Case Study Highlight: Enterprise Data at Farm Bureau Financial

Jeff Goldberg

As we approach the announcement of the Novarica Impact Awards in the fall, we will be highlighting one Impact Award nominee each week on our blog. The Novarica Impact Awards are voted on by over 300 members of the Novarica Insurance Technology Research Council, making them the only purely peer-reviewed awards program in insurance technology.

Many of the 2016 Impact Awards nominees cited cross-functional teams, with resources familiar with multiple business areas, and the use of Agile methodology as keys to a quick and successful delivery. Many projects focused on consolidation and speed, combining disparate data silos and core systems to enable centralized access and real-time querying.

This week, we look at an enterprise data initiative at Farm Bureau Financial Services.

Farm Bureau Financial Services needed to improve its data integration capabilities as part of a larger life insurance core systems replacement project. To address this issue, the company built a hub-and-spoke architecture to consolidate more than 30 data integration points between disparate systems. The team executed the project through a series of Agile iterations, and the integration layer was ready for deployment in July 2015. The project reduced report run time from over an hour to three minutes, and time to produce complex data reports decreased from two weeks to an hour. Design time was cut from multiple months to two weeks, and consuming systems are now able to retrieve data in near real-time as opposed to batch feeds. Defining long-term strategy and enterprise architecture and articulation of the goal state were crucial to help the team stay focused. The team also attributes success to support from executive management, as well as education and assistance from its vendor partner.

For more detail on this project and more than 30 others, including cases from MetLife, Amerisure, Merchants Mutual, and Trustmark, see Novarica’s Best Practices Case Study Compendium 2016.

Case Study Highlight: Self-Service for Claimants & Partners at Homesite

Martina Conlon

As we approach the announcement of the Novarica Impact Awards in the fall, we will be highlighting one Impact Award nominee each week on our blog. The Novarica Impact Awards are voted on by over 300 members of the Novarica Insurance Technology Research Council, making them the only purely peer-reviewed awards program in insurance technology.

The 2016 Impact Awards nominees consistently cited cross-functional teams, with resources familiar with multiple business areas, and the use of Agile methodology as keys to a quick and successful delivery. Many projects focused on self-service capabilities, multi-channel applications, and data infrastructure to facilitate cross-departmental access.

This week, we look at a Homesite project that enabled self-service for claimants and partners.

Homesite wanted to provide better service to claimants and partners during catastrophe events, with the goal of improving customer experience, operational efficiency, and cat resource capabilities. The project built a strong relationship between IT and business units, which the team credits as a key success factor. Homesite also cites collaboration between the company and its vendors and business partners as crucial. The lessons learned from the project helped team members focus scope and understand industry standard technologies. It also eliminated manual rekeying associated with 33% of incoming FNOL volume and increased scalability during times of high claim volume. The project is ultimately expected to save the company $1 million over the course of eight years.

For more detail on this project and more than 30 others, including cases from AIG, MetLife, Heritage, and Glatfelter, see Novarica’s Best Practices Case Study Compendium 2016.

Case Study Highlight: Infrastructure Optimization at the Hartford

Don Metz

As we approach the announcement of the Novarica Impact Awards in the fall, we will be highlighting one Impact Award nominee each week on our blog. The Novarica Impact Awards are voted on by over 300 members of the Novarica Insurance Technology Research Council, making them the only purely peer-reviewed awards program in insurance technology.

Many of the 2016 Impact Awards nominees cited cross-functional teams, with resources familiar with multiple business areas, and the use of Agile methodology as keys to a quick and successful delivery. Common among many projects was a focus on operational transparency, overcoming internal challenges, improving relationships, and cost savings.

This week, we look at The Hartford’s initiative to optimize application infrastructure.

The Hartford Group Benefits division needed to optimize application infrastructure in order to decrease the total cost of maintaining the environment. The project team faced disparate data sources, an outdated application inventory, and lack of standardization within the application infrastructure. Tracking templates and assigning support helped to overcome these issues, as well as improvements in resource time and commitment to the application environment. The team cites the ability to quickly identify and execute opportunities and the savings to come from future investments in the infrastructure as further success factors. The resulting application infrastructure improved the TCO/lifetime value of the environment and reduced storage and server costs by 8% annually. The migration to a private cloud model saved 2-3%, and decommissioning physical servers saved an additional 2%. Finally, database optimization saved the company 3-4% annually.

