How One Carrier Successfully Modernized their Policy Management Software

How One Carrier Successfully Modernized their Policy Management Software

Article

Carriers face an array of challenges in their modernization efforts for core administration systems. Key among them are that the old systems themselves may have become the product documentation, and there’s no guarantee after half a century or more that they are correct. The variances from what are filed and approved products can be significant and surprisingly expensive to remediate. Also, old product features were designed around the system capabilities “back in the day”. Recreating those capabilities and features in modern systems can be expensive and create new challenges in keeping modern systems current with vendors.

Robert McIsaac, FLMI, LLIF, Head of Life, Annuities and Benefits Insurance, Aite-Novarica Group

Why did the carrier decide to modernize its legacy insurance policy admin systems (PAS)?

As a global leader in pre-funded Final Expense solutions, one carrier made a strategic decision to modernize the technology that supported their most critical products. In order to accelerate product innovation, retire legacy systems and reduce costs they needed to modernize their policy administration systems and consolidate all Final Expense business on a modern platform.

The insurance carrier’s legacy core systems challenge

The carrier’s back-office platforms were out of date‒to the point that technical and architectural limitations of the systems used to administer their Final Expense business were creating significant business risk.

Although the aging PAS infrastructure had been upgraded over the years to enable it to continue to support the business, the ad hoc solutions created their own set of issues. In particular the company was struggling with the amount of data duplication caused by the fixes and also the proliferation of architectural standards that made managing their IT landscape a challenge. Although the systems still worked to maintain existing business, they had become expensive in terms of the increased need for support and high development costs.

The legacy insurance PAS systems were also becoming more difficult to manage with each passing year. The out-of-date user interface was neither intuitive nor easy to use. The system was so old it still used old ‘green screen’ interfaces that had to be navigated through menus.

And the PAS itself was complex and so difficult to learn that the onboarding of new staff to the point where they were proficient in its nuances took almost a year.

Code challenges from the last century

While existing products could still be administered on the PAS, new product development and product changes were a big challenge. All new requirements had to be hardcoded and the programs over time, come to contain a mix of code written for old products and code for new core products like Final Expense.

To make matters worse the PAS still incorporated pre-2000 code, which meant they would face legacy Y2K issues in 2020 and 2030 if something wasn’t done.

Legacy policy admin always causes data issues

Data is at the root of many challenges. Life carriers tended to build relationships tied specifically to contracts, rather than targeted personas. Again, over time, data that isn’t used for transactions tends to become stale. Run stale data through conversions in the past and you have the very definition of “dirty data” which can also be expensive to remediate and attract regulator attention when things go badly.

Robert McIsaac, FLMI, LLIF, Head of Life, Annuities and Benefits Insurance, Aite-Novarica Group

Data challenges

Data duplication and proliferation was a big problem for the carrier due to the flat file structure of the old policy admin systems. Addresses, for example, were duplicated in many locations, rather than just one with links to the relevant products and policies. When the data copied to ‘bolt-on’ systems during upgrades was factored in, there was far too much redundant information. The needless data overhead increased storage costs, and also created the risk of data inaccuracy.

The data was also not very useful for modern business needs. The unique and complex file system didn’t allow for integration with a modern self-service solution like a customer and agent portal. And there were no good business intelligence tools that could be used to turn that data into useful information.

PAS modernization goals

Given the increasing technical debt and the growing inability of the PAS to deliver on developing business needs the need to modernize became clear. They obtained buy-in to the decision and began the search for a vendor partner who could implement the best PAS for servicing both new and existing products, as well as migrate the in-force policies of the legacy system.

They wanted a system and a partner who would be able to help them:

  • Improve customer experience
  • Lower expenses
  • Enable growth through innovation to ensure business value from investment in IT
  • Easily innovate (without code changes) to align with business goals and processes
  • Facilitate long-range competitive advantage in the marketplace
  • Be flexible enough to enable fulfillment of any future strategy or product development required because of changing market, consumer, regulatory or business needs

The search for the best solution

During their comprehensive vendor selection process, the carrier examined a number of PAS solutions and vendors. Each one of them would be an improvement on their legacy environment. However, the key to achieving their business goals in this project and providing a foundation for growth for the next generation lay, not in accepting policy management software that provided marginal improvements over their existing systems, but in identifying the system and partner that met all their requirements.

Read the case study to find out which solution was best and how it was successfully implemented.

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