Innovating the group insurance policy administration core to drive business growth - April 2021
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Innovating the group insurance policy administration core to drive business growth April 2021
Proposal title goes here |
Section title goes here
Contents
Executive summary 1
The case for group insurance policy administration transformation 6
Business and technology architecture implications 8
Key learnings from the trenches 10
Group insurance policy administration transformation approaches 11
Policy administration technology marketplace perspectives 13
Getting started with a group insurance policy administration transformation 14
2
Innovating the group insurance policy administration core to drive business growth | Executive summary
Executive summary
Market trends indicate the business case for a core policy
administration system (PAS) transformation to be stronger than
ever. Legacy PAS systems continue to limit an insurer’s potential for
growth and its ability to meet its digital transformation objectives.
Legacy systems were built with an emphasis on core system
capabilities, but these systems are now turning into bottlenecks,
and more carriers are undertaking core transformation programs
to address the following challenges:
administrative burden associated with
Business challenges ecosystem integration across key
core processes, such as onboarding,
partners, such as benefit administrators.
• Create customer-centric integrated and addressing those concerns will drive
product architectures for rapid quoting, • Manage technology debt within the higher retention and greater market
rating, and proposal generation and architecture to reduce risk of obsolescence. penetration across case sizes. The
development of plan offerings to increase PAS serves as the system of record for
• Identify and address security
quote volumes in support of topline employer and employee data and is vital
vulnerabilities to prevent risk of
growth objectives. in delivering a differentiated customer
business-threatening data breaches and
experience by simplifying and digitizing
• Optimize employer, employee, and improve compliance posture.
processes that leverage data from sales
broker experiences to drive seamless
and underwriting activities while also
digital interactions in moments that matter. Innovating at the insurance core through
minimizing onerous back-and-forth with
a PAS transformation has become table
• Support improvement of product the carriers.
stakes, and the industry has recognized
development and distribution
the need for a modern digital core. A 2020 • Product innovation has never been
capabilities to meet market needs
survey of insurance CIOs reveals that 37% more important in the group insurance
across segments.
would choose to allocate a hypothetical 10% market. Product offerings must
• Resolve inefficiencies in business increase in discretionary technology budget to be tailored to respond to a robust
operations (e.g., underwriting, billing) core transformation and cloud projects, which combination of external (regulatory,
to reduce operational expenses and would be 14% higher than the second-highest customer expectations, etc.) and
premium leakage. category, innovation and growth.1 As adoption internal drivers (distribution channel
continues to rise, it will be increasingly difficult diversification, profitability, etc.).2 The
• Close reporting and decision support
to remain competitive without a modernized PAS provides the digital core needed
gaps to enable effective business insights
core that enables the digital capabilities to develop the integrated product
and decisions across group administration.
needed to thrive in the market. capabilities necessary to keep up with
ever-changing market demands.
Technology challenges
A PAS transformation provides the
• As the group insurance ecosystem
• Reduce the run costs to free up resources underlying business and technology
continues to broaden, the role of partner
to spend time on strategic change core needed to build out enabling digital
engagement continues to play a pivotal
initiatives, such as PAS modernizations. capabilities that drive multiple elements in
role in growth.3 Providing a platform with
the broader group insurance value chain:
• Address legacy technology brain drain plug-and-play capabilities to employers,
to minimize key person risk. • Group insurers need to provide a brokers, agents, and other ecosystem
delightful customer experience. partners simplifies data and workflow
• Improve interoperability within the
Employers are grappling with the integration in an increasingly complex web
technology stack to enable rapid
1. Deloitte, 2020 Global Tech Leadership Study, 2020.
2. Michelle Canaan and Kelly Cusick, “Modernizing insurance product development,” Deloitte Insights, October 9, 2019.
3. Deloitte, 2020 insurance outlook, 2020.
3
Innovating the group insurance policy administration core to drive business growth | Executive summary
of interconnected business relationships.
