How software as a service isrevolutionizing automated newbusiness and underwriting systems
Life insurance and annuity carriers today face intensified pressures                                                      ...
The growing popularity ofautomated new businessand underwriting systemsAutomated systems for new business and underwriting...
Ratcheting up the value:New business and under-writing delivered on aSaaS modelSoftware solutions such as Accenture’s auto...
SaaS adoption: Slowbut sureAlthough the insurance industry has been somewhat slow toadopt a SaaS licensing or cloud-based ...
Choosing the right automated systemfor new business and underwritingInsurers weighing automated systems for new business a...
Conclusion: Findingthe right solution anddelivery modelOne of the important keys to success with automated systemsfor new ...
The Accenture Life Insurance              Why Accenture?                                   About the MarketScopePlatform w...
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Software as a service for life insurers

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Life insurance and annuity carriers today face intensified pressures
to reduce costs and improve efficiencies across the end-to-end
policy lifecycle in a way that can create market advantage. Driving
better performance in the area of new business and underwriting
is especially important. Reduced customer affordability is forcing
many carriers to offer lower face-value policies in the middle
market—underscoring the need to reduce the costs to put new
business in place. Speeding up the underwriting process is also
important, since the longer it takes to perform underwriting for
a new account, the greater the chance the application might be
withdrawn. The automated capabilities of a new business and
underwriting system are therefore increasingly attractive. Such
systems can enable insurers to more rapidly process new applications
and assess risk, while reducing the cost of issuing policies.

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Software as a service for life insurers

  1. 1. How software as a service isrevolutionizing automated newbusiness and underwriting systems
  2. 2. Life insurance and annuity carriers today face intensified pressures to reduce costs and improve efficiencies across the end-to-end policy lifecycle in a way that can create market advantage. Driving better performance in the area of new business and underwriting is especially important. Reduced customer affordability is forcing many carriers to offer lower face-value policies in the middle market—underscoring the need to reduce the costs to put new business in place. Speeding up the underwriting process is also important, since the longer it takes to perform underwriting for a new account, the greater the chance the application might be withdrawn. The automated capabilities of a new business and underwriting system are therefore increasingly attractive. Such systems can enable insurers to more rapidly process new applications and assess risk, while reducing the cost of issuing policies. Accenture believes that one of the most On-premise new business and underwriting important trends in the area of new systems will still be an important option business and underwriting systems is for many insurers. However, for smaller the growing use of a software as a service or mid-tier carriers, SaaS offerings can (SaaS) delivery model. Buying software provide robust capabilities in automated with a SaaS licensing option is attractive underwriting without the upfront cost to insurers that do not need a customized of systems and hardware. Larger carriers solution; companies can leverage pre-defined can also implement hybrid models with templates and pre-existing configurations on-premise solutions combined with SaaS based on best practices and the experience solutions for specific functionality. of the SaaS provider. A SaaS approach can also shorten implementation times and give firms ready access to IT maintenance and monitoring capabilities, eliminating the need to hire specialized skills.2 | How SaaS is revolutionizing automated new business and underwriting systems
  3. 3. The growing popularity ofautomated new businessand underwriting systemsAutomated systems for new business and underwriting deliverimportant benefits to insurers in terms of speed, accuracy, costreduction and improved service. And such systems are increasinglypopular. For example, Navy Mutual Aid Association, a non-profitmutual benefit organization for active-duty, reserve and retiredmembers of the U.S. sea services, has reaped significant valuefrom its automated system for new business and underwriting.Navy Mutual sought to replace its existing According to Tom Benton, Vice President of • Cost benefits. Automated systems cansystems with a modern system for new Technology and Systems for Navy Mutual, help insurers reduce per policy costs forbusiness, underwriting and policy adminis- “This systems replacement program is new business and underwriting over time.tration that would make it possible to: critical to support Navy Mutual’s growth Total cost of ownership for the software agenda, as the new platform will allow us can be significantly reduced because of• Improve service to members by bringing to more easily create products that meet the Web-based distribution methods. better products to market faster, supporting our members’ needs and bring these to Estimates of overall savings can be straight-through processing and improving market faster.” as high as 70 percent.1 A recent article access to information. published by Celent2 estimates that a• Maximize return on IT investment by Across the industry, automated systems are 10 percent improvement in instant issue avoiding the maintenance costs associated delivering impressive benefits, including: could result in operational savings that with legacy systems, minimizing reliance can pay for an automated system in a • Faster cycle times. The automated system few years. on scarce skills and ensuring compliance, audit functionality and documentation. facilitates rapid processing of new applications using real-time validations Automated systems will never do away• Optimize talent by improving employee as well as systematic ordering and receipt retention and reducing non-value-add entirely with the need for underwriters. of requirements and automated workflows, However, life insurers are successfully using activities. resulting in faster close rates. automated new