The 13 “Don’ts” of Core Systems Implementations

Chuck Ruzicka

Implementing a new core system is always a learning process for an organization. While every insurance company is different, all of their system implementations tend to encounter the same sorts of difficulties. In my most recent executive brief, I outline the following 13 common mistakes to avoid in core systems implementations. Keeping these 13 “Don’ts” in mind will help to reduce the risk associated with these challenging transformational projects.

  1. Don’t Expect Too Much from Solution Providers and SIs. While they have experience, neither the solution provider nor the SI should be asked to lead or manage the entire project. Carriers must maintain overall ownership of the project.
  2. Don’t Ignore Solution Provider Recommendations. Solution providers are the experts in what their system can and cannot do. Respect their expertise. Carriers should explore configuration approaches exhaustively before thinking about asking for system changes.
  3. Don’t Create Win/Lose Situations. Micro-managing solution provider staffing, costs, and actions can be counterproductive. Instead, insurers should manage outcomes and agree on work processes and how transparency will be created. The end goal of a successful implementation should be a strategic partnership.
  4. Don’t Be Afraid to Create a Backlog. It is better to go live faster with a base system and learn from it than to go live later with a feature rich system that may be underutilized. Insurers should communicate this clearly to business users, assuring them that the initial release is not the final product, and that backlog items will get delivered.
  5. Don’t Ask to Change the System until You Understand It. Insurers should examine configuration options extensively—most modern systems can meet most needs through configuration rather than customization. Insurers should be open and understand suggested alternatives.
  6. Don’t Over-Engineer Your Workflows. Too many carriers build multiple business rules and notifications only to take them out in their second releases. Insurers should understand work queues and query capabilities, and ask whether business users would prefer query and queue tools or rules and notifications.
  7. Don’t Build Unnecessary Control Reports. Many companies have hundreds of reports that modern systems make obsolete. Modern systems accomplish all these with filters and views within work queues.
  8. Don’t Perpetuate Legacy Master Data. Legacy systems with poor data structures or configurability often made it easier to embed payment types, LOBs, and other business data into fields meant to do something else. Insurers should clean up these tangled data structures rather than perpetuate them.
  9. Don’t Convert Data When You Don’t Have To. Carriers should understand the cost for converting historical policy data and detailed transaction data before committing to expensive conversion projects. Data warehouses, document management systems and legacy inquiry environments can often be viable and much cheaper sources of the required data.
  10. Don’t Treat This as a Part-Time Job for Senior Leaders. Insurers need to free up their best people and backfill for them to get these projects done fast and right. Full-time project managers, adequate-skilled BAs and adequate testing resources must be assigned to complement the development team and solution provider resources.
  11. Don’t Skimp on Environments. Having too few environments can create artificial constraints that delay the development effort and limit the productivity of a carrier’s most expensive resources.
  12. Don’t Be Afraid of Risks, Manage Them Instead. Carriers can manage implementation risks by resourcing teams adequately, investing in quality assurance, creating transparency, and having the end users review deliverables from each sprint. The financial risk of cost overruns must also be managed. Successful carriers assign portions of the overall program budget to each project and work stream in advance.
  13. Don’t Expect the Organization to Change on Its Own. Many individuals within an organization will be apprehensive about the impact of the changes that implementation projects will trigger. Carriers should align the organization by communicating the need for change and the benefits to be achieved. The end goal is a culture that embraces and contributes to change.

Implementation projects are often painful and downright ugly. Ironically, carriers typically end up better prepared for the project after they complete it than before they start it. Avoiding these 13 “don’ts” can help insurers avoid pitfalls sooner rather than later.

Lessons for Insurers from Banking and Fintech

Tom Benton

At Novarica, we’ve noted that many emerging tech advances are implemented in banking first, followed in five years or so by property and casualty insurers, then after another five year lag they begin to appear at life and annuity carriers. In fact, at the recent LOMA Life Insurance Conference I mentioned that implementation of core systems in the cloud appears to be following a five year lag between P/C and L/A carriers and vendors.

