According to new reports published by Novarica, over the past 10 years insurance carrier core system replacement initiatives have been driven more often to deliver capabilities or modernize technology rather than as efficiency plays. US P&C Policy Administration Projects: Averages and Metrics and US L/H/A Policy Administration Projects: Averages and Metrics present data and analysis on project scope, duration, resource utilization, cost, and business impact of implementing a new policy administration system based on a study of over 30 US Insurers.
The reports also found that insurers' core system initiatives more often depend on internal resources for testing and conversion, while relying on vendor resources more heavily during deployment; that most projects take from one to three years, but that some have been completed in as little as six months; and that software license fees average less than 10 percent of the total cost of life/annuity/health projects but closer to a quarter of costs for P&C projects.
The publication of the reports is intended to meet an appetite for insight resulting from a Novarica estimate that one in three P&C carriers and one in five life/annuity/health insurers are currently planning, evaluating or conducting core policy administration projects. "These reports are designed to help insurers understand what their peers' experience has been," notes Matthew Josefowicz, insurance practice director, Novarica, and co-author of the reports.
In addition to quantitative metrics, the reports provide insights into challenges and best practices, according to Novarica.
“Insurers can take four steps to increase their chances of success in these highly complex projects,” comment Novarica principal Chad Hersh, co-author of the reports. “One, clearly define your business goals and tie them to organizational goals; business ownership, not just sponsorship, is key. Two, use high-level requirements to find the right vendor and set the project direction, and an iterative approach to developing more detailed requirements later. Three, carefully evaluate vendors for both product fit and organizational capabilities, and four, focus on program management and change management as well as project management.”
Anthony O'Donnell has covered technology in the insurance industry since 2000, when he joined the editorial staff of Insurance & Technology. As an editor and reporter for I&T and the InformationWeek Financial Services of TechWeb he has written on all areas of information ... View Full Bio