American Physicians Insurance (API) was founded in 1975 as a reciprocal insurance exchange that writes professional liability insurance for physicians and other health care providers in Texas and Arkansas. API’s in-house functions include underwriting, claims handling, marketing, risk management, day-to-day servicing and accounting for approximately 4,000 policies. API needed a business intelligence solution that would put meaningful, easy-to-access data directly into the hands of business users, empowering them to make good business decisions. A secondary objective was to remove report writing from the IT team’s tasks, to allow them to focus resources on strategic initiatives and business process improvements.
Turning Data into Intelligence – Ensuring Actionable Reports
The insurance industry centers on people and information. For insurance businesses, success is based largely on the ability to get the right information to the right people at the right time. One of API’s greatest challenges was getting the massive volumes of data associated with its products and services into manageable reports. API’s legacy system required pulling data from various sources and importing that data into Excel pivot tables. The company regularly reports on headcount, policy count, premiums, cancellations, non-renewals, top producing agents, open claims, and closed claims across a variety of dimensions including medical specialty, policy limit, and practicing territory.
In the past, report preparation for a board meeting alone took two to three weeks, requiring extensive resources. Now, with Sybase Industry Warehouse Studio (IWS) and Business Objects, API can generate better reports “at the touch of a button,” says API senior vice president and CFO, Marc Zimmermann. “What previously would take us two to three weeks to do now takes a couple of days. And we can prepare the information in a much more concise and visually pleasing way.”
Sybase Partner INSolve Helps Solve the Problem
After conducting a review of its business processes, API identified the need to update its policy and claims system – a complex and timely implementation. As part of that design, API decided to implement IWS in order to improve the company’s information access before embarking on a new system. API wanted to deliver meaningful data directly into the hands of users, empowering them to make better business decisions while at the same time alleviating IT’s report-writing load to focus on business issues.
API evaluated the top business intelligence vendors for a solution: Hyperion, Cognos and a few smaller companies – but nothing met API’s need to consolidate data from disparate systems into a central analytical reporting facility. Unsure of the best approach to their problem, API engaged the services of INSolve, an Austin-based firm that develops and delivers business intelligence solutions specifically for insurance customers. INSolve, a Sybase partner, helped API identify its requirements and information needs, then made recommendations on developing an insurance data warehouse, alleviating the issue of de-centralized and disparate data systems. INSolve’s insurance expertise helped API identify the most viable and appropriate insurance-focused solution.
“We didn’t even think about a data warehouse until INSolve’s president, Rob Clark, came in,” Zimmermann said. “Rob told us about Sybase, so we read the white papers and made a cold-call to a sales representative. We were very excited when we saw the flexibility of the roadmap of tables that were already set up in IWS.”
Zimmermann explains his initial concerns, “As a CFO, looking at data warehouse projects and hearing the horror stories about them failing, I would not have considered that as a solution. However, IWS combined with INSolve’s deep insurance business intelligence expertise and experience provided us with a solid framework to get where we needed to go. Not having such a framework would be like going on a trip without a map.”
Zimmermann’s primary requirement was that the solution be both flexible and cost-effective. “This was a big move for our company and required a lot of upstream selling,” he said. “We needed something that wouldn’t be too expensive or too laborious.”
Sybase Industry Warehouse Studio Enables Seamless Data Integration
Initially, API had concerns about extracting information from their legacy ERP system. With INSolve’s expertise with Business Objects’ Data Integrator and Sybase IWS, “It turned out to be much easier to get to our data than originally thought,” said Zimmermann.
INSolve helped API pull its information into Data Integrator using XML as a bridge, then staged the data in a series of SQL Server tables, where it mimicked the information in the legacy system. API next reviewed the IWS model with INSolve, then used Sybase PowerDesigner to model the code for the data tables. The data was then seamlessly integrated with Sybase IWS.
“One of the major advantages of Sybase IWS was how seamlessly it works with Data Integrator; the real power is the flexibility of IWS to fit API’s niche medical malpractice insurance business,” Zimmermann said. In fact, he chose the Business Objects product because of the smoothness of the integration “the likes of which we had not seen with other competing products.”
Better Decisions Mean Better Business
API is already seeing the benefits of the Sybase IWS-based solution, sometimes in unexpected places. “One thing we’ve seen in the board meetings since we implemented the solution is more questions,” Zimmermann said. “It’s the overall transparency of the information. It provides a lot of leverage, and elicits more thoughtful analysis.”
Now API can examine data like policy cancellations to identify why a customer left and with that information, the company is better positioned to identify areas for improvement in both its services and products. API also has a better view into customer loyalty, retention rates, new business by month and much more. In short, API has developed a 360 degree view of its customers and has built the foundation for a customer relationship management solution.
“One thing that’s been very powerful,” Zimmermann said, “is API’s view into open claims.” The company can now clearly see a baseline ratio that shows if they’re trending high for a certain medical specialty. “This is a key data point when looking at rates,” the CFO said.
When evaluating the project’s contribution, Zimmermann understands the challenge of measuring success. “Aside from shortening report generation time, pinning down hard ROI numbers is difficult,” Zimmermann admitted. “It’s hard to quantify the value of information. But I can tell you, I feel more confident in making decisions. Overall, if we can make better decisions, we’re providing better service.”
Sybase IWS is the Right Solution
Zimmermann credits the success of API’s information access project to the due diligence API, INSolve and Sybase all brought to the table. The company thoroughly outlined business and technical requirements and did a deep review of vendor strengths and costs before moving ahead with its solution.
“Like all projects, if you take the time to develop your requirements, it greatly improves the likelihood of success,” Zimmermann said.
INSolve’s involvement in the project was invaluable, Zimmermann added. “To have someone who worked in the insurance business with large-scale customers was a major advantage,” the CFO said.
Rob Clark underscores INSolve’s dedication to their customers, “We are extremely thorough in our planning and requirements to ensure we always successfully execute a project. We keep in mind that the business dictates the technology solution and not the other way around. This enables us to deliver a business solution to our customers – not just a technology solution.”
Today, API can pool a massive amount of information into a single data location specifically designed for the insurance industry. The resulting development and distillation of meaningful reports has not only led to better decision making and a reduction in report writing tasks for the IT team, but has also resulted in business process improvements. And, improved data quality also supports business compliance efforts. “If you can’t produce transparent information in today’s world, that’s a problem,” Zimmermann says. “It not only affects Sarbanes-Oxley compliance, it can impact your financial statements.”
Zimmermann has advice for executives in the insurance industry who are considering a similar project, “Sybase IWS combined with INSolve’s insurance expertise is unparalleled in the industry,” he said. “I would recommend this team to any insurance executive considering a data warehouse solution.”