With this in mind, I recently attended a conference kickoff session by Suresh Ramamurthi, Chairman and Chief Technology Officer of CBW Bank and former Google executive. Suresh and his wife, also a tech leader with experience at Lehman Brothers, purchased CBW (Citizens Bank of Weir (Kansas)) in 2009 and have been using the tiny bank as a platform for disruption of the banking industry. Suresh and CBW are on the forefront of the Fintech movement in banking, and the presentation provided some insight into possibilities for the future of insurance and Insurtech. Here are some thoughts from Suresh’s presentation:

  • In the age of Fintech startups, it no longer makes sense to be a “fast follower”. New technologies are being introduced at a fast pace, taking two years or so for implementation. Banks that adopt a “wait and see” approach to innovations in products and technologies are in danger of falling too far behind the curve.
  • We are in the “age of the individual” – companies that can’t personalize the tech experience for customers and for employees risk being considered behind the times.
  • The two most significant opportunities for transformation are in digital and data – companies need to consider not only changing their architecture for digital delivery of products and services, but also transforming their data and data management.

Suresh pointed out that the biggest obstacle to transformation is not technology, but knowing where to start, how to minimize disruption to the business, how to accelerate time to value, and how to ensure both stability and agility.

Suresh and CBW bank are demonstrating the importance of organizational transformation, proving that disruption can be applied from outside by a company inside the banking industry. CBW is a very small bank with relatively few resources, yet it has created a culture that allows rapid change and agility. CBW’s focus on emerging Fintech that provides advanced customer experience with strong data and digital capabilities is establishing them as a new leader in banking.

These lessons are important ones for insurers to note. As many carriers wait for disruption to occur in a risk-averse, slow-to-change industry, the best way to prepare is to create organizations that can adapt and implement quickly. Insurance leaders need to look at personalizing products and customer experiences. To enable these, they need to consider how they are architecting data and developing digital solutions that are stable and agile. Insurance carriers who want to lead in a new age of Insurtech need to prepare for disruption by being proactive, and not just reactive.

Please contact me if you’d like to discuss emerging Insurtech and strategies for improving customer experience.

The Digitalization of Insurance Comes Home to Roost in Austin

Frank Petersmark

At the recent Digital Insurance Conference in Austin, I had the opportunity to moderate two panels that highlighted the very different perspectives on disruption that digitalization is having on different segments of the industry.

Knowing is only half the battle

The first panel was with a sitting CIO and a former CIO in the P&C industry, and their collective perspectives can best be characterized as those of the disruptees, as compared to the disruptors. I spoke to many carrier people at the conference, and almost all of them acknowledged the new reality of the macro trends that are impacting the industry, most particularly the digitalization of the insurance industry. That’s the easy part. As the CIO panelists pointed out, however, it’s one thing to acknowledge and recognize the pressures coming from digitalization – particularly as it relates to customer centricity – and quite another thing to have the wherewithal to actually do something about it.

The past is not dead. In fact, it’s not even past

The CIOs on the panel were both from midsize insurers, and they correctly pointed out that it’s difficult to make progress on any one of these macro trends, let alone all of them, given the realities of budget constraints, ongoing core systems transformations, the constant shift of priorities, and the difficulty in acquiring and retaining the kind of IT talent that can push this rock forward. Those are real problems, and based on the panel and the many conversation I had with carrier people, that won’t be solved anytime soon.

Target-rich environment

On the other hand, the second panel I moderated featured three disruptors who in their own ways were reimagining how the insurance industry should work.

  • The first panelist had started a customer focused data aggregation service that allows small business owners to get insurance with just a few clicks – a clear threat to existing agent distribution channels in small commercial.
  • The second panelist started a service that while not completely disruptive to the industry, it nonetheless uses intelligent data to quickly compare policy contract contents and highlight the difference, a laborious mostly manual process for the industry.
  • The third panelist has placed themselves squarely between the consumer and the carrier, by creating a smart, wifi-enabled nine volt battery for home smoke detectors that has the potential to contribute to the smart home assault on home insurance premiums.

Each one of them viewed the insurance industry as an easy target for disruption, given its poor track record with customer experience and process transparency.

Lack of resources for innovation

That was the general theme from nearly all of the disruptors attending the conference. Many of them had the kinds of ideas and solutions that might play well in other verticals, but the disruption barrier to entry is so low for the insurance vertical, they’ve chosen to go there first. Unless you’re a Fortune 50 insurer, it’s becoming increasingly clear that much of the digital transformations entering the industry are and will be from outside the industry, leaving the industry in more if a reactive mode for the foreseeable future.

Who watches the future?

