An increasingly competitive business environment and more demanding customers unquestionably are putting pressure on carriers and their IT departments to do more, but the biggest challenge facing companies trying to improve policy administration systems today may be the antiquated systems they already have in place, say experts including Bill Jenkins, CIO and vice president, information technology, for Penn National Insurance, Gary Plotkin, CTO of the P&C company at The Hartford, and Marcel Nickler, vice president, global insurance, for BearingPoint, Inc.

"There are significant challenges for policy administration systems," says Jenkins. "Carriers have been strapped with legacy systems that are a business inhibitor. They're not flexible, you can't get the data out of them, and they're very costly to maintain."

In a former position with a different insurer, Jenkins relates the company had some 50 legacy systems. While there are fewer legacy applications in his current company, the ones that are there remain a problem. "We bought [software] packages back in the mid-'90s that are not flexible or nimble enough to enable straight-through processing or analytics easily," he notes. As a result, "60 percent to 70 percent of our IT budget is spent maintaining the legacy systems. This is not uncommon, and obviously, that's a sap of resources." Ideally, he admits, the company would prefer to spend more on development and to put in state-of-the-art systems.