I recently led a workshop on core systems with a group of insurer CIOs at Novarica’s 12th annual Insurance Technology Research Council Meeting. As technology advances, workforces age, and new vendor offerings appear, core system transformation is becoming an increasingly daunting task. As a result, most attendees were interested in hearing success stories and lessons learned from peers who have recently undergone policy implementations. Some of the key themes of the discussion included:
Building the right team.
A project with the time requirements and complexity of a policy implementation can only succeed if led by a strong, knowledgeable, and experienced team. Sometimes this can mean bringing external resources in if there is a knowledge gap. Having a dedicated project manager with the right skillset is key to the project’s success, as well as fostering a strong partnership between IT and other business units and ensuring that everyone at the organization shares the same vision and goals.
Choosing the right vendor.
No one vendor is the best for any project; every carrier has a different set of requirements and goals. Smaller vendors may be better suited for carriers with very specific needs, while larger vendors may better support carriers looking to scale. Some attendees looked at suites, while others preferred a best of breed approach. Several CIOs had found going through a formal vendor selection process with a third party like Novarica to be helpful.
Minimizing cost.
Minimizing cost for policy transformations is top of mind for most CIOs. One way to mitigate cost is to start simple. Implementing a minimum viable product first and acknowledging that there may be functionality takeaways in the first few releases can set a carrier up for a smoother process down the road. Another strategy is minimizing configuration. As much as possible, carriers looking to keep costs down should stick to package out of the box capabilities and work to change their processes and products to fit, not the other way around. Each piece of customization brings additional cost when the time comes to upgrade. Finally, accelerating the transfer of expertise from SI partners is key. This can not only reduce costs, but it can also lead to a higher quality product, since a carrier’s staff would be working on and dedicated to their own product.
Core systems are vital for insurers and transformations are no small task. CIOs should consider these issues carefully before deciding on a strategy that works best for their organization. For more information on core systems, see our Market Navigator reports on Policy Administration Systems, our Executive Brief on Buy vs. Build, and information about our Vendor Selection consulting offerings. For further information, contact us at [email protected].
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