As much as insurance technology leaders hate being saddled with legacy policy systems that keep their companies from reacting to changes in a nimble manner, they all seem to have a grudging respect for the 20th century technology that lasted for so long.

But will the systems they've put in place—or are preparing to install—offer the same kind of long-term stability for insurers? It's all guesswork right now, but PropertyCasualty360.com asked six insurance technology leaders the following question to gain some insight on the subject:

Do you believe the life expectancy for modern policy administration systems will match that of the legacy systems so many insurers are still using?

Click on the following pages to see what these IT leaders had to say: Judith Haddad of Patriot National, Larry Fortin of Millers Mutual, Ernie Pearson of Secura, Stuart Tainsky of PURE, Chris Haines of Buckeye Mutual, and Greg Ricker of Atlantic Casualty.

Judith L. Haddad, executive vice president, CIO and CTO of Patriot National Insurance

The strengths that made most legacy policy administration systems viable long term are those strengths that are needed to leverage a modernized platform long term as well.

Typically those strengths include capabilities such as rating engines, forms libraries, and user-based configuration tables. Modern policy administration solutions must include those functions as well as include new technology to enable service oriented business processes to streamline business practices.

Removing old business functions that are labor- and system-intensive is important. Also, utilizing a separate business logic tier for rapid changes to the system is required. Done right, the modernized system will certainly have the longevity that legacy platforms have had in the past.

Larry Fortin, vice president and CIO for Millers Mutual Group I think the life expectancy for a modern policy system will be less than for current legacy systems. Newer systems will be easier to work with and implement and so I think insurers will move to different vendors more frequently.

However, with that said smart modern policy system vendors will continue to evolve their products quickly and so an insurance carrier will continue to get more value over time. The originally purchased system may look very different five years out. Will that be considered a legacy system?

I think best-of-breed systems will grow in popularity especially because many traditional end-to-end vendors now have separate functional components (claims, billing, PAS, etc.). The cost to make the jump to the modern systems is heavy and so adoption has been slower. In the future, a company that has made the jump will be more likely to upgrade components than what wasdone in the traditional legacy environment.

Ernie Pearson, IT Director, Applications Development, for SECURA Insurance

It's a tough call. On one hand, current policy administration solutions are increasingly modular, configurable, and extensible which should bode well for longevity. These systems are not the monolithic "do-it-all" solutions of the past so upgrading individual components as needed is a much more manageable effort.

On the other hand, recent years have witnessed a proliferation of solution providers with intense competition, the preference to buy versus build, and an increasing rate of change in both technology and business, which might logically reduce longevity.

Still, core policy administration replacement projects are expensive, relatively high risk, time consuming, and are not necessarily game changers. For those carriers that select the right vendor, I think that modern policy administration systems will approach the longevity achieved by their predecessors, but that they will adapt and evolve much more quickly than in the past.

Stuart Tainsky, senior vice president and CIO, PURE

As a policyholder-owned insurer dedicated to meeting the property & casualty needs of high net worth families, PURE's focus is consistently on delivering world class service to our members (policyholders) and independent agents. In our experience, the newer policy administration systems that we use serve as a competitive advantage, as they enable us to increase our agents' ease of doing business, resulting in an overall more positive experience for our members.

While the length of time that some of these older custom legacy systems have survived is very impressive—many of them have been around for 25 to 30 years—newer systems have come a long way since their "birth" at the start of the millennium, and the reasons for migrating to one of these newer systems are very well documented. At PURE, we've seen that accounts can be quoted more quickly, quotes can be bound more easily, and changes and endorsements are more seamlessly processed.

As carriers are now performing migrations, they typically have a higher level of discipline around requirements and general documentation around their conversions. Additionally, more attention is paid to the underlying structure of how their data is being stored.

Companies are increasingly moving away from the "black box" technology where they put factors in and magically generate rates. With this enhanced knowledge and comfort, I believe the ease and willingness to migrate to the next generation of software will be increased when it is developed and launched.

R. Christopher Haines, Vice President, Technical Operations and CIO, Buckeye Insurance Group

No. There are technology reasons behind this, but I feel a big reason parallels some questions about personnel. Will we see employees working at insurance companies as long as we have seen in the past? Will we see IT and other management positions being filled over and over with internal personnel moving up the ladder? I would say no to those questions as well.

Currently, it is somewhat common to hear stories of management personnel with 25, 30, and even 40 years of employment at the same company. Also, management positions were often filled over and over by internal resources moving up. I believe both of these lead to loyalty to things such as systems.

I'm not sure we will see this in the future. As we come to expect more frequent changes in management, often filled by external candidates, the more we should expect each new person to want to put their stamp on things and justify their existence at their new company.

These external management hires may also try to push for the implementation of systems with which they have previous experience. I feel these factors will have an effect on the length of the life of policy administration systems within insurance companies.

Greg Ricker, senior vice president and CIO for Atlantic Casualty

Modern policy admin systems have been designed and built in a less monolithic manner than their predecessors. Typically one system performed a number of functions from rating, underwriting, policy issuance, and billing, to agency portals, claims, and reporting. Maybe a rule processing engine and an image system were bolted-on, but one single system performed all of the core processing.

Full scale replacement of these systems is difficult due to the years of product expansion and software changes, so they tended to stick around for a very long time. Today's systems are much different, being designed from the start where one component can be removed and replaced with another.

With the rate technology continues to change and the impact of this change, it's important to be flexible in your architecture. Seven years ago tablet devices and mobile applications weren't on many radar screens. Today they are critical.

As technology continues to advance, policy admin systems with their services-based architectures will continue go through many changes, and you'll see life spans becoming much shorter.

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