By Cyril Tuohy
Deal volume among life, annuity and health insurance carriers, and technology vendors was up 21 percent last year compared to 2012. This comes about as a rising stock market, higher interest rates and hopes for growth in life and retirement suffused buyers with more confidence, according to an annual survey of the market.
A more active deal period signals a warming market for software technology. Life and annuity carriers often turn to distribution platforms first for technology upgrades so financial advisors are the most likely to be affected in one way or another by the new technologies.
The findings are included in a 44-page reported titled “North American Insurance Software Deal Trends 2014,” out this month by the consulting firm Celent. Deal volume amounts were not included in the report.
“Increased investment in distribution solutions was clearly reflected in the life/annuity/health deal data,” said Mike Fitzgerald, senior analyst and co-author of the report. “This activity reflects the priority that insurers are placing on growth.”
Celent tracked deal volume among four software categories: core processing, distribution, document management, and infrastructure and financial vendors.
Among the four categories, the number of software deals related to the distribution category was up the most in 2013 compared to 2012. Distribution software deals accounted for 27 percent of all deals in the life, annuity and health space last year, up from 15 percent of all deals in 2012, the report said.
Deal activity for “like-on-like” vendors among life, annuity and health carriers jumped 72 percent in the two-year period from 2011 to 2013, the report also said.
Measuring deals among like-on-like vendors is the insurance software industry’s equivalent of the retail industry’s same-store sales. Measuring same store sales gives analysts a more accurate gauge of market activity as it eliminates the variability of sales from a new store opening.
“These veteran vendors from our past reports have been effectively selling new products to their existing clients and making progress in selling to new logos,” said analyst Karen Monks, a co-author of the report.
Software improvements allow agents and financial advisors to close deals faster and to capture a more holistic view of client accounts.
Advisors with a broader view of a client’s financial position are in a better position to offer suitable, complementary protection and retirement products.
With deal volume up in 2013 from 2012, and up in 2012 from 2011, “it appears that the impact of the Great Recession has worked its way through the market,” the report said.
Cyril Tuohy is a writer based in Pennsylvania. He has covered the financial services industry for more than 15 years. Cyril may be reached at [email protected].
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