MarketScope for North American Property and Casualty Insurance Claims Management Modules
 
27 January 2011

Kimberly Harris-Ferrante

Gartner Industry Research Note G00209429
 

Gartner research and client inquiries show many North American P&C insurers are seeking replacement options for claims administration systems. This report evaluates the leading and emerging vendors offering claims management modules against current and future functional and technical criteria.





What You Need to Know



This document was revised on 28 January 2011. For more information, see the Corrections page on gartner.com.

Gartner research and client inquiry demand show a continued interest in buying stand-alone claims management modules among North American property and casualty (P&C) insurers to replace legacy claims systems in supporting commercial, personal and specialty lines of business. Selecting vendors with an industry vision, ability to execute, continued product enhancements and modern technology architecture is critical in future-proofing system selection.






MarketScope



This is an update to the "MarketScope for North American Property and Casualty Insurance Claims Administration Systems," published in 2009. However, the name has been changed to reflect the modular nature of this solution. Gartner reports published in 2010 regarding management modules (including policy management and claims management) reflect the growing demand among insurers for stand-alone modules and the maturity of the market in meeting this need.

The replacement of legacy claims administration systems with new claims management modules is a top concern among Tier 1 to Tier 3 P&C insurers (see Note 1). Options for replacement and help with generating a shortlist of claims management modules are among the most frequently asked questions among P&C insurers, and research shows this trend continuing throughout 2011. Buying decisions, however, are often challenging, due to the high number of new entrants into the market, the importance of assessing the R&D road maps of the vendors to ensure that they have appropriate vision to stay ahead of market demands, and concerns about derisking application purchases when buying from small vendors that lack implementation track records, have limited implementation staff and lack financial stability.

Furthermore, Gartner sees a growing number of insurers wanting a single system to support all P&C product lines — personal, commercial and specialty — from a single platform. Doing so would help reduce application costs and simplify the IT landscape. However, many claims management systems lack support and proven expertise in all product lines, making this option difficult.




Drivers to Legacy Claims Administration System Replacement Among P&C Insurers in North America

Insurers are replacing claims administration systems for some, if not all, of the following reasons:

  • Aging and difficult to change technology, which increases the risks associated with legacy platforms, such as the inability to support due to the lack of skill sets in the IT department, inability to change workflow in these systems, and the rising cost of maintenance

  • High costs to support and enhance these systems

  • Fragmented claims data

  • The desire to capture mobile claims data, or collect data that is housed in legacy claims systems

  • Inefficient and manual claims-handling processes, which lead to subjective decision making

  • The desire to consolidate multiple claims administration platforms to one or two platforms (for example, one platform for commercial and personal lines)

  • Improvement in the speed and accuracy of claims payments

  • A greater focus on business process, workflow redesign and business rule management

  • Preparation for acquiring or shedding books of business, and merger and acquisition (M&A) activity

  • Externalized business processes to add new channels, such as Internet access for claims input and inquiry

  • Easier integration with surrounding applications, which is enabled through the use of modern technology platforms and service-oriented architectures (SOAs)

  • The ability to support improved processing through better workflow, rule management and business process management (BPM)

  • Embedded analytics for more-granular claims analysis of internal and external fraud (built by the vendor or a third-party partner)

  • The need to open up claims applications to policyholders and agents/brokers to allow customer self-service via a portal

  • Improved user interface to allow for easier navigation and improved experience for internal and external users, including supply chain partners, agents/brokers and policyholders




Claims Management Functionalities

For optimal operations, claims management systems must support the entire claims life cycle. This includes a set of functions, tasks and subtasks that handle first notice of loss (FNOL), imaging, reserve setup, assignment, policy coverage and verification, litigation, and settlement (for example, closed recoveries). The leading solutions provide best practices, templates and toolsets that enable insurers to quickly define, model, implement and modify processes to meet their particular business needs. Also at the heart of leading claims administration systems are prebuilt business processes that range in capability, from screen flow to rule engines and "what if" impact-modeling tools.

Insurers considering a claims administration solution should weigh a number of criteria in evaluating business functionality and technology architecture. In addition to basic functionality, modules are emerging that include next-generation features, such as mobile support, portal enablement and an advanced user interface (UI). State-of-the-art modules will have the following functionalities:

  • Online entry of claims and self-service functionality by agents and customers

  • FNOL application, which can be run in the call center, via an agent or policyholder portal, and on a mobile device

  • Online inquiry of claims status

  • Integration across policy lines for a customer-centric view of claims service

  • Easily editable tables and housing rules

  • Initial claims setup

  • Skill-based claims assignment

  • Policy coverage and verification

  • Administration (for example, workload distribution)

  • Robust reporting capabilities, including ad hoc reporting, that help identify exposures and assist with decision making

  • Advanced claims analytics, including a set of prebuilt reports (for example, loss adjuster productivity and injury analysis), claims key performance indicators (KPIs) set up in the system, and dashboard capability to proactively manage the claims operations

  • Integration with GISs, especially for the mobile workforce (for example, claims adjusters), and to aid in the assessment of claims losses and fraud

  • Special handling and instructions (for example, for a special investigative unit [SIU])

  • Diary file/notes

  • Claims financials, including settlement (payment)

  • Litigation management

  • Supply chain management and integration with other applications (for example, repair shop applications)

  • Salvage and subrogation ability for property damage

  • Support services and maintenance by the vendor for implementation and ongoing requirements

  • An ability to audit reserves, losses and property damage, as well as determine the appropriateness of loss reserves

  • An ability to calculate structured settlement options and legal fees

  • Security provisions for employees being promoted or terminated, or servicing other areas of the company

  • Support of fraud analysis, including reports and predictive modeling for structured and unstructured data

  • Portal for claims intake

  • Multicurrency and multilingual support for multinational companies wanting a single claims solution to be used for global operations

Additionally, buyers of claims management modules should look for solutions that have:

  • A single data structure that all modules and functions use — meaning that they all conform to the same data formats

  • An n-tier architecture, in which the presentation layer, business logic and data are separate and easy to change

  • A configurable rule engine, which limits the amount of programming changes to the application

  • A componentized system, in which modules can be easily added or removed

  • Thin-client, Web-based access for all users, regardless of office location, whether remote or home

  • A library of adapters/XML interfaces for integrating with third-party applications and services (such as motor vehicle records)

  • Number of releases for the product and current product version number, which provides an indication of added functionality and the number of bug fixes associated with that product

  • Newer platforms, such as Java EE or Microsoft .NET

  • SOA enablement

  • Adherence to industry standards, such as ACORD XML for P&C

  • Support for wireless or mobile technologies

  • Ability to handle transactions in real time and batch (for bulk payments, for example)




Evaluation Criteria for Module Selection

P&C insurers must assess the vendor viability, functionality, product vision, and technology foundation and vision among competing claims management modules. Key evaluation criteria should be:

  • Solutions that are sold as stand-alone and that can be easily integrated with surrounding applications, including policy management modules, billing systems and general ledgers, using industry standards and an open architecture based on SOA.

  • The breadth of functionality offered by the vendor. Some emerging vendors offer front-office and FNOL functionality only, not replacing the back-office claims financial system. These applications front-end the existing legacy claims systems, instead of replacing the entire claims system footprint. This report assesses systems that support end-to-end claims functionality and does not include those offering only front-office features.

  • Built-out functionality and experience in specific P&C lines of business. Assessing specific subfunctions for specialty and commercial lines of business, including workers' compensation, is critical to ensure the proper fit and to reduce the amount of configuration needed during implementation.

  • Easy configuration of the module, based on the use of business rule engines and BPM tools, to allow visibility and easy access to business logic and workflow.

  • Portal and UI capabilities, and the ability to easily adapt the UI based on the user role (for example, agent/broker-facing portal versus a customer-facing portal).

  • The availability of reports, dashboards and prebuilt claims KPIs that are delivered in the base solution.

