S T R A T E G I C P A R T N E R S H I P D A T A, N E T O W R K S P E O P L E, P R O C E S S, T E C H N O L O G Y, Europe

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1 S T R A T E G I C P A R T N E R S H I P WHERE INNOVATION BEGINS Web-enabled, transparent, optimized business processes, extensive data analytics, continuously innovated business solution for the P&C / General insurance value chain available on a common SOA platform via a BPO / SaaS delivery model. Is this the future? No, it is real today through the implementation of Innovation Insurer software in our regional BPO operations. Innovation Insurer is a functionally-rich, enterprise-wide platform with pre-built services and rules and a client-centric data model, This JEE-based, SOA solution underpins our BPO service delivery providing a standardized, automated, flexible service platform and rich stream of right-time data for business analytics. The significant business benefit for our customers includes: Up to 25% productivity improvement 20% claim creation improvement 25% invoice creation improvement 50% claims process / deployment improvement 15% complaint improvement Optimize resources and address key skills shortages Improve average repair cost by 22.5% Improve customer satisfaction by 10%+ and retention / growth Cost-effective market entry solution enabling product and service innovation Capital preservation and cost savings on technology total cost of ownership While most vendors focus on segments of the P&C insurance value chain, providing software or BPO, Innovation Group envisioned a solution that leverages business process excellence within our software, transitioning from traditional BPO with customized approach to true business process optimization with a configurable, yet common platform. The business impact for our customers is significant and extends beyond traditional issues of operational and cost efficiencies. Our variable cost business models enable reallocation and more effective use of capital. Our enhanced business intelligence; business agility; and operational effectiveness delivers innovation and transformation, creating sustainable business value. While automation is a lever for cost reduction, analysts recognize that automation and cost efficiencies alone do not provide long-term operational effectiveness or sustainable financial results. As a result, insurers are creating new operational models that provide increased business value through a combination of software and BPO. Innovation Group provides a new business model for insurance operations that is capital efficient, operationally effective and market transparent powering growth, transformation and sustainability. 1

2 STRATEGIC FOCUS Over the last four decades, outsourcing changed as business models evolved, technology advanced and competition for resources and expertise expanded. In its infancy, outsourcing gained market traction in the data center (information technology outsourcing/ ITO), focusing on IT operational cost savings and IT staff augmentation; evolved in the 1990 s and early 2000 providing resources for Y2K and the dot-com frenzy by expanding technology capabilities and linking onshore and offshore resources, creating networked organizations and the first BPO services focused on non-core functions such as human resources, payroll, mailroom and printing. The recession of represented a significant shift and watershed moment for BPO. Cheaper and off-shore BPO did not deliver market agility. BPO revenue decreased for the first time. As a result, companies began looking for new BPO models that avoided complex implementations, limited ROI, and limited organizational agility to respond to future market changes. This shift gave momentum to an emerging model identified in the 2010 Gartner Hype Cycle for BPO, called Business Process Utility (BPU). BPU is defined as a unique one-to-many software application platform supporting a BPO offering; has a fully automated process workflow; and features a high degree of standardization. The BPO vendor provisions, designs, operates, supports and maintains the software application supporting the BPO services, either running it on their own infrastructure or using a third-party hosting service with delivery using the Internet. This new BPO creates an environment with innovative business options, agility, process optimization, and brand enhancement. It allows reallocation of resources including capital, time and people, to more strategic initiatives focused on growth and competitive enhancement, creating real market differentiation. This model embraces strategic technologies and is technology enabled. Business services are available on a common one-to-many modern software platform automating the end-to-end insurance process workflow, delivering it via the Internet. The model enables the rapid creation of new services; offering complimentary plug and play between software and BPO. It provides a robust, scalable, standardized platform with a richer, seamless stream of process data across the value chain ripe for insurance analytics. Innovation Group and our customers are living this BPO transition. Recognizing industry trends and market shifts including SOA, direct to consumer growth, new operational models and supply chain integration were changing the business of insurance, we envisioned a transition to this new BPO model that would transform our business and our customers businesses. 2

