The carrier's new rating system for personal lines enables Balboa to process new applications quickly, due in part to the solution's Extensible Markup Language (XML) architecture.For almost 30 years, Balboa Life and Casualty Co. provided lender-placed insurance solutions to financial institutions. However, to become a leading player in both the consumer and financial institution spheres, the insurance carrier has begun focusing on introducing growth-oriented personal insurance products, such as homeowners insurance.

To achieve its goal, Balboa needed a sophisticated and complex insurance rating and policy administration solution for its personal line products. The carrier writes business in 50 states and wanted to be able to offer a product mix that conforms to varying state regulatory requirements.

After reviewing 13 different vendor solutions, the Irvine, Calif.-based carrier selected Duck Creek Technologies' Example Platform to provide faster rates and scalable service to clients in its personal lines business.

The deal has translated into demonstrably improved results for Balboa: It now receives customer rate information 10 times faster with Duck Creek's XML solution, according to Kathy Sharman, vice president of application development at Balboa.

"We wanted to make sure that if we had several hundred agents trying to give quotes from several carriers at the same time, (the policy administration solution) would be fast enough," she explains.

The Example Plat-form enabled Balboa to create rules for claims-history evaluation and tier determination for its new product offerings, which include multiple-tier homeowners insurance in numerous states.

Wendy Corman, business development officer for Bolivar, Mo.-based Duck Creek, says one of the Example Platform's top attractions for Balboa was its ability to support all aspects of product definition, including rules and ratings. Also, she says, it gives carriers the flexibility of creating, maintaining and making changes to rates without having to depend on the vendor.

Duck Creek gave Balboa the tools necessary to be able to run everything in-house, since the Example Platform integrates with Balboa's insurance policy administration system, Corman explains. "While Balboa didn't initially take on the build themselves, they knew they would eventually," she says. "So we jump-started that for them."

The XML advantage

Additionally, a crucial feature of Duck Creek's solution that appealed to Balboa is its use of Extensible Markup Language (XML), the text-based data format on which Web services are primarily based. In fact, 13 companies vied for the Balboa contract, and each of the finalists uses XML.

"The big advantage of Duck Creek's solutions is that it is XML native," says Matt Josefowicz, manager of the insurance group of Celent Communi-cations, a research and consulting firm based in Boston. "And that makes it very easy to populate a portal with the same logic that is used to create the rates. So a business analyst can go in and make changes to the rating process or the ratings calculations and then it automatically flows out and reconfigures a Web portal," he says.

This is ideal for insurers that are going to use a service-oriented architecture, Josefowicz adds. Some of Balboa's competitors use traditional rating engines built in various languages, which are powered by relational databases. In such cases, the firms must have a translational layer to put their results into XML.

"Duck Creek has taken that step out and put XML at the core of everything that it does," Josefowicz says.

Duck Creek also worked to allay some of Balboa's concerns, which included the belief that Duck Creek's solution might be too XML-centric.

Balboa, a unit of Balboa Insurance Group Inc., was initially concerned as to whether an XML solution could handle its high volume projections and stringent performance criteria.

The carrier subjected Duck Creek's Example Platform to a rigorous performance test to ensure that the vendor had a scalable solution for Balboa's complex rating processes.

Consequently, as it does with all customers, Duck Creek took Balboa through a proof of concept before trying to sell its solution (see "Test Drive Before You Buy," page 28).

"We feel it is important for them to see that what we offer will fit the bill," Duck Creek's Corman says. "We want to make sure we can support them, and that they are a good partner. We are very ethical when it comes to that." Along with one of its partners, Duck Creek simulated the environment Balboa would be operating in, and passed the test with flying colors.

Expanded services

Similar to many of Duck Creek's 38 customers, Balboa only uses the rating service from the vendor's Example Platform, which is built on component-based architecture.

Specifically, Balboa is using Example Author, which defines all features of an insurance product, including rates, rules, algorithms, documentation, screen flow, and policy transactions; and Example Server, which transforms XML documents into Web-enabled services, such as rating, underwriting, and policy processing.

Balboa's Sharman says that although the Example Platform has not been used for the firm's financial institution clients, the solution will eventually support that line of business. "We are developing it for financial institutions to provide a robust rating structure," Sharman explains. "In that arena, a rather simple rating method has been used and the Duck Creek technology enables us to introduce more complexity" to the process. Specifically, Balboa aims to use inheritance variables in some of its rate development.

However, while Duck Creek continues to have discussions with Balboa to expand services, such as to support some underwriting rules projects, Balboa says there are some limitations.

For example, not all of the Example Platform's tools suit Balboa's needs, says Sharman. Furthermore, Balboa had hoped to turn over more of the development to individuals outside of the carrier' IT department.

"But so far we have not been able to do that," she explains. "And we don't know how much of that is attributable to the platform. The system is not that complex to work with, but it's a (notch) up from where (non-technical) users are comfortable."

Celent's Josefowicz notes that while Duck Creek's solution was appropriate for Balboa, it may not be suited for other insurance carriers with different infrastructures, particularly those that do not use XML.

"If insurers aren't using XML in other places in their company as an internal standard, then it would require an adjustment for the company," he says. "But a lot of carriers are moving to XML, so we don't see that resistance continuing long term."

In fact, he says there are many strong rating engines on the market and the bulk of these now plan to support Web portals. XML-based systems are typically easier to integrate if the company has made investments into XML.

"One of the big advantages of XML is that it is reusable-it is the same no matter where it is coming from, so integration is a lot easier," he says.

Expectations met

Balboa has begun doing most of its XML ratings work without assistance from Duck Creek. About a dozen Balboa staffers use the Example Platform, according to Sharman.

"It's tough to say how many people are serviced by it, but virtually all the personal line quoting comes through that engine," she adds.

Duck Creek remains actively involved with Balboa. Corman says that Balboa still has a Duck Creek team working with the firm-building and maintaining the insurance products-and that Balboa generally calls Duck Creek when they do not have the ability to fill the request in-house.

Balboa executives are pleased with the results of the implementation. "Duck Creek has lived up to our expectations in terms of continuing to be a flexible platform for developing our rating quickly," Sharman concludes.

Daniel Joelson is a freelance writer based in Alexandria, Va.

Register or login for access to this item and much more

All Digital Insurance content is archived after seven days.

Community members receive:
  • All recent and archived articles
  • Conference offers and updates
  • A full menu of enewsletter options
  • Web seminars, white papers, ebooks

Don't have an account? Register for Free Unlimited Access