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:
- 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.
- 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.
- 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.