In insurance business, companies rely on business-critical core systems, such as policy administration solution (PAS), to support and facilitate the daily operations. For many insurance company employees, the PAS system is often seen as a plain user interface, which is rather familiar, and has been around for quite some time. What typically is not exposed is the required knowledge and investment it takes to manage and maintain the PAS system to ensure the business-critical service is operating as expected. It involves people and skills encompassing deep understanding of IT infrastructure maintenance, know-how of applications and database software topped with deep insurance business knowledge to aid in troubleshooting, maintaining and developing the PAS system.
EIOPA and national regulatory body issue guidelines
Insurance companies and regulatory bodies are increasingly starting to accept and adopt the Software as a Service (SaaS) model as an option to the predominant in-house PAS systems. Gartner’s 2019 CIO survey* is indicating also strong digital transformation trend where 33% of CIO’s are planning to increase investments into cloud services and solutions (SaaS and PaaS) and 35% of CIO’s are planning to decrease investments in infrastructures and data centers.
The European Insurance and Occupational Pensions Authority (EIOPA**) has released its guidance on how insurance companies shall operate in a SaaS context. EU member state’s national regulatory bodies, like the Finnish Finanssivalvonta*** (Financial Supervisory Authority) has enforced this guidance and as of January 1st, 2021, the EIOPA guidance is applied with a transition period until December 31st, 2022.
Transitioning from in-house to SaaS is not a lightweight undergoing, it requires careful consideration and planning as the PAS systems are tightly integrated with the surrounding IT solutions and company business processes. However, the technology is usually not the problem and PAS systems are already today, in many cases, running in virtual cloud setups governed by the company’s own IT organization. For older PAS systems, still running in mainframe computers, the SaaS option is an integral part of the core system renewal project.
SaaS with benefits
The benefits of cloud computing and virtualization are well known. The additional benefits, when transitioning into a SaaS model stems from the deeper collaboration with the PAS vendor and the even more intimate integration with the insurance company’s business processes.
SaaS merges the PAS software vendor, the IT hosting and operating vendor into a single common entity. This brings great benefits in efficiency and cost savings when considering daily operations, solution development and maintenance and possible troubleshooting tasks. Cloud platforms offer very price competitive processing power and storage capacity, where costs are generated by the true consumption of resources. The combined PAS and SaaS vendor has the world’s best talents and expertise available to manage its own developed PAS solution and is furthermore incentivised to continuously monitor and seek ways to optimize its operations. The time required to bring a feature from the drawing board into production is greatly shortened. Having less parties around the table leads to clearer roles and responsibilities, discussions and resolution times become shorter and overall quality improves.
In the insurance business, the regulatory bodies introduce frequent requirements updates to govern the business landscape and its actors. The PAS systems face a continuous demand to keep up to date with the changing requirements. Profit Software’s Profit Life & Pension (PLP) SaaS solution is up-to-date and compliant with the regulatory requirements. This is an essential part of Profit Software’s core value promise.
The SaaS model brings flexibility into project resourcing. When there is a need to enhance the PAS solution Profit Software has the capability to adjust the team size to meet the customer needs. This brings agility into business development and strategic planning.
SaaS is a testimony of trust
SaaS is much more than plainly outsourcing an insurance company’s PAS solution and its operations to a SaaS vendor. It is about building and maintaining trust between the insurance company and the SaaS & PAS partner, to deliver and operate, the solution in a seamless integrated way. It should be experienced by the SaaS customer as if it would be done as part of the insurance company’s own IT organization. Profit Software and Profit Life & Pension is ready for SaaS.
Learn more about the Profit Life & Pension solution.