Filed Under:Carrier Innovations, Information Security

Configuration or Contortion? Making the Best Choice in Policy Systems

When choosing a policy administration system, insurers are looking for the ability to make as many changes as possible through “rules and tools”-based configuration rather than code-based customization.

“Configurability is seen as table stakes for policy administration and most other core systems as well,” says Donald Light, senior analyst in Celent’s insurance practice.

“For years, product and marketing departments wanted to control their own destiny—manage rating, regulatory, and other product changes independent of IT,” says Dan Colarusso, senior vice president and CIO of Cypress Insurance Group. Gaining that control is a driving force behind the company’s in-progress migration from multiple systems currently managed by a BPO to a single SaaS-based version of MajescoMastek’s STG suite.

Likewise, Canadian specialty lines insurer Jevco is in the process of consolidating numerous legacy administration platforms to Sapiens’ RapidSure suite.

“The gains we are looking for include getting new products to market faster and making changes to existing products more rapidly through new configuration capabilities,” says Bryan Harper, assistant vice president of IT for JEVCO.

But when it comes to configuration capability, not all systems are created equally. Configurability is “one of the most overused terms” in the policy administration market today, says Kimberly Harris-Ferrante, vice president and distinguished analyst at Gartner Research.

“In its simplest form, configuration means that the system is built in a fashion that allows unique workflow, product rules, and system changes to be done in a table-based format where configuration is stored separately from source code. However, there’s a wide degree of variability in how vendors define configuration,” she says.

Selecting the right administration system requires understanding the differences among vendors; successfully implementing and managing a system once the choice is made requires understanding five key aspects of configuration and assessing how they will impact both business and IT.


Configuration requires balance. In choosing among vendors, insurers need to balance their ability and desire to configure a policy administration system against the amount of out-of-the-box domain content and insurance-specific functionality it provides.

“There are some vendors that offer a ‘toolkit’ approach. You can completely configure the inner workings of the system to make it look like your own unique system. However, you need sufficient skills trained in configuration in order to reduce implementation risks,” says Harris-Ferrante. “Implementations often are more complex and time consuming due to skills transfer required for configuration, which must be taken into consideration in project planning.”

In 2008, life insurer Columbian Financial Group (CFG) began a project to consolidate six different legacy platforms with a modern policy administration system. Stuart Smith, vice president of information systems at CFG, reports that after evaluating several vendors the insurer’s IT staff preferred to go with a highly configurable system, which he declines to name.

“We would talk about a functionality, and the vendor would say, ‘If you want it to do that, it can,’” he says. “However, there was no structure to the system. It was just a blank slate—an appliance.”

“While it was a developers’ delight, it was a nightmare on the implementation side,” adds Peggy Rubin, executive vice president and COO. “When we talked to reference customers, we found that having business tell the configuration team how every single item in the system should work was an overwhelming task. We found other companies spending two or three years just getting the system initially configured.”

Mitch Letho, senior vice president at Innovation Insurer Group, recommends an approach that combines configuration capability with prebuilt templates and content. “Every insurer issues a policy, and every policy has a coverage, so those two items should be elements of the system out of the box,” he explains. Those elements should have common attributes, such as “limit,” regardless of the line of business to which they apply.

“It gets confusing when the insurer has to create every element from scratch, or when you are required to copy or recreate common elements that are core to insurance between different lines of business,” he says. “You need a balance of prebuilt elements and templates and the ability to configure fields to reflect your company’s unique underwriting philosophy and rating.”

Smith says CFG found that balance in the ALIS policy administration system from FIS Software, which merged with Sapiens in July 2011. “The system is built with a particular underlying process flow and data model that gave us something to standardize on,” he explains. “At the same time, the designer provides a level of abstraction between product data and processes that allows us to do business-level configuration.”

First deployed in late 2009 with CFG’s single-premium whole-life product, the ALIS platform has allowed CFG to launch new products in under three months, compared to about a year under its legacy platforms. The company is continuing to consolidate remaining legacy environments to ALIS.

The business side also needs to understand there are limits to configurability in choosing the platform that provides the best balance for their business. The further an insurance company gets from industry standard forms and content, the more some platforms are stretched.

“Once you start peeling the onion, how much of the system is truly configurable—and what are the implications of that for both business and IT?” asks Light. “Whether a system can do 98 percent of what a company wants or significantly less is something insurers need to assess in the selection process to avoid cost and time overruns.”

Harper says that for JEVCO, a 70 percent figure is good target. “You could push that to 90, but we would spend more time trying to create configurable rules for unique situations versus simply customizing the system,” he says.

