Event

On 7 March 2013, SAP announced that it plans to acquire the North American software provider Camilion Solutions, which offers solutions in insurance product development, product life cycle management and underwriting primarily for property and casualty (P&C) products. Financial terms of the deal were not disclosed. SAP plans to continue to offer ProductAuthority as a stand-alone product, and to integrate both ProductAuthority and PolicyAuthority with the SAP suite to support policy management, and with other SAP solutions (such as claims and billing) to support a P&C end-to-end suite.

Analysis

SAP has targeted the North American insurance market for years, but has found it difficult to compete against local rivals, particularly those that offer a suite of modules to support the end-to-end insurance process. To combat this, SAP created an OEM relationship with Camilion in 2011. This acquisition takes that relationship one step further, and provides SAP with improved capabilities to compete in the North American P&C solutions market. The acquisition will lead to further North American business opportunities, as Camilion's assets will:

• Provide SAP with an installed customer base of 16 North American customers, including four stand-alone ProductAuthority implementations, and more than 130 employees with P&C insurance knowledge. (Currently, however, the company has three installations outside of North America.)
• Fill the gap within the SAP insurance solution portfolio with a P&C policy and product management system proven in the North American commercial P&C insurance market.
• Strengthen rating, product configuration and underwriting capabilities, and support for Insurance Services Office (ISO) content.

This acquisition will revitalize Camilion, which has won relatively few new customers for the past two years, mostly due its lack of experience in personal-lines P&C and buyer preferences shifting to suites. Camilion customers will benefit from new enhancements to the rebranded solution, which will also better position SAP to meet North American market requirements.

Although Camilion's assets advance SAP toward its vision of competing in the North American P&C market and supporting P&C insurers' core business needs, challenges remain. SAP will need to carefully manage its integration efforts and positioning to ensure that it can still serve the needs of midsize insurers. Further, SAP faces an uphill battle in realizing its plans to take Camilion beyond P&C. While some Camilion life insurance customers use ProductAuthority, the product line offers limited content. SAP must invest heavily in the policy management capability before it can support life insurance product requirements, and will likely require a partner to develop products that meet local buyers' needs.

Insurance CIOs:

• Watch for further announcements from SAP on its integration plans and accomplishments. While some integration has already been completed through the pre-existing SAP partnership, expect further technical and packaging changes to Camilion and SAP insurance solutions.
• If you are currently a Camilion customer, verify which Camilion components SAP will carry forward, discard or significantly change in favor of SAP assets, and how that will affect pricing. Ensure that SAP addresses the upgrade path for your implementation.
• If you are considering Camilion for PolicyAuthority or ProductAuthority, monitor product road maps and technical changes as SAP updates the solution to increase its compatibility with SAP technologies. Expect long-term enhancements as SAP makes database, processing and mobility improvements that leverage its technical capabilities.

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

• "North American P&C Insurers: Shifting Focus to Customer Retention, Core Systems Replacement and Technology Evolution" — A Gartner survey of IT leaders in P&C insurance in North America revealed that their top investment area was in modern claims and policy management packages. By Kimberley Harris-Ferrante
• "MarketScope for North American Property and Casualty Policy Management Modules (2013)" — P&C insurers are increasingly investing in policy management modules to take advantage of templates for faster deployment of new products, easy-to-use design tools, and support for customer self-service and real-time transactions. By Jeff Haner