From Legacy to Modern: Why and How to Migrate Pricing/Rating Solutions
Earnix Team
October 22, 2024
- Pricing
- Rating
In the fast-moving landscape of insurance technology, staying a step ahead is imperative for insurance carriers looking to remain competitive.
Many carriers have made it a strategic imperative to modernize their pricing and rating solutions, yet the process of doing so can be seen as daunting.
Regardless of wherever you fall in your digital transformation journey, in this post, we’ll quickly recap some of the benefits of modernizing, then we’ll walk through some practical steps to ensure the migration and implementation project can be completed in weeks to a few months rather than many months or even years.
Aligning Goals with Processes for Better Outcomes
The decision to migrate from a legacy pricing and rating solution(s) to a modern one is often driven by the pursuit of enhanced functionality that results in increasing levels of operational efficiency and lower total cost of ownership.
So where are these efficiencies coming from? Modern solutions deliver many advantages over traditional rating engines by enabling actuarial and pricing teams to start with a specific goal, develop better models and strategies, and quickly deploy them into production (and into the market) with limited to no assistance from IT or other groups. IT can remain involved, but given the much smaller lift required, it frees up IT to work on more strategic initiatives.
Unlike the legacy pricing and rating systems of the past, that were often two disparate systems strung together, modern pricing and rating engines are now provided as a fully integrated, single solution that eliminates the need for translating or reimagining rates, enabling carriers to achieve their most critical goals with actionable pricing and rating decisions and processes. These capabilities help to streamline time-consuming internal operations and enhance any insurer’s agility when responding to changing market dynamics.
Advanced Capabilities
Modern pricing and rating solutions offer a wide range of advanced features and functionality that empower insurers to optimize pricing strategies with precision. From dynamic pricing to predictive analytics, today’s solutions provide leading carriers the tools they need for turning real-time insights into a new competitive advantage.
In addition, the most advanced modern solutions will provide robust modeling capabilities for more sophisticated, more intelligent risk assessment and scenario analysis. All of these capabilities lead to improved decision making and better results.
Plan for Success: Best Practices in the Migration Process
Migrating from the legacy pricing and rating solutions to a modern one involves a systematic, holistic approach to ensure a seamless transition. It also requires in-depth knowledge of both systems to successfully convert key components. To get started, here are a few recommendations to consider:
Start with your business stakeholders - When embarking on a migration from a legacy pricing/rating system to a modern one, it's crucial to begin by engaging your business stakeholders, particularly your actuaries and data scientists. Actuaries should be involved as the primary source of truth throughout the migration process, rather than taking the approach of simply attempting to recode what exists in your legacy system. This approach ensures that the new system is aligned with current business needs and regulatory requirements and goes beyond being a lift and shift project.
Architect with Reusable Components – To maximize efficiency and reduce redundancy, design your new system with reusable components. Avoid re-writing all the same logic across different lines of business (LOBs) and regions. This modular approach of using commonalities across product definitions ensures consistency and ease of maintenance.
Approach in multiple phases. A phased approach can often increase the likelihood of a successful migration. Consider starting small by implementing the new system in one region and one line of business. This approach allows you to identify and address any issues early on, applying those learnings to subsequent phases. It also allows you to gather market feedback, monitor claims and more rapidly iterate as you roll out similar offerings in different regions.
Change Management – With the ability of these modern systems to seamlessly push pricing models into a rating engine without recoding, it’s important to redefine the role of IT in the change management process. This shift opens up new opportunities and innovation projects that were previously not feasible. Teams can now focus on strategic initiatives that drive business value.
Migration Automation
A modern pricing and rating system makes the migration process easier with powerful automation capabilities using Python scripting. In this case, automation accelerates the entire migration process. In fact, at Earnix, in some cases we’ve observed some insurers move from a legacy system to Earnix Price-It in just a few weeks.
However, it is important to remember that the timeline may vary depending on the complexity of the overall implementation and the number of jurisdictions and lines of business involved.
Gain a New Competitive Advantage
The migration from a legacy system to a modern one represents a better decision for insurers looking to modernize their pricing and rating capabilities.
By embracing a modern, pricing and rating platform like Earnix, insurers can unlock new levels of agility, efficiency, speed, and pricing innovation. These new modern platforms can be rapidly implemented standalone and done concurrently and later integrated into longer-term projects such as a core policy administration system replacement. With a systematic, well-designed migration approach that starts with actuaries, is done an phases and leverages automation, the entire process can be simplified and streamlined – ensuring a seamless transition and maximizing the total value of a carriers’ investment.
Learn how Earnix Price-It can help you make better pricing and rating decisions