According to a recent report by Novarica, more than one-third of insurers are either in the middle of a core policy administration system replacement or are planning one for 2013. One of the first decisions carriers must make once they have committed to a replacement is whether to create a single system or de-coupled architecture.
The focus of core system technology is improving the efficiency of internal transactions. They are designed and architected for transactional rather than interactional processing. As such, while they are crucial to a strong foundation for growth, they cannot fully address the needs of agent, managing general agent (MGA), broker or consumer users, especially across emerging channels such as social media and mobile.
To remain competitive, P&C insurers must keep focused on the ever-evolving patterns and needs of their distribution channel partners--the agents, consumers, brokers and MGAs that grow carrier business. Carriers must be quick on their feet and constantly assess and improve the experience of their customers--even during a policy system replacement.
While back end systems are tremendous internal workhorses, the process to update, test, promote, and implement changes within them can be lengthy. Given the multi-year development and implementation lifecycle associated with core systems replacement, it is difficult for businesses to respond quickly with changes or new products in the P&C space without a separate web portal.
Consider this: in the three- to five-year timeframe it takes to complete core systems replacements for a typical midsize, multiline, multistate carrier, tremendous technological shifts occur. The insurance industry is not immune to these technology and cultural shifts. Can your business afford to put aside emerging channels and opportunities while your core systems are being replaced?
There are capabilities and qualities inherent in web-facing portals that, by design, support a carrier's need to keep customers at the epicenter of their business focus--regardless of the status of their policy systems. Keeping those attributes distinct from the core systems is powerful.
- Multichannel Capability
Carriers today must adopt multichannel, multidevice, multiterritory, multiproduct business models to stay competitive and relevant. To attract, acquire and retain distribution partners, carriers must offer many ways to interact with them online and make all of these channels easy to use. Independent front end software ships with distribution-friendly web design out of the box and provides functionality specifically tailored for agents, brokers and policyholders.
Whether using mobile phones, CSRs or other avenues, the carrier/agent relationship has moved beyond the web to the street and third parties. Back end systems struggle to meet the needs of these outward-facing offerings, while portals were built for them.
- Service, Service, Service
Today's P&C carriers need to be able to extend their user experience beyond agents to consumers, and insureds; handle upload integration; provide real-time interfaces; support third party services, automate business processes; and systematically respond to paper form submissions that are either emailed or even faxed.
Agents also have a clear need to quickly get the best quote for their client, and they expect to do it through existing agency management system desktops. An agent cares about completing a quote quickly and efficiently.
A policy administration system is designed to display all information and combinations of possible data options for an organization and its underwriting staff, not to move an agent as quickly as possible from point A to point B. Exposing this display and all of its non-essential information to an agent can be not only overwhelming to the producer but can introduce potential for user error.
In the end, it's all about making producers happy. Simple, straightforward workflow at all levels mitigates the chances of frustration and errors and boosts carrier business.
- Flexibility = Faster Business
A core system is built to last. Distribution products, on the other hand, are architected for flexibility to quickly and easily respond to changing business needs. Any competitive modular front end solution uses modern, global technology designed to grow not only with a carrier but with today's business and consumer trends. The most competitive commercial lines portal applications today are all decoupled from their core policy administration system. Good modular components are architected to integrate easily with rules and rating engines, third party and internal data validation and data enrichment services as well as with core systems, giving carriers the dexterity to quickly shift gears.
Modern, easily integrated technologies allow carriers to take advantage of innovations in the distribution space and agents to be the best possible facilitators of the relationship between carriers and their insureds.
- Reduced Risk
Hinging your back and front office success on one implementation with a single system is high risk. By comparison, a component-based strategy, regardless of the timing of front end and back end replacement, significantly reduces exposure and risk for CIOs.
- A Shield for Your Customers
A core system conversion is disruptive by nature. If the replacement strategy hinges on a single system, that disruption extends directly to your to producers, and ultimately to your business. If the internal replacement is shielded by a de-coupled front end, however, producers can continue transacting business with you uninterrupted. Isn't it about being easy to do business with?
IT expenditure over the next several years will continue to be fueled by the replacement of and enhancements to carrier core applications.
Careful consideration of how to best distribute products during a major policy system overhaul can help an organization continue to grow, in spite of the disruption. Companies looking to continue to respond quickly to market opportunities and keep their producers happy need to stay nimble and service-oriented. By detaching the front end web user interface, companies can gain independence from the back end development cycle and the disruption it presents, and can continue to be as responsive and innovative as they need to be to compete in the marketplace.