Thursday Feb 19, 2015

Oracle’s Dave Shively Offers His Thoughts on Core System Solution and Vendor Selection

Dave Shively, Oracle's Senior Director of Life and Annuity Policy Administration, discusses the topic of core system solution and vendor selection in today’s post:

Over the past ten years, the vendor landscape for back-office Insurance solutions has changed tremendously. The number of offerings based on modern technology has increased dramatically and the breadth of capabilities offered by these solutions has also improved significantly. As the market evolves, capabilities that were once cutting edge become default and new functionality becomes differentiating. Capabilities which once were “nice to have” are now “need to have.”   

The current vendor landscape can be broken down into the following classifications:

  • Emerging Players - newer vendors who are starting to gain a foothold in the marketplace, but do not yet have a proven track record.
  • Market Pillars - established players with very strong vendor credentials, but whose technology has not kept up with the competition.
  • Innovators - have demonstrated innovative product strengths that act as their competitive advantage in appealing to niche segments of the market but whose solutions may not yet be ready for enterprise level deployment.
  • Champions - have a strong market presence, modern competitive solution, and are the trendsetters for the industry.

When assessing the viability of a solution vendor, it is important to not only consider the strength of their product offerings, but also their strategy and reach. For their product offerings, evaluation criteria would include functionality, advanced features, affordability, usability and architecture. The other important parameter driving a product’s strength is its adaptability –providing fundamental business capabilities along with the ability to adapt to change and support growth and changing business and regulatory requirements over time.

But there are several factors that should be considered when choosing a vendor partner that go beyond the capabilities of the solution itself.  Carriers have to keep in mind that selecting a Core System ties you to the product vendor for years to come.  The average life-span of a Core System in a carrier is more than 30 years so it is important to consider not only the immediate need, for which the solution is being selected, but also the longer term needs and viability of the solution.  A few of the factors to consider include:

Financial Stability and Transparency

The long term stability of your vendor is critical to the success of your business. Vendors showing poor financial performance/statements are risky as there is a significant probability of acquisition or even insolvency. There are many examples of vendors who have created innovative solutions but could not weather market down cycles.  Vendors not willing to share audited financial information or shying away from providing an accurate picture of the past performance of their products/offerings are likely doing so for a reason. Hence, selecting vendors who can prove that they are financially stable, profitable is undoubtedly a critical criteria for selection.

Resources – Ongoing Product Investment

Significant levels of investment are required for sustained development of next generation products, maintenance of current products and customer support. Additionally, investments done in R&D that add to the performance, stability, functionality, reliability of the product demands depth of industry experience, true knowledge of the solution and a rich experience in implementing the solution. Hence, selecting a vendor who has industry experience, solution knowledge and product implementation expertise along with a proven track record of ongoing product investment is key. Additionally, as with anything you buy, there are fees and costs associated with investment products and services. Fees that seem small initially but over time grow, such as ongoing consulting fees, may have a major impact on your investment portfolio over time. All ongoing fees and charges should be well understood and vetted in order to ensure you are getting good value for each dollar paid over the life of the product.

Experience in Domain

Domain experience is critical not only to implementation success, but also to the long-term viability of the solution. Minute details of the industry are known only to those who’ve spent years in the Industry rather than having just researched it.  With regard to the implementation of the solution, you want to ensure the vendor team has the experience to quickly understand your business needs rather than your team having to educate them about basic insurance principles.  In addition, you want to make sure that the product development team understands the Insurance market so that the solution evolves with the market rather than stagnating and becoming irrelevant.  In addition, it is not only important that the vendor can put forward one or two industry experts, but rather you should look for a team of people supporting the solution who all have a solid understanding of the Insurance business.

Scalability

While most vendors profess to have a scalable solution, it is important to look for proof points around this supposition.  A vendor should be able to provide large scale implementation references, have well documented scalability testing results, and be able to succinctly articulate how their solution achieves scalability.  They should be willing to let your technical team “under the hood” so they can understand the underlying architecture and how it responds as business volume increases.

Documentation

Documentation detailing the use of product features and configuration capabilities are a basic requirement for a complete packaged solution. Guides providing installation and use instructions that are well-documented and readily available with the product are critical for the adoption of the solution by your organization.

