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in collaboration withA new beginning for outsourcing closedbook insurance policy administrationThe drive to compete in an increasingly pressured marketplace and the imminentarrival of new regulations are giving insurers the opportunity to re-evaluate outsourcingoptions for their policy administration operations. Capgemini offers a business processoutsourcing solution that can deliver strategic benefits as well as the efficiency savingsand cost certainty associated with outsourcing.

Facing up to the challengeIn spite of recent technological advances in the insurance industry, the in-housemanagement of closed book operations presents many obstacles to businesseslooking for agility in an increasingly competitive environment. These challengestouch most areas of the business making it harder to reduce operational costs,complicating financial reporting, and obstructing new selling opportunities, to namebut three.In addition, maintaining the legacy systems often used for closed books flies in theface of current IT best practices. In many cases, individual closed books requireindependent teams of developers, engineers and customer relationship managers.It is often difficult, if not impossible, to consolidate these fragmented operations andachieve efficiencies of scale.The need to reduce costs and become more agile is all the more urgent at a timewhen new capital and risk regulatory requirements — including Solvency II and RetailDistribution Review (RDR) — are bearing down on the insurance industry.So it is hardly surprising that insurance companies are redoubling their efforts tooutsource the cost and complexity of their closed book operations to a third-partyorganization. The question is, how?2

Financial Services the way we do itA new approach to closed bookoutsourcingIn earlier outsourcing contracts, success was measured simply by cost reduction goalsgoverned by Service Level Agreements (SLAs). But today, offsetting the financial burdenis no longer enough. Insurers are looking for ways to extract additional value fromtheir closed book operations by integrating them within an overall client managementstrategy. As well as cost, success is driven by customer satisfaction, delivery of servicesand cross-sell/up-sell opportunities.This multifaceted approach to outsourcing requires an equally agile solution. Based onour technology and business process optimization expertise, Capgemini has devised anew approach to closed book outsourcing that addresses the concerns of insurers andoffers a rapid roadmap to benefits.Removing complexity, accelerating benefitsThe Capgemini business process outsourcing solution takes advantage of a ‘lift anddrop’ approach to closed book outsourcing. Unlike solutions from other vendors,this involves a ‘once only’ migration at the start of the process. There is no need for asecond migration phase after the initial legacy transition has stabilized. This means thatinsurers enjoy a clear, structured roadmap to benefits, supported by clear milestonesand cost transparency. This removes the uncertainty and disruption associated with asecond migration step that comes with other outsourcing solutions.Oracle: a proven partner, an outstanding solutionCapgemini’s closed book outsourcing solution transitions legacy systems toOracle Insurance Policy Administration for Life and Annuity, a flexible rules-basedsystem that helps insurers become more adaptive enterprises and achieve truebusiness transformation.To underpin this partnership and maximize customer benefits, Capgemini has investedin an Oracle Insurance Policy Administration Center of Excellence to build expertise,foster innovation and support the creation and standardization of processes andmethodologies specifically to support policy administration transformation usingOracle Insurance Policy Administration. The Center of Excellence brings together over75 professionals with hands-on experience implementing Oracle Insurance PolicyAdministration with our global insurance clients.The Capgemini SolutionDisruptionLegacy TransitionThis next generation policyadministration solution has been:DisruptionStabilizationMigration Tested and proven inreal-world implementationsRun0 Years 5 Years‘lift and drop’Process TransitionStabilization One time disruption Knowledge transferas the people arestill available Insurance companystill involved andcommitted totransition whichenables the migrationRunThe Capgemini solution involvesjust one transition insteadof the two disruption pointsrequired when working withother outsourcing companies.Following the transition,Capgemini stabilizes the systembefore preparing for ‘run’. Noadditional migration is required. Designed to address requirementsfor global reach without losinglocal focus Ranked highly by independentanalysts including Gartnerand Celent1 Created using a state-of-theart approach that supports nextgeneration platforms such as serviceoriented architecture1 Gartner, Inc.: “MarketScope for North American Life Insurance Policy Administration Vendors,” June 2010; Celent: “North American PolicyAdministration Systems, Life, Health, Annuities ABCD Vendor View,” January 20103

