Keeping Up With IT

Technology has a special role to play in the highly labor-intensive and paper-driven supplemental insurance realm. Though products are marketed to payroll groups, each policy is individually owned—in contrast to group healthcare coverage—and is sold through one-on-one contact between independent field agents and individual customers. Consequently, acquisition costs are high and agents are motivated to request labor- and time-saving solutions.

Having long established itself in the supplemental insurance business, American Family Life Assurance Co. of Columbus (GA) has capitalized on the advantages of technology for face-to-face selling, at a time when the industry has explored the use of technology for disintermediated transactions. During the 1980s the firm began a transition from its original flagship cancer protection product to offer an increasingly broad portfolio of supplemental insurance products.

One of the greatest challenges the carrier faces now is simply keeping up with rapid growth. It's facing that challenge with a tighter alignment of IT and business, and with automation of the highly labor-intensive traditional supplemental insurance sales process. While doing so AFLAC has been named one of Fortune magazine's "100 Best Companies to Work for in America" for the third consecutive year, and has been named to Fortune's "America's Most Admired Companies" list. AFLAC sells its products in all 50 states, through more than 170,000 US payroll groups, making it tops in worksite marketing.

"We've transitioned over the past couple of years to take advantage of Web technology to improve customer service, decrease transaction costs and improve communications with our field agents," says Jennifer Pitts, vice president and director of information technology.

One of the key factors in identifying AFLAC as a leading-edge company, in the opinion of John Minutaglio, AFLAC's director of infrastructure services, is its aggressiveness in keeping up with technology. "We have a strong 'currency strategy;' we are not dealing with a lot of legacy infrastructure," he says. "We're not saddled by 16-bit operating systems, say, or antiquated mainframes, so as we look forward to tomorrow's development environment, we are not saddled with constraints that would prevent us from getting there."

That environment has helped the carrier to use Web technology to best advantage. "We have a portal for our sales associates where we provide tool kits for reporting and aids for selling," says Ed Jones, second vice president, IT. "We're also looking at offering more services to our payroll accounts that will allow much more self-service, information and communications."

To streamline the enrollment process, AFLAC developed SmartAp, a laptop-based point-of-sale software program. The SmartAp solution incorporates intelligent forms and customizes the interview process to prevailing state regulations, says Jones. Customers are guided through questions, after which their signature is captured electronically. At the end of each day, the business is automatically transmitted to headquarters for processing. "It automates as much of the enrollment process as possible so the agent can spend more time selling," Jones says. This not only pleases commission-driven agents, but results in a needed increase in productivity. "It's been fundamental to handle the tremendous growth we've had," Jones adds.

Over 80 percent of AFLAC's new business is now enrolled through SmartAp, Pitts claims. "We were very much leading edge in this technology, and it has allowed us to absorb a double-digit growth rate as we've watched our policies change and become more complex," she says.

AFLAC also took the lead through development of its proprietary Internet billing application, to streamline the administrative side of business. "We were one of the first companies to create a B2B e-commerce initiative with our payroll account customers," says Pitts.

AFLAC US has a traditional organizational structure that includes development and operation groups, and project and vendor management offices, says Pitts. The carrier also has a separate software research center located in Atlanta that is studying advanced technology solutions, she adds. Pitts' group collaborates with AFLAC's chief technology officer, Jim Lester, who supervises the research center and "helps define the technical architecture and long-term strategies related to legacy integration, computing platforms and systems replacement options," Pitts says.

As the firm has adapted to technological change, a cultural shift has followed within the organization, according to Pitts. "IT used to be behind the scenes. That's changed tremendously," she says. One of the first big steps, she adds, was to put a business person—herself, in July 2000—in charge of IT. "Now IT is a business partner right at the table, helping to support the whole," she says.

Minutaglio says the IT group focuses on three key areas as opportunities for leveraging IT investment. "The strategic umbrella the SmartAp falls into is that which supports our firm's ability to generate premium revenue," he says. The second area relates to marketing opportunities, which Minutaglio characterizes as tailored to AFLAC's independent sales force. "We have a number of Internet-based technology deployments, such as AFLAC.com, that are designed to augment our marketing efforts," he says. "The third area could be characterized as back-office-type things," he adds.

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

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