The pivot to digital is fraught with numerous obstacles but with proper planning and execution, legacy carriers can update their core systems and keep pace with the competition, while proactively addressing customer needs.

1. Cognizant 20-20 Insights
June 2021
Policy Administration Modernization:
Four Paths for Insurers
The pivot to digital is fraught with numerous obstacles but with proper planning
and execution, legacy carriers can update their core systems and keep pace with
the competition, while proactively addressing customer needs.
Executive Summary
Fewer in-person interactions, higher mortality rates and
greater financial insecurity have become the rule not
the exception in the insurance trade since the onset of
COVID-19. Moreover, expectations are changing even more
rapidly amid the post-pandemic’s rapid digitization of nearly
every facet of consumers’ lives.This has compelled carriers
to radically up their digital games to stay relevant and
remain competitive in these uncertain times.
Many carriers, if not most, are implementing some form of
digital business change. Some are focusing on operational
improvement/efficiency, while others are seeking to
connect with new customer segments to increase revenue.
However, many digital programs are not hitting the mark
or meeting the expectations of stakeholders — including,
most importantly, the customers.
Although there are multiple reasons why digital projects are
not yielding the desired results,one of the biggest challenges
for insurance carriers is their legacy policy administration
systems (PAS).Not many insurers have made investments into
their PAS,and those that have are struggling to determine how
to proceed. Based on our experience,there are four options
(detailed below) to move forward.Depending on how the
carrier is trying to differentiate itself,and on its objectives,one
(or more) of the four may be the best option.

2. Cognizant 20-20 Insights
2 / Policy Administration Modernization: Four Paths for Insurers
Most carriers are still trying to determine how to
address significant legacy PAS shortcomings.
Legacy systems by their nature have limitations.
They are difficult to modify, expensive to maintain
and inflexible since they are traditionally hard coded
and built for industrial-world business models. They
make it tough to address the need for more intuitive
and hyper-personalized customer experiences,
faster processing and the process transparency that
reduces business friction.
Insurers’ major PAS challenges include:
❙ A lack of documentation/SME knowledge about
existing application functionality and landscape
❙ Resistance to change, which typically engenders a
fear of job losses and of the unknown
❙ A lack of will, time and resources to tackle the
change
❙ A lack of leadership support to make the
necessary investments for change
The pluses & minuses: Our experiences
Based on our extensive client work, we have seen the
following four methods used to address legacy PAS.
1. Building/enhancing existing APIs or
integrations: Rather than replacing an older
PAS,the carrier focuses on enhancing the ability
to get data into and out of those systems to
improve transparency and accelerate processing
time. Moreover,this enables a broader ecosystem
of partners to improve product selection,
underwriting, premium calculations vs.the
competition, etc.A few carriers are also using
this approach to deliver a better experience by
integrating legacy applications with a digitally
enabled front-end application.
For example, a carrier could create a portal that
acts as the user interface to the agent/customer.
The portal can integrate to the PAS so they can
conduct self-service transactions such as a change
of address. From a customer perspective,they did
not have to call the contact center (thus, a better
experience) and from the carrier’s perspective, it has
reduced the number of calls coming into the contact
center (thus, gains in efficiency and cost reduction).
❙ Benefits:
> Least complex of the different methods and the
usual method preferred by insurers that are
looking for a solution without replacing the PAS
> Integrates touchpoints only between required
applications

