The Agriculture Department’s Risk Management Agency is in the middle of one of the biggest years ever for insurance claims with drought in the southwest and the tremendous amount of rainfall in the North and Northwest.
Chad Sheridan, RMA’s chief information officer, said the agency’s systems are being pushed to the limit to process these claims, which include accepting 45 million-to-50 million records and paying $300 million in losses to insurance providers a week.
“In terms of number of records, we may be 10-20 percent higher,” he said. “If you look at the value of commodity crops, the total amount of liability, we are seeing about 20-to-30 percent increase in value. Last year for 2010, you are talking about $70 billion in liability. We are looking at about $103 billion in liability this year.”
“Where we are feeling the stress right now is on the back end accounting systems,” he said. “Unfortunately, we have not yet gotten to modernize our back end accounting systems so we are still working off of a Unix and Informix database engine. So what we take is our modernized systems that are pulling in the policy information and we do an extract to populate our legacy systems. Our next step is to complete our modernization by getting accounting into this updated system.”
He said his staff along with the CFO and budget experts started developing requirements for the new system in September.
RMA received system modernization funding in the 2008 farm bill and has improved many of its front end systems, such as its actuarial data systems to deliver the policy information so insurance providers can write policies. RMA also modernized their policy tracking and acceptance systems.
“One of the things we’ve done over the last three months is improve, or go through a shakedown period on those systems,” Sheridan said. “Those two systems came on board for the 2011 reinsurance year. At the same time, RMA rolled out a whole new insurance program, called the Combined Policy program, which combined 5-6 different polices into one policy. That policy includes a very heavy calculation burden.”
He said over the last two months, the systems have started to improve performance, calculating data five-to-six times faster.
“It was taking our systems about eight hours to process that and now we are down to an hour or two,” Sheridan said. “Now a provider can send in a batch in the morning and get the results, including whether there are any errors in accepting some of those policies,turn around, and re-submit the same day.”
Sheridan added the system is finding errors much more quickly and stopping potential improper payments to policy holders.
Part of the way RMA fixed the systems was by simplifying the calculations and doubling the speed of the computations.
“We implemented a new set of servers in our production environment,” he said. “That brought us a factor of two-to-three improvement in processing speed.”
Over the long term, Sheridan said he wants to relook at RMA’s business needs and ensure the IT systems are meeting them.
“If you start to take a look at each area’s business requirements you can start to get a feel for if we are meeting those requirements, where we are not meeting those requirements and where is there integration across systems that perhaps we hadn’t thought about before,” Sheridan said. “In essence, coming up with a contract of what the business needs from IT and what IT is providing.”