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Policy Administration

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Q&A With Mike Clifton, CIO, The Hanover: Combining Legacy and Modern Technology

The Hanover CIO Mike Clifton relates how the Worcester, Mass.-based insurer successfully combines legacy and modern, rules-based technology to meet changing customer and distributor demands and exploit market opportunities.

I&T: What policy admin capabilities do insurers need in today's market, and how is this influencing The Hanover's technology decisions?

Clifton: The insurance market is influenced more than ever by the investments that carriers make in architectural planning and policy administration -- for example, [with] ease of use for agent partners. ...

With this in mind, The Hanover views architectural planning and execution as its top priority. We have made a major commitment in both surrounding and replacing major policy administration functionality with service-oriented extensible components. We have created a set of component Web services that are provisioned and executed in a central registry that has attained approximately 45 percent reuse.

At the same time, within policy administration we have enhanced our specialty lines capabilities with high-speed rich interface development and database-driven product design and development. Central to our strategy is enabling our underwriting teams to access key information from one central desktop as well as full account support, helping to drive opportunities for our agents.

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I&T: What is the value proposition of newer, rules-based policy administration technology to The Hanover?

Clifton: The Hanover has invested in both rules-based platforms with the acquisition of OneShield's [Westborough, Mass.] Dragon product as well as rules-based technology in support of our legacy modernization with Pegasystems' [Cambridge, Mass.] PegaRules product. The value in our model is about rapid change in a timely manner with little to no disruption. The tools will accommodate just about any change.

We have focused the OneShield solution on our most complex lines due to its ability to handle large complex risk. This has allowed us to deploy an agency-facing capability quickly as well as [expand] in a very short time. Pegasystems has allowed us to modernize the mainframe-based PMS [Policy Management System from Falls Church, Va.-based CSC] by externalizing the rules, allowing for individual edits based on attributes such as status, location, designation of class, etc.

The extensibility reaches out to our business partners as well with the ability to manipulate rate factors and model output as though they were in production. The final result is a tested and ready-for-production rate update.

I&T: What is the current state of your policy admin environment?

Clifton: The policy administration environment can be explained in two parts: one is all about packaged software [Dragon] and the second is about components [PMS]. ... Both of these platforms have been extended to operate within our services framework so that we can expose functions of each. An example of functions we expose is rating -- regardless of which is doing the rating, we call a set of services to return a value, rules drive the outcome and a high-speed user interface with rich user experience drives our portal offering.

I&T: What is The Hanover doing to continue to get value from its legacy policy administration technology?

Clifton: While other companies have always justified the move off legacy because they could not modernize, we took the opposite approach and have experienced great success. We selected new platforms to replace those with short life spans, we deployed a surround-and-componentization of those that could withstand the test of time, and lastly we grew organically with reusable services and new platforms with the best of both included. Our efforts to push the barrier of mainframe Web services, service registry optimization and high-speed transaction engines made the difference in keeping our economic costs within the right tolerance.

I&T: How is your IT organization evolving along with its technology?

Clifton: The team interaction with our business partners is one key difference. ... We make it a priority to align technological innovation with the needs of our agent partners and our business. As part of this approach, the business team has embraced key members of our technology team and embedded them in staff meetings, allowing for quicker response to business needs.

I&T: What will The Hanover's policy administration technology environment look like five or 10 years from now?

Clifton: I am a firm believer that users want to customize the experience for the best workflow based solely on them. The ability to continue to orient the workflows, process tasks and location analytics will be integrated into one platform. Integration layers to plug and play third parties will become easy [to create]. As we have seen with Web 2.0, it's about the platform by which you enable capabilities.

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

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