Pent-up demand has life/health/annuity insurers undertaking critical policy administration replacement projects in growing numbers, and a majority of carriers rank PAS projects as their top priority, according to a new report from Novarica.
The report, “Life/Health/Annuity Policy Administration Systems: A Novarica Market Navigator Report,” includes an overview of the life/health/annuity policy administration systems market, which includes a summary of the available systems and profiles of 25 vendor solutions.
“For a variety of reasons, L/H/A carriers were under an enormous amount of financial pressure in 2008 and 2009,” said Chad Hersh, managing director at Novarica and author of the report. “They put off critical core systems replacement projects during that time, and we’re seeing a growing number of those projects now being planned, despite the continued challenges of a low interest rate environment.”
The primary factors driving the increase in policy administration replacement projects, according to the report, include the need for improved product development speed, the addition of group life/health business for some carriers, a desire to reduce the costs of running myriad legacy systems on aging platforms, remaining competitive by modernizing, and dependence on vendors to maintain or enhance the system.
This report comes on the heels of research from Strategy Meets Action last week indicating that nearly half of P&C insurers were engaged in a PAS implementation or in vendor selection/planning.
The Novarica report also points out that insurers are looking to attract a new generation of producers for whom the challenges of legacy solutions are a big deterrent.
“Inflexible legacy policy administration systems can prevent insurers from taking advantage of new opportunities and meeting customer and agent expectations,” Hersh said. “Even attracting and retaining IT employees is growing more difficult—interest in working on 30-something-year-old systems is limited at best.”
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