Figure 1. PAS transformation approaches
The diversity in group insurance
ecosystems (HRIS/HCM providers, benefit
administrations, enrollers) and the
nature of many of these partners being
Replace Refocus
technology companies further warrants a Replace
Sourcing
robust digital architecture. and retire
Greenfield Sale of
• As the digital core of the organization, the install closed block
PAS must have the infrastructure and
integration capabilities needed to enable
Remain Do nothing PAS Wrapper
innovation and organizational agility that (wait) transformation or reskin
will drive continued growth. Insurance CIOs approaches
surveyed mentioned that, on average, they Consolidate Port to newer
systems technology
expect the percentage of their technology
budgets allocated to innovation and Convert or Upgrade or Retool
retire enhance
growth to increase from 15% in 2020 Retire
to 25% in 2023.1 During the COVID-19
pandemic, companies running cloud-based
platforms and modern architectures,
such as microservices, APIs, and low-code
approaches, have scaled and adapted right solutions. A nuanced PAS strategy that investments and provide a framework
more easily, illustrating the importance of a aligns with the business’s strategic levers will to make data-driven product and
robust and resilient digital core. potentially deliver key capabilities that drive customer decisions.
impactful outcomes.
• Analytics and artificial intelligence • Develop tiered service delivery models
contribute to large amounts of value in across segments or cohorts.
Getting started
data-intensive workflows like underwriting Independent of the decision to commit to
and rating. In a recent industry survey, 67% There are various best practices that may
a full-scale transformation, there are four
of respondents indicated they were able potentially ensure the impact from a PAS
“no-regret” steps that all group insurers
to achieve cost savings in the underwriting transformation is realized while mitigating
should take. These initiatives not only provide
process using predictive analytics, and 60% some of the more common risks. The
immediate value by alleviating some of the
of respondents managed to increase sales most appropriate approach to take will
pressing challenges carriers face today, but
and profitability.4 Such use cases require depend on where a group insurer is on its
also create the foundation for additional
a robust data foundation and integration transformation journey.
benefits that can be achieved through a PAS
fabric that are often bottlenecked by legacy transformation—either today or in the future. • I need to define what my long-term strategic
PAS system limitations. vision is and which PAS capabilities are needed
• Optimize product structure by
to support it. > Plan digital transformation
There are several different approaches to developing modular product
design workshops to align on the strategic
deliver a PAS transformation, which include architecture and simplify business
goals–enabled transformation.
a combination of technology and sourcing operations processes.
strategies (figure 1). • I know where I want to end my journey
• Establish business-aligned reference
but need to craft a compelling argument
technology and digital architecture to
Developing the right PAS strategy for a to get the resources to start. > Formulate
define a core systems vision and guide
group insurer requires a multilevel analysis a PAS transformation business case
future investment.
of the business model, strategic priorities, to determine the value proposition of
technology needs, available resources, and • Modernize data and integration undertaking a PAS transformation.
timeline objectives while also selecting the environments to simplify future
4. Josh Wozman, “North America life insurers embrace predictive analytics to elevate their business,” Global Newswire, June 17, 2019.
4
Innovating the group insurance policy administration core to drive business growth | Executive summary
• I want to find the right PAS vendor and • I am ready to start and want to ensure I enough to weather market disruptions.
systems integrator that share my long-term achieve my vision in a cost-effective manner. In an industry that has historically been
vision. > Go through the PAS vendor > Start a PAS implementation with an plagued by legacy technology bottlenecks
selection process to identify the vendors experienced strategic partner. and underinvestment, group carriers
that are most aligned to the objective of now appear to be initiating steps toward
the transformation. Conclusion revitalizing their aging core systems. Our
While a core PAS transformation recent Group Insurance Benchmarking
• I need to identify which ongoing programs
undertaking is a complex journey, the Survey indicates that 80% of participating
are part of my final vision and should be
capabilities and benefits delivered by carriers have already or are planning to
continued. > Perform a PAS program
modernized PAS solutions far surpass undertake at least one PAS transformation
health check to evaluate all ongoing
the pressing needs of the current market. in the short term.5 The time to act is now in
initiatives (including PAS, if currently
Additionally, they also create a stable order to remain competitive in the group
underway) and see if they align with the
digital core for future growth that is robust insurance market.
strategic vision.
