Model Insurer 2012
Exchanging Ideas on Effective Use of Technology
January 26, 2012
Twitter: #celentiandi
BOSTON, MA
FINANCIAL SERVICES
© 2011 OLIVER WYMAN
Model Insurer Concept
January 26, 2012
Karen Monks
Analyst, Celent Insurance Group
BOSTON, MA
FINANCIAL SERVICES
© 2011 OLIVER WYMAN
What Is a Model Insurer?
• What would it look like for an insurer to do everything right with today’s technology?
• Key best practices in the use of technology across a broad range of areas
© 2011 CELENT, A DIVISION OF OLIVER WYMAN, INC.
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What Is a Model Insurer Component?
• Components that make up a theoretical model of an insurer’s IT systems and practices
• No single practice makes an implementation successful
• Model Insurer Components are those that generally represent the way things should be
done
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What Makes a Model Insurer Component?
IT
Best
Practices
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Measurable
Business
Results
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IT Best Practices
• Use of industry standards
• Optimization of infrastructure
• Positioning for future reuse
• Automation, STP, and system integration
• Data transparency and compliance
• Improved use of channels
• Risk management through proper development, testing, and project management
• Solicitation of end user feedback
and review
• Use of metrics
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Measurable Business Results
• Higher productivity, lower staff expenses
• Increased revenue or market share
• Faster cycle times and more consistent processes
• Better decisions, more accurate pricing, reduced losses
• Decreased time to market
• More efficient document/content management
• Green organization
• Improved agent/customer satisfaction
and adoption
• Compliance and reduction of market conduct
penalties
© 2011 CELENT, A DIVISION OF OLIVER WYMAN, INC.
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Common Themes
• Emphasis on innovation
– Mobile
– Cloud services
– Unique product design
– Telematics
• Continued focus on SOA/Web Services across partners and ACORD standards
– Insurers want to build lasting, integrated solutions
• Interesting digitalization projects
– Using technology to make greener and more automated process flows
© 2011 CELENT, A DIVISION OF OLIVER WYMAN, INC.
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Nomination and Selection Process
Celent Model Insurer 2012 Awared
by Sector
(Total awards = 24)
• Invitation and self-nomination forms were sent
to insurers and vendors across the globe
Life and Health
27%
• Nomination forms were reviewed by Celent
insurance analysts to identify the cases that
demonstrated effective use of technology and
industry best practices
• Insurers were interviewed to provide additional
information if necessary
• Celent analysts drafted cases, which were
approved by the insurers for accuracy and
confidentiality
Property and
Casualty
73%
Celent Model Insurer 2012 Awards
by Country
(Total Awards = 24)
United
Kingdom
13%
Netherlands
4%
Japan
8%
Singapore
4%
© 2011 CELENT, A DIVISION OF OLIVER WYMAN, INC.
India
13%
USA
58%
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Client Disclosure
• There were no fees charged to insurers or vendors for nomination or recognition
• Some of the nominating vendors, and many of the selected insurers, are or have been
Celent clients
• Celent was not directly involved in the creation or deployment of any of the initiatives that
have been recognized
• No preference was given to clients in the selection process
© 2011 CELENT, A DIVISION OF OLIVER WYMAN, INC.
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Functional Areas
• Agent Portal
• Claims
• Distribution
• Enterprise Systems
• Infrastructure/architecture
• IT Management
• Policy Administration
• Product Design/Definition
• Risk Management
• Service
• Underwriting
© 2011 CELENT, A DIVISION OF OLIVER WYMAN, INC.