JEVCO rolled out its first line of business to the Sapiens platform, branded internally as “Jevcom,” in 2008 in nine months. Today the company can deploy new products in about six weeks.

Unfortunately, the configuration balance of systems can be difficult for insures to assess, according to Light. “The range of things that insurance companies might want to configure is large,” he says. “In practical terms an insurance company can’t ask three or more vendors how configurable their systems are for 1,000 different scenarios.”

He advises companies to choose a handful of changes commonly requested by business and see how they are handled in the system, then evaluate how the platform handles unique processes or product features that give the insurer competitive advantage.


Configuration requires discipline. Configuration provides powerful capability to make changes quickly and truly customize a system to meet insurers’ needs. Companies need to wield this power wisely.

“Unchecked configuration, or configuration that exceeds the design of the platform, can actually restrict growth and flexibility.” says James McCully, product marketing manager at Guidewire.

Harris-Ferrante stresses that carriers should be wary of the temptation to create a “new-old” system.

“Process rationalization has to come before configuration,” she says. “Is a change to the base system truly needed for competitive advantage, or just because you’ve always done it that way? If you’re not getting to where you need to go it doesn’t make sense to get there twice as fast.”

In its implementation project, CFG has made a commitment to modifying its internal workflow to match the ALIS system wherever possible. “It’s been a struggle,” admits Rubin. “Everybody wants the workflow just the way it was.”

Cypress Insurance has been making modifications to the MajescoMastek system based on an analysis of what agents, customers, and staff need, rather than on the way the insurer’s previous systems administered business.

“We wanted to make sure that we kept it [the STG system] as vanilla as possible because it’s easy to get scope creep and have projects take on a life of their own,” Colarusso says. “We are only making modifications that are absolutely necessary to service our clients.”

Scheduled for a May 2012 pilot, the STG Suite is pre-configured with standard insurance content for several lines of business. MajescoMastek’s Insurance Content Manager (ICM) provides the toolkit for Cypress to manage rates, rules, forms and other configurable data within STG.

“Previously the business would come to IT with a regulatory, product or formchange request. It was analyzed, sent off to the vendor who would analyze it, figure out how long it was going to take and how much it would cost. The whole process was time consuming. Now we will be able to take control of our own destiny,” says Colarusso.


Configuration requires alignment. Configuration can shift some traditional IT responsibilities to the business side. Insurers need to understand that, rather than cutting IT out of the change process, this shift makes alignment between IT and business essential.

“Success in a configurable approach to policy administration is highly dependent not just on understanding the capabilities of the tool set, but in creating a partnership between business and IT,” Colarusso says.

Harris-Ferrante stresses that alignment around configuration begins with organizational readiness for configuration—including whether business understands and accepts a role in the process. She recalls working with an insurer that was implementing a new administration system and attempted to involve the business side in system configuration.

“They brought it to the business sponsor who said, ‘That’s IT’s job.’ The business had no interest in being involved,” she says. “Companies have to be careful because they can create divisions between business and IT if the business feels IT is trying to push their job off onto them.”

She recommends a hybrid approach to policy administration project staffing. “A combination of business and IT is the best strategy but, unfortunately, some companies are averse to the mixing and mingling of those two areas,” she says.

CFG has taken a hybrid approach in creating a new configuration team. The eight-person group consists of business analysts, who will primarily handle workflow configuration, actuaries, who are responsible for rating engines and product definitions, and developers.

Although the ultimate goal is for the team to handle the ALIS system internally, Sapiens is currently performing the bulk of the system configuration while the CFG team completes system training. CFG plans on hiring a full-time resource from Sapiens for a significant portion of this year to further facilitate the transition to configuration self-sufficiency.

“It’s realistic to rely on vendor expertise or knowledge experts who designed the system in [implementing] your initial lines of business so you don’t go down paths you don’t need to,” says Tom Chesbrough, senior vice president of enterprise products at StoneRiver.

Ideally, configuration will not only require alignment but facilitate it as well.

“The objective is to enable the IT team to be much more responsive to business requests, and, in many cases, reduce the ‘translation’ required to take a business concept and incorporate it into a system environment,” says McCully. “A configurable policy administration system should empower the IT group to effectively meet the demands of the business.”


Configuration can still look a lot like programming. “The biggest ‘aha’ moment for some insurers is that vendors say a business analyst can do this, configuration is table based, but a lot of the logic looks like you are writing source code. Or, the configuration interface has a ‘programmer’ look and feel versus a ‘business’ look and feel,” says Harris-Ferrante.

