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IASA 87TH ANNUAL EDUCATIONAL CONFERENCE & BUSINESS SHOW
Maximize Greenfield Project Value: Leveraging People, Core Systems and Analytics
Session #571
IASA 87TH ANNUAL EDUCATIONAL CONFERENCE & BUSINESS SHOW
Karlyn Carnahan Research Director – Celent’s Insurance
Karlyn is a Research Director in Celent’s insurance practice.
She is a widely recognized expert in the industry who has
been extensively published in a broad range of industry
media and general business media. She has presented at
numerous industry events including ACORD, IASA, ACE,
and PCIAA.
Karlyn’s consulting experience includes numerous systems selection projects
across policy admin, billing, claims, loss control, CRM, and other core systems.
She has also completed multiple IT organizational assessments, primary market
research of insurance agents for carriers, marketing and product roadmap
strategies for multiple software vendors and other strategic projects for carriers.
She holds an MBA from Stanford Business School and a Certified Property
Casualty Underwriter (CPCU) designation.
Karlyn can be reached at [email protected]
IASA 87TH ANNUAL EDUCATIONAL CONFERENCE & BUSINESS SHOW
Doug Cretsinger Sr. VP of Business Transformation & CIO – GuideOne
Doug is the Senior Vice President of Business Transformation
and CIO at GuideOne Insurance. Doug oversees the enterprise
project management office (EPMO), process improvement and
lean operation efforts, as well as strategic and operational
planning.
He graduated from Drake University with a BS in Business
Administration and an MBA degree. He joined GuideOne in
2012 but worked for the company previously from 1982 to 2000
and held various positions, including Assistant Vice President of
IT, Director of Marketing and Training, and Regional Claims
Manager.
Doug holds a Project Management Professional (PMP) certification from the
Project Management Institute and is certified in Strategy and Portfolio
Management from Stanford University.
Doug can be reached at [email protected]
IASA 87TH ANNUAL EDUCATIONAL CONFERENCE & BUSINESS SHOW
Jasmeet Gill Principal – Deloitte Consulting LLP
Jasmeet is a senior leader within Deloitte’s global insurance
practice, based out of Chicago. He is recognized for driving global,
complex, high-impact, technology-enabled, strategic initiatives at
some of the largest insurance organizations in the world. His area
of focus is around core insurance systems, specifically around
claims transformation, policy administration transformation, billing
transformation, and analytics. He has extensive international
experience, having served his insurance clients around the globe in
the Americas, Europe and Asia-Pacific.
Jasmeet has a proven track record of successfully partnering with business and IT to
deliver end-to-end technology advisory to implementation services. He has deep
experience with business alignment, business value, technology investment decisions,
business process design, technology planning, and technology development and
support.
Jasmeet can be reached at [email protected]
IASA 87TH ANNUAL EDUCATIONAL CONFERENCE & BUSINESS SHOW
Ben Moreland Senior Business Architect – Innovation Group
Benjamin Moreland is a Senior Business Architect at Innovation
Group. He has over 15 years of experience in the insurance
industry and 30 years of experience in IT.
Prior to joining Innovation Group, he worked for Celent, an
insurance analyst firm, focusing on Data Mastery, BPM, Portal,
rules, SOA and policy administration solutions. While at Celent,
he wrote a vendor spectrum report on data mastery in Insurance
and jointly authored two Big Data reports.
Before working at Celent, he was Director of Enterprise Architecture, responsible for
all the data, SOA, BPM, rules and portal architects The Hartford Insurance Group.
Ben’s primary responsibility is to help drive business value into the Insurer Suite
solution and assist customers to better understand the business value of Insurer
Analytics.
Ben can be reached at [email protected]
IASA 87TH ANNUAL EDUCATIONAL CONFERENCE & BUSINESS SHOW
Maximize Greenfield Project Value: Leveraging People, Core Systems and Analytics
Session #571
IASA 87TH ANNUAL EDUCATIONAL CONFERENCE & BUSINESS SHOW
About Celent
Global business and IT strategy research
• Digital and Omni-Channel
• Innovation and Emerging Technologies
• Legacy and Ecosystem Transformation
• Data Mastery and Analytics
• Operational Excellence
Ongoing advisory services
Vertically-oriented consulting
Staffed by industry experts - 13 FTEs devoted to insurance
with additional coverage by analysts in other practice areas
A division of Oliver Wyman - global financial services
consultancy with 1,400 consultants, offices in 40 countries
9 9 © CELENT
The Business Environment Continues to be Challenging
High levels of competition
Expenses continue to rise
Customer expectations rising
Margins squeezed
Low interest rates
Low growth
Weak loyalty
IASA 87TH ANNUAL EDUCATIONAL CONFERENCE & BUSINESS SHOW
A Demand For Growth Is Fueling IT Plans And Budgets In 2015
• Growth continues to be
the number one issue
driving IT investments
followed by efficiencies
• It’s more important that
carriers do it “better” than
“cheap”
• Increasingly regulatory
requirements are also
driving investments
• Diversification made the
charts with over 20%
saying this is a significant
reason to invest
0% 20% 40% 60% 80% 100%
Innovation
Diversification
Competitive Parity
Cost Reduction
Regulatory Reqs
Efficiency
Growth
Impact on IT Plans for 2015 (n=39)
Significant Moderate Small None
IASA 87TH ANNUAL EDUCATIONAL CONFERENCE & BUSINESS SHOW
How do I
grow the book?
