Larry Lauder
Permanent General Companies
He runs home-grown systems that bring in 98 percent of the businesselectronically.

The typical insurance company started out as a small carrier andexpanded both geographically and by lines. Some have gone national,and many more have stayed as regional carriers. No one, however,can refer to the Permanent General Companies as typical.

All of its uniqueness exacts a price. When it comes toapplication software, much of it has to be customized. Our policyadministration and underwriting system started as an SIS (nowFiserv SIS) system years ago, but its been completely rewritteninternally. Any remaining similarity to the original system ispurely coincidental, jokes Larry Lauder, vice president and chiefinformation officer.

Permanent General Assurance Cor-poration (PGAC), the leadcompany in the group, does only one thing. It writes non-standardauto insurance$175 million premium per year of it. No otherpersonal lines, such as homeowners. Not even closely relatednon-standard commercial lines. Just non-standard auto.

Also atypical, the insurer hopscotches around the countrynoroutine expanding into adjoining states. Of its seven states, three(California, Wisconsin, and Ohio) dont touch any of the others,although Florida and Georgia do. The company doesnt sell insurancein a typical fashion, either.

We use three distinct distribution channels, explains Lauder.About five percent comes from our newest channel, written directover the Web. The other 95 percent is split between independentagents and a retail operation that operates much like anindependent agency.

Non-standard auto is a highly competitive business, so PGACsupports all the main comparative raters. These raters dont captureall the unique company questions, however. More importantly, PGACalways had the problem of a significant number of upcharges due toaccidents and tickets the insureds forgot to mention. To solvethese problems, PGAC developed a product called WinPUB.

It stands for Policy Upload and Bridge, Lauder explains,referring to it as point-of-sale software. It bridges the data overfrom the desktop rater, captures any additional data, and does areal-time upload to the companys AS400, where it runs MVRs,possibly CLUE reports, and credit scores (in some states). Iftheres a premium difference, the agent finds out right away, notlater, he says.

Besides the obvious advantages to the agents, there are somemajor benefits to PGAC, too. PGAC stores the uploaded data andprepares a special fax cover sheet for the agent. When the agentfaxes in the signed application, the fax goes directly into thecompanys SolCom document management system, and the cover sheetallows the system to match it up programmatically with the data andput it into the workflow, without anyone touching it. BetweenWinPUB and the Web business (which is already electronic, ofcourse), 98 percent of the companys new business is coming inelectronically.

Lauder runs all this, and the rest of the IT operations, with 33of the companys 600 employees. He came up on the technology side ofthe business. A Chicago native, he graduated from the University ofIowa with a degree in computer science and then joined theUniversity of Chicago as a programmer. Lauder next spent five yearswith Ernst & Young. E&Y was split into industryspecialization and technology specialization groups, he says, andhe was in the latter but worked a lot with the insurancespecialists. One of the contacts he made, the CIO of Liberty Life,approached him a few years later with a job offer, and he went offto Greenville, S.C., for four years, heading up Libertysinfrastructure. In October 1998, he was recruited to PermanentGeneral as the CIO.

Our big push these last few years has been automating as manyprocesses as we can. Its not like weve come up with any new secret,he admits. Maybe not, but he brought over at least one idea fromhis life insurance background. Life carriers use jet-issue to referto business that comes in clean enough to be written without anyextra back-and-forth communications. Lauder refers to hisimplementation of it as automated issuance.

Its very tough, he says, because a really clean piece ofbusiness is a rarity for us. Nevertheless, by constant tweaking ofthe algorithms, he says, theres now up to 20 percentand growingofbusiness that gets issued automatically.

Permanent General is experienced in specialization. Its a whollyowned subsidiary of Ingram Industries, whose two other mainholdings are Ingram Book Group (the countrys largest bookwholesaler) and Ingram Barge (the second-largest barging operationon the inland waterways). It used to own Ingram Micro, a leadingdistributor of microcomputer products, before it was spun off as apublic company in 1996. What do books, barges, and insurance havein common? The same thing California, Wisconsin, and Ohio do:Theyre places the company can make money, with specialization.

Richard Connell
Selective Insurance Group, Inc.
His focus on technology helps keep the company ahead of thepack.

At about $1 billion in premium and ranking 60^th outof over 3,000 P&C carriers, Selective Insurance Group, Inc., isone of the largest of the regional property/casualty carriers andnipping at the heels of larger, national carriers. Following theretirement of its former chief information officer, CEO Greg Murphywent looking for someone with experience in large-carrier IToperations. Richard Connell was recruited and took over as CIO inAugust 2000.

Connell has spent his entire 30-year career in insurance IToperations. After graduating as a business administration majorfrom Central Connecticut State University, he joined Aetna as aprogrammer trainee. When he left 23 years later, he was vicepresident of IT and had just completed a three-year stint as CIO ofa Mexican subsidiary in Mexico City.

He went on to spend over four years as CTO at Liberty Mutuals ITheadquarters in Portsmouth, N.H., 55 miles north of Libertys Bostonhome office. In addition to his CTO functions, he set up Libertysoperations in Belfast, Northern Ireland, growing to over 100employees. Connell was president of that operation, called LibertyInformation Technology.

Selective is a strong supporter of the independent agencydistribution channel, writing its commercial (80 percent) andpersonal lines (20 percent) insurance solely through a network ofapproximately 850 agencies in 20 northeastern, southeastern, andmid-American states. The insurer has about 2,400 employees, with220 direct employees (and 30 consultants) reporting to Connell.

Basically, we have four areas of focus, Connell says, describinghis IT operations. The first is business strategy alignment, whichhe describes as making sure those IT initiatives are alignedwithand driven bySelectives business initiatives.

The second is project management, Connell continues. As part ofCEO Murphys management vision, Murphy set up an Enterprise ProgramManagement Office, which the CEO personally heads up. All majorinitiatives, IT and otherwise, go through this office. Startingwith the business case, Connell explains, there is a formalizedtemplate-driven process for managing all major projects. There isregular status reporting, with scorecards that go all the way up tothe board of directors. Connell says this is indicative of theimportance of this management methodology. There is also an ongoingtraining program, for both IT and general management, leading tothe Professional Management Professional (PMP) designation.Twenty-four members of Selectives management team have completedthe program (half from IT), and another 24 are now in it.

Connell describes the third focus as technology management. Heinstituted architecture management, assigning target archi-tecturesfor certain areas, such as Web services. All new projects followthe target architecture, and older ones are either rewritten orretired over time. He also instituted service level agreements, notonly for vendors but also for the companys own IT department, andformulated total cost of ownership metrics.

Last, but not least, are major initiatives. Some, such as agencyintegration, are comparable to those of other agency-basedcarriers. Others, however, have come about specifically as a resultof Selectives Presidents Club, roughly the top 10 percent of theagents, and annual strategy meetings with agencies. Two years ago,our agents asked for an optional small business service center,which we implemented about a year ago. Its been very successful,with many agencies opting to use it. That was followed by a claimsservice center, which has just gone live. Agents and theircustomers who opt to use it have 24x7 access to Selective personnelwho either resolve the claim on the spot or immediately assign itto one of the companys field adjusters. Claims are handled faster,better, cheaper, Connell says.

Other initiatives include a new general ledger suite, variousWeb projects, and ongoing development of Selectives popular One andDone system for writing simpler, slot-rated commercial risks. Whenasked about emerging technologies, such as wireless, Connell saysSelectives intent is to be just behind the national carriers andwell ahead of the other regionals.