Consultants' Corner

10 Key Considerations to Help Prepare your Conversion Strategy

Imran Ilyas
Insurance Experts' Forum, July 28, 2011

Once an insurance carrier has justified the business case for its policy administration system (PAS) replacement, designed a transformation roadmap, selected a vendor partner, mobilized its implementation, and is successfully managing the execution and change, one daunting task remains: The conversion of its book of business onto the new system. While the beauty of conversion may be that it is a one-time effort, the beast is that every single account and/or policy must be touched in order to effectively complete it. Therefore, an organization should carefully consider what it will take to facilitate a successful conversion effort and minimize the impact on itself, its agency force, and its customers.

Converting to a new PAS is much like running a race. Preparation is critical, regardless of the distance. Therefore, considering the level of effort required, carriers need to begin planning their conversion strategies early on. Just as one would train months in advance for a marathon, it's critical to perform due diligence up-front to assess conversion options, define a sound strategy, and ease the experience for those involved. Moreover, early preparation should provide ample time to align the interests of all conversion constituents, a group that ranges from agents and customers to IT and finance.

Conversion constituents typically are able to determine a conversion approach only after agreeing on the timing of policy migrations ("big bang," "on demand" when customer touch-points arise, or at renewal) and the migrations' level of automation (anywhere from fully manual to completely automated). Main conversion challenges include deciding on when and how and, perhaps more importantly, obtaining widespread buy-in from all affected parties.

In order to facilitate this process and position your company for success, we strongly recommend you ask yourself the following questions when deciding on a go-forward conversion strategy. If you answer the questions thoughtfully, thenit should be much easier to determine which conversion approach is best suited for your particular circumstances:

1) What effort is required of customers? A conversion strategy should minimally impact the insured in terms of the effort or touch-points necessary to migrate a policy onto the new system. Try to determine the easiest ways to obtain customer consent, such as electronic authorization. Doing so will help instill positive customer perceptions of the new system.

2) What effort is required of agents? You can expect varying levels of agent involvement, depending on whether your organization services a captive or independent agency model. Based on your needs and wishes, you can leverage conversion as an opportunity to improve your book of business (e.g. data cleansing, cross-selling, up-selling, etc.), or you can convert policies with minimal agent interaction.

3) Does the approach adhere to legal and compliance guidelines? Numerous legal implications can arise when you migrate policies in your book of business. It's critical to involve the legal and compliance departments early in the process to ensure adherence with relevant statutes and regulatory restrictions (e.g. rate increase/decrease thresholds, mid-term policy changes, audit trails, etc.).

4) What are the expected fiscal implications on the book of business? You should assess how conversion approach options may affect the book of business. Be sure to perform an impact analysis on written premium, policies in force, customer growth, and retention. You should do this should both at an aggregate and more granular level (e.g. by agency).

5) Does the approach ensure a timely completion? Without firm dates and milestones, a conversion can turn into a long, drawn out process. Be sure to set a target end-date and mobilize the organization to achieve this goal. Instill the appropriate controls, progress tracking processes, and consider incentivizing those performing conversions in order to achieve the milestone.

6) Does the approach balance technical complexity with desired functionality? Conversion is a one-time event and all requirements, development, testing, and related efforts are essentially throw-away work. Therefore, be careful not to waste time and effort over-engineering a conversion tool (in other words, don't design a race car when all you need is a family sedan).

7) How transferrable are my data sets from old system to new? When implementing a new PAS, a range of data structure changes will be required depending on the extent of transformation that has occurred. As a result, customer data may not map cleanly from the old system to the new. Be sure to select a conversion approach that clearly defines which data to transfer and how to translate it.

8) How much will the selected approach cost? Conversion approaches can range from a fully-manual solution to a fully-automated one, and related costs in terms of time, effort, and associated dollars will vary. Be mindful of expenditure and select an option that is the most cost-effective relative to the size of your book of business and complexity of products.

9) What kind of organizational training and support is involved? The approach you select should dictate the level of training and support you need. Don't underestimate the need for guidelines, standard operating procedures, a call center, and change management support to help you perform conversions.

10) How will the approach help me with hard-to-reach customers? Unless you opt for a big bang approach, you will need to determine a strategy for handling customers who prove difficult to convert in a timely fashion due to inaccurate contact information, scheduling conflicts, or difficulty gaining buy-in. Carefully consider strategies in advance to handle these individuals (e.g. advance notification of conversion or non-renewal forewarning).

With the appropriate amount of preparation and due diligence, you can mitigate your conversion effort challenges, no matter how daunting they may be. In order to define an effective conversion strategy, be sure to determine the various stakeholders, take into account how they may be affected, and build consensus around the requirements and timing of the effort. Answering the above questions will help you achieve alignment, strengthen confidence in the conversion approach, and most importantly, ease the overall process of reaching the finish line.

Imran Ilyas, partner with PwC's Diamond Advisory Services insurance practice, coauthored this piece with Samit Bhandari, senior associate, PwC’s Diamond Advisory Services.

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

This blog was exclusively written for Insurance Networking News. It may not be reposted or reused without permission from Insurance Networking News.

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Comments (2)


Good article. Informative.

Apart from the above, what are the other factors that need to be considered, specially for migrating life insurance & general insurance policies? Could you please throw light on this?

Posted by: sriram s | August 8, 2013 10:15 PM

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Good article. Informative.

Apart from the above, what are the other factors that need to be considered, specially for migrating life insurance & general insurance policies? Could you please throw light on this?

Posted by: sriram s | August 8, 2013 10:14 PM

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