Thursday Oct 16, 2014

Market Value Adjusted Annuities

Changes in market conditions are leading carriers to make changes to their product offerings. “A lot of annuity carriers already have MVAs, but those that don’t are busy adding them to their products right now,” says Danny Fisher, president of the Fisher Agency, a Dallas brokerage general agency. The carriers are persisting on securing MVA approvals largely because of concerns about the interest rate environment, Fisher says. Today’s fixed annuities are paying very low interest rates, he explains.

MVA Annuities on the Rise

Let’s take a look at what’s happening in the MVA annuities market. Last year, while MVA annuity sales were up 88 percent over second quarter compared to fixed-rate non-MVA products were up 71 percent, income annuities were up nearly 19 percent, and indexed annuities were up 10 percent, according to Beacon’s third quarter report.  Similarly, when compared with third quarter performance of the previous year, MVA annuities in third quarter 2013 were up by staggering 131 percent, while fixed-rate non-MVA gains were less than half, about 61 percent.

$2.5 billion worth MVA sales in third quarter were up from $1.3 billion in second quarter. That growth says a lot about the current direction of the MVA segment: Sales are chasing rates. With this level of growth, carriers will need tools to help them manage this business in an efficient way.

Selecting the Right Core Admin Solution to help with MVA Annuity Management

Generally,  MVA annuity is treated as a fund that tracks the prevailing rate. Some products use calculated values stored in fields on the policy in lieu of a fund. A good life insurance policy administration system that maintains MVA annuity products should be:

  • Configurable to allow each carrier's version of MVA
  • Calculations should be customizable based on their product's profile
  • Be able to carry out a series of calculations using the results of each prior calculation, so as to arrive at the finalized; Cash Surrender Value after the MVA factor and then MVA has been calculated per set formulae.
  • Capable to quickly apply any changes/modifications to the formulae.

With the consistent growth in sales of Market Value Adjusted annuities, inevitable indications with various surveys have lead to suggest that Market Value Adjusted annuity products can boost growth in business for carriers of any size. Oracle Insurance Policy Administration provides a highly configurable and flexible platform that enables the carriers to quickly build and sell various custom products including Market Value Adjusted annuities with record speed-to-market times leveraging the highly customizable calculation capabilities and pre-built templates.

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

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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]

Tuesday Aug 12, 2014

Accelerating Speed to Market with Product Templates

To drive competitive advantage, life insurance and annuity carriers must continuously innovate within their product portfolio to move new products to market rapidly and efficiently. However, traditional lengthy product lifecycle management processes are still slowing the time required to launch new products to the market. Around 70% of small and mid-sized insurance businesses are still using manual or partially automated methods, taking several months to launch new products. This drives up development costs, delays ROI and leads to the loss of potential new business.

What if you could accelerate development and launch products to market in days rather than

By extending each predefined product template (also called a chassis), insurers can quickly define custom products, create user-defined transactions, and add new business processes and regulatory requirements at the product, product line, and company levels.

Use of templates can help reduce time by providing a vision of what is possible within the policy administration system. Also, it provides a starting point of common best practices that can be adapted to business - so the carriers do not have to start from scratch, allowing them to better align business processes to get the most value out of new IT investments.

Product Templates:

Templates are documented, predefined set of product definitions built out to demonstrate a particular way to address policy life-cycle processing. The template specifications include the definition of the underlying features, transactions, calculations, tables and business processes. This will help carriers to get a jump start of the product life cycle for implementation of traditional and non-traditional life products, increasing the ability to help reduce the time and cost to launch new products.

Key components to look forward from a

  • Wide variety of products need to be available as part of Templates
  • Pre-Configured (Reusable) calculations to support standard regulatory calculations
  • Pre-Configured (Reusable) set of standard life cycle events/transactions
  • Clear documentation for Product specifications and implementation design
  • Utilities to easily copy these templates to new plan/product

This template-based approach gives insurance carriers several benefits

  • Faster product life cycles with enhanced speed to market
  • New sources of ROI, delivered faster.
  • Efficient product management cycle.
  • Increased productivity with reduction in efforts for product-development stage.
  • Build better relations with distribution partners due to greater flexibility and market responsiveness.

