As a provider of group pension programs, New York-based Guardian Life Insurance Co. of America understands that when it comes to mutual fund policyholders, many have an insatiable desire for data that will help them maximize their investments.Unlike typically static health and life coverage, 401(k) plan participants regularly juggle fund portfolios on a weekly or monthly basis. Even if they don't engage in fund reallocation, group pension customers are inveterate monitors of their fund balances-many doing so on a daily basis.

Cognizant of this level of fluidity, Guardian's pension unit has made a conscious effort to disseminate data to its pension policyholders quickly and accurately. Much of this process in the past was carried out manually, through call centers or through brokers and agents. The lack of efficiency within the system was not lost on Guardian executives.

For example, Guardian executives found that when mutual fund customers contacted a call center, they often wanted only to check the status of an account. This only served to tie up call center representatives' time when they could be assisting customers with more pressing needs.

Guardian also found that inefficiency ran amok in the manual preparation of group pension proposals. In addition to significant paper costs, it took several weeks from the time a proposal was presented to when enrollment books were printed.

With an eye on improving these vexing areas of the operation and to better serve its customers, The Guardian's $2.5 billion (total assets) group pension unit has, over the course of two years, boosted its investment in the Web to drive its business to greater heights.

The implementation of an ambitious strategy for its Web property is just one reason why The Guardian has been able to hike its overall unit growth 25% to 30% each year over the last three fiscal years.

Autonomous automation

Guardian's Web initiative within the group pensions unit is just one piece of an ambitious enterprise-wide push toward automation at the company.

Established in 1894, Guardian and its subsidiaries provide almost 3 million individuals with life and disability insurance, retirement services and investment products, such as mutual funds, securities, variable life insurance and variable annuities.

When The Guardian began to explore the Internet in the mid-1990s and the role it would assume throughout all of these product lines, top management recognized that each business unit possessed its own unique operational circumstances.

Most carriers that serve policyholders via the Web, for example, understand that the needs of a life insurance customer in a Web environment is dramatically different than the needs of a customer who owns a mutual fund. Life customers need Web tools at the front end of the process to determine precise coverage amounts.

As a result, each business possesses divergent uses for Internet applications. Instead of implementing a cookie-cutter Internet development strategy, The Guardian's senior executives had other ideas.

Customer empowerment

"We implemented a plan where each business was free to develop its own e-business profit and loss program, with crossover points connecting the various businesses. The backdrop to all these initiatives is that in each business unit, the program is being driven by senior executive oversight," says Dennis Callahan, senior vice president and chief information officer for The Guardian, who joined the company in late 2000 from New York-based AIG Corp.

Executives in the group pension saw the handwriting on the wall. In the mercurial world of mutual funds, investors need ongoing support to maximize their investments.

The Guardian's group pension unit serves approximately 6,000 small-size U.S. companies, issuing 185,000 individual pension policies to employee participants. These policies encompass 41 mutual funds that span the risk spectrum from high to low, and include both growth and income funds-or a combination of both.

During the mid-1990s, The Guardian's group pension executives were attuned to one emerging trend surrounding their business: mutual fund investors were becoming increasingly more astute in their overall grasp of 401(k) products. As such, The Guardian found that plan participants continuously wanted anytime access to their funds. But aside from access, The Guardian found that consumers harbor a passion toward their 401(k) plans.

"If you look at a 60-year-old consumer today, their 401(k) is now the most important asset they own. A 401(k) is now viewed as more valuable to them than their own home," explains Dennis Mosticchio, The Guardian's vice president for group pensions.

There was another emerging trend taking shape concurrently with this. "Providers such as Fidelity Investments and Vanguard represent intense competition," he says. "The large mutual fund companies lead the charge, so we realized that it was critical to make the Web strategy a growth vehicle."

To address competitive forces and better serve customers, Guardian put a plan in place that would be light years ahead of the group pension's first-generation Web program, which consisted largely of bro-chureware, says Mosticchio.

Working independently of other insurance units within the company, the group pension division's Web strategy reached a higher plateau in 2000.

This is when The Guardian not only redesigned its Web capabilities from an aesthetic standpoint with richer text and graphics, but from a utilitarian standpoint as well.

Adding New Features

The site now enables customers to access online calculators, perform investment planning and market mapping and perform mutual fund modeling that's critical to long-term performance and growth.

