When insurance company Vero, part of the larger Promina Group, bought specialised warranty insurance company Autosure in 2004, it was faced with the fact that Autosure’s processes were still largely manual and prone to error, somewhat surprising given that Autosure is the country’s largest warranty insurer. Competing insurers which already had online systems were lining up to eat Autosure’s lunch.
Motor vehicle warranty insurance is an attractive proposition because it has no exposure to natural disasters. Also, the insurer can quickly build up a knowledge database of which cars are likely to break down and at what age, which makes setting a premium a fairly precise exercise. The market is worth tens of millions of dollars annually.
“Autosure motor dealers were using paper rate charts, writing the proposals by hand,” says Vero systems development manager Andrew Diver. “The proposals were then posted to Autosure or picked up by their reps. Again, they were prone to loss, or money could even be pocketed — though I’m not sure that happened. The proposals were entered into the computer at Autosure and, once a month, the reps would handwrite invoices to the dealers.
“It was all prone to delays and error, high administration costs and the potential to lose revenue.”
Diver says an online facility was needed to generate premiums and proposals for customers to sign and take away. This would feed into the Autosure computer, which would generate an invoice back to the dealers.
“We went through the process of looking within our own organisation but we decided the applications weren’t a fit. We needed to build a web-based system but we didn’t have the skill-set in-house in terms of building it.”
Diver says Vero is an organisation that likes to do everything itself. “But our real expertise is around core insurance applications. We are not particularly strong at code-cutting and it didn’t make sense to build up a Java resource.”
SolNet Solutions was hired, though Vero provided the business analysts, testers, project management team and solutions architects.
Diver says two other companies were involved in the project. Dyatron provides the Autosure back-end system, and NetInsite provides Autosure’s internet system. “We wanted to hang the extranet facility off the site with the same look and feel, so NetInsite did the screen design,” says Diver.
Promina’s IS department, which provides infrastructure for the insurance group, was also involved.
“It was a project that had a lot of parties,” Diver says. “The project team were all located separately but came together physically once a week.”
The project took five months. Diver says it was a $500,000 investment. “We’ll get a return on that in less than a year.
“We thought having multiple parties may have been an issue, but it wasn’t. There were no technical glitches and we went live just before Christmas.”
Autosure wasn’t the first warranty provider to offer an online service but Vero faced losing business if it didn’t make the move. “It wasn’t ground-breaking but opportunity was knocking on the door for our competitors,” Diver says. “If we hadn’t, our business would have been eaten into.”
The company chose Solnet without going to the market. “They’d been courting us in general and we felt they would be a cultural fit. They’ve done a really good job.”
The application is delivered over WebSphere Application Server using web services to integrate with Vero’s AS/400 policy system and the Selectica rules engine. It replicates insurance algorithms, policy documents and automatic synchronisation of information to the existing policy systems.