One way for insurers to get ahead of this is to continue to advocate for the strategic imperative of technology and its effective use at the executive and board levels. One way that midsize insurers can accomplish this is by appointing technology experienced board members, and by considering the establishments of board level technology committees as way to place the competitive and market implications of a well-executed technology strategy in their proper place – at the strategic top of the company. We’ll be presenting our research on this topic at the NAMIC Annual Convention on September 25-28, 2016 in Vancouver, BC, Canada. These are the kinds of actions that might help many carriers change their digital disruption orientation from reactive to proactive.

Cloud Adoption for Core Applications: The Outlook is Clear

Chuck Ruzicka

Many insurers have embraced cloud and SaaS-based applications for functions such as sales and HR administration, but core solutions are finally beginning to gain momentum. In our recent survey report on cloud adoption for core applications, the majority of participants indicated that they had either implemented a SaaS solution or had projects in progress. These solutions aren’t ideal for every carrier, but the maturity of modern cloud/SaaS-based core applications makes them appealing even for large carriers.

That being said, these systems are not without their skeptics. Most carriers do not have formal ROI metrics, and many in our study noted that upgrades and cost predictability were not ideal. Concerns over data and security are also real and present for many insurers. Yet even despite these anxieties, nearly 85% of insurers who implemented cloud-based core solutions reported a net positive impact.

In our discussions with carriers, the following items were consistently identified for consideration when planning, evaluating, and implementing a SaaS core application.

  • Evaluate the current capabilities of your IT infrastructure and application portfolio.
  • Develop a roadmap with priorities for SaaS/cloud deployment.
  • Establish clear governance that considers key stakeholders for cloud deployments.
  • Develop metrics for vendor performance and for measuring success in meeting cost and other deployment goals.
  • Adopt vendor management practices to monitor SLA performance and define responsibilities.
  • Provide active project management to keep implementation on time and on budget.
  • Plan for ongoing support, acquiring or training resources for the necessary skills, and address skills gaps.
  • Regularly evaluate vendor performance and goals/metrics to ensure they are being met.
  • Audit compliance with security and other standards, practices, and privacy policies.
  • Ask vendors to provide specific data and experience with cloud-to-cloud integration and performance.

  • Challenges in implementation are inevitable, but the benefits of cloud are widely recognized. For the future, the outlook for cloud adoption remains clear.

    John Hancock Launches Blockchain Program

    Jon Leslie

    Last week, Coindesk reported that John Hancock is starting to explore development using the blockchain.

    While it’s becoming common in financial services overall (as Novarica VP Jeff Goldberg noted in a blog post a few months ago), this represents the first instance of an insurance company per se (excluding USAA, whose work in the area is likely focused more on banking applications) disclosing an exploratory program around blockchain.

    As Jeff and I wrote last year in Bitcoin and Insurance: An Overview and Key Issues, adopting blockchain is not just an opportunity for some good press (and a helpful recruiting tool for tech-oriented millennials to boot) but also smart from a long-term strategic perspective. In our brief, which offers an overview of the area and a brief explanation of blockchain’s mechanics, we argued that insurance, as consisting of financial contracts between trusted parties, is a natural domain in which to apply a “trust machine” like blockchain. In areport on the same subject from earlier this year, Ernst & Young discussed the same subject in great detail, pointing to a number of likely use cases, including “micro-insurance”, “cyber liability”, “P2P”, and better distribution of highly personalized/regionalized products.

    Naturally, however, the time-to-market for blockchain-based insurance is gated by regulatory issues, as well as by the perfectly reasonable fact that many of the products to which it is likely most suited still have yet to be invented.

    John Hancock in its first phase does not appear to be planning to build anything related to insurance. Instead, a small group of their own developers, in partnership with a few startups, are prototyping an internal “employee rewards program”. This lean and iterative approach sounds like a smart way to build institutional knowledge around a potentially revolutionary, raw, and challenging technology. As a database, network, and a currency system all in one, blockchain really is a unicorn, (as many suggest, perhaps most analogous to the web itself in terms of its technical novelty). Therefore, any company that hopes to “fast follow” in this area will need to have a firm foundation of institutional understanding on which to stand.

    As Matthew Josefowicz has pointed out before, technological disruption is not unlike that Hemmingway quote about how ones goes bankrupt: “first it happens gradually and then all-at-once”. While we’re still definitely in this gradual phase, it’s reasonable to expect only small dividends from these R&D programs. On the other hand, taking a relaxed “let’s see what happens” approach, of the sort many media companies in 90’s took to the web, may seem ill-advised when reflected upon after an “all-at-once” kind of transition.

