Digital Platforms

A new study that purports to pinpoint the economic losses stemming from state-by-state regulation of the life insurance industry finally provides the smoking gun that advocates of optional federal regulation say they need to bolster their case before Congress.Commissioned by the American Council of Life Insurers (ACLI), the study contends that life insurers could save more than $600 million annually, or $6 billion over 10 years, if a federal regulatory charter option were enacted.

U.S. financial service providers (FSPs) are expected to spend $65.7 million on IT services in 2005. However less than 30% will outsource any strategic projects by the end of 2006, according to Gartner Inc., Stamford, Conn."Most FSPs currently use outsourcing tactically to augment staff for faster project turnaround or to reduce operational costs, rather than for strategic value," says Kimberly Harris-Ferrante, research vice president at Gartner. "FSPs should now begin outsourcing strategic projects in order to gain larger-scale, enterprisewide value."

Insurers sell promises, and after Hurricane Katrina, they certainly have a lot of promises to keep.At press time, the economic loss from what appears to be the worst hurricane in U.S. history-along with subsequent flooding of New Orleans-was expected to exceed $125 billion, according to Risk Management Solutions (RMS), a Newark, Calif.-based catastrophe management technology and services provider.

Verbalizing its intent to become the No. 1 customer relationship management (CRM) applications company, Oracle Corp. at press time had announced it had agreed to buy Siebel Systems Inc., San Mateo, Calif. The deal is valued at approximately $5.85 billion, or $3.61 billion net of Siebel's cash on hand of $2.24 billion."Siebel's 4,000 applications customers and 3,400,000 CRM users strengthen our No. 1 position in applications in North America and move us closer to the No. 1 position in applications globally," said CEO Larry Ellison from Oracle's Redwood Shores, Calif., headquarters.

For better or worse, the reinsurance industry is in the middle of its 15 minutes of fame. With regulators shining a spotlight-some might call it a blinding one-on the industry, insurance companies are being forced to take a hard look at their reinsurance practices.Regardless of the overall impact the attention will have on the reinsurance market-specifically on finite reinsurance (see "Regulators Focus on Finite Reinsurance" ), it's a safe bet to say that insurance carriers will start to more closely examine their reinsurance automation needs, according to Donald Light, senior analyst at Celent Communications Inc., a Boston-based financial services research and consulting firm.

In spite of centuries of sales experience, most insurers rely heavily on price for acquiring and retaining customers. The reality is that customers base insurance purchasing decisions on many factors. While this does not mean that we can ignore pricing, it does mean that alternatives exist for insurers to remain competitive.For some companies, the frustrating cycle of hard and soft markets will not exist. By relying on the power of data mining, they can maintain the consistency and accuracy of their underwriting decisions; they can significantly reduce the impact of fraudulent claims; and they can have a better understanding of their customers' wants and needs.

San Diego, Calif. - According to a recent report issued by San Diego-based messaging security developer Akonix Systems Inc., some 25 new viruses were reported on corporate IM networks during the month of September.

Boston - In 2003, Allianz Life transformed its Individual Insurance Group Call Center with key features including a single converged voice and data network, voice over Internet protocol (VoIP) phones, simple and understandable 800 number access for agents and policyholders, and intelligent call routing.Allianz's new call center has produced both financial and nonfinancial benefits, according to a report from Celent Communications Inc., titled "Upgrading Call Center Technology at Allianz Life." Productivity (measured by utilization of internal sales reps) has increased from 85% to 92%. Current year sales are up 78% year-over-year with essentially the same staff count. Management has a much better ability to track performance both real-time and retrospectively. Perhaps most importantly, the introduction of skill-based routing has facilitated the matching of calls to sales representatives.

Mayfield Village, Ohio - One million consumers have heeded the call of the Drive Insurance from Progressive marketing campaign and visited driveinsurance.com to find out more about the benefits of buying auto insurance through an independent agent or broker, including personal service and advice, competitive rates, and choice.The Web site was introduced in December 2004 as part of the launch of the Drive brand, which promotes the more than 30,000 independent agencies that sell Drive Insurance products across the country. The Drive Group of Progressive Insurance companies is the country's number one writer of private passenger auto insurance through independent agents and brokers.