One of the features that Mosticchio believes has brought significant credibility to the Web program is the company's recent affiliation with Chicago-based Morningstar Inc., a mutual-fund rating firm.

Within this venture, Guardian's plan participants are able to directly link to Morningstar's Web site to glean a complete view of the mutual fund market and then download the most current information on performance trends of various funds.

With the data in tow, they can transfer funds around accordingly. "Stale data can kill you," says Ted Kobela, manager of Guardian's IT group.

These features have made a dramatic difference in The Guardian's Web volume but, more specifically, real activity. In early 1999, the group pension portal of was generating about 240 transactions a week, says Kobela.

Presently, the company is amassing 1,000 transactions per week from existing pension policyholders. All told, The Guardian receives 17,000 unique visits per week to its site.

Targeted to its customer base, Guardian's pension unit isn't stopping at these innovations. In the coming months, the company plans to introduce more interactive features. To complement the Morningstar initiative, the company is in negotiations with several online financial advisor providers so that plan participants can connect with an online financial advisor.

The Guardian is also developing a wireless application protocol (WAP) that will enable customers to use their wireless phones to check account balances and perform other functions, says Mosticchio.

Digital destiny

The Guardian's strategy also encompasses its business affiliates, which include employer/employee groups, third-party administrators, brokers, agents and its internal sales force.

The company is committing resources to enable these groups to maximize their efficiencies. Among other things, The Guardian is establishing Web portals for them.

For example, nowhere is The Guardian's internal program and its attendant Web portal program paying bigger dividends than in the new-business arena. Under the old system, a sales proposal would be initiated by a sales representative who would complete all the specifications before handing it off to another contact point for the next step of processing.

This processing typically would be handled by an administration representative who could be located in any one of 10 Guardian branch offices.

However, this second phase was a fragmented process that led to mass inefficiency, predominantly involving human error, Mosticchio says. Within its Web-based program, sales people now have total control over a client's proposal, effectively eliminating a dicey part of the process, and saving both time and money for group pension enrollment.

When Guardian sales associates complete a sale while at a client's headquarters, using a laptop computer they can log onto and navigate to a secure area to begin processing the enrollment documentation.

From an individual Web portal, the sales person can establish a Web interface with the vendor that develops enrollment kits for group pensions.

Electronically transmitting the order to the vendor, The Guardian is able to shave significant time and money from the manual processing cycle. A binding process that normally took weeks now takes two or three days, Mosticchio says.

One of the dramatic improvements that The Guardian has been able to make to a group pension handbook is the customization the Web provides.

"In the past, the booklets were very generic. They could have belonged to anyone," Mosticchio says. "Now, a client can provide us with an electronic image of their logo, and a message from the CEO complete with an electronic signature, which can be used as the cover page. We can construct the enrollment kits around these elements. It has become very personalized."

Another dramatic improvement is with cost savings. Under manual enrollment processing, it used to cost Guardian $12 per individual enrollment kit for a company's pension plan. It now costs The Guardian $4 per individual enrollment kit through electronic processing. The savings come mostly from elimination of manual labor, and reduction in the number of vendors involved.

Assisting Third Parties

The Guardian has also made life easier for its 150 third-party administrators who oversee many of The Guardian's group pension programs on an ongoing basis. Much of their responsibility is in the regulation phase of group pensions. Presently, third-party administrators use the company's integrated Web portals to make sure The Guardian's group customers are participating in the program in a prudent manner.

"Third-party administrators calculate vesting within a 401(k) plan and also tend to perform non-discriminatory testing to make sure that higher-paid executives at a company are not allocating more into an individual account than they are entitled to," Mosticchio says.

As it goes forward, The Guardian appears to be in good shape to build its technology to even higher levels over the next three to five years, Callahan says. "We aim to have the most technologically advanced, user-beneficial technology in the industry. Basically, we think we have a Web program that's as intuitive as possible for our customers and other business affiliates." he says.

Register or login for access to this item and much more

All Digital Insurance content is archived after seven days.

Community members receive:
  • All recent and archived articles
  • Conference offers and updates
  • A full menu of enewsletter options
  • Web seminars, white papers, ebooks

Don't have an account? Register for Free Unlimited Access