The Greenfield approach to PAS modernization in life insurance won’t solve all your problems

By Brian Carey

Traditional policy administration system modernization projects are complex, expensive and can take years to complete. As a result, carriers are looking to the greenfield PAS modernization strategy, which enables them to implement new core systems and deploy new products without needing to retire the legacy systems at the same time. But, although greenfield is smaller in scope than a traditional PAS modernization project and enables life insurance companies to start processing new business quickly, it's not the solution to all your digital transformation roadblocks.

The effectiveness of the greenfield approach can be stifled by an organization’s legacy data, integration complexity and continued reliance on pre-existing legacy systems, thus requiring careful planning, execution and partner selection to ensure it delivers on the expected value.

Legacy data considerations

One of the biggest appeals of greenfield is that organizations can start putting business on the new system immediately. This allows insurers to create an open environment for integration with innovative digital insurance technologies that streamline new business and underwriting processes. Yet that doesn’t mean the legacy data can simply be ignored.

The data within these legacy systems might be decades old. It might have incorrect validations and the fields may not even coincide with modern categorization practices. The data siloed in those remaining PAS systems must be integrated and transformed if it’s to be used in modern sales enablement or analytics solutions. This means ensuring that your data is accurate, complete and consistent.

Failure to update legacy data as part of the modernization process creates the added challenge of having multiple systems with inconsistent or misaligned data formats that must be reconciled — impacting consistent user experience as well as specific data-related and data-informed functions. This may also put other mitigating initiatives on the critical path, such as implementing a new data warehouse, which may be needed to aggregate and feed data from multiple systems.

Integration complexity

Another component of ensuring the greenfield approach can truly help your organization is looking at how your systems are integrated. Some may think that their integration doesn’t need to be updated to account for data flowing from multiple core systems, but that fallacy will only create more issues further down the line when extracting or calling data into the new systems for different business operations.

The digital transformation is rendered ineffective if the data in the legacy systems can’t be moved. Life insurers first must have a good understanding of how and where legacy data is used throughout their organization, and then determine how that data needs to transform to migrate to new systems.

Carriers too often treat legacy data considerations as an after-thought. They don’t commit time, resources and budget to the eventual migration or transformation of the data. As a result, data modernization is sometimes addressed in an ad hoc manner, which increases data risk, cost and timelines.

Lingering legacy systems challenges

While leaving the legacy systems alone with the greenfield approach may enable life insurers to acquire new business quickly, it also means they can’t realize the full benefits of the transformation until the legacy systems are retired. For example, the life insurance company still must invest time and resources into maintaining the older systems. This results in higher organizational costs that take away funding from business development and product innovation.

Most often, companies are undergoing a digital transformation because they are growing, and their legacy systems can’t scale with them. The four success factors for greenfield PAS modernization can help organizations with their modernization process to extract as much value as possible, but organizations will still be held back by their legacy systems until they’re put out of commission for good.

Another important consideration is the total, long-term cost to implement. Although some life insurers can handle greenfield in-house, others may not have the resources, expertise or bandwidth required to fully address the issues that may come from it. This forces life insurers to look to third-party providers for assistance and guidance.

Some of the providers may take a money-solves-all approach to address the greenfield-related problems, which could result in significant expenses. Conversely, the right partner will help guide carriers through the greenfield digital transformation strategy and will approach data maintenance and system integration as a knowledge game — relying on their expertise and experience working with legacy systems to anticipate and resolve issues.

The greenfield approach to PAS modernization offers life insurance companies a promising strategy for digital transformation, allowing them to implement new core systems and products more quickly and at lower cost. However, carriers must be careful not to overlook the issues that may arise from it, including outdated data, inability to integrate systems and lingering legacy system challenges that hamper the ability for an organization to grow — all of which damage the customer, agent and broker experience.

To successfully implement the greenfield strategy, carriers must meticulously plan and select partners who understand the intricacies of legacy systems and the pitfalls of greenfield and can proactively mitigate the risks.

Brian Carey is senior director of insurance solutions, Equisoft. Contact him at [email protected].