Accenture Insurance
Are you getting the most
value from your policy
Most Property & Casualty (P&C) insurers now view
replacing or modernizing their policy administration
system as a strategic priority for driving growth. This
renewed interest is warranted, as less than half (44
percent) of P&C insurers Accenture surveyed believe
their current policy systems help differentiate them
from the competition.
1Insurers that updated their
policy administration systems increased their speed to
market and data accessibility by 25 percent, according
to Novarica.
2Drawing on Accenture’s experience with multiple
carriers, we believe that insurers can get the most
out of their policy administration investments by
proactively following six key steps:
1.
Stay focused on the targeted business value.
2.
Choose where best to invest.
3.
Validate the business model.
4.
Rationalize products.
5.
Leave no policy data behind.
When replacing a policy administration system, it is easy for requirements, customizations and plans to grow unruly. In an attempt to gain consensus, it is not uncommon for project sponsors to request input from every part of the organization. This type of input can be risky. It typically results in a policy improvement program that is preoccupied with implementing technology or a new process, rather than achieving the targeted business value (cost efficiency, customer centricity, product flexibility, market agility and so forth). Accenture experience shows that when carriers establish a discipline for and embed value-based decision-making into their policy system design processes (using tools, processes, and frameworks such as Accenture’s Value Management), they can better:
• Confirm the value of the initial design. • Respond to changing demands and needs
throughout the life of the program. • Reduce the overall cost of the investment
while increasing the ROI and ensuring that key strategic goals are met.
• Reap near-term business outcomes. • Support future strategies, such as
mergers, acquisitions, service changes and new products.
For example, a leading US PC Insurer used value-driven decision-making as it deployed a new non-mainframe policy system. The company not only achieved its goal of faster product introductions and Web-oriented services, but is now also able to:
• Quickly develop new rate plans, incorporate rate changes and expand to new markets.
• Offer improved usability. • Easily integrate underwriting
rules and scoring.
• Build upon its new Web services technology infrastructure.
Stay focused on the
Choose where best to invest
With the business value clearly in mind, the next step is to determine where, and how, to invest in improving policy administration, to actually achieve the targeted value. Historically, delivering business value through policy administration improvements meant total replacement of a complex, customized solution. Today, there are more options available to carriers, depending on the business goal. We recommend that insurers first define value across key capability groups, and then identify solution options for the capabilities delivering the most value. Our experience shows the highest areas of value are found in the following capabilities:
Front-Office Capabilities
Back-Office Capabilities
• New sales tools to improve the agent/broker experience. • New access methods to improve
the customer experience through web and mobile channels.
• Better structure and use of customer information for target marketing and reduced data entry.
• Automated Underwriting. • Integrated quoting at the
point of sale.
• Tools that improve speed to market to create new products and offerings, or enter new markets. • Product factory concepts to improve
re-use of rates, rules and forms. • Better policy servicing
and administration. • Enhanced management
and operational reporting. • Improved analytics to boost
product and channel performance.
Where to invest?
To help insurers evaluate where and how to invest in
improving policy administration, Accenture draws on
common frameworks:
Insurance Capability Blueprint
helps to define and
prioritize an insurer’s key capabilities, depending on its
market profile and producer channel. By identifying
the support required for key processes and creating a
common vocabulary for business and IT, the blueprint
jump-starts the design of a new target operating model
and reduces delivery time.
Insurance Process Reference Models
drill down into
each of the major insurance company capabilities to
reveal the key requirements for high performance in
core functions. It helps illustrate the overall business
process architecture for insurers, assesses the strategic
impact of the proposed operating model and lowers
operating costs by up to 30 percent.
Insurance Scales of Mastery
features more than 100
Validate the business model
Rationalize products
As part of holistic policy administration improvement, insurers should challenge the go-forward validity of their business model rather than just replicate old ways onto a new system. Does the existing business model still work? What innovative process, product or organizational change, such as providing customers with self-service capabilities, will new policy technology support and how do they align with business goals? How can this improve the customer experience? Does the current model take full advantage of the capabilities or processes of the new software package? Answering such strategic questions requires a focus on the targeted business value. For example, a business goal to create and drive more self-service might prompt an insurer to create new roles that
provide live online chat assistance or web support. Customer self-service portals may become part of front-end sales and service processes. And, existing call centers might be fitted with electronic communication platforms that support and integrate with Web-based communications (such as video conferencing) and customer self-service portals.
Insurers need to critically assess all policy capabilities in terms of cost efficiency and business capability, to define the target business model and processes that will yield the greatest long term return. Ignoring this step will significantly impact a carrier’s ability to achieve the full benefit of any policy system replacement or upgrade.
In addition to a plethora of systems, carriers also have a wide range of similar products with little market distinction. This collection of products requires significant operational and back-office costs to maintain and keep compliant, often with minimal competitive advantage.
New policy systems have advanced product configuration capabilities that allow products to be developed quickly. But, just because the capability exists, does not mean that the right solution is to duplicate all of a carrier’s existing products into the new system. By taking the time to rationalize products and to build a more stringent product development discipline going forward; carriers can not reduce the implementation time and costs; but can
create a sustainable operational cost reduction in terms of maintenance and compliance. Product rationalization can also help free up capital and regulatory costs by consolidating writing companies as product catalogues are rationalized. Our work implementing Product Factories and new policy systems confirm that taking the time to significantly streamline products yield compelling benefits: • Reduced cost and implementation time. • Faster speed to market of new products.
