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Magic Quadrant for Life Insurance Policy

Administration Systems, Europe


Published: 5 October 2017 ID: G00320047

Analyst(s): Laurie Shotton

A highly competitive market characterized by low sales has driven European


policy administration vendors to extend their system offerings. Life insurance
CIOs should focus their core replacement business cases on wider digital
capabilities as well as legacy modernization benefits.

Strategic Planning Assumption


By YE19, platform vendors will dominate 70% of deals in Western core insurance software markets.

Market Definition/Description
Gartner defines a life insurance policy administration system (PAS) as a system that provides full
end-to-end life cycle management of group and individual life and pension products. This Magic
Quadrant shows that the functional richness and capabilities needed to support a full range of life
insurance products and features are becoming increasingly commoditized. Specialist focus still
exists, with some vendors' portfolios slanted toward more individual or group offerings within
specific lines of business (life, pensions or annuities), but in general, vendors are increasingly
offering a comprehensive range of products. The highly competitive market has accelerated the
transformation of the leading vendors into platform vendors. A platform vendor is one that has
established an ecosystem of technology partners that collectively support the insurer's value chain
by offering a broader range of technology solutions for front-office and back-office operations, and
has architected its policy administration system to interoperate seamlessly with them. To achieve
this, vendors are creating a network of partners to go beyond system integrators to ones that
include extending capabilities to include Internet of Things (IoT), portals, business intelligence (BI),
video capabilities and other capabilities.

This Magic Quadrant evaluates European life insurance policy administration systems that support
end-to-end policy administration transactions, including:

■ New product development and ongoing product maintenance


■ Quotations/illustrations and application management
■ Assessment and underwriting of risks
■ Policy issuance
■ Collections and disbursements
■ Technical subledger accounting
■ Ongoing contract administration and endorsements
■ Benefits and claims management

The European life insurance policy administration market remains highly fragmented and localized,
and is still characterized by a low number of deals per vendor. This competitive landscape has seen
vendors accelerate the expansion of their offerings beyond basic skilled advisor portals and simple
analytics to offer enhanced multichannel digital experiences, including broader array of BI
dashboards and reports. Insurance CIOs should therefore rethink their system replacement plans
and build business cases that are not solely focused on legacy modernization and digital
foundations, but consider these purchases as digital accelerators, as well.

It is important to note that, for the purposes of this Magic Quadrant, the definition of the European
market is not limited to the European Union (EU), but includes more than 46 countries, including
Turkey and Russia. (It does not include any non-European geographies. Several of the vendors
evaluated are, however, headquartered outside Europe.) Gartner tracks more than 40 vendors that
offer life insurance policy administration systems in Europe, and the 2017 Magic Quadrant
represents a snapshot of the market for a subset of those vendors that have built up a significant
portfolio of clients (11 clients) and are continuing to add to their portfolio (at least two in the past
two full calendar years).

This Magic Quadrant is intended to be used by European life insurers' and pension providers' CIOs
and enterprise architects who are considering their options for modernizing their core systems. This
research will help them better understand both the market and how Gartner evaluates vendors in
this market, so that they can better assess whether specific vendors' policy administration systems
address both their current and future needs.

Gartner's assessment of the market thus helps insurance CIOs differentiate the policy
administration system vendors by focusing on those key areas that are fundamental in the decision-
making process.

Product Development and Maintenance


Product functional capabilities and coverage across different lines of business are becoming more
commoditized, but the usability and ease of launching products varies significantly. Understanding
the ease with which products can be launched or changed and packaged or bundled by business-
oriented users will be a key factor in making insurance organizations more agile. In this research, we
also examine the functional richness of vendors' solutions, looking at product coverage,
functionality and servicing features to support a full range of life and pension products.

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Software-Oriented Architecture
Insurers' dependency on legacy systems, with their lack of openness and ease of integration, is
inhibiting their movement toward insurer's digital ecosystem initiatives (see "Insurance CIOs Need
Better Understanding of Business Ecosystems to Drive Digital Transformation"). Insurance CIOs will
need to analyze the software-oriented architecture (SOA) of their future core policy administration
systems to ensure that they provide a foundations for the digitalization of their businesses.

SaaS Deployments
Cost optimization, a key objective of insurance CIOs, as well as a requirement for greater speed and
agility, has seen a growing interest in SaaS and hosted deployments. With around only 12% of total
deployments currently hosted in SaaS deployments, and many vendors in Europe lacking expertise
in this area, SaaS experience has become a key differentiator that insurance CIOs need to
understand.

Digital Accelerators
In addition to increasing the openness of their policy administration systems, many vendors have
extended their offerings to incorporate BI capabilities with an array of dashboards, key performance
indicators (KPIs) and reports to assist with decision making. Vendors' portal development efforts
have moved beyond web-based platforms for advisors, to deliver multichannel intuitive portals with
different degrees of configurability for different distribution channels and devices. Vendors are using
partnerships and solutions from other parts of their organizations' products to incorporate additional
capabilities in areas such as needs analysis, video technology and chatbots. They are also piloting
other emerging technologies, including roboadvisors, artificial intelligence and robotic process
automation. The vendor movement toward platforms could help insurance CIOs accelerate the
digital aspects of their IT roadmaps.

Vendor Viability and Success


The European market is characterized by low sales and increasing competition and mergers and
acquisitions (M&As). All of these factors make long-term vendor viability a concern for the insurance
CIO. Five of the 11 vendors evaluated in last year's Magic Quadrant have been involved in M&A
activity since it was published. Gartner research considers some key financial measures, as well as
vendors' go-to-market strategies, customer portfolio size and success in obtaining clients and
building partnerships, to help inform CIOs' decision making. Gartner's financial and customer
assessments are based on YE16 data (see Note 1), although passing comments will be made on
client numbers achieved up to July 2017.

Market Awareness and Package Direction


With the needs of insurance companies evolving, it is extremely important for CIOs to be able to
quantify a vendor's awareness of the local and global market and the business drivers that are
shaping insurers' core policy administration system needs. Gartner examines the vendor's

Gartner, Inc. | G00320047 Page 3 of 31


awareness of market change, how engaged and influential the vendor's clients feel, and the
resulting product roadmap's alignment with the future needs of the industry.

These factors, coupled with other in-depth analysis, will help insurance CIOs and other IT
professionals evaluate vendors based on their companies' specific requirements. Gartner advises
life insurance CIOs against simply selecting vendors that appear in the Leaders quadrant. All
selections should be buyer-specific, and vendors from the Challengers, Niche Players or Visionaries
quadrants may be better matches for an insurance company's business goals, IT budgets, risk
appetites, local country needs and line of business (LOB) or functional requirements.

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Magic Quadrant
Figure 1. Magic Quadrant for Life Insurance Policy Administration Systems, Europe

Source: Gartner (October 2017)

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Vendor Strengths and Cautions

DXC Technology
DXC Technology is a U.S.-based IT services provider. DXC Technology was formed in April 2017
following a merger between the Enterprise Services business of Hewlett Packard Enterprise (HPE
ES) and CSC. The new organization has 170,000 employees worldwide, with 17,000 focused on
insurance, and with 5,000 in Europe. DXC Technology offers a broad portfolio of policy
administration systems across the globe, including multiple life and pension solutions. Two of these,
GraphTalk A.I.A and Integral are offered in Europe. The company's main life insurance policy
administration system offering in Europe is GraphTalk A.I.A. The resources for GraphTalk A.I.A are
based in a European competency center with 700 employees — 40% in France. DXC Technology
has a large nearshore delivery center in Bulgaria and additional staff in the U.K. The remaining
resources are spread throughout offices across Europe.