Oracle Insurance Policy Administration (OIPA) Template Library

Template Plan Name Availability
NBU Term Life GA
Level Premium term GA
Indexed Universal Life GA
Group Disability GA
Group Term Life GA
Whole Life Will be available soon
Life Bonus Variable Annuity Will be available soon
Term Life ROP Will be available soon

*GA – General Availability

For more information on Oracle Insurance Policy Administration for Life and Annuity, visit oracle.com/insurance.

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Friday Feb 28, 2014

Consolidating Legacy Systems on a Single Platform. Learn more at Oracle Industry Connect.

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

Carriers are faced with a growing portfolio of legacy core applications segmented by business line and tied together through a complex network of systems interfaces running on a multitude of platforms.  This is leading to high costs for infrastructure, operations, maintenance, support, and build activities.  It also forces carriers to either employ a large workforce with very diverse skill sets or rely on third party service providers.  The need to support ever changing business requirements and to enable the business to enter new markets and launch new products continues but adding additional IT cost and complexity is not an option.

A number of carriers have found a way to address their short term need to support new products while at the same time beginning a journey to rationalizing their core system portfolio.  That solution is the Oracle Insurance Policy Administration (OIPA) platform.  Those who have been in the life insurance policy space for some time are probably familiar with the OIPA solution and its ability to support any type of individual life or annuity product regardless of complexity and the fact that new products or changes to existing products can be made in a matter of hours with OIPA.  What is new is the fact that Oracle has enhanced this solution to support Group lines of business.  Now a carrier can not only accelerate their time to market, they can also consolidate any type of business on to one modern platform.  For the first time, carriers can actually simplify their systems portfolio with the implementation of a new policy application rather than adding to an already complex web of interconnected legacy headache.

Does this sound too good to be true?  Don’t take my word for it; listen to the carriers that are in the process of taking this revolutionary step towards process and technological efficiency by watching our recent webcast or joining us in person at Oracle Industry Connect.

Oracle Industry Connect is a premier conference designed to promote innovation and transformation through open and provocative discussion within the Financial Services and Insurance communities. The event will take place March 25-26, 2014 in Boston and features sessions where you can talk to the leaders from the carriers who are embracing this innovation. Hear from the carriers themselves about how the OIPA platform is streamlining their business and technology operations. You’ll also have a unique opportunity to join your industry peers for in-depth discussions on trends, challenges and opportunities facing insurers today.

If you are unable to attend Oracle Industry Connect, we encourage you to download and watch our recent webcast on Consolidating Individual and Group Business on a Single Platform. In the webcast, you can hear from industry analyst Chad Hersh about why carriers are finally starting to address their core systems issues as well as Olivier Lafontaine from Equisoft about how they are helping Jamaica-based carrier NCB realize the potential of this transformational technology. 

Don’t forget to keep up with Oracle Insurance year-round:

Thursday Jul 25, 2013

Upcoming Webcast: Transform Business Operations: BPS = Efficiency and Innovation

Transform Business Operations – buzz words in the insurance industry for sure.  But how can a carrier really accomplish this transformation?  How should you rethink the business you’re in and develop new ways to sustain a profitable, competitive advantage? How and where does BPS fit in this equation?

Cognizant and Oracle have a long and tested partnership with Cognizant utilizing Oracle Insurance Policy Administration for Life and Annuities processing that supports several of their clients and a broad spectrum of services for product rollout and versioning, policy administration integration, upgrade, and testing.  Join us on August 15, 2013, as Oracle and Cognizant industry experts team up for a joint webcast to share how these two companies have improved performance and productivity through end-to-end business processing. Topics to be discussed include:  

  • How an integrated BPM solution helps achieve business process automation
  • Lowering operational and conversion costs while enabling growth, product innovation and speed to market
  • Improving the customer experience and processing efficiencies through best in class technology platforms and service delivery
  • Consolidating multiple LOBs, increase workflow efficiency and boost workflow productivity and operational adeptness
  • Service oriented architecture providing enhanced capabilities for real-time business processing

Thursday, August 15, 2013
2:00 pm ET / 11:00 am PT
Register Today

Listen to the Related Podcast: Cognizant also recently discussed how their Business Process Services can help transform a carrier’s business operations through process modernization, automation, and providing the platform for carriers to become agile.  To deliver these Business Process Services, Cognizant often uses the core of the platform powered by best in class policy administration system, thereby leveraging their partnership with Oracle.  Download and listen to the podcast “Delivering Business Process Services.”

Related Resources

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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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