Policy Administration Transformation : How do you avoid the pitfalls? - Whitepaper


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A policy transformation project impacts all aspects of the organization – People, Process and Technology. It requires substantial investment on insurance specific systems. Other than the financial investments, this complex transformation needs a commitment to lock in key business and technology talent and willingness of the executives to make difficult business decisions. Given these challenges, this whitepaper addresses the pitfalls and provides recommendations that organizations can use to avoid challenges that arise while executing policy administration transformation

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Policy Administration Transformation : How do you avoid the pitfalls? - Whitepaper

  1. 1. www.niit-tech.com Policy Administration Transformation – How do you avoid the pitfalls? Rupesh P. Practice Lead - Insurance Vertical NIIT Technologies White Paper
  2. 2. CONTENTS Introduction 3 Challenges 3 Making the Right Move 3 Conclusion 6
  3. 3. Introduction Challenges Insurance companies across the globe face similar issues with Some of the common pitfalls on major system transformation policy administration function and supporting technologies, projects include the following: including: • Lack of clarity around the business goals and drivers for the difficulties with creating new products, high processing and maintenance costs, and low customer service policy transformation project satisfaction levels. To keep up with the changes in the market Before carrying out system transformation, firms must place, in the current economic climate, many Property and understand the business goals/drivers for the project. Ideally, Casualty (P&C) insurance carriers are modernizing their the business drivers and goals need to be clearly articulated systems. They are replacing rigid and outdated legacy systems before embarking on the program. with modern and flexible distributed Policy Administration, Claims Administration and Billing systems. • Over customization/configuration - Most times carriers end up over customizing/configuring the vendor package (most often to tailor their existing processes). These new policy administration systems provide unmatched levels of reliability, availability and security. They also provide carriers the flexibility to roll out new products or make changes • Lack of regular sponsor involvement throughout the program • Unavailability of the right people at the right places to existing products quickly making them more agile, and • Rushing to a solution without spending enough time to go reducing time-to-market. However, the transformation to through a well thought out Request for Information(RF)I modern systems presents a formidable challenge that most companies fail to understand. According to CIO.com, more than 60% of system transformation projects fail. process • Inability to select the appropriate sourcing model • Inability of the carrier to manage risks A policy transformation project impacts all aspects of the organization – People, Process and Technology. It requires • Unavailability of a good communication and training plan for internal and external stakeholders substantial investment - on an average, 27% of the insurers budget is spent on these insurance specific systems. Other than the financial investments, this complex transformation needs a commitment to lock in key business and technology talent and willingness of the executives to make difficult business decisions. Making the Right Move Many software vendors focus on specific elements in the chain of system transformation without having a holistic view of the complexities surrounding the entire process. However, the Given these challenges, this whitepaper addresses the pitfalls transformation processes should focus on the complexities and and provides recommendations that organizations can use to define ways to avoid challenges that arise with the process. avoid challenges that arise while executing policy administration transformation. 3
  4. 4. Recommendations Define Business Goals Reduce Customization/Configuration Clear and Transparent Communication with Sponsors Well thought out RFI process Manage Risk Right people at Right Places Select Appropriate Sourcing Model Communication and Training Plan Clear and transparent communication with sponsors Transparent communication on the state of the program and the risks on a weekly basis are crucial for the success of the project. Communication helps find out challenges/issues impacting the progress of the program. Right People at Right Places Staffing levels in IT departments may be reduced through year Define Business Goals 2020. Therefore insurance carriers must define appropriate It is imperative for the Insurance Carriers to understand what drives organizational structure, communication plan and people. As businesses future profitability and benefits the new solution. The insurance CIOs adopt new approaches to IT, they need organization must understand the wider business goals and Solution Architects, for taking technology related decisions, constraints and then select solutions that help Business Leads for business related decisions and PMO Leads • Tthe carriers become more agile to understand scope, schedule and budget, and help with system transformations. • Reduce time to market on additions of new products or changes to existing products Well thought out RFI process Insurance carriers must If the carrier takes time to understand the specific business case • Include skilled resources in your RFI team and product mix and market dynamics, then the modern policy - Technical Architect administration system can provide - Business Lead • Improved experience for the customer and users of the systems - PMO Program Lead (typically agents, underwriters, claims adjusters, etc. ) • Improved operational efficiencies through automation, straight through processing and data pre-fills • A simplified single customer view, enabling agents to better serve customers • More accurate risk assessment leading to improved loss ratio Reduce Customization/Configuration The best way to avoid this is to look at how the system works out - Business SME’s • Consider some Factors during the RFI process - Vendor financials. Whether the vendor fit with the carrier technically, culturally, size wise, etc.? - Does the functionality meet business needs? - Level of customization required - Ability to configure - Ease of integration with other systems in the landscape - Upgrade path and complexity - Suite offerings – Does the vendor have an end-to-end solution for all business capabilities – all lines of policy, claims, billing, etc. of the box (OOTB) and only change the process/functionality, if - Licensing model and costs there are very crucial business reasons to do so. Recreating the - Typical duration and cost for implementation legacy system/old way of doing business in the new vendor - References package entirely defeats the purpose of investing in a new system. • Include time for site visits to customer locations where the vendor It leads to over customization of the product that will not just put package has been implemented and is in production (for the top delivery at risk but also make future upgrades extremely complex 2 selected vendor packages) and time consuming. 4
