NORTH AMERICAN POLICY ADMINISTRATION SYSTEMS 2013 PERSONAL, COMMERCIAL, AND SPECIALTY ABCD VENDOR VIEW Mike Fitzgerald and Donald Light November, 2013 This is an excerpt from a Celent report profiling policy administration system vendors. This reprint was prepared specifically for Guidewire Software, but the analysis has not been changed from the original report. CONTENTS Executive Summary .......................................................................................................................... 1 Introduction ....................................................................................................................................... 2 Policy Administration Systems: Definition and Functionality ............................................................. 5 Report Methodology .......................................................................................................................... 8 Celent’s ABCD Vendor View and the XCelent Awards ..................................................................... 9 About the Profiles ............................................................................................................................ 11 Full Profiles ..................................................................................................................................... 12 Guidewire Software, Inc.: Policycenter ............................................................................................ 13 Leveraging Celent’s Expertise......................................................................................................... 20 Related Celent Research ................................................................................................................ 21 EXECUTIVE SUMMARY This report is the fifth in Celent’s biennial series that looks at policy administration systems (PASs) available to insurers in North America. Since the first report in 2005, activity level has remained high among both insurers and PAS vendors. This report profiles 42 PASs in use for personal, commercial, and/or specialty lines, with 28 full profiles and 14 limited profiles. Each of the profiles presents information about the vendor and its PAS; the professional services it offers; product history and customer base (North America and elsewhere); its functionality and line of business; usability, reporting, and analytics; technology, implementation, and costs; and a summary Celent view. Comments from reference insurers using the solution are reported in the appropriate sections. Vendors with full profiles are ranked in the ABCD Vendor View grids. The top performers in each of the ABCD dimensions receive a corresponding XCelent Award as follows:  XCelent Technology for the leading Advanced Technology score  XCelent Functionality for the leading Breadth of Functionality score  XCelent Customer Base for the leading Customer Base score  XCelent Service for the leading Depth of Service score INTRODUCTION This report is the fifth in Celent’s biennial series that looks at PASs available to property and casualty (P&C) insurers in North America. Since the first report in 2005, activity level has remained high among both insurers and PAS vendors. From January 2011 to April 2013, more than 150 P&C insurers licensed a new PAS. As of April 2013, approximately 160 insurers were in the process of implementation. Also in the past two years, nearly all vendors have made major investments in upgrading features, functions, usability, and integration methods. There have been some upgrades to modern frameworks and languages — very few solutions run on legacy platforms. Capabilities for configuring products, rules, document management, and user interfaces (UIs) have also improved, although true workflow/process design and mobile capability still lag. In general, these changes have occurred at a more modest pace than usability/personalization improvements for end users. This report profiles 42 PASs in use for personal, commercial, and/or specialty lines, with 28 full profiles and 14 limited profiles. Vendors with full profiles are ranked in the ABCD Vendor Views. Table 1 details the vendors, which lines of business are in production at one or more P&C North American insurers, and the type of profile in the report. Table 1: Profiled Vendors Commercial Vendor Personal Lines Lines Specialty Lines Ful Profiles    Accenture    Adaptik    CGI    Cover Al Technologies    CSC EXCEED    CSC POINT IN    David Corporation    Decision Research Corporation -    DecisonMaker Suite Exigen Insurance Solutions    Focus Technologies    Guidewire    Innovation Group    Insurance Systems, Inc.    Insuresoft    2 Chapter: Introduction Insurity    ISCS    MajescoMastek    Maple Technologies    Maximum Processing    OceanWide, Inc.    OneShield    PCMS    Speedbuilder Systems, Inc.    StoneRiver Policy STAR    StoneRiver PowerSuite    Tritech    Unirisx    Xuber, an Xchanging Company    (Genius) Limited Profiles    Agile Financial Technologies    Comtec Ltd.    Decision Research Corporation -    GameChanger Suite IDMI Solutions    Insurance Global Operations    PCIS    Quindel (Iter8 solution)    SAP (Camilion solution)    Silvermoon    Simplesolve    Solartis    Tata Consultancy Services (TCS)    Tropics Software Technologies    Xuber, an Xchanging Company     (Xuber for Insurers) Key: =in production in North America; =not in productioni n North America Source: Celent 3 Chapter: Introduction It should be noted that although a particular system is shown as implemented in only one major line, it still may be capable of supporting both commercial and personal business. For example, an insurer looking for a personal lines solution may wish to contact a particular commercial lines vendor because of that vendor’s technology or delivery capabilities. An insurer considering a new PAS today can choose among a number of attractive and capable systems. This report allows such an insurer to see what solutions might meet both its business needs and its technology standards. 4 Chapter: Introduction POLICY ADMINISTRATION SYSTEMS: DEFINITION AND FUNCTIONALITY DEFINITION In one sense, the definition of a policy administration system (PAS) is very simple — it is the system of record for all policies that an insurance company has written. At this most basic level, a PAS is a repository of policy-level data related to objects of insurance, coverages, limits, conditions, exclusions, duration of the policy, endorsements, and so forth. A permanent policy record is created at the time a policy is issued; and includes the complete history of the policy through renewal, termination, cancellation, and/or reinstatement. CORE PROCESSES In actual practice, an insurer uses a PAS — either by itself or closely integrated with specific point solutions — to execute a number of core processes, and relies on several types of supporting capabilities, as shown in Figure 1. Figure 1: Policy Administration System Core Processes Source: Celent The core processes fall into three broad groups, each with subprocesses:  New Business Rate Quick quote and quote Bind Issue  Policy Service Endorsements Other changes to the policy Cancellation and reinstatement  Renewal Renew Non-renew 5 Chapter: Policy Administration Systems: Definition and Functionality Supporting the core processes are several components: rules and workflow, forms and correspondence (more broadl y, content management), reporting and business intelligence, rating engine, and portals. Each full solution profile in this report includes information about whether and how a given vendor offers these components.  