Q&A: Navy Mutual Embraces Industry Standard Processes with help from Accenture Life Insurance Platform

As insurance core systems offerings continue to evolve, insurers enjoy more modernization options with lower risk profiles. Many carriers are taking advantage of the customization capabilities of configurable, rules based systems, as well as alternatives such as flexible front-end solutions extending the life of their systems of record, or business process management backbones to tailor systems to proprietary business processes. However, Navy Mutual Aid Association has adopted Accenture's configurable ALIP (Accenture Life Insurance Platform) system explicitly to depart from a heavily customized environment dictated by the limits of legacy systems. Navy Mutual began examining systems options in Jan. 2010 and signed an agreement with Accenture early in 2011. The insurer's implementation is currently underway and is targeted for completion in early 2012. Tom Benton, VP, Technology and Systems, discusses Navy Mutual's modernization initiative with I&T.

I&T: What were the business drivers of your policy administration system modernization initiative?

Tom Benton: At Navy Mutual, our legacy Policy Administration System had been highly customized, which was making it difficult to upgrade and interface with customer-facing applications as well as internal back-office systems. The customizations were developed to support unique products and processes, and resources for maintaining the COBOL-based system were becoming more difficult and expensive to procure. In order to support our objectives of membership growth, excellent customer service and improving the efficiency of our operations, it was clear that we needed to upgrade both our systems and business processes.

I&T: How would you characterize your policy administration system modernization strategy, and why did you take that approach?

TB: Our strategy is to completely replace our legacy policy administration system as well as some other key legacy systems that interface with it. Along with the system replacements, we want to transform our business processes to become more industry-standard, so we are implementing our new systems with a minimum of customization. This is the right approach for Navy Mutual because we need systems that we can maintain with a lean IT staff and that we can implement quickly to support our growth and other business objectives.

I&T: What considerations informed your strategy?

TB: We developed our modernization strategy by first considering our mission and objectives and completing an assessment of the limitations of our existing systems. As a small insurance and annuity provider to members of the sea services and their families with a strong 130-year history of meeting our commitment of service, we wanted to ensure our systems and processes were updated to meet the objectives of membership growth, excellent customer service and low cost through efficient operations. Our legacy systems were not able to meet these objectives without requiring substantial investment and continued use of existing processes. They also were becoming more expensive to maintain due to harder-to-find COBOL programmers and increased complexity of interfaces to other key systems. After seeking input from industry experts and peer groups, we determined that the best approach for us is to completely replace our systems because the risks of converting to the new system will be less than the risks of continuing to operate with current systems and processes.

I&T: What selection criteria did you lay out for a solution?

TB: Our main selection criteria were to choose a system that could support our products with a minimum of customization and to select a vendor partner that could provide adequate resources to deliver a solution on a short timeline - one year if possible.

I&T: Have you made any other hardware or software acquisitions related to the initiative?

TB: The implementation is leading us to embrace a Java/Websphere platform (we are mostly a Microsoft shop), but the hardware acquisition supports our current infrastructure roadmap.

I&T: What resources have been needed to execute the implementation?

TB: The project has required us to develop not only a close relationship with Accenture for implementation and delivery resources, but also to build relationships with several other partners for IT staff augmentation and support. We also hired a business analyst and project manager for our team prior to the launch of the project to better manage tasks/schedule and interaction with our business stakeholders.

I&T: What results do you expect from the initiative?

TB: We expect the main improvements to be in expanded capabilities for operations and for customer service. We expect to see general improvement not only in existing metrics for these areas, but also in reduced costs for maintaining the new system as compared to those for the legacy system.

I&T: When will you enjoy a return on investment (ROI), and how will you calculate it?

TB: We modeled expected ROI based on both our current growth goals and stretch goals for growth that the new systems could enable. If we meet or exceed our policy growth targets, we should see positive ROI in as few as three to six years.

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