Aspects of a Successful Core System Transformation

Property/casualty carriers continue to actively invest in core system transformations as they search for ways to accelerate speed to market, leverage advanced digital capabilities, and improve workflows. According to Novarica’s study of 55 midsize property/casualty insurer CIOs, 27% are continuing investment in core policy administration systems in 2021, 7% are starting a new replacement, and 15% are launching major enhancements. The percentages are equally high for claims and billing transformation.

Recently, Novarica hosted its Commercial Lines Special Interest Group meeting with four commercial insurer panelists. The session was a virtual meeting with a gallery view, which made the discussion much more interactive. We had significant audience participation and great panelist engagement as Novarica’s insurer client and community members discussed their experiences conducting core system transformations and shared implementation strategies, challenges, and key success factors.

Guiding Principles

Core system transformations can be approached in many different ways. Some insurers are investing in new suites for policy, billing, and claims from modern core system vendors, while others are building new platforms in house. Regardless of which path a carrier takes, it is important to clearly define what the carrier would like to gain from the initiative and determine guiding principles. One panelist shared that his company’s objective was to streamline processes through core system enhancements. The guiding principle that the company used was to stay as close to out of the box as possible while still reducing handoffs and decreasing complexity.

Speed to market is often one of the primary drivers of a core system transformation. Panelists at the Special Interest Group all agreed that once the core system is modernized, time to bring a new line of business to production decreased by months. While we were discussing benefits of implementing modern technologies, one panelist added that speed to market is not just about the product; it is also about pricing, which is a big differentiator in a small to mid-market. Business benefits come from technologies with model-driven pricing or pricing based on individual risk. Access to these technologies is a big advantage of having a modern core system. Other core system transformation benefits that insurers have experienced include increased transparency with agents and policyholders and access to third-party data through external vendors.

Buy vs. Build

Several panelists used a “build” approach as part of their technology strategy. One panelist shared that out-of-the-box, vended components for digital and data capabilities did not meet their needs; these components were jettisoned in favor of homegrown capabilities that were optimized for their specific needs.

Another panelist is in the process of successfully building out their policy platform to meet their specific needs from a core, digital, and data perspective. Other participants are leveraging low-code/no-code environments to deliver their digital, externally facing capabilities.

Key Drivers of Success

Core system transformation is a journey that can take years from putting a project team together to releasing a product. It consumes a great deal of organizational attention and requires numerous internal resources from various teams, as well as external resources. Insurers often face time and resource challenges. Keeping decisions aligned across teams is also a big hurdle.

The key to moving core systems transformations forward is coordination among teams and strong business support. The leadership team should help facilitate cross-team communication and make sure that the teams are aligned in achieving the right goal within a set timeline. Having a strong steering governance team that focuses on proactive change management is also a key to success.

Finally, all panelists agreed that having proactive change management plan to address changes with internal staff, agents, and brokers is key to a smooth implementation and user satisfaction.

If you are interested in this conversation, join us at our next Commercial Lines Special Interest Group on July 8, when we’ll discuss data strategies and CRM use in commercial lines. Details and registration for Novarica’s upcoming events can be found here.

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