5. Deloitte, Group Insurance Benchmarking Survey (GIBS), 2019.
5
Innovating the group insurance policy administration core to drive business growth | The case for group
Proposal title
insurance goesadministration
policy here |
Sectiontransformation
title goes here
The case for group insurance policy
administration transformation
Group insurers are recognizing the need CIOs surveyed by the 2020 Global Tech needs and achieve the resulting business
to transform and revolutionize their Leadership Study choosing to allocate a benefits, a group insurer likely needs a
operating models through a variety of hypothetical 10% increase in discretionary digital infrastructure that can enable real-
modes that include customer experience technology budget to core modernization time and consistent interactions with its
transformation, greenfield technology and cloud projects, leading the second- members through mobile apps, member
setups, and extension of capabilities highest category, innovation and growth, portals, and other engagement channels.
through M&A and the InsurTech ecosystem. by 14%.6 Furthermore, our 2019 Group As core system of record that aggregates
In response, insurers are continuing to Insurance Benchmarking Study revealed member data from all supporting business
refine their value proposition to be relevant that 80% of respondents were planning on functions, the PAS is the core for enabling
with brokers and employers. Employers and undertaking at least one PAS transformation an ecosystem of customer engagement
employees continue to demand seamless by 2022.7 As industry adoption continues capabilities across the group value chain.
experience across all their interactions with to increase, a modern PAS core will soon
the insurer. The complex legacy technology become a requirement, rather than a luxury, Product innovation
architecture environment demands ever- in staying competitive in the marketplace. One fundamental shift in the group
increasing IT maintenance budgets to insurance marketplace is the need for ever-
keep systems relevant. Legacy technology We believe group insurers can achieve increasing velocity in product development.
architecture further imposes limits on accelerated growth by focusing on the PAS’s As tailored product offerings become
the business and inhibits growth. The role across the following strategic levers. increasingly necessary to meet external
modern group insurance market requires drivers like changes in regulations and
modular product structures and simplified Customer experience customer demands, as well as satisfy
operations, such as client onboarding, that Customer experience and the importance internal drivers, faster time to market may
can only be enabled by a modernized digital of providing a human touch is one of the allow group insurers to ensure viability
core. Recent pandemic impacts have further leading differentiators in the market today.8 and market response to new product
demanded acceleration around digital Keeping the modern customer satisfied offerings. These needs have been further
transformation initiatives given business requires capabilities to allow them to engage accelerated by the COVID-19 pandemic. The
continuity issues experienced in various with their insurer at any time and through Insurance Innovation Reporter (IRRE) noted
functions, such as sales and distribution, any channel. In a study of more than 2,000 that “post-pandemic, the group insurance
enrollment, claims and absence, and consumers, three of the top-cited customer market will reward insurers that can keep
underwriting. Prioritization of customer expectations were (1) fast response times up with market demand.”11 Modernized
retention is critical, given increased to the customer’s needs and issues, (2) product development capabilities require
sensitivity to inadequate experiences during a real person to speak with, regardless a robust product engine core to a PAS. The
this period. Moreover, products likely need of time or location, and (3) information modernized PAS not only enables the group
to be adapted to more individual needs where and when they need it.9 Providing insurer to develop tailored products, but
during the pandemic. a differentiated omnichannel customer also provides automation capabilities and
experience is no longer just a luxury, but a business rule frameworks to accelerate
In the face of these market pressures, foundational requirement to achieve growth. delivery to market. Group insurers reliant on
it is becoming increasingly clear that Customers who have the best experiences legacy PAS systems will be unable to keep
modernizing the core PAS is likely critical tend to spend approximately 140% more up with the rate of innovation needed to
to meet business objectives. Executives in and remain with their provider five years consistently and quickly adapt their product
the industry are recognizing the value of a more than the customers who have the offerings to the demands of the market.