  • The delivery of content from the claims application to mobile devices, with prebuilt applications for popular smartphones and devices, including iPhones, iPads and BlackBerrys.

  • Implementation approaches, including the number of available staff, implementation or system integrator (SI) partners, data conversion methodologies and tools used, and track record of being on-time and on-budget with past customers.

  • Delivery models for the solution, in addition to the on-premises software. Some vendors are building partnerships and capabilities to support hosted solutions and offer the solution on a software as a service (SaaS) basis. This may be an alternative for Tier 2 and Tier 3 insurers that want functionality derived from the claims management module, without the on-premises licensing, implementation and maintenance costs.

  • Self-sufficiency possibilities in which the insurer can maintain the software postimplementation without great reliance on the vendor for workflow changes, addition of new workflow, service partners, or integration with best-of-breed adjacent claims applications, such as estimation tools. This will help reduce reliance on the vendor, as well as possibly reduce the response time needed for system changes and reduce the cost of system maintenance. Transferring the knowledge to the insurer during implementation through documentation, training and on-site assistance is essential to becoming self-sufficient.




Market/Market Segment Description

This MarketScope provides a lens into the market for claims management modules in North America aimed at Tier 1, Tier 2 and large Tier 3 P&C insurers. It is not a comprehensive market scan of all vendors offering these types of systems. Instead, it is a review of the established and emerging vendors that support full end-to-end claims management and issuance functionality, from first notice of loss to claims payment or settlement.




Inclusion and Exclusion Criteria

This MarketScope includes only claims management modules that are offered stand-alone (for example, not coupled with a policy system or sold as a comprehensive policy administration suite). The inclusion criteria for this report differ from that of 2009 in that the number of live installations has been reduced to include emerging vendors, which are gaining momentum in the North American P&C market, as well as solutions that have sizable customer bases in commercial lines of business.

To be included in this report, the solution must exhibit these criteria:

  1. The solution must be sold independently and deployed as a stand-alone module.

  2. The solution must have at least four live customers in North America. Each organization is counted once, even if there are multiple deployments for commercial and personal lines within a single company. This will allow for insurers that are entering the market but have some proven expertise in the market.

Not included in this MarketScope are vendors that supply only claims front-office functionality (that is, they lack claims financials), solutions sold exclusively to workers' compensation product lines with no capability to support commercial- and personal-line functions, and those with fewer than four live customers as of the date of publication. This MarketScope is specific to North America and does not apply to other regions. Careful review must be done by insurers located in other countries, because vendors will vary by region.

Based on these criteria, this MarketScope includes a total of eight vendors and nine solutions that met the above criteria (see Table 1). Vendors such as BlueWave Technology, MajescoMastek, Fineos and Oracle were excluded, due to their lack of meeting the criteria listed above.


Table 1. Vendors and Products Covered in This MarketScope

Vendor Name
Solution Name
New Vendors Added in 2010
Aon eSolutions
iVOS
x
Accenture
Accenture Claim Components
 
CSC
Advanced Claims
 
CSC
Exceed Claims
x
Guidewire Software
Guidewire ClaimCenter
 
Innovation Group
Insurer Claims
 
LexisNexis
Claims Decisions
x
SAP
SAP Claims Management (FS-CM)
x
StoneRiver
Claims Workstation
 

Source: Gartner (January 2011)

 



Rating for Overall Market/Market Segment

Overall Market Rating: Positive

Continued demand among P&C insurance IT buyers has led to continued growth in the claims management module market — including new market entrants and greater range of functionality in solutions as they grow to meet user demand. Solutions support basic claims functionality needs and were built on modern technology foundations that meet buyer desires for SOA and process flexibility. Vendors continue to invest in R&D in new areas, including claims analytics, UI improvements, customer portals and mobile support, to match industry demands.

Overall, among the vendors covered in this MarketScope, they are in production at 191 companies across Tier 1, Tier 2 and large Tier 3 companies in North America. In addition, a total of 35 new contracts from 2009 through year-end 2010 have been signed in North America alone (see Table 2). The table shows installations and new customer wins globally, which will aid companies in assessing the local footprint in North America, as well as capabilities for multinational P&C insurers seeking a single solution for global operations. Many of these vendors also have solid footprints in EMEA and growing footprints in Asia/Pacific, as they globalize their solutions to meet the needs of international insurers.


Table 2. Installed Base and New Customer Wins for Each Profiled Vendor

Vendor
Solution
Number of Live Customers in North America
Number of Live Customers in EMEA
Number of Live Customers in Asia/Pacific
Number of Customers Signed January 2009 to Year-End 2010 in North America
Number of Customers Signed January 2009 to Year-End 2010 in EMEA
Number of Customers Signed January 2009 to Year-End 2010 in Asia/Pacific
Accenture
Accenture Claim Components
17
7
1
1
2
1
Aon eSolutions
iVOS
37
0
0
4
0
0
CSC
Advanced Claims
16
0
0
4
0
0
CSC
Exceed Claims
13
1
0
0
0
0
Guidewire Software
Guidewire ClaimCenter
47
6
8
17
6
3
Innovation Group
Insurer Claims
6
17
1
4
4
1
LexisNexis
Claims Decisions
6 (plus 23 on an older version)
0
0
0
0
0
SAP
SAP Claims Management (FS-CM)
4
10
0
3
3
0
StoneRiver
Claims Workstation
45
0
0
2
0
0

Source: Gartner (January 2011)

 



Evaluation Criteria


Table 3. Evaluation Criteria

Evaluation Criteria
Comment
Weighting
Market Understanding
This is the ability of a vendor to anticipate the insurance industry's evolving challenges, understand insurer wants and needs, and translate those into products and service offerings. Vendors that show the highest degree of vision listen to and understand insurer wants and needs, and can provide added industry expertise to shape or enhance an insurer's vision. Vision is critical in order to drive product enhancements, fund new development (or modules), identify strategic business partners (both SIs and technology partners), and interact with customers.
High
Offering (Product) Strategy
This is the vendor's approach to product development and delivery that emphasizes differentiation, functionality, methodology, architecture and feature set as products map to current and future P&C insurer requirements. This is the viability of a vendor's product strategy and capabilities to support insurers' continuous operational improvements and to respond to changing insurance strategies for claims improvements. This includes having a solid vision and R&D to meet functional and technical needs of buyers today, but also vision and a road map for future needs. Highly rated vendors are proactively enhancing solutions based on their market understanding of next-generation functionality. Modules should be open, be easy to integrate with surrounding applications and support industry standards.
High
Product/Service
The systems and services offered by a vendor should excel in serving the P&C insurance market. This includes system capabilities, quality, feature sets and skills, as well as installation, configuration and maintenance services, whether offered natively or through partnerships. Product quality, functional completeness and integration capabilities were all critical elements that were assessed, as well as the ability for the customer to be self-sufficient after implementation (for instance, maintain all rules and workflow).
High
Overall Viability (Business Unit, Financial, Strategy, Organization)
Viability includes an assessment of the vendor's overall financial health; the financial and practical success of the business unit; and the likelihood that the individual business unit will continue investing in the product, will continue offering the product and will advance the state of the art within the vendor's portfolio of products.
Standard
Customer Experience
This is the relationships, products and services/programs that enable clients to be successful with the products evaluated. Specifically, this includes the ways that customers receive technical support or account support. This can also include ancillary tools, customer support programs (and the quality thereof), availability of user groups, service-level agreements, upgradability of solutions, responsiveness of the vendor when needed, and so on.
High
Sales Execution/Pricing
This is the vendor's capabilities in all presales activities and the structure that supports the presales activities. This includes deal management, pricing and negotiation, presales support, and the overall effectiveness of the sales channel.
Standard
Sales Strategy
This is the strategy for selling products that uses the appropriate network of direct and indirect sales, marketing, service and communications affiliates that extend the scope and depth of market reach, skills, expertise, technologies, services and the customer base.
Standard

Source: Gartner (January 2011)

 


Figure 1. MarketScope for North American Property and Casualty Insurance Claims Management Modules

Figure 1.MarketScope for North American Property and Casualty Insurance Claims Management Modules

Source: Gartner (January 2011)
 



Vendor Product/Service Analysis

Accenture

Accenture is a publicly traded company headquartered in Bermuda, with more than 190,000 employees worldwide, and clients in over 120 countries. Accenture provides management consulting, technology services, software platforms and outsourcing to the global market. The company reported $21.6 billion in revenue for the fiscal year ended in 31 August 2010.