Rules, Process and Workflow Management: Designing, managing, and executing business rules (attached to products or processes) and workflow (person:person, person:system, system:system) during any activity or process. In a more modern PAS, rules (especially) and workflow (perhaps) will be externalized from the core code and from the presentation (UI) layer.  Forms and Correspondence (document management): Creating, managing, and using a broad variety of documents, including policy content, forms, and correspondence.  Reporting and Business Intelligence Reporting: Designing, storing, and accessing reports ranging from simple lists to multidimensional calculated variables. In general, reports are used to monitor activities by a user and by all levels of management. Business Intelligence (including more advanced analytics): Using various forms of statistical analysis to identify and present patterns of relationship and causation which an insurer can use to improve such functions such as pricing, underwriting, and claims.  Rating (optional): A stand-alone rating engine should be capable of handling complex pricing algorithms, and should integrate easily with various PASs.  Portals (optional): A portal provides a producer (or policyholder or prospect) the ability to upload submissions or other data, download policy and other information (e.g., billing or commission data), and communicate via various forms of messaging. In general it provides an integrated purpose-built user environment. It is worth noting that the last two components (rating engine and portals) are optional. They are usually, but not always, available or bundled with a vendor’s PAS. For the purpose of this report, a PAS must provide a means for rating submissions and for producers to exchange information with an insurer. Such means could be a rating engine and portal offered by the vendor; or such means could be rating engines and portals/websites provided by other vendors or built by the insurer itself. HIGH LEVEL COMPONENT AVAILABILITY Celent has limited the definition of a PAS to include a set of core processes and key supporting capabilities. But vendors do not necessarily limit their definitions of a PAS in the same way, and many have attempted to build out some or all of the end-to-end components that an insurer might need. Some insurers are just looking for a best-of- breed PAS to work with other core systems already installed, but other insurers may be looking for a vendor who can offer broad solutions for multiple areas of their insurance operations. Some of the additional end-to-end components defined here are also listed as core processes of the PAS. This is not a contradiction. A vendor might bundle a component with their PAS (for example, a billing system), but also consider it (and also sell it as) a separate, stand-alone product. Alternatively, a vendor might provide a basic level of functionality in one area, but also have an upgraded, higher cost product or an ISV partnership with a different vendor to provide an advanced solution (e.g., rating). In order to help insurers with their comparison of different solutions, each profile in this report has a table summarizing whether the vendor in question offers one or more of the following end-to-end components and whether the components are part of the base offering or sold as a stand-alone system. 6 Chapter: Policy Administration Systems: Definition and Functionality  Update Service for ISO/AAIS/NCCI Rates, Rules, and Forms: Providing current versions of bureau-generated rates, rules, and forms for an insurer that uses such content for various lines. The updates are provided in formats that are compatible with the PAS’s product configuration and rating capabilities.  Update Service for Industry Standard Rates, Rules, and Forms: Providing current versions from a standard setting body (e.g., ACORD) of generated rates, rules, and/or forms for an insurer that uses such content for various lines. The updates are provided in formats that are compatible with the PAS’s product configuration and rating capabilities.  Rating: As defined above.  Underwriting: A set of features and functions providing a robust underwriting desktop and managing complicated workflow between multiple systems.  Billing: A system to create invoices and handle collections from producers and usually from policyholders as well.  Commission Management: A system to calculate, record, and transmit information and data regarding commissions due to producers. Sometimes combined with a billing system.  Reinsurance Management: A system to record any reinsurance contract related to a policy or set of policies, and to manage the financial and reporting interactions with reinsurers and brokers.  Business Intelligence / Analytics: As defined above.  Claims Management: A system to record and transact all matters relating to a claim from first notice of loss through final settlement.  Risk Aggregation Tooling: Ability to analyze total risk by geographic area.  Content Management: Includes forms/correspondence/document management as described above. It also includes other forms of content, such as public-facing web pages, social network sites, etc.  Business Rules Management: As defined above.  Business Process Management: As defined above.  Customer Relationship Management: Allows the aggregation of data on a customer and account level view and provides utilities that streamline the communication and management of customer data.  Portal: As defined above. 7 Chapter: Policy Administration Systems: Definition and Functionality REPORT METHODOLOGY ELIGIBILITY FOR INCLUSION IN THIS REPORT In general, in order to have a full profile and be included in the ABCD Vendor Views, a PAS solution had to have:  At least three deployed North American insurance carriers, writing more than one line of business.  At least three reference clients that provide their perspective on the solution. This report profiles 42 PASs in use for personal, commercial, and/or specialty lines, with 28 full profiles and 14 limited profiles. Vendors and solutions have limited profiles for various reasons. They may be entrants to the North American market or may be undergoing significant change in the technology or business model, or may have simply requested a limited profile. EVALUATION PROCESS Celent sent a detailed request for information (RFI) to a broad set of PAS vendors. After completing the RFIs, each eligible vendor provided a briefing and demo for Celent concentrating on usability and functionality for everyday users, as well as configurability, integration, and data model issues for IT and system administration users. Celent also asked the references provided by each vendor to complete a survey and/or be interviewed to obtain their view of the system’s business and technology value. The RFIs and the reference surveys and interviews provided quantitative and qualitative data, much of which is included in this report. Vendors had an opportunity to review their profiles for factual accuracy but were not permitted to influence the evaluation. Some of the vendors profiled in this report are Celent clients, and some are not. No preference was given to Celent clients for either inclusion in the report or in the subsequent evaluations. 8 Chapter: Report Methodology