Core Insurance Solution Implementation Program Charter

Transcription

1 CITIZENS PROPERTY INSURANCE CORP Core Insurance Solution Implementation Program Charter Program Description and Governance Core Program Charter_FINAL_V Doc

2 Table of Contents History of Document Versions Introduction...5 Overview... 5 Purpose Program Definition Program Vision Business Background...6 Program History Guiding Principles Program Scope...7 In Scope... 7 Out of Scope Deliverables Business Impact Key Stakeholders Internal Stakeholders External Stakeholders Resources Required Program Measurable Outcomes and Benefits Program Objectives Potential Annual Benefits from Improvements Constraints Dependencies Risks Additional Risks Estimated Cost Core Program Charter_FINAL_V Doc Page 2

3 10-Year Net Savings Timeline and Milestones Program Milestones Governance Processes and Structure Governance Roles and Process Description Critical Success Factors Critical Success Measures for the Progress of the Program Program Management Approach Appendix A Core Context Diagram Appendix B - Guidewire Integrations Appendix C Corporate Strategic Objectives Appendix D - Linkage between Outcomes and Strategic Objectives Appendix E Strategic Advisor Workgroup & Stakeholder Workgroup Membership Appendix F Out of Scope Supporting document Core Program Charter_FINAL_V Doc Page 3

4 History of Document Versions Version Content Author Date 1.0 DRAFT Initial draft developed Constance Josef 12/6/ DRAFT Draft updated from Business Case Report 3.0 DRAFT Draft updated from Business Case Report 4.0 DRAFT Draft updated from Business Case Report 5.0 DRAFT Draft updated from Business Case Report 6.0 DRAFT Draft updated from Business Case Report 7.0 DRAFT Incorporated edits from meetings with Constance Josef and Kelly Booten. 8.0 DRAFT Incorporated PGT Edits. Revised Governance team lists. 9.0 DRAFT Incorporated final Governance Team edits. Re-aligned appendices. 10, 11, 12 PGT recommendations & approval 13.0 FINAL Steering Committee Approval 14.0 Added appendix F supporting out of scope decisions Constance Josef 7/11/2011 Constance Josef 7/13/2011 Constance Josef 7/14/2011 Constance Josef Constance Josef Michael Stephens 10/13/2011 Michael Stephens 11/28/2011 Michael Stephens 1/10/12 K Booten 2/12 K Booten 3/1/2012 Eva Tinc 05/02/12 Core Program Charter_FINAL_V Doc Page 4

5 Core Program Charter 1. Introduction Overview The Core Program consists of a number of projects and initiatives intended to achieve Citizens goal of providing services in an efficient and effective manner by managing its book of business on a single insurance platform. Projects include implementation of the Guidewire suite of insurance applications, implementation of a new rating engine, implementation of a new document production application, development or modification of interfaces to supporting systems, and development or modification of business processes to support industry best practices in insurance operations. Purpose The purpose of this document is to: Define the Core Program Describe the Program s Guiding Principles Summarize the business need for the Core Program Identify the Program s impact on Citizens business units and other stakeholders Links the Core Program to Citizens strategic goals and objectives. Discuss Program strategies and approaches. Outline Program governance structures and processes. Define the authority to spend money and commit other resources to the program. 2. Program Definition The Core Program is a corporate-level initiative within Citizens that is charged with oversight and management of a series of related projects and initiatives intended to fundamentally transform the core insurance business functions of Citizens. The program provides: Overarching objectives for the collective activities of all business and technology projects related to the core business transformation effort; Governance, decision-making, prioritization, and funding authority; Program-level planning, monitoring, reporting, and budgeting for Core initiatives and projects; Corporation-wide resource management across projects and processes that are components of the program; Organizational Change Management oversight to ensure that the organization and its people, internal and external, are prepared to operate effectively and efficiently in the new environment; Management of cross-project dependencies for initiatives supporting the program; Definition and monitoring of key metrics that indicate the health of the program and progress toward the stated business results; Establishment of business and technical standards and processes related to the program; Core Program Charter_FINAL_V Doc Page 5

6 Analysis, definition, and acceptance of program-related process improvements; Audit and enforcement of established program processes and procedures. 3. Program Vision Core will be our next generation insurance operating system which will combine a number of current systems into one integrated, user-friendly platform which will increase our capabilities for automated handling, increase process efficiency and improve productivity while at the same time lowering our operating expenses. 4. Business Background Program History Citizens Property Insurance Corporation ( Citizens ) was formed in 2002 by an act of the Florida Legislature, when it merged two existing state-backed insurance pools, the Florida Residential Property and Casualty Joint Underwriting Association and the Florida Windstorm Underwriting Association. Currently Florida's largest property insurer, Citizens insures more than 1.4 million homes, condos and businesses in Florida, and employs more than 1,100 people at its offices in Tallahassee, Jacksonville and Tampa. As a result of its creation by merger, and typical of insurers that evolve in this way, Citizens core operations including policy administration, claims management, billing and payment activities are supported by multiple software applications. As such, there exists a need to maintain multiple system vendor and professional services relationships while managing a wide variety of internal skill sets. In addition, customer policy and claims data are segregated between and among these systems, and gaining timely, accurate visibility into operational metrics by querying multiple, disparate environments is extremely challenging. Finally, Citizens legacy systems are aging, and in need of significant modification to sustain operations in a fiscally sound manner. Starting in 2009 Citizens conducted an extensive analysis of its business operations in order to determine key business requirements to support its strategic mission. This analysis determined that significant financial and service-related benefits could be gained by consolidating the insurance related operations onto a single platform. In several potential solutions were identified through a rigorous analysis and solicitation process, and the resulting cost benefits analysis and business case recommended moving forward with a number of projects to replace the legacy systems and processes with a single integrated solution centered around the Guidewire suite of insurance applications (to be referred to as the Core Insurance Solution ). 5. Guiding Principles The Core Program and its associated projects will be governed by a set of guiding principles that will be used to maintain focus on the fundamental approaches and governing philosophies agreed upon by the sponsors and key stakeholders: Core Program Charter_FINAL_V Doc Page 6

