Back to the Future
At the end of the 1990s, Safeco ($339.2 million in annual net income) had lost its way. Undisciplined risk selection and pricing had resulted in plunging financials. Appointed as CEO in January 2001, Mike McGavick identified both a new direction for the company and a means of getting there to ensure that the Seattle-based P&C carrier got back to profitability.
McGavick looked to the company's past to identify its traditional corporate competencies and key lines of business - culminating in the sell-off of the firm's life and investments and Safeco Trust arms. To maximize the cost-effectiveness of these moves and the resulting competitive edge, McGavick put technology at the center of Safeco's strategic planning, as he believes every insurer wishing to be successful must do.
Technological Revolution
The last decade has experienced a technological revolution not seen for nearly half a century, McGavick believes. As a consequence, "Anyone leading a significant insurance operation today must be sufficiently acquainted with the trends and impacts of changes in technology," he argues. "As we go forward, technology will continue to be at the center of how business is conducted, to the extent that it actually determines strategy."
Prior to 2001, however, technology played a subordinate role in both strategic approach and organizational structure at Safeco. As McGavick recounts, the top technology officer was four steps away from the highest levels of business decision-making. "The CIO reported to the head of marketing, who reported to the president, who reported to the CEO," he says.
McGavick addressed that problem by appointing former Accenture (Chicago) partner Yom Senegor not only CIO, but also chief strategy officer. "That sends the right message that technology is at the center of what we do," McGavick glosses. "If IT is regarded as order takers to fulfill your vision, you're not going to take full advantage of what technology has to offer."
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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