DXC Technology has the largest installed base of any vendor in this market. It has 112 GraphTalk
A.I.A implementations in 18 European countries (most in France), including three new clients in 2016
(in France and Spain), and has added a further three clients in 2017. DXC Technology has extended
its SaaS client base to five clients, and has stated its intention to focus on SaaS. The SaaS version
will be branded as Digital Insurance as a Service (DIaaS), with the GraphTalk A.I.A brand being
maintained for the on-premises offering.

GraphTalk A.I.A is written in DXC Technology's proprietary GraphTalk programming language, with
additional technical components in C, C++, Microsoft Foundation Class (MFC) and Java. Key
functional and technical developments have focused on improving the ease of product
configuration, addressing regulatory changes for the EU's Markets in Financial Instruments Directive
2004/39/EC (MiFID), enhancing GraphTalk A.I.A's REST APIs and building an integrated offering to
support its DIaaS proposition.

DXC Technology's GraphTalk A.I.A deployment is provided with a portal supporting both customer
and brokers. DXC Technology has built a public data model (PDM) operating with SAP
BusinessObjects to provide users the ability to generate their own reports, and the software comes
with 15 to 20 template reports out of the box. Insurance companies can use a range of tools,
including QlikView, Sisense and Snowflake, to generate their own reports.

DXC Technology is building a range of technology partners to help extend its offering, including
DocuSign for e-signatures, Salesforce for CRM and a multichannel portal, IBM Watson and Recast
for chatbot solutions, and Amazon Web Services for its cloud offering.

Strengths

■ DXC Technology's Digital Insurance as a Service proposition is now established with the
second-highest number of clients among the vendors in this Magic Quadrant. DXC
Technology's SaaS offering is on a price-per-policy basis, which includes regulatory updates as
standard, at no additional cost.

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■ DXC Technology's holistic set of IT services — including application service provider (ASP) and
SaaS offerings and a migration factory — increases its flexibility, and its Bulgarian delivery
center offers cost-effective resource deployment.
■ DXC Technology's migration experience is more extensive than those of most other vendors,
with 80 migrations to GraphTalk A.I.A conducted.
■ The vendor has a broad European presence, with experience supporting large multicountry
installations. Some clients run multiple European markets on the same GraphTalk A.I.A instance.
■ DXC Technology is the sales leader in Europe, having added nine new clients since 2015. The
implementation of these new clients will further enhance the functional capabilities of its core
policy administration and supporting offerings.

Cautions

■ As a merged entity, DXC Technology currently lacks a single policy administration system
strategy, and now has eight policy administration systems to maintain for life and pension
business.
■ DXC Technology does not have a data visualization capability for building dashboards and
reports on top of its public data model. Insurers would need to select their own tool and build
their own dashboards and reports on top of the data mart.
■ The vendor has limited experience with modular implementations, with only five instances of
modules currently deployed on a stand-alone basis.
■ Those implementing GraphTalk A.I.A on-premises may find it to be comparatively expensive.
For a SaaS implementation, pricing is per policy and based on consumption, which improves
the total cost of ownership (TCO).

Edlund
Edlund completed a request for information (RFI) and provided references for this research, but
chose not to provide a demo of its system. Gartner's analysis is, therefore, supplemented by other
credible sources, including publicly sourced information.

Edlund is a Denmark-based provider of life and pension and non-life administration solutions.
Founded in 1992, it has been a subsidiary of the Danish IT group KMD since 2016. Edlund has 250
employees, all focused on insurance, with approximately 220 dedicated to the company's policy
administration product, Lifelink+.

Edlund has targeted the Danish market, where it has gained a dominant market share and provides
a full range of life and pension products for its domestic clients. Its Lifelink product, originally
launched in 2008, went through a technology refresh in 2016 and was rebranded Lifelink+. Edlund
has implementations with 22 clients with Tier 1, Tier 2 and Tier 3 life and pension organizations in
the Danish market. Edlund gained two new clients in 2016, but had not added any more new clients
as of July 2017. Despite the addition of new clients, Edlund's total client base has declined, due to

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the consolidation of some Danish insurers' books of business. Edlund has a separate, cloud-based
Solvency II offering, called Actulus.

The company will predominantly position its policy administration system as a SaaS solution. The
SaaS solution is currently used by two of its 22 clients, and Edlund will only implement on-premises
at an insurer's insistence. Lifelink+ uses .NET for both the front end and the business layer, and runs
only on Windows for its application server and operating system (OS). Lifelink+ can run on DB2 or
SQL databases. Functional and technical enhancements in 2017 included enhancements to
contribution and disbursement modules, the launch of the Connection customer service front-end
solution, and infrastructure changes to support Azure cloud deployment. The vendor provides 175
web services, and has experience implementing an array of stand-alone modules, including billing,
collections, disbursements and portals. Edlund also offers agents and end users a portal, called
Lifesteps, to support new business and policy servicing transactions, which are written in HTML5
and can be rendered on different devices and a separate portal for agents, Connection.

Strengths

■ Edlund offers insurers a SaaS option with low involvement, incorporating configuration services
and full regulatory compliance in its fees. The company states that the insurer's only ongoing
postimplementation requirement will be to perform acceptance testing of releases.
■ Edlund has knowledgeable technical staff, with particular finance and actuarial expertise and
qualifications. This, along with local product, legislative and tax framework experience, has
enabled the vendor to secure its Danish client base.
■ Edlund offers a range of business solutions to support clients' life, non-life insurance and
financial management requirements (including Solvency II).
■ Edlund is experienced at delivering stand-alone modules, with more than 10 deployments of
various modules.
■ Lifelink+ is provided with a full suite of process diagrams documenting all business processes,
from quotes to claims, which insurance companies can use to document their own end-to-end
processes.

Cautions

■ Edlund's Lifelink+ SaaS offering is inflexible, with Edlund taking entire responsibility for change,
including all initial configurations of the products and processes.
■ The Lifelink+ system is aimed at back-office users, but its user interface (UI) is for expert users,
and hence, it is not completely intuitive. The UI lacks guidance, and processes involve a
significant number of steps and pop-ups in a transaction-focused approach.
■ Lifelink+'s product capabilities typically require code change. The system is provided with 300
rigid product templates, with limited ability to override parameters.
■ Edlund is operating in a saturated Danish market and needs to prove that its solution is fit for
the purposes of other European markets.

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■ Edlund has yet to establish a strong partnership network, with the vendor typically
implementing its policy administration system itself.

Fadata
Fadata, founded in 1990, is a U.K.-headquartered vendor with a development center in Bulgaria.
The company has approximately 230 employees, all of which are focused on the insurance industry,
and on its Insis (Insurance Information System) life insurance policy platform. Fadata's acquisition of
Impeo in July 2017 will provide it with approximately 40 additional resources and business
knowledge in the German-speaking markets, as well as a portal and quoting solution.

Fadata has primarily focused on Tier 2 insurers, and has 19 European clients for Insis, having added
one new client in 2016 and one more in 2017. Fadata's implementations are spread across Europe,
with implementations in Austria, Bulgaria, Greece, Luxembourg, Poland, Romania, Russia, Serbia,
Slovakia, Turkey and the U.K. Fadata has won clients in new countries, adding clients in Finland and
the U.K. in 2016, with a further client being added in 2017. To manage growth, it has established a
portfolio of system integration partnerships with BearingPoint, Charles Taylor InsureTech, Evry, EY,
Infosys, Sollers and Tieto, with these partners having been involved in priming or supporting Insis
implementations. Fadata also has clients in the Middle East, Africa and Latin America.

