Tools That Fuel Growth

Driving growth in today's more transparent, competitive and regulated insurance business requires an array of complex technologies, skills and strategies. Attendees at Insurance & Technology's 2005 Executive Summit, which took place last month at La Quinta Resort in California, learned from leading companies about both the pains and benefits involved in "Mastering the Growth Imperative."

The sponsors of this year's event were CSC, Deloitte, Document Sciences, EDS-Solcorp, Exstream Software, IBM, Navisys, Oracle, SAS, Satyam Computer Services and Steel Card.

Meeting "market demands" is the top driver of IT initiatives in insurance, according to Matthew Josefowicz, manager of the insurance group at Celent, who presented the initial results of the firm's most recent CIO/CTO Priorities Study. Josefowicz defined those demands as "meeting customer expectations for service and speed, both outside and inside the enterprise."

In 2006, IT budgets will increase about 7 percent over 2005 figures, Josefowicz reported, with a slight increase in the portion of budgets earmarked for new projects as opposed to maintenance. High-priority projects include network security, document/content management, business intelligence/reporting, data warehouses and transactional agent portals. Also, the open source movement is gaining ground - 20 percent of respondents have some Linux applications deployed in their architectures, said Josefowicz.

The related topic of enterprise architecture was addressed in the presentation "Gaining a Competitive Advantage via Leading-Edge Architecture," given by Guardian Life executives Rick Omartian, IT CFO and chief of staff, and Jaime Sguerra, chief technology officer. Omartian related the challenges of presenting the business case to senior management for an $11.2 million architectural transformation to a services-oriented model beginning in 2001, to take place over 36 months.

The business case modeled application programming spending from 2001 over two five-year periods, Omartian said. "We modeled it based on what it would be with the architecture and what it would be without it." The model showed that by 2006, spending on application programming would be reduced by 32 percent.

Nearly five years later, the project is right where Omartian and his colleagues projected it to be. "Fortunately, we delivered on the architecture, and we are seeing the savings that we had projected," Omartian told attendees.

Sguerra cautioned that enthusiasm for services-oriented architecture (SOA) on the business side, while useful for selling the project, could result in unforeseen difficulties. "SOA requires a lot of discipline, a different mind-set," he remarked. Above all, according to Sguerra, IT executives should keep in mind the ultimate purpose of the technology they construct.

A robust architecture is essential to support cross-selling - an obvious strategy for growth. But even in the most ideal circumstances, cross-selling is difficult, explained Gary Scholten, senior vice president and CIO of Principal Financial Group, who addressed "Maximizing Cross-Selling and Multichannel Distribution in Today's Regulatory Environment." Identity theft, hacking, phishing and privacy laws all pose barriers to cross-selling, but the greatest challenge involves defining a cross-selling strategy, Scholten said.

In the late 1990s, Principal Financial Group decided to maximize cross-selling efforts by changing its focus to improving customer relationships by defining a consistent business strategy across the enterprise. "Our strategy is based on relationship broadening," Scholten said. "Principal found that by creating natural relationships with the employer, marketer and individual, we could broaden our relationships."

Next, the insurer endeavored to provide visible and meaningful metrics, and was able to track retention and at-risk assets for products and determine customer profiles, Scholten reported. This data provided the Principal with specific benchmarks for cross-selling activity.

The next step, according to Scholten, is providing a seamless customer experience supported by integrated data systems and call centers. "We are starting to see some real momentum," reported Scholten. "The silos between businesses seem to be broken down, and our technology is really supporting our cross-sell and co-sell efforts. But this doesn't happen overnight."

Elaborating on the theme of changing the way employees think about their jobs and how they interact with customers and colleagues was Brian Rohr, senior vice president, organization development, Sammons Financial Group, who offered some examples of "New Perspectives on Leadership and IT's Role." Transforming corporate culture has to be managed like any other change initiative, explained Rohr. "Culture is the seedbed where everything else takes place - initiatives, strategy, policy, processes, structures, practices and how we do our work," he said.

Seven years ago, Sammons explored how to create a culture that would differentiate the diversified financial services firm in the marketplace. Accordingly, Sammons defined company culture in terms of the human needs of mastery, mutuality and meaning. "We all want to be in charge, we all want to work with other people and we all are seeking some kind of meaning or purpose. By combining our human needs, we can become better human beings and, in turn, better employees," said Rohr.

Another highlight of the Executive Summit was the 2005 Elite 8 Awards. This year's honorees were Paul Rix, AIG Life Division; Annaclair Kiger, Colonial Life & Accident Insurance Co.; Scott McKay, Genworth Financial; Mike Byam, Hartford Financial Services Group; Georgette Piligian, MetLife; Dennis Noice, Nationwide Financial Services; Piyush Singh, RLI Corp.; and Ron J. Ponder, WellPoint.

I&T's 2006 Executive Summit is scheduled for Nov. 5-8, 2006, at the Arizona Biltmore Resort & Spa in Phoenix. For registration, program and sponsorship information, visit www.insurancetech.com/events.