Insurance Networking News - Strategies 2011

rapid deployment
not breaking the bank

By dan sobotincic, execUtiVe Vice president, Head of p&c diVision, sapiens

In the world of core P&C systems the most common approach to modernization has historically been the ‘big bang’ replacement. The goal was to replace the entire legacy system in one aggressive move and one large project in the hopes of solving all of the legacy woes. While the intentions were good, the results weren’t always as expected. The gap between the objective and reality has often left the project in ruins and sponsors licking their wounds.

A major drawback of the big bang implementation mindset is underestimating the number of years of knowledge and process nuances that have been built into the incumbent system. For example, the exception to the rule that is typically specific to a jurisdiction and data combination is often not even considered during the new system implementation since the exception was identified and implemented long ago, most likely never documented, and forgotten over time. Multiply the one exception to the rule by years of exceptions and the legacy replacement project just got a lot more complicated.

The new system that was selected to provide the company the flexibility to compete in the new insurance world often doesn’t even get out of the starting blocks. While the system may promise ultimate flexibility to quickly implement any rule, it typically lacks the real world education and the system equivalent to street smarts to know just what those rules should be. The years of knowledge, rules, and exceptions built into the existing legacy system need to somehow make the transition from the old to the new.

Rather than the big bang, once and done approach, any core system replacement should be a controlled migration with a well thought out transfer of knowledge. As insurers move more of their corporate knowledge and management to automated systems, the ability to preserve and share that knowledge between IT solutions becomes more critical.

In essence, the term ‘legacy applications’ should be redefined to reflect these systems’ important roles as knowledge goldmines to be carefully excavated rather than just old technology that needs replacement.

Any new policy administration system worth considering should include a
robust product configuration engine that isolates insurance product setup from
the transaction processing engine. The details of these product configurations are
contained within existing legacy systems as both data definitions and business
rules. Exposing existing product configurations and rules to the new policy systems
as data and/or services mitigates the overall project risk and allows the insurer to
more effectively move product knowledge to a new platform, independent of the
processing systems.