Virtual Viewpoint: How to Determine the Cost of Configuration

(Editor's note: Occasionally, we ask an insurance technology leader a single question to elicit a response that will enlighten and inform the Technology channel readership. If you would like to participate, contact the editor at rhyle@sbmedia.com)

Question: What is the total cost of ownership for true configurability?

Heather Peacock is executive vice president for OneShield, Inc.: True configurability can reduce the total cost of ownership (TCO) by minimizing or eliminating expensive professional services during and after the implementation, and by enabling internal users to gain operational and process efficiencies, as well as product and market agility without involving in-demand IT resources. 

True configurability requires a design tool that goes beyond just the definition of functional insurance products, including rates, rules, forms and product definitions. However, it must extend to all aspects of the insurance enterprise, including processes, organizational structure, and the insurer's ecosystem of suppliers, distribution channels and customers. The configuration capabilities of the design tool should extend to object model, partner and customer management, security, workflow management, user interface and integration.

When insurers move to configurability beyond product, operational efficiencies that were not possible before can be identified more easily, as evidenced in the examples below:

• With a configurable workflow and business partner management, reinsurers can be brought into the process much earlier, and can collaborate with an insurer's underwriters to construct policies requiring facultative reinsurance.
• With configurable asynchronous processing, insurers can construct bespoke processes to solicit business from lost prospects early enough in the renewal season that the chances of getting the business are improved dramatically.
• With configurable presentation, insurers can technology-enable MGA partners to put up program business websites aimed at particular markets.

As a result of being highly extensible, a configurable system does not require the costly investments of time, money and effort associated with coding, which can lead to substantial implementation and long-term maintenance costs. Insurers stand to gain significantly with regards to improving service levels, cost controls, operational savings, streamlining enterprise business processes and achieving a more customer-centric view when a configurable system is leveraged to its full potential.

Heather Peacock is executive vice president for OneShield, Inc. She can be reached for further comment via email at hpeacock@oneshield.com.