Fireman's Fund is one of several leading adopters of Service Oriented Architecture (SOA) in the insurance industry. The company, which generates $4.3 Billion in premium revenue, is relying on SOA to consolidate 70% of its technology applications. By more effectively aligning business with IT and strengthening its relationship with agents, Fireman's Fund believes it can strategically differentiate itself in a crowded property and casualty marketplace.
Having inked a $10-year SOA contract with IBM (valued between $94M and $157M), the company is expecting a return on its investment in excess of $200M beyond what it spends, according to a recent article in Insurance and Technology Magazine, which describes the SOA efforts of not only Fireman's Fund, but Highmark and The Hartford as well.
The company is particularly interested in the opportunity to align technology with it business objectives in a more agile fashion. Fred Matteson, CIO of Fireman's Fund, sees SOA as a method of remodeling the carrier's business so that business executives can more clearly and directly communicate to IT. That collaborative clarity is expected to help IT improve products and services the carrier offers its customers and agents. "To me, that's the power of it - to finally get a technology representation of how the business actually works," Matteson says.
"There's a pretty compelling value proposition if you do it right," adds Matteson. Whereas the multi-line carrier has traditionally interacted with agents in a piecemeal way through multiple, disparate systems, it now has the ability to establish "a unified, single view of who Fireman's Fund is to our agents, and that view encompasses a number of business lines," he says.
Matteson describes SOA as a means of remodeling the carrier's business in which business executives communicate to IT in terms of services that IT provides to construct the products and services the carrier offers to its customers and agents. "To me, that's the power of it - to finally get a technology representation of how the business actually works," Matteson says.
The company is not only pleased with the opportunity it has to leverage existing legacy systems, it welcomes the speed and flexibility that the new architecture presents. "Business models change much more rapidly today, and being able to reuse and recombine services into different workflows will bring huge benefits," Matteson says.
Of course, Matteson recognizes the challenges that lie ahead and the limits of technology. Nevertheless, he sees SOA as a powerful driver of competitive differentiation and business transformation. "This is the best example I've seen of being able to describe the business process in a way that allows us to build flexible technology," he says. "That alone, if you can align your business partners to get it going, is a huge opportunity to transform both the business and, frankly, what IT does for a living."