How do I
reduce
expenses?
There Are Only Four Ways to Drive Growth
Manage the Product
• New products
• Cross sell additional products
• Align pricing to risk quality and
gain more margin
• Build capacity to process more
There Are Only Four Ways to Drive Growth
Manage the Product
• New products
• Cross sell additional products
• Align pricing to risk quality and
gain more margin
• Build capacity to process more
Manage the Channel
• New agents
• New territories
• Manage agents better
• New channels
There Are Only Four Ways to Drive Growth
Manage the Product
• New products
• Cross sell additional products
• Align pricing to risk quality and
gain more margin
• Build capacity to process more
Manage the Channel
• New agents
• New territories
• Manage agents better
• New channels
Manage the Brand
• Strengthen the brand
• Improve competitive
positioning
There Are Only Four Ways to Drive Growth
Manage the Product
• New products
• Cross sell additional products
• Align pricing to risk quality and
gain more margin
• Build capacity to process more
Manage the Channel
• New agents
• New territories
• Manage agents better
• New channels
Manage the Brand
• Strengthen the brand
• Improve competitive
positioning
Acquisition
• Acquire a book of business
• Acquire a company
IASA 87TH ANNUAL EDUCATIONAL CONFERENCE & BUSINESS SHOW
While Carriers Are Focusing On A Number Of
These Growth Initiatives, It Isn’t Easy To
Actually Deploy.
Increasingly carriers have challenges launching new
products quickly, entering new territories, attracting new
markets and adding new channels.
Why?
• Complexities of older legacy systems mean long launch times
• In the middle of an existing core system replacement and don’t want
to divert efforts
• Hesitancy to invest in large scale system changes when it’s not clear
how successful the initiative will be. Easier to take a temporary step
that can be canceled if necessary.
• Adding additional work to start something new to already overloaded
staff often means the new initiative gets short shrift.
• Sometimes, it’s just plain easier to start new - Greenfield
IASA 87TH ANNUAL EDUCATIONAL CONFERENCE & BUSINESS SHOW
What Do We Mean When We Say “Greenfield”?
Any of the below
• Launching a new product/line of business
• Entering a new territory
• Deploying a new channel
• Entering new markets
Essentially - starting fresh
IASA 87TH ANNUAL EDUCATIONAL CONFERENCE & BUSINESS SHOW
There Are A Variety Of Ways Carriers Start Fresh
A variety of techniques
• Create a start up unit within the carrier.
• Pull staff off existing projects to focus on the new initiative
• Utilize out of the box fully integrated insurance company in a box –
often in the cloud
• Take advantage of an already planned core system replacement by
starting with a new product, new state, or new market
IASA 87TH ANNUAL EDUCATIONAL CONFERENCE & BUSINESS SHOW
Carriers Have To Balance The Risk Factors And Plan For A Variety Of Challenges.
Can create significant challenges.
• Redeploying staff from existing business to a zero revenue producing new
opportunity (at least day one)
• Lots of parts have to come together - not just the technology but the
distribution channel, branding, and regulatory issues.
• Risky - a large investment may yield suboptimal results
• Lack of information can keep a carrier moving down the wrong path
• Lack of agility can make it hard to change plans if assumptions are wrong
• There may be a lack of knowledge in the organization of the new product, line
of business or market
It can fail
• May need to plan in advance for a quick exit
• Think through brand implications in the event….
