The document discusses best practices for replacing rating and policy administration systems, emphasizing the importance of thorough project management, system selection, and integration. It outlines eight key steps for successful implementation and highlights the challenges of system failures due to poor planning and execution. Additionally, it details how AQS and ISO services can support companies in achieving efficient and compliant insurance operations.

1. Best Practices for Rating and Policy Administration System Replacement June 18th 2009

2. Martin Higgins Director, Edgewater Technology, Inc. Todd Meyer Senior Sales Consultant, ISO Susan Daly Sales Consultant, AQS Today’s Speakers

3. About Edgewater The Nature of the Beast Best Practices Summary How AQS can help How ISO Rating Service can help Final Thoughts Q&A Agenda

4. Technology Management Consulting Firm Provide a unique blend of specialty IT services Leverage proven industry expertise in strategy, technology and enterprise performance management Focus on middle and Global 2000 market Stable and Proven Founded in 1992 Headquartered in Wakefield, MA 300 Employees, 240 Consultants 600 Clients Large North American footprint +2,000 projects completed to date Publicly traded (NASDAQ: EDGW) Insurance Practice Over 50 clients Expertise in policy administration, rating, system selection About Edgewater

5. The Nature of the Beast (Why best practices are important) Best Practices

6. Project Resolution Statistics Source: Standish Group 2006

7. The Challenges and Failures Source: WSR Consulting Group, LLC He Said… She Said… System doesn’t work; not what we needed. You changed your minds; You don’t know what you want or need. You delivered limited functionality. You continually changed project scope. The system failed in the field and in production. You didn’t perform the required “business process reengineering” to make it work. Your software, services, and expertise were oversold. You conducted your reference checks and due diligence. What didn’t you know? No one can use system! Poor training. “ Required staff” never came to primary training or refresher training. The system is “fundamentally flawed.” We only need 2 more months to test/fix issues. You never told us that! You gave poor advice! You didn’t follow our recommendations; you changed/delayed making key decisions. The system is full of bugs! Bad data conversion/poor interfaces caused the problems. Systems always have bugs! You baited, then switched! You provided unqualified, unstable, uncommitted staff, project manager(s), steering committee. No, you baited, then switched! You provided unqualified, unstable, uncommitted staff, project manager(s), steering committee.

8. Excerpt from Edgewater Whitepaper Best Practices Summary

9. 8 Steps to System Implementation Project Inception System Selection Requirement Definition Negotiation Planning System Integration Data Conversion Build or Modify Deploy & Maintain

10. Common motivation for a new system Speed time to market for new products Improve efficiency of business processes Reduce cost of change (ISO updates) Enhance back-office integration Rising cost of legacy technology Improve agent communication and involvement Expand reporting capabilities Commitment & Investment Requirements Significant Risk What about refacing or repurposing existing systems? Do you really need a new system? Project Inception

11. Build support for the initiative internally Identify the team Sponsor and stakeholders Define a solid business case What do you hope to gain? Expected ROI or cost/benefit Your Criteria for Success Get to know the market Consider talking to industry experts Identify potential solutions (Is there a fit out there?) Custom Build? Yes! Now what? Project Inception

12. Selecting a System Here be Dragons! Most treacherous step Mistake here can doom the initiative from the onset Clearly define the selection criteria Define approach schedule and team Invest the time to do it right! System Selection

13. Vendor Market 101 Over 50 rating and administration vendors Product Types Code vs. tool based Support for out of the box product definitions Best of breed vs. 1-stop-shop Delivery Models Ongoing Updates System Selection

14. Is the technology sustainable? Is the vendor sustainable? Can the system be customized and still get maintenance releases from the vendor? Can I customize the system in house? What do really get out of the box? ISO content? Big part of the TCO How will it integrate with my back-end systems? Favor standard formats like XML What do your customers think of you? Questions to Ask System Selection