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Model Insurer of the Year
• Best practices in IT Management
• Measurable business results
• Large scale project implemented on time and on budget
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Celent Model Insurer Components: Case Studies
of Effective Technology Use in Insurance
Introduction of Honored Initiatives and
Presentation of Awards
Celent
BOSTON, MA
FINANCIAL SERVICES
© 2011 OLIVER WYMAN
Section 1
Agent Portal
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Torus Insurance
Delivering a modern portal to Excess & Casualty brokers
• Excess & Casualty Portal Entry (ESCAPE) built leveraging Accenture Duck Creek’s policy
administration system and Microsoft .NET server, Ajax and chat functionality from LivePerson
• ESCAPE’s features include
– A quick-quote capability that lets producers provide a preliminary price to their clients rapidly,
avoiding the full underwriting process
– Live chat with underwriters, enabled through a co-browsing capability whereby underwriters can
share the broker’s screen in real time
– The ability to display multiple limit options that spare brokers the need to reenter information multiple
times for different limits
– Immediate policy issuance upon the binding of risk, including the ability to download a PDF of the
quote, binder and invoice
• The benefits realized by Torus include:
– 87% of quotes require no referral to underwriting
– Expansion of Excess & Casualty business without adding U/W or operations staff
– Input time for brokers decreased from 10-12 minutes to 4 minutes
– Quote, bind, invoice time decreased from 30 days to immediate for 87% of quotes
© 2011 CELENT, A DIVISION OF OLIVER WYMAN, INC.
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CNA
Real time quoting portal that adapts to any agency’s workflow
• CNA partnered with SeaPass Solutions
– Leveraged ACORD XML technology
– Built a solution that enables agents to create an ACORD XML quote and issuance request
– Integrates with CNA’s systems regardless of the agency technology or workflows being used
• Real Time Quoting (RTQ) integrates agency management systems with CNA’s proprietary portal,
CNACentral.com, and CNA’s proprietary rating system and policy administration systems
• RTQ can rate in 30 seconds or less for business owner policy, worker’s compensation and commercial
automobile insurance
• Effective training program implemented across all independent agencies.
– Marketing program “Ready.Set. Quote!” included interactive and educational videos and demos.
• As a result of the new portal
– Quotes are up 85% year over year
– Premiums from these quotes are up 60%
• The solution helped C N A make it easier and more profitable for agents to write business
© 2011 CELENT, A DIVISION OF OLIVER WYMAN, INC.
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Section 2
Claims
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Courtesy Insurance Company
Transforming claims through new systems and reengineered processes
• Courtesy Insurance Company (CIC) underwrites finance and insurance products offered in the
automotive industry.
– Guaranteed Asset Protection (GAP) is an automobile dealer obligor product offered on new and used
vehicles
• Working with Innovation Group, CIC implemented a J2EE web based claims management system
known as GAP Smart.
– Integrated with banks, leasing companies, and the insurer’s billing, contracts, and document
management systems.
– And with FileNet for imaging, indexing, and records retention making the notification and data
gathering phase paperless
– Serves as one central system to both internal and external users
• Before applying the technology CIC significantly re-engineered their claims process
• Significant results include
– Productivity increased by 50%
– Number of people processing claims dropped by 50%
– Allowed for growth and expansion in market
– Reduced fraud and claims leakage
– Accuracy improved to almost 100%
© 2011 CELENT, A DIVISION OF OLIVER WYMAN, INC.
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Universal Insurance Group
The first digitalization of claims in the Caribbean
• Universal Insurance Group (UIG) is the top writer of personal lines in Puerto Rico and controls over
47% of the island’s personal automobile insurance market.
– Universal Insurance Group processes more than 77,000 claims annually, 90% are partial loss claims
• Paper and labor intensive process was holding UIG’s customer satisfaction rating hostage and stifling
growth
• Over three years UIG changed the way claims were managed
– Addressed both paper file management and its disparate information systems
• Now manages claims electronically through OnBase, their ECM solution, and their claims application
– Utilize16 workflows from the time a claim is received throughout its lifecycle to create digital records
and automatically assign claims to employees for processing
– Integrates with PAS and email systems for online image generation
• Key success was involvement of implementation team which included staff from all areas and levels
• Benefits include:
– Customer satisfaction rates of 97%, a significant increase
– 45% of partial loss automobile claims settled and paid in one day
– Time to process automobile repair shop claims decreased 60%
– Checks now available immediately
• A claims submission website plus apps for mobile phones and tablets has made Universal the
preferred automobile insurer for independent agents
© 2011 CELENT, A DIVISION OF OLIVER WYMAN, INC.
