8 Reasons Why Large Policy Administration Systems Are a Thing of the Past

Today, it’s clear that insurers will stop placing big bets on large systems. They’re moving to a model where small components and web services combine with their legacy components in an incremental manner. Here are some of the reasons why:

  1. All systems want to be the “center of the universe”. In a future world of SOA and architectures of small re-usable components across an enterprise, components need to be built from the ground up to be standalone and ready for integration.  Most vendors of “systems” or “platforms” say they are built for integration (and some of them even are). Of course, you need to make that system the “hub”.
  2. “Throwing the baby out with the bathwater” – much of what insurers already have in place works just fine and can be leveraged in some way without significant expense.
  3. The full software package has a number of awesome features that are just not applicable to your business.  It has been estimated that more than 50% of the overall functionality a system has to offer is not even needed or used in the average implementation.   The customer is paying for this functionality one way or another (with higher than needed fees to vendor and higher maintenance costs due to “code bloat”).
  4. There is no comparable “one-to-one” match to your existing legacy platform you want to replace.  So, a significant mapping, customization, “configuration” and integration job is required.
  5. Redundant functionality in the admin system to other areas.  Typical redundancy consists of client, product, policy, agents, and even generic functionality like content management, users, security, work queues, correspondence and much more.
  6. It’s all legacy anyway.  The “newest” US life Policy Administration system with any substantial customer base is about 10 years old.  With technology generations coming and going faster than ever, this is already out-dated.  Compound that with the fact that it will take you 3-4 years to convert your legacy onto this “new” system that is now almost 15 years old when you are finished…time to start looking again for a new system.   Now, let’s look at some of the other “good” systems on the market…they have all been re-branded by slapping on new technologies onto their old core code.  In those cases, you’ll be looking at a 20-25 year old system by the time you’re done.
  7. Instead of incremental improvements sooner, systems are designed to be implemented as “big bang” by converting full blocks of business or put up new products.  They do not allow you to implement one major business function at a time.
  8. Most of the top vendors out there have been acquired by a large company who has significantly increased costs, are primarily looking for the “big deals”, have stopped innovating, and diluted the domain expertise and talent.

If you want to learn about the next generation of Life Insurance enterprise components, see www.fasttechnology.com.

Tom Famularo
FAST

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One Response to “8 Reasons Why Large Policy Administration Systems Are a Thing of the Past”

  1. Gail Nelson says:

    Tom,

    Excellent post! You’ve penned an accurate description of the issues facing those insurers saddled with outdated systems that need to improve their business results, and done it all in plain-English.