Menu
Vitech
Software for Insurance, Retirement and Investment Administration
Search
  • Products
    • V3locity
      Overview
      CoreAdmin
      Digital
      ClaimsCenter
      CampaignCenter
      DataInsight
      Industries
      Group Insurance
      PRT & Institutional Markets
      Retirement
      Public Pension
      Taft-Hartley
      Alternative Investments
  • Technology
  • Services
  • News & Events
    • News
      Events
  • Resources
    • Analyst Reports
      Blog
      Brochures
      Case Studies
      Infographics
      Insights
      Podcasts
      Videos
      Webinars
      White Papers
  • Careers
    • Careers
      Careers in India
  • About
    • About
      Leadership
      Partners
      Customers
      Trust Center
  • Contact Us
Close Menu
April 4, 2022

What's the Deal? Trends in the 2021 Life Insurance Policy Administration System Market

Introduction

A silver lining of the pandemic for 2021’s life insurance policy administration system market was the acceleration of digital modernization efforts. With working from home policies, Zoom meetings, and remote demos suddenly the new normal, group insurance companies were compelled to increase their digital technology investments. The need to improve customer engagement was also an ever-present incentive. Together, these factors helped the 2021 life insurance policy administration system (PAS) market sidestep a sluggish post-pandemic recovery. In this blog, we’ll review the reasons behind the success of the 2021 market for the individual and group/voluntary life insurance segments, as well as near-term growth and customer predictions.

Just the Stats

The strong 2021 life insurance PAS market was evident in both segments. According to Celent’s report on the state of the North American life insurance PAS market, the data provided was reported via vendor RFIs about sales in North America over the previous two years.1

Individual life insurance

In the individual life insurance provider segment, 51 PAS deals occurred over the past two years, with demand resulting from insurers’ needs to establish a more digital relationship across channels for policyholders and agents, more efficient operations, and faster product introductions.2 The segment experienced significant expansion, with many individual life insurers looking to replace their individual PAS due to legacy technology, the need for more efficient, cost-effective platforms, and in particular, faster speed to market and delivery.3

Group/Voluntary life insurance

In the group/voluntary life insurance provider segment, there were 26 new deals.4 The increase in deal volume over the previous year was partially due to group insurers seeing the market bounce back as employment numbers increased, with current workers requesting more in terms of benefits such as wellness, retirement income, and other offerings beyond health care.5 There was also continued demand for voluntary lines like critical illness, accident, dental, and vision, and term life products.6

Who’s Buying

After the actual deal statistics, the next big question is who made these PAS purchases? In both markets, it was the larger-tier insurers (i.e., those with premiums greater than $1 billion) who were doing much of the buying, due to the availability of resources as well as their tendencies to purchase multiple systems for different divisions. In the individual life insurance provider markets, smaller insurers are now starting to purchase new PAS to compete with the larger carriers, to retain and build on their segment position.7

Purchase Drivers

Although the pandemic may not have adversely affected life insurance PAS purchases, it did challenge the industry in other ways, in terms of business strategies, distribution channels, and product development schedules and timelines. As a result, insurers in both segments made PAS purchases to accelerate their growth and digital modernization efforts with advanced technology platforms and key enhancements. Specifically:

  • Cloud deployment. Insurers are more eager to deploy cloud systems for easier upgrades and lower costs.8
  • Improved, integrated architecture. To efficiently support seamless, end-to-end experiences, via API integrations and microservices.9
  • Quicker product development. To accelerate product development and stimulate speed to market.10
  • Improved customer experience. Insurers want to capitalize on the differentiating value of personalized and engaging customer experience and self-service capabilities.11
  • Growing data demand. The increased use of data has led insurers to seek easier ways to access and implement data for improved outcomes.12

What’s Ahead

Looking to the immediate future, at least 50 life insurers will be purchasing new PAS to administer their individual and/or group/voluntary lines of business over the next two years. For individual life insurance providers, expectations are for purchases to come from midsize to smaller carriers, who are trying to become more competitive. Larger carriers who have made recent PAS purchases for many of the above enhancements are unlikely to make another system purchase anytime soon.

For group/voluntary insurance providers, predictions indicate that larger carriers will continue to make purchases, but that Tier 3 insurers ($500 million to $999 million in premium) to Tier 5 insurers (under $100 million in premium) will constitute most new deals over the next couple of years to compete against the larger Tier 1 ($5 billion-plus in premium) and Tier 2 ($1 billion to $4.9 billion in premium) companies. Interestingly, some PAS providers in the group/voluntary market have begun to expand their product offerings to the individual life market, so there may be future sales and product overlap in store for both segments.13

Final Thoughts

As global businesses continue to recover from the pandemic, many will come to depend more on technology to help them weather large-scale, unforeseen obstacles. Modern PAS are certain to play an essential role not only in improved operations and expected growth, but also enable the enhanced processing, digital engagement, and speed to market of new product offerings to ensure steady expansion and long-term vision and delivery.


1 “Life PAS Rising to the Occasion: Deal Trends in the 2021 North American Life Insurance Policy Administration Market,” Celent, March 2022
2-13 Ibid.

TODD EYLER

Todd Eyler is Vice President of Strategic Marketing at Vitech Systems Group. He manages Vitech’s strategic marketing efforts including analyst relations, industry communications, competitive analysis, ecosystem partnerships, and thought leadership. Todd has held leadership positions at top-tier software companies and systems integrators and has extensive experience in identifying/analyzing market trends and aligning business priorities with the right technology.  

Sign Up For Updates

Stay up-to-date on the latest industry news,
digital products and innovations.

    V3locity

    CoreAdmin
    Digital
    ClaimsCenter
    CampaignCenter
    DataInsight

    Industries

    Group Insurance
    PRT & Institutional Markets
    Retirement

    Alternative
    Investments

    Technology

    Services

    News & Events

    Resources

    Careers

    About

    © Vitech Systems Sub LLC 2023. All rights reserved. | Privacy Policy. Vitech refers to Vitech Systems Sub LLC and may sometimes refer to VSG Hosting Sub LLC. Vitech Systems Sub LLC is a separate legal entity from VSG Hosting Sub LLC.