In Novarica’s US Insurer IT Budgets and Projects 2015 report, survey data showed that nearly 40% of Property & Casualty and Life/Health/Annuity carriers are currently replacing or planning to replace a policy administration system.
There are various reasons why P/C and L/H/A insurers are focusing their efforts on replacing policy administration systems, including:
- The need to improve product development speed — and enhance product capability—to pursue new opportunities, or to accommodate market demands
- The need to improve product development flexibility to enter profitable new niches whether in Life or P&C.
- The need to attract and retain not just top producers, but also the new generation of producers who won’t stand for the challenges presented by legacy solutions.
- A desire to find more cost-effective ways to support the ongoing operation and management of core-systems capabilities and reduce the sizeable costs associated with simply keeping legacy systems on aging brittle, platforms.
- A desire to real-time processing, increase automation and gain internal efficiencies
- Increased data accessibility demands as business intelligence and data analytics become a significant part of insurers’ strategic objectives. In order to better set rates/pricing, reduce fraudulent claims, and generate other predictive models, core system data must be available for analysis, whether within the system or via export and transformation.
Novarica’s recent research indicates that carriers continue to aggressively seek to replace their existing policy administration systems, or in some cases add a new system to the mix. The P/C policy administration market continues to flourish for those vendors with in-demand systems and reflects a number of trends most of which remain unchanged from last year.
While sales of L/H/A core systems have continued to lag the pace of their P/C counterparts, the level of interest has steadily grown, and growth in sales of core systems is likely to follow. In fact, the pattern of investment profiles for L/H/A carriers is following a very similar path to what has already happened for P/C carriers, albeit at a somewhat delayed pace, undoubtedly a consequence of the relative risks associated with implementation and the challenges related to in-force block conversions.
With a variety of vendor solutions available, choosing the right solution that best fits your needs can be a complex process. A great way to start is by checking out our latest Market Navigator Reports on Property/Casualty and Life/Health/Annuity, blog posts (links below), trends in policy administration webinar recording, as well as our vendor selection services.
To learn more the latest policy administration trends or to see how Novarica can help you with your vendor selection project, contact me via email for a complimentary 30 minute consultation.
- Vendor Selection Best Practice for Insurance Carriers: Simplified vs Extensive RFI
- Vendor Selection Best Practices for Insurance Carriers