7 1. During implementation, we will build staff capability for efficient, effective, and sustainable operations. During implementation our target ratio of employees to vendors is 60%/40%. 2. The business units will make every effort to conform to industry standard practices in order to minimize or eliminate customization of the product. 3. We will manage scope to bring projects in on time within budget. 4. We will provide clear, effective, proactive, and regular communication to key stakeholders regarding project progress, delivery challenges, risks, and other critical issues. 5. We will increase collaboration among functional organizations by facilitating communication and interaction between affected stakeholders. 6. We will manage our work in a manner that ensures success while making the most effective and efficient use of resources (people, time, budget, materials). 7. We will increase transparency in order to build trust and engagement, and will readily involve stakeholders in discussions and decisions related to priorities, dependencies, and capacity. 8. We will maintain focus on measurable business outcomes as the only reason for the program. 9. We will provide a fresh perspective on all of our business processes and product decisions. 10. The program governance structure will be respected by all program/project team members. 11. All program/project team members are encouraged to raise issues and make recommendations for improvement to the program governance team. 12. Citizens owns the program and is the customer. Consultants and vendors are service providers. 6. Program Scope This section summarizes the work that is to be included in the program, as well, as any significant exclusions. In Scope In order to fulfill the Core ITN Business Requirements as included in ITN # , the scope of the Core program includes: 1. Replacement of policy administration functions currently handled by three systems (epas, POINT and Wind) by a single vendor solution; 2. Development and integration of a third-party rating engine, web portal and document production capability; 3. Replacement of Citizens Claims Tracking System ( CTS ); 4. Migration of the first notice of loss capabilities of existing policy administration environments to a single vendor solution; 5. Migration of the billing and payments capabilities of existing policy administration environments to a single vendor solution; 6. Integration of multiple third party applications and information services used in support of the policy and claims lifecycles, as fully described on the Core System Context Diagram provided in Appendix A. Core Program Charter_FINAL_V Doc Page 7

8 7. Training of Citizens IT and business unit staff and management, independent agents who write Citizens policies, and independent adjusters, underwriters and other third parties used to augment Citizens staff. 8. Retirement of legacy systems (to be budgeted in a future year). Given the comprehensive scope of the program, the following items define the effort required for the intended scope: 1. In support of the technology projects in scope for the Core Program (see the Core System Context diagram in Appendix A), identify, develop, and apply business process and organizational changes intended to: a. Improve or replace inefficient and outdated business practices and processes that were necessary due to constraints in the legacy systems. b. Establish new quality assurance measures and key performance indicators for staff and operational performance. c. Update position skill sets, responsibilities and competencies across operations, and training resources d. Improve workflow administration and reporting. 2. Implement business process and organizational changes in support of the Core Program objectives and the purposes listed in item #1 to the following business functions: a. Insurance Operations i. Underwriting: Product Development, underwriting, and their supporting services ii. Claims: First notice of loss, loss adjustment, settlement, recoveries and litigation with supporting services. b. Vendor relations i. Contracted vendor payments ii. Vendor assignment workflow c. Financial Services i. Financial Operations ii. Policy billing and payments iii. Claims payments iv. General Ledger Reporting d. Consumer and Agent Services i. Agent interface ii. Depopulation iii. Customer Care iv. Manage My Policy v. IVR e. IT Infrastructure i. TOC 24x7 Core Program Charter_FINAL_V Doc Page 8