The Insurance Software group is a division of Accenture and has 2,000 employees globally, focused on supporting and developing insurance software assets. Accenture's claims solution is called Accenture Claim Components. It was first developed in 1997 and, today, is marketed globally. It has 17 live customers today in North America on the solution, as well as seven in EMEA, one in Asia/Pacific and one in Latin America. During the past year, the company has focused on global expansion into new regions. Among the customers in North America, the majority are using the solution to jointly manage personal and commercial product lines. It also has customers using the system for specialty and workers' compensation product lines. Since January 2009, the company has signed one new customer in North America for personal-line support, as well as two in EMEA and one in Asia/Pacific.

Accenture has typically targeted the Tier 1 insurance market, but has been slowly making inroads into smaller accounts. Of its North American customer base, most were more than $1 billion in direct written premiums (DWPs); however, it has two customers with less than $500 million in DWPs. In addition to its customer base for on-premises software, it has the option of running the solution in the Accenture business process outsourcing (BPO) processing center. It currently is doing this in Europe for five clients but lacks clients in a hosted model in North America.

During the past few years, the company has invested in internationalization of the system, including support for other languages, currencies and local processes. The current version is Claim Components r.9, which was released in May 2010. This is the product reviewed in this report. Currently, no customers are deployed on this version. This version contains several major enhancements, compared with previous versions, including extension of the FNOL component to the workers' compensation line of business, a customer service portal for agents and policyholders, Japanese and double-byte layers for internationalization, and automated testing and standard interfaces to the SAS analytics framework for fraud analysis.

Accenture has also focused on adding capabilities specifically to support workers' compensation needs, including return-to-work tracking, full disability data capture, prebuilt integration with a state reporting vendor tool (that is, Claims Harbor), full Medicare data capture, required data checks and prebuilt integration to ISO, receipt of repriced medical invoices with exception handling (accept or deny the invoice), and repetitive payments to support lost time cases.

Accenture's claims and policy components are both built in .NET technology. They share a common technology foundation, as well as foundational modules, such as party database and event processors. Accenture Claim Components is developed on the .NET framework, using Visual Basic .NET (VB.NET) and C#. The solution contains Task Librarian, which is a workflow console to help manage business processes.

Furthermore, the Events framework allows integration with best-of-breed BPM solutions. It contains a proprietary rule engine to support rule configuration, and it comes shipped with a set of standard rules, which can be configured by the user during implementation. The solution is database-neutral — it has been certified in SQL but has implementations on all major databases. It was built using the Accenture data model.

Strengths:

  • Insurance expertise and brand recognition in the P&C insurance market, associated with thought leadership, research and professional services.

  • Ability to leverage its offshore development teams.

  • Highly scalable system, with its highest-volume customer handling over 15 million claims per year on the system. This is one of the largest deployments among the vendors covered in this report.

  • Live customers and tested functionality for personal, commercial, specialty and workers' compensation product lines.

  • Componentized solution, which allows customer options to license modules independently, such as FNOL, or the entire claims module.

  • Embedded reports and dashboards for performance tracking, as well as a partnership with SAS for fraud analysis (SAS fraud workbench needs to be licensed separately at an additional cost).

  • Base solution contains a portal for FNOL entry.

  • Accenture has its own Insurance Data Migration Factory (IDMF) to help with implementations; in one customer implementation, this tool was used to migrate 2.3 million claims from three systems to Accenture Claim Components.

  • iPhone interface in the base solution, as well as electronic pen and paper interface with ExpeData for mobile devices.

Weaknesses:

  • Client concerns that software implementations require heavy professional services and are a driver for selling Accenture services.

  • Limited implementation options — All customers have used Accenture services for implementation, with no customer yet buying only the software.

  • Limited experience in supporting customers long term through maintenance, upgrades and version control. Some customers report concerns and limitations about the upgradability of the products.

  • Accenture is the primary implementer of Claim Components — lacking other third-party SIs, implementers or offshore partners.

  • Overall cost of deployment higher than some competitors that offer stand-alone modules.

  • Some customers report that forms and correspondence functionality is outdated and needs improvement.

Even though Accenture continues to grow its presence and customer base for insurance software, it is still often met with skepticism among buyers. It has only been since Claim Components r.8.0 that customers have had the option to sign maintenance contracts; therefore, only eight of the customers to date have signed contracts. Other concerns include the continued use of Accenture services among customers for implementation and the lack of implementation or SI partners outside of Accenture (especially for smaller insurers wanting more boutique assistance).

Gartner believes that the creation of Accenture Software, done in 2010, will help Accenture overcome perception problems of not being a valid software provider. However, more effort is needed to promote stand-alone software applications separate from Accenture's professional services. This will be key in winning business with Tier 2 and Tier 3 P&C insurers. Accenture has a proven track record of high scalability, which will help ease technical concerns, and IDMF will substantially help customers with implementation derisking. In addition, the financial stability that Accenture offers will ease concerns around corporate viability. Research and insurance vision are apparent in the product road map, and the most recent functionality has been added, such as mobile support and its partnerships with SAS for advanced analytics and fraud.

Buyers should consider Accenture a strong contender in the claims management module market. However, Tier 2 and Tier 3 companies may find the service fee from Accenture to exceed their project budgets.

Rating: Strong Positive




Aon eSolutions

Aon eSolutions is headquartered in Illinois and has 320 employees. The company focuses on insurance software solutions, including a portfolio of claims, policy and billing systems targeted specifically at P&C insurance. It is a public company, and it is the technology solution business of Aon Corp. The company does not disclose financial information. For the software division, approximately 65% of its revenue comes from claims systems.

The claims management module is called iVOS. It was originally developed by Valley Oak Systems in 2002 (the prior version was released in 1995), which was acquired by Aon eSolutions in 2007. The solution is sold only in North America, and the company reports 165 live customers using the solution, including managing general agents (MGAs), self-insureds and carriers. Of these, 37 implementations are with insurance companies. Of these customers, the majority are commercial-line or workers' compensation carriers. In 2009 to 2010, a total of four carrier customers were signed. Customers are under $500 million in DWPs.

Aon eSolutions lacks any Tier 1 customers and has only a single Tier 2 customer that went live in 2010. According to the company, it has numerous clients that have more than 1 million historical claims stored in iVOS. The company offers the solution as on-premises software and offers hosting services out of its data center in Georgia. It currently has 35 customers (carriers, MGAs and self-insureds) that it hosts the solution for.

