Eliminate Errors Prior to
Core System Replacement
Core systems replacement is a career defining moment for insurance technology leaders, so mistakes
need to be, at the least, minimized. We asked three insurance technology analysts their view on an
important factor involving systems replacement. our analysts include: Gerald Shields, IT practice director,
The Nolan Company; Stephen Applebaum, principal, Insurance Claims Solutions; and Donald Light,
director, Americas property/casualty practice, Celent.
What Do You Think?
This month’s question:
What is one error you too often see among insurance carriers as they
undergo replacement of their core systems and what steps can be taken
to prevent others from making the same mistake?
The Nolan Co.
I’ve had the opportunity of being
involved in many
system replacement projects.
One of the biggest
issues I see in such
projects is exec-
utives using the
system as a lever to fix a poor business
model or faulty business practices.
The belief that new software will automatically bring best practices is flawed.
While it may be true that new systems
can and should be a catalyst for improving business practices, the trauma of using a new system to force change often
dooms an organization in its efforts to
operationalize that new system.
In that unpleasant scenario, the new
system is seen as the face of change
rather than the ideas, inspiration, and
leadership of the business executives.
A core systems replacement project
should always be positioned at the outset as an enabling element of a broader
business improvement initiative. With
goals in place and leaders reinforcing
the underlying business imperatives,
employees are motivated to develop
and own new operating models and
business processes along with the
software that enables them.
Insurance Claims Solutions
The most costly
mistake we see is
the failure to include and consider
the needs of all
could be impacted
by such modernization.
In many cases, front-line system
users, even down to the level of call
center representatives and data input
operators, can provide critical insight
and help avoid costly delays and extensive rewrites.
Other stakeholders, seemingly well
removed from the operational area
whose system is being replaced, also
represent a source of critical and
valuable input. For example, carriers
implementing a new policy administration platform would benefit from
a collaboration with claims to ensure
the news system can accommodate
business intelligence and advanced
analytics tools, which will flag new policies during underwriting that exhibit a
relatively high risk of claiming activity
so when and if a claim does occur it is
identified well before claim costs are
The adage “measure twice and cut
once” seems to apply here rather well.
There are many
this honor: poor
complexity of data
My nominee is: Failure to define and
follow a value roadmap as part of the
implementation and near-term post
A value roadmap identifies specific
types and sources of value the new
system will provide. If the insurer has
developed a business case for the new
core system, the value roadmap will
address many of the cost reduction
and revenue enhancement elements of
that business case. In addition, the value roadmap will place these benefits
on a timeline, which could start during
implementation, and definitely begin
when the system goes live.
If the insurer does not have a reasonably complete business case the
value roadmap allows senior management to focus on realizing value
through new offerings, processes, and