(Steve Hauck is Co-CEO of Agencyport Software.)

Back office needs at p&c insurance companies have changedsignificantly over the last few decades. Expanding existingproducts, introducing new ones, changing distribution strategies,and the need for business agility—among other factors—have putenormous pressure on legacy policy administration systems, most ofwhich are unable to handle the growing demands of themarketplace.

CTOs and CIOs know they need to act, but the time and costinvolved in a replacement project is daunting—as is a plan formigration of policy data from the old system to the new one. While data migration is complex, it doesn't have to befeared. With the right tools, Carriers can ensure anefficient and accurate movement of data into a modernsystem.

Let's break down some of the myths around data migration and tryto take some of the fear out of moving ahead with a new policyadministration system (PAS).

Myth: Policy administration system data conversion is astraight-forward mapping exercise—fraught with the inevitableerrors inherent in such processes.

Myth Busted: The movement of data from legacypolicy administration systems to modernized systems is complex tobe sure, but it does not have to be error-prone or inefficient.Until recently, carriers have had two fairly poor solution choices:straight-through process (STP) or custom coding.

While relatively quick, a pure extract-transform-load (ETL)/STPalmost guarantees that bad data will load into the newsystem. Legacy system data may be bad or outdated; the datastructure between the systems may be different; and data fields maynot always be apples-to-apples—garbage in, garbage out. At theopposite end of the solution spectrum is a home-grown mappingtool. While more custom in nature, it represents years ofarduous and potentially error-prone manpower.

Fortunately, there are modern alternatives to these two choicesthat actually combine the best qualities of each—ETL for most ofthe data and a robust web user interface to find and fix errorsbefore they go into the new system. Highway and high touchcombined.

Myth: Data migration is time-consuming andexpensive.

Myth Busted: It's true that because Carriershave been forced into either an STP or custom code strategy, policyconversion has historically been a laborious, costlyprocess.

Today, however, data migration associated with a PAS conversioncan be executed using tools that accurately define a policy'sdefinition—mitigating mapping surprises—and scrub data associatedwith mass data transfers—reducing custom code.

These tools also automate the processes at predetermined policyterm periods, providing continuous movement of data, requiring lessoverall handling, and less time to verify and troubleshoot. Set theschedule and the systems take it from there with human interventiononly when necessary—rendering PAS conversion projects bothmanageable and cost-effective.

Myth: There is no need for detailedreporting during policy administration system conversion becauseit's a back end process.

Myth Busted: Because the conversion process ishighly complex, it's critical to know what's happening step-by-stepalong the way in order to avoid costly errors at the far end.Reports can answer key questions before those errors occur. Is thedata complete? Is it in the correct format? Are there duplicaterecords? Why was a transaction stopped?

Reporting tools help clear up data obstructions in a PASconversion. If you can identify the bottlenecks, you can quicklyimprove the elements used in the conversion resulting in fewer datamismatches and fewer hours spent trying to decipher what wentwrong. Reporting tools can pinpoint these hiccups and help acarrier correct them immediately.

Myth: A policy conversion tool is a once and donesolution and isn't worth the financial investment.

Myth Busted: Carriers may hesitate to invest ina PAS migration solution for fear that once the conversion iscomplete, they have a useless tool sitting on the shelf. Insurerscan maximize return on their investment by choosing reusable toolsthat can handle many aspects of ever-changing back end systemconfigurations and underwriting appetite.

The same tools used for policy migrations can also automatebook-of-business analysis, inter-carrier book rolls, and rate andunderwriter modeling. If the solution is designed specifically forthe P&C industry and offers a balance of mapping and UIcapabilities, it can be used over and over again.

Conclusion

Implementing a new core system is an enormous strategicinvestment, and risk-heavy. Moreover, until recently,carriers have been forced to take on additional risk by inevitablypopulating the new system with redundant or inaccurate data, orspending a fortune in development hours trying to prevent it—costlyand frustrating steps backward. Fortunately, solutions tohelp get clean, accurate data into a new core system quickly areimproving all the time. Carriers should not have to sacrificecost for accuracy—or vice versa.

(Steve Hauck is the Co-CEO of Agencyport. He most recentlyled his management team in a buyout with Thomas H. Lee Partners andDowling Capital Partners of Sword Insurance from the Sword Group.Prior to being named Co-CEO of Agencyport Software, Steveco-founded AgencyPort in 2001 after nine years in financialservices sales and marketing. Before AgencyPort, he was a directorwith The E*Trade Group and head of US Institutional Sales andMarketing. He holds a bachelor's degree from Denison