MarketScope for North American Life Insurance Policy Administration Vendors

Life insurers and annuity providers are expanding their reasons to invest in policy administration systems. Historically, insurers have been focused on system support risk reduction, system simplification, reducing dependency on key staff members, system consolidation, and legacy modernization. Additionally, insurers continue to move toward a simpler, more flexible, Web-enabled, service-oriented architecture (SOA), and they see commercial off-the-shelf policy administration systems for life insurance as a way to help them achieve this. Additionally, within the past year, conversations with life insurers and policy administration vendors indicate that insurers are increasingly moving toward positioning themselves for growth. This adds pressure to the already strong reasons for policy administration purchasing. While they are not allocating significant new budget funding for product and distribution development yet, insurers are revisiting product and distribution growth plans, and Gartner expects greater financial investment in 2012. Many of these growth plans require new products, new distribution channel relationships and services, new underwriting models, and new customer service functions, fundamentally increasing the demand for new policy administration solutions.

Commercial off-the-shelf policy administration systems for life insurance and annuities continue to mature, and are offering better rule engines, more flexibility, more configurability, and richer functionality and broader product support for group and worksite products. While deploying a vendor-provided alternative is usually cheaper for insurers in the long run than building a solution themselves, these projects are not inexpensive and vary widely in cost and time frames. Based on conversations with insurers and vendors, Tier 1 and Tier 2 life insurers can expect to pay as much as $35 million for a commercial policy administration solution, including software and implementation services, while solutions more targeted to Tier 3 insurers can cost as little as $2 million to $3 million. These projects can take nine months to several years. Drivers of the variations in cost include the number of systems, policies and products slated for conversion; the number of new products part of the initial launch; the number of interfaces to other systems; and the scope of process and organizational change. While time-consuming and expensive, policy administration projects can improve business flexibility by:

• Speeding up time to market with innovative products
• Improving the ability to cross-sell multiple products based on customer needs
• Improving Web-based self-service capabilities for customers and distributors
• Allowing for the redesign of operational, compliance and risk management processes

The 14 vendors (15 systems) included in this research reported 17 new contracts signed among Tier 1 and Tier 2 life insurers (those with at least $5 billion in assets) in North America for policy administration systems during 2011. These new deals represent policy administration for both individual and group business. This reflects a nearly 20% growth over last year's number of deals in the North American market. License expansions, or the choice by insurers to expand vendor systems to new countries, products or legal entities, was roughly the same as in previous years.

Business and IT Trends Affecting Policy Administration Decisions

Gartner has identified several business and IT trends that insurers should consider when creating a policy administration road map:

• Increasing preference for "out-of-the-box" deployments — Many insurers have found that their existing policy administration strategy — whether it be building solutions from scratch internally or heavily modifying vendor solutions — has led them to the point where these legacy systems are no longer viable to maintain. To avoid this situation going forward, insurers are increasingly choosing to license a policy administration solution, and then maintain the application with upgrades provided from the vendor. To make the upgrade process as simple as possible, these insurers are committed to deploying the base system from the vendor with minimal modifications, and in some cases are willing to modify their own workflows to stay with out-of-the-box functionality. They may even limit product characteristics in an effort to reduce or eliminate modifications to the system. In nearly all cases, insurers are also looking for solutions that have extensive configurability, or strong separation between base and client code without needing to modify base code.
• End-to-end policy administration solutions versus specialized systems — Tier 1 insurers are more likely to seek policy administration solutions that have a narrower functional focus and are limited to policy administration functions, such as managing customers and calculating and maintaining policy values. This approach then requires that policy administration is more broadly integrated to specialized systems for commissions, electronic applications, new business, enterprise workflow, claims and other core insurance functions. Smaller Tier 2 and Tier 3 life insurers are more likely to select a policy administration solution with a broader functional focus that could manage the end-to-end insurance process. More on this trend can be found in "End-to-End Policy Administration Strategy or a Specialized System Strategy: Life Insurers Must Decide."
• Insurers are losing expertise related to legacy systems — As a result of retirement and attrition, North American life insurers are feeling the loss of key expertise throughout their IT organizations. This is a growing concern that is driving increased urgency to retire legacy systems, as well as spawning new employee models to retain critical knowledge — through working from home, consulting or better knowledge transfer models. Life insurers find, too, that the policy administration vendors in this research can provide additional knowledgeable resources that are increasingly valuable and help to drive interest in these vendors. However, insurers must be alert to the fact that, going forward, vendors will also struggle to find and keep key resources. Insurers would be wise to lean toward vendors with deep experience and extensive staff, and established partnerships with third-party implementation partners.
• The emergence of software as a service (SaaS) delivery models — Policy administration vendors for life insurance have been offering hosting services and application service provider (ASP) delivery models as part of their offerings for many years. As noted in previous years' research, multitenant, Web-delivered, monthly priced SaaS models are slowly gaining ground for policy administration delivery. Insurers continue to have concerns about sharing hardware or software with others, often finding it difficult to be satisfied with a solution that is not customized to their own requirements and still needs tight integration. However, despite these objections, insurers are increasingly amenable to SaaS as a possible delivery alternative for policy administration. Vendors are also finding ways to ameliorate these concerns further by creating platforms that maximize the sharing of hardware and software while keeping insurance company data on separate physical environments. There are now a handful of examples across the industry to leverage these models. Tier 3 insurers and smaller Tier 2 insurers are particularly interested, as the cost pressures on these companies are great as they attempt to remediate their legacy system challenges.
• Certain policy administration characteristics are deal killers for many insurers — Insurers have become so concerned about deploying solutions today that will become legacy systems in the near future, that they are increasingly shying away from mainframe hardware platforms, Assembler and COBOL. While some of these concerns are justified, as these characteristics can add cost and support challenges, these systems should not be relegated to the trash heap just yet. Many of the systems that have these perceived legacy characteristics are proven, functional platforms complete with Web services and rich configurability, matching the functional characteristics of systems built with newer technology. Furthermore, all of these platform providers continue to root out legacy characteristics and are investing in migration approaches for their existing customers. Rather than reflexively rejecting these solutions, North American life insurers would be better served to evaluate vendors based on the functionality and configurability of the platform, and the proven performance of the vendor.

Continued Development and Enhancements

Over the past several years, there has been little concentration of new deals with one or two vendors. Instead, there has been a broad distribution of new deals across all vendors. The largest number of deals won by any single vendor is three, with three vendors reaching this number in 2011. The wide distribution of deals across vendors is evidence that insurers are evaluating solutions and vendors based on a variety of functional capability and vendor delivery factors. Insurers evaluate solutions based on vendors' software support model, the hosting and delivery model, vendor performance, the surrounding systems, integration points, existing workflows and procedures, the hardware platform, development technologies, and so on. The variety of selection criteria among life insurers makes it more difficult for vendors to know exactly what insurers need. Most have opted to focus their efforts on adding as many products and product lines as they can, along with adding as much functionality and flexibility as possible. However, they have not focused strongly on transformational elements, such as mobile, social media or the improved use of data to fundamentally change how policy administration is done.

