Anil Chitale is senior vice president and leads the p&c division at MajescoMastek.

There are six remotes in a bowl on your coffee table, if you include the gaming joystick. Five of the remotes operate specific units (surround system, cable, Blu-Ray, TV, etc.) and one is a universal remote. When you're ready to watch television you can juggle three of the remotes, or pick up the universal.

The universal remote is a clever gadget, but has its own issues. First, it has 52 buttons and a knack for reprogramming itself every month or so. You realize you never use 95 percent of the functions, making it counter-productive to weed through all the buttons just to find "record" or "mute." While the universal remote was built for everyone to be able to use it, it was not specifically designed for you (the one who matters).

Insurers face a similar conundrum when looking at core system replacement. There is a plethora of core solutions in the market today with functionality stacks akin to a universal remote. However, the best, new, all-in-one, universal, one-size-fits-all core system ends up stereotyping insurers rather than addressing the uniqueness of each. Oftentimes, third parties join in to customize and implement the system, while the core solution providers take a "hands-off" approach when the rubber meets the road.

What insurance organizations need is something that is right for them, not everyone else—right for now as well as the times to come. And, a system backed by an unrelenting commitment to service an insurer's needs throughout and after the implementation.

What works, isn't always what works best.

Consider the vast differences between p&c insurers as you think about a one-size fits all approach. First, there are tiers. Is your organization a tier 1, 2, 3 or 4? What kind of business do you write? Commercial lines? Personal lines? Both? Have you been selling the same niche product for decades? Are you an opportunistic, aggressive insurer, good at trend tracking and taking advantage of short-term opportunities? Is your target market as narrow as a particular affinity group or is it as broad as the entire U.S. population between the ages of 18 and 85? Do you need deep analytics or is blanket marketing continuing to work for your company?

Considering these perspectives, the idea of a universal core system working well for everyone seems virtually impossible. No two companies are exactly alike, even companies that seem to be close competitors. Each organization, yours included, has its own fingerprint, DNA, processes, and varied needs. Just because six buttons on the remote work well for you, doesn't mean that the rest of the buttons are applicable to your needs. Likewise, investing in a new system based on features and functionality alone may offer an insurer a lot of functionality, but not necessarily the right functionality.

Does this mean an insurer should start with nothing and custom-build a core solution to exacting specifications? Probably not. You wouldn't want to build a remote from scratch either. The reality is that there is a spectrum of core systems as well as system providers. A quick look at the broad picture can help achieve a balanced perspective on what might work best for a given insurer.

Thinking in Global Terms: The Broad Criteria for Evaluation

Key areas to consider when replacing a core system might include: commitment, expertise, capabilities, and the maturity and flexibility of the system.

Buying a commitment

Investing in a core system also means buying into a 10-20 year commitment with a system vendor. What will that relationship look like in 10 years? Is the vendor just as committed to the industry as you are? Will they "have your back" when the industry shifts or regulatory needs change?

Large IT providers, especially those who specialize in ground-up system building and business process outsourcing (BPO), have a tendency to gravitate to underserved industries, resulting in their investments and resource serving a wide range of industries. A better fit might be an organization committed to the insurance industry, demonstrated by their successful, long-term relationships with other insurers.

Investing in expertise

Are you looking to invest in software writing expertise, insurance-focused technology expertise or a company with a pre-built framework allowing for the application of your own expertise?

All of these types of provider companies exist in the insurance market. But a solution that comes from an insurance-focused technology vendor will likely be the one that requires the least amount of transitional work to make it fit.

A vendor that is investing in insurance-specific R&D may be able to more readily grasp the uniqueness of each insurer's requirements. Their system will typically have pre-programmed expertise common to most insurer environments, the flexibility to adjust to unique needs, and the ability to 'organically' improve over time with new releases and upgrades.

Judging capabilities beyond system features

You might be well served by considering the entire IT picture, identifying specific needs, then applying these criteria to the RFP. Once the new system is in place, will the organization be able to service and support it? A true partner will be able to provide not just a system, but also the services that will be needed before, during and after the implementation. A solution provider who has made investments in the industry will offer proven software assets as well as a broad range of services, such as domain-aware testing, data extraction, configuration capabilities, and more.

You may discover you don't really need a new core system at all, and might be best served by a hosted service offering. Does the vendor under consideration also offer a proven SaaS/Cloud model?

Analyzing the maturity and flexibility of the system offering

Sure, there is always some insurer willing to be the first to implement a new solution, but for most insurers the ideal system is proven and mature, offered with the bulk of the functionality that is needed.

A proven and mature solution will also have a history of being regularly modernized with new capabilities, and support of new technologies. It is also flexible enough to be "sized" to fit each insurer's needs now and "resized" to fit the future. Once implemented, the organization should feel like the system was custom-made, even if it is using a common core system as the framework.

Remember that it's all about you (and your company).

In a day and age where customer-centric focus is the norm, core system replacement is a process where it can pay to be a little selfish for the sake of your organization. Evaluate well and make the solution fit your unique criteria, and your organization will enjoy the benefits for decades to come.

(Anil Chitale, Senior Vice President, leads the P&C division at MajescoMastek. He was the Co-founder of STG and a principal architect of the STG suite of products. He can be reached via email at anil.chitale@majescomastek.com)

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