The insurance industry truly is a document-driven enterprise. Insurance companies rely on documents to make informed decisions that help them support their customers’ needs. However, documents often come in the form of paper, and this paper build-up is actually drastically affecting productivity, process efficiency, regulatory compliance and customer service.
For this reason, it’s no shock that the insurance industry was one of the early adopters of enterprise content management (ECM). According to Gartner Inc., more than 50 percent of Tier 1 and 2 insurers in the P&C and Life sectors have invested in ECM software to manage their documents.
What does seem shocking – given the importance of document processes such as policy administration, claims administration and underwriting – is how many carriers are unwilling to upgrade or replace their legacy ECM systems they purchased more than a decade ago, especially since ECM platforms have advanced significantly in terms of functionality, ease of use, and total cost of ownership.
So what’s the setback? Well, many ECM providers are making such drastic changes to their software that it looks as if they created an entirely new product that insurers are too intimidated to implement. Even worse, transitioning to this new, vastly different software is often costly, requiring companies to purchase an abundance of services hours or even an entirely new product from their vendor. From there, they begin the process of migrating (not upgrading) from their old system to the new one. Not only does this completely change insurers’ business processes, but it also drains time and money spent on on new training and implementation.
This spikes the question – Why would ECM vendors do this to their loyal customers? It’s simple: Because they can. They know it frustrates insurers, but they also know that insurers will continue to buy their offerings. Switching to a different vendor is too expensive and time-consuming.
Insurers shouldn’t let their vendors win – staying with legacy ECM systems is often actually far more costly than switching to a different vendor. Even though insurers DON’T receive new direct expenses with legacy ECM systems, they DO receive many indirect costs, including change management, risk mitigation and opportunity costs. These indirect expenses can contribute to a hefty total cost of ownership of legacy ECM systems.
In the long run, it’s a good idea to explore options with other vendors if insurers go about it the right way. In addition to asking, “How much positive ROI will we receive by replacing our legacy ECM with a new one?,” a question just as important is, “How much is it really costing us to own our current system?” This question will help insurers figure out what’s best for them and their organization.
Think it’s time to explore other options? Check out our case study below to find out how a leading life and annuity insurer achieved enterprise-wide success by implementing an ECM system.