    We expect to see more carriers launch these sorts of exploratory programs in the coming months.

    A Challenging Environment in the Industry

    Frank Petersmark

    I recently had the opportunity to participate as a judge for the ACORD Insurance Innovation Challenge held in Des Moines. The event brought together seventeen startups who each had five minutes to pitch their ideas and approaches, and another five minutes to field questions from the judges. Two winners were chosen who now move on to the finals competition in conjunction with ACORD’s annual meeting. There are several of these Challenge events being conducted in the U.S. and Europe, and at least part of the idea is to attract more innovative and entrepreneurial thinking to the insurance industry.

    The View from Outside

    The Challenge has the benefit of providing some perspective on how innovative and entrepreneurial types view the industry as a potential market. If this event was any indication, many innovators view the industry the same way fighter pilots viewed certain kinds of combat missions – as a target rich environment.

    Nearly all of the participants were from outside of the insurance industry, and their startup ventures focused mostly on data aggregation for customer centricity, process improvements for policyholder and agent service improvements, and seamless straight through processing for underwriting and claims decisions. In short, many of the things that the industry doesn’t do particularly well currently. As I said, a target rich environment.

    “Capital Rich and Service Poor”

    Encouragingly, there were a few venture capital firms present, and a couple were even from insurance companies. Both the startups and the venture capital firms view the industry as capital rich and service poor, and that means opportunities for the kinds of approaches that will make a difference to the next generation of policyholders who many of these startups hope to turn into lifestyle customers.

    Minimizing Distracted Driving

    One of the startups focused on distracted driving by actively monitoring drivers and their behaviors, resulting in reports that indicate what adjustments might be made to improve safety and reduce premiums. The interesting part about their approach was that they had the ability to dynamically turn off smartphone apps that tend to cause distracted driving if given permission to do so.

    Nudging Consumers Towards Healthier Behaviors

    Another startup focused on the kinds of lifestyle changes that would result in customized life insurance products that included rebates or modifications for health related activities. Interestingly, their premise counts on the fact that the new generation of consumers is much more willing to share private information about their lifestyles in exchange for financial or other benefits, a fact that the industry has been slow to pick up on generally.

    Shared Service Drones for UW and Claims

    Still another had the bright idea of becoming a third party provider of a drone service that insurers would use for property assessments during the policy and claims processes. The startup would use vetted and licensed drone operators and charge a flat fee per fly by. That has a lot of potential.

    Optimizing Existing Marketing and Processes

    Finally, there were a few startups that sought to smooth cumbersome processes – one for reinsurance coverage by creating an online marketplace to connect needs with coverages, and another that proposed using advanced analytics to personalize the travel insurance market, thus leading to more sales.

    More Change, More Responsibility for Corporate Leaders

    In all, there were encouraging signs that the industry has begun to wake up to the fact that the ground is moving underneath it, and if in the end the industry doesn’t move quickly enough to keep its balance, there are others who will.

    From our perspective, our recent research on the relationships between insurance CIOs and their boards of directors, and our view that the industry should appoint more board members with deep technology experience to their boards, is reflective of where the industry needs to go. There are even a few carriers that have begun to appoint board level technology committees as way to place the competitive and market implications of a well-executed technology strategy in their proper place – at the strategic top of the company. We’ll be presenting our research on this topic at the NAMIC Annual Convention on September 25-28, 2016 in Vancouver, BC, Canada. In the meantime, on to the next Challenge.

    Novarica Council Gathers Insurer CIOs to Address The First Year of the Future

    Matthew Josefowicz

    Nearly 70 IT leaders from more than 50 insurers gathered last week at the 9th Annual Novarica Insurance Technology Research Council Meeting to participate in panels and workshop sessions with their peers, get insights from Novarica’s senior team, and attend keynote sessions from outside experts on operational transparency and cyber-security.

    The First Year of the Future

    We dubbed last year “The Year the Future Arrived” for insurance, when nascent trends like wearables, Internet of Things, consumer internet giants’ interest in the sector, and a growth of direct sales beyond personal lines became a reality. This year, the clock is no longer counting down, but counting forward.

    Keynote: Nine Trends and Issues…


    My keynote focused on our Novarica Nine for 2016 and Beyond, looking how these and other trends are shaping the industry, as well as what kinds of technology strategies insurers are taking to address these trends, and how they are managing their IT organizations to deliver these capabilities.