Brea, Calif. - ChoicePoint and The Hartford Financial Services Group Inc. have co-led a $20 million strategic investment that funds the expansion of XDimensional Technologies Inc. in the independent insurance agency market. Additional terms of the transaction were not disclosed.XDimensional's flagship product, Nexsure, is an agency management Internet service for the insurance industry. Nexsure is designed to put information at the fingertips of agents and carriers, delivering a progression of the entire customer/policy life cycle for any and all lines of business, from first contact, to submission, to sale and to in-force policy service.

Hartford, Conn., - Two insurers are partnering to bring advanced workers' compensation services to businesses throughout the Connecticut. The Hartford Financial Services Group Inc., Hartford, Conn., has contracted with Aetna to offer its customers the Aetna Workers' Comp Access (AWCA) network of health care providers. This arrangement, which became effective Sept. 1, follows a June 1 initiative when

Kansas City, Mo. - State insurance regulators, working cooperatively through the National Association of Insurance Commissioners (NAIC), are working to ensure that survivors of Hurricane Katrina are being treated fairly and in compliance with the state insurance laws. To help respond to consumers' needs, the NAIC is creating an Emergency Responder database of state resources. This database will serve as a network of consumer assistance representatives from around the nation, who will help support state insurance departments in Louisiana, Mississippi and Alabama, as they respond to losses associated with the disaster.

Alexandria, Va. - The national board of the Independent Insurance Agents & Brokers of America (IIABA) has adopted a new policy on producer compensation disclosure by carriers.

New York, N.Y. - The insurance commissioners of several large states will convene a summit November 15 and November 16 to develop a National Catastrophe Insurance Program, which would more effectively spread insurance risk and help survivors cope with the tremendous financial damage caused by natural catastrophes and acts of terrorism.

Boston - Will Katrina change the insurance industry in fundamental ways? Have loss patterns changed from "small and frequent" and "large and infrequent" to "very large and not infrequent?"In a new report, "After Katrina: What Now for the Insurance Industry?" Celent Communications Inc. examines the immediate and long-term implications of Katrina and describes best-case and worse-case scenarios of its impact on the insurance industry and select insurance providers.

Jersey City, N.J. - ISO's guide on state insurance laws and regulations, the State Filing Handbook, is now available in a new Web-based format designed to make it easy for insurers to access the information they need when they need it. The State Filing Handbook is available through ISOnet, ISO's secure Internet platform for delivering information to property/casualty insurers.The online State Filing Handbook features multi-state reports on a broad range of filing topics. Insurers can select a single topic, a type of filing and a number of states -- or choose all states -- and the handbook will generate a table summarizing the requirements for those states. A keyword search feature includes regulations, bulletins and forms to make it easier to locate the exact topic or section.

Los Angeles - In response to unprecedented demands on independent adjusters due to Hurricane Katrina, Marshall & Swift/Boeckh (MS/B), a supplier of local building cost information, residential and commercial property valuation technology and services for the property and casualty insurance sector, has extended its help desk hours. Its fully staffed technical support is now available weekdays from 7:00 a.m. to 9:00 p.m. CST and on weekends from 7:00 a.m. to 7:00 p.m. The help desk can be reached toll free at 888-337-9665.

Philadelphia - Mutual of Omaha has implemented COMPASS, an enterprise group benefit administration system from Philadelphia-based SunGard. In 2004 the Omaha, Neb., carrier created a sales force dedicated solely to group life, disability and dental products. It purchased COMPASS in July 2004 to support product development, billing, collections and administration and to help it manage its group life, disability, dental and voluntary insurance offering. COMPASS, a participant recordkeeping and plan administration system, supports a range of plan types, including group pension, group and life disability, individual pension and annuity, and corporate profit sharing.

Boston - New York-based MetLife and Babson Executive Education held their second annual Thought Leadership Conference this week in Wellesley, Mass. The meeting brought together key players in the Internet and multi-channel marketing arena to discuss innovative practices for understanding the multi-channel marketing mindset.

San Diego, Calif. - Mitchell International Inc., a provider of information and workflow solutions to the automotive insurance and collision repair industries, has acquired ClaimIQ, a leading San Francisco-based provider of claims decision optimization applications for insurance carriers.ClaimIQ will join the Mitchell organization as a business unit of Mitchell's medical division. All products of both Mitchell and ClaimIQ will continue to be supported and expanded, and a new set of integrated products that combine the strengths of decision support, bill review, and collision estimating will be introduced.

