ACORD LOMA Session Highlights Policy Administration Trends

Helen Pitts, senior product marketing manager for Oracle Insurance, attended and is blogging from the ACORD LOMA Insurance Forum this week.

Paul Vancheri Fidelity.jpg

Above: Paul Vancheri, Chief Information Officer, Fidelity Investments Life Insurance Company. Vancheri gave a presentation during the ACORD LOMA Insurance Systems Forum about the key elements of modern policy administration systems and how insurers can mitigate risk during legacy system migrations to safely introduce new technologies.

When I had a few particularly challenging honors courses in college my father, a long-time technology industry veteran, used to say, "If you don't know how to do something go ask the experts. Find someone who has been there and done that, don't be afraid to ask the tough questions, and apply and build upon what you learn." (Actually he still offers this same advice today.)

That's probably why my favorite sessions at industry events, like the ACORD LOMA Insurance Forum this week, are those that include insight on industry trends and case studies from carriers who share their experiences and offer best practices based upon their own lessons learned. I had the opportunity to attend a particularly insightful session Wednesday as Craig Weber, senior vice president of Celent's Insurance practice, and Paul Vancheri, CIO of Fidelity Life Investments, presented, "Managing the Dynamic Insurance Landscape: Enabling Growth and Profitability with a Modern Policy Administration System."

Policy Administration Trends
Growing the business is the top issue when it comes to IT among both life and annuity and property and casualty carriers according to Weber. To drive growth and capture market share from competitors, carriers are looking to modernize their core insurance systems, with 65 percent of those CIOs participating in recent Celent research citing plans to replace their policy administration systems.

Weber noted that there has been continued focus and investment, particularly in the last three years, by software and technology vendors to offer modern, rules-based, configurable policy administration solutions. He added that these solutions are continuing to evolve with the ongoing aim of helping carriers rapidly meet shifting business needs--whether it is to launch new products to market faster than the competition, adapt existing products to meet shifting consumer and /or regulatory demands, or to exit unprofitable markets. He closed by noting the top four trends for policy administration either in the process of being adopted today or on the not-so-distant horizon for the future:

  1. Underwriting and service desktops
  2. New business automation
  3. Convergence of ultra-configurable and domain content-rich systems
  4. Better usability and screen design

Mitigating the Risk When Making the Decision to Modernize
Third-party analyst research from advisory firms like Celent was a key part of the due diligence process for Fidelity as it sought a replacement for its legacy policy administration system back in 2005, according to Vancheri. The company's business opportunities were outrunning system capability. Its legacy system had not been upgraded in several years and was deficient from a functionality and currency standpoint. This was constraining the carrier's ability to rapidly configure and bring new and complex products to market.

The company sought a new, modern policy administration system, one that would enable it to keep pace with rapid and often unexpected industry changes and ahead of the competition. A cross-functional team that included representatives from finance, actuarial, operations, client services and IT conducted an extensive selection process. This process included deep documentation review, pilot evaluations, demonstrations of required functionality and complex problem-solving, infrastructure integration capability, and the ability to meet the company's desired cost model. The company ultimately selected an adaptive policy administration system that met its requirements to:

  • Deliver ease of use - eliminating paper and rework, while easing the burden on representatives to sell and service annuities
  • Provide customer parity - offering Web-based capabilities in alignment with the company's focus on delivering a consistent customer experience across its business
  • Deliver scalability, efficiency - enabling automation, while simplifying and standardizing systems across its technology stack
  • Offer desired functionality - supporting Fidelity's product configuration / rules management philosophy, focus on customer service and technology upgrade requirements
  • Meet cost requirements - including implementation, professional services and licenses fees and ongoing maintenance
  • Deliver upon business requirements - enabling the ability to drive time to market for new products and flexibility to make changes

Best Practices for Addressing Implementation Challenges
Based upon lessons learned during the company's implementation, Vancheri advised carriers to evaluate staffing capabilities and cultural impacts, review business requirements to avoid rebuilding legacy processes, factor in dependent systems, and review policies and practices to secure customer data. His formula for success: upfront planning + clear requirements = precision execution.

Achieving a Return on Investment
Vancheri said the decision to replace their legacy policy administration system and deploy a modern, rules-based system--before the economic downturn occurred--has been integral in helping the company adapt to shifting market conditions, while enabling growth in its direct channel sales of variable annuities.

Since deploying its new policy admin system, the company has reduced its average time to market for new products from 12-15 months to 4.5 months. The company has since migrated its other products to the new system and retired its legacy system, significantly decreasing its overall product development cycle.

From a processing standpoint Vancheri noted the company has achieved gains in automation, information, and ease of use, resulting in improved real-time data edits, controls for better quality, and tax handling capability. Plus, with by having only one platform to manage, the company has simplified its IT environment and is well positioned to deliver system enhancements for greater efficiencies.

Commitment to Continuing the Investment
In the short and longer term future Vancheri said the company plans to enhance business functionality to support money movement, wire automation, divorce processing on payout contracts and cost-based tracking improvements. It also plans to continue system upgrades to remain current as well as focus on further reducing cycle time, driving down maintenance costs, and integrating with other products.

Helen Pitts is senior product marketing manager for Oracle Insurance focused on life/annuities and enterprise document automation.

Comments:

Excellent summary of the session!

Posted by Roger on May 28, 2010 at 04:04 AM EDT #

Excellent blog Helen. I'd like to thank Paul and Craig for sharing their experiences and thoughts during the session.

Posted by Srini Venkat on May 28, 2010 at 04:38 AM EDT #

Thank you gentlemen. I'm pleased you found this blog beneficial. This was an excellent session to write about as both Craig and Paul were compelling speakers and very insightful on this very timely topic.

Posted by Helen Pitts on May 28, 2010 at 07:15 AM EDT #

Helen, Reading your summary, I am very much interested in the full presentation. Would you by any chance have it or have information on how I can reach the gentleman (Mr. Vancheri) that presented it ? I am very interested in policy administration systems and trends in that area and would greatly appreciate if you can point me to valuable resources in this area. Great summary. Ram

Posted by Ram on August 19, 2010 at 02:19 AM EDT #

Interesting stuff that we have here. I haven't had a chance to really look into this a lot, but it really is cool to see that there are articles out there such as this for us to read about and see what is all going on.

Posted by direct channel sales on September 17, 2010 at 10:01 AM EDT #

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