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Policy Administration

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Rethinking the Single-Platform Policy Admin Strategy

Consolidating down to a single policy administration system would be a dream-come-true for many insurance CIOs, but given the capabilities of modern systems architecture, it's not necessarily the right objective.

Many insurers can only dream of consolidating their complex policy administration environments down to a single platform and enjoying the benefits that a simplified environment could bring. But no solution -- even single-platform -- will fit the needs of every carrier. Furthermore, the appeal of the single-platform strategy is, to a considerable extent, conditioned by the limits of insurers' traditional technology architecture.

There is no doubt that consolidation of policy administration systems is an important goal for many carriers. The accumulation of acquired systems is more likely than not to introduce unjustified complexity into the technology environment. Consider the advantages of the single platform strategy as expressed by Mark Clark, CIO, Jackson National Life (Lansing, Mich.) in a recent I&T story:

Among the most important gains are reduced maintenance costs simply from having a single platform because of things like regulatory changes that you only have to do once instead of multiple times. But also, as you look at wrapping automation throughout the company, having a single platform is a huge advantage. So when we start driving processes with business rules, putting things out on the web, and considering developing mobile applications -- all the things you want to do in the modern world -- having to interface with a single system significantly drives down the costs of those initiatives, and in fact makes those things possible from a financial perspective. So it's a hugely important strategy to us, and if we were to bring in additional business through acquisitions or something like that, we would continue that strategy going forward.

No arguing with Mr. Clark. But during a recent conversation with Karen Furtado of research and advisory firm Strategy Meets Action (SMA, Boston) insisted that the avoiding the lure of "one-size-fits all" applies even to single-platform. A given carrier might benefit from having different policy administration systems for different lines of business, Furtado says. A service-oriented architecture (SOA) can provide the element of simplification, enabling data needed by other systems to sit in a central location rather than in the policy administration systems themselves.

Specialty carrier Torus Insurance provides a case in point of how modern architecture minimizes the difficulty of policy admin system diversity. Michael Kim, the insurer's chief administration officer, recounts technology concerns arising from the carrier's recent acquisition of Lloyd's Syndicate 1301 and its corporate members Broadgate Underwriting Limited and Broadgate Underwriting 2010 Limited.

"I was actually really concerned about the additional policy admin platform," Kim recalls. "But as we started doing impact analysis on this, I realized, 'You know what? It doesn't really matter for us whether we have a new policy admin platform.'"

The issue that insurance companies generally have, Kim notes, is that the policy administration is the center of their technology universe -- or multiverse, as the case may be -- and all ancillary systems are connected to it. "It is the center of the rating platform, center of the broker submission platform, center of the UW workbench; it's what the claims system pings off of, it's what's connected to the data warehouse and the reporting on the back end," Kim explains. "Everything is connected point-to-point integration, so when they have a project they think in terms of years at larger, more traditional insurance companies because of the point-to-point integration work, because of the complexity of the environment and because of the architecture."

The difference at Torus is that the carrier has a hub-and-spoke architecture with a data warehouse at the center rather than a policy administration system.

For every application there's only one integration point, and that's with the hub, according to Kim. "It has been architected to be all about the data and having a single source of the truth," Kim relates. "Because all the integration points —with the claim system, with the broker submission platform, with the back-end financial reporting system -- are to the hub rather than to the policy admin system."

Given Torus' architecture, the new Broadgate policy admin platform became merely another spoke, rather than another "universe" requiring a large integration effort. Integrating a new policy administration may never be a trivial matter, Kim acknowledges, but it becomes a much easier task in the hub-and-spoke architecture. "As long as I can get the data mapped in correctly, I don't care," he comments.

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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