Midwest Family Mutual looks back at a decade of growth and increased productivity, powered by CGI's INSideOUT insurance solution
"Since 1995, our company has become more productive and profitable and we attribute that growth significantly to the continued product development and enhancements to CGI's INSideOUT insurance solution."
Ron Boyd, President, Midwest Family
Mutual Insurance Company
Midwest Family was established in 1891 as Minnesota Farmers Mutual Insurance for the purpose of writing crop and hail insurance for Minnesota farmers, adding automobile and dwelling coverage in the 70's. Over the years, the company's product offerings were expanded and today Midwest Family is a multiple line property/casualty insurer actively writing Personal and Commercial Lines in seven Midwestern states: Minnesota, Wisconsin, Illinois, Iowa, Nebraska, North Dakota, and South Dakota.
In this retrospective, Midwest's President, Ron Boyd, comments on a decade of expansion, increased productivity, and greater efficiency, powered by a productive partnership with CGI and its high-performance INSideOUT insurance solution.
Midwest began its relationship with CGI in 1995 with the initial implementation of CGI's INSideOUT Policy and Claims Software Suite aimed at automating the insurance business. The company wanted to diversify its product line and increase its commercial book of business, given that 75% of its business was derived from Personal Lines. Moreover, Midwest wrote 87% of its business in Minnesota at the time, making geographic diversification a key priority.
In 2001, seeing the potential in implementing a major upgrade of the software, Midwest established a plan to make the company more efficient and productive by ultimately increasing market share through geographic and product diversification, improved customer service, and a more efficient distribution channel. The plan also called for the need to become a virtually paperless environment and to have a document management solution enabling all policyholder information to be mailed or emailed directly to customers. "We were focused on how our workflow could be improved so that we could drive down our expense ratio and at the same time make us more efficient. We also wanted agents to have immediate access via the Web."
To achieve these objectives, Midwest decided to go ahead with the upgrade, taking advantage of the new technology to become Web enabled by migrating their claims and policy administration functions to the full and enhanced suite (version 8.0) of the INSideOUT insurance solution. This major implementation by CGI, delivered on time and on budget in 2002, improved the performance and functionality of the software to include: policy and claims administration, Web enablement, underwriting, underwriting report ordering, rating, management and bureau reporting, workflow imaging and document management. The aim was to move toward an electronic workflow putting every policy on the Web so that each file would be at the fingertips of every employee and agent. According to Boyd, the success of the project implementation was due largely to CGI's management skills: "The project change request process, business analysis, and test procedures eliminated a lot of confusion. The people on the CGI team not only knew project management, but their insurance technology skills are the best in the business. CGI is not just an IT company, their members understand the insurance business." (See Midwest Success Story, published in 2004)
The INSideOUT upgrade was a significant step forward for Midwest allowing the company to achieve its primary objectives of greater efficiency, and increased productivity by driving down its expense ratio. The product's workflow and imaging component, for example, automates the workflow process, routing work automatically to appropriate users based on work type. All documents are imaged and viewed on line, creating a paperless environment. "INSideOUT has given us the capacity to put every file in the company at the fingertips of every employee. No one is looking for files anymore. We are paperless. The automation and development of internal workflow means supervisors no longer spend time queuing work, watching service levels, and manually moving files. Thanks to version 8.0, we can date stamp and distribute work electronically. Our workflow is totally automated. Moving transactions to the Web and using imaging for all our paper files have improved our expense ratio dramatically and human resource management has accounted for our biggest savings. With both Web enablement and automated workflow, we have succeeded in our goal of reducing our expense ratio."
- Application Development Environments: Centura Team Developer, IBM VisualAge for Java, Microsoft Visual Studio
- Application Deployment Environment: Oracle, Windows
- Languages: Visual Basic, JAVA, Aion, Smalltalk, COBOL
- Technologies: HTML/JSP, XML, Servlets, Citrix server, and 3Com VoIP
INSideOUT has helped Midwest power through a decade of expansion with results that are nothing short of outstanding. "At the end of 1995, we wrote $16.3 million worth of business, had $9.8 million in policyholder surplus, $26 million in assets, and $14 million in direct written premium and an underwriting expense ratio of 32.3%.