Kansas City, Mo. - The National Association of Insurance Commissioners (NAIC) has redesigned its Web site to be more user friendly to both NAIC members and first-time visitors. Work on the new site began in May after an internal audit was conducted to focus on potential areas of improvement and enhancement, with the goal in mind to create an easier, more accessible online resource for all audiences."Improvements made to our Web site should make finding information much easier for anyone who is seeking insurance information," says Catherine J. Weatherford, NAIC executive vice president and CEO. "We've grouped information into categories that should simplify searches for specific topics."

Redwood Shores, Calif. - Verbalizing its intent to become the number-one CRM applications company, Oracle, announced that it agreed to buy Siebel Systems Inc., San Mateo, Calif., for $10.66 per share. The offer is valued at approximately $5.85 billion, or $3.61 billion net of Siebel's cash on hand of $2.24 billion.

Springfield, Mass. - MassMutual piloted its e4 Wireless Enrollment System with several plan sponsors and participant focus groups early this year, and so far, the results have been significant.In an effort to make retirement planning less overwhelming for participants and more action-oriented, MassMutual engaged Ameranth Wireless Inc., San Diego, to develop e4, MassMutual's custom Electronic Enhanced Enrollment Experience.

Newark, Calif. - Risk Management Solutions reports that insured losses from Hurricane Katrina are estimated to be $40-$60 billion, of which $15-$25 billion are related to the Great New Orleans Flood. This estimate does not include NFIP coverage.

Malvern, Pa. - The CPCU Society has established an emergency relief fund to provide assistance to people living in areas affected by Hurricane Katrina. The Society's Board of Governors voted unanimously to create the fund after receiving numerous phone calls and e-mails from members asking how they can help hurricane victims. The Board also agreed to match contributions from its members and chapters up to $25,000. The CPCU Society will give all donations collected to the American Red Cross on behalf of its chapters in the affected areas.

Acton, Mass. - CCH Insurance Services, a part of Wolters Kluwer Corporate & Financial Services division, has launched a new micro site summarizing regulatory compliance information for insurers responding to catastrophe in the wake of Hurricane Katrina. The web site, located at www.insurance.cch.com/katrina is free of charge as a public service to insurers."Affected states are now issuing requirements and other directives specifically related to this catastrophe," says Joe Bieniek, compliance manager for CCH Insurance Services. "We want to provide insurers with a resource that will help them easily determine what is required in Alabama, Florida, Louisiana, and Mississippi so they can respond to claims quickly, avoid confusion, and maintain compliance."

Pearl River, N. Y. - IBM is contributing more than 100 business-process models, model definitions and other industry content to the Association for Cooperative Operations Research and Development (ACORD), reports the non-profit standards organization. The models come from IBM's Insurance Application Architecture (IAA), the company's insurance business and IT architecture framework. The donation will accelerate the development and adoption of business-process standards that will help address some of the global insurance industry's greatest challenges.

Kansas City, Mo. - The National Association of Insurance Commissioners (NAIC) says that while the damages from Hurricane Katrina may set record losses, the property and casualty industry maintains the adequate capital and liquidity required to withstand claims arising from one of the most devastating natural disasters in U.S. history.

Nearly a year has passed since New York Attorney General Eliot Spitzer charged insurance brokerage firm Marsh & McLennan with rigging bids to maximize its commissions with insurance carriers.Allegations against Aon, AIG, ACE and other brokers and insurers followed-and within weeks, the country's largest insurance brokers-Marsh, Aon and Arthur J. Gallagher-as well as AIG and ACE had ceased the practice of accepting (or paying) contingent commissions.

The terrorist attacks that ripped through the heart of London last month provided a jarring wake-up call to American insurers.Even though the attacks, which killed 55 people and injured hundreds more, are expected to result in relatively modest liability exposure according to early estimates, insurers are taking notice.

The London bombings may have provided a wake-up call, but insurers could also be experiencing restless nights fretting over the fate of the Terrorism Risk Insurance Act (TRIA) of 1992.The future of TRIA, a safety net that has provided some protection against the financial fallout from a terrorist event, is uncertain. The law, which was enacted in November of 2002 and is in effect until December 31, 2005, provides a federal financial backstop for the insurance industry for claims from certain terrorist attacks.

Insurers are better prepared to face the hurricane season this year, after the harsh 2004 season forced them to learn how to more effectively interpret the information they get from catastrophe (CAT) modeling systems, according to Risk Management Solutions (RMS), a Newark, Calif., provider of products and services for the management of catastrophe risk. At press time, RMS estimated that losses from Hurricane Dennis were likely to be between $1 and $3 billion.The two million claims produced from the 2004 season were a catalyst that encouraged companies to improve their understanding of the models, much like Hurricane Andrew in 1992 pushed catastrophe modeling into the mainstream, says Kyle Beatty, meteorologist with RMS.

