Midwest Insurance Co. is an INNovators Award Winner runner-up, chosen for its strategy to replace an aging legacy policy administration system with one that now delivers real-time data to all end users.Just seven years old in 2005, Midwest Insurance Co. had already outgrown its policy administration system. "It was old client-server technology," recalls Rick Vogl, the company's vice president-IT. "The legacy system couldn't handle the volume of quotes we have coming through our system, and the amount of premiums we push through it.
"And there were certain things we couldn't get from it ever," Vogl continues. "We had to look for something that was going to take us to where we really needed to be from a systems standpoint. Our tiny, little Web-based rating engine could handle the volume, but our back-end policy administration system couldn't."
Based in Springfield, Ill., Midwest is a mono-line workers' compensation carrier active in states including Illinois, Indiana, California, Minnesota, Arkansas, Kansas and Missouri, and has aggressive expansion plans. Founded in 1998, the company's premium currently exceeds $100 million. Midwest sells exclusively through agencies, but all of its business is Internet-driven.
"The agents log in and use our Web rating process, which is integrated with everything else," Vogl says.
Customers can also log onto the Web site for online payment and, as another system currently in implementation becomes available, to enter claims in that system as well.
The search for a new system began early in 2005. "From an IT standpoint, we were looking for a very robust product," Vogl says.
The system had to integrate well with Midwest's Web-based rating and rules engine and deliver real-time data to the company's end users. It had to deliver the reports and produce the documents Midwest needs. Finally, Vogl wanted to be able to make changes quickly. With the legacy system, he had to wait while the vendor made modifications. This time, he wanted the code so Midwest could do its own development.
Vogl looked at dozens of policy administration systems-"all the big ones," he says-and finally chose PowerComp from InsureWorx. (PowerComp was renamed PowerSuite following the September 2006 acquisition of InsureWorx by Brookfield, Wis.-based Fiserv Insurance Solutions.) "Honestly, the first time we saw it, we just knew it was the one," Vogl says. He was impressed by the technology, the flow, the amount of data it captured that he could see, the rules built behind it and the way the database was structured.
"A big selling point was the people who were involved in our demos," Vogl continues. "They were actual business people who had worked in [workers'] comp for 20 years. We were comfortable, since they knew how the system had to be programmed. They knew going into it what we needed."
But there was a slight hitch. PowerComp was originally written for DB2, and a version for Oracle - Midwest's platform - was still under development in the summer of 2005 when Midwest made its choice.
"So we waited," says Vogl. "They gave us a shell copy of the program to begin our integration with our Web product from a database standpoint. We began that at the end of October 2005, and we got our first official release the following February. We received a subsequent release in March 2006, and we went live on April 1."
Midwest did its own data conversion and integration in-house. Major integration points included the company's Web product, its imaging system and its claims system. The latter is currently being replaced by Fiserv's PowerSuite claims product.
Integration with the imaging system and the Web-based rating system went smoothly. The biggest implementation problem, according to Vogl, was cleaning up data from Midwest's old policy management system.
"When it rated, it would sometimes truncate something and sometimes round it. Then, in the next release, that same rating element would truncate again or round down instead of rounding up. We had all kinds of issues with that, so we had lots of write-offs," he says. "And when we tried to get PowerComp to bill the way our old system billed; that didn't work, so we had to turn that off and just let the system do what it was designed to do."
The difficulties, Vogl points out, were tied to some idiosyncrasies in the way the legacy system ran its calculations. And the solution amounted to cleaning up the data. "We held up certain things so the road would be less bumpy," he notes. "We knew going into it that we would need to do this because of the quality of the data that we had."
During implementation, Midwest's agents were completely unaware that the company was putting in a new policy administration system. "They could quote all day long," Vogl says. "It never affected anything. We could revise a quote because that's held outside of the back-end policy administration and claims arena." Agents didn't know about the new system until it went live.
The new policy administration system also automates and streamlines everything from document creation to e-mail creation and reporting. "We track everything now," Vogl comments. "When you give somebody a live view of the data and you know it's going to be correct, then you're able to start gauging yourself and tracking your performance."
A little more than five months after Midwest implemented PowerComp, Fiserv acquired InsureWorx and PowerComp was renamed PowerSuite. But the change in ownership hasn't made much of a difference to Vogl. "Our agreement never changed. It's almost like a code-development environment. We use IBM ClearCase [version control software]. We get a cut of the code every evening, and it gets merged back into our base product."
That new environment has led to growth in the company's IT department. The original implementation of the PowerComp policy administration system involved just two people at Midwest, including Vogl, with a little help from the vendor and a consulting firm. Since this past July, Vogl's staff has grown to include three developers and a support unit.
Apart from better positioning Midwest for growth and change, PowerSuite is having a significant customer service impact on the carrier's agents and insureds. "Cancellations are going down and we're putting more policies on the books," Vogl says. "It's ease of use, for us as well as our customers."
Bob Mueller is a freelance business writer based in Grand Beach, Mich.
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