While securing $279.1 million of private-equity capital at the beginning of 2007, start-up SPARTA Insurance promised to begin writing business by year-end. Further, Hartford-based SPARTA, an acronym for "Specialty Program and Risk Transfer Alternatives," had pledged to open its doors with all lines available, in all 50 states, using the program administrator (PA) model for distribution.
"As a niche insurer we envisioned our key differentiator would be an agile, Internet-enabled policy admin system," explains SPARTA cofounder, president and COO Kevin Costello. In particular, "We intended to reduce traditional frustrations with re-keying data into different policy-related applications, including government agencies, regulators and industry applications."
Having also assured investors it would run lean, SPARTA identified six policy systems appropriate for the virtualized Microsoft Windows Server environment it had on the drawing board. Then vendors offering legacy technologies were weeded out in favor of .NET and XML architectures, which narrowed the options to two. In March SPARTA settled on New York-based LexisNexis Insurity's Policy Decisions for Commercial Lines.
"The LexisNexis application was ISO and NCCI-based out-of-the-box, so it could satisfy our product requirements immediately," Costello says. "Plus the vendor's installation and maintenance models were compliance-oriented, which we believed was critical to meeting both our initial timeline and ongoing goals."
While SPARTA's four-person IT staff began the infrastructure build out, LexisNexis installed Policy Decisions. "LexisNexis devoted an entire team to bringing the policy system on-line, but we only needed to dedicate one person," recalls Costello. "Since one of our goals was making a statement when we launched, we didn't want to turn away business due to lack of infrastructure. So the biggest challenge was ensuring we could underwrite all products in any state from the minute we entered the marketplace."
By June the policy system was sufficiently implemented for SPARTA to pass its first insurance rating test. "From then until November outside consultants ran approximately 3,000 test scenarios for us," Costello remarks. "With infrastructure on track, our marketing department formally opened in August and we wrote our first business, on schedule, in December."
Intense Working Relationship
According to Costello, an intense working relationship with LexisNexis kept the race on course. "Clients always vie for the attention of their vendors," he notes. "Our physical proximity permitted us to literally walk to LexisNexis offices, which significantly assisted with keeping processes on schedule. They know us by name or by face at every level of the organization. There's no substitute for that level of professional interaction."
And the implementation has been equally successful, Costello adds, noting that customer satisfaction is high. "We're constantly receiving enthusiastic feedback about our policy platform," he reports. "We've definitely attracted business due to the efficiencies that PAs achieve by touching data only once to complete everything -- including the regulatory steps. As a result, PAs submitted business in excess of $2.5 billion during our first year."
SPARTA plans to continue adding utilities and adapting LexisNexis to its business model, while simultaneously holding down costs. "As PAs present us with special requests we'll build out the system's inherent capabilities," says Costello. "But we won't become a software development shop because the system only requires a half an FTE [full-time equivalent] to administrate. And due the system's robust feature set, our policy service and business analyst staffs are one-third the size of what we'd need otherwise."
But the benefits go beyond low overhead. "The system we selected is vital for maintaining compressed policy writing timelines compared with industry averages," Costello asserts. "In short, we're winning business and meeting our goals due to Insurity's flexibility, usability and comprehensiveness."
Case Study Profile
company: SPARTA Insurance (Hartford; $31 million in annual premium income)
lines of business: Specialty P&C.
vendor/technology: New York-based LexisNexis Insurity's (a division of London-based Reed Elsevier) Policy Decisions policy admin platform for specialty insurers.
challenge: Adopt a streamlined policy admin system that supports an Internet-enabled business model.
Anne Rawland Gabriel is a technology writer and marketing communications consultant based in the Minneapolis/St. Paul metro area. Among other projects, she's a regular contributor to UBM Tech's Bank Systems & Technology, Insurance & Technology and Wall Street & Technology ... View Full Bio