Building Them Like They Used To

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

But will the systems they've put in place—or are preparing to install—offer long-term stability for insurers? The question we posed was: Do you believe the life expectancy for modern policy systems will match that of their legacy systems?

Here is what several IT leaders had to say.

JUDITH L. HADDAD

Executive Vice President, CIO and CTO, Patriot National

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, Millers Mutual Group

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, so insurers will move to different vendors more frequently.

Smart 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?

Best-of-breed systems will grow in popularity because many traditional end-to-end vendors now have separate functional components. The cost to make the jump to the modern systems is heavy, so adoption has been slower. In the future, a company that has made the jump will be more likely to upgrade components than what was done in the legacy environment.

ERNIE PEARSON

IT Director, Applications Development, SECURA Insurance

Current policy administration solutions are increasingly modular, configurable, and extensible which, should bode well for longevity. These systems are not the monolithic solutions of the past so upgrading individual components is a 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.

Core system replacement is expensive, high risk, time consuming, and not necessarily a game changer. For 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.

GREG RICKER

Senior Vice President and CIO, Atlantic Casualty

Modern policy 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.

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 long time. Today's systems are much different in that 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 apps 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.