Interest in policy administration system replacement remains strong at life and annuity insurers. Policy admin replacement was high priority in Novarica’s Insurer IT Budgets and Projects 2021 report: 31% of large and 42% of midsize life/annuity/benefits (L/A/B) insurers reported plans to start or continue replacement projects in 2021 or make major enhancements to their policy capabilities.
Insurers are increasingly looking to stand up new environments for new product or market opportunities, allowing solutions to complement legacy environments and enable phased evolutions toward modernized core ecosystems. Insurers see core replacement as important to customer experience and product innovation.
Preparing for a Future… That May Already Be Here
Customer experience and understanding the complete customer journey have become increasingly important drivers as insurers consider new systems, including core policy administration. Better customer and agent experiences with system usability, 24/7 access to data, and system flexibility for new communication channels require modern architectures and capabilities.
Banks, investment companies, and, increasingly, property/casualty insurers have implemented systems to meet customer requirements for information access. L/A/B insurers have lagged, though many now recognize that aging legacy systems challenge their ability to meet rapidly evolving customer expectations. Legacy environments can create resource and cost issues for insurers, but the conversion models frequently deployed in short-liability businesses need modification to avoid increasing costs and risk in the L/A/B ecosystems.
Keeping Up With the Times
Insurers face an aging workforce among top producers in their distribution network. As Baby Boomers retire, insurers will need to prepare for a world with far fewer agents, using significantly better technology to manage much bigger books of business.
Legacy system constraints and processes with incomplete digital support are among the issues insurers have grappled with during the past year of working from home. Recruiting a new generation of talent and allowing them the flexibility to work in the office or at home is a challenge with legacy systems. Usability and information accessibility issues of legacy systems will continue to hinder the ability of insurers to attract captive agents and employees and expand business with independent agents.
New generations of business and IT associates will not be willing to live with aging systems like their older counterparts. These issues are becoming more urgent for insurers today as Millennials remain on track to represent 75% of the US labor force by 2025. For both operations and IT organizations, an acceleration in early retirements by Baby Boomers may be forcing a reckoning with lost skills and the preservation of institutional knowledge much sooner than many carriers had been planning for, perhaps another consequence of the COVID-19 pandemic.
Vendors for L/A/B policy administration systems are offering more implementation options to lower risk and cost. To learn more about the trends and vendors in this space, our annual Novarica Market Navigators contain in-depth profiles and comparative tables on 23 life/annuity/benefit and 48 property/casualty PAS vendors.
Add new comment