Express Line

Schmittlein has been president_and CEO of Small Commercial since December 2001. Prior to that he served as vice president of the Mid-Atlantic region for Travelers Property and Casualty Insurance Co. He also held field assignments in underwriting and marketing management for Aetna Life & Casualty Co. Coon joined The St. Paul in January 2002. He is responsible for technology development for Small Commercial. Prior to joining The St. Paul, Coon served as assistant vice president of business process and systems at United States Fidelity and Guaranty (USF&G).

Tech Decisions: What is SPCXpress doing for Small Commercial at The St. Paul?

Coon: The system is a quote-to-issue platform. Prior to this innovation, all we had was a quoting platform. The way it differs from where we were previously is it allows agents to issue a policy, not just quote it. They can get a quote like they were able to do under our previous system, but if it is eligible for issuance, agents can issue it right from their desktop.

Tech Decisions: This was developed in-house. How big of a technology team did Small Commercial put together for such a project?

Coon: We have a technology team of about 100. For this particular project we probably had 25 people working full time for six months.

Tech Decisions: That puts quite a strain on your department, doesn't it?

Coon: This is what's important to the agents. We met with a group of them last May and June and asked, 'What's important to you?' The hue and cry was ease of doing business. They wanted to be able to issue eligible policies. We said we'd look at what's feasible. We worked with underwriting and the actuaries, and we put it all together.

Schmittlein: In essence, the only business [Coon's IS team] services within The St. Paul is Small Commercial. If you said we had to achieve this mission within The St. Paul [and all of its entities] and we'd all be on the same platform, I think it would have been much more difficult. Here it was easier because the [IS] people Charlie was talking about service Small Commercial only, so they obviously knew what the top priority was, and Charlie was able to act quickly.

Tech Decisions: How did this project fit in with the expectations of the business side of the company?

Schmittlein: From a business perspective, it made it more difficult for Charlie. We looked at this platform for our MainStreet policies [one of two policies Small Commercial offers], which was the area we were not very proficient at. We felt the coverages embedded in [MainStreet] needed to be changed and updated and also to be menu driven. To reach the small commercial customer–I use the analogy of the Lexus and the Yugo–we were sending the Lexus product out to cover all the [customer's needs], and in effect the person who is a minimum premium policyholder has difficulty in buying some of these coverages. The coverages might not be a fit for where that person is in the business life cycle. Could we make a product where you build in coverages to fit your client's needs? The agents and brokers said_it would be a win-win combination to be able to_do that. On the flip side, Charlie had to be able to program the menu-driven piece back in, which was actually more difficult.

Tech Decisions: What were some of your major challenges in putting this platform together? Where did you acquire the data you needed?

Coon: One of the major challenges was validation of information–making sure we understood what the risk did. One of the innovations is we now receive information from third-party information providers. We get the SIC code, years in business, how many employees, and information from Dun & Bradstreet; so we can get a good understanding of what the risk does. We also get information from ChoicePoint for motor vehicle driver information and vehicle information from Polk. We put all that together with the information entered by the agent and look at the total risk so the system can make some intelligent underwriting decisions–whether this is something we want to issue or something we want to refer to a human decision-maker.

Tech Decisions: What percentage of all the decisions do you expect to be made electronically?

Coon: We're hoping for 25 percent of the policies to go through without a stop.

Tech Decisions: Were there any stumbling blocks along the way in this project?

Coon: This was brand-new technology that had never been done before. The stumbling block was we wanted to make sure there was no software to be distributed because that's hard for the agents to do business with. It had to be Internet-enabled, and it had to be fast. Because [this platform] had never been done before, we had to get all our features to work with vendors that had never done this type of connectivity and make it seamless and behind the scenes. We applied for a patent for this process because we wanted to preserve some intellectual property rights.

Tech Decisions: That must have been exciting for your people?

Coon: That was exciting and a very interesting process. None of us had ever been involved in it before, so it was interesting working with the U.S. Patent Office. You can't patent software; you can only patent the process. I'm not sure what other insurance companies have done in that arena, but it was certainly a fun process to go through.

Tech Decisions: Can this system be adapted for other lines of business within The St. Paul?

Coon: The technology could be adapted for other lines of business or other specialty groups. It's more of a process than_a program. Changes would mean adding new products because niche businesses have their own products. You would have to accommodate that scale, but there are no technological barriers.

Tech Decisions: Did any changes have to be made within your systems to accommodate SPCXpress?

Coon: Because we were unencumbered by a legacy environment–it's a brand-new, N-tiered, Java-based XML platform–we were able to use messaging techniques. Utilizing a single front end, we could send a message to the billing system saying that here is the premium we need to bill and send a message to the downstream reporting system that this is the premium that needs to be booked. All that takes place behind the scenes so the user is not encumbered by many different systems and user interfaces. They basically see one set of screens.

Tech Decisions: Were there any training issues for the agents or your home-office staff?

Coon: One of the design criteria was that an agent would need no training. This had to be intuitive, and all the information you would need to issue a policy had to be contained within the program itself. We have two different user interfaces–one is for agents and one is for our company people. Our company people adapted to it very well.

Tech Decisions: What's the next project for your staff?

Coon: The next thing on the agenda is workers' compensation. We're introducing a workers' comp product in August of this year. We're also working on MIS systems for our field force. That will allow them to walk into an agent's office and have a robust set of reports for hit ratio, retention, and things like that so they can have a meaningful conversation with our trading partners.

Tech Decisions: Many insurance companies don't look at technology as being a core competency. You obviously feel differently about that.

Coon: Marc has me sit in with his staff for staff meetings each Monday. We're part of the process. There's no wall between the business side and us.

Schmittlein: Our customers told us technology has to be the lead thing you use to differentiate yourself. We were fortunate to have Charlie Coon and his staff really imbedded in Small Commercial. This technology makes us a lot more nimble than some of our competitors that are wed to a legacy system and every business move they make is contingent on any changes in that system. That slows things down.