9 ii. Storage and Backup iii. ITS support iv. Telecom Support v. Performance and Capacity f. IT Applications i. Data Warehousing and Reporting ii. Configuration/Development iii. Automated Testing iv. New systems integration tools - Only in scope for the interfaces to Core 3. Delivering into operational production the following technology systems or improvements: a. Replace existing policy applications (epas, Wind, Point) with the purchased software products: Policy Center and Billing Center from Guidewire Software. b. Replace existing claim application and modules (Claims Tracking System CTS, epas Claims FNOL and claims payments, Wind Claims FNOL and claims payments, Point Claims FNOL and claims payments) with the purchased software product Claims Center from Guidewire Software. c. Guidewire Contact Manager software integrated with Policy Center, Billing Center and Claims Center. d. Fully integrate Guidewire Software Policy Center, Billing Center and Claims Center (Between Centers) e. Interface the integrated Policy Center, Billing Center and Claims Center (P B C Centers) with the corporate applications and third party products whose functions were not replaced by the P B C Centers. See Appendices A & B. f. Existing and new operational reports and analytics that will support the new processes and procedures in Underwriting, Claims, Accounting and Consumer and Agent Services modified to include data from the newly integrated Policy, Billing and Clams Centers. g. New enterprise consolidated reports and analytics communicating policy, billing, claims, consumer and agent service metrics. h. Rating engine integrated and fully loaded to function with the Policy Center (Guidewire Software product). i. Document production software fully loaded with policy administration, claims and billing documents, forms and letters, and integrated with Policy Center, Billing Center, and Claims Center (Guidewire Software products). j. Improved Agent interface. k. Improved IVR interface. l. Replace the usage of ImageRight for document repository with new 3rd party software. m. Replace the usage of ImageRight for workflow management and administration. n. Expand Data Warehouse technology to support: i. Modifications to existing reporting and support of new reports and analytics named in the Program Scope. Core Program Charter_FINAL_V Doc Page 9

10 o. Expand the Technology development environments to support all new technology and integrations to legacy systems and corporate applications that are in scope. Ensure the environment meets the expected technology standards (architecture, infrastructure, security, monitoring /maintenance and usage support), including testing and data migration. p. Architectural evaluation of data warehouse related to the Core Program scope. q. Expand the Technology production environment (including training) to meet the technology standards (architecture, infrastructure, security, monitoring /maintenance and usage support) for the existing legacy applications (CTS, Point, Wind and epas) which will be retired eventually, along with the addition of the following: i. Guidewire Software products Policy Center, Billing Center, Claims Center and Contact Manager Center ii. Rating engine iii. Document production software iv. Interface capabilities outlined in the statements of work for the commercial lines and personal lines releases. v. Document repository software (in addition to ImageRight). 4. Organizational changes to Information Technology (IT) Support for software and hardware maintenance and User service support for the new software and technology introduced through the Core Insurance Solution program named in the Program Scope. 5. Converting and migrating policies, billing and claims records and documents needed to transition from current state to future state and retire legacy applications following a prescribed schedule. 6. Solution to replace Agent management functions that are in current policy systems. 7. Delivering training related to: a. Organizational changes b. Technology changes c. Business Process change 4. Delivering communications related to: a. Program direction, expected outcome, benefit realization b. Organizational changes c. Technology changes Out of Scope The following items are out of scope for the Core Program: 1. Replacement of the existing IVR 2. Replacement of the existing Policyholder Portal 3. Agent Management systems (AAS/ARS) 4. Implementation of a System integration tool between Guidewire products Core Program Charter_FINAL_V Doc Page 10

11 7. Deliverables Given the scope of the program, the following describes deliverables and other components that are to be created by the program. Further definition of the deliverables for each Core project will be provided in the individual project charters. 1. Organizational change delivery in practices, processes and procedures, quality assurance measures and metrics, competencies, position skill sets and responsibilities in the following business units: a. Underwriting: Product Development, Commercial Lines Underwriting, Personal Lines Underwriting b. Claims: Claims Operations, Claims Shared Services, Commercial Claims, Litigation c. Insurance Services d. Accounting and Payment Services e. Consumer and Agent Services f. Mail Center, Scanning g. Distribution h. Enterprise Planning and Project Portfolio Management: Business Operations Support i. Technology: IT Strategy and Architecture, Corporate Systems and Applications and Claims Policy and Billing Systems j. Enterprise Quality Assurance k. HR and Corporate Training 2. Technology infrastructure delivery: a. Development environment to support the expected technology delivery. b. Production environment modified to support the expected technology delivery. c. Data Warehouse expanded to support the expected technology delivery. d. Production environment plans for legacy systems retirement. e. Training f. Testing (See earlier sections) 3. Facility delivery: a. Facilities to support the development environment. b. Facility changes needed to support the operational changes 4. Technology delivery: a. Integrated policy center, billing center, claims center and contact manager (known as Core suite) i. The scope of work for these components is depiceted Appendix A. b. Core suite integrated / interfaced with corporate applications in Appendix A c. Rating engine setup and integrated with Policy Center d. Document production software is set up and integrated with Core Suite e. Document repository software is set up and integrated with Core Suite. f. Policy, Billing and Claims reports and analytic capabilities with corresponding expansion of Data Warehouse and where required development of supporting data marts. Core Program Charter_FINAL_V Doc Page 11

