Say Goodbye To The BPO Model
Cypress Insurance (Jacksonville, Fla.; about $130 million in written premium) relied for more than a decade on a business process outsourcing arrangement to successfully deliver multiple core system functionality, but new business dynamics and plans for the future drove a decision to move to a software-as-a-service delivery model, according to senior VP and CIO Dan Colarusso. This past October, the P&C carrier, which underwrites homeowners and general liability in Florida and Texas, went live on a single SaaS-based version of MajescoMastek's (New York) STG Suite.
"For years, our product and marketing departments wanted to control their own destiny, managing rating, regulatory and other product changes independently of IT," Colarusso comments. "We wanted more control of the policy administration process, greater speed-to-market, quicker product development and to give our agents the ability to better serve their customers."
Making the transition from BPO to SaaS was a process of going from outsourcing to insourcing that amounted to building an insurance company, in Colarusso's account of the initiative. "We needed a new policy administration system, new billing, new general ledger, a new claims system, new first notice of loss and various other systems," he recalls. "It was creating infrastructure to support an entire insurance operation."
Cypress selected the STG Suite after considering 22 vendors and then narrowing down to two. The insurer has implemented a technology architecture where the policy administration system serves as a central hub, surrounded by ancillary systems. Colarusso describes expanding concentric circles of functionality branching out from core policy and billing systems to include ease-of-use features for distributors through a consistent UI, agency portal, and a paperless option for bureau and data call reporting capabilities. "In a final concentric circle we used a number of proven industry data providers to help us create the kind of process efficiency we were looking for such as [Experian; Boston] QAS for address scrub, IVANS [Stamford, Conn.] for downloads, ISO 360 [Jersey City, N.J.] for replacement values and Perr & Knight [Santa Monica, Calif.] for staff reporting," Colarusso notes.
"While policy is the heart, we're also developing a data warehouse structure drawing from policy, billing, general ledger and claims," Colarusso adds. "We're transforming and normalizing that data, using a BI tool to provide reports so that the business can better understand what we're doing and where we're doing it, and make better business decisions based on that consolidated data."
In addition to the kind of business visibility and flexibility provided by the move to SaaS delivery, Colarusso cites an economic motive. "We wanted the benefit of modernized architecture without having to develop the internal expertise and additional IT resources to be able to run and maintain it," he explains. Through the new infrastructure, he adds, "We have all the benefits of security, anti-virus, anti-spam, redundant disaster recovery, physical redundancy and SLAs with 99.99% uptime."
Cypress expects to enjoy efficiency gains of 50% as a result of its cloud strategy, the CIO explains: "I now have predictable and affordable monthly costs; we enjoy automatic upgrades and backups; we have scalability with on-demand network storage and processing; and we have a single administration point to manage features and policies, simplifying administration and reducing support time and costs." -- Anthony O'Donnell
Nathan Golia is senior editor of Insurance & Technology. He joined the publication in 2010 as associate editor and covers all aspects of the nexus between insurance and information technology, including mobility, distribution, core systems, customer interaction, and risk ... View Full Bio