Insurance IT All-Stars 2009

Standing out in tough times is something many business leaders may fantasize about. Actually performing under intense pressure . . . well, that can be a completely different matter. As we honor the Insurance IT All-Stars for 2009, they will be remembered as a group that faced down an extraordinarily difficult year–both in the insurance industry and in the global economy–and helped their companies continue to perform at a high level.

This year's team includes Lisa Ward of Esurance, Chris Gay of MileMeter, Kendall Blythe of Tokio Marine, Mark Hansen of Horace Mann, and Bob Eshelbrenner of Hastings Mutual.

If there is one thing these five share in common, it's that they have little in common except producing excellent results for a range of companies. Eshelbrenner and Hansen are veteran insurance IT guys, while the other three are much newer to the industry. Two work for direct writers–Ward and Gay–while the others focus on more traditional channels of the industry.

To select our group of All-Stars, we turned to a variety of industry observers and participants to get their input on who is making a difference for a company and the industry. We think you will find some talented people in our list this year and learn from some interesting approaches to difficult challenges.

Kendall Blythe Tokio Marine

Kendall Blythe has gazed into the glazed eyes of business users and known her message about why a technology project wasn't meeting the business side's needs or schedule wasn't getting through.

So, when Tokio Marine Management developed a reorganization plan to bring IT closer to the business side, it fit perfectly with her mix of skills.

“We needed some bridge between what the business asks for and what IT sometimes found difficult to provide,” says Blythe, vice president of enterprise business and technology services for Tokio Marine.

“We focused on requirements and testing to ease the pain with the limited resources,” she continues. “Requirements are really the focus of the IT and business alignment. IT always has responded with solutions but maybe not the best ones because it did not understand what the use was or the purpose of the solution.”

The purpose of the reorganization, which went into effect in April, was to improve communication, Blythe explains. Some workers had to be moved around. “We knew the skill sets of some of my people to be in the IT thick of things, and we had business analysts who were better suited on the business services side of this department,” she says. “We just started communicating better at a management level.”

One improvement made was with the request-for-change system built into Tokio Marine's e-mail. “I know from the business side it seemed like requests would come in and go into a black hole,” she says.

Blythe created an enterprise PMO that focused project managers on certain internal verticals–someone who did all the finance projects, someone who did all the underwriting projects, and someone who did all the claims projects.

“I made [the project managers] more visible to the business managers who were working on these projects,” she says.

At the same time, Blythe did some data mining of the carrier's request-for-comment application and developed metrics for such functions as time from submission to approval, approval to target date, and target date to delivery.

“We created management reports that went back quarterly to the executive committee that said here is everything you asked for and here is what we can deliver this quarter,” she adds. “We basically time-boxed by quarter some project work we could commit to and forced [business users] to understand we also have limited resources and we need to prioritize and watch expenses.”

The services group is flexible, indicates Blythe. “When someone comes up with a project in mid-quarter and it's compliance related, we'll jump right on it and switch out projects within departments if we have the resources,” she says.

The carrier now is in the third quarter of the process. Blythe reports there were good results from the first quarter, but she is not satisfied. “We had a lot of carry-overs of projects into the third quarter, which reduced the amount we could work on as far as new work, but I think the requests have dropped about 50 percent,” she says.

Blythe has been with Tokio Marine for five years, starting out as manager of claims data quality. Eventually, she took charge of data quality for underwriting before her new position opened up.

While 2009 has been a difficult year for many insurers, Tokio Marine looked upon it as an opportunity to focus on the fundamentals. “We needed to look at customer service, data quality, and find some efficiencies to do more with less,” says Blythe. “The data quality and business process efficiencies went hand in hand.”

The carrier also is in the midst of implementing a new policy management system–a project that began four years ago and is about to achieve fruition. “We certainly are looking forward to the efficiencies we'll find with that,” she says.

In addition, Tokio Marine purchased the OnBase system from Hyland Software for document management and workflow this year. “That was rolled out to claims knowing underwriting would be very busy with the policy management system,” says Blythe. “In 2010, we are looking to merge those two projects. We also are going to build a data warehouse and implement some sort of master data management and business intelligence for streamlining our management reports.”

