Technology and Your Grandfather’s Insurance Company
Robert Regis Hyle | January 12, 2016
Everybody has a wish list and it seems that atop the lists for insurance carriers still operating with legacy systems is the desire to do away with such antiquated technology and move forward. We all know how difficult that can be. Among the major worries are the cost factor, the time involved in implementing such a project, and selecting the right technology partners.
There’s no doubt how important those issues are, but there is one issue that can’t be ignored: the fear of what will happen to your company if the issue of out-of-date technology is not addressed.
The February issue of ITA Pro magazine examines the issue of policy administration systems and I was fortunate enough to speak with a few insurers who have addressed the issue. What is most interesting about these companies is how different they are from one another.
Both are personal lines carriers, but one is 100-years-old and the other quite a bit younger. One needed to replace multiple policy systems that kept the company from effectively using 100 years’ worth of data. The other had internal issues in managing contracts with customers that needed to be resolved.
Both chose to bravely move forward. We sometimes overuse the word brave, but it makes sense in these cases because inaction feels so much easier, even if it ignores issues such as maintenance of elderly systems. These carriers recognized what had to be done, though. The future of their business would be imperiled by such inactivity.
It is clear that business as usual can no longer be tolerated, particularly for personal lines carriers. The threat of competition, both from within the insurance industry and from the outside, is upon us. To compete, insurers need to be agile and flexible, two words that do not belong in the same sentence with the words “legacy systems.”
An even bigger issue, though, is the change in the way the younger consumer base is doing business. Consumers get frustrated with web-based systems; mobile is the key word today and often look at the industry with disdain. They don’t want to do business with their father’s insurance carrier and shake their heads at what could often be described as their grandfather’s insurance company.
Addressing the legacy issue, particularly with policy administration, remains a great challenge for a large number of insurance carriers. It is nice to see courage on display with many carriers who have made the move to modern systems. The challenge for those lagging behind will be even greater, though, the longer they wait. Another word may come to mind at that point: Desperation.
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