While vendors are responding to insurers' demands, and are developing increased flexibility and configurability in their systems, vendors invest in adding flexibility in specific areas of the platform rather than across the entire solution. For example, some vendors deliver flexibility with a product rule engine, while others deliver flexibility with Web service capabilities. Still others look to modular components focused on key administrative functions such as customer service, workflow or incentive compensation. Because of this, insurers have a difficult time asking the right questions on their RFPs to ferret out the flexibility benefits that will be the most beneficial to them.

While flexibility and configuration are important, insurers should be careful to seek flexibility that will deliver tangible value to their users. For example, insurers find that along with this increased flexibility and configurability come added complexity and increased training for implementation and maintenance staff. While insurers desire the flexibility of highly configurable systems, they also value simplicity. Vendors are increasingly answering this call with solutions that attempt to balance both.

2011 was another strong year for policy administration systems as 15 to 20 new policy administration systems were purchased among Tier 1 and Tier 2 North American life insurers and annuity providers. This reflects a steady flow of deals over the past four years. Furthermore, sales funnels remain healthy, indicating that 2012 is likely to be an even stronger year for life insurance policy administration deals in North America. While in the past, insurers were primarily concerned about legacy modernization and risk reduction, insurers increasingly are looking to policy administration solutions to support business growth. Life insurers are increasingly looking to new product designs, new distribution channels, and new selling and service styles. Insurers' growing interest has made vendors with niche products for disability, long-term care and dread disease, and vendors supporting group and worksite products, more popular as insurers look to these areas to fuel their growth.

Market/Market Segment Description

While some definitions of policy administration systems include everything from new business to claims, the focus of this MarketScope is limited to the core policy administration functions — namely, tracking policy values and information, adding new products, and serving data to other systems, along with display screens, transactions and often workflow capabilities for service representatives.

This MarketScope focuses on the policy administration vendor alternatives for Tier 1 and Tier 2 life insurers in North America. North American Tier 1 insurers have assets of more than $12 billion, while Tier 2 insurers have assets of more than $5 billion and less than $12 billion. Differences in the products supported, technologies and hosting options are noted. Separate components, such as incentive compensation, claims or correspondence, are not included as part of the policy administration offering for this MarketScope.

Inclusion and Exclusion Criteria

All the vendors included in this MarketScope must offer a software solution to provide core policy administration for life and annuity products. The functions supported with the software product include product design, policy calculations, policy transactions, correspondence generation, and customer management for life insurance products. The following criteria must be met:

• All solutions in this research must have six or more production customers.
• Three of these must be Tier 1 or Tier 2 customers in North America.
• Policy administration vendors must be well-known among Tier 1 and Tier 2 life insurers.

Inclusion Criteria Background

To be included in this MarketScope, solutions for life and annuity policy administration must have the functional range to support the administration of group or individual business. Providers of these applications must have a deep understanding of both the technology and the life insurance domain to create solutions to deliver against these functional and product requirements. Vendors must demonstrate through their implementations an understanding of insurance workflows, insurance products, tax laws, regulatory requirements and user behaviors. They must deliver their solutions in an environment filled with old technology, legacy policy administration systems and users who are reluctant to change.

Policy administration vendors gain these competencies by successfully selling and deploying solutions to many diverse customers across North America. As vendors meet the needs of their insurance customers, they gain the increasing proficiency necessary to deliver successful solutions. The importance of live customer deployments is reflected in the inclusion criteria for this year's MarketScope. It is not enough that vendors can provide a key set of functional capabilities; they must also have experience with many insurance companies to expose the range of requirements that exist in the life insurance marketplace.

Changes to the Vendors in This Year's Report

No vendors were added or removed in this year's MarketScope report, as no additional vendors met the inclusion requirements. Life insurers should note that, despite the lack of changes in the report, there are still significant changes to policy administration, including three vendor trends impacting the marketplace:

• New policy administration entrants — Insurers can expect new entrants to the policy administration market in North America over the next several years. Emerging offerings based in North America include Fast and Adminovate. Sapiens, too, has leveraged its experience in Europe to draw attention and win new deals from North American life insurers throughout 2011. As these and others gain sufficient customers to meet the inclusion criteria, they will be added to this report.
• Indian firms buying North American-based policy administration solutions — The North American policy administration market has seen at least four instances of Indian-based firms purchasing North American-based policy administration companies over the past several years. These are MphasiS buying Wyde, Infosys buying McCamish Systems, EXL buying PDMA, and MajescoMastek buying SEG Software. On the whole, this has been very good for the customers of these firms. As the companies have received additional funding, they have provided more expertise and larger implementation staffs.
• Business process outsourcing (BPO) providers entering the policy administration space — Traditional BPO providers continue to move toward offering policy administration as a multitenant or dedicated cloud offering. While this may provide insurers with more flexibility, it will take some time before BPO providers will be able to successfully sell software offerings.

Insurers should expect these three trends to continue with new alternatives over the next several years.

Rating for Overall Market/Market Segment

Overall Market Rating: Strong Positive

While the number of new policy administration deals each year is relatively small, the licensing of new deals each year has remained consistent over the past several years, even through the economic downturn. Interest in policy administration solutions remains high as insurers consolidate policy administration solutions, reduce legacy systems, demand more flexibility and position themselves for growth. As a result, not only are pressures growing on insurers to simplify, consolidate and modernize, but they are also pressed to support new products, distribution channels, and emerging technologies and services. The amplification of needs, along with the combination of well-established and capable vendors, leads to the Strong Positive rating for the overall market segment in this year's MarketScope. Gartner expects the North American policy administration market to remain strong for five to 10 years until the backlog of legacy policy administration systems is eliminated.

Evaluation Criteria

Source: Gartner (June 2012)

Source: Gartner (June 2012)

Vendor Product/Service Analysis

Accenture

Accenture Life Insurance Platform (ALIP)

Accenture's ALIP offering is used for both individual life and annuity products in the U.S., with the largest deployment supporting more than 1 million policies. The platform was originally launched in 1992. Since then, Accenture has upgraded the technical and functional aspects of the platform, giving its life insurance customers a migration path to stay current with the most recent version. With 18 life insurance customers, one of which was added in 2011, Accenture continues to make steady sales growth each year.

The Accenture team continues to be a leader in moving the platform forward with a solid vision to deliver greater product support and flexibility for insurers. It is making some progress toward making the system less expensive to implement, with additional prebuilt interfaces, new implementation processes and enhanced product templates, as well as providing standard insurance carrier operational processes. Accenture has been improving its analytics capabilities within the platform to give insurers better insights into sales and service activities. The company has also introduced a stand-alone tool called the Accenture Actuarial Calculation Engine to help insurers design and document new products. Finally, Accenture is seeking ways to maximize value for its hosted clients by creating better reuse of platform elements without jeopardizing data security.

