Having Your “It Cake” and Eating It

In normal business practice, it is always wise to keep a sharp watch on costs. With the present tight business economy it becomes absolutely essential. While cost control techniques vary greatly depending upon the type of business being operated, some things are universal, such as getting the most from expensive systems and services in which you already have substantial investments.

Out of sight

On most large insurance operations, Information Technology (IT) – including telecommunications – is a major cost. In many cases, once these systems are installed they tend to be ignored, and are very rarely examined to determine whether or not the system(s) are performing optimally. Very often, after the initial few months of operation, it becomes a case of “out of sight, out of mind”, and while the system remains static, the needs are constantly changing.

Ongoing industry development often comes up with new system features that could provide needed applications and significant cost reduction. But if no one keeps track of maintaining optimum performance, the system applications and user needs slowly drift apart, to the point where the costs rise substantially, and the performance depreciates. One method of reducing costs is with integrated voice applications (VoIP), although they do not appear to be included in many of the systems being implemented today. VoIP applications could add significant utility for servicing both consumers and brokers, and lead to both increased sales and customer satisfaction while reducing “telco” costs between brokers and underwriters.

Faster access

Mainframe applications are another area that should be revisited. While at first look this seems an unlikely area for reducing expense, depending on the circumstances, certain changes can result in reduced costs totaling many millions of dollars, while improving the performance by orders of magnitude. This can be true for any company, but is especially applicable to insurance companies that tend to rely heavily on looking up reference tables, utilizing temporary tables, or summarizing data. This can be achieved by storing tables in computer memory where applications can access and update information much faster than from disk, for one. The result can be a radical increase in the performance of mainframe applications while extending the useful life of the mainframe system, which subsequently reduces maintenance and replacement costs.

The “re-architected” system will also require fewer hardware resources, translating into additional cost savings. For instance, memory management of the table system results in less I/O to disk, providing the ability to handle increasing processor demands, and completing more transactions using fewer hardware resources. The benefits of table management can also trickle down to the broker level with easier and faster access to information such as quotes, sales and policy changes, in addition to opening an avenue to web-enabled distribution and satisfying increasing supply chain demands for online claims management.

Finally, business rules that serve the software applications can be stored in the table system, instead of residing directly in software code. This enables software applications to be changed quickly and easily, with the risk of introducing new logic errors greatly minimized. It also offers a high level of flexibility for table data viewing. Table views and business reports can be easily developed to provide various views of data, for specific roles in the company.

New systems

One currently available technology that is being used to re-architect mainframe systems in this manner is “tableBASE” – a memory-resident, table management system for enhancing DB2, CICS and IMS applications running on IBM compatible mainframes – by Ottawa-based Data Kinetics Ltd. The Foremost Insurance Co. is an example of a company that has successfully leveraged this technology to achieve a significant reduction in overall expenses. The tableBASE system is providing a program interface that enables applications to read information from external tables. This robust system also provides tools for creating tables, updating them, managing version of content, applying security to control access to tables and programmatic interfaces for most of these functions. Following the implementation of this system, Foremost has significantly increased its mainframe data throughput using fewer CPU resources, while reducing expenses as a result of faster development cycles, a reduction in software update and maintenance costs, and reduced hardware expenditures.

Experience would indicate that underwriter systems can be architected so as to be capable of servicing any standard consumer, broker, or associate, no matter how generated. In terms of expense, while it is not possible to guess at the overall costs and gains without a great deal more data, integrating voice, and where possible re-architecting the mainframe will probably provide significant long term gains, and ready the system for further improvements.

The Wired World welcomes your feedback. Contact us, via E-mail at vikki@canadianunderwriter.ca