Introduction

Market Growth by End-User

• The digital insurance platform market which includes insurance software development, had an estimated annual growth rate of 13.7%.  
• The market is segmented by three categories of end-users; third-party administrators, insurance companies, and aggregators.
• However, the growth rate specific to each end-user segment was not publicly available.  
• This market is projected to reach $164.13 billion by 2023, up from $78.47 billion in 2017.
• While this figure represents the global growth, the US accounts for approximately 39% of the overall insurance software market, with growth rates in the US mirroring global growth.
•  Growth is attributed to the adoption of Internet of Things (IoT) within industries, an increased focus on customer-centric strategies within the insurance space, and an increased awareness of the benefits of digitalizing channels amongst insurers.

Growth of Third-Party Administrators

• Given data was only available for the overall digital insurance platform market, we've also found data to triangulate how this growth would vary for the third-party administrator segment as a whole, as compared to the overall insurance market.
• The growth of revenue generated by third-party administrators in the insurance space had a growth of 4.7% in the five years leading up to 2019, including all sectors of insurance.
•  Growth was caused by need within the insurance industry to outsource claims processing, administrative services and risk management while cutting operation costs and increasing efficiency.
• This mirrored overall growth in the space, with the global insurance market having a growth rate of approximately 4.48% between 2018 and 2022.
• Given the growth of third-party administrators in the insurance space increased at a similar rate to the insurance space as a whole, we can deduce that the annual growth rate for the third-party administrators segment would be similar, if not slightly higher, than the overall growth rate of 13.7%.  

Other Relevant Data

• The life insurance administration SaaS market has a projected growth rate of 13% between 2018 and 2026.
• There are a total of 137,944 third-party insurance administrators in the US.
• Industry revenue for third-party insurance administrators was estimated at $256.3 billion in 2019.
• Increasing concerns around cyber security will further increase the need for software development aimed for third party administrators in the insurance space, with third parties needing cloud services and data systems that meet regulatory standards.

Research Strategy

Major Market Drivers of Software Development Market for TPA Insurance Providers

• One major market driver in the software development market for TPAs (third party administrators) is the rise and utilization of consumer data collection in general, and its role in the overall digital experience of the consumer. For example, increased efficiency and innovations in data collection, storage, and management, are critical in areas such as overall speed and efficiency, easier data informed claims processing, and better risk management, thus minimizing costs. With increasing amounts of data storage and information, data security also continues to play an essential and increasingly important role in software development, thus making all aspects of data collection major market drives of this industry.

• Advances in computer technology and software themselves of course are major market drivers for TPAs in the insurance industry. Artificial intelligence and its advancements will be utilized in vastly different ways, such as data management, claims management, minimizing fraud, increasing efficiency and real time responsiveness through chat bots, etc. Artificial intelligence allows for the fast processing of large amounts of data, including customer queries, or large numbers of claims at once. It also allows a more personalized claims, and a more customizable customer experience overall. Another example why technological factors are major drivers continuing to influence market are the paperless and digital currency revolutions taking place, as the software developers for TPA insurance providers continue to innovate new ways to integrate both.
• Increasing demand for a better customer experience in the insurance industry in general has made many of these TPA software developers to consider it in the development of their product, and thus a major market consideration. Ease of use, real time service for pay, eligibility, approvals, and questions, are thus major marketing drivers that many of these companies consider. All transactions can be done in real time, including fraud edits. As was said, advances in artificial intelligence are leading the way for personal and individual digital experience when buying insurance. A better digital experience for the consumer will continue to be a major market driver to consider.

Insurance Software Development Market

• In 2017, the insurance software development market was valued at $10.4 billion. The market was predicted to reach $11.5 billion by 2022, demonstrating a compound annual growth rate of 2%.
• Using the 2% annual growth rate, the market value in 2018 was estimated at $10.61 billion. This was accomplished via the following equation: 10.4 billion x 0.02 = 10.61 billion.
• The 2019 market value was estimated at $10.82 billion. This was accomplished via the following equation: 10.61 billion x 0.02 = 10.82 billion.