The ALIP system has components for illustrations, electronic applications and forms, new business workflow, electronic underwriting, policy administration, call center, claims, and incentive compensation. It was one of the first policy administration systems to use a rule engine to apply a common set of rules to multiple modules within the system. The system was written using Java, C++, SQL and Xpath using a Java Platform, Enterprise Edition (Java EE)-compliant approach.

Strengths:

• Accenture continues to see steady growth, adding a new Tier 2 client in 2011. Accenture also reports that a handful of customers expanded their existing licenses, showing that their customers view its product as a strategic platform.
• Accenture can deliver all aspects of administration upgrade options (rearchitecting existing systems and replacing and consolidating existing systems), full BPO and offshore development teams that can be used as needed, and expanded functionality to support alternative license models, including SaaS. Its consulting operation also makes Accenture a strong consideration for insurers needing consulting help with workflow redesign, system architecture, legacy modernization and other core IT improvements.
• Accenture is consistently adding advanced functionality such as better data analytics and mobile capabilities to the end-to-end policy administration platform as a part of its ongoing releases, while demonstrating a strong track record of maintaining a migration path for existing customers.

Cautions:

• Some insurers perceive Accenture as using software as a vehicle to maximize consulting revenue, which causes frustration with companies that simply want a software solution. This continues to occur despite Accenture Software's active efforts to change how it uses consulting resources as part of software implementation projects.
• Accenture is positioning itself as a policy administration software provider to both Tier 1 and Tier 2 life insurers. This has been difficult, as Accenture is not known for taking smaller projects, and Accenture's history with ALIP has been one where projects are most typically above $5 million. Accenture is, however, directing a significant percentage of its investment into making the system easier and less costly to deploy.
• The ALIP is not yet available to support group life products, although Accenture is currently building out support for group products, and has clients using the solution for corporate-owned life insurance(COLI)/bank-owned life insurance (BOLI) and executive benefit plans.

Accenture is a solid North American provider with a strong vision for the future and ongoing investment in the ALIP, and it is taking active steps to simplify implementations. The Accenture Software group needs to continue to work out its marketing and positioning issues with the consulting side of Accenture to better address the life insurance market. Accenture also needs to demonstrate that it is simplifying implementations and saving its clients money. This will be necessary before Accenture becomes successful with Tier 2 insurers. Accenture's ALIP is rated Positive in this year's MarketScope.

Rating: Positive

CSC (CyberLife)

CyberLife

CyberLife from CSC is a policy administration system that supports a wide range of insurance products, including individual fixed and variable life and annuity products, and limited group life insurance. The solution has 41 existing insurance customers, but no new customers have been added to the platform in 2010 or 2011. Nevertheless, insurers on the platform are generally satisfied with the system and the service CSC provides, and CSC is not seeing existing customers leave the platform. The solution is functionally rich and has been proven for Tier 1 insurers that need an enterprise policy administration platform for high volumes and a wide range of life and annuity product designs. CSC is a well-established vendor with a long track record of helping its customers advance technically and functionally with each release of the system.

CyberLife is written in Java and COBOL, and CSC has developed an Enterprise Rules Strategy that will create a centralized repository for business rules and calculations that will be deployed with the CyberLife application in the future. CyberLife is currently integrated with CSC's Product Accelerator to support flexible product and calculation definition. CSC also has other software products that cover a wide range of insurance functions, including licensing, commissions, call center support, workflow and electronic underwriting, which can be purchased with prebuilt integrations to CyberLife. CSC also has extensive experience integrating CyberLife with third-party specialized systems for functions across the insurance value chain. Finally, CSC has the necessary experience, staff and tools to assist insurers with converting from older legacy platforms and policy administration functions from other vendors.

Strengths:

• With 41 live customers in North America, CyberLife is one of the most used solutions reviewed in this research, with an estimated 19 million covered lives. The largest single instance has roughly 4 million policies. The extensive use across the industry demonstrates CSC's thorough understanding of products, interfaces and conversions.
• CSC has proven experience and expertise in executing complex system conversion projects using prebuilt conversion tools and offshore facilities in South Africa and India, as needed.
• CSC has approximately 4 million policies being administered by CyberLife in its outsourcing facilities, which gives insurers greater flexibility to shift from on-premises models, to remote hosted models, to BPO models. The use of CyberLife in the BPO operation provides valuable feedback to the development team on needed features and functionality.
• CSC has a strong track record for ensuring that its customers are not without a migration path. Its development plans and vision consistently accommodate the diverse needs of CSC's existing customers.
• CyberLife integrates with all of CSC's Accelerator components, including product design and configuration, new business, electronic application, customer service, incentive compensation management, and claims management. This provides existing customers with end-to-end components that are more integrated and that complement each other.

Cautions:

• Because CyberLife was originally architected decades ago, the system requires development to support completely new activities, such as unexpected types of riders or product features, that aren't already supported in the system. This reality has often forced insurers to customize the base platform, thereby creating a need for retrofits to accommodate future upgrades.
• CyberLife has a complex architecture, which will make it more expensive to support in the long term, although its product road map addresses this complexity over the next several years of releases. CSC has rearchitected the solution to deliver a service-oriented architecture with the platform.
• CyberLife is not as flexible and configurable as some other solutions in this research, but CSC continues to move in this direction, while making the system less complex, with as little disruption to existing customers as possible.

CyberLife is a proven platform with support for many existing insurance products and services. CSC continues to move the platform forward with functional and technical enhancements. CSC's deep knowledge of products and insurance systems and ongoing customer support has led it to become a leader in insurance software over the past four decades. The company has both onshore and offshore resources to provide enhancement, conversion and support functions for the platform. CSC has a solid vision for the future and continues to move the platform away from COBOL and other older technologies and toward more control for users to configure the platform. CyberLife receives a Positive rating in this year's MarketScope.

Rating: Positive

CSC (Wealth Management Accelerator)

Wealth Management Accelerator

CSC provides both CyberLife and Wealth Management Accelerator to the life insurance market for policy administration. CSC continues to implement more rule-based processing and configuration options as it works to unveil a Java version of Wealth Management Accelerator in the future. CSC has developed a new Enterprise Rules Strategy that will create a centralized repository for business rules and calculations, and will be deployed with the Wealth Management Accelerator application. The goal of Wealth Management Accelerator is to be the destination platform for both Vantage-One and Repetitive Payment System (RPS) users. Considering CSC's track record with providing insurers with a viable migration path, Gartner predicts that CSC will design the new platform to minimize migration risks. Wealth Management Accelerator has also been the solution used by new relationships — four of the 17 Wealth Management Accelerator customers are new customers for CSC.