strong digital core, with 37% of insurance worst experiences.10 To meet customer
6. Deloitte, 2020 Global Tech Leadership Study.
7. Deloitte, GIBS.
8. Deloitte, 2019 Tech Trends.
9. CMO Council and SAP Hybris, “The Customer in Context,” 2017.
10. Harvard Business Review, “The Value of Customer Experience, Quantified,” 2014.
11. Stephen Boucher, “Opportunities for Group Insurance Innovation during the Pandemic.” IRRE, August 20, 2020.
6
Innovating the group insurance policy administration core to drive business growth | The case for group insurance policy administration transformation Partner engagement Organizational agility of the vast amounts of data generated by The business impact of partners, such as Innovation and agility remain a priority for group insurers. In a recent survey, 67% brokers, third-party administrators, and growth for group insurers. A study of 41 of respondents indicated that predictive enrollment providers, in the group insurance insurance CIOs revealed that, on average, analytics had led to cost savings in the ecosystem is important in influencing the respondents expect their technology underwriting process, while 60% credit overall employer and employee experience. spending on innovation and growth to the insights for improving both sales The partner ecosystem continues to expand to roughly 25% in 2023 from 15% and profitability.15 Higher levels of data be fragmented by various technology in 2020.14 A modernized PAS provides the standardization, quality, and integration, companies across benefit administration, robust core needed to thrive in this dynamic anchored by a modernized PAS, can drive enrollment, HRIS, and other functions that environment. A group insurer’s revitalized significant improvements in the business are vital to the business operations of a PAS strategy can leverage on-demand operations of a group insurer. The life group insurer. Furthermore, the scope infrastructure provided by cloud offerings, cycle, from customer onboarding setup of the partner ecosystem continues to which keeps run costs relatively low while to servicing turnaround times for data- expand, with insurers increasing their usage also providing the flexibility to scale up on intensive workflows, including rating, can of external data depositories, application short notice to accommodate new products be greatly reduced. In addition, error rates hosts, and external partners.12 Developing and business capabilities. Furthermore, for enrollment and billing processes can business relationships with partners in this modernized PAS platforms typically be lowered. As new external sources of ecosystem requires increasingly complex support robust integration frameworks data continue to emerge, it is paramount bidirectional connections to support between the PAS and dependent functional that a group insurer builds the PAS data data-driven processes like quoting, rating, systems, reducing the turnaround time for core needed to continue realizing the value underwriting, enrollment, claims processing, key business processes like underwriting, of analytics. As the key system of record and absence management. The capability evidence of insurability, and new containing member and policy data, PAS to provide a plug-and-play ecosystem that enrollments. Combining the scalability of is an important component in addressing minimizes the overhead of data exchange is cloud with a dynamic integration framework dynamic data and analytics needs. a key point of differentiation in the market creates a level of organizational agility and can likely result in growth stemming that enables a group insurer to respond from additional cases won and additional effectively and quickly to changing market premium revenue.13 A legacy PAS, serving conditions. the role of main system of record, is one of the major bottlenecks in building out Data and analytics an ecosystem engagement platform that The group insurance business model is very delivers true plug-and-play capability with data-intensive, and there is a significant business and technology partners in the amount of growth opportunity that can group insurance ecosystem. be achieved through more effective use 12. Deloitte, 2020 insurance outlook. 13. Deloitte, “Digital market connectivity in the group ecosystem,” 2020. 14. Deloitte, 2020 Global Tech Leadership Study. 15. Wozman, “North America life insurers embrace predictive analytics to elevate their business.” 7
Innovating the group insurance policy administration core to drive business growth | Business and technology architecture implications
Business and technology
architecture implications
PAS transformation has fundamental catalog, ensures a single source of • Policy management
implications across all layers of the truth, and facilitates design and Manages any changes to plans, products,
enterprise business and technology construction of products to support and/or policies requested by an employer.
architecture due to its central role as the underwriting capabilities.
• Bill calculation
digital core of a group insurer. It typically
• Case installation Calculates and generates bills associated
serves as the system of record for critical
Configures cases associated with with employer plans (i.e., list bill), based on
data domains (e.g., policy, product) while
employer plans, along with associated the enrollments and associated premiums
being integral to enable other value chain
product- and employer-specific in the plan to support bill presentment.
operational systems (e.g., claims, customer
operational and servicing metadata.
portals). We define PAS as the system that • Operations
has and supports the following capabilities • Case maintenance Supports ongoing customer service
(figure 2). Maintains employer plans, including, but operations to manage employee-level
not limited to, eligibility determination, demographic data, capture of life events,
• Product management
premium administration, etc. and/or servicing customers with plan
Maintains a comprehensive product
inquiries (non-claims-related).
Figure 2. Typical PAS capabilities
Underwriting
Medical
Claims
underwriting
Case Case
installation maintenance
PAS Compensation
Product Policy
Enrollment mgmt.
system of mgmt. and incentives
record mgmt.