12 g. Conversion strategy that addresses migrated policy, billing and claims records and documents. h. Improved Agent Interface i. Improved IVR Interface j. Integration tool (see earlier reference). 5. Training strategy delivery: a. Changes and new organizational processes and procedures b. Usage of new technology 6. Communications strategy and delivery: a. Internal stakeholders b. External stakeholders 7. Deployment Strategy 8. Benefits Realization Strategy and Process 8. Business Impact Key Stakeholders This section describes key internal and external stakeholders, and summarizes stakeholder positions to the degree known. Internal Stakeholders This section will list internal stakeholders and will describe program impacts they will experience. Internal Stakeholder Type Interest/Impact/Influence Underwriting: Product Development, Commercial Underwriting Operations, Personal Lines Underwriting Claims: Claims Operations, Claims Shared Services, Commercial Claims, Litigation, Litigated and Disputed Claims Primary Primary Resources from the business units will serve as project team members. Additional training required to prepare resources that will backfill FTEs staffed on the project. Potential overlap in use of multiple systems as phased roll-out occurs. Production slow-downs due to learning new systems and processes. Some staff turnover due to uncertainty. Increased efficiency due to common platform. Major impact from new workflows/processes and roles. Resources from the business units will serve as project team members. Additional training required to prepare resources that will backfill FTEs staffed on the project. Potential overlap in use of multiple systems as phased roll-out occurs. Production slow-downs due to learning new Core Program Charter_FINAL_V Doc Page 12

13 Internal Stakeholder Type Interest/Impact/Influence Insurance Operations: Vendor Management, Business Analysis Secondary systems and processes. Some staff turnover due to uncertainty. Increased efficiency due to common platform. Major impact from new workflows/processes and roles. Increased visibility into data required for contract/vendor management due to common platform, better BI strategy Secondary impact from potential need to enhance tools/reporting to utilize new data from system. Accounting and Payment Services Primary Increased efficiency due to single platform. Potential role/responsibility changes in new system. Initial decreased productivity due to learning multiple new processes. Consumer and Agent Services: Customer Care Center, Business Analysis, QA/Training, Agent Compliance, Customer Correspondence, Agent Administration, Depopulation, FMAP, Communications Information Technology: Claims Policy and Billing Systems, Corporate Systems and Applications, IT Operations, IT Enterprise Systems, IT Infrastructure, IT Security and Disaster Recovery. Enterprise Planning and Project Portfolio Management: Business Operations Support, Business Process Improvement, Program Management Primary Primary Primary Increased efficiency. Large spike in external training volume due to cutover strategy. Increased call volumes in initial months. Increased need for agent support/assistance. Resource unavailability for other projects. Large learning curve for new technologies. Increased need for internal user support. Increased initial workload due to maintenance of legacy systems as new system rollout occurs in phases. Increased workload due to maintenance of additional development, test, and training environments. Increased workload to manage the Core Program while keeping other corporate initiatives on track. Development of internal processes to manage Enterprise Quality Assurance Secondary Interest Ensuring that new system provides data/visibility to support EQA processes. Impact EQA processes/tools will require modification to work in the new environment. HR and Corporate Training Secondary Primary impact from recruiting resources for the project and developing new processes for managing in a matrix environment. Training impact support of Core training initiative and coordination of delivery. Purchasing and General Services Secondary Increased procurement workload due to acquisition of resources, facilities, and tools for the project. Risk, Records and Corporate Insurance Secondary Impact Increased involvement in certain project processes to ensure that public records provisions are followed, and are considered in system design. Enterprise Risk Management Secondary Interest - Identification and monitoring of global project risks that can significantly impact the project. Core Program Charter_FINAL_V Doc Page 13

14 Internal Stakeholder Type Interest/Impact/Influence Increased workload due to the need to be involved in program risk management. Development of enhanced risk monitoring and reporting specific to the Core initiative. Key Interest Reducing Citizens overall risk exposure on the project. Corporate Metrics Secondary Impact More accurate data available for developing and monitoring corporate metrics. Will require modification of tools/processes currently used to monitor/report system impacted metrics. Corporate Analytics Secondary Impact Better visibility into data required for analytical analysis and compliance reporting. Actuarial Services Secondary Impact Better visibility into data required for actuarial analysis. Office of Internal Audit Primary This primary stakeholder has in interest in ensuring that the project is executed according to accepted standards in order to assure the Board of Governors that the project is healthy, from an independent perspective. Board of Governors and Related Committees Key This key stakeholder group has the ultimate responsibility and authority to authorize and fund the project. Interest Project delivery on time and on budget, with expected outcomes. Executive Leadership Team Key This key stakeholder group s interest an influence is second only to that of the Board of Governors. This group is the highest internal authority, and has internal control of funding authorized by the Board of Governors. Senior Leadership Team Key This key stakeholder group owns the primary and secondary processes affected by the project. This group has significant influence on project requirements, use of internal resources, and project direction. Legislative Affairs Secondary This stakeholder group serves as liaison between Citizens and key external stakeholders within the Legislature. Legal Primary This stakeholder group has sign-off authority on all compliance related issues, and as such has a major influence on key areas of project design and execution. Key Stakeholder= Those who have significant influence upon the project. Primary Stakeholder = Those ultimately affected, either positively or negatively by an the project Secondary Stakeholder = Persons or organizations who are indirectly affected by the project. Core Program Charter_FINAL_V Doc Page 14

