[To read last year's responses from industry leaders, read 11 Burning Insurance Industry Questions That Will Be Answered in 2012]
1. What is the Right Core System Modernization Strategy?
What we saw in 2011: "Carriers are weighing their core system replacement options… from monolithic suites to best-of-breed systems, and now to best-of-breed suites"
What happened in 2012? "A trend is definitely becoming more visible although one must differentiate between Tier 1 and 2 insurers as well as by region," says Robert Cummings, head of SAP's insurance business unit. "Tier 1 insurers in North America, Western Europe and Japan continue to move toward best-of-breed systems to replace their legacy applications. In Tier 2 and the rest of the world, almost half of the RFPs coming into our company ask either about a platform for core insurance (usually meaning policy, claims, billing, reinsurance and sometimes commissions)."
In 2012, fewer than 25% of SAP's inquiries were for stand-alone components — about a two-thirds drop from 2010.
"We believe that 2013 will see a continuing strengthening of this trend, with the difference that subsidiaries of Tier 1 players will also begin to consider full suites due to the cost disadvantage of large heterogeneous systems," Cummings adds.
