Policy administration systems (PAS) are known as “core systems” for good reason—as the backbone of the insurance carrier, no department’s processes are untouched by the PAS’s features, functionalities, and problems, or lack thereof.
As the functionality gap between continuously updating cloud solutions and legacy systems continues to widen, it becomes more important than ever for insurers to make the right decisions in a core system replacement process in order to stay competitive—from the choice of the system itself to project governance and decision-making structures.
Striking a Balance Is the Key to a Successful Partnership
In some areas of a project, the vendor’s expertise will be most important, whereas in others, the insurer’s knowledge of their own business needs should prevail. Go in with eyes open and intentionally strike the right balance between trusting in third parties’ expertise and sticking to the original project goals.
PAS vendors often have an array of offerings and may be eager to provide additional capabilities. Don’t deviate from the originally established scope without good reason. That said, misdirected focus on creating a future state just like the current state can result in over-customization with costs and charges that add up; this mistake can also make upgrades or future implementations much more complicated down the line.
Listen to the vendor when they tell you how their product should be used, and apply the new solution’s functionality to legitimate needs rather than preexisting processes.
Test Early, Test Often
It can be tempting to cut costs wherever possible on such a hugely expensive project, but this will only lead to problems in the long run. It’s impossible to preemptively address every challenge in a PAS replacement initiative, but testing early and often enables organizations to nip potential issues in the bud.
Investing in a proof of concept early on can potentially prevent much more wasted time, money, and energy in the future. Cohesive oversight of testing processes can help to avoid neglecting portions of code.
Meet Your New PAS Halfway
The processes that worked for your old PAS may not be right for your new system. That said, it’s natural for individuals, departments, and entire organizations to be resistant to change, particularly if legacy processes have been in use for years or even decades.
Organizations should acknowledge and address the aspects of culture, roles, and the business-IT relationship that may have to change before and during the PAS endeavor. Change management can be as important as the technical aspects of a project, if not more so.
The low frequency of PAS replacement initiatives means that the first challenge many insurers face in this process is figuring out where and how to start. Furthermore, experience with seemingly analogous projects in other industries can present a red herring due to challenges that are unique to insurers.
If you are at any stage of a project, whether the vendor selection, prologue phase, or in execution and you need assistance, Aite-Novarica Group is available. We’ll assess your current state against our knowledge of best practices and can work with you on specific actions for your implementation.
Read Aite-Novarica Group’s report PAS Lessons Learned: Implementation Best Practices for Life, Annuities, and Benefits for advice backed up by direct experience combined with industry knowledge and engagement—or contact me directly at [email protected] to discuss further.