Half of insurers report difficulty with policy administration systems

More than half of commercial insurers responding to a survey they had more than one policy administration computer system in production while 45% of respondents reported it was difficult to integrate other services with their core system.

Boston-based Strategy Meets Action released this week the results of a survey of 121 North American property and casualty insurers. The report, titled Policy Administration: P&C Plans and Priorities was written by SMA partner Karen Furtado.

More than 40% of those surveyed are “currently involved in” either selecting vendors for, planning a change of or implementing a policy administration system.

Respondents were asked what their “pain points” were with current policy administration systems. SMA listed a total of 10 pain points in its report. More than half (58%) identified “dependency on IT resources for all changes” as a pain point while 50% said they had “difficulty meeting current business requirements” of their organization with their policy administration system. Nearly half (45%) said it was “difficult to integrate other services” with their core system while 25% said the “green screen environment” was a pain point.

SMA also asked respondents how many policy administration systems they had in production and broke down the results by line of insurance.

In personal lines, 65% of respondents had one system, 29% reported having two or three while 6% reported having four to six systems. In commercial lines, 49% had one system, 37% had two or three, 10% had four to six, 2% had seven to 10 while 2% of carriers in commercial lines reported having more than 10 policy administration systems in production.

“The findings from this research indicate that there is a 10% decrease in the number of legacy systems that remain in production,” according to the report, which noted that replacing a policy administration system is “costly, time consuming and risky.”