Economic and market conditions are encouraging property/casualty insurers to replace or upgrade policy administration systems, according to a report from New York-based research and advisory services firm Novarica released last week.

The report, “Novarica Market Navigator: US Property/Casualty Policy Administration Systems 2012 (Q2),” analyzes the factors prompting policy administration replacement and also profiles 58 property/casualty-specific policy administration systems.

Authored by Novarica partner Chad Hersh and Novarica analyst Lis Maguda, the report said while the need to improve customer-facing technologies until recently was a priority mainly for personal lines insurers, commercial lines insurers are now feeling pressured by evolving customer expectations around functions such as quoting and claims management. According to earlier Novarica research, roughly a third of insurers are currently replacing or planning to replace a policy administration system.

“On the commercial side, the rise of online self-service across many consumer industries has raised the expectations of users in general, forcing carriers to provide certain online capabilities even for lines of business that just a few years ago seemed safe from such requirements,” the report states. “Inflexible legacy policy administration systems can prevent insurers from being able to take advantage of new opportunities and being able to meet customer and agent expectations.”

Mr. Hersh and Ms. Maguda say modern administration systems are constructed to enable increased data accessibility, which can aid in areas such as regulatory reporting as well as providing data for models used in everything from rates/pricing to fraudulent claim detection.

Moreover, they say that a modern system may help reduce long-term total cost of ownership as finding information technology staff to maintain legacy system becomes more difficult as the systems age.

“Attracting and retaining IT staff and even front- and back-office employees is also increasingly important as today's job seekers increasingly lack the skills—or the desire—to work on 30+ year-old systems,” the report states.