For those new to the insurance industry, the length and complexity of the system-purchasing process must seem overwhelming and, at times, unnecessary. Overkill might come to mind, but the much-maligned request for proposal (RFP) process drives technology selecting and purchasing in the risk-averse insurance industry. For core administration systems (policy, billing, and claims), RFPs can provide an organized approach to working through and scoring dozens of seemingly viable alternatives. But three vitally important things are often neglected in the RFP process, all of which should be primary considerations for a long-term partnership with a system vendor:

1. Consider how well the base system meets the needs of the organization. Most systems have out-of-the-box entry screens, workflows, reports, and processes that can speed implementation and production. While some level of customization is almost always requested, remember: More customization means longer timelines, higher costs, tougher upgrades, and more complicated maintenance. Weigh what’s available vs. what’s possible.
2. Pay attention to the ways configuration tools work and how such tools will be used during implementation and for ongoing system and product maintenance. The capabilities of configuration tools are frequently overlooked because vendors typically set up the first few lines of business. So, configuration tools aren’t given the same scrutiny as policy, claims, or billing functionality. Consequently, post-implementation, insurers rely on vendors to make changes and updates or give those responsibilities to IT staff members. Either way, the capabilities of the configuration tools will affect time to market for future changes or new lines of business.
3. Sending an RFP to a number of prospective vendor partners is like speed dating in the hope of finding a few good candidates. But technology aside, don’t overlook cultural and philosophical rapport. Differences in work ethic and responsiveness have caused many projects to fail in discord and dysfunction, especially if communication is reduced to procurement or consulting channels, rather than direct interaction between stakeholders and vendors. After contracts are signed and the project kicks off, two companies will aspire to be long-term partners. That only happens through cultural compatibility and alignment of goals. That compatibility and alignment of goals can only be achieved through extensive, open communication. And that communication, ideally, should be conducted face to face.

Take the Time, Not the Headache

A popular corporate axiom says, “There’s never time to do it right. But there’s always time to do it over.” When it comes to core system replacements and implementations, that’s a recipe for disaster. Insurers may never recover from the time and money lost to a bad vendor relationship. That’s why underwriters, claims examiners, accountants, executives, and IT staff member have to be comfortable with the vendors and the systems they select.

Conducted conscientiously, the RFP process can ensure appropriate compatibilities between insurers, vendors, and systems. If you take the time to do it right, you’ll save yourself the headache later.

One of our professional colleagues who shall remain unnamed shared an email with us the other day that qualified as the written equivalent of a cold call, and an inappropriate one at that. This is what it said:

Dear Sir,

I tried to call you, but you didn’t pick up. Because I didn’t want you to miss out, I’m sending you a transcript of how our call would have gone.

You: Hello.

Me: Hi. I’m calling from Cirrus MegaSystems, developer of thinware for insurance. Can I steal 2 minutes?

You: What do you want?

Me: We replace aging and inadequate core systems to modernize operations and improve the policyholder experience.

You: Well, we’re in the middle of implementing another system.

Me: Since you’re a customer of Amerisurica Worldwide, I thought their bad reputation might compel you to jump ship.

You: Things haven’t yet gotten ….

Me: A lot of Amerisurica customers are in the same boat. Cirrus MegaSystems would be a perfect fit for you.

You: I’m not ready to begin looking at other alternatives yet.

Me: Let’s schedule a demo anyway. It’s never to early to begin developing another plan in case things don’t work out.

Say what you want about the guy who wrote that email, but he was persistent. And he definitely put the cold in cold call.

Numbers Don’t Lie

We know the reality. Almost 40 percent of our new customers over the past four years came to us after failed or failing implementations. There are reasons for those failures, of course — a lack of defined goals, under-estimations of the effort, the resources, and the time required, and many more. And those reasons suggest there needs to be higher degrees of cognizance and vigilance about whether and when to find another vendor before more good time and money gets thrown after bad, before you burn through your budgets and the patience of your Board, and before heads start rolling.

You can’t allow vendors to stuff themselves down your throat. But at the point at which you start to sense trouble with an implementation, start preparing to pull the plug. And make sure you have a Plan B.

The company or the job you save may be your own.

The outbreak of the coronavirus constitutes a profound test for the insurance industry. More pointedly, it’s a test of your company’s ability to continue operations without staff members being in the office. The fact is, now more than ever, insurers will have to rely on the contingency plans they put in place and the software they use to ensure disaster recovery and business continuity. And now more than ever, insurance is essential, from the strategic complexities of assessing risks to the tactical simplicity of printing documents.

