CalcFocus

How Configurable is your Insurance Software? – Part 2

Part 1 of this discussion began from the premise that configuration capabilities are, today, table stakes for core system replacement.  The authors concluded that configurability was never a well-defined principle; and that many vendor instances of configurability recreate the historic suite of problems, inefficiencies, delays, and costs that configurability promised to correct.

Nonetheless, the authors concluded that a well-designed infusion of skilled business expertise into insurance software implementations is key to a project’s success. Asking the binary question “is it configurable?” is a mostly meaningless exercise without elucidation of the underlying principles and processing nuances of the respondent.

This discussion’s goal is to present the CalcFocus novel response to the binary configurability question from multiple contexts. Shared among contexts is that software should be judged by best principles of software design, not just in configurability. And, any solution provider should also be judged by the functionality, creativity, and purpose that they envision. The focus for this discussion is policy administration and how CalcFocus policy administration addresses each aspect of configurability.

The Policy Administration Environment

Too many “configurability” vendors begin sales presentations with a focus on ‘speed to market’ for new product introductions. They imagine an uncluttered policy administration environment whose primary problem is that no existing solution in their prospect’s arsenal can support one or two new features in the proposed product’s design. The sales team then show how easy it is for a business expert to  configure the new “feature’ before their eyes, using a proprietary scripting language,  and contrast this success with the known excessive cost and time estimates to achieve the same results, programmatically, in existing, antiquated “non-configurable”  prospect policy administration environments.

CalcFocus, also, as we will see, can address the “speed to market” for new product introductions; but CalcFocus initial prospect interactions always confront a wider policy administration environment. Prospects present CalcFocus with a handful to thirty or more legacy administration systems supporting multiple generations of many product types, including older product types that the prospect no longer sells.

Core system replacement must migrate thousands or millions of policies from these diverse platforms to a new destination platform in addition to speed-up for new product introductions. These older product generations have many quirks in design and additional quirks based on constraints of their policy administration platform.

Any sales presentation that focuses only on “speed to market” configuration stumbles when asked how their solution can efficiently build a myriad of products and product generations and migrate thousands to millions of policies. Sometimes they show how easy it is to clone an existing suite of configuration scripts – just a tweak here and there in each successive clone.  Moreover, even though Greenfield operations may be quick to “get up and running”, their configuration code base typically does not anticipate scalability design concerns.  When future products are configured on top, and inevitably do not fit perfectly, the new modern system may find itself alongside other Cobol systems as a candidate for converting away from far sooner than expected.

Focus on a wider policy administration environment underscores several principles of CalcFocus policy administration solutions:

  • “Configurability” vendors often proclaim that prospects can have it their way. “Tell us what you want, and we will configure it for you” leads to prolonged requirements sessions to listen and gather everything the prospect might want for their new product. The CalcFocus approach is to partner with prospects to proactively discover how inforce products function and how new product introductions might function. CalcFocus teams include industry leading product experts who discover how legacy products and new designs work without undue strain on prospect subject matter experts. The first CalcFocus deliverable for legacy products is to configure, as described below, an inforce projection engine that can match legacy administration policy values. CalcFocus partners with prospect subject matter experts to resolve outlier items later in the project plan, never needing to be spoon-fed product functionality from strained partner resources.
  •  A configurability strategy requires a well-reasoned methodology for policy migration and  legacy platform sunset. Another document in this discussion series – “Rollforward Policy Migrations” documents a novel approach based in large part on configuring two inforce policy projection engines – one that is configured to match legacy platform functionality and another to match the agreed destination CalcFocus platform functionality (and that will become the integrated policy illustration / projection functionality for the new CalcFocus platform as well as becoming the identical configuration for policy administration financial event processing).
  • The CalcFocus “design by delta”, configurable  product designer data management platform, described below, becomes a key component  to record and deploy the myriad product generation and diverse products that are integral to core system replacement.

CalcFocus’ configuration strategy was conceived under the assumption that the problem statement for configurability demands that configuration projects require a partnership plan that  does not drain overtaxed prospect resources (who sometimes no longer know how some legacy platform products create policy values); that extend configurability to a policy migration solution; and that include a robust configurable data solution to enable all generations of inforce and proposed products to become administered from a single, configured code base.

The Primacy of Policy Administration Data

The earlier CalcFocus discussion on configurability defined the plan definition strategy of most twentieth century policy administration systems as “old configuration” – their programming / algorithm code is not configurable, but differences in business analyst driven data parameters, like employee class rules and plan file field settings, will control and alter the way the programming behavior behaves at selected junctures.

