Learn More About Life Insurance Policy Administration Systems
What are Life Insurance Policy Administration Systems?
Life insurance policy administration systems, sometimes referred to as policy administration systems (PAS), manage the entire life insurance life cycle for insurance professionals. Life insurance policy administration solutions are a type of insurance software with features to handle everything from creating new products to issuing policies and handling claims related to an insurance company’s policies. These tools provide insurers with the means to digitize their policy creation and issuance, streamlining their businesses and making customer interactions easier. Life insurance policy administration systems aid in the digital transformation of insurance agencies, reducing the cost and difficulties associated with creating, issuing, and managing life insurance policies and the annuities the provider will have to pay out.
For example, a smaller insurer is looking for ways to introduce more efficiency into their business and fuel their product-related decision making with data. That insurer could implement a life insurance policy administration system to have a consolidated, organized view across multiple business units and drive improved outcomes.
What are the Common Features of Life Insurance Policy Administration Systems?
The following are some core features within life insurance policy administration systems that can help users with:
Underwriting: Most tools either provide native underwriting functionality or support the underwriting function by fueling it with real-time policy data. Underwriting capabilities make life insurance policy administration systems more comprehensive and enhance the amount of automation in a given company.
Rules-based calculation engine: Using rules input from the insurer, this feature helps to standardize insurance-product-related calculations across the business. These are configurable, allowing users to manipulate inputs, change information related to potential policy changes and policyholder behavior to see possible business outcomes, and plan insurance company decisions.
Claims processing: Processes claims related to life insurance policies managed by the life insurance policy administration system. The claims features a system provides are key to preventing fraud and unnecessary payouts on annuities.
Web portal: Provides a web portal through which potential customers and policyholders can submit policy applications and documents related to claims and policies. Web portals allow insurers to shift to a more self-service model and empower their customers while introducing operational efficiency along the way.
Product templates: Contains reusable templates for insurers to create new products and alter existing product lines. This feature is particularly useful for companies that want to quickly and easily adapt to shifting consumer needs and offer them products in line with those needs.
Analytics: Analyzes policy-related data for different lines of business to aid in risk management across the policy lifecycle, including renewals. Analytics tools help streamline business processes across the insurance industry while meeting regulatory standards.
What are the Benefits of Life Insurance Policy Administration Systems?
There are numerous benefits to using life insurance policy administration systems; a few of them are mentioned below:
Data-driven decision making: Data is the fuel on which the insurance industry runs. The easier access to real-time data an insurance provider has, the better decisions they can make for their business and their customers. Life insurance policy administration systems provide single-pane access to real-time policy information across an organization’s customer base, allowing users to use that data to generate new business strategies and manage existing product lines.
Streamlined product release process: Product configuration features and configurable workflows reduce the time to market for new products and product configurations. Life insurance policy administration tools make organizations more nimble, able to engage in faster product development, roll out new product lines, and alter existing ones while adjusting to market conditions and demands in real time.
Improved customer experience: Customer portals included in these solutions drive more efficiency related to account applications and onboarding workflow. As more businesses empower their customers with an increasingly self-serve model, life insurance policy administration tools are a way for insurers to do the same.
Who Uses Life Insurance Policy Administration Systems?
Insurance brokers: Insurance companies, typically large insurance ones, and their brokers are the primary users of life insurance policy administration systems. These companies use these tools to streamline their processes and become more efficient, effective organizations.
Policyholders: Insurance policyholders, or insurance customers, may use insurance policy administration tools to update account information, request policy changes, apply for new policies, and generally interact with their insurers in a more self-service way.
Software Related to Life Insurance Policy Administration Systems
Related solutions that can be used together with life insurance policy administration systems include:
Insurance agency management software: Insurance agency management software may integrate with life insurance policy administration systems to provide a seamless transition from prospect to customer and policyholder.
Insurance claims management software: Life insurance policy administration systems often include, or will integrate with, insurance claims management tools to help provide an integrated stack of symbiotic solutions.
Challenges with Life Insurance Policy Administration Systems
Software solutions can come with their own set of challenges.
Data security: Life insurance policy administration tools contain a lot of sensitive customer data. With many customers and users comes a larger attackable surface, which means more risk and more reason for insurance providers to properly vet their insurance software providers in adherence to business rules. Prospective buyers should vet potential vendors thoroughly to assess their security standards and determine whether or not they meet those which have been internally set.
Interoperability: Ensuring a product will integrate or communicate well with existing solutions across the organization’s technology stack, particularly with its core systems, is vital to its successful implementation and use. During the buying process, prospective customers should ask questions related to existing integrations and ones on the roadmap. An isolated solution is typically an inefficient and ineffective one in the context of a business with dozens of pieces of software, so interoperability is key to selecting the right new solution.
How to Buy Life Insurance Policy Administration Systems
Requirements Gathering (RFI/RFP) for Life Insurance Policy Administration Systems
Prospective buyers should choose a selection team before putting together their list of requirements. That list should consider the organization’s existing tech stack, including products with which the life insurance policy administration system will need to integrate. RFPs should be realistic about cost, but they should be designed with the understanding that aspects like demonstrated ROI and high user adoption are far more important than the sticker price.
Compare Life Insurance Policy Administration Systems Products
Create a long list
The long list should comprise all products which meet the initial list of core requirements. Buyers should try to limit the number of products to a list short enough that every product can get a fair evaluation while narrowing the long list down to a short list.
Create a short list
The short list should include products that include wishlist features but ones that will pass the test of implementation and adoption. The short list should be a time to dive into the proven ROI of the product seen at other, like-sized companies.
Conduct demos
The demo process should be comprehensive. The selection team should ask questions specific to their business, diving into how the product would handle different configurations and potential product lines that are on the roadmap.
Selection of Life Insurance Policy Administration Systems
Choose a selection team
The selection team should include actual users of the software as well as security stakeholders and IT professionals with a good understanding of how the solution will fit into the existing systems in place.
Final decision
The decision should be based on a consensus among a small group of key stakeholders. Because insurance companies are often divided along product-type lines, the life insurance portion of the company, the actual users of the software, should have a significant voice during the decision-making process.
