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Mercury Insurance Minimizes Risk, Maximizes Opportunity with Guidewire InsuranceSuite

The La Brea, Calif.-based insurer's greenfield initial implementation of a full core system suite in a new state paved the way for renovated systems and business processes across the enterprise.

Mercury Insurance (La Brea, Calif.) CIO Allan Lubitz acknowledges that the company took a somewhat radical approach by implementing Guidewire Software's full InsuranceSuite — which includes the San Mateo, Calif.-based vendor's PolicyCenter, ClaimCenter and BillingCenter core system components — rather than beginning with a policy or claims systems alone. Mercury first deployed the vendor's systems in Nevada in Aug. 2010, where the insurer had previously not written business. To date Mercury has deployed InsuranceSuite for homeowners insurance in six states and commercial auto in five states.

"By first going into a market where we didn't have an existing presence, we minimized the risk and eliminated the need for a data conversion," comments Lubitz. "We were able to implement all three modules and radically change business processes."

Given the risks historically associated with core insurance system implementations, business people are understandably skeptical, Lubitz suggests. What the successful first rollout proved was that the new technology could improve cycle time, take paper out of processes and create a ubiquitous capability that could be used across the enterprise, he says.

"We rolled out for Nevada out of our Austin, Texas office," Lubitz relates. "It demonstrated in a live environment what was possible: highly efficient and completely paperless operations on a new platform."

Lubitz acknowledges that at the proof of concept stage, there were some "missing pieces" of functionality that needed to be built out rapidly. However, with success in Nevada there was enthusiasm rather than resistance to rolling out the system elsewhere. "To our surprise, the human change management was much easier than expected," Lubitz shares. "We expected an uphill battle, and there was some resistance, but the believers lined up more quickly than we anticipated."

[For more on the advantages of modern systems, see Newer Policy Administration Systems Ease Transformation of Smaller Insurers.]

Mercury's first implementation took 13 months, according to Lubitz. "We thought that was a long time, but people were impressed it didn't take longer," he observes.

The second release took about nine months, but Lubitz says that it included the need to built out missing functionality, including renewal capabilities. "We picked up the rhythm after that," Lubitz adds.

Lubitz expects to have rolled out InsuranceSuite for all of the company's primary product lines — a total of 17 releases — by the end of the first quarter of 2013. Following that milestone, the carrier intends to use the new system to embark on writing business in new states and for new lines of business, according to Lubitz.

"We operate on a five-year plan and already have an implementation game plan for the next two years," Lubitz reports.

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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