All of the benefits, no surprisesCapgemini’s ‘lift and drop’ approach to closed book outsourcing is founded onprecise analysis and realistic projections that enable us to determine clear time tobenefit and cost transparency. By exercising thorough due diligence at the outset,Capgemini works with insurers to understand the complexities of their existingoperations and identify the right approach that takes into account the business andtechnical objectives of the insurer.Structured Analysis By putting in the hard work up front using Capgemini’sstructured analysis process, it becomes possible to measure the risk and cost ofoutsourcing a closed book operation.Structured AnalysisReports of Source SystemProduct Codes and AssociatedProducts with Product FeaturesSource System DataProduct Files &DocumentationAnalysisProduct FeaturesSystem FeaturesCensusProduct/PlanCounts FileAnalysisSystem FeaturesReports of Source SystemProduct Codes notassociated to a ProductSystem Files &DocumentationReports of all ProductFeatures supported bythe Target SystemGroup Source System Product Codes into actual ProductsReports of required ProductFeatures not supportedby the Target System(Indicates modifications required)Map Product Features for each Source System ProductEnter Product Features supported by Target SystemPMAReports of Source SystemProduct Codes related toTarget System Product CodesCreate/Enter Target System Product codesMap Source System Product Codes toTarget System Product Codes4Reports of Source SystemProduct Codes not mappedto a Target System Plan Code

Financial Services the way we do itMeasuring the opportunity – and the riskThe structured analysis enables the insurer and Capgemini to position the size ofthe opportunity against the business value of the portfolio and the net cost/risk oftransfer. Most closed book operations are associated with Zone C1 (Block 2).Data migration as a standard processIf the decision to migrate to the new solution is taken, Capgemini uses its provendata migration model to clean, consolidate and upload data to Oracle InsurancePolicy Administration. This process is 99 percent automated.HighZone A1Zone A2Block 4Business Valueof PortfolioZone B1Zone A3Block 1Block 3Zone B2Zone B3Block 6Block 2Zone C1Block 7Zone C2Block 5Zone C3LowLowNet Cost/Risk of TransferHighNB: The size of the circle indicates the size the BlockImplementation and configurationThis structured, predictable approach to analysis, migration and deploymentensures that Capgemini outsourcing projects maintain their momentum across theirlifespan. Because Capgemini has the tools that make this a measured and seamlessprocess, projects don’t run the risk of running into delays that postpone or evenprevent the delivery of long-term benefits. In addition, it ensures that both data andfunctionality migrate smoothly to the Oracle platform. As part of this step, Capgeminitakes advantage of the highly configurable functionality associated with Oracle’stechnology to implement insurance products.5

A global solutionWorking with Capgemini offers the opportunity to take advantage of our globaldelivery model called Rightshore . This means that insurers who opt for ouroutsourcing solutions can realise the full benefits of Capgemini business processoptimization experts at multiple locations worldwide. Again, part of the solutioninvolves working with the insurer to determine the optimum location for outsourcedoperations based on specific skill sets, languages and more. From a customerservice point of view, once the closed book operation has been migrated, Capgeminican offer services in any languages that are required.Managing employeesIdentifying the right approach to staffing is a key component of an outsourcingstrategy, and with more than 40 years of outsourcing and business processoptimization experience, Capgemini is well equipped to carefully manage this issue.The insurer’s staff have a vast amount of knowledge and experience which needsto be retained. Accordingly, the right balance needs to be struck between stafftransfer and transition to new arrangements. Capgemini has a network of world classDelivery Centers that offer effective and efficient operations. This capability must beeffectively balanced with an appropriate strategy for the client’s existing personnel.Data Migration as a Standard ProcessDownloadData intakeUpgradeMergeConvertUploadCheckFilter / Cleanse / De-duplicate / EnrichLogical DataObjectSourceTarget.Cleanse“Object View”TechnicalCorrectDataCorrect eptionHandling ReportsCorrect setof groupeddataMapping & Tansformbased on the LDOExceptionHandling ReportsTechnical Audit Control ProcessBusiness Audit Control ling ReportsAudit Trail

Financial Services the way we do itConclusion and call to actionNobody is pretending that successful outsourcing of closed book operations iseasy. That’s why selecting the right carrier with the best blend of technology skills,consultancy skills and operational capability is paramount. Capgemini has investedin proprietary methodologies, models and tools to help insurers make the rightbusiness calculations to drive IT investments for the future.Capgemini’s commitment to helping insurers with policy administrationtransformation includes more than 15 years of experience with life insurance policymigrations using our proprietary methodology and toolset. Using proven methods,Capgemini has achieved a consistent conversion success rate of over 99 percentpredictability and accuracy of the migration with portfolios ranging from one hundredto over 500,000 policies.Capgemini is also one of the leading service providers in IT outsourcing, with clientsin the life insurance domain. Over 36 percent of Capgemini’s 2010 revenue camefrom outsourcing, primarily application and infrastructure management. We havemore than 400 insurance clients across the globe and our financial services businessin 2010 was 1.6 billion.To find out more about Capgemini’s business process outsourcing solution forinsurance policy administration, contact us at lifeinsurance@capgemini.com7