Wealth Management Accelerator delivers functionality for accumulation and payout capabilities for annuity products. Many existing customers also support life products with the platform. Its 17 existing production customers are heavily concentrated in the U.S., with only one customer in Canada. In 2011, CSC added one additional Canadian customer as well as two more Wealth Management Accelerator customers in the U.S. The company's development efforts in 2011 focused on the replacement of COBOL code with Java, creating a more rule-based architecture, and adding new functional and product support capabilities. The solution has an SOA, and continues to be more configurable as CSC enhances the rule capabilities in the platform. It can be deployed either on a mainframe for high-volume customers or on a midtier platform as needed.

Strengths:

• Wealth Management Accelerator has comprehensive payout capabilities that will allow insurers to use annuitization strategies for a variety of product types. This functionality will also allow the blending of annuitization characteristics during the accumulation phase of the product.
• Wealth Management Accelerator and CSC's support capabilities allow insurers to make code modifications and customizations to the platform to address unique products and servicing needs of their organizations. Insurers should be careful, however, that these customizations don't create undue cost when it's time to upgrade the system.
• CSC uses Wealth Management Accelerator in its BPO facility for policy administration and claims, giving insurers the option to switch from a software model to a BPO model without the need for a policy conversion.
• CSC has extensive experience with all elements of the policy administration project including legacy modernization, planning, conversion, installation, customization and testing, along with a strong track record of ensuring that its existing customers have a strong migration path to follow.

Cautions:

• Because the Wealth Management Accelerator system was not designed originally as a rule-based system, CSC has had to move to a rule-based approach more slowly, and the system is not as flexible and easy to modify as other solutions discussed in this research.
• Because of the system's scale, capabilities and age, it has a more complex system architecture that makes it somewhat more expensive to support in the long term.
• Wealth Management Accelerator has some worksite capabilities, but has limited group functionality and would not be a good choice for insurers with extensive group portfolios.

CSC continues to invest heavily in its Wealth Management Accelerator product, and between CyberLife and Wealth Management Accelerator has the largest life insurance customer base of any of the vendors profiled in this research. Its industry knowledge, ongoing customer care, long commitment to the industry and extensive investment in the platform make it a strong contender in the marketplace. Wealth Management Accelerator is a good migration destination for insurers already using Vantage-One or RPS. It should also be considered for Tier 1 insurers that need help creating an ongoing migration and conversion strategy. Insurers should take care, however, as CSC's vision for Wealth Management Accelerator, while effectively addressing the industry's needs, is not fully built out. Insurers will not have as much flexibility and configurability with Wealth Management Accelerator as with some other systems reviewed in this research. Wealth Management Accelerator receives a Positive assessment in this year's MarketScope.

Rating: Positive

EXL

LifePRO

EXL acquired LifePRO a little more than two years ago, and has done a good job creating needed functional enhancements in the system, including additional support to the existing annuity living benefits, as well as health-style claims functionality. LifePRO is deployed exclusively in the U.S. EXL added one new customer in 2011 to its already sizable roster of 41 customers, along with three new license expansions for the platform from existing customers. The majority of its deployments are for individual businesses, but the system has several group implementations as well. Customers report high satisfaction with EXL's current levels of service, its value for price, and the direction the platform is taking. EXL's two largest production clients have more than 1 million policies each on the platform.

LifePRO is an end-to-end platform containing the functionality to cover the entire policy life cycle from new business processing through claims. The solution has been built using Microsoft technologies, including 85% of the code in COBOL for .NET. EXL is leveraging its data analytics team to enhance the data analytics capabilities of the platform. The solution tends to cost less than other systems profiled here, while also having deeper claims capabilities for health-type products.

Strengths:

• EXL is targeted at Tier 2 and Tier 3 insurers and delivers an end-to-end solution with support for a large number of product types, and lower costs. Still, Tier 1 insurers should not dismiss EXL for their lower-volume product needs.
• EXL uses the solution for its offshore BPO solution, giving insurers greater flexibility in using their own service staff, or in outsourcing service to EXL, without converting policies.
• LifePRO has deep capabilities for claims-heavy products, such as disability and long-term care, and should be considered for these products.
• The LifePRO external rule engine delivers flexibility of newer platforms to enable product cloning, creation and maintenance.

Cautions:

• LifePRO was designed as an end-to-end system, and cannot be installed as separate components for only policy administration, new business, incentive compensation, claims and others.
• The solution is built using Microsoft technologies, with extensive COBOL code still present in the system. Some insurers have a bias against Microsoft for its policy administration platforms, and others are increasingly eschewing COBOL.
• LifePRO has only been deployed in the U.S., and does not have any experience with the Canadian market, lacking a thorough understanding of Canadian products and processes.

LifePRO receives a Positive rating this year with strong customer references and expertise, and functional and technical depth. LifePRO's investment into reducing total cost of ownership, its strong customer base and its business growth are also factors in this rating. The solution is targeted at U.S. insurers that desire an end-to-end solution for their group or individual business. LifePRO is also committed to the Microsoft technology stack and still has significant COBOL code, which some insurers perceive as a negative characteristic.

Rating: Positive

HP

Ingenium

HP's Ingenium was a major player several years ago, but has not made a new sale in North America in the past six years. In addition to North America, the solution is targeted to multinational insurers and insurers across the Caribbean, Europe, and emerging markets in Asia, such as India. It is a flexible platform that is rich in functionality for life and annuity products. Despite its lack of North American sales over the past several years, Ingenium has more North American production deployments than any of the systems in this research. HP's staff continues to support existing customers and enhance the new platform with added features and functionality.

HP continues to improve the technology platform by replacing HTML and COBOL code with JavaServer Pages and Java EE. It also continues to invest in new functionality, such as support for Canadian Tax-Free Savings Accounts and partial annuitization for North American and multinational life insurers. HP's other policy administration solution, Radience, is not profiled in this research because it does not meet the inclusion criteria. HP views Radience as the solution for the future, although neither HP nor most Ingenium customers are actively pursuing a concrete migration strategy.

Strengths:

• Ingenium has a sizable customer base — 70 clients globally, 50 of them in North America. This large customer base has provided HP with an extensive understanding of the challenges associated with implementing policy administration systems for life insurers in a variety of different insurance company contexts.
• Ingenium has out-of-the-box integration with ProductXpress to support product configuration. ProductXpress can be deployed with Ingenium or as a stand-alone component to feed product rules and calculations to other systems, such as illustrations or electronic apps.
• Ingenium has deep, proven flexibility and strong support for the Canadian market in particular. The system also supports high volumes, with the largest implementation numbering more than 9 million policies.
• Ingenium has been deployed in multiple countries, and is a proven solution for multinational companies trying to move to a single solution across many countries.

