The expression "the sum of the parts is greater than the whole" has many tried-and-true applications. PwC Consulting is contributing its own technology-driven version of this axiom, and insurance carriers are in line to benefit.Last year, PwC Consulting, a business unit of New York-based PricewaterhouseCoopers LLP, unveiled an e-business solution for property/casualty insurers that the global management and consulting firm believes will alter how carriers invest in technology.
Under the direction of a 65-person cross-functional development team that was formed in October 1999, PwC developed what it considers to be the first end-to-end e-business solution designed for insurance. The solution is driven by an umbrella program PwC dubs as Integrated Financial Services Solutions, or iFS Solutions.
Embedded within iFS Solutions is the Virtual Insurance Community (VIC). And "community" is the operative word. VIC comprises a consortium of no fewer than a dozen insurance industry technology providers, with each partner bringing a unique IT contribution to the table.
As it began to assemble the Virtual Insurance Community platform in 1999, PwC embarked upon a long and time-consuming process to forge agreements with a host of best-in-class technology vendors-would-be members of its "community."
Marshalling together technology companies to support a program such as the Virtual Insurance Community is often easier said than done. But PwC leveraged its long-time strengths in vendor selection and systems integration, and then proceeded to secure alliance agreements, which vary among the partners.
The result is a pre-integrated, component-based e-business solution for processing insurance transactions in an allocation-hosting environment.
"Over the years, PwC has developed various cross-industry solution sets that encompass components such as customer relationship management and enterprise resource planning, just to name two," says Lynn Lawless, the lead financial services partner, PwC Consulting. "We're able to take these solution sets, add to and specifically tailor them into vertical offerings for financial services and, more specifically, insurance carriers."
Carriers appear ready for such solutions. In the evolutionary e-business cycle, experts say the influence that dot-coms had on carriers peaked in 2000 and is now in steady decline. Presently, carriers are independently going about selecting internal technology investments to optimize internal operations and those of their producer networks. That's where VIC comes in.
"Carriers have experienced a host of recurring technology issues," Lawless continues. "In their legacy system environment, there's not a lot of flexibility to enhance areas such as billing, policy administration, claims and support for new distribution channels. To many carriers, their systems aren't able to respond to these needs."
Within the VIC program, Lawless says that while the "c" could have been designated to imply a virtual insurance company, "it's really a community, and we plan to enlarge this community over time."
PwC designed the program for the property/casualty segment of the market, placing an emphasis on the business to-business end of the equation. It eventually plans to leverage VIC's internal architecture so that carriers offering life, annuities, workers' compensation and group health products can adopt the program.
The program, accessed via a Web portal, can also be directed toward the business-to-consumer and business-to-employer segments of insurance.
From January 2000 to last September, PwC embarked on integrating each individual piece to a very intricate puzzle. "We had to understand each business application and then build an architecture-through middleware-to integrate each component," says Patricia Hamilton, director, consulting services for PwC. "The applications are all highly configurable and are able to be integrated easily, enabling a plug-and-play approach based on the needs of our clients. We designed templates to help our clients with the gap analysis, configuration and business process definition around each of the insurance components."
In the context of business-to-business expansion, VIC was designed initially with a carrier's agent force in mind. "Most of the property/casualty carriers we interact with are figuring out ways to Web-enable their agent force, particularly middle-market insurers that rely heavily on agents to build business," Hamilton adds.
The program provides a measure of distinction-at least what insurance carriers are accustomed to-because it offers bundled accessibility to best-of-breed technology through a "pre-integrated" solution. However, one distinct characteristic of iFS Solution/VIC is that even though various applications are pre-integrated, any carrier that adopts VIC isn't bound to deploying the entire suite of applications.
In fact, a carrier can substitute a pre-integrated VIC application for one that it has already invested in. The deployment of a middleware layer provides messaging and translation for any non-native VIC application a carrier may use.
PwC is targeting middle-market and large carriers to adopt its Virtual Insurance Community solution within their operations. During the latter part of 2001, PwC unveiled its first VIC customer-American Modern Insurance Co. (AMIG).
A marketer of various lines of home and vehicle insurance, with an emphasis on manufactured housing policies for new home starts, Cincinnati-based AMIG entered into the first phase of VIC implementation late last year (see story on page 36).
"AMIG is in the midst of a component-based overhaul of its legacy application through the use of the VIC architecture," says Hamilton, who serves as the PwC project director for AMIG.
"The first part of the project is to enhance their Web access and lay the foundation of the integrated architecture for future component replacement strategies, such as the policy administration system. The key is that AMIG is running and supporting the applications via licensing agreements with the various partners aligned through VIC. The iFS Solution can also be adopted by our clients in a hosted environment, with application support."
While PwC's development team originally developed the Virtual Insurance Community program as an application service provider model, it shifted gears to licenseing directly between partners and their clients. The reason is that most insurers prefer the internal control of their IT function, Hamilton says. An ASP strategy is more appropriate for startup companies, and presently the startup universe is shrinking.
Web portals are the gateway to the Virtual Insurance Community. AMIG's customer service reps as well as its various distribution channels ultimately will be equipped with VIC's applications loaded onto their desktops under what's regarded as a seamless common Web interface. "Regardless of the type of user and regardless of the application they need to activate-be it policy administration, billing or claims-the portals offer a common look and feel to all users across the integrated platform," Hamilton says.
In 2002, PwC plans to expand the penetration of VIC through tentative agreements that are in the works with several unnamed property/casualty carriers. PwC will also be expanding this solution for life, annuity and other wealth management insurance products, as well as for workers' compensation and group health. "We are in the process of performing analysis and building a roadmap for these lines of business," Hamilton adds.
One thing that PwC will be vigilant to address is keeping the Virtual Insurance Community dynamic and not having the solution become "stagnant from a component standpoint," Hamilton says.
"We will keep up to date on the best-in-class applications and will always explore agreements with vendors that can enhance the power of VIC," she notes. "If we didn't, then VIC would lose the very characteristic that we believe sets it apart form other industry solutions."
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