We had 45 employees and produced $362,000 in revenue per employee. Today, we have 61 employees but have increased our revenue to $1million per employee. Since 1995, our company has become more productive and profitable and we attribute this growth significantly to the continued product development and enhancements to CGI's INSideOUT insurance solution."
Indeed, the metrics of success for Midwest are impressive. In 2006, Midwest did increase its direct written premium to $61 million, secure $28.5 million in policyholder surplus, book assets of $82 million and reduce its expense ratio to 28.4%. "The reduction in our expense ratio is directly attributable to the automation and changes that we have implemented over the past ten years with INSideOUT."
Geographic diversification has moved Midwest's business into seven Midwestern states, with Minnesota today accounting for only 38% of its book of business. (Midwest has also been admitted into five new states including Indiana, Kansas, Missouri, Montana and Ohio.) "Our plan for geographic diversification using INSideOUT has been very cost beneficial for our company and this system has made it relatively easy to migrate to new states. The system is heavily table-driven and there is not a lot of technology-driven work that needs to be done when we enter a state. Our people are at the point where they now know how to maintain the INSideOUT tables, so changes to the system are done with ease. We started doing business in two states and have expanded to seven and will in the future be writing in 12 states. INSideOUT has enabled us to complete our geographic diversification plan and grow our business. By handling all lines of business, INSideOUT has allowed us to grow our Commercial Lines business much faster than we would have on our legacy systems. Commercial Lines now account for 61% of our business."
The benefits of INSideOUT have also penetrated Midwest's distribution channel, which is completely agent based. Web-based technology allows agents to handle more transactions, making them more productive and efficient. Agents do their own quoting, issue policies on line and have instant access to real-time inquiry into billing, claims and policyholder data. "Our agents have all policyholder information at their fingertips. That saves time and time is money. We empower our agents through INSideOUT to have all vital policyholder data needed to service our customers. Calls to Midwest staff from agents requesting customer information have been significantly reduced. Before version 8.0 of INSideOUT, we had ten Company Agents' Service Representatives with data at their fingertips. With Web enablement and the data at our Agent's fingertips, our number of Customer Service Representatives grew to over 1,000."
According to Boyd, INSideOUT has enabled Midwest to improve customer relationships by developing a single personal insurance policy for each client known as Portfolio of Personal Insurance (POPI). Automobile, homeowners, scheduled property, umbrella and recreational vehicles can all be written under a single policy number. POPI provides one policy and one bill or EFT for all personal insurance needs. "This approach has been very successful and I would give the credit to the continued technical development of INSideOUT."
In 2005, Midwest further cemented its relationship with CGI by outsourcing its document management. "It would have taken a big investment for our company to implement the mail equipment and bar coding process that CGI had in place. Because of the distribution management process that CGI brought to the table, we were able to mail all billing and policy documents direct to policyholders from CGI's Fort Worth, Texas facility. The agent receives an electronic file the same day the policy is mailed to the insured. Agents never receive paper unless they choose to print their electronic file and this process has saved our company and agents time and money."
Perhaps among the most significant benefits of the software suite is the cost savings achieved by enabling employees to work from home. "The biggest recent cost savings to Midwest Family from INSideOUT is the fact that our 61 employees, who used to work out of this office, now work from home. All of their work is distributed electronically through the INSideOUT workflow imaging system and all customer files are available online. We would not be able to do this if it were not for INSideOUT. You cannot achieve this kind of progress as long as you have paper files and you have to have a technology managing your workflow and INSideOUT has given our employees the benefit of working from home. INSideOUT was supplemented with Citrix technology and Voiceover Internet Protocol VOIP to accomplish work from home.
Moreover, the cost savings to our company in real estate capital alone is significant. With the sale of our building and a move to a much smaller space, we will realize a net surplus gain of over $1.5 million. At the same time, we have a much happier work force, and we also have spread our risk in terms of disaster recovery. We are no longer dependent on a single work site where all our employees are located, If this building should be damaged or destroyed, we still have 61 Midwest employees at home sites available to take care of our customers."
In concluding this overview of a decade of success for Midwest Family, Boyd offers some final thoughts on CGI and its empowering product: "CGI is truly our business partner and the continued development of the INSideOUT suite has made our company much more productive, efficient and profitable."
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