Product Vendor versus IT Services Provider

A recent trend in the marketplace is the acquisition of industry products by services companies in order to drive services revenue.  The challenge is that services companies lack the basic product management disciplines such as providing technical support, packaging and rolling out software upgrades, supporting new releases of platform software (OS, DB, Web server), and generally having discipline around product strategy.  In addition, they are not incented to provide rich out-of-the-box functionality; rather they want to create solutions that drive services revenue by providing good core capabilities but requiring a carrier to pay for services to “customize” the solution to their needs.

Experience

Last, and perhaps most important, is the vendor’s relevant experience implementing their solution for similar carriers.  They should be able to provide both case studies and references for customers that are of a similar size and with similar product lines.  In addition, it is important to look at their list of customers that have the solution live and in production today to verify what they are telling you about their ability to successfully deliver their solution.  Just because they have sold to a lot of carriers does not mean they have a track record of success on the delivery side.

The Bottom Line

Following these criteria can result in creating long term partnerships and strategic engagements, the output of which can be the best business-product evolution in the industry. When insurers connect their business with a product and vendor well-equipped to meet today’s challenges and provide a platform for future growth, the best is sure to follow.

Tuesday Feb 10, 2015

Transform Your Enterprise through Core Systems Consolidation

The life insurance industry is facing decreasing revenues. Written premiums have been flat or even decreasing since 2012, and coupled with interest rates that have been falling, we are now at historic lows – making it harder for life carriers to grow the business. As regulations, industry, competitors, and consumer needs change, life insurance and annuity carriers must continue to adapt their product portfolios and introduce new products faster to market to gain competitive advantage and sustain growth.

Dave Shively, Oracle's Senior Director of Life and Annuity Policy Administration, discusses how insurers can approach consolidation of core systems:

Unfortunately for many carriers, their aging, legacy policy administration systems prevent or inhibit rapid changes to products or processes. Many carriers are struggling with policy administration systems that are over 30 years old. These aging systems impede carriers from capitalizing on growth opportunities or reacting to competitive pressures. These systems also require significant maintenance, thus reducing profits. However, insurers can overcome these challenges by consolidating distributed and aging policy administration systems into a modern, flexible system that can improve business agility.

There are many benefits that carriers can gain by replacing their old systems with a modern system such as Oracle Insurance Policy Administration for Life and Annuity. Our customers have achieved benefits such as faster time-to-market for new products, enhanced customer service, increased flexibility on product configuration, improved management and distribution by taking advantage of a modern system that is scalable and high-performance to support growth in the business.

In fact, one large multi-national carrier with tens of millions of active policies in several business units is currently implementing Oracle Insurance Policy Administration. They do business in more than 15 countries and wanted to standardize their solution into one modern policy administration system. The challenge facing the company was the urgent need for new modern systems to replace multiple aging policy admin platforms across the group. The carrier recognized that none of these legacy platforms met the requirements necessary to fulfill the strategy put forward, and they decided to standardize using the Oracle Insurance Policy Administration solution.

To learn more about how this company is achieving transformational results from policy modernization and is overcoming challenges by consolidating distributed policy administration systems, we invite you to watch the recent webcast hosted by LOMA and sponsored by Oracle.

Join Us for Oracle Industry Connect in Washington, DC, March 25-26, 2015

The impact of digital disruption is being felt in the financial services industry. Join us for open and provocative discussions during Oracle Industry Connect, an exclusive event taking place March 25–26, 2015 in Washington DC. The Financial Services and Insurance program brings together top business and IT executives from leading financial institutions including insurers, healthcare payers, and banks. Join your industry peers for in-depth conversations on trends, challenges and opportunities facing insurers today.

Don’t forget to keep up with Oracle Insurance year-round via social media.

Wednesday Nov 05, 2014

Live Webcast with LOMA: Time to Transform: Business Realities Demand Newer Core Systems

Facing ever-changing market demands, life insurance and annuity carriers must continue to adapt their product portfolios—and business processes—as regulations, industry, competitors, and consumer needs change. Unfortunately for many carriers, their aging, legacy policy administration systems prevent or inhibit rapid changes to products or processes. However, insurers can overcome these challenges by consolidating distributed policy administration systems.