Bill
Operations calculation
Metrics and
Self-service reporting
Bill
Presentment
Core Capability – Addressed directly by the PAS system
Enabling Capability – Relies on PAS, but happens outside of it
8
Innovating the group insurance policy administration core to drive business growth | Business and technology architecture implications
As PAS capabilities are an integral part of partners like brokers and employers. • What changes are required to the
a group insurer’s operations, they have Technology capabilities like plug-and-play business operating model to realize
numerous downstream and upstream are becoming increasingly intertwined efficiencies from a modern PAS?
impacts across the entire technology with business strategy, as they are the only
• What PAS capabilities should be owned
architecture. The reference architecture pathways to enable profitable future growth.
in-house, and which ones are leveraged
(figure 3) depicts the various technological In addition to meeting the organization’s
via third parties in the ecosystem to cost-
capabilities that are either directly technological demands, the PAS
effectively enhance the value proposition?
addressed by or enabled by PAS. transformation strategy must match the
The widespread organizational reach of needs of its various business functions.
a PAS transformation and its associated Crafting a PAS transformation strategy to
impact on a group insurer’s technology accommodate the structure of business
architecture provides an opportunity units and/or product classes will require an
to enable several modern technology organization be ready to address the PAS’s
capabilities and design patterns, many of key role in various dimensions of the group
which have historically been a challenge to insurance business architecture (figure 3).
implement due to the limitations of legacy
• How will the PAS capabilities support
PAS platforms. For example, one of the
the group insurer’s desired
more notable trends in recent years has
distribution channels?
been the increased importance of having
a robust data integration fabric in order to • What product and/or service
enable real-time integration with ecosystem differentiation does the PAS enable?
Figure 3. Group insurance reference business architecture
Key customer
Employer Employees Brokers and agents Internal staff Partners
groups
Enroller HRIS/ Benefits Cloud
TPA/TPP admin
HCM
Self service interaction and communication management
Medical
Payments Regulatory External
providers
data prov.
Mobile Web IVR Email Chatbot
Data and integration connectivity fabric Infrastructure
APIs and Enterprise Events and Framework
API gateway Data abstraction
microservices service bus messaging services
Operational data stores Non-operational
Design, authoring, DevOps
Business operations data stores
and publishing
Sales management Actuarial
Product management Enterprise data management
Account management
Underwriting Capture, index,
Enrollment Medical underwriting and search
Master data management and
Provider management single view of customer
Marketing Security
Billing
Customer service Claims Document
Analytics workflow
Workflow and RPA
Core systems and business support Data and analytics Content mgmt. Support services
Core capability – Addressed directly by the PAS system Enabling capability – Relies on PAS, but happens outside of it
9
Innovating the group insurance policy administration core to drive business growth | Key learnings from the trenches
Key learnings
from the trenches
Despite the ongoing need to modernize core to prevent misaligned expectations functionality to free up the business
PAS environments, the industry overall does among executive stakeholders. value intertwined with legacy systems.
not yet have a successful track record using
• Utilize a robust vendor due-diligence • Commit to an executive-led
new technology solutions. Group insurers
process to minimize implementation risks. change management strategy early
have historically encountered a variety of
to prevent the low adoption of new
challenges throughout the transformation • Periodically refresh the PAS
PAS capabilities.
journey, predominantly stemming from transformation business case with
varied product requirements and case-level financial outcomes (return on investment,
Being ready to address the common
customizations across various market growth opportunities, etc.) to justify and
challenges of a PAS transformation will
segments. Each of these challenges has secure continued funding.
enable the group insurer to navigate around
a proper mitigation step that can be
• Pilot transformation programs in the common pitfalls that have limited
preemptively put in place to minimize
smaller lines of business or segments overall success of PAS transformations.
implementation risks and increase
to validate business fit and value of PAS However, no amount of preparation will lead
confidence in realizing the objectives
vendors in the early stages of maturity. to a successful outcome without the right
associated with the transformation agenda:
combination of transformation approaches
• Adopt a policy of simplification and align
• Clearly define business objectives that align to the business’s needs.
business capabilities to out-of-the-box
at the onset of the PAS transformation
10Innovating the group insurance policy administration core to drive business growth | Group insurance policy administration transformation approaches
Group insurance policy administration
transformation approaches
One of the most difficult decisions to tailored to meet the differing needs of all • How can the customer experience be
make with regard to transformation is business segments, requires careful analysis optimized to achieve profitable growth?
