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Insurance claims handling, previously a labor-intensive process, has been transformed over the past decade by the Insurance Claims Processing Software industry. According to IBISWorld Industry Analyst Sarah Kahn, "Industry operators market their products, which are used to process insurance claims and manage policies, primarily to the Property, Casualty and Direct Insurance industry (IBISWorld report 52412) and the Life Insurance and Annuities industry (52411a)." Property and casualty (P&C) insurers and life insurers actively seek to differentiate themselves in their competitive environments with these products, designed to streamline operations, reduce process complexity and costs, manage compliance with new regulations and increase customer satisfaction. Over five years to 2014, industry revenue is expected to increase an average annual 4.0%, to reach $5.4 billion.
Claims processing software publishers are affected by the investment capabilities of P&C and life insurance companies. The performance of P&C insurers is reliant on several factors, including growth in the number of motor vehicle registrations and the homeownership rate. Moreover, life insurance margins are affected by per capita disposable income levels, as households with rising wealth protect their assets, as well as the overall state of employment, as an increase in the number of workers stimulates demand for employer-sponsored group insurance; the yield on the 10-year Treasury note affects both these drivers since a majority of insurance investment income is related to fixed-income securities, severely impacted by interest rate movements. With all these conditions showing signs of recovery and benefiting downstream customers, revenue for claims processing software publishers is expected to grow 1.2% in 2014.
The next five years will bring fresh changes to the young industry, including new business models and predictive analytics. "Software publishers are expected to continue rapidly shifting toward cloud computing, a technology that will expand software capabilities on platforms previously limited by hardware," says Kahn. Furthermore, companies will strive to make data more accessible and are expected to invest heavily in new security measures. The shift will likely accelerate the adoption of new business models, such as software as a service. The race to find an analytical tool that predicts the likelihood of individual claims to cause financial loss to insurance companies will stimulate industry growth; industry revenue is expected to grow in five years to 2019.
The Life Insurance and Annuities industry operates with a low level of market share concentration. The top four companies are estimated to account for less than 8.0% of total industry revenue in 2014. The combination of high demand, increasing industry revenue and profit, along with low barriers to entry, has created ample opportunities for new entrants. In the past five years, industry operators have also found it easy to create specialized products for niche insurance markets. Increased demand for product innovations, such as predictive analytics, telematics-based data collection and mobile applications has also enabled new players to enter the industry.
For more information, visit IBISWorld'sInsurance Claims Processing Software in the US industry report page.
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IBISWorld industry Report Key Topics
The Insurance Claims Processing Software industry develops and sells software that is used to process insurance claims and manage policies.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
About IBISWorld Inc.
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