Cautions:

• The lack of North American sales is a concern. Gartner believes that this is attributable in part to a lack of a clear product strategy and a failure to put forth a broader insurance vertical strategy that resonates with life insurers.
• HP has yet to articulate a viable insurance strategy for the product that effectively balances how the solution fits with HP's global services and sales.
• The current trajectory of HP's existing core products is leaving its customers with difficult choices about whether to continue with Ingenium, move to Radience or seek another vendor's solution. Even so, insurers are satisfied with the tactical enhancements and improvements to the platform.
• The solution only supports individual business, and is not best for insurers supporting group business.

HP receives a Caution rating this year because of its ongoing lack of sales success in North America and the uncertainty related to the continuing lack of vision for the product. HP also reports that, over the past three years, insurers have not expanded their existing Ingenium licenses to new product lines, countries or legal entities. This fact suggests that insurers are not aggressively expanding the use of Ingenium within their enterprise. Despite this, the HP Ingenium team has deep insurance experience and remains committed to improving the platform, supporting existing customers and delivering services to them.

Rating: Caution

IBM

Genelco Insurance Administration Solution (GIAS)

Genelco was purchased by IBM in 2005 and operates as an independent software and services organization to deliver policy administration capabilities to group and individual insurers. IBM's BPO operation uses the Genelco software application to deliver BPO services to life insurers, and implementation work is under way to move the operation to GIAS production by the end of 2012. GIAS, which was originally launched in 2009, is the destination solution for the older Genelco systems — Genelco Life+, with nearly 30 North American life insurers, and Genelco Group+, with nearly 70 health insurance customers in North America. Within the past 12 months, IBM has made enhancements to the GIAS platform, including improvements to individual life and annuity processing capabilities, and new group processing functionality, including a health administration and claims adjudication component with ICD-10 capabilities. IBM has one North American customer on GIAS in production and a life insurer in China on the system. Approximately 30 existing life and health insurers are in various stages in their migration to GIAS. In addition, IBM has four life insurers currently implementing GIAS for group and individual products. Since GIAS was introduced, IBM has made the system available to other fast-growing markets, including Brazil and countries in the Middle East and Asia.

Over the past several years, IBM has used Java and the Ilog JRules commercial rule engine, along with an SOA, to build the GIAS platform. Much of this system is now complete, with many of the components in production at client sites. IBM continues to expand the platform, with enhancements being made for group and individual health products, electronic forms integration, integration with Cognos (IBM's business analytics tool), and claims functionality.

Strengths:

• IBM is investing in bringing thought leadership to the insurance industry, and insurers should expect this forward-thinking approach, along with new innovative features and design, to help fuel insurance transformation.
• Insurers that want the flexibility to manage their policies in-house, or leverage BPO operations for their individual or group business, should consider the GIAS platform, as it can be used for either in-house processing or BPO.
• Insurers looking to conduct international individual or group life business using a single solution in multiple countries should evaluate whether the system is deployed in the countries they want to support.

Cautions:

• GIAS is still very new, and will require ongoing deployments and maturity before it will have the proven functionality and ease of implementations that most life insurers seek. Insurers should generally expect higher deployment risks with solutions that have fewer than six production deployments.
• Genelco is a bit of an anomaly among IBM offerings, as it supports insurance more deeply than its other solutions. This makes its use more risky, but this fact is countered somewhat by the significant investment of the platform over the last few years, showing a strong commitment to verticals.
• While available as a pure software offering, the Genelco team is aligned under IBM's BPO services, making GIAS less visible in the marketplace. However, IBM has made GIAS a core insurance system transformation solution within its insurance industry framework offerings.

IBM has received a Promising rating in this year's MarketScope because it is a solid provider investing in a new solution for the North American and broader global market. IBM also delivers BPO capabilities using the same modern platform, which gives insurers administrative flexibility for either a software or BPO offering. Nevertheless, there are still some risks that insurers should be careful to mitigate. First, there is the possibility that IBM will change its position toward the platform and determine that it goes too deeply into insurance-specific content. Second, the system is still very new and has been deployed only two times.

Rating: Promising

Infosys

VPAS Life

In late 2009, Infosys purchased McCamish Systems along with its BPO operation and software assets, including the VPAS policy administration system. Since then, Infosys has continued to invest in the platform, promoting it both in North America and in India. In 2011, Infosys licensed the platform for the first time in Canada on its multitenant software as a service solution, giving this client a lower total cost of ownership than an on-premises or private cloud model. The flexibility in deploying on-premises, privately hosted, multitenant-hosted and full BPO gives insurers move deployment options without the need to convert policies from system to system. Overall, Infosys has 13 software customers, with two wins in 2011. Of these, some do all the processing themselves, while others outsource some of the processing work to Infosys.

The system itself uses a combination of Java and Progress 4GL, and is composed of a centralized rule engine that provides business and calculation rules via Web services to other components. Over the past 12 months, Infosys invested in the platform by establishing partnerships and integrations to improve business process management, workflow, new business processing, electronic underwriting and claims. The company has also expanded its offshore support team by 50% to take more advantage of the lower cost of offshore resources at Infosys. Java-based VPAS supports a wide range of group and individual products, with customers using the platform equally for both lines.

Strengths:

• The BPO business, along with the software-only offering, gives insurers the flexibility to deploy in a variety of ways, including software-only, full BPO, BPO only in times of business continuation or when peak processing demands system support, or BPO or specific functions. The addition of a multitenant SaaS model should interest insurers that want fast time to market with niche products.
• The flexibility of the system and rule engine has been developed with BPO customers in mind. It accommodates unique product characteristics from a wide range of insurers, and enables speed to market to accommodate BPO customer demands.
• Disaster recovery and business continuation plans are more developed than they typically are with pure software vendors, because Infosys has had to provide these plans as part of its BPO offering.

Cautions:

• Infosys has a relatively small number of on-premises license customers, and while it has migrated blocks of business to its BPO operation, it has less experience dealing with the complexity within an insurer's enterprise.
• The architecture and prototyping of the solution give insurers the ability to integrate with third-party rule engines, but this has never been implemented in production.
• With a recent win in Canada, Infosys is just now moving into the Canadian market. As a result, it has less Canadian experience than other solutions outlined in this research.

It has been more than two years since Infosys bought McCamish, and over this time, the company has continued to invest in the platform, expand internationally, improve its offshore resourcing, grow its customer base and create alliances. Because of these and other factors, Infosys receives a Positive rating in this year's MarketScope. However, insurers should keep in mind that Infosys is still a small player in on-premises life insurance policy administration systems, and deployment risks remain.

Rating: Positive

InsPro Technologies

InsPro Enterprise

InsPro's policy administration solution is built using Java and is 100% Web-enabled for a wide range of functions, from new business to claims, including billing; electronic underwriting; correspondence; commissions; licensing/appointments; document management; Web portals for constituents such as agents, group administrators and policyholders; and data analytics. The system supports group and individual life, and is worth considering for insurers of all sizes looking for a low-cost way to enter the group market with an end-to-end solution, particularly when multiple products need to be supported or hybrid products are desired.