15 External Stakeholders This section lists internal stakeholders and will describe program impacts they will experience. External Stakeholder Type Interest/Impact/Influence Agents Primary 9,000 + agents and thousands of their Customer Service Representatives (CSRs) must use the agent facing components of the system. Will require investment of time/resources in learning new processes/procedures. Could lead to initial productivity dips as new procedures are learned, but ultimately will increase efficiency. Vendors Secondary Vendors (claims servicers, inspection providers, etc.) will experience impacts impact as they learn new procedures/processes/interfaces. Will require investment of time and resources in learning. Could lead to initial productivity drops as new system comes on line, with increased speed and accuracy after the initial dip. Mortgage Companies Secondary Impact will need to re-write interfaces that provide data to Citizens. Policyholders Primary Impact Increased quality of service, better processes for self-managing policy information, better/quicker response from CSRs. Service Providers Primary Service Providers will feel a primary impact as they learn new procedures/processes/interfaces. Will require investment of time and resources in learning. Could lead to initial productivity drops as new system comes on line, with increased speed and accuracy after the initial dip. Office of Insurance Regulation Key This key stakeholder has a major influence through regulatory oversight of the organization. OIR also impacts the project through its responsibility to approve all rates, rules, and forms that will be implemented in the system. External Auditors Secondary Impact Better access to data for audits. Less complex audit process due to single platform, streamlined processes, better controls. Auditor General Secondary Impact Better access to data for audits. Less complex audit process due to single platform, streamlined processes, better controls. Legislature Key This key stakeholder has a primary impact on the project due to its role in setting statutory and regulatory requirements. Legislative activity can produce changes that impact schedule, scope, and cost of the project. Agent Associations Secondary This stakeholder represents the interests of the agent workforce, and as such is impacted by systems changes. Taxpayers Primary This stakeholder group is affected when the system provides lower operation costs, thus reducing the Core Program Charter_FINAL_V Doc Page 15

16 External Stakeholder Type Interest/Impact/Influence potential for assessments or other financial mechanisms used to alleviate shortfalls. Takeout Companies Primary This stakeholder group will receive better information from the new system in order to make more informed decisions when selecting polices to assume from Citizens. Key Stakeholder= Those who have significant influence upon the project. Primary Stakeholder = Those ultimately affected, either positively or negatively by an the project Secondary Stakeholder = Persons or organizations who are indirectly affected by the project. Resources Required The program will require participation from each of the internal stakeholder groups listed above. Initial estimates indicate that approximately 180 staff members will participate in the Core Program over a 3- year period. Specific resource requirements are outlined in the Core Staffing Plan and in the Core Program schedule. 9. Program Measurable Outcomes and Benefits This section describes measurable outcomes for the program, as identified in the business case and associated documentation. Program Objectives The following objectives serve as the foundation for the desired outcomes and expected benefits of the program and its associated projects: Program Objectives 1. Consolidate insurance operations and associated data to a single platform, leading to a reduction in the number of vendor relationships, maintenance agreements, and technical skills needed to maintain systems. 2. Increase automation to reduce processing times and error rates. 3. Implement consistent business processes and workflows to maximize productivity and minimize training required for staff proficiency 4. Decrease time and cost associated with system changes by using configuration to avoid custom programming. 5. Provide more efficient integration with ancillary systems and processes. 6. More effectively utilize corporate resources between functional areas as a result of common processes and platform. 7. Increase timeliness and accuracy of critical operational reports in support of management decision-making. 8. Contribute to the fulfillment of Citizens corporate objectives through direct and indirect impacts of the Core implementation. Core Program Charter_FINAL_V Doc Page 16

17 The program objectives support the following Corporate Strategic Objectives. For a full list of the Corporate Strategic Objectives, see Appendix C. Strategic Objectives 1 Provide outstanding policyholder service and support through a strong customer service culture 1.3 Identify customer expectations and improve service levels. 1.5 Simplify, improve and consolidate processes and procedures to provide enhanced, customer-focused services. 2 Develop superior claims and underwriting operations 2.1 Improve qualities and efficiency of Claims and Underwriting operations. 2.3 Provide additional coverage options to allow policyholders to tailor coverage to their individual needs. 2.4 Attain national high-performance efficiency benchmarks, validated by an independent evaluation firm. 2.5 Benchmark Citizens file quality to protocol standards and attain a 90-percent review score in claims and underwriting. 3 Ensure strong corporate governance and fiscal prudence 3.2 Ensure proper internal fiscal and operational controls. 3.3 Utilize greater enterprise risk-management approach to business operations. 4 Expand and strengthen recruiting, education and development programs for staff 4.1 Optimize and align staff and organizational structure. 5 Ensure appropriate capability and reliability of business systems 5.1 Develop core insurance systems strategy and execute according to plan. 5.2 Enhance application and technology strategy and capability in alignment with long-term business goals and objectives. 5.3 Create and execute a quality improvement plan. 5.4 Implement improved information technology governance policies and procedures. Potential Annual Benefits from Improvements The program will produce tangible financial benefits, as listed in the table below. It will also lead to a number of related operational improvements/outcomes that are linked to the Corporate Objectives (as depicted in Appendix D). See the Core Benefits Realization Plan for a detailed overview of the expected operational and financial benefits. Business Operation Area of improvements Average cycle time improvement Policy Administration Based on # policies Underwriting, Endorsing policies, Renewals, Managing documents Configuring Rates, Rules and form Depopulation Personal Lines 45 minutes to 1 hour per application / policy Commercial lines minutes per application / policy On average 120 hours each rate change setup 15 minutes each Personal lines policy, on average 300,000 policies Core Program Charter_FINAL_V Doc Page 17

