There’s no doubt that a compelling business case is needed before an insurer will undertake what is probably the most engrossing and far-reaching technology implementation for insurers: replacing a policy administration system. Yet, there has been a spike in activity recently, according to Deloitte, which means the business cases for investment are out there and that lessons are being learned about how to gain the most from such a long, expensive implementation.
In order to achieve desired results, Deloitte’s newest report, “Policy Administration Transformation: Driving the change agenda,” provides three best practices:
- Avoid software customization unless there is a clear and measurable link to significant business value
- Leverage a system integrator who can provide a broader perspective and experience beyond pure technology integration to assist with requirements creation and design, and share industry practices on how the target system and business process design should operate
- Business rules should not be created by the technology team. Instead, rules should be created by business advisors familiar with the organization’s processes, or bring in a valuable outside perspective to create, store and manage rules.
For insurers still considering a replacement, Deloitte provides a shareholder value map as well to help companies make a considered decision. The map asserts the fact that the four levers that impact shareholder value are revenue growth, operating margin, capital efficiency and expectations. From there the value map is further segmented, where Deloitte encourages insurers to assess whether specific implementation components are adding relevant and specific business value.
While the policy administration puzzle continues to challenge insurance carriers, a successful implementation has been proven to enable better design, the implementation new products, as well as making it easier to sell to and service policyholders, according to the report.
