The recent Novarica report on policy administration systems reminded me that the property & casualty insurance world is once again getting both busy and interesting.
As we've learned over the years, every insurance carrier has its own needs so there is no "typical" carrier. It is interesting to note, though, that the vast majority of insurers surveyed by Novarica are planning to do some type of work on their policy systems in 2012.
The Novarica report showed that only 28 percent of large carriers are going to maintain their systems this year rather than make minor enhancements (28 percent); make major enhancements (13 percent); begin a replacement project (9 percent); or continue replacement already in progress (13 percent).
As for the midsize insurers, they appear to be even more aggressive. Only 18 percent are in maintenance-only mode this year. The midtier group's percentage of those beginning a replacement project (18 percent) is double that of the larger insurers.
The Novarica report states: "Core policy administration replacement is one of the highest priority projects among p&c insurers in the U.S. Driven by the need to support new channels (including online channels), improve speed-to-market for rate changes, and new product introductions, improve the ability to create new products and variants, optimize internal workflows, and improve access to enterprise data, core policy administration projects are at an all-time high."
The need to upgrade or replace their systems is hardly a surprise. The pain that carriers have experienced as they worked to become more agile while surrounded by behemoths has always been evident.
Insurers have been headed full steam through dangerous waters and it has proved costly as they have spent more time and energy on keeping the boat afloat rather than improving its performance.
As Chad Hersh, author of the report for Novarica says, "All of insurers' core business issues—speed-to-market, distributor service, efficiency, and data analytics—eventually come back to core policy administration systems."
The systems that can turn a carrier's performance from blah to bright depend on agility and dependability. It now appears even more carriers are finding ways to do something about this crucial issue. That's a good sign for all of us.
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