PAS Re­place­ments Hit­ting Crit­i­cal Mass

As larger in­sur­ers bring their new sys­tems on­line, smaller car­ri­ers be­gin to up­grade.

Digital Insurance - - STRATEGIES - Martha Con­lon No­var­ica BY ELLIOT M. KASS

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.

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