Retail giant Wesfarmers has deployed a Web-based consumer insurance application on a private cloud and is leveraging it to transform its legacy commercial insurance architecture.
Lumley Insurance is a trading name of Wesfarmers General Insurance Limited, a wholly owned subsidiary of Wesfarmers, which also owns the Kmart Tyre & Auto Service (KTAS) retail chain.
By its own estimates, Lumley Insurance is the fifth largest general insurance company in Australia with more than $1.1 billion worth of contracts and some 1500 staff. The company is the third largest insurance broker in Australia and New Zealand.
Lumley Insurance CEO Vivek Bhatia said when the company reviewed its business model a few years ago it discovered inefficiencies in connecting insurers with brokers and was “struggling with a credible online offering”.
“We had a checkered past with that portal and saw an opportunity to white label insurance through large retailers,” Bhatia said.
With IAG and Suncorp having about 70 per cent of all “personal lines” of insurance in Australia, Bhatia said Lumley had a good opportunity to build a new system from scratch without any legacy.
“We wanted to be able to sell policies online and over the phone with the same software,” he said.
In March Lumley launched its motor insurance product through KTAS and Bhatia says it has been an instant success.
“The business and IT teams (Jeremy Edwards is the head of IT) worked together and now we can use the application easily with internal and external retail groups.”
Lumley chose software from Pegasystems to build a private cloud and insurance application that is accessed via the Web.
Bhatia said the KTAS project took less than 12 months, including the business requirements, testing, branding and deployment.
Other companies can now white label the insurance product using Lumley’s cloud.
“Retail brands have customers they want to add value to, but insurance is not a product retailers are used to dealing with,” Bhatia said. “Our application is a very good experience and is how a normal person would buy insurance. We held focus groups to set the user experience.”
With the new insurance application established, Lumley is moving more core business functions away from its in-house developed system dubbed Genetica.
Genetica was developed seven years ago and runs on a Unix platform. Pegasystems software is Java-based, but includes an abstraction layer for designing business processes.
“Everyone uses the backend system to process policies, but we want to use Pega, not a green screen,” Bhatia said, adding the Pega implementation project took about eight months and was finished by September last year.
For reporting, Lumley is using Pega for basic reporting and Cognos for BI, but still relies on Excel spreadsheets for reports, which Bhatia said is “good and comprehensive”.
“We are moving the logic from the backend system and putting into Pega which is more flexible,” he said.
Pegasystems founder and CEO Alan Trefler said BPM tools remain too complex and require code-level development to be effective.
Trefler, who started Pega in 1983 after a career as a chess player, said the software’s abstraction layer allows people without any programming experience to design the business process.
“We have redeveloped our architecture four times and now all access and development is done inside the Web browser,” he said.