In December 1903, North Carolina earned an auspicious designation-the state to be "first in flight." That's the year Orville Wright achieved the first man-powered, heavier-than-air flight. The Wright Flyer lifted into the air in a trip that lasted 12 seconds covering a distance of 120 feet.A full century later, Greensboro, N.C.-based Jefferson Pilot Financial, a national provider of universal and variable universal life insurance and annuities, is trying to inspire the legacy of its aviation-rich state roots. The company might not be launching small aircraft, but it is launching ambitious initiatives centered around streamlining electronic efficiencies.
One could probably imagine the daunting task of getting a small plane air born in 1903. But in 2003, a handful of financial services providers would concur that piloting IT-related tasks don't automatically get off the ground. Particularly if the objective is to convert information technology from an "overhead position to a strategic position," says Charles Cornelio, executive vice president, underwriting/new business and chief information officer for the Fortune 500 company.
Following a string of acquisitions in the latter part of the 1990s, Jefferson Pilot in mid-2000 embarked upon a string of projects, the centerpiece of which would be automation.
In fact, the vision Cornelio conjured up in 2001 was to create a "digital insurance" company. "Being a digital insurance company means putting less dependence on a legacy environment in favor of Web services-basically utilizing technology to change behavior," he explains.
"It also means removing friction from the equation-friction that often exists between a company and its affiliates. We did this by putting less reliance on paper processing and by eliminating those 'black holes' during the information-gathering process."
Evolving into a digital insurance company spawned specific results that currently benefit producers, policyholders and others.
"Internally, we pattern managers to think differently, to go after larger projects and do it by stressing objective benefits over subjective ones," Cornelio says. "It also helps that we put people in leadership positions in both IT and business. We pick good leaders."
Jefferson Pilot Financial was formed following a merger during the early 1900s of Jefferson Standard and Pilot Life. Since 1994, the company has completed several major acquisitions, including Chubb Life and Guarantee Life. Current total assets now amount to more than $26 billion, with $210 billion in-force life insurance premiums.
A graduate of Boston University School of Law and Tufts University, Cornelio joined JP Financial in 1997 following a successful career at Chubb Life, where he engaged in both legal and administrative functions.
So how did a lawyer become connected to IT? "One thing about me is, I'm not an IT guy," admits Cornelio. "At Chubb Life while I oversaw the legal function, I was introduced to IT in my role as an administrative officer.
"It's a challenge to pick up all the intricacies of IT, to manage IT as a business. I think I brought to Jefferson Pilot a financial view of IT: cost of ownership and ways to maximize value. How we could create a tool for IT spending and measure its strategic value while stimulating objective top-line and bottom-line growth.
At Jefferson Pilot, IT must generate an internal rate of return of 12% to 15% or we won't go forward with a project."
After its acquisition binge, the carrier launched a directive to focus on organic growth and convert IT into a strategic and not an overhead corporate function.
This effort was not always simplistic. "One of the more significant growing pains was that some of our supervisors who were accustomed to doing things a certain way had to think differently," Cornelio admits.
In setting the stage for the creation of a digital insurance company, Jefferson Pilot developed a Strategic Project Office (SPO). The initiative is designed to facilitate cross-functional activity across company lines. Projects are spread across five business areas. The IT-business partnership was a major component of the initiative.
"Within SPO, IT builds the case, project specifications, deadlines and is responsible for the development of attainable ROI," explains Cornelio. "It was essential to get away from operating within a legacy environment in favor of a browser-based infrastructure, using Internet tools and modern language."
The initiative also is able to identify internal hurdle rates on deployment of capital to technology, which includes payback periods, Cornelio adds.
"The Strategic Project Office, for instance, wanted to use digital reporting capabilities to get rid of paper. In 2002, we had an initial goal of eliminating 12 million pieces of paper, and in fact those projects ended up eliminating 15 million pieces."
Digital call to arms
The digital call to arms is having an impact on producers. It comes in the form of reduced friction. "For our producers, we've been able to eliminate steps in processing," Cornelio explains. "We took a 24-step process and reduced it to six. We took an annuity processing activity from 17 steps down to three."
A few years ago, Jefferson Pilot conceived a program called Premier Partners, which focuses on ways to improve communication efficiencies with its most optimal producers. The initiative has paid specific dividends over time.
Last May, the company introduced real-time pending business updates for producers via the Internet. The service offers financial professionals access to new business information as it changes, enabling them to see the same up-to-the-minute information as home office representatives.
Jefferson Pilot is improving its service to policyholders as well. Last October, it launched a program to enable variable universal life and variable annuity policyholders to process fund transfers and premium allocation changes on JPFinancial.com. It's among several enhancements designed to increase both site functionality and security.
"Our policyholders can feel the change," Cornelio states. "We've empowered them with Web tools and removed a layer of human element. Mistakes are reduced and overall quality goes up."
Support from the top
Support from upper management, of course, is a contingency for successfully driving these programs.
"We convinced our CEO about the strategic value of IT in about a meeting and a half," he asserts.
With this level of endorsement, there's a lot of impetus to fly even higher. In 2003, Jefferson Pilot plans to build on its already ambitious plans.
"We want to go live with transactional straight-through processing for life insurance and have our producers do an entire transaction online," Cornelio explains.
"We plan to expand our agent portal program to make it more robust and user-capable. We'll also go live with automated consolidated statements for our JP Securities broker/dealer group," he says.
One area that the company has and will continue to tread slowly is outsourcing. "We continuously benchmark our IT efforts against what an outsourcer would provide. For example, we have a very smooth help desk-I don't even have to concern myself with it. We benchmark all these things, and every time keeping an IT function in-house wins out."
Name: Charles Cornelio
Company: Jefferson Pilot Financial
Years with company: 6
IT mission: To create a digital insurance company
Headquarters: Greensboro, N.C.
Revenues: $1.67 billion (2002)
Sales Force: 47,900 independent agents, brokers, and financial advisors and wholesalers
Major Business Lines: Universal life insurance and annuities
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