This post starts a longer series looking at the key systems components normally present within a life insurance organisation. Subsequent posts will look in more detail at each component.
The systems components have been split into Core (systems that run the main operations of the business), and Infrastructure (not always discrete systems but underpin the operations).
Core
Policy Administration – responsible for capturing new business, recording underwriting information and decisions, issuing policies, quoting and implementing policy endorsements, calculating premiums, collecting premiums, managing debtors, maturities/expiries. Many companies accrue multiple administration systems as new products are created, and so these can often be referred to a Product Administration systems.
Claims Management – sometimes part of the Policy Administration system, responsible for capturing, underwriting, and paying claims. May include collection of reinsurance, and tracking/payment of investigation costs.
Agency Commission & Competency – management of distributors, usually focused on tied agency forces and IFAs/Brokers. Sometimes also includes calculation of commission for bancassurance, although this tends to be simpler than for other channels.
Reinsurance – treaty and facultative, reinsurance borderaux, sometimes premium payment and claims recovery.
Annuity Management – performs calculations of annuity amounts and generates scheduled payments. Does not always include tax calculations, which change frequently and therefore require significant maintenance overhead. Sometimes a company will use a payroll-style system for tax components. For companies that sell annuities as separate products, an Annuity system will be considered a Policy Administration system.
Billing / Payments – sometimes a separate system the consolidates/splits banking files across multiple policy/product administration systems.
Servicing Call Centre – ranges from basic enquiry screen with notes facility, through to CTI and full “CRM” systems.
Sales Force Automation / Agency Support – tools for agents/distributors to use, including needs analysis, quotations/illustrations, electronic forms, e-submission of new applications (depending on signature and compliance requirements), …
Investment Management – companies will need some sort of tool to manage their investment portfolios, even if the bulk of the work is outsourced to an investment arm or another company.
Direct Marketing and Lead Management - for companies that sell through a Direct Marketing channel, a campaign planning/monitoring system is needed. In addition, a system to manage (deduplicate, track, etc) leads through the sales and conversion process.
Infrastructure
Data Warehouse – often further separated into Marketing data warehouse (true warehousing for analysis) and Operational Data Stores (for operational reporting).
Imaging & Workflow – ranges from simple diary system to full-fledged integrating document management and business process management. Many would argue that for larger organisations this is a core component for the business.
Financials – what is normally known as ERP, but in the case of financial services organisations is often reduced to General Ledger, possibly plus Accounts Payable and for larger organisations Asset Management, etc.
Banking Interfaces – interfacing information to and from the banking systems and the administration systems.
Automatic Underwriting – a rules/engine or equivalent that is usually integrated through workflow to assess new business cases and arrive at an underwriting decision.
Corporate Website – the company's corporate presence on the internet. For companies that operate a direct sales channel, this will usually include some sales functionality.
Human Resources – normal HR and payroll systems, although often outsourced.
Quotation Engines – performs quotations for New Business and alterations/endorsements. Often separated out with the intention of reducing maintenance overhead across multiple systems.
Premium Calculation Engine – sometimes separated out into a discrete system that is then called from within New Business, Policy Administration, Quotation/Illustration systems, etc.
Of course there are many more. In some mid-sized organisations the number of systems is in the hundreds (although this is often a result of patching “holes” in the core components!).
