Recently, at Novarica’s 11th annual Insurance Technology Research Council Meeting, I led a workshop on core systems with a group of insurer CIOs. As core systems and the employees who maintain them age, insurers are seeking new ways to navigate issues in technology, product, and human resources. Some of the key themes of the discussion included:
Buy vs. Build
The choice to buy a solution versus building one in-house depends heavily on the carrier in question. While most carriers are buying solutions for policy administration, billing, and claims, some participants noted that they chose to build one or two systems for specific lines of business while maintaining legacy blocks of business on a purchased platform. In general, however, participants reported that new products are launched on vended, rather than built, solutions.
Customization vs. Configuration
Customization of purchased solutions should be avoided by insurers. Most newer systems are configurable and can be tailored to suit individual carriers’ needs. Workshop participants noted that this configuration is still best handled by IT resources. While many vendors assert that their products can be configured by business users, this is rarely done in practice.
Managing Vendors
Another overarching issue insurers are dealing with is managing vendor partners. Some participants cautioned the rest of the group to maintain clear lines of communication with vendor partners, especially when working on complex projects. Picking an internal program manager can help projects stay in line with carriers’ overall goals. A clear consensus was that any carrier planning on working with a vendor should research their options thoroughly to find an appropriate partner.
Core systems are vital for insurers—CIOs should consider these issues carefully before reaching a solution that works best for their company. For more information on core systems, see our Market Navigator reports on Policy Administration Systems, our CIO Checklist on Core Systems Project Readiness, and information about our Vendor Selection consulting offerings. For further information, contact us at [email protected].
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