Lasting Legacy

American National Insurance Co. (Galveston, Texas; $15.1 billion in assets), a provider of life, health, annuities, credit, and P&C insurance, has transformed its customer service over the past five years into an efficient operation by focusing on one goal: simplifying customer service representatives' interactions with back-end processes. A high rate of customer abandonment on calls motivated the carrier to identify the goal, and to develop a new IT strategy to achieve it.

Realizing that customer service representatives (CSRs) were forced to pluck customer information from multiple legacy systems, American National purchased Cambridge, Mass.-based Pegasystems Pega rules/process middleware product (Pega) in 1998. The middleware solution acts as a legacy system's automated translator for CSRs. The implementation has not only improved customer service; it has led to a revitalization of the way technology decisions are made at American National by bringing together the resources from multiple business units.

The product also helped optimize the insurer's existing call-tracking and distribution software, Navigator System from NEC (Irving, Texas). "Navigator gets the call to the proper location, where it's handed off to Pega, which does everything someone in a call center would want," relates Gary Kirkham, vice president of planning and support, American National. "Pega launches transactions to back-end systems in the native language of those systems, which brings all of the data relevant to one particular client back in multiple buckets of data and maps them cleanly in HTML format to a clipboard that gives the agent the ability - through business rules and process - to begin having a meaningful conversation with data and images that relate to why that person is calling." Reps don't have to know any of the other systems or command sequences; they are presented with the customer information on a single composite screen. Additionally, they require less training than if learning multiple legacy systems.

The carrier chose the Pegasystems solution because the vendor has a strong presence in the banking industry and significant knowledge of the insurance and financial markets. During its presentation to American National, Kirkham says, Pegasystems demonstrated a realistic view of the market, a good understanding of the business overall and a drive to improve its products.

The business-oriented approach that American National used to deploy the product and the way the carrier is leveraging legacy technology have improved not just the contact centers, but the business as a whole. American National implemented Pega in a way that made business sense: It took six months to roll out the solution in the strategically important but smaller credit insurance division as proof of concept, then deployed it in the larger individual health division over a period of two years, from 1999 to 2001.

Business Process Focus

The logic and benefits of a staggered timetable were identified as the result of the carrier's business process focus, which is achieved through clear dialogue with the business units involved in each technology implementation. For example, the president of the credit insurance division came up with 12 questions that he thought CSRs in his division should be able to answer with the use of Pega; the VP of the individual health division laid out a plan to roll out the larger project over the two-year period in a series of workable phases; and the EVP of the independent marketing group, who decided to implement the Pega system after seeing how it was working for the other two divisions, focused on measuring profit delivery from independent agents by forming three customer service levels: gold, silver and bronze.

"Along the way, one of the things we had were business unit leaders with a very clear vision," Kirkham says. "We also had powerful software combined with strong products, persistent and well-trained agents, and what became a very effective contact center. There is never just one item that makes a difference."

When the independent marketing group's Pega effort began in 2000, the division's collected premium stood at $200 million. In 2001, the premium grew to $450 million, followed by $720 million in 2003 and $2.47 billion in 2004. Kirkham credits the system's ability to empower CSRs with quick and accurate information for much of the growth in sales.

Related customer service improvements also translated into impressive bottom line metrics in the call center over the five-year period from 1999 to 2004. American National consistently tracks five companywide areas of improvement, and Kirkham notes a 44 percent reduction in caller abandonment rates; a 41.5 percent improvement in average speed of answer; a 29.6 percent reduction in average handling time; a 13.1 percent increase in service levels; and a 192 percent increase in workload capacity.

It is this kind of detailed tracking, coupled with constant revision and business optimization, that has enabled American National's transformation. However, it is not just about installing a new piece of software. Starting in 2002, the carrier's IT department obtained executive support for a cross-functional Customer Service Action Team (CSAT) that spends a half-day a month with the senior leadership team examining projects in minute detail. The business units involved are required to attend these sessions as sponsors. "Our IT projects are not thought of as IT projects but as business projects, so business units need to be there to discuss business benefits," says Kirkham. "One of the topics last month was, 'How does your contact center relate to your business unit's plan?'"

Required Reading

The CSAT was inspired by a book that the IT portion of the Pega implementation team read as a group, "Fast Cycle Time," by Christopher Meyer of MIT (Free Press, 1993). "The more we read the book, the more we thought, 'This looks like our project,'" Kirkham relates. "We mimicked the practice [of reading a group book] after seeing the success of the president of American National's P&C division. They read 'Customers for Life,' by Carl Sewell [Currency, 1990], in the late 1990s as a management team. It had a huge impact on their performance," Kirkham says.

Per Meyer's suggestions in "Fast Cycle Time," the CSAT uses best practices in terms of running meetings and schedules topics about which to educate the group. "One way this is done is by using the parking lot concept," Kirkham explains. When ideas that are off topic are brought up during meetings, they are added to a list that forms the schedule of topics to be discussed in further meetings. Through this continuing education, American National has begun to formulate internal best practices in its CRM initiatives and across its contact centers.

"We work on connecting dots among people," Kirkham relates. "It's easy to get caught up in sophisticated technology, but technology that doesn't provide business benefits is not what we're all about." American National's strategy is to deliver a blend of both leading-edge and proven technologies. "We have used image [IBM ImagePlus; White Plains, N.Y.] extensively in our back office and have had rules-based underwriting [Lincoln Underwriting System; Lincoln National Risk Management; Wayne, Pa.] for over 10 years," Kirkham notes.

Through a consistently clear line of communication between business units and the IT department, American National has relied on those who know the business process to achieve effective business plans, and on those who know the systems and the back-end processes for architecture and rules that effectively connect the plans to information. This ideal is at the center of the cost-sensitive strategy employed by American National's IT department, according to Kirkham, who points out another cost-sensitive practice: "If a business unit can find a service we offer somewhere else for a lower price, our position is that the unit should go outside the company," Kirkham explains. "This keeps us on our toes as we set our rates and it keeps our focus on saving the company money and time, and adding value."

Carrier Report

Company Profile

Company: American National Insurance (Galveston, Texas; $15.1 billion in assets).

Lines of Business: Life, health, annuities, credit and P&C insurance.

History: Founded in 1905; currently has 3.4 million policyholders.

Key Initiatives: Improvement of contact center performance through Pegasystems middleware technology; the formation of a cross-functional Customer Service Action Team (CSAT) that continually maintains executive-level awareness, provides internal standards and educates business units on IT and CRM initiatives.

Executive Profile

Who: Gary Kirkham, vice president of planning and support.

Career Path: Before joining American National Insurance, Kirkham worked for 18 years as an independent consultant and as executive director of Forecasting Planning Associates (which became

Dallas-based The Waddill Group in 1990).

IT Philosophy: "If a business unit can find a service we offer somewhere else for a lower price, our position is that the unit should go outside the company. This keeps us on our toes as we set our rates and it keeps our focus on saving the company money and time, and adding value."