• Better ability to automate straight-through processing and use more sophisticated pricing models.
Leave no policy data behind
Carriers have traditionally shunned the cost, and risk, of converting old policies from legacy to new policy systems. Thus, many insurers maintain both old and new systems, which increase the cost and complexity of their environments and creates challenges for historical reporting. Yet, managing the conversion does not need to be as expensive or risky as many carriers assume.
Based on our experience conducting more than 80 conversions and migrating more than 60 million policies and accounts through the Accenture Insurance Data Migration Factory, we recommend that carriers convert and transfer all customer and policy data to their new system as
part of a customer-focused data strategy. Doing so helps guard against incomplete, inaccurate, duplicate or missing data. It also better positions the carrier to leverage policy data for more complete, advanced analytics—leading to higher service levels and more accurate actuarial analysis and reserving capabilities. Data migration specialists can help assess and define the most appropriate data migration journey, minimize disruption to service levels and accelerate deployment of higher quality data. Without this step, carriers are simply adding to their back-office cost structures instead of realizing the operational simplicity and efficiency that a new policy replacement should provide.
Manage the change
with precision
Managing the transition for customers, distribution channels, employees and partners onto the new system and operating model is the last step in capturing the full ROI from a policy administration investment. This step requires sharp focus and critical project discipline, similar to those used for testing or data management. It means a dedicated team of change professionals as part of—not separate from—the overall program to address people, processes and data concerns.
Four elements are essential to a successful change program:
• Involve senior leadership to drive and lead the change, and be responsible for ensuring the achievement of the business benefits.
• Involve and guide customers, brokers, employees and vendors through the transition with clear messages on business goals, benefits and outcomes. • Orchestrate ongoing process
improvement through a large number of small, distinct initiatives with specific business benefits that also help to better manage risk and outcomes. • Consistent measurement and
monitoring of business results,
“The benefits of the new solution have been
tremendous. In the excess and casualty marketplace,
the average time to quote, bind and invoice was weeks
or even months. With our solution, the time to quote is
now just four minutes compared to the other portals,
which take 10 to 12 minutes. Once quoted, more than
87 per cent of Torus’ quotes are bind-able, eliminating
the need for referrals to underwriting. In the first
year, premium predictions were surpassed by 180 per
cent and the system paid for itself, including software,
hardware and services. This is a remarkable success.”
Justin Manley,
Get more with Accenture
Policy improvements are significant investments for any carrier. Executed intelligently, with the right leadership, dedication and experienced technology partner, the effort can yield significant benefits and be a source of ongoing strategic advantage. Insurers that follow the six key steps discussed above, as part of a holistic approach to change, will be better positioned to drive a greater ROI. Accenture can help. Our approach to modernizing policy administration combines our industry knowledge with market-leading technology software to help carriers enhance their business and underlying cost structures, respond rapidly to changes in customers’ needs and, where necessary, innovate. For example, the Accenture Duck Creek Policy Administration software addresses the constraints of legacy systems and enables flexibility in managing products across multiple business lines, including personal, commercial and specialty. With more than 40 carriers using the platform and another 40 using specific components, Accenture Duck Creek supports hundreds of products, thousands of users and millions of policies each day. This, in turn, allows insurers to provide better customer service and overall business results.
When one P&C carrier expanded its product line by offering multiple-tier homeowners insurance, it used Accenture Duck Creek products to create rules for claims history evaluation and tier determination—getting more from its investment dollars. The insurer can now develop rates in about one-tenth of the time it would have taken using previous coding methods. The insurer also draws on the new solution to deploy self-service insurance portals to customers and agents.
Eight of the top 10 global P&C/general insurers have worked with Accenture to begin or advance their journey to high performance. Among the benefits our clients gain is:
• Superior service, driven by relevant and personal customer interactions. • Lower product/policy processing costs (up to 25 to 40 percent). • Increased speed to market (up to 50 percent). • Faster business cycle times (up to 30 percent). • Smart pricing that improves financial predictability. • Rationalization of legacy product sets. • A superior level of automation in policy submission/endorsements/renewals (over 90 percent overall).
Accenture helps enable greater certainty of outcomes by selling on the basis of quantified, predictable business value and by sharing risk with our clients. Accenture can deliver:
• Flexible, transparent deal structures. • Deep insurance industry knowledge. • Strong and integrated consulting,
systems integration and business process outsourcing (BPO) services, as needed.
About the Author
Gino DiGregorio is a managing director
in Accenture’s Insurance practice, helping clients reinvent their business and
operating models through transformational change programs. He also leads Accenture’s Property and Casualty Insurance Policy Services in North America.
gino.b.digregorio@accenture.com Michael F. Reilly is a managing director
in Accenture’s Insurance practice. He has helped leading insurance companies to transform operations and organizations around the world, including the US, Canada, Demark and Sweden.
michael.f.reilly@accenture.com
References
1 Accenture Product, Policy and Billing Survey, 2010
2 U.S. P&C Policy Administration Systems Projects: Averages and Metrics, April 2012, Novarica.
About Accenture
Accenture is a global management consulting, technology services and outsourcing company, with approximately 259,000 people serving clients in more than 120 countries. Combining unparalleled experience, comprehensive capabilities across all industries and business functions, and extensive research on the world’s most successful companies, Accenture collaborates with clients to help them become high-performance businesses and governments. The company generated net revenues of US$27.9 billion for the fiscal year ended Aug. 31, 2012. Its home page is www.accenture.com.
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