Reaping the Rewards

John Kellington, SVP, CTO, Ohio Casualty Group John Kellington doesn't hesitate when asked about Ohio Casualty Group's (Fairfield, Ohio) greatest technology-related accomplishment during his tenure as CTO - the implementation of the PARIS (Policy Administration, Rating and Issuance System) policy administration system. Cutting-edge when OCG ($1.4 million in net premiums) rolled out PARIS for its commercial lines division in 2001, Kellington vaunts the platform as an example of how to build an insurance architecture that can serve as the basis for future technology development for years to come.

I&T: What are the benefits of having PARIS as your underlying architecture?

Kellington: The insurance industry is unique in that it's really not the number of premiums written or the size of the carrier that dictates the level of complexity, but the number of lines you are in and the number of states in which you do business that dictates the level of complexity. We focus on three main lines - personal (home and auto), commercial and specialty, which includes bond and commercial umbrella - and are licensed to do business in 49 states, so our business is quite complex.

With the PARIS architecture in place - which uses (Santa Clara, Calif.-based Sun Microsystems') Java, (IBM's) WebSphere and DB2, and is based on IBM's (Armonk, N.Y.) Insurance Application Architecture (IAA) - we are able to do a whole lot of technology projects with fewer people. We compete against carriers seven or even 10 times larger than us, and we're able to keep up in a very technically demanding environment. That's probably one of the better value statements of PARIS. If you look at the industry leaders - those recognized as being on the cutting edge - normally our name will come up, even though our staff is one-fifth or one-tenth the size of the other leaders.

I&T: Can you describe some of the projects that PARIS enables?

Kellington: With the architectural platform that supports PARIS in place, we are able to do some pretty amazing things with Web services - which we call PARIS Connect - to support both our external partners and some internal applications as well. We currently support quoting, issuance, billing and claims inquiry, and first-notice-of-loss transactions for IVANS' [Old Greenwich, Conn.] Transformation Station, and we're just about to extend that to AMS Services' [Bothell, Wash.] TransactNOW.

I&T: How does PARIS impact development time?

Kellington: We are extremely fortunate that we have implemented PARIS - it's been the foundation of our enterprise component model and continues to provide a very flexible architectural framework. For example, the components that support policy processing are the exact same components (unchanged) that support our agency compensation system, and soon to be claims. Having this model makes system development much quicker and less risky, and we produce higher-quality code.

Considering we have an enterprise component model, our enterprise data warehousing efforts are proving to be quite feasible. Not easy, but feasible.

It's really nice to be in the situation that we are in. I feel for those carriers that are in the midst of such work, or looking forward to it. But getting to this point was a ton of work. Thinking back on the choice we made when architecting PARIS, we were either lucky or very intelligent - I'm going to say it was intelligence.

I&T: Are other carriers jealous?

Kellington: When we have the opportunity to present at IBM's IAA user conference - one of our OCG architects is head of the user group - we have a lot of interest in our presentations because we've been through the issues and are looking now at the value statements on the other end. It's something a lot of other carriers are interested in - though I can't say whether they are jealous or not.

I&T: What impact has wireless technology had on your operations? Can you quantify any of the benefits wireless has provided?

Kellington: We find the value of wireless communications to be extremely high. We rolled out wireless solutions to our claim adjusters and loss-control reps in 2003. Using cellular networks, they can get to our systems from wherever they are - they don't have to be in hot spots, so it's a really effective way to extend communications out to those remote offices and workers who need it.

Having communications always available and being able to respond to our customers' needs is difficult to quantify. From the feedback we are getting from our agents and customers, it is definitely worth the cost.

I&T: Do you outsource any technologies or services?

Kellington: We have engaged with a few off-shore firms for staff augmentation reasons. We are in the midst of some very sizeable application projects - such as the development of our data warehouse environments - and it just makes sense to staff the temporary bubble using offshore firms at relatively reasonable costs. The relationships have worked out pretty well - there are always challenges with offshoring arrangements, but we have been able to overcome all of them.

I&T: What technology or technology-related initiative will grow most in terms of its slice of OCG's budget?

Kellington: We've already made a significant investment in PARIS - we're now adding all the rest of our lines (personal and specialty); then we'll extend it to support claims. This is important because it's the foundation for everything we do. It makes our agency interface solutions very powerful and efficient, which is probably the largest benefit.

I&T: What cutting-edge technologies are you working with or keeping an eye on?

Kellington: We have worked very hard to implement portal technologies for our claims, loss control and underwriting organizations. Portals combined with workflow and content management solutions are going to provide a powerful operating platform for processing efficiencies. We also have been successful in implementing predictive modeling software for our pricing and fraud analysis.

I&T: Three to five years from now, what technologies will have the greatest impact on the insurance industry?

Kellington: Without a doubt, the service-oriented architecture (SOA) environment will do more to streamline this industry than any technology platform to date. If all carriers would implement an effective SOA - which links the independent agent's systems with the carrier's systems - our industry could once again focus on insurance as opposed to technology. As much as I like technology, insurance is not about technology - insurance is about insurance. And as soon as we get the technology out of the equation, we are all better off. Quite frankly, SOA will do it. It will streamline a lot of processes and make processing business easy and efficient.

I&T: Are there any hardware or software products deployed at Ohio Casualty Group that you would consider "outstanding?"

Kellington: We've had great success with IBM's IAA; it truly is an excellent insurance model. We've also had success with IBM's WebSphere Portal, SEEC's (Pittsburgh) Mosaic, Fair Isaac's (Minneapolis) Blaze Advisor and Insbridge (Richardson, Texas) RateManager.

I&T: Your title is CTO rather than CIO. Was that a conscious decision?

Kellington: We didn't want the chief information officer title because we really believe that we are delivering a technology value statement. It's a subtle thing, but OCG really wants to deliver technology that means something for our agencies, and that's why we chose the chief technology officer title.

I&T: What is your greatest challenge as CTO of OCG?

Kellington: Balancing the demands of our users with resource and cost pressures is probably the greatest challenge. I would imagine this is the challenge for most technology executives. It's a constant struggle.