Five Eval Criteria to Jumpstart Your P&C Coretech Shortlist
Use these criteria to narrow your platform selection process to a manageable number of vendors
Supported lines of business (LOBs)
Breadth of platform capabilities
Size and type of customers
Number of customers in production
Vendor employee count
You’re in the market for a P&C core platform. You’ve put together a list of vendors in this space. (Perhaps you’ve consulted the Coretech Insight Solutions Directory.) Depending on how wide you’ve cast the net, you’re looking at 20, 30, maybe 40 or more vendors.
At first glance there’s little difference from one vendor platform to another. They’re all cloud-based, offer similar components, and promise to digitally transform your business. Even industry veterans will sometimes shake their heads and say, “These vendors are all the same.”
You may feel resigned to grinding your way through a lengthy list of vendor evals to get to a shortlist, but there are key criteria that can serve as filters to help with this process. Use the following five criteria to narrow your search to a manageable number of vendors.
1. Supported LOBs
Start by focusing on the vendors that have clients in production with the LOBs that must be supported for your company.
Every vendor and their platform
is a reflection of the clients and LOBs
they have supported in the past.
In theory, modern, configurable systems can support any line of business. In practice, it’s more complicated. Most vendors have greater experience with a subset of LOBs. For example, it’s common for a vendor to offer strong support for commercial lines, but to have less experience with personal lines (or visa versa). Many vendors (40% or more) either offer no support for workers comp (WC) or only support WC on a limited basis as an accommodation for certain customers. Surety bond management is a niche LOB that over half of P&C core platform vendors are not supporting for any clients.
Vendors are continually adding new LOBs, but building out support for new, unfamiliar LOBs — such as adding commercial lines to support for personal lines, or adding support for workers comp — is often more difficult and time consuming than vendors anticipate. New regulatory, business process, and data requirements can challenge existing capabilities. You’ll take on less risk and make faster progress by focusing your search on vendors that can support your LOBs from day one.
2. Breadth of Platform Capabilities
Similar to LOBs, focus on the vendors that have already built out the platform components you require.
From platform to platform, there can be key differences. A handful of platforms do not include core modules for claims or billing management. A few vendors do not offer portals and mobile apps for agents and policyholders. Some lack reporting and/or business intelligence capabilities. Roughly a third of vendors do not offer a reinsurance module and instead rely on integration with third-party systems. Although less common, a small minority of vendors include a full general ledger module with their platform.
Filling gaps in a vendor’s platform
will require custom development or integration
that will increase complexity, time, and cost.
Focusing on vendors with prebuilt platform capabilities aligned with your needs will narrow your search and result in faster progress.
3. Size and Type of Customers
Focus on vendors that have clients with profiles similar to your own – similar types of P&C insurance carriers of similar size.
In the same way that vendors tend to specialize
in certain LOBs, over time vendors also become
tuned to serving insurers of a certain size.
A vendor successful with large national and global insurers with billions of dollars of direct written premium (DWP) may be challenged to scale down to support a $200M DWP regional carrier. A vendor that excels at supporting single-state $10M to $20M DWP mutual insurers may be overwhelmed by the needs of a $100M DWP regional carrier. A vendor in the middle – easily capable of supporting carriers with hundreds of millions of dollars in DWP – may find there is a floor of $100M DWP and a ceiling of $1B DWP beyond which they have difficulty scaling up or down.
By focusing on vendors serving customers similar to your company, you’ll be aligning with providers with the strongest experience and functional capabilities for your organization.
4. Number of Customers in Production
The number of customers (P&C insurance carriers) supported in production is a key indicator of success — focus on vendors who have been successful with companies similar to your own. Real-world experience is essential for understanding business and regulatory requirements, refining platform capabilities, and developing strong implementation practices. A vendor that can point to dozens of successful implementations of similar customers will be in a much stronger position than a vendor with a handful of customers.
A surprising percentage of core platform
vendors (40% or more) are not able to claim
dozens of customers – they may have
fewer than a dozen customers in production.
There is no magic number of customers required for success, but vendors with fewer customers have less experience and represent more risk. The risks are even greater if a vendor’s existing customers are dissimilar to your organization.
5. Vendor Employee Count
Focus your initial scan on vendors with a sufficient number of direct employees to support and continue developing their platform.
Roughly 60% of core platform vendors have fewer than 200 employees directly supporting their platform. Most are small companies; some are subsidiaries of larger organizations.
A quarter of P&C core platform vendors
have fewer than 50 employees.
Employee count is not a vendor viability assessment, but it is a helpful initial metric. You can quickly obtain this info thanks to sites such as LinkedIn and Glassdoor. Smaller vendors – especially those with fewer than 100 people — require more scrutiny. These companies have additional short and long-term risks.
Short-term, there are risks of turnover of key personnel and resource limitations that may impact service levels. Long-term, vendors with insufficient resources will be challenged to continue developing their platform to keep pace with industry changes. Small vendors or subsidiaries may struggle to remain viable, and are more likely to be acquired.
These five eval criteria are not the only vendor selection criteria to consider; they serve as a valuable starting point. Use these to filter out vendors unlikely to be viable contenders so you can focus on more thorough reviews of vendors that are a potential match for your organization.
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