The Big Fix-Case Studies Published in ITA Pro
Technology Gives Insurer Vision for the Future
Like many insurers, Iowa-based GuideOne Insurance was saddled with a legacy platform for claims, policy, and billing that was over 30 years old. So in 2013, GuideOne began its transformation that its leaders feel will allow them to profitably grow their business over the next few decades.
The carrier went live with a new claims system for its workers` comp business in 2013 and followed that up in 2014 with its material damage and property claims. Today, GuideOne is in the process of replacing both of its policy systems for personal lines and commercial lines business.systems for finance, billing and claims,” says Doug Cretsinger, senior vice president, business transformation, and CIO for GuideOne. “We had around 40 interfaces that had to work with the new policy system.”
GuideOne is a P&C carrier with about $600 million in direct written premium. Over 80 percent of that is written on commercial lines with the rest in personal lines. GuideOne began as a personal lines carrier and evolved to where it is today, writing coverage primarily for the church market, senior living community market, and the education market.
GuideOne is looking to expand to a non-profit niche, according to Cretsinger, and has identified 120 other classes of non-profit areas that the company is qualified to serve.
“Our vision is to be the leader in faithfully serving the ministry, non-profit, education, and care communities, but also to serve the people who work in those organizations,” says Cretsinger. “We have an affinity strategy to offer discounts and special benefits to members of those institutions—such as a faculty member of an educational institution—that we insure so they can get personal lines benefits.”
Two key strategies were used by GuideOne to reduce risk and maximize value. First, the insurer conquered the integration issues before it rolled out to additional states. The second key was to take a greenfield approach with the new system being used strictly for new business.
“It's a new product for auto, home and umbrella so we are not going into this with an old product,” says Cretsinger. “When we went into Missouri we offered three new auto products. The economy product for those early in life and to protect a limited value of assets. The value product serves higher coverage needs for those that have accumulated some assets. The premier product is for folks with a lot more assets.”
GuideOne went live with the commercial lines policy system with four states for workers` compensation and is in the midst of developing the commercial lines package policy this year. Three major systems are being replaced with all policies and claims converted throughout this four-year period.
“It`s a lot of activity in a short period of time; a lot of change to take on, but we believe it is imperative to be able to grow our business and replace these legacy platforms with modern technology that allows us to extend policy, claims, and billing through mobile technology, portals to allow our customers to view claims and do billing online, and make transactions online in a consumer-friendly model,” says Cretsinger. “The ability to see what's happening through the life cycle of the policy is important to our agents. In the new world, they will have access to everything they need to know. Our focus is on transformation through the replacement of our three core systems.”
GuideOne conducted its due diligence on the solution provider market with the help of the insurance technology advisory firm Novarica. They scanned the environment and studied more than 50 software firms. The number was reduced to nine and those vendors were sent RFIs.
From that group, three finalists were selected and were passed on to the carrier`s internal committee. The three remaining vendors each ran demos for one week to show GuideOne what they could do. Cretsinger explains it was a highly scripted demo based on what GuideOne wanted to see accomplished. A big part of the evaluation was how the vendors were able to meet the demo requirements. Innovation Group and its Innovation Insurer package came out on top for personal lines. That process took about six months.
“We scored the three finalists with a detailed evaluation of functionality across a number of parameters and we had about 30 people involved,” says Cretsinger. “We engaged our personal lines users with people from underwriting, policy issuance, and billing. Innovation Group scored the highest by far in terms of functionality. We built a business case for this and they were competitive on pricing as well.”
GuideOne mobilized a project management team that included project managers, business analysts, quality assurance representatives, and developers—the four key roles within the PMO realm. The carrier had a product team, a business sponsor, an executive sponsor, and an executive governance group that oversaw the project. The insurer realized they needed additional help with business and system integration so Deloitte was engaged to deliver this.
“There is a trifecta—business leadership with the carrier, software development leadership, and the delivery expertise that comes from a systems integration partner. All three of those are important to have together before deployment,” says Cretsinger. “Don't try and do this alone. You have to have the expertise of the software vendor and a partner that has done this and understands the black holes you can fall into. It's important to have a partner to help with that. We set up a dual model where I had a project manager and Deloitte had a project manager. We have over 100 people working on this project. You need folks who can manage the business and project resources.”
Thus far, the performance has been good, according to Cretsinger, although projects of this scope never come without challenges.
“It's not for the faint of heart,” he says. “Anyone who takes on a policy project needs to remember the end users are their agents. The agencies and the CSRs have to build this system into their business model and there are no two business models that are alike, especially in the agent market. We went to the career agents first because we have more control over how they sell and market. We then rolled it out to our independent agents. The high risk on any implementation is you are injecting your process into an independent agency office and if it doesn't work flawlessly they are not going to adopt your system.”
The big advantage GuideOne sees from this project is the company was able to roll out a new set of life-stage products with an affinity strategy to allow the carrier to market itself through affinity partners.
“With that commercial relationship we are able to sell to partners a system that allows us to identify those leads and feed them to our career agents, our independent agents, and also home-office agents through our call center,” says Cretsinger. “As the affinity partners give us their membership lists, the member gets to choose what type of agent they want to deal with. It's given us the ability to rapidly grow our personal lines business through those affinity marketing capabilities and with a new product capability that we didn't have before.”
Cretsinger doesn`t believe the core systems are going to be replaced again any time soon. He feels the new software should be good for decades and what will evolve are mobility and the front end of the systems with portals for agents and customers, mobile platform that the portals run on, and the ability to extend the way the carrier operates over the next several decades.
On the back end, Cretsinger sees the advantage being the ability to perform data analytics. GuideOne has also purchased Innovation Group`s analytics platform, Insurer Analytics.
“We have more data capabilities than we had in the past in terms of understanding buying behavior and their cycle of activities,” says Cretsinger. “Our focus once everything is live is to extend our capabilities on the front end and on the back end through data analytics capabilities.”
The second advantage involves the insurance product itself. Cretsinger maintains the reason insurance companies replace legacy systems is because of the need for more agility in the market.
“You need to be able to bring new products to market quickly,” he says. “We couldn't write a five-car personal auto policy. In today's economy it's not strange to find a five-car household. We didn't have the ability to extend our product to the modern world. There were many examples of market constraints in our old system and we now have the ability to be more agile and meet the demands of our customers.”