IASA 87TH ANNUAL EDUCATIONAL CONFERENCE & BUSINESS SHOW
There Are Some Critical Success Factors To
Reduce The Risk And Give A Carrier A Better
Chance Of Succeeding
Success factors include:
• Fast deployment
• Ease of exit
• Clear metrics to monitor progress
• Flexibility and agility to rapidly modify products, processes, business
rules and prices
• Ability to gain insights and respond quickly
• Rely on the expertise of partners where possible
IASA 87TH ANNUAL EDUCATIONAL CONFERENCE & BUSINESS SHOW
Business Transformation Case Study – GuideOne Insurance
A $650M DWP P&C Niche Carrier
“Insuring the people and organizations in the ministry,
non-profit, education and care communities”
IASA 87TH ANNUAL EDUCATIONAL CONFERENCE & BUSINESS SHOW
GuideOne Transformation Journey
Go Live 2013 2014 2015
Claims Work Comp June AMD/Prop Feb
Casualty Mar
Enhancements
Personal Lines
Policy, Portal,
Billing, Analytics
1 State Auto Sept 9 state auto roll-out
Home and
Umbrella
Development
Commercial
Lines Policy
4 State Work
Comp Oct
CPP + Crime,
Inland Marine
Development
Key Strategy #1 – Reduce risk and maximize business value by implementing
single line of business first, conquer majority of integration issues, then roll out
remaining products and states in a fast follow
Key Strategy #2 – Greenfield for personal lines to grow business quickly
and put conversion on back end at renewal
IASA 87TH ANNUAL EDUCATIONAL CONFERENCE & BUSINESS SHOW
Commercial Business Case
Premium Lift Generates $21M
profit in 10 years
Today, church quote
turnaround is two weeks.
Tomorrow agents will be able
to quote approximately 50%
SAME DAY, in their office
without home office
intervention
Today, online quoting is
available only in 34 states and
church only. Tomorrow, ALL
states, ALL lines
Quote Today
IASA 87TH ANNUAL EDUCATIONAL CONFERENCE & BUSINESS SHOW
Commercial Business Case
Today agents must print all
documents, then scan and send
via email. Inefficient!
Today’s quotes, policies and
endorsements are extremely
outdated in look/feel.
Policies are produced in an
indexed PDF format making it
easy for policyholders, agents,
and adjusters to find the specific
section of the policy they are
looking for.
Quote Tomorrow
IASA 87TH ANNUAL EDUCATIONAL CONFERENCE & BUSINESS SHOW
Commercial Business Case
Business Division Savings From Process Improvement
Functional improvements from system are:
• straight through processing
• automated underwriting
• moving entry to agent office
• reduction of duplicate entry (4 systems to 1)
Results in:
• 100% touch to 50% touch on submissions
• Reduction of 25 FTEs and an avoidance of another 36 FTEs = a
$45M savings over 10 years
• $1.6M annual save ramping to $7M annually
IASA 87TH ANNUAL EDUCATIONAL CONFERENCE & BUSINESS SHOW
Commercial Business Case
Loss Ratio Improvement
Improved data analytic capabilities
will lower loss ratios, saving $30M in
10 years
Programming the underwriting rules
into the system provides increased
consistency in the application of the
rules = improved management of
our risks and loss ratios
Improved data mining enables
expanded use of predictive
modeling in new lines, improving
risk selection and pricing
Better reporting desired by A.M.
Best and our reinsurers
IASA 87TH ANNUAL EDUCATIONAL CONFERENCE & BUSINESS SHOW
Personal Lines Business Case
Organic and Acquisition Growth/Profit
Ability to provide new functionality to
capture affinity business and get a
piece of this $35 billion market
segment
Immediate issue, underwriting and
print – none of which is provided today
Flexible billing options asked for by
customers and offered by competitors,
not available today aiding customer
retention
Life Stages Product Suite – not
possible today
Billing today
Legacy transaction history is coded and does not provide any
additional details. Also, the Customer Service Team must manually
calculate the impact of an endorsement on the
Legacy system.
IASA 87TH ANNUAL EDUCATIONAL CONFERENCE & BUSINESS SHOW
Personal Lines Business Case
Profit Restoration on Current
Book as we move legacy
business to PL 2.0 >$6.5M
Improved product flexibility (e.g.
ACV coverage, restricted
coverage forms, reduced
premium leakage)
Speed to market (e.g. rapid rate
changes)
Underwriting rules are automated
Better matching of risk to price
Superior data analytics to track
profitability
Billing Tomorrow
The new system provides a simplified view of transaction
history.
IASA 87TH ANNUAL EDUCATIONAL CONFERENCE & BUSINESS SHOW
Personal Lines Business Case
Business Productivity
Automated processing
• Home: 100% touch to 10% touch
• Auto: 40% touch to 5% touch
20 FTE reduction saving >$8M
over 10 years
Training for CSRs – from 6 mos. to
a few days
Training for billing – from 4 mos. to
a week
The Legacy system requires 2
policies and multiple screens to accommodate 4+ vehicles in one household. This often results in 2 different effective dates and
duplicate fees.
5 vehicles? Problem!
