Software deals plateau for P&C industry: Celent

The level of information technology investments by property and casualty insurers in North America slowed last year, with many companies sticking to the same vendors in a period of economic turbulence, research firm Celent noted in a recent report.

It reported a decrease in the volume of software purchases by 8.6% in 2011 compared to the previous year, adding that the still-fragile economic recovery has put a strain on IT budgets.

“This finding from the data supports Celent’s belief that current economic conditions are reinforcing the status quo for insurers,” the research firm stated in North American Insurance Software Deal Trends 2012. “Given the outlook of an extended period of low growth in the general economy, insurers are rethinking their corporate objectives and strategies. Although deals are getting done, there is still a concern about expenses relative to slow growth, resulting in a smaller volume of deals in the time period.”

Celent also observed that “insurers continue to be risk-averse when choosing software and are more inclined to stay with current suppliers. Given this driver in the current market, effective account management and cross-selling efforts continue to be extremely important for vendors.”