For more detail on this project and more than 30 others, including cases from MetLife, Tokio Marine HCC, Prudential, and Unum, see Novarica’s Best Practices Case Study Compendium 2016.

Case Study Highlight: Rapid Product Launch at Legal and General

Tom Benton

As we approach the announcement of the Novarica Impact Awards in the fall, we will be highlighting one Impact Award nominee each week on our blog. The Novarica Impact Awards are voted on by over 300 members of the Novarica Insurance Technology Research Council, making them the only purely peer-reviewed awards program in insurance technology.

2016 Impact Awards nominees consistently cited cross-functional teams, resources familiar with multiple business areas, and the use of Agile methodology as keys to a quick and successful delivery. Many projects focused on systems consolidation and speed, combining disparate core systems to improve product development and time to market.

This week, we look at a Legal and General initiative to enable rapid product launch.

Legal and General sought to expand the reach and market presence of its pension risk transfer product within the United States. Legal and General updated existing systems to include 90% of the most common retirement and annuity products in just 100 days. Agile methodology and program structure created a common team understanding of the initiative, and both were critical to the rapid delivery of the project. The team also notes that internal communication was always open, frequent, and responsive, and that executive support from the project sponsor was consistently supportive. Subject matter experts that provided user feedback were also valuable assets to the project. The finished project includes improved payment processing, new business onboarding, and product build-out. Despite its short timeline, the project remained on budget at $1 million and also changed 80 COBOL and 150 Delphi programs. Since its delivery, the new system has allowed for the addition of over $500 million in new business within six months.

For more detail on this project and more than 30 others, including cases from Aflac, Heritage, Michigan Millers, and Trustmark, see Novarica’s Best Practices Case Study Compendium 2016.

Case Study Highlight: Investment Analytics and Operations at MetLife

Mitch Wein

As we approach the announcement of the Novarica Impact Awards in the fall, we will be highlighting one Impact Award nominee each week on our blog. The Novarica Impact Awards are voted on by over 300 members of the Novarica Insurance Technology Research Council, making them the only purely peer-reviewed awards program in insurance technology.

Many of the 2016 Impact Awards nominees cited cross-functional teams, with resources familiar with multiple business areas, and the use of Agile methodology as keys to a quick and successful delivery. Many projects focused on consolidation and speed, combining disparate data silos and core systems to enable centralized access and real-time querying.

This week, we look at a MetLife project that enabled real-time interactive views of data across multiple platforms.

MetLife needed real-time access to derivatives and associated risk data from multiple systems and data sources. Metlife’s goal was to use advanced analytics to manage liquidity and optimize the use of highly liquid assets. The project employed Agile methodology and a framework for program governance, both of which the team cites as critical to success. Resources with knowledge spanning technology, business domain, and industry standards were also crucial. The 17-month initiative and its resulting system freed up over $575 million of highly liquid assets and cut the liquidity retention period from 30 days to 5. The time required to aggregate data from multiple sources was reduced by 65%, and the project ultimately saved MetLife more than $5 million.

I will be moderating a panel on Metlife’s case study at Insurance Analytics 2016 on October 20 in New Orleans. For more detail on this project and more than 30 others, including cases from GuideOne, Trustmark, Unum, and Amerisure, see Novarica’s Best Practices Case Study Compendium 2016.

Case Study Highlight: Enabling One-Day Health Claims Payments at Aflac

Matthew Josefowicz

As we approach the announcement of the Novarica Impact Awards in the fall, we will be highlighting one Impact Award nominee each week on our blog. The Novarica Impact Awards are voted on by over 300 members of the Novarica Insurance Technology Research Council, making them the only purely peer-reviewed awards program in insurance technology.

Many of this year’s impact award nominees share some common characteristics – the use of Agile methodology, a focus on communication, strong executive support, and planning for substantial user training as a key part of unlocking value creation.

This week, we look at an Aflac project to enable one-day health claims payments.

The One Day PaySM initiative was a response to a direct challenge from Aflac’s CEO to create a unique claims payment process. Aflac’s goal was to reduce average claims processing time from four days to one. Over the course of the 12 month project, Aflac used Agile methodology to ensure delivery and quality, which they credited with enabling their speedy delivery and enhancing collaboration between IT and business teams, especially when supported by co-location of IT and other business units. The lessons learned have since been applied to a full restructuring of the IT organization. The project has resulted in 87% of online claims meeting One Day Pay requirements—a year-over-year increase of 43%. Customers submitting claims online reported a satisfaction rate of 91%. The direct deposit capability also reduced the company’s carbon footprint, saving an estimated 16,000lb of paper.