Insis is built on an Oracle technology stack. The Java front end is built on the Oracle Application
Development Framework, which has been extended, and the application layer was designed with
PL/SQL. Fadata uses Oracle integration services for SOA, and more than 2,800 web services are
available. The architecture has been built on software-defined architecture principles, with internal
APIs interfacing between Insis' functional components. Functional and technical developments have
been to improve the architecture and performance of the rule engine and enterprise service bus,
and enhance pension's functionality and renewal simulation capabilities. For reporting, Fadata offers
its own BI, based on Oracle BI Publisher, with approximately 100 out-of-the box reports, key
performance indicators (KPIs) and dashboards.

Strengths

■ Insis has been developed with a highly flexible software-defined architecture that has been
proven to be scalable for both small and large insurers. One implementation in production has
more than 14 million policies.
■ The system's highly flexible, business-user-friendly workflow and business process
management (BPM) tool provide the foundations for digital business platforms and ecosystems.
The BPM tool can configure business process steps, combining Insis product rules with internal
and external systems and components to manage a full end-to-end process, which could
include processes managed by an insurer's third-party partners.
■ Insis includes a highly configurable and business-oriented product configuration module that
can be integrated with other systems and enables clients to maintain their own products.
■ Fadata has combined its low-cost Bulgarian development location with an expanding team in
the U.K., Germany and the Nordics, which will provide additional delivery capabilities.

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■ Fadata has invested significantly in its partner network with more than 350 trained resources
and a track record of priming and supporting project implementations. Fadata has delivered
more than 13 projects in conjunction with its partners.

Cautions

■ Fadata lacks migration experience, specifically in the life insurance market, with only three
migrations to the Insis policy administration system, which is considerably lower than the
market average.
■ Insis' front end lacks usability with screens and processes more geared to expert users. The
usability received general dissatisfaction, 25% lower than market average from client references
over the past two years.
■ A lack of governance and standardization and adherence to out-of-the-box configurations of
end-to-end business processes has led to clients personalizing processes, which can result in
increased regression testing and resultant costs of releases for custom-made process
configuration.
■ Insis' BPM tool is initially complex with a steep learning curve, and mapping operational
business processes to technical Insis business processes will require significant vendor
support, particularly for first implementations.
■ Fadata's go-to-market strategy for global expansion is far-flung, with the vendor focusing on
Europe, the Middle East and Latin America. This has led to single implementations in individual
countries, which could adversely affect Fadata's capacity to service its clients.

IN2
IN2 is a Croatia-based software vendor and IT services company providing solutions for a broad
range of industries. The company has about 650 employees, 50 of them dedicated to the insurance
industry and 20 dedicated to its INsurance2 policy administration system.

IN2 has focused predominantly on Tier 3 organizations, and has established its client base in
Eastern Europe, accumulating 21 clients in Bosnia, Bulgaria, Croatia, Serbia and Slovenia. IN2
added two clients in Slovenia in 2016, and one additional client in 2017.

INsurance2 is built on an Oracle technology stack. The front end of its bank advisor portal is built on
Oracle ADF, while the back end uses the older Oracle Forms OAS technology. The programming
language of the solution is a mixture of PL/SQL, Java and .NET technologies. The solution supports
multiple OSs and application servers, but requires an Oracle Database. The system is provided with
30 web services. Functional and technical enhancements have focused on improving the
parameterization of the solution and adding new functionality to financial and accounting, claims
and billing modules. INsurance2 is provided with a front-end portal for bank advisors and agents.
For reporting, IN2 provides a BI and analytics offering called BInsurance2.

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Strengths

■ IN2 provides Eastern European insurers with a low-cost policy administration option with a
proven track record of delivering in a number of different countries in the region.
■ INsurance2 supports a broad range of lines of business within a single common architecture,
including group and individual life and pension products, as well as health and non-life product
sets.
■ INsurance2 provides the flexibility for insurers to add additional personalized parameters into
entity definitions, business flows and formulas without the need for coding.
■ INsurance2 has been proven to be scalable, and is in production with more than 7 million
policies (more than double the median implementation size) and more than 500 concurrent
users.
■ IN2 is experienced with system migration, having performed 20 migrations onto its policy
administration system.

Cautions

■ IN2 has only 20 resources focused on its solution, which will make availability and
responsiveness difficult and prevent significant R&D investment. The company has multi-
industry coverage, and insurance is not its main focus.
■ INsurance2 back-office screens, based on old Oracle Forms technology, are not aesthetically
pleasing and lack guidance for the user.
■ Product configuration is a highly technical task requiring extensive experience, with a significant
use of short codes, extensive pop-ups, lack of intuitive navigation and no product copy
function. IN2 typically takes on all configuration tasks itself.
■ The INsurance2 solution offers only basic task management, called entry control, which
provides a simple task list of actions assigned to the user and lacks common functionality such
as priority and due date.
■ The ease of integration and openness of the INsurance2 solution are limited, with only 30 web
services and significant gaps across the policy life cycle. This is highlighted by a lack of self-
service options in the front-office solution, with all servicing changes requiring a manual back-
office function.

Keylane
Keylane is a Netherlands-based software vendor that was founded in 2014, following the merger of
a number of Dutch software providers. In April 2017, Keylane extended its policy administration
system portfolio by acquiring Schantz, a Denmark-based vendor that was assessed in last year's
Magic Quadrant. The acquisition has expanded Keylane's delivery capabilities, adding a
development center in Denmark alongside its other office locations across Europe. Keylane now
administers four policy administration solutions: QIS for non-life, LeanApps for individual life and

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pensions, Maia for group life (for existing clients only), and Schantz Life, which replaces Maia and
will also overlap with the LeanApps product set. This profile is focused on the LeanApps policy
administration system. Keylane employs about 750 staff, all focused on the insurance industry, with
100 of them dedicated to the LeanApps policy administration system.

Keylane's preferred delivery approach is SaaS, and the vendor has moved all but one of its 14
LeanApps clients to its SaaS offering. Keylane added one new client in the U.K. in 2016 and added
a further client in 2017.

LeanApps Life is a Java EE-based system that can run on Windows. IBM WebSphere, BEA and
Oracle WebLogic Server are supported web application servers, and Oracle, SQL and DB2 are
supported databases. Functional and technical enhancements have focused on enhancing life
claims, completing the integration of LeanApps with the company's front-end portal for front- and
back-office administrators, agents and customers, and upgrading the Oracle Database structure to
version 12. Keylane is also continuing to work on sharing components across its three main policy
administration systems (Schantz Life, LeanApps and QIS). For reporting, Keylane provides a data
mart to run reports, but does not provide a BI or data warehouse capability or tools and has not
developed a partnership with a third-party solution provider.

Strengths

■ Keylane is the most experienced SaaS provider of life insurance policy administration systems
in Europe, with 12 life clients deployed on a SaaS basis. Its commercially viable model will
appeal to a range of insurers, and clients have reported to Gartner that it has reduced their
TCO.
■ Keylane's user-friendly portal supports the full life cycle of business functions for clients,
agents, employees and back-office users. The UI is independent of Keylane's policy
administration systems, and uses web services to interface with LeanApps and Keylane's
property and casualty (P&C) offering to provide a single view of a client's portfolio across
multiple lines of business.
■ Keylane's approach to building shared components across its core policy administration
systems will enable multiline insurers to manage their entire portfolio through one common
interface and enable cross-system sharing of capabilities and functions.
■ Keylane's acquisition of Schantz Life provides an extension of its delivery capabilities with IT
and business expertise, as well as 11 clients in Denmark that will help its expansion into the
Nordic countries.
■ Keylane has deployed an independent, user-friendly business process component. The system
does not include a graphical process editor, but instead uses forms that provide the user with
the ability to define screens alongside calculation definitions, business rules and questions to
develop a configurable business process.

