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03:16 PM
Paul McDonnell
Paul McDonnell
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Reshaping Policy Administration

There is a strong trend among property and casualty (P&C) carriers to adopt a new breed of policy administration systems. These component-based solutions offer the opportunity to improve customer management, expand distribution channels and upgrade enterprise information management.

There is a strong trend among property and casualty (P&C) carriers to adopt a new breed of policy administration systems. These component-based solutions offer the opportunity to improve customer management, expand distribution channels and upgrade enterprise information management.Life and annuity (L&A) insurers also are exploring ways to improve policy administration. Some carriers are embracing new-breed systems wholeheartedly. Others are seeking to use service-oriented architecture (SOA), business process automation and other tools to improve the performance and capability of legacy systems.

An additional issue facing those P&C and L&A companies that are exploring new policy administration solutions is whether to select an integrated solution suite for policy administration, claims and billing, or invest in leading solutions for specific functional components. The choice will depend on the company's particular circumstances.

Whether adopting a new policy administration solution, extending the functionality of legacy systems, or choosing between an integrated suite and separate components, a company can only achieve its business objectives if it has a sound implementation and deployment approach. Unfortunately, many implementation projects fail to deliver the anticipated results. Here are several pitfalls in system and process implementations that insurers can encounter as they equip themselves to meet changing business demands:

Pitfall 1: Failing to Define Project Requirements Adequately and Specify Key Transformation Objectives

Companies that want to transform policy administration systems and processes must first set clear objectives and carefully define project performance metrics for the implementation process. Failure to do so can lead to delays, expansion of project scope and even outright implementation failure. Pitfall 2: Neglecting Customer Data Conversion Requirements

One of the most challenging issues facing insurance companies as they transform core systems and processes is improving the quality of data they have in hand. Companies are much more likely to achieve their implementation goals if they start a separate data cleanup project that proceeds in parallel with the system implementation. As part of the data cleanup, an insurer should strengthen its legacy systems sufficiently to support the edits and other improvements needed to upgrade data.

Pitfall 3: Developing New System Tunnel Vision

We have found that, during the implementation process, companies often become so focused on the new solution they are adopting that they develop a kind of tunnel vision. They neglect the importance of the ancillary systems and processes that are important to effective company performance. As discussed above, data conversion is a critical step. System integration is equally important because core systems and processes typically must be integrated with 20 to 30 other business systems when they go live.

Pitfall 4: Failing To Create a Governance Model That Solves Problems, Removes Barriers and Has Ongoing Senior Executive Support

Insurance companies sometimes underestimate the size and complexity of an implementation project. As a result, they try to adopt the new process or system without creating a truly representative project management team charged with overseeing implementation. We have found that effective implementations are guided by special governance teams that represent all of the company stakeholders.

Pitfall 5: Not Recognizing That Change Management Is More Than Training

Even with an excellent governance team in place, an insurance company is much more likely to achieve the results it wants if it recognizes two things. First, implementation is a change management process. Second, change management is more than training. Preparing the organization starts at the beginning of the project and continues through training and post-implementation support.

Pitfall 6: Not Using Prototypes and Pilots to Create Measurable Deliverables

In the traditional waterfall, or sequential, method of delivering a software solution, a team will spend months defining requirements in Word and Excel. The team then divides up the work among sub-teams, which spend months more building individual parts of the solution. But, when the sub-teams come together at the end, they may realize that the components do not work together or do not meet the actual business needs. Today's agile development methodologies are designed to provide both transparency of the development process and constant progress toward business objectives.

Pitfall 7: Failing To Define and Manage Scope

One of the most common causes of implementation failure is "scope creep." That is, a company fails to set, or more frequently fails to stick to, a well-defined and manageable scope for the implementation project. No change is free, and if the team decides to broaden the scope, it should only do so with a clear understanding by all stakeholders of the implications of the expansion for the schedule, cost and risk of the project.

Avoiding these pitfalls will help insurers address the complexities in transitioning to a more flexible, cost-effective framework that ultimately can support such capabilities as straight-through processing, automatic assignment, assisted underwriting, self service and more.


Paul McDonnell serves as senior vice president, managing director and Insurance segment leader for BearingPoint. He has more than 20 years of experience in the financial services industry, both domestic and international. He specializes in assembling and managing high-performance teams to assist financial services clients in transforming their business operations and realizing the benefits of IT investments.

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