“Sometimes things that are called ‘configuration’ can be complicated scripts that look like computer programs to the layman, or they can be convoluted business rules that look a little dense to the uninitiated,” says Light. “If a vendor tells business users in the sales process, ‘you won’t have to rely on IT anymore,’ that could be an example of overpromising.”

JEVCO came to this realization early in the implementation. “The early pitfalls [in implementation] were that everyone thought it was extremely simple; anyone could do it. We found quite quickly it had to be a little more than just anybody.”

For now, JEVCO is keeping the configuration responsibility within IT. “I know that some companies are pushing configuration out to end users, but we’re under the belief that an IT person is better equipped to deal with today’s configurable items,” Harper says. “There are some business people who are very technical, but pushing configuration out to them would take more training than it will to keep it in IT for now.”

Insurers also need to understand that configuration still requires traditional IT governance and change management.

“With so much control entrusted in their hands, the carrier will soon realize that the content creation is just one part of the whole puzzle,” says Manoj Porwal, assistant vice president of product architecture at MajescoMastek. “There are other critical and important aspects like version control and configuration and release management that they have to deal with. We have seen lot of carriers struggle with these two aspects.”

“Because configurability opens a Pandora’s box of possibilities, it’s important to have crisp decision making on how you want the system to work,” says Bob Dale, director of the systems implementation group at STG, which provides technology services to the Plymouth Rock Group of insurance companies. “There’s a learning curve with configurability—what it is, and what the ramifications are when a decision is made.”


Configuration requires a skills assessment. Ron Karam, head of insurance business solutions at Sapiens, says that basic configuration tasks—such as setting up user profiles, user security, letters and other documents, and some workflow tasks—can usually be performed by business analysts. However, more complex configurations to support actuarial formulas, product rules, and accounting require actuaries or senior system analysts—individuals with a thorough understanding of those subjects who also have both strong analytical and system skills.

“In between the simple and complex configurability, system analysts, with a good understanding of the business, product and systems, are most often charged with the balance of the configuration activities such as updating rates, configuring underwriting and reinsurance rules, setting up complex workflows, or configuring claims adjudication rules,” he says.

Most insurance companies with an IT staff will find the technical skills they need for configuration, but business analysts with comparable technical expertise are harder to come by. “With the current crop of policy administration systems it is definitely bringing out a skill-set gap because people in charge of configuration don’t just need technical knowledge or business knowledge, they need both, as well as familiarity with the process and culture of how to configure,” Harris-Ferrante says.

Companies with a big skills gaps may find it difficult to achieve the speed-to-market benefits promised by modern administration platforms. “If they are learning to configure at the same time they are implementing, that is directly correlated to the failure of projects to meet the original scope and timeline,” says Harris-Ferrante.

In its configuration team, CFG has carefully chosen people with an analytical background. “You don’t need a programming background, but you do need to be able to understand why something has happened and how to get it to work—people who can work through the logic of configuration. Fortunately a lot of our business users have that,” says Rubin.

The greater challenge for CFG is going beyond the mechanics of configuration and understanding the theory behind it. That understanding is necessary to make configuration most effective and reduce the duplication of effort. Smith illustrates the difference with the decision-making process around configuring multiple products on the ALIS system.

“We need to understand whether it’s better to set up one product and multiple versions so there is inheritance between them, or whether to set up separate products so that changes to one product are not inherited by the others,” he explains. “There are theoretical aspects of it that would suggest you take one approach over another depending on your business goals, and that takes a deep analytical understanding.”

Cypress faces the additional challenge of moving from a BPO at the same time it implements a new administration system. “Our IT department is changing from more of a traditional, heads-down coding and implementation group to delivery management,” Colarusso says. He believes IT has the skills necessary to make that transition and that at the outset configuration will be handled by the IT group.

“We will work through our business partners to understand what we want to do in terms of product, rate and regulatory configurations and use the ICM tool to make those changes,” says Colarusso. “For now, ICM will be a repository of the IT toolset because we need to understand it, quality assure configuration changes, and understand how to move those changes out to the production environment. But with that said, when we agree business has developed the experience, we will transfer some responsibility to the business.”


Migrating to a more configurable policy administration platform “has definitely changed our IT world,” says Harper. “We’re already much more responsive than ever before.”

Colarusso expects the continued evolution of policy administration platforms will allow insurers to more easily control their own destiny and manage changes independent of outside resources. But he issues an important caution for the business side.

“Configuration isn’t just pushing buttons. It still involves analysis, version control, and testing,” he says. “The promises of rapid configuration and fast speed to market are appealing, but the business needs to understand what IT people have known for years—it needs to still be a carefully managed process.”

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