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Cautions

■ Lack of auto-underwriting capability in Keylane's portal will reduce an insurer's straight-through


processing capability, with all assessment of underwriting questionnaires requiring manual
underwriting.
■ Insurance CIOs should be aware that they may be positioned with Keylane's alternative
solution, Schantz Life, particularly if the product coverage is for both group and individual life
and pension product sets.
■ Keylane exposes LeanApps data only in a normalized data mart, and does not offer a BI
capability or a data warehouse, either directly or via a partnership.
■ The vendor is focused on an off-premises deployment model, with 100% of its life client base
operating in its SaaS model, which will not appeal to clients that prefer on-premises
deployment.
■ Keylane does not provide a full workflow capability, which is cited as an issue by its clients.

Mphasis (Wyde)
Wyde completed an RFI and provided references (none of which completed the survey), but chose
not to provide a full demo of its system capabilities. Gartner's analysis is, therefore, supplemented
by other credible sources, including publicly sourced information.

Wyde, an Mphasis company, is a subsidiary of Mphasis. Wyde was founded in 1997 as a niche
insurance policy administration solution provider. It was acquired in 2011 by Mphasis, which has a
market focus in banking, capital markets and insurance, as well as other industry verticals. In
September 2016, Blackstone acquired a majority stake in Mphasis from Hewlett Packard Enterprise
(HPE). There are approximately 317 employees in Mphasis' Wyde business unit. Wyde has 307 staff
members dedicated to insurance, all of which are focused on its life policy administration system,
Wynsure (which also supports non-life business).

All of Wyde's client implementations are with French Tier 2 and Tier 3 insurers, but its French clients
have also installed its policy administration system in Germany, Italy, Malta and Spain. Wyde's client
base has remained static at 11 clients, despite a SaaS client being added in France in 2016. The
vendor added no further clients in 2017. The vendor is also selling Wynsure in the U.S. and Asia.

Wynsure was launched in 2003 and built with C++. The UI is a rich internet application that requires
an ActiveX or ClickOnce browser plug-in. Wynsure has been deployed on Oracle Solaris and
Windows, and supports a full range of database options. Wynsure enhancements in the most recent
release include enhancements to product versioning and improvements to group functionality,
including group underwriting and bulk policy changes and investment in their integration
capabilities. Wynsure includes 364 RESTful APIs, which are also leveraged by its portal solution,
wPortal. The portal serves agents, brokers, policyholders and group plans. Wyde does provide a BI
and analytics capability using a MySQL database, and uses Kibana to build dashboards and
reports.

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Strengths

■ Wynsure includes an event-driven architecture that provides its clients with more than 500
defined points. These points are within business processes that enable a product rule to be
called or a user-defined XML extract to be generated to integrate with other applications and
databases or generate reports.
■ The openness of the Wynsure solution has been enhanced, with more than a 75% increase in
web services.
■ Wynsure supports multiple lines of business, including individual and group life insurance, as
well as general insurance. This can be attractive for multiline insurers looking for one vendor
across multiple business lines.
■ Wyde has a large client base of 34 clients in France, and internationally, the ongoing support of
which will contribute to the functional and technical enhancement of its Wynsure solution.
■ Wyde offers a wide portfolio of IT services and has an offshore development center in Pune,
India, and nearshore center of excellence in Poland.

Cautions

■ Wynsure lacks the functional capabilities and implementation experience for investment,
pension and annuity products. Wyde states its primary focus is on the group and affinity life and
credit insurance market.
■ Wyde has primarily focused Wynsure on the French market in Europe, and its client portfolio
has remained relatively static during the past few years, with client wins being offset by
discontinuations of clients.
■ The Wynsure solution lacks an automated underwriting capability, and integration with third-
party solutions has only happened on a specific custom-made project implementation.
■ Wyde's multichannel portal is still under development with broker, customer and end-user
functionality yet to be fully implemented.
■ Wyde has yet to establish a strong partnership network, with the vendor typically implementing
its policy administration system itself and limited case-by-case experience of working with
partners.

msg life
A Germany-based software vendor, msg life, is affiliated with the larger msg Group, which has more
than 7,000 employees. On its own, msg life has approximately 950 employees, 880 of whom are
focused on insurance and 800 dedicated to the msg.Life Factory policy administration system. The
vendor still supports and updates another package, msg.Life, marketed at pension schemes.

The vendor has 40 msg.Life Factory clients, having added four new clients — in Austria, Germany
and Ireland — in 2016 and an additional client in 2017. One client discontinued its relationship with
msg life following a takeover by another insurer. The vast majority of msg life's clients are Tier 2 and

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Tier 3 insurers in Germany, but the company also has clients in Austria, Ireland, Liechtenstein and
Switzerland.

msg.Life Factory supports both individual and group business. The application was developed with
an HTML front end and a JEE business layer. msg.Life Factory is platform-independent and
supports multiple OSs (HP-UX, IBM AIX, Oracle Solaris and Windows) and databases (DB2 and
Oracle). The system is SOA-certified by IBM, and has approximately 140 web services. Recent
functional enhancements include improvements to investment, billing capabilities and group
pension functionality related to retirements and wealth management. Technical improvements have
been made to upgrade to full JEE implementation of the product and contract management
components. msg.Life Factory is provided with a multichannel portal (msg.Sales & Service) and a
customer self-service portal (msg.Online Insure). For reporting, the vendor does not provide any BI
or data warehouse capabilities.

Strengths

■ The msg.Sales & Service system portal provides a highly configurable and flexible front end for
multiple distribution channels and devices, using a wide range of templates and widgets to
create a different process and screen layout for different channels and devices. The system also
offers an opportunity to create different marketable offerings by bundling or packaging
underlying products.
■ Msg life has extensive migration experience, having performed over 40 migrations to msg.life
Factory. The vendor has a detailed methodology and a range of profiling and cleansing tools
that operate on its intermediary data mart (migsys). Full decommissioning of source systems is
supported by a migration archive tool for data that is not needed in the target system but does
need to be retained.
■ The vendor collaborates positively with its user group to jointly develop its product roadmap,
and has been commended by its clients for a number of years for its reliability, implementation
methodology and business competence.
■ msg.Life Factory is a functionally rich and reliable solution, proven for a broad coverage of
group and individual life and pension products for a large customer base.
■ Msg life maintains a robust approach to its product mentality with reference customers citing
customization at around 10%, the lowest percentage among the vendors in this Magic
Quadrant.

Cautions

■ Msg life has been unsuccessful at international expansion outside German-speaking markets,
with only one client outside those markets (in Ireland).
■ Msg life's reporting capabilities are limited to sales dashboards in its portals or daily extracts via
its Business Integration Gateway (BIG). The vendor does not offer a full BI or data warehouse
capability as part of its offering.

Gartner, Inc. | G00320047 Page 15 of 31


■ The workflow and BPM capabilities of msg life are relatively weak, and are more akin to task
management. Work with external BPM tools has not gone beyond prototyping to prove
integration. Clients would therefore need to integrate external workflow and BPM tools
alongside the policy administration system.
■ The vendor's product workbench remains a highly complex and technical task, using Java
language for formula adaptations, adding fields such as strings and integers, and significantly
using short codes. Despite guidance taking users to specific tables, actual understanding of
what field to add or update relies on real expertise.
■ Msg life has yet to switch its APIs to RESTful services.

Sapiens
Sapiens, based in Israel, has 2,500 employees, with 2,000 focused on the insurance industry and
about 600 focused on the Sapiens Alis (formerly Alis) life insurance policy administration system.
The vendor has continued to look to acquisitions and partnerships to grow and extend its system
portfolio. In February 2017, Sapiens announced the acquisition of StoneRiver, which provides the
vendor with a range of solutions: e-app, needs analysis, illustrations, employee benefits enrollment
and underwriting solutions. In addition, it entered into a formal partnership with Life.io, providing a
mobile solution for engaging customers incorporating wellness program and life event functionality.

