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Property/casualty insurers that have implemented new policy administration systems are realizing gains in business-user satisfaction and distributor service, according a study released Thursday by research and advisory firm Novarica, a division of New York-based Novantas L.L.C.
The report, “U.S. P&C Policy Administration Systems Projects: Averages and Metrics,” is based on information from 37 large and midsize insurers. It found that insurers that have updated their policy administration systems report improvements of more than 25% in speed to market and data accessibility. Moreover, Novarica found that 25% of large P/C insurers and 40% of midsize P/C insurers are either in the middle of a policy administration system replacement project or are planning to begin one in 2012.
“P&C insurers are replacing their core policy administration systems at an unparalleled rate, and these findings underscore why,” Chad Hersh, partner at Novarica, said in a statement. “All of insurers’ core business issues—speed to market, distributor service, efficiency, and data analytics—eventually come back to core policy administration systems.”
The report notes, however, that these efforts consume a considerable amount of time and money. According to the report, the average total cost for upgrading or replacing a policy administration system at a midsize insurer was $8.7 million. At a large insurer, the average total cost was $23.5 million.
Most large P/C insurer policy administration systems projects completed their initial rollouts in less than 20 months, and their full projects within 40 months, the report noted.