Modernising insurance policy administration systems: driving efficiency and competitive advantage

Given their importance to any insurer, a policy administration system upgrade represents a major opportunity to create or maintain a competitive edge, enhance efficiency, and ensure ongoing compliance. However, in our experience, the process of upgrading these systems can often be complex and challenging. Success hinges on aligning the upgrade with an organisation’s overall business strategy and goals, along with other best practices, and avoiding common pitfalls that can erode value.

The strategic imperative to upgrade

Policy administration systems are the lifeblood of insurance operations – managing everything from quote and buy through policy issuance and maintenance to renewals. As technology evolves and customer expectations rise, legacy systems often fall short. Upgrading these systems not only addresses technological shortcomings, but more importantly aligns with broader business strategies, leading to:

• Enhanced operational efficiency. Modern systems automate routine tasks, reducing manual errors and freeing staff up for more strategic activities.
• Improved customer experience. Faster processing times and better service capabilities enhance customer satisfaction.
• Compliance and security. Up-to-date systems are better equipped to handle the latest regulatory requirements and cyber security threats.
• Scalability and Flexibility. Newer systems can easily scale with business growth and adapt to changing market conditions.

The importance of business alignment

In our experience, organisations can unintentionally gravitate towards taking a technology centric perspective as part of the upgrade process. This can set the project up for failure later down the line. Our overriding advice to any client is that to help ensure business alignment, and get off to the best possible start, the following steps must be taken as a bare minimum:

• Align with strategic goals – Ensure the system upgrade aligns with the organisation’s long-term strategic goals. Whether the focus is on market expansion into new territories, customer satisfaction, or operational efficiency, the new system should support these objectives.
• Involve executive leadership – Gain buy-in from executive leadership to ensure the upgrade is seen as a strategic priority. Their support is critical for securing necessary resources and driving the project forward.
• Define clear business objectives – Clearly articulate the business objectives driving the upgrade. These could include reducing operating costs, improving data accuracy, or enhancing the customer experience. Clear objectives help in selecting the right system and measuring success.
• Ensure architectural alignment – Determine how the business capabilities will be delivered and whether or not this is via the policy administration system e.g. is there a separate solution for Pricing; how do customers engage digitally

Best practices for upgrading policy administration systems

In addition to overarching goal of business alignment, there are a number of other critical success factors that we typically expect to see in place as part of any successful policy administration systems upgrade. These include:

1. Performing a robust needs assessment – Building on overall business alignment, a comprehensive assessment of the current systems capabilities, limitations, pain points, and unfulfilled user requirements, will help in selecting a system best aligned to strategic objectives.
2. Engaging stakeholders early and often – It is imperative that key stakeholders from across the organisation, including IT, operations, compliance, and customer systems are all involved. This can also extend to external stakeholders such as brokers if they will be accessing the system.
3. Build the required delivery team – Whilst technology is the main deliverable, the focus should be on a business outcome and the business SMEs are a key part of the delivery team.
4. Chose the right vendor – This is one of the most critical decisions in the entire upgrade process. If there isn’t an incumbent who you are locked into, look for vendors with a proven track record in the insurance industry, strong support services, and the ability to scale and customise solutions to your needs.
5. Develop a detailed implementation plan – Create a clear and detailed implementation plan that outlines the project scope, timeline, milestones, and resource allocation. Determine the delivery method and ways of working before starting. Include contingency plans for potential setbacks to ensure the project stays on track. ‘Big bang’ approaches do not work, and don’t forget to plan in decommissioning.
6. Integrations – A modern integration approach i.e. APIs is essential to simplify connectivity and enable greater flexibility in the ongoing change and maintenance processes.
7. Prioritise data migration and integrity – Data migration is often one of the most challenging aspects of system upgrades. Ensure that data is accurately transferred from the old system to the new one, with thorough testing at each stage to verify data integrity.
8. Invest in training and change management – A new system is only as effective as the people who use it. Invest in a comprehensive training programme to help employees adapt to the new system. Additionally, implement change management strategies to address resistance and facilitate a smooth transition across internal and external stakeholders
9. Test rigorously – Conduct extensive testing to identify and fix issues before the new system goes live. This should include unit tests, integration tests, and user acceptance testing to ensure the system meets all functional and performance requirements.
10. Monitor and optimise post-implementation – After the system is live, continuously monitor performance and gather feedback from users. Use this information to make ongoing improvements and ensure the system continues to meet business needs.

Common pitfalls to avoid in the upgrade process

Typically, we see policy administration system upgrades fall into distress as a result of one or more of the following:

1. Underestimating the complexity of data migration – Data migration is often more complex and time-consuming than anticipated. Underestimating this can lead to data loss, corruption, or extended downtimes. Plan meticulously and allocate sufficient time and resources to this critical task.
2. Ignoring stakeholder input – Failing to involve key stakeholders can result in a system that does not fully meet an organisation’s needs. Ensure all relevant parties have a voice in the decision-making process.
3. Inadequate training and support – Insufficient training can lead to low adoption rates and operational disruption. Ensure that comprehensive training and support are available to all users.
4. Rushing the testing phase – Skipping or rushing through testing can result in unresolved issues that affect systems performance and reliability. Prioritise through testing to identify and resolve problems early.
5. Neglecting change management – Resistance to change can derail even the best-planned projects. Implement a robust change management strategy to address concerns and foster a positive attitude towards the new system.

Upgrading policy administration systems is a significant undertaking that requires careful planning, execution, and ongoing management. By following best practices, including prioritisation of business alignment, and being mindful of common pitfalls, insurers can navigate the complexities of system upgrades and unlock the full potential of modern policy administration solutions. This not only enhances operational efficiency and customer satisfaction but also ensures that the organisation’s technological infrastructure is well-aligned with its strategic goals, positioning it for long-term success in a rapidly evolving industry.

If you would like to speak to Mike Kingston or Paul Atherton regarding this insight, send your enquiry to contact@masonadvisory.com.  

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