Carriers do not take the decision to replace a P&C policy administration system lightly. Nor should they.
Deploying a new policy admin solution represents a significant investment of both time and capital. Unless a new line is in play, it’s probably a once-in-a-generation job. No insurer likes doing it, and that will simply never change. Even in today’s world of advanced, democratized technology, it’s routine to see carriers handling day-to-day operations on systems from the 1970s or ’80s. The pain of replacement can be that acute.
Fortunately, it doesn’t have to be. With the right solution, migration and deployment can be accomplished (relatively) simply, making it possible to build a cogent business case for the project relatively quickly.
Knowing When to Pull the Plug
How do you know when a policy admin solution might be ready for replacement? If your organization can answer “yes” to one or more of the following questions, the time is soon – if not now.
- Is it painfully slow to bring new products or lines to market?
- Are existing integrations with third-party systems and data sources essentially locked in?
- Do technology limitations directly affect strategic business decision-making?
- Is the hardware required to run your system past its EOL date?
- Is it becoming difficult or impossible to find experienced professionals to maintain the system?
Above all, be sure to avoid the “sunk cost” fallacy. Just because significant amounts were invested preparing a policy admin solution for Y2K or retrofitting it to support web applications doesn’t mean it will serve your organization better tomorrow. If it’s time to change, it’s time to change. Pulling off the band-aid is never enjoyable, but it’s sometimes necessary.
Identifying a New Policy Admin System
Once it becomes evident that the existing policy admin solution is no longer viable, it’s time to identify a replacement. Most carriers accomplish this through a closed RFI/RFP process, narrowing a wide list of potential vendors down to a manageable amount, then making the final decision based on in-person visits and proofs of concept.
Such searches often focus on systems’ distinct features and functionality. This approach, however, has become less and less fruitful in recent years. Advances in technology and development techniques, as well as the increasing maturity of the modern policy admin market, have served to significantly level the feature playing field among all leading vendors. Even elements that were once considered advanced functionality – configuration, quick quote, dynamic questioning, portals, web apps, mobile, etc. – are essentially standard across the industry. Finding meaningful differences between systems requires looking beneath the surface. For instance …
- How quickly can the solution be deployed, and by how many people?
- Do configurations modify core system files, hindering future upgrades?
- Can rules be tailored by channel (agent, customer service, underwriter, etc.), or must they be deployed universally?
- How are the legacy system’s existing functionality and data migrated?
- Can the system be utilized in the cloud or on-premise, or is a single deployment paradigm forced?
Asking these kinds of deeper questions allows carriers to quickly separate the wheat from the chaff and ensure the efficacy of their search.