Chola MS General Insurance looks for a new core insurance solution

Chennai: The Chennai-based private non-life insurer Cholamandalam MS General Insurance Company Limited, part of the $2-billion Murugappa group, has decided to go in for a new core insurance solution.

The company has short listed three vendors and a 15-member multi disciplinary team is evaluating the proposals in depth including their pricing and would shortly decide on the preferred vendor.

Declining to reveal the names of three short listed software companies to S S Gopalarathnam, president, operations, says the company has budgeted around Rs11 crore for core insurance solutions as well as the hardware. "We will take care of the hardware needs ourselves."

It has become imperative for Indian no-life insurers to revamp their information technology (IT) solutions to cope with the changes arising from the four major lines of business — fire, engineering, motor and workmen compensation insurance — recently being freed from the administrative pricing mechanism. In addition from next April onwards the companies, will be free to custom design their products. There is a view that the Insurance Regulatory and Development Authority (IRDA) might advance this to 1 January, 2008.

The non-life insurers have to launch several products and the current IT systems used by most of the insurers are inadequate and inflexible to meet the future needs.

Says Gopalarathnam, "We plan to launch 20-25 products in - fire, engineering, motor and workmen compensation- business lines."

With the freedom to decide on the rates and the risk covers, insurers have to mine data and do a detailed actuarial analysis to price their products adequately. All these years, a body called Tariff Advisory Committee (TAC) had determined the premium rates and the insurers just loaded the rates in their systems.

"Lot of data analysis had to be done and the core insurance solutions should be robust enough to do that. Products and pricing are the levers on which the new IT systems have to work," remarks Gopalarathnam.

One of the fast growing Indian non-life insurers, the Rs314 crore premium income Cholamandalam MS General Insurance, expects the new core insurance solution should be robust enough to web enable many of its products effortlessly.

"The solution we look at should address the needs of all core insurance functions like underwriting, sales, marketing, agents related work including commissions, data mining, data analysis and many other things," he adds.

According to him the core insurance solution should be compatible with specialised stand alone solutions like human resource rating, reinsurance analysis.

Source: Domain-b