Doing More with a Little Bit Less

THIS MONTH'S EXPERTS

Don West
Vice President of Client Services, State National Companies (Fort Worth, est. $600 million in premium in 2002).

David Annis
Chief Information Officer, The Hartford ($167 billion in assets).

Wayne Ratz
SVP and Chief Information Officer, The Harleysville Companies (Harleysville, PA, $571.7 million in net written premiums).

Joel Gelb
Chief Information Officer, Main Street America Group (Keene, NH, 2000 net written premiums of $442.4 million).

Q: Do you anticipate that in 2002 your company's technology spending will increase, decrease or stay about the same as in 2001? What factors will drive this?

A: Don West, State National Companies:We expect a moderate increase in spending on technology in 2002. Our organization has been growing profitably over the past several years and we are making appropriate investments in infrastructure to meet the needs of the organization, our clients and markets.

A: David Annis, The Hartford: Technology spending will rise slightly in 2002, but we expect a more modest increase than in past years. We're continuing our strong commitment to customer service-related investments, including Web technologies and ongoing improvements to our core transaction processing platforms. We're using a disciplined prioritization process to make sure we're doing the projects with the greatest benefits.

A: Wayne Ratz, The Harleysville Companies: For 2002, our IT spending will definitely increase. We are on an aggressive plan to consolidate a number of our transaction processing systems and add new functionality to support our Premier Small Commercial product strategy.

A: Joel Gelb, Main Street America Group: Our IT budget is running in line with our strategic plan projections and we expect it to increase for 2002 when compared to 2001. The major driver of the increase is MSA's large multi-year project to enable our independent agents by developing an Internet-based system to provide all the functionality for service, sales and access to customer information at the desktop. This effort is driving major infrastructure upgrades, as well as replacement of many legacy systems.

Q: On what kinds of applications will your organization focus technology spending in 2002?

A: West, State National:As an organization, we will continue our investments in development of a CRM system, expansion of our e-business capabilities and strengthening our regulatory compliance infrastructure. CRM will provide "just-in-time" information about our clients and markets, allowing us to be supportive and responsive to the needs of our clients and an ever-changing marketplace. Expansion of e-business capabilities will further streamline the transaction and information supply chain. Regulatory compliance is increasing in complexity; we must make appropriate investments to keep pace.

A: Annis, The Hartford: The Hartford is clearly focused on continued service-related investments at all levels—investing in the Electronic Business Center for agents, the Hartford Investor for brokers and financial advisors, the intranet portal for employee services, and customer relationship management for policyholders. Many services today are delivered through Web-based portals or business-to-business electronic connections, and we plan to build on the strong foundation we've put in place.

A: Ratz, The Harleysville Companies: A significant amount of our new development will be spent on added functionality that we can deliver over the Internet. Enabling all our various users, agents, business partners and employees to transact business with us via the Web is a major strategy.

A: Gelb, Main Street America Group: In light of our drive for agency connectivity and flexible systems, our focus is on development of our main processing applications—policy and claims systems—as we move to an Internet-based architecture from a legacy environment. Costs associated with this change are upgraded servers (including a mainframe) and network environment, along with monitoring and other tools and training to ensure our ability to support these new and demanding production needs. Integration with existing systems is also a key focus.

Q: What do you foresee as your biggest challenge in 2002? Following the events of September 11, do you expect concerns about issues such as security and business continuity to cause a shift in focus away from other areas that may have had priority in 2001?

A: West, State National:The tragic events of Sept. 11, 2001, have unquestionably brought greater focus on security, business continuity and disaster recovery. That said, I do not expect our technology priorities to be significantly altered by the events of 9/11. Our biggest technology challenge in 2002 is the implementation of a custom-developed CRM system. This system is key to effectively supporting and servicing our clients. At the same time, the system will also assist the organization in evaluating the direction of our markets.

A: Annis, The Hartford: I don't expect to shift our focus away from technology that enables business innovation and service. However, the bar has clearly been raised on security and business continuity. More sophisticated virus attacks, new types of disaster exposures, and high customer expectations must be addressed. The Hartford was already implementing security enhancements and high availability infrastructure platforms prior to 9/11, and those investments will continue.

A: Ratz, The Harleysville Companies: Fortunately, we have had an excellent disaster recovery and business recovery plan in place and tested for a few years. Our biggest challenges in 2002 will continue to be getting talented resources and being able to deliver solutions that fully meet the expectations of our business units.

A: Gelb, Main Street America Group: Our challenges revolve around keeping our major systems project on track while supporting the business' strategic and tactical needs during a turbulent year for insurers. While 9/11 has caused us to review and strengthen our security and business continuity activities and plans, addressing these issues is not causing major changes to our existing focus.

Q: What do you believe will happen with insurance e-business in the coming year? Will the clicks-and-bricks model continue to dominate?

A: West, State National:E-business strategies continue to vary with no particular approach, taking the marketplace "high ground." The virtual insurance organizations have all but disappeared from the scene, leaving "clicks-and-bricks" as the dominant approach. We are seeing a greater emphasis on support for the agent via the Web. The belief that property-and-casualty insurance products can be sold direct to consumers has not proven out. The focus on streamlining the supply chain to reduce the overall cost of acquisition is taking center stage. All of that said, I believe the industry as a whole continues to be slow in developing and implementing e-business strategies.

A: Annis, The Hartford: Clearly, the clicks-and-bricks model will continue to dominate. Selling insurance on the Web depends heavily on the type of product and will be somewhat limited, but service on the Web will continue to grow. I think we're going to see ongoing specialization as best-of-breed companies partner to provide better products and services for customers. At the same time, I also think the Web will be a key enabler as the platform to work across traditional corporate boundaries efficiently.

A: Ratz, The Harleysville Companies: I continue to believe it will be very difficult to sell a complex, intangible product like insurance over the Internet. I do believe that servicing policies and customers via the Internet definitely will grow. I think the clicks-and-bricks concept will be the dominating model for the insurance industry, at least for the next three to five years.

A: Gelb, Main Street America Group: Our most basic belief at National Grange (a unit of MSA Group) is that the independent agent is the best provider of insurance services, both for personal and commercial lines. As such, independent agents are our customers and our only channel for doing business. We also believe that the Internet is a fundamental vehicle to enhance agency/insurance company connectivity in a B2B sense, and will likely also become more important in connecting agent to customer as time passes. Thus, we see an increase in business on the Web, with the existing clicks-and-bricks model getting stronger and more efficient. Currently, agency management system vendors and insurance carriers are doing a lot of groundwork. Due to a number of factors, my guess is that there will not be major movement in this area in the coming year, but there will be some trending in this direction, with larger business-to-business Internet utilization coming subsequently.

Peggy Bresnick Kendler has been a writer for 30 years. She has worked as an editor, publicist and school district technology coordinator. During the past decade, Bresnick Kendler has worked for UBM TechWeb on special financialservices technology-centered ... View Full Bio