Third Party Administrator Scope

• Third party administrators (TPAs) are involved in the development of claims processing software.
• The role of TPAs in insurance software development is growing. This includes use of TPAs in the development of smart contracts, artificial intelligence applications, data analytics, and underwriting applications.
• Insurance companies have been reluctant to adopt new software development options provided by TPAs, primarily due to concerns of regulatory compliance. The newness of TPA software development in various insurance applications limits the ability to ascertain the scope of TPA involvement in insurance software development at this time.

Third Party Insurance Software Developers

• PLEXIS Healthcare, using the PLEXIS Cloud software, is a TPA specializing in a hosting and delivery system. This application uses the Cloud to store data and run analysis, thereby freeing up IT resources to be used in critical functions.
• The application provides IT support to the primary insurance company as well. This technology is newly marketed. Therefore, specific information on market value was not publically available.
• EZLynx, Applied Systems, and Vertafore are noted as leading TPAs working in insurance software development. Information on their market value was not publically available but may be located in fee-based reports through market websites.

Additional Findings

• Overall revenue in the United States for claims administration software was $12 billion, and the market size for insurance analytics software was $6.63 billion in 2018. We were unable to find the market size for software development in these areas.

Research Strategy

PLATFORM ECOSYSTEM

• Digital third-party administrators (TPAs) are seeking to integrate "plug and play" third-party applications into a platform ecosystem to build a highly automated environment to increase efficiency and productivity.
• This ecosystem aims to achieve workflow automation by reducing human input.
• It automates "advertising, purchasing and regulates insurance services to become as personalized as possible."

• This system increases productivity and efficiency three to five times as regards the policy count handled per processor compared to the administration system.

• FINEOS delivers turn-key customer experience for the service needs of insurance customers in the life, accidents, and health insurance markets, using its role-based portals.
• The company's application program interface (API) integrate the customer's B2B ecosystem into the digital services which it provides.
• It is developing "ecosystem applications with certain strategic platforms such as Salesforce, enrolment/benefit administration systems, and select human capital (HCM) systems."
• The system would thus allow customers to leverage their investment in such platforms while retaining the perks of the FINEOS platform.

DIGITAL CUSTOMER ENGAGEMENT

• Digital TPAs are debunking traditional paper and voice-based channels that drive 80% of customer engagement in the insurance industry, by enabling policyholders to choose their digital interaction channel of choice. Members can essentially start their customer journey on one channel and end on another.
• Digitizing customer engagement ranges anywhere from the application of robots for document scanning, using chatbots to engage policyholders, to feeding claimants their information via mobile apps.

• By employing multiple digitization methods for customer engagement, TPAs can offer the option of "providing complete flexibility and responsiveness across a broad range of demographics."
• Also, with over 60% of interactions occurring over digital channels, more data and analytics can be obtained to inform product decisions across the business.

• FINEOS also provides insurers with a range of integrated digitized channels for customer interaction on the insurer's website, with AI chatbots, or voice assistants.
• They would also be available for "the insurer to connect to their own enterprise portal, digital communication channels, and any third-party platforms specific to their business."

RESEARCH STRATEGY

Barrier: Market size

• According to the Society of Professional Benefit Administrators, there are only approximately 200 named member firms and product price point is a great concern.
• Since TPAs work with large insurance companies, there may be preexisting software.

Barrier: Speed of development

•  New software releases are in more frequent demand. No longer are quarterly updates enough.
• Some challenges for insurance software developers include: increasing demands for optimal customer experiences, omnichannel distribution, data security and uptime reliability.
•  Sedgwick, one of the largest TPA firms, has over 1,000 IT professionals on staff to keep up with the demand for updates and change.

•  Feature experimentation and low-code platforms can streamline more labor-intensive processes such as traditional feature flagging and hand-coding.

Barrier: Complexity of the industry

• According to an article about the integration of technology in the insurance industry (Insurtech), complex insurance processes, data security, acts of God, and government regulation are big hurdles to overcome in the adoption of technology in the industry.
• Big firms like Salesforce, SE2, Sedgwick and Crawford all stress their expertise and years of experience in the industry.

