Full Policy Lifecycle Capabilities
Flory stresses the quality of what he describes as PolicyCenter’s end-to-end, full policy lifecycle capabilities as tipping the scales in Guidewire’s favor. “It may not look exactly as we’d like, but the guts of P&C processing are there, including some of the hardest processes,” he elaborates. “We didn’t want to stumble into a crevasse, so we took a close look at the really hard processes and the integration challenges they implied.” Incongruence between NI’s systems and PolicyCenter’s base capabilities was by no means necessarily a bad thing, Korcykoski stresses. “What we don’t want to do is pave the cow path,” he says. “We’re not necessarily trying to recreate that legacy world in a new system, but by extracting how our world looks today to the extent that’s realistic, we can implement the package and only have variation when necessary.”
NI’s strategy embodies the doctrine that core transactions are commodities and that, hence, flexible core systems can liberate insurers to dedicate time and resources to truly market-differentiating capabilities. “If we're spending our resources on core systems, we’re taking it away from the fringe where we can make a difference,” comments Flory. Furthermore, packaged systems also enable insurers to split the cost of developing non- differentiating capabilities with all the vendor’s licensees, Flory notes.
Making Technology Matter Less
In a larger sense, the package choice suggests a belief on the part of Nationwide that though technology may still matter, it ought to matter less. One manifestation of that conviction is NI’s insistence that the PolicyCenter-based core system transformation project is a business project, not a technology project. Korcykoski terms the initiative a package-enabled re-engineering effort aimed at simplifying technology and processes. “It’s not that it couldn’t be done without a package, but we believe that the changes will take less time and cost,” he says.
The project is aimed at stripping away unnecessary complexity, Flory adds. “We’ve allowed a ton of complexity to creep into personal lines, and not necessarily because the market demanded it, but because of the systems we have in place today.”
Korcykoski and Flory acknowledge that in addition to liking PolicyCenter product, they also liked “who Guidewire was,” where the company was going and what its customers said about their products. But especially relevant to NI’s technology philosophy was Guidewire’s systems’ resistance to customization. The problem this approach eliminates is one of being able to customize to the point of not being able to take upgrades.
Korcykoski illustrates the question by noting that there is always a percentage of, say, an ERP system that makes no financial sense to touch. “This package in effect enforces your not customizing it, while also providing a baseline above which you can configure to your particular needs,” he explains. “That’s a really different approach than starting with your existing processes and wondering how to simplify.”
It was a lesson that emerged repeatedly during NI’s viability assessment of PolicyCenter, during which NI talked to several carriers who had gone down the path of custom-building new solutions or modernizing. “All of them are facing the same question today,” Korcykoski declares. “They say, ‘I successfully built the system and it has lived its life, but I can’t continue to maintain it.’”
NI plans to roll out PolicyCenter on a state-by-state basis, starting with Nationwide-branded products. Korcykoski estimates that the first state will be rolled out within about 30 months. “It’s premature to be more precise than that at this stage,” he says.
[For more on package-based core systems modernization strategies, see Filling the Gaps in Package Policy Admin Systems.]