March 2002: Upset about the size of his annual bonus, a global financial services employee planted a "logic bomb" that deleted 10 billion customer records. The incident affected more than 1,300 of the company's servers throughout the United States. The company sustained losses of approximately $3 million-the amount required to repair damage and reconstruct deleted files.

Imagine leaving your sales and marketing efforts to guesswork. Not understanding your customer's age, lifestyle, income or other factors would spell certain disaster for any insurance carrier trying to market or cross-sell specific products.Amica Life Insurance, a wholly owned subsidiary of Amica Mutual Insurance Company, is one company that decided to attack its marketing efforts with statistical intelligence.

Insurance firms must perform more due diligence if they want their Web sites to net them greater revenues. That is one of the crucial messages of a recent study from Forrester Research, a Cambridge, Mass.-based technology and market research firm, as a litany of mergers and acquisitions (M&A) and a blur of technology offerings in the Web analytics field make insurers' search for the ideal vendor a murky proposition.The Forrester report, titled "How Web Analytics Buyers Structure Contracts," indicates that too many companies are rashly choosing vendors to tackle a very important element of their success strategies: maximizing their business on the Internet.

Kansas City, Mo - The officers and members of the National Association of Insurance Commissioners (NAIC) have decided to cancel the Fall National Meeting, which was scheduled for September 10-13 in New Orleans. Approximately 1,500 insurance regulators, industry representatives and interested parties had registered to attend the conference.

Dublin, Ireland - The U.S. insurance industry has fully emerged from a rough patch at the early part of the decade, according to Research and Markets, a Dublin research firm. Both life and non-life carriers are currently experiencing a period of relative stability, and have reassessed their technology opportunities. In its report, which examines how U.S. insurance technology strategies have evolved over the past 18-24 months, Research and Markets asserts that claims processing will continue to be the focal point of IT spending for non-life insurers through 2008. Overall spending growth will moderate around 2007 as the bulk of costly system rationalization and standardization efforts will be either underway by then, says the firm.

New York - Hurricane Katrina is expected to be one of the costliest U.S. storms for insurers in history, but risk forecasters are not in total agreement about the extent of the damage.Insured losses from Katrina may total as much as $25 billion, say analysts. This tops the $20.9 billion bill from 1992's Hurricane Andrew, which set a record as the costliest U.S. storm.

Mayfield Village, Ohio - Progressive Direct is taking what it believes to be the next big step in the evolution of auto insurance pricing. The Mayfield Village, Ohio company is inviting its customers throughout the country to participate in a voluntary research program that will gather driving habit information.

Springfield, Mass. - In its latest effort to provide women with comprehensive financial education, MassMutual Financial Group is targeting females with an online financial seminar designed to help them assess their personal finances and develop a long-term financial strategy.

New York - U.S. insurers will turn more and more to professional services providers and consultants in developing, implementing and managing complex technology projects. That's according to a report by U.K.-based independent market analyst Datamonitor.According to the report, titled "U.S. Insurance Technology Strategies," for the first time (year end 2005), spending on external solutions will outpace that of internal IT spending.

Stamford, Conn. - Dennis Callahan, CIO, Guardian Life Insurance of America, has joined The BTM Institute's Global Leadership Council as the organization amends its name to The Michael Nobel Harriet Fulbright Institute of Business Technology Management.

Hartford, Conn. - Specialty Risk Services LLC (SRS), a property-casualty third party administrator for workers' compensation and general liability claims, is offering its clients access to a suite of tools to monitor their program's performance on its newly redesigned Web site.In SRS' password-protected Employer's Toolbox, clients have secure access to resources, including industry statistics, employee training materials, libraries of legislative and industry updates, loss control and safety tips, and links to national and industry Web sites.

Philadelphia - Cigna has introduced a new tool designed to allow companies to stay connected to employees during times of crisis. Travel Locator Service is a Web-based tool that combines worldwide medical and security intelligence with illness and accident medical coverage designed expressly for international business travelers. Philadelphia-based Cigna says the tool is available with its Medical Benefits Abroad service, and is designed to provide companies with employees abroad a detailed alert to quickly identify which employees are traveling on business and where -- pinpointing the exact whereabouts of traveling professionals down to country, city, and hotel location - so that employers can immediately communicate with traveling employees.

