Life offices face the prospect of merging or closing as the UK marketplace gets increasingly competitive, claims a new report.
Insurance management consultancy Winchester White's latest Marketwatch report says some companies will find themselves unable to live up to the task of becoming low-cost operators while developing simple innovative products.
It warns that companies must improve their technology quickly to enable them to compete effectively in the next century. The report identifies "enormous tension" within the admin departments of many life offices.
It cites a "relentless downward pressure on costs as a result of market forces, combined with a steady increase in the range of conflicting demands" as the cause.
The report adds: "For some companies, the current priority is simply to survive."
But it warns that many life offices' information technology functions are increasingly stretched to support admin demands.
Winchester White says there are four ways forward. Life offices can either buy package solutions from specialist software providers, build their own bespoke development programmes, outsource functions to a third party or blend a combination of the options. The report is one of a series published by the company's research unit and covers over 30 systems packages, 12 of them in detail.
It analyses package providers, technical and func- tional information, pricing strategies and implementat-ion times for each life office studied.