A Modern Policy Admin Platform with Cost and Customer Experience in Mind
Chris Eberly, VP, Life IT, Lincoln Financial Group
The insurance industry is not known as an early adopter of new tech or cutting-edge innovation.It hasn’t been pushed to advance in the same ways that some consumer industries have been due to disruptors like nimble tech start-ups that rapidly propel them forward, causing companies to quickly adapt and modernize or disappear. But insurers do need to modernize and evolve to stay relevant and best serve and meet their customers’ needs. Modernizing your Policy Administration platform is critical to providing the flexible experience customers expect today, but how you do it is just as important as getting it done.
Update the current tech or start fresh?
Undoubtedly, there are huge advantages to going to a modern platform, but our industry has notoriously kicked the can down the road on modernizing our core admin engines. Over the years, carriers have built surrounds around core platforms to bridge the old system to the new world, trying to reach today’s customer. This approach seems to appease the need to update, but it’s not sustainable. It adds more complexity to existing ecosystems, driving up maintenance costs, and fails to mitigate much of the risk present in legacy systems.
The modern approach to policy administration enables companies to leverage event processing and API integrations, allowing real-time processing that delivers immediacy to our customers. It’s about delivering instant event-driven interaction for policy holders, offering a feeling of true ownership and transparency.
Stakeholder buy-in and approach
As with any tech modernization effort that impacts platforms deeply embedded in business processes, greenlighting the change often requires a deliberate internal campaign to demonstrate value. The hard part is presenting the financial benefits – showing a true understanding of the financial model that supports the business model, bolstered by a clear illustration of the improved values.
To replace the Policy Admin system, you must rework the entire business process and evolve the existing ecosystem,taking advantage of new capabilities and patterns to eliminate complexity and manual stopgaps that have become business-as-usual. In addition to the pure IT cost saves, weigh the risk of not modernizing, which results in a crippling inability to compete in the realm of real-time functionality and speed-to-market. It gives insurers the ability to quickly update and sell new products, and grants customers fast access and updates.
A key driver of the saves afforded by modern Policy Admin platforms is collaborative consumption – providers that offer shared platforms on a cost-per-policy model are significantly less expensive than the cost per policy carriers will pay on an internal platform. These configurable out-of-the-box digital software platforms include chassis to support your entire policy lifecycle. You could essentially knock your IT cost per policy by 50 percent or more. We’ve seen the cost per policy drop significantly as an industry standard through collaborative consumption platforms.
You won’t get this benefit by trying to build your own custom platform. Insurance carriers don’t seek to differentiate themselves from competitors by way of their core Policy Admin platform. They won’t sell more policies because of a custom system and will face challenges convincing their distribution teams to sell it as a benefit. Put simply, it’s going to be very difficult to prove that value.
A flexible, current,configurable out-of-the-box Policy Admin system is table-stakes today if a carrier hopes to adequately support the products and services it provides and create quick and robust accessibility to those products for customers. This modernization is critical to meeting the expectations of customers today and keeping pace with the market.
Lincoln Financial Group is the marketing name for Lincoln National Corporation and its affiliates. The views expressed are those of the author as of the date specified.
