The report warns that while regional consolidation looks promising, the patchwork of technology systems across markets, particularly in Europe, and the cost of integrating them represent a growing barrier to insurance acquisitions. Acquiring firms are increasingly wary of these hidden costs, as well as the risk of falling foul of the latest wave of regulations such as the Digital Operational Resilience Act (DORA), unless systems can be seamlessly plugged into wider networks. Clyde & Co note that “tech-washing”, being superficial improvements that mask underlying legacy problems, and the high cost of integrating subpar systems, have made acquirers justifiably cautious. Sellers, too, are affected, as valuations can be significantly reduced when outdated technology is factored into due diligence.

This is not just a theoretical problem. Integration challenges often persist long after the deal is signed, leading to prolonged periods of disruption and delayed return on investment. According to FTI Consulting’s European Insurance M&A Barometer 2024, operational integration, particularly around finance and compliance, is one of the biggest differentiators between successful and underperforming deals. Meanwhile, regulatory frameworks such as DORA are raising the stakes for resilience, forcing firms to conduct deep gap analyses and overhaul their systems to avoid compliance risk.

Modern technology readiness has become a key factor in the attractiveness of acquisition targets. A recent report from Novidea highlights that insurers and MGAs with flexible, API-driven systems are increasingly favoured, as they can be integrated quickly and allow synergies to be realised much faster. In other words, tech is no longer just a cost centre, it is a value centre in M&A.

The solution lies in investing in systems that remove friction from the process. Platforms like Diesta are designed with exactly this challenge in mind, offering plug-and-play integrations with policy administration systems, payment providers, and trust accounts. By consolidating data from disparate sources, automating reconciliation, and providing a robust, auditable sub-ledger, we help acquiring entities maintain transparency and compliance from day one. That means fewer spreadsheets, fewer delays, and faster realisation of deal value.