Life insurers continue to implement policy admin systems (PAS) narrowly, limiting their use to core back-end operations, a new study by Celent reveals.

The study, titled Life Insurers' Perception of Policy Administration Systems: 2014 North America Edition, makes it abundantly clear that PAS implementations are heavily focused on functions such as product configuration, billing, and claims.  In fact, almost every one of the 44 companies surveyed uses PAS for product configuration.

In stark contrast, a relatively small percentage of respondents use their PAS solution-of-choice for front-end functions such as illustration and eApplication.  PAS functions such as trading & settlement, content management and BI/analytics also showed up low on the list of implementation.

“These numbers suggest that North American life insurers are more apt to purchase or build best-of-breed solutions for many functions that PAS vendors have built into their solutions,” says Karen Monks, the Celent insurance practice analyst who authored the study.  “The limited use of front-end PAS functions by insurers is most likely also in part due to their heavy reliance on independent agents.”

The study also indicated that about two-thirds of the insurers are more than three years into their current PAS implementation—suggesting that those implementations are at least reasonably mature—while about one-quarter are still in an early stage.  Just 9 percent are not in production yet at all.

The primary objective of the study, however, was to assess insurers’ perceptions about their PAS vendors’ performance. These results were largely positive.  Eighty-three percent of respondents, for example, characterized integration of their PAS with their financial systems as “easy”—up from 68 percent when the question was asked back in 2011.  Ease of integration with other internal applications and databases was also noticeably improved.

Integration with external data sources, on the other hand, took a slight downturn.  This may have more to do with the advent of cloud services and how insurers have become increasingly interested in such integration—and therefore more aware of the challenges that present themselves when attempting to leverage external sources—rather than because of any inherent decline in PAS vendor’s capabilities.

There was also good news about the usability PAS vendors are achieving.  In 2011, only 15 percent of survey respondents could claim that the PAS solutions they chose required just a few days of training (as opposed to weeks or months).  In 2013, that percentage almost doubled.  Vendors also scored well when it came to attributes such as knowledge of the insurance business, responsiveness and project management.

Vendors scored less well when it came to the flexibility of their solutions, especially in areas such as custom-configuring the user interface for the contact center or creating rules for process flows and pricing calculations.

“Insurers are looking for solutions that can be much more flexibly configured and customized based on their specific business objectives,” says Monks.  “The results of our study indicate that PAS vendors are still falling short of these expectations.”

The complete report is available online at


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