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Section 3
Distribution
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The Co-operative Insurance
Expanding into a strategically important distribution channel
• The Co-operative Insurance offers a variety of general insurance products and is part of The Cooperative Group, UK's largest consumer co-operative
• In 2009, at risk competitively as the household insurance aggregator channel rapidly grew
• Implemented SSP ‘s InsureJ, an agile component based SOA solution
– New direct web site and call center interfaces integrated with existing IT infrastructure
• Adopted SSP’s Enhance and Evolve approach to legacy modernization in lieu of a complete
replacement
• The solution met the insurers needs which included:
– Allow for an interface with a wider range of aggregator sites and provide a contemporary user
experience
– Improve quote volumes and conversion rates
– Scale to support additional products in the future
– Contain costs by using functionality within the existing policy administration system, while ensuring
that the business was on a strategic path to replace this legacy system in the future.
• Results
– Doubled its aggregator relationships and doubled number of quotes presented to aggregators
– Reduced quote times by 50% and online direct sales up 20%
– On target to achieve 300% increase in quote and new business volume over the previous year
– Improved conversion rates
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Erie Insurance
Streamlining the marketing, selling and processing of life insurance
• Erie Insurance is a multi-line insurance company which sells its life insurance products through a
network of independent agents in 11 states and DC.
• Desired a straight through process solution to streamline the marketing, selling and processing of life
insurance
• Launched iPipeline’s iGo e-App in 2011 integrated with Erie Family Life’s underwriting and policy
administration systems (administered by Dell)
– ACORD data standards used in integration
– Cloud based solution replaced post application data entry into the U/W system
- App is accessible through single sign on into Erie website
- Includes front end data validation to ensure accuracy
- Used with eSignature and eSubmission
- Provides agent complete visibility into new business process
• Large grass roots effort to ensure agent adoption
– Over 40% apps submitted via eApp in first 3 months
– Adoption rate surpassed 3 year goal within first year
– NIGO apps down 20% and application processing costs down 20%
– Time to issue decreased 10% for In Good Order apps
© 2011 CELENT, A DIVISION OF OLIVER WYMAN, INC.
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Section 4
Infrastructure/Architecture
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AEGON Nederland N.V.
Preparing for Solvency II by automating input to internal model calculations
• AEGON is a global provider of life insurance, pensions and asset management products
• Anticipating Solvency II (January 2014) embarked on data improvement project to develop a data
warehouse that could provide all the necessary input for Solvency II required calculations
• Chose to build homegrown solution
– Informatica data integration platform
– Oracle database
– HCL’s technical consultation
• Recently implemented data warehouse for life lines of business
– Integration of three PAS and 25 other different sources
– Reduced 5 weeks of manual data gathering and calculations to 24 hours, all automated with
traceability for audits
• Key success was data integration architecture
– Publication layer for data works as a foundation for future data-on-demand platforms
– Created an enterprise standard operating procedure for AEGON for all future data projects including
comprehensive data definitions and a business glossary for implementation that defined data
sources, storage, and final usage in internal calculation model
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DirectAsia.com
Changing the way insurance is sold in Singapore
• DirectAsia.com, launched in June 2010, is a secure, customer friendly 24/7 website for
obtaining quotes, purchasing policies, and managing accounts. It is supported by a fully
integrated office and call center
• Website was built from ground up
– Prep work included claims experts from Australia and Hong Kong, process experts from
Europe, actuarial help from Singapore and Europe, and IT experts from all over
– Used I D I Technologies Software suite, a J2EE SOA application with an integrated
contact center management layer, call center telephony APIs, a workflow engine, and
multi-channel communication enablers for SMS, web, mobile, email, etc.
– Includes end to end PAS, claims and billing software integration with web portal via web
services
– Document management repository
– Hosted environment
• Since debut in 2010, over 700K visitors to website, 500K quotes, 21K in force customers,
positive customer feedback, especially on customer service and claims service.
– In brief history, went from 0% to 4% market share for private car insurance in Singapore
© 2011 CELENT, A DIVISION OF OLIVER WYMAN, INC.
