Paul Calvet
Western MutualInsuranceCompany

Being ahead of the automation game today just means youve got towork hard to stay ahead tomorrow.

Western Mutual Insurance Company (WMIC) is a niche player. Itwrites predominantly preferred homeowners policies, and its nicheis that it deals almost exclusively with lender-affiliatedagenciesones that are owned by (or somehow tied to) a bank orsavings and loan. For example, Washington Mutual Savings Bank,which wandered down into California and started gobbling upcompetitors to become the states biggest lender, has its owninsurance agency and writes through Western Mutual, amongothers.

Builder-affiliated agencies are also part of this niche. Thecountrys largest private home builder, Californias Kaufman &Broad, also has its own insurance agency and is one of WMICsagents. Because of this unique way of generating business, WMICgets almost all its production from literally a handful ofagencies.

Paul Calvet, the companys senior vice president and CIO, hasspent his entire career in exactly that niche. After getting abusiness degree from USC, Calvet joined Dallas-based RepublicInsurance Company in 1980. At the time, Republic was one of thebiggest writers of lender-affiliated business, and Calvet spentseven years there, mostly in the marketing area. He joined WMIC in1987, originally in marketing but working with the IT department,and took over the systems department in early 1990.

Hisand WMICs specialty has been heavily automated for years.Back in the early 80s, WMIC was letting its agents quote and issueinteractively. Then it was using an IBM System 38, with 5250terminals in agents offices tied in with leased lines. The agencyCSR had to go to a specific terminal to transact business. Today,the systems been upgraded to an AS/400, and any CSR can operatefrom their own desk, using terminal emulation software while stillhaving full access to all of that agencys WMIC records.

The coverage is so specialized, in fact, that WMIC hascustom-written almost all its own line-of-business applications(except for accounting and word processing). Calvet credits two keyprogrammers who together have about 50 years of programmingexperience. Because of their experience, Calvet said, weve beenable to internalize all our own development.

So, what kinds of things do you do, when youve been doing whatyoure doing for so long? Incremental improvements in the system.For example, WMIC has been doing document imaging for years. Allits images are currently on a server with six gigabytes of storage,and its historical images (approaching 100 GB) are stored on 40-GBdrives as part of a jukebox. It doesnt matter how many images areserved up quickly, Calvet says, users are going to complain aboutthe occasional historical image that isnt. So the company is movingto a new system that will have a 380-GB drive, with all imagesavailable instantly. Its also moving from a single-processorPentium server to a dual-processor Pentium 4 machine.

Its going to bring more improvements out of the change, too. Allthe companys internal workflow programming is done in a Lotus Notesand Domino environment. Currently, all the links to its imagingdatabase use OLE, with an average size of about 17 K. The newimaging environment uses a technology called WebArchive andsupports URL links, which average less than 2K each. That 15Kdifference doesnt sound like much, but the companys system has somany imaging links that it will dramatically reduce the size of itsLotus Notes databases, with resulting increases in speed.

WMIC s latest automation foray is into direct writing over theWeb. Although it isnt well known to the public, the company hasboth a strong financial rating (A-) and highly competitive rates,so its added the public access to its Web site for quoting andordering homeowners insurance. The hard part, of course, is to getthe public to actually find the site, so its starting to drivetraffic with a direct-mail campaign. This new segment of thebusiness is already starting to grow.

Calvet says that, at WMIC, Automation is the straw that stirsthe drink. He credits WMICs CEO, Joe Crail, whose basic attitude isWhy cant we automate? rather than Why should we automate?, fordriving all its automation efforts.

Lee Russell
Southern Family InsuranceCompany

When you start a company from scratch, you need to start yoursystems from scratch, too.

Takeout, to most people, conjures up images of tasty Chinesefood in paper cartons with folding tops and metal handles. InFlorida, though, theres another kind of takeout.

After a number of years of mounting insurance losses, the worstof which was Hurricane Andrew in 1992, the insurance climate inFlorida had deteriorated. As the number of insurance carriers inthe state dwindled, more and more policies ended up in the FloridaResidential Property & Casualty Joint Underwriting Authority(the JUA). Its the market of last resort, and the number ofpolicies was increasing to an alarming amount. So in 1995, Floridainsurance commissioner Bill Nelson, working with the statelegislature, came up with a plan to depopulate the JUA. Toencourage the return of private carriers (or the creation of newones), it would pay a cash incentive for each policy removed fromthe plan, and a three-year exemption from both JUA and FloridaWindstorm Underwriting Association assessments.

Former Tampa mayor and long-time Florida insurance exec WilliamPoe, Sr. was one who stepped forward to accept the challenge. Heformed Southern Family Insurance Company, which started by assuming74,000 policies from the JUA. In Southern Familys case, it startedby servicing the existing policies as of the assumption date, andwriting new policies as the old ones expired.

In January 2001, it acquired another insurance company, AtlanticPreferred, adding more premium and policies. (Both insurancecompanies are now part of the Poe Financial Group holding company,which also owns some related insurance operations.)

Lee Russell is vice president of information technology for allof Poe Financial Group. Ironically, Russell started his career as aCOBOL programmer working for another Poe company, Poe &Associates. He moved on to other positions, going over to thebanking and financial services side. He found himself working withBill Poe again in 1997, this time as an IT consultant as the newcompany was being formed. After it was operational, all the policyprocessing was outsourced to PMSC, and Russell moved on to anotherproject. But in 1998, Southern Family decided to bring theprocessing inside, and Russell returned as a full-time employeeoneof only two IT folksin the position he holds today.

We started small, Russell says of his staff, adding one personevery six or seven months, as the company grew. Today, the IT staffnumbers 10 out of a company total of 120.

The first order of business was to choose a policy processingsystem. We looked at a number of them, but we chose Allenbrookprimarily because it was the only one willing to commit to a verytight delivery timetable, Russell said. In answer to the inevitablefollow-up question: Yes, they delivered on time.

Allenbrooks Phoenix system is based on Microsoft SQL Server,running on an NT platform, so Russells team set up a Citrix serverfarm to extend it out to the companys 150 agencies. Our agents canquote directly off the Phoenix system, he explains, and they caneven issue, if it fits all the underwriting parameters. They canalso do billing inquiry.

The company has outgrown its space; its claims operation hasmoved to a separate office 10 miles away. Remote claims adjusters,who live and work around the state of Florida, use Citrix to runPhoenix as if they were sitting in the home office. More recently,the company had one customer service employee and one financialemployee go on maternity leave, and the system allowed them to workpart-time from home.

It really helps us keep trained people on staff, Russellexplained. He even has one of his own staff using it. A keyprogrammer with a unique set of skills re-located to San Francisco,but was able to stay on staff by telecommuting. Theres even a videoconferencing system set up, so company employees can sit down anddiscuss problems, issues, and potential system changes withhim.

Southern Family has grown to about 117,000 policies and $100million in premium, and about a third of that is a growing book ofcommercial business. Russells keeping busy, too. The companyimplemented an integrated RightFax systema great efficiencycreatora couple of years ago. Now its implementing an ImageRightimaging system, with the first department (customer service) havingjust gone live. Russell is already pleased with the way thatimplementation is going; hell be rolling it out to the otherdepartments in one-month intervals.