(Image credit: PIRO4D.)
The unique nature of life and annuity policies spanning many decades makes administration problematic. By contrast, technology changes rapidly, and regulatory changes can also impact previously issued blocks of policies. And as in other industry segments, carriers often grow through acquiring other companies or blocks of business. These challenges leave carriers with multiple older technology platforms that are expensive to administer and not well suited for today’s digital environment.
Software vendors have tried to address these challenges with new modern platforms that are highly configurable. While many of these platforms can indeed demonstrate fast configuration and reduced time to market once fully implemented, they are subject to some of the same challenges as the older platforms—and they can generate new challenges as well.
Most of the modern platforms have introduced their own proprietary tools for configuration. This includes scripting languages along with the necessary development environments. These tools have often not kept up with the rapid pace of technology changes, forcing the vendors to make changes that cause disruption within their existing client base making upgrades long and expensive.
The proprietary scripting languages are often inferior to open industry tools, making them hard to troubleshoot—which causes quality issues and delays. A simple change made with proprietary scripting languages can have far reaching impacts throughout the platform—and some of these impacts are typically not caught until the changes go into production.
The rapid configuration using these proprietary scripting languages makes each client installation unique, which also leads to support and upgrade challenges. Some vendors are trying to rein this in by offering to make the significant changes as part of their base. This has the promise to provide more consistency at the cost of speed to market and innovation.
Challenging and Costly Upgrades
Ironically, the platforms developed since the Assembler and Cobol mainframe platforms have experienced the greatest challenges in terms of technology obsolescence. The more modern platforms have seen wholesale changes in their underlying technology, making upgrades very challenging and costly. It’s not rare for upgrades to be comparable to full scale conversion.
What the industry needs is a platform that provides rapid configuration and innovation without reinventing the open-source technology in the market today. This approach allows the platform to ride upon the rapid innovative changes we are experiencing today such as Cloud and DevOps without sacrificing ease of upgrades and industry support.
Key capabilities carriers should ask of any vendor of life insurance core systems include:
- What tools do you supply for configuration? If the vendor uses proprietary scripting languages, then look carefully at how they have supported them in the past and their roadmap for future support.
- How easy is it to upgrade the platform? Get references and make sure the vendor has a track record of demonstrating this ease over several upgrades.
- Is the platform DevOps and Cloud ready? If not, what will the migration path look like.
- How easy is it to test the platform and assess impacts of change? This has been a very problematic area for most vendors.
- Does the vendor allow for other partners to participate in the support of the platform?