Some benefits of a modern PAS are obvious (provided the selected PAS is a solid choice):
- Improved experience for home office employees, agents, customers, employers/employees (group benefits)
- More responsive product development (faster time to market, more flexible product design, etc.)
- Reduction/elimination of batch cycles
- No reliance on mainframes, midrange computers, or – for many SaaS solutions in the cloud – even servers
- Flexibility to make changes to products, business process, or technology much more quickly and easily
- Improved automation and workflow
- Better access to data/better data quality.
However, some benefits are perhaps less obvious. These may be critical to pushing a business case past the debate phase and to the approval phase. They typically come from transformation planning, not just from a systems replacement plan. For example, insurers often don’t include in their business cases the ability to drastically reduce acquisition and service costs through enhanced self-service (for group benefits, this could include fully automated census upload and processing, or online list bill reconciliation; for individual life, self-service quotes for loans could be done by customers). A modern PAS often enables open APIs, web services, and microservices, which can drastically reduce future integration costs.
While many benefits are inherent to having a modern PAS in place, many benefits require careful transformation planning. One example of this would be true straight through processing (STP). Some modern platforms are designed to allow full straight through processing, even for complex group products, for all aspects of the product and client lifecycles from enrollment to issuance to claims. However, to achieve STP, a modern platform that supports it is not enough. An insurer must carefully evaluate its underwriting rules, auto-adjudication rules, and even product features to determine if these types of items can be tweaked to increase STP levels, or if new product variants should be considered as an example of how to take full advantage of the platform. This is just one example of many “hidden” benefits of a modern platform.
Another key to reaping benefits from a core systems replacement is a reduction in the number of systems to be managed/licensed/maintained. Nearly every insurance carrier has a unique application portfolio and a unique set of challenges, but relatively few of them have taken the necessary steps to reduce complexity by substantially reducing the overall size of the application portfolio. In fact, it’s not uncommon for insurers to intentionally or unintentionally end up adding a modern PAS to its existing portfolio of admin platforms without retiring two or more in its place. However, consolidation of multiple PAS platforms into a single modern one is a best practice where it is practical (as addressed elsewhere in this series). In addition, some modern PAS can also replace existing platforms for underwriting, claims, document management, commissions, and more, leading to further consolidation of the application portfolio. However, this only works well if other admin platforms are retired.
Even if full consolidation isn’t possible, any consolidation helps. As an example, we recently worked with a top-tier life and annuity company that had merged with another major insurer and consolidated multiple systems onto one platform. However, it proved to be cost-effective to retain some of the legacy systems and wrap them using a surround application to provide a common user interface. The company immediately lowered its IT maintenance costs (dealing with a single UI and a reduced overall systems footprint) and adopted a long-term roadmap for continued modernization and consolidation.