15. Selecting a System: Requirements Business requirements Consider current and future Level of detail is very important For example, “The system must support OOS endorsements” Most vendors will meet this requirement What does that really mean? Do you expect automatic rollback and roll-forward? How will your back-end systems respond? What will the DEC look like? System Selection

16. Selecting a System: Evaluation RFI and/or RFP? Limited short list Based on well-defined requirements Scripted demonstrations Script the demos! Proof of concept Really needed? What risk is being addressed? Make meaningful and reusable Perform the due diligence System Selection

17. Project Management and Planning Project Management Critical as selecting the right vendor Look for relevant prior experience Hire if necessary Building the Plan What lines and states first? Look for quick wins (low volume, low customization) Build on early success “ Don’t eat an elephant in one bite!” Conversion and roll-out Negotiation & Planning

18. Requirements approach depends on product High functionality OOB -> Gap analysis Low or no functionality OOB -> Detailed requirements Gap analysis is lowest risk Involve the right combination of business users High Business Knowledge Progressive Thinkers Consider business process reengineering Consider cost of modifications Varies depending on vendor Code-based or limited content = $$$$ Configuration-based or high content = $ Requirements or Gap Analysis Requirement Definition

19. Strongly consider a blended approach If vendor allows it Institutionalizes knowledge about system early Insist on frequent releases Only reliable way to track progress Testing Early and often Clearly defined test plans Plan for broken builds Include smoke, system, and user Development/Customization Build or Modify

20. With integration, one size does not fit all Pick the right product to start with Consider the following interfaces Agency upload and download (use a tool) Real-time interfaces Batch interfaces Reporting and business intelligence For all but the simplest cases, use a product! BizTalk, WebSphere Integrator, ESB Consider using experts to get you started System Integration System Integration

21. Is automation required? Number of policies True cost of automation (specs, development, testing, environments, cleanup, etc.) How cl3an is y0ur d@ta? Exception cases Consider manual entry if practical Use the vendor’s API if possible Data integration (ETL) is last resort What about historical data? Consider a historical repository Consider BI up front Data Conversion Data Conversion

22. Externally facing or internal only Internal is better to start with Most common strategies Renewal (lower risk, higher cost) Big Bang (higher risk, lower cost) Consider limited agency rollout Automate regulatory updates Minimize interpretation Maintenance of ISO content 3,100 ISO filings in 2006 for commercial/lines Over 2,200 affect the 9 primary lines Deployment and Maintenance Deploy & Maintain

23. Select the right product Out-of-the-box functionality Ability to customize without forking Integration Friendly Build the right Team Project Management, Partners Don’t bite off more than you can chew Minimize Risk in all areas Requirements, Development, Conversion and Rollout Consider life after implementation Best Practices Summary

24. How AQS Can Help Best Practices

25. AQS has 40 customers Average tenure 16 years Stability and experience Founded in 1979 More than 200 dedicated employees Average employee tenure – 7 + years Average insurance experience – 12 years Why AQS? Experts in both insurance and technology Decision support tools Streamlined maintenance of ISO updates Experience delivering and implementing rating & policy system implementations for small, medium & large Carriers Multiple implementation options Vendor Support (full service) Self Service Hybrid (shared) AQS Overview

26. AQS Access and ISO Rating Service AQS Access Quote & Policy Access ISO Rating Service Designer Access Policy Management External Integration Browser-based UI that is client centric, insures valid policy data entry Premium calculation engine - ISO based algorithms - Extensible architecture Full policy life cycle management Toolset used to Create ISO & Client Customized Ratebooks ISO Rating Service ISO Rating Service Generates policy xml for each issued transaction. Stages and publishes xml for downstream systems.

