An arch without a keystone will collapse, so it makes sense that Praetorian Financial Group named its technology architecture "Keystone" to illustrate just how important the infrastructure is to the organization. Mike Anselmo, CIO of New York-based Praetorian -- which now is owned by QBE the Americas, a division of Australian QBE Insurance Group ($4.6 billion in annual gross written premiums) -- has helped build that infrastructure, guiding the specialty insurer to create a virtual environment that allows anywhere access and provides a strong technology foundation for growth.
I&T: What is the history behind Praetorian?
Anselmo: Praetorian was spun off from Clarendon in March 2006. Praetorian manages all new business and Clarendon handles legacy claims. Both companies were owned by Hannover Reinsurance in Germany. It was announced in December 2006 that QBE, the Australian insurance firm, would acquire Praetorian during the second quarter of 2007. (Ed. Note: QBE completed the acquisition June 1.)
When I joined Clarendon in 2005 the company had many manual processes and lacked a solid IT infrastructure and a structured system architecture. In fact, they still rely on more than 200,000 spreadsheets. Praetorian's management supported the continued growth and advancement of an innovative IT system that would support our Program business. The leading-edge technologies that support both Keystone and the Nexus [computing environment] are flexible and responsive to our continually changing business.
I&T: What is Keystone?
Anselmo: Keystone includes a fully functional insurance back-end system, a data warehouse, financial applications and reinsurance applications. To build Keystone, we first greenfielded the entire existing environment and created a new infrastructure. The original infrastructure was a standard one-off application/server relationship with no real backbone or recovery processes in place.
We built Nexus -- a server-based computing environment using virtualization and remote access technology -- using Citrix (Fort Lauderdale, Fla.) and VMware (Palo Alto, Calif.) technology to allow our employees to log into our Keystone enterprise systems remotely from anywhere in the world. When employees log into nexusservices.com their entire Microsoft (Redmond, Wash.) Windows desktop appears. They have complete access to their world, their business applications and all of their icons.
We went live April 3, 2006. We've decreased the number of servers we run from 52 to nine and have achieved a 600 percent return on investment. Today we are running 182 virtual servers on 17 ESX VMware hosts in our production environment.
I&T: What has been the impact of Nexus?
Anselmo: Nexus has changed Praetorian's business. Employees used to ship boxes of paper to clients. Now they bring their laptop or use a machine in the client office, log on and have access to the full data set, claims, audit files -- everything -- while we provide security and compliance within the infrastructure.
I&T: How does this support your strategic mission?
Anselmo: All of Praetorian's E-mails are signed with the phrase "Strength. Stability. Relentless Innovation." Nexus supports that business philosophy.
I&T: How does Keystone work?
Anselmo: Praetorian receives data from our partners (general agents) through an FTP site and automatically feeds that data into a data warehouse. But it's more than just a data warehouse; it's a full NCCI/ISO-compliant transactional database that provides additional data-mining capabilities, such as operational reports, data cubes and analytics. We feed our reinsurance system direct data and calculated ceded data and move it back into the warehouse for more ceded/net reporting capabilities. We have processes that allow people to perform topside entries, internal data-collection processing, manual spreadsheet entries and estimates, and push that data into the warehouse inside of Keystone as well.
I&T: How has Keystone changed processes at Praetorian?
Anselmo: Clarendon had developed a preprocessor system and distributed it to its 300 agents. Clarendon forced their agents to take their data, create an extract and funnel it through the preprocessor. Our agents spent a lot of time on technology, and our processes required a heavy monthly reconciliation that took agents away from their business and increased their technology costs. Praetorian closes the books quarterly now; but with Keystone we will move to a monthly close process.
At Praetorian, our strategy is to capture all data with one touch. We provide the agents with a data schema, and they provide a database file extract that conforms to that schema. We map the data from each agent into the data warehouse separately so we have smaller, individually maintained programs that make it easier for us to modify. We use financial edits and a suspense process within the workflow to manage their thresholds. We want the agents to focus on growing the business, not on technology.
I&T: What has been the reaction of your agents?
Anselmo: They look forward to when they are on Keystone. They just send us the data every month. Accounting doesn't bother them, actuarial doesn't bother them. Agents will be able to do pivot tables and claims reporting, to name a few [capabilities], using our partner portal. We merge the TPA [third-party administrator] data that we receive with their policy data and they get it back on one screen to do analytics.
I&T: What is on the front end?
Anselmo: We don't have a front-end system tied yet within Keystone, but we do use multiple front ends that our partners use; they all map into Keystone. Our data warehouse is a transactional rather than a summary system. We know everything about each book of business.
I&T: What role does the information interface from Q.Know Technologies play?
Anselmo: We discovered Q.Know (Reston, Va.) about a year ago. I see Q.Know as a paradigm change in technology. Q.Know will help us maintain and organize all the information we deal with every day as an insurance company using a corporate categorization strategy. We'll be able to find information and get access to the data in the data warehouse and present a Web page to the user. It allows you to organize your world.
I&T: What do your peers think of Keystone?
Anselmo: My peers are very interested in what we're doing. I've had discussions with other insurance CIOs, and like most insurance companies, they run Citrix as well, but they've acknowledged that Praetorian is two years ahead in delivering this server-based computing environment to their users.
I&T: What role did your staff play in the project?
Anselmo: The success of a project like this is really about the people you hire, the team you build and the qualifications they have to get the project done. Our people make it all happen. I'm really focused on teamwork, and try to give my staff a good quality of life. I can't thank them enough. I have a staff of about 25 people -- everyone was a part of this team to build Keystone and Nexus and keep the business moving forward.
I&T: Would you call your IT strategy "bleeding-edge?"
Anselmo: We're not bleeding-edge. I learned early in my career never to go bleeding-edge, but we sure are leading-edge within the insurance industry.
I&T: What makes Praetorian's senior management different from other insurers' management?
Anselmo: Rod Fox is the first CEO I've worked for who really supports innovative technology (Ed. Note: I&T named Fox one of its 2007 Tech-Savvy CEOs). Most CEOs ... view technology as a support function. Rod is different. His leadership and engagement in the IT process allow Praetorian's IT organization to be continually innovative and for us to build solutions that are ahead of the industry.
Name: Mike Anselmo
Title: Chief Information Officer
Education: City University of New York
Started in IT: As president of high school computer club
First Job: 16th employee of Fuji Photo Film, USA
Hobbies: Sports cars and technology
Greatest Technology Accomplishment: Building the world's first open cry electronic auction system for the NASDAQ at Primex Trading (New York, N.Y.)
LISTEN TO I&T's EXCLUSIVE PODCAST with I&T 2007 Tech-Savvy CEO honoree Rod Fox to learn more about how his leadership is driving innovation at Praetorian: https://insurancetech.com/blog/archives/2007/05/innovation_cata.html