The insurance industry is going through a lot of changes and insurance carriers are looking for new avenues to create a competitive advantage – innovative products, quicker time-to-market, better utilization of customer touch points, etc. Meanwhile the business context has changed both internally and externally. The challenge for the IT organization of a mid-market insurance carrier in this context is to enable such business initiatives while at the same time keeping costs down. The critical and most costly piece of the Insurance IT landscape is their core business systems.
Mid-tier carriers struggle with having the same needs for business agility, process efficiency, and support for a growing portfolio of products as large carriers but with IT budgets that are a fraction those of their larger peers. Typically their core systems consist of inflexible legacy applications cobbled together through a patchwork of brittle system interfaces. Most carriers understand that they must do something about these core systems in order to achieve their business goals, but the challenge is to identify the systems that can achieve their goals at a price they can afford. At first glance, the core system selection process might seem to be a staggering set of challenges but when analyzed carefully, there are quite a number of opportunities a well-selected core system can provide to an Insurance organization.
Considering the challenges first, the typical concerns include: high cost of implementation, speed to market for new products, diverse portfolio of products existing on multiple legacy systems, maintenance overhead of existing legacy systems, manual processes, localization, burden of implementing large systems as well as back office customer service costs and user training. The opportunities that can be addressed through a new core system implementation include: product innovation, new service delivery channels and distribution channel options, rationalization of IT resources and easier regulatory compliance processes.
To mitigate these challenges and address them in the most effective way and to ensure the organization can benefit from these opportunities and get the best benefit from the new core system implementation, the core system and vendor selection criteria should be exhaustive to provide appropriate weights to all these factors. Ideally, the system and vendor selection criteria should be an exhaustive but easy-to-use checklist for the Policy Administration (PAS) and System Implementation (SI) vendors.
For a more detailed look at all the challenges and opportunities and recommendations on setting up the system and vendor selection criteria, you could refer to the strategy brief on “Addressing the Challenges and Opportunities Mid-Market Insurance Carriers face in a Core System Selection Process” in the Oracle Strategy Brief:
To learn more about Oracle Insurance Policy Administration for Life and Annuity and how Oracle’s solutions can benefit mid-market insurers, visit oracle.com/insurance.
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