A gymnast swinging gracefully through anuneven bar routine; a running back making a spin move on thegridiron to avoid a would-be tackler; a figure skater executing aperfect salchow jump: All these athletes possess strength andskill, but the moves they make require something more—agility.

Athletic agility is defined technically as “the ability tochange direction in efficient and effective manner.” Inperformance, it is much more than that and the most agile athleteis often the one that outperforms his or her peers, crossing thefinish line first or earning the highest score.

The commercial insurance business isn't an athletic competition,but agility—in a business sense—is just as important. Companiesthat can change direction efficiently and effectively in responseto or preparation for market conditions are often the ones thatoutperform the competition.

The desire to increase business agility has spurred interest inmodern commercial lines policy administration systems (PAS) toreplace inflexible legacy platforms. In its most recent PolicyAdministration Systems Vendor market report, Celent found that over230 insurers had licensed a new policy administration system, andabout 100 were in the process of implementation. Additionally,Celent noted that commercial PAS vendors have made majorinvestments in upgrading features, functions, usability, andintegration methods.

“There has been a sustained interest in new policyadministration systems,” says Donald Light, report co-author anddirector, Americas P/C Practice at Celent, adding that companieslooking at PAS replacement fall into three main categories. Aboutone-quarter—typically bigger companies—still have homegrown,mainframe, COBOL systems. Another half is dealing with legacyvendor packages that often have been highly customized. Theremaining quarter have multiple contemporary systems and arelooking to consolidate to a single platform and upgrade in theprocess.

The Goals of Agility

For some commercial insurers, the time has simply come for a PASupgrade. “The 'green screens' are still around, although they arebecoming less common,” Light says. “What is more common is thatcarriers have a 'webified' front end for users, but the processingof the system is based in legacy code that is difficult to maintainor change and is impeding their ability to be agile.”

Union Mutual of Vermont Companies (UMVT) is inthe final stages of replacing its 25-year-old PAS platform. “Ourlegacy platform is a green-screen, AS/400 COBOL system we've hadsince 1988,” says Gary H. Ouellette, vice president operations,technology, and enterprise risk for UMVT. “There is no vendorsupport and we were finding some serious issues with COBOLcompiling. It was also very difficult front-ending the legacyplatform to the agents or making it look like it wasmodernized.”

UMVT launched the ISCS SurePower Innovation PAS in January 2012after an eight-month installation, beginning with businessownerlines. Although to a large extent it was simply time for a systemupgrade, the insurer also had an eye to agility.

“We had identified a number of ease-of-doing business andinternal efficiency initiatives, such as online endorsementprocessing and delivering greater web capability to agents,”Ouellette said. “We realized that the cost and timeline of tryingto build those out on the legacy system was encumbering, not onlyin additional manpower in IT, but in doing the architectural anddesign processes around the system because it was no longersupported by the vendor.”

“There's nothing wrong with a mainframe-based system, butthere is very little innovation taking place in the market from avendor standpoint on that platform. Therefore, you're limited tobuilding system capabilities yourself, which is not where we wantedto be on a go-forward basis,” says Piyush Singh, CIO, GreatAmerican Insurance.

Great American is in the midst of an architecturaltransformation initiative, going division by division. AlthoughSingh declines to name specific platforms that are involved, hesays that agility is a key factor in the selection of applications.“As new business needs and delivery methods, such as mobility,evolve, we need a foundation that will be able to move with thatchange,” Singh says. “We need platforms that will put us in abetter state from a foundational architecture standpoint whilecontinuing to provide business with the evolving services andcapabilities it requires.”

Agility in commercial lines PAS falls into three main areas ofemphasis: business processing, marketing, and systems developmentand deployment.

Agile Business Processing

In the diverse and complex world of commercial lines, a keybusiness challenge is getting the right price for the right risk.How carriers meet that objective depends in large part on thebusiness they target.

“There's been a lot of emphasis on straight-through processingin small commercial lines,” Light observes. “It's nothing like thelevel [of straight-through] in personal auto or homeowners, buthaving the policy admin system provide exception-based or evenno-human-touch processing from start to finish is getting easierwith modern approaches to rule sets, automated process flows, andautomated access of information.”

However, much of commercial lines involves larger accounts thatdon't lend themselves to commodity processing. Celent's “Top 11”features of advanced PAS functionality (see sidebar) includeseveral areas of business processing agility for non-STP accounts,including automated alerts and dynamic interviewing, that can speedaccounts to the finish line.

“For larger commercial, agility [in PAS] is about the ability tochange workflow and processes to reflect the differentcharacteristics of complex risks,” Light explains. “That startswhen a policy comes in. Getting that application prepared to thepoint of pricing and decision-making as efficient and agile from atechnology point of view is important.”

