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Carrier Confidential: Allianz of America

Allianz of America CIO Oliver Bussmann and his senior technology executives have established a shared-services model that allows the carrier's P&C and life companies to leverage IT synergies while remaining focused on their unique challenges.

Observers of P&C carrier Fireman's Fund's ongoing technology transformation might not have noticed anything remarkable about the renewal of a networking contract with existing provider AT&T (San Antonio) -- even if the multiyear, $70 million contract implied a significant expansion. What was remarkable about the October 2007 news was that despite the Novato, Calif., dateline on the release, the company behind the announcement was not Fireman's Fund, but rather its Westport, Conn.-based parent, Allianz of America (AZOA), speaking on behalf of both Fireman's and AZOA's principal life insurance subsidiary, Allianz Life (Minneapolis).

Fireman's Fund's relationship with Munich-based Allianz Group (US$12.2 billion in 2007 net income) was no secret, of course, and this announcement was prefigured by an earlier one the preceding August about a $330 million, seven-and-a-half-year outsourcing agreement between AZOA and long-time Fireman's Fund partner IBM (Armonk, N.Y.). What was revealing, however, was that the AT&T contract announcement made clear that the unification of Allianz Group's P&C and life companies under the AZOA umbrella was a fait accompli. Building on a shared-services model established earlier in the year, the companies now were operating on a single network. As AZOA CIO Oliver Bussmann commented at the time, "We are no longer two entities."

Bussmann's primary mission today, he relates, is to drive more business effectiveness and efficiency through Fireman's Fund's and Allianz Life's IT shared-services model. AZOA will continue to leverage the well-established brands of Fireman's Fund and Allianz Life. According to Bussmann, the scale of the combined operation, with its concomitant efficiency advantages, will create a market perception that surpasses the sum of its separate parts.

Bussmann's vision of change for AZOA is based on the idea that insurance is moving in the same direction as other financial services verticals -- toward greater automation and straight-through processing, and the ability of the entire enterprise to interact seamlessly with the customer. In the latter respect, Bussmann says, AZOA has ambitions to exploit the cross-sell opportunity between its P&C and life arms, while acknowledging the challenges posed by the disparate distribution channels for those lines of business in the North American market.

However, Bussmann also has identified other synergy opportunities between the life and P&C companies. Within the single network paradigm, the carrier is continuing to standardize infrastructure and has established governance for infrastructure services. AZOA also has adopted SAP (Newtown Square, Pa.) as its enterprise resource planning (ERP) platform for finance, HR, procurement and billing. The carrier's life and P&C application teams remain separate, but they operate under single management, using a common development and maintenance platform, and working within common governance for application development and maintenance. The entire IT organization also shares a common operating model and governance framework for outsourcing and bundles sourcing contracts to drive lower cost via volume discounts.

Fireman's Fund laid the foundation for these synergies in 2005 with the introduction of an offshore application development and maintenance model, and infrastructure outsourcing to IBM, as well as the initial network services contract with AT&T. Since taking on the Fireman's Fund/AZOA CIO role in 2006, however, Bussmann has readjusted the scope and priorities of the transformation effort.

"Large initiatives were broken up into smaller ones to improve performance and success," Bussmann comments. "The focus has been on both project execution and improving underlying IT processes, striving to achieve industry best practices."

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 Financial Services of TechWeb he has written on all areas of information ... View Full Bio

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