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Opportunity Knocks

Though its individual lines of business facilitate speed to market for specialized niches, Century National Insurance decided to consolidate disparate systems to ensure process consistency.

For Lou Balicki, vice president of information systems for North Hollywood, Calif.-based Century National Insurance, good things come to those who wait. Hired by the carrier in 1994 to head up a project to consolidate the disparate systems of autonomous lines of business, Balicki finally completed the initiative this year.

Although "disparate" and "autonomous" are quite the opposite of what Balicki has done from a technology and process perspective, those words describe exactly the way the company runs its business. "Century National is an opportunistic niche marketer," he explains. "Each line of business has a different target market, product, distribution channel mix and marketing plan." Paraphrasing his boss, Weldon Wilson, chairman and president of Century National's parent company, the Kramer-Wilson Company, Balicki says the company motto is, "Find a good niche and love it to death."

Supporting autonomous product lines allows Century National ($239 million in 2004 direct written premium) to respond quickly to market changes, according to Balicki, who cites the lender-affiliated agent distribution niche for homeowners insurance as an example. In the early '90s, Balicki relates, a regulation was passed that forced earthquake coverage to be included in all homeowner's insurance policies. "Many insurance companies stopped writing homeowners insurance in California at the time, so we stepped into the lender-affiliated slot and started writing business that included earthquake insurance and probably quintupled in size in about three years," he explains. "If there is a competency in each division, the company will have the ability to prosper overall."

All for One

Although the company finds opportunity and competitive advantage by maintaining the division of business units and marketing, having completely separate operations and systems often led to back-office complexity and a lack of process commonality, even when some business units had processes with identical functions, according to Balicki. His goal was to consolidate the systems that support those processes while maintaining as much business-line autonomy as possible. "After a long search with different vendors, we chose Insurance Data Processing (IDP) in Wyncote, Pa., to help us with a combined system approach in 1995," recalls Balicki. "We proceeded division by division - it was like merging about seven or eight separate companies."

The business divisions included in the systems consolidation project are commercial auto, personal auto, mobile home, homeowners, two recently merged divisions providing auto collateral protection for a variety of financial institutions, and a mortgage loan tracking and mortgage forced order group, according to Balicki. He adds that several other divisions have been "retired" along the way, including a commercial property specialty line for apartments and condominiums. "My biggest challenge here has been - and will continue to be - maintaining the delicate balance between a need for business line independence with its continual demands for customized front-end process against the process efficiencies gained by greater commonality and shared resources," relates Balicki.

Each business line was run on a home-built proprietary system that Balicki and his team systematically tied into a back-end system provided by IDP called the Vision system, a midrange-based system that handles all of Century National's statistical premium billing, statistical reporting, ISO reporting, and policy accounting and administrative functions for all lines of business, according to Balicki. However, he did develop a few front-end systems due to the autonomous nature of each line of business. "We have built our own front ends for commercial auto - which is our second largest division - and mortgage loan tracking, a new venture for us, as well as auto collateral tracking and claims management, with each system tying in tightly to the IDP back end," Balicki explains. The insurer added its own rules logic and user presentation capabilities to the in-house-built front-end systems.

Whose Decision Is It?

The reasoning behind custom-built front ends for some of the systems, Balicki explains, is that the insurer holds a unique business process focus on the decision maker from the beginning. "When looking at a process, we find who the decision maker is first and look at all of the processes that feed information to that person," he says. "We then streamline those processes to make that person's decision easier, wrapping as much automation around that decision maker as possible." Since information flows ultimately are pointed at an individual, the front end of the system - or the part with which that person interacts - is something Balicki wants to control. "I want to make sure that when our business decision makers talk to different departments, they can talk from a position of knowing," he relates.

This process focus on the decision maker then applies separately to each company division, since each has a different distribution system, adding to the overall complexity of the insurer, according to Balicki. "In commercial auto, we are a nonstandard market niche, so we use about 500 independent agents that we must maintain interfaces with," he says. "For mobile home, we are direct marketers, and for our collateral protection, we market to financial institutions."

With that in mind, the biggest challenge - and the most important IT goal for Balicki - is not missing the window for bringing a product to market. "As a small company [with 345 employees], we can and must respond to market changes more quickly than our competitors," he says. In the past, a division was likely to miss the market window to deliver a full product because the back-end systems were managed independently, creating a breeding ground for reporting mistakes, according to Balicki. "Now, we are able to manage the back end and get reports out fast, and I have an easier time working one on one with each division head to get our marketing strategies rolling," he says.

A Little Help From Friends

Balicki isn't the only one doing all of the IT work and collaborating with the business units. "I have been here 17 years, and I am surrounded by some employees that have been here 25 years or more," he relates. But that kind of company loyalty can result in a lack of fresh talent. With that in mind, Balicki promotes a very strong learning environment, including seminars, online training supported by Dublin, Ohio-based MindLeaders and a project management certification program. "Cultivating an open learning environment keeps us away from 'management by airline magazine,'" says Balicki. By this he means that Century National encourages the development of new skills and exploration of new trends in technology rather than having project managers find out about cutting-edge IT trends in airline magazines.

In addition to his internal staff of approximately 50 programmers and financial analysts, Balicki relies on support from IDP and other independent contractors and service providers. He refers to these technology specialists as his guardian angels who guide his IT staff through large projects and changes. For example, the insurer's mortgage loan tracking system is Microsoft (Redmond, Wash.) .NET and SQL Server based. When it had to be tied to IDP's back end, "I hired the services of a firm that is an expert in that particular technology to act as a resource for my staff," Balicki relates. "Being Web based is especially important when responding to niche markets and turning around new products - it had to be a cogent part of our system," he says.

Almost 10 years after it began, Century National recently completed the last division integration, the newly combined auto collateral protection division. And Balicki credits the human talent in IT, more so than just the technology, with the project's success. "I believe that people are our real strength, so educating our internal staff and finding external people who are experts is an important part of our organization."



Company Profile

Company: Century National Insurance (North Hollywood, Calif.; $239 million in 2004 direct written premium).

Lines of Business: Homeowners insurance, commercial auto, personal auto, mobile home, auto collateral protection, mortgage loan tracking and mortgage forced order group.

History: Century National Insurance is wholly owned by the Kramer-Wilson Company, a privately owned insurance holding company. Ownership has remained unchanged since 1972, when the company was founded. Century National ranked 53rd nationwide in direct written premium for homeowners insurance in 2004, serving approximately 250,000 policyholders.

Recent Initiatives: Century National recently completed a systems consolidation for several autonomous lines of business.

Executive Profile

Name: Lou Balicki, Vice President of Information Systems

Career Path: After a stint in the army in the 1960s, Balicki received his business degree from the University of Iowa and began his career in 1973 as an underwriting intern at The Insurance Company of North America (INA), which later became CIGNA Property & Casualty Insurance Co. He left CIGNA in 1987 and joined Century National Insurance in 1988 in the newly created position of vice president of operating systems.

No. 1 IT Challenge: "My biggest challenge here has been - and will continue to be - maintaining the delicate balance between a need for business line independence with its continual demands for customized front-end process against the process efficiencies gained by greater commonality and shared resources," Balicki says.

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