Stacey Cheese, Edgewater Consulting Insurance Practice Director, presented on trade-offs and decisions necessary to make strategic long term technical investments for supplemental insurance systems.

1. Carrier Uncertainty and the Vendor Reaction

2. Agenda
► Product vs. Custom? The market switch
– The ACA impact on the vendor market
► Integration Technology
► Discussion

3. The Old Vendor Development Landscape
► Easy answers become the right answer for mainstream
– Consultants, Analysts, Vendors look for the path of least resistance
• What has worked in the past?
• What are the industry norms?
• What is advice that cannot be challenged?
► Quick solution decisions that are defendable are the mainstream
– Large – Mid carriers look for the wholesale replacement and refurbishment
of enterprises or specific issues (PAS)
• High spend with perceived success
– CIO decisions supported by Analysts and Vendors

4. Carrier movement
► Carriers need to think about what is the best approach and the
end game
– What are my 3-5 year end goals?
– What is my business end game?
– Where do I want to be in the ACA space
• Do I need a short term solution until stable
► Alternative technology thinking for a modern market
– Can technology can fill the void of past issues
– Build your enterprise the way a vendor builds their product
► Carriers seeking expansion into supplemental products
– Large changes in the rider market to expand coverage
– Supplemental carriers supporting large carrier offerings

5. ACA and the Vendor market impact
► ESI insurance is expecting to see significant change
– >50 Require full health plan
• Possible risk of increased plan cost vs. penalties
– Multi carrier enrollment, major medical and supplemental expected to
increase
– <50 expected to see a reduction as Employers pull plans
► Supplemental products in the Employer group space
– People look for supplemental products as they enroll in major health
– Third party broker quote and application process (iPipeline for example)
► Vendors are beefing up for large group coverage and small group
supplemental
– Seasonal workers
– Flexible payment / billing /reconciliation

6. Individual – Direct or Enrolled
► Individual sales are expected to rise
– Dropped coverage creates uninsured with premium dollars
– Exchanges and direct sales are expected to see a similar rise over the first
few years
► Individual sales are a tough sell to brokers
– Comms are low and ease of sale is key
► POS at annual benefit selection seen as opportunity for Worksite
► Large carriers seeking supplemental partners for administration
and servicing
– Worksite market seeing good growth in individual supplemental products
► Increased availability and knowledge of consumer
– More consumers looking for coverage raises expectations of consumer
• Ease of enrollment, purchase – the amazon phenomenon

7. Product vs. Custom?? Shifting sands
Group / Employer
Maintenance
Suspense
Management
`
PAS
Reconciliation
Module
Receipting
Module
Billing
Module

8. The Package Solution

9. Vendor Market
► Worksite / Voluntary BPO is almost non-existent
– Few TPAs
– Small or poor track record of actual business model
► Product Modules
– Billing systems exist but integrate poorly with overall solution
• What good is billing if you cannot reconcile
– Agent outreach is limited in Broker market
– Supplemental Enrollment
– Overall investment has been limited, changing market
– 3rd party multicarrier enrollment has been increasing as large entities
require full service enrollment
– 3rd party solutions, covering more than health, have been practically non-
existent…..until now…..

10. Vendors for the Supplemental /Voluntary World
► Inspro
– Older Health / LTC platform
– Reconfigured for Life and Senior Health solutions
– Provides base product templates
– Quoting full Worksite suite
• Consolidated billing, reconciliation, suspense, group maintenance
► Benefit Focus
– Employer online enrollment system
– Cloud based technology
– Custom platform for each carrier

11. Vendors for the Supplemental/Voluntary World
► FAST
– New company
– Component based architecture and implementation
– Worksite module set for 2014
• Consolidated billing, reconciliation, suspense, group maintenance
– Easy integration / staged rollout
• Conversion expertise
– Large Insurance software history (originally Navisys)
► Sapiens
– Currently working on a Worksite installation
– Showing implementation issues due to rapid growth
– Full group and case management, limited billing

12. Vendors for the Supplemental/Voluntary World
► Mphasis Wyde
– Ground up PAS construction for worksite market
– Sole focus for 2013 is group business
• individual to follow late 2014
– Several key sales, still new but high promise
– Full Health and Life product support
• Variable Annuities expected late 2014

13. Integration Technology: The New World

14. ► Extend or replace database
schemas
► Modify PAS source code
► Makes system upgrades
unnecessarily long, expensive
and painful
– In many cases, system cannot be
upgraded
Customizing a Legacy PAS
14
PAS Data
Policy Admin System
Commissions
Commissions

16. ► Each component (or module)
provides specific functionality
► Exposed as a well-defined
interface
► Components are integrated
together using industry
standards such as ETL, SOA or
workflow processes
► Components can be swapped
out or modified easily
– Integration with external entities
eased
Component Approach
16
Policy
Admin
System
Billing
Reconciliation
Group Maint
Agent
Outreach
Suspense

17. App Store = Future
► Moving to a component based architecture can be done overtime
– Start with a blended old PAS, new modular design with an ESB
– Overtime integrate and create Apps to solve your business needs
– Create a framework for success
– Incorporate many varied App solutions
• Cloud based
• Hosted
• BPO integration
• Home grown
► Carriers need to move now to a framework that allows app
generation, purchase to solve bespoke needs
– Remove the need for wholesale enterprise changes
– Share Apps amongst carriers
– Co-Sponsor App development (The Deltas approach to success)
– 85% of all functionality can be common, your market value is not in your code

18. The Component Enterprise
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19. Discussion