Outsourced SOA Eases and Streamlines Insurance Quote Process | Article

bottleneckDan Pitcher, Vice President of IT for Western Reserve Mutual Casualty Company, had a big problem a few years ago.

He realized there was a tremendous information bottleneck between his mainframe and the independent agents that wrote his company’s policies. It was costing money and affecting business at Western Reserve, which is part of the Western Reserve Group (WRG), of Wooster, Ohio. Moreover, he realized he was fighting a twenty-first-century battle with twentieth-century weapons. Little did he know on that day that his problem would be solved with the help of an outsourcing provider that would explode his bottleneck with a real-time information stream to cure his ills.

At the time, getting an insurance quote from an independent agent was a manual, time-consuming process. Agents relied on rate information from many companies, typically mailed on disk by each insurance agency. Agents loaded the updated rates onto their desktop and their rating program would recalculate them. The agent combed prices from multiple insurance agencies one at a time.

If a quote was accepted, the agent printed the application, filled it out, and mailed all the materials to WRG, which then keyed the information into the mainframe, printed the results, and mailed it back to the agent.

This process took a long time with the danger of any number of mistakes entering the application at any point in the process; improper data entry was one of the largest, according to Pitcher.

“The quotes were close but seldom perfect, off by a few dollars. That was universal to the industry at the time,” he says.

But what alarmed him most was the fact that the insurance business was shifting to real-time rate information and he didn’t have the time, money, or staff to redevelop the WRG database into a Web-friendly one. As he worked the problem, the thought became clear. His answer lay in outsourcing.

The old diskette-based mailings had to end in favor of live rate information via the Web. And he discovered his answer was an outsourced Service-Oriented Architecture (SOA) to facilitate communications between two services: in this case, his mainframe and a remote hosted ASP with Web pages his agents could access.

“Insurers have to be easy for agents to do business with,” he says. “We’ve got to improve services and manage expenses. And extending data applications to agents via the Web is the mantra.”

A New Portal in Weeks, Not Years

Pitcher’s quest led him to OpenConnect Systems of Dallas, Texas where he found a partner with the answer to his needs. Ed Peters, CEO of OpenConnect explains the solution that essentially left WRG’s database intact, yet built a new, highly-efficient portal to it. “If you have assets you can already tap and reuse, SOA actually allows you to decrease your risk and produce more value with what you’re already using. And obviously, it increases your productivity.”

“The emergence of outsourced SOA is actually revitalizing the mainframe business,” says Dana Gardner, principal analyst for Interarbor Solutions, of Gilford, New Hampshire.

OpenConnect’s development unit along with Pitcher’s staff configured a Web service from WRM’s existing mainframe business processes that a provider hosted. It was a test project using a farm owner’s policy. It took only six weeks to develop, thereby bypassing the traditional solution of establishing an entire mainframe system, which typically takes at least a year.

OpenConnect’s Vice President of Product Marketing, Chris Houck, says his company’s experience in providing similar services many times prior helped that developmental acceleration. “Nothing is really created, just repurposed for the Web world. They already did the hard part on the mainframe.”

Given WRG’s relatively small size, mapping out the Web access site was simple, according to Pitcher, who notes a larger organization would have a more difficult time. But it was that very idea that created another opportunity for OpenConnect to expand its offerings.

Imagination Creates New Partnership Opportunity

The firm then developed a mainframe process discovery application called “Comprehend,” which also sits remotely with OpenConnect outside Western Reserve’s mainframe. It monitors every Web user’s interaction and catalogs behavior.

After the successful test project, WRG and OpenConnect spent three months to Web-enable the insurer’s first line of business, homeowner’s policies. Pitcher said he was stunned at the speed of implementation; the supplier integrated all but one line of WRG’s business over the next couple of years.

Once independent agents started using it, several sequential benefits began to appear.

First, the company’s efficiency increased, as agents got policy information in real time. Then the company enjoyed an increase in policies. Marketing information gleaned from Comprehend produced intelligence that allows WRG to develop more attractive services. Not to mention the seven-to-eight-figure savings generated by not having to build and program multiple Web-based mainframes.

Now that agents receive quotes and write policies directly from the Web, they–instead of WRG employees–create 97 percent of WRG’s auto and homeowner policies. Pitcher also notes much of the “old way” that found WRG employees typing all policies into the mainframe was virtually eliminated, now that agents can communicate directly with his mainframe.

The new system also produces other gains such as an end to data-transcription errors and only occasional production and mailing of data diskettes.

So what does Pitcher think when he looks at his $1.2 million solution now? “Without this service, we couldn’t afford to stay competitive.”

Lessons From The Outsourcing Journal:

  • Service Oriented Architecture outsourcing providers can create real-time communications between existing mainframes and end users in a fraction of the time it takes to build “Web-friendly” mainframes in house.
  • SOA providers can also monitor user habits, thereby helping to create more market-centric products and services based on intelligence gleaned. This can have a dramatic effect on insurance firms in helping them develop products and services to meet a fast-changing market and are easy for agents to sell.
  • Firms that use twentieth-century technology to address twenty-first-century problems are best served financially and operationally by outsourcing the tasks necessary to make them competitive in today’s real-time business arena.

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