Policy administration system transformation

Core growth strategies for insurance companies

Legacy policy administration systems (PAS) continue to limit insurance companies’ potential for growth, making PAS transformation a growing business imperative. Explore the case for PAS modernization, a framework to help guide your PAS strategy, and four “no-regret” steps for alleviating market pressures and starting your transformation journey.

Innovating the core to drive business growth

Market trends indicate the business case for a core policy administration system transformation to be stronger than ever. Legacy PAS systems continue to limit an insurer’s potential for growth and its ability to meet its digital transformation objectives.

More carriers are undertaking core transformation programs. A 2020 survey of insurance CIOs reveals that 37% would choose to allocate a hypothetical 10% increase in discretionary technology budget to core transformation and cloud projects, which would be 14% higher than the second-highest category, innovation and growth. As adoption continues to rise, it will be increasingly difficult to remain competitive without a modernized core that enables the digital capabilities needed to thrive in the market.

The case for group insurance policy administration transformation

When it comes to a PAS transformation, group insurers can achieve accelerated growth by focusing on the PAS’s role across the following strategic levers.

  • Customer experience: The PAS serves as the system of record for employer and employee data and is vital in delivering a differentiated customer experience by simplifying and digitizing processes that leverage data from sales and underwriting activities while also minimizing onerous back-and-forth with the carriers.
  • Product innovation: The PAS provides the digital core needed to develop the integrated product capabilities necessary to keep up with ever-changing market demands.
  • Partner engagement: Providing a platform with plug-and-play capabilities to employers, brokers, agents, and other ecosystem partners simplifies data and workflow integration in an increasingly complex web of interconnected business relationships.
  • Organizational agility: As the digital core of the organization, the PAS must have the infrastructure and integration capabilities needed to enable innovation and organizational agility that will drive continued growth.
  • Data and analytics: Analytics and artificial intelligence contribute to large amounts of value in data-intensive workflows like underwriting and rating.

Group insurance policy administration transformation approaches

One of the most difficult decisions to make with regard to transformation is which approach to employ when having to choose between incumbent legacy PAS solutions and a new, modern solution. There are several different approaches to deliver a PAS transformation, which include a combination of technology and sourcing strategies.

Developing the right PAS strategy for a group insurer requires a multilevel analysis of the business model, strategic priorities, technology needs, available resources, and timeline objectives while also selecting the right solutions. A nuanced PAS strategy that aligns with the business’s strategic levers will potentially deliver key capabilities that drive impactful outcomes.

The following framework provides a model for characterizing the differences between approaches Deloitte has leveraged in the industry.

Getting started with a group insurance policy administration transformation

Independent of the decision to commit to a full-scale transformation, there are four “no-regret” steps that all group insurers should take. These initiatives not only provide immediate value by alleviating some of the pressing challenges carriers face today, but also create the foundation for additional benefits that can be achieved through a PAS transformation—either today or in the future.

Optimize product structure by developing modular product architecture and simplify business operations processes.
Establish business-aligned reference technology and digital architecture to define a core systems vision and guide future investment.
Modernize data and integration environments to simplify future investments and provide a framework to make data-driven product and customer decisions.
Develop tiered service delivery models across segments or cohorts.

In addition to taking the “no-regret” steps, there are several key activities that are vital to maximizing the value that can be achieved by a PAS transformation, no matter where an organization currently is on its transformation journey.

  • Plan digital transformation design workshops to align on the strategic goals–enabled transformation.
  • Formulate a PAS transformation business case to determine the value proposition of undertaking a PAS transformation.
  • Go through the PAS vendor selection process to identify the vendors that are most aligned to the objective of the transformation.
  • Perform a PAS program health check to evaluate all ongoing initiatives (including PAS, if currently underway) and see if they align with the strategic vision.
  • Start a PAS implementation with an experienced strategic partner.

Taking the next step

While a core PAS transformation undertaking is a complex journey, the capabilities and benefits delivered by modernized PAS solutions far surpass the pressing needs of the current market. Additionally, they also create a stable digital core for future growth that is robust enough to weather market disruptions. The time to act is now in order to remain competitive in the group insurance market.

Fullwidth SCC. Do not delete! This box/component contains JavaScript that is needed on this page. This message will not be visible when page is activated.

Did you find this useful?