CNA Supports Product Differentiation Strategy with Oracle Insurance Insbridge

Insbridge contributes speed, agility and operational efficiency to CNA’s market segmentation strategy, which the company believes will translate into improved combined ratio.

(CNA’s headquarters on Wabash Avenue figures prominently in the Chicago skyline.)

CNA (Chicago; over $9.5 billion in 2012 revenue) has sought to distinguish itself from other commercial insurance carriers through a market strategy focusing on key segments, such as technology, healthcare and construction. In order to fully support that differentiation strategy, the carrier has embarked on a multi-year initiative to deploy Oracle Insurance’s Insbridge Rating and Underwriting.

“That business initiative created a burden for our systems to respond, so we looked for a rating engine to better support building customized products and meeting the needs of our customer base,” relates Lindsay Lovvorn Fassett, associate VP and business lead, CNA. “To go after segmented business, we need to be more agile, getting innovative projects out the door faster.”

Lindsay Lovvorn Fassett, CNA.

Lindsay Lovvorn Fassett, CNA.

In 2011 CNA began a search for a suitable standalone rating engine to replace existing rating capabilities embedded within its policy administration systems to support its enterprise rating direction, according to Lovvorn Fassett. “We had a very detailed RFI/RFP and proof-of-concept process to explore candidates,” she recalls. “We looked at all of the options out there, and compared them head-to-head – we were very diligent about our selection.”

CNA’s IT, actuarial and underwriting departments – whom Lovvorn Fassett characterizes as the main stakeholders in the initiative – identified key criteria for selection. “IT looked at deployment, ease-of-integration, server configuration and database support,” she says. “We had actuarial and underwriting involvement to pick the most user-friendly option, because we were moving the building and maintenance of rates from IT to actuarial – it had to not only handle their complex actuarial logic, but also be user-friendly.”

In exploring the Oracle Insurance offering, CNA was impressed by Insbridge’s testing tools and reporting capabilities, according to Lovvorn Fassett. “One thing that wasn’t a ‘have-to-have” for us was Insbridge’s interesting deployment option to provide rates to MGAs or agencies,” she comments. “All of the reporting and administrative capabilities are important to us because of the number of people accessing and working on the system.”

Shortly before signing with Oracle in mid-2011, CNA began working on requirements for commercial property within a larger rate-renovation project of which the Insbridge implementation was a large part. “We looked at all lines of business and thought about where we should be most aggressive,” Lovvorn Fassett comments. “It was valuable to get new rates for commercial property, and as it is one of largest lines of business, we had the policy count to get immediate benefit.”

CNA began building rates outside of systems work in the summer of 2011, and after completing that phase, in Feb. 2012, CNA began work on the rating system implementation with Oracle Consulting. The system went live for commercial property the following February. The new environment, including Insbridge and the new rating structure, provides CNA with greater flexibility to set rates that better reflect the risks underwritten, according to Lovvorn Fassett. It also enables actuaries and analysts to easily and rapidly build, change and manage rates without IT support. The rating capabilities with policy admin systems that Insbridge replaced required hard-coding to change rates – which slowed time to market. Insbridge has reduced policy processing time for agents and underwriters, and enabled CNA to gain the ability to support proprietary rating models, Lovvorn Fasset affirms.

Follow-on projects are underway for CNA’s general liability product line and for the carrier’s life sciences and specialty division, with new projects starting in 2014, according to Lovvorn Fassett.

CNA will measure the success of the Insbridge Rating and Underwriting system project by the cost of the system and implementation against the business advantage that will help to realize. The overall effect will be an improved combined ratio, Lovvorn Fasset believes. “We think that our segmented market strategy, including products that are unique or customized, will bring in new business,” she says. “We also think that the new system will cost us less to run.”

Anthony R. O’Donnell // Anthony O'Donnell is Executive Editor of Insurance Innovation Reporter. For nearly two decades, he has been an observer and commentator on the use of information technology in the insurance industry, following industry trends and writing about the use of IT across all sectors of the insurance industry. He can be reached at [email protected] or (503) 936-2803.

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