Filed Under:Carrier Innovations, Technology Solutions

Case Study: XL Group Integrating Multiple Systems

Global carrier undertakes a three-year technology strategy that includes FirstBest underwriting solution.

In late 2010, XL Group introduced a new business strategy that was designed to change the direction in which the insurer was heading to include global expansion with new business units, new products, and more complex risks. The new strategy presented a challenge to the carrier’s IT department, headed by Robin Arendt, Global CIO.

“The [current] technology was not going to support the business direction and what it was going to take for us to expand, or to introduce new business units,” says Arendt. “The older technology was going to prohibit us from expanding and that expansion was the key to driving profitable growth for XL.”

Like many large insurers, XL Group has multiple systems it has acquired through acquisitions over the years.

“We have multiple policy writing systems thatdon’t talk to each other and we have data quality issues as well,” says Arendt. “This project was unique in the sense that the business strategy we wanted to undertake was going to push the envelope.”

Arendt laid out the problems XL needed to solve: speed-to-market, improved data quality, and integration of analytics.

“What we were looking for was a dynamic, flexible platform that was easy to configure knowing the complexity and diversity of our product suite,” she says. “That was a big driver for why we looked at FirstBest Systems and why we ended up choosing FirstBest. I’ve been in this space for 23 years and haven’t seen such a business-friendly, intuitive, comprehensive software package out there yet. I was impressed.”

Over a period of nine months, XL performed its due diligence and conducted a proof of concept that Arendt feels proved to everyone that the FirstBest underwriting platform will be able to support the XL strategy and vision.

Part of that nine-month timeframe involved introducing an overall IT strategy for XL. The carrier put together a three-year technology roadmap. The FirstBest platform is just one of eight initiatives that Arendt explains are running in parallel.

After completing the proof of concept for XL Group’s workers’ compensation line of business, the carrier and the vendor are now deep into the development and working toward delivery in the first quarter of 2011.

“Our solution set is best-of-breed, so integration is probably our biggest challenge and risk point,” says Arendt. “Not only are we going to have to plug into our back-end legacy systems, we also are combining FirstBest on the front end from the data capture point to be the single source for our underwriters to rate, quote, and issue.”

The challenge involving integration comes from the fact XL is implementing three different solutions from FirstBest, Accenture Duck Creek, and PCIS.

“There are going to be challenges, but when I think about what has made us successful so far and why I think this is going to be successful going forward, we are mitigating our risk into different areas,” says Arendt. 

Arendt’s IT group has a strong business sponsorship along with the right business resources that understand the importance of the project, according to Arendt. In addition, XL is rolling out the project incrementally.

“We are following FirstBest’s best practices on chunking up the scope and rolling it out by product line vs. a big-bang approach,” she says. “If you have business sponsorship and the right incremental approach I think it mitigates the risk of a typical migration/integration challenge.”

With such a large scope, Arendt realized she needed a stellar team on this project to make sure it could happen.

“We’re leveraging FirstBest for the critical roles as far as architecture and product knowledge,” she says. “We did due diligence to pick the right partners, so we have a thorough global sourcing program with three key suppliers. As our key partner we chose Accenture, so there was the due diligence of software as well as our consultant partner.”

XL has four different business units and 14 different product areas that need to be tackled.

“As we roll it out we are taking product lines as well as increased capabilities and functionalities,” Arendt says. “It’s a two-pronged approach. It’s not just building a transactional system; it’s about imbedding analytics into our predictive modeling and pricing automation into this platform so there really is one place for the underwriters to go. We’re bringing in internal and external data and making sure we leverage that. When you look at the entirety, the underwriting system is just one piece of our business model.”

John Belizaire, founder and CEO of FirstBest, reports he is impressed with the team Arendt has put together to lead this effort from the program management level all the way down to the staff working on the company’s architecture.

“They took time to look at how best to lay out the project, taking into account potential risks and integration items between three new systems and also looking at an architecture that lays the groundwork for XL to achieve their goals,” he says. “The key to success with these projects is spending time planning out the decisions with a lot of focus around getting value quickly and reducing risks.”

XL Group chose workers’ compensation as the first line of business for the implementation.

“We worked closely with the business units, not only laying out our vision, but the best way to prioritize driving value for the business up front,” says Arendt. “ForNorth America, workers’ compensation is our biggest area of growth. When you look at the different business areas across XL between p&c and reinsurance, we started focusing out of the gate onNorth Americaand where we see the market opportunities and where we can get the scale. The project was prioritized based on business value.”

In addition to the XL Global project, this has been a special year for FirstBest as well. The company recently announced it has achieved 125 percent growth in orders over the previous year as well as doubling its customer base. Belizaire cites demand for its front office suite of applications as the company driver.

“FirstBest is seeing great interest from large world-class carriers eager for greater profitability, flexibility, efficiency, and integration from their underwriting and policy systems,” he says.” Our explosive growth in 2011 validates the need for a common and strategic front-office solution for the entire insurance enterprise. We are laying the groundwork for multi-line carriers to transform their infrastructure to deliver account-centric underwriting across the enterprise, and to deliver truly collaborative and efficient service to their agents and brokers.” 

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