Change is happening all around the life insurance industry, and unless carriers have the tools necessary to make changes or even keep up with the change, they will fall behind. Their legacy systems are preventing them from moving into the next generation of life insurance and stressing a market that is prime for innovation.
A new policy administration system can be the key to a carrier’s successful navigation of these shifts. While the thought of implementing a new system can be daunting and goes against a life insurance company’s need to avoid risk, it doesn’t have to be that way. PAS vendors understand carriers’ concerns, and many of them have invested in the technology, infrastructure, and integration to help carriers get past these concerns.
Two main fears vendors have worked hard to overcome are the need to convert all policy data into a single system and the need to integrate all features at once. Today, many PAS vendors discourage the conversion of all policy data due to the cost and time necessary for the conversion. A full conversion can take 18 months or longer, and the value of integrating the business may not be worth it. For a book of business that brings less value to the organization, many PAS vendors recommend letting the business fall off the books. Other vendors offer to manage and maintain the older, less valuable books of business so the carrier can focus on what is most important.
PAS vendors also recognize that carriers may have already integrated tools over the years that they are committed to, such as new underwriting or claims systems. Even though PASs are meant to be end-to-end solutions, vendors have worked to separate or componentize their solutions to support the integration of other technologies. These components help support the need for lower-cost solutions as well as the carriers’ need to only integrate the tools necessary for a solid core system. Componentized solutions help carriers integrate more slowly, testing the waters, if you will, and reduce the overall concerns of a full integration.
A new PAS system, or various components, will help carriers as they move toward the next generation of life insurance. Whether the strategy is product innovation, digitization of sales, customer-facing and self-service tools, or analytics, there is a solution that supports that strategy and the technological culture.
For more insights, check out my report Life Insurance Policy Administration Systems: A Business View.
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