Ohio National’s IT Organization Shines in Challenging Business Environment

Ohio National inherent strengths have enabled it to shine in response to the challenges faced by the life insurance industry in the wake of the financial crisis.

Along with other life insurers, Cincinnati-based The Ohio National Life Insurance Co. ($146 million in net income) has faced greater business challenges than many P&C or health insurance companies amid the financial crisis, and current business conditions continue to put extraordinary pressure on the mutual insurer's IT organization. But the opportunities of the changed market and inherent strengths in the way the company is managed -- along with the quality of the IT organization itself -- have combined to make the ride more exhilarating than stressful, suggests SVP and CIO Al Bowen.

In some key respects, Ohio National has taken a defensive posture, according Bowen, who explains that in order to stay on the shelves of many broker-dealers, the carrier has been intensely focused on maintaining its strong capital position. "We have adjusted our enterprise strategy to meet the demands of this unusual time," he comments.

That strategy has made governance extremely important, as the carrier's resource allocation group, overseen by Ohio National's chairman, has worked with the IT organization to reorder investment priorities. It has also necessitated precise reaction to the life and annuities market in response to changing demand on the part of distributors and consumers, according to Bowen.

"You have to take a careful look at the pricing of your products and the capital strain they have," he says. "We're involved in a great deal of product work now, having just repriced the products in response to the 2001 CSO [mortality table] changes on the traditional life side, and now we're immersed in tremendous change on the annuity side."

Product Pressures

Products are changing faster, and the need to move to products with different features places pressure on the IT organization, notes Jeff Oehler, VP in charge of Ohio National's policy administration systems. That pressure manifests itself in more-intense communication among the actuarial, risk management, legal, marketing and systems areas, he says. "Often what was true yesterday is not true today, and obviously when you're trying to build new products and features, you need more lead time than that," Oehler relates.

Ohio National also feels pressure from to support data exchanges with external partners, such as Blue Frog Solutions and EbixExchange. "We have to meet their schedules and fit them into our product introduction," comments Kim McGregor, assistant VP, new business systems.

The carrier uses Vertex Incorporated to help maintain the PPfA (Product Profiles for Annuities) product descriptions that it shares with external partners. Due to the speed of changes, Ohio National has already spent its entire annual budget for PPfA development and by year-end expects to exceed original projections by eight to 10 times, according to Bowen. But such adjustments in spending are necessitated by a market in which Ohio National is enjoying a competitive edge, as long as it meets what Bowen calls "date certain" demands. "Owing to the quality of our products, we are now being viewed as a manufacturer of choice where we were perhaps not viewed that way before," he relates. "At the same time, we have administrative areas that are under stress because of the sheer volume of business coming in."

Inevitably, some products and features are launched before all the their functionality has been built, Bowen acknowledges. For example, there may be a particular calculation needed in relation to a guarantee on an annuity that is yet to be built. "That will mean that every case that comes up with that characteristic will have to go to Actuarial for the calculation to take place until we can follow up with the appropriate functionality," Bowen says. "That pushes stress all the way into the administrative and customer service areas."

Proper Motivation

The motivation to handle such pressures comes from a variety of sources, according to Bowen and his lieutenants. Given the precarious state of the life insurance industry, Ohio National's IT professionals are not immune to concern about job security, Bowen admits. However, they also enjoy the positive motivation afforded by the carrier's profit-sharing program. "We had a strong profit-sharing contribution last year in a very difficult economic environment," he observes. "We're working hard to achieve a similar outcome this year."

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