INN: You have an interesting title, can you explain your responsibilities at GuideOne?

Doug Cretsinger: I’m not just the CIO, I’m the head of business transformation. A big part of my job is to help us grow this business, help us conquer new markets, get new customers and become more profitable. It's less about the technology all the time, but we clearly collaborate on all technology decisions because it's integral to the business. I've created extremely strong partnerships with my business leaders and they always invite me to the table because they know that they can't be successful without technology. It’s integral, whether you're an insurance carrier or any business. You can't separate business from technology. It doesn't happen anymore.

INN: Give me an overview of what's new at GuideOne.

DC: We've been on a transformation journey from 2013 through this year. We're replacing all of our core systems, starting with policy admin. We had an old, green screen, COBOL-based legacy system for 20-plus years. It was packaged, but highly modified over the last 20 years, so it was as good as homegrown. We replaced that system and went live in June of 2013 with worker's compensation; then we went live in March of 2014 with our auto and property and casualty functions for that claim system. That was the first of three major system replacements that we've been working on, and that's now live and in production. We're just working on enhancing it this year in 2015.

INN: What did you buy? How did you implement it?

DC: For claims, we purchased the GuideWire product. Then we purchased Innovation Group's personal lines policy system and portals: the agent portals, billing and analytics. We went through about a six-month selection process, looked at 50 different vendors, got it down to the top nine for an RFP [request for proposal], got it down to the top three for vendor demos. The top three got a week each and Innovation Group won that battle. We began implementing that in 2014. We went live in September with auto in one state, Missouri. And now in 2015, we’re rolling out nine additional states and bringing in our homeowners umbrella.

INN: What’s your strategy for managing that much change?

DC: Strategy No. 1 is to maximize your business side by implementing a single line of business first. We did this in all three of these implementations. We took work comp first for claims. We took auto first in one state for personal lines. And we took work comp first for commercial lines in four states. So pick a line of business and pick a state where you can implement and be successful, because that conquers the majority of the integrations. These policy systems don't work by themselves. They have to send all that data downstream to print out the policies; they have to send it to a claims system to pay claims. They have to send it to a financial system to receive and pay premiums, refunds, all of that. So these are highly integrated systems.

In our claims system we had like 36 different interfaces to external third parties that we had to connect with. And on these policy systems, there's usually 30, 40, 50 integrations that you have to do. And you prove that with one state, one line of business first, then you know that everything else is a copycat exercise.

In all cases, we were able to root out a lot of risk by going in with one line of business one state first. And I've seen carriers try to do this with multiple lines of business, multiple states at the same time, big bang type of approach. I strongly recommend against that.

The second key strategy is go with new product first. For an existing product, try not to put conversion on the front-end. So build your product base out and new business out to the point where you know that it's going to work, and then you convert on the backend. So you don't have to do conversion on the front-end of these implementations. You can put it on the backend, and that's what we did for personal lines and new business only. So the lowest risk implementation you can have is new business only, one state, one line of business. Anything more than that adds risk, adds complexity, and you're amping up the odds that you will not be successful.

INN: Sure. So are you using telematics, big data or drones?

DC: Comparative rater, telematics and e-signature are three compelling add-ons to our policy system. We've worked with LexisNexis on the telematics capability; we're running that with their onboard diagnostic device, which is Smartphone driven; they've got a new platform they're just rolling out that is taking telematics beyond the Progressive model. LexisNexis manages all of that, and we just get the data.

INN: LexisNexis does telematics on a mobile phone? They don't do a device in the car?

DC: It's both. They have an onboard device that's in the car, but it's also logging to your mobile phone. That's how the data is captured, and then that's uploaded to the carrier. They've figured out, front to back, how to get the data from the car. So it tracks the person, it tracks the car, and it tracks all that data back up to the carrier.

INN: That's interesting -- so how soon until Internet of things comes to homes and homeowners insurance?

DC: Homes are right around the corner. We’re even looking at it for our commercial market. We insure a lot of churches; we have a program called SafeChurch. How do we create a smart church that has monitors to tell you when your fire suppression system is not fully charged? These things could help us, and our customers, prevent losses all together. We do a lot of risk management and are now looking at the Internet of things to extend that capability.

We have about 40,000 churches, that's our biggest market. Senior living communities is our second largest book of business, nursing homes, assisted living, etc. And  our third largest is colleges and schools. The fourth market we're going after is nonprofits. We're looking at 21 distinct classifications of non-profits that we believe our current distribution channels are tapping into.

INN: So what was the big differentiator for each system?