In 2009 to 2010, the company launched several product enhancements, including enhanced business rule management, unlimited organizational hierarchy, excess insurance tracking and reporting, central document distribution, compliance (U.S. Center for Medicare & Medicaid Services, IAIABC release 3, medical electronic data interchange [EDI], National Council on Compensation Insurance [NCCI] reporting, automated subsequent report of injury [SROI]), address cleansing and verification, U.S. Office of Foreign Assets Control (OFAC) verification, time tracking, batch payment approval enhancements, caseload management, certificate of insurance generation, litigation calendar and litigation search, workflow approval process (notepad and correspondence), dynamic benefits calculator, auto claims adjudication, integration with third-party document management solutions, and customer management.

iVOS is a system specializing in commercial and workers' compensation product lines. For workers' compensation, the solution supports the calculation of temporary disability (TD) and permanent disability (PD) rates. It can also set up to schedule and generate TD payments automatically, as well as to produce the employer's first report of injury (FROI); jurisdiction-specific forms and letters for all 50 states; OSHA 300, 301 and 300A tracking and report generation; unlimited work status tracking; calculation of most jurisdictional standard compensation rates; and business rules to facilitate compliance with state requirements. iVOS also includes a standard interface to support all state-mandated workers' compensation EDI and fully supports IAIABC release 1, 2 and 3 transmission requirements. The interface will produce an export file that contains data formatted for transmission to the appropriate jurisdiction.

iVOS is a browser-based solution. The solution is written in Java and can utilize either Oracle or Microsoft SQL Server databases. The iVOS data model is proprietary, but it supports the ACORD standards for data extracts to external systems.

The solution has its own workflow engine and rule engine, but can also interface with third-party rule engines upon the user's request. In the next 24 months, the company plans to enhance the system by adding multicurrency and multilingual capabilities, tools for interface building that empower clients to create their own interfaces, and reporting module enhancements. Mitchell SmartAdvisor Medical Bill Review suite is embedded in iVOS. Aon eSolutions also has a strategic partnership with AgencyPort as a solution for agent portal access.

Strengths:

  • Financial stability of parent company Aon.

  • System specialized in commercial lines and workers' compensation claims handling.

  • Large number of customers in commercial and workers' compensation product lines.

  • Prebuilt reporting, including approximately 200 reports in the solution, plus own iVOS Report Designer to support additional analytics.

  • Prebuilt dashboards to show risk management and performance data to claims managers.

  • Solid data conversion methodology used in client engagements to move data from an existing system to iVOS.

Weaknesses:

  • Not targeted at personal-line market; no customers in this product line.

  • No SI or integration partners.

  • Customers are small in DWPs — all customers are under $500 million in DWPs.

  • Catastrophe management capabilities must be configured by users.

  • No prebuilt KPIs come in the base system for analytics and dashboards.

  • No mobile enablement in today's base system.

  • No fraud management module.

  • No integration with GIS or geocoding vendor.

  • Report design is difficult to use.

Aon eSolutions has been selling claims systems since the late 1990s when the company was Valley Oak Systems. Since acquired by Aon, the company has been more aggressive in its marketing and R&D to enhance iVOS. As a result, iVOS has a large clientele and continues to win new customers. iVOS is a solid solution for small to midsize carriers and MGAs wanting a solution to support commercial-line claims processing.

iVOS is suitable for Tier 2 and Tier 3 insurers for which high-volume processing is not needed. In 2011, the company plans on international expansion. The company is leveraging its experience and prior investments in the internationalization of other systems in its product portfolio. As such, this initiative should not shift the focus away from filling out functional gaps, which is needed to continue its traction in the North American market. Buyers should watch the R&D investments of Aon eSolutions as it grows and ensure that its vision and road map match their line-of-business and geographic needs.

Rating: Positive




CSC

CSC is a public company headquartered out of Virginia and has approximately 95,000 employees globally. Its revenue was $16.1 billion for fiscal 2010. Approximately, 17% of overall revenue comes from the financial services industry. It offers services and solutions to a wide range of industries. Of those employees, 2,000 are U.S.-based in the P&C insurance division. Within this group, 300 employees are dedicated to claims software. The company offers two solutions targeted at P&C claims processing — Advanced Claims and Exceed Claims — which differ based on the underlying technology of the solutions.

Advanced Claims

Advanced Claims was originally launched in 2000. The solution target is global; however, today, it has installations only in North America. It currently has 16 live customers in North America (including Puerto Rico), with another four currently implementing. Those customers use the solution for personal and commercial lines of business (including workers' compensation). Its target market for Advanced Claims is carriers with over $50 million in DWPs. Of these customers, the majority are Tier 3, under $500 million in DWPs. It does, however, have one customer with over $1 billion in DWPs and two customers between $500 million and $1 billion in DWPs using Advanced Claims. Furthermore, of these customers, three have CSC to host Advanced Claims in CSC's BPO center.

As with many solutions delivered by CSC, Advanced Claims runs on a continuous delivery release schedule in which small releases are delivered incrementally throughout the year. Advanced Claims C.0 was released in August 2008. Enhancements made in the past 24 months include browser user interface, ISO claim search and reporting, movement to the latest .NET enhancements, Web services, data field audit, foreign addresses, check interface enhancements, diary enhancements, CMS third-party Medicare reporting requirements, integration with ISO ClaimSearch, and electronic funds transfer support for payments.

To support workers' compensation clients, CSC has added functionality, including company-specific financial worksheets for reserves and payment processing; case management features specifically for workers' compensation claims to provide details required for rehabilitation and compensation-specific claims handling; detailed employment information, including automatic wage calculation features; detailed claimant injury information features to track benefit types and dates of disability; detailed claims information (DCI) reporting for loss act, type of loss, type of recovery and so on; unit statistical details, fraudulent claims indicators and managed care details; scheduled payment features, with triggers to notify the claims handler of available reserves; and EDI, which allows electronic submission from third-party entities, such as medical bill review providers.

Advanced Claims is componentized to work with CSC core applications or integrate with non-CSC systems. It was developed based on the ACORD XML standards and an SOA. It is .NET-based and is an n-tier application running on the Wintel platform. The solution has embedded workflow and a proprietary rule engine. CSC reports that multiple databases can be supported, but all client installations are on SQL Server. Clients have the option to deploy Advanced Claims on-premises or have it hosted in the CSC data center.

Strengths:

  • Financial stability of CSC and history of experience in the P&C insurance industry, especially in providing industry software.

  • Strong and active user community.

  • Litigation management is supported in the system or can be integrated with CSC's Legal Solutions Suite (which must be licensed separately and at an additional cost).

  • It is integrated with CSC's Business Analytics tool for reporting (which must be licensed separately and at an additional cost).

  • Fraud management is supported by CSC's Fraud Analytics Suite (which must be licensed separately and at an additional cost).

  • Investment in 2010 for Web 2.0 capability to improve portals.

  • An application infrastructure to support mobile devices already established.

  • Leveraging CSC India and CSC Vietnam for configuration and implementation services.

Weaknesses:

  • Catastrophe management must be configured.

  • Multiple modules, which must be licensed separately to build out all the needed claims functionality.

  • Analytics and reporting tools do not come with prebuilt KPIs.

  • While having an import feature to allow customers to bring in third-party data, the system has limited preintegration with third-party data providers.

  • Limited implementation options; all implementations are done by CSC — no SI or implementation partners.

  • Solution is not yet ready for global deployments, which is an issue for multinational insurers wanting a global deployment.

  • No integration with GIS or geocoding.

Advanced Claims is an option for Tier 2 and Tier 3 P&C insurers wanting a stand-alone application from a reputable and financially stable vendor, with basic functionality for personal- and commercial-line deployments. The continuous delivery release schedule will help companies stay current with new features and functionality, and the investments made by CSC in future technologies (for example, mobile enablement and Web 2.0) will be enjoyed by customers of Advanced Claims. Customers have the option of buying multiple modules, which comprise Advanced Claims and adjacent claims processes, such as litigation management, to build out a comprehensive claims platform.

Rating: Positive

Exceed Claims

Exceed Claims was first released in June 2003, and July 2007 was the release of Exceed C.0.0.0, the foundation for continuous delivery. It is sold in North America and Europe. To date, there are 13 live customers in North America and an additional customer in Europe. While some customers are using the solution for commercial lines and one for workers' compensation support, the majority support personal-line claims processing. Of those customers, two are over $1 billion in DWPs, nine are between $500 million and $1 billion in DWPs, and two are under $500 million in DWPs.

