Hitting the IT Target

Robert Eshelbrenner, Vice President, IT, Hastings Mutual For a regional P&C carrier to be competitive, according to Hastings Mutual (Hastings, Mich.; $511 million in assets) VP of IT Robert Eshelbrenner, it must husband limited resources well, while adopting new technologies when the business need is clear. Eshelbrenner says he chooses to be a "fast follower" rather than a new technology leader simply because technology isn't his business - his business is insurance. But he still believes in strong technology leadership, both to ensure the best service to customers and distributors and to attract and retain technology talent.

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I&T: What is your technology strategy?

Eshelbrenner: I would put us somewhere in between bleeding edge and late adopters; more like a "fast follower." However, circumstances and business requirements can force us out of our comfort zone. A few months after I came to Hastings Mutual [in June 2002], we took a risk on selecting a new claims system from a software provider - Guidewire Software [San Mateo, Calif.] - without an installed base and track record because we felt it offered the best solution for our needs. The relationship has been successful and the partnership has benefited both companies.

I&T:: How did you mitigate risk when selecting a vendor with a limited industry track record?

Eshelbrenner: We did a different type of due diligence. We went to their office, talked to their staff to assess the quality of their people, reviewed their development and testing process, and talked to their investors to gauge their commitment. We don't have the resources to do much technology experimentation, and when we make a decision, it's important that we hit the target. Being in insurance operations, we obviously are in the risk business; however, mixing too much risk into our technology decisions isn't our business.

I&T:: As a company located in a rural area, what challenges have you faced with IT staffing?

Eshelbrenner: Even though we're in a rural county, we can draw staff from Grand Rapids, Lansing and Kalamazoo. To compete in today's insurance market, we've had to both hire talent and develop talent internally. Over the past two years, we've been able to find the candidates with the skills we need even as the market starts to firm up.

I&T: How do you keep IT staff motivated and engaged?

Eshelbrenner: Keeping IT staff motivated is primarily about leadership and keeping people challenged. Leadership is key to attracting and retaining talented staff. People respond to good leaders. Without them, they start to look for jobs elsewhere.

I&T: How do you develop good leaders within IT?

Eshelbrenner: We have internal leadership and management training and use outside resources for off-site training to make sure that folks moving into the management ranks are transitioning and developing skills. It's a big change for someone to move from hands-on coding to a management role. They need to know technology, but they need to use different skills, such as communicating, coaching, working with staff and delegating. It's also important that they respect people, take care of them, understand their needs and be flexible when it's appropriate.

I&T: Hastings Mutual supports three major lines of business: personal, business and farm. Are the lines of business integrated from a product standpoint and/or a technology standpoint?

Eshelbrenner: Our policy, billing and claim systems are architected and programmed to serve all three lines. In a company our size, this helps hold down expenses. The business units handling these lines of business are separate yet integrated into one organization. While our architecture helps manage expenses, one of the disadvantages is that system upgrades and replacements have a far-reaching effect on the organization.

I&T: What role has Web-based technology played in your business? How does it affect technology spending?

Eshelbrenner: The P&C industry continues to be impacted by the Internet and thin-client user interfaces. The Internet has allowed companies to extend the power of their computing platforms into the independent agent's office, with such services as real-time quoting, automated underwriting decisioning, policy and claim transaction processing and status, access to document images and, of course, e-mail, which has changed significantly the way we communicate with our staff and our business partners.

Extending Web tools to our agents, as well as delivering thin-client systems to our agents, office staff and remote staff, allows us to cost-effectively support all users with the same system and user interface. Last year we were able to make strides in this area with both our legacy policy system and our newly implemented claim systems. However, because much remains to be done, this technology will continue to take a large amount of our IT staff resources, which translates directly to budget dollars.

I&T: How long have you had a Web site for agents?

Eshelbrenner: We've had an agent Web site that provides a variety of services for about four years. Over the past couple of years, we've created Policy Express as part of our agent portal to include real-time policy rating and quoting, automated underwriting, and confirmation of issued policies. In addition to Policy Express, we also have claim status, marketing tools, e-payments for both the insured and the agent, and product information. We'll also be adding online viewing of declaration sheets, bills and correspondence, and eliminate paper distribution of these documents.

Although we have an underwriter referral process for certain policies, a high percentage is handled by automated underwriting. This streamlines things extensively for the agent - it gives them a once-and-done process instead of completing an application, mailing or faxing it, waiting for a response, and dealing with the communications issues. For an agent to accomplish this as one step is a significant change over the way the industry has operated for a number of years. We've gotten very good feedback and response from our agents. It's not quite a standard service yet for us, but it is rapidly approaching that.

I&T: Longer range - three to five years out - do you see any technologies that will have a great impact on the insurance industry?

Eshelbrenner: I've been in this business for over 30 years and I've heard on more than one occasion that if insurers don't adopt a particular technology, they will go out of business. I've never seen that happen. Those of us in technology have to remember that we are in the insurance business and products, claims service and premium levels still drive the market. Technology is an enabler - albeit an important one - to most companies.

Of course, it's also a timing issue. If we were trying to do business the way it was done 30 years ago, we'd be out of business. But a certain technology suddenly changing the insurance industry isn't going to happen. Companies migrate to technologies and sometimes skip them, which can be to their advantage. Companies that went from the mainframe environment to the Web and thin-client and skipped over distributed and client/server technologies saved themselves a lot of heartache.

I&T: What about wireless? Do you see that as an enabling technology for insurance?

Eshelbrenner: We're not doing a lot with wireless - just experimenting with it - because we don't yet see a big business driver for it. Certainly, there are benefits to wireless, but we don't see being able to run a major business application, such as claims for our remote field adjusters, wirelessly in the near term because wireless is not available in all the places we need it to go. Of course, that will change. But the move to wireless for us will be more evolutionary than revolutionary.

I&T: What is your greatest challenge as CIO of Hastings Mutual?

Eshelbrenner: The ongoing effort to understand what our customers, agents and employees want and then delivering what they need. It sounds simple, but it's not that easy. We train our folks to take care of our customers - whether those customers are agents or consumers or internal users. To do that, you have to listen and really understand the customer needs and requirements and translate that into a solution. And that may not be what the customer believes they want.