Assurance Quotation Services

Transcribed from the printed issue; not yet reviewed. Read it in the PDF of the issue, page 88

Three years ago, an assurance company wanted to design and launch a new product for employers leaving firms and taking their pension benefits with them in a “Section 32 Buy-Out”. In order to make the contract financially attractive and capable of matching a wide variety of existing pension schemes, it had to rely on complex actuarial logic. The resulting procedures and calculations could not be managed manually. Although a computerised quotation service was required before the launch in two months time, the marketing staff were free to modify the contract up to the last minute.

The cost and delay associated with a Head Office quotation service meant that a DIY facility in the hands of our local staff or even our clients would give us a competitive edge.

Initial decisions to be made:

1. System to be constructed by computer or user department.
2. Mainframe or Micro. system.
3. Batch or Interactive Procedures.
4. Software to be used.

If the system were to be built by the computer department it would have to be scheduled in with other work and a fixed specification provided. The time limit meant that work had to start immediately without an agreed specification. Thus it had to be a user department job. Batch processing procedures are, by their very nature, unsuited to a quotation service supporting salesmen in a competitive market. Interactive procedures giving immediate results were required if at all practical.

A system on line to the mainframe would restrict usage to those with the right equipment, only be available during normal office hours and offer variable response times. The computer department would want to know what volume of traffic to plan for and what response times would be required. With this information they would quote a price and ask for authority to buy the extra hardware. Since answers to these questions were not known and negotiating time was unavailable, a PC based system was examined. This would run on any IBM-PC compatible machine, any time anywhere and give known response times.

The choice of software was made by a process of elimination:

a) Since support for the volume and variety of existing software was a major drain on resources, any proposal which added to the problem would be questioned. APL was well established on the mainframe and its ever growing cost was prompting requests reconsider its use. Developing a quotes programme in APL for the IBM PC would be a step in the right direction and would not be resisted. This eliminated introducing ‘C’.

b) Since the quotes service had to run on up to 200 remote PC’s in our sales offices or the clients office, the cost of running the service per PC was important. Few new PC’s would be required as many were already in place and the volumes per machine would be small. APL-PLUS offered a run time version whereby we could obtain 200 copies at a reasonable price. Our marketing department were happy to foot the bill in advance so that the quotes service could be distributed without recipients having to buy software. We also had to agree to deliver in 2 months. This eliminated the IBM version of APL for PC’s and most integrated packages.

c) Speed of system development was critical and the complexity of actuarial logic was a major consideration. Experience had shown ‘BASIC’ to be too slow in development and ‘Dbase’ inadequate for complex calculations. The staff who were to develop the quotation service had substantial expertize in APL and had access to actuarial subroutines already written for mainframe systems. They were happy to use APL on the PC as long as we provided an XT with a maths co-processor as the development machine (that dates the project).

Having chosen to base the quotation service around the IBM PC using the run time version provided by APL-PLUS we had to solve the following:

1) The end product must fit on one floppy disk for distribution. This must include operating instructions and help screens, so that paper instruction could be restricted to a single sheet.

2) The service had to run on a variety of configurations, twin floppies and hard disk, colour and monochrome, most common printers, with and without a maths co-processor. Speed on the slowest configuration had to be reasonable.

3) Since the actuarial terms and conditions, including the calculation of all rates, were to be incorporated in the programme, security was essential. The ability to quickly change terms and conditions without recalling disks was also critical, particularly when interest rates are volatile. The actuaries had to be convinced that they still had complete control over the terms and conditions being quoted on behalf of the society.

These problems were all overcome and the new contract launched with its supporting quotation service operational from day one at Head Office. Distribution of floppy disks soon followed after the contract stopped being modified. The framework which we developed for this contract has been extended, and now offers a series of pensions contracts via a menu.