Israel: The Greenhouse of Insurance Software
published on POLICY - TEL AVIV RE 05/2007
After so many success stories in the software industry, Israelis are recognized today as important players also in the software dedicated to the Insurance Industry. There is a growing interest in Israeli companies such as FIS, Sapiens and Idit.
Many analysts ask me about the reasons that brought Israel to be so strong in Insurance. After all, Israel is very small in the Insurance Industry.
Israel is Small
Paradoxically, that is the main factor: Israel, being so small created the right environment for ventures, for a more risk taken approach. It is easier to decide and to build a new software system for a company with 500,000 policies than for a company with ten million policies. The risk, the logistics, the analysis, the project size and scope – everything is simpler.
Till the year 2000, Israelis built hundreds of insurance projects. Israeli companies were changing their whole system every five to eight years.
Israel is Complex
Another strong reason is the fact that the structure of the Insurance in Israel is very complex.
Everybody thinks that their insurance is the more complex in the World: the English Pension Simplification is not so simple, the Swiss are sure that their regulations are the most difficult in the World, and the French regulators really know how to complicate things. Around the Globe, Insurance is not an easy Industry.
Even so, Israel is more complicated: Actuaries arrived to Israel from all over the World and they brought with them the complexities from their original countries.
The Inflation
Another ingredient to the Israeli insurance complexity was the enormous inflation that dominated the economic and financial from the sixties till the nineties. Israelis needed to deal with money in real terms and that create a unique expertise and a sharp ability to deal and understand financial packages.
Those factors had another effect: no international company is willing to compete in Israel. The Israeli Insurance companies are, in fact, a captive market to the Israeli software companies.
The Players
FIS was the pioneer. The company was founded in the seventies and at middle nineties they got to the UK market. Since then they have been steadily growing. They deal mainly with Life Insurance and they are at CNP, AXA, Swiss Life, Aegon, Royal London Group, Scottish Widows, Ethniki Insurance, Delta Loyd, Rogostrek and many more.
Sapiens is a veteran in the software scene but a newcomer into Insurance. The decision to turn the company dedicated to the insurance domain was taken five years ago. Since them they developed software packages marketed as INSIGHT and they cover Life & Pensions, Reinsurance and General Insurance (INSIGHT P&C). Sapiens is strongly present all over the World with branches in UK, US and Japan.
Idit acts in the General Insurance domain. They started in the Direct Insurance Company in Israel and today they are present in Belgium, Netherlands, Poland and China.
Others companies dealing with Insurance in Israel are Comtec, Ness, the Israeli branch of EDS and other smaller companies.
The Future
It is not easy and probably it will be increasingly difficult to compete with giants such as Accenture, SAP and CSC. However, Insurance is getting very demanding in software resources and Tata and other Indian companies are the main menace.
The Indians are the big headache of the Israelis. They are good, they are fast, they are cheap and they have infinite resources.
Insurance, however, demands expertise. It will take years to the Indians to catch the Israelis experience.
I believe that in the next years we are going to see increasing Israeli-Indian collaborations.
That will be the win-win key to the international market.
Mely Lerman
Mely Lerman is the General Manager of LEAD Software Consultants 2000 LTD (www.lead2000.biz). His expertise is Life Insurance software and he has experience of more than thirty years working in Israel, UK, France, Germany, Switzerland and Brazil.