Donegal is a very traditional insurance company. At $256 million of premium, it is a well-known and respected company in its market area, which is Pennsylvania, Maryland, and a number of nearby states. The carrier writes only property and casualty insurance, through 1,200 independent agencies, with which it has very strong ties. A little over half of its premium is personal lines; the rest is commercial.

Ferraro, vice president and chief information officer, is the man responsible for Donegals IT strategy. He has a strong technology background, starting in the telecom industry in the late 1970s and moving to insurance in 1982. Most of that career has been on the carrier side, originally with Maryland Casualty (bought by Zurich), Donegal, PHICO, and his current, second tour of duty at Donegal. Ferraro is responsible for 42 technology professionals at the Donegal companies.

The biggest iron in Donegals data center is its IBM mainframe, running its main CSC (formerly PMSC) policy processing system. The insurer has no plans to replace it, so tying it into Donegals future plans is very important. Among other things, Donegal uses it to feed the companys own data warehouse, which it built based on Oracle and with tools from Cognos. Its a fairly big project, Ferraro says, referring to the data warehouse project. It has been in place for two years, during which time the company has gone from monthly data downloads to weekly ones, and now Donegal updates parts of it every night and is adding new functionality. A data warehouse is never really finished, he observes.

Like most agency carriers, Donegal has built an agent intranetaptly called Donegal Expresswhich the company is expanding. Unlike many, however, the carrier has gone the extra step to open it up to its policyholders. There is far more functionality for agents, of course, but policyholders can see their policy information, make payments, report claims, and do a number of other functions. Agents can do commercial rating (but not real time, yet), access claims information, see a myriad of reports, view images of policy documents, and more.

One major project under way is to create real-time, personal lines rating capability for agents. Currently Donegal uses rating disks, made by a local vendor, for personal lines. We really want to have the rating done using the same code that issues the policy, Ferraro says, so that we have only one set of programming to maintain. Here is how Donegal is going to do it: Its working with CSC on a new product that will re-compile its mainframe COBOL code to run on a PC-based system, and Donegal will download the code to it each night, so the company only does updates to the main system. The PC system will be updated nightly, operate in real time, and access the same MVR, credit, and CLUE systems, so it can give issuable quotes. The system will also include automated underwriting decision trees so that a significant percentage of policies will be issued without human intervention.

Scheduled for later this year, the system will initially be deployed through the IVANS Transformation Station network. Our first connections will be to agents who have the Applied Systems agency management systems, since that management system already contains the technical capability we need, Ferraro states. Then well roll it out for agents with AMS and DORIS systems, and eventually add it to Donegal Express as well.

Pretty big plans. Wonder if they have enough room in that new data center?

Ray Carroll
Pekin Insurance Group

He solved a common IT problem in an unusual way.

Pekin Insurance, like many carriers, has a number of COBOL-based legacy systems. They are not broken, and Pekin does not intend to replace them anytime soon. The company did want to start moving to the Web, however, but didnt have those skills internally. The usual choices were to outsource, hire new people with these skills, or start cross-training the current staff in the new technologies. Like many, Pekin chose the last option but did it differently. Specifically, the company arranged with a local college to have college-level, for-credit classes given on the insurers premises.

It takes a lot more advance planning, says Ray Carroll, vice president of systems, but our people really like it. The company has employees going for degrees and advanced degrees. The classes, limited to 15 people per course, are usually completely full and taught by the faculty of the Illinois Central College. Pekin has a classroom facility for computer training that was ideal for the courses.

The carrier has a lot of infrastructure because it writes many different kinds of insurance. Most insurance companies are either predominantly or exclusively property/casualty or life/health, although many of the bigger ones operate on both sides. Pekins business is about half and half, with premiums for both operations totaling approximately $450 million. Pekin Insurance Company, the main property/casualty operation, writes about a 60/40 split between personal lines and commercial lines. Pekin Life Insurance Company, the main life/health company, writes about 55 percent in life insurance and 45 percent in group health. With the exception of their general ledger system, the two sides of the business have entirely different software, much of which is homegrown. Or they did, at least, until Pekin introduced Pekin Partners, the companys new agent intranet.

We listen to our agents, Carroll says, referring to the carriers 1,100 agencies, which write mostly in four midwestern states, and they were asking for a lot of functionality. Capitalizing on Carrolls programmers newly trained Web capabilities and their inherent understanding of the existing mainframe systems, the company tied its new agency intranet directly into the mainframe systems.

When an agent or CSR quotes on auto policy on Pekin Partners, for example, the intranet is hitting the mainframe code in real time. It pulls the MVR, insurance (credit) score, and CLUE report from the companys real-time connections to its suppliers. If the risk is eligible, it returns a fully bindable and issuable rate. The same code that quotes the risk during the day issues it at night, if the agent orders the policy. This capability is already live for personal auto and homeowners. Some life and group products are available for rating, although issuance is not considered at this time.

Many of Pekins agents write policies across lines, in both of their main companies. They tied it all together with the intranet. Agents can get a view (and reports) of all their business and drill down into any of it. Similarly, pulling up the detail of a policy will bring up a view of all the policy information, including claims, premiums, billing, etc., for that policy. This all happens seamlessly in the agents view, but in the background the intranet is hitting a number of disparate systems and tying the results into a combined display.

Much of what you would expect to find is there, of course, like copies of the forms and manuals (in PDF format) that the company uses. Even there, though, Pekin has gone the extra step. We keep copies of every version of every manual on the site, Carroll says. On the property/casualty side, those manuals can change as often as every month, if the company changes something or the bureau does. It already has one manual that is up to about 10 revisions.

Carroll has been on the IT side of insurance for 35 years. He started with a small, local carrier called Pana Hillsboro District Cyclone Mutual Insurance Companyhows that for a handle?and joined Pekin in 1976. The real reason they hired me, he says, laughing, is that Pekin had a Honeywell computer back then, which Pana Hillsboro also had, and I was able to generate and maintain the operating system. He took over as VP in the beginning of 2000.

Even though Carroll is keeping his 70 (out of 750) IT employees focused on those agents, his team found time for other projects. Most recently they rolled out a new ImageRight imaging system for the home office. So far the system includes the life underwriting, life claims, and group underwriting. The P&C company has brought up the commercial lines department and is currently bringing up the personal lines department.

Maybe after all of this, Carroll will teach a few courses of his own.