These older system plan files became huge and unwieldly. Business analysts had to fill-in thousands of fields and rate structures for every plan administered, even when the preponderance of fields might be irrelevant for a specific product’s behavior. A proliferation and complexity of fields occurred towards the end of the last century as many new product types and features were introduced (universal life, variable life and annuity products, interest sensitive whole life, adjustable life, and whole life modal and lump sum paid-up addition riders and flexible term riders, to name just a few changes to the landscape as product design unbundled product functionality). Legacy plan definition files collapse under the weight of so much flexibility.

Unlike many “configurability’ vendors, CalcFocus did not reject the premise of “old configuration”.  CalcFocus’ widened perspective of policy administration meant that all of these old product types may surface in a single core system conversion and data differentiation should be recognized in the data and not in “ifs…ands…and else statements” in the configuration code.

Business analysts may be trained to configure the CalcFocus Product Designer which is a core CalcFocus application that manages data as securely and responsibly as CalcFocus manages configuration code, and that overcomes the technology constraints and widened product type problem that plagued and eventually eviscerated “old configuration” predecessors.  

The CalcFocus Product Designer’s  interactive hierarchical diagrams and tables allow configurers to define life, health, and annuity products and their product feature rules and tabular rates based on their differences only. Design by delta enables configurers to understand the true variance between carrier companies, acquired blocks, products, groups/clients, and employee classes.

CalcFocus Designer is a configuration tool that enables skilled product designers to maintain product definition and other policy administration platform data rules and data values avoiding the explosion of data that happened to legacy plan files (hundreds to thousands of plan codes and employee class records that contain up to 98% redundancy). 

CalcFocus Designer is hierarchical based on object oriented best practice – templating is allowed for disparate products to share features. Regardless of level (company, product, client, employee class, fund, etc., including state overrides) all data parameters resolve to a single set of data used at the policy / certificate level to guide policy administration and illustration processing. ‘Design by delta’ means CalcFocus Designer architecture only captures differences exponentially reducing data redundancy and enabling insurers to contrast their insurance and annuity products in ways never seen before. 

As noted, every revision to CalcFocus Product Designer, even the smallest field change, is versioned in a source repository that records the secure user responsible for the change and creates ability to quickly revert versions. CalcFocus continuous integration automates execution of test regression suites from all CalcFocus subscribers whenever a change is committed. CalcFocus SOC2 controls mandate that the CalcFocus Information Security Committee confirm and attest that  a full regression of expanded test suites, from all CalcFocus subscribers, is executed successfully before every CalcFocus production release.

CalcFocus treats data quality as seriously as configuration code quality. CalcFocus has reimagined “old configuration” as one component of a comprehensive CalcFocus configurability strategy. CalcFocus Product Designer restores the purpose of “old configuration” simultaneous with a reimagined architecture that resolves all items that complicated and eviscerated “old configuration” on legacy policy administration platforms.  

Policy Administration Business Software Code

CalcFocus supports and deploys a single instance of configured business software code.  New CalcFocus prospects do not start with a configuration tool without content, or a configuration tool with a collection of samples or templates that were configured using the tool.  Instead, CalcFocus starts from the full suite of business software objects shared by all CalcFocus subscribers.

New business software objects are configured as new functionality increments the shared business software that dynamically incorporates the relevant CalcFocus Product Designer rules and values.

On occasion, implementations require subscriber specific functionality with no shared purpose or subscriber proprietary logic. The CalcFocus component overrides framework architecture enables individual subscribers to maintain intellectual property and/or segregate subscriber specific logic without shared purpose separately from primary releases. Overrides are organized to automatically couple with each business software update.

Business subject management analysts are trained to manage the CalcFocus Product Designer tools, and the CalcFocus Quality tools discussed below. CalcFocus policy administration business software code is configured by business programmers – subject matter experts that can learn and wield best principles in software design. CalcFocus enables a small pool of business processing experts to configure CalcFocus core business processing logic  

CalcFocus business programmers build  new functionality and revisions to the subscriber shared single business software code base. The CalcFocus development environment employs a powerful yet simple business language to manage and extend CalcFocus out-of-the-box calculation and processing engines; to configure and brand web and mobile user experiences; to configure upstream and downstream trading partner integration; and to configure and brand policy document and reports.

The CalcFocus technology team, that had previously helped build proprietary configuration scripting languages for other policy administration platform suppliers, recommended a different path for CalcFocus configuration. The team built  the CalcFocus Framework on top of the Java EE platform and Spring framework. Their goal was to segregate platform technical functionality from business processing content declaration to provide a simplified development environment for business programmers to efficiently transfer business knowledge directly to code by creating business components divorced from the technology infrastructure to manage the underlying business components.

The technology framework architecture separates 100% of business code from technical code. Insulated CalcFocus business programmers have all assets of a traditional Java EE programmer – the multitude of debugging and support / security / connectivity tools, and the compiled business objects they configure are pure complied Java EE code without the need for a translation layer. At the same time, the CalcFocus business programmers have all the responsibilities to adhere to peer reviewed software design best principles .