3. Cognizant 20-20 Insights
3 / Policy Administration Modernization: Four Paths for Insurers
> Enables a digital experience in customer-
facing applications
❙ Disadvantages:
> Core application product enhancements
and speed-to-market continue to take up
bandwidth and inhibit long-term growth,
posing the risk of falling behind competitors
> IT run and maintain costs continue to be high
> Process inefficiencies persist within the PAS
2. Targeted replacement of key applications:
Some carriers elect to go after the surrounding
applications such as systems of engagement and/
or enterprise business process management to
orchestrate a better experience that cannot be
delivered with the PAS.
For example, a carrier could leverage an
enterprise business process management (BPM)
solution to arm internal call center agents with the
right information from the legacy PAS to quickly
share with customers. The integration with the
PAS saves time for the call center agent and thus
shortens the call, leading to a better customer
experience. The data captured through these
interactions could then be used to help carriers to
more precisely understand the market’s evolution,
thereby helping them to develop products
tailored to customer needs, which will ultimately
translate into revenue. This option is sometimes
combined with option 1 above.
❙ Benefits:
> Partially addresses pain points and challenges
through replacement of peripheral
applications
> The IT landscape remains untouched except
for the surgical changes
> Core applications and processes within the
PAS remain largely untouched
❙ Disadvantages:
> Disadvantages of option 1 continue to apply
3. Core legacy modernization: Here, the focus is
on resolving the core PAS through a new custom
built system or buying an off-the-shelf product.
❙ Benefits:
> Provides digitally scalable applications with
long-term benefits and enhanced customer
experience service capabilities
> Offers cloud plus on-premises ERP-type IT
landscape, which improves IT support costs
> Enhances speed-to-market, process
automation and the product enhancement
process to stay ahead of the competition
❙ Disadvantages:
> Initial time and money outlays are higher than
with the other options; however, long-term ROI
will be beneficial
> Requires commitment,resources (SMEs,dollars,
etc.) and support from business and IT leadership
> Requires strong governance and change
management process during implementation
to stay on track
> Custom-built applications are potentially riskier

4. Cognizant 20-20 Insights
4 / Policy Administration Modernization: Four Paths for Insurers
than COTS product implementation, driving
insurers toward COTS implementation
4. Stand up a new system and potentially a new
organization: Another potential approach is to
start with a clean slate through either an insurtech
venture or installing a new PAS for future products.
❙ Benefits:
> Creates an ecosystem without bottlenecks from
existing systems,people and processes,leading to
an improved experience and greater efficiencies
> Eases implementation of leadership’s vision by
reducing politics and resistance to change
> Creates new solutions to address market
conditions and customer expectations
❙ Disadvantages:
> Initial time, money and resource outlays are
higher than with the other options; however,
long-term ROI may be beneficial
> Requires a different mindset, level of
commitment and strong support from
business and IT leadership, including strong
governance during the initial phases
Comparing the ways and means
Each carrier’s situation and needs are different.
Figure 1 presents a quick and simplified comparison
of the options outlined above. We based this
comparison on speed-to-value (i.e., time from a
project’s commencement to when it demonstrates
value) and cost/complexity. At the end of the day,
determining a path forward is not easy. The options
are complex and need to be considered in various
combinations. Our framework provides a directional
understanding of the various options and a basis to
select the most appropriate one to your business
circumstances and technology landscape.
PAS options overview
Figure 1
Option Speed-to-value Cost & complexity Potential candidates for this approach
Building/enhancing
the existing API or
integration strategy
Targeted
replacement of key
applications
Core legacy
modernization
Stand up a new
system and
potentially a new
organization
Companies with a mature/nearly-there integration
architecture in place. If the company does not have
an established integration architecture or is at low
maturity,speed-to-value and cost/complexity will be
impacted.
Companies that are moving to an enterprise platform
and/or solutions that can span the value chain such as
enterprise business process management,low code/no
code solutions,CRM umbrella,etc.and have little or no
legacy baggage.
Companies that have the available time (multiyear)
and budget (double-digit millions) and are focused on
reimagining business and customer experience from the
ground up.
Companies that have an innovation organization or
culture,and want to target a new product or a new
market segment. These organizations are willing to
leverage insurtech advancements and other cutting-edge
technologies,and are nimble enough to change quickly.
Short-Medium
Medium
Long
Medium-Long
Low-Medium
Medium
High-Complex
Medium-High

5. Cognizant 20-20 Insights
5 / Policy Administration Modernization: Four Paths for Insurers
Moving forward
To meet ever-changing and rapidly evolving customer
demands, legacy policy administration challenges can no
longer be ignored and put off. Insurers need to address
them as key elements of their digital journeys. Every insurer
is in a different place due in part to their unique legacy
overhead and progress made on their digital journeys.
Therefore, each carrier’s needs are different. There is
no one silver bullet that works for every company, but
with thoughtful analysis and planning, the right path and
roadmap for your organization can be determined.
As carriers consider these different options, we suggest
that decision-makers answer the following next-step
questions to determine the right path forward:
❙ Business objectives and differentiation: Is our
organization trying to differentiate on customer service
or be the low cost producer?
❙ Organizational culture: Does our organization have the
culture and support to take on a large-scale program
that will require a multiyear investment in time, money
and resources?
❙ Experience: Do I have the right leadership and
execution capabilities to enable the option in a time-
efficient manner that allows my organization to keep
pace with the industry’s rapid digitization?

