One for all: Safeco merged technology and business objective to create a single Internet platform for pricing and underwriting multiple lines of business.

When Mike McGavick came to Safeco as president and chief executive officer in 2001, he brought the ailing company a new strategy, including a tighter focus on core business lines and an elevated role for information technology. For six years prior to that, Safeco had suffered declining return on equity and in 2001, lost nearly $1 billion.

"It was a crisis situation. We were at the brink of disappearing as people know us," said Yom Senegor, senior vice president of corporate strategy and chief information officer.

At the beginning of McGavick's march to return Safeco to financial health, Senegor came on as a consultant. "I saw that Safeco already had a high-caliber IT operation, but it was buried in the organization," he said. "They talked, but not many people listened. Mike gave IT a huge boost. He talked about it being a differentiator."

Shortly thereafter, Senegor became the company's CIO and corporate strategy officer. The designation was unusual but significant because it showed that McGavick linked long-term strategy with technology.

Senegor will talk about that linkage, its role in the creation of an innovative Web-based underwriting platform and the contributions the platform has made to Safeco's financial turnaround at the second-morning keynote session at E-Fusion 2004.

Agents' Dream

Safeco's new platform, the focus of much of its IT effort under Senegor, allows agents access to automated pricing and underwriting for multiple lines of business, including business owners, homeowners, commercial, workers' compensation and personal auto. The goals for the platform, Safeconow.com, are to make doing business with Safeco easier, reduce costs, increase sales and be a sustainable technology.

To date, the platform is meeting its performance objectives and is even a little ahead on sales and profitability, Senegor said.

In personal auto, the percentage of policies on the platform has increased from 28% in September 2002, following the state-by-state rollout beginning in April 2002, to nearly 100% currently. Combined ratio for this line has dropped from 101.2 in September 2002 to 90.5, according to Safeco.

In small commercial, the percentage of policies on the platform increased from 24% in September 2002 to 45% currently. Combined ratio dropped from 106.6 to 89.4.

Since September 2002, gross written premium has increased about 18% in personal auto and about 19% in small commercial, according to Safeco.

Reaching that success has required strict discipline in aligning technology with business objectives. "My first task was more about governance," Senegor said. "The important question was whether the technologists were working on something important to business. Pet projects weren't important. If they weren't driving value, they were costing money. We put in a process by which the company could guide itself and make decisions about which projects to work on.

"But here's the challenge: When you speak knowledgeably and aggressively as I did, you had better have an organization to back you up with execution. My team was executing. We took a new auto product from concept to market in less than seven months. When we created the focus, we made an impact on business," he said.

A Complex Puzzle

Building the platform was a multifaceted process. "You can't get just one thing right; you have to get a lot right," Senegor said. "Technology provides a back, middle and a front. Often, all anyone thinks about is the front--the interface, but you have to have more." For example, technology has to be able to provide pricing guidelines--that's part of the back. The intermediate piece is underwriting. The visible piece is how they interface--"but that's just a facade," he said. "Everything must be behind it."

In selecting which business lines to add to the platform first, IT prioritized in conjunction with what was most important to Safeco. Auto and commercial were worked on simultaneously, but auto was developed faster because some of the auto pricing technology had been done before. "With auto, we were playing catch-up. We had very little time to get it out there," Senegor said.

With small commercial, the company was innovating. "We were trying to adopt the automated scorecard and predictive modeling from personal lines to small commercial, and that took a little longer," he said.

For its programming standard, Safeco settled on .NET a few years ago. In the new initiative, "we didn't spend time on that," Senegor said. "We had a clean environment here. We also have a good relationship with Microsoft; after all, they're our neighbor."

The important message about Safeco's use of technology in its financial turnaround isn't about programming or "the nuts and bolts of unique technology that techies get excited about," Senegor said. "The important piece of what we have been able to accomplish through technology is what the nuts and bolts contribute to the business.

"There's no point in having a car if you open the hood to have someone look at the engine, and they say, 'Oh, what a beautiful engine, but will it run?'"

The next step for IT at Safeco is to push the organization to push growth even farther. "This is my message to my IT leadership," Senegor said. "If we deliver just technology, we don't get high fives. If we're not increasing growth and reducing expenses, we're not doing our job."

Companies need an IT culture that is ready to challenge the business. "We need to tell business what to do from a tech standpoint," Senegor said.

Safeco Insurance Cos.
Property Casualty
Expense Ratios

One of the primary goals of
Safeco's new Internet platform
is to reduce expenses.

1998    30.1
1999    30.2
2000    29.1
2001    32.1
2002    31.2
2003    29.3

Note: Table made from line graph.

Source: A.M. Best Company Report

Key Points

* Safeco's new multiline Internet platform for agents is a major player in its financial turnaround.

* Developing the platform required an IT strategy focused on what technology can contribute to business.

* The goals for the platform, Safeconow.com, are to make doing business with Safeco easier, reduce costs, increase sales and be a sustainable technology.

Learn More

Safeco Insurance

A.M. Best Company # 00078

Distribution: Independent agents

For ratings and other financial strength information about these companies, visit www.ambest.com

Speaker Spotlight

Yom Senegor

Senior Vice President of Corporate Strategy and Chief Information Officer, Safeco Insurance

Second-Day Morning Keynote Address:

"One for All"

Hyatt Regency Hotel, Inner Harbor 

Baltimore

Oct. 17-19, 2004

www.efusion2004.com