Life PAS Perceptions: We've Seen Better Days

By Karen Monks, Insurance Senior Analyst, Celent

PAS PerceptionsKaren Monks, Insurance Senior Analyst, Celent

Legacy and ecosystem transformation can reduce operational and IT costs, confer competitive advantage or parity, enhance claims and underwriting decision making, and improve the quality and availability of data and analytics. However, this process is complicated, and can lead to significant challenges and risks that can disrupt the business of any insurer undertaking the transformation. To successfully execute a transformation, it’s critical for insurers to understand exactly what they need from their vendor partners and their policy administration systems (PAS).

"Life insurers must determine exactly what they need (and don’t need) from their PAS systems"

As part of a recent report that surveyed the vendor landscape for life insurance policy administration systems, Celent surveyed forty-seven North American life insurers to gauge their satisfaction with their PAS. The results of the survey show that life insurers were generally satisfied with their systems; however, satisfaction ratings decreased since our last survey illuminating some pain points for insurers and vendors.

Celent’s survey found that life insurers are finding policy administration systems less easy to use than in previous years. Nearly half of the survey respondents had replaced or added a new PAS within the last six years. Celent surmises that user expectations that the new system will solve all problems may be the cause of the dissatisfaction. While this sounds like an issue for the insurer to fix, it must be tackled by both the insurer and the vendor. It is important that insurers understand and prepare for the change with all who are involved, but it is also important that the vendor does their best to meet or temper the expectations of the insurer.

Most of the surveyed insurers had difficulty integrating their PAS with outside systems. While interest in APIs and microservices—both of which could improve this—is exploding, neither has been broadly adopted yet. Celent fully expects this is an area that will improve as these technologies become more universally used.

The implementation process is an area of opportunity for vendors. Insurers are concerned about retention, project management, and the availability of tools to improve the implementation process. While retention will only get harder during this low unemployment environment, vendors must improve their project management skills and processes and do more to build templates and testing tools to shorten the implementation cycle.

Selecting, implementing, and maintaining policy administration systems are all complex and costly processes for vendors and insurers alike. Both parties have lessons to learn here. Vendors should improve continuity of support during and after implementation, and focus on improving core functionality since many vendors opt for best-of-breed solutions for non-core functions. Life insurers must determine exactly what they need (and don’t need) from their PAS systems. Insurers should meticulously go over the technological capabilities of a vendor’s PAS system and the knowledge and skillset of their support staff to ensure the capabilities match their business priorities. Doing so can prevent roadblocks later in their transformation process, especially if identified during the due diligence stage. The stakes of core system transformation are sky high and the process is complicated and disruptive and better communication between both parties can better ensure PAS implementations are successful.

Read Also

How IT Transformation is Enabling Nationwide's Digitization

How IT Transformation is Enabling Nationwide's Digitization

Michael Carrel, SVP-IT & CIO, Enterprise Applications, Nationwide
Underwriting: Yesterday, Today and Tomorrow

Underwriting: Yesterday, Today and Tomorrow

Paul Miller, Vice President & Chief Data Officer, Nationwide
Aiming Big with Data

Aiming Big with Data

Upendra Belhe, Ph.D., Chief Data and Analytics Officer, Gen Re

Weekly Brief

Top 10 Insurance Analytics Tech Companies - 2019
Top 10 Insurance Analytics Consulting/Services Companies - 2019

Analytics Solutions Special