Like a pair of shoes, insurers may find that they are most comfortable with their new policy administration systems after a while. Indeed, a new report from Boston-based Celent, “Policy Administration Systems: Building Value over Time,” reviews strategies carriers can employ to glean continuing value from policy administration systems.
“The two basic ways to realize the full value from a new policy admin system are to extend and/or deepen its use," says Donald Light, Senior Analyst with Celent's Insurance group and author of the report. “Extending addresses what kind of business is put through the policy admin system; and from where that business comes. Deepening is a matter of how it is used, and who uses it. There is a great deal of fluidity in how an insurer can blend extending initiatives and deepening initiatives from year to year."
The report also tackles the “paving the cowpath” conundrum of whether insurers should fit the new technology to existing business practices or use the new system to redefine the processes altogether. Light says the answer depends on time.
“An insurer can achieve some real value right away as a new policy admin system goes live by fixing the most obvious deficits in the current state system. In general, though, it should take a more gradualist approach in making organizational and process changes until the capabilities of the new system are more fully understood and experienced.”
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