Madison, Wis.-based Rural Mutual Insurance Company can be counted among the many insurers that have witnessed, over the past few years, the changing needs of both personal and commercial insurance buyers.More than three years ago, Rural Mutual embarked on a strategy that would enable the company to better serve its customers, its 160 career agency force and its own internal support staff that often interacts with agents.
The company's plan was no small undertaking: Rural Mutual will, by the end of this year, have put the finishing touches on a three-year system conversion project designed to phase out a legacy environment in favor of an open, flexible and cost-effective operating platform.
Rural Mutual recognized the role automation plays both in its ability to enhance its existing service and develop innovative new products. The company's objective was to chart a course that would leverage the right blend of technology to accomplish this goal.
"The company is at its best when face-to-face with customers," says Todd Argall, Rural Mutual's vice president of information systems. "We take pride in the personal service we provide-and establishing a comprehensive and personalized insurance policy requires the latest interactive software."
A company with roots that date back to 1934 when it provided auto insurance to members of the Wisconsin Farm Bureau Federation, Rural Mutual had put all its "eggs into one basket." It ran its entire business from one unified platform.
"We had operated in a mainframe environment with a policy administration system that was expensive to operate, and was limited from the standpoint of what we could feasibly do with technology," says Argall. "Development efforts in this environment added significant dollars to what was already a high fixed-expense structure," he explains.
"In addition, it was a 'green-screen' system with heavy paper-bound processing and no straight-through processing capabilities."
Narrowing choices
Narrowing its choice for a new system to two development vendors, Rural Mutual proceeded to fund a gap study to more closely scrutinize the differences between the two finalists. With the results in hand, the carrier then selected a fully integrated solution developed by Toronto-based Tritech Financial Systems Inc. and a document management system developed by Picom Software Systems Ltd., also based in Toronto.
Rural Mutual decided that Tritech's General Insurance Management System (GIMS) and Picom were the right systems for its needs-based on a variety of rationalizations. Argall emphasizes that the solution set was compatible with Rural Mutual's general business requirements and specific needs, which were actually relatively modest.
"We were not seeking a so-called 'Cadillac,' or a customized systems solution," he says. "Mainly, we wanted a cost-effective solution that offered significant functionality, and that was flexible enough to operate in a non-mainframe environment."
Rural Mutual's leadership opted to divide the project into three phases that would span 11 lines of insurance. Each phase was carried out by specific business lines.
The more simplified personal lines were performed first, while the more complex lines-among them workers compensation and business owners policies-were the last to go live on the new architecture.
"Phase one occurred in 2003, and was performed as part of a 'big bang' conversion over a weekend affecting the first wave of insurance lines," Argall says.
"We built up a history (of the data) quickly. During the conversion process, we were also able to bring over historical data. This approach positioned us to retire our legacy applications aggressively."
Managing the risks inherent in performing a "big bang" conversion, Rural Mutual decided during its due diligence on process selection to work with a third-party consultant to carve out an IT needs assessment.
It engaged in the traditional process of reviewing proposals. "During the selection process we performed a business case analysis," says Argall. "Our CEO was involved and the team was focused and bent on doing this right."
Carriers such Rural Mutual can get much more out of their systems and business processes, says Bob Symons, president of Tritech.
"End-to-end systems are able to integrate all lines of business, improve access to information and dramatically reduce costs and ultimately raise the bar on customer service."
Adds Symons: "Rural Mutual perceives the new technology as having a significant influence on the way it does business. The integrated computer system provides greater availability and access of information to agents, underwriters and adjusters as well as to home office staff. The direct entry of information by agents eliminates duplicate paper work, improves accuracy and speeds delivery of policy information back to the customer."
Tritech isn't the only vendor partner with a stake in the project. Picom Software Systems' solutions are designed to enable carriers to engage in automatic online retrievals, where information can be accessed from a centralized business repository.
Built on an open and integrated architecture, the system will give carriers access to unified customer and agent data across all lines of business and products.
Efficiencies apparent
While return on investment is still not measurable with the Tritech-Picom project, Argall asserts that the company's information systems expenses will beat industry best practices starting next year. And the organization is already realizing significant efficiencies due to the implementation.
For example, replacing the paper processing with a PDF-based electronic folder system that gives everyone in the organization access enabled the company to completely eliminate a file room where policy documentation was stored.
Argall adds that for agents, the system migration at first was a disruption to their existing workflow. But as agents become more familiar with the system, they are able to engage customers more effectively at the point of need.
And there's a lot to be said for that capability. While the Badger State might be modest in population size, the needs of its population has added a complex twist to insurance product development and distribution.
"Using this new technology, our company and agents are better able to expand service capabilities that will enable us to meet the needs of Wisconsinites from all walks of life," concludes Argall.
Rural Mutual Insurance Co.
At A Glance:
Headquarters: Madison, Wis.
No. of employees: 160
No. of career agents: 160
Annual written premium: $138 million
Personal lines: Personal, automobile, homeowners, renters, umbrella Liability, health, disability, long-term care
Commercial lines: Business owners policy, commercial package policy, workers compensation, business auto policy, commercial excess liability, group health & disability, business overhead expense
Farm lines: Farm excess liability, crop hail, multi-peril crop insurance, workers compensation, country estate, group health & disability, business overhead expense.
