Legacy systems are an increasingly large concern for insurers in all lines of business. One of the primary issues for life carriers when dealing with legacy is conversion. Several factors determine the complexity of conversion; simple products make for a simple conversion, but they typically comprise a limited portion of a carrier’s block of business. “First of a kind” products present a bigger hurdle, especially since they are often coded without capabilities for “future date” processing. Hybrid coverages, uncoded product features, and excessive customization also increase the complexity of conversion efforts.
When determining an appropriate conversion approach, insurers should analyze blocks of policies by plan code and product type to develop a strategy for each block individually. They should also determine the range of acceptable value differences and whether smaller complex blocks can be handled manually. Agreeing on these factors ahead of time ensures a faster, more efficient execution of conversion strategies, whether insurers decide to use a from-inception approach or a point-in-time approach.
Other best practices to keep in mind for life policy admin conversions include initially focusing on the most straightforward products, assigning dedicated subject matter experts to conversion efforts, and conducting practice runs with increasing scope that culminate in a final dry run to solidify processes and timing.
No two legacy conversions are alike, just as no two insurance carriers are alike. While conversion projects are high risk, they also yield high rewards. Carriers should take the appropriate steps to ensure that their project is poised for success. For a more detailed examination on how to do so, read my latest brief, Life Core Systems Conversion: Key Issues and Best Practices.
Add new comment