Blythe admits the carrier has been very aggressive at a time when others have backed off projects. Tokio Marine did have to show some patience, though. When the policy management system and the data warehouse project were begun at the same time, the carrier realized it did not have the resources to complete both simultaneously. Still, with the data warehouse now at the front of the line, Blythe believes the early work done on the warehouse has given the carrier a good start. “We hope we are at least halfway there,” she says.

Blythe points out in its Japanese culture, Tokio Marine has a rotating Japanese staff, and the CEO is new this year. “His big initiatives are streamlining management reports and data quality,” she says. “Now, we have that from the top.”

Chris Gay MileMeter Insurance

MileMeter Insurance may be small and it may operate in just one state, but there is no doubt the direct writer's pay-by-the-mile pricing policy for personal auto makes it stand out in an industry that traditionally has trouble embracing new ideas.

“We don't fit in any of the normal boxes,” says Chris Gay, MileMeter's CEO. “We're a technology company that happens to sell insurance. We're almost the anti-insurance insurance company. In many ways, we don't consider our peers to be insurance companies; we consider them to be retail brand companies or technology companies.”

MileMeter achieved a regulatory first in 2006, according to Gay, when Texas approved the first per-mile policy. “We formed a new insurance company in the middle of last year and sold our first policies in October,” he says.

Gay doesn't like inefficiency, which is what he sees in most of the insurance industry. “We think half the market currently is being overcharged for auto insurance and getting mediocre service,” he says. “We set out to address that.”

Creating the concept of by-the-mile insurance was one thing, but making it work was another. “Because the industry was so entrenched against doing this, you had to become an island unto yourself as a company,” says Gay.

Starting MileMeter from scratch also proved beneficial. “It made our job easier in that we didn't have to start off supporting [multiple] lines of business with [multiple] legacy systems,” notes Gay. “It gave us the ability to design for elegance and simplicity. We have a whole technology stack for good, old-fashioned insurance policy administration, claims administration, and the e-commerce sites–the whole stack. Commercial off-the-shelf software just couldn't get it done.”

MileMeter doesn't use any tracking devices or on-board diagnostics technology. “We feel those have a number of problems, not the least of which are cost, convenience, and privacy,” remarks Gay. MileMeter uses standard variables for rating, including age, location, and vehicle.

What sets MileMeter apart is transparency in explaining rates. “If you can't explain to your customers how you arrived at the price in one sentence, you shouldn't be selling the product,” he says. “Anything else above and beyond that is manipulation and obfuscation designed to take from someone what you shouldn't be taking.”

MileMeter doesn't use rules it finds discriminatory in determining rates. “It just leaves an unsavory taste in our mouth to choose between prices for customers based on whether they have 10 years of education or 12 years of education; if they are married or single; whether they are responsible and rented within their means or irresponsible and bought a house that exceeded their means,” says Gay. “We don't discriminate male vs. female in our pricing. The objective is transparency with the customer.”

The MileMeter policies are tied to a vehicle/driver pairing, continues Gay. By charging by the mile, he believes the company is giving someone an incentive to drive less. And by making the price transparent–for example, five cents a mile for the coverage a customer selected–the customer is in control.

“They decide how much they want to spend, and when people have that kind of pricing transparency, they can see the benefits of reduced driving,” says Gay.

This year was extremely volatile for all insurers, including MileMeter, points out Gay. On the positive side, the economy helped the carrier in that potential customers reevaluated their expenditures. “We won a lot of business from people who were looking for ways to be more efficient and were willing to try something new,” he says.

The economy hurt MileMeter because it was lumped with many troubled businesses. “Some people were so panicked about the condition of financial companies it didn't matter we were offering the best product in the world when they were watching huge companies topple,” he says.

What also hurt MileMeter is the capital markets slowed down. “We couldn't grow as fast as we'd have liked,” says Gay. “The benefit of [slower growth] is you run financially lean and focus on customer service.”

Currently operating in Texas alone, Gay relates the goal for 2010 is to “grow, grow, grow” both in Texas and in other states. Furthermore, he reports many companies have expressed an interest in MileMeter's technology. “We'll probably begin licensing that on a service model to other insurance companies for regular insurance policies,” he says.