In anticipation of operational interruptions of any sort, more than 10 years ago we developed the capabilities for entities to act as virtual insurers. There’s no need for bricks and mortar, other than a mailing address for legal purposes. All processes and transactions could be completely conducted online. All printing and check issuance could be outsourced. As a result, and because the Finys Suite is an online system, your employees can do their jobs without coming into the office. Print still goes out. Checks still go out. Claims still get processed. And for most of our customers, we  manage all the hardware and software they need to run their core systems.

There’s More

Because of the capabilities we’ve developed, all our employees are now working from home. All implementation and development work is being completed without significant interruption. We’ve developed some new management-reporting protocols. We’re gathering specifications for two new implementations that will begin this month. And our sales efforts continue apace, albeit without travel.

It’s not our intent to exploit the difficulties caused by the coronavirus pandemic. Rather, it’s our intent to take responsibility for doing what we can to help the industry we love and serve weather this storm and serve its constituents as comprehensively as possible. Yes. We’re a software company. Yes. We did prepare ourselves and our customers for an eventuality such as this. But it’s not our intent to take advantage of it.

We’re all in this together. And if we pull together, we’ll move more weight across the finish line of this pandemic.

The coronavirus is now. We can’t know what might be next. But we’re ready for it, by design.

Please let us know how we can help you be ready now and for the future.

A recent review of trends for strategic initiatives in the insurance-industry showed core transformations remaining relatively flat over the period between 2015 and 2020. At first, we wondered why: Is it because the need is constant and is being addressed relative slowly and, perhaps, consistently? Especially in light of the fact that so much marketing communication and trade advertising seems devoted to legacy-system replacements and core transformation, we would have expected that particular initiative to be trending upward more steeply. We would have been wrong. Here’s why:

A Closer Look

On further review, we discovered that roughly 85 percent of all insurance companies are in the process of replacing their core systems. They’re all at different stages, of course. But since core-system replacements typically take so long, the fact that the trend line stays relatively flat become less surprising. And in more than a few cases, the replacement systems take so long to implement they’re obsolete before the transitions are complete.

Given those realities, it’s much more constructive, much less frustrating, and much less expensive in the long term to treat modernization as an ongoing process of continuous improvement. That’s why we don’t recommend standard buy-and-license models to our customers: Core transformation isn’t— and shouldn’t be considered — a once-and-done thing.

One More Thing

There may be some confusion between initiatives typically characterized as digital transformation or as core transformation. From the perspective of modernization, though, those terms may be red herrings. Everything today is digital. If it’s not, it’s quickly on its way to obsolescence. What that means is that insurance companies, particularly insurance companies that run multiple core systems, have to prioritize the value they’ll derive from modernizing each of them. (What are the chances any core transformation won’t be digital?) It’s entirely possible that their usage of or dependence on some of those core systems is so small they don’t warrant updating or modernizing. So, the companies continue to run them, as is, until a better option comes along.

While core-transformation trends may be appear to be flat, they’re flat at a very high level. And they’re flat at a very high level because, in most instances, modernization is and should be ongoing.

Don’t be deceived.

Sixteen months or so ago, we published a post about digital transformation. In that post, we suggested this:

One of the most constructive things we might do is ignore all the commotion about digital transformation. While organizations might need to transform (more likely they need to adapt and evolve), digital transformation has become all but indecipherable because it can’t be defined consistently. And it can’t be defined consistently because it’s too broad and, so, too vague.

Since the phrase hasn’t gone away, we decided to re-examine the notion of digital transformation, to look at it a little more deeply than we might have the first time. More specifically, since we’ve been communicating digitally for two or three decades, we wanted to figure out if there’s anything besides jargon and marketing hype going on here.

Butting Agendas

Two objectives seem to be converging and conflicting here. Objective #1 is to look at thing from the perspective of the prospective buyer; that is, insurers are facing pressure to:

• Be more customer-focused
• Be more responsive to policyholders and prospects
• Provide greater access to policy- and claim-related information
• Provide more options and opportunities for self-service.

But they’re facing the sobering realities of Objective #2 — getting their core systems to function at levels sufficient to achieve Objective #1. If products remain difficult to change, if integrations continue to be a challenge, and if BI isn’t meaningful enough to improve operational decision-making, customer behavior, responsiveness, accessible information, and self-service capabilities become tough nuts to crack.

Those brittle systems force insurers to try to bolt digital communication capabilities onto them, rather than designing their systems — or buying systems that are built — around digital communication. Case in point: When we wrote Finys, distribution channels were our focus. Maybe we should have called what we were doing digital transformation. We didn’t. But it means the system is designed to provide a completely digital experience — to operate from the perspective of its users, regardless of who’s using it — to agents, to policyholders, to TPAs, and to anyone in any authorized role in the insurance company.

By Any Other Name

Maybe instead of digital transformation, what’s really going on is core modernization with the addition of more digital capabilities.

It doesn’t matter what we call it. What matters is that many insurers need to get it done.