Sapiens Alis has 15 European clients, having added one additional client in the U.K. in 2016.
Sapiens has yet to win a new client in Europe in 2017. The majority of Sapiens clients are U.K.-
based Tier 2 and Tier 3 insurers or small implementations with large insurers, but Sapiens also has
clients in Belgium, Cyprus and France. The vendor is active in other regions worldwide, including
Australasia, South Africa and the U.S. Through acquisition and self-development, Sapiens has built
an array of insurance solutions that includes six policy administration systems. In particular, it has
developed a separate closed-book platform (a different technology from Sapiens Alis) to manage
runoff books of business for life insurers.

Sapiens Alis, launched in 1998, is built with Java EE for the services and presentation layer, and C+
+ for the application layer. Recent functional and technical enhancements have included a new
portal launch, a separate group module, a document configuration accelerator tool, integration of
the Decision software for business rules and StoneRiver illustrations, as well as additional
dashboards and reports for the Sapiens Intelligence BI tool.

Sapiens Alis supports all major OSs (HP-UX, IBM AIX, Oracle Solaris and Windows), application
servers (Apache Tomcat, MQSeries, WebLogic, WebSphere and Windows) and databases (DB2,
Oracle and SQL Server). Sapiens Alis includes an SOA-based service layer, with its own enterprise
service and a catalog exceeding 1,000 web services. Sapiens has extracted its application data into
a predefined Sybase IQ database and integrated with the SAP BI platform to develop a suite of
reports and dashboards. In 2017, the vendor implemented its multichannel portal.

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Strengths

■ Sapiens has invested significantly in the R&D of its solution, moving toward a platform offering
by developing a new portal, integrating solutions such as Decision and StoneRiver's illustration
capabilities, and embedding Sapiens Intelligence reports within the Alis screens.
■ Sapiens has the largest dedicated life policy administration internal delivery resource base of
any vendor in this Magic Quadrant, and it has continued to extend this capability through
acquisition.
■ The vendor now offers a comprehensive and interactive BI capability, which can be
incorporated into the Sapiens Alis screens and used on a stand-alone basis or packaged as an
app. The data is split into six business domains, and is provided with 10 to 15 reports and two
to three dashboards per business domain, with the ability to drill down into the detail.
■ Sapiens' new multichannel portal offers clients an engaging user interface using different
widgets, such as plain-English text with variable-parameter dropdowns for fields such as
smoker status and sum assured, sliders to change coverage amounts, and other features
geared toward simplifying the new business process.
■ Alis' new group module provides a dynamic structure without rigid plan categories and with
flexible application of different rules to varying subsets of the plans' members. The ability to
copy plan templates and customer plans provides an accelerator for establishing new plans.

Cautions

■ The vast majority of Sapiens Alis clients are not on the latest software, and clients on older
versions face the daunting task of migrating to the latest version because there is no upgrade
path. In addition, the vendor's clients are presented with an unfavorable commercial model with
which to upgrade. If this situation is not resolved, the vendor's development capacity will be
impaired, as it is forced to maintain clients on older versions of the software.
■ The product development workbench comes with a dated PowerBuilder interface that has not
changed fundamentally for more than 10 years, offers a poor user experience and requires
significant expertise. The loose coupling of Decision to the formula engine of Alis to manage
business rules has further complicated the user experience.
■ Sapiens Alis is still provided with only basic task management. It lacks full workflow and
business process monitoring (BPM) capabilities, and will require integration with a client's
chosen BPM solution.
■ Sapiens lacks migration experience, with only two migrations having been conducted onto Alis
in Europe and seven worldwide.
■ Sapiens clients, over the past few years, have claimed that implementations with the vendor
have led to escalating costs, and that establishing a firm scope with the vendor is key to
preventing this from happening.

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Vermeg
Vermeg is a Dutch-based vendor specializing in insurance software. Vermeg focuses on a life
insurance policy administration solution, Solife, an asset and wealth management solution, Soliam,
and a securities processing solution, Megara. Vermeg has a total staff of approximately 720, with
330 focused on the insurance industry and 280 focused on the Solife policy administration solution.

The Benelux countries and France are the focus of the vendor's sales strategy. Vermeg's total
reported client base has fallen to 26 clients in Europe, despite the addition of one new SaaS client in
Belgium in 2016 and a further new client in 2017. The vendor stated that the decline in numbers was
largely due to mergers and insurers' decisions to close down unprofitable parts of their insurance
businesses. The majority of the company's clients are Tier 3 Benelux insurers, with one midtier
implementation with more than 5 million policies. The vendor has five clients in France and is also
active in Africa, where it has three clients.

Solife is a Java EE-based system using spring remoting technologies replacing old EJBs, with fat
client developed on Java Swing and deployed using JNLP technologies. The client is designed to
run on Windows workstations supporting Windows XP, 7, 8, and 10 x86 and x64 versions. You can
also deploy the client for "virtualization" deployment on Windows Server 2008R2 x64, 2012R2 x64
using (or not) virtualization systems such as Citrix and VMware. The business logic is deployed in an
application server such as JBoss 6 EAP and is supported on Red Hat Enterprise Linux 6, 7 x64 and
Windows Server 2008R2 x64 and 2012R2 x64. Recent significant functional and technical
enhancements include the development of five standard core insurance products for mortgage and
savings for the French, Luxembourg and Belgian markets, and enhancements to annuity
functionality and regulatory change, including compliance of Italian, Spanish, Portuguese taxation.

Solife is currently provided with 146 web services for integration with client and third-party systems
with the vendor continuing with an ongoing transformation of SOAP to API/microservices. To date,
all clients have deployed the entire Solife suite, but they do not necessarily use the company's
portal. This portal, called eSolife, is an HTML5-based web portal for agents and brokers that can be
licensed separately. The portal provides self-service functions, as well as support for online
illustrations and quotation management, and it can run on mobile devices.

Strengths

■ Solife offers a breadth of product capabilities with excellent functional support for high net
worth product sets and is proven in production with a number of insurance clients.
■ Vermeg has focused its efforts on ease of implementation, having invested in a release tool,
automated test tools, a catalog of preconfigured products and core features, and a set of
standard connectors for interfaces.
■ Solife has a flexible and highly configurable product development workbench that is now
provided with five base products that are maintained as part of the core product delivery.
■ Solife has proved to be highly scalable, with 5.5 million policies, one of the largest
implementations in Europe.

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■ Vermeg's business and industry knowledge and analysis skills are valued by its clients, with
these being cited as key strengths for the past four years.

Cautions

■ Vermeg's portfolio of clients is declining as insurers discontinue their service with the vendor,
which will impact the revenue stream.
■ A delay in R&D investment in differentiating capabilities has seen Vermeg fall behind in terms of
portal, workflow and reporting capabilities.
■ The usability of Solife has not been improved, and the system is geared toward the skilled
administrator. Rather than being intuitive, processes lack guidance, and processes contain
many steps and tabs within screens. The eSolife solution's usability is better, but is geared
toward the expert advisor.
■ The system's group capabilities are missing key functionality, with no self-service capabilities,
bulk servicing or renewals, and limited attributes that can be configured at a plan or category
level. Fewer than 10% of its clients use the system for group life or pension products.

Vendors Added and Dropped


We review and adjust our inclusion criteria for Magic Quadrants as markets change. As a result of
these adjustments, the mix of vendors in any Magic Quadrant may change over time. A vendor's
appearance in a Magic Quadrant one year and not the next does not necessarily indicate that we
have changed our opinion of that vendor. It may be a reflection of a change in the market and,
therefore, changed evaluation criteria, or of a change of focus by that vendor.

