Problems with a “Best of Breed” Software Approach

A best of breed approach offers some advantages for insurers. The ability to obtain the leading systems for different services can, of course, be tantalizing and imply leadership.

Best of breed is a potentially viable strategy that requires extensive resources, as it is a complex approach that is often time-consuming and prohibitively expensive. Integrating multiple systems with different logic, along with databases governed by different rules, under various technologies, isn’t for the faint of heart. To give an example, claims possesses a certain type of logic, but billing has totally different logic, making it difficult to sync them. Insurers (or their system integrators) will have to create their own flow, often without full knowledge of all the systems and their best practices.

Best of breed portfolios often boast impressive new features, but it’s easy to forget that it will be necessary to connect every one of them to each other and to the policy administration system (PAS). Each feature will likely take between six months and a year to connect and there is no guarantee of ultimate success! Many times these types of projects eventually fail, due to cost overrides, or unbearable delays (or both).

Having many features is appealing, but if they aren’t properly connected, insurers won’t reap the expected value. For instance, if insurers have a wearable technology program, but can’t effectively analyze the data that is generated or respond quickly to that data, the program will be devoid of most of its potential benefits.

Once everything is finally connected, insurers will still have to deal with upgrades, which will mean going back to the drawing board and re-syncing all systems and features manually. After go-live there is a continuous conveyor belt of regression testing as each component in the jigsaw has its own independent roadmap and upgrade strategy, not to mention the underlying software platform with its own cycle of upgrades.

The Difficulties of Integrating Two Key Digital Components

Customer portals, agent portals and advanced analytics (also called “business intelligence”) offerings are critical for today’s insurers. Portals provide a unique and modern experience for customers and agents, while advanced analytics enables insurers to produce actionable insights and maximize the value of their data. And yet, both systems are notoriously difficult to integrate, both to the back-office systems and to each other.

It can take up to two years to integrate an advanced analytics proposition to a PAS and get it up and running, because there is an abundance of logic contained in hundreds of different charts (with varied formats). During that extended period, the insurer must manually generate reports and then integrate them with its marketing system, making it difficult to ascertain why customers are dissatisfied, and then effectively address the issue. Competitors with a fully integrated and functional BI system may swoop in and take some of those dissatisfied customers.

Effectively integrating advanced analytics offering requires intricate knowledge of the source system and the data warehouse models. Because data is granular and spread out, integrating it with business models and aggregating it is a complicated process. It requires an extensive understanding of an insurer’s own systems, plus deep knowledge of each vendor system, and profound business and technical knowledge of the data models and logic.

Insurance providers who purchase a standalone portal often find it difficult to integrate its logic with the logic of the surrounding components and systems (the brief case study in the next section highlights some of these problems). The information coming to and from the portal must be mapped to the PAS.  This can be challenging, as many of the PAS fields are required in an in-office application. The portal may need to be interfaced to multiple internal systems to complete a quote/application. Error solutions must be designed and written for these interfaces.

In addition, non-integrated solutions will typically be much “lighter” in terms of the ready-made insurance logic and will require insurance carriers to invest significant time, effort and money into defining and designing such logic. These difficulties can inadvertently impact upon the customer experience. Without an experienced PAS insurance software vendor who lives and breathes the insurance lifecycle, insurers miss out on best practices that can shorten integration timeframes and reduce costs.

Sapiens’ NEW white paper, A Pre-Integrated Suite is Key for Establishing a Digital Business, details SIX specific advantages insurers can reap from a pre-integrated, digital software approach.

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Erica Moe

Erica Moe

Erica Moe is the head of Sapiens' North American Life Insurance practice. She possesses expertise in business and technology-enabled transformations, mergers and acquisitions, outsourcing, software implementations, business architecture and end-to-end operations for the financial services industry (life insurance, P&C, group benefits and banking).

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