LUCKY Insurance Case Study

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1 Appendix A LUCKY Insurance Case Study Show me by example. 1 A.1 DESCRIBING AN INSURANCE EXAMPLE This appendix contains half-baked requirements statements for a hypothetical organization called LUCKY INSURANCE. They are purposely kept incomplete and unpolished to provide true representation of problem statements in practice. There are areas in this problem statement that good modelers will have to sidestep, depending on the needs of their users. This case study is based on a real CRMS implementation project in which the author was involved. It provides opportunities for application of quality, testing, modeling and design in software projects. The description of the business situation in this case study also opens up the possibility of its application in studying globalization and mobilization (dealing with application of mobile technologies to businesses) projects. A.1.1 Background Information on the Project LUCKY INSURANCE has grown rapidly by acquisition and has a large customer base. However, it now finds that the lack of appropriate and sufficient customer service is causing it to lose many clients. Competition from rivals is intense. Many 1 Source: Unknown. Verification and Validation for Quality of UML 2.0 Models, by Bhuvan Unhelkar Copyright # 2005 John Wiley & Sons, Inc. 231

2 232 APPENDIX A competitors have implemented the latest technologies, including sophisticated customer call centers fully integrated with CRMS. LUCKY INSURANCE realizes that it must now catch up, and the board of directors has decided to install an off-the-shelf Internet-enabled new CRMS package. The board considers the following to be major issues in this project: LUCKY s insurance system is a typical 25-year-old legacy system written in COBOL using an ISAM database. This software system has provided the necessary support for LUCKY s business without any major technical flaws. Experienced users are able to navigate through it easily. During the Y2K saga, this insurance system underwent detailed corrections of both its Date-Logic and Date- Storage systems at a substantial cost to the organization. Therefore, despite its future-oriented viewpoint, LUCKY s board is not keen to give up the old system. Thus, the new CRMS software project will have to consider integration with the existing system Since LUCKY s board has decided to proceed with a third-party developed CRMS system. The major part of this project will include capturing and documenting detailed requirements that can be satisfied by the CRMS package rather than instituting major in-house development. A certain amount of customization is envisioned to ensure that the package is tailored to LUCKY s needs. Thus, there is a need for a detailed, quality-conscious software development process that will handle the issues of both integration and package implementation. It is recognized that the information technology (IT) department of the organization still uses the old mode of thinking. The IT department has only read and briefly discussed processes such as QSP, RUP, OPEN, MeNtOR, ICONIX and XP. There is a general awareness that these processes are beneficial, but how and when they should be deployed and used is not clear. Therefore, LUCKY s board wants to consider not only these new processes of software development and maintenance but also the transition to them. The sociological factors related to this transition are matters of concern. The level of maturity of software processes that can be achieved after the transition (particularly the CMM process maturity levels) is also of interest to this technology-savvy board. As mentioned earlier, the existing legacy application that supports LUCKY s current business contains a large amount of data that are stored in an ISAM format. Handling of these data is crucial to LUCKY s business. Therefore, the board is eager to consider the issues related to data integration, including both existing primary data that may continue to remain in the legacy system, as well as new data that will be needed to perform additional analysis and to provide additional functionalities demanded by the business users. Eventually, issues related to data conversion will also have to be considered. The overall development, as well as conversion, will need a disciplined approach for data conversion and testing. A.1.2 LUCKY Insurance Business A Clientele The primary business of LUCKY is to provide insurance. Having been in business for several decades, and having acquired new and established businesses over the past few years, LUCKY has a suite of customers that

3 APPENDIX A 233 range from individuals who take out vehicle, home, contents, life cover and hospital insurance to large businesses, medical practitioners and hospitals who also take out professional indemnity and worker s compensation insurance. Furthermore, new types of insurance products are being continuously conceived by LUCKY s marketing department, resulting in new types of clients. While individuals deal directly with LUCKY for the most part, organizations that deal with LUCKY do so through their representatives. These representatives are usually the employees of the client organization dealing with LUCKY. Individuals can also nominate their representatives especially in cases of life insurance, where representations are required for clients who may not be physically capable of representing themselves or who may be dead. There are thus people who play a variety of roles in dealing with LUCKY most representing themselves as personal clients and others representing their organizations. A Insurance Policies and Risk Categories Whatever is insured by LUCKY is called a risk in insurance parlance. Therefore, all insurance policies are taken out by clients in order to insure themselves against a particular risk. Potential clients (including existing clients who are buying a different type of insurance) need to provide complete and correct details of the risk item for which they are taking a quote (e.g., a vehicle insurance quote involves the make, model, registration, and other details, as well as details of the driver, including age, driving experience, claims history, etc.). The existing legacy application is able to provide this information. In that application, all the details provided in response to a query are stored separately from the details of an actual paid policy. Therefore, when the time comes to convert a given quote into a real policy, there is a certain amount of avoidable duplication of data and procedure. One of LUCKY s needs is that the software support for inquiries should be provided in such a manner that the quotes can be converted into policies and all the information provided for quotes is reused and not lost. At the end of a detailed quote, clients are provided with a premium amount. This is the amount they have to pay if and when they decide to proceed with the insurance cover. There are additional terms and conditions under which a policy is issued. As mentioned earlier, a policy is provided for a particular item, which is also called a risk. Thus, a policy insures a risk. A policy can cover more than one risk (e.g., a car and a home). Policies are also issued for part of a risk (e.g., only for the stereo system in a car or jewelery in a home). Policies are issued on monthly, quarterly, half-yearly and yearly bases. They are governed by regulations, requiring details of the insurance to be documented formally and provided to the respective government organization through an interface to its software system. This information includes what is being insured, the sum for which it is insured, excess payments and details of the conditions under which excesses have to be paid, and, most important, the terms and conditions under which LUCKY is obliged to cover the item even if premiums have not been paid. For example, in a life cover, the person is covered even if premiums are not paid for a quarter, provided that the arrears premiums are paid in the event of a claim. Another example concerns a motorcycle whose risk is covered with

