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News Briefs

March 1, 2008

STUDY GAUGES BACK OFFICE EFFICIENCY

Deloitte Consulting LLP has unveiled the results of its 12th annual life and annuity back-office operations benchmarking studies, LIONS 2007 and ACES 2007, which provide comparative analysis to benchmark expenses for operations and information technology among insurance companies. The analysis covers a variety of topics including efficiency, effectiveness, key trends, use of technology and business performance.

The studies found that for life insurers, expenses per $1,000 of total annual premiums have declined 9% per annum. While the life insurance industry has made some progress with respect to cost cutting and increased efficiencies, there is still opportunity for further change, the study finds.

"Given the increasingly competitive and slow-growth environment for life insurance products, cost containment through operational efficiency is considered a top priority for executives," says Joe Guastella, national leader for Deloitte's insurance consulting group. "But it is vital executives recognize that success depends not just on committing to increase efficiencies–it also requires focusing on the ones that have the most impact."

Because expenses are evenly divided among new business operations, customer service operations, and related IT, insurers need to manage the entire business process model, not just one area. The studies also found opportunities to improve service standards, especially in call centers.

"Annuity sales have experienced explosive growth over the short term, which may be masking underlying efficiency issues," says Richard Roth, practice leader for Deloitte's global benchmarking group. "While it can be challenging to try to determine where a system can be made more efficient right when it's being taxed the most, that is exactly the time to seek out the disconnects and redundancies because they are magnified."

The studies revealed several areas that offer annuity providers the opportunity to improve efficiency:

* Reducing the not-in-good-order rate by addressing root causes.

* Expanding the use of straight-through-processing.

* Exploring additional outsourcing opportunities.

* Leveraging eService capabilities.

BUSINESS RULES ENABLE APPS BUILD

Is business rules technology finally hitting its stride? That's the question posed by Forrester Research Inc., a Cambridge, Mass.-based research firm, which says business rules are now a key enabling technology for dynamic business applications.

According to Mike Gualtieri, senior analyst with Forrester, this is because they enable applications to be built for change. In a preview to the "Forrester Wave" research report due out in March that evaluates 13 business rules platform vendors, Gualtieri notes that because business rules are used throughout the enterprise to make operational decisions, enforce policies and comply with regulations, there's a perfect storm of trends brewing for the business rules space.

One of the key trends in business rules is the ability new platforms provide for business people to directly create and maintain business rules. Another trend that Forrester identified, the evolution of the business analyst role, meshes nicely with this trend in business rules platforms to provide the technology and organizational ability to create and manage more flexible business solutions, Gualtieri notes.

But what about the idea that businesspeople might create and change business rules directly?

"For many people, this is a scary thought," Gualtieri says. "That is why it is critical for enterprises to adopt and extend their development processes, testing processes and release management practices to include businesspeople. The emergence of the new business analyst will play a key role in driving this."

ORACLE TO ACQUIRE BEA SYSTEMS

Redwood City, Calif.-based Oracle Corp. and San Jose, Calif.-based BEA Systems Inc. entered into a definitive agreement under which Oracle will acquire all outstanding shares of BEA for $19.375 per share in cash. The offer is valued at approximately $8.5 billion, or $7.2 billion net of BEA's cash on hand of $1.3 billion. "We expect this deal to be accretive to Oracle's earnings by at least 1-2 cents on a non-GAAP basis in its first full year after closing," says Oracle president and CFO Safra Catz.

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