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«Policy Administration Systems for General Insurers in Europe 2011 This authorised reprint contains material excerpted from a recent Celent report ...»

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functionality and lines of business deployed; usability, reporting, and analytics, technology, implementations, and cost; and some summary comments.

Concerning fees, Celent asked vendors to provide first year licence and first year other implementation costs (work by the insurer, vendor, or

third parties) for two hypothetical insurance companies:

National Insurance Company—a single licensed company that writes in the United Kingdom, for eight lines of business, producing annual GWP of €250 million.

European Insurance Holding Company has four companies, writes in five countries (UK, Spain, France, Italy, and Germany), across 24 personal, commercial, and specialty lines of business, and has GWP of €2.5 billion.

When discussing insurance customers of the various solutions, the profiles use the terms very small, small, medium, large, and very large insurers. Very small insurers (Tier 5) have under €100 million in annual premium; small (Tier 4) have €100 million to €500 million; medium (Tier 3) have €500 million to €1 billion; large (Tier 2) have €1 billion to €5 billion; and very large (Tier 1) have over €5 billion.

The profiles also discuss how many of the advanced policy administration features a given solution provides. These features are:

Out-of-sequence endorsements Automated underwriting (New Business) Preconfigured ordering and receiving third party data Automated renewals Premium and billing accounting Statistical reporting

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Company and Product Background RDT is a privately owned UK-based company that was founded in 1991.

The PAS solution offered by RDT is called Landscape, and the solution was first released to the market in 1995. Landscape 1.0 was released in 2005, when the solution was redeveloped on the.NET platform. The current release is version 3, which was released in January 2011. The annual revenue from the product is approximately €6 million. The R&D expense on the product has been 40-50% of the product revenue on average over the past two years.

RDT considers the following factors to be differentiators of the product.

Landscape is a packaged solution with all customers sharing a common code base. Customers benefit from continual upgrades and combined investment of others.

Landscape supports full cycle policy administration, quote and buy, MTA's and renewals for all channels via all routes to market; intermediated, EDI, call centre, web, aggregators.

Supports both personal and commercial lines.

Modern interface means staff are effective in days not weeks, product launch times are collapsed, business process changes effective in minutes rather than months.

The system is rich in functionality, modern and proven.

Professional Services RDT has 48 corporate employees, 46 of whom are providing professional services and support for Landscape. The staff average 11 years experience.

Customer Base RDT has 13 deployments of Landscape in Europe who are using the latest version of the software. Landscape has eight clients in UK, and two in each of Ireland and Gibraltar. Two European clients are implementing the latest version of the software. The clients are fairly evenly spread among the different insurer sizes in the RFI. RDT has one client outside Europe. Three news clients have purchased the solution since the first of January, 2009. RDT states the target market for Landscape Copyright 2011 © Celent, a division of Oliver Wyman, Inc. 12 comprises of insurers and large intermediaries. Well known clients include Towergate Partnerships, Royal Bank of Scotland Insurance and Markerstudy Group.

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Source: Vendor RFI RDT has no clients using Landscape for Business Process Outsourcing operations.

Customer Feedback Two RDT customers provided feedback for this report. These companiess—Tier 2 and Tier 4—were using the system for personal lines. One company has used Landscape for less than one year, and the other between one and three years. The customers used a full set of features and functions but had not implemented any portals.

Implementation experiences—as shown in the diagram below—were excellent or very good in all areas, and overall, RDT receives one of the highest ratings in this area for this report. Customers refer to the company approach as “down to earth” and “no nonsense.” When making product changes, customers reports that cloning a product or creating a new product can be done within a few days. Within one customer, the business users are empowered to make almost all the changes required to the system. Training to get a new user productive on the system is moderate. Experiences of integrating Landscape Copyright 2011 © Celent, a division of Oliver Wyman, Inc. 13 with other insurer systems was reported as excellent, with customers using web services and XML. The positive score card continues with features and functions were rated as either very good or excellent.

Figure 2: Customer Feedback on Implementation Capabilities

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Source: Customer Feedback Functionality and Lines of Business Landscape offers all of the additional end-to-end. Components for underwriting, rating and update services for industry standard rates, rules and forms can be licensed as stand-alone components. Components for commission management, reinsurance management, claims management and business intelligence/analytics are only available bundled with the Landscape solution. RDT also partners with external IT vendors to offer additional components. For instance, components for document production are provided by a partnership with Thunderhead and Streamserve, and components for document management are provided by a partnership with Invu and Infonics.

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Specification of billing parameters (to be trans- Available through configuration by a nontechmitted to separate billing component) nical business user Specification of commission parameters (to be Available through configuration by a nontechtransmitted to separate compensation and bill- nical business user ing components)

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Source: Vendor RFI Copyright 2011 © Celent, a division of Oliver Wyman, Inc. 15 Landscape offers a comprehensive set of workflow management and business rules management functions. The solution also provides a graphic design environment for workflow management. All these functions are easily configured by a nontechnical user. Dynamic interviewing, a functionality where the system intelligently poses questions based on prior responses, is not available in the current offering. This functionality is in development and will be available by late 2011.

