A recent study by research and advisory firm Novarica, entitled US P/C Policy Administration Projects: Averages and Metrics 2012, reveals that more than half of the P&C insurers that have implemented new policy administration systems report improvements of more than 25% in speed to market and data accessibility, as well as gains in business user satisfaction, distributor service, and reduced technology risk.
Key findings of the study include:
- The average PAS project total cost (including internal costs) at a midsize insurer was $8.7 million. At a large insurer, the average total cost was $23.5 million. Roughly half the cost was internal staff, while license and software was less than 20% of total project costs.
- More than 85% of recent projects involved conversion, not additions of a new system. The majority of P&C insurers converted policies on renewal rather than prior to launch.
- The vast majority of P&C PAS projects include other components beyond core PAS such as agent portal, rating engine, underwriter workflow, billing, claims, reinsurance management, document generation, and business intelligence/reporting. Large insurers’ projects included 4.8 of these additional components on average, while midsize insurers’ projects included an average of 5.5.
- Most large P&C insurer PAS projects completed their initial rollouts in less than 20 months, and their full projects within 40 months. Midsize insurers’ initial rollouts were generally faster, but full roll-outs took more than 40 months for more than 1/3 of recent projects.