Digital Platforms

Since the beginning of the decade, it's been pedal to the metal for AAA Life Insurance Co.. The organization, which offers term and universal life products, fixed annuities, and travel accident insurance to AAA members, has grown from 75 employees in 1999 to a staff of 400, supporting more than 800,000 customers and more than $1.1 billion in assets.As AAA Life's business began to accelerate at breathtaking speed, the organization's managers began to see some treacherous bumps and obstacles on the road ahead. The company lacked an enterprisewide system for watching and managing costs within the various business units. With relentless hiring and increasing costs of doing business, managers needed a clear, single view of where more gas needed to be applied to boost business, and where the brakes needed to be applied to curb spending.

New York - More than 90% of risk management executives are building or want to build enterprise risk management (ERM) processes into their organizations, but only 11% have completed such a task, according to a recent report issued by New York-based The Conference Board. The Board, in conjunction with Mercer Oliver Wyman, a New York financial consulting firm, surveyed 271 risk management executives from a variety of industries across North America and Europe.

Avon, Conn. - Worksite carriers recorded another year of reserved growth in 2004, according to the sixth annual U.S. Worksite Study, conducted by marketing advisory firm Eastbridge Consulting Group, Inc., Avon, Conn. New worksite sales in the U.S. totaled an estimated $4.223 billion, a 3% increase over 2003 results. Growth improved from the 1.8% increase realized in 2003 (based on revisions several companies made to their reported 2003 sales). [Note: As a result of these revisions, total sales for 2003 were revised downward to $4.1 billion.]

Needham, Mass. - U.S. insurers may face a tough road to better aligning business processes, data, and content to help to drive more profitable, competitive, and differentiated services for growth, but as insurers advance their capabilities, the demands for straight-through processing will drive them toward more open business architectures that will help produce reusable assets, services, and business modules.

Chicago - Agents are being introduced to an e-mail autoresponder that automatically includes complete health insurance quotes to prospective customers and allows continuous flow of e-mails to prospects over a specified timeframe. Norvax, a Chicago developer of Web-based sales and customer communications tools, has released its LeadMiner tool in three versions - Basic, Pro and Marketer. Each version enables agents to automatically e-mail messages customized with their own information on a regular basis at intervals specified by the agent, automatically send HTML and text e-mails with instant, integrated health insurance quotes, and automatically add updated health insurance quotes to scheduled e-mails sent after the initial contact.

Alexandria, Va.--Five top insurance industry leaders will participate in a CEO panel discussion during the opening session of the Independent Insurance Agents & Brokers of America's (Big "I") Convention in New York.CEOs participating as panelists for the discussion are: Frederick H. Eppinger, CEO, Allmerica Financial Corp.; Robert J. Joyce, chairman and CEO, Westfield Group; Charles M. Kavitzky, president and CEO, Fireman's Fund; Axel P. Lehmann, CEO, Zurich North America Commercial; and William J. Mullaney, president, MetLife Auto & Home.

Princeton, N.J. -- American Re-Insurance Co. was named "Best Overall Reinsurer in the U.S." in the 2005 survey of cedant perceptions about reinsurance and reinsurers conducted by Flaspohler Research Group, a Kansas City, Mo.-based business-to-business research. American Re received the same recognition in 2003, the last time this survey was conducted."We are enormously proud of the results of the Flaspohler Survey. Retaining our No. 1 ranking in the "best overall reinsurer" category clearly demonstrates that we continue to be judged as the best reinsurer in this market by our clients - by far the most important arbiters of our performance," said John Phelan, Chairman and CEO of American Re-Insurance Co.

Boston - Although its financial services sector is still small compared to the United States, Europe, or Japan, China's rapid growth rates and huge potential make it a critical arena for expansion for both insurers and solution providers, according to Celent Communications. In its latest report, Insurance in China: Market and IT Overview, Celent predicts IT spending by insurers in China will jump from $2 billion in 2005 to more than $5 billion in 2009.

Washingon, D. C. - Members of the PIA Insurance Technology Coalition met with Congressional staffers on Capitol this week to discuss data security/identity theft and its potential effect on the insurance industry.

Chapel Hill, N.C. - Yankelovich Inc., has unveiled a tool that links the attitudes of individual consumers to insurance industry-specific product behaviors. The tool, Attitudes in Action, enables marketers to tailor their messages to a specific individual's wants and needs and tailor their offers to attitudes linked to individual names and addresses. These insurance-specific attitudes can be used for selecting target lists and performing database enhancements, thereby improving marketing productivity through higher response rates and reduced costs.

Frisco, Texas -Skywire Software, an insurance and financial services software company based in Frisco, Texas, announced it has completed its acquisition of InsBridge, Richardson, Texas, a rating and underwriting applications software provider.

