Policy administration modernization is becoming an imperative for smaller P&C insurers whose total written pre- mium is dwarfed by the IT budgets of
their larger competitors.
“We can’t beat the big guys’ ‘black boxes,’ but
we have to be able to compete,” says Kentucky
National Insurance Company CFO David A.
Combs. Competing means achieving straight-through processing on the vast majority of
simpler accounts, automating and standardizing
workflows, and presenting a modern interface to
the outside world.
“Our agents and customers have to see something that’s similar to what larger companies are
offering,” Combs says.
Appetite among small- to mid-tier carriers is
strong for modernization. “Vendors are reporting
wins with heavy emphasis on larger companies as
always, but they are also reporting more activity
among the tier- 3 companies below $1 billion in
premium,” says Jeff Haner, principal research
analyst in Gartner’s insurance industry advisory
“In our research we’ve found that over 50
percent of smaller carriers are going through policy administration vendor selection and modernization planning right now,” says Karen Furtado,
partner at research and advisory firm Strategy
Meets Action. “There is a wave of modernization projects still to come among that sector of
There are many systems from which to choose.
“We track 62 different P&C policy admin solu-
tions in the market, which goes to show there’s a
fit for everyone,” Furtado says. “The lion’s share
of the market is definitely held by the top 20 or so
companies, but it’s not a ‘one size fits all’ market.”
Although one size doesn’t fit all, small insurers
tend to look for an all-in-one solution. “The
extensiveness of the capabilities of the solution,
conjoined with the needs of the company, will
Small and mid-sized carriers look to grab as many
capabilities as they can at the ever-growing buffet offered
by policy administration system vendors. However, staff and
budget limitations offset how much smaller insurers can
afford to put on their plates.
By Michael P. Voelker