Penn National Insurance’s Jenkins Proves a Seasoned Innovator

Rejecting the false dichotomy of buy-versus-build, Elite 8 Bill Jenkins has leveraged the best of both in Penn National's systems transformation.

Insurers often face the same dilemma whether they're seeking technology leadership or technology solutions: The tried-and-true lacks flexibility while the latest-and-greatest lacks the benefit of experience. In the person of Bill Jenkins, Harrisburg, Pa.-based Penn National Insurance solved both the leadership and the technology dilemmas.

While acknowledging the prevalence of the buy-versus-build philosophy in the industry today, Jenkins notes that available core insurance systems packages present a choice between robust functionality limited by old technology or new technology with immature functionality. Bearing these complications in mind, when Jenkins was called upon to renovate Penn National's systems, his answer to the buy-or-build conundrum was to do both at the same time.

Spurred by its technology-savvy CEO, Dennis Rowe, Penn National ($560 million in gross written premium) had already begun a technology transformation by late 2004, but the departure of its CIO at the time left it without the kind of experience that Rowe believed the organization needed to drive the initiative forward. When Jenkins took the position in December of that year, however, he found that the job involved more than simply moving forward a work in progress.

"There were a number of objectives that needed to be formalized or modified," Jenkins recollects. "An IT vision had to be established, and there was a need to put in place formal IT operating principles."

Having evaluated the IT organization's systems and processes, and benchmarked it to best-in-class insurance IT shops, in 2005 Jenkins developed an IT strategy broken into three major areas: core legacy systems refresh, data integration/conversion and infrastructure upgrade. He also established a formal IT vision and operating principles, set in place the organization's quality assurance capabilities, and instituted an IT risk management framework and processes.

"The basic thrust early on was the replacement of our personal lines system because the company was losing market share," Jenkins explains. "The discussion on the table was, 'What are we going to do to combat reduction in our premium base?'"

Penn National had recognized that its legacy systems were a business inhibitor before Jenkins' arrival, but, owing to the carrier's buy-versus-build philosophy, it had made a questionable choice in seeking a replacement, in Jenkins' opinion. "They had signed a contract and were poised to implement a certain policy administration system that would not have accommodated straight-through processing, workflow management or integration with predictive analytics," Jenkins asserts. "This agreement was shelved."

Penn National considered several other packaged solutions but in the end decided that it would be better able to maintain control over the transformation process by building new functionality over its legacy PMS (now part of Austin, Texas-based CSC) V6 policy administration system. This strategy of "extend, evolve and enhance" -- supplemented by "construct" -- comprised seven subprojects. In December 2007 Penn National went live with the first two pieces, a homegrown predictive analytics scorecard and London-based EMB's Emblem predictive analytics solution.

The following April the carrier went live with the five remaining projects: its in-house-built agency portal, an ImageRight (Conyers, Ga.) workflow and imaging system, Skywire's InsBridge rating engine [Skywire was acquired by Redwood Shores, Calif.-based Oracle in 2008], Pegasystems' (Cambridge, Mass.) PegaRULES rules engine, and enterprise data warehouse integration.

"The warehouse initiative started in 2004 and has now been fully populated with 20 years of policy and claims data," Jenkins reports. "The warehouse will become the central reporting source — providing one version of the truth — replacing all back-end reporting systems. We have begun to build out data marts and have also started to implement our business intelligence strategy, rolling out the Microsoft [Redmond, Wash.] Reporting Suite to our user community."

According to Jenkins, the initial state-by-state rollout of the functionality for personal passenger auto will continue through 2009; development for homeowners will begin in 2009.

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