Anil Chitale says that in the area of decision support,information-sharing and collaboration technologies are key featuresof a modern PAS that commercial carriers seek. The objective is tostreamline the lengthy information-gathering phase that hastraditionally characterized larger commercial lines.

“With the exception of commodity products in commercial lines,you need to do collaborative underwriting,” says Chitale, seniorvice president and P&C division leader atMajescoMastek.

“It [underwriting] is an intensive, back-and-forth processbetween the underwriters and the agents submitting theapplication,” he explains. “You need systems to adapt, that haveprovide a collaborative environment such as the ability to chat,attach documents, and have automated notifications.”

Sentry sought several business agility goals with itsimplementation of Guidewire's PolicyCenter for its truckingbusiness. PolicyCenter replaced two separate systems that had beenused by agents and underwriters, respectively, depending on thesize and characteristics of the policy being processed.

“From an agents' standpoint they can now enter all business intoone system,” explains Kevin Lang, Sentry's IT director. “That alsohelps drive consistency across product lines by putting rating andforms management under one system instead of two.”

Sentry was able to provide “no-touch” underwriting on someaccounts and increase overall speed-to-issuance on all accountsthrough scorecard rating. Using data from third party and internalsources, such as financial reports, credit scores, and motorvehicle information, along with information captured during thequote process, Sentry can present the agent with a price on manyrisks without requiring underwriter involvement.

“In the past, we relied on underwriting adjustments a lot in ourpricing, but you can't do straight-trough processing with thatapproach,” Lang says. “Our scorecard lets us get the right price upfront and lets underwriters use manual credits and debits as theexception rather than the rule.”

Underwriters and agents can see the rating scorecard along withthe inputs that drove that score, identifying areas of concern thatdrove the price up. “It's given both underwriters and agents toolsto collaborate,” Lang says. “It's helped us be more granular in ourpricing and faster in our policy issuance as a result.”

The system also incorporates rules-based workflow and decisionsupport for accounts that need underwriting referral. “In the past,if business needed underwriting review, agents would send in theapplication, it would be keyed in, there would be an [electronic]'route slip' process to review it, and it was up to the underwriterto recognize things to look for. Now there is guidance aboutadditional underwriting questions that need to be answered,referrals for reinsurance, and so on,” says Lang. Cases can also beelevated for authority considerations and managers can monitorworkflow.

Also essential to agility, the Guidewire platform providesprocess management and design capabilities that allow Sentry tomodify workflows through configuration. “In the legacy environment,we didn't have that configuration framework. Any process changerequired a lot of coding to get workflows to trigger correctly,”Lang says.

Marketing Agility

“A PAS that does not allow insurers to model and dynamicallyprototype products through some type of a configuration functionseverely limits market agility,” says Frank Petersmark, CIOadvocate with enterprise architecture consultancy X by 2. “Insurersneed to quickly create 'me too' products to match competitors, andthey need the ability to model 'what if' products for first moveradvantage in the market.”

RLI Corp had been using a rating engine from Duck Creek,acquired by Accenture in 2011, for many of their product lines. In2010, the insurer launched its Professional Services Group totarget businesses such as law firms, brokerages, and other firms.RLI looked within its existing systems portfolio for a platformthat could serve the new group and chose to extend the PAScapabilities of the Accenture Duck Creek platform.

“We needed 'just-in-time' technology,” says Murali Natarajan,vice president, information technology, RLI Corp. “We needed to geta product to market quickly and we needed technology that couldmove at the same pace as business. The Duck Creek platform helpedRLI accomplish that.”

RLI's goal is to have four professional products—workers'compensation, commercial auto, businessowners, and excessliability—in all 50 states with a technology platform that can keepup with rate, form-filing, and other bureau changes. Today thesystem supports workers' compensation business in 47 states, andthe remaining lines in 28.

“Following the initial deployment, we wereable to achieve economies of scale through the use of templates,”Natarajan says. “It takes about one week per state per product todeploy today—it's gotten to be almost like an assembly line.”

Templates also enable market agility at Meadowbrook InsuranceGroup, which upgraded its Instec Quicksolver platform to the latestversion in October 2012.

“As we deploy a new coverage or a rating algorithm, we are ableto leverage what we've done in the past. Even though a new coveragemay not be exactly like another, we can roll it out much morequickly than starting from scratch,” says Mark Sundquist, ITmanager, Meadowbrook Insurance Group.

Celent identified that the ability to design and manageproduct-specific rules and forms is a key feature of a moderncommercial PAS. Light adds that true marketing agility requiresputting the power of design—as well as changes to rates, rules, andmore—in the hands of the business.

