When most insurance companies look to new technology to improve business operations, the focus typically is on saving time or money by taking a manual process and automating it.In reviewing the time required to bring their new products to market and give their agents an efficient means to do business, American Reliable Insurance Co., a subsidiary of Assurant Inc., decided time was money.
The Scottsdale, Ariz., niche marketer of specialty personal lines and farm owners coverage often faced a 12-month lead-time to its new product delivery schedule.
In the highly competitive specialty risk marketplace, that may be several months too many-and for American Reliable, it was less a question of which new product to develop, and more a question of being able to offer a new product at all.
"If we see a market that makes sense for us to enter, there is a limited amount of time in which we can jump on that opportunity," says Steven Addair, American Reliable's vice president of IT. "If it's going to take us too long to develop a new product, we might have to pass on it. If we can get to the market quickly, we would be more inclined to go ahead."
The excessive time spent on requirements-gathering to create the rules and algorithms necessary to quote and approve policies on new products was but one hurdle American Reliable faced.
The company also needed to improve support for its independent agents and subagents. Agents relied solely on the carrier's proprietary systems for rating and policy issuance, while subagents depended on third-party rating authorities to get a policy approved, which necessitated the use of redundant rating engines throughout the rating cycle.
One of the same business strategies that established American Reliable in 1952 as a premier specialty risk provider-to deliver the utmost in customer care-is still in place today.
So the company committed to simplifying the process for all its internal customers: its staff, general agents and their subagents-with a rules-based policy administration system.
After evaluating a number of technology companies, American Reliable whittled the choice down to two. A proof-of-concept trial occurred next.
"You really need proof on a system like that, even if you have to pay for it," says Addair. "If a company refuses to let you test it the way you want before you ink the deal, there is probably something wrong with it."
American Reliable's testing of the Example Platform Product Suite, a Web-based underwriting and policy administration system developed by Duck Creek Technologies Inc., Boliva, Mo., revealed some important insights: The system efficiently reduced bottlenecks associated with time-to-market, rating and rate-change initiatives.
Example's attributes-based rules system enables American Reliable to reduce data-gathering time-and, as a result, reduce the time it takes to bring a new product to market by more than 60%.
"Subject to regulatory bodies, we can also get rate changes out the door as fast as necessary. If it takes six months to get a needed price adjustment out the door, that is money that you could be losing for those six months," says Addair.
One of the highlights of the Duck Creek system is that it talks XML, making it relatively easy to integrate with other back-end systems. This was an important consideration, Addair says.
"Along with our service-oriented architecture (SOA), XML made it a lot easier for us to plug-and-play with our older legacy systems, as well as with our newer best-of-breed components," he says. "By replacing our legacy policy processing environment, we are now able to bring a new product to market in four months or less," Addair adds.
In the last two years alone, American Reliable has introduced new insurance products in the motorcycle, motor home and watercraft markets.
"It's very likely that in the next two years, we'll find additional products that we'll want to market as well," he says.
Reducing time to market is not the only benefit American Reliable has experienced from the rules- and Web-based policy administration system.
The new technology makes it easier for subagents to get quotes on policies for prospective customers. While staying within the company's general agency model, the new system expands underwriting, quoting and workflow to the point of sale.
"The Internet has enabled us to push down our quotation process to the subagent level," Addair says. "We are looking at supporting up to 90,000 subagents on the new system over the next few years."
For general agents, the Internet services architecture simplifies quotation, underwriting and policy processing.
"With proprietary systems, we often had to build the same ratings engine over and over again. Now we have one system that everyone can access through our SOA," says Addair.
Agents can log on to the system and create an application on the spot. The system is able to determine if the application meets the underwriting standards set by American Reliable. If so, the policy is approved instantly. If not, the application may be forwarded to the firm's underwriters for review. There, a manual inspection can reject or approve the application or approve it with revised terms.
"This system allows the agents to log in from anywhere," explains Karen Minica, account manager for Duck Creek. "They can also print out the quotation letter once the policy has been approved and immediately hand it over to the customer."
Having an XML-based system will make it easier for American Reliable to add new technology and systems in the future.
"When new technology becomes available, it will be easier for them to convert it to their existing systems," Minica says.
The XML factor aside, Addair advises other insurance companies looking for comparable technology not to get too hung up on the platforms that the systems rest on.
"Look for the best business solution and forget about platforms," he says. "What you want is a system that uses attribute-based, rules technology and can plug into a SOA, not the older scripted or table-based systems."
Before deciding on the Duck Creek system, American Reliable looked at technology developed outside the insurance industry and at technology companies internationally.
"We talked to companies that offered rules-based systems and they had some good products," says Addair. "But with these companies we had to teach them about the insurance business. Duck Creek had a next-generation, attribute-based rules system and it already knew our business."
* Case study:
American Reliable Insurance Co.
* At issue:
The 50-plus-year-old niche carrier faced 12-month new product lead times and agents that required more efficient rating and policy processing methodologies.
* The solution:
American Reliable replaced its legacy policy processing environment with a Web-based underwriting and policy administration system from Duck Creek Technologies Inc.
* The benefits:
The efficiencies created by the carrier's new system enabled it to reduce bottlenecks in time-to-market by 60% and provide agents with a simplified quotation, underwriting and policy-processing system.
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