IASA 87TH ANNUAL EDUCATIONAL CONFERENCE & BUSINESS SHOW
Personal Lines Business Case
Ease of Doing Business
Data Prefill (e.g. pulls registration
data)
Simplified data entry for agents
Accurate data entry on quotes
and amendments
Data verification in real time
1/3 of endorsements done online
by agents
Clear English descriptions of
transactions
5 vehicles? No Problem!
The Customer Service Team is able to view all of a
policyholder’s vehicles at once. This is a simple process
compared to Legacy.
IASA 87TH ANNUAL EDUCATIONAL CONFERENCE & BUSINESS SHOW
What do our agents think?
PL PAS video
Difference from agent perspective
IASA 87TH ANNUAL EDUCATIONAL CONFERENCE & BUSINESS SHOW
Realizing value from core systems transformation
Jasmeet Gill
Principal, Deloitte Consulting LLP
IASA 87TH ANNUAL EDUCATIONAL CONFERENCE & BUSINESS SHOW
Potential challenges with value realization in core systems transformation
Core systems transformations can offer tremendous value, but also
present several challenges to realizing business value
IASA 87TH ANNUAL EDUCATIONAL CONFERENCE & BUSINESS SHOW
Value realization blueprinting using a business case
A business case, when done effectively, can serve as a blueprint for
your core systems transformation delivery and value realization
Building a realistic business case 1
Working the business case into program delivery and
governance
2
Refining business case to enhance value realization 3
IASA 87TH ANNUAL EDUCATIONAL CONFERENCE & BUSINESS SHOW
Building a realistic business case: Stakeholder alignment
Building a realistic business case should begin with alignment between
key stakeholders on the business strategy and its enabling technology
Alignment between business strategy and enabling technology
Stakeholder alignment and sustained commitment
Core systems transformation is generally considered an investment for the future
Critical to have alignment between stakeholders on future business strategy and its
enabling technology
Equally critical is alignment between key business and IT stakeholders on the drivers
for and key capabilities desired from the core systems transformation
Given the typical complexity and risk from these transformations, stakeholder
commitment to the change is important throughout the transformation effort
IASA 87TH ANNUAL EDUCATIONAL CONFERENCE & BUSINESS SHOW
Building a realistic business case: Controllable business benefits
Benefits captured for a realistic business case should be based on
measures that can be operationally owned and controlled
% of Policies
Lapsed
% Inc.in
Annualized
premium
Shareholder Value
Revenue Growth
Combined
Ratio
Expectations Asset Efficiency Operating Margin
Volume
Improve Customer Interaction
Efficiency
% Change in
Billing
Call Volume
Avg. Handling Time / Call
(min)
Customer Satisfaction
Index
Retain & Grow Current
Customers
Less errors in
billing process
Straight-through Claims
processing
Customer Satisfaction
Index
# follow-ups
for premium
reminder
Acquisition and Maintenance Costs
IASA 87TH ANNUAL EDUCATIONAL CONFERENCE & BUSINESS SHOW
Building a realistic business case: Capturing costs
All internal and external resource, hardware and software costs should
be captured with due consideration to scope and the ‘cone of certainty’
Discovery
Requirements
Design
Cone of Estimation Certainty
50%
30%
10% Accuracy % of Estimates
Internal and external resource costs
Operational run costs for the new technology stack
Software licensing and maintenance costs, and infrastructure costs
Key cost components
IASA 87TH ANNUAL EDUCATIONAL CONFERENCE & BUSINESS SHOW
Working the business case into program delivery and governance
Once approved, the business case can be a mechanism to help guide
program delivery towards achieving benefits within cost parameters
Adherence to functional and technical guard rails
Making governance everyone’s responsibility
Managing program functional scope and promoting out-of-the-box conformance
Avoiding customization to help achieve easier upgradability
Providing a vision and framework through which the project team can self-govern
Recognition of the impact of decisions on business benefit realization and/or program
costs
IASA 87TH ANNUAL EDUCATIONAL CONFERENCE & BUSINESS SHOW
Refining business case to enhance value realization
The business case is considered a living document that can help guide
course corrections during program delivery to enhance value realization
Monitoring benefits over time and making course corrections
Refining business case during the program lifecycle
Value monitoring during program delivery can provide an early view into actual vs.
planned benefits realization
Course corrections can be made to help mitigate the impact of wrong assumptions
and to realize business objectives
Business case should be refined through a governance process as additional details
that can impact benefits and costs become known
IASA 87TH ANNUAL EDUCATIONAL CONFERENCE & BUSINESS SHOW
Questions & Answer
Session
IASA 87TH ANNUAL EDUCATIONAL CONFERENCE & BUSINESS SHOW
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