Added
The following vendors were added:

■ IN2

Dropped
The following vendors were dropped, as they no longer meet the entry criteria:

■ Aquila
■ Profit Software
■ Schantz (acquired by Keylane)

Gartner, Inc. | G00320047 Page 19 of 31


Inclusion and Exclusion Criteria
To be included in this Magic Quadrant, vendors of life insurance policy administration systems need
to meet all of the following inclusion criteria:

■ Vendors must have at least 11 direct clients in Europe. Out of the 11 clients, at least 50% must
be in production. Only the number of implementations is relevant for inclusion, not whether a
vendor has implementations in multiple European countries.
■ Vendors must have signed at least two new European insurance clients to implement a life and
pension policy administration system during the past two full calendar years (between 2015 and
2016).
■ Vendors must have achieved revenue of at least €6 million in the most recent full business year
(2016).

This Magic Quadrant includes vendors that are focused on a single country, as well as some that
are present in multiple countries. The focus on direct clients means that Gartner does not consider
indirect customer relationships via business process outsourcing (BPO) providers or other third
parties as installations. There are no further restrictions regarding deployment models; it does not
matter whether offerings are delivered via a traditional software license, an ASP or a SaaS provider.
The only prerequisite is that clients have a direct relationship with the provider of its policy
administration system. The origin of a vendor — the location of its headquarters — and its targeted
customer segment (Tier 1, Tier 2 or Tier 3) are also irrelevant. It does not matter whether a vendor
has its headquarters outside Europe, as long as its solution is offered in Europe.

The vendor offerings reviewed in this Magic Quadrant must be software products developed and
owned by the vendor, and intended solely for the administration of life insurance policies. This
research does not include consulting companies or professional services providers that do not offer
discrete life insurance policy administration applications, although those application providers may
offer services to build custom-made applications for clients. To be included in this Magic Quadrant,
vendors must offer solutions that provide end-to-end policy administration functionality for
European life insurers and pension providers.

From an initial pool of more than 50 vendors, we selected nine software providers for this Magic
Quadrant. We requested information about company size, financials, product features/functionality,
alliances and technical architecture. All vendors included in the Magic Quadrant also provided
Gartner with client references, and most provided full demonstrations of their offerings. We advised
all vendors that we would evaluate their products against our criteria. Here are the vendors and
products included in this Magic Quadrant:

■ DXC Technology — GraphTalk A.I.A v.4.92


■ Edlund — Lifelink+ v.2017.2
■ Fadata — Insis v.10.4.3
■ IN2 — INsurance2 v.20
■ Keylane — LeanApps Life v.Q1.2017

Page 20 of 31 Gartner, Inc. | G00320047


■ Mphasis (Wyde) — Wynsure v.5.6
■ msg life — msg.Life Factory v.17.1
■ Sapiens — Sapiens Alis v.7
■ Vermeg — Solife v.6.3

Evaluation Criteria
Ability to Execute
This axis evaluates life insurance policy administration software vendors on the quality and
efficiency of the processes, systems, methods or procedures that enable their performance to be
competitive, efficient and effective, and to positively affect revenue, retention and reputation.
Ultimately, these software application providers are judged on their ability and success in
capitalizing on their vision. Our evaluation of a vendor's Ability to Execute is based on these criteria:

■ Product or Service: This is the breadth and availability of the vendor's products that compete
in and serve the life and pension policy administration market. Criteria include the quality of the
UI, BPM and SOA capabilities, analytical functions, and configuration options.
■ Overall Viability: This is product quality and consistency, as well as the vendor's financial
strength and viability, including the likelihood of continued investment in life insurance policy
products. Criteria include the number of resources that are devoted to the solution, revenue and
profitability, and diversification into other markets.
■ Sales Execution/Pricing: These are the capabilities of presales structures and management
activities, including pricing and negotiation, as well as the overall effectiveness of sales
channels. Criteria include deal management capabilities, sales capabilities and the vendor's
effectiveness in turning clients into high-quality references that can be used for presales
purposes.
■ Market Responsiveness/Record: This is the ability and responsiveness required to meet
changing market dynamics. Criteria include the quality of the response to Gartner's RFI, the
number of new customer deals in the past two years, and the overall competitive positioning of
the vendor.
■ Marketing Execution: This is the clarity, quality, creativity and efficiency of programs designed
to influence the market and promote the brand and business. Criteria include the public
presence of the vendor and its overall perception by clients.
■ Customer Experience: This is the ability to provide technical and relationship support and
services that drive customer satisfaction. Criteria include the existence of an influential user
group, the maturity of the vendor's project management capabilities, the quality of system
upgrades, and the knowledge about and availability of vendor resources.

Gartner, Inc. | G00320047 Page 21 of 31


■ Operations: This is the ability to meet objectives and commitments as part of a vendor's
operational market activity. Criteria include the number of trained vendor and partner
consultants, the percentage of clients that already upgraded to the vendor's latest software
release, largest implementation size, and migration experience
Table 1. Ability to Execute Evaluation Criteria

Evaluation Criteria Weighting

Product or Service High

Overall Viability High

Sales Execution/Pricing High

Market Responsiveness/Record High

Marketing Execution Low

Customer Experience High

Operations High

Source: Gartner (October 2017)

Completeness of Vision
This axis evaluates life insurance policy administration software vendors on their ability to
convincingly articulate logical statements about current and future market direction, innovation,
customer needs, and competitive forces, and how well these statements map to the Gartner
position. Ultimately, these application providers are rated on their understanding of how market
forces can be exploited to create opportunities for them. Our evaluation of a vendor's
Completeness of Vision is based on these criteria:

■ Market Understanding: This is competitive position, market knowledge and mechanisms for
customer feedback. Criteria include the existence of an influential Europe-wide user group, the
completeness of the vendor's offering, the vendor's awareness of market trends and the
association of the vendor offering and roadmap to the market trends.
■ Marketing Strategy: This is the ability to provide various professional services. Criteria include
the quality of the vendor's website and sales collateral.
■ Sales Strategy: This is the ability to work with clients through the vendor's sales force and
sales tools. Criteria include the number of dedicated salespeople, their perception by clients,
the number of new sales in the past two years and the quality of vendor references.
■ Offering (Product) Strategy: This is the vendor's strength of R&D, its capability in product
design and its ability to respond to market requirements. Criteria include the transparency of the
vendor's product roadmap and the system platform strategy, including the ability to extend the

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platform with additional capabilities developed themselves or through partnerships, and the
scalability of the product to serve different client segments.
■ Business Model: This is the soundness and logic of the underlying business proposition.
Criteria include partnerships with system integrators, the overall market growth strategy of the
vendor and the vendor's service portfolio for supporting alternative deployment options,
including SaaS.
■ Vertical/Industry Strategy: This is the ability to provide a vertical-specific product and service
portfolio. Criteria include the vendor's overall focus on the insurance strategy and the coverage
of different market subsegments, such as individual and group business.
■ Innovation: This is the ability to focus financial and human resources on the development of
new system and service capabilities in order to maintain a competitive edge. Criteria include the
vendor's technologies and architecture uses, digital capabilities, and the overall spending on
research and development. This also looks at how they are using partnerships to develop into a
platform vendor.
■ Geographic Strategy: This is the ability to provide products and services across a wide range
of European markets. Criteria include the vendor's number of installations and its presence in
different European markets via its own resources or via sales and service partners.
Table 2. Completeness of Vision Evaluation Criteria

Evaluation Criteria Weighting

Market Understanding High

Marketing Strategy Low

Sales Strategy Medium

Offering (Product) Strategy High

Business Model Medium

Vertical/Industry Strategy Medium

Innovation Medium

Geographic Strategy Medium

Source: Gartner (October 2017)

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Quadrant Descriptions

Leaders
Leaders have the highest combined scores for Ability to Execute and Completeness of Vision. They
have a thorough market understanding, a strong insurance industry focus, and a clearly articulated
vision for the future of the market and their products. Leaders are able to express the unique selling
points of their life insurance policy administration systems, offering technically solid and functionally
complete software products. They have proven implementation track records with an adequate
installed base; they constantly expand their portfolio of innovative system capabilities and are able
to develop new reference clients. Leaders are present in multiple European countries, and they have
the necessary human and financial resources to further penetrate their market. They also have
robust organizational structures and professional services resources. We have placed the largest
emphasis on product strategy, customer experience and product offering. There are five Leaders in
this year's Magic Quadrant: DXC Technology, Fadata, Keylane, msg life and Sapiens.