  5. 5. • Ensure the customer is similar to your organization in terms of size, lines of business, complexity, etc. • Get a good understanding of the challenges they faced, how the vendor partnered with them on the engagement and their thoughts on the success of the program. Insurance carriers must also connect with a few key agencies before opening up the new system to the entire user base. They should place heavy emphasis on technologies to tie together legacy and newer system during the rollout. Conversion is another key area that needs a lot of focused attention and can be a major risk to the policy administration Select Appropriate Sourcing Model Insurance carriers need to figure out the sourcing model that works best for the organization based on the budget, culture and expertise. Therefore, it is important to engage an external consulting/contracting help with a well thought out methodology, models and tools which help insurers make the right selection to drive IT investments for the future. Also if budget and 24 hour development lifecycle is a factor, organizations can go for a blended model where some of the developers work offshore for significant cost savings and efficiency gains. implementation. This involves moving data (policies, claims, etc.) from the legacy system to the new system. Decisions need to be taken on how to handle in flight policies or claims, how much history needs to be ported, etc. One of the best choices is to convert policies into the new system at renewal instead of converting the entire book of business in one go. An organization also needs to take a realistic look at its strengths and weaknesses while building strategic architecture roadmap, reference architecture and technological accelerators. The decisions need to be in congruence with the strategic architecture roadmap. Insurers must also build the reference integration architecture and make any associated tooling decisions, purchases (for example investment in an ESB or ETL tool) and associated Manage Risks training before starting on the transformation program. The risks during a program implementation change with every phase. Insurance carriers must adopt a methodology of analysing the risks early in the development cycle and ensure that all milestones are reached. Once the analysis is complete, a phased approach to implementation should be carried out to reduce the risk of failure. Typically most organizations prefer taking on one line of business (LOB) when it comes to a Policy Administration system implementation. It’s best to select a LOB that provides the most value in terms of ROI. Communication and Training Plan A communication and training program can be extremely successful from a technical perspective but can fail miserably if communication is handled poorly and user expectations are not managed through all phases of the transformation program. For example, if you plan on introducing a new predictive model with your PAS implementation, it is crucial to have the support of agency managers and agents for the success of the program. 5
  6. 6. It is also important to put a detailed communication plan in place to It is necessary to reduce the cost involved in legacy system address all the stakeholders that are exposed to the new system – maintenance in the next two to three years and identify ways to agents, underwriters, agency managers, business users, etc. consolidate systems, move to lower-cost platforms, reduce redundancy, and externalize rules and processes that are Insurers must also invest in a good training team to train all users hard-coded in legacy systems, and eliminate systems that are of the system and communicate with all project team members on high in cost. a regular basis with the help of weekly status reports, monthly meetings, etc. In order to achieve these carriers must streamline their business processes and simplify their architecture by investing in a modern distributed system. They must apply savings from legacy system replacement and modernization to transformation Conclusion The insurance industry is faced with an opportunity to transform significant aspects of its operations via technology. Companies should ensure adequate finances for transformation to these new systems. According to a study, 45% of life insurers and 50% of initiatives aimed at building competitive advantage. Clearly articulating the business goals/drivers of the program and understanding the linkages between the business drivers and technological capabilities derived from the new system is the need of the hour. P&C insurers have dedicated budgets for transformation. 6
  7. 7. About NIIT Technologies NIIT Technologies is a leading IT solutions organization, servicing customers in North America, Europe, Asia and Australia. It offers services in Application Development and Maintenance, Enterprise Solutions including Managed Services and Business Process Outsourcing to organisations in the Financial Services, Travel & Transportation, Manufacturing/Distribution, and Government sectors. With employees over 7,000 professionals, NIIT Technologies follows global standards of software development processes. Over the years the Company has forged extremely rewarding relationships with global majors, a testimony to mutual commitment and its ability to retain marquee clients, drawing repeat business from them. NIIT Technologies has been able to scale its interactions with marquee clients in the BFSI sector, the Travel Transport & Logistics and Manufacturing & Distribution, into extremely meaningful, multi-year "collaborations. NIIT Technologies follows global standards of development, which include ISO 9001:2000 Certification, assessment at Level 5 for SEI-CMMi version 1.2 and ISO 27001 information security management certification. Its data centre operations are assessed at the international India ISO 20000IT management standards. NIIT Technologies Ltd. Corporate Heights (Tapasya) Plot No. 5, EFGH, Sector 126 Noida-Greater Noida Expressway Noida – 201301, U.P., India Ph: + 91 120 7119100 Fax: + 91 120 7119150 Americas NIIT Technologies Inc., 1050 Crown Pointe Parkway 5th Floor, Atlanta, GA 30338, USA Ph: +1 770 551 9494 Toll Free: +1 888 454 NIIT Fax: +1 770 551 9229 Europe NIIT Technologies Limited 2nd Floor, 47 Mark Lane London - EC3R 7QQ, U.K. Ph: +44 20 70020700 Fax: +44 20 70020701 Singapore NIIT Technologies Pte. Limited 31 Kaki Bukit Road 3 #05-13 Techlink Singapore 417818 Ph: +65 68488300 Fax: +65 68488322 Write to us at marketing@niit-tech.com www.niit-tech.com D_05_120413 A leading IT solutions organization | 21 locations and 16 countries | 8000 professionals | Level 5 of SEI-CMMi, ver1.2 ISO 27001 certified | Level 5 of People CMM Framework