By Anthony Kumnick, OARBIC Software Inc.
Allowing consumers, brokers and internal resources connection to P&C systems via a common process has long been an issue for Insurance companies. The advent of newer technologies and the emergence of web and internet strategies mean that insurers can take advantage of extended distribution opportunities offered by the internet. It is however, vitally important to look at the bigger picture and examine how these technologies could really assist in initiatives to position insurers for the future and not just cater to immediate needs.
Insurance focused publications have recently been highlighting the fact that the days of large implementation projects are gone and that companies must now internally look for and require their vendors to provide a fast return on investment. Greg MacSweeny of Insurance Technology Magazine in his article entitled �The Perennial Legacy Systems Question: Restore or Rebuild?� discusses the conundrum facing insurance companies relating to their outdated inflexible policy management systems. In this article Greg outlines a number of reasons why it is impractical to replace policy management systems wholesale with web based applications.
While some companies have no choice but to replace; one of the solutions available to CTO�s for a lower risk and more immediate return of investment is the implementation of an Internet Strategy that utilizes both web-based applications and the current systems in use. This option for risk adverse insurance organizations means a replacement can be achieved with a well architected Web Portal solution that has the potential to help both �Rip and Replace� and �Enhancement� strategies.
However, early internet solution implementation projects have focused on the more obvious immediate benefits of exposing policy management functionality through the internet which may be overshadowing the true potential of a portal strategy. Are we as an industry overlooking the strategic long term benefits when entering into this kind of development?
Creating an interactive internet presence to lessen administration overhead for brokers and the underwriting departments alike, and to extend the distribution capabilities of an insurance company�s policy management system has been the number one priority of a number of insurance companies.
But have insurers also being considering web portal solutions as a significant piece of the strategic move towards technological change and the continual update and maintenance of policy management systems? Web portals, if designed and developed correctly can offer much more:
- Extend legacy system capabilities through newer technologies
- Enhance overall functionality
- Facilitate policy conversions.
- Aid in implementing new underlying Policy Management system
- Help to consolidate systems.
Web portals provide a powerful distribution channel to brokers, internal staff or even directly to the consumer. The needs of the market differ now from when the legacy application was built – market requirements, products and users have moved forward yet the technology they are using remains the same. The pressures of new requirements mean that legacy applications are no longer operating within their original design criteria. Some applications cannot possibly support the new requirements expected of them. New technologies can however provide new enhanced functionality and extending the capabilities of a legacy application with new functions.
To get true benefit from a web portal application and to ensure that you are positioned for the future, insurers cannot just use simple scripting to solve one-off issues; a robust frame work needs to be considered. A web portal solution built using technologies such as Javas� J2EE or Microsoft�s� .Net will best position companies to integrate additional future and existing functionality more effectively. Fronting aging policy management systems with an intelligent portal solution develops a path to provide a basis for growth.
Applying business changes to existing legacy systems has in the past proved to be an expensive and time consuming undertaking. Implementing technological solutions that allow these changes to be applied on the front end of the application that has a solid structure makes sense in terms of cost of implementation, ease of on going maintenance and changing business requirements. Consideration for the existing business rules and edits should be taken into account as the overhead may be increased if the same processing has to be maintained on the front end and the back end.
Companies who operate with batch based policy management systems can see substantial benefits as a portal can act as a real-time kiosk allowing edits and data cleansing to be carried out immediately. Depending on the implementation the policy may even be able to be issued and bound prior to the data being communicated to the back end system.
Implementing a web portal framework can enable insurers to capitalize on the development of Web Services as they evolve. In the future we can expect to see interfaces to broker management systems for immediate synchronization, links to a host of value add services such as MVR, Vehicle validation, claims reporting to the IBC for Fraud purposes and address and postal code validation even third party rating all provided through web services. The potential to enhance the functionality currently available to brokers and all types of external and internal users lies with the introduction of strategic internet solutions taking advantage of technology currently available and tried and tested in other markets.
Mergers, acquisitions and new partnerships present technology issues related to the management of policy information. The consolidation of books of business within newly acquired companies or the introduction of new policy management application presents potential challenges for technical departments.
Currently we have a few choices in the methods that are used for policy conversion: The �big bang� conversion, a process to convert all policies at a single point in time, the conversion of each policy either manually or automatically at renewal or a manual re-keying over an extended period. All have their advantages and disadvantages and there is no one method that will suit all companies and all circumstances, and some require a combination of a number of methods.
An intelligent web portal can now provide another option that may be a more effective strategy for policy conversion. A web portal would in this scenario provide a bridge between the new and older policy management systems. The system would then convert the policy from the older to the new upon next endorsement, this is completely transparent to a user and means that no new training on new applications is required; users are only exposed to one application even though they may be using multiples. The older systems could then be slowly decommissioned at a time convenient to the company.
If these multiple backend systems are operating perfectly in their in their own right it may make sense not to fix something that isn�t broken. However, the insurance company may still wish to allow external access to the system. A web portal can provide a common gateway to these systems allowing users to access multiple backend systems through a common front end, again removing the necessity for a user to be trained on multiple applications.
Insurance companies by nature are risk adverse, and implementing new policy management systems has always been high in the risk scale. Properly architected web portals in addition to allowing conversion to new back end policy management systems can also assist companies in the implementation of these systems. By allowing the web portal to front both new and existing systems the implementation may take place in stages. For instance, if the new management application is a component based system, the company could choose as part of a phased implementation to introduce as an example the rating service initially. The web portal could then collect the information calling the new rating service perhaps utilizing a Web Service and then present the information back in the existing system allowing the company to conduct a staged implementation to a new policy system without affecting the end user.
Its not only insurance companies that need to think about their portal strategies. Policy management system vendors producing their own web front ends for their own systems also need to considered the bigger picture as just outlined.
One of the major decisions insurance companies will be faced with when undertaking a Web Portal project: to build in house or engage a software vendor. Important points that need to be taken into consideration in either option: Knowledge of back end systems and the type of resource required for such an undertaking.
There is no silver bullet for Web Portal integration. Although several companies may have the same system, the way that those systems have evolved may be dramatically different from company to company. Therefore each of these systems must be assessed on a case by case basis. Just because a vendor has implemented a web strategy for one company, the same vendor, strategy or tool may not be the best for company Y, even though it has the same policy management system.
Technologies exist which have been used to create truly strategic web portal solutions. Individuals and/or vendors who know both the insurance industry and how to aptly apply these technologies are a pre-requisite to moving insurance systems in the right direction.
About OARBIC Software Inc.
OARBIC Software Inc. is a provider of J2EE insurance portal software offering full transactional capabilities to enable insurance companies to enhance and extend existing legacy applications. OARBIC resources have been successful in implementing, developing and maintaining policy management systems for insurance companies around the world. In addition, OARBIC has assisted companies such as Royal and SunAlliance Canada and AXA Insurance Canada to successfully design and deploy internet portals allowing brokers to access real-time transactions connecting to backend policy management systems. To contact the author, Anthony Kumnick, Product Manager, you can email [email protected] or call (416) 362-4743.