which approach to employ when having of several strategic and operational drivers
• Could a third-party administrator or service
to choose between incumbent legacy PAS to deliver optimal results in a manner that
outsourcing be used as a strategic lever,
solutions and a new, modern solution. The is aligned to the overall business strategy.
keeping acceptable customer experience?
following framework provides a model for Answering the following questions for
characterizing the differences between each line of business affected by the PAS • Can we simplify our operating and
approaches Deloitte has leveraged in the transformation will provide a good starting platform ecosystem?
industry (figure 4). point to ensure that a group insurer
• Can the services be tiered based on the
identifies the priorities and nuances that
level of customization required across
The continued intertwining of technology must be addressed with the overall PAS
case mixes?
and business architecture raises transformation strategy:
additional considerations that must be • Can we enhance the overall architecture
carefully considered when crafting a PAS Questions regarding key strategic drivers maturity to a sufficient level leveraging
transformation strategy. Picking the right the PAS system?
• Is this line of business or product group
combination of approaches, which must be
critical to our strategy?
Figure 4. Approaches to PAS transformation
Replace
Replace Refocus
Refocus
Replace
and retire Sourcing
Greenfield Sale of
install closed-block
Greenfield install: Replace and retire: Sourcing options Sale of closed-
Select a replacement Select a replacement (TPA, BPO, AMS, ITO): block policies:
application, but do not application and convert Includes full administration Selling nonstrategic
Remain Do nothing PAS Wrapper of policies, hosted ITO, blocks of policies to
convert existing data existing synonymous Remain
(wait) or reskin application management, expedite transformation
applications transformation
approaches or function-specific and free up capital
sourcing
Consolidate Port to newer
systems technology
Convert Upgrade or Re-Tool
Retool
or retire enhance
Retire
Retire
Convert or retire: Consolidate systems:* Wrapper or reskin: Port to newer Upgrade or enhance:
Convert to a synonymous Consolidate multiple instances Reskin presentation technology: Upgrade current system
or existing application into a single application layers and service enable Update underlying and applications to a
* Often resulting from M&A transactions back-end systems languages, data bases, later release level
file structures,
communications, etc.
11Innovating the group insurance policy administration core to drive business growth | Group insurance policy administration transformation approaches
Questions regarding key competition, increasing its share of wallet, • Data and analytics
operational drivers improving revenue, and driving growth. Organizations achieve high levels of
Furthermore, disaster events like the data standardization, quality, and
• Are the operational costs for this line of
COVID-19 pandemic have demonstrated integration using PAS data that can be
business too high?
the need for robust digital engagement utilized to improve business outcomes.
• How do you streamline any legacy channels that can rise to the forefront Clean data greatly reduces processing
product complexity? when traditional channels are temporarily times for data-intensive tasks (e.g., rating)
or permanently closed. and lowers error rate in workflows like
• Can we standardize and improve our PAS
claims processing.
service process efficiency? • Product innovation
A modernized PAS enables product
• Does the line of business have favorable
development capabilities required to
conversion economics?
create robust solutions targeted to the
• Can savings be realized through “lift and market’s needs. Automation and flexible
shift” to a modern platform? business rule frameworks enable new
products to be brought to market relatively
• Are there enough critical resources skills
quickly to capitalize on changes in demand.
to maintain multiple systems?
• Partner engagement
To maximize the impact from a PAS A modernized PAS enables plug-and-play
transformation, a group insurer must capabilities between partner ecosystem
carefully craft its PAS strategy so that it and PAS, including the ability to accept
aligns to the prioritization of the strategic real-time electronic notifications for
and operational drivers, as well as any other changes in member data. The improved
significant organization-specific nuances. ecosystem connectivity results in
reduced turnaround time and fewer
Another factor that must be considered manual workarounds for processes that
when selecting a PAS transformation require external data, including EOI and
approach is the trade-off between new client enrollment.
an approach’s timeline and the value
• Integration
associated with its completion. Incremental
Services build composite applications
digital development remains a tried-and-
that interoperate with the PAS across the
true method of delivering value in the short
organization with real-time data flows.
term, but still cannot match the totality of
Complex processes like new plan creation
benefits delivered by a comprehensive PAS
and underwriting can be automated
transformation that builds a true digital
or simplified to reduce manual effort,
core. Several different outcomes across
therefore reducing costs.