18 Claims Management Based on # claims Policy Billing and Accounting Based on # Policies Dispatching claims, setting reserves, adjusting losses, settling claims, Managing Documents, Vendors setup and payments Processing policy payments, Making payments Performing accounting functions Reporting Personal Lines and Commercial lines 2.5 hours reduction in cycle time Annual savings in hours Personal lines: improvement of ½ minute to process 2.1M policies payments: 17,600 hours Overall improvements of 5 minutes in each policy Agency and Consumer Services Based on # calls Viewing consolidated customer policy, billing and claims data Commercial lines: 1800 hours of annual savings Personal lines savings 1 minute per call Commercial lines 1-2 minutes per call 10. Constraints The following items represent known constraints that restrict, limit, or regulate the program, and are not completely controlled by the Program Management team. 1. Resources: a. People The availability of resources with the technical or business knowledge required limits the number of concurrent work streams. b. Budget - The project must be delivered within a finite budget that will be allocated in phases. c. Space/Facilities The large number of simultaneous work streams required is limited by the availability of facilities and work space. 2. Procurement Process The procurement process provides proper and necessary checks and balances, but may limit program responses to specific project needs identified in the future. 3. Time-based constraints Schedule constraints will limit the number of tasks that can be completed within any given period. Due to the nature and size of the program, prioritization of essential functions/requirements will be necessary to ensure that objectives are met. 4. Deployment during CAT season Service to policyholders during a Catastrophe will take priority, and will limit availability of certain key resources assigned to Core. 5. Project Sequencing Due to the large number of dependent systems, and the nature of the business itself, sequencing of deliverables will be governed by the need to maintain seamless operations. Core Program Charter_FINAL_V Doc Page 18

19 6. Project Team geographically dispersed The location of teams (and the need for some team members to travel) will limit some interaction that is required between and among teams. The Program Management team will seek ways to reduce these barriers through the use of available technologies. 11. Dependencies The following items represent known program-level dependencies that must be complete and in place for the program to proceed successfully: 1. Approval of the budgets. 2. Approval of the Core Resource Plan. 3. Office of Insurance Regulation (OIR) approval of new products. 4. Board approval of related/dependent project resources, hardware, and software. 12. Risks Of the 61 risks identified during the initial risk assessment conducted as a part of the procurement phase, the following implementation-related risks remain with a high or medium risk exposure. See the Core Risk Register for risk response plan details for each of the following risks. # Risk Category Risk Description Risk Exposure Level 2 Cost Benefit Analysis 4 Cost Benefit Analysis 6 Change Management and Process Improvement 7 Change Management and Process Improvement 9 Change Management and Process Improvement 10 Change Management and Process Improvement 11 Change Management and Process Improvement The ongoing cost of maintaining the new applications may be significantly different than the cost included in the CBA. Without an actionable plan of how the benefits will be achieved, the Board of Governors may question the ability of Citizens to realize them. Inability to make decisions regarding the scope of process changes or configuration requirements during implementation can result in implementation delays, cost increases, lack of functionality, or inability to improve processes. The lack of a clear, well-defined project scope or inability to manage changes may encourage scope creep thereby causing timeline slippage and increased costs. The lack of end-state standard operating procedures will complicate the implementation. The organization is unwilling or unable to change processes to match system design, resulting in customization or inability to realize anticipated productivity gains. With highly configurable or customizable systems, the risk exists that business units will attempt to configure the software to match existing processes rather than leverage the software s standard functionality. 49 Training The amount of effort required to develop training programs and train staff on the new systems is significantly underestimated; Medium Medium Medium High High Medium Medium Medium Core Program Charter_FINAL_V Doc Page 19

20 # Risk Category Risk Description Risk Exposure Level resulting in project delays, inaccurate cost estimates, or inadequate training. 54 External Impacts Legislation, governmental oversight, or a CAT event during the implementation could result in a shift of priorities and related resources that could delay the project. 58 External Impacts Lack of a contingency plan in place to address external risks increases the risk of project delays and cost overruns. High High Additional Risks Additional risks have been identified subsequent to the initial risk assessment. These risks have not yet been rated, but are slated to be addressed via the Program s risk management process. # Risk Category Risk Description Risk Exposure Level External Impacts External Impacts Resource Availability and Constraints Resource Availability and Constraints Change Management and Process Improvement External Impacts OIR Approval of Program Rates, Product Rates, Forms Failure to receive approval of these items by the planned dates will delay critical project milestones. Legislative Process/Session over Multiple years The Legislature may modify or create laws that broaden the scope or take resources away from the project to implement the required changes in legacy systems. Employee Turnover - Continuity of same resources on the project Loss of critical resources may impact the team s ability to meet objectives due to the loss of institutional knowledge, experience, and technical skills. The effectiveness of the team may be impacted by the lack of knowledge of Citizens-specific processes by resources assigned to the project as well as the management in some departments. The right decisions made at the team and management level prevent rework and schedule impacts. Scope Expansion of scope due to factors such as Legislative or regulatory actions, discovery of unknown yet critical requirements, or failure to manage scope across teams will lead to schedule delays or missed objectives. A catastrophic event during the implementation is likely to result in a shift of priorities and related resources that could delay the project. TBD TBD TBD TBD TBD TBD Core Program Charter_FINAL_V Doc Page 20