Los Angeles - Undervaluation statistics for the U.S. homeowners business have continued to improve since 2004, according to Marshall & Swift/Boeckh (MS/B), a provider of building cost data and estimating technology to the property insurance industry.MS/B has been tracking home valuation statistics since the early 1990's and reports it as the MS/B ITV Quality Index". In 2005, MS/B's research shows the percentage of undervalued U.S. homes has dropped over the prior year from 61% to 59%, and the average percentage of undervaluation has improved from 25% to 22% across the industry. This is a significant improvement from five years ago when approximately 73% of homes in America were undervalued by an average of 27%, according to MS/B.

Hartford, Conn. - Aetna is launching an online customer service program that lets consumers find out what they can expect to pay at the doctor's office before going in for a visit. The service will allow consumers to better estimate their out-of-pocket health care expenses by having online access to the actual discounted rates for up to 25 of the most common office-based services offered by their own primary care or specialist physician. The program will initially be piloted with information for approximately 600 distinct procedures provided by 5,000 individual physicians and physician groups in Cincinnati, Dayton and Springfield, Ohio, Northern Kentucky and Southeast Indiana.

Stamford, Conn., - While property and casualty insurers need to implement the same standards to provide real-time transactions for brokers and agents, survey results by Gartner, Inc. show that many insurers have been slow in offering the technologies necessary to implement these transactions.A Gartner survey of 72 members of the Council of Independent Agents and Brokers (CIAB) conducted between January and April of 2005 showed that agents and brokers prefer to do business with insurers that provide real-time transaction capabilities to better service policy holders. However, adoption of single-entry multiple-carrier interfaces (SEMCIs), which enable distributors to send and receive data seamlessly, continues to lag among insurers and distributors.

Hartford, Conn. - If small businesses always maintained the same workers, locations, fleet vehicles or inventories, then reporting changes for their premium audits would be easy. Reality, however, is quite different. The Hartford Financial Services Group Inc. has introduced an online Premium Audit Reporting tool that dramatically simplifies the process of submitting information to reconcile insurance premiums.Most commercial insurance premiums are provisional, calculated at the beginning of the policy year based on estimates of the business operations throughout the year. At the end of the policy year, the business's records are audited for changes that may affect the premium, including increases or decreases in payroll and sales. When the audit is complete, the premium is modified accordingly.

Brea, Calif. - XDimensional Technologies Inc., the provider of Nexsure, the Internet insurance agency management solution, and The Ohio Casualty Insurance Co., Fairfield, Ohio, have extended the inquiry services available on Nexsure."Our company is committed to providing cutting-edge technology to agents in order to help them succeed in the competitive marketplace," says John Kellington, senior vice president and chief technology officer for Ohio Casualty. "We work with innovative, proven vendors to help us achieve this goal. For example, agents using Nexsure from XDimensional Technologies and leveraging extended services are able to access a wider variety of information exactly when they need it, to speed business along. Specifically, Nexsure users are able to access selections of loss run and document retrieval information through this process. This provides an advantage over the traditional process, yielding a timely, accurate and convenient solution."

Northbrook, Ill. - Allstate Financial Corp. has launched a new illustration system for its variable annuity product line called ClearCast Illustrations. This new illustration system enables producers to create hypothetical views of the entire variable annuity product suite.ClearCast walks the user through the process of selecting features, riders and subaccounts. The system has several unique characteristics that include:

Jersey City, N.J. - ISO has acquired eLIENS, a unit of Xtria LLC. eLIENS provides lien holder and mortgagee notification services for insurance carriers. Xtria is an information technology and services company. Terms of the agreement were not disclosed.Lending institutions that finance the purchase of autos, homes and other property typically require borrowers to maintain minimum levels of insurance coverage. As a lien holder or mortgagee to the property being insured, these lenders are entitled to receive many of the same notices that are sent to policyholders. The result for insurance companies is often a very paper- and labor-intensive notification process.

Newark, N.J. - Prudential Financial Inc. has launched a Women & Finance section on its consumer Web site. The new section of the company's site provides information and tools designed to help women address the unique financial issues they face."Bringing education to the online experience is just one way we hope to provide women with the tools they need to help secure their own financial futures," says James Brett, vice president and head of eBusiness Development for Prudential. "In today's fast-paced world, a great way to provide knowledge is through the convenience of the Internet."