BPO and Carrier BackOffice Technology Best Practices Michael

BPO and Carrier Back-Office Technology Best Practices Michael Risley Vice President and General Manager CSC Global Insurance Offerings April 26, 2016 #iri. Ops. Tech

New Challenges are Requiring Fundamental Changes Social and Economic Dynamics Growth of New Entrants Current State Future State Sold by Agents Bought by Customers Policy-Centric Customer-Centric Underwriting History Sales and Underwriting Manual Technology Operations and Claims Capital Management Underwriting Behaviors Digital Data Capture Data Analytics Insurer Ecosystem Fixed Costs Variable Costs Data Revolution Insurance Company The Digital Mandate 2016 #iri. Ops. Tech

Build the New Growth of New Entrants Social and Economic Dynamics Data Revolution The Digital Mandate Increased Customer Understanding There Will Be Winners and Losers! Future Winners • Customer Focused • Open Architecture • Ecosystem Aligned • Real-Time Data Current Situation Tackle the Legacy • Product Focused • Legacy Constrained • Channel Conflicted • Data Poor Effective Technology Enablement 2016 #iri. Ops. Tech

Insurers Are Crippled by Legacy <10% IMPROVEMENT INCREMENTAL CHANGE Incremental cost reductions are not sustainable Change the Business APPLICATIONS AND INFRASTRUCTURE BACK OFFICE Run the Business 2016 #iri. Ops. Tech

Insurers Can Embrace the Legacy and Achieve a Step Change <10% IMPROVEMENT INCREMENTAL CHANGE Incremental cost reductions are not sustainable TO STEP CHANGE 30+% IMPROVEMENT POST TRANSFORMATION Available to Focus on Modernization Projects Change the Business APPLICATIONS AND INFRASTRUCTURE BACK OFFICE Run the Business 58% of insurance IT spend relates to supporting existing technology and infrastructure — Celent, IT Spending in Insurance: A Global Perspective, April 2015 CSC Proprietary and Confidential Run the Business January 27, 2016 5

Recognize that Innovation is Moving Outside the Firm New Value Increasingly Created Outside the Firm Cloud Computing Crowd-sourcing Social Media Community Content Co-creation Mobile/ Location Edge Devices Collaborative Commerce Big Data Sensors Design Production Sales and Marketing Open Innovation Peer-to-Peer Support Value Traditionally Created Inside the Firm 2016 #iri. Ops. Tech

What’s Driving Insurers to Consider Outsourcing? Business Flexibility and Speed to Market • Enable quick scaling up & down (resources, capacity, etc. ) keeping variable costs variable • Enables focus on business objectives vs. business operations • Enter new markets quickly Transformation • Join with experienced third parties to radically overhaul operating models and infrastructures • Expand internationally Cost Management • Increase cost visibility and financial control • Simplification and standardization through fixed unit costs/pricing • Gain the benefit of wage and labor arbitrage Service Excellence • Address poor/inconsistent performance levels through a provider with mature, proven practices • Embed best practices, process discipline and controls Management Focus • Flexibility to focus staff on true value-added tasks 2016 A Range of Outsourcing Needs • BPO • Application Outsourcing • Infrastructure Management • Testing • Data Center • Administration Implementation • Back-office Processing • Staff Augmentation • Product Development #iri. Ops. Tech

Are you Re-thinking the Typical Outsourcing Plan? 2016 #iri. Ops. Tech

What Key Areas of Concern are Holding you Back? 1. Data security issues 2. Inability to differentiate company through service offering 3. Lowering of service levels 4. Loss of control 5. Negative perceptions of customers 2016 #iri. Ops. Tech

Change your Perception of “What can be Sourced” The search for value goes beyond traditional functional organization boundaries Retain Source Leadership and Strategy Supporting Commodity Contextual Judgment Competitive Advantage Enablement and Governance 2016 #iri. Ops. Tech

Business Process Services Manage Your Business Objectives vs. Your Business Operations Traditional Thinking • It’s all about cost reduction • You have to outsource large business segments for BPO to work Drive Cost Down 2016 New Thinking • BPS provides an elastic model to accommodate market change • BPS enables transformation Drive Value Up #iri. Ops. Tech

Taken Together, These Delivery Models Represent a Full Suite of Business Process Services Commodity Value Protection Value Maintenance Contextual Judgment Transform Value Creation Growth New Capacity Plus 1 Run, Maintain, Surround 2 Comprehensive BPO 4 New Single Function (Specialty) 5 BPaa. S 6 Virtual Insurance Company 3 Fluidity within and across models is key 2016 #iri. Ops. Tech

What can be outsourced? Distribution Channel Support Customer Access Captive Agents Call Center General Agents and Brokers Direct Response Other Distribution Partners Business Management Market Research Prospect Segmentation Product Development Mail and Fax Investments Channel/Market Strategy Insurance Operations Distribution New Support Business Product Design Distribution Management New Business IVR Filing and Compliance Licensing and Appointments Underwriting Decisions Web Underwriting Guidelines Compensation and Commissions Policy Printing and Mailing Financial Management and Reporting Additional Services Due Diligence Policy Administration Policyholder Recordkeeping Billing and Collection Repetitive Payouts Variable Processing Claims and Reinsurance Acquisitions Data Center Consolidations Conversions and System Consolidation Support Mail and Records Accounting/ Reporting Workstation and Desktop Image and Workflow Selectable Outsourced Functions 2016 Data Center Systems Development Production Systems Support Typical Company Retained #iri. Ops. Tech

LESSONS LEARNED Agent • Don’t let cost be the only driving factor • Invest in due diligence and requirements up front • Vendor management is harder than you think • Keep your end customer’s experience at the center of your ultimate decisions • Don’t automate bad a process; reinvent through a new lens 2016 Bank Advisor Direct Policy Holder Partner CSR #iri. Ops. Tech

Thank You 2016 #iri. Ops. Tech