Analytics

Last year was viewed as a coming out party for Enterprise Application Integration (EAI)-related investments in the insurance industry. A larger coalition of carriers made a commitment in 2001 to identify the role that EAI-and within it XML-plays within the context of their operations.Financial services firms spent more than $4 billion on EAI-related hardware, software or other services in 2001, and this year projections are they will spend almost $6 billion. By 2006, EAI expenditures will reach upwards of $12 billion, reports Newton, Mass.-based Meridien Research Inc.

The Internet has been around less than a decade, and already it has proved to be the quintessential double-edged sword-a potent weapon as well as a useful tool. The Melissa virus unleashed in 1999 cost companies as much as $385 million, followed shortly after by the Love Bug in 2000, which infected more than 10 million systems and cost businesses an estimated $10 billion.

The hardened insurance market, costly incidents of cyber crime, and a new ISO Electronic Data Liability endorsement, which provides clear limitations for cyber risks under its Commercial General Liability standard-are all factors driving commercial insurers to reevaluate their business liability coverage. And many of them are beginning to separate cyber coverage from commercial general liability coverage."You're clearly starting to see traditional insurance policies getting much clearer on their intent around cyber exposures," says Jon Farber, assistant vice president of global technology underwriting at St. Paul Cos. The St. Paul-based insurer is one of several commercial insurers offering cyber insurance. Others include Zurich North America, AIG, Chubb, and Lloyd's of London.

Virtually no payers in a HIPAA readiness survey conducted in December by Gartner Inc., Stamford, Conn., indicated they had completed their selection of technology tools to comply with the Health Insurance Portability and Accountability Act.But insurance companies are implementing privacy and security tools for their Web-based applications, and these tools will factor into their HIPAA privacy and security assessments.

Security isn't a new topic in business. Many years ago, businesses were concerned primarily with physically securing information within their facilities. We managed our companies' critical information on a "need-to-know" basis-if you needed to know, then the keeper of the information would share the information with you.With the advent of e-commerce and networked computers comes the added need to secure these networks. Businesses, including insurers, want to facilitate the sharing of relevant data while protecting proprietary and confidential data. And, of course, the need-to-know rule still applies.

Environmentalists should be happy about the new document scanning and imaging system at Prudential Group Insurance-because it's saving a lot of trees. The insurer's disability insurance customers should be pleased too-because it's enabling the company to process their claims more quickly.What had been a manual, paper-intensive process of receiving disability claim documents via fax machine or mail has been replaced by a nearly paperless operation.

Insurance CIOs report that the emerging mix of legacy and Web systems in their enterprises creates a set of integration challenges that dominate their list of IT priorities. Not only are these integration challenges technically demanding, they're becoming increasingly critical to the business of insurance.Spending on enterprise application integration (EAI) in the insurance sector reflects growing levels of commitment to achieve legacy-to-Web integration. Gartner Dataquest forecasts that worldwide spending on EAI-related services in the insurance sector is poised to grow from $654 million in 2000 to more than $1.7 billion in 2005.

Biometric technology is in the throes of an identity crisis. Biometrics relies on matching algorithms that analyze the physical or behavioral traits that differentiate one individual from another, such as fingerprints, the retina or iris of the eye, or the patterns of an individual's voice.Through its use, financial institutions could reduce costs related to identity theft, while simultaneously assuring consumers that their financial assets are protected.

Five years ago, Security Insurance Co. was suffocating under the weight of paper files. The company's file room was packed to the point where the company had to place file racks in hallways, consuming office space that cost $20 per square foot.Space constraints weren't the only problems that the Alpharetta, Ga.-based carrier's paper filing system created. Call center representatives had to put customers on hold and ask a file room clerk to retrieve the caller's file just to answer routine questions. Moreover, only one person at a time could work on a customer's file during the underwriting process, a situation that didn't foster high worker productivity.

The expression "the sum of the parts is greater than the whole" has many tried-and-true applications. PwC Consulting is contributing its own technology-driven version of this axiom, and insurance carriers are in line to benefit.Last year, PwC Consulting, a business unit of New York-based PricewaterhouseCoopers LLP, unveiled an e-business solution for property/casualty insurers that the global management and consulting firm believes will alter how carriers invest in technology.