If there is one word to describe what insurance carriers are demanding from their policy administration systems today, it would be flexibility. You wouldn't have heard that requirement a few years ago, but today's policy systems have gained flexibility thanks to insurers' and vendors' ability to integrate components into the solutions. This has been made possible through the help of (everyone say it at once): service-oriented architecture (SOA).

Dave Gleberman, senior vice president of the consulting group Appix, sees plenty of activity with component solutions in the market, particularly in rating engines, billing, document production, claims processing, reinsurance, and imaging and workflow. "These are all pieces being replaced or augmented in a traditional end-to-end solution," he says. "SOA architecture is permitting carriers to unplug some of those components and replace them with others."

Software finally is at a place where it's in sync with the insurance industry, particularly on the property/casualty side, Chad Hersh, senior analyst in the insurance practice for Celent, points out. "We're fond of saying you can't generate demand in the insurance market, but you can release pent-up demand. In this case, a lot of what's happening is carriers have needed these [components] for a while, but there have been internal and external hurdles," he says, adding there has been too much siloed management, which has kept things such as personal and commercial lines from teaming up. "We're actually seeing a tremendous push for that–combined personal/commercial solutions–and that's stimulating market demand," indicates Hersh. "Modern, flexible solutions that actually meet carriers' needs are stimulating a lot of carriers to relook at things."