Insurance Software Migration: What It Takes to Transition Successfully

Successfully navigating insurance platform migration demands careful consideration of essential elements and adherence to a systematic process. The move could be necessitated by a shift from legacy to agile systems or even from supposedly ‘modern platforms’ that lack the features you need. For insurance carriers, the apprehensions of a costly rip-and-replace approach often make them delay the inevitable.

Modernizing insurance software solutions need not be an uphill battle. Like any important life choice, understanding the possible pitfalls and knowing how to evaluate options will avoid potential future costs from a poorly executed implementation.

Understanding the Why — Drill Down to the Reason Driving the Software Migration

The decision to transition from one insurance software to another is significant, and it’s essential to understand the underlying reasons driving this shift. By pinpointing the driving forces behind the insurance software migration, you can tailor your approach to address specific challenges and ensure the new platform aligns seamlessly with your business goals.

• Antiquated Technology: Technology advances at a rapid pace, and clinging to outdated systems may hinder your organization’s ability to adapt and innovate. If your current policy platform relies on obsolete technology, it could be holding your business back from harnessing the full potential of modern tools and solutions.
• Service/Vendor Issues: A seamless platform experience relies not only on its features but also on the efficiency of the service provider. A compelling reason for transitioning your software is if you’re facing persistent issues with the level of service or experiencing challenges with your current vendor relationship.

It’s not just Technology: Assess Your New Vendor on Multiple Fronts

While navigating the transition between platforms, it’s natural for insurance carriers to concentrate on the features and functionalities of the prospective system during the vendor evaluation process. It is also crucial to recognize that the implementation of a new policy management system entails a commitment of 7 to 10 years on average, which means you will need to establish a harmonious long-term relationship with your chosen technology partner or vendor.

A successful platform transition requires a technology vendor well-versed in the intricacies of your specific lines of business. Evaluating their track record and experience in implementing Property and Casualty (P&C) insurance platforms is key. Connect with users of the vendor’s software who aren’t referred by the vendor directly. This approach allows for unbiased perspectives and firsthand experiences, providing a more comprehensive understanding of the software’s capabilities, limitations, and overall performance.

Evaluating a vendor’s commitment to innovation is another criterion for a successful partnership. It ensures adaptability to industry changes, and future-proof solutions, and indicates a long-term commitment to mutual growth.

Sometimes Big is Not Always Better When Selecting Your Insurtech Partner

Larger insurance software providers often prioritize their high-revenue clients, leaving smaller insurance carriers at the bottom of the service pile. This preference is often driven by the scale of operations and revenue generated by these clients. In contrast, smaller insurance companies with limited budgets and less revenue potential may receive less attention and support from the big insurtech providers, leading to slower response times, fewer customization options, and a lack of personalized service. Smaller insurers also end up paying for features they might not need since they are paying for pre-packaged solutions.

It often is more advantageous to work with reputed smaller insurtech providers. They are much more agile and offer a more customizable approach, allowing clients to pay only for the features they truly need, thus optimizing their investment and ensuring they get the most value out of their software solution.

Ensure Financial Clarity in Long-Term Insurtech Partnerships

Ensuring visibility and transparency into maintenance, enhancement, and support commitments is paramount when considering an insurtech partnership over the next 3, 5, 7 or 10 years. Beyond the initial budget approval, understanding the subscription models employed by insurtech companies is crucial in determining the total cost of ownership. Many follow a DWP-based model, where annual payments are linked to a variable percentage of your company’s total profits. While seemingly flexible, this model can gradually consume a substantial portion of your revenue, potentially posing financial challenges over time.

Moreover, tech partners might impose additional charges for maintenance and customization, introducing the risk of ‘scope creep’- a situation wherefinal costs surpass the initial budget. To address this concern, adopting a fixed non-DWP-based billing model, as practiced at SimpleSolve, ensures annual payments are not contingent on your business success. Routine maintenance costs are explicitly included in the stated amount, offering a clear and predictable financial landscape throughout the partnership.

Also Read: Ask the 5 Tough Questions of Potential InsurTech Company Partnerships

The Power of Clear Insurance Platform Transition Documentation

Insurance software migration requires a clear understanding of specific documentation requirements. A precise requirements document is more than just a roadmap. An experienced technology vendor will not only craft comprehensive requirement documents but can also identify potential gaps and provide nuanced solutions, ensuring a successful and informed insurtech implementation tailored to the unique needs of organizations.

The documentation normally required is:

Client Side Documentation:

• Regulatory Compliance Documentation
• System Configuration and Integration Documentation: Software alignment, data migration plans, etc.
• Data Mapping and Transformation Documentation
• User Training and Support Documentation
• Testing Protocols and Results Documentation

Vendor Side Documentation:

• Customization and Configuration Parameters Documentation
• Change Management Documentation: Manages scope creep
• Post-Implementation Support Documentation

As reliance on external insurtech vendors grows, insurance companies need a clear demarcation of roles and responsibilities as well as robust vendor risk management (VRM) practices. This includes setting SLAs, contractual dates, termination clauses, escalation mechanisms, exit plans, etc., with legal and procurement teams typically leading this effort.

Conducting thorough vendor due diligence is vital for anticipating potential challenges and ensuring a seamless transition process.

Read about more ways to ensure you have a successful software transition in the original article published at https://www.simplesolve.com/blog/insurance-software-migration-challenges

Originally published at https://www.simplesolve.com.