Policy administration system replacement is one of the most ambitious -- and risky -- projects that an insurer can pursue. But even before the daunting systems replacement effort, IT and line-of-business executives have to develop a business and financial plan for the project and get buy-in for the effort at the highest levels of the company. How can insurers build an effective business case for modernization what should carriers include in a request for proposal and, ultimately, how can they measure the success of a policy admin system implementation? --Peggy Bresnick Kendler
Policy administration systems are core to a carrier's operations, and replacing them presents more risk than nearly any other IT project. Many insurers are familiar with the idea of a proof of concept (POC) but may skip this important step due to time or budget constraints. Yet, for a policy administration transformation, a POC can be a critical step in the evaluation process.
A leading North American life insurance carrier recently demonstrated the importance of a POC to a successful policy administration system migration. During its evaluation process, the carrier not only examined the technology available, but also the "soft" skills that set the vendors and systems integrators apart from each other. They evaluated people, process and technology, and weighed which team could best help with implementing the proposed solution. The POC became a "proof of capability."
Other carriers can adopt this idea of a "proof of capability" in their own policy admin transformation projects. This process reduces risk and helps build buy-in across the organization. This approach can be crucial to receiving a green light -- it is the final validation of all of the research and decision making that the carrier has done to date and sets the stage for success.
While completing a project on time and within budget is important, it may not signify success. To determine the success of a policy admin implementation, insurers must instead focus on measuring organizational changes and business results, including faster time to market for new products, improved customer service and better business management for growth.
Roger Soppe is Senior Director of Insurance Strategy at Oracle Insurance (Redwood Shores, Calif.)