Modernizing life insurance and annuity legacy systems: The alternative to migration

CIOs of life and annuity (L&A) insurers find themselves between a rock and a hard place. The business wants to deliver a better employee experience – fewer screens, fewer swivel-chair activities, easier user interfaces – but both the nature of their IT infrastructure and their business make this almost impossible.

It's a tough spot but not an uncommon one. Many L&A CIOs are struggling to balance their desire to streamline and modernize their technology interfaces against the reality of their infrastructure and business models. Some worry their organizations may never deliver a truly seamless employee technology experience. A handful worry their careers may not survive the journey.

The fact that L&A CIOs find themselves in a tenuous position is not entirely surprising. The cards are now stacked against them.

On the one hand, they have massive pressure coming from inside the business. Insurers want to become more digitized and differentiated and introduce direct-to-consumer channels. They want to roll out new products and introduce new business models. They want to eradicate paper, digitize channels, and radically improve the ability to automate transaction processing. And they want it all now. Rightfully so – the world is changing, and insurers need to keep up.

Yet, on the other hand, most L&A CIOs know they preside over a technology estate that, using current tools and technologies, would be impossible to migrate without either massive cost, massive disruption, or both. The last thing a CIO wants is to have problems moving from one system to another due to poor migration.

In reality, what passes as a 'system' is actually just a bowl of legacy spaghetti. The pieces are interwoven but disjointed and disconnected. Decades (sometimes centuries) of merger and divestiture activity have created a mess of complex systems, each with its own data silos, processes, interfaces, and policy and regulatory requirements. Picking them apart and then moving them all to one platform would be a monumental task.

That's if those systems can even be touched in the first place. L&A is not like other businesses in which customer lifecycles are measured in clicks, transactions, weeks, or years. L&A policyholders are often customers for life (and beyond, as focus shifts to their beneficiaries). Even the shortest-lived policies often last at least 10 years. And in most cases, systems simply can't go into retirement while they continue to service live policies.

Even if you could untangle a single system, modernize it, and provide a notably different customer experience for those specific policyholders, you may still negatively impact the brand or create unachievable customer expectations (particularly for those who hold multiple policies). And the transformational value of updating a single system in a silo has its limits.

No wonder L&A CIOs feel they are in a tight spot. Expectations are sky-high. And the potential for large-scale digital transformation remains limited. Yet there is a fairly simple solution.

What if there was a way to deliver the benefits of digital transformation without tearing out the guts of the existing policy administration systems? What if – instead of trying to drag each policy system into the modern era – you simply applied an overlay to serve as an orchestration layer between policyholders and your various policy administration systems? What if you're not facing a tough spot at all but rather a massive opportunity?

A unified, standardized orchestration layer would allow your organization to provide customers with a simplified and consistent customer experience. It would give your people and partners a 'single pane of glass' into the front, middle, and back offices. It would pave the way for better data management – from data capture right through to analytics. It would enable straight-through processing (STP) of transactions. And it would deliver a smart interaction model that unlocks workforce flexibility, work team unification, and omnichannel experiences.

With an orchestration layer, achieving a better employee technology experience is possible. Processes can move into the cloud. New technologies can become integrated. New workforce models and partnership models can get created. Business and operating models can evolve. Unhindered by legacy system challenges and focused on a single screen, the business can transform, grow, and thrive.

This is not some emerging new idea or technology. Genpact has already implemented a unified orchestration layer (UOL) for insurers and seen firsthand the massive enabling effect it can have and the quantitative impacts it can deliver, including:

• A 30% reduction in employee training times
• Cost savings of up to 40% through STP enablement
• Further cost efficiencies of 10–15% by standardizing and simplifying processes
• Improved workforce performance management using insights derived from broader and deeper data

These are substantial (investment proposal-grade) returns. And you can achieve them at comparatively low risk and low cost.

The beauty of the UOL is that it is platform agnostic. It sits atop your existing technologies and uses application programming interfaces (APIs) to integrate data and processes into a single servicing platform. That means you can leave your bowl of legacy spaghetti alone. No big migrations. No core system customizations. No big technology investments.

We have built our UOL approach on our business process management suite, Cora Orchestration, allowing our clients to go even further – automating their manual workflows using insurance-specific artificial intelligence and machine learning tools and accelerators. And that has allowed them to push their digital transformation even further.

Ready to get out of that tough spot? Implementing a UOL is straightforward if you plan it properly. Here are five things to consider as you start to think about the value a UOL can provide:

1. What have you got? Start by inventorying your policy administration systems, data requirements, and processes. Understand which lines of businesses and products use those systems. Identify the media from which you will pull data (email, voice, databases, and so forth) and where they reside.
2. What do you want to deliver? Consider how you will enable your employees to become more efficient in transaction processing. Know what kind of employee experience you hope to achieve, what metrics you are hoping to change, and what behaviors you are hoping to encourage.
3. How will you use it? Think about who'll be using the interface and what they will require to achieve their objectives. There's no limit to how they can use it. That means that many different types of users will interact with the UOL; understanding their various needs will be key.
4. How does it integrate into the wider digitization strategy? A UOL can enable transformative outcomes. But it must arrive as part of the enterprise-wide digital transformation strategy and objectives.
5. What's the business case? Think about the tangible, short-term wins and efficiencies that a UOL approach can deliver and consider how enablers like STP and automation can drive sustainable value generation.

An orchestration layer provides L&A insurers with a simple approach to solving a complex problem. It provides a smarter user interface with faster transaction speeds and analytical capabilities. It leads to improved employee experiences. And it supports further technology adoption and self-service models.

That means better efficiency, greater productivity, stronger employee engagement, and more rewarding employee experiences – all without the risk of a big and expensive migration.