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The Brains of the Operation

Insurance carriers rarely can avoid the difficult decisions that come their way when the subject of policy administration systems arises. Do you opt for great ...

By Robert Regis Hyle | Updated on December 31, 2004

Insurance carriers rarely can avoid the difficult decisions that come their way when the subject of policy administration systems arises. Do you opt for great architecture or business functionality? The latter usually winds up winning these debates, according to META Group vice president Todd Eyler, but not without plenty of discussion. Were at a point now where companies are realizing the cost of always going for the functionality and not great architecture is starting to become too high, he says. Were seeing a lot of discussionbut still not a lot of actionin the consolidation of systems.

Policy administration systems run through all lines of business. Life insurers dont use them the same way property/casualty insurers door the way annuity companies do, for that matter. But they all have many things in common: connectivity between the business side and the customers (whether those customers are policyholders or agents), a clear view of what business the policyholder is doing with the carrier, and the ability of the carrier to mine the data it has collected to help retain its customers and sell them even more policies.

The challenge most P&C companies face with regard to policy administration systems is most operate in legacy environments, Kimberly Harris, vice president and research director with Gartner, points out. Many of their applications are internally built dinosaurs that have been sitting around for many years, she says. It really is a challenge to begin replacing these systems. A lot of companies start to figure out there are problems with their systems, but because the systems are old and built in-house, they have trouble meeting their business requirements and the investment is too large to rip and replace. Though not without their share of challenges, the following insurers are able to tell a different story, each with a happy ending.

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