6. Cognizant 20-20 Insights
6 / Policy Administration Modernization: Four Paths for Insurers
References
• Assessing digital impact across insurer and channel operations — Research by ACORD
• Modernization of Legacy System Insurance 2019: Protiviti
• Digital Transformation Approach, MIT CISR Research Briefing, Vol. 19, No. 8, August 2019
• Peter Weill, Stephanie L. Woerner and Michael Harte,“Replatforming the Enterprise,” MIT CISR,July 15, 2020,
https://cisr.mit.edu/publication/2020_0701_Replatforming_WeillWoernerHarte?utm_medium=email&utm_
campaign=2020%20July%20SP%20Research%20Briefing&utm_content=2020%20July%20SP%20Research%20
Briefing+CID_31fb824a002f1d26f4ae85652acb3389&utm_source=Campiagn%20Monitor&utm_term=Read%20the%20
Research%20Briefing
• “A Journey to Digital Transformation: Collaborative Innovation in the US Insurance Industry,” Gomedici,June 19, 2018,
https://gomedici.com/journey-to-digital-transformation-collaborative-innovation-in-us-insurance-industry/
• Joanna Glasner,“A Record $2.5B Went to U.S. Insurance Startup Deals Last Year, And Big Insurers Are In All The Way,”
Crunchbase News, April 4, 2019, https://news.crunchbase.com/news/a-record-2-5b-went-to-u-s-insurance-startup-deals-
last-year-and-big-insurers-are-in-all-the-way/
• https://www.thebalancesmb.com/what-is-insurtech-4584490
• Alison Coleman,“Four Insurtech Startups Shaking Up The Insurance Industry,” Forbes, July 9, 2019, https://www.forbes.
com/sites/alisoncoleman/2019/07/09/four-insurtech-startups-shaking-up-the-insurance-industry/#788606b129f4
• https://insur-tech.com

7. Cognizant 20-20 Insights
About the authors
Steven Waldrop
AVP and Partner, Insurance Consulting Practice, Cognizant
Steven Waldrop is an AVP and Partner in Cognizant’s Insurance Consulting Practice. As a business
transformation leader, he is passionate about helping carriers transform their capabilities to drive business
value and better engagement experiences — both internally and with their customers. Applying his
25-plus years of experience, Steven advises companies on the design, development and execution of
transformation programs that enhance engagement, business capabilities and processes, while leveraging
the latest technologies across digital and core applications. He applies a human-centered design
approach, to help companies think about solutions from the outside-in. He has worked with carriers across
the property and casualty (P&C) and life and annuity (L&A) spectrum. Steven earned his BBA in computer
information systems at Georgia State University. He can be reached at Steven.Waldrop@cognizant.com |
linkedin.com/in/stevenwaldrop/.
Gordon Sanders
AVP and Partner, Insurance Consulting Practice, Cognizant
Gordon Sanders is an AVP and Partner in Cognizant’s Insurance Consulting Practice. He has 40-plus years
of experience in insurance business and technology. While his claim to fame is legacy core transformation,
he also has deep experience in distribution management, from both a business and applications
perspective. Gordon earned his BBA from Hofstra University in administrative computer science and
business management. He can be reached at Gordon.Sanders@cognizant.com | Linkedin.com/in/gordon-
sanders-13b4581.
Shriram Sankaran
Associate Director, Insurance Consulting Practice, Cognizant
Shriram Sankaran is an Associate Director within Cognizant Consulting’s Insurance Practice. As a
business transformation leader, he is passionate about helping carriers evolve their capabilities to derive
overall value and growth for all stakeholders. Shriram has global consulting and insurance experience,
advising clients on insurtech start-ups, green field implementations, program management, business
process enhancements and customer experiences that leverage the full gamut of the flourishing digitally
enabled technological ecosystem. Shriram has 29-plus years of insurance and consulting experience,
working with various P&C carriers in India, the Middle East, APAC, the UK and the US. He has worked as
an underwriter, claims professional and reinsurance broker in his prior experience in the insurance and
reinsurance sectors. Shriram earned his master’s degree in commerce and bachelor’s degree in business
administration at Annamalai University. He can be reached at Shriram.Sankaran@cognizant.com |
Linkedin.com/in/shriramgs.
7 / Policy Administration Modernization: Four Paths for Insurers

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