The process of defining and deploying new insurance products or modifying existing products is a basic function any insurance company should have the ability to complete with ease. While new product configuration software tools have enabled insurers to configure and modify products much more quickly than was once possible, until recently such tools were not configurable by the business users who depend on them.

Until the recent past, configuration tools that required no programming were not readily available, and that left insurers beholden to vendors or in-demand IT resources to make even the smallest updates and changes. This often would involve a laborious process of sifting through hundreds and sometimes thousands of lines of source code, a needlessly time-consuming process.

Insurers may like a product configuration vendor’s full service model for updating policy content rules, forms, etc., but they don’t want to be held captive by the vendor if the vendor doesn’t offer fast turnaround that delivers speed-to-market. If the product configuration technology that is being used is proprietary and programming-based, designed primarily for IT personnel, then the vendor has the insurer over a barrel.

In response, insurers began to require self-configuration tools that could be used to provide better internal control. This technology has grown in sophistication to the point where the newest product configurators are far more business-user friendly, offering a visual drag-and-drop and no-programming/scripting configuration environment for business or technical analysts to quickly develop and release new insurance products, or to modify existing products. As a result the vendors developing and providing these solutions in the insurance marketplace are now helping insurers move toward a greater degree of self-sufficiency through the product configuration process.

Today’s product configuration technology simplifies the configuration process so analysts can focus on product development, design, and prototyping without the complications of system functionality and technical landmines. Some of these configuration tools enable insurers to obtain bureau product updates from third-party vendors while still maintaining company-specific deviations. These environments may also offer the ability for insurers to leverage a vendor’s bureau content update services, while being fully independent on product updates for others. In addition, this technology may allow an organization to configure and maintain all P&C products on a single platform, including ISO commercial lines, workers’ compensation, personal lines, excess and surplus, specialty lines, and other custom products.

But, can modern core policy administration solutions really offer the ability for insurers to eventually gain total independence? And, how much self-sufficiency is enough? The answers, more often than not, depend on the company and the available resources. When it comes to leveraging product configuration technology, the fact is that very few insurers do it in-house. There is a lot of outsourcing to third-party vendors. Interpreting and integrating ISO and NCCI changes into the software can be a cumbersome process and, mostly, insurers don’t want to own that process.

Keep in mind, there are degrees of self-sufficiency, from making subtle product changes to developing entirely new products. The key question is: “Where along the spectrum of self-sufficiency does the insurer want to be, given demands on budget and available resources?” Some insurers have no internal IT staff, and therefore not only want the vendor to make product changes, but also want the solution hosted and updated via a SaaS delivery model. Other insurers want to host the policy system, including the product configuration solution, and be fully independent of the software vendor for product updates and creation of all new products. 

Availability of IT time and resources is also a key factor in deciding what level of self-sufficiency makes the most sense for an insurer. The reality is that while progress has definitely been made, most of the vendor product configuration tools on the market today still require IT help. Insurers actively working toward self-sufficiency should seek out configuration tools that don’t require scripting, source code writing, or compilation of source code. Even in this instance, not every business user is cut out for configuration. It comes down to having an analytics skill set, and indeed, even for business personnel involved with product configuration, it helps to be a little tech savvy.

Although insurers claim self-sufficiency through product configuration technology is the desired end result, what they really want is choice. Insurers want the ability to choose to have a vendor do configuration work, but also to be able to bring it in-house if the business need arises, or to outsource product configuration, maintenance, or creation of new products to a third-party firm if necessary.

This blog entry has been reprinted with permission.

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The opinions posted in this blog do not necessarily reflect those of Insurance Networking News or SourceMedia.


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