Furthermore, two customers are live on C.0. Three customers are migrating from earlier releases to C.0, and four customers have retrofitted continuous delivery releases into their earlier versions of Exceed. The largest Exceed Claims-installed client processes more than 80,000 claims monthly. No new customers have been signed in 2009 or 2010.

CSC continues to provide system enhancements for Exceed Claims. Commercial-line support was released in 2010, and workers' compensation will come at a later date. In the past two years, it has done UI changes via Web 2.0 to enhance usability, appearance, branding and personalization. It also added Medicare secondary-payer support, a management center, automated workflow, vendor assignment, direct access to third-party vendors from Exceed, supplemental fields to allow data capture on the fly, enhanced loss information data capture, disbursement check sorting, electronic payments, common policy interfaces, data encryption for Social Security numbers and federal tax IDs, technology upgrade, enhanced contact information, and enhanced occurrence processing.

Exceed Claims can be interfaced with CSC's Exceed Policy Administration and other CSC products, or with legacy systems and other vendor products. In 2010, CSC integrated Exceed Claims with CSC's Claims Desktop. Claims Desktop provides electronic business-to-business integration, assignments and communication to vendors and third-party applications; real-time updates for status view; notifications sent to a claims diary; and comments. Now that Claims Desktop is integrated with Exceed Claims, users can assign work to outside claims vendors right from Exceed.

CSC has a proprietary workflow engine and rule engine. CSC is still in the process of transforming the code from COBOL into Java. Today, the solution runs on the mainframe, and the Java alternative is not due out until later in 2011. The databases are Microsoft SQL Server 2005 for the presentation layer, and DB2 Universal Database (support) and DB2 9 for z/OS for the business services layer. A mix of programming languages is used:

  • Presentation layer: VB.NET, XSL, HTML and JavaScript

  • Communications layer: Java

  • Business services layer: choice of Java or COBOL

The system supports multiple standards, including ACORD XML, WSDL, SOAP, TCP/IP, SSL and JMS. Additionally, the communications framework supports BPEL. Exceed Claims supports the ACORD data model; however, CSC has launched its own data model in 2010.

Strengths:

  • Clear road map for future enhancements; many are leveraging developments of the parent company in areas such as mobile enablement.

  • Strong and active user community.

  • Occurrence or catastrophe component offered.

  • CSC's Legal Solution is integrated with Exceed Claims for litigation management (but requires separate licensing and an additional cost).

  • Integrated with CSC's Business Analytics (which is built on SAP's BusinessObjects) for reporting and dashboarding (but requires separate licensing and an additional cost).

  • Dashboards come with prebuilt reports and KPIs that were developed by the user communities.

  • Fraud management is supported by CSC's Fraud Analytics Suite (which must be licensed separately and comes at an additional cost).

  • Support for mobile devices.

  • CSC India and CSC Vietnam to help with development and implementation/configuration.

  • Currently runs Exceed Claims for a customer in CSC's data center; this can be leveraged in the future for customers wanting an ASP model.

Weaknesses:

  • Lack of sales execution. No new customers signed since 2007.

  • Limited experience in commercial lines and workers' compensation product lines.

  • Limited prebuilt integration with third-party data providers.

  • No support of geocoding or GIS.

  • No implementation or SI partners, other than CSC.

  • A variety of databases and programming languages used to build Exceed claims.

  • No portal is shipped with the product; customers must build it out.

  • System needs improvement in the output management functionality.

  • Java version is not yet available.

While CSC continues to build out and enhance Exceed Claims, it has found it difficult to win new deals and compete against other market players. Its customer base primarily consists of Tier 3 companies, and it lacks experience implementing this module in high-volume Tier 1 claims operations.

Leveraging corporate investments in new technologies, CSC's offshore resources and hosting facilities will help CSC further penetrate the midsize and small insurer market for claims management. However, additional investments are needed to build out and gain experience in commercial lines, enhance the sales performance to win new customers and drive greater implementation experience, and finish the development of the Java version to offer customers an option other than mainframe deployment.

Rating: Promising




Guidewire Software

Guidewire Software is a privately held company owned by its employees and venture capitalists. The company does not disclose financial information. It is based in the U.S. and was founded in 2001. Guidewire has approximately 583 employees worldwide, with 267 dedicated to implementation and services. Guidewire Software provides application software and implementation services for the P&C segment. Products include ClaimCenter, PolicyCenter and BillingCenter.

ClaimCenter was first released in 2003, and today, the solution is sold worldwide. Today, it has 62 live customers globally using ClaimCenter (representing 85 separate claims implementations). Of those customers, 47 are in North America, eight in Asia/Pacific, six in EMEA and one in Latin America. These customers are running the system for personal, commercial, specialty and workers' compensation lines of business. Its customer base is evenly split among all product lines. Twenty-seven new customers were signed since January 2009, 17 in North America. Customers range in size from under $500 million in DWPs to over $1 billion in DWPs, with the majority of its customers falling into the Tier 1 and Tier 2 markets. The largest customer deployment is over 2.5 million claims processed per year.

The current release is 6.0, which was launched in December 2009. It is primarily offered as an on-premises software, although several of its customers use a hosted solution available through Guidewire's alliance partners. Of the existing customers, six are live on this new version, including four insurers that have successfully upgraded to it from an earlier ClaimCenter version.

Overall, Guidewire spends 30% of its revenue on R&D. Enhancements in version 6.0 include out-of-the-box claims-performance-monitoring screens and tools, claims support for ceded reinsurance, association of related claims from the same occurrence, triggers for large losses, improved visibility into catastrophe exposure, and better tools to tie claims that have already been reported to newly defined catastrophes. Also included are "best practice" enforcement for homeowners, workers' compensation and travel lines of business; multicurrency support for policies in any currency; enhanced deductible handling; and APIs for integration to the claims portal for policyholder or agent access to claims data and functions.

The solution offers basic reporting, and it is released in version 6.0 with Claims Performance Monitoring. Reports come with a range of claims "health metrics" to measure claims performance throughout the life cycle and present these results in a dashboard format. To support workers' compensation product lines, Guidewire offers a benefits calculation framework, compensability decision support, workers' compensation parameters for the administration of indemnity benefits and compensability decision parameters, ICD-9 selection tool, medical case management screens, and line-of-business-specific fields throughout.

The system has an open architecture, allowing integration with the surrounding policy, billing and accounting systems. ClaimCenter has a proprietary workflow engine and rule engine. It supports Oracle and Microsoft SQL databases, and the solution is developed in Java. It uses a proprietary data model. Technical enhancements made in the past 24 months include customizable data types; enhanced integration tools to output standard messages from Guidewire applications; integration tools to map data to any XML Schema Definition (XSD) and to manipulate application data models; enhanced support for multilingual and multicurrency implementations — including "multitenant" implementations with multiple regions and different addresses, calendars, time zones and other parameters on a single instance.

Also included are multilingual enhancements, including localizable data columns and localized Guidewire Studio; enhancements to the object-caching algorithm and cache instrumentation for easier application tuning; additional administrative tools to profile and tune batch processes, integration points, rule execution and workflows; support for JBoss Enterprise Application Platform (EAP) application servers; and improved tools for upgrades.

Strengths:

  • Customers in all product ranges and a solid number of customers using the system for commercial and personal lines simultaneously.

  • Solid track record of growth, with 26 new customers globally signed in 2009 to 2010, and the largest customer base of Tier 1 and Tier 2 insurers for any claims solution in the market (22 customers in North America are over $1 billion in DWPs, and four of these are equal to or over $5 billion in DWPs).

  • Strong implementation track record of go-lives.

  • Open architecture — while Guidewire does offer complementary policy and billing systems, it has a lot of experience integrating with non-Guidewire systems.

  • System developed using modern technologies and platform, including Java for the Java EE platform.

  • Scalability proven for large claims volumes.

