Hollard cuts costs, improves service with move to MIP Life

Hollard, one of South Africa's largest private insurance businesses, has converted half its direct life policy book to MIP's administration system to garner the benefit of reduced costs and improved service for its users and clients.

The insurer made the switch away from its in-house developed Life Lite system to cater for business growth, evolving market requirements, and additional business complexity.

“We developed our own administration system when we launched the direct life business,” says Gaby Faltermair, head of operations at Personal Finance Solutions, a division of Hollard. “As the business grew, the system supporting it became cumbersome with added complexity. We reached a point where we had to make a decision to either rewrite the system or find an external solution.”

Hollard provides short-term and life insurance services to more than 6 million policyholders in South Africa and abroad, 400 000 of whom are direct life policyholders. The business has about 1 000 dedicated employees, has been operational for 30 years and has a presence in Australia, Pakistan, India, the UK, Botswana, Namibia, Ghana, and Mozambique.

In late 2006, Hollard awarded a contract to MIP to implement MIP Life.

Following some customisation, the system went live in October 2008 with 30 000 policies, and by November 2009 around half of the 400 000 active policies were live on the system.

“MIP's personal finance solution was a solid fit for Hollard because it is an end-to-end solution that manages all administration, from new business through to claims, and also administers wealth management,” says Naas Jordaan, divisional manager of MIP Personal Finance. “Integration across business systems is a key benefit because the consolidation drives easier and better financial visibility, with full drill-down capabilities. The system also assists clients to obtain the best returns on their investments and to resourcefully manage market and regulatory changes.”

MIP's system re-uses rules and code, which makes change management and propagation significantly easier and less risky. It also makes more efficient use of resources and ensures rapid turnaround, which means faster market response and rapid product launches.

MIP Life uses a rules-based, object-oriented architecture for better user friendliness, openness, comprehensiveness and flexibility. It supports traditional life insurance products, including whole of life, term, credit life and unit-linked or universal life policies. By adopting multi-tier, relational databases, MIP Life provides a platform that facilitates fast and easy deployment, performance evaluation and management information.

“A significant factor in our decision to select MIP was the fact that they have extensive experience in our industry,” says Faltermair. “MIP has many other insurance sites so the development cost is shared. They also have a unique billing model where they charge us per policy so it's financially beneficial, something we can pass on to our customers in a competitive marketplace.”

“Our competitors require their clients to make a large, up-front payment for their software,” says Jordaan. “The initial outlay is normally followed up with more payments for implementation, upgrades and maintenance. We don't charge clients for those. There is no up-front payment for our administration system and no hidden cost. We have a risk-based billing model, which means it's in our interest to help grow our clients' businesses. That means we're keen to give them the best platform to do that and keep it that way.”

Monthly billing is negotiated and linked to clients' key performance indicators, such as member count, policy count, or number of basis points of assets under management. The model includes all product development, technology upgrades and new value-added systems. And MIP offers general ledger and financial integration as an integral part of the solution.

“The scale and complexity of the end-to-end deployment was enormous,” says Jill Bronner, a senior member on Hollard's project team. “Life insurance is complicated to automate at the best of times due to the number of permutations and combinations that can be conceived. Factor into that a target system that has been customised to cater for the variety of products and a source system, Life Lite, which had been organically developed over time, with the resultant conversion challenges. The planning and co-ordination required was intense and co-operation had to focus entirely on achievements and deadlines.”

Hollard and MIP converted policies to the new system in batches. One such project saw 200 000 converted at the same time.

“The work was excellent because the project plan was brilliant,” says Faltermair. “The team started on the Thursday night, which put us offline on the Friday, and they were finished by Sunday night. On Monday morning the system went live and there were no hiccups. We had a strong team from our side too and had the business representatives involved at every step to ensure smooth change management.”

Change management was an important component of the project, particularly as two systems run in parallel. Effective co-operation between IT and business representatives as well as training ensured eager user adoption:

* Agent Trevor Monkwe says: “[MIP Life] saves me time, is faster than Life Lite, and if I make any mistakes, its validation process prevents these from being captured.”
* Agent Sechaba Rantie says: “It's a super system, it's exciting, it feels like working for a new company. It shows me my mistakes so that I can correct them before it affects me or any other department.”
* Agent Portia Ndarane says: “We are able to check our stats of how many sales we are on for the month. Having the different debit dates as an option makes it so much easier to sell. You don't lose context compared with Life Lite; just press contract summary and it brings up the policy you last worked on.”

Hollard and MIP aim to have the remainder of the policyholders, both active and inactive, converted to the new system by the end of 2010.