PAS Replacements Hitting Critical Mass
As larger insurers bring their new systems online, smaller carriers begin to upgrade.
Pressed to increase their efficiencies and grow more profitably, the latest studies show that more than 50% of insurers are making plans or in the process of replacing their policy administration and underwriting systems.
“Insurers are looking to grow their top-line revenue,” says Martha Conlon, Senior Vice President of Research and Consulting at the insurance technology consultancy Novarica. “That means rolling out new products quickly, extending into new jurisdictions, automating as much as possible… These are the drivers for policy admin solution replacements.”
Historically, Conlon says, policy admin system (PAS) replacement activity has mainly taken place among large and mid-size insurers. What’s changed over the past couple of years is that smaller players—P&C carriers in particular—are now flocking to the PAS upgrade market. But while mid-size insurers are beginning to wrap up their replacement projects (see Slow and Steady Wins the Upgrade Race, p. 18), smaller insurers are just getting started.
Insurers that have completed their projects have begun to realize the many anticipated benefits. Among them:
1 Decreased time-to-market for new products and product changes.
2 Faster, more accurate service and greater pricing visibility for customers and agents.
3 A flexible technology platform that provides the foundation for new digital capabilities such as social media and mobile access.
4 Lower operational costs for system maintenance, policy printing and customer mailings.
5 Reduced staffing requirements for functions such as data entry and system management.
6 Improved regulatory compliance through automated pricing and government form updates.
7 Increased data sharing for underwriting, enhanced business intelligence and predictive analytics.
8 A greater ability to attract and retain top producers, data engineers and highly-skilled IT technicians who want to work with leading-edge technology.
Small insurers have the same or very similar business objectives as their larger counterparts, and therefore the same motivation to upgrade their systems. “If you’re a $200 million premium commercial lines writer,” Conlon points out, “you probably pretty much have the same goals as a $1 billion-line writer. You have 15 or so different lines of business that you need to support; you want to make one or two changes per year, per line of business, per state, and you want to be able to add new digital capabilities.”
The difference, she says, is that the smaller insurers have seen so many larger companies successfully traverse these replacement efforts, by now, that they are less daunted by the magnitude of the undertaking and more willing to move forward with their own modernization initiatives.