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Section 5
IT Management
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Nationwide Insurance
Proactive monitoring of online and other IT applications
• IT Event Management Team’s objective is to monitor the end-to-end health and availability of business
critical applications, alerting IT support personnel of system failures before user impact
• 15% of system failures in 2010 were “user detected”
– Monitoring tools in place at the time did not detect the IT system failure prior to user detection
– Failures accounted for almost half of the total unavailable minutes of applications in 2010
– Blind spots occurred in quoting, billing and policy binding functions and failures in those three areas
proved difficult to identify
• Watch actual web user sessions to detect error messages that appear on users’ screens in real time
– Leveraged Tealeaf to record actual web user clicks and interactions
– IT team defined specific error conditions for Tealeaf to detect and integrated Tealeaf with
Nationwide’s enterprise IT ticketing system; alerts team to high priority incidents across multiple
business solution areas
• Also leveraged HP Diagnostics to enable proactive monitoring within the “MQ” messaging layers
– Allows communication between legacy mainframe based systems and newer distributed systems
– Displays mainframe data as well as distributed MQ information, allowing a single proactive view of
mainframe and distributed system health metrics
• Significant results
– Within first few days detected a key Level 0 risk of outage
– Exceeded goals by preventing outages and/or limiting their negative impact 31 times in 2011
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HDFC Standard Life Insurance Company
Offering enterprise wide learning through the internet
• HDFC Standard Life Insurance HDFC Life from India has over 70,000 Financial Consultants who sell
its products
• Major problems with HDFD’s goals of expanded branch network and manpower resources
• GOAL (Go Online and Learn) Learning Management System offered in all 1200 locations
– GOAL leverages SumTotal LMS and enables HDFC Life to offer training and learning initiatives and
programs on the Internet / Intranet
– Integrated with HDFC Life’s SAP HR system and LifeAsia, its policy administration system
• Key elements
– Use of ADDIE (Analyze, Design, Develop, Implement, Evaluate) - standardization
– Expansion of IT infrastructure at all locations
– Records every learning activity (classroom, online or field or blended)
– Alignment to business goals = training matches strategic plans
– All new hires are trained within one week of employment and progress is tracked
– Compliance with regulatory requirements for training
• Significant results
– Available at all 1,200 locations
– Online training hours recorded in the first 16 months equaled 65,525
– Equates to $1.3 million in savings
© 2011 CELENT, A DIVISION OF OLIVER WYMAN, INC.
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Section 6
Policy Administration
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Mitsui Sumitomo Insurance Co., Ltd.
Coping with a nationwide disaster in the cloud
• Mitsui Sumitomo Insurance (MSI) is one of Japan's largest non-life insurance companies and sells
insurance policies through a network of 530 sales offices and 40,000 independent agencies.
• After the East Japan earthquake in March 2011, MSI was required to quickly settle claims and
terminate policies on lost property
• To successfully achieve this goal, MSI required a quick information sharing solution that could be
accessed from anywhere at anytime.
– MSI decided a cloud based Platform as a Service (PaaS) would meet their time constraints and allow
them to effectively manage earthquake affected policies
– MSI chose Microsoft Windows Azure and implemented it in one month and at low cost.
• Project management included a team including product department managers, IT SMEs, and call
center managers.
– Agile development – conducted daily sprints alternating between discussions and development.
– Focused on the minimum and mandatory business requirements and kept the system as simple as
possible.
• Specific data fields from over 20,000 policies were uploaded onto cloud platform
• System will be in use for eight months.
- No interface built between the MSI master policy administration systems, so there is no need to
export data from the cloud back into the master files
- Files will be exported to a log, data deleted and contract terminated
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Philadelphia Insurance Companies
Coordinating the replacement and integration of multiple vendors systems to achieve
enterprise operational efficiencies
• Philadelphia Insurance Companies (PHLY) designs, markets, and underwrites commercial
property/casualty and professional liability insurance products for select industries
• Existing systems were not flexible enough to improve operational efficiencies , increase capabilities for
policy creation and serving, and make it easier for agents to do business with the insurer
– Identified six major gaps from inability to access and service accounts from the web to Philadelphia’s
dependency on their vendors for changes to their systems
• Chose Sapiens RapidSure (SOA based, J2EE architected) solution
– Integrated with existing imaging, billing, claims
– Also implement CGI Ratabase and Document Science xPression
– All systems were decoupled to allow for real time processing
– ACORD messaging was the standard so a translation was necessary for older systems
• Results
– Project completed in six months
– First product rolled out in 16 weeks
– Within 24 weeks, PHLY achieved complete system rollout of 5 products in 50 states including
conversion
– In past two years, rolled out six products, representing 4 lines of business, averaging 4 months per
product
– Agents and insureds have web access for selling and servicing
– PHLY now has complete configuration control and capability over product or system changes
© 2011 CELENT, A DIVISION OF OLIVER WYMAN, INC.
