Planning PAS Changes? 10 Questions to Ask

Experts who have gone through the painful process of migrating, upgrading or replacing a policy administration system share their lessons learned.

Insurance Networking News, February 28, 2013

Joe Mckendrick

For any insurance IT executive, nothing is more challenging than migrating, upgrading or replacing a policy administration system. This assembly of functions, files, rules and workflows represent the very core of the insurance business.

Many policy administration systems in place today are a decade old or more, experts estimate, and there's good reason why these systems last so long: It takes a lot of work and resources to upgrade or replace them. And when that does happen, such efforts are "bet-your-career projects," says Frank Petersmark, VP of X by 2 and former Amerisure CIO. "They're that big. Policy administration systems are complex, because they're the gateway for information into an insurance company. It's a risky proposition that requires a lot of work, a lot of money and a lot of time. And you have to do all that while the train is still on the tracks. You can't go to your company and say, 'let's take the next year or two off so we can do the system for you.'"

Analogous to replacing a train's engine while moving at 100 miles per hour, IT managers need to carefully plan each step in the process. Here are 10 questions that need to be addressed as a policy management system upgrade or replacement is undertaken:

1. How do we sell the project to upper management? A project as complex and demanding as a policy management upgrade or replacement requires a compelling business case-replacing a system due to age is not reason enough. Proponents need to explain how the new application will speed up underwriting, or make it easier for customers to do business with the company. And executives need to hear how a new system will increase business, reduce costs, increase speed to market and ramp up, or better support the organization's business intelligence and analytics capabilities.

2. Who should be on board with the new system? All parts of the business need to be intimately involved with the implementation, because all will touch the new system one way or another, including underwriters, service personnel, sales managers and product managers. "Your impetus to switching might be to increase service efficiency," says Michael Miller, CEO of Brightway Insurance. "Guess what? It's going to dramatically change your whole sales process, too and your accounting process. It's going to affect all the departments of your company. Get the buy-in of the entire company, so that everybody is part of the process that is happening with them-not to them."

3. What will be the true costs? Given that a policy administration systems migration, replacement or upgrade is a large project with many moving parts, costs can quickly get out of hand. "Most enterprises have a sense as to what their systems cost to run, but don't really have a great sense as to how they connect to a larger ecosystem at a detailed level," says James McGovern, chief architect for insurance at a large integrator, and formerly enterprise architect with The Hartford. "It is not enough to know that a policy administration system connects to a rating engine or any other high-level concept, but to know exactly how many interface points there are with upstream or downstream systems. From a budget perspective, this gap almost always causes someone to have to go back to the pot for more budget allocation. As costs creep up, executives can enter an endless cycle of having to re-justify why they are doing this initiative. This causes the team to get further distracted from delivery." A strong enterprise architecture, in which a technology roadmap is laid out, will help rein in potential scope creep, he says.

4. Whose time will the project take up? Many organizations fail to consider the amount of time people will spend on the new system. "[Implementation contracts] don't include the cost of staff time, both IT and the business," says Donald Light, analyst with Celent. "There's a lot of time and effort that IT staffs have to spend making sure outside parties, vendors, understand the kind of systems environment they're being brought into, and setting up integration methods. Plus, if somebody's working for half time or full time on the implementation, who's going to do their day job?" The IT department itself may see a shifting of resources. At Amerisure, Petersmark helped justify new projects by asking if, and how many, IT resources would be freed up by the new system-resources that could "be rededicated to something that's more important to the company: developing a new product, getting into a new geography, creating a new portal."

For more information on related topics, visit the following channels:

• Enterprise Technologies
• Policy Administration