Last fall, Rod Fox, CEO of Praetorian Financial Group (New York; about $2 billion in premium income) addressed an assembly of business partners at the carrier's annual Partnership Technology Forum to demonstrate Praetorian's technology capability. By the end of the event an attendee had commented that "it was great to finally see an insurance carrier practice what they preach."
Such accolades would have been unlikely had Fox taken a more conventional path upon becoming Praetorian's CEO in February 2006. "Technology had been an Achilles' heel for us, in our ability to interface with the outside world, to manage data internally and just run basic financial analyses," Fox remarks. "Historically, our IT capability consisted largely of Excel spreadsheets."
The P&C specialty insurer had been formed about a year earlier as a spin-off of Clarendon Insurance Co., a subsidiary of Hannover Re (Hannover, Germany; $10.5 billion in revenue). To support the new business of Praetorian as well as Clarendon, Clarendon's CEO hired Mike Anselmo to build a technology infrastructure that would function as an ASP in support of those two companies as well as three other Hannover Re entities. The result was the first version of the Keystone/Nexus technology, which went live in January 2006.
Prior to the official launch of Praetorian in March 2006, two critical milestones occurred: Fox joined as CEO and Hannover Re decided to sell Praetorian, leaving the fate of the technology infrastructure that had been developed to support the company unresolved, recalls Anselmo, who had been named Praetorian's CIO. "We had gone live with the new technology on Jan. 1 and were still running the legacy environment, so the question was, 'Does Clarendon keep it or do we?'" he says. "Rod was a very strong proponent of keeping the innovative systems on the Praetorian side."
The legacy environment Anselmo refers to included a staggering 199,624 spreadsheets used to manage business with Praetorian's managing general agent (MGA) distributors. Fox found the existing way of doing business unacceptable, particularly at a time when the business was growing rapidly. "If you continue to run that out a couple of years and add another couple hundred thousand spreadsheets, one error can cascade through and significantly distort your loss ratio calculation, or whatever you happen to be computing," he explains.
At its January 2006 launch, Nexus Services existed as a server-based computing pilot, according to Anselmo. "When Rod came we started planning to build it to support the entire company and the MGAs," he says. Built in-house with VMware (Palo Alto, Calif.) virtualization technology and Citrix (Ft. Lauderdale, Fla.) application delivery software, Nexus enables thin-client access to all users of Praetorian's applications. The infrastructure also keeps all files permanently within Praetorian's control rather than carried on the hard drives of employees and business partners.
Maximum Ease of Access
Fox also has invested in the build-out of Keystone and promotion of its features to Praetorian's distribution partners. The enterprise system, built on a Policy Administration Solutions (New York) administration and data warehouse core, houses all the data formerly kept on spreadsheets, manages all business transactions and calculations, and provides a portal to the carrier's MGAs and wholesale producers.
In order to deliver the "last mile" of ease of access to the Keystone system, Praetorian has freed partners of systems compatibility issues. "All those producers have different IT capabilities and systems, but we have developed technology to communicate with all of them," Fox reports.
Praetorian Financial Group
Career: Before joining Praetorian as CEO, Fox led the development of Benfield´s U.S. reinsurance operations as CEO of the company's U.S. reinsurance intermediary division. He joined Benfield in 2000 as a director of the group and CEO of Benfield Greig. Previously, Fox worked for 15 years at EW Blanch, where he became president and COO.
Technology Philosophy: "We try to be very transparent. Where I've seen failures is when senior business executives want technology to support their business but don't adequately inform the CIO about where they are going as a company and what they are trying to do strategically."
"Producers have different IT capabilities and systems, but we have developed technology to communicate with all of them."
To hear more from the 2007 Tech-Savvy CEOs, visit www.insurancetech.com/podcast.
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