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PURE (Privilege Underwriters Reciprocal Exchange)
Using configured work flow processes to meet customers’ unique needs
• PURE is a policyholder owned company focused on meeting the unique and often individual needs of
successful individuals and families
• Canvassed policyholders regarding policy and billing delivery preferences
– Wide range of preferences meant one-off processes were necessary
• How they did it
– Developed and implemented a workflow automation process into their existing OneShield Dragon
policy administration system that allows agents and members to define their preferences and service
them according to their preferences.
– Worked with agents and members to fully understand electronic delivery and, as a result,
– Delivered a e-delivery solution that has been adopted by more than 45% of its new business
• Benefits
– Increased ease of doing business along with higher standard of service
– Began writing in 17 new states without adding additional resources dedicated to policy and billing
delivery
– Eliminated more than 50,000 printed pages related to policy issuance
– Reduced costs from $23.00 per policy to about $0.25 per member, with an average of two policies
per member
© 2011 CELENT, A DIVISION OF OLIVER WYMAN, INC.
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Section 7
Product Design/ Definition
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Canal Insurance Company
Leveraging technology to open up new markets
• Canal has historically developed unique insurance programs that rely upon products developed and
customized by the Canal product development and actuarial staff.
– The typical product development cycle ranged from 6 to 12 months.
• Business opportunity presented to Canal in 2011 highlighted inability to design products quickly
– Requirement: have product to market within six weeks for quoting renewals
• Canal chose to pursue opportunity
– Implemented ISO Rating Service, AQS Designer Access, and AQS Quote Access
– Integrated with Canal’s iQuotes portal and backend systems
– All were developed and are maintained in a Microsoft .NET environment and use SQL server
• Results
– Able to put new products in production in 46 states in 6 weeks
– Decreased product implementation time by 75%
– Decreased product implementation costs by 85%
– Increased premium volume by 10% in 8 months with new book of business
• Represented large cultural shift from technical and business perspective
– Change from niche product insurance company to less customized
– Reevaluating and expanding market position
– New opportunity arose in late 2011 – able to meet requirements with less than 75 hours of IT
resources
© 2011 CELENT, A DIVISION OF OLIVER WYMAN, INC.
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The Hartford
Changing the business model of how life insurance is sold and bought
• In 2010, The Hartford sought to change the way life insurance is bought and sold
• Issue First changes the order of the life insurance application process
– Eligible clients get immediate coverage in about five days
– Agents get immediate closure of the sale
• How does it work?
– Uses iPipeline’s iGo eApp with eSignature and full integration will illustration and producer web portal
(ACORD based web services)
– Does not eliminate underwriting or put a low cap on the face value of the policy
– Asks as few as eight questions to determine eligibility
– Coverage offered at predetermined ratings (standard is recommended)
– Wait for underwriting to confirm the final rate
– If rating and price is higher, policyholder can choose to pay more or cancel and get a full refund
• Results of 2010 pilot and 2011 launch
– Closed 383 Issue First cases with total premium $2.4 million
– Placement rate of 95% compared with 65% for non Issue First applications
– After underwriting, 90% of eligible cases received a rating that matched or exceed the initial rate
given
– Agent feedback is positive and a growing number of independent agents want to work with The
Hartford because of Issue First
© 2011 CELENT, A DIVISION OF OLIVER WYMAN, INC.
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Tokio Marine & Nichido Fire Insurance Company
“One-Time Insurance” products that can be bought anytime and anywhere
• In April 2010, Tokio Marine & Nichido and Japanese telecom company NTT docomo teamed up to
lauch a series of insurance products called “One Time Insurance”
• “One Time Insurance” products
– Short term; designed to cover potential risks from sporadic and short term events
– Purchased any time and any where from smart phones
– Premiums start around $4
– Designed to cultivate an untapped market and attract a new customer segment
• Technology involved
– Consumer’s mobile phone platform identifies user by phone serial number
– Using PIN code, basic information is retrieved from NTT docomo’s database
– GPS identifies location
– Context aware computing technology provides insurance product recommendations based on current
location and past activity of mobile phone user
• Results
– Introduced golf, travel, and sports/leisure insurance first
– Since introduction, medical insurance with a health promotion program
– One Day Auto Insurance for those who don’t own a car and need to drive a borrowed car
– Opened a new delivery channel that does not conflict with existing agency channels
© 2011 CELENT, A DIVISION OF OLIVER WYMAN, INC.
