QBE the Americas

Topics: Technology Escrow

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QBE the Americas - Iron Mountain 


The QBE Specialty Insurance group invested over $10 million in customized financial processing software. Protection for this software was a serious concern for the group’s Information Systems (IS) team.


The company protected its financial processing software with a software escrow agreement from Iron Mountain, and then went a step further to verify the escrow deposit with Deposit, Compile and Compatibility Verification testing.


The senior IT team at QBE the Americas achieved a high level of confidence as to its ability to quickly and accurately recreate their critical software application in the event of any problems with their software vendor.

Headquartered in New York, QBE the Americas produces over $5 billion in gross written premiums annually. The company relies on several mission-critical applications to run its business. Mark Fruchtman, Assistant Vice President of Information Systems Department Governance, has this to say with respect to the company’s $10 million investment in financial processing software: “This particular application drives our business end-to-end — from the data coming in from the agents, all the way to our financial statement. So, it was critical to the mission and stability of the company that we could rely on the source code being deposited, and being available, if something ever happened to our software vendor.”

QBE the Americas is the North American division of QBE Insurance Group Limited, Australia's largest international general insurance and reinsurance group, and one of the top 20 worldwide.

The Challenge

"The best part of implementing Escrow Verification is the confidence that I have in ensuring that the version of source code in escrow at Iron Mountain in fact can be compiled. It is a valid set of complete source code, not just a subset. And, if something happens to one of these small vendors, then we know we have a good set of code that actually operates."

Michael Anselmo, Senior Vice President, CIO

With such a significant investment in financial processing software, QBE the Americas needed to know their applications were protected. Fruchtman continues, “We use this software not only for financial reporting, but also for booking to the ledger for our annual financial statements. It’s really the core of business data that we have, and in insurance your data really is your most valuable asset.”

QBE had its mission-critical software source code protected through an escrow agreement with Iron Mountain. However, in discussions with their Iron Mountain representative, the company realized that taking the extra step of escrow verification would be a wise decision given the nature of the applications.

For software users, or licensees, verification services maximize the return on their investment not only in software escrow, but in the technology itself, which can cost millions of dollars. Verification also helps safeguard business continuity, and has become a best practice in industries that rely on mission-critical technology to run the business.

Michael Anselmo, Senior Vice President and CIO of QBE Specialty and Reinsurance, states, “One of our challenges was that we used vendors that were new. They certainly had software in the market, but they weren’t an IBM or a Computer Associates. So, we were relying on smaller vendors. Therefore, we wanted to verify that what we did have in escrow was, in fact, able to be run and compiled.”

Verifying the contents of an escrow deposit provides insight into the completeness of the deposit, and into what’s needed to recreate a working version of the technology. If the deposit is determined to be incomplete or non-functional—which is often the case—these issues can be rectified with the help of the developer before it’s too late.

Anselmo adds, “When we escrow software, which we do quite a lot, it’s just in escrow, and it sits there forever and always. The advantage that Iron Mountain offered us was an opportunity to actually verify the compilation of this software, and at a very reasonable cost as well.”

Escrow Verification

Verification supports users of software escrow as part of their overall risk management strategy, helping them to avoid or minimize the following:

  • Costs associated with replacing licensed software and hardware
  • Lost profits and/or savings
  • Lost time (e.g., downtime for customer response, order processing, accounts payable)
  • Customer dissatisfaction
  • Breach of contract(s)
  • Costs associated with consultants’ fees, court costs, arbitration fees and attorneys’ fees
  • Costs associated with retraining personnel

The Solution

Adding verification services to an escrow arrangement helps minimize risks. Essentially, escrow verification ensures that authorized users will be able to quickly and effectively read, recreate, and maintain critical technology assets in the event of a deposit release.

QBE the Americas selected Iron Mountain’s Deposit Compile Verification to provide a complete examination of the composition of escrow deposits and identify any missing components. The company can also choose to implement Usability Testing to recreate the technology for testing, and provide comprehensive reports that can be used to maintain mission-critical software.

“The advantage that Iron Mountain offered us was an opportunity to actually verify the compilation of this software, and at a very reasonable cost as well.“

Michael Anselmo, Senior Vice President, CIO

Statistics based on Iron Mountain’s escrow customers show that over 70 percent of all deposits sent in to Iron Mountain for analysis were determined to be incomplete and required additional input from the developer in order to be compiled. The value of an escrow arrangement is heavily dependent on the quality of the deposit materials, a fact increasingly recognized by both licensees and developers.

Fruchtman states, “I think one of the biggest issues was just getting the tools and library extensions in place at Iron Mountain, so that the compiled tests could be completed successfully. That took a lot of collaboration between Iron Mountain and the vendor to ensure that they had the proper versions of the DLLs and the proper versions of the compiled tools and whatever else they needed to successfully complete the Usability Test. I’m glad we were able to go through that exercise now, rather than face problems if we ever needed to recreate the software application in a real-life situation.”

"We are definitely mitigating some pretty heavy-duty risks by going through the verification exercise."

Michael Anselmo, Senior Vice President, CIO

Anselmo comments, “We are actually working on some consolidation efforts between all the different divisions of QBE now. We’ll have a process in place that will require an escrow agreement for all mission-critical software applications. And now, looking ahead, I would recommend that all the divisions verify their escrow deposits as well.

“QBE has invested a significant amount into these products, into these software applications,” Anselmo concludes. “And that pales in comparison with the risk that the company faces should these applications not function, and we don’t have vendor support to fix it. So, we are definitely mitigating some pretty heavy-duty risks by going through the verification exercise.”

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