, Celent expects the software market to look significantly different. SAP will become a major player, CSC is likely to have new ownership, SunGard and ChoicePoint will be vying for the position of "The .NET CSC," at least one Indian firm will have bought itself a significant market position, and many of today's smaller players will be rolled up, hunkered down in protected niches, or gone.

"The coming consolidation is no reason for insurers to avoid badly needed software purchases," adds Josefowicz. "But we advise insurers to be sure to understand the acquisition strategies of their large providers, and the change of control provisions in their relationships with smaller companies."

The report is 18 pages long. A table of contents is available here.


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
Tel: +1 212 345 1366

Europe (London)
Chris Williams
Tel: +44 (0)782 448 3336

Asia (Tokyo)
Yumi Nagaoka
Tel.: +81 3 3500 3023

Table of Contents

New York, NY, USA May 17, 2006

The Coming Wave of Consolidation in Insurance Software

Executive Summary 3
Introduction 5
Major Players 6
Aspiring Majors 9
Sleeping Giants 11
Sector Analysis 13
Insurance Software Market In 2011 15
Concluding Thoughts 16
Objectivity And Methodology  17

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