Steven Jensen
Omaha Property & Casualty Company
Combining an AS/400 system with Web-based services for agents meanttaming the technology wilderness.

Mutual of Omaha had such a successful and long-term relationshipwith the Wild Kingdom television program that people still rememberand relate to it today. Steve Jensen also has had a successful andlong-term relationship with Mutual of Omaha, although he never gota wild animal safari out of it. He did get to travel a lot, though.There were years when I spent more time in England than I did athome, he says, remembering a 10-year stretch when he worked withtwo former affiliates of the company.

Starting out in the actuarial department of Mutual of Omaha in1981, Jensen got involved in a number of different areas over theyears and with several different Mutual of Omaha affiliates. One inparticular, Omaha Indemnity, was a property/casualty predecessor toOmaha Property & Casualty (OPAC), his current home. About fiveyears ago, Jensen was asked to take over as vice president ofmanagement information services for OPAC. In the last few years,hes been given some additional areas of responsibility, and hiscurrent title is vice president of management information services,pricing, and compliance.

Mutual of Omaha, through its OPAC affiliate, was the firstcarrier to start writing flood insurance through the governmentsWrite Your Own flood program. In this Federal Emergency ManagementAgency (FEMA) program, carriers such as OPAC, Allstate, Bankers,and others actually write the policies, handle the administration(such as issuing policies and paying agents), and provide all theservices of a regular insurance company (including handlingclaims), but FEMA assumes all the risk.

In addition to the flood policies, OPAC writes personallinesauto and home. Today, the flood business is about $120 millionof our $180 million in premium, Jensen says, but the one-third bookof $60 million in premium is growing. The affiliate writes auto andhomeowners business in about 15 states. It has about 450independent agencies, plus some Mutual of Omaha career agents whoalso write some P&C.

We use Fiserv SIS for our policy processing system, Jensenstates. Mutual of Omahas IT department handles the hardware for us,and Mutuals IT department provides people dedicated to our P&Ccompany, plus my own staff. The system runs on an AS/400, with theinternal people using Attachmates Extra Office Client terminalemulation running on PCs. OPAC wanted to start pushing its servicesout over the Web to its agents, and its first project was auto. Thetechnology in use is Java Server Pages on an RS/6000 thats runningIBMs WebSphere.

The Web is a real-time, 24/7 operation, Jensen says, but theAS/400 isnt. It has to do batch processing at night. Jensen andproject manager Dan Duffy kicked around a lot of different ways ofhandling that disparity, until Duffy came up with a concept theycall Front Office/Back Office. He took the ball and ran with it,Jensen says. Heres how it works:

During the day, OPAC has a real-time connection between theAS/400 back office and front office with AS/400 data queuestransporting the information to the Web server on the RS/6000. TheWeb server only communicates with the front office on the AS/400.If a data-entry person enters a payment on a green screen in theback office, for example, it shows up instantly on the front-officesystem, which in turn is viewable out on OPACs Internet solution,and vice versa. When the AS/400s back office goes into batch modein the evening, however, the real-time connection is severed whilethe Web site keeps running, only it is now using static data fromthe front office. Once the batch processing is completed, thereal-time connection is re-established, and the two systemsreconcile.

To demonstrate the Web front end, Jensen dialed into Mutual ofOmahas Remote Access Server (RAS), using a security device calledSecureID. This is a small key fob, with a built-in clock, thatdisplays a long number that changes every 30 seconds or so. (Thesesecurity devices actually have been around for years, but their useis not as pervasive as one might imagine.) In addition to hispassword, which must be typed (not stored), he has to type thenumber in before it changes. Since the remote employees areinstructed to keep the fobs separate from the computers except whenactually using them, it adds one more layer of security. Someonestealing the notebook might get the data on it but cant get intothe RAS.

