Recognized universally as one of the basic laws of nature, inertia
is the tendency of an object to continually move (or not move)
in a straight line until a contradictory or opposing force causes
that motion (or lack thereof) to change. Metaphorically speaking, inertia can be applied to things other than objects, and for
the purposes of this article, that means it is not a big leap to
say the insurance industry has been stuck in a bit of a rut lately
when it comes to core administration systems.
On Monday, April 17, I posted the following thoughts to
Average Insurance Core Administration Lifecycle?
Purchase new system and implement: two years
Data conversion from old to new and turn off old system:
Decide “new” system is obsolete and build business case for
“new” new system: one year
Get budget approval, hire consultant to develop 600-page
RFP, shortlist vendors: one year
Put together project team or PMO, begin PoC with shortlist
vendors, make purchasing decision: one to two years
Begin again seven to eight years in.
Don’t anybody tell me this doesn’t happen, because it does.
Not in every case, of course, but all too often and more often
than anyone would like to admit.
Agree or Disagree
Several people commented publicly on the post, while others
contacted me privately to agree or disagree with parts of my
proposed timeline. Some took issue with the entire timeline,
asserting that, especially for life insurance companies, the cycle
takes more like 10 to 12 years. Others blamed the entire vicious
circle on failed data conversions, projects made impossible by
dark, dirty data resulting from messy mergers and acquisitions
(M&A) and incomplete integrations. Still others disputed the
existence of a 600-page request for proposal (RFP).
One would think the pain of the process alone would have
been enough to inspire angry mobs to take to the streets, or at
least inspire change, right? Wrong. It took something much big-
Insurtech Interrupts Insurance Inertia
A slowdown in the replacement of core insurance solutions can partially be
blamed (or credited) to insurtech solutions.