Reinsurance Group Simplifies on Global Scale With Administration System

The reinsurance industry isn't for the faint of heart. The business processes that enable reinsurance firms to form agreements with other insurance companies to accept all or part of their risk can get mighty complex, mighty quickly.

Now imagine developing a single system that manages reinsurance business processes for numerous offices around the world—offices whose staffs speak different languages, are in different time zones and just might be stuck in their ways as to how they manage their business. It's a challenge that could overwhelm you if you tried to tackle it all at once instead of breaking it into small pieces.

When workers in the global software group at Reinsurance Group of America Inc. (RGA) in Chesterfield, Mo., first took on this mammoth project, they would have been the first to tell you they were unprepared for the obstacles that lay ahead.

"This whole system required so much communication and teamwork, and I'm not sure we understood at first what we needed to contribute to make it a success," says Mike Ring, project manager at RGA.

But by engaging the business and adapting its own practices to the demands of the situation, the group is successfully rolling out an integrated, multicurrency, multilanguage life reinsurance administration system, dubbed CybeRe, for its international division.

By 2008, CybeRe is expected to manage $1 trillion worth of business for RGA's 13 offices around the globe. It's already up and running in South Africa and is nearly ready in the U.K., with Australia next on the docket.

"CybeRe is able to handle some of the most complex insurance arrangements that RGA and its subsidiaries have created," says Kam Chan, chief architect of CybeRe.

End of the Rainbow

CybeRe fully integrates the many functions that make up the life reinsurance business, including quotes, underwriting, claims, risk management and accounting. Integrating this data, as well as automating processes such as client audits, will increase productivity, minimize errors and enable RGA to keep pace with growing business needs without increasing staff, says Azam Mirza, vice president of global software and head of the CybeRe effort.

Before CybeRe, workers in RGA's global offices mainly relied on a mix of spreadsheets and databases to manage clients. Now, with information stored in one location, workers can analyze data by client, contract and product and find client errors more easily.

"People can stop worrying about, 'If I sell this business, how am I going to manage it?'" Mirza says.

The system also strengthens data validation and data quality, Ring adds, which will enable better risk analysis and retention analysis, resulting in better profitability. Ultimately, return on investment will reach over 15%, "which compares very favorably to the average ROI for RGA's products, which are normally in the range of 12% to 15%," Mirza says.

But the picture wasn't always this rosy. When the project began six years ago, IT began gathering business requirements from the global offices, planning to emerge a couple of years later with a full-blown system. But by late 2001, it became apparent that a phased approach was more practical.

"The different units all do things slightly differently, and getting everyone to agree became very contentious," Chan explains. So the group embarked on a plan to build a pilot system in one office (South Africa) and gradually implement it in the remaining ones, with as few customizations as possible.

In the process, the software group learned how to conduct user acceptance testing, prioritize enhancements and develop change management, scope management and quality assurance processes, Ring says.

It also learned how to work more effectively with the business. "One of the big problems in the first five years was we thought of this as an IT project," Mirza says. "Now the business units are responsible for defining requirements, testing and making sure the data is in the right format."

The first module was delivered in July 2002, and the entire 10-module system was completed for the South Africa office about two and a half years later. Meanwhile, the U.K. implementation began, and 18 months later, it is nearly complete.

But the sledding wasn't always smooth. For one thing, converting all the historical data and loading it into the CybeRe system required a significant data cleansing and migration effort.

Other factors, such as differences in the terminologies used in various offices, also caused delays. For example, while gathering requirements, IT asked whether the South African office used compound benefits. The answer came back "No," but it turned out that that office just used a different term: acceleration of benefits.

"The change in scope delayed us four or five months," Mirza says.

Probably the biggest challenge—which continues today—is getting people to accept common practices as defined by the system.

"That's where we're the bad guys," Mirza says. "If they really need it, they have to prove it. We challenge everything. We don't want to create a product that's convoluted because it tries to be everything to everybody."

Customization

Despite the local customizations, RGA still maintains just one version of CybeRe. Local units can simply "turn on" the options or customizations that are relevant to their businesses.

"Not maintaining 13 different versions is very important," Mirza says. "It's critical to our success."

"CybeRe provides an impressive breadth of functionality," says Donald Light, senior analyst at Celent Communications LLC. "Being a successful reinsurer, especially when dealing with placements of individual risks, requires speed and accuracy. Primary companies, and their producers, need answers quickly. If they don't get those answers from Reinsurer A, they will turn quickly to Reinsurer B.

"Given the life reinsurance market's consolidation of recent years, CybeRe should provide RGA with an important competitive weapon," Light says. "RGA aims to 'reinvent reinsurance.' That is an ambitious goal. CybeRe is an important step along the way."

Brandel is a Computerworld contributing writer. Contact her at mary.brandel@comcast.net

Reinsurance Group of America Inc.

www.rgare.com

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Business: One of the largest life reinsurers in the world, with more than $1.3 trillion life insurance in force and assets in excess of $13 billion.

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Project champion: Azam Mirza

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IT department: 50

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Project payback: Annual IT savings are conservatively expected to grow to $30 million per year. The system cost $35 million to $40 million to develop and deploy; support and maintenance costs are projected to be $3.5 million to $4 million per year over the next 10 years.

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