US-based insurance holding company Transamerica has terminated a $2bn administration contract with Indian technology firm Tata Consultancy Services (TCS), two years before schedule, Reuters reported.
According to the news agency, the contract between the two companies is said to have ended amid a challenging macro environment.
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In January 2018, TCS and Transamerica entered a ten-year contract, under which TCS agreed to digitise more than ten million policies into a single integrated platform.
The deal covered Transamerica’s life insurance, supplemental health insurance, annuity, as well as other employee benefit products.
As part of the deal, TCS also hired 2,200 Transamerica employees.
At the time of signing, it was claimed to be TCS’ largest contract.
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By GlobalDataThe companies will now cooperate to transfer the policies’ administration to a new servicing model. This process is anticipated to take 30 months.
Motilal Oswal Financial Services retail research head Siddhartha Khemka was quoted by Reuters as saying: “It’s more of a sentimental negative rather than a big impact on the financials of TCS.
“We don’t see a big impact because of this. But yes, it’s a sign that the demand environment is not very good.”
With the latest move, Transamerica looks to reduce its reliance on third-party IT services companies and instead prioritise insourcing, reported Mint.
In June 2022, Transamerica strengthened its workplace supplemental health benefits suite by updating Transamerica Accident Insurance and Transamerica Critical Illness Insurance.
Some of the new benefits added to Transamerica Accident Insurance include mental health benefits, and an organised sports benefit rider while Transamerica Critical Illness Insurance added Covid-19 treatment benefits, among others.