4 234 APPENDIX A a cover note even if the premium is not yet paid. It is also necessary to interface with other government departments that help deal with legal issues, as well as departments that interact with hospitals and the police. This interaction becomes important if a claim runs into dispute and especially if the claim is related to worker s compensation for injuries on work sites. A Payment Types Insurance premiums can be paid in various ways by credit cards, checks, cash, or BPAY. The client can also determine the frequency of payment weekly, fortnightly, monthly, quarterly, half-yearly or yearly. Premium payments can be automatically renewed or may need a signature for renewal. A Interactions Clients, both personal and organizational, continue to interact with LUCKY by traditional face-to-face contact, phone calls and faxes. LUCKY s board believes that this interaction should be better supported by providing the staff with detailed information on the caller, especially if the caller is known to the organization. This would first require software support in identifying the caller, followed by detailed information on the caller to be flashed on system screens in front of the staff once the caller has been identified. Furthermore, the traditional means of contact can no longer suffice. There is a need to facilitate client contact with LUCKY through , on the company s Internet website, and very soon through mobile technologies. This need to enhance interaction through the new technologies is important not only for LUCKY s staff, but also for its clients especially large corporate clients who want to automate the process of inquiries, payment of premiums and lodgements of claims with LUCKY. Business managers at LUCKY realize the acute need to free their crucial sales staff from the work of answering routine inquiries so that they can pursue new leads. Therefore, they want a sophisticated inquiry facility on their Internet website that will not only provide regular information to clients and potential clients, but also basic calculations on quotes for premiums. A quick market survey indicates that existing clients as well as many potential clients prefer Internet-based access to information, doing basic calculations and comparisons, and making routine payments of premiums (e.g., through BPAY or periodic charges to credit cards). A Growth While the business is continuously coming up with new ways of insuring clients and new ways of packaging insurance, it is eager to utilize the potential of the new software support to create additional cross-sell and up-sell opportunities. (For example, when home contents insurance is provided, building insurance should be offered; when motor vehicle insurance is provided, additional insurance to cover injuries should be suggested.) Currently, these opportunities are created by the skills and perseverance of individual sales staff. System support is considered vital in improving the offerings and scaling them up. Essentially, the business is looking for proactive system support. A Employee Portal In addition to dealing with clients, LUCKY s management wants the substantial spin-off benefit of putting the employee details of

5 APPENDIX A 235 LUCKY on the potential CRMS package. This would include the name and address of the employees and other contact details, as well as workers compensation details. Leave accrued, salaries, tax and other such details, once placed in the employee portal, will substantially reduce LUCKY s administrative overhead of and improve the information flow among employees. LUCKY also uses many contract staff and wants to be able to manage their timesheets effectively. Using the employee portal would free management from routine timesheet management, and an interface with the accounting department would speed up processing of invoices and payments. Eventually, the software package s human relations management module can be tailored to handle internal career tracking and management of employees. A Thinking Ahead LUCKY s management is keen to consider all new technologies in this project. For example, mobile technologies remain a serious consideration in this new CRMS project. The ability to provide on-the-spot insurance (especially for travelers) by simply dialing a number from their mobile phones and having a one-time premium appear on their mobile phone bills is a new concept that LUCKY feels will provide a great advantage over its competitors. LUCKY is also eager to explore the concept of e-services when the new application is implemented. This is because LUCKY believes it can provide insurance service from system to system, thereby eliminating the overhead of dealing with insurance manually. The concept of e-services transforms the business of providing insurance into a suite of interactions between two systems representing the client and the insurance organization rather than two people representing these organizations.