Fewer than 1 in 3 policy admin system transformations ‘meet the traditional definition of success’ for insurers

Technological change and new regulatory proposals outside of Canada are among the top issues for the insurance industry this year, PwC said in a new report released Thursday.

In its report, dubbed Top Issues: The Insurance Industry in 2014, PwC suggested most updates to policy administration systems are not successful.

“We are seeing unprecedented investment by insurance carriers in policy administration system (PAS) transformations,” PwC stated in the report. “Even though it likely will be the largest single project investment a carrier ever pursues, most new PAS implementations are ‘challenged’ and only a few deliver transformative capabilities to the business.

“After surveying industry, we have found that only 30 percent of policy administration projects meet the traditional definition of success in terms of time, budget and scope. Moreover, only about 10 per cent of transformations realize their full business benefits.”

PwC advises carriers who are updating their PAS systems to use “consistent users interfaces and work flow across systems (e.g., policy, billing and claims).” The firm also advises insurers to have a “dedicated forms team” to consolidate and standardize forms, where possible.

In the report, PwC also discussed taxes, mergers and acquisitions and regulation.

“Regulatory uncertainty is of particular concern to international groups, given regulators’ increased emphasis on group-level supervision, colleges of supervisors, revised global capital and solvency standards, and (in some cases) the real risk of extra-territorial application of regulatory powers,” according to the report.

PwC noted that some regulatory initiatives that are under development will “not be limited to the largest and most ‘internationally active’ companies, but will influence regulatory change and policy and the world and therefore practically all insurers.”

One development cited by PwC is the International Association of Insurance Supervisors (IAIS)’s development of a global insurance capital standard to apply to internationally active insurance groups.

“Insurers who have yet to see substantial change are likely to see it soon.”