4 Fac­tors Why In­sur­ers Might Not Re­place Core Sys­tems … and Some Pos­si­ble Re­sults

Digital Insurance - - STRATEGIES - By Tom Ch­es­brough, SVP StoneRiver, Inc.

MAs you face th­ese chal­lenges, in­dus­try an­a­lysts fre­quently re­peat: Car­ri­ers must trans­form them­selves if they want to thrive. The typ­i­cal sce­nario:

1. Your com­pany is cur­rently “steady,” but new cus­tomer de­mands and com­peti­tors have emerged. It’s harder to beat the com­pe­ti­tion. With­out new prod­ucts and ser­vices, com­pany value will erode.

2. To thrive, the or­ga­ni­za­tion needs to rein­vent it­self by adopt­ing a new path, us­ing new tech­nol­ogy. With­out rein­ven­tion, the com­pany will fall be­hind for­ward-think­ing com­peti­tors. So­lu­tions may re­quire tech­nol­ogy from ven­dors like StoneRiver.

Fre­quently adopt­ing a new path in­volves com­pet­ing pri­or­i­ties for bud­get, time and ca­pac­ity. If fo­cused on shorter term needs of cur­rent sys­tems, the car­rier uses th­ese pri­or­i­ties to re­main with the sta­tus quo.

In a nut­shell: Take ac­tion. If your team thinks your com­pany can rely on wraparounds to keep up with the pace of change, they are avoid­ing the is­sue of sup­port for your core sys­tems. Stick­ing with the sta­tus quo won’t po­si­tion your or­ga­ni­za­tion to com­pete in the fu­ture.

Four fac­tors that busi­ness lead­ers use to put off the in­evitable changes needed: time, cost, peo­ple, and risk to the busi­ness.


ake money, save money, beat the com­pe­ti­tion, ap­peal to agents, and cre­ate new prod­ucts to keep up with change. Th­ese are the tough is­sues your com­pany faces. For any sys­tem project, car­ri­ers want to avoid a run­away ef­fort that spends time and uses re­sources—and then have to abort the project and go back to look­ing at sys­tems.

An­other el­e­ment is the time re­quired for im­ple­men­ta­tion. Some sys­tem im­ple­men­ta­tions can be multi-year projects. A phased ap­proach may be pos­si­ble, but they in­volve more ex­pense with du­pli­cate in­ter­faces, ad­di­tional re­port­ing and extra sys­tems sup­port. Ul­ti­mately, phased ap­proaches de­liver ben­e­fit ear­lier, but you need to con­sider the im­pact on your in­vest­ment. StoneRiver has done hun­dreds of im­ple­men­ta­tions that in­clude both phased and big bang … we can guide you to the right choice for your suc­cess.


The cost of the ini­tial cap­i­tal ex­pense can also be a barrier. It’s dif­fi­cult to write a check for a new sys­tem while still pay­ing for the ex­ist­ing one. Car­ri­ers need to un­der­stand which sys­tem ven­dors tai­lor the cost and pay­ment struc­ture to soften the fi­nan­cial im­pact un­til the car­rier is gain­ing ben­e­fit from the sys­tem.


Many com­pa­nies have de­creased head­count sig­nif­i­cantly and feel they don’t have re­sources for the ef­fort re­quired for a new sys­tem. It helps to work with a ven­dor with so­lu­tions that au­to­mate work­flows and that are in­tu­itive and easy to learn. Equally im­por­tant is a ven­dor with an im­ple­men­ta­tion method­ol­ogy that in­volves a core team. Af­ter sys­tem set up, it’s usual to ‘train the trainer’ and then train on sys­tem use.

The skill set of cur­rent staff may be tar­geted to­ward le­gacy, and it would be dis­rup­tive to the or­ga­ni­za­tion to re­tool/re­train ev­ery­body. In your com­pany, who are the top busi­ness and tech­ni­cal peo­ple? If they’re near­ing re­tire­ment, it’s even more crit­i­cal to start im­prov­ing sys­tem doc­u­men­ta­tion and build­ing a new work­force. Hav­ing a strong mod­ern plat­form like StoneRiver’s In­sur­ance In­te­gra­tion Plat­form (IIP®) can also help at­tract new peo­ple to the or­ga­ni­za­tion.

De­pend­ing on when ex­ist­ing sys­tems were im­ple­mented, staff may have been part of that ef­fort and feel some own­er­ship in the cur­rent process. There may be a de­sire to recre­ate what they have rather than re­think and trans­form.

Risk to the Busi­ness

Car­ri­ers per­form new sys­tem im­ple­men­ta­tions in­fre­quently, so the project might seem daunt­ing. While car­rier per­son­nel won­der what needs to be done and how to do it, there’s usu­ally some per­ceived risk around the im­pact on the or­ga­ni­za­tion and its busi­ness rep­u­ta­tion.

Thor­ough dis­cus­sion of all risk el­e­ments is crit­i­cal. No­body wants billing op­er­a­tions up­heaval. Ev­ery­body wants to keep agents sat­is­fied. Busi­ness in­ter­rup­tion af­fects rev­enue. Car­ri­ers want to go live “with a whis­per”—with­out busi­ness in­ter­rup­tion. With a soft­ware ven­dor that has proven method­ol­ogy for core sys­tem re­place­ment, car­ri­ers have a deeper con­fi­dence in suc­cess­ful project com­ple­tion.

What’s com­ing down the road? No one knows, but car­ri­ers need to grow and stay rel­e­vant by deal­ing with in­fra­struc­ture, with flex­i­ble op­tions for oper­at­ing in the cloud, and with big data from the In­ter­net of Things. Then there are por­tals to streamline work­flow, di­rect self ser­vice to cus­tomers, busi­ness in­tel­li­gence and in­te­gra­tion of all th­ese com­po­nents. Clearly, with­out the right sys­tems, be­ing an ef­fec­tive car­rier will get harder and harder.

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