In todays world, where snap decisions are a necessity at times, insurers face a difficult choice: Make a fast decision even if its based on incomplete information, or find a way to get all the data needed to make an informed decision quickly. For Chubb Specialty Insurance (CSI), a division of the Chubb Group of Insurance Companies, the answer was to get its hands on all the data needed to rate policies on an exposure basis.
The company did not have a good process in place to improve the rating process, says Mark Berthiaume, senior vice president for information technology at CSI. It was all spreadsheets, he explains. The original plans called for us to build our own [rating engine]. But we decided we should at least look in the marketplace.
The insurer turned to technology consultant Accenture to conduct an industry scan. We went through the process, and Duck Creek [Technology] came out as the only [vendor] we wanted to evaluate further, Berthiaume says.
Chubb was clear in its direction. We knew the way we wanted to improve our practices was to implement a system that enforced the discipline of rating on an exposure level, says Berthiaume. We wanted a solution that would meet Chubbs requirements for standard technology compliance. We wanted a Web-enabled system to extend this into the future. We also wanted this to integrate with our existing systems.
The Duck Creek engine was tailored specifically around those requirements. The engine doesnt have its own database, and it doesnt persist to a database, says Berthiaume. It calculates a rate based on something given to it and then gives an answer back. We like that because we had a whole suite of systems we wanted to wrap around the engine.
The Chubb actuarial department drove the project on the business side with IT handling the technology issues and Chubbs vendor management organization negotiating the contract._For Chubb, though, the ratings engine from Duck Creek was just one piece of the puzzle. The insurer designed its own GUIs for developing the data capture capability, where exposure information was placed so it could be rated, and capturing other information that helped from a management reporting standpoint. We separated the Duck Creek component from what we wrapped around it, says Berthiaume. The GUI has been very popular. It performs well, it looks good, and the features are good.
One technology problem encountered by Chubb involved large manuscripts that were running slower on the new system, Berthiaume states. Duck Creek took care of that by upgrading its rating engine. Other issues involved integrating the rating data model with Chubbs corporate data model. They were challenges that were from a business or workflow standpoint that we had to address, he says.
Chubb operates on a WebSphere server. Berthiaume says the company had to upgrade to Windows 2000 because the rating system wouldnt run within an NT environment, which was the previous environment used by the insurer. He says Chubb used MQ Server to integrate the ratings engine with other parts of the system. Its a thin-client Java WebSphere application that is integrated within the specialty systems using XML and MQ, he explains. The company opted for a Web-based system even though it didnt need one immediately. From a performance standpoint, thin client has helped us on our own network. It also will make it more open if we were to offer this to parties outside of Chubb, says Berthiaume. We have no plans for that right now, but we wanted to have that feature available to us.
The specialty insurance line currently has 75 percent of its policies rated through the new system. Were now capturing all the data on every exposure were insuring more efficiently, says Berthiaume. Thats not information we easily had available to us in the pastit was in spreadsheets and was not effectively structured. We now have structured data sitting on our database that we can go back and look at to see how that piece of business was priced.
Berthiaume feels it is difficult to define an ROI on such a project, but management is sold on the fact this was an important strategic step. The ROI is the data, he says. Thats what this was put in place forto get hold of our exposure-based rating information and make intelligent pricing and product decisions with it.
CaseFile
The Challenge: To obtain better information on exposures being underwritten.
THE COMPANY: Chubb Specialty Insurance
NET WRITTEN PREMIUM: $3.3 billion
WEB SITE: www.chubb.com
THE SOLUTION: Example Server from Duck Creek Technologies
WEB SITE: www.duckcreektech.com
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