Out With the Old

Insurers often face an agonizing risk/benefit analysis when they consider whether to replace or extend their legacy policy administration systems. For Western United Life Assurance (WULA; Spokane, Wash.; $1.7 billion in assets), which had been supporting an obsolete application running on a VAX mainframe system since the early '90s, it was an easy decision.

"As a medium-size carrier, we were looking for a way to lower our cost of ownership, out of necessity," says George Hanrahan, VP and CIO, WULA. "The maintenance factors of the legacy platform were always on the rise."

Seeking a client/server solution that would give WULA an improved cost profile, flexibility, platform scalability and ease of use, Hanrahan examined systems in May 2002. "We were nearly ready to make a move with a company, and then the upstart AdminServer came into the picture," he quips. The Chester, Pa.-based vendor offered WULA a free "test drive" of its policy administration system. Hanrahan was impressed enough to stop negotiations with the other provider, which he declines to name.

Hanrahan was attracted to AdminServer's easy-to-use Microsoft-based, client/server architecture (AdminServer also provides its solution on a J2EE platform). WULA's technology staff had been trimmed recently from nearly 70 people to less than 30 individuals, as WULA shed unproductive lines of business. "I wanted to be able to find people off the street, for the most part, who can help write and maintain [the system], rather than needing a lot of trained expertise in-house," Hanrahan says.

Another benefit was AdminServer's ability to provide improved speed-to-market. With the solution's rules-based platform, Hanrahan notes, "You can have a business person trained in the rules do much of the setup of new products." The system's ability to create variations or derivatives of existing products is "phenomenal," he says.

WULA signed a contract with AdminServer in May 2003 and began consolidating its life and annuity systems onto the platform the following month. The vendor provided a small team to train WULA's staff. "AdminServer promotes a transfer-of-knowledge approach to keep the cost of a project down and to assure that we have control of our destiny in the long term," Hanrahan says. WULA purchased two application servers for load balancing and one SQL server. "The underlying operating system was all off-the-shelf Microsoft products, along with [San Jose-based Business Objects'] Crystal Reports" enterprise reporting software.

WULA went live with the new system for all 16 of its annuity products in July 2004. "All the new business that we're selling and servicing today is on the new system," Hanrahan relates. "Our next phase is to start converting policies over from the former system to the new one, which will take about a year."

So far, Hanrahan has been pleased with the system's performance. "The primary metric is the ability of the business to enter daily new business into the system, which has been achieved with very little effort," he explains. "As we go forward, we are monitoring the loads and will tune accordingly." A return on WULA's initial investment will come within 12 to 18 months, Hanrahan predicts.

Hanrahan puts the achievements of the new system in perspective: "Getting the old system up and running was a project with a duration of nearly two-and-a-half years," he says. "With AdminServer, we purchased it and got up and running in about nine months - that's huge."

Case Study Profile

Company

Western United Life Assurance (Spokane, Wash.; $1.7 billion in assets).

Lines of Business

Fixed annuities, life.

Vendor/Technology

AdminServer (Chester, Pa.) policy administration system.

The Challenge

Reduce legacy system costs and increase speed-to-market.

Anthony O'Donnell has covered technology in the insurance industry since 2000, when he joined the editorial staff of Insurance & Technology. As an editor and reporter for I&T and the InformationWeek Financial Services of TechWeb he has written on all areas of information ... View Full Bio