When a global financial services behemoth such as Zurich Financial Services Group decides to merge three commercial property/casualty businesses into one regional unit, it would be reasonable to assume that consolidating their IT resources into one common platform would take longer than nine months.After all, large corporations aren't usually nimble and quick, insurance companies are known for their cumbersome legacy systems, and mergers of any kind are difficult to implement.

But that's how long it took Zurich America, Zurich Commercial and Zurich Small Business to combine their systems under the auspices of a new company-now called Zurich North America-which writes more than $8 billion in gross annual premiums.

"We literally made the decision in March 1999 to merge (these) billion- dollar companies together and get their systems on a single set of back-office systems, and we accomplished that before we had to shut down before the Year 2000 freeze," says David Saul, chief information officer of Zurich North America, Schaumburg, Ill.

As swift as the IT consolidation was, the effort didn't involve anything mysterious, Saul explains. Just a fixed focus on the business objectives and the discipline to carry out the necessary tasks.

"You've got to look at your premium information, your policy information and your claims information," he says. "You have to make a decision about what systems you're going to run with, how they can work together, and which ones you're going to throw away. Then you've got to move premium and claims history over so you can manage your reserve systems accordingly."

Keeping some of the existing underwriting systems intact while at the same time retiring 94 claims, back-office and support systems, the three insurance entities moved to a common financial system, a common data warehouse (now IBM Corp.'s Universal Database Enterprise Extended Edition) and a common claims system adopted from Zurich America.

Sorting out which systems to keep from those to be scrapped was relatively easy, Saul says. For example, Zurich America's claims system was newer and paperless, while the data warehouse, which was originally built on Sybase, had additional capabilities-such as handling restatements of history-which made it the best choice for the combined platform.

Far more difficult than the technical aspects of the job, Saul says, was dealing with the 600 people in the IT group at that time who were responsible for a consolidation project that was reducing their headcount by 15%. Stay-on bonuses of 20%, 30% or 40% of annual salary helped to keep approximately 50 key employees with the company for varying periods of time to perform the move to a shared platform.

"It was quite a bit of work-a lot of file-mapping," Saul says. In addition, each company had built 30 or 40 years' worth of idiosyncrasies into their systems, and demystifying those unique operations required people who had a lot of experience with the legacy systems.


Knowledge capital is also at the core of a current strategic IT initiative at Zurich North America called "smart applications." This program, which is expected to be complete by 2003, involves capturing and sharing employees' knowledge all across the company-even globally-to enable better decision-making.

"For example, if I'm an underwriter in Seattle, the (business) rules will be written so that, literally, when that risk is identified, the knowledge base is searched and information from a claims adjuster in Tampa, Fla.-which is pertinent to that risk-will come up," Saul explains. "It's similar to a search engine you would use on the Internet."

The Internet, in fact, is a key component of several of Zurich Group's strategic initiatives, according to Saul, who now heads a 1,200-person IT group.

Zurich North America's online small business sales have grown at an enormous rate, he says. From January through May of this year, the company obtained $165 million in new small business accounts over the Internet through the 22,500 independent agents registered in the e-ZSB program. Currently, 80% of Zurich North America's new small business accounts are sold online.

As a result, Zurich North America is expanding its Internet sales capability to include all product lines, beginning with middle market accounts, which will be sold online in the next six to nine months.

Also in the works: the "virtual worker," which will enable employees to do their jobs from anywhere with a browser; and global e-procurement, based on Ariba, which is expected to save Zurich Group at least $100 million within three years.


It's a little surprising that Zurich North America was able to accomplish so much so quickly, Saul admits, since a rather modest 2% of gross written premiums have been invested in information technology.

But moving agent and customer functionality to the Internet was facilitated by a basic policy administration platform developed in the early 1990s when client/server processing was in vogue. "We really saw enough of the signs then, and we developed the system in a way that separated the rules from the user interface and from the data," Saul says.

Therefore, unlike many other insurance companies saddled with much older systems, "we were able to put an Internet user interface right on top of our system and get out there significantly ahead of everyone else," he says.

The 1999 merger was just one step in Zurich Group's continuing efforts to consolidate and globalize. The Switzerland-based company is upgrading its financial systems in preparation for listing on the New York Stock Exchange, expected this fall. And last October, the company regrouped into eight regions with the intention of developing a common technology and manufacturing platform.

Zurich North America is leading the way in that effort, Saul says. "We're the largest writer of commercial P&C in the Zurich Group," he says. "We write more global accounts than any other company in the Zurich Group. And we're basically saying, 'If our software can be used in any other business model in the Zurich community, our aim is to do that."

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