Many a carrier has embarked on ambitious projects only to have overlooked a critical issue: Will their policy administration system be able to handle the big leap forward? While hindsight is 20-20, and no insurer can pinpoint exactly how much it will expand in two to three years, much less in 10 or 15, carriers do have many strategies at their disposal to avoid the resultant problems. Those lacking the necessary foresight face grave headaches indeed. Some are obligated to jettison their long-time policy admin system because of its failure to scale. Replacement projects can take 18 months or longer for insurers, which are forced to embrace band-aid solutions in the interim, according to Jeff Goldberg, senior analyst in the insurance practice of Boston-based Celent.

Carriers that find their modern systems floundering "suddenly are dealing with weeks of turnaround, when the whole reason to spend millions of dollars and 18 months on an implementation was to avoid that kind of issue," he says. Some systems that simply cannot handle the policy load either slow down or crash altogether, triggering the carrier to filter business manually and push clamoring customers onto its Web site.

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