From business and technology perspectives, it's hard to imagine anything more consequential for insurers than the updating of a policy administration system.
Yet irrespective of—or perhaps because of—the high stakes, insurers are replacing or overhauling their systems en masse, with an estimated one-third of insurers either already in the midst of or planning a policy administration system project during 2012. So, what set off this stampede?
While each insurer will base its decision on its own peculiarities and requirements, a common impetus in policy administration projects is the need to update the way in which customers are addressed. For many insurers, policy administration represents a veritable steamer trunk of legacy baggage. As the mobile and social media channels proliferate and customer expectations evolve rapidly, a policy administration system underpinned by expensive-to-maintain, obsolete technology is no less than an impediment to top-line growth.
In this light, a modern policy administration system is less a mere option than a prerequisite for insurers looking to remain competitive in a customer-centric age and cultivate a better relationship with forward-thinking producers.
Another abiding driver is the need to prepare policy administration systems for the era of pervasive analytics and big data. Policy administration systems, by definition, are central repositories of customer data, and therefore provide feedstock for the models that will redefine business processes across the enterprise.
Taken together, these drivers cause many to posit that a policy administration modernization can be a driving force for organizational renewal, clearing out sclerotic and unnecessary operational practices as well as outdated technologies.
While the business logic for overhauling policy administration may be clear, the path from project conception to production can veer in unexpected directions. From intractable business rules to more mundane implementation issues, even the most carefully considered policy administration project is bound to feature some unexpected turns. To be sure, the carriers profiled in this issue's cover story have trod some miles in your shoes.
This is not to suggest that you follow the herd like so many lemmings. Rather, if you are serious about business transformation I'd suggest you at least have a sense of where the herd is going and why. Replacing or updating a policy administration system may or may not be justifiable considering your business objectives or risk appetites.
The purpose of this special issue is to give you some germane information to help you chart your own course.
This column originally appeared at Insurance Networking News.
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