When an insurer plans a system renewal, the primary focus is usually on how the new system supports needs today and in the future. However, few insurance companies start from scratch. Especially within life insurance, policies may be older than 50 years. Therefore, the migration of run-off portfolios usually pops up at some point during the renewal project.
Older systems often have an “uncontrolled flexibility”, a feature that originally was regarded quite handy. Individual policy details could be modified in many ways, and not all information had a designated place or format. Thus, over time, users may have entered the same information in different places and, for example, dates in different formats. Older policies also do not always have all the information required by the new structure; in which case the policy information needs to be enriched. Not to mention file formats, which have changed over the years. There are certainly many more examples. And now, 15–20 years later, when this rather mixed data should be adapted to the structures of the new system, we are faced with a data cleaning task. The scope of a migration project can often be bit of a surprise, but luckily there are tools available to help.
The power of collaboration
In data migration the cooperation between the insurance company and the system supplier is key. The insurance company knows its old products and can foresee some of the challenges in the data structures. The system supplier on the other hand, knows inside out the logic and structure of the new system. When a mechanism for checking the quality and consistency of the data is created in between, even a difficult migration becomes easier.
The three phases of migration
Data migration can be divided into three phases. In the first phase, the migration is planned, and the portfolios are studied to the smallest details. First steps are taken with smaller test data and the creation of data mapping rules starts. At the same time, the insurance company often considers whether some product portfolios can be combined to simplify the management of portfolios in the future.
In the next phase, our conversion tool will take centre stage. It is used to check whether the data to be migrated is consistent and compatible with the new system. Rarely, if ever, is older data ready at once. The conversion tool provides feedback on differences and inconsistencies, such as data fields that cannot be matched in the new structure, missing data fields, or data in an inappropriate format.
This is where the actual data cleaning begins. The same data may be run through the conversion tool several times until it can be stamped as OK. Finally, a policy lifecycle testing will be done to ensure that everything matches in the future as well. For the work to progress promptly, the conversion tool is made available also for the insurance company. Hence, the actual experts of the portfolios and those working on data cleaning can independently test the changes and updates. All in all, a time-consuming phase, but the work is rewarded in the last phase.
The actual migration is often the fastest phase. When the old data has been processed and its compatibility has been verified, this is largely a technical routine, where the converted policies smoothly float into the new system. As a final check, the outcome is reconciled with the source data.
Extensive experience of migrations
In addition to the conversion tool, Evitec Life‘s accurate description of the data structure makes migration work significantly easier. The description gives the customer a clear view of which information is needed and in which format.
At Evitec we have carried out system migrations for several decades. We have converted nearly one hundred portfolios and hundreds of thousands of policies. So, it’s fair to say that our experience has built up over time and our migration process and tools have been put to the test in many demanding projects.
In this blog I will give my views on the Swedish occupational pension, what are the drivers for core system changes and what Evitec is offering to the Swedish life insurance companies.
Swedish occupational pension
Swedish occupational pension was introduced to the labor market as a safe complement to the national pension (folkpensionen) back in 1913. The occupational pension’s importance for the total pension have increased over time and will be even more important in the future. Occupational pension is also getting more relevant for the younger audience due to the last years news and discussions about the pressure on the pension system and the need to start saving for your own pension early on in your career.
Drivers for core system changes
Insurance companies are facing pressure to be fast and agile in order to deliver modern and digitalized customer services. When adding new customer services, which in itself can be quite small projects, it might lead to long and complex, and in many cases, very expensive IT projects that in the end is impossible to do. The reason for this is in many cases caused by the old and outdated IT systems. The IT systems were built for decades ago and are lacking API’s (application programming interface) and real-time transactions for modern online services. Another challenge is the constant demand from regulators and authorities that eats up a large portion of the IT budgets. Then, there’s internal demands on improved efficiency and lower cost of operations.
When it comes to new technologies the insurance companies need to look at an arsenal of technologies as; blockchain, AI, machine learning, Big Data analytics, robo-advisors and IoT. These technologies are drivers for extended user experiences and services. Customers are getting more tech savvy and they are demanding an increasing level of tailored services and fast answers to their questions.
The digitalization agenda with the increased demands for new services and fast go from market launch of new insurance products are already today heavy and will most likely increase further in the future. In order to satisfy the current demands and to be prepared for the future, the insurance companies need to clean up their IT stack and renew their core systems. If not, it will be a never-ending story with IT patchwork and a spaghetti IT architecture that just make it even more challenging to handle with increasing operational expenses as time goes on.
Evitec’s offering to the Swedish life insurance companies
Evitec Life is a life and pension insurance solution for the Swedish occupational pension market. Evitec Life includes support for key business processes including insurance product management, sales, digital services, claims and claims management. The solution includes services, tools and mandatory system integrations to effectively run an insurance business that meets the regulatory requirements.
Evitec’s advanced solutions are the result of faithful and sustainable work in the financial industry since 1992. We understand our customers’ needs and adapt our solutions to build world-class IT-systems. We continuously renew and develop our working methods and our product range.
Read more about our Swedish occupational pension offering.