different domains that rely on the PAS’s
capabilities could become key differentiators • Infrastructure
in the group insurance ecosystem: PAS infrastructure needs are supported
through an “on-demand” model
• Customer experience
that allows for rapid deployment
A modernized PAS facilitates real-time
of new applications or features. New
updates between the PAS and user
provisioning paradigms grant increased
engagement layers, creating a consistent
organizational agility and allow faster
user experience across all platforms.
adoption of new capabilities with lower
The outstanding user experience can
capital requirements.
differentiate the group insurer from
12Innovating the group insurance policy administration core to drive business growth | Policy administration technology marketplace perspectives
Policy administration technology
marketplace perspectives
To achieve the benefits of a complete PAS
transformation, a group insurer must identify Figure 6. Breakdown of major PAS vendor classifications
the PAS technology platforms with capabilities 4
that are matched to the organization’s
strategic goals. PAS platform selection
remains a nuanced challenge. For many 3
reasons, the PAS technology market has not
reached a fully mature state (figure 5).
2
Comprehensive solutions continue to be
developed, but organizations will need to
mix and match solutions that fit the needs of
their business and technology architecture.
PAS platforms have scaled their solutions
and capabilities from an initial industry
Quo�ng-, ra�ng-, and PAS- and billing-focused Claims-focused
focus (e.g., P&C, retirement), along with
underwri�ng-focused
specific functional focus (e.g., billing, claims)
into full enterprise solutions. However, the Group insurers should identify platforms solution. While group insurers have initiated
platforms original framework will continue whose capabilities are vital to supporting programs to modernize the PAS in pockets
to influence the strength and completeness overall strategic goals. It must, however, be for specific segments or product types, a
of its capability offerings. There are likely noted that the group insurance technology full-fledged, industrial-scale deployment has
three major categories of PAS vendors platform space is fragmented—none are yet to be observed in the market.
based on their original specialties (figure 6). emerging as a fullyformed, best-in-class
Figure 5. PAS technology market fragmentation factors
GENESIS
VOLUME
Most of the PAS vendors in this space began their lives
Given the limited number of group insurers in the market,
focused in other parts of the market—P&C, individual
there are only a handful of vendors who have invested to
life, or pension—and evolved into this space
develop modern technology solu�ons
searching for new market opportuni�es
MARKET APPROACH PLATFORM MATURITY
PAS vendors have taken two dis�nct approaches to the The maturity of the specific capabili�es and features of
market: 1) beta build with major group insurers with each PAS pla�orm varies depending on what has been
broader scope; 2) more agile, MVP builds on new required by previous customers, both from product and
products and smaller scope to test and learn feature perspec�ves
MARKET FRAGMENTATION ROAD MAPS
Where gaps exist in the capabili�es of the primary Building greater maturity across the product and feature
solu�ons vendors, we’ve seen smaller players enter the spectrum tends to be driven by their ini�al client
market to help support unfulfilled needs, at �mes in implementa�on needs first, and only then to address
formal rela�onships with the PAS vendors market poten�als
13Innovating the group insurance policy administration core to drive business growth | Getting started with a group insurance policy administration transformation
Getting started with a group insurance
policy administration transformation
Independent of the decision to commit to environment is a requirement for unlocking various PAS transformation approaches to
a full-scale transformation, it is likely that the value of a PAS transformation. decide on the methodology that is the best
there are four “no-regret” steps that all fit to achieve long-term strategic vision.
• Finally, group insurers can define a
group insurers should take. These initiatives Create a business case document and
tiered services catalog to simplify and
not only provide immediate value by summarize outcomes, timelines, and scope.
standardize the service offerings provided
alleviating some of the pressing challenges
to their employers, with tiering based on • I want to find the right vendor that shares my
that carriers face today, but also create the
service usage, profitability, and internal long-term vision.
foundation for additional benefits that can
capabilities. The service catalog is used
be achieved through a PAS transformation:
by both outward-facing functions (e.g., PAS technology selection process
• Group insurers can start by optimizing sales) to determine which services can Define which PAS capabilities are critical
and simplifying product structure be provided to customers in a profitable to thrive in the group insurance industry,
and business processes. The resulting manner and internal teams (e.g., claims) to and perform due diligence on vendors in
organizational agility improves reaction align on and execute services consistently the market to determine which is the
times to new market demands, allowing for all customers. best match.
the insurer to capitalize on changing
• I need to understand which ongoing
customer preferences. In addition, the In addition to taking the “no-regret” steps,
programs are part of my final vision and
lean business structure will be better there are several key activities that should
should be continued.
suited to most out of-the-box vendor likely be undertaken by any insurer who is
functionality and reduces the time needed embarking on the PAS transformation journey.