Challengers
Challengers offer excellent functionality and have a substantial number of installations, but they lack
the market presence, the clarity of unique selling points, the innovation portfolio and the vision of
Leaders. They do not yet address all market segments (such as individual and group business) or
business models (such as different deployment options) with their life insurance policy
administration systems. Challengers are often in the process of expanding their market penetration
by enhancing their sales and marketing strategies, and by improving customer experience through
enhanced support and professional services, as well as through partnerships with other companies.
Vermeg is the only Challenger in this year's Magic Quadrant.

Visionaries
Visionaries typically show a strong understanding of the market and anticipate shifting demands.
They may lead efforts relating to standards, new technologies or alternative delivery models, but
they demonstrate less Ability to Execute than the Leaders. They continue to deliver innovation to
their client base, but often have difficulty entering new markets or convincing clients to upgrade
from earlier release versions of their software, or they continue to have functional product gaps.
Visionaries often pioneer innovative product and service offerings or test enhanced business
models to extend their market penetration or geographical reach. There are no Visionaries this year.

Niche Players
Niche Players typically focus on specific market segments or geographies with their life insurance
policy administration offerings. One example is emerging markets, such as Eastern Europe, where
life insurers and pension providers want to establish "greenfield" operations. Niche Players lack the
vision or ability to execute across a wider range of evaluation criteria. They tend to be smaller
companies with limited geographical reach, a smaller functional scope or restricted human and
financial resources. Niche Players have typically not been able to compensate for some of these
disadvantages by establishing more mature relationships with system integration partners. This

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category may also include vendors that are still ramping up their overall life insurance policy
administration offerings, as well as vendors that generally have no strategic intention to break out of
the Niche Players quadrant. Edlund, IN2 and Mphasis (Wyde) are Niche Players in this Magic
Quadrant.

Context
■ Insurance CIOs looking for a new core policy administration system should consider the wider
digital needs of their organizations. Gartner has seen the policy administration vendors in this
market start to extend the footprint of their offerings through acquisition, partnership and reuse
of components from other in-house solutions. The expansion of offerings is accelerating the
shift from a policy administration focus to becoming platform vendors. The roadmaps of many
of the vendors within this Magic Quadrant highlight further plans to incorporate more
capabilities, including needs analysis, chatbots, artificial intelligence, predictive analytics and
IoT integration.
■ Finding the right cultural, functional and technical fit for the insurance organization is a
challenge. Gartner has sought to assist in this process by building a Life Insurance Policy
Administration Capability Checker (see "Toolkit: Use the Life Insurance Policy Administration
Capabilities Checker to Assist in Creating a Personalized Shortlist of Vendors"). This tool
enables CIOs to enter details about their core business and the requirements for their target
policy administration system, with a matching process conducted against information received
from vendors. The insurance CIO is then presented with a final list of up to 10 vendors to use
alongside analyst inquiries, peer discussions and other sources to identify a shortlist for RFPs.
■ When deciding on the final vendor shortlist, insurance CIOs should examine the type of vendor
organization that meets their needs. A large vendor with a strong product mentality, wide client
and product portfolio and range of additional system capabilities, and range of additional
services may be too costly and unnecessary for a niche insurer. Life insurance policy
administration sales have been heavily slanted toward individual life. Therefore, insurance CIOs
looking for other product lines, particularly group life, will need to examine closely the product
capabilities and may find a specialist vendor is more appropriate for their needs. Vendors' SaaS
experience is maturing, but insurance CIOs should be prepared to be "test subjects" and
recognize the risks that are entailed.
■ Gartner has also found that insurance CIOs and their business partners are too often, in their
eagerness to add new capabilities and optimize costs, willing to make a "leap of faith" and
move from the RFP stage directly to full implementation. Only two of the Magic Quadrant
vendors stated that they always conduct a proof of concept prior to entering into contracts.
Insurance CIOs should insist on a proof of concept to help validate vendor selection and ensure
a successful implementation (see "Proofs of Concept Are Critical to Successful Insurance Core
System Implementations").
■ Comparing the licensing and overall implementation costs of different systems will generally
become a major challenge for insurance CIOs. License fees for European life insurance policy
administration systems vary considerably, and are determined by a number of factors that differ

Gartner, Inc. | G00320047 Page 25 of 31


from vendor to vendor. Licensing components, for example, are based on the number of
policies that are managed in the system or on the number of users (see "Software Licensing
Basics Insurance CIOs Need to Be Aware of to Manage Costs").
■ Gartner has found that more than 50% of life insurance policy administration system projects
fail to deliver on time or on budget, because CIOs do not account for all the factors that
influence cost. Understanding the factors that influence the budget and timeline prior to building
a business case is of paramount importance in achieving successful delivery (see "Projecting
the Full Costs of Replacing Life Insurance Policy Administration Systems").
■ Ongoing policy administration system upgrades can prove costly and time-consuming for
insurance companies. Many policy administration system vendors have realized this, and are
moving toward continuous delivery approaches, but insurance CIOs should look for ways to
push the regression costs to the vendor and remove customizations to reduce TCO (see "Life
and P&C Insurance CIOs Need a More Standard Approach to Policy Administration System
Upgrades").
■ European policy administration system product engines' poor usability and technically focused,
database-centric architectural approaches force life insurance CIOs to rely heavily on vendors
for key configuration tasks. However, full configuration independence may not be desirable.
Gartner has developed an assessment framework to help insurance CIOs realize their
appropriate level of configuration independence (see "European Life Insurance CIOs Must
Evaluate Their Needs for Vendor Independence in Configuration").

Market Overview
The European market for life insurance policy administration systems remains saturated, with more
than 50 vendors. The market is highly fragmented and crowded, with many smaller (and often
privately held) software providers that have very limited market reach. No one vendor dominates the
market as whole, and many of the leading vendors operate in only one or two European countries.
This Magic Quadrant focuses on those vendors that are continuing to win additional clients and
have a relatively large portfolio of at least 11 clients. Most of these Magic Quadrant vendors are
extending their delivery capabilities via organic growth and, increasingly, by merger and acquisition.
Three of the vendors mentioned in this Magic Quadrant have been involved in merger-and-
acquisition activity, and all but one have been involved in such activity in the past 10 years.

Gartner has surveyed 38 vendors in the European life insurance policy administration market in
2017. This research revealed that the number of life policy administration system deals grew by
more than 30%, to 40 deals, compared with 27 deals by the same set of vendors in 2015. Of the 40
deals, 18 were achieved by the vendors within this Magic Quadrant. The compound annual growth
rate for the period from 2007 through 2016 increased to 1.06%, and the average number of deals
rose to 1.05 per vendor. Although the overall percentage rise in sales is significant, one-third of
policy administration vendors made no sales in 2016. Only two of the Magic Quadrant vendors
achieved more than two deals in 2016. However, this upturn is still a positive sign, which could be
the result of greater IT budgets following the completion of Solvency II requirements and increased

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budget allocation to legacy modernization initiatives. Up to July 2017, the Magic Quadrant vendors
had won a total of only nine new clients, highlighting the continuing challenges of the market.

