Steve Forte, director insurance strategy and alliances,OneShield, Inc.

It seems one cannot help but rehash debate in the insuranceindustry. I suppose we are not that unique but certainly fixated onissues that long seemed resolved, akin to best of breed. Legend hasit that only the largest (and financially capable) insurers wouldembark on a journey of replacing core insurance applications (forexample, policy administration) from numerous vendors.

However, as we have witnessed, this was the norm. Insurers withfewer resources (people, skill, money) than their bigger brother,tended to purchase a suite of products (policy, billing, andclaims--the trilogy) from a single vendor for a multitude ofreasons, including but not limited to:

? Reduced complexity of integration

? Central location of data

? Vendor management

While the above reasons appeared sound, the reality is muchdifferent. Insurers that licensed the trilogy from a single vendordiscovered the three products were developed in silos and thus didnot have a central location of critical data to query, nor did thisease the complexity of integration, especially if new and/orproprietary languages were introduced into the architecture of theinsurer.

Some suite solutions cannot be sold as separate components. Ifan insurer wanted to only replace policy administration and lookdown the road to claims and billing, they would have to license allthree even if they never installed the other components.

The most impactful tradeoffs with the suite approach are theloss of business functionality within one or all components, andinsurance specific content (e.g. rules, workflow). Insurers ideallywould want/need to replace these systems every 15 - 20 years.

Modern solutions are architected to provide separation betweenpresentation, business logic and persistence. Some vendors havedeveloped adapters for nearly all commonly utilized insuranceintegration point and provide implementation patterns and designsto reduce the complexity of integration.

When making this kind of investment that will impact yourbusiness for years to come, why is there an argument that best ofbreed is only for the big boys?

Steve Forte can be reached via email at [email protected].