Harleysville Group

Technology at a premiumMichael Browne, president and chief executive officer, tells Andrew Pelis how new technology creates a competitive edge in the insurance business. Having started out in 1917, Harleysville Insurance has gone from strength to strength, with innovation and technology set to play a prominent role as the insurance group heads towards its centenary. Today the company is represented by approximately 1,800 employees and works with about 1,400 agencies across 32 states. The role of agents in the Harleysville success story cannot be underestimated, as Michael Browne, president and chief executive officer explains. ÔÇ£Our focus on the agent has always been a core part of our business, and we market our insurance strictly through independent agents, who control more than 80 percent of the commercial property and casualty business in the United States.ÔÇ£In many respects, independent agents are our primary customer, so we are extremely focused on using technology to enhance their ease of doing business with us. When I became CEO in 2004, it was apparent we needed to upgrade our technology. Independent agents typically work with up to 15 different companies, so we needed better technology to give us an additional competitive advantage.ÔÇØTo that end, the company hired one of the leading technology figures in the country, Akhil Tripathi, as chief information officer. His team has worked closely with agents, looking at the best aspects of existing technology, to develop a new agent portal, as well as new commercial and personal lines policy administration systems that Browne describes as a ÔÇ£dramatic improvement.ÔÇØ ÔÇ£We have made strides to become a leader in technology, which is the way independent agents like to do business and has given us a great advantage,ÔÇØ he adds.Indeed, the new systems not only have received accolades from agents, but have helped the company rank 23rd nationally in Information WeekÔÇÖs 2007 Technology Innovators AwardsÔÇömeaning that the company is the highest-ranking property/casualty insurance company on the list. The new commercial and personal lines policy administration systems have so far been introduced in eight states with particular success in the small business market. ÔÇ£The new systems were rolled out earlier this year to Pennsylvania and New Jersey, two of our largest states, where new small business for commercial lines has increased by 20 percent. The technology has allowed us to write more small businessÔÇöwhich is an important part of our strategy. If you can write more small business in the property and casualty business, in a market in which prices are being driven down, you increase your opportunity to be more profitable,ÔÇØ explains Browne.Another key contributor to HarleysvilleÔÇÖs success has been the innovation provided by a unique predictive modeling system. ÔÇ£It is a challenging time because pricing is so competitive. If you want to maintain your profit margin when prices are going down you have to improve the quality of the business. We stayed focused on our basics and invested in predictive modeling, which involves using large amounts of data that we put into models to help identify the best accounts and how to price that business. We have successfully implemented predictive modeling into our underwriting process and believe we are the leader among large regional carriers in its use, having started four years ago.ÔÇØAdditionally, predictive modeling has given Harleysville insight into when they can offer pricing flexibility, based on accurate risk assessment, which in turn has improved the quality of HarleysvilleÔÇÖs book of business. But the business is not all about technology. A business with a 90-year history must have good people, too. ÔÇ£We have a very strong leadership team that can compete with anyone in the industry,ÔÇØ says Browne, ÔÇ£and we have a healthy mixture of new blood and people who have been here a long time. It is critical to have a culture where people feel free to raise ideas, make suggestions and offer criticism, and we aim to get everyone engaged. We have made huge strides in that area in the last four and a half years, and have a very open culture.ÔÇØBrowne has been involved in the insurance sector for roughly 28 years, having served as the Insurance Commissioner for the State of Pennsylvania from 1980 to 1983, and then joining the Harleysville Group Inc. board when the company went public in 1986. This seminal moment gave the group the necessary funds for growth through acquisition.Browne thinks the insurance business has changed significantly during the time heÔÇÖs been involved with the industry. ÔÇ£I think it has become an even more competitive industry. Insurance companies have become sharper in their focus and execution and much more focused on using technologyÔÇöthat is at the forefront of how companies manage themselves now. I think insurance companies are now much more astute in terms of enterprise risk management. I personally think competition is a good thing, and keeps you sharp.ÔÇØFor the future, Browne expects the new policy administration systems to be up and running in all its states by the end of this year, with opportunities beckoning in additional states. However, the main benefit of the new technology brings us back to HarleysvilleÔÇÖs core focus, the agent. ÔÇ£With our new systems and new products we expect to write more small business with our agents. We want to get stronger with the agents we have and by being Web-based, this will become much easier.┬á