Exclusive INN interviews with insurance thought leaders
The Policy Administration
James Klauer, of Fidelity Investment Life Insurance, weighs in on
the rationale and challenges of core system replacement.
Survey after survey confirms policy administration replace- ment and modernization as a top-of-mind concern for in- surers. This seems hardly a surprise when one considers the centrality
of a well-functioning policy administration system to ensuring satisfactory customer experience. Indeed, with organic
growth and new business flexibility at a
premium, many recent policy administration projects have been undertaken to
deliver new capabilities unavailable with
aging legacy systems.
Yet, this search for new functionality
is not a risk-free endeavor. As the most
interconnected of core systems, policy
administration replacement projects are
prone to fail. In this light, the question of
whether to replace or to instead opt to
extend and/or deepen the use of an existing policy admin system is germane. If
a carrier does decide to replace, the question then becomes whether to opt for a
targeted replacement or to take a more
holistic approach that stresses making
organizational and process changes
alongside technological ones.
To find answers to these questions,
Insurance Networking News asked James Klau-er,VP, Client Services Technology at Fidelity Investments Life Insurance, for his
take on the issues surrounding policy
“just make it work the same as the old
system.” If you can afford the time, take
the opportunity to re-engineer inefficient
business processes. We were able to drastically change our death processes, introducing automation and error-proofing.
Ensure that all key stakeholders agree
to the same set of success criteria. Establish a tight change-control process that
ensures that only changes critical to the
success of the project are accepted.
As with any large systems initiative,
you should expect to experience issues.
Ensure that you have the right processes
and tools in place to manage the intake,
triage, backlog, and workarounds for
system defects. Also, if possible, you
should delay any subsequent projects
until the policy administration system
has been stabilized. Then ensure that the
system is working correctly before making additional changes.
customer website, an SOA service was
already in place with the legacy system.
For the customer website, the switch
from the legacy system to the new policy
administration system was relatively
Fidelity Investment Life Insurance
INN: What are the primary business
benefits to adopting a modern policy
JK: Modern policy administration systems are more flexible than systems of the
past. This has allowed us to shorten our
delivery time for new products and product changes. We have also had a greater
ability to integrate with other systems and
to deliver process efficiencies.
INN: What impact will anticipated
regulatory changes have on legacy administration systems?
JK: Required regulatory changes will
make it that much harder to deliver product changes to legacy administration systems. Where there is typically a scarcity of
resources and funding for legacy administration systems, the regulatory changes
will have to be done first, leaving little
ability to deliver on strategic work.
INN: What best practices should a carrier bear in mind when replacing a
legacy policy administration system?
JK: Ensure that you have a solid understanding of the requirements. Legacy systems users often have a hard time articulating what they want in a new system:
INN:What has the move toward service-oriented architecture meant for carriers
looking to replace core systems?
JK: For us, it made the process of integrating with other systems a bit less
complicated. For integration with our
INN: Given the long-tail nature of life
insurance products, can an argument
be made for extending a legacy system
rather than full replacement?
JK: Yes, it certainly can, though you need
to weigh the potential cost savings
against the ability to quickly deliver new
products, deliver product innovations,
deliver process efficiencies, and respond
to regulation changes. INN
For more about system replacement, search “Weighing
the Options” at www.insurancenetworking.com.