    …100 Technology-Enabled Capabilities


    We also reviewed our expanded “Benchmarking the New Normal” framework, which we will publish this summer, looking at deployment rates for 100 key technology-enabled capabilities across functional areas like product, marketing, distribution, customer engagement, billing, claims, and finance/operations and technology areas like data, digital, and core.

    CIO Panel: Core, Agile, Evolving Customer and Employee Dynamics

    Our CIO Panel, which included Kate Miller of Unum, Scott McClintock of OneBeacon, and Paul Brady of Arbellla, addressed strategic issues ranging from core systems replacement to embracing agile development to redesigning their organizations to make insurance IT an attractive career option for millennials.

    Operational Transparency for External and Internal Customers

    Our guest keynote, associate professor Ryan Buell of Harvard Business School, presented his research on operational transparency and its impact on customer service to a tremendously responsive and engaged group. We’d invited Dr. Buell to join us because his research is so applicable not just to the insurance customer experience, but to the relationship between IT and other business units. See this recent post for more on this session

    Novarica Research on Core Transformation, Data, Digital

    On the second day, the Novarica panel of Rob McIsaac, Martina Conlon, Mitch Wein, and Jeff Goldberg from our team discussed some of their recent research and customer projects in areas like core systems selection, transformation project assurance, data strategy, meeting agents’ digital needs, and a wide range of other trends and best practices.

    Discussion Groups of CIO Members Focus on Their Key Issues

    Special interest group discussions for group voluntary benefits, individual annuities, individual life, personal lines, specialty, commercial lines, and workers comp explored recent research relevant to each sector. In discussions co-led by a Novarica expert and a CIO chairperson, these groups addressed topics like enrollment standards, impact of the DOL fiduciary ruling, market dynamic changes, ISO rating, and core systems vendors.

    Cyber-Security Threat Evolution and Preparation

    Distinguished professor and Department of State cyber-security adviser Dr. John Savage gave a closing keynote on the cyber-security, emphasizing the importance of managing security beyond perimeter protection and staying engaged with industry groups to monitor the evolution of new threats globally.

    Knowledge-Sharing and Networking

    novarica-councilCouncil members valued the opportunity to network and learn from each other in a private, vendor-free environment, and many of the special interest groups have already made plans to meet again later this year. We’ll be publishing a report summarizing the discussions and panels next month, and the 10th Annual meeting will occur in late April, 2017.

    For more information on joining the Council, senior insurer IT executives are invited to visit and request membership. Membership is free and has no obligations.

    Operational Transparency, Agile, and Perceived Value

    Matthew Josefowicz

    Our guest keynote speaker at the recent Novarica Insurance Technology Research Council Meeting was professor Ryan Buell of Harvard Business School, who presented some of his recent research on operational transparency and its impact on customer service.

    Transparency Changes Perceptions

    The main finding of Dr. Buell’s research is that service providers perform better when they see the impact that their work has on customers, and that customers are more appreciative and feel better served when they see the work that has gone into providing services to them.

    Here’s a video of Dr. Buell presenting on this topic as it relates to government services, from his website:

    I invited Dr. Buell to join us after encountering his research online, and realizing how important this topic was not just for insurance customers, but for the internal customers of insurance IT leaders.

    Insurance is an opaque product

    For customers, insurance is an invisible and mysterious product. Few customers know what goes into underwriting and issuing a policy or processing a claim. Even for distributors, a major source of frustration is not understanding when or how decisions are being made. Some insurers have found that simple process additions like progress bars, proactive process notifications, or simple explanations can have an impact on customer and agent satisfaction levels.

    IT is also an opaque product

    IT is an equally opaque product to its internal customers. Leaders and staff in other business units generally have a poor understanding of IT, why things that seem simple are complex, how long tasks actually take, and generally just what the heck those technology guys are doing all day. This lack of understanding and lack of transparency leads to frustration and turns other business executives towards trying to manage IT with the only tool they do understand: budgets. This rarely leads to value creation.

    For IT, Agile is helping

    With the mass adoption of Agile development by insurers, this is starting to change. One of the main benefits of Agile is enforcing regular communication and review of progress between technology staff and other business units.

    As shown below, the majority of insurers report that this is improving end-user satisfaction with delivered products, relations between IT and other business units, and even IT job satisfaction.


    Through frequent interactions and reviews, other business units feel greater ownership in IT projects, and IT feels like it’s making a difference in achieving overall business goals.