With 14 production customers, three license expansions and two new customers in 2011, InsPro is showing strong growth among North American policy administration providers. Founded in 1986, the company has continued to provide strong functionality in the system to enable configuration without the need to customize the solution. InsPro provides services through its own staff of 90 employees, as well as having a relationship with iGATE for offshore work. InsPro can support its customers using a variety of delivery alternatives, including on-premises and remote hosting offerings. InsPro continues to enhance the platform by adding support for annuity products and improving data analytics in the platform.

Strengths:

• The InsPro Enterprise suite is one complete system composed of modular components that cover end-to-end functionality. For insurers who need only core policy administration functionality, the surrounding modules can be switched off and interfaces to existing enterprise applications can be provided through predefined Web services.
• InsPro customers note that annual InsPro release upgrades take much less time and effort than other systems within their organizations. Gartner also notes that release upgrades with InsPro Enterprise are among the shortest in the industry. This is due primarily to the fact that the system must be deployed as a base system without code customizations, which eliminate the need for retrofitting customizations as a part of the upgrade.
• InsPro has deep product support, with particular capabilities to support claims-intensive products such as dread disease, Medicare supplement, long-term care, disability and accidental-death insurance.
• Based on conversations with insurance customers, Gartner notes that InsPro is one of the lower-cost alternatives among the solutions offered by the vendors reviewed in this MarketScope.

Cautions:

• The solution may not be ideal for companies replacing only their core policy administration system, as the solution is designed as an end-to-end system with support for everything from new business to claims. While the policy administration component system can be deployed as a separate component and integrated with specialized solutions from other vendors, the policy administration component is not available individually for a reduced license.
• Insurers that want maximum flexibility within their systems may be less inclined to select InsPro Enterprise, as this solution chooses to balance flexibility with simplicity and proven functionality through prebuilt product templates. As a result, insurers may need to change their business processes to match system capabilities, rather than changing the system to meet the current business process. Those that do, however, find faster, less costly implementations.
• While InsPro would like to add internationalization, the solution is not currently the best choice for Canadian companies, as InsPro has not yet developed a thorough understanding of the Canadian market. While all existing business is with U.S. customers, one third-party administrator client administers a block of Canadian business (including documents provided in French).
• InsPro Enterprise does not yet support either UL or annuity products, although it has had commitments from two customers to deploy annuity support once it is available. Both annuity and UL support are anticipated for 2013 availability.

InsPro is a solid provider that supports a specific insurance niche with a configurable and flexible platform. It focuses on U.S. insurers that need a low-cost, broad life and health product mix, and want a base system deployment without customizations. Insurers with a need for variable product or annuity support would be advised to wait until these products are in production before looking to InsPro for this support. InsPro has been given a Promising rating in this year's MarketScope.

Rating: Promising

LIDP Consulting Services

The Administrator

For the past 30 years, LIDP has offered the product The Administrator to life insurers to administer their individual life insurance. With one or two deals each year for the past several years and a win of a Tier 2 insurer in 2011 for variable annuity products, LIDP continues to deliver solid functional capabilities with a small but very experienced staff. LIDP has 16 existing customers.

The production version of The Administrator is a COBOL-based solution with deep functionality, full Web services capabilities and strong product configurability. LIDP continues to work on developing a Java EE version of the platform to replace the COBOL core of the current version. The user interface is already 100% Java, but the calculation and other capabilities still need to be rewritten to rid the system of COBOL. As this task is being completed, existing customers will be able to migrate to the Java version using upgrade tools. Additionally, LIDP continues to add new functionality to the system, including greater flexibility to the correspondence capabilities in the platform, and ongoing product enhancements.

Strengths:

• The Administrator runs on a 100% real-time 24/7 environment, which eliminates the need for batch processing. The emphasis on real-time processing is increasingly important as insurers provide accurate data to customers and agents through their real-time portals and call centers.
• The Administrator has proven itself effective with Tier 1 and Tier 2 individual life providers, with successful implementations and satisfied customers. The solution has supported as many as 2.5 million policies in a production environment.
• LIDP comes in at a lower cost, and offers more pricing options than many of its competitors.
• The Administrator can be extended and modified in code, but there is also extensive functionality that can be configured in the platform, making it a good choice for insurers that want configurability with the option of customizing the solution.

Cautions:

• LIDP is not recommended for group business, as LIDP does not have group production implementations.
• LIDP's customers are dependent on its small staff of 20 development and support personnel to provide them with enhancements, patches and upgrades, causing some customers to move more development tasks in-house.
• While much of The Administrator is written using Java, and efforts are under way to move completely to Java, the system still contains COBOL, which will be a concern for insurers that are modernizing legacy systems and attempting to move away from systems developed in COBOL.
• While considered an end-to-end solution, The Administrator does not have the depth of functionality for new business, workflow and claims that other end-to-end or specialized system providers do.

LIDP received a Promising rating in this year's MarketScope. Its small company size and customer base still make it more vulnerable to resource risks than vendors with more staff. Furthermore, some insurers shy away from COBOL in new systems, and would rather wait until the Java solution is available. Still, the experience of the team, the proven functionality of the system and a successful record with customers make it a strong consideration for Tier 1 and 2 customers, either as a niche or enterprise platform.

Rating: Promising

MajescoMastek

Elixir

MajescoMastek continues to promote its Elixir product in North America. The Elixir for North America is a rebranded SEG system that MajescoMastek bought in 2010, and is a separate system from the Elixir that has been sold in other parts of the world. The Elixir for North America will replace the Vector solution, which MajescoMastek had promoted as its individual life insurance and annuity solution prior to the SEG purchase.

Elixir is built using a Java EE services architecture, and leverages a common rule engine to support a range of end-to-end policy processing functions, including new business, workflow, call center, claims and commissions. It has been deployed and in production with six insurers in North America (one in Canada and five in the U.S.), with one new customer in Canada signed in 2011. The Elixir team has continued to enhance the platform with improvements to the user interface, enhancements to the workflow capabilities in the system, and the creation of more flexibility in the product workbench for designing and deploying products.

Strengths:

• MajescoMastek continues to develop its onshore and offshore team to support existing customers and ongoing development of the Elixir product. This gives insurers greater flexibility with staffing for large projects.
• Customers cite the flexibility and rule engine of the system as being key factors in selecting Elixir, which makes it particularly powerful for specialty, combination, or unique products or services.
• Elixir is a strong consideration for Tier 2 insurers for a variety of reasons, including its support for a broad set of functions across the value chain, group and individual product types, range of life and annuity products, and proven support for smaller volumes.

Cautions:

• The largest Elixir deployment currently supports around 200,000 policies, making it better suited for Tier 2 insurers' enterprise needs or Tier 1 insurers' smaller-volume products.
• While the merger between SEG and MajescoMastek has not caused disruptions in the sales or delivery of projects, there is still uncertainty about how MajescoMastek will migrate its current Vector users to Elixir, and how it can improve its positioning and marketing for North America.
• The relatively small customer base reflects that there are still functional areas and business requirements that will need to be added, as well as maturity in other areas, such as testing tools, development methodologies, code maintenance and development discipline.