Were getting ready to implement SERFF [System for ElectronicRate and Form Filing], Jensen says, and were in the planning stagesto add homeowners for our agents over the Web. Another likelyproject will be to extend Mutual of Omahas imaging capability toOPAC. Although there are plenty of projects still to complete,Jensen already has had his share of successes, and certainly amongthem is the Web-AS/400 solution. Says Jensen: It works like acharm.

James Sullivan
Consumers Insurance USA
In developing systems from scratch with a new company, this CIOfound a real advantageeverything can be Web-based and real timeright from the start.

Most insurance company chief information officers join a carrierwith an existing IT operation. James Sullivan, CIO of ConsumersInsurance USA, came on board even before the company opened itsdoors.
Consumers is a relatively new carrier, formed in 1995 by fewer than50 insurance agents in Murfreesboro, Tenn. As the states onlyagent-owned carrier, the companys agency focus is almost agiven.

Premium is growing much faster than staff. Well do about $20million in premium this year, states Sullivan. Drawing on theautomation Sullivan and his team have built, the company operateswith just 28 people, including claims, underwriting,administration, and officers. The IT component, including Sullivan,consists of five people.

When Consumers was first formed, writing only personal auto inTennessee at that time, it outsourced its policy processing to avendor in Des Moines, Iowa. That got the company rolling, but theinsurer quickly realized the setup wasnt going to work for the longhaul.

Today, virtually all Con-sumers processes are Web based,including major systems for policy processing, claims, and rating.We made a bet on the Internet, Sullivan says, describing thedecision to build its real-time system. The insurer started workingon the new policy processing system at the end of 1997 and rolledit out in mid-1998. By the beginning of 1999, all of Consumersbusiness was on the new system, including new lines (eventuallyadding another state next door in Missouri) and all its renewalbusiness.

Everything Consumers writes either is personal or commercialauto or related to auto. It writes various kinds of automobilebusinesses, such as lube shops, repair shops, even nonfranchised(read: used car) dealerships. Beyond Tennessee and Missouri, it isalready licensed in three other states. Its up to more than 200agencies, although most of the newcomers are not owners.

Sullivan attended Tennessee Techno-logical University with amajor in computer science. He ran his own computer sales andprogramming business for three years before joining Consumers.Originally, Sullivan did all of the planning and coding, but he nowhas a team of programmers who are instrumental in the developmentof the system.

The Consumers system is all PC based, running on Microsoft SQLServer with a Web front end and the code written in a combinationof VB Script, Java Script, and Dynamic HTML (DHTML); the company isstarting to move to XML. It currently has more than 20,000 policieson a database of only about five gigabytes. We have a lot ofcapacity, Sullivan says.

Sullivan points out both the underwriters and the agents areusing the same code and the same screens. The policy declarationspage and key documents such as auto ID cards are issued immediatelyin the agents offices. Well assemble and mail the policy to theinsured to reduce the printing load on the agents, he says, unlessthe agent wants to print the whole thing or deliver a PDFversion.

Endorsements are rated and issued also in real time, includingeven the dread-ed out-of-sequence endorsements. It wasnt an easything to do, Sullivan notes. The system produces a daily activitylog, a company version of what agents call transactional filing.Real-time Web reports are handled using Crystal Reportssoftware.
In a break with the industry trend, Consumers does not do creditscoring, even though it is allowed in the states where the companydoes business. Sullivan points to Consumers agent ownership andfocus for that decision. Agents hate credit scoring, he says. Itmight cost us a point or two, but we dont know that for a fact, andit makes our agents happier.

Current projects include building hooks to upload from Rackleyand ITC, the two most popular comparative rating systems Consumersagents use, as well as an imaging system. It already built itsclaims system, which is operational, and its looking at otherfunctionality such as electronic bill presentment.

The agents, whether owners or not, seem to like what they see. Arecent survey in the August/September issue of The Tennessee Agentrated Consumers number one in the ease of doing business throughautomation category. Theres always a better way to do things,Sullivan says, describing the companys creativity. We keepimproving all the time. I love it.