We've all heard the old analogy of "trying to change the tires while the car is moving." As if that wasn't difficult enough, imagine trying to do that during a NASCAR race - for all the vehicles on the track. The insurance industry equivalent of this might be found in trying to keep commercial lines systems current and maintaining regulatory compliance.
Making it even more complex, add the goal of achieving and maintaining competitive advantage through product differentiation. Carriers typically add, deviate or extend bureau content to create proprietary or marketable products.
This type of complexity has caused many carriers to focus their efforts on simply maintaining compliance while giving up any hope of achieving speed-to-market as it relates to bureau-based commercial lines products.
One thing is certain, staying current on commercial lines systems is a shared industry pain. The good news is that emerging technologies are quickly maturing, and proving to deliver a level of operational agility that allows carriers to finally achieve speed-to-market while also enabling compliance efficiencies.
As carriers scour the market and evaluate new technologies to bring commercial lines operations into the 21st century, several factors should be taken into consideration to ensure the best fit: a technology that performs as expected and an acceptable return on investment.
BUSINESS APPETITE, MARKET STRATEGY, OPERATIONS MODEL
The carrier's business appetite - both the size of policy and the lines of business - is an obvious influence on system requirements. In addition, distribution channels and how to most effectively market to those channels also impact needs. Finally, the efficiency of the business operation, processing business as well as developing new insurance products and existing product changes, should be taken into consideration when selecting technology solutions.
Let's assume the carrier's business appetite is high-volume, low-premium; perhaps main-street business owner's policy or small commercial package. In this scenario, technology must enable low-touch and straight-through processing, and must be easy for agents and/or consumers to navigate. The support for adding complex underwriting rules to keep that business "in the box" becomes a key operational efficiency requirement.
Large or boutique business appetites swing the pendulum of requirements toward flexible pricing and "on-the-fly" custom underwriting. Insurance professionals (brokers, MGAs or underwriters) must be able to efficiently perform tasks and process business. This carrier requires its operation to have the ability to easily and dramatically modify the standard bureau offering.
Arguably, the most crucial requirement of any bureau-based commercial system is its ability to easily adopt bureau changes. Today's technology solutions can be leveraged to streamline circular updates and regulatory changes to achieve compliance efficiency and operational productivity.
COMMON DENOMINATOR FOR TECHNOLOGY DECISIONS
Here is a checklist of important functionality to consider related to bureau change adoption:
* The availability of a subscription service to bureau changes is vital. This enables the carrier to reduce costs, lower risks and maintain agility in product development. It is important that the subscription provider has a solid track record of timely service, giving carriers adequate time to evaluate, adopt, test and deploy well before the effective date of the bureau changes.
* The technology must provide a separation of bureau product information from the technology platform. In simplest terms, this means that adopting bureau updates should not require taking a platform or system upgrade. Some refer to this as "product centric" technology. Doing a full system adoption, testing and deployment cycle would cost too much time and money.
* The technology must provide a separation of bureau information from the carrier's filed exceptions. If the subscription service is staying current, the carrier will receive frequent updates from the bureau. In parallel, the carrier will likely generate many company exception requirements. The ability of the system to manage and merge bureau changes with filed exceptions is critical to speed-to-market success.
While the commercial lines race will always have its challenges fraught with dangerous curves, and a crowded and formidable competitive field, there are ways to minimize the risks and make it to the finish line in record time.
Staying in the race and ahead of the pack requires good planning, a thorough understanding of requirements and careful evaluation for suitable technologies.
John Roller is SVP/product management at Duck Creek Technologies, Bolivar, Mo.
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