“It's much faster, and often much easier, to have a businessanalyst or underwriting or product manager handle those changes,”he says.

“We can already make some changes to the ISCS system usingbusiness analyst resources,” Ouellette reports. “There are XMLtables that can be accessed and different levels of configurationthat can be moved to production.”

A 2013 installation of ISCS's “Power Tools,” a configurationworkbench, will expand those capabilities even more. “We willreally be looking to create a repeatable process that allows thebusiness analyst community to exclusively handle all the rates,rules, forms, type of configuration work, which for us is what ittakes to run the insurance enterprise,” Ouellette says. He projectsthis will reduce the time to make changes by 30 percent and willsave up to 40 percent on resource costs.

UMVT is currently live on the ISCS system for businessowner,personal auto, home, and umbrella, accounting for about 96 percentof its companywide premium. The insurer is in the process of movingremaining lines—dwelling fire, business auto, and commercialumbrella—to the platform as well.

“We now have a platform that offers internal staff a fullymodernized data repository, full document imaging and automatedworkflow, and that supports a true, 24/7 portal for ourdistribution channel, adjusters, and insureds,” saysOuellette.

Business-level configuration is playing a key role inspeed-to-market agility at Sentry as well. “Previously if therewere rate changes, they were sent to IT where we made the changes,worked with the business area to test the changes, and moved thechanges to production,” Lang says. “With the new system, thebusiness can go into the rating engine, update rates andalgorithms, and promote the rates. It's moved flexibility to thebusiness and helped them respond faster to marketconditions.”

Systems Agility

Part of the interest in commercial PAS upgrade is driven by thefact that modern architecture has made the upgrade process morepalatable.

“Making upgrades from older to newer releases quicker and lessexpensive is something we've seen all the policy admin vendors workon,” Light observes. “To take the configuration and customizationdone on an early version, unplug it from the main body of thesystem, and plug in those changes to a new system is much easiernow than it has been in the past. It is still a lot of time andwork, but the amount of resources that are needed is substantiallyimproved compared to a few years ago due to how the architecture isenabled in modern platforms.”

Meadowbrook saw the architectural benefits to agility inits upgrade, a four-month effort. “One of the nice things aboutthis particular system con

version in contrast to others I have been through is that whenInstec upgraded to .NET, they designed the system to use theexisting objects and the existing database. There was not a lot ofrewriting of code to make the jump,” Sundquist says.

“The new architecture also allows us to leverage web services tobring in more underwriting information such as geospatial data,motor vehicle, Polk [automotive] data—anything an underwriter feelsis important, we can integrate seamlessly,” he adds.

Sundquist believes the new platform is more adaptive to thechanging needs of its agent base. Currently the system is accessedby agents via a Citrix-based connection—the same method as theprevious version. However, Meadowbrook is exploring different meansof web-based system delivery.

“With its .NET architecture, the Instec system is a richInternet application that we can offer to agents via the web. As westart to look at the deployment of agent portals, the fact thatQuicksolver is browser-based allows us to do more point-of-sale andmobility applications for agents,” he says.

At RLI, the Accenture Duck Creek platform fit well with RLI'sservice-oriented architecture (SOA), which the company has beendeveloping since 2007. By connecting applications through acentralized enterprise service bus (ESB), RLI's SOA avoids creatingthe web of point-to-point integrations common in the industry,blamed for inhibiting both systems and business agility and makingit difficult to upgrade systems and components over time.

“Our goal within our SOA is to create an event- andmessage-driven architecture,” Natarajan says. “The objective is tohave the right message delivered to our ESB at the right time, sowe can fire off different processes downstream. Duck Creek gives usthat capability.”

Great American has also been on the journey to SOA for severalyears as well. “SOA gives us the flexibly to be nimble for the longhaul. Every system is connected to an ESB so that everything talksto each other through canonical XML,” Singh says.

“The key to enterprise agility for us is SOA,” Singh adds. “Itallows us to connect various applications in a nimble fashion andeasily replace applications that are no longer viable, whilekeeping functionality and user experience the same from theend-user standpoint.”

Becoming Agile

Agility in commercial lines involves bringing new products tomarket faster through modeling and prototyping; changing rates andrules without involving IT; providing automated informationgathering and underwriting decision support; launching new systemcapabilities quickly and when the business needs them.

“All of these capabilities address agility and should be tablestakes for competitive carriers. For carriers that can't do this,the way to fix it is to implement one of several modernized PASplatforms available in the market today,” Petersmark says.

“Of course this is easier said than done, as PAS modernizationis non-trivial for carriers both in terms of financial and resourcecommitments,” he adds. “However if they don't do this, theiroverall agility in their chosen markets will continue to be quitelimited.”