• Nationwide Insurance and others are proponents of the DevOps movement, that has software developers communicating directly with operations personnel. There is also a DevSecOps movement incorporation cyber security.

Barrier: Software patents

• The fear of and defense against patent infringement lawsuits may discourage software development in any industry.

• According to at least one Forbes contributor, software should be excluded from patent protections.

NexGenRx acquisition of MyBenetech (MBT) and Canadian Benefit Administrators (CBA)

• Since 2003, NexGenRX has been a provider of health benefit plans supported by technology and based in Toronto, Ontario. NexgenRx created claims processing software and provider portal software for adjudicating claims.
• MyBenetech provides health-industry leading software to third party administrators.
• Canadian Benefit Administrators is an independent third party policy administrator offering their VITAL Objects software.
• NexGenRx bought all shares of CBA and of MBT at the aggregate price of $4,000,000.
• NexGenRx paid $2,800,000 up front with an agreement to pay $1,200,000 2 years after the closing date.
•  Ron Loucks, CEO of NexgenRX that this acquisition will solidify NexgenRX's value proposition in the TPA industry, combining claims processing with software.

Davies Group and Alternative Service Concepts (ASC)

• Davies Group offers insurance claims solutions and consulting that incorporates software platforms such as Ember, SaaS platforms, and Veriphy.
•  Nashville-based Alternative Service Concepts is a third-party administrator in the property and casualty and workers' compensation insurance industries.
• The financial terms of the deal have not been disclosed.
• In 2018, ASC reported over $16 million in revenues, with over half from its workers compensation claims business.
• Davies' CEO Dan Saulter believes the acquisition of ASC will strengthen Davies' end-to-end claims processing and adjusting solutions for North American insurance markets.

Davies Group and Ember

• Davies Group offers insurance claims solutions and consulting that incorporates software platforms such as Ember, SaaS platforms, and Veriphy.
• UK-Based Ember Group Limited provides CX consulting and analytics, in addition to specialist resourcing and training for companies in the insurance and financial industries.
• The terms the deal have not been disclosed.
• At the time of the acquisition, Ember had 60 employees set to join Davies. The acquisition will broaden Davies' offerings to include 1,400 international industry professionals and to provide deeper solutions and staying relevant to their evolving needs in service design and delivery.

Conduent and Health Solutions Plus (HSP)

•  Conduent offers business, healthcare, and government services and solutions from claims processing to benefit administration.
• HSP is a software provider in the healthcare payer administration market. According to the KLAS Research Software and Services report, the HSP solution was listed as the number one vendor in administration and claims platforms in 2018 and 2019.
• The financial terms of the acquisition have not been disclosed.
• The acquisition improves Conduent's ability to serve commercial and government payer clients through advanced technology. Through HSP, Conduent can provide a modern Core Administration Processing System (CAPS), to connect administrative functions across healthcare entities.

InsPro Technologies

•  Website 
• "Anthony Verdi was appointed President and Chief Executive Officer for InsPro Technologies, LLC, a leading provider of core policy administration software for Group and Individual Life, Health, and Annuity products that enable insurance carriers and third-party administrators to quickly respond to evolving market needs, improve customer service, and reduce operating costs."
• With an estimated annual revenue of $21.6 million, InsPro has a 0.17% market share.

ClaimVantage

•  Website 
• "We fully understand the nature of your business as a Third-Party Administrator."
• With an estimated annual revenue of $10 million, ClaimVantage has a 0.08% market share.

DataGroup Ltd.

•  Website 
• "Datagroup Ltd. provides Group Insurance Administration Software for TPAs, Third Party Administrators, TPA Software, IBAS and Insurance Software Solutions for Association Health Plans (AHP)."
• With an estimated annual revenue of $3.6 million, DataGroup Ltd. has a 0.03% market share.

JW Software

•  Website 
• "JW Software was started in 1989, as a software company designed to create custom business applications for small businesses in the St. Louis area. The company found a niche in the insurance industry, specifically Third-Party Administrators that needed Claims Management Software to manage their business needs and launched the claims management software FileHandler."
• With an estimated annual revenue of $4.8 million, JW Software has a 0.04% market share.