21 13. Estimated Cost The Financial Analysis in the business case included the following components: Costs based on purchase price of the Guidewire software as well as forecasts for implementation, installation, licensing and training timeframes, resource requirements and related costs; Expected financial benefits accruing to Citizens business processes due to the improved operational efficiencies and cost avoidance anticipated from the implementation of system; and Financial metrics, derived from cost and benefit calculations, including Total Cost of Ownership ( TCO ), Internal Rate of Return ( IRR ) and Return on Investment ( ROI ). The estimated 10-year Core direct project investment as identified in the Business Case is $73M. Any changes from this estimate will be addressed via the Scope Management Process. Please note that the plan is to re-estimate the project at the end of the Inception Phase, using the high-level requirements developed during that phase. 10-Year Net Savings The 10-year total project investment is approximately $73 million. The net savings over 10 years is approximately $108 million. Core Program Charter_FINAL_V Doc Page 21

22 14. Timeline and Milestones This section provides a high-level overview of the phases and expected milestones of the program. Core Program Charter_FINAL_V Doc Page 22

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25 Core Program: Suite Commercial & Personal Lines Approach January 2014-June /2013-3/2014 Continue CL New Claims in Claims Center 8/2014 All CL Policies in Policy Center Commercial Line of Business 4/2014 7/ /2014 1/2015 4/2015 1/2014 6/2015 8/2013-7/2014 Continue CL Policy Renewal & New Business In Policy & Billing Centers 12/2013-1/2014 2/2015 Continue 2/2014 2/2014-1/2015 All PL Policies in PL Claims Center Personal Lines Go Live PL New Claims in Claims Center Policy Center Deployment & Training Personal Line of Business 4/2014 7/ /2014 1/2015 4/2015 1/2014 6/2015 2/2014-1/ /2013-1/2014 PL Policy Renewal and New Business Continue PL Policy & Billing Deployment & Training Program Milestones This section lists the major milestones and their expected completion date. Milestone Description Due Date Commercial Lines (CL) Policy Center Inception Complete 4/2012 CL Billing Center Inception Complete 4/2012 CL Claims Center Inception Complete 4/2012 CL Claims Center Development Complete 11/2012 CL Policy and Billing Center Development Complete 12/2012 Rating Engine Stand-Alone Testing Complete 12/2012 CL Claims Center Testing and Readiness Complete 2/2013 Document Production Stand-Alone Testing Complete 1/2013 CL Claims Center Go Live 4/2013 CL Policy and Billing Center Testing and Readiness Complete 6/2013 Commercial Lines Policy and Billing Go-Live 8/2013 All CL Policies in Policy Center 8/2014 Core Program Charter_FINAL_V Doc Page 25

26 Personal Lines (PL) Policy and Billing Center Inception Complete 2/2013 PL Claim Center Inception Complete 5/2013 PL Policy and Billing Center Development Complete 7/2013 PL Claim Center Development Complete 8/2013 PL Claims Center, Policy, and Billing Centers Testing and Readiness Complete 11/2013 PL Policy, Billing and Claims Centers Go-Live 2/2014 All PL Policies in Policy Center 2/2015 Core Program Charter_FINAL_V Doc Page 26

27 15. Governance Processes and Structure The following structure summarizes the processes and structure required to govern the program, including the senior level decision making process. Governance is the process and structure used to exercise overall control and set the direction for a program or project. It defines the purpose of the program/project, sets strategies for attaining the purpose and gives authority for the use of resources to implement the defined strategies. Governance provides the structure that links process, resources and the business strategies and objectives. Governance includes the activities and associated roles and responsibilities required to provide leadership, strategic direction, control, and accountability. In contrast, management is concerned with administration and delivery through planning, monitoring and reporting. While the two areas are related, they are distinctly different functions. This section is intended to describe the Governance model for the Core Program. Program management and operating procedures of committees and the teams will be defined in the Program Management Plan. The Core Program will utilize a three-tiered governance structure, with 95% of decision-making owned by the project teams. This structure includes the Core Steering Committee, the Program Governance Team, and the Core Delivery Project Teams. Core Program Charter_FINAL_V Doc Page 27