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Section 8
Service
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Great American Insurance Company
Mobile application delivery to a niche market
• GAI embarked on delivery of mobile applications to the Trucking and Equine industries in 2010
• Took six months and $25,000 to implement applications because of foundation work at insurer
– Previously deployed modern internally developed and best of breed solutions based on SOA
principles to support submissions, underwriting, policy, claims, and electronic document
management
– Positioned GAI to deliver custom mobile application front ends targeted at agents and consumer
• Mobile apps interface with back end systems
– Code base of all involved systems are not customized
• IT and business areas worked in tandem to define system requirements and functionality
• Mobile application functionality includes
– Payment and claims capabilities
– Policy views
– Mapping technology for locating services
– Intuitive data entry on multiple phone platforms
• Results
– In first six months, over 300 active equine policy accounts using apps/220 paid bills through app
– 15,000 trucking apps downloaded
– Gives GAIG ability to compete with larger insurers in the market
– Appears first in Google search for Equine Insurance
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Prudential Group Insurance
Using BPM to create a single intuitive view of the customer
• In May 2010, Prudential launched “CustomerOne”, a major service initiative to improve the customer
experience, increase efficiency, and reduce costs. It had a three year life span.
• Project scope: all operational contact centers as well as select operating areas including claims, billing,
and medical underwriting
• End Goal: web services enablement of nine underlying group policy administration platforms to provide
real time case management and implement an intuitive user interface for customer service
representatives
• Prudential selected Pegasytems BPM to achieve results
– Integrates 9 legacy systems and 5 IVRs
– Corporate security systems
– Web portals
– Monitoring tools
• Project governance team had “by the people, for the people” mentality
• Results
– Five contact centers consolidated into one and customer service staffing reduced by 14%
– With 50% of CSRs trained on system CSR utilization increasing and climbing towards goal of 80%
– Call volumes up 16% without drop in service levels
– Consistent single view of the customer
– Consistent process – any associate can service any product
© 2011 CELENT, A DIVISION OF OLIVER WYMAN, INC.
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Zurich
Using telematics to improve fleet operations and risk
• Zurich is one of the largest automobile fleet insurers in the world
• Zurich Fleet Intelligence developed in 2010
– User friendly, onboard, driver focused telematics technology
– Combines telematics with extensive reporting tools to turn raw data into insight
– Helps improve driver safety, reduce fleet operating costs, optimize journey planning, and improve
fuel economy
• Zurich contracts with vehicle telematics application providers
– Once equipment in place, data collected on vehicle and driver behavior
– Fleet operator accesses data via web portal
– Zurich developed data hub to collect data
– Gathered data is used for targeted training and coaching
• Results
– Launched in UK, USA, Canada and Australia
– In UK, 15 fleet operators participate
– Immediate ROI achieved by participant
– 15% fuel savings
– Collisions and minor incidents down 13%
– Damage reductions down by 40% for fleet owned vehicles and 30% for third party vehicles
© 2011 CELENT, A DIVISION OF OLIVER WYMAN, INC.
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Section 9
Underwriting
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American Safety Insurance
Integrating all underwriting units under a common system
• American Safety offers specialty insurance to underserved markets
• Added a unified underwriting, rating and policy administration platform accessible by brokers
– Integrated four of ASI’s least automated underwriting units into one single underwriting and PAS
– Also integrated downstream applications like billing, content management, reinsurance, data
warehouse, and claims
• Accenture’s Duck Creek Policy Administration System was the backbone
– Included at least three other vendor systems and several internal systems
– Syntel was the implementation partner
• Some significant benefits
– Improved underwriting due to consolidated, accurate data and consistent rating methodology
– Eliminated manual and redundant process steps
– Consolidated business requirements
– Common workflows for 60% of process
– For first two products, automated 90% of process (versus 18% with old method)
– STP of automated quoting increased from 15% to 70%
– Reduces IT maintenance and support costs by $400K annually
– Reduced implementation for new LOBs by two-thirds
© 2011 CELENT, A DIVISION OF OLIVER WYMAN, INC.
