It's a Wrap at ACORD LOMA 2012
By Lynne Sampson-Oracle on May 17, 2012
In our discussions with customers, Oracle Insurance has noticed an increasing number of multi-year transformational projects. Insurance companies are recognizing that their existing IT systems have become so complicated, they’re actually holding insurers back, instead of helping them to move forward. This was reflected in our 2011 industry survey, where nearly two-thirds of insurers said they could provide better customer service if they had better IT.
During yesterday’s Platinum session at ACORD LOMA, Oracle’s Srini Venkat and Roger Soppe focused on the business drivers behind these transformational projects. They gave a number of real-world examples of insurance companies who are undertaking real-world transformations. They noted that one size does not fit all: transformation can take many different paths. Some examples they discussed:
Focus on business rules. Srini Venkat noted that in this approach, the goal is often to extract, consolidate and simplify the huge numbers of business rules that insurers have. These rules may govern everything from rating and underwriting to policy processing. He gave the example of one insurer who wanted to be able to support growth over the next 10 years. When the company looked at replacing and consolidating its multiple policy administration systems, it discovered that the number of rules would overwhelm a new core system. Instead, the insurer decided to focus on product configuration and rating, with a phased approach to policy admin replacements. It’s looking at a number of new tools to manage its business rules, 40% of which are related to rating and underwriting. In this approach, volume and complexity were the insurer’s key considerations in transforming its business.
Consolidate rating. For many P&C insurers, rating engines are where product information lives. Insurers often have multiple rating engines tied to policy administration systems, web portals, or other systems. This leads to inconsistent pricing, compliance issues, and the inability to develop innovative products. In addition, rating engines that are locked into policy admin systems are often inflexible and lack the ability to scale.
Consolidating onto a single, rules-driven rating engine can help alleviate these issues. Srini Venkat gave examples of three different insurers who have taken this route. The benefits have included accurate pricing, an increase in the number of new business quotes, more automation, faster product development, and improved ease of doing business for agents and customers.
Replace core systems. For life and annuity carriers, speed to market is often the key business driver. Insurance is a first-mover business, and those who can be first to market with a popular product often come out the winners. In addition, life insurers often lack customer self-service capabilities, they want to create products that agents and brokers want to sell, and they are saddled with the high costs of maintaining multiple, legacy policy administration systems.
Roger Soppe discussed several customers who chose to replace their aging policy administration systems with a modern, rules-driven one. The results they achieved included faster speed to market, better-selling products and increased revenue.
Modernize distribution. The final transformation approach discussed during this session focused on modernizing distribution. Many carriers struggle with the high cost of distributing their product portfolios to diverse channels, and agents often find it difficult to do business with multiple carriers. Roger Soppe shared the story of one life insurance direct marketer who chose to use a data exchange service. This gave them a central hub which they could use as a single source of data for the multiple carriers who use the service. By using a single, aggregated feed, the marketer lowered its IT costs and found it easier to do business with a multitude of carriers.
The presentation was well received by the Twitter-sphere, with attendees tweeting that they enjoyed the story-telling approach.
Today featured a presentation from Oracle customer CNA Insurance. AVP Lindsay Fassett shared details of the company’s approach to transformation, a five-year project with the ultimate goal of delivering superior service to customers and agents for CNA’s highly profitable commercial lines. While there are five separate pillars to the project, Fassett’s team is focused on the “speed to market” piece, which includes product configuration, rating and document production. The company selected Oracle Insurance Insbridge Rating and Underwriting as its rating engine, and Oracle Documaker for the production of forms. Fassett shared that the business side of the house, including actuaries and underwriters, are very much involved in IT selection, and they selected Oracle Insurance Insbridge because the application would be easy for them to use to create and manage rates.
The conference wrapped up this evening with a Cuban-style party hosted by ACORD LOMA. It was a fun and successful event, and we look forward to doing it all again next year!