Banking on an agile approach to a complete life insurance system replacement

“We definitely see the advantages of having a single platform for the entire solution.”

By Martin Stewart : 2nd of December 2018

The situation:

The life insurance market in New Zealand is dominated by several large international companies. But that hasn’t stopped a small insurance team from one of New Zealand’s major banks deciding to take an aggressive approach to replacing their ageing new business, claims and policy administration systems.

With critical functions relying on increasingly outdated and difficult to maintain systems, the company was unable to extend their product set, lacked a depth of insight into the business, and were limited by manual workflows. The team became interested in exploring the efficiencies that newer technology could offer.

The challenge:

Limitations around annual IT spend meant the team was faced with progressively replacing their old technology, rather than undertaking a larger wholesale replacement. As a result, the team started by replacing a non-web based new business quoting system with a web-based system that could quote and underwrite new business and mid-term changes.

According to the company’s Business Solutions Lead, “At the time the new business system we were using was aging and was effectively end-of-life in terms of the underlying technology it used.”

As part of the process to find a replacement, the team decided that their existing system only went part of the way in terms of the entire new business process flow. So they started to look around to see what their options were.

“Whenever these projects come along, we never want to do simply a like-for-like replacement. We thought we could find something that matched where we saw processes going in the future, something that allowed us to work smarter and better. And that’s where Axe came up. What we were shown at the time was enough for us to think there’s great flexibility here, the costs were right, and away we went.“

The process:

The project was run in 3 distinct phases, starting with the new business quoting system in 2011, the replacement of their claims system with Axelerator in 2016, and a final phase which will see a complete replacement of the Policy Admin system.

Initially the company mandated that the team (a blend of developers from Axe, the client and a local software integrator) follow a waterfall approach, but over time as the company gained confidence in the team’s ability to deliver, they moved to an agile development framework.

The company allocated a fixed annual budget to support a permanent team who could work through a regular pipeline of work under an agile project style. This avoided the stop-start that is inherent with an annual CAPEX approval process. Once the new business project was complete, it was time to look at the claims system.

“We had well and truly seen end of life for our Claims as it was an Access database, and as an insurer the claims process is one of our most critical processes. We had to do something that was long overdue and having the experience with Axe on the new business system we didn’t really look for any other options because both the process we went through and the product experience were good enough to simply expand out the functionality and use the Axelerator system to manage both.”

The pipeline approach to development that had been put in place after the new business phase meant the team had time to continually enhance the system documentation, build an extensive regression testing suite and automate deployments with scripts. As a result, while the initial new business system was a relatively large project with an Axe team of about 10 working for 12 months, the claims project was achieved with a much smaller team of around 4 Axe developers over 8 months.

Since then, an average of 2 developers and one tester from Axe plus 4 staff from the client have been not only maintaining and enhancing the existing systems but progressively working through the replacement of the policy admin system and data migration.

Over the next 18 months the replacement of the policy admin system will be completed. This will happen in stages, with first the other online transactions being moved to the front end, followed by the renewal run and premium calculations. After this the back-end system will become the master database that supports commissions, reinsurance, payments, receipts and general ledger postings.

The final stage will see all the data moved to the Axelerator system, instead of extracting it policy by policy when needed.

The benefits:

Efficiency improvements have come in a number of areas. Because all functions now use the same code base and system architecture Axe’s developers are able to work on all areas of the solution at once, which means regular releases offering frequent improvements and resolving issues across all systems.

“When we first started we were probably only doing one or two releases a year which were so large they were nearly impossible to test and carried greater risk. Now we’re doing 6 to 7 a year and the business sees the benefit of that. Our key stakeholders are very appreciative of the volume and extent to which we are able to adapt and implement new things quickly.”

“And while we haven’t yet invested time in exploring the potential that exists in our newly connected data in terms of product and pricing changes, I have no doubts that we will be able to do that in time based on what we’ve implemented and the way in which we are capturing the data.”

Final thoughts:

“We definitely see the advantages of having single platform for the entire solution. One system to rule the world, you might say! Some people might argue it’s not a good idea to put all your eggs in one basket going with one vendor.”

“But I think the fact that we’ve decided to go down that path and invest in having everything with them and their technology speaks volumes for the product – and the company overall.”

“And in the end, I think that our experience shows that it is possible – and practical – to progressively replace old technology provided you start with technology that has the potential and flexibility to replace all current systems.”


Rethink, don’t reboot your commercial insurance systems

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