Enough states are interested in MileMeter's by-the-mile approach, according to Gay, he doesn't see major problems in expanding, just the usual regulatory obstacles that slow things down.

“I thought government contracting [an earlier job for Gay] was bureaucratic and slow,” he says. “Insurance makes government contracting look like a cheetah. Our industry is incredibly bloated and Byzantine. Some of that was a necessary reaction to business failures and ethical failures over the past century. Some of those problems still exist, and others are simply just challenges and reform no one has tackled. They should be tackled at some point.”

Lisa Ward Esurance

The way we look at technology enhancements is generally what's good for the customer is good for us,” says Lisa Ward, director of customer experience for Esurance.

The customer experience team at Esurance is a cross-functional group focused on customer-facing touch points, explains Ward. There are several smaller teams within the group, such as a user interface design team responsible for the look, feel, and functionality of all customer-facing applications. The apps include the sales, policy management, and claims systems and extend to all of the carrier's e-mail communication. There's a Web analytics team, as well, to measure the changes to the carrier's Web site (www.esurance.com) and make sure the changes are having a positive effect.

There also is a creative services group that includes graphic designers and copywriters. “It's a bit of an unusual team, but it's worked really well for us to create a cross-functional group having a singular customer vision across all our customer touch points,” says Ward. It gives us tremendous consistency and the ability to apply lessons learned across these areas.”

The user interface for claims online applications also falls under Ward's direction. “Our team writes and designs the interface for all our claims applications–from reporting the claim online to managing the claim, checking claims status online, vehicle repair monitoring, and claims-related e-mail,” says Ward. “Recently, we launched a mobile claims application, so we are truly delivering on our brand promise to be available for our customers 24/7 via their wireless device.”

Ward started with Esurance in 2000, shortly after the company launched in 1999. From the beginning, Esurance's business model has been focused on using the latest, most robust technology at every point in the process to make the overall experience shorter, faster, and more accurate for the customer, notes Ward.

The benefit to the carrier is to perform the functions online and be faster and more accurate. “It was challenging as a startup, but we had advantages because we didn't have any legacy systems in place and none of the channel conflicts that many companies have,” she says. “This was our business model from the beginning.”
Esurance always is looking to optimize the customer experience on the Web site. Ward estimates the company has redesigned the quote and purchase process eight or nine times in the last decade.

“We always are making changes, not only to stay current but to try to introduce new and better functionality,” she says. “We do a lot of usability testing where we can watch live visitors interact with our Web site, and that directs a lot of positive solutions for Web site design.”

Usability testing has been a valuable tool for Esurance, continues Ward. “We find it much more effective than other models where you bring consumers into an artificial lab environment,” she says. “We also do a lot of surveying of our quoters and our customers.”

Esurance has its own in-house survey system. “We survey folks on a variety of fronts–people who have had claims with us to make sure the experience went well; new policyholders to make sure the on-boarding service was positive; and we survey those who cancelled their policy,” says Ward. “We take a rigid approach to keeping the surveys really short, and so they don't take any more than two minutes. You don't get a lot of responses when you have exhaustive surveys.”

Esurance believes strongly in verifying information while the customer still is online. “It enables us to do things more accurately,” says Ward. “There is no 'we'll follow up with you later.' All of our data feeds are done real time so when you buy a policy, it is the real policy. It makes sense for us and for the customer. It's a lot of work to get there, but when you do, the rewards are there.”

Recently, Esurance completed an architecture upgrade to the .NET platform throughout the enterprise. “The upgrade delivered technical benefits to IT as well as additional functionality for the consumer, so it was a win-win,” says Ward.

Additionally, the carrier built its own e-mail system. “That enables us to maintain a consistent experience, understand all the metrics beneath it–and this is directly integrated into our buying and servicing system,” she says. Every customer e-mail is stored in customers' accounts for review at any point, she relates.

Esurance has kept a close eye on the economic turbulence that has shaken all insurance carriers. The carrier works with comScore, a third-party data provider to measure what's going on in the industry.

Ward reports shopping for policies has been down overall in the industry. But a bright spot in the gloom, Esurance discovered, has been Internet usage.