For more detail on this project and more than 30 others, including cases from MetLife, Prudential, The Hartford, and Trustmark, see Novarica’s Best Practices Case Study Compendium 2016.

Common Characteristics of Successful IT Initiatives

Matthew Josefowicz

Our fifth annual Novarica Impact Awards are underway, which recognize impactful IT initiatives executed by insurer CIOs and their teams. More than 30 initiatives qualified for this year’s Impact Awards across data, digital, core systems, and IT best practices. Case study subjects include AIG, CSAA, Everest, Great American, GuideOne, Homesite, Merchants, NORCAL, AFLAC, MetLife, Prudential, The Hartford, Trustmark, Unum, and more. Among the qualifying initiatives, some commonalities emerge that reflect the changing state of IT in the insurance industry.

Executive Support

A consistent factor in successful projects was support from executive leaders. Strong executive support ensured the coordination and communication necessary to execute complex cross-departmental projects. The vision of executive leaders was also important in clearly defining project goals and benefits for all departments within a particular carrier.

Training

A key component of many projects was ensuring that employees received necessary training. In some cases, this was practical: users needed to know how to use a new feature effectively. However, many projects needed to overcome resistance from prevailing corporate culture and reluctance to embrace change.

Effective Communication

In order to overcome internal resistance and ensure cross-departmental coordination, clear communication was essential to many projects. In many cases, demonstrating the benefits of new technology was a key factor in overcoming resistance to change. Many projects also required interfacing between multiple internal carrier departments as well as frequent coordination with external units.

Agile Development

Insurers whose projects used Agile development methodologies realized gains in time to delivery, project costs, transparency, and improved communication between IT and business units. Agile helped many teams manage large projects while staying flexible. In particular, Agile helped kept multi-part projects on schedule, as distinct project components could be completed in parallel. Agile also helped project teams adapt on the fly to changing requirements during the development process.

Voting is currently open to members of the Novarica Insurance Technology Research Council, and winners will be announced in the fall. To learn more about the Research Council, check out http://novarica.com/council.

Related reports:

  • Novarica Impact Awards 2015

    Matthew Josefowicz


    Today we announced the nominating committee for the 2015 Novarica Research Council Impact Awards.

    This will be our 4th annual celebration of case studies of effective technology initiatives by insurers, as recognized by a peer jury of hundreds of insurer CIO members of the Novarica Insurance Technology Research Council.

    An average of 40 case studies per year are submitted for publication in our annual Case Study Compendium, and the best ones are nominated for awards by our committee of CIOs. Unlike other industry awards, no vendors, journalists, or consultants (including the Novarica team) have a vote in selecting nominees or winners.

    Past nominees and winners include: AIG, American Safety, Allstate Life & Retirement, Amica, Assurant, Brickstreet Mutual, Capitol, Cincinnati Financial, Encompass Insurance, Erie Insurance, Foresters, Great American Insurance Group, ICW, Legal & General of America, Oregon Mutual, Patriot National, Penn Mutual, PURE Insurance, RLI Insurance, Tokio Marine, XL Group, Zurich North America, and others.

    Rules and submission forms are online at http://www.novarica.com/impact2015

    We’re looking forward to hearing about your successes and honoring them next spring! Please contact us at inquiry@novarica.com with any questions.

    Here’s the Problem… A Process Is Only As Good As Its Weakest Link!

    Rob McIsaac

    Recently, I decided that I needed to update my life insurance portfolio. With a range of life events taking place, and a 10 year term policy purchased in 2004 coming to a natural end, I was poised to take quick action. Suffering from mild OCD, I actually started the process a full 8 weeks before the anniversary date. Little did I know that I was dancing on a razor’s edge in terms of timing. This sort of “secret shopper” experience has been frustrating, humorous and thought provoking all at the same time. Does it really need to be this hard? If a process is only as good as its weakest link, this one sets a new standard on the low side of the scale.

