Situation: We are seeing unprecedented investment by small- to mid-sized carriers in policy administration implementations. The convergence of aging legacy platforms, complex market demands, and a more mature vendor landscape has ushered in a unique period in which it is possible for small- to mid-sized carriers to change systems with less risk than ever before. Carriers that do this successfully will be well positioned to leapfrog larger, better-funded competitors thanks to improved product flexibility and timeliness — not to mention lower IT costs.

Complication: Most new policy admin transformation projects are “challenged” and only a small percentage of them realize the full benefits of change. The goal of a policy administration project should not be the implementation of yet another application, but to deliver transformative capabilities to the business.

Solution: Carriers should harness the opportunity by ensuring their policy admin transformation projects make an impact on the organization’s growth and profitability. Effective transformations feature the ability to 1) continually map daily program management decisions to the original benefits case, 2) rapidly deliver code in an iterative manner, and 3) utilize a policy-specific framework to proactively identify and address common project challenges.

More specifically, successful transformations overcome potentially major obstacles by developing capabilities in the following 10 areas.

Core Business Capabilities

1. Customer and agent experience – Improve customer and agent interaction through the use of consistent user interfaces and work flow across systems (such as policy, billing and claims). For example, utilize a portal solution that integrates and aggregates information from multiple cross-enterprise applications.

2. Underwriting and rating – Align the program’s tasks to meet the carrier’s goals for underwriting and pricing automation. For example, an expert system strategy for personal auto would seek to automate the majority of submissions and provide sophisticated rating to price risks automatically with little human intervention. Alternatively, a human system strategy for commercial specialty products would seek to automate repetitive and manual tasks while providing rating flexibility to experienced underwriters who are capable of evaluating risk.

3. Data and analytics – In order to prepare for information demand and avoid expensive rework later, plan for likely data analysis early in the process. Employ a balanced approach to strategic (e.g. product growth and profitability, risk concentration) and operational objectives (e.g. process metrics, work queue volumes and fraud detection).

4. Forms and documents – Consolidate and standardize forms where possible to reduce development effort and minimize future business and IT maintenance. Utilize a dedicated forms team to proactively manage what is typically a large volume of forms with many data mappings and inference rules.

5. Data migration – Identify legacy data quality issues early and develop custom rules and scripts to fix the data prior to migration. In addition, carriers should consider what migration approach is most appropriate for their implementation (i.e., big bang versus rolling migration at policy renewal).

Core Delivery Capabilities

6. Program management – Develop a sound business case and tie program decisions, the program plan, and change control decisions to a quantifiable return on investment calculations. Insurers should assign a fully dedicated executive-level resource to lead the project and promote fact-based decisions, quality deliverables, and benefits that are within scope, schedule, and budget.

7. People and change management – In order to mitigate operational impacts and speed user adoption, utilize a change management framework that a) engages the right stakeholders, b) assesses the impact/support necessary for managing sensitive changes (e.g., staff reduction/reassignments), and – to effectively navigate people through change – c) aligns HR strategies to the business strategy.

8. Integration and architecture – Implement modern enterprise architectures prior to or early in the policy transformation to mitigate program risk. For example, utilize an enterprise service bus and an abstract enterprise data model that reconciles disparate data across multiple systems, promotes reusable services, and speeds project implementation.

9. Program quality and testing – Utilize a “test first” approach in which risk-based tests are performed during the development phase, thus reducing the volume of defects in later system integration testing and user acceptance testing phases.


Supplier management – Partner with a general contractor to address sourcing needs (e.g., skill gaps, variable capacity in case of the need to quickly ramp up or down resources, optimized mix of onshore and offshore resources), provide industry experience across a variety of perspectives, and share accountability for delivering agreed upon scope within planned schedule and budget, thereby mitigating implementation risk.

Carriers that focus on their policy administration projects’ core delivery capabilities tend to design, manage, and govern the projects on time and within budget. That said carriers that focus on increased growth and profitability will need to optimize their policy administration transformation by focusing on core business capabilities. By doing both, carriers can make substantial improvements to their business and surpass the competition.

Imran Ilyas, partner with PwC's Advisory Services, coauthored this piece with Matt Hurlbut, Matt Wolff, David Tiejen and Marc Gallo of PwC’s Advisory Services.

Readers are encouraged to respond to Imran using the “Add Your Comments” box below.

This blog was exclusively written for Insurance Networking News. It may not be reposted or reused without permission from Insurance Networking News.

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