For insurers in Latin America (LATAM), managing multiple policy administration systems (PAS) presents a variety of challenges ranging from difficulties in getting new product innovations to market quickly to operational inefficiencies, data inconsistencies, increased costs, and degraded customer experience.
In addition, to these general drawbacks, there are certain factors unique to the LATAM region that create very specific issues for insurers in the market.
LATAM Market Challenges #
Regulatory Diversity #
The LATAM region is a diverse collection of countries which have a wide variety of different rules and regulations governing the insurance industry. This diversity makes it challenging for insurers operating in multiple LATAM countries to manage compliance across different systems, as each system must be configured to comply with the local regulations.
System configuration is much more difficult on older PAS and may require the creation of new code and/or reliance on the original vendor. This creates particular problems for companies that operate in different countries and that continue to rely on aging systems who will find themselves less flexible and adaptable to changing regulatory environments.
Insurers who have multiple legacy systems will be further challenged by the effort required to maintain those systems and the products they house in a compliant and secure manner. Each system an insurer operates increases the complexity of ensuring all data handling and processing comply with local and international regulations. Moreover, multiple systems can create security vulnerabilities, making it more challenging to protect sensitive customer information from cyber threats.
Economic and Political Volatility #
Economic and political fluctuations are a reality in some countries in LATAM, meaning that, at times, insurers need to adapt quickly to changing regulations, economic conditions, and market demands.
Having multiple aging PAS can greatly reduce an insurer’s ability to quickly adapt to volatile market conditions. Running multiple systems means multiple rounds of configurations will have to be made. And, on old legacy systems, those changes may be difficult and slow to make, especially if the platforms lack rules-based configuration capabilities. These effects are multiplied when an insurer has to ensure changes are compatible across several systems.
Maintaining pace with competitors’ digital transformation #
While the pace of digital transformation is accelerating globally, and LATAM insurers recognize the need to modernize, carriers in certain LATAM countries can be hamstrung because of limited resources, infrastructure constraints, or the cost of technology adoption. These factors can hinder efforts to consolidate PAS or implement modern, cloud-based systems that better address today's challenges and lay the foundation for future digital solutions.
Market Fragmentation #
The insurance market in LATAM is diverse. In some cases, large multinational companies are challenged by the variety of PAS solutions and the operational processes they create across different national business units.
Customer Expectations #
LATAM consumers are increasingly demanding digital-first experiences, challenging insurers with multiple outdated PAS to provide seamless, fast, and personalized services. The gap between customer expectations and what insurers can deliver with fragmented core systems can be more significant in countries where the population is rapidly becoming digitally proficient.
Specific trends amongst LATAM PAS modernization adopters
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The 2023 Celent Latin America Life Policy Administration Systems Deal Trends report revealed the following specific findings about carrier attitudes and behavior towards PAS modernization:
Cloud and cloud native solutions are valued – 91% of companies will invest in cloud in 2024
- Cloud-based PAS implementation increased 10% between 2021 and 2023.
PAS is the foundation for new adoption of new, digital CX and engagement platforms
- CX and ecosystem development is an emerging and important trend. However, it often can’t be facilitated with legacy core systems. Insurers need modern PAS solutions to be able to access data in real-time and connect via APIs to the new solutions.
Data Conversion Opportunities
- Insurers increased use of data for pricing and rate setting is leading them to search for better ways to access their data, including vendor solutions to the problem.
- New conversion technology (including AI) is helping insurers mitigate risk.
PAS solutions are increasingly componentized and linked by APIs.
- Modern PAS solutions are solving LATAM insurer challenges.
- They are increasingly SaaS + cloud based.
- They offer seamless, end-to-end experiences with clearly articulated and integrated architecture that efficiently enables those experiences via API integrations and microservices.
- Modern PAS have flexible product, workflow, geographical, and regulatory/tax configuration.
- New systems increase speed-to-implementation and lower up-front implementation costs, including low- or no-code and client self-sufficiency.
Solutions for LATAM insurers with multiple PAS #
Addressing the challenges associated with managing multiple policy administration systems (PAS) in the LATAM insurance sector involves strategic, technological, and operational solutions. These solutions aim to streamline operations, ensure data consistency, reduce costs, and improve customer experience. Some of the best practices and solutions include:
System Consolidation
One of the most effective solutions to the challenges created by multiple legacy PAS is to consolidate multiple PAS into a single, more modern system. This approach reduces operational complexity, ensures data consistency, and lowers maintenance costs. Consolidation also makes it easier to comply with regulatory requirements across different regions.
Investment in End-to-End Insurance Solutions
Implementing integrated insurance solutions that offer end-to-end capabilities from policy administration to customer relationship management (CRM) can solve many issues. These platforms facilitate seamless data flow and processes, improving operational efficiency and customer service.
Cloud Adoption
Adopting cloud-based PAS solutions can provide LATAM insurers with the scalability, flexibility, and security they need to manage their operations more efficiently. Cloud services also facilitate easier integration with other systems and access to advanced analytics and artificial intelligence (AI) tools.
SaaS models for policy admin systems can also reduce the load on LATAM insurers’ IT teams, ensure that the system is always up to date and can reduce costs.
Data Modernization and Migration
Investing in data modernization and data migration solutions can help insurers make sense of the data spread across multiple systems. These solutions enable consolidation of all data or can give access to data siloed in multiple legacy systems. This data be used to improve decision-making, risk assessment, and personalized customer service by providing a unified view of all data.
Customer and Advisor Engagement Platforms
Implementing customer experience platforms that integrate with PAS and other systems can enhance customer satisfaction. These platforms enable more personalized communication, faster service delivery, and a seamless customer journey across all touchpoints.
Partnerships and Collaboration
Collaborating with technology providers who are experienced in PAS modernization in LATAM can provide insurers access to innovative technologies and solutions that are difficult to develop in-house. These partnerships can also offer new insights into improving operations and customer service.
Wrap up #
By adopting these solutions, insurers in the LATAM region can overcome the challenges of managing multiple PAS and position themselves for long-term success in competitive and evolving markets. Modernization of core systems and retirement of aging legacy PAS will improve operational efficiency, enhance customer satisfaction, and give companies competitive advantages in the countries they operate in.