MajescoMastek's Elixir solution has achieved a Promising rating in this year's MarketScope. The system is modern, highly flexible and broad in its product support and functional scope. Furthermore, it is quickly becoming an attractive platform for Tier 2 insurers with a broad set of product and functional requirements. However, the customer base is relatively small, and the merging of the two organizations is still under way.

Rating: Promising

MDI

Fimmas

Fimmas has been available for life insurance and annuities since 1982, and launched its first production customer in 1984. Since then, MDI has been adding customers, and now has 14 production customers in the U.S. and one in Canada. In 2011, MDI signed a deal with a Canadian insurer and two more deals in other non-U.S. North American countries. The installed base is divided equally between group and individual business, and is supported by a small team of nearly 40 employees. The largest instance of the product supports roughly 1.5 million policies.

Fimmas is an end-to-end solution delivery with capabilities from new business to claims. The system is separated into base code and client code to allow insurers (or MDI) to make unique customizations to the platform without creating challenges for base system upgrades. The solution itself is built using Java, APPX and Visual Basic, and loads and maintains products and processing rules with a flexible external rule engine. MDI uses an SOA to ease integrations with other systems. In 2011, MDI added additional reporting charts and graphs to the platform, along with support for indexed UL products.

Strengths:

• MDI has had the most growth in new customers of all the vendor solutions in this research — with three new deals in 2009, two deals in 2010 and three deals in 2011. While MDI is selective about whom it chooses to do business with, the market remains receptive to its offering.
• The design of Fimmas delivers flexibility in that it allows customizations without making upgrades increasingly complicated by keeping client and base code separated. It also has an externalized rule and calculation engine, and it allows for quick and easy migrating between databases.
• Fimmas should be considered by insurers that wish to operate in multiple North American countries, as it has deep product support, end-to-end processing capabilities, and multilingual and multicurrency support.

Cautions:

• The rapid growth in customers has put strain on existing resources, with staff growth failing to keep pace. The now 40-person company must manage growth, but has been reluctant to add to staff too quickly. Some reference companies report slow responses at times to their immediate needs because of apparent resource limitations.
• MDI uses a proprietary programming language called APPX, which allows the system to operate on multiple database platforms, but APPX is not well-known, and it may be difficult to find resources to support it.
• Large insurers may have difficulty finding sufficient resources to maintain and enhance the platform, as MDI does not have sufficient partners and staff to ramp up quickly.

Tier 2 or Tier 3 insurers with a desire for a single platform for both their group and individual needs, and the need to support a wide range of life and health products, should consider Fimmas. Tier 1 life insurers looking to build out or experiment with a group product using a limited investment might consider Fimmas as well. However, insurers interested in this solution should have the ability and willingness to augment vendor expertise with their own experts, as MDI does not have implementation partners, and has a small internal staff.

Rating: Promising

MphasiS Wyde

Wynsure

Wyde was purchased in 2011 by MphasiS to increase its presence in North America and extend its reach into the life insurance vertical. With nine production customers in North America and two additional customers added in 2011, the Wynsure product equally supports group, individual life and workplace enrollment insurance. The MphasiS purchase is poised to strengthen the offering with additional investment in the platform, cross-selling with existing MphasiS customers around the world, and an offshore development center currently being developed in India. Wynsure is also deployed in other regions, including Bermuda, France and the Caribbean, and can support multilingual and multicurrency deployments. Wynsure supports more than 2 million policies in its largest production instance.

The Wynsure product has remained on its existing development path, and currently provides functionality across the insurance value chain, including policy management, agency management, claims management, Web portal management and document management. These functions are separated into individual modules that can be deployed separately or together. During the past year, the base development team has been improving the reporting capabilities in the platform with the creation of a production reporting database. The platform has good separation between client code and the base system code to allow users to make customizations without complicating system upgrades. Wynsure is structured as an SOA using Microsoft's C++ for the entire application.

Strengths:

• The system has a good rule-based architecture, and an interface for adding or changing products and for making claims, service or other process changes. Most of the company's clients maintain their own systems — either with business or with IT staff — without having to rely on the vendor.
• The Wynsure solution allows insurers to make customizations without changing the underlying base code. The ability for insurers to make their own customizations without undermining the ability to upgrade the system gives insurers flexibility to have a customized platform without the cost of maintaining their own code branch.
• Wynsure offers strong flexibility through its object-oriented design, SOA and rule engine capabilities.

Cautions:

• The MphasiS purchase is still quite new, which will create transitional challenges despite the fact that there is strong synergy and alignment between the two organizations.
• The system currently lacks support for variable and indexed products.
• Wynsure is built using Windows technology throughout. Some insurers, particularly Tier 1 companies, are less inclined to rely on Microsoft and may prefer a Java-based platform.

Wynsure continues to offer a strong product, good investment into the base system and continued sales success through the MphasiS acquisition. Furthermore, support for group and individual products, end-to-end capabilities and international capabilities all contribute to a Positive rating in this year's MarketScope. These positive elements are balanced by the vendor's ongoing adjustment to a new owner and the lack of support for variable and indexed products.

Rating: Positive

Oracle

Oracle Insurance Policy Administration

Oracle has been a leading choice for policy administration for life insurance and annuities during the past decade. The solution has delivered flexibility and configurability to insurers for policy administration support. The solution is built using a rule engine that enables insurers to configure the system to drive their business processes, thereby greatly reducing the need for customer-specific customizations in the underlying code. Oracle has created a consistent code base across its insurance company users. This commitment to a base system solution has greatly reduced the need for customizations in code, which drives down additional expenses when making changes or upgrading the system. It also eliminates a separate code branch for each customer. As with all highly configurable solutions where insurers are dependent on the configuration capabilities of the platform for changes, insurers depend more on the direction and commitment of the vendor. While users can make changes using the configuration tools, the insurer must rely on the vendor to keep the base system development path in line with the direction of each insurer, thereby adding some elements of risk, and requiring the insurer to remain engaged in the road map development process to ensure that its requirements are met. While Oracle does not disclose customer counts, Gartner is not aware of any new customers in the past 24 months.

The Oracle Insurance Policy Administration is built for individual life insurance and annuities using Java with a full SOA. The largest single instance of the solution exceeds 1 million policies and has been benchmarked to 100 million policies. The solution focuses on policy administration, but provides some support for new business and electronic underwriting, leveraging common rule architecture. It may be more attractive to Tier 1 insurers that often have specialized systems for these functions, but Oracle does have Tier 2 clients and targets this segment with its premium-based pricing model and partners.

