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