Hands-on E-Strategists

AIG eBRS provides insurance solutions to address the risks of transacting business on the Internet.

If excellence in getting traditional insurance products online is regarded as a visionary achievement, then AIG's eBusiness Risk Solutions' (AIG eBRS) executives could be called meta-visionaries. Not only are the executives leveraging the latest technology to sell insurance, they're crafting new insurance solutions for the business that the latest technology has spawned.

Pioneering the newest technology in a new business medium has required taking business/technology partnership to a new level. And it has resulted in an experiment in the degree of flexibility more akin to a start-up environment than that of one of the largest insurance players on the domestic and international scenes.

Established about a year-and-a-half ago, the AIG division was created to provide insurance products to address the needs of doing business on the Internet. "We decided to set up eBRS as a multiline profit center to both bring together existing insurance solutions, and integrate new ones that really spoke to the risks of doing business online," says eBRS president Gretchen Hayes. But when evaluating that challenge, it quickly became clear that required more than just insurance solutions, she adds. "We've extended our mission to include alliances such as network security assessment partners, data partners, credit agencies and even goods inspection firms."

One of eBRS's first challenges was what might be called a meta-partnership, taking AIG's part in launching Avantrust, a joint venture with Dun & Bradstreet (Murray Hill, NJ) that provides products and services ensuring a secure e-commerce transaction environment. The project was a central influence in shaping the eBRS, according to Hayes. As a result of the joint venture, she says "we've been able to structure ourselves differently from any other technology group in the company." An important part of that structure is what Hayes calls the "co-location" of business and technology, meaning both literal proximity and tight collaboration between those functions.

Allen Brewer, eBRS's CIO, says "strategic business issues are not just dealt with in the business. We spend a great deal of time together, and there are strong ties helping form the strategic direction of the business."

The Avantrust experience was especially helpful in setting precedent for a greater degree of flexibility than that enjoyed by other corporate divisions. "We've been able to take the standard development life-cycle 'bible' and modify it, to be able to push things out a lot quicker," Brewer says.

The unique role of eBRS has led it to be recognized within the corporation as a technological "front-runner," Hayes asserts. "So if AIG is looking at new technologies that have e-commerce applicability, eBRS is seen as a place to test it out, incubate it," she says.

Consequently, eBRS is utilized by other parts of AIG as a kind of laboratory, according to Brewer. Both corporate headquarters and other divisions "push to us vendors that they're considering building alliances with," he says. A recent initiative to produce a trade credit application serves as an example of how the division's collaborative structure enables a more sure-footed path to success. Originally developed in a cost-center that Hayes was responsible for before leading eBRS, "it was a classic case of what happens when you throw a project over the wall and it comes back later not being what you wanted," Hayes says.

Once eBRS took up the project, however, Brewer says, "we concentrated on simplifying the business flow within the application to the point where you could sit your child in front of it and let them purchase trade credit insurance." Because of the work style at eBRS, the technology developers are encouraged to voice criticism of the business side's requests, Hayes says. "That's music to our ears, because we're not just trying to take an offline process and Web-enable it, we're trying to deliver a product that's more intuitive and easier to use."

Perhaps the easiest trap for a technology-driven outfit to fall into is the pursuit of technology for technology's sake. "What I watch out for is not to get pulled away from the concept that we have to spend as little as possible and generate as much revenue as possible," says Brewer. "A lot of times as a technologist you can lose sight of that."

But eBRS seems to have done a good job resisting those temptations. According to Brewer, the division set out with a budget of $11.2 million for 2001, but will probably end the year $600,000 to $800,000 shy of that figure in spending. "We decided that it was a little too early to put in some of the technology that we thought we were going to need to spend on," Brewer says.

That spirit of economy didn't impede generating premium revenues of about $60 million—a figure that Hayes thinks could easily reach $100 million in the year to come.

But for eBRS to reach its goals, according to Brewer, the division has to keep the spending/revenue calculation foremost. "We've been driving this thing at the pace we've been able to drive it at because the team is a select group that has been very focused," he says. "The next two years are going to be critical for us. The competition will start to catch up, and we're going to have to continue to keep in front of them."

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E-Biz Team Effort

COMPANY NAME: AIG eBusiness Risk Solutions (AIG eBRS, New York, $60 million in premium revenues); a division of AIG.

LINES OF BUSINESS: Network security, trade credit, payment, transit and other insurance products to address online business risks.

KEY EXECUTIVES: Gretchen Hayes, president; Allen Brewer, CIO.

KEY INITIATIVES: Avantrust joint venture with Dun & Bradstreet, which is targeted at online B2B exchanges to provide a suite of products and services to ensure a secure environment in which to transact e-business.

IT ARCHITECTURE: Multi-tiered basic Java design, running in a Unix environment with Oracle database. Application based on Iplanet/Websphere servlet engine. Site Minder security with LDAP (Policy Server) on Web server.

IT BUDGET: $11.2 million.

IT STAFF: Eighteen full-time employees, with four to 20 consultant staffers, depending on projects.

WHAT IS YOUR GREATEST BUSINESS CHALLENGE?

HAYES: To keep the same spirit, momentum and pace going as we get larger, and not to just become satisfied with just 15 percent growth per year.

BREWER: The challenges are going to be to continue to foster the kind of team relationship we've enjoyed, as the group expands. The next two years will be critical.

Anthony O'Donnell has covered technology in the insurance industry since 2000, when he joined the editorial staff of Insurance & Technology. As an editor and reporter for I&T and the InformationWeek Financial Services of TechWeb he has written on all areas of information ... View Full Bio