(Editor's note: This is the fifth and final in ourseries of 2013 Insurance IT All-Stars. Read articles onDavid Lawless of Magna Carta, Peter Settel of Homesite Insurance, TraceyBerg of West Bend Mutual, and Suren Gupta of Allstate.)

Technology is a key element of the insurance enterprise and DanColarusso, senior vice president, operations, and CIO for CypressInsurance, believes it allows carriers to achieve greaterefficiencies, greater levels of service, and more customerservice.

“We can do a number of things that heretofore were difficult,but technology advancements will give us greater opportunitiesgoing forward,” he says.

One area of technology that caught Colarusso by surprise hasbeen the impact social media has on the business community.

“Clearly, mobility access is no big surprise, but the wholesocial activity surrounding the business today—whether it beTwitter or Facebook—is becoming quite interesting from myperspective and I'm a little bit surprised by it, to tell you thetruth,” he says.

As far as the insurance industry's standing within thetechnology universe, Colarusso points out that the nature ofinsurance is risk management, so it should not be a surprise thatinsurers IT tends to lag other industries.

“[Insurers] want to make sure the technology they are going toemploy is going to give them the benefits and the stability theyare going to need to meet their business objectives,” he says. “Oneof the things we are seeing now is the number of legacy systems andmost are COBOL-driven. There aren't a lot of folks that want to beCOBOL programmers today. That is a risk and it is driving companiesto adopt new technology for policy administration systems. In2014-15, I believe there will be a large number of companies movingfrom the legacy systems to newer client/server based systems.”

Colarusso maintains insurers need to put our arms around whatmobile technology can do for the industry.

“I know there are a lot of mobile apps and lot of potential fortheir use so that is one area we have to give some real thought asto the type of technology, how it is implemented, and the benefitsthat will be derived,” he says. “By putting mobile apps in thehands of insurers in claims situations, that will enable us to givethem the service they certainly deserve from us.”

Early mobile apps have been built largely by insurance ITdepartments, but Colarusso hopes that changes to vendor-suppliedtechnology.

“One of the things we really need to make sure of is that we asinsurance companies focus on our core—providing policy and claimscoverage for our insureds,” he says. “Having to create thingsdistracts us. I'm not sure there is a benefit there for us. I'drather buy than build.

In April 2011, Cypress was completely outsourced in itstechnology operations, thanks to a BPO agreement with CSC. Thecompany was not pleased with the high costs of maintaining thoselegacy systems with manual interfaces and duplicate processingamong other issues.

“It was difficult to achieve the objective of capturing newbusiness,” said Colarusso. “Platform changes were timeconsuming.”

Cypress made the decision to insource the activities thatpreviously had been performed by CSC—policy administration,billing, commissions, claims, finances, and data storage andreporting. The insurer went to the market and selectedMajescoMastek as the policy administration system; Great Plains asthe general ledger system; CSC's advanced claims system; and CSSIto access data and put that data out to the individual users'desktop.

“It's been a complete transformation,” says Colarusso. “When wedid the breakdown there were approximately 50 people from CSCsupporting our account (prior to the insourcing). We've been ableto reduce that by 50 percent, so we added 25 new individuals to thecompany, primarily in the insurance operations space. It's been alarge-scale project that has touched everybody in thecorporation.”

One of Colarusso's earlier positions was CIOfor Mass Mutual's broker/dealer network—MML Investor Services. TheCEO, Ken Rickson, explained to Colarusso that the company had $3billion in assets under management and Rickson felt the companyneeded to automate as much as possible to maintain the business,provide more service to clients, and to respond toregulators.

“[Rickson's] objective, as substantiated by the chief legalofficer, was to put in as much automation as we possibly could,”says Colarusso. “He said this was critical to the success of thebusiness and he gave me the wherewithal and the funding and we wereable to create some exciting applications in a short period oftime.”

One application allowed MML to onboard the agents and licensethem. The company had more than 5,200 agents and on average theycarried 10 licenses for the various jurisdictions where the tradestook place.

“That was a tremendous amount of licenses that had to beadjudicated from the first of October to the first of January,”says Colarusso. “We were responsible for their licenses so we wouldget an invoice for over a million dollars in licenses, we wouldwrite a check for them, go ahead and license (the agents), and thenget the money. It put us in a precarious position because we becamebill collectors. We created an e-commerce site that allowed us toissue the license to an agent in less than four hours while theindustry average was close to 30 days. We built that application in13 weeks.”

In building his staff at Cypress, Colarusso looks for peoplethat are creative, innovative, think differently, and “turn thecube from a standard axis.” Team leaders also need excellentcommunication skills, teamwork, and the ability to focus onobjectives, he adds.

“I'm a true believer that IT is here for the business and thebusiness is not here for IT,” he says. “It is our responsibility toenable the business to achieve their objectives. If we do that, weobviously achieve our objectives as well.”

The technology and the advancements Colarusso has witnessed insuch a short period of time are going to continue. He feels thereis a great opportunity to take those technologies and providebetter service and quicker decision-making by corporations.

“Some years ago, if you used the term data warehouse they wouldwonder what you were talking about,” he says. “Now we are talkingabout Big Data, BI, and the tools to manage the business,. As wesee other tools emerge from that, we will be able to take advantageof them. We see expansion of those technologies all over theplace.”