Farmers Alliance Mutual Insurance modernized and refreshed its billing, claims and policy admin systems all in a matter of three years. And the work isn't over. Just last year, the insurer shifted gears on its policy admin system strategy for its commercial, general liability and homeowners' lines of business.
Using a buy-and-selective-rebuild approach, Farmers Alliance Mutual employed middleware standards that enable interoperability across multiple core back-end systems, eliminating manual re-entry and resulting in straight-through processing.
The standards-based approach enabled the insurer to realize incremental transformation with minimal impact on the business, and the end result is a very flexible system that Farmers Alliance Mutual is able to enhance and support without vendor lock-in.
As the VP of IT with McPherson, Kan.-based Farmers Alliance Mutual Insurance Co. (FAMI), Andy Edwardson knows a few things about successful system overhauls.
In the past few years, Edwardson has overseen a complete overhaul of FAMI's core systems, in which he employed a variety of approaches. (See "Project Timeline Year Milestones," right.)
To replace FAMI's policy administration system, Edwardson used a phased approach by line of business and state. This was in contrast to the big-bang approach taken earlier with other core systems.
For Edwardson, the insight derived from the sea-change strategy to overhaul several core systems at once caused him to focus on how execution of this strategy would impact all stakeholders. As a result, his team created the "iFAMI" approach, which won the insurer the 2009 Celent Model Carrier designation.
That large project, which the insurer named iFAMI, involved a number of pieces. "Initially, with iFAMI we were going through the modernization initiative-we refreshed the billing system, the claim systems and the policy admin systems. Through this, we took off down a path with respect to policy admin, but after about a year or so we shifted gears," Edwardson says. "We implemented OneShield's Dragon product for business owners' LOB, but then for some of the other lines of business-the larger lines-we wanted to do something different."
That "something different" was already in-house. Since the insurer had several pieces-including print and rating engines, claims correspondence and document management systems-already in place, FAMI was looking for only the core administration pieces of a policy admin system, Edwardson says. Based on an ongoing relationship with Pittsburgh, Pa.-based Jarus Technologies Inc., FAMI decided to build out the policy admin piece with Compass, a comprehensive and advanced policy admin system developed by the tech solution provider. The decision ultimately proved successful and won the insurer second place in Phase II of the INN 2010 VIP Awards program.
In May 2009, using a buy-and-selective-rebuild approach, FAMI initiated the core system redevelopment, and converted commercial property from a manual line to an automated line. As of press time, FAMI was in the process of converting general liability, and homeowners' is planned for November.
The primary goal of the modernization effort is to improve the ease of doing business for FAMI's agents. FAMI wanted to provide agents with a number of capabilities, one being an easy search function within its agency-facing portal. "Short of going the distance of a Google-style search, we started to look at other frameworks, and Jarus has been good about bringing in other frameworks to the table," Edwardson says, noting that the insurer is using The Apache Software Foundation's Apache Lucene, an open-source, full-featured text search engine library written entirely in Java, to fulfill that need. "We're using [the new policy admin system] as a foundation to build on. Even outside the context of pure business processes, Jarus has thrown other tools on the table that would help out."
A Standard View
Edwardson says the use of standards has resulted in improved reuse and optimized integration efforts. Because FAMI's specialty lines products are highly customized, understanding and pinning down the business requirements can be tricky. Accordingly, FAMI employed standards to create a standardized middleware that uses a consistent business vocabulary across all systems. The standards enable interoperability across multiple back-end systems, which eliminates manual re-entry and enables straight-through processing (STP). In addition, the business rules have been externalized to a business rule engine, resulting in increased business agility.
While simultaneously supporting the old and new during the transition period created interesting technical challenges, the standards-based approach enabled FAMI to realize incremental transformation with minimal impact on the business.
The end result is a flexible system that FAMI is able to enhance and support without vendor lock-in. The strategy also resulted in a significant return on investment, and a faster time to market compared to traditional approaches such as buy or build. In addition to monetary benefits and business efficiency, the new system enables higher quality of service, resulting in improved customer satisfaction for the agents. Agents also now see quicker turnaround times for new business and policy changes. Whereas processing used to take a week, the new system has reduced it to just minutes. Agents also are now empowered with more processing capabilities and access to additional information, which help them maintain a consistent and complete view of their clients.
FAMI's agency-facing portal is specifically customized for the agent, but the system that people use in-house is a legacy application-something FAMI plans to change. "Our hope is that the agent and internal user will eventually play in the same sandbox," Edwardson says, referring to slight nuances driven by rules between the user interface. "They'll eventually use the same user interface, and the agents are really excited about that. When they're talking with a customer service rep or underwriter, they can talk the same language and look at the same things."