The solution comes with manager audit/review capability. Landscape has a comprehensive audit trail for all functional sections. Additionally, Landscape Workflow provides manager views of work by workgroup. Rules, workflow, content versions, transactions and correspondence are all entirely auditable.

The solution has a broad range of personal and commercial products in

production today:

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Source: Vendor RFI Usability, Reporting, and Analytics Producer portal, prospective customer portal and policyholder portals are available though programmatic modification to the solution’s code base. RDT demonstrated both a highly functional client and a broker portal to Celent.

The primary business user interface is through Windows-based thick client. Some clients distribute this using thin client technologies such as Windows Terminal services or Citrix. This interface is well suited to complex adjustments to policies, accounting functions and claims 16 Copyright 2011 © Celent, a division of Oliver Wyman, Inc.

handling. The main thick client looks is a modern Windows application with navigation through the system on the left of the main window and a menu bar at the top. Drilling down into detailed screens for items in the system usually brings up a new window, with the context in the top left, further detail and linked records along the bottom and history in the top right. A user can accumulate a number of open windows at any one time which may be a useful feature to expert users. A secondary browser based interface is available with new business, mid-term adjustment and claims notification. RDT is planning to port the user interface to Microsoft Silverlight in the next 12 to 24 months.

Graphical tools for workflow management are available for nontechnical business users. This component is based on Microsoft Workflow foundation and allows authorised users to modify the manner in which business functions operate within the package. Simple workflows can be defined using a more basic non-graphical interface.

Configuration of products and rules is handled in a separate thick client tool which is necessarily more complex than the operators interface, but is still usable by nontechnical users.

Management reporting dashboard and financial reporting data store are also provided which are easily configurable. The dashboard makes use of Microsoft reporting components.

The data model is proprietary, although the solution offers many industry standard interfaces. RDT releases the data model to insurers when required. The internal data model of Landscape is easily published to an insurer’s data model and can be mapped to an intermediate format. RDT does not provide a set of tools that allows extension of the data model and the SQL database schema although snorers have significant control over section data, code lists, etc. In recent implementations core code modification has formed 20% of the overall implementation cost with changes such as integration to third party systems, additions to direct debit and direct credit functions.

The solution supports multicurrency, however with separate charts of accounts for each currency. A policy can only be in a single currency.

The solution does not support multiple languages. However, this functionality is under development plans and is likely to be supported over the next 1-2 years.

Copyright 2011 © Celent, a division of Oliver Wyman, Inc. 17 Technology Landscape is 100% VB.NET code base. Configuration and development is also entirely done in VB.NET. The solution only supports Windows operating system and Microsoft SQL Server database. Among application servers, only Windows Server/.NET is supported.

The integration options are broad and preferred options include SOA/ Web Services, ACORD Standard XML. Other integration options include SQL calls, flat files, custom APIs and EDI. Landscape can call external systems using SOAP over HTTP and can be called by external systems in the same way.

Regarding scalability RDT note that the system has demonstrated 0% down-time due to software errors over the past five years across all customers. The largest deployment supports over 400 concurrent users, of which 250 use Landscape thick client. Landsscape.NET runs in an environment with 10 million policies, including historical data.

Implementation and Costs The average time from project initiation to getting the first line of insurance live takes about four to six months. The average time for subsequent lines of insurance is one to three months. The typical size of an installation team is between six and ten people. The typical size of an installation team is between twelve to twenty people. The typical split among the employees is 50% from RDT and 50% from the Insurer.

RDT does not work with external third party systems integrators, since RDT has expanded its implementation teams.

Most of the first year cost typically goes in software licensing (40%), followed by installation and customisation (35%), and annual maintenance (20%). The remaining 5% is spent on training. Perpetual license and term license are preferred revenue models, however, RDT is prepared to accommodate customer preferences. Currently, RDT does not actively offer a shared risk pricing model, however, it is open to the idea. The parameters that form a basis for the license fee are number of functional components, number of lines of business, number of concurrent users, policy volume, premium volume, number of total users and an enterprise license or flat fee.

For the national insurer in the RFI, the initial license plus maintenance fee could vary between €500,000 and €1 million. The total implementation costs excluding license would again be €500,000 to €1 million. This project would require eight to ten staff from the insurer. For the european insurer detailed in the RFI the initial license fee would be 18 Copyright 2011 © Celent, a division of Oliver Wyman, Inc.

between €6 million and €10 million, with the total implementation costs coming to €3 million to €6 million. In this case the insurer would typically commit around 40 FTE. In both cases the continuing maintenance fee would be 20% of the initial fee.

Summary Landscape is a mature system that is seeing continued investment from RDT. In addition RDT are leveraging Microsoft investment in their own technology stack to the benefit of the product. Celent welcomes the investment in further implementation resources and commends RDT on their strong customer feedback. RDT has proven capable of working with insurers of all sizes and would sit well on any English speaking insurers short list.

Copyright 2011 © Celent, a division of Oliver Wyman, Inc. 19 20 Copyright 2011 © Celent, a division of Oliver Wyman, Inc.

Copyright Notice Prepared by Celent, a division of Oliver Wyman, Inc.

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