PAS program health check
for a future PAS transformation. These are vital to maximizing the value that
Perform an analysis of the health
can be achieved by a PAS transformation, no
• Next, insurers could establish a of ongoing PAS transformation or
matter where an organization currently is on
reference technology and digital enhancement programs to determine if
its transformation journey.
architecture that is aligned with the the current programs will still deliver the
business’s strategic goals. They should • I am not sure what my long-term strategic desired business value. Complete a value
try to identify opportunities to sunset vision is and which PAS capabilities are assessment for active PAS programs and
inadequate or redundant legacy systems needed to support it. formulate a decision framework to make
to reduce operating costs. Insurers should future start-stop decisions.
also define the core systems vision, Digital transformation design workshops
• I am ready to start and want to ensure and
which could be used to guide investment Plan interactive workshops with key
achieve my vision.
decisions, including the approach and stakeholders and outside industry experts
timing of a PAS transformation program. to reimagine the business capabilities
PAS implementation with an experienced
needed to succeed in the group insurance
• The third step is to modernize the business transformation partner
marketplace. Obtain executive alignment
data and integration environments Avoid common pitfalls to improve
on the long-term strategic vision, and detail
across the entire business, reducing the confidence in value creation and ensure
a capability map for the ideal PAS solution.
complexity of future investments and delivery excellence by partnering with an
providing a framework to make data- • I know where I want to end my journey, but experienced system integrator to execute
driven product and customer decisions. need to craft a compelling argument to get the and support the PAS transformation journey.
Given the PAS’s role as the system of resources to start.
record for critical data domains (e.g., As current market trends continue to
policy, product), having a prepared PAS transformation business case accelerate the rate of digital transformation,
modernized integration and data Analyze the business benefits and costs of legacy PAS platforms are becoming
14Innovating the group insurance policy administration core to drive business growth | Getting started with a group insurance policy administration transformation increasingly larger liabilities for group advantage by either beginning a PAS reemphasized the need for organizations insurers. PAS transformations are no longer transformation program or accelerating to become digitally native, and it all begins isolated as technology initiatives, but are any ongoing initiatives within the space. by building a robust and modern core that fundamentally tied to an organization’s The technology benefits delivered by a acts as the foundation for future innovation future strategic vision and intertwined with modernized PAS potentially enable the while also supporting group insurers’ its business structure. Despite the many business capabilities and organizational strategic imperatives across both business historical challenges of completing a PAS agility needed to thrive in a market and technology. transformation, group insurers would likely that is changing with ever-increasing be better suited to capture competitive velocity. Recent pandemic events have 15
Innovating the group insurance policy administration core to drive business growth | Authors and project team
Authors and project team
William Mullaney Santosh K. Kutty
Managing director, Group Principal, Insurance
Insurance Industry sector leader Operations & Technology
wmullaney@deloitte.com sakutty@deloitte.com
Abhishek Bakre Will Wang
Senior manager, Insurance Senior consultant, Insurance
Operations & Technology Operations & Technology
abakre@deloitte.com williamwang@deloitte.com
Additional thanks
The project team expresses gratitude to the following
for their contributions and support:
David Schmitz Ted Epps
Managing director, Insurance Principal, Insurance
Operations & Technology Operations &Technology
Peter Migliorato Michelle Canaan
Principal, Insurance Deloitte Center for
Financial Services
16About Deloitte Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee (“DTTL”), its network of member firms, and their related entities. DTTL and each of its member firms are legally separate and independent entities. DTTL (also referred to as “Deloitte Global”) does not provide services to clients. Please see www.deloitte.com/about for a detailed description of DTTL and its member firms and www.deloitte.com/us/about for a detailed description of the legal structure of Deloitte LLP and its subsidiaries. Certain services may not be available to attest clients under the rules and regulations of public accounting. Copyright © 2021 Deloitte Development LLC. All rights reserved.
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