Jeff Haner here: On March 5 2013 Insurity announced that it had acquired AQS for an undisclosed amount. Insurity has indicated that no changes are planned for the support for existing AQS customers. The AQS offices in Hartland, WI and Nashua, NH will remain open, and no staff reductions are planned.
On the surface, there is substantial overlap between Insurity and AQS. Both companies have a long history in the P&C industry and offer policy management modules that have been deployed primarily in support of commercial lines. However, Insurity has indicated that it was not targeting the full range of AQS policy solutions with this acquisition, but focusing on specific assets that AQS offers: a stand-alone rating engine, business rules, and a relationship with ISO that is unique in the industry. Per Insurity, these AQS assets fit well with planned enhancements to Insurity’s policy system, Policy Decisions.
Insurity plans to introduce AQS functionality as incremental enhancements to its Policy Decisions customers. Timing for these product changes has not yet been announced. While support for AQS customers will continue, Insurity will only be offering Policy Decisions to new customers.
This acquisition reflects several trends in the P&C core system market:
- A growing preference for modular suites.
Best-of-breed vendors are at a disadvantage as buyers increasingly look for vendors who can provide all core system modules in an integrated suite. Gartner expects to see the number of best-of-breed vendors shrink as these vendors either build out or acquire additional modules to offer a full suite.
- An emphasis on configuration tools that enable self-sufficiency.
Although many insurers engage their core system vendors for some level of ongoing support, buyers are placing a high priority on configuration tools that would enable them to independently. Insurity has been investing in the configuration tools it provides with Policy Decisions, and this AQS acquisition provides components that may accelerate planned enhancements.
- The need for rapid product development.
Product updates can be challenging for insurers – especially those who offer ISO-based insurance products and find it difficult to stay current. Insurity has an existing internal bureau which interprets ISO circulars and provides updates to Policy Decisions customers. By acquiring AQS, which provides the software and tools that ISO uses for the Verisk ISO Rating Service, Insurity has access to additional capabilities for providing content electronically.
There is overlap between Insurity and AQS, but this acquisition offers some intriguing possibilities. Insurity must move quickly, though, to leverage these newly acquired assets. There are several competitors who offer full core system suites with strong configuration and product management capabilities. For an overview take a look at our latest MarketScope for North American P&C Policy Management Modules.