Insurance Technology Case Study Compendium 2022: Recipe for Successful Core Systems Transformation

Insurance Technology Case Study Compendium 2022: Recipe for Successful Core Systems TransformationCore systems projects create strategic capabilities that can open new opportunities for insurers and allow them to achieve long-term goals. As digital and data become more critical to insurer operations, agile and responsive core systems are increasingly required across all functional areas.

Aite-Novarica Group’s 11th annual Insurance Impact Awards program features 65 examples of insurer IT initiatives that delivered real business impact. This year’s report on core initiatives highlights 16 case studies. Each case study details business goals, project sponsors, team structure, project timeline, tools and technology used, challenges and success factors, and business impact delivered.

Core systems projects create real impact.

Core systems projects deliver business value in many ways. They can optimize workflow by enabling automated application of business rules or straight-through processing (STP). They can improve risk management via invocation of analytics, algorithms, and third-party data. These projects can also create measurable savings or revenue by enabling new products, saving staff hours, or reducing legacy system maintenance costs and risk.

This year’s life/annuity/benefits winner, Ohio National, deployed a new core system platform to support new product expansion, self-service, and improved efficiency. The platform has added over US$50 million in new premium and decreased new business times by 20%, with nearly 12,000 new applications to date.  

Core systems projects to support new lines (or new companies) are common.

One of the key themes of this year’s compendium is that many insurers are implementing new core platforms in support of new lines or de novo companies, often in short time frames. For example, a startup specialty program administrator, TIMBY SPECIALTY Insurance Solutions, leveraged a cloud-based policy administration system and a third-party program administrator development platform to launch two trucking products nationally in 105 days. The company has quoted over US$100 million in premium six months after launch.

Many insurers are implementing cloud to support the growing needs for agility and capacity.

Insurers often undertake core system implementation or transformation projects to support new and existing products, enable STP, and improve third-party data availability, among other goals. Product speed to market remains a top priority for many insurers, especially in the large property/casualty sector.

Core modernization is increasingly taking place in the cloud as insurers look for core systems that can support the growing needs for agility, capacity, and on-demand scalable computing power. Many insurers are shifting to “cloud-first” infrastructure strategies.

Tokio Marine Highland, this year’s midsize property/casualty winner, is one of the most unique case studies featured in the Impact Awards. The insurer built an underwriting engine in the cloud to codify its private flood underwriting expertise and calculate flood risk and premium for U.S. addresses, exposed via API. Developed in six months, the tool has reduced processing time from 24 hours to minutes and generated US$1 million in revenue as a pay-for-use service.

Core system initiatives are challenging, but rewarding in the long run.

Core systems projects tend to be complex projects that involve years-long transformation efforts. Most projects last 18 months or more and require integrations to existing enterprise technology. Migrating books of business from legacy systems can add an extra layer of complexity.

As challenging as these initiatives can be, core systems ultimately enable all other business processes. Core system modernization is a key to preparing for the future and a tremendous step toward enabling insurers to leverage technology to sell more, manage risk better, and cost less to operate.

Insurance Technology Impact Case Study Compendium 2022: Core Initiatives provides insurance business and IT executives with examples of ways they can leverage technology to create business value. Solution providers can also use these case studies to frame the ways their products can create value for their insurer clients. Access to the report can be found here.

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