Join Oracle and LOMA for this webcast on November 11, 2014 at 2:00pm Eastern / 11:00am Pacific. We will discuss the advantages that one integrated Policy Administration platform offers for the Life, Annuity, Wealth, Group, Worksite, and Health Insurance market, and how it can improve growth opportunities for the future. We also present case studies on how carriers larger and small, domestic and international, have increased business agility and reduced costs and are achieving transformational results from policy modernization.

  • November 11, 2014
  • 2:00pm Eastern / 11:00am Pacific
  • Register Now

For more information on Oracle Insurance Policy Administration for Life and Annuity and how Oracle’s solutions can be used to support your business, visit oracle.com/insurance.

Friday Sep 26, 2014

Utilizing a Centralized Calculation Repository for Increased Business Agility in Life and Annuity Insurance

There have been different strategies adopted to contend with the many challenges facing life and annuity insurers today, from tactical product and service offerings through more strategic programs involving significant front and back office developments to support them. The use of a centralized robust calculation capability can be a key element in the life and annuity product supply chain.

David Punter, Global Product Specialist at Oracle, discusses the topic in today’s post:

I’ve been looking at market trends recently, around Insurance specifically, around Life and Annuity even more specifically. There is growth and there is contraction, it all depends on where you look, what cannot be denied is that it is sometimes a disappointing experience. But beyond that last bit, I see a realization amongst insurance carriers that in order to do more than survive in this capricious market, some significant investment in revitalizing their infrastructure is in order.

This is not the now classic tinkering around the edges with a spot of workflow here, a code conversion there or some productized patch from another insurer’s system to deal with enrolment from somewhere else. There seems to be something more to it this time. The image below outlines some statistics to substantiate this view.

[Read More]

Monday Feb 10, 2014

Finding Peace of Mind in the Midst of Rapidly Changing Dynamics in Life and Annuity

There’s no doubt that the Life and Annuity industry has had its fair share of challenges over the years with new regulatory requirements as well as stiffer competition from within and outside of the insurance industry, but there are signs of life as carriers tackle more strategic planning and attempt to deliver more innovative products.

Dave Shively, Oracle's Senior Director of Life & Annuity Policy Administration, discusses the topic below:

Even with new signs of life, there still remains the age-old challenge of getting new products to market quickly and managing those products across multiple systems. So why don’t insurers just bite the bullet and tackle the monumental task of replacing their legacy systems to support growth? I believe that sometimes what’s needed isn’t a complete overhaul, but a simple solution to a big problem. Here’s a prime example of the problem: the calculation of product pricing duplicated across multiple systems including New Business, Illustrations, Underwriting, Actuarial and Commissions. If a carrier wants to modify the pricing for the product they need to make changes across all of these applications.

And as if the IT challenges weren’t enough, the overall industry is still experiencing high expectations around growth rates as well as the need for improved profitability, customer service and competitive differentiation.

Here at Oracle, we love solving pressing challenges which is why we created the new Oracle Insurance Calculation Engine for Life and Annuity. The purpose-built software provides Life and Annuity carriers with a single engine on which to standardize their rules and calculations – without a complete policy administration transformation.

Oracle Insurance Calculation Engine for Life and Annuity enables carriers to gain a competitive advantage and accelerate time to market with a single environment for managing, maintaining and reusing complex calculation algorithms.  The highly configurable solution allows carriers to centralize their calculation algorithms on a single rules-based platform for use across lines of business by enabling the setup, copying, modifying and maintaining of calculations through configuration without additional costly and time-consuming code development.  The platform also enables users to test and debug their calculations without having to create complex test scenarios in legacy environments. 

So for insurers who aren’t ready for a total policy administration transformation, Oracle Insurance Calculation Engine for Life and Annuity offers peace of mind that a small step can alleviate a major challenge. 

About

Oracle's flexible solutions can help insurers navigate the change necessary to meet today’s challenges and have the business agility to be prepared for the future.

For mor information, visit oracle.com/insurance.

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