In sum, CalcFocus business processing logic framework creates configuration opportunities for a new configuration role – the business programmer. CalcFocus business software configuration relates broadly to the DIY ‘configuration’ dialects that emerged in the early 2000’s. The working assumption was business experts can “configure” user experiences; integration mappings; documents and reports; and policy processing calculations and logic associated with policy administration processing.

CalcFocus business software configuration differs from other DIY configuration strategies in several important ways:

  • CalcFocus business software configurers are skilled business programmers who follow peer reviewed best principles in software design: business data architects and algorithm experts who maintain policy administration business processing logic and algorithms; and who build user experiences
  • CalcFocus business software configurers work in a restricted space – business code and technical framework code are 100% separate, and CalcFocus business software configurers code and compile a true Java EE subset
  • CalcFocus’ business software configurers are disconnected from technical challenges like data object lifecycle, data persistence, multi-threading, etc.
  • CalcFocus’ user experience configuration leverages the Vaadin framework and a proprietary UI scripting language which allows business developers to create robust user experiences without requiring knowledge of HTML or JavaScript.
  • CalcFocus recognizes the importances of integrations (a prime example of needing to meld business and technical expertise; and a prime cause of project delay).  The technical programmers create the integration “plumbing” – they work on timing (e.g. async vs. sync), means of transmission (e.g. SOAP, REST, JSON, XML, file based, etc.) and performance.  However, they present the data, using standard CalcFocus methodologies, to simplified business components where business programmers can define “to and from” field names and are provided a full suite of useful business functions. The business programmer is thereby empowered to perform the non-trivial mapping process which is often a significant challenge for a pure technical programming on or off-shore teams.
  • CalcFocus business software configurers may directly access all CalcFocus Product Designer structures in intuitive and straightforward declarations with no technical hurdles
  • Non-programmers with the requisite logical aptitude and knowledge of insurance data structures can be trained to become business programmers who configure CalcFocus policy administration from user experience; through group and individual financial and non-financial event processing; through integration implementations; through product calculations; and through policy results and state display including correspondence, document and report creation.

Policy Administration Quality

The prequel Part 1 to this discussion stressed that a “configurable” solution must be judged not just on its “configurability”, but policy administration solutions should primarily be judged by their adherence to best principles in software design. The CalcFocus team enthusiastically supports Kent Beck’s four rules (in strict priority order of importance):

  1. Passes the tests – Making testing paramount in software development is insurance that software processes what was intended
  2. Reveals intention – Code should be readable and easy to understand
  3. No duplication – Do not repeat yourself
  4. Fewest elements – Remove code that is not used today

The CalcFocus team dogmatically asserts the first principle – passes the test. CalcFocus supports one shared configuration code base and all current CalcFocus subscribers access their solutions as a cloud resident service. The CalcFocus contracted SOC 2 auditor, once apprised of our service delivery, our preferred agile development methodology,  and about our shared single code base, immediately asked us to enumerate the controls in place to ensure that CalcFocus subscribers receive and maintain the software processes they intended, and that new deployments never compromise functionality previously agreed. 

The CalcFocus Information Security Team enumerated the processes already in place based on CalcFocus’ dogmatic quality commitment:

  • The CalcFocus Quality Tool enables the rapid creation of regression test cases that can rapidly compare policy calculations and processing results against multiple varieties of expected results
    • Quality can test policy values with ability to expose intermediate values for any production scenario
    • Quality can generate policy values, policy correspondence or other documents, or report values
    • Quality asserts policy value and processing results against a wide range of expected results end points
  • Every code deployment and every Product Designer deployment has full auditability for what was changed and who initiated each change
  • Every code deployment or Product Designer commitment triggers automated continuous regression against policy values and processing regression suites for every CalcFocus software with immediate email notification if any test case is no longer a match
  • Every code deployment or Product Designer commitment to a carrier test or production region triggers automated regression against a larger suite of regression suites for all CalcFocus subscribers with immediate email notification if any test case is no longer a match
  • Business trace allows an inspection of values at any point of policy administration processing history down to the individual method calls
  • Superior event logging and data analytics enable the ability to monitor and recreate any error scenario
  • Every code deployment to internal or subscriber regions is automated “no touch”

The SOC 2 contracted auditor partnered with the CalcFocus team to document quality assurance granular controls that can be regularly audited as part of the recurring SOC 2 audit process.

In sum, the standalone Quality tool is a browser-based application used to maintain a comprehensive set of test suites for automated quality assurance regression tests against asserted expected results; a subset of the same regression tests can be executed regularly as part of a continuous integration process. In addition, all policy administration events, including all historic events,  are traceable and auditable.

