Building the Case for Policy System Replacement

Neil Betteridge, Director, Product Marketing, Guidewire Software

Our current difficult economic environment has not diminished insurers’ interest in addressing the challenges posed by legacy core systems. Replacing aging policy admin systems continues to be a top priority project for property/casualty insurers in 2010. While the need is widely acknowledged, building the business case to proceed with the major undertaking of replacing one, or more, policy systems has sometimes posed a challenge. There are a number of areas where significant hard and soft benefits can be realized from a new underwriting and policy administration system.

Business Agility

In some of my conversations with insurer business executives over the past few months I was struck by a disheartening sense of d?j? vu. These experienced, resourceful managers had assessed the challenging, dynamic market environment their companies are operating in and identified a range of possible strategies and actions to compete effectively and improve results. Regrettably, far too many of their ideas were still being thwarted by limitations imposed by inflexible legacy systems. Gaining the business agility needed to offer the right products, and adapt processes to do so efficiently in a manner agents and customers expect is a critical imperative.

As part of their research into product development best practices and speed-to-market, analyst firm Celent developed a product portfolio freshness model that demonstrated notable increases in revenues and profit for insurers able to reduce cycle time for bringing new and enhanced products to market. Introducing new offerings, or updating existing coverages and rates, can be done much more rapidly with a modern, configurable policy administration system. As an indicator of the opportunity, think about how many project requests have been shelved as infeasible, and their benefits foregone, because the time and effort to implement them in your current environment was prohibitive.