  • Large number of claims performance indicators prebuilt into core adjusting screens and reporting tools.

  • A number of implementation partners, including Capgemini, Ernst & Young, IBM Global Services and PricewaterhouseCoopers. In addition, Guidewire has regional consulting partners, such as Adaptra in Australia, CastleBay Consulting and HCL Technologies.

  • Customers report that the system is easy to configure and very flexible.

Weaknesses:

  • Prospects report concern over its ability to scale and fast growth and how long it can keep up this momentum, as well as concerns over bandwidth and the cost and dependency on SI partners for implementation services.

  • Analytics, including predictive modeling, not supported in the base solution and no formal partnerships established.

  • Limited fraud detection capabilities — the solution uses only business rule execution or configurable pattern matching to identify fraud; no visual link analysis or other advanced techniques are used.

  • Integration with ISO ClaimSearch, Metropolitan Reporting Bureau and Microsoft MapPoint is provided out of the box, but all other third-party integrations must be built out through accelerators during implementation.

  • No mobile applications are offered in the base solution, but template solutions are being developed.

  • The system does not support ACORD XML messaging standards by default, other than for FNOL.

Guidewire has one of the strongest track records for deploying claims management modules among all of the vendors covered in this report. It continues to win customers year over year, and customers report on-time and on-budget deployments. Simultaneously, Guidewire has expanded its solution by adding functional depth and investing in internationalization of the solution to fit the processing needs of P&C insurers in other regions. It has customers who have selected ClaimCenter as a stand-alone application, but it also has a significant number of insurers buying Guidewire modules for claims management, plus policy and billing management, due to the tight integration of the three modules and the common technology foundation that is used across the solutions.

However, it lacks the resources of its largest competitors, which can tap into corporate funding for new technology initiatives to always stay ahead of their customers' and prospects' business demands. As a result, Guidewire will need to rely more on business partnerships to fill solution gaps, obtain help with globalization and implementation services, and access state-of-the-art technology advancements in areas such as mobile enablement and predictive modeling. However, R&D investments and a positive vision enable Guidewire to continue to be a top contender for claims management for commercial- and personal-line P&C insurers in North America.

Rating: Strong Positive




Innovation Group

Innovation Group, founded in 1997, is a publicly traded company headquartered in the U.K., with U.S. headquarters in Connecticut. Innovation Group has 2,400 employees globally, with approximately 450 focused on services and support for its software solutions. Approximately 200 Innovation Group employees support the Insurer Claims solution, and approximately 100 employees are dedicated to implementation services. In fiscal 2010, the company's revenue was £162.1 million, and 80% of the revenue came from the insurance industry.

One of the main issues of Innovation Group in the past was concerns about the stability of the company and its focus, as it juggled services (including BPO) and software. Management changes in 2009 and 2010 addressed this issue. The outcome is a renewed focus on creating and selling software, targeting, first, the U.S. market, and implementing its technology in its BPO service division to provide complementary plug-and-play technology and services for insurers. It provides a modular set of applications for core insurance, including Insurer Claims, Insurer Policy and Insurer Analytics.

The claims management module is called Insurer Claims (rebranded in 2010 from Innovation Claims). It was first released in 2001 and is sold today in North America, Europe, South Africa and Asia/Pacific. It is offered as an on-premises software, or it can run hosted as an ASP or SaaS. Customers can also opt for BPO, using Innovation Group's service centers. Approximately six customers are live in North America, with an additional 17 in Europe (including 104 insurers being supported via two SaaS and BPO installations), and one in Asia/Pacific. In total, there are 24 implementations globally of Insurer Claims. Of the six North American customers, three are for personal lines, two for commercial lines and one for specialty lines. Innovation Group is planning on implementing the SaaS and BPO delivery for North America, beginning in the fourth quarter of 2011.

Since January 2009, the company has signed four customers in North America (two being for workers' compensation support), four in Europe and one in Asia/Pacific. Its North American customers are all under $1 billion in DWPs: Three are between $500 million and $1 billion in DWPs, and the remainder are below $500 million in DWPs. A separate product called Insurer Works is targeted at workers' compensation claims handling. It processes approximately 1.8 million claims annually in its BPO operations.

The company spent 2009 working on a new architecture for the solution. Today, the current release is version 7.0, released in December 2010. Three customers are on the newest release. In addition to Insurer Claims, it has Insurer Analytics, which comes integrated with Insurer Claims (that is, included in the base license), or can be licensed separately to support claims analytics.

Version 7.0 has additional enhancements, including a refreshed UI (as well as some usability enhancements), wireless applications, upgraded online help, additional industry standard integrations, dynamic question sets, and configuration-driven screens and data extensions. Furthermore, architectural support for external portal functionality has been enabled for customers and will be delivered out of the box in upcoming releases. The solution has prebuilt interfaces with Experian QAS, and additional interfaces to ChoicePoint, ISO and Audatex are in the plans for 2011.

Insurer Claims has a proprietary workflow engine and rule engine supporting fraud management, security, authorization, workflow and assignment. In version 7.0 of Insurer Claims, the rule engine is decoupled and enabled through a JSR 94 industry standard interface, which will allow the solution to be plug-and-play with any JSR 94 rule engine. Innovation Group is a Microsoft and IBM partner. Implementation is in production on IBM DB2 and Oracle v.9.2 and v.10.0 databases. It plans to certify on Microsoft SQL Server in 2011. The solution is written in Java, and service components and data were mapped to IBM's IAA Component Business Model and the U.K.'s Financial Services Authority's Insurance Function Models. Insurer Claims leverages the IBM Insurance Process Acceleration Framework, including the use of IBM SOA Foundation middleware products, IBM WebSphere Application Server, IBM WebSphere MQ, IBM DB2 and IBM FileNet P8, to deliver performance, scalability and flexibility, and it has been tested against the rigorous criteria of the IBM IPA Framework.

Insurer Claims received IBM's IPA Framework validation in early 2009 and was the first non-life-insurance solution to be SOA-validated. Using its Service Integration Layer (SIL), Insurer Claims supports industry standards for a wide array of non-life-insurance data standards that are country-specific, including ACORD, eEG7, Polaris, German Insurance Association (GDV), SIVI, Portima and D'Arva (the Danish insurance association).

SI and implementation partners include IBM and Cognizant.

Strengths:

  • Experience offering Insurer Claims as SaaS or BPO and hosted in other regions, which could be leveraged in North America. It hosts Insurer Claims today for customers in BPO centers in France and Spain.

  • Integration experience: Through the BPO center, it has integrated with over 400 policy systems.

  • Modules to support a common customer file, litigation management, FNOL and supply chain management.

  • Integration to Innovation Group's extensive repair network, which is part of its BPO service.

  • Solution comes with prebuilt reporting and with Insurer Analytics for advanced analytical capabilities, including dashboarding and advanced analytics.

  • Mobile support, with an iPhone application delivered as part of the base solution.

  • Leveraging offshore technology centers to help support implementations.

  • Range of delivery models.

Weaknesses:

  • No North American customers over $1 billion in DWPs or proven scalability with large insurance volumes; however, it does have customers in this premium tier in other regions.

  • Functionality gaps for commercial-line processing.

  • Lacks advanced fraud detection capabilities, such as visual link analysis.

  • No out-of-the box portal shipped with the product.

  • Competing product for workers' compensation claims handling (Insurer Works), so workers' compensation functionality is limited in Insurer Claims.

  • Limited integration with third-party data providers relevant to U.S. companies.

The continued R&D investments made by Innovation Group and the reorganization done in 2010 will significantly help the company overcome concerns and challenges. Customers report to Gartner that they are pleased with the new management team and the focus shifting back to quality products. An enhanced UI, analytical capabilities and leveraging of its BPO experience will help Innovation Group stand out from the crowd of vendors offering claims management modules. Solution functional enhancements planned in 2010 to 2012, including the addition of necessary integration points and line-of-business support for the U.S. market, plus technical changes, will help Innovation Group more aggressively compete in the North American P&C market. The refocus on North America will help grow its customer base in the region, where today, it is slanted more toward European deployments and customer wins.