28 Executive-level governance is the responsibility of the Core Steering Committee, comprised of the President/CEO/Executive Director, the Chief Insurance Officer, and the Chief Information Officer. This group receives input and advice from the Executive Leadership Team on specific issues. They address issues that represent a change from the original business case, and serve as the final approval authority on any changes that impact the business case, scope, cost, or schedule of the program s initiatives. They also review and make final decisions on issues that are escalated from the Program Governance Team. See Governance Roles and Responsibilities (below) for more information. The Program Governance Team (PGT) represents the next tier of governance for the program. This body includes the Vice President Core Program Director, the Consulting Program Director, the Project Sponsors, the Senior Director of Consumer and Agent Services, the Core Program Manager, the Implementation Partner Program Manager, the Senior IT Program Manager, the Guidewire Project Manager, and the Implementation Partner IT Consultant. Vendor members serve in an advisory and mentoring capacity. The Citizens members are solely responsible for program decisions made by the Program Governance Team. This PGT is the decision-making body for the Core Program. It is responsible for approval of all project plans to ensure coordination across all projects. This group is also responsible for ensuring that stakeholder input is used to inform decisions. The PGT is the body that addresses issues escalated from the Project teams, and ensures timely escalation to the Steering Committee for issues that cannot be resolved at this level. This team reviews scope change requests, and ensures that change requests escalated to the Steering Committee are valid, necessary, and provide all information required for an informed decision by the Steering Committee. Individual PGT members have specific responsibilities. See Governance Roles and Responsibilities (below) for more information. The Delivery Project Tier is the next entity in the governance structure. This tier consists of the Core Project Management Team and the Core Delivery Project Teams. The Core Project Management Team manages all of the business and technology projects of the Core Program. Oversight and coordination of this group is the responsibility of the Core Program Manager. This group is responsible for coordinating dependencies among the project teams. Issues and decisions having cross-project impacts that cannot be resolved at the project team level are escalated to this group for resolution. If resolution at this level is not possible, the issue/decision is escalated to the Program Governance Team for resolution. The Core Delivery Project Teams are responsible for a majority of the project decisions that are made. This is due to the fact that the Core Delivery Project teams work in a collaborative manner with other related teams in delivering one of the centers (i.e., Policy, Billing, Claims). The delivery teams include product owners who represent the functional departments or (business units) that are the users of the product. Since many of the projects will utilize the Agile development approach, the Product Owner, Project Managers, and Guidewire Project Managers will work closely with all of the center teams to identify, discuss, and resolve issues prior to escalation to the Program Governance Team. See Governance Roles and Responsibilities (below) for more information on their governance roles. Specific roles of Project Managers and Product Owners are defined in the project charter for each initiative that requires one or both roles. Core Program Charter_FINAL_V Doc Page 28

29 There are several advisory groups that inform decision-making at all layers of the governance structure. At the Steering Committee level, the Executive Leadership Team receives regular reports and updates from the Steering Committee. At the Program Governance Team level, the Strategic Advisors Group provides input to ensure that this group of stakeholders is represented. The final advisory group is the Core Stakeholder Working Group, which represents the interests of stakeholders at the operational level. This group provides input to both the Program Governance Team and the Core Delivery Project Teams on specific issues. See Governance Roles and Process Description (below) for more information. The program governance structure provides the process for which program/project decisions are made and issues resolved. The governance structure also addresses the needs of stakeholders but addresses them differently and not as part of the decision making process. Organizational structure is not addressed by the program governance structure. Governance Roles and Process Description Governance Roles and Processes Core Steering Committee (Subset of Executive Leadership Team (ELT)) Focus on business case and ensuring the program projects deliver the expected outcomes and benefits reflected in the business case. Approves project investment decisions. Primarily revolves around the business case. A (project brief or proposal introduces the decision needed. Approves any changes that subsequently impact the program investment decision or any changes to the program s business case (i.e. decisions that clearly state adding functionality that is not contributing to the existing expected outcomes (in the business case) and is adding to scope and potentially to the schedule duration and dollar investment. ) Makes decisions regarding issues raised by the Program Governance Team that potentially impact Citizens organizational policy or strategy. (Issues needing decisions that are business practice, process and procedure related are brought directly to the Sponsor and Organization Chief for decision through the Strategic Advisors Group.). Responsible for the resolution of issues elevated by the Program Governance Team. Provides regular updates and reporting to the full ELT. The VP Core Program Director chairs the Core Steering Committee Meetings. The Core Steering Committee will consist of the President, Chief Insurance Officer and Chief Information Officer. Other members of the ELT will be consulted as necessary and kept informed through regular reporting. Program s Project Governance Team Program Governance Team is chaired by VP Core Program Director. Program Governance Team is the decision making body for the Program s Projects and supports the VP Core Program Director. Does not address program communications or reporting needs. This is addressed by Program Management. This is not a Stakeholder forum. Provides stakeholder and technical input to decisions affecting the program s delivery projects. Approves program project plans (which include milestones across all projects). Addresses and provides decisions on project issues that cannot be resolved by the Project teams. Addresses and provides decisions and resolutions to issues and concerns introduced by the VP Core Program Director arising from the Strategic Advisors and from the Core Program Manager arising from the Stakeholder Work Group. Endorses project documents regarding change management affecting the business case that must go to the Core Program Charter_FINAL_V Doc Page 29