METLife Insurance

Case descriptionIn 1995 METLife, one of the world’s largest insurance companies acquired New England Financial (NEF), one of the oldest and most venerable insurance companies in the U.S. MET’s product line included casualty (Auto and Home) insurance as well as various life insurance products (e.g. Term Life, Whole Life and Annuities). New England Financial focused exclusively on life insurance and wealth management offerings. While the average net worth of the typical METLife customer was approximately $200,000, the net worth of the average NEF client was ten times that amount. It should therefore come as no surprise that the average life policy sold by MET was a term policy with a face value of $50,000, but NEF’s average policy was a whole life product with a face value of $500,000 to $1 million.

In 2000, MET decided that for it to achieve its strategic business objective of becoming a global, full financial services provider to its client base of approximately 15 million individuals (primarily American heads of household), the firm needed to move from its mutual insurance company status to a publicly traded stock company. Since in a mutual company the policy holders are the “owners” of the company and in a stock company the stockholders constitute the owners, MET was obliged to issue stock to all its policy holders, based on the total worth of their policies held by MET. This needed to be accomplished prior to going public and opening the opportunity to other non-policy-holding investors who wished to buy MET shares. To that end, MET needed to locate information on each and every policy owned by its clients, determine the collective value of said policies, and to then provide these policy owners with equivalently valued stock certificates. Unfortunately, each major METLife and NEF insurance product’s data was stored within its own information system and the only way to establish such a list of policy holders and the relative worth of their policies would be to extract the policy ownership data from each system and then to merge this data into a common master database.

This was a very complicated and difficult task. First of all, the policy-based information systems at both METLife and NEF were numerous and very different from one another. Second, while each insurance system may have had its own standard for capturing client information, there was no established standard among systems for said data collection. Some of these systems were very old and developed to meet specific business unit needs, while others reflected more current data management standards. Even such a thing as a unique client identification number did not exist prior to MET’s move to a stock company. Third, in many instances those employees who worked on and understood the data structures in the older systems, were dead, retired, or no longer employed by METLife. Lastly, the data about individual policy holders themselves naturally changed over time as clients relocated, married, changed careers, and so forth.

MIS 301 Sep 2012 Page 1

METLife Insurance

Homework Questions:1. What internal challenges do you foresee in bringing this data together in a single, integrated

database? [list]

Information systems different from one another No established standard among systems for data collection Many employees who worked on/understood the data structures were dead/retired/no

longer employed by METLife Data about individual policy holders= outdated Culture of organization, diversity of product lines Integration challenges at different levels (look at knowledge hierarchy) Levels of information processing

2. What differences might exist in the management of data from one insurance product system to another? [list]

Insurance policy administration system consists of a mathematical notation that captures the

relationship between policies and objects and the entities that manage policies for those

objects.

The Insurance policy administration system is consisting of a number of policy administration

domains.

The domains are arranged in a hierarchy, representing descending levels of authority.

The presence of an object in a domain represents the ability of the manager of that domain to

write policy for that object.

A number of important issues for policy administration are identified and addressed within

the model.

Designing database

3. What issues might exist in matching the ownership of different policies owned by the same person? [list]

Potentially have duplicate records

Single customer being serviced by different product lines

Information outdated (remain referential integrity), life cycle changes

4. In what ways will the MetLife master policy holder database of policy holder data differ from its many individual policy databases? [table]

Master Policy Holder Database

Consistency

Individual Policy Databases

More data

MIS 301 Sep 2012 Page 2

METLife Insurance

Comprehensiveness

One-to-many relationships

Policy registration is intended to be a vehicle for the exploration and discussion of policy issues and is aimed in particular at enhancing communication between health policy researchers, legislators, decision-makers, and professionals concerned with developing, implementing, and analyzing health policy.

Insurance companies need a way to keep track of their current policyholders and the type of coverage they have, and many companies will use a master database to hold that important information. It is important for companies to capture as much information as possible when building these databases, including the name and address of each policyholder, as well as the type of coverage each customer has, the coverage limitations, and information on any claims that have been filed. The more information that is included in the database, the more useful it will be.

Policy quotations engine is an on demand quotation management feature coupled with detailed profit optimization and approval management engines.

Policy renewals and policy cancellation can be managed by the insurance policy management system.

When you have completed your quotation you can use the engine to seek approvals for non- standard pricing and/or terms and conditions. Discounts and loading management

With quotation engine you can automate the sales and services processes that are currently being done using a hybrid of spreadsheets, documents and emails with little to no process control.

5. Will MET find it difficult to achieve the standardization of data and data management required of the master database system? [Yes/No, and then explain via list]

MIS 301 Sep 2012 Page 3

METLife Insurance

Could be very labor intensive

Employee training

Costly

Must fill gaps to achieve data automation

What is in MetLife’s favor?

o IPO= better financial position, can cover costs

o Some overlap (incentive for users/sales people/employees to do the work)

MIS 301 Sep 2012 Page 4