GOTCHA! 5 pit­falls to mod­ern­iz­ing PAS ... and how you can avoid them

Digital Insurance - - STRATEGIES - Kym Gully Engi­neer­ing and Tech­nol­ogy Lead Ac­cen­ture Life and An­nu­ity Soft­ware

Mod­ern­iz­ing your life and an­nu­ity pol­icy ad­min­is­tra­tion sys­tem (PAS) feels a lot like pi­lot­ing an ocean liner through a sea of ice­bergs. You’ve read all the “how to’s,” “glide paths,” and “roadmaps”; pre­sented your idea to se­nior lead­ers, eval­u­ated po­ten­tial ven­dors and geared up your team. Now it’s time to forge ahead. Will you safely ar­rive in open wa­ters, gen­tly graze a harm­less patch of float­ing ice, or … let’s not talk about the last op­tion.


The Ac­cen­ture team com­piled from more than 20 years of mod­ern­iza­tion projects across all sizes of life and an­nu­ity car­ri­ers the top five gotchas—all those hid­den and not-so-hid­den is­sues—that threaten the gains you plan to achieve from your PAS mod­ern­iza­tion. Learn how you can avoid these com­mon profit pit­falls and reap the re­wards you planned.

1. Waive the wa­ter­fall fail whale.

If you’ve ex­pe­ri­enced the pain of cre­at­ing a wa­ter­fall de­vel­op­ment plan only to learn that at the end of the months it took your team to cre­ate it, the re­quire­ments changed or you un­cov­ered an unan­tic­i­pated legacy “ice­berg,” then you know the neg­a­tive im­pact on project cost and time­line. Ap­ply a de­vel­op­ment method­ol­ogy that cre­ates gov­er­nance around first build­ing the high-value seg­ments of the project.

One way to speed de­vel­op­ment and quickly de­liver re­sults is with the agile scrum tech­nique in ad­di­tion to lean plan, do, check, act

(PDCA) to per­form con­tin­u­ous test­ing at the start of the project and through­out each de­vel­op­ment sprint. We also rec­om­mend a “back-to-base” strat­egy, so no de­vel­op­ment work is wasted and in­stead folded back into the base tech­nol­ogy plat­form—this ben­e­fits every­one on the plat­form and gives you a stronger start­ing point for your cur­rent or fu­ture up­grade im­ple­men­ta­tion.

Based on your busi­ness ob­jec­tives, pin­point the PAS el­e­ments that de­liver the great­est value in the short­est pe­riod of time and ap­ply a se­ries of sprints to si­mul­ta­ne­ously build, test and im­ple­ment them. Look for a provider that de­liv­ers up­dates on a reg­u­lar fre­quency so as new tem­plates, in­te­gra­tions and in­ter­faces be­come avail­able, you don’t have to wait more than a few months to re­ceive them.

2. Dodge down­stream dead ends.

In­sur­ers seek­ing to re­duce op­er­at­ing costs from their legacy pol­icy ad­min­is­tra­tion sys­tems of­ten over­look down­stream op­er­a­tions that could sab­o­tage up­stream PAS mod­ern­iza­tion gains. Does this sound fa­mil­iar: Your ac­count­ing team com­plains that they re­ceive old data from your pol­icy sys­tem. So, you up­grade your pol­icy ad­min­is­tra­tion sys­tem. Now ac­count­ing is happy, but the up­grade didn’t in­clude the cus­tomer por­tal. Now you ef­fi­ciently process poli­cies, but your clients can’t eas­ily in­put in­for­ma­tion. Your mod­ern­iza­tion doesn’t look so mod­ern to your cus­tomers. Con­sider mod­ern­iza­tion as an op­por­tu­nity for IT teams to col­lab­o­rate across the or­ga­ni­za­tion to drive ef­fi­cien­cies and po­ten­tially share mod­ern­iza­tion costs and ben­e­fits.

Look at your end-to-end process and iden­tify quick wins down­stream that if left un­touched, could di­min­ish up­stream mod­ern­iza­tion ef­fi­cien­cies. Some of the most com­mon down­stream is­sues that neg­a­tively im­pact up­stream gains in­clude slug­gish cus­tomer por­tals, slow un­der­writ­ing sys­tems and vin­tage doc­u­ment man­age­ment sys­tems. De­pend­ing upon the age of your down­stream sys­tems and your busi­ness ob­jec­tives, iden­tify which of the down­stream com­po­nents to tackle first. In our ex­pe­ri­ence, car­ri­ers that ex­e­cute a broader multi-year plan and ap­ply a phased-in ap­proach that de­liv­ers added up­front value, can ap­ply ef­fi­ciency gains and cost avoid­ance to fund later phases of the pro­gram.

3. Em­brace the ecosys­tem.

An ecosys­tem of ef­fi­ciency is key to be­com­ing a dig­i­tal and con­nected in­surer. That means hav­ing a plat­form with an ex­ten­sive li­brary of out-of-the-box, ACORD-stan­dard in­te­gra­tions. They should be pretested and val­i­dated in a pro­duc­tion en­vi­ron­ment, so you’ll shorten the path to im­ple­men­ta­tion and ex­pe­ri­ence few to zero is­sues upon go­ing live. In fact, with suf­fi­cient up­front prepa­ra­tion, we’ve seen one Tier One car­rier con­vert tens of thou­sands of poli­cies from its legacy sys­tem over a week­end—and op­er­ate busi­ness-as-usual on Mon­day morn­ing.

