Core Systems, Agent Portals Top the To-Do List for Insurers in 2011: Novarica Report

With 2011, budgets holding within historically average ranges, insurer priorities are focused on core policy administration environments, agent portals, and business intelligence, all with a goal of improving business agility, insights, and service quality.

Those are the points taken from Novarica’s second annual state of the industry report, “Insurance Information Technology 2011: Across the Core Systems Map.”

Policy administration (including rating, underwriting, and product management) is the highest priority area for insurers in 2011, since it is critical to introducing or modifying products, serving customers and distributors, and sourcing data for BI, according to Matt Josefowicz, partner and managing director of Novarica.

The scope of policy admin system (PAS) work varies widely, from core to full suites, adds Josefowicz.

“Claims is a perennial focus area for property/casualty and is on many large insurers’ priority lists,” he says. “Billing as a stand-alone area is not at the top of many lists for 2011, but more than half of P/C PAS suite projects include billing. As the most common interaction that insurers have with their customers, billing is a service as much as a financials issue.”

Agent portals offering both informational and transactional functions have become a key component of insurers’ strategy as they strive to be easy to do business with for their distributors, explains Josefowicz.

“Adoption of electronic applications varies by product line, with more complex underwritten products lagging behind simpler products,” says Josefowicz. “With the exception of specialty and large commercial lines, transactional agent portals are ubiquitous among property/casualty insurers. In 2011, P&C insurers are focused on enhancing these portals, including building out their capabilities.”

Business intelligence is another area of focus with insurers investing in BI and predictive analytics to improve underwriting, claims, marketing, and internal operations, especially in P&C.

Document Creation/CCM and Document Management/BPM are less common areas of high priority investment, according to the report.

“Most larger companies have acceptable solutions in place,” says Josefowicz. “Smaller companies do not prioritize these highly, but they do recognize needs in this area.”

Reinsurance and financial systems are generally considered low priority for this year, with the exception of a few large property/casualty insurers with active projects primarily related to consolidation.

Infrastructure and security tends to be an ongoing low-grade issue rather than an acute issue that jumps into the top-three priorities for most companies, maintains Josefowicz. One exception is server virtualization, he explains, which is an active priority for companies that haven’t already done it. There is a movement toward use of cloud/asp/hosted solutions in P&C, but Josefowicz reports most companies are still concerned about security and integration.

“For 2011, top projects are similar to those in 2010—policy administration systems, agent portals, and business intelligence,” he says. “Claims projects are also somewhat common among large P/C insurers. Overall, 2011 looks to be another year of do a lot more with a little more.”