3 A New Approach Our customers validated this model based on their multi-national or multi-state operations; increased demand for standardized products, services and management information; demand for greater visibility of and access to our outsourcing operations and activities; and increased demand for operational efficiencies, effectiveness, margins and sustainable results. As a major BPO services provider to the insurance industry, we identify five key business drivers for effective and sustainable services for our customers represented below. By evaluating the industry and our organizational challenges, needs, strategic objectives and industry trend for SOA and SaaS based solutions, Innovation Group decided to enhance and leverage its own insurance software solution, Innovation Insurer, as the foundation for this new BPO model. To accomplish this, Innovation Group combined Insurer, a new BPO / SaaS delivery capability, insurance process expertise, and an insurance focused analytics solution to provide dynamic business options; services and insight; insurer agility and responsiveness; improved financials; and competitive positioning and differentiation. The approach provides key benefits including: Deliver best of breed business processes to client organizations a standardized solution delivered at scale, reducing cost with operational options and agility Delivery of new product and service offerings or new market entry at speed, process and service innovation including integrated insurance analytics services A platform for interchangeable BPO and software delivery dependent on the customer need; a plug and play BPO and software on a common software platform Proven scalability to support any customer size / tier; extensively tested within IBM labs and our own infrastructure Configurability - enabling business units to grow predictably and at minimum cost Proven security and disaster recovery capability A pay as you go approach to delivery reducing or eliminating need for expensive capital investment 3

4 Furthermore, the model provides new and increased opportunities for analytics-driven business process differentiation due to the volume of data generated across Innovation Group s BPO operations, providing insurers access to aggregate data metrics and comparisons to evaluate their competitive position. Using the claims process as an example, the diagram below highlights the breadth of BPO services delivered for insurers, including 104 insurers in France and Spain today with other regions currently in transition during This model supports the entire end-to-end process, including supply chain management, to decrease claims timeframes, costs and improve overall customer service and retention, enabling claims transformation. It provides: The ability to leverage the economies of scale generated through aggregated repair volumes Best practice network management with the flexibility to match clients needs with stringent contract & audit management processes Enhanced customer service through the introduction of service extenders such as Pick-up and delivery Repairer sustainability with enhanced fair payment terms and procurement benefit delivery (paint, hire, parts) Structured and measurable performance scoring to secure client SLAs 4

5 Data from our BPO operation in France demonstrates a strong and growing interest for this new model. The chart below highlights the number of claims per year in France that are processed via Innovation Groups BPO service as compared to insurers processing business in-house. Some key facts: 3.6 million total claims in 2010 in France Innovation Group customers represent 38% of the total in 2010 and growing by 25% over the next 3 years. A New, Transparent, Comprehensive Solution The days of attempting to control and do everything in-house is no longer effective. The market is changing too rapidly, is too complex. Insurers are increasingly focusing valuable resources, knowledge, staff and capital, on core competencies like product portfolios and risk management. For the rest of the operation including policy and claims management, insurers are increasingly seeking strategic partners with knowledge, expertise and new BPO capabilities that support immediate operational needs, but more importantly provide a platform to enable strategic options previously unavailable. Innovation Group is this new strategic partner. Innovation Group s new BPO model provides a bespoke range of solutions to meet the needs for end-to-end insurance or risk management, replicating the operational delivery of an insurance company. It provides a comprehensive virtual insurer capability that sits behind our customers brands. Similar to other industry leaders like DTCC for securities and SWIFT for money transactions, Innovation s model provides an industry best-practice operational environment under-pinned by customer experience with a continuous investment in best practices and new technologies. Innovation Group provisions, designs, operate, supports and maintain Innovation Insurer software which is responsible for providing the BPO services via a SaaS delivery over the Internet. Insurer provides a set of interchangeable business processes, alone or together, as a standardized solution with scalability and lower operational costs. This enables quick and cost effective market entry, reduced organizational risk, limits capital requirements, increases cost effectiveness and provides a platform of continuous innovation by leverage the power and ideas of many within a single software platform. This model is new for the P&C industry. It is the first fully automated, functionally rich, BPO / SaaS based solution on a common modern SOA software platform. 5

6 The early success of this model is based on the following: Vision, senior level sponsorship and commitment to bring value to all parties, encourage business involvement, collaboration and open communications. Shared Values, of superior customer service, strong commitment to the market and innovation. Intimacy, a true partnership between insurers and Innovation Group based on transparency, transfer of knowledge and skill and win / win interactions to stand the test of time and create mutual trust and traction at every level. Combining the expertise of our people, process, data, technology, partners and repair and supply chain networks, this new model delivers a platform of continuous innovation across the insurance value chain. Often described as a company that is different, innovative and pushing change. This is a prime example of change and innovation, for Innovation Group, our customers and the industry. Innovation delivered. 6