How Prudential is Moving On-line

Prudential Insurance Company of America Inc. CIO William Friel talked in early April at the company’s IT headquarters in Roseland, N.J., with IDG News Service’s Sami Lais about the future of e-commerce in general and insurance electronic business in particular.

IT World Canada: How is the business of Prudential driving information technology development?

William Friel: We’re using IT to compete, so, like any other business activity, we have to make it more efficient, make sure we deliver more value. We’re using computing to reduce costs and to compete.

ITWC: What are your business units asking for?

Friel: E-commerce is the most requested. There are three things driving the model: the Internet, wireless communications and bandwidth. Everybody wants to get that last mile. The way to do it is the thin-client model. There are too many fat clients. They’re difficult and expensive to manage. We’re still in the first stage. All [of the Prudential] businesses have data that users can access and transactions they can perform, whether it’s to get a quote for auto insurance, trade equities, maybe move funds. The next stage will be a truly e-commerce-based model.

The transition between clicks and bricks will be seamless. But over the Internet isn’t the only way or even necessarily the best way, or the way that people prefer to sell or buy insurance. People want personal contact. In fact, we’ve found that with insurance, people are using the Internet for doing research, and when they’re ready to buy, they make the phone call. For that, they want personal contact.

ITWC: Will people be buying insurance in the same way they withdraw money from ABMs?

Friel: No, we must continue to build functionality, and we’ve got to save time for our customers. [At Prudential] every individual business’s budget includes e-commerce and adding financial transaction capabilities.

ITWC: Why haven’t we seen in the insurance industry the kind of business-to-business exchanges we’ve seen in other industries?

Friel: The insurance industry has been behind in that aspect of technology. It’s been later, as an industry, to take advantage of the Internet. Many players believe you can sell auto and home insurance over the Internet.

ITWC: When Prudential’s businesses come to you in the IT department for e-commerce applications, what’s their biggest concern?

Friel: One, security and two, privacy. Privacy is very important. You have to do the security and privacy well to come out ahead on the trust equation.

You have to have robust authentication that’s accepted by the courts. You have to be able to go to the Web site and say, “Yes, I want to do this transaction,” and have that accepted in a court of law.

You need encryption — and I’m not going to say unbreakable, because there’s no such thing. But it has to be strong enough that it’ll cost you more to break it than you’ll get from breaking it.

ITWC: How do you see IT handling privacy issues?

Friel: Well, first, you have to have ethical companies and an agreement that they will ask, “How can we use your information?” That’s why we don’t believe in using cookies to track where you’ve been without first getting your consent.

I think consumers are going to demand the ability to control who gets access to their cookies. You can do it to some extent today, but some companies will punish you if you don’t play. They’ll say, “We can’t notify you of a sale,” or something like that.