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Core systems strategy for policy administration systems
Legacy and insurance system modernization
A study by Deloitte and LIMRA uses results from a recent survey of life and annuity (L&A) insurers to explore key insights on core systems transformation (CST) as part of an insurance system modernization initiative.
- Core systems transformation efforts
- Key considerations for modernization
- Join the conversation
- Related topics
Core systems transformation efforts
Seventy-one percent of L&A insurers are in the process of, or have already completed performing, a policy administration systems (PAS) modernization. This is not a surprise as current economic conditions have given many L&A insurers a renewed interest in strategic investments. As a result, insurance system modernization and replacing legacy systems has surfaced as a top priority for many L&A insurers. Is this a viable next step for your organization?
The insurance systems modernization journey is not for the faint of heart; it can be a long and challenging endeavor. In fact, many organizations are just now seeing the benefits of their labors.
To learn about best practices and what other companies like yours are experiencing, read the report developed by Deloitte and LIMRA. This report takes a closer look at the state of modernization efforts by L&A insurers in the United States and Canada. LIMRA surveyed 58 companies in the United States and Canada to learn more about their current core policy administration (PAS) legacy systems and plans for modernization.
Explore the following insights on core systems transformation as part of an insurance system modernization initiative:
- What are the primary business drivers behind core systems transformation initiatives?
- What are the key factors affecting the solution decision criteria?
- How big is the legacy PAS problem and where is your organization in the modernization journey?
- What approaches are insurers employing to modernize systems?
- How can insurer success be achieved?
Download the report for more insights.
Key considerations for modernization
Most insurance executives will only get one chance to complete a successful insurance system modernization at their current organizations. These projects are professionally risky ventures due to the perils of time and budget overruns.
To be effective, there are a few other best practices to add to a project’s critical success factors checklist:
- Build business cases early: Develop a realistic business case with complete costs and benefits associated with the program. Start the business case development early in the vision and strategy development process. Include key stakeholders in the process and socialize the business case. Be prepared for a marginal or even a negative ROI initially. Continue to quantify the risks/probabilities in financial terms in an effort to provide a balanced analysis.
- Align executives: These programs are transformational and the leadership team needs the unwavering commitment of all impacted parties. As most of these programs are measured in years rather than months, fatigue can set in, priorities compete, or management restructuring can sabotage an important initiative. It is imperative to have the personal commitment of leadership to bring these projects to completion.
- Commit SMEs to the project: Generally a CST program will need to involve a company’s most knowledgeable and constrained resources. Subject matter experts need to be able to focus exclusively on the program. Back-fill day-to-day activities with temporary resources and new hire resources to allow the A-Team to deliver this project. Don’t forget rewards and recognition at milestone deliveries (results) of the project team, including partners and vendors.
- Assess realistic capabilities: Take initial stock of the team. Be honest about employee skills. Companies generally do not get two attempts to do a CST right. Engage with experienced professionals. These projects won’t initially be staffed without some incremental staff. Resist the tendency to go it alone. Rather, select partners and vendors carefully in key value-added roles and take advantage of their expertise and experience.
- Establish strong program governance: This recommendation is predictable, but bears inclusion. CST programs will usually take several years. Developing robust standards and a cadence for the program are essential to drive decisions, enhance communication, and create transparency and trust among the project team and stakeholders.