TPA Stream

•  Website 
• "Today, TPA Stream is utilized by third-party administrators, health plans, and financial institutions across the country."
• With an estimated annual revenue of $4.2 million, TPA Stream has a 0.03% market share.

Research Strategy

Management Data & Insurance Administrators Inc.

•  Management Data & Insurance Administrators Inc. (henceforth "MDI") positions itself as offering "flexible, full-function" individual and group insurance administration system. They highlight their nimbleness and adaptability, and promote their ability to handle not only life and health insurance claims for insurance carriers, but also financial institutions (e.g., support for mortgage insurance), which sets them apart from their competitors. Further, The FIMMAS system was recently updated to an HTML5 browser interface to provide the benefits and improved usability of new technology, in addition to mobile support.
• MDI's Flexible Insurance Marketing, Management, and Administration System (FIMMAS) technology suite is able to handle functions for individual, group, health (and absence) insurance and supports products for annuities and repetitive payments. Specifically, FIMMAS supports health and absence insurance products such as short- and long-term disability, dismemberment, hospital indemnity, dental and vision products, individual accident and medical reimbursement policies. Supported products for individual, group, and annuities and repetitive payments include actuarial support, agency administration (e.g. commissions), billing administration, policy administration, claims handling, new business, reinsurance, correspondence, and underwriting.
• In addition to the above product support, MDI provides planning and implementation services for their products as well as hosting services, allowing software to be run on their associated server, the client's server, remotely, or on the cloud (using Software as a Service, "SaaS") via their partnership with Insurance Administrators, Inc.
• ZoomInfo reports decreased revenue for MDI through the past seven quarters.

InsPro Technologies

•  InsPro Technologies positions itself as being "entirely focused on the insurance industry" and "an end to end policy administration system." Their technology suite Inspro Enterprise has been built specifically for the life and health insurance industries, and they consider themselves specialists in this area. They particularly highlight that this focus provides "exceptional time to value (TTV)" and improved operational performance as compared to competing vendors. They further promote their end-to-end services policy services offered include hosting, a client engagement manager, business analysis, development, implementation, integration, and data migration from legacy systems.
•  Inspro Enterprise is their singular technology suite. It contains functions for policy administration, product and plan configuration, new business and underwriting, billing and collections, agent management and commissions, claims, document management, data mart, and web services. Their software supports group insurance, individual insurance, accident and health insurance, long-term care insurance, medicare, supplement insurance, and annuity administration. InsPro’s solutions are offered through standard software licensing, as a locally hosted solution, or via SaaS delivery.
• On Glassdoor, an employee of the company cites "old tech" as a weakness of the company. They have also posted plateauing or decreasing revenue through the past seven quarters, which they attribute to completing implementation services for their largest client (in 2018).

ClaimVantage

•  ClaimVantage promotes itself as a manager of life and health/absence (e.g., FMLA leave, ADA and ADAAA accommodations) claims. They particularly position their absence claim management platform as "the first of its kind" and as setting them apart from their competitors. They also promote their entirely cloud-based software solutions that allows for a 60% reduction in implementation costs and an "unrivaled" speed to market (45 days).
• Their technology suite is hosted on the Salesforce Lightning platform hosts the "life cycle" of a claim, from intake to payment for individual, group, and workplace benefits. They specifically cover life insurance (whole, term, and universal), health insurance, and workplace absence benefits such as short- and long-term disability, accidental death and dismemberment, life waiver of premium, critical illness and cancer, accident, and hospital indemnity policies. Their platform allows for automation of workflow and tasks, transition of data from legacy systems, claim management and payments. These solutions are offered via Software as a Service (SaaS) delivery.
• There has been some past evidence that ClaimVantage has had difficulty with legacy data migration under tight deadlines. A case study published by Pexlify Enterprise Solutions reported that ClaimVantage had to utilize their services for transition of data during the launch of a new company in 2017. Further, revenues for ClaimVantage have fallen or remained plateaued over the last 7 quarters.