DC: We had 30 different business users testing all these systems out and we had a scorecard for functionality. Then IT took a look, in terms of technical fit and the architecture, and then we scored all of these vendors. We started with 50, but we only asked nine for a detailed RFP. And then we scored the top three through the vendor demonstrations. Innovation Group got the highest score from our user community and was a good fit with our technology architecture. And it was the best business case from a cost/benefit standpoint.

INN: It’s interesting that you didn't just go with Guidewire. You went best of breed.

DC: There was a lot of debate about that. Why not just go enterprise? There was quite a few folks that held that opinion. There are integration advantages to that. At the time, we hadn't selected our commercial lines policy system yet. We ended up selecting Guidewire for our commercial lines policy system. And we're a $600 million company and about $500 million of that is commercial lines, and $100 million is personal lines. So we also looked at like we were a  $100 million company and our P&L leader for personal lines said he couldn’t afford Guidewire; it's an expensive product. Part of it was a business decision: users felt it was superior in some things. Guidewire was number two, so it was a close call and there was quite a few folks that were arguing for an enterprise solution.

We did subsequently pick Guidewire, going through a similar process, for policy on the commercial lines side. Hindsight being 20/20, would I say “enterprise solution” is the right way to go? Yes, I would always give preference to an enterprise approach. To the extent you can get your needs met with an enterprise suite, it’s important that you try to meet it that way. In our case, we had a different personal and commercial timelines. It was more of a timing issue, how we ended up best-of-breed. Rewinding the clock, would I go enterprise? Probably yes.

INN: Do you have any working or innovation groups to monitor business or tech trends?

DC: We have an innovation budget that tracks IOT as well as other emerging technologies. Telematics is an early innovation that we tracked from the beginning and now we're actually implementing it. We are working on concepts like SafeChurch, where we're putting monitoring devices into churches to help monitor their equipment and know when it's failing and when a loss could occur. We have our own construction company and are in discussions about whether they should get into the facilities management business. If a church burns down, we send out our construction company, which specializes in church reconstruction. After a fire, we know how to get that building back in place quickly so they can get back into service. It's kind of a value-added service we offer to our customers. They don't have to figure it out; we’ll do it, and pay for it, because we're covering the claim. That construction company is a natural potential partner for facilities management, with the Internet of things and device management.

INN: So tell me about big data.

DC: Our strategy there is really to bring our claims and policy data together in a way that we can better understand all the transactions and what's happening there. So we're starting foundationally with these policy systems and starting to collect additional data types. Our data warehouse strategy is around the ability to tie disparate sources of data together. And we have a visualization, a business intelligence strategy on top of that. We have a data warehouse strategy, a BI and a visualization strategy in terms of how are we going to build out our big data capabilities. For us, it's still very early because we don't have the foundational layer of policy complete. That's our '15 and '16 focus to get policy in. Just by virtue of replacing our policy and claims systems, we're adding a 10X data elements to the data pool.

INN: Really? That much? Is that all external data? Or are you guys making changes to front-end business processes to acquire that organically from customers and agents?

DC: Agents already capture a lot of this information. But in our old process, it got scanned in as an image, so the data was lost. It wasn't captured as data within our system. Our new system is designed so, whether that agent is on an agency management system or directly entering into our system, we will capture and be able to use that data. In the past, a lot of our processing, especially of our commercial business again, was images.

INN: Was it re-keyed, or did you use OCR?

DC: It was mostly re-keyed, and what was re-keyed was not necessarily sufficient for us to do a lot of analytics around it. It was basic information. In our new system, we were gathering a lot more data from the agents directly.

INN: You guys are really, really doing a lot.

DC: Yeah, we are. My peers would call me a little crazy for taking on three major system upgrades in the same year. 2014 was the year of massive change. We had a claims system and two different policy systems going live all in the same year. Now I'm on the backend of that, rolling out all the states and lines of business. We've been able to do it through a lot of coordination and collaboration, and we haven't failed on a single implementation yet. We've had some date changes on specific deliverables, but we haven't had any concerns of not being to succeed.

INN: So how many staff people do you have working on this? How big is the team for the Innovation Group implementation?

DC: All in, that's staff, contractors and consultants, about 100 people. A third consultants, a third contractors and a third GuideOne is how I'd characterize the breakout. As part of each of the implementations, we had an onshore/offshore model through our partners. We have PwC working with us on Guidewire. And we have Deloitte working with us on the Innovation Group implementation. The main message I  have for your readers is: don't try to do this alone.

It's a huge undertaking; it’s a huge change management initiative that most companies don't understand how to manage. They’re used to running an insurance company and not used to this massive change.

With the system integration partners, this is what they do. They've done it for many organizations before, and they'll deal with many after you. Having a systems integration partner is critical for success. These projects are eight-figure projects, and high eight figures in some cases if you're not careful. So these are not things that you take on lightly and shouldn't go into without a partner.

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