“Folks with direct writers have a propensity to use the Internet to shop much more than those with agent-based insurers,” she says. “We know people who come to us [for a quote] are most often with [other] direct writers.”

Ward cites a “shared focus between IT and the marketing teams” to implement the most impactful updates for customers. Two years ago, Esurance changed its structure so each business team has a dedicated set of developers who work on the business unit's prioritized projects.

“It's an ongoing collaboration,” indicates Ward. “The business team for marketing, for example, has a set number of hours we manage for every release.”

Ward's team works together with IT to ensure highest-customer-impacting projects move to the top of the release list. “Any project IT has, such as a systems upgrade or architectural update, has to be prioritized alongside the business team,” she says. “IT adds value and makes our systems better, but we understand the importance of prioritizing each project for our marketing goals. We also share the measured results of our projects, so we all see the impact to the customer.”

Mark Hansen Horace Mann

In an age when companies are turning over rocks to find new customers, Horace Mann remains faithful to its customer base of educators. It is just one of the aspects that make the carrier unique, “especially at our size,” says its CIO, Mark Hansen.

“The breadth of our product offerings as well as the way we price them are focused on taking care of the educators' needs.”

Serving the educational community also makes Horace Mann stand out as an employer, according to Hansen. “There are a lot of carriers that mass-market insurance, but we're focused on a unique group of customers who are very special to us and, frankly, special to the country and society, as well,” he says. “I think it generates enthusiasm within the company we're focused on a specific niche market. Our customer base has a special place in our heart.”

Hansen joined Horace Mann four years ago. Prior to that, he served as CIO at American Manufacturers Mutual (more commonly known as Kemper Commercial) for five years. He also spent 20 years with Allstate. “I was adding it up the other day, and I have more than 35 years of IT experience and more than 30 years in insurance,” he says. “I had the opportunity to get into IT to get myself through college.”

Being a multiline carrier offers great challenges for Hansen and the IT department. “There's a certain amount of ante for playing the game the way we do,” he says. “We support a wide array of systems, each specific to the product lines.”

One area Horace Mann focuses on is to make sure everything is high value for its market. For example, a couple of years ago the carrier extended its life insurance offerings. “Like a lot of annuity carriers, we had the opportunity to deal with the 403B IRS regulations, and that represented a great opportunity for us,” he says. “We specialize in that, and we had the opportunity to retain a significant number of relationships with our school districts. On the surface, when [the IRS rules] first came in, it looked like an awful lot of work to get it done. But in the end, we had an initiative called Comply and Compete, and that meant we were going not only to comply with all the regulations but also use it as an opportunity to compete in the market.”

On the P&C side, the carrier introduced Educator Segmentation in which the company specially priced auto products for educators.

“We are the only company I am aware of that offers a triline discount across P&C and life and annuity products,” Hansen says. If you have any combination of the three products, you get an even greater discount.”

From a technology standpoint, Horace Mann is focusing its spending on hitting the target market. “Over the course of the last few years, we've been redirecting some of our spending that has been wasted or burned in the infrastructure to get it refocused on strategic areas,” says Hansen. “We rebuilt our entire data center and took advantage of opportunities to reduce the cost in our core IT operations and subsequently be able to do things such as offer new products. It's been a fun and interesting challenge.”

Asked how this process was accomplished, Hansen notes, “You know in the IT business if you do it step by step you'll never get anywhere,” he says. “The first thing we are trying to do is reduce our underlying cost of the core technology offerings, and as soon as we start to do that, we are going to spend some resources on our strategic work. It's been an ongoing thing, more parallel effort than serial.”

An important step for the carrier is the move from captive agents to exclusive agents, similar to the model used by carriers such as State Farm and Allstate. “They are exclusive to us but independent,” he says. “They are running their own agency and selling our products.”

Horace Mann has been working to rebrand the entire company along with the corporate Web site. “We don't have the resources of the really big guys, but we've been in the process of adding high-value educator-focused opportunities on our site,” says Hansen. “We went through some of the things our agents and our customer-care center said were the most frequent requests from our customers. We have a strategy that extends over the course of the next 12 to18 months we are going to put on the Web. We've added some self-service and some improvements on our quote engine, but once again, rather than broadly try to accomplish everything others are doing, we are trying to focus on things our educators want.”

