(Editor's note: This is the second in our series of 2013Insurance IT All-Stars. Read the article on David Lawless here and keep following this space as we presentall-stars Tracey Berg of West Bend Mutual on Wednesday, Suren Gupta of Allstate on Thursday, and Dan Colarusso of Cypress Insurance on Friday.)

Peter Settel doesn't believe there's been a time since theInternet first hit its stride that we've witnessed so muchtechnology innovation and opportunity moving in so many directionssimultaneously.

"When you had the dot-com movement there were incredible changesin so many directions so quickly," says Settel, senior vicepresident and CIO of Homesite Insurance. "It's different now, butyou are seeing the phenomenon of amazing and important thingshappening simultaneously and in many different directions. You needto be close to the action because just as the dot-com era rose andthen descended, nobody can ignore the lasting impact of theInternet. This is an important time and some amazing things willpop up. You will want to be very close to that action. It's apretty amazing time right now.

Still, Settel knows there are limits to how quickly things aregoing to change even if the technology is in place and if there isa rationale for using that technology. For insurance companies,that involves the ability to handle massive volumes of data andthen being able to make use of that data for product, pricing orimproved customer experience.

"There are limits to how quickly you can produce change withinan organization," says Settel. "Technology can enable you to moveat a quicker pace, but it is our ability to use that appropriately,effectively, and safely that will be the constraint. There may alsobe regulatory constraints as well. While we are at a time ofamazing opportunity and change, we want to make sure we are workingin a proven manner and mindful this is all new. We don't want to dothings that will create more risk."

In Homesite's early stages as a start-up company, Settel wasinterested in putting together a staff with strong technicalskills, passion, a level of creativity, and problem solving.

"To me that was a key to growing quickly and building a strongorganization," he says. "That has to be at the nucleus."

But Settel also contends strong management is needed to build afully-formed organization where people can be successful.

"If there is just a bunch of hard chargers, it's hard to buildan organization," he says. "We have a team structure where peoplecan come in and be successful."

Homesite's plan was to grow quickly, so Settel and his IT staffset out to take three steps to establish the back office—automate,outsource, and simplify.

"We didn't want to be burdened by outgrowing the back office,which becomes very labor-intensive and a strain on middle andsenior management," he says. "You want to focus on other things. Westarted from nothing and built out a back office infrastructurewith in-house technologies, integration between packaged software,and working closely with BPO partners based on how they fit withinthe infrastructure."

Homesite continues to leverage that strategy to achieve a costadvantage within the industry.

"We would not have been able to grow as quickly as we did if wedidn't go down that path," says Settel. "It became a prettyexciting project. Early on, when we built out our full webquote-bind-issue capability, we were first in the industry forhomeowners insurance."

Being able to start out without a legacysystem was a huge advantage for Homesite and the company placed itsbets on the Internet becoming a significant part of the insurancebusiness.

"In 2001 we started writing through that system and by 2005-07as the Internet exploded for personal lines, we were positioned tohave the basic capabilities to grow in that channel," says Settel."All the time we are improving, but the basic logical architecturehasn't changed in the decade-plus since we laid it out."

Settel believes legacy systems have held back many insurancecarriers from doing some of the things modern technology has madepossible.

"In personal lines, companies are in unison saying they have tohave the technology to support the requirements of the consumer inthat channel, they have to be multi-channel, they have to have timeto market, and they have to have great customer experience imbeddedin their systems," he says. "If you want to get all of theadvantages of multi-channel distribution and direct to consumer,you have to be willing to make the investments."

Settel also believes the personnel talent in the industry isgreat, whether it be in marketing, actuarial departments, oranalytics.

"That environment has translated into pretty good technology,"he says. "I'm pretty bullish on insurance being seen not as atechnology laggard compared to other industries, but as an industryhitting its stride and starting to see the need for seamlessintegration between the user experience and marketing as acompetitive advantage. When you look at the auto insurance industryyou can see the dividing line between companies that embraced thatand companies that have not."

One of the most exciting thing about the future for Settel iscreating customer experience that is substantially better thananything the industry has seen in the past.

"Customers are going to judge us not based on who is the bestinsurance company or who creates the best experience, but ifcustomers are working with Google products, or Apple products, orAmazon products, they are going to look at what companies arecreating the best customer experience overall," he says.

Settel believes the power is shifting to the customer, but healso acknowledges the industry is in a position to create fantasticcustomer experiences, whether it is in sales, how customers paytheir bill or how a claim is settled.

"As that power shifts to the consumer and their ability toselect the companies they want to work with, I think [insurers]will benefit," he says. "As you take the intermediary out and workdirectly with the consumer, you have to imbed into the technology,not just a fantastic customer experience, but the pricingsophistication and granularity in your pricing plan and thecontrols in place to put that out directly to the consumer andexpect to get the result that you want."

Settel is particularly mindful of the importance of enterprisearchitecture to support business agility, and the need to viewmobile as a new channel—not a replacement to an existing channeland not as a copy-and-paste opportunity to simply re-use technologyand business processes with some new requirements. 

"In our view, the copy and paste approach is often tempting butnot a path to success," he says. "It was not a path tosuccess as companies moved (and still move) to online sales andservice. The challenges related to ensuring data accuracy,maximizing pricing sophistication, optimizing expense advantagewhile meeting extremely complicated customer expectations as somuch power shifts to the consumer are magnified withmobile.  We're excited by the opportunity to be leaders increating mobile solutions, but we also fully recognize the need forsignificantly new investments not only within IT but also broadlywithin the organization."