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
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