Zurich North America's (Schaumburg, IL) executive VP and CIO, David J. Saul, is preparing for a soft market (which he predicts commercial P&C lines will experience in fewer than 24 months) by reducing costs through self-service. Saul has held his current role at Zurich NA since 2000. As part of Zurich's shared services plan he has been responsible for the consolidation of The Maryland Company and Zurich American Insurance Company onto a Web-enabled, common application portfolio.
I&T: Can technology help insulate an insurer in a cyclical insurance marketplace? What are some examples of ways that Zurich North America's IT has helped shield the carrier from the negative effects of the marketplace?
David J. Saul: Technology can certainly help shield an insurer from the cycle. First, let me point out that Zurich North America underwrites commercial property and casualty coverages. These lines are in a hard cycle at this time, and depending on your source, the hard market is believed to be in its second or third year. So, now is the right time to invest and help prepare, or shield, the company for the soft cyclethat, based on history, will be here in less than 24 months. Cost efficiency is important for the obvious reason that in a soft market, by definition, you are not getting the necessary pricing. Therefore, companies must aggressively go after those areas where cost reduction is possible. Zurich North America's approach is to pursue a "self-service" strategy, one that aims at putting as much information and capability as possible in customers' and distributors' hands.
I&T: Will your financial resources be expanded in the coming year and how will spending strategies in 2003 differ from strategies of 2002, if at all?
Saul: There will be no increase in IT investment in 2003. Our investment strategy will be a continuation of 2002. Our IT spending will be very focused on key areas such as our Underwriting Workstation and Advanced Claim Technology initiatives. Much of the investment in IT is funded through reductions in run-rate costs. Zurich North America deals with many commercial segments, but does so by utilizing a single enterprise platform for underwriting and rate/quote/issue capabilities. This enterprise platform services everything from the small customers to the large accounts. It uses common components and Web services on an increasing basis and passes XML between components and services. This strategy is key to Zurich's desire to reuse components before we buy them, and buy them before we build them.
I&T: What are some of the technology initiatives that you have planned for 2003?
Saul: Our current RiskIntelligence product is a differentiator for our large customers. It provides them with real-time information about losses and lets them do "what if" analysis related to losses. In 2003, Zurich North America will go to a new plateau with that capability. RiskIntelligence will be taken from a structured, typical business intelligence tool, to a collaborative environment that will allow the sharing of both structured and unstructured data between customer, distributor and underwriter. For example, the broker will be able to "drop" a spreadsheet of exposure characteristics and loss history in the workspace and the underwriter will be able to analyze the risk and leave risk engineering reports for the customer.
I&T: How important is access to real-time customer information and what opportunities for efficiency are created within the organization when it is granted?
Saul: In the past, our company, like many property and casualty insurance carriers, had been product focused while the distribution channels handled much of customer relationship. There is a greatly heightened awareness around the need to monitor our company's relationships with the customers as well as the distributors. Information about our customers can now be joined from multiple sources to provide a complete look at a total client relationship. We have moved to a single repository that indexes all information about our customers and distributions. Given the diversity of our organization, the clearance function is made much more efficient with our new customer data store.
I&T: Zurich North America is implementing an enterprise-wide underwriting workstation. Why did the company decide to embark on such a project during tight economic times ?
Saul: With improved quality in underwriting as a mission, Zurich North America has the goal to have a workstation for risk selection of all lines of business. The rollout of those workstations has begun, and is being met with tremendous acceptance, plus producing notable successes. Some return on investment is immediate because of our ability to collaborate and quickly share best practices electronically across the organization. This capability will be critical to Zurich NA's success once the market softens.
I&T: Does Zurich North America partner with other insurers? If information is being shared with third parties, what security precautions are taken?
Saul: Recent legislation further reduces insurers' ability to share information with third parties. However, we do partner heavily with our sister companies in the Zurich Financial Services Group to provide a full range of products to our global customers. We do use third-party information sources to limit the amount of information required to quote and issue policies.
I&T: Is Zurich NA's tech strategy affected because it is part of a global organization, and if so, how?
Saul: Today, Zurich Financial Services Group has four IT organizationsZurich North America being one of themthat work together very closely to drive synergy for cost reduction and reuse. The CIOs for these organizations approach large vendors as a combined global organization to achieve better negotiation leverage. We have global standards regarding IT infrastructure such as platforms, operating systems, hardware, etc. Applications are shared on a more limited basis due to the deltas in business models for the four organizations.
I&T: There are many senior-level IT executives at Zurich North America. Do they all report to you?
Saul: Actually, I have responsibility for all IT functions at Zurich North America. This was not always the case. When I assumed my current position in 2000, there were a significant number of IT organizations with their own mission, staff and several CIOs. In less than a year those organizations were merged into the central IT group. In my view, this was accomplished through a mutual desire to meet our commitments to our internal business partners and by demonstrating a real service mentality.