Policy Administration Technical Landscape

“Configurable” policy administration systems must be secure and must be available 24X7, 365 days a year. Increasingly, and always with current  CalcFocus subscribers, robust cloud deployments are preferred that insulate subscribers from the technical landscape. Even insulated, subscribers are entitled to full visibility and transparency with all policy administration platform processes including superior data analytics and statistics. Just like configurable systems must be judged by best principles in software design, they must also and equally be judged by the robustness, currency, and security of their technical landscape. And it is the supplier’s responsibility to expose “best in class” statistics and analytics for subscriber access, and to contract for recurring external audits for the services subscribers receive.

The CalcFocus policy administration platform was designed from the ground up as a cloud resident, highly secure and regularly audited solution, that provides highly transparent and auditable configured services.  

In sum, CalcFocus policy administration solutions are novel in design and purpose; and are built with a pragmatic approach to configuration and a dogmatic approach to quality.

Isn’t Content and Usability Most Important?

Most vendor configurability strategies do not challenge what a policy environment does; they assert their “configurability” as an improved process to achieve the identical purpose. In contrast, CalcFocus challenges the purposes traditionally assumed for policy administration.

CalcFocus supports a full range of products, sharing logic and process flows where appropriate.  Only a small part of design is centered around technical decisions. Most design discussion involve enabling the calculations and logic needed to support business use cases and enabling different channels of users to most easily understand how to execute those business use cases, all the while ensuring full auditability and analytics.

Traditional purposes for policy administration include accurate and secure management of policyholder assets and liabilities; flexibility to perform all product required financial and non-financial policyholder events; timely and periodic transparent communication of policy state for policyholders, producers, reinsurers, beneficiaries and other policy stakeholders; and timely and periodic integration and reporting with internal and external, upstream and downstream trading partners and their systems of interaction.

The CalcFocus policy administration solution adds one additional policy administration purpose: to anticipate and responsibly communicate, periodically and real-time, the policyholder consequences and future policy trajectory of policy state and/or policyholder just completed or contemplated actions.

Two other discussions in this series focus specifically on the deficiency in most policy administration platforms – legacy or offered today: “Rethinking Universal Life Policyholder Service – Inforce Illustrations Increase by a Thousandfold” and “How My Policy Administration Failed Me?”.  These discussions conclude that policy administration is vastly enhanced if every customer service dialogue with policyholders, and every administered policyholder event includes a forward-looking trajectory check that very quickly demonstrates future potential consequence and that can dynamically recommend remediation alternatives if the trajectory is off-track from policyholder intent.

This discussion already noted that one of the first deliverables for a new policy administration project is to configure an inforce projection engine, as described below, for all products being converted, and a new business engine for new product introductions.  The inforce engine is fully integrated with every CalcFocus policy administration solution that includes product types with flexible premium options and/or the ability to erode policy values with indebtedness, benefit change or user withdrawals of policy value. Integration is possible because CalcFocus inforce illustration projection engines and inforce illustration solutions can orchestrate future policy administration events on the calendar date when they are expected to occur in policy administration and CalcFocus engines may be configured to match policy administration interest and related policy administration functionality including intermediate values’ postings and rounding.

CalcFocus policy administration integration of CalcFocus inforce projection functionality achieves the following:

  • One engine for all policy value calculations – with CalcFocus, the same configuration, data definitions and configuration code are present in illustration and administration.
  • A customer service representative can, within milliseconds, view a clear policy trajectory graph of current policy future state as they initiate policyholder interaction
  • The customer service representative can, again within milliseconds, propose remediation strategies if the future trajectory is off-track
  • A customer service representative can dynamically respond to policyholder questions about what will happen if they make a change, or how much change they may compliantly request.
  • Regularly triggered policyholder communications, like pre-lapse correspondence or loan interest billing, can communicate not just what it takes to get out of trouble today or what to pay today, but also clear information about what it will take to restore their policy on-track or what to pay today to schedule policy indebtedness repayment and what positive consequences will accrue
  • Periodic policyholder communications, like Annual Reports, not only communicate when a policy may lapse given different assumptions, but also provide a suite of specific policyholder solutions to select based on what each policy’s forward-looking projection reveals.
  • CalcFocus policy administration platforms can easily add highly performant projections and reports more regularly – every monthaversary or every daily cycle – to isolate policies that will most likely fail policyholder goals and not mature and/or guideline premium policies that will require asymptotically growing premium payments to mature as life insurance (and may be candidates for conversion to a cash value accumulation test policy).   

The CalcFocus configuration strategy includes early configuration of product projection engines that become the source for policy administration calculations and, also, to equip CalcFocus policy administration platforms, in all aspects, with forward-looking vision.