Insurer technology demands are shifting from traditional standalone applications, tools, data and services to integrated solutions, according to a technology consulting firm.

That finding came from Boston-based Strategy Meets Action (SMA) as part of its Insurance Ecosystem Research Series reports.

The firm's study of technology solution trends identified an increasing need for convergence within the IT vendor space. "As insurance IT solutions continue to evolve, data and analytical tools/engines are increasingly being leveraged to create offerings with more strategic impact on the business," Mark Breading, SMA partner and co-author of the report, said in a statement.

Speaking to NU Online, Breading said there are still IT solution providers who will provide only a claims system, for example, or only pure data, such as a producer licensing list. Others may provide some type of IT tool, rating engine, or rules engine. "But more and more," he said, "[providers] are trying to figure out how to combine data, tools and applications."

He noted that insurers have had to figure out how to combine data, tools and applications anyway, but now vendors are trying to gain a competitive edge by combining it all themselves into complete solutions.

Insurers have responded positively, Breading said, to the availability of more complete solutions. He noted that tier-one insurers still like to create unique solutions for themselves, as they have unique needs and big IT staffs. But lower-tier insurers, he said, cannot afford to create the solutions themselves and are more receptive to the complete vendor solutions.

He also said vendor solutions are about even with insurer expectations to date, but added, "Admittedly, it's a fragmented and confusing marketplace." He noted there are almost 500 vendors providing just property and casualty solutions, and it can be hard to keep track of all of the offerings, mergers and acquisitions, and alliances.

Vendors need to better explain their offerings and services, Breading said. "The need is there on the insurer side," he stated, and providers are improving their offerings, but there is a "misalignment" in the understanding of what exactly is in the marketplace.

Looking forward, Karen Furtado, SMA partner and report co-author, said in a statement, "We expect to see significant changes in the IT provider landscape over the next three years, in both the evolution of the offerings and the nature of the technology companies. More consolidation will occur in the core areas such as underwriting, policy services and claims. New entrants, new types of product offerings and new partnering models are expected across the value chain with a high focus on marketing and distribution."