Customers wanting end-to-end claims functionality and/or alternative delivery methods should assess Innovation Group against their needs for personal- and commercial-line claims processing.

Rating: Positive




LexisNexis

LexisNexis Insurance Software Solutions is a division of LexisNexis Risk Solutions and located in Hartford, Connecticut. It does not disclose financial information. It has about 460 employees, with seven employees dedicated to product development, with operations and implementation activities supported through shared enterprise resources. Insurance Software Solutions focuses exclusively on the insurance industry, offering a range of data services (via the acquisition of ChoicePoint) and solutions (via the acquisition of Insurity). It offers claims, billing and policy systems (called Insurance Decisions) aimed at the North American P&C market.

Its claims solution is called Claims Decisions. It was developed in 2004 as a .NET solution based on Pyramid Claims, which was acquired by Insurity in 2003. The solution is sold only in North America, and the company has six customers live on Claims Decisions (plus another 23 live on an older version). The customers have personal, commercial, specialty and workers' compensation line deployments. However, the majority of customers are commercial and/or workers' compensation lines of business. The company has not signed new customers since January 2009. Customers range in size from over $1 billion in DWPs to under $500 million in DWPs. The company states, however, that Tier 2 and Tier 3 insurers are its target market. Of the live customers, all but one are hosted by LexisNexis.

The most recent version is 1.62, and it has four customers on the current release. The new version is based on .NET and is built on the Insurance Decisions framework. Since 2009, the company has been making architectural and functionality enhancements to the system. This includes expanded use of configurable control of screens through new data dictionary capabilities, performance improvements, security enhancements and enhanced tracing capabilities.

Functionality enhancements include enhanced claims search capability by the addition of the universal and component name search to claims party inquiry, enhanced activity manager, addition of the homeowner FNOL process, duplicate-payment validation, new subrogation model, new SIU module, and multiple regulatory compliance enhancements. For workers' compensation product lines, the system supports a return-to-work module, medical case management module, Medicare secondary-payer data collection support, DCI data collection support, integrated medical bill repricing with MedData, and employee-specific data for 1099 and W-2 tax form reporting.

The company is a Microsoft technology partner, using both .NET development platforms and portals built in SharePoint, and supporting the SQL database. ACORD XML messaging is used for interfaces, and it has a proprietary data model. The solution is offered as on-premises software, as well as in a hosted, ASP model (using its data center in Georgia).

Strengths:

  • Financial strength, now as part of LexisNexis, and improved product and project delivery since the acquisition.

  • Solid number of commercial-line deployments.

  • Significant enhancements done in 2009 to 2010, both architecturally and in functionality.

  • Includes Reporting Decisions for analytics, with integration to LexisNexis services (however, licensing for additional data services not included in the base cost of the system).

  • Fraud analysis tool, Magnify, offered, using visualization and geocoding, which can be integrated (but at a separate licensing cost).

  • Hosted solution offered for insurers not wanting to deploy the module on-premises.

Weaknesses:

  • No new customers have been signed since January 2009.

  • No SI or implementation partners, onshore or offshore.

  • Limited experience in personal-line claims processing; most customers have been in commercial and workers' compensation product lines.

  • Limited integration with third-party providers; integration exists only for MedData medical bill repricing, LexisNexis report ordering for police and fire reports, HealthTech for EDI compliance reporting, and ISO ClaimSearch.

  • Solution supports only the SQL database.

  • No support of mobile applications today.

  • Lack of experience in deploying the solution as an on-premises software — only one customer is not hosted today.

  • Basic workflow, which must be configured; no integration with best-of-breed BPM tool; and rules and workflow coded and more difficult to configure. Customers can modify rules; however, all new rules require LexisNexis' involvement.

  • No supply chain management functionality in the base system.

  • Customers report the system has a slow response time due to each screen requiring refresh, and processes not being streamlined.

LexisNexis is a new addition to the report this year. While Insurity was struggling in the past, Insurance Software Solutions has turned around since the acquisition by LexisNexis. In 2009 to 2010, it focused on filling out functional gaps and improving customer experience using its portfolio of solutions. Today, the software division offers the basic claims-handling processes that buyers can buy in a modular approach to match their business needs.

With Claims Decisions, however, configuration is still a problem, and clients are less likely to be self-sufficient than with the other vendors reviewed in this report. Claims Decisions is best suited for carriers wanting a Microsoft-based solution and wanting to run the application in a hosted environment. Carriers seeking to deploy on-premises may find implementation challenges due to the lack of implementation experience and methodologies available through LexisNexis.

Rating: Promising




SAP

SAP is a public company headquartered in Germany and has 48,000 employees globally. In 2009, the company's revenue was €10.6 billion. There are 800 resources dedicated to insurance products in general. SAP offers a wide range of solutions to various industries, and insurance is one of its target industries. Specific to insurance, the company has created a portfolio of solutions targeted at policy management, claims management, collections and disbursements, reinsurance, and commissions, and it offers CRM, ERP systems and business intelligence (through BusinessObjects).

The claims system is called SAP Claims Management (FS-CM), which was launched in 2002. It is marketed globally. Key targeted geographies are EMEA and North America, and it targets carriers with $200 million and up in gross written premiums (GWPs). It has 14 customers globally (40 customers globally, and 25 in P&C, of which 14 are live): four in North America and 10 in EMEA. Of the North American customers, all four use the solution to support personal- and commercial-line processing, two of which also support workers' compensation. A total of three customers were signed in North America since January 2009, and an additional three in Europe.

Its North American customers are Tier 1 and Tier 2: Two are over $1 billion in DWPs, one between $500 million and $1 billion in DWPs, and one under $500 million in DWPs. Its largest installation in P&C supports 1 million P&C claims. However, in Europe, one customer is using the system to support more than 69 million health claims annually. In addition to its software customers, Capita Insurance Services handles claims for seven primary insurers in the U.K.

The current version is SAP Claims Management 6.0, Enhancement Package 4. SAP Claims Management is shipped as part of the ERP Central Component. Enhancement Package 5 is currently in the ramp-up phase and will be generally available in 2011. Enhancements made in 2009 to 2010 include new best practices and improved usability for line-of-business private auto claims (U.S. and Germany), new claims financial reporting, new approval process for repetitive payments, enhanced service catalogs, new enterprise services for finding and reading claims, new enterprise services to integrate to a reinsurance system, enhanced business rule framework, enhanced bulk subrogation, and enhanced SAP Solution Manager content for accelerated claims implementations.

The solution comes packaged with reporting and prebuilt dashboards embedded with KPIs for claims performance tracking. The solution has basic functionality for workers' compensation product lines, including benefits for temporary or permanent work incapacity, medical benefits, benefits for dependents in the event of death, and benefits upon loss of body parts or functioning of body parts. It partners with Esri and Pitney Bowes for geocoding and GIS.

The solution uses SAP Business Workflow and a proprietary rule engine. SAP has partnerships with over 30 integrators worldwide. Some of the more well-known names include IBM, CGI, Deloitte, Accenture, ConVista, Cognizant, Ernst & Young and Capgemini. The solution is mostly written in SAP's proprietary language, ABAP. All SAP solutions run on the SAP Web Application Server, a component of SAP NetWeaver. It supports SAP's claims data model for SAP Claims Management (FS-CM). SAP ships enterprise services as part of SAP's Enterprise Services Architecture, certified by ACORD XML and GDV standard.

Strengths:

  • Highly scalable, as proven by a health insurance customer in Europe.

  • Can be integrated with SAP CRM for full call center and service support (but requires additional licensing and cost).

