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4 Ways Insurers Are Taking the Risk Out of Policy Admin Replacement

How can insurance companies mitigate the risk that comes with high-stakes policy administration replacement initiatives? Four insurers reveal their strategies to diminishing risk and optimizing the business impact of new systems.
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First Things First

Risk Mitigation Strategy: Prioritzing revenue-producing functionality over core PAS replacement, Agile development methodology, data cleansing.

Patriot National Insurance Group's (Ft. Lauderdale, Fla.; $400M in annual written premium) situation was similar to that of many insurers in that it was confronted by legacy system limitations that had to be resolved. However, the company's response was a little different: Patriot National chose to carve out agent portal functionality from its target system to accelerate new business capabilities. The insurer launched the portal for 12 states in July 2011 and will complete rollout for all 46 of the states it does business in by July 2012. The full functionality of its Vikaran Solutions packaged policy administration system is scheduled for October 2012.

"We knew we would almost certainly have to replace our legacy system, but we didn't want to rush it," recalls Judy Haddad (at right), CIO, Patriot National. "We also looked at quoting as a major component of what we could do with new technology."

Patriot National conducted a proof-of-concept of Vikaran's technology but planned to proceed first with the vendor's portal technology, in support of a quoting model accessible by iPad or laptop.

"We could have marketing reps in an agent's office talking about products but because of the limits of the legacy system, the actual quote wouldn't come in until it made its way to our sales office and was entered into the quoting system," Haddad explains. "The objective with our new quoting model was to capture the piece of business immediately, at the point of sale."

The decision to implement the portal technology meant that implementation of the full policy administration system would take a few months longer. However, the delay was justified by both business and IT benefits, according to Haddad.

[Esurance Manages Its Policy Admin System With Customers In Mind.]

"We can now walk into an agent's office and say, 'We can quote,'" she says. "On the IT side, we got confidence that we could work successfully with the vendor to deliver a system."

Haddad characterizes Patriot National's use of Agile methodology as a "huge risk mitigator because there are no surprises as to what will be delivered." She also cites a data cleansing initiative as reducing risk associated with the insurer's core system replacement.

"Conversion began a year-and-a-half ago with data scrubbing," she relates. "Using a third party to assist with conversion helped us to focus while we maintained a separate track for developing the new system. We are nearing the integration of the two efforts and feel more confident about success due to this approach."

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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