With Core Modernization, Group Insurance Companies Can Only Benefit

It is remarkable how crises, such as the ongoing global pandemic, never fail to present the duality of disruption and opportunity. For the insurance industry, the pandemic interrupted the regular flow of business, necessitated quick upgrades of digital technology to make client communications and business management more effective, and curtailed research and development. Group insurance companies also faced these challenges, but with the added burden of many outdated core administration systems and related manual, paper-based processes that lead to inefficiency and a poor customer experience. Group insurance companies must also contend with the larger group insurance ecosystem and its layers of enrollment providers, benefit administrators, and data providers, with different employer customers requiring different combinations of the above. Faced with the additional challenge of the pandemic and its after-effects, many group insurance companies must modernize their core administration systems in this uncertain environment to enable critical improvements to their user experience, operational efficiency, and effectiveness.

Despite the challenges, group insurance companies continue to benefit from an established and successful business model, with two distinct advantages. First, employers vet insurance products on behalf of their employees, eliminating a time-consuming, individual product selection process. Second, group insurance companies benefit from the lower distribution costs and better risk pooling. A new, modern, and advanced platform that enables more efficient and seamless benefits processing can only enhance these competitive edges.

When selecting a new policy administration system (PAS), what should group insurance companies consider as they start the decision process? Companies should ask themselves the following five questions before they review their options:

  • Does the system support the industry’s larger technology scenario?
    As the insurance industry evolves to one more heavily dependent on technology, company systems need to be able to interact with broader innovations that will continue to develop and proliferate, such as Artificial Intelligence and Machine Learning. Companies cannot expect their systems to work in isolation and expect to be effective for the long term – they must be able to adapt to the surrounding and evolving technology ecosystem.
  • Is the system sufficient based on future technology and anticipated business environment for the coming decade?
    Companies need to adopt their new systems based on their future technology needs and anticipated environment, namely their business segment landscape and company culture. Therefore, CIOs must pace the new system adoption with what they believe will occur in the next 10 years. CIOs should be aware of any potential, disruptive scenario, where the system may need extra support to operate within the larger insurance ecosystem. If the system has the capacity to operate without further support in the next decade, CIOs should then focus on a system that can support non-group insurance products enterprise-wide to increase efficiency further. Scalability should also be a consideration if the company expects future rapid growth.
  • How important are flexible administration systems, as well as deployment speed and ongoing vendor platform services?
    Companies need to consider whether cloud or on-premises solutions will be the right fit for their needs. For example, a company that requires fast deployment and turnkey post implementation services should consider vendors with cloud-native implementations that take advantage of cloud-native services, as well as those that offer ongoing managed services. Companies that view internally owned policy administration systems as a long-term differentiator can consider more traditional on-premises solutions or traditional managed services.
  • What kind of upgrades are anticipated for the duration of the system?
    Will the system require either simple and fast upgrades or more complex reworks going forward? Companies should consider systems that are architected and implement low-code/no-code development tools to keep upgrades relatively quick and painless. A containerized system that supports an automated DevOps capability is ideal for multiple, agile, automated upgrades. Companies also need to consider other outside factors such as possible regulatory changes as well as upgrade costs.
  • What additional system features will justify the new system investment?
    Besides the eventual cost savings from new system efficiencies, are there other features that justify the investment? Improved data transparency, speed to market, flexible billing alternatives, enhanced user experiences, and more advanced workflows can also provide measurable enhancements. These are all important considerations before investing in a multi-million-dollar, long-term implementation.

These five questions should enable companies to perform a basic self-assessment to determine their current and future technology needs. Once companies progress to the vendor selection stage, they should be able to weed out candidates whose offerings are incompatible with their long-term requirements and focus on what features, future enhancements, and efficiencies can help their businesses adapt and thrive in predictable and unexpected situations.

Group insurance companies will hopefully retain their PAS selections for well into the future, so the scrutiny, prioritizing, and reprioritizing of requirements is worth the effort for a modern platform that enables more efficient, seamless benefits processing. An advanced solution can help any group insurance company capitalize on market opportunities, meet changing client needs, and improve its competitive positioning for years to come.

To read more about what group insurance companies need to consider when selecting new policy administration systems, see Vitech’s recent insight paper, Group Insurers’ Best Practices for Choosing a Policy Administration System Partner.

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