Founded 40 years ago to provide insurance for contact lenses, a concept that seems quaint in an era of disposable lenses, RLI (shortened from its original Replacement Lens Insurance) hasn’t stood still. Whether by necessity or market wisdom, the Peoria, IL-based carrier has adeptly restructured its business over the years to provide insurance to niche areas that have been underserved by larger players.
To succeed, it has avoided bureaucracy and instead hired experts in particular lines of insurance and asked them to act like entrepreneurs, taking responsibility for their divisions. The approach evidently works. With high industry ratings, 30 consecutive years of dividends, and its 15th year on the “Ward’s 50” list, the company seems to be doing something right.
But supporting an adaptable business requires flexibility on the technology side, and RLI had begun running up against the limits of WINS on an IBM AS 400. It overcame the limitations of its legacy system through the development of Web-based front-end applications using first Microsoft ASP, then .NET.
“RLI has created an IT strategy that reflects corporate goals and enables line-of-business strategies,” said Don Light, a senior analyst for the insurance industry at Celent, who has studied the company. RLI’s IT group has built applications that maximize business value through building useful Microsoft .NET access to a legacy system.
The company’s previous CIO had the vision to understand he would need to do a fair amount of in-house development to have a user-friendly front-end for three main lines of business, explained Light. RLI’s existing staff had about 30 people with a fair amount of exposure to the Microsoft toolset already, so it became a relatively easy choice to go with Microsoft.
That legacy system serves its purpose well, said Don Almario, AVP systems development at RLI. “The AS 400 is really a good box, not a lot of moving parts, and very easy to maintain,” he said.
What has changed is the Internet, and the need to quickly provide information from the system to internal and external users over the Web, a ubiquitous user interface. The AS 400 is great as a repository and transaction processor, but information flowed easily in only one direction – into the back end.
To get information from the AS 400 was a serial process that required navigating from one screen to another without many options. That was not flexible enough for a world in which underwriting staff, brokers and agents expect to access underwriting decision-making information directly.
For the company’s surety business, said Light, agents were given a CD containing PDF files of forms and policies they could print and use. That approach wasn’t working any longer either.
“RLI was beginning to lose ground to other insurers with whom it was easier to do business,” Light said.
So the company began developing a new IT strategy, and it took a practical approach of “if it ain’t broke, don’t fix it.”
“Instead of building a big system to replace the AS 400, we decided to take a project in pieces and build a front-end submission system for our underwriters and for agents and brokers to interface back to the AS 400,” said Almario.
The IT group created a clear vision statement to guide its work: “A ‘Real Time Enterprise’ provides internal users and the external business community with a technology environment that is intuitive to use; enables streamlined process workflow and self-service; and empowers users with functionality that gives RLI a sustainable competitive advantage.”
In defining how to get there, it set forth four steps: First, it needed a single user interface that would be easier to learn and use and efficient for IT to support. Second, it needed a single point of data entry to reduce expense and improve accuracy. Third, it needed a single source of data and information. Fourth, it needed a single corporate depository of information for operational efficiency and easier monitoring for compliance.
Light said identifying these basic needs helped the IT group set priorities for accomplishing them. The team avoided automating existing workflows and instead built solutions that transformed the way agents worked. An example of this is the issuance of policy forms. To expedite the service of RLI to the agents, policy forms are printed in the agents’ office as soon as the policy is bound. To support RLI’s entrepreneurial style, the group developed one operational foundation and layered unique business models on top of it. Common composite applications manifested through Web services were developed so they can be re-used across many front-end applications. For example, the menu system Web service presents common navigation and presentation characteristics but may appear slightly different between applications depending on the uniqueness of the product. Users were involved throughout the development cycle to ensure the new tools met their business requirements.
A company full of hard-driving entrepreneurs could easily become a nightmare for an IT organization. To maintain sanity, said Almario, RLI implemented a project management office (PMO).
“The IT charter has two components – we support business needs and seek business opportunities where we think technology can be leveraged to grow profitability,” he said.
Business requests go to the PMO where their costs are estimated and the company decides if they should be supported. Carol Denzer, the new CIO, who has a very strong understanding of the insurance industry and RLI business, believes in continuing the IT vision to leverage technology.
“My focus is to champion the alignment of technology and business needs and processes which will consistently contribute to RLI's growth,” Denzer said.
“They have successfully taken steps to avoid being nibbled to death by a hundred ducks,” said Light of the RLI technology group.
Moving from an AS 400 world to distributed computing was a paradigm shift, Almario said. An application may have an engine, API’s, and workflow, but that doesn’t make it an end-to-end user system.
“It is not end-to-end out of the box. We had to build the links and integrate it with our system,” he said.
In an ideal whiteboard world, IT has time to develop a detailed architecture and then assign developers. But transitioning from AS 400 to Web-based systems, “our world did not stop,” said Almario. “We continued to do development while the architecture was put in place,” he explained. “We put an architecture framework in place with Web services. As we developed applications in parallel with the framework, we had many discussions about what and when can the application consume the framework, gradually aligning applications to the .NET foundation.”
Now the users have a familiar looking front end and they can navigate easily through point and click menus that they are accustomed to using in Windows applications.
“Microsoft has an edge in making development quick,” he said.
The IT group formalized an n-tier architecture and a methodology to consume Web services that will lead to SOA.
“Standardizing on a .NET platform and .NET architecture made a lot of sense given the level of transition they knew they would go through over a multi-year period,” said Light, who noted that RLI created a .NET development team to build applications such as agent validation, policy registration, and a correspondence log that are exposed as Web services.
RLI also launched another key initiative in document management. It had begun scanning claims and policy documents in the early 1990s but needed to move to newer technology that could store digital images and audio files. The carrier selected Vignette, running on a Windows 2000 server and SQL Server database, for integrated document management and workflow. The company figures the database and EMC 2.2 terabyte jukebox, occupying about 10 square feet, eliminate about 10,000 square feet that would be required to store the same records on paper. The system supports an entirely electronic claims processing system with integrated workflow to accept new claims and monitor their progress through the system.
Almario said RLI will continue with its .NET development. Much of the company’s existing development is Active Server Pages in a .NET Framework, but that is quickly changing.
“ASP is becoming a legacy around here,” he explained. “We want to continue to bring it to .NET, extend and solidify the SOA, and improve time-to-market.”
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