7 Major Issues that Complicate Policy Admin Replacement Projects
40 percent of mid-sized and 10 percent of large P&C insurers are implementing or planning such projects, and many challenges are foreseeable, Deloitte research says.
Insurance Networking News, November 20, 2012
Large-scale policy administration system (PAS) replacement projects are being revisited as the U.S. economy improves and the P&C industry recovers, according to “Policy Administration Transformation: Achieving results in a complex ecosystem,” a white paper from Deloitte Consulting LLP.
According to the research, 40 percent of mid-sized carriers, and more than 25 percent of large carriers are currently implementing a policy administration system or planning a replacement project.
Policy administration systems are central to insurance operations and touch virtually all of a carrier’s functions, such as such as quoting and rating, underwriting, distribution and customer service. As such, they are enormously complex and require multiple integration efforts.
Deloitte found that many current policy administration systems are decades old, expensive to support and maintain, and do not scale quickly enough to support growing businesses or the increasingly sophisticated expectations of customers and agents.
The paper examines seven major issues that can hamper a PAS implementation, including:
• Unclear business objectives: many projects suffer from scope creep, and Deloitte recommends limiting initial implementations to two of these three categories: Business process transformation, new technology implementation, and new product introduction
• Changes in business sponsorship: the sponsor’s primary responsibility is fulfillment of the business case; their actions and decisions should drive the program toward defined business benefits
• Insufficient business direction: IT delivery leadership is crucial, but goals and objectives should be based on business benefits
• Insufficient program stamina and discipline: quick wins and tangible solution components help maintain enthusiasm and encourage active stakeholder participation
• Role confusion and skill gaps: transformative change doesn’t come from a legacy workforce, Deloitte said, and organizations that believe otherwise may run into trouble
• Disparate rule sets: Deloitte recommends a four step approach to collecting, organizing, and redeploying rules: Define underwriting, rating, product and workflow rules strategies; Define a plan to store and categorize rules; Allocate ample time to understand the rule's landscape and create proper documentation; Understand where to fire rules in order to improve workflow.
• Estimation inaccuracy: Deloitte recommends establishing and communicating the approach to the project in the following major components: Program Strategies – Program management, resource management, quality assurance and testing, and policy conversion strategy; Business Strategies – Change management and training, communications, and product management; Technology Strategies – Infrastructure, integration, forms and correspondence management, and data conversion.
The authors conclude by stating that PAS implementations are complex projects; that no two are the same, and that each will present a unique set of challenges.
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