As the economic turmoil continues and markets harden, P&C insurers of all sizes look for ways to invest strategically to quickly enter new markets or launch new products. Insurers will need to replace expensive, inflexible legacy systems with modern rules- and tools-based policy administration systems. These modern systems not only have dramatically lower systems maintenance costs compared to their hard-coded predecessors, but they also reduce underwriting costs by automating previously manual and error-prone processes. Most importantly, though, these systems help insurers achieve product agility and ease of doing business for their producers, both essential to achieving speed to market. They also provide online sales capabilities that exponentially shorten policy application to issuance times, a capability that will attract producers and reduce costs.
However, as important as the solution is, it is equally important that insurers choose the right implementation partner, and be willing to consider the new approaches that come with a modern system. The industry is rife with anecdotes of late and failed implementations, and millions of wasted dollars.
That said, there are seven criteria that must be met to ensure the successful and speedy implementation of your modern policy administration system:
1. Iterative implementation methodologies provide early cost justification. Iterative implementation methodologies blend agile best practices with deep insurance industry expertise and are tightly mapped to a solution's ability to quickly configure products. The methodology supports a series of smaller-scope, rapid implementations that reduce risk and yield quick return on investment. This methodology also provides feedback after each iteration, allows for constant improvement and justifies your business case early.
2. Project governance mitigates risk. Modern policy admin vendors should have a project management office (PMO) to help develop risk-mitigation strategies and provide regular, objective reviews of a project. PMOs should be staffed by professionals with experience implementing complex, modern, enterprise software solutions.
3. Agile insurance product architecture reduces costs and enables speed to market. Starting with solid, flexible insurance product architecture is critical to a successful modern policy administration implementation. Product architecture examines your current product portfolio and identifies and catalogues existing product components such as coverages, riders, rates and rules, along with data structures, reference tables and rating logic. Once a sound product architecture is created, business users can inherit and configure reusable product components from a central product repository to make simple product changes or create new products. This can all but eliminate expensive programming costs and enable real speed to market.
4. Expertise in technology, project management and insurance. To meet your unique needs, it is key for your vendor's implementation team to have deep insurance industry expertise. However, equally important is a team that includes senior project managers who can handle the complexities of core system replacement, business analysts who can translate business needs into technology solutions, and experienced solution architects and technical consultants who can get your modern rules- and tools-based solution deployed and integrated quickly.
5. Self-sufficiency lowers future maintenance costs. Insurers that deploy modern systems want to lower their ongoing system maintenance costs, and do not necessarily want to be dependent on their vendors for the long-term. They should select a vendor that has comprehensive training programs, understands how knowledge transfer is achieved and is willing to help them become self-sufficient as quickly as desired.
6. Flexibility. No two insurers are exactly the same, nor are any two policy admin system implementations. Steer clear of vendors with a one-size-fits-all methodology - their implementations often take longer, and cost more. Instead, look for a vendor who has a flexible methodology and attitude - one who is willing to meld their best practices with yours.
7. Courageous execution. Last, but certainly not least, look for an implementation partner with a courageous, innovative team with demonstrated success. And, don't just take their word for it. Ask their customers.
Susan Hutt is SVP, services at Camilion Solutions Inc., Markham, Ontario.
(c) 2009 Insurance Networking News and SourceMedia, Inc. All Rights Reserved.
Register or login for access to this item and much more
All Digital Insurance content is archived after seven days.
Community members receive:
- All recent and archived articles
- Conference offers and updates
- A full menu of enewsletter options
- Web seminars, white papers, ebooks
Already have an account? Log In
Don't have an account? Register for Free Unlimited Access