WEB RATING
Survival Rate
Inefficient older practices threaten the future of some smaller insurance carriers, but utilizing Web services has allowed others to compete with insurers of virtually any size.
Web services have leveled the playing field, says Dan Pitcher, vice president of information technology with Western Reserve Group (WRG), an Ohio-based property/casualty insurer. Faced with the twin challenges of high costs and administrative overhead in supporting an old system of proprietary rating diskettes the carrier issued its independent agency force, Pitcher knew there was a more efficient way of getting personal auto rates into the hands of the agents. We saw the Web rating as an opportunity to eliminate many of those problems, he says.
WRG normally provided rating diskettes to agencies at least once a year, usually when rates changed, but that issuance didnt take into account such occurrences as VIN master updates and new models of automobiles for which a rating symbol had not been created. As new vehicles came out, if [agents] were using the old VIN scan tapes, [they] couldnt even get a symbol on those vehicles, Pitcher says, stating the company had two options: do an AL3 upload he believed was too expensive for a carrier the size of WRG, or utilize a Web-based rating system as a straight-through process. This latter solution would allow agencies to enter the WRG mainframe and eliminate any problems with incomplete or unedited data.
In mid-summer 2002, WRG began its rating system research. By January 2003, the carrier had reached its decision to employ the eXtremeVista solution from OpenConnect. By May of last year, the first line (personal auto) was up and running. The carrier is in the process of adding its farm owner product to the solution.
We felt we would get a lot of service with the data residing in our system. We could turn policies around faster, says Pitcher. Previously, with the proprietary diskettes, [agencies] would have to wait until they got the [declarations] back from us to see what the mainframe rate was compared with the rate generated by the diskette. Now, with one set of rates, we are producing the quote, the application, and the policy declaration. WRGs strategy was based on the Web as the place for its business to be, Pitcher says.
We approached [this solution] from the basis of what do we want in terms of Web-based rating, he explains. The key conditions were, first of all, we want to have centralized maintenance as far as the reading and the editswe dont want to have to change the rates in two places. We also wanted to make sure this Web rating interfaces directly to our mainframe. In addition, we knew there were a lot of products that can do direct screen scrapes against the mainframe system, but we wanted [a product] to support the J2EE architecture.
Pitcher believes there is going to be a strong adoption rate of the ACORD data standards in the near future, which makes the middle-tier technology crucial. We chose the J2EE-IBM architecture rather than [Microsofts] .Net because we think its more robust, more reliable, and we dont think it will have some of the security issues.
Another important factor for WRG was cost. We dont have a lot of money, so we needed to make sure the cost is reasonable, he says. We also wanted to make sure there were some value-added vendor services. [We wanted] someone who could help us tweak little things through JavaScript to make that middle-tier position more powerful.
The new system hasnt been without some difficulties, Pitcher admits, but the biggest early problems were related to the J2EE architecture and not the OpenConnect software. Limiting problems also is an important issue for a carrier the size of Western Reserve Group. He notes the company has eight technical service people, 10 programmers, and four analysts.
We are pleased weve got something we can stack up with what very large companies are doing, he adds. Theres not a whole lot different in what we are doing and what larger insurers are doing. ROBERT REGIS HYLE
Case File
THE PROBLEM
Timing issues and expense made
rating diskettes outdated.
THE COMPANY
Western Reserve Group
Web Site: www.wrg-ins.com
Direct Written Premium: $155 million
THE SOLUTION
eXtremeVista from OpenConnect
Web Site: www.oc.com
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