February 09, 2010

Selective Insurance Group's motto -- "Response is everything" -- appears on its Web site, Selective.com, right below the company logo, not once but twice, the second time more visible than the first. This could be read as an inadvertent duplication, but given the Branchville, N.J.-based regional P&C carrier's unequivocal devotion to distributor relationships, it's more likely deliberate emphasis, as if to say, "Seriously, we mean it."

Over the past decade Selective ($1.7 billion in 2008 total revenue) has pursued what it calls a "high-tech/high-touch" strategy designed to maximize the benefits of both realms, uniting dedication to old-fashioned service with aggressive investment in state-of-the-art technology, says Richard Connell, who joined Selective as CIO in 2000 and now serves as senior EVP and chief administrative officer. At Selective, he explains, the concept extends to adopting advanced technology on a fast-adopter basis and proactively addressing service demands through regular "producer councils," where Selective's leadership meets with its distributors, and also annual customer service representative user group meetings that are designed to proactively meet users' needs.

"At the end of the day, we want to be the carrier that our agency partners turn to because we have better relationships and more effective technology," says Connell. "We think we have a strong case to make to them as to why they should do business with us before somebody else."

Among the latest arguments in that case is Selective's Knowledge Management initiative, which introduced business analytics for evaluating book-of-business performance, predictive models to enable precise pricing and real-time scoring engines to help underwrite individual risks, Connell reports. The initiative, completed in 2008, is the foundation for ongoing work in developing what Connell describes as a core competency in predictive analytics.

The Knowledge Management initiative is the second step in a long-term strategic plan that began with a focus on ease of doing business in the first half-decade of Connell's tenure and opened the way to a strategy of "better access to better information to make better business decisions" during the past five years, he says. The way in which both objectives were pursued in turn -- and are sustained together in ongoing initiatives -- reflects Selective's methodical approach to IT: "Our technology mission statement is, 'Plan it right, build it right and then run it right,' " Connell relates.

One of Connell's first actions upon his arrival at Selective was to conduct a portfolio assessment to gauge how well systems were matched to business strategy. The review drove investment priorities, including a rebuild of the carrier's personal and commercial lines policy administration systems that ran through 2005.

Selective declines to share vendor names, but its investment decisions reflect a philosophy of "reuse before you buy; buy before you build," according to Connell. "For example, we bought the core rating engines for both personal and commercial lines but built the integration technology around them to do things such as integrate with our B2B software, or integrate to a browser-based front end to do quoting and policy issue," he explains. "The last resort is to build from scratch -- which we're perfectly capable of doing."

Wherever a technology decision falls on the buy-build continuum, Selective's technology investments are subject to a three-tier management process, Connell notes. The top tier involves a review of proposals with regard to their relevance to business strategy. All investments then are considered within a holistic context of annual technology expenditures arranged according to priority. The third level involves the consideration of proposed technology on a business case-by-business case basis.

"We have a process where business leaders will make a case about where they want to go with a particular strategy, including a discussion of the technology investment that aligns to that," Connell says. "That forces us into a very disciplined way of evaluating where the investment will go and managing the payback."

Interfacing With Agents

Roughly parallel to the core systems rebuild, Selective began building the externally facing parts of its transactional systems, with the sponsorship of the underwriting and business services unit and under the direction of Brad Allen, SVP, enterprise application delivery services. The carrier built proprietary Web-based interfaces for commercial, personal and surety lines for agents who preferred working directly with Selective over the Internet, Allen reports. Following the Web-enablement of the policy systems for agents, Allen's organization built its xSELerate platform for distributors who preferred to work through their own agency management systems.

"The key competitive advantage that we look for through technology has been developing real-time quoting interfaces with our policy systems," Allen remarks. "We have built integration capabilities to allow the agents to start in their management systems, bridge their data over to our system, get real-time quotes presented back to their system and then stream the balance of the transaction to place the business with us."

Selective also has integrated with leading comparative rating vendors to supply real-time, bindable rates rather than prepackaged rates that typically change when agents actually try to book business with a carrier and provide more-detailed underwriting information. "The value to our agencies is that all our commercial and personal lines are enabled in this manner," Allen notes. "We present a single interface to our agencies, and we've given them the choice of either placing their business through our system or working within their preferred system, whether that be their agency management system or a comparative rating product that they use."

Selective's agent interface includes a layer that helps agents evaluate the relative merits of Selective's product offerings and adjudicate between them on the basis of product features, Connell elaborates. "We've also gotten into the area of being able to move business in bulk, to support a book roll, for example," he adds. "We have tools in place that allow us to take a look at a book of business with an agency and also move that business into our systems."