business and underwritingAccenture helped Navy Mutual implement • Improved accuracy. The rules-based systems for simplified issue and non-the Accenture Life Insurance Platform. The decision engine of the automated system medical underwriting. This has meantplatform supports all of the insurer’s policy improves the accuracy of the new business that underwriters are able to focus theiradministration and new business functions and underwriting process. attention on more complex cases.and completely replaces its existing systems. • Better customer service. An effectiveAccenture is also helping it to securely automated system can increase efficiencymigrate all of its policies from its legacy and flexibility in the new business process,system to the new platform using Accenture’s providing higher-quality service toInsurance Data Migration Factory. The producers and customers. The Web-basednew platform will help to drive U.S. growth system also offers advanced usabilityfor Navy Mutual by reducing the time it features in the new business applicationtakes to create and launch new products process.and services. 3
  4. 4. Ratcheting up the value:New business and under-writing delivered on aSaaS modelSoftware solutions such as Accenture’s automated system fornew business and underwriting are expanding options to includea software as a service delivery model. Through a SaaS licensingand delivery option, the software capabilities are made availableas a service—using a Web browser to access the software in thecloud—with costs assessed on a usage basis. Companies do nothave to acquire hardware, nor deal with costly software upgradesand maintenance costs. They can all subscribe to a sharedinfrastructure as well as shared help desk services.The results can be impressive: Reduced costs and risks to sell new products. SaaS vendors can scale indefinitely to meet customer demand Cost savings are rooted in several capabilitiesFaster deployment and upgrades of the SaaS licensing and delivery model. and many also offer customization capabilities to meet specific needs. Additionally, theyThe SaaS option provides a rapid rollout of A cloud-based deployment option reduces provide application programming interfacesnew business and underwriting capabilities. redundancies and achieves economies of that let insurers integrate with existingLeveraging an existing infrastructure and scale in run and maintenance costs. Initial ERP systems or other business productivityout-of-the-box functionality provides carriers costs are also reduced because there are systems. Problems with standards are alsowith shorter and more cost-effective no license fees involved; SaaS applications lessened or eliminated because the SaaSimplementation projects. Because the are subscription based. Having the SaaS product is built on a service-orientedSaaS provider manages all updates and provider manage the IT infrastructure also architecture. This results in a plug-in/upgrades, there are no patches for customers results in lower IT costs for hardware, plug-out capability.to download or install. The SaaS provider software and the people needed to managealso manages availability, so there’s no need systems over time.for customers to add hardware, software or Higher employee productivitybandwidth as the user base grows. Greater scalability The SaaS system provides cross-channel (customer, broker, internal, etc.) access to As an insurer grows in terms of products, new business data entry processes. Employees markets and customers, a SaaS licensing can also get help faster through integrated product grows with it. The SaaS product help desk capabilities that are a part of the can also give an insurer important and even standard service. innovative out-of-the-box functionality4 | How SaaS is revolutionizing automated new business and underwriting systems
  5. 5. SaaS adoption: Slowbut sureAlthough the insurance industry has been somewhat slow toadopt a SaaS licensing or cloud-based deployment model forapplications and systems, evidence shows that such traditionalattitudes are undergoing a change. For example, Gartner recentlyconducted a survey of 1,022 IT respondents in several countries toassess the current rate of adoption of SaaS. The study found that35 percent of insurance respondents currently use some form of SaaS, and 20 percent plan to adopt it within the next 12 months.3Although the benefits of SaaS for smaller Barrierscarriers are readily obvious—faster What are the barriers to SaaS implementations,implementation of robust functionality especially in the area of new business andat lower cost—a recent article from “Best’s underwriting? Data security, not surprisingly,Review”4 notes that SaaS can also be is the concern most often cited, but thereattractive for large insurers, who can use are others as well. Ellen Carney, seniorit as an alternative way to move new products analyst at Forrester Research, believes thatto market faster. It can also enable large, an “institutional mindset” may be preventingglobal carriers to maintain functions 24/7 companies from considering SaaS for coreand in multiple languages. functions. There is a “craftsman mentality” among insurance IT professionals, CarneyNarragansett Bay Insurance Co. launched says; many CIOs wish to point to theira major technology modernization initiative success in creating their own customized,in 2010 and did not want to have to build on-premise systems. Even the low price ofan expensive technology infrastructure to SaaS may be a deterrent to adoption insupport the systems. “To meet our timelines,” some cases. Some insurers seem to believesays Michael Anselmo, CIO of Narragansett that a low-cost system may not haveBay, “we selected a combined cloud and the functionality they need, accordingSaaS model, and it’s been very successful. to Carney.5Our SaaS provider manages all upgrades,customization and configuration of upgrades.It’s our own hosted services for our owncore products, and it provides secure,redundant disaster recovery with limitedstaff resources.” 5
