Enterprise Resource Planning System for Insurance Sector

Enterprise Resource Planning System for Insurance Sector The Indian Insurance industry is a flourishing one which has several national and international players who compete for excellence. With several reforms and policy regulations, the Indian insurance sector has witnessed tremendous growth in the recent past. India having around 17% of the worlds population is a largely untapped market. Nearly 80% of the Indian population being without a life, health and non life insurance, a growing number of insurance companies are now emerging in the Indian insurance sector. With the opening up of the economy, several international leaders in the insurance sector are trying to venture into the India insurance industry. The growth in the insurance industry directly impacts the reinsurance industry. Reinsurance providers are basically companies that provide insurance cover to insurance companies so as to cover their risk. With the growth in the amount of insurance products sold by the insurance companies their risk component goes on increasing. So as to cover this risk, companies resort to reinsurance. Thus the reinsurance market is all growing at a rapid pace. The growth of the Reinsurance industry in India is coupled with a number of challenges. Challenges faced by the reinsurance industry include shrinking margins, increasing competition etc. In order to meet the challenges, reinsurance companies across the globe have begun leveraging heavily on their information and communication technologies. Reinsurance firms are using enterprise management solutions to increase productivity, save on expenses, to obtain higher customer satisfaction, thereby resulting into customer retention and to improve sales performance. General Insurance Corporation of India (GIC Re) is the sole reinsurance company in the domestic reinsurance market in India with more than three decades of experience in the Re-Insurance business. GIC is headquartered in Mumbai. In India, GIC provide reinsurance to the direct insurance company as it is the sole reinsurer in the market of domestic reinsurance. It is one of the leaders in the facultative placements and domestic companies treaty programmes. OBJECTIVES FOR ENTERPRISE RESOURCE PLANNING SYSTEM The key objectives for initiating ERP implementation were as follows: So as to retain leadership position in the national (Indian) reinsurance market. The intention of emerging as the leader of reinsurance in the Afro Asian markets. To obtain an integrated view of all business transactions. MAJOR BUSINESS CHALLENGES FACED BY GIC RE Customer-Centricity The change in focus of the organization to being customer-centricity created a number of issues for the company. It became important to have optimal knowledge of all the customer segments. Customized products and services were required to designed to meet the needs of each of the identified customer segments. It became important to adopt cross selling of products and services as an important growth strategy. It also became important to provide any time and any place reachability to the customers. Competition The growing number of players in the market created an environment of intense competition In order to sustain such levels of competition it became imperative for the company to adopt new strategies and identify means of securing a competitive advantage over its competitors. Globalization Expansion of company operations across multiple geographical locations also made it necessary for GIC Re to identify means of effective monitoring and control. Expansion also increased the level of competition by adding new competitors from the new geographical locations. Product Commoditization The increase in competition was impacting the companys profit margins. It became absolutely necessary for the company to distinguish its brand from competitors. Lower customer loyalty and increasing price sensitivity were also measure threats to GIC Re. Consolidation It was important to bring about a consolidation across the organization so as to deliver a clear value to its customers. Compliance Expansion of operations across multiple geographical locations made its imperative to comply with multi-national regulations. MAJOR IT CHALLENGES FACED BY GIC RE Data Quality Data maintained by the organization was fragmented by the line of business, the branches, the different geographical locations etc. It was important to consolidate this data and provide high quality of product and operations related data. Process Integration It was important to standardize and streamline cross functional processes and develop and integrated workflow. The company was suffering from value leakage due to non integration of systems. Legacy IT Systems The legacy system used by the company did not reflect the change in focus from being a contract centric to customer centric insurance provider. Reduction of Operation Complexity The company used a number of applications to manage the daily activities. As a result, a number of interfaces had to be monitored and managed which proved to be very difficult. It thus became important to reduce the number of interfaces and bring about standardization across the interfaces. EXPECTATIONS FROM ERP Reduction in overall cost through improved efficiency and increased productivity