It seems everything old really is new again, making vintage and retro all the rage. People are in love with classic cars, antique furniture and golden oldies. The same can't be said for technology, however. Even though many insurers still are struggling to maintain legacy systems, there is nothing "cool" about them.

Think back just a few years to that flip phone that you carried in your pocket. It was cutting-edge. Just like a Star Trek communicator, right? Now, think about trying to answer an e-mail, send a text or buy something online using that phone. Not a pretty picture is it? Do you remember how many clicks it took just to make a lower case "o"?

So, you invested in a new phone with the latest features and functionality that lived up to your e-mail, social media, video, online buying, GPS and music needs. You made the decision, invested the budgeted money and acquired the technology to meet your needs. On a personal scale, it's a simple thing.

On an enterprise scale, it still doesn't have to be complicated. P&C insurers are under pressure - internally and externally - to become digitalized, operationally transparent, customer-centric and innovative with products, services and communication. Legacy policy administration systems (PAS), just like those old flip phones, can't meet today's demands. They have been the workhorses, in some cases for 20 to 30 years, issuing and managing policies back in the day when 10MB was considered a lot of data. However, their days of effective use are diminishing rapidly and negatively impacting competitiveness. The time has come to put the old workhorse out to pasture.

Today, there appears to be widespread recognition of this fact by P&C insurers and industry analysts who have ranked PAS replacements as one of the top three IT priorities for both personal and commercial lines. However, not all insurers have the appetite, in terms of budget or risk, to take on a large scale, PAS replacement project.

To invest or not is the question

To many, selecting and implementing a new policy solution represents a significant budget consideration competing for limited resources and prioritization. The trick is getting all parties to buy into the project and look at it as an investment in the company's future viability and competitiveness. As the adage goes, sometimes you have to spend money to make money. In this case, insurers are spending to create a bigger, brighter future.

Investing in features and functionality that will form the foundation of consumer satisfaction will determine whether an insurer retains customers and whether top-volume producers perceive true ease of doing business. Modern systems enable insurers to rapidly respond, embrace and adjust to new demands from customers utilizing new developments in social, mobile, analytics and cloud to handle requests effectively for new, innovative and personalized insurance products tailored to unique risk and behavioral factors.

When it's the right system, PAS replacement can be an investment in diversity and opportunity. There has been significant focus on the commoditization of personal lines, the drive toward self-service and an improved customer experience, and recently these pressures can be equally applied to commercial and specialty lines. Across all lines, there is a shift in customer expectations and needs, often driven by interactions with businesses outside the industry.

When it's the right time, PAS replacement can be an investment in growth. By gaining agility, efficiency and flexibility, insurers open up to new opportunities, new markets and a larger customer base. With a greater ability to provide an exemplary customer experience, insurers can easily leapfrog ahead of competitors.

When it's the right vendor relationship, PAS replacement can be an investment in partnerships. Insurers will benefit from an expanding business ecosystem, including business partners, distribution channels and customers. Ease of doing business is critical to all interactivity, whether it's with an agent network, a reinsurer, or directly to customers. Underlining those interactions is a shiny, new PAS that provides insurers increased capabilities for gathering, managing and sharing information.

We admired our PAS systems when they were fresh and new. They worked hard, some for more decades than anyone would like to admit. But the time has come to make a move toward full PAS replacement. Like the workhorses of the old days, insurance legacy systems served us well, but in time, these workhorses must be put out to pasture, making room for a younger, more modern, more agile workhorse better equipped to carry us into the future.

Denise Garth is EVP of strategic marketing and industry relations and global head of market strategy for Innovation Group in North America.

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