If you’ve been following my previous two blog posts in this series: Life insurance platform modernization: A must for high performance and Six benefits of life insurance platform modernization, you’ll agree—platform modernization can help life insurers grow their business. Why is it then that so many still rely on old, obsolete processing systems?
Often it comes down to two reasons: expense and impact on the business. In most cases, legacy systems are still functional, making it difficult to justify writing them off. However, there are different ways to approach the problem.
Choosing the approach that’s right for your business
Accenture believes there is no single approach to platform modernization that is ideal for all, but the following are worth considering:
- Legacy wrap uses tools to “wrap” existing administration systems. While the life of the legacy technology is extended, IT costs are increased and the problem of obsolescence is deferred rather than solved.
- Legacy renovation is the quickest, safest and cheapest of all approaches. It involves updating applications to perform at a higher level, but often offers little enhancement of processes or functionality.
- System replacement allows the insurer to introduce new end-to-end policy administration capabilities, but may require more of an investment than others.
- Outsourcing is growing in popularity among insurers and can reduce a number of costs and accelerate speed to market. The organizational impact, however, can be significant.
- Hybrids allow insurers to increase new capabilities slowly and strategically over time. Most carriers often explore hybrids because they combine a number of migration strategies to meet specific objectives.
There is no one-size-fits-all approach to platform modernization—every insurer faces a different set of internal and external circumstances. Are you ready to embark on this journey? Join me next week when I discuss some essential considerations when modernizing your platform.
To learn more in the meantime, download Reducing costs and time to market through life platform modernization (pdf; opens in a new window).