In a recent survey conducted by Celent Research, 80% of life insurers listed the inflexibility of their applications and the difficulty of bringing new products to market as their top challenges. In the Life and Annuities business, where even a single policy could translate to a 100-year commitment, several issues are being generated by this combination of legacy technology and ageing policies:
- Inaccurate and incomplete data from older, less mature systems
- Data being stored in someone’s desk or in other improper places leading to manual-intensive policy administration
- Users being forced to utilize the system in incorrect ways which may bring on risk and are not scalable
- A multitude of platforms gathered through acquisitions with products requiring almost dedicated platforms.
As the skillsets required to maintain outdated systems become scarce, and technology investment fails to keep up, insurers are struggling to meet expectations in terms of customer experience, new product development and legacy product management.
Insurers have the option to either undertake the technology transformation for policy administration in-house, or to hand over the whole process to a Third Party Administrator (TPA). TPAs often have the agility to keep pace with rapid technological changes that a large insurer might struggle with. In either case, a few key points should be considered to ensure a future-proof solution:
- A migration and implementation process that allows the correction of data anomalies and which supports best practices.
- A platform that supports the correct build of products and which allows for complete flexibility through business rules and formula-based configuration. The platform should also have the ability to communicate with most applications or tools used in the organization. This allows the insurer or TPA to support the current policies as well as all the historical varieties built and sold over the last 50 years.
- Consolidation of all client policies onto fewer platforms, even down to one. This has huge cost and efficiencies savings.
For our own wholly-owned TPA subsidiary, we have partnered with Oracle to use their OIPA platform. OIPA’s configuration and rules-based system not only addresses the issues created by legacy platforms and ageing policies, it also allows for putting up a new product in three to six months, and updating it with new features very quickly. New products can even be built off existing products through OIPA’s template concept.
We recently had two experiences where we were able to significantly reduce the time to market. The first scenario was with a client who wanted to put their toe in the water and try a new product. Their current platform could not support this product and they did not have the expertise and domain knowledge to do this in less than 18 months. We were ready to go live with the product in three months.
The other situation is happening now: a client who wants to experiment with different versions of a product and see which one does best in the market. They want to create a “sandbox” to play in. They know it will take them over a year for the original and almost a year each for every new version, or changes they might make. We could get the main product up in six months and are looking at three months or less for the features they wanted to test.
An added bonus is the ability to add new features that emerging targets like millennials expect at a minimum such as apps and an integrated digital experience.
So regardless of whether insurers choose to overhaul their technology backbone or whether they opt to bring in a TPA, the solution should keep the commitment to the customer at its heart and aim to be future-proof.