Below is the 8th of 11 Novarica Research Council Impact Award nominee case studies, which INN is presenting in no particular order. The awards will be presented at the research and advisory firm’s August 13th event in New York and honor best practices in insurance industry IT initiatives and strategy.
Philadelphia Insurance Co. is a niche provider of commercial property/casualty insurance products and services for select classes of business. The company had developed an expert decision support system focused on price monitoring, which provided a mechanism to ensure that adequate rates are being charged prior to business being written. Through business process reengineering of the system, Philadelphia Insurance introduced new capabilities to provide more accurate and timely information, and achieve the strategic objective of portfolio price optimization.
A variety of business disciplines were involved in the project. The actuarial group provided the expertise in modeling cross-policy term rate analytics. Underwriting, marketing and compliance participated throughout the project by defining requirements for system enhancement, unit testing and workflow integration.
A small group at the executive management level acted as the steering group, providing project governance and oversight. The project management office managed resource utilization and project scheduling.
About 30 IT staffers were involved in the development effort, and external service providers helped with requirements gathering, consulted on report development and information delivery, and provided general staff augmentation.
The first phase was completed in six months, with additional iterations delivered monthly over the next 18 months. The bulk of the application is now in production, and its use is embedded in the underwriting workflow.
Development work was done in house, as the system required extensive domain expertise across multiple disciplines and departments. The team adopted an agile development methodology to achieve the aggressive timelines required by the initiative. The system was built using Microsoft SQL Server as the relational database management system, with IBM Cognos for the front-end information delivery platform.
Building a cross-functional multidisciplinary team of insurance professionals, IT staff and external vendors proved challenging. Philadelphia Insurance placed emphasis on identifying leaders of the subgroups and building trusted relationships at the management level.
By providing expert pricing guidance at the point of sale, the new capability has positively affected net operating income by about 1 percent, which equated to about $3.4 million dollars in return on investment for calendar year 2013.
The result of the project was a shift in strategic direction through portfolio optimization. In addition, the company is now able to forecast future pricing and take action earlier. A variety of design and development standards used within the project have taken root and flourished in other development efforts.
Bringing together knowledge from a variety of disciplines in the company was a key contributor to the overall success of the project. The organization’s willingness to assume risk in new development methodologies also was vital.
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