Manufacturer and Distributor

Russ Bostick, Chief Technology Officer, Chase Insurance Former Zurich Life CIO Russ Bostick has had a wild ride. In May 2003, the acquisition of Zurich by Bank One was announced, and by July 2004, the acquisition of Bank One by JPMorgan Chase was concluded. Now CTO of JPMorgan's (New York; $1.1 trillion in assets) Chase Insurance (Elgin, Ill.) operation, Bostick runs a shop that has the advantage of tight integration with corporate systems, and which comprehends agency and bank distribution technology, as well as the direct distribution and manufacturing operations that Bostick ran at Zurich Life.

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I&T: Chase Insurance combines the legacy Bank One Insurance Agency and the Chase Insurance Agency with the legacy Zurich Life carrier operation. What opportunities does that bring from a business point of view?

Bostick: Merging those three legacies gives you, first of all, larger businesses than the component companies had before. You combine the fixed annuities from the two banks and that puts us, if not No. 1, then a close No. 2 in the United States in the distribution of fixed annuities. From the Chase side, we're big in the debt-protection space. And from the Zurich side, we've always been big in the sale of term life insurance, and now we have new bank distribution markets that we can add to the ones we already do well in.

I&T: How does this business profile affect your job as chief technology officer?

Bostick: Under my management now, I have the technology for the distribution of insurance products in the bank. Chase Insurance is a single organization that's involved with the manufacturing of insurance products for distribution both within the bank and outside of it. We're also a distributor of insurance products, ironically, mostly outside the bank. We have the opportunity to work with other carriers and other distributors to decide whether we want to be a manufacturer or distributor in every element of our product lines. So a big difference from the past is that our strategy has more opportunity for offering value to our customers and distributors than just saying, "We make this product."

I&T: How has this strategic reorientation influenced the structure of your IT organization and its integration with the parent company?

Bostick: We were not strongly integrated into the rest of the Zurich technology organization. We managed our own data center for midrange computers, and we did not have a branch network or anything like that. So I really ran all the IT for Zurich Life U.S., with the exception of mainframe processing, which we got from our Farmers Insurance affiliate.

In the bank, however, there are well-developed functions that do that, and the intent is for us to be simply another element of the bank's full product line. So we've reorganized so that some of the functions I used to manage directly are now provisioned out of other areas of the bank, and staff that I had have gone on to careers in those other areas.

I&T: What capability advantages do you enjoy, then, as a well-integrated part of a larger enterprise and technology apparatus?

Bostick: It allows us, for example, to improve our business continuity and disaster recovery plans. It means that we have a stronger security infrastructure, which is necessary today. It also means that in terms of career-pathing, I can open a position for a programmer here and expect that people who have been in other parts of the bank will post for it. And frankly, that never happened at Zurich. So there's a whole different view, from my staff's perspective, on how their careers can look and where staff can come from to work with us - and that's a very healthy thing.

I&T: Given that you used to run practically all of information technology for Zurich Life, how does the new arrangement impact you as a technology executive?

Bostick: Personally, I went from being a "real" CIO, who had total accountability for every element of delivery, to being a divisional CIO, responsible for application development and business alignment, but not so much for infrastructure or procurement. [Editor's note: Bostick reports to Jeannie Ianello, COO, Chase Insurance.] I used to negotiate a lot of contracts that today are managed by the sourcing organization. And, in fact, if I get too close to it they'll say I'm in their way.

I&T: How integral is technology to Chase Insurance's business strategy?

Bostick: In today's economy, it's important that you're able to deliver automation to the line of business that you're dedicated to, both to reduce cost and scale the business up and down in response to business opportunities that arise. And in the banking environment, offerings such as consumer lending, mortgage refinancing, savings accounts, etc., have cycles whereby volume can skyrocket. Then, all of a sudden, with an interest rate change, activity stops.

My new colleagues are much more in tune with the idea that there has to be a strong level of automation that allows you to bring the business up and down in size rapidly in response to opportunities.

I&T: How might this affect your near-term technology investment?

Bostick: We're making a major investment in simplifying our life policy administration and life new business processing so that we have one platform. Many other insurers have taken the same route, but we never had the investment to do that at Zurich Life. Now we do, so we're in the process of replacing all of our life policy admin systems with the latest version of [Austin, Texas-based CSC's] Cyber Life and replacing our new business functionality with CSC's New Business Accelerator.

In the process of doing that, we're going to eliminate paper and reduce cycle time. And, frankly, it allows our business to develop products in the term life space that are customized for the distribution channel and its opportunity. With the new technology, we'll be more able to talk to external distributors - as well as the bank's distribution environment - and say, "Here's a term life product that makes sense for your customer set." It allows different riders, different underwriting criteria - depending on the market - and the kind of flexibility and scalability that wasn't possible with the 10-plus-year-old technology that we had been using.

I&T: How does that fit in your overall technology investment strategy?

Bostick: That is our big area of our current investment cycle, which is focused on making what happens inside the company more effective. And that will reveal itself to distributors through faster turnaround time, better information on the current status of cases and, more importantly, to products that make sense with their customer set, as opposed to a one-size-fits-all type of term life product.

Later, we'll build on that to enhance how we electronically interact with our distributors. But we need to get our internal manufacturing plant simplified and modernized in order to do that.

I&T: Zurich Life was known for ease-of-business initiatives, such as EZ-App and EZ-Appoint. What will Chase Insurance do to build on those programs or other related ones?

Bostick: We continue to make small enhancements to what we now call Chase Insurance EZ-App and Chase Insurance EZ-Appoint. We don't have a new system that we'll be deploying, but we are beginning the planning of what we could be doing next.

Shortly after the close [of the merger], it was clearly established that we needed to put in an image-based workflow, and we spent last fall thinking about how we'd do it. We concluded that we wanted to combine that with putting in a new life policy admin system and converting all of our policies. That was driven by the need to integrate all of those mainframe systems into the Bank One environment, and we judged that it would be prohibitive to do it without putting in a new system. So we're up to our eyeballs in that project and we'll deliver phases of it throughout 2005 and finish converting all of our policies in the first quarter of 2006.

That keeps us pretty occupied, but over the next few months, on the same sort of "you've got to lead the target" rationale, we will begin planning our 2006 initiatives that we think will have an impact on internal distribution and consumer interfaces. That is also aligned with the bank's internal agenda to rationalize the chase.com and bankone.com capabilities. That's a massive project that's underway, because there were two fully developed Web capabilities in the bank.

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