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Elite 8 2012: CIO Michael Fergang Drives Innovation for the Business at Grange Insurance

Grange Insurance CIO Michael Fergang's tenure demonstrates that developing a creative team with the right business mind-set can result in delivery of solutions unforeseen by the business.

Michael Fergang insists that he owes much of his success to letting the talented people in his shop do what they do best, and to having been in the right place at the right time. The Grange Insurance CIO cut his technology teeth on Wall Street in the 1980s, at a time when, he says, rapid adoption of technology -- combined with a dearth of experienced professionals -- made it easy to accumulate experience in a wide variety of technology areas. "Because of the immaturity of technology, if you expressed interest in something, you were afforded the opportunity to get involved, and you were able to move fairly easily within a company or between companies," Fergang recalls. "The '80s were a great time to learn all different disciplines in IT."

According to Fergang, the breadth of experience he gained enabled him to take on the position of CIO at a financial holding company fairly early in his career. The experimental atmosphere of the time, he says, left him with an abiding interest in innovation that has colored the activities and accomplishments of his IT organization.

Accordingly, Fergang was influential in making Columbus, Ohio-based Grange (more than $1 billion in 2011 premium) the first insurance company to provide real-time endorsements via agency management systems, and one of the first to implement a real-time bridge between those systems and comparative raters, according to the carrier. Grange also was the first insurer in the country to use the F# programming language to develop and implement a rating system, which reduced the turnaround time for actuaries to perform "what/if" analysis and validate the impact on premiums from six hours to nine minutes, Fergang reports. He also oversaw the development and implementation of a fraud system that utilizes unstructured adjuster notes to detect potential fraud.

Fergang stresses that at Grange, innovative spirit is combined with an ethos of efficiency to find ways of helping the business to "work smarter." Every one of Fergang's managers are tasked with both efficiency and innovation objectives with associated metrics that impact their performance reviews. "You read a lot about innovation that's self-contained within IT," Fergang comments. "That can be valuable, but what excites us is when we're able to influence how Grange does business."

As an example, Fergang points to a billing portal initiative originating in IT that consolidated multiple systems and reduced the duration of customer calls by 30 percent. He also mentions Grange's Quote Options system, which automatically generates options for agents seeking quotes. After the agent has entered preferences for coverage, deductibles and so on, Grange's rating engine automatically generates two other options -- a bare-bones price with less coverage and another, intermediate option between the extremes. All the information, Fergang notes, is presented on a single screen and can be printed for agents to present to customers.

"The agent can change any variable and have an intelligent conversation with the policyholder or prospect: 'If you're willing to take some risk or change your deductible, we can save you this much in real time,'" Fergang explains. "The system is no longer just taking orders; it's driving a value-added sales proposition to help an agent or CSR have that conversation." Grange also automatically generates a term life quote for every auto quote, in order to promote cross-selling, Fergang adds.

Empowering Creativity

The degree of IT/business alignment that enables the kind of opportunistic thinking behind these innovations is a matter of culture, insists Fergang. At the company's Columbus, Ohio, headquarters, IT development teams sit on the same floor as their business partners, and there are special areas of the building designed specifically for Agile development. "We have structured meetings based on the demands of each of the business units, but we also have a very concise meeting format across all the units," says Fergang. "If the president of commercial lines were to go to a personal lines meeting, he'd see the exact same format." [Continued on next page]

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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