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QBE European Operations
Leveraging a geographic risk assessment tool to manage portfolio exposures
• QBE Insurance Group is Australia’s largest general insurance and reinsurance group.
• QBE UK developed an inhouse underwriting and actuarial tool called RAPTOR (Risk Acceptance
Pricing Tool for Optimum Rate)
• Integrated Mapflow, a geographic risk assessment tool which geo locates business property addresses
then tags the associated risk from flooding, subsidence, and commercial burglary
– Also provides indication of accumulation of QBE policy locations so that QBE can manage portfolio
exposure
• Benefits gained
– Real time accumulation of issued during underwriting
– Assessment of geographic risk
– Improved accuracy of pricing
– QBE UK has saved 1% on reinsurance spend in 2010 (equated to a six figure saving)
– Avoided potential loss for the Cumbrian Flood in 2010
– Additional profit achieved as a result of more accurate pricing
© 2011 CELENT, A DIVISION OF OLIVER WYMAN, INC.
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Section 10
Risk Management
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AIG - Chartis
Leveraging a geographic risk assessment tool to manage portfolio exposures
• With pressure on operating expenses, increasing regulation, a competitive marketplace and cost of
paying out claims, Chartis needed insurance from a growing risk environment
• Business analytics would be the answer
• Strategic Risk Analysis (SRA) team creates automated solutions to target challenges in underwriting,
risk management, and accounting
– Targeted three areas: executive liability, catastrophe planning, and financial accounting
• Executive Liability
– Statistical analysis of loss drivers
– Identified fewer than 3% of all companies were responsible for majority of claims
– Focused on profitable segments
- 100% growth in segment and $14 million in new business
– $75 million in claims were prevented by active management of poorest performing segment
• Catastrophic (CAT) risk
– CAT model built using SAS Business Analytics
– Evaluates 2 million commercial policies
– Outcome is daily marginal contribution to risk on each policy, particularly new business
– 15% reduction in CAT probable maximum loss (PML) = lower reinsurance premium expense
• Identified $22 billion in unreconciled claim payments for a deferred tax credit of $10 million
© 2011 CELENT, A DIVISION OF OLIVER WYMAN, INC.
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Section 11
Enterprise Systems
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L&T General Insurance Company
Realizing organization wide results in short time frame
• L&T General Insurance Company, part of Larsen & Turbo, Inc., began operations in 2010
• TILT (Technology Innovation at L&T Insurance) was implemented in October 2010
– Enterprise wide, single integrated technology platform – end to end solution for full life cycle of
general insurance products
– Includes general accounting system, reporting, and provides for business continuity planning
• Core philosophy of design and technology is ‘openness & flexibility’
– SOA and J2EE
– Vendor software from IDIT, Oracle, SAP, FileNet, and IBM
– Includes mobile applications and cloud based micro insurance services for micro and rural insurance
• Key quantitative metrics delivered by TILT include
– Redefined motor policy insurance eliminating manual cover notes - can issue policy in 20 minutes
– Enabled L&T to launch 28 products within 8 months across all lines of business
– Improved speed to market by at least 18 months as compared to legacy systems
– Enterprise productivity improved 15% because integrated system requires less manual intervention
than legacy system
– Distribution reach expanded to included rural market – on the spot policy issuance for low cost, high
volume policies
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Section 12
Model Insurer of the Year
© 2011 CELENT, A DIVISION OF OLIVER WYMAN, INC.
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Nationwide Insurance
• Consolidated two $1 billion commercial businesses
• Iterative, cooperative development approach between IT and business
• Comprehensive implementation roadmap
• Conversion of IT department from maintenance shop to delivery factory
• On time/on budget delivery
• Overcame post-merger business and IT challenges
• Market expansion – new states and new distribution channels
© 2011 CELENT, A DIVISION OF OLIVER WYMAN, INC.
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Photos and Lunch
January 26, 2012
Celent
Boston, MA
FINANCIAL SERVICES
© 2011 OLIVER WYMAN