    In an era of instant access, and nearly instantaneous gratification, I went online to start shopping at an aggregator site. To my surprise, this was less functional than the site I recalled from 10 years ago but it did earn me a call back from a call center agent. After going through the medical questions, we landed on the need to “draw fluids”, a process that could take 2-3 weeks to complete. Given the green light, this process started. It took 3-4 weeks to actually schedule the blood draw.

    Thinking the process had run amuck, I went to a second carrier directly. After completing their app online, I was called back in minutes for the medical questions. Because of how I answered one question, I was cautioned that I wouldn’t qualify for the super preferred rate and that the agent had no idea what the premium might be. The thrust of the conversation was that it would likely be around 50% more, but that this was just a SWAG. Clearly surprised that I wanted to proceed anyway (not a great trait in sales) we again marched into the need to draw fluids. A process that could take, I was assured, 2-3 weeks.

    The third carrier was a traditional Agency company that I decided to test to see if the web site channel worked. Although it took several business days for someone to respond, when they did, the agent was effective and knowledgeable. She was able to share different premium scenarios and suggest which products might best fit the need. While the low end price was higher than the direct company super-preferred rate, the “likely” rate based on the medical questions was lower. And, of course, drawing blood would take several weeks.

    Several interesting points in the process:

  • For all practical purposes, the questions the carriers asked were exactly the same. The only variations seemed to be in looking at my driving record (3 years or 5) and my parents issues with illness (before 60 or 65). Other than that, it was cookie cutter.
  • All three companies declined the opportunity to get medical records (fluids, EKG, chest x- ray) directly from my doctor, despite the fact that they were available as part of an annual physical done two weeks earlier. All wanted to have their own chance to stick me with needles.
  • All three carriers used the exact same service to do the fluid draw and on site visit. Some effect envy for me there, since I got a “three for one” deal on the fluids and the list time. Each carrier wanted their own EKG original so I had to sit through that multiple times, but only partially disrobe once.
  • The direct carriers are decidedly poor at staying in touch with process updates. With them it feels like I’ve fallen into an abyss. The agency carrier seems to be far more engaged through my touch point.
  • Across the board, the process seems broken … or at least archaic. I became a little worried about coverage gaps with the ’04 policy exporting, but I shouldn’t have been concerned. The old carrier indicated that it takes a calendar quarter to actually lapse the contract … whose premium would triple on the next anniversary barring action on my part.

    At a time when the balance of consumer’s financial lives is so readily available through self service and guided experience, this seems like a trip back in time to a different world. Actions are measured in weeks and quarters rather than minutes and hours. Rather than full transparency on information and pricing, the process feels both secretive and ill-informed.

    The process also seems to be intentionally inefficient. When my doctor did his version of the fluid analysis, we had results in 2-3 days. The paramedic firm used by all three carriers said it took 2-3 weeks. How could that possibly be?

    Left to a natural course, this process could run (in total) 6-10 weeks, by my estimation. At that point, I will be presented with “take it or leave it” offers from all the carriers involved. I will, of course, have a personal choice to make at that point, armed with full disclosure and valid pricing as inputs. In the end, it will have a happy outcome for some.

    This got me thinking about my own children and their Gen Y peers. They would be highly unlikely to participate in an exercise as slow and as painful as this one. Baby Boomers like me may now be closing in on purchasing their last life insurance contracts as other life events loom.

    For carriers, the time to think about the required paradigm shifts is coming quickly. Those footsteps you hear are future generations of prospects but they may be running away, rather than toward, you!

    Big data, mobile capabilities, access to a form of Telematics and other devices may all prove to be game changers sooner than we think. Remember what life was like before SmartPhone? I don’t either…

    The Target Data Breach and Lessons for Insurer CIOs

    Rob McIsaac

    While the Target stores “hack” was not the biggest in recent history, it is certainly one of the most visible and offers some important object lessons for insurance company CIOs. As we have now learned, malicious software was installed on company servers in late 2013, providing a gateway through which hackers were able to gather significant personal and confidential data on Target’s customers. The theft of this data has had significant adverse consequences for the company’s earnings, the trust of their customers, and the career plans of a number of high-profile individuals. The full scope the damage will be hard to quantify and the period over which recovery takes place will likely be measured in years rather than days or months. This is all pretty significant for a company that appears to have been ahead of the curve in thinking about these issues and had made significant investments in both people and technology to inoculate themselves from attacks prior to last year’s holiday shopping season.

    What went wrong?