The demand for packaged life insurance policy administration systems varies considerably by
country, line of business and size of organization. Major trends in the market include the following:

■ The three largest European insurance markets — France, Germany and the U.K. — have the
widest adoption of packages, while there are fewer installations in the Nordic and Southern
European countries (with the exception of Denmark, where the market has experienced a
significant number of sales).
■ Sixty-six percent of the European installations covered by this Magic Quadrant administer
individual life insurance policies versus group insurance policies.
■ Eighty-eight percent of policy administration implementations are still on-premises, so the
movement toward SaaS still represents a slow adoption.
■ More than 95% of the European life insurance policy administration installations are with Tier 2
and Tier 3 insurers, with fewer than 10 million policies under management (see Note 2 for a
taxonomy of tiers). Larger European insurers and pension providers will find fewer options and
may face performance and scalability issues.

The vendors included in this Magic Quadrant continue to use a wide set of technologies for their
packaged applications, including Java EE, .NET, C/C++, COBOL and proprietary programming
languages such as GraphTalk. In most cases, vendors also use different sets of technologies for
their front-office and back-office functions, or a different technology for the UI layer. The two most
common programming environments are Java and .NET. There are a number of other noteworthy
trends that we have observed in this market:

■ Vendors are continuing to expand the footprint of their policy administration offerings either
themselves or through partnerships to include modern, adaptable stand-alone or integrated
multichannel intuitive portals that, in some instances, can be configured for optimal
performance on different devices. Some vendors are partnering to add additional front-end
capabilities, such as chatbots and personalized customer videos.
■ Some system providers have begun supporting additional lines of business (such as non-life
insurance) and marketing them as competitive differentiators for multiline insurers that are
looking for a single system. Some providers are building out common components across life
and non-life.
■ There is a growing appetite for offering support for SaaS, with many vendors investing in this
area to make themselves more attractive to insurers looking for lower-cost solutions. However,
most vendors' capabilities remain unproven with regard to this deployment model.
■ Product configuration capabilities remain a technical task, with little investment by the vendors
in improved user interfaces. Most enhancements have been minor usability improvements or
the development of user guides and more preconfigured content. Gartner research has shown
that time to market and lower TCO are considered two of the most important criteria in the

Gartner, Inc. | G00320047 Page 27 of 31


selection of a policy administration system, but these are likely to be adversely impacted by
insurers' limited ability to administer their own configurations for product changes.

Gartner Recommended Reading


Some documents may not be available as part of your current Gartner subscription.

"How Markets and Vendors Are Evaluated in Gartner Magic Quadrants"

"Critical Capabilities for Life Insurance Policy Administration Systems, Europe"

"2017 CIO Agenda: An Insurance Perspective"

"European Life Insurance CIOs Must Evaluate Their Needs for Vendor Independence in
Configuration"

"Insurance CIOs Need Better Understanding of Business Ecosystems to Drive Digital


Transformation"

"IT Key Metrics Data 2017: Key Industry Measures: Insurance Analysis: Multiyear"

"Life and P&C Insurance CIOs Need a More Standard Approach to Policy Administration System
Upgrades"

"Projecting the Full Costs of Replacing Life Insurance Policy Administration Systems"

"Proofs of Concept Are Critical to Successful Insurance Core System Implementations"

"Software Licensing Basics Insurance CIOs Need to Be Aware of to Manage Costs"

"Toolkit: RFI Template for Global Insurers Seeking Life and Annuity Policy Administration Systems"

"Toolkit: Use the Life Insurance Policy Administration Capabilities Checker to Assist in Creating a
Personalized Shortlist of Vendors"

"Toolkit: Utilizing Risk Maps to Assess Life Insurance Policy Administration System
Implementations"

Note 1 Customer and Revenue Data


In this Magic Quadrant, all data regarding clients and revenue reflects vendor status as of YE16. We
decided to exclude any 2017 data because vendors have different fiscal years. However, we have
included, anecdotally, information on client wins up to July 2017.

Note 2 Insurance Company Tiers


Gartner segments vendor implementations at European life insurers and pension providers as
follows:

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■ Tier 1: Large insurers with more than 10 million policies under management
■ Tier 2: Midsize insurers with portfolios of 1 million to 10 million policies
■ Tier 3: Small insurers with fewer than 1 million policies in their portfolios

Evaluation Criteria Definitions


Ability to Execute
Product/Service: Core goods and services offered by the vendor for the defined
market. This includes current product/service capabilities, quality, feature sets, skills
and so on, whether offered natively or through OEM agreements/partnerships as
defined in the market definition and detailed in the subcriteria.

Overall Viability: Viability includes an assessment of the overall organization's financial


health, the financial and practical success of the business unit, and the likelihood that
the individual business unit will continue investing in the product, will continue offering
the product and will advance the state of the art within the organization's portfolio of
products.

Sales Execution/Pricing: The vendor's capabilities in all presales activities and the
structure that supports them. This includes deal management, pricing and negotiation,
presales support, and the overall effectiveness of the sales channel.

Market Responsiveness/Record: Ability to respond, change direction, be flexible and


achieve competitive success as opportunities develop, competitors act, customer
needs evolve and market dynamics change. This criterion also considers the vendor's
history of responsiveness.

Marketing Execution: The clarity, quality, creativity and efficacy of programs designed
to deliver the organization's message to influence the market, promote the brand and
business, increase awareness of the products, and establish a positive identification
with the product/brand and organization in the minds of buyers. This "mind share" can
be driven by a combination of publicity, promotional initiatives, thought leadership,
word of mouth and sales activities.

Customer Experience: Relationships, products and services/programs that enable


clients to be successful with the products evaluated. Specifically, this includes the ways
customers receive technical support or account support. This can also include ancillary
tools, customer support programs (and the quality thereof), availability of user groups,
service-level agreements and so on.

Operations: The ability of the organization to meet its goals and commitments. Factors
include the quality of the organizational structure, including skills, experiences,
programs, systems and other vehicles that enable the organization to operate
effectively and efficiently on an ongoing basis.

Gartner, Inc. | G00320047 Page 29 of 31


Completeness of Vision
Market Understanding: Ability of the vendor to understand buyers' wants and needs
and to translate those into products and services. Vendors that show the highest
degree of vision listen to and understand buyers' wants and needs, and can shape or
enhance those with their added vision.

Marketing Strategy: A clear, differentiated set of messages consistently communicated


throughout the organization and externalized through the website, advertising,
customer programs and positioning statements.

Sales Strategy: The strategy for selling products that uses the appropriate network of
direct and indirect sales, marketing, service, and communication affiliates that extend
the scope and depth of market reach, skills, expertise, technologies, services and the
customer base.

Offering (Product) Strategy: The vendor's approach to product development and


delivery that emphasizes differentiation, functionality, methodology and feature sets as
they map to current and future requirements.

Business Model: The soundness and logic of the vendor's underlying business
proposition.

Vertical/Industry Strategy: The vendor's strategy to direct resources, skills and


offerings to meet the specific needs of individual market segments, including vertical
markets.

Innovation: Direct, related, complementary and synergistic layouts of resources,


expertise or capital for investment, consolidation, defensive or pre-emptive purposes.

Geographic Strategy: The vendor's strategy to direct resources, skills and offerings to
meet the specific needs of geographies outside the "home" or native geography, either
directly or through partners, channels and subsidiaries as appropriate for that
geography and market.

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