(Image credit: Shutterstock.)
Many of today’s software vendors claim their highly configurable systems will enable insurers to deploy new products in a fraction of the time previously required, but true time to market isn’t solely measured after a system goes live. The clock starts ticking the minute the decision to modernize is made. If it takes years for a new system to launch, its business benefits are minimized, or may never be realized.
Speed to market is often justifiably cited as a goal by insurers undertaking a policy administration system modernization project. The lack of flexibility and complex maintenance requirements of aging legacy systems constrain insurers’ ability to achieve business agility, bring new products to market quickly and roll out changes to existing products. Typically, legacy administration systems also do not integrate well with other applications or the online tools increasingly demanded by the current digital generation of consumers and brokers.
Speed to market is a legitimate concern, but carriers replacing legacy environments, proprietary systems, or older third-party solutions should consider a broader definition and evaluate speed to production: the time it takes to deploy a system and begin reaping its benefits. There are five key areas of capabilities that insurers should consider in terms of speed to production while selecting a system.
Out-of-the-box functionality: Legacy, hard-coded systems often require extensive custom coding any time a change is required, while modern systems are usually highly configurable. However, if a chosen platform is essentially a “blank slate,” it can still require extensive custom work to bring the system to a usable state. It is a massive undertaking to configure every process that is needed when a system is deployed.
Every insurer has unique processes that create competitive advantage, but there are many processes common to every insurer and common regulations to comply with across geographies.
Templates—pre-built rules and frameworks that define all the different processes that occur through a policy’s lifecycle—provide a “jump start” to an effective configuration process and deliver robust, out-of-the-box functionality.
For example, new business quotes and claims workflow are two processes in place at every insurer. Using common templates does not prohibit these processes from being implemented differently at multiple insurers; it enables each carrier to use configuration tools to define those processes for their business and shortens the time to bring the system into production.
Templates also help insurers avoid recreating legacy limitations when deploying a new system. With a “blank slate” approach, carriers may be tempted to spend an inordinate amount of time customizing or “over-architecting” a new system to replicate their existing processes. Instead, insurers should evaluate whether current processes truly represent best practices, or if they constrain the ability to innovate for a constantly evolving customer base.
Pre-defined integrations: support for industry standards is essential to achieving speed to production, but not enough. A chosen system should also come with pre-built integration to common internal systems in place across the industry, such as workflow and financial systems. The system should have pre-defined integration with third-party platforms, including agency management systems and external databases used for fraud detection, address validation, driving records and more. Through pre-defined integration, a modern administration system allows carriers to reduce both the time and risk of deployment.
Iterative development: the proven benefits of a flexible and iterative development approach are the reason for a sustained movement away from waterfall and other methods. A chosen system vendor or systems integrator should have a demonstrated track record of using iterative development methods, with successful system deployments for insurers.
Iterative development provides intermittent deliverables that help keep the project on track and increase speed to production. It allows business users to continually “test drive” the system and request changes that, combined with system configurability, require minimal rework to complete.
Cloud as a speed facilitator: A company should be able to achieve quick speed to production through a modern on-premise system, with configurability and templates working in tandem to minimize time to value and maximize ROI. However, an effective administration system should also be able to support a range of deployment options, including hosted and cloud, to provide the greatest business flexibility.
Cloud deployment can be a significant facilitator of increased speed because it minimizes the need to create on-premise infrastructure. It also shifts the cost equation from an ownership model to a utility model, requiring an insurer to pay for only the capacity that it uses. Additionally, insurers looking to test the waters by launching a new product line can turn to a cloud-based administration system as a way to minimize risk, while achieving rapid deployment.
Ease of maintenance: Insurers should evaluate considerations that occur after a system comes online that impact ongoing speed to production. This includes ease of maintenance and whether a company prefers to be reliant on the vendor for changes or self-sufficient, and how a system supports those preferences.
Some carriers elect to focus on their core business—actuarial, underwriting, distribution management, claims, etc.—and turn maintenance over to the vendor. Other carriers, particularly those with large IT departments and experience in development, prefer to handle maintenance themselves and prefer self-sufficiency, which they feel enhances agility and flexibility. Core system vendors should be evaluated for their ability to work independently, in tandem, or in parallel with the insurer.
Going from solution selection to writing a policy in as short a time as possible is essential in today’s competitive climate. Insurers should define “speed” differently and ask system vendors tough questions about how their solution will help them achieve speed to production. Shortening this timeframe will not only help insurers bring new products to market faster, but also maximize the return on the investment for a new policy administration system.