Drive business innovation To a give a competitive advantage to the company over its competitors Driver for business growth Improve overall customer experience and satisfaction Ensure regulatory compliance Support global operations Create new revenue streams for the company Ensure growth of existing revenue streams CHOICE OF SAP The major factors contributing to the choice of SAP are as follows: Integrated Enterprise platform for transacting GICs business The company required a platform that would integrate all the processes and procedures across the enterprise. The system was required to standardize all processes and streamline set of processes across the organization rather than streamlining large number of procedures. The company expected the have an enterprise wide visibility of business operations. SAP Reinsurance solution being used by Global Industry leaders Munich Re and Hannover Re One of the major contributing factors to choosing SAP was the companys biggest competitor and the global industry leader Munich Re and Hannover Re had implement SAP Reinsurance system. Adoption of the global best practices By 2005, SAP Insurance had almost all insurance service providers running it. SAP had in the past implemented both the insurance and reinsurance packages for multiple clients. This enabled SAP to gain an understanding of the global best practices in the prevalent in the industry. GIC Re hoped to reap the benefits of this knowledge in their own implement of SAP Reinsurance. Most companies who had previously implemented ERP had strong positive experience with SAP for their insurance portfolio ERP IMPLEMENTATION START DATE Early 2005 ERP GO LIVE DATE February 2006 SAP VERSION SAP R/3 Version 4.7 GEOGRAPHICAL SCOPE Offices in India, London and Dubai SAP MODULES IMPLEMENTED SAP FS-RI Reinsurance SAP FS-RI is an insurance solution that enables reinsurance firms, direct insurers and brokers to achieve a reinsurance process that is completely integrated and streamlined. SAP FS-CD Collections / Disbursements SAP FS-CD is a solution designed for insurance service providers to standardize and streamline their billing and disbursement activities for their policyholders and agency holders. SAP IM-IC (CFM) Investment Management SAP IM-IC (CFM) module provides useful tools for reporting of WBS which are in progress, PO commitments and assets that have been capitalized. SAP FI-CO Finance The SAP FI-CO module can be viewed as the core of the integrated SAP system as it deals with the monetary impacts on business and other modules of SAP. SAP HR Human Resources SAP HR is the largest module implemented It deals with the management of human resources and human capital SAP BIW Business Intelligence SAP BIW is the business intelligence module that provides analytical, reporting and data warehousing solution IMPLEMENTATION CHALLENGES First SAP Reinsurance (FS-RI) implementation outside Europe. First SAP FS-CD Implementation in India. First SAP IM-IC implementation in India in an Insurance/Reinsurance environment. One of the few Active Reinsurers in the world using SAP FS-RI Legacy data Migration Customisation of Reinsurance Module (FS-RI) Risk Manager in FS-RI (Facultative Business) had not yet been implemented even in Europe IMPLEMENTATION HIGHLIGHTS Opportunity to critically re-look the companys business processes and practices and incorporate changes wherever required. Elimination of data inconsistency by correcting, validating and cleansing legacy data. Opportunity to streamline the organisation by adopting the global best practices in the industry BUSINESS BENEFITS Tight integration between underwriting and technical Accounting processes thereby providing better business focus. Integrated processes eliminating almost all redundancies and inter-departmental reconciliations. Increased automation reduced manual intervention and improved data quality. Improved reserving process (tracking the development of outstanding loss reserves). FINANCIAL STRATEGIC BENEFITS SAP allowed visibility of all assets Standardized evaluation of all assets were achieved Daily updates to the investment portfolio enable the company to achieve integrated investment management Effective real time risk analysis TOTAL COST OF OWNERSHIP 95 % of the companys requirements were met by th standard solution offered by SAP and minimal customization was required OPERATIONAL BENEFITS The operation benefits as evaluated by the company after two years of implementation are as follows: KEY PERFORMANCE INDICATORS (KPI) IMPACT Time to measure performance -70% Time to plan for new projects and activities -30% Time to performance market risk analysis -80% Efforts to map sources of risk -80% Reporting Flexibility +90% Quality of Reports +80% Quality of Portfolio evaluation +90% Quality of transaction mapping +90% FUTURE PLANS Up gradation from SAP R/3 Version 4.7 to SAP ECC 6.0 platform Connecting offices in Moscow, Malaysia and South Africa to the upgraded ERP network General Insurance Corporation of India has derived significant benefits from implementation of SAP Reinsurance. From this case it is evident that SAP has the potential of being a measure source of improved efficiency and competitive advantage for insurance service providers. APPENDIX [1] Monitor Performance: Executive Dashboard [2] CEO Dashboard [3] Sales Dashboard