    The origins of the issue of course extend well beyond Target’s environment. The debit and credit card infrastructure in the United States is substantially behind what is used in other markets (e.g., Europe). This problem has been well known for a number of years but participants in the ecosystem (e.g., retailers, card processors, banks) believed that this was someone else’s problem, certainly not their own. Since the issues emerged most obviously during the Great Recession, the natural tendency was to kick the issue down the road and hope, in the meantime, that the security risks could be otherwise managed. The sense seemed to be that it would take some future, seminal, event that would create a cause for action. That time may be upon us with this incident, although that is little consolation to impacted customers. As noted in a recent Business Week article, Target had actually made significant investments to get ahead of security concerns. Unfortunately, it also appears that they made notable errors in implementation which allowed the events to unfold with shockingly adverse consequences.

    Are insurance companies immune to these kinds of events? Of course not … and they increasingly will face these types of challenges as transaction volumes grow and the speed of transaction processing accelerates. Implementing tools that allow for transaction analysis of varying types is increasingly the domain of all players and financial services, banks and insurance companies included. As the systems are deployed one of the issues CIOs and their teams face is the need to install them so that they effectively operate within their own environments. Failing to tune these systems may produce false positives that will overwhelm the staffs responsible for final intervention in determining whether or not activity is malicious. This issue applies across all monitoring systems used by carriers, including things such as financial transactions, e-mail traffic and security access. Just having expensive software installed is of little comfort if it has not been effectively tuned and is being appropriately monitored in order to assess results. Fine tuning these systems can be as much art as science but is critical if a financial institution is going to achieve a project’s operational objectives.

    One of the interesting aspects of the Target case is that these were apparently lessons that the company had learned. The solution they implemented for transaction monitoring was very sophisticated and the company had spent considerable money both implementing it and in creating supporting infrastructure to analyze the results. According to the BW article, they had created a sizable organization in India to monitor the activity. The article goes on to note that this team did their job, effectively creating the appropriate level of alert and communication back to the corporate home office. The corporate home office was also well equipped to handle these types of incidents having created a command center that was specifically designed to deal with security related incidents.

    For some unknown reason, however, the communications between the teams in India and the United States went unnoticed or were ignored. What has become clear in recent weeks is that the failure had nothing to do with technology and everything to do with the process and human beings managing the process that were created to support that technology.

    There are a range of possibilities for why this happens; speculation on those causes is of little value at this point. The main message is that any process is only as good as its weakest link. This is hardly new news but it does reiterate the importance of real testing, in real world circumstances, to understand how components will react and interact. The parallels between incident management, such as this case illustrates, and disaster recovery events are reasonably significant. Practice exercises get people and technology working together to understand both the “happy path” toward resolving issues as well as to highlight areas where real world circumstances may deviate from a carefully crafted script. The magic for IT organizations can be in understanding those unanticipated events, and creating the mental shelf space for teams to be able to deal with those events by freeing them from needing to focus on relatively simple or mundane tasks. It remains to be seen exactly how the process in this incident broke down.

    One element to consider is how tools are used in separate geographic locations as well as how communication process loops can be “closed” to assure confirmation of high priority concerns. Another to consider is the difference in cultural norms which can exist between teams in different parts of a country (to say nothing of different parts of the world) when they are attempting to share information. The nuance and subtlety which are an embedded part of the English language are important for CIOs and their teams to consider, particularly as they move to take advantage of resources in different geographic locations. While this is hardly news too many organizations, the importance of making sure this is well understood throughout the chain of command is directly correlated with the practical importance of the information being shared.

    Target is hardly the first company in financial services to learn this lesson, but their logo made for a Business Week cover that will be hard to forget.

    For insurance company CIOs, this is also a reminder that there are a range of security threats which need to be dealt with in the near-term. With Windows XP now in the final weeks of support, many CIOs face the unenviable task of selecting from a series of less than optimal choices for risk mitigation. Doing nothing is not an option! Recently, my colleague Tom Benton published a brief on IT Security issues specifically related to insurance carriers. In light of the targeting of Target, this is something that carries renewed important for all of us.

    Information security is a messy business. It is not something that can be ignored, given the costs both financial and reputational terms. Even as plans for expanding channels and touch points became clear in our Survey of 2014 Carrier IT Budgets, the security challenges may be expanding faster than oeverall spending levels. We live in interesting times. Good hunting!