Comparison of MDI to InsPro and ClaimVantage

• In competitive positioning/advantage, InsPro and ClaimVantage both highlight their self-proclaimed specializations (a focus on specifically life/health insurance, or absence insurance, respectively) on their homepages via infographics. Inspro also highlights their end-to-end services for their clients. While many of these services overlap with those offered by MDI, these strengths are not so prominently highlighted on MDI's homepage. Overall, in terms of the promotion of competitive products or services, InsPro appears the strongest.
• However, in terms of the amount of products and services offered, MDI's are the most robust. Their supported products and services overlap with and in some cases exceed those offered by InsPro and ClaimVantage. For example, while ClaimVantage promotes their cloud-based services and speed, MDI offers SaaS support along with traditional services to serve a wider client base. MDI also offers the widest range of health/absence insurance coverage of these three companies, including providing support for dental and vision insurance (even though this is claimed to be a specialty of ClaimVenture). They are also the only company of the three that provides support for the management of insurance needs specific to financial institutions.
• Annual reports for these (privately held) companies are not publicly available, making weaknesses more difficult to determine. All three companies reported a decrease or plateau in revenue over the past seven quarters, making them 'even' in this metric. However, some data regarding one other point of weakness were uncovered for both ClaimVenture (difficulty managing legacy data transfer over a short time period) and InsPro (an employee reporting the use of "old tech"), while none others were uncovered for MDI. This, in this sphere, MDI appears the strongest.

Research Strategy

DataGroup Ltd.

• DataGroup Ltd. is the developer of the Insurance Broker Administration System (IBAS). The company's main office is in Chicago, Illinois, and there is a subsidiary office in Newburyport, Massachusetts.

• DataGroup Ltd.'s competitive positioning is its longevity in the market, the availability of the original developers of the product, and the wide applicability of its group insurance software, IBAS. IBAS is for both life and health insurance applications by large professional associations and large and small third party group insurers. In the software solutions market for third party insurance since 1979, the developers of the solution have remained with the company, and have over 64 years combined experience in working on life and group insurance applications.

• IBAS's features are that it is a table driven, open database compliant solution where data entry is easy for both new business and updates to existing clients. Payments are applied manually or electronically, the data is distributed, and current customer service information is on demand.
• DataGroup Ltd. also provides customer service support, software enhancements, and custom programming for IBAS users. The company also provides specialized software consulting and custom programming for application in the insurance industry.

• DataGroup Ltd.'s main strength is also its weakness. Because of its specialization in the group insurance market, IBAS is at a disadvantage compared to similar software that also administers annuity and other individual insurance products.

JW Software.

• JW Software began operations in 1989 with the development of custom business applications for small businesses. Headquartered in St. Louis, Missouri, the company specializes in claims administration and risk management software, claims management systems, third party administration, and software development. It is a private company and has between 11-50 employees.

• JW Software's competitive positioning is with the Claim Jump product. Claim Jump offers customers not satisfied with their existing claims and risk management solutions, the ability to implement or convert to the FileHandler Enterprise System at a reduced cost.

• The FileHandler Enterprise software is for claims management and the PolicyHandler software for policy management. The FileHandler Enterprise solution is a claim administration system that streamlines and automates the workflow for claims and risk management. Features of the product are dashboards, business intelligence tools, security technology, and reporting functionality.
• JW Software claims that the product helps clients save time, automate functions, organize tasks, and helps with customer satisfaction. The product has integration capability with accounting, HR, payroll, ISO, third-party administrators, carriers, ACH for banking, and policy systems. It is browser independent.
•  PolicyHandler is a policy management system used by professional employment organizations, insurance carriers, risk managers, and third-party administrators for worker's compensation administration. The solution is scalable, in use by both large and small companies, and applicable to any market.
• Key features of PolicyHandler are easy importation of loss cost tables, rating variables, the provision of templates for use, a streamlined quote to issuance workflow, a billing module, and an audit module. The internal business rules engine improves renewal processing through renewal quote creation and notifications to staff. HIPAA compliant, the system also includes workflow tools. Services offered by JW software are software training, project implementation, and maintenance.