    Future collaboration

    We believe that insurers can benefit from an operational transparency orientation in multiple areas, and we’re currently in discussion with Dr. Buell about future collaboration and activities with our team and Novarica Research Council members. Contact me if you’re interested in learning more.

    Related Research

  • Novarica Nine Insurance Technology Trends and Issues for 2016
  • Agile at Insurers 2015
  • Digitalization and Disruption: Thoughts from the MI IASA Conference

    Frank Petersmark

    I recently attended the MI IASA Spring Conference where I presented recent research on the continued and disruptive digitization of the insurance industry. The research resonated with many of the carrier IT and financial people in attendance, who find themselves and their companies at various points along the digitization continuum. One of the central themes that emerged in the ensuing discussions was how many in the room viewed this transformational trend as both a risk and an opportunity. Which way it was viewed really depended on the perspective of the viewer, with the more security oriented in IT expressing concerns over security, and the more customer (agent and policyholder) focused on the potential for engagement and information sharing.

    That dividing line was more nuanced than it sounds, as on the whole most of the attendees of the session and of the conference were engaged in trying to figure out how to position their carriers and organizations for the digital onslaught to come. However, where the dividing line became a little less nuanced was in the positioning actions that many of the carriers in attendance were taking. During some of our discussions it became clear that the conference attendees represented a microcosm of what’s going on the industry overall, and that’s the creation of digital haves and have-nots. The interesting part about that was the fact that not a single conference attendee I engaged with indicated that their company was making a conscious decision to be a digital have-not; rather, it was in the ways their respective companies viewed the potential of digitization that was the tip-off.

    For those who were focusing on the security and data protection concerns, and the need to tightly control the kinds of devices and platforms, the move to digital looms more as another threat that has to be dealt with rather than an opportunity to leverage. In fairness, their concerns are far from unfounded, but focusing on the potential problems and issues with digitization is missing the forest for the trees. As with any new technological trend, there will be issues and attitudes that have to be dealt with.

    On the other hand, several of the attendees I spoke with were very excited about the possibilities of a digital insurance world, and the promise that brings for improving relationships, processes, and products. Many indicated that their companies were utilizing portals and mobile platforms for things like agent and policyholder self-service, and as a way to reach new market opportunities. The results seemed mixed thus far, but experimentation and adjustment are all part of the equation when adopting new capabilities. The same attendees were also interested in the ways a new generation of employees, agents, and policyholders might want to interact with and leverage digital capabilities and how they should be thinking about that inside carriers. It was also true that many of the attendees were just trying to figure it all out, and that’s fine so long as that figuring out process leads to actionable initiatives.

    The good news was that there seemed to be widespread recognition among the carrier attendees from the financial, business, and IT functions, that the digitization of the industry was going to proceed whether their companies were ready for it or not. That readiness, and an orientation toward the opportunities that digital presents, will become the difference markers between the insurance industry digital haves and have-nots.

    Related Research:

  • Hot Topics for 2016
  • Novarica Nine for 2016
  • Benchmarking the New Normal: 50 Advanced Capabilities for P&C Insurers
  • Preparing for Digital Transformation
  • Insurance Enterprise Software Reverticalizes

    Matthew Josefowicz

    This week’s announcement of Accenture’s spin-off of Duck Creek Technologies to a joint venture with a private equity firm underscores a trend we’ve seen in the insurance enterprise software and services market — increased verticalization.

    When we first started tracking M&A in this space nearly a decade ago, we focused significant attention on the tech giants like IBM, MSFT, ORCL, and SAP, pictured on the left of our 2015Q2 market view below, as well as the financial investors, pictured on the right.


    Source: Insurance Software M&A Update 2015 Q2

    While financial investors have gotten much more active in this space in the last five years (lured no doubt by the successful Guidewire and Majesco IPOs), the tech giants are no longer much of a factor. They seem to be focusing much more on their horizontal strengths like cloud and data analytics.

    Why is this happening? Well, insurance enterprise technology is not like general enterprise technology. It has a distinctive and closely-connected customer community that values vertical expertise and relationships above all, it requires maintaining a network of partnerships or a comprehensive set of vertical services, and has a business rhythm and sales process that rarely aligns with that of horizontal enterprise technology companies.

    Insurance technology companies have been most successful on their own, and frequently struggle to maintain relevance when they are swallowed up by larger companies with broader markets. Right now, most of the M&A activity in this space is taking place among the vertical insurance software providers themselves. We expect this to continue for the foreseeable future.