April 06, 2012

Since its founding in 2008 as an energy/property-focused excess and surplus lines carrier, London-based Torus has grown rapidly into a global insurance company with nearly $1 billion in annual premium income that provides technical property, casualty and specialty insurance as well as niche reinsurance products. Torus chief administrative officer Michael Kim recently shared with I&T executive editor Anthony O'Donnell how the company's rapid success has been aided by the opportunity to build technology infrastructure and architecture from scratch, avoiding the friction and delays of legacy insurance systems.

How has Torus's technology architecture been planned in support of the company's niche market strategy?

Michael Kim
Michael Kim, Torus Insurance
Kim: As a start-up company, we were not encumbered by legacy systems, so we were able to introduce technology at a considerable state of maturity and build something that is fit for the present and future. That has been a source of competitive advantage for us, in the form of speed and cost to market to support any business strategy.

From an architecture perspective, our chief architect [Dom Anthony] delivered a hub-and-spoke architecture built around a central data warehouse that we call TARDIS [Torus Architecture for Risk Data Integration Schema]. At most insurance companies, the policy administration system is the center of the universe, surrounded by a great deal of point-to-point integration to other systems, such as rating engines, front-end business platforms or back-end data warehouses. Because of the complexity of their environments and the burden of data migration, they think of projects in terms of years. At Torus, for every application, there's only one integration point, and that is with the hub. Our technology environment has been architected to be all about the data. Data is king at Torus, and the TARDIS data hub is the center of our technology universe.

Can you provide an example of how this architecture has supported speed and cost to market?

Kim: We acquired renewal rights to CV Starr's business and Syndicate 1301 at the end of 2011. At most other insurers, a transaction such as this would have felt burdened by the addition of Oceanwide's (Montreal) policy admin system to support this business. But since policy administration is not at the center of our technology universe, it really doesn't matter whether we have two or three policy admin systems. We're OK with plugging in another policy admin system because the center of our universe is TARDIS, and once data flows to that hub, it can be distributed across the rest of the organization, downstream to Oracle Financials and upstream to our Guidewire (San Mateo, Calif.) claim system. Implementing and integrating this acquisition will take us four to six months, whereas a carrier burdened by legacy architecture may have taken years to complete the technology integration and, as a result, often leaves the acquisition as a stand-alone entity with systems that are not integrated.

Our implementation of Guidewire's ClaimCenter in November 2011 is another case in point. I've seen it take three years to implement a claims system at a large carrier, and this took us less than a year. We were able to do that across our many product lines and 16 offices worldwide because what typically takes a long time is the data integration and migration, but we were spared that burden by our hub-and-spoke architecture.

[For more about Torus Insurance's Implementation of Guidewire ClaimCenter, see related story.]

In what other ways have you built simplicity into your technology architecture?

Kim: We run almost exclusively on Microsoft-based technology. There are only two application nodes -- an Oracle (Redwood Shores, Calif.) ERP system and Guidewire ClaimCenter -- off our central hub that are not on the Microsoft (Redmond, Wash.) platform. The degree to which we've standardized on Microsoft has facilitated a seamless operating environment from both an integration perspective and a skill set perspective.

Having a heterogeneous technology environment has cascading implications not only on speed of delivery but also on the cost dimension. Having a single technology platform allows us to have a group of individuals all with the same set of skills that are then fungible across applications. Because of the simplicity of our environment, our overall costs of supporting technology are probably about a third of those of insurance companies with more traditional technology environments.

How has Torus streamlined its technology infrastructure?

Kim: Our entire data center is virtualized, from both a server and storage perspective, and there's a cost advantage associated with that: When you have standalone servers dedicated to specific applications, you have to size them for the application; with a virtualized environment, where all the resources are shared, you size the whole environment across all the different applications. We've also combined telephony with data.

In addition to simplicity, what other principles govern your technology environment?

Kim: We focus on making sure that our technology is current — there is nothing in our environment that is more than n minus 1 behind, and most of our package products are either on or close to n. One important benefit of that is, we don't have the availability and reliability issues that many insurers suffer. At most legacy carriers, something goes down every day. At Torus, I could count on one hand the number of unplanned outages we've had.

As a start-up you had the opportunity to create a tailor-made technology environment; as a growth company, how do you ensure IT-business alignment on an ongoing basis?

Kim: We effectively monitor our alignment through our governance structure. There are three sets of services that IT provides to the business -- making sure systems are up and running, doing maintenance enhancements, and delivering projects -- and the means of alignment differ depending on which of those is provided. We have an official project governance committee that is effectively our executive committee. They provide governance around projects delivered, and our operating committee oversees the other two areas. Our objective is to be "better, faster, leaner" across the different areas, and we align ourselves to our business goals by making sure we're on track within those dimensions.

How have Torus's business and technology strategies shaped the skill sets within the IT organization?

Kim: Our technology architecture has shaped our IT organization's skill sets more directly than our business strategy. That's true with regard to the data-focused hub-and-spoke architecture and also our Microsoft technology strategy. We need people who are data-oriented and who have .NET, SSIS and SharePoint types of skill sets. While at many insurers the data-oriented IT professionals might constitute 15 percent of IT staff, here at Torus it's closer to 40 percent.

What tradeoffs have you faced in crafting your IT environment, and what thinking was involved in the sacrifices you've had to make? For example, how did you justify implementing major applications that don't run on Microsoft technology?

Kim: Most of the sacrifices we've made have to do with robustness and functionality of systems. One of the advantages of a 30-year-old legacy system is that, owing to enhancements made over its life, it may do A to Z in terms of business functionality. Our aim is do to something more like A to T, measuring nice-to-haves against more strategic technology decisions. Our systems may be missing some bells and whistles because we've had three years, not 30, and because we've built while driving 60 miles per hour down the highway, so to speak.

One of the big differences at Torus is that while decisions are typically driven something like 80/20 by business over technology, here it's more like 50/50 because we generally don't consider something that doesn't fit into our environment — and I can tell you that it's been great working with business partners who allow us to do that. Now, in some cases we have diverged from our pristine technology architecture — as in the case of Guidewire and Oracle — because at the end of the day, you have to be practical. In both of those cases we came to the conclusion that these were the best systems out there for us.

Which of your technology organization's achievements stand out the most?

Kim: I'd probably point to our ESCAPE [Excess Casualty Portal Entry] portal, which has helped differentiate us among our distributors because of a combination of functionality that is unmatched in the industry. We built it by leveraging a Duck Creek (Bolivar, Mo.) policy administration system and Microsoft .NET SQL Server 2008. It uses Ajax (Asynchronous JavaScript and XML) to query the system with each question posed by users, and it deploys chat functionality from New York-based LivePerson. We developed ESCAPE within five months, and since it launched on Nov. 1, 2010, it has enjoyed tremendous popularity with our brokers and accounted for significant growth. In fact, research and consulting firm Celent recently recognized Torus as a 2012 Model Insurer for the development of ESCAPE.

[For more on Torus Insurance's ESCAPE Broker Portal, see related story.]

Anthony O'Donnell has covered technology in the insurance industry since 2000, when he joined the editorial staff of Insurance & Technology. As an editor and reporter for I&T and the InformationWeek ...