• JW Software separates its claims and policy management systems. This means that clients do not have the option of an integrated system to optimize business processes or to minimize costs.

TPA Stream

• Founded in 2014, TPA Stream aims to make health reimbursement arrangements easier for employees. The company operates a web-based platform that also supports various pretax health accounts. It is a privately held company, headquartered in Cleveland, Ohio, with close to 50 employees. TPA Stream announced that it had raised $1.4 million in seed funding in September 2019. The investment will form the basis of sales and marketing efforts for the next stage of the company's growth.

• The company's competitive positioning is on improving the workflow for claims processing with third-party administrators. In August 2019, TPA Stream announced an affiliation with DataPath Inc. which allows DataPath clients to automate collecting claims data from carriers, used to auto-substantiate debit card transactions on DataPath's cloud-based Summit platform. This alliance allows TPA Stream to improve the efficiency of its billing and claims systems, reducing processing times for customer productivity.

• The products offered by TPA Stream are for claims harvesting, billing, and integration apps. Integration apps are for HR and accounting, enrollment, benefit administration, and analytics and reporting software. File feeds are extracted and imports and exports are configured daily for seamless data migration and flexibility.
• TPA Stream offers its clients competitive advantages with the claims harvesting process from paperless Explanation of Benefits, processing, and electronic retrieval. The process for the client is simplified, administrative costs are reduced, and participant satisfaction is increased.
• TPA Stream's billing services allow for the management of complex recurring fees using a single automated process. The details and summaries on a report are previewed quickly and easily, and commission reports are automated in minutes.

• TPA Stream, aside from being a relatively new entrant into the industry, offers its services to the healthcare administration sector of the overall market. This, combined with the small footprint of the company, limits its ability to expand while its technology is still being commercialized.

Management Data & Insurance Administrators Inc. as a competitor

• The competitive advantage for Management Data & Insurance Administrators Inc. is the flexibility and wide applicability of its main product, the Flexible Insurance Marketing, Management, and Administration System (FIMMAS). FIMMAS is an integrated system where the same programs, screens, menus and procedures support group and individual insurance products. Aside from the single user interface, benefits include user training, centralized information and service for customers with multiple policies, and simplified set up with support.
• Compared to the IBAS product from DataGroup Inc., the FIMMAS system is stronger based on its integration into a single interface, and its applicability to a wider range of insurance products. The TPA Stream solution is applicable to healthcare administration, with the target market focused on the workflow for claims processing rather than its administration.
• The mission of the Claim Jump product from JW Software directly impacts on FIMMAS, where there are dissatisfied competitors, and is the strongest of the three company competitive advantages when measured against the product from Management Data & Insurance Administrators Inc.

Research Strategy

 TPA Stream 

• Founded in 2014, TPA Stream is headquartered in Cleveland, Ohio. 
• Since the company was founded, it has raised $2.5 million in funding over 3 rounds.
• In 2019, it raised a $1.4 million "seed funding round, led by North Coast Angel Fund (NCAF)."

 HealthEdge 

• Founded in 2004, HealthEdge is headquartered in Burlington, Massachusetts.

• Since the company was founded, it has raised $97.8 million in funding over 6 rounds.
• In its latest funding, on Jul 14, 2017, the company raised $34 million in a venture round, led by Minnetonka-based Medica.

 Healthcare Bluebook 

• Founded in 2007, Healthcare Bluebook is headquartered in Nashville, Tennessee.
• Since the company was founded, it has raised $10 million in funding over 3 rounds.
• In its first funding ever, on Jan 14, 2014, the company raised $7 million "from a single, strategic investor, The Martin Companies."

 ClaimVantage 

• Founded in 2005, ClaimVantage is headquartered in Portland, Maine.
• Since the company was founded, it has raised €2 million ($2.2 million) in funding over 1 round.
• On March 28, 2017, the company raised €2 million ($2.2 million) from Davy EII Tax Relief Fund 2015.

 Datagenix 

• Founded in 2000, Datagenix is headquartered in Riverside, California.
• The company is a private company that has 11-50 employees. 
• The company has not engaged in any public funding rounds.

Research Strategy