Are the recent acquisitions of SEMCAT and QQ Solutions beneficial to the end user?

Posted on Wednesday, June 24, 2015
Are the recent acquisitions of SEMCAT and QQ Solutions beneficial to the end user?
The insurance agency management market just became a step shallower.  The choices of management systems are already scarce.  In an industry with over 500,000 potential users, only a handful of software solutions exist. The largest two players, Applied Systems and Vertafore continue to consolidate their empires. They just bought two smaller, but well-known providers.  Is this a good thing for the end user?  Does consolidation mean better product development and lower prices?  Or does it mean less competition, no need for further development and higher prices?  Let's take a look at the facts and you be the judge.  

This is not the first time mergers in the insurance management system market have occurred.  In fact, the two main systems, Applied and Vertafore, have acquired many smaller systems in the last few years.  Vertafore acquired FSC rater, Kaplan Compliance Solutions, Sircon, ImageRight and a few more insurance related software solutions.  Applied owns IVANS and most recently bought SEMCAT.  According to their websites, these two systems hold over half of the insurance market in the US. 

Two weeks ago, Vertafore announced the acquisition of QQ Solutions.  QQ Solutions' website claims to have 4,800 agencies and 22,000 agents.  In a recent press release, Vertafore's website alleges to have 10,000 agencies and 500,000 users.  Is this even possible?  According to the US Department of Labor, there are less than 450,000 insurance agents in the US.  Click Here to see the report.  

Applied Systems also went shopping and bought one of the better rating systems in the industry.  SEMCAT is now part of Applied.  SEMCAT claims to have 100 percent accurate rater serving 2,400 agencies in 44 states.  According to Applied's website, Applied Systems servers 12,000 agencies and 450 carriers.  

If we take their statements as facts, these two systems hold well over 50 percent of the insurance agency market.  With a total of 35,000 active insurance agencies in the US, Applied and Vertafore have a combined agency count of 22,000.  Then if we add the numbers from their new purchases, we end up with a total of 29,200 agencies dependent on the services of 2 software providers.  

If these two systems already hold the majority of the market share, do they have an incentive to provide better and less expensive solutions?  Or is their ultimate goal to buy out the competition and secure their comfort in the marketplace?  What about the end user?  Does every agency have the financial means to afford the pricing dictated by the industry monopolies?  Do small, new ventures have the ability to overcome these new barriers to entry?  Or perhaps this is a good thing for the industry.  Maybe we should expect some great new innovative development and slashing of subscription prices.  It could also be a good thing for the well established and profitable agencies.  New barriers to entry can mean less competition for the veteran agencies.  Insurance Sales Agent career paths are quite lucrative, and insurance sales agents entering the field can expect to move onto senior positions in less than 10 years in most cases.

All of these and many more questions rise as a result of these new changes in the insurance industry.  If you have any questions or would like to provide your opinion on the subject, please get involved by posting your comment below.  
JAM 3 February 2016, 10:56 AM

"Vertafore's website alleges to have 10,000 agencies and 500,000 users. Is this even possible? According to the US Department of Labor, there are less than 450,000 insurance agents in the US. " The number of insurance agents is not indicative of the number of people operating in the insurance industry. Many agencies may have individuals performing jobs which do not requiring licensing (claims, billing, etc come to mind). The number of users is no doubt SUBSTANTIALLY more than 500k, especially when you consider Applied is another large player in the market. Rejoice! There are a lot of clients for you to go after.

Tray 13 July 2015, 6:00 PM

Free market why not have just one agency management system? If someone wants to pay and buy all of them, I see nothing wrong.

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