A flex­i­ble tech­nol­ogy plat­form for pol­icy ad­min­is­tra­tion is of­ten forced to work with an ecosys­tem that’s not as flex­i­ble. Ac­cen­ture re­search found that 94 per­cent of in­sur­ers say adopt­ing a plat­form-based busi­ness model and en­gag­ing in ecosys­tems with dig­i­tal part­ners are crit­i­cal to their suc­cess.1 Look for a plat­form that pro­vides fre­quent up­dates at pre­dictable in­ter­vals, bring­ing you the lat­est in­ter­faces and in­te­gra­tions—back­ward com­pat­i­ble and for­ward look­ing.

4. Mind the gap.

In­sur­ers face a po­ten­tially crit­i­cal knowl­edge gap re­sult­ing from a short­age of IT and busi­ness skills, turnover and a lack of busi­ness con­text around how and why mod­i­fi­ca­tions were de­vel­oped on these legacy sys­tems over many years. As­sign a strong project leader who is a change agent with ex­pe­ri­ence lead­ing large-scale change man­age­ment projects and re­ports di­rectly to ex­ec­u­tive lead­er­ship. With a broader change man­age­ment per­spec­tive sup­ported by the ex­pe­ri­enced legacy sys­tem op­er­a­tions team, the project leader in­spires and guides the team to a new way of think­ing. The goal is not to repli­cate ana­log or legacy pro­cesses in a dig­i­tal work­flow, but in­stead re­think the work­flow and adapt it to ben­e­fit a mod­ern dig­i­tal busi­ness.

Be re­al­is­tic about staffing. You’ll need ded­i­cated IT and busi­ness re­sources. Con­sider both func­tional and tech­ni­cal re­sources to en­sure a suc­cess­ful and timely im­ple­men­ta­tion. We’ve found that ded­i­cated teams re­tain con­ti­nu­ity, and when com­bined with lean and agile tech­niques, de­liver the project faster with­out jeop­ar­diz­ing daily busi­ness op­er­a­tions. Out­sourc­ing can also help nar­row the skills and staffing gap. Ac­cen­ture re­search in­di­cates that 75 per­cent of in­sur­ance ex­ec­u­tives be­lieve lead­ing or­ga­ni­za­tions will seam­lessly blend their in­ter­nal and ex­ter­nal work­forces into a bor­der­less en­ter­prise within five years.2

5. Build a bet­ter busi­ness case.

Don’t cre­ate a mas­sive mod­ern­iza­tion project that won’t get funded. De­fine a spe­cific and mea­sur­able busi­ness im­per­a­tive. For ex­am­ple, your com­pany wants to ex­pand into the in­dexed uni­ver­sal life (IUL) mar­ket. How­ever, your cur­rent legacy sys­tem is un­able to man­age these com­plex poli­cies with­out sig­nif­i­cant up­dates. Con­sider not only the top line growth from the new prod­uct, but also the bot­tom line ben­e­fits in your busi­ness case.

Bot­tom line ben­e­fits such as op­er­a­tional ef­fi­ciency are com­mon in most legacy sys­tem mod­ern­iza­tions, how­ever, look for down­stream ben­e­fits that strengthen your busi­ness case. Are there ca­pa­bil­i­ties that you and your agents can now de­liver? For ex­am­ple, will your new sys­tem make it eas­ier for to­day’s dig­i­tal con­sumers to do busi­ness with you? Ac­cen­ture re­search in­di­cates that 80 per­cent of in­sur­ers are pri­or­i­tiz­ing ease of use and sim­plic­ity in the user in­ter­face to en­sure a more hu­man-like ex­pe­ri­ence.3 A bet­ter user in­ter­face could de­liver ad­di­tional busi­ness and help re­tain ex­ist­ing clients. PAS MOD­ERN­IZA­TION: NOW WHAT?

How should you mod­ern­ize your pol­icy ad­min­is­tra­tion sys­tem? The an­swer de­pends on your busi­ness ob­jec­tives, cur­rent en­vi­ron­ment, hu­man re­source ca­pac­ity and of course, bud­get. Mod­ern­iza­tion is about re­think­ing your pro­cesses. It’s an open sea of op­por­tu­nity to mod­ern­ize your think­ing, free from the con­straints of your legacy sys­tem shack­les. Sure, you have pro­cesses that are ef­fec­tive, but be care­ful about lim­it­ing your new sys­tem’s po­ten­tial by trans­fer­ring, ver­ba­tim, legacy pro­cesses into your mod­ern sys­tem.

We’ve helped many lead­ing life and an­nu­ity in­sur­ers avoid the trap of wast­ing time and bud­get to re-im­ple­ment non-value added process steps they thought were needed sim­ply be­cause “the old sys­tem did it that way.” It’s lib­er­at­ing to learn how much more ef­fi­cient pol­icy ad­min­is­tra­tion can be—and the im­ple­men­ta­tion of a new PAS— when you fo­cus on the ar­eas that will drive value for your busi­ness op­er­a­tion.

The Ac­cen­ture team can help. We’ve im­ple­mented our Ac­cen­ture

Life In­sur­ance & An­nu­ity Plat­form (ALIP) for a half dozen clients in just the last two years. We’ll nav­i­gate with you, and as your busi­ness and the en­vi­ron­ment change, we’ll make sure you’re ready for the fu­ture. Learn how you can be­come fu­ture ready. Down­load our free Tech­nol­ogy Vi­sion for In­sur­ance 2017: https://ac­c­­nSxo

of in­sur­ers are pri­or­i­tiz­ing ease of use and sim­plic­ity in the user in­ter­face to en­sure a more hu­man-like ex­pe­ri­ence.

of in­sur­ance ex­ec­u­tives be­lieve lead­ing or­ga­ni­za­tions will seam­lessly blend their in­ter­nal and ex­ter­nal work­forces into a bor­der­less en­ter­prise within five years.

of in­sur­ers say adopt­ing a plat­form-based busi­ness model and en­gag­ing in ecosys­tems with dig­i­tal part­ners are crit­i­cal to their suc­cess.

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