With independent agents as its sole distribution channel, Selective Insurance is banking on the Internet and its agency force to distinguish itself from competitors.Gregory Murphy hasn't been CEO of Selective Insurance Group Inc. for very long, but that hasn't stopped him from developing a clear focus for and understanding of what IT direction the company needs to take.
The 44-year-old executive was named CEO in May 1999 of the Branchville, N.J.-based insurance holding company and became chairman in March of this year. He has been president since 1997.
During his relatively short tenure, Murphy has emphasized to his employees that technology and organization's strategic goals are inextricably linked. "IT is essential to execute our strategies," Murphy says. "The applications under development are crucial to our company's success."
Selective is a holding company for five property/casualty insurance companies offering primary and alternative market insurance for commercial and personal risks. With assets of approximately $2.5 billion, the company reported net earned premiums of about $800 million in 1999.
The company spends about $25 million a year on information technology and has an IT staff of approximately 215 persons. Commercial lines represent about 70% of Selective's net earned premium with personal lines constituting the remaining 30%.
As a 20-year veteran of Selective, Murphy previously served as chief financial officer and chief accounting officer of the company. A certified public accountant, he completed the Harvard Advanced Management Program and, significantly, the MIT Sloan School of Management course, Managing the IT Infrastructure for Global Competitiveness.
Murphy doesn't consider himself a "techie," but he comfortably talks about tech-nology, and doesn't at all fit the stereotypical chief executive who either avoids technology or is content to leave its management to subordinates.
In fact, Murphy talks proudly of Selective's accomplishments and commitment to IT which include using Internet technology to improve its business processes. Technology initiatives completed in 1999 include simplifying commercial lines rating and quoting, streamlining claims handling, providing agents with information, reports and business processes online and creating a national Internet channel for processing flood insurance in all 50 states.
With the launching of e-Select last year, Selective developed an extranet that enables agents to securely exchange information with the insurer. Currently, the insurer's Web site is primarily brochureware that contains product information and descriptions.
Through e-Select, however, agents can access product and rating information, forms, billing information, agency profitability statements, production reports and instant e-mail access over a virtual private network.
Another project that's currently being piloted by small group of agents is Selective's Commercial Lines Automated System, a project that the insurer hopes will eliminate many manual processes and speed up processing of commercial insurance policies.
The system provides instant access to critical underwriting information and enables underwriters and claims adjusters to quickly answer questions, process changes, verify coverages and work more efficiently with agents.
Other recent technology developments at Selective include a mobile claims system that's intended to support the insurer's claims management field adjusters who handle workers' compensation claims.
The company expects to expand the system to other lines of business by the end of 2000. Selective is also providing online rates and quotes with agents selling and servicing flood insurance nationwide.
A bump in the road
Selective also is spending money on technology initiatives not specific to the Internet but nevertheless are crucial if its Internet and other technology ventures are to succeed.
What Murphy calls a "speed bump" on the road to technology improvement involves Selective's need to implement a data warehouse and rewrite the databases for its back-end systems for personal lines.
Like many insurance companies, Selective is saddled with older legacy systems that house information in separate data silos, interfering with the insurer's ability to improve business processes.
Murphy calls the dilemma a speed bump because the data warehouse itself won't bring in premium dollars but is a necessary cost to bring about the efficiencies that Selective needs to compete.
"Structurally it's what we need to do," Murphy says of the data warehouse, which is in its early phases of construction.
Selective's commitment to its agents, Murphy says, is as important as its Internet initiatives. Because agents are the sole distribution channel for Selective, the Internet can reduce duplication and costs while bringing agents more sales contacts and leads, and improving service for customers.
Selective views the agent as a trusted business professional that can use the Internet to supplement his or her ability to service the customer. Unlike many carriers, Selective does plan to sell policies to consumers directly online.
"It's a question of where am I going to put my money," Murphy says, noting the company can develop a channel solely for the Internet or use it to reduce costs by working through agents-something it's already doing through e-Select.
A new committee
To help bring about its technology initiatives and to make sure that the business and technology units are on the same page, Selective, under Murphy, has established a new structure for executive committees.
This includes a management committee called Enterprise Project Management Office that focuses on evaluating strategic initiatives.
Composed of Selective's senior management, the committee meets almost biweekly and includes Murphy, the company's CIO, general counsel, chief financial officer and others. At the same time, an IT management office also reviews plans and helps develops IT projects.
In addition, Selective recently established a new career path for project managers, giving them the responsibility to keep strategic projects on track and on time and to assess the impact IT projects will have on all areas of the company.
All of this comes under Murphy's aggressive technology push. "Greg is the evangelist for technology around here," says Bob Redden, manager of e-business development for Selective. "He's behind the business effort and technology effort 110%. It's made all the difference in the world."
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