Many insurers are focusing on legacy transformation for open- and closed-book business. However, the complexity of individual blocks of business and a decades-long buildup of infrastructure can increase risk and make these projects especially daunting. Insurers will need to carefully analyze their options for each affected block of business as a result; a block analysis is an important first step towards this goal.
Up-front block analysis helps insurers understand the challenges and constraints of migrating each segment. An effective block analysis provides insights into how a transition will affect different products and lines of business, creates a broad understanding of costs and benefits, and provides a framework for executive decisions. The seemingly rational desire to apply a common approach can actually increase risk of failure, as diverse blocks of business share few true commonalities.
It’s important for insurers to note that migration projects will take on a life of their own once they begin. Converting complex policy blocks can take years, and the pace can slow dramatically once simple blocks are converted. Novarica’s latest report, Block Analysis and Life Systems Transformation, addresses these issues and provides an overview of benefits and approaches to block analysis.
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