27. AQS Advantage: Major Functions AQS Advantage Enter Edit Engine Rating Engine Transaction Gateway Document Generation ISO Stat Generation Policy Management Integrator Sophisticated browser-based UI that ensures valid policy data entry Premium calculation engine - Data-driven algorithms - Extensible architecture Document selection, data capture, and pdf generation. Support for document delivery integration options. ISO Statistical record coding and generation Full transactional support. Maintains policy history. Policy storage and retrieval. Generates policy xml for each issued transaction. Stages and publishes xml for downstream systems. Unattended transaction processing initiated by external system. Advantage Toolset Rates / Document Rate & Document Management Toolset

28. XML based integration ‘ Call-Out’ capability Modern .NET architecture for all application components Highly configurable Preloaded ISO content Integrates with ISO Passport data sources Performance and Scalability Reports – impact analysis, functional specification Automated testing tools AQS Highlights

29. AQS Approach Best of breed Partnerships with functional components for enterprise solutions Claims Billing Etc.

30. No duplicate data entry Support for all policy types/lines of business Full policy life cycle transaction types Real-time data validation/error checking Real-time rate calculations Easy to use/intuitive navigation Automatic forms selection/assignment Automated workflow and referrals Rating worksheets Workflow/diary/notes Customer-centric view (vs. policy-centric) Benefits for Primary End Users

31. Faster speed to market for new products Reduced premium leakage Reduced “adverse selection” Improved retention of profitable customers Easier to stay current with ISO Less costly to maintain content Web-based for ease of doing business Automatic “Stat Code” assignment Best-of-breed product component option Benefits for Management

32. Single system supports all P/C lines of business Tools based Decision-support tools Configurable page design (user interface) All changes are automatically documented Designer tools Ratebook inheritance leverages ISO base content Import/export capability (speed, accuracy) Ratebook modeling, comparison, and analysis tools Functional specification documents Benefits for Product Specialists

33. Current technologies (.NET, SQL Server, XML) Highly configurable security model Proven performance/scalability Content updates distributed via ISOnet XML input/output Integration with downstream systems Version control (date-driven Ratebooks) Self-documenting system Benefits for IT/Systems Personnel

34. The ISO Rating Service Best Practices

35. Maintenance of ISO content Over 4000 ISO filings last year alone Analysis and data entry can be costly Expert content from the source Legacy system maintenance can cost carriers millions of dollars per year! The Magnitude of the Challenge

36. ISO Filings 2005-2008

37. How does the ISO Rating Service address this challenge?

38. ISO Rating Service A single rating solution for multiple ISO programs Incorporates ISO-interpreted content Content inheritance model allows company-customized rating deviations and state exceptions Streamlined delivery of ISO content updates via ISOnet

39. Single Rating Solution

40. ISO-Interpreted Content

41. ISO Rating Service: Inheritance Methodology ISO Rating Service Base Company-Specific Base ISO LOB Countrywide Company-Specific LOB Countrywide ISO LOB State Company-Specific LOB State Spans lines of business for company Spans states for company Company, LOB-specific state exceptions

42. ISO Rating Service Tools and Information

43. Key Benefits What does all of this mean for you? Quick access to ISO-defined content, leveraged to enable faster speed to market for bringing up new lines, states, and rate plans Ability to determine how close your company is with respect to following ISO for loss costs, rules, forms and stat code assignment, allowing your company to remain in compliance and thus reduce exposure to fines Use of development tools with a patented inheritance methodology that provide you the ISO-defined content to customize to your needs, resulting in greater accuracy, less redundancy, and reduced costs Use of analytical tools to assist with the analysis effort for maintenance going forward, resulting in less time spent preparing for the next release Powerful Tools Designed with Growth, Quality and Efficiency in Mind!

44. Final Thoughts Best Practices

45. Manage expectations There will be many bumps in the road Play to your strengths Be realistic about your weaknesses Augment if necessary Treat vendors as partners Invest in the relationship Everybody wants a successful implementation White paper available: www.iso.com/edgewater Final Thoughts

46. Any Questions? Martin Higgins Edgewater Technology [email_address] (781) 224 9026 Todd Meyer ISO [email_address] (781) 224 9026 Susan Daly AQS [email_address] (603) 546 2434