In a difficult year, the good news for Horace Mann is it has a conservative investment portfolio. “Everybody [in the industry] got dinged, but our [portfolio] was better than most,” says Hansen.

This meant Hansen's IT projects did not suffer greatly this year. “A lot of companies ran short of capital and literally had to stop [projects],” he says. “Some companies did the complete retrenching–slashing budgets by 30 percent to 40 percent. Some companies just hunkered down–sat there and didn't do anything.”

Horace Mann had several important initiatives that were kept alive, Hansen indicates. “While we felt the pinch, we also were able to continue funding and move forward on critical fronts,” he says. “It's been a very challenging year, but we viewed it as a year to be opportunistic. The biggest pressure we had out of 2009 has been to make sure the stuff gets there. There is a lot more pressure on delivery.”

The industry is slowly coming out of the economic funk, so the move to the new distribution model will fit in well for the company and its customer base. “About 150 of our agents have converted to the new model,” he says. “Next year we need to continue to stay ahead of that. There's an opportunity in technology. They no longer are employees of the company. They'll be used to working with technology capabilities out there. That will create a challenge looming ahead for IT, as well.”

Bob Eshelbrenner Hastings Mutual

Bob Eshelbrenner, vice president and CIO, Hastings Mutual, claims he got in on the ground floor of insurance technology. “The first day I went to work in 1972, the company I worked for was just acquiring its first IBM drum terminals,” he says. “They were much smaller screens. We were starting an application to rate personal lines and homeowners using the mainframe.”

Eshelbrenner still is impressed with the speed with which the industry is moving. “Companies have become more willing to invest in automation projects,” he says. “The projects have gotten larger, and from a user perspective, the big thing is the systems are so much easier to use. We were meeting this morning on a product we will be rolling out to agents. We provide the application, a training handbook, or a quick desk guide. We don't have to train everybody. The test is the product has to be good enough so the people who know insurance can complete an act without any classroom or further detailed instruction.”

When he started, Eshelbrenner points out, the equipment was enormous and business users treated technology as if it was all a big mystery. “Even after 35 years, you still hear fears–'Am I going to hurt the system?'–which is not going to happen anymore and probably never could have happened,” he says. “People have PCs, cell phones, or BlackBerry devices. They basically hold their own.”

Eshelbrenner concedes 2009 has been a rough year, but he believes the fact he works for a mutual company has made it easier. “We have a certain advantage in the market because we are not driven by the expectations of security analysts,” he says. “We feel we can make decisions that are best for our policyholders without that cloud hanging over our head of meeting some quarterly target of earnings.”

Although he doesn't like the term business as usual, Eshelbrenner asserts that best describes how Hastings has operated for the last 12 months. “Our direction was we would work that much harder to get [projects] done,” he says. “That involved some additional spending in some cases where we brought in a handful of consultants–people who could help us deliver what we planned much quicker.”

Recently, the Ward Group consulting organization named Hastings as one of the best operating companies in the industry. “We were very pleased to see that,” says Eshelbrenner. “We were a little taken aback last year when we weren't on the list, but we overcame that, and we are back on the list this year. When we look at things such as financial stability, which Ward addresses, we feel we are one of the top companies in the country. No one exceeds the recognition in the industry we have received.”

It will be business as usual again for Hastings in 2010, predicts Eshelbrenner. “We have not started the formal [budget] process yet, but each department has some informal work going on, so we can build our plan in September,” he says. “I already have heard enough to know that our significant appetite for automation is not going to change next year.”

Two areas Eshelbrenner believes are ripe for development next year are continued expansion of the carrier's agent portal and improvements on the claims side.

“We have a number of [processes] we put out there–personal and commercial lines, rating, automated underwriting–but there are a few more lines of business to do,” he says. “Fully operating our farm product is one we will be undertaking.” On the claims side, Hastings will look at automating first notice of loss to a greater extent.

With the business chugging away, “there are a number of things that already are on the table we will be making every effort to finish as they are carried over from last year, and we'll kick off new projects next year, as well.”