TAM - Insurance Software Development Market
The global life insurance industry's total addressable market (TAM) in the sector of software development is approximately $816.1 million USD with a total market size of $3.4 billion as of 2018.
Global Life and Annuity Insurance Software Development Market Size
- The total global revenue for life and annuity insurance premiums was $2.82 trillion in 2018.
- Operating costs accounted for about 21% of all revenue for life insurance companies in 2018, meaning that global operating costs mounted to approximately $592.2 billion worldwide.
- Life insurance companies spend an average of 18% of their operating budgets on IT expenditures, which comes to about $106.6 globally.
- Software expenses account for about 29% of IT budgets, which comes to around $30.9 billion globally.
- Of this $30.9 billion, 11% is spent on industry-specific applications, which comes to $3.4 billion.
- This means that the life and annuity insurance software development market is approximately $3.4 billion globally as of 2018.
Total Addressable Market (TAM)
- The insurance industry has been slow to adopt new technologies.
- The global insurance technology market is expected to see a compound annual interest growth rate of 43% between 2019 and 2025.
- As of 2019, only 24% of the global insurance industry has adopted new insurance technologies.
- Going off a potential market size of $3.4 billion and a 24% adoption rate globally, this means the total addressable market is about $816.1 million as of 2019.
- In 2017, the US had 852 life insurance companies.
- The US life insurance market makes up 23% share of the global market, meaning that there were approximately 3,704 insurance companies globally.
- At a 24% adoption rate, this means that total addressable market is around 889 companies globally.
Since no pre-compiled information on the life insurance industry's market size or total addressable market was available on the public domain, the numbers had to be triangulated. First, the market size was triangulated by taking the global life insurance revenue ($2.82 trillion) and multiplying it by the operations expenditures percentage (21%), IT expenditures (18%), software expenditures (29%), and industry-specific application expenditures (11%) to get the approximate global market size ($3.4 billion).
Then the total addressable market was triangulated by taking the approximate market size ($3.4 billion) and multiplying it by the industry's adoption rate (24%) to get $816.1 million. The number of companies was triangulated by taking the number of life insurance companies in the US (852) and dividing that number by the percentage of the country's global market share (23%) to get 3,704 companies. This number (3,704) was then multiplied by the adoption rate (24%) to get a total addressable market of 889 companies.