Magna Carta Allows Agents To Choose Manner of Doing Business, CIO Says

Magna Carta allows its agents to submit business any way they want, including phone, fax, E-mail or U.S. postal mail, says CIO David Lawless.

I&T: Describe Magna Carta's business.

Lawless: We have 35,000 policyholders and about 90 percent of our business is commercial. We work through independent agents; they really are our sales force.

We are a mutual company, so we're owned by our policyholders rather than by stockholders. One advantage of being a mutual company is that you are not under quarter-to-quarter performance pressure. This gives you an opportunity to focus on long-term strategies.

I&T: What are your responsibilities as SVP and chief administrative officer?

Lawless: I'm the rubber-meets-the-road guy. I'm responsible for anything having to do with facilities, such as lease holding, maintenance, and mail room and clerical operations. IT is one of my most significant responsibilities. We have a very small IT division, with about nine employees in Portland, Maine, and six employees in New York. It's very nimble.

I&T: What is Magna Carta's growth strategy?

Lawless: In today's soft market, companies are pressured to reduce rates to gain market share. We could grow very quickly if we changed our rate structure dramatically. But while we want to grow, we are not willing to reduce our rates so much that we become unprofitable.

I&T: What technology platform do you run?

Lawless: We own them all. We have a small mainframe that handles tasks such as statutory reporting and data consolidation. We run our workers' compensation system on an [Armonk, N.Y.-based IBM] AS/400. Our primary policy system is Allenbrook Phoenix [from Bothell, Wash.-based AMS Services]. We do a fair amount of middleware development, but we try not to do any package development.

I&T: What are your independent agents demanding in terms of supporting technology?

Lawless: Some agencies are fabulously automated, rivaling carriers in their level of automation. Other agents tell us that they are not interested in getting electronic data or quoting on the Web it's a shrinking group, but they're still out there.

We allow our agents to submit business to us any way they want, including phone, fax, E-mail or U.S. postal mail. Most agents send underwriting submissions via fax. Our job is to make it easier to do business with us no matter which method they choose. Would I prefer receiving business by E-mail or another electronic format? Absolutely. But far be it from me to tell our agents how they should do business.

I&T: What's the impact of technology on brand loyalty?

Lawless: Technology can help or hurt brand loyalty. If you establish a terrific relationship with a customer yet every transaction is painful, you will ruin that brand loyalty. Our rule is: First, do no harm, and second, add a lot of value.

I&T: What middleware development platform do you use?

Lawless: We use MQSeries from IBM when we need to send and transmit data between disparate systems. Most insurance companies have more than one policy administration system; agents have to submit a query for each system. But MQ passes messages to both systems so agents don't have to know which system to use. It's a very handy way to move data between disparate systems. Another benefit of MQ is that it translates messages between platforms, such as PC to AS/400. The employee can create the message in the platform he or she knows and MQ takes care of the rest.

I&T: Describe some recent tech initiatives that provided value to Magna Carta.

Lawless: About two years ago we started using ImageRight's [Conyers, Ga.] document management and workflow system. The solution has made a dramatic improvement in our service operations.

We also just wrapped up an initiative to implement SAP (Walldorf, Germany) Financial Asset Management for general ledger, accounts payable and fixed assets. Going forward, I'm focused on improving our internal operations to provide more value to the agents by giving them a better view of their client base and their clients' payment history.

I&T: Has imaging had a big impact on the business?

Lawless: It's had the most dramatic impact in our underwriting area. Imaging has enabled us to provide a lot of automation. We've been able to capture certain underwriting tasks electronically and can predict what the underwriters need in advance. For example, due to our location in New York City, we watch terrorism exposure very closely. Every time we write a piece of business, we gather the longitude and latitude to determine the exposure for that business. Before the underwriter issues a quote, they see a map with little red dots that show the policies already in place in the surrounding area. Although we may like the business from a pure risk point of view, we may decline it based on a concentration of risk in a particular area.

I&T: Do you use any other technology that you would consider outstanding?

Lawless: We were an early adopter of server virtualization technology, which enables us to put multiple servers on a single physical machine. Today our operations are 100 percent virtualized using VMWare ESX [Palo Alto, Calif.]. We run more than 100 virtual Linux and Windows (Microsoft; Redmond, Wash.) servers on less than a dozen IBM blades.

I&T: What is the most challenging aspect of your job?

Lawless: Balancing the thirst for technology that everyone has with their ability to incorporate it into their daily lives. Any big technology initiative has a huge social impact on your operations and your interactions with your agents. You can design the world's best system, but if your agents, customers and employees don't adopt it, it will be a failure.