Over the past four years we've talked on numerous occasions about the riskiness of core system replacement and the possibility and impact of failure. This is especially the case for policy administration systems (PAS), which are the most complex and difficult insurance application systems to replace. Given that this issue of Tech Decisions is focused on PAS, we're going to consider ways you can minimize the risks inherent in replacing a legacy PAS. There are three “mitigation strategies” that a carrier can use to minimize both the risk and the potential impact of project failure. These are: choose the right vendor/software, create contractual flexibility by defining exit points, and build in project milestone reviews that test the contractual exits at appropriate times. 

Mitigation Strategy No. 1: Choose the Right Vendor/Software

Projects usually fail for a combination of reasons, but the likelihood of success will be severely limited if a carrier chooses the wrong vendor/software solution for their needs. Several Shop Talk columns have discussed the ins and outs of third-party software selection in some depth, but let's review the key points because of the fundamental importance of getting this step right.