High Priority on Core Among L&A Insurers

Karen Furtado
Insurance Experts' Forum, January 29, 2014

Our recent research investigating plans and priorities among life and annuity insurers provided some interesting perspectives. It’s not surprising that core is important, but what is remarkable is the level of progress that is being made in transforming from legacy to modern policy administration systems. While 40% say they are very satisfied with their end state, nearly half of the insurers (47%) are reevaluating their situations.  What is amazing is that over 40% of all L&A insurers are currently involved in either PAS (Policy Administration Systems) vendor selection, planning for a PAS change, or the implementation of a PAS solution. Annuity providers are leading the way with an amazing 46% in vendor selection/planning and another 17% in the process of implementing new systems.

Most insurers try to extend the lifespan of their PAS for as long as feasible due to the major investment in resources, time, budget, and the risks that are involved in the implementation of major new systems. Our research confirms that L&A insurers use their PAS for very long periods. Over half (54%) are using systems that are more than 20 years old. And, 76% are using systems that have been in place for 10 or more years.

The noteworthy news is that there has been an increase in the number of modern systems implemented – another sign that progress is being made. This surge in new systems and planned implementations signifies a strong response to the requirement for flexibility and agility in today’s market conditions. Insures simply are not able to respond to a competitive market with new products and new customer demands without a flexible and agile policy system in place.

Core systems support the fundamental foundation of the insurance business. Those insurers that have made the investment in modern core systems are seeing results. The flexibility is helping them grow and profit in today’s exceptionally complex and dynamic market environment. Those insurers that have not yet made the investment and don’t have the capabilities in operation are painfully aware of the need to catch up. But, the picture is optimistic. There are robust solutions and multiple sourcing options available.  The time to get started was yesterday. But it’s not too late, just yet anyway, to get the ball rolling in the right direction.

Please contact me for any additional information about SMA’s research, findings, and insights in the core systems space. I can be reached at or 978.239.2741.  

This blog has been reprinted with permission from Strategy Meets Action. ( 

Karen Furtado is a partner at SMA.

Readers are encouraged to respond to Karen using the “Add Your Comments” box below.

The opinions posted in this blog do not necessarily reflect those of Insurance Networking News or SourceMedia.

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