Agent of Change

Penn National Insurance improves sales with Oracle insurance solutions.

by Karen J. Bannan, May 2009

Penn National Insurance sells its products through a network of more than 700 independent agents and brokers, so it’s imperative for the company to be able to determine the right pricing and product information and put it to use quickly and accurately. For a company that was using two different legacy rating engines—software that automatically evaluates and prices insurance requests—that hadn’t always been easy to do, because the two rating engine prices didn’t always agree. Recently, however, the company designed a new system, called Personal Lines, to improve not only pricing and product accuracy but also customer service to better compete in the marketplace.

Before starting the Personal Lines project, Harrisburg, Pennsylvania-based Penn National Insurance was saddled with a number of data systems issues. According to Bill Jenkins, CIO at Penn National, agency customers were using a cumbersome Web interface that was generally disliked. Even if customers used this application, difficulty getting data out of those old rating engines complicated relationships with customers and became a barrier to generating and retaining new business. Interaction between the rating engines and the Web interface created accuracy issues, which caused the company additional problems and required employees to do additional work.

“A key phrase that’s used in this industry is ‘the ease of doing business,’” explains Jenkins. “All these agents have their choice in where they place business for the policyholder. If it’s too difficult for agents to use a company’s technology, they are apt to put the business with someone else.”

This realization came at a time when every insurance company in the United States was feeling the crunch to improve productivity, says Craig Weber, senior vice president, insurance, at Celent, a research firm based in Boston, Massachusetts. Making changes has been more than just important, according to Weber; it’s been necessary for everyone in the industry. “Most insurers are continuing to raise the bar on producer-facing tools like their portals, their back-office tools like their policy admin systems, and customer-facing technology such as the document production suite that they use,” notes Weber. “If five years ago, you thought you were under the gun to contain costs and improve productivity, three years ago that pressure had intensified,” he adds. “In other words, you need to continue to innovate and attract new agents or agencies and get them to sell your products, and part of that is improving services.”

In Penn National’s case, that bar raising came in the form of several technology improvements, including migrating from a legacy rating engine to Oracle Insurance Insbridge Rating and Underwriting.

The Path to Wellness

It wasn’t a simple choice, says Jenkins. He and his team looked at 49 software vendors before making a selection. They also looked into building their own system, because at first glance they weren’t satisfied with the off-the-shelf solutions that were available. The Penn National Insurance project team even went out to other insurance companies, looking at what they were doing and which software and services they were using. All of these steps were necessary because the company had very specific goals and needs in mind that came directly from its business units. Unlike some companies, where the IT department researches new technologies and disseminates information to the business units, Penn National does just the opposite, says Jenkins. Penn National Insurance’s 105 IT department employees get their marching orders from the company’s business executives. The new rating engine project was no different, he says. The company had to make a change because the business realized that it was losing sales to other, more agile companies that had better customer interfaces and better rating engines that provided more exact estimates.

“I refuse as the CIO to set the IT agenda. That’s a prescription for death. I’ve seen too many CIOs ultimately fail because they’re trying to tell the business how they’re going to do business through technology,” Jenkins says. “From a rating engine standpoint, we wanted it to be enterprisewide. We wanted it to be able to rate in all states for all lines of business and also give us enough flexibility and interoperability to interface with legacy components that we had, like the back-end policy administration system, and other things that we’d build out, like the agency portals.”

Oracle Insurance Insbridge Rating and Underwriting fit that bill not only because it allows Penn National to price risk based on multiple factors but also because it was easy to integrate with the company’s existing technology as well as any future products. One of the most important architectural features: it is Web-based and uses XML and Web services, so it doesn’t require specific programming experience or knowledge, reducing the strain on the IT department. “We were able to integrate the Oracle Insurance Insbridge rating engine with both our new Web portal and our mainframe policy administration system,” notes Dean Kimball, project manager at Penn National.

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