  6. 6. Choosing the right automated systemfor new business and underwritingInsurers weighing automated systems for new business and underwriting—whether delivered on-premises or through a SaaS licensing model—shouldlook for several distinctive characteristics of the most effective solutions.Automated, rules-based engine to support effective decision makingEffective systems leverage an automated rules-based decision engine that rapidly andconsistently analyzes underwriting risk and speeds the new business application process.A rules engine enables automated workflow processing and requirements tracking for eachstep of the policy lifecycle, from new business application through to issue of a policy.The rules engine enables insurers to better control underwriting processes and decisions,automatically assessing the risks associated with a case and adapting new business andunderwriting processes accordingly. Drawing on configurable underwriting guidelines andrules, the system responds to application data with highly reflexive questioning and makesa series of underwriting decisions—including whether to “instant issue,” request additionalinformation from third-party sources, or refer the case to an underwriter.Centralized case data managementA robust underwriting workbench in the automated system maintains all case data inone place—impairments, requirements, tasks, case notes, related applications, reinsuranceinformation, underwriting decision data and other essential case data. The workbenchalso provides a “single view of the truth”—that is, consolidated and consistent information—which supports better collaboration among agents, case managers and underwriters.Different parties can document, review, track and revise the financial and medical under-writing requirements for applications. The workbench automatically generates tasks totrack actions required on a case.Interfaces to third-partiesInterfaces to third-party vendors streamline and automate the underwriting process,improving the reliability and consistency of the underwriting process. A number of thecost benefits of the Web-based system can be lost if the system cannot effectively interfacewith medical and physician data providers. Platform neutrality, a service-orientedarchitecture (SOA) and the ability to pass and accept ACORD-standard and proprietaryXML standards facilitate smooth communication. The system needs to evaluate a customeras accurately as possible and to do that it needs streamlined and integrated data.6 | How SaaS is revolutionizing automated new business and underwriting systems
  7. 7. Conclusion: Findingthe right solution anddelivery modelOne of the important keys to success with automated systemsfor new business and underwriting—whether an on-premisesystem or one delivered with a SaaS licensing option—is findinga provider with both technical and industry experience. Forexample, it is critical for a SaaS provider to understand how itsapplications may force an insurer to adopt particular workflowsor standard processes that may not currently be in place at thefirm—and then to work with the insurer to improve and align itsprocesses accordingly.While some smaller carriers may well go with a 100-percentSaaS solution for some functions, other carriers (as seen in theNarragansett Bay adoption) are likely to embrace hybrid models,and that creates the need for an integrator that is adept at whatis increasingly being called “cloud integration services.” Tomorrow’sIT departments are generally going to be hybrids of legacy systems,public clouds and private clouds inside the firewall. This candramatically increase the complexity of the IT environment, andinsurers will need experienced integrators to implement solutionsand then maintain them over time. 7
  8. 8. The Accenture Life Insurance Why Accenture? About the MarketScopePlatform won the XCelent Accenture is viewed as a market leader Gartner does not endorse any vendor, with deep industry knowledge and extensive product or service depicted in our researchFunctionality Award and systems integration capabilities. publications, and does not advise technologyXCelent Customer Award users to select only those vendors with thein Celent’s 2010 “North Accenture has 30 years of experience in highest ratings. Gartner research publications the insurance industry with a dedicated consist of the opinions of Gartner’sAmerican Life Insurance New business, Accenture Software, which focuses research organization and should notBusiness and Underwriting on developing differentiated software- be construed as statements of fact. Gartner based solutions. disclaims all warranties, expressed orSystems” report. implied, with respect to this research, including any warranties of merchantability or fitness for a particular purpose.The Accenture Life Insurance Why Accenture LifePlatform was rated “Positive” Insurance Platform?in Gartner’s latest “Market- The Accenture Life Insurance Platform is a About AccentureScope for North American Life trusted software suite used by more than 40 leading life insurance and annuity carriers, Accenture is a global management consulting,Insurance Policy Administration enabling them to transform their policy technology services and outsourcingVendors”, published June administration operations, reduce operating company, with more than 249,000 people costs and increase speed to market. serving clients in more than 120 countries.21, 2012. Combining unparalleled experience, comprehensive capabilities across all industries and business functions, and References extensive research on the world’s most successful companies, Accenture collaborates 1 “Today’s Automated Underwriting: A with clients to help them become high- Case of Bells, Whistles and Accuracy,” performance businesses and governments. Linn Cook, Secondary Marketing Executive, The company generated net revenues of May 2007. US$25.5 billion for the fiscal year ended 2 “Automated Underwriting Systems Key Aug. 31, 2011. to Meeting Life Insurance Lower-End Market Demand,” Karen Monks, Celent, January Accenture Software combines deep 31, 2011. www.insurancetech.com. technology acumen with industry knowledge to develop differentiated software 3 Gartner report, “Market Trends: SaaS in products. It offers innovative software- the Insurance Industry.” Published November based solutions to enable organizations 14, 2011. to meet their business goals and achieve 4 “Pay as you go: insurers have lagged high performance. Its home page is in using Software-as-a-Service, but lower www.accenture.com/software. For Life costs, improved speed and mature systems Insurance software, the home page is are changing that,” Best’s Review, April 2012. www.accenture.com/lifesoftware. 5 “Letting Go of Core Insurance Systems Thanks to SaaS,” Michael P. Voelker, January 2010. www. propertycasualty360.com.Copyright © 2012 AccentureAll rights reserved.Accenture, its logo, andHigh Performance Deliveredare trademarks of Accenture. WSS361 | 9-2389

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