Policy Admin System Replacement: Insurers Shift Focus From Systems to Functionalities
Mix and Match
A mix-and-match approach can also help maximize specialization in capabilities that will differentiate an insurer from its competitors, according to Scott Schenker, a New York-based senior managing director with SMART Business Consulting. He counsels that insurers identify a platform that can be leveraged across more lines of business and can capture the majority of the carriers' functionality. They should then augment that platform with other capabilities, such as business process management or content management, to augment the processing areas that the central system may not be able to tackle adequately. "Have fewer policy admin systems and expect them to do a little bit less on the workflow and front-end side, and focus on the core, underlying system-of-record capabilities," Schenker advises.
In making their selection, carriers need to accurately define their strategic needs in order to be prepared for the future, Schenker adds. "An organization is much better off having two or three different packages or components that solve the overall business problem and provide flexibility for future changes than one system that meets 100 percent of the requirements today but might not have the flexibility as the organization evolves over time."
The desire for both the flexibility to respond to emerging business opportunities and the ability to differentiate how it does so from its competitors' efforts animated Harleysville Insurance's adoption of predictive analytics for underwriting. The carrier has integrated predictive modeling software and Fair Isaac's (Minneapolis) Blaze rules engine with a .NET-based AQS (Heartland, Wis.) rating, quoting and policy issuance system. Using Documaker technology from Skywire (Frisco, Texas), Harleysville has built proposal capabilities and real-time electronic distribution of policy forms. The carrier began rollout of the AQS system over its accessHarleysville producer portal in 2007 and will finish the rollout this year. Agents using the portal have access to an automated proposal process that includes highly segmented underwriting and the capability to draw up variations on proposals to present to customers.
Harleysville SVP and CIO Akhil Tripathi cites the initiative as an example of technology-powered business transformation. While Tripathi acknowledges that policy administration is "a great concept" and a vital suite of processes, it is not necessarily the locus of differentiation, he points out.
In incorporating predictive analytics capabilities to power more highly segmented underwriting, "We're not replacing the policy admin system; we're replacing the whole underwriting process," he says. "It's the transformation of the business process, and underlying that is the policy administration system."
Tripathi agrees with the urgency of assessing outward-facing capabilities, but he sees it as more than a front-to-back analysis. "To transform your process, you need to change all sorts of things," he says. "Changing the whole underwriting process -- being able to evaluate the risks, do the rating and quoting, issue policies, view the policy documents online and generate proposals -- to unite all those components in one seamless process requires decomposing all those processes. You can't just do that from the front end."
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
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