Anton Wiryawan, Insurance Product Strategy Director, discusses the topic below:
Recently, I was at the IASA conference in Indianapolis. Oracle had a large booth with several demo pods, and I was showcasing Oracle Insurance Insbridge Enterprise Rating. An attendee stopped by our booth and had questions about how to decide on a rating solution. His company is looking to modernize their IT infrastructure and one of the systems that they want to replace is the policy administration system. So his question was: do they still need to invest in a stand-alone rating system or can they just use the rating components that come with the new policy admin system?
Historically, carriers have relied on policy admin systems to provide all functions to manage the policy lifecycle from quick quote to application to underwriting to policy issuance and even servicing the policy. Even today, in markets outside North America such as in Europe and Asia, many carriers are still relying on their policy admin systems to handle everything. However, over time, there are vendors that now specialize in one particular function of the policy lifecycle (i.e. rating, underwriting, etc.) and deliver more robust systems to address that one specific need. Now, carriers have more options and need to choose between standalone systems that perform one function very well or one integrated system that offered modules for each function, but with varying degrees of functional depth.
According to Celent through their conversations with many carriers and vendors, the central consideration in choosing best of breed or best of suite is one of architecture. The stand-alone rating solution enables carriers to centralize all product and rating information in one place. Rates can be built once by business users and distributed to any application that needs it. This will position carriers with a more agile business, reduce total cost of ownership, speed time to market and improve distribution management.
Because of the benefits of stand-alone rating solution architecture, many policy admin system providers are now offering their rating functions in a stand-alone manner. So should you buy rating solution from these policy admin vendors? We believe that even though these vendors position their rating as a stand-alone solution, the reality is the rating system is somewhat tied into their policy admin offering, and often customers might need to install some of the policy admin components to make the rating module work. Rating users might be impacted by policy admin system inefficiencies and scalability issues.
A better alternative is to invest in a stand-alone rating solution to achieve the architecture benefits mentioned above from a vendor that built the rating system from the ground up (i.e. not part of the policy admin system). The vendors that provide a true stand-alone rating solution have resources that are dedicated to delivering more advanced features for rating only and not for other policy admin functionality. Using modern technologies, these vendors make their stand-alone rating solution open and more easily integrated to different systems.
If you want to know more about the true standalone rating solution and its benefit, you can download a white paper.
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