Hosted Policy Admin System MUSIC to Startup's Ears

As an organic startup led by a seasoned management team, Montpelier US Insurance Company (MUSIC) promised its parent company that it would hit the ground running -- fast. "After our former company was acquired, our team established a relationship with Bermuda-based Montpelier Re Holdings," explains Patrick Porter, VP and controller. "MUSIC was officially formed in June 2007. Our goal was having a policy admin system operational and writing business by March 1, 2008."

MUSIC, which was formed as a division of Pembroke, Bermuda-based Montpelier Group (US$2.9 billion in total assets), began the policy admin system hunt immediately, leveraging the Insurance Accounting & Systems Association (IASA) Annual Conference and Celent research to identify 10 potential vendors, according to Porter. Following requests for proposals, he notes, three vendors responded, and by November 2007 Westborough, Mass.-based OneShield's Dragon rose to the top.

"A modern Web-enabled architecture was key to permitting our people to work remotely," Porter relates. "Also, OneShield's tool kit promised to make administration easy enough that hiring a programmer was unnecessary."

The vendor's industry expertise sealed the deal, Porter adds. "OneShield's representatives ... spoke in insurance language, which made it clear they understood our industry," he asserts. By contrast, he says, competitors, which Porter declines to name, approached the project primarily from an IT standpoint.

To get the core system up and running within a six-week window, OneShield provided all of the initial implementation, configuration, integration and hosting services. "Due to the compressed time frame, we chose to implement functionality incrementally and delay receiving the full benefit of the system," Porter explains.

Indeed, OneShield made the deadline. "We opened our doors with the ability to underwrite general liability," reports Porter. "This included full integration with Vertafore's ImageRight (Bothell, Wash.) and Oracle's Documaker (Redwood Shores, Calif.) as the foundation for straight-through processing."

Next, billing functionality was added. "Although billing was completed in July 2008, it later required repair and cleanup," Porter concedes. "We were the guinea pig for actually integrating the ... electronic billing module, which OneShield had previously acquired from Mellon Financial Corp. [now Bank of New York Mellon]. The underlying data transformation proved more challenging than OneShield had expected. In retrospect a fully developed billing system within the core product would have been advantageous."

During the first half of 2009, integration of the policy admin platform with MUSIC's homegrown data warehouse was completed, additional business lines went live and reporting capabilities were enabled, according to Porter. By the end of the third quarter, he says, the claims module will be completed and then custom rating engine development will begin. Once these tasks are finished in mid-2010, Porter notes, the carrier expects to extend the system to its agent network.

Of all the challenges of launching a new policy admin platform, the only unanticipated hurdle has been administrating the Oracle database that serves as Dragon's foundation, Porter reveals. "We're otherwise a Microsoft (Redmond, Wash.) shop," he explains. "So we can't bring OneShield in-house until we develop our own Oracle expertise, which we plan to do over the next two years." At that time MUSIC expects to migrate the system onto three in-house HP (Palo Alto, Calif.) servers, he says.

Yet staying focused on core business processes proved to be a winning strategy, according to Porter. "We wrote $57 million in premiums from March to December 2008," he says. "We accomplished this by generating transaction volume first, and then chipping away around the edges."

Not surprisingly, Porter credits OneShield with helping MUSIC exceed expectations. "STP was an unachievable pipe dream when we started, and the efficiencies are significant," he says. "Presently our revenue per operations staff is about $4 million annually, but we project that will double to $8 million. OneShield has absolutely enabled our business to get off the ground successfully. Most important, we now have the infrastructure in place to take the company to the next level."

Case Study Profile

company:
Montpelier US Insurance Company (MUSIC), a division of the Montpelier Group (Pembroke, Bermuda; US$2.9 billion in total assets).

lines of business:
P&C, excess and surplus.

vendor/technology:
OneShield's (Westborough, Mass.) Dragon policy administration platform.

challenge
:Implement a Web-enabled policy admin system to support a rapid business launch.

Anne Rawland Gabriel is a technology writer and marketing communications consultant based in the Minneapolis/St. Paul metro area. Among other projects, she's a regular contributor to UBM Tech's Bank Systems & Technology, Insurance & Technology and Wall Street & Technology ... View Full Bio