Vendor Selection Best Practice for Insurance Carriers: Simplified vs Extensive RFI

In my last vendor selection blog post I highlighted a few best practices, one of which included using a simplified Request for Information (RFI) that was easy for the vendor to complete and for you to score. I’d like to delve into this topic more and explain why a simplified RFI can make or break the vendor selection process. A simplified RFI will get you through the vendor selection process much faster, and will help your selection team focus on what really matters – your unique requirements.

From a functionality perspective, don’t inventory the ordinary; instead focus on areas that are specific to your business. We know that any insurance application that is in production with several insurers will support basic transactions. For example, all policy systems have a new business, policy change and cancellation transactions so there is no need to spend time and focus on them. Instead, dig into features that matter to your business. Perhaps you need robust premium audit features to support your workers comp business, or you need advanced reinsurance capabilities to support your middle market commercial business. Ask questions in the areas where you may be stretching the capabilities of a vended solution.

Having been involved in over 50 vendor selection projects (rating, policy administration systems, claims, billing, agent portals, business intelligence, etc.), Novarica recommends that during the RFI phase the focus should be on discovering reasons not to consider a particular vendor (the “deal-killers”). Novarica’s experience has shown deal killers generally fall into one of four areas: Staff, Organization,Functionality, and Technology, easily remembered by the acronym SOFT.

Staff

• Do the staff have the right skills and experience?
• How well are they likely to understand your needs?
• What resources are available for implementation and support?
• What assurances will you have that the staff you meet during the sales process will really be the staff that you work with?

Organization

• How stable is the organization?
• Is it big enough for your company to do business with?
• Is there a conflict in the company’s ownership (i.e., are they owned by a competitor)?
• Who are their other clients?
• How much of a role do clients have in product development?

Functionality

• Does the solution support the lines of business, states, and high-level functionality that you need?
• Which functions are actually live at reference clients?

Technology

• Is the solution’s technical architecture compatible with your enterprise standards?
• Does your IT staff have the skills to support it?

The typical Novarica RFI includes 100-150 questions. The typical response for 30-50 pages takes 2-4 hours to score. Your time is valuable – don’t waste days reading and scoring complex RFI responses full of information you probably already know. This simplified approach will typically allow you to narrow the range of potential suppliers in any particular solution category to 2-3 candidates much more quickly and effectively than with a large dense RFP.
For more information about vendor selection best practices, make sure to register for our upcoming Vendor Selection Best Practices webinar taking place Thursday, January 29th at 2 p.m. (ET) or send me a note at email.

This blog has been reposted with permission from Novarica.

Martina Conlon is a principal at Novarica, a research and advisory firm focused on insurance technology strategy for insurers.

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