Strengths:

• The system's componentized service-oriented, browser-based and business-rule-driven architecture gives the solution flexibility for insurers. The modern approach continues to make the platform easier for life insurers to configure and leverage for their own needs.
• The product rule engine can allow insurers to rapidly configure complex types of annuity and life insurance products, while also enabling flexible screen designs and interfaces. While Oracle was a leader in this regard, other vendors are aggressively pursuing many of these capabilities and are competing successfully with Oracle in this regard.
• Because the solution is focused on core administration system functions, is scalable and is supported by Oracle, it is a good alternative for Tier 1 insurers that need to administer life and annuity products.

Cautions:

• Oracle has encountered some setbacks in its development of group support, so insurers should not expect group capabilities to be available for at least the next 12 months. Group support does remain a stated objective for the Oracle development team.
• Insurers have noted for the past several years that negotiating and contracting with the Oracle team have remained challenging. While the Oracle insurance team has tried to make steps to resolve these challenges, Oracle's contracting practices could make the contracting process long and difficult.

Insurers remain interested in the Oracle solution, as it is one of the most flexible and configurable solutions in the marketplace. The architecture, rule engine and modern development languages make it a strong consideration for insurers that want a solution that is not as dependent on their IT department. Gartner estimates that Oracle has between 15 and 20 insurers on the platform, and customers report that the platform is functionally rich and very flexible. Oracle enables insurers to customize the platform through an extensibility framework and maintain the value of those changes in future releases. However, insurers should be aware that, while most required changes to the system can be handled through configuration and the extensibility framework, life insurers must remain engaged with the Oracle development road map process for ongoing functional and technical enhancements to the base system. Insurers remain very dependent on the Oracle development team to keep the system moving in the direction they need with new functionality and technical upgrades.

Rating: Positive

StoneRiver

ID3

StoneRiver's ID3 product, which has been available since 1995, currently has 19 insurers using the platform. StoneRiver has not added a new customer since 2009, but existing customers remain satisfied with the platform, ongoing services, and enhancements made to the platform. Strategically, StoneRiver has committed to keep upgrading ID3 and supporting its existing clients. While it has not committed to replacing the older technology in the system, it does plan to create a new front end that conforms with the user interface for other systems in the value chain, such as new business workflow, electronic underwriting, electronic forms and illustrations. Furthermore, StoneRiver is positioning ID3 as a hosted solution to better leverage the functionality and speed-to-market elements of the system while reducing platform costs for insurers.

ID3 is built using COBOL and utilizes a product engine that can be configured to a large degree by business analysts. The platform has a good reputation for enabling insurers to get products into production quickly, particularly with insurers that seek to create innovative product offerings. The largest production instance of ID3 supports roughly 1.2 million policies. Because the solution does not support variable business or group business, customers tend to be concentrated in Tiers 2, 3 and 4, or it supports niche products for Tier 1 insurers.

Strengths:

• ID3 has a good reputation for allowing insurance companies to quickly add, copy and change new products, but perhaps more importantly, support the invention of new product designs.
• ID3 was one of the early supporters of indexed products and has developed extensive expertise with these products. Insurers seeking to pursue indexed products for their growth plans should consider this offering.
• StoneRiver's references note that the company has a solid knowledge of the insurance industry, can deliver proven functionality, and can execute at a significantly lower cost compared with other solutions evaluated in this research.

Cautions:

• ID3 does not support variable life or variable annuity products, or true group products.
• ID3 is positioned for the U.S. market and has not been implemented in Canada, making it a poor choice for Canadian life insurers.
• Despite ongoing improvements to move modules and components to Java, the platform still lacks many modern technology characteristics, such as an SOA, that are provided by other systems described in this research.

ID3 is a functionally solid, proven platform for fixed individual life insurance and annuities in the U.S. The support team is knowledgeable and available to support existing and new customers, and customers generally remain satisfied with the level of service they receive from StoneRiver. Insurers should be cautious, however, to make sure that the technical and functional shortcomings do not undermine their present of future plans. While insurers might choose the platform today, they are dependent on StoneRiver to make a commitment to upgrade the platform to resolve the technical shortcomings, and provide a viable migration path to the new platform. As a result, ID3 receives a Caution rating in this year's MarketScope.

Rating: Caution

SunGard Financial Systems

iWorks Core Policy Solutions

SunGard's iWorks Core Policy Solutions supports individual and group, life and annuity products. Existing customers are almost evenly split between the U.S. and Canada, and are evenly divided between life and annuity products. SunGard did not make any new sales in 2011, and remains with 15 customers, although it added a Canadian life insurer in 2010. While delivered in separate modules, SunGard supports processing capabilities, including actuarial, risk management, investment management, illustrations, workflow, claims and billing. SunGard is expanding its service offerings and changing its overall delivery focus from being a product-led offering to becoming more of a solution- and service-led offering. It is restructuring its message and marketing approach to position itself as a services organization with product offerings, rather than the other way around.

SunGard has built the system using primarily COBOL, but Java, C and other languages are also used in the platform. The solution has a deeply integrated rule engine, which can be used to create and modify insurance products. The largest instance of the solution supports more than 800,000 policies. SunGard continues to make enhancements to the platform, which have helped improve the user interface and the separation between base and client code.

Strengths:

• iWorks Core Policy Solutions is one of the most proven group insurance systems in North America, with tens of millions of covered lives on the platform across its North American customers.
• Because iWorks Core Policy Solutions has wide-ranging product support across group and individual products, including Canadian investments, medical and retirement products operate on proven high-volume platforms. The product is most suitable for high-volume companies with multiple lines of business.
• SunGard has a 4,000-person-strong global service delivery organization to support policy administration and other insurance software offerings, providing deep resourcing capabilities for large projects.

Cautions:

• Insurers are increasingly moving away from COBOL-based systems, and SunGard's history with other insurance systems suggests that it will be unlikely to invest enough to keep the platform ahead of the technology curve.
• While iWorks Core Policy Solution has some configurability, the platform generally leverages a more traditional deployment model that uses configuration and customizations for new deployments. With SunGard's increased emphasis on services, insurers should not expect significant investments in configuration capabilities. The solution will best serve insurers that desire a more customized platform to support their group and individual products.
• SunGard's sales efforts are targeted at the international market rather than North America. As a result, SunGard's success in international markets will help push R&D efforts toward the necessary functions for international deals, which may jeopardize ongoing investments and enhancements in the North American market.

The fact that SunGard delivers a rich functional solution for group and individual insurers in North America, along with having a skilled staff, contributes to its Promising rating in this year's MarketScope. iWorks Core Policy Solutions continues to be a leader in the group life market, supporting a wide diversity of products and an array of other modules for insurance core processing. However, insurers should note that the system leans toward development rather than configuration-only for deployments. SunGard also was only able to achieve a single sale in the past two years. SunGard needs to continue to make sufficient investments in the platform to remain competitive in all of its chosen markets.

Rating: Promising