  • Comes with an integrated reporting tool, and customers have the option of also buying BusinessObjects (an SAP company) for additional analytics and reporting capabilities (requires additional licensing and cost).

  • Partnerships with Esri and Pitney Bowes for geocoding, but no preintegration in the base solution.

  • Large implementer and SI partners.

  • Prebuilt services for tasks such as FNOL and claims notification.

Weaknesses:

  • Limited footprint in North America currently, but growing, as reflected by three customer wins during the past 24 months.

  • Does not offer mobile application in the base solution.

  • Limited integration with third-party data providers — today, integrated with ISO and motor vehicle records (MVRs) only out of the box.

  • Lack of support for ACORD XML messaging standards, except for FNOL.

  • Written in ABAP, which is proprietary to SAP and drives IT skills that are not normally housed in the IT department.

  • Limited implementation experience, and customers reporting improved project management skills are needed.

SAP has been targeting the North American P&C insurance industry for years but has had a tough entry into this marketplace. To date, it has secured only four live customers, allowing it to be included in the 2010 report as an emerging player in the North American claims management module market. Its experience in Europe can be leveraged in areas such as scalability and implementation, but it will need to ensure that the solution fits the functional needs of North American P&C insurers in both personal and commercial lines in order to continue to win new deals.

Adding more third-party data integration, leveraging the acquisition of Sybase for mobile support, and supporting North American industry standards will significantly help SAP during the next two years to gain strength and better compete to win Tier 1 and Tier 2 P&C customers. Today, buyers wanting basic functionality with enhanced analytics and financial processing may find SAP a viable vendor to shortlist when doing vendor selection, especially those already running SAP applications or looking for multiple solutions from SAP to run in combination on their NetWeaver platforms.

Rating: Promising




StoneRiver

StoneRiver (formerly known as Fiserv Insurance Solutions) is a private company with a majority ownership by Stone Point Capital and a minority ownership by Fiserv. StoneRiver has approximately 2,000 employees. Of those, 400 are dedicated to services and 600 to P&C operations. The company's revenue in 2009 was $835 million, and it is focused solely on the insurance industry. Insurance software sales (including licenses and ongoing maintenance) account for 15% to 20% of revenue. In addition, 3% to 5% of corporate revenue is derived from its premier claims solutions, Claims Workstation and PowerSuite Claims.

StoneRiver's claims solution is called Claims Workstation. It was originally developed in 1998 and is marketed solely in North America. It currently has 45 customers in production. Of those customers, 21 are using the system for personal lines, 14 for commercial lines, 10 for personal and commercial lines, five for specialty lines, and two for workers' compensation (some use multiple product lines simultaneously). Since January 2009, it has signed two new customers in North America. Customers range in size: Two companies are over $1 billion in DWPs, 18 are between $500 million and $1 billion in DWPs, and 25 are under $500 million in DWPs.

The current version is 7.1, and about 30% of customers are on the current release. It offers on-premises software, as well as ASP hosted through its BPO services. It is currently hosting two Claims Workstation customers in its data center in Philadelphia.

StoneRiver is currently building out its next version, called Claims Stream, which will add more functionality to the solution and deeper integration with the FICO Blaze Advisor rule engine. This effort is a technology shift for Claims Workstation to deliver a new UI and integrate to the company's SOA platform, Insurance Integration Platform (IIP), which will be used across its core systems. Additional enhancements in 2011 include the new capabilities of intelligent workflow, BPM, deeper rule integration, dashboards and reporting.

The solution supports FNOL, including a loss entry process modeled after the ACORD loss report forms for agents, customers, call center and other outside entities. Overall, the solution has limited functionality to support workers' compensation because it has a separate solution (PowerSuite) targeted at that market.

The system uses FICO Blaze Advisor as the rule engine. The solution is certified on IBM DB2 Universal Database 9.5, Microsoft SQL Server 2005 and Oracle Database 10g. It is written in Java, and it is currently in production with Windows Server 2003 and IBM AIX 5.3. The solution uses proprietary XML and a proprietary data model.

Strengths:

  • Long history in deploying solutions in the Tier 3 P&C insurance market, and industry experience for midtier P&C insurers.

  • Proven track record of installations, with many live customers on Claims Workstation.

  • Customers using the solution for personal, commercial, specialty and workers' compensation line claims processing.

  • ASP model offered, and currently, two customers using that model.

  • Use of FICO Blaze Advisor as the rule engine, which is a strong contender in the rule engine market.

  • Solution comes with prebuilt Web services that customers can use to assist in integration.

Weaknesses:

  • Limited experience in large insurers over $1 billion in DWPs.

  • No SI and implementation partners.

  • No support of reporting and analytics, and no dashboard.

  • The system does not support litigation management — Its selected partner is Allegient Systems.

  • No portal comes with the base product.

  • No mobile applications offered in the base solution.

  • Limited workers' compensation functionality; competing solution supports workers' compensation.

  • Does not support ACORD XML standards.

StoneRiver has traditionally targeted and focused on Tier 2 and Tier 3 insurers, which has served the company well. Since the divestment by Fiserv, StoneRiver has continued this focus and significantly stepped up investment to refresh Claims Workstation and is now building out a new version, which is due out in 2011. That version, Claims Stream, will fill gaps currently experienced in Claims Workstation and will be StoneRiver's next-generation claims management solution. Once available, the company will need to help its existing customer base migrate to Claims Stream to take advantage of the new features and functionality being delivered.

In the interim, StoneRiver will find it difficult to sell Claims Workstation due to the migration required in 2011 to the new version. Buyers should wait for Claims Stream to be generally available before proceeding with StoneRiver.

Rating: Promising


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Note 1
Definition of Tiers




Tier 1 — More than $5 billion in DWPs

Tier 2 — $1 billion to $5 billion in DWPs

Tier 3 — Less than $1 billion in DWPs





Vendors Added or Dropped




We review and adjust our inclusion criteria for Magic Quadrants and MarketScopes as markets change. As a result of these adjustments, the mix of vendors in any Magic Quadrant or MarketScope may change over time. A vendor appearing in a Magic Quadrant or MarketScope one year and not the next does not necessarily indicate that we have changed our opinion of that vendor. This may be a reflection of a change in the market and, therefore, changed evaluation criteria, or a change of focus by a vendor.





Gartner MarketScope Defined




Gartner's MarketScope provides specific guidance for users who are deploying, or have deployed, products or services. A Gartner MarketScope rating does not imply that the vendor meets all, few or none of the evaluation criteria. The Gartner MarketScope evaluation is based on a weighted evaluation of a vendor's products in comparison with the evaluation criteria. Consider Gartner's criteria as they apply to your specific requirements. Contact Gartner to discuss how this evaluation may affect your specific needs.

In the below table, the various ratings are defined:


MarketScope Rating Framework

Strong Positive
Is viewed as a provider of strategic products, services or solutions:

  • Customers: Continue with planned investments.

  • Potential customers: Consider this vendor a strong choice for strategic investments.

Positive
Demonstrates strength in specific areas, but execution in one or more areas may still be developing or inconsistent with other areas of performance:

  • Customers: Continue planned investments.

  • Potential customers: Consider this vendor a viable choice for strategic or tactical investments, while planning for known limitations.

Promising
Shows potential in specific areas; however, execution is inconsistent:

  • Customers: Consider the short- and long-term impact of possible changes in status.

  • Potential customers: Plan for and be aware of issues and opportunities related to the evolution and maturity of this vendor.

Caution
Faces challenges in one or more areas:

  • Customers: Understand challenges in relevant areas, and develop contingency plans based on risk tolerance and possible business impact.

  • Potential customers: Account for the vendor's challenges as part of due diligence.

Strong Negative
Has difficulty responding to problems in multiple areas:

  • Customers: Execute risk mitigation plans and contingency options.

  • Potential customers: Consider this vendor only for tactical investment with short-term, rapid payback.