Brookfield, Wis., - Fiserv, Inc., a financial management and compliance software provider, released a software system designed to be compliant with the Sarbanes Oxley Act. The Nautilus SOX solution is a tool that uses document management technology for enterprise-wide compliance with the 2002 federal legislation, and similar provisions that the National Association of Insurance Commissioners is expected to embrace for non-public insurers. The software provides an automated, searchable system for documenting internal controls and business processes to help ensure SOX compliance. With Nautilus SOX, users can create, collaborate, log, execute and conclude business transactions in a structured, efficient environment. It also provides users immediate access information regarding a process or project, including all outstanding issues, approvals, statuses, discussions and communications. The system's framework of pre-defined indexes and templates enables users to monitor and record all external and internal events affecting SOX compliance--from risk assessment to controls testing and remediation. Notifications and scheduled reviews can be set up to ensure that important deadlines are met, and the system can automatically route content between collaborating participants.

Orem, Utah - Xactware Inc. has introduced a collaboration tool that allows homeowners to review and approve their insurance to value calculations. This new tool, XactInfo, is a first-of-its-kind offering for the property insurance market, according to Xactware Inc., Orem Utah. Existing XactValue customers can automatically link into XactInfo for homeowner review and approval. XactInfo automatically sets up a personalized Web site for each homeowner and displays a copy of the information recorded about the home during the initial valuation such as total square footage, features and finishes. Homeowners can use the site to directly communicate with insurance agents and other interested parties regarding approval of existing information, and to provide updates as needed.

Springfield, Mass. - MassMutual Financial Group, Springfield, Mass., announced the acquisition of New York-based Golden Retirement Resources Inc., (GRR) a privately held firm that develops and distributes products and services for the retirement-income market. Comprising member companies with more than $350 billion in assets, MassMutual Financial Group is a global, diversified financial services organization providing life insurance, annuities, disability income insurance, long-term care insurance, retirement planning products, structured settlement annuities, trust services, money management, and other financial products and services. Under the transaction, MassMutual Holding, LLC, a wholly owned subsidiary of Massachusetts Mutual Life Insurance (MassMutual) purchased a majority interest in GRR (including all intellectual property), and intends to own the entire company by year-end. No financial terms were disclosed.

Boston - Liberty Mutual has launched a new Website designed to put benefit tools and information at the fingertips of benefit managers, employees, brokers and consultants. The site - MyLiberty Connection - is a gateway to the Boston-based carrier's on-line tools, secure services, and product information. From the site, users access resources built just for them; so each audience gets specific product and service information answering their common questions, and on-line tools to manage their exact benefit needs.

Jersey City, N.J. - Despite slowing premium growth and a deluge of catastrophic losses, property and casualty insurers ended a 26-year drought by posting $5 billion net underwriting profit in 2004, according to Insurance Services Office (ISO), Jersey, City, N.J. Powered by the best underwriting results in almost three decades, insurers' net income after taxes and overall profitability rose for the third consecutive year, and insurers' surplus climbed to a record high, according to ISO's newly-published insurance issues series study "Insurer Financial Results: 2004."

Hartford, Conn. - The U.S. life insurance industry is projected to post operating gains in 2005 and 2006 that build on positive 2003 and 2004 results, according to Conning Research and Consulting Inc. Hartford, Conn.

Dublin, Ireland - In response to the increasing in outsourcing of insurance company assets to third-party investment firms, Ireland-based Research and Markets released a Resource Guide that profiles the industry's most prominent global asset management firms, insurance companies, and key industry service providers. Included in the guide are industry rankings and comparisons, asset management firms, industry service suppliers, and corporate indexes. The names of major property and casualty, life and health, mutual property and casualty, mutual life and health, and reinsurance companies are also included, along with executive-level contact information. The Resource Guide also includes a full directory listing for industry consultants, technology and information providers, custodian banks, industry-related law firms, and industry associations.

Kansas City, Mo. - The National Association of Insurance Commissioners (NAIC) warns that significant market disruptions could develop with the Federal Terrorism Risk Insurance Act's (TRIA) expiration on December 31, 2005, the law's current sunset date. The economy's current strength reflects the ability of businesses to cover affordably catastrophic terrorism risks.

El Segundo, Calif. - Ohio Mutual Insurance Group, a Bucyrus, Ohio, insurance company, has experienced a 13 percent increase in staff productivity over the previous year, thanks in part to software from Computer Sciences Corp. (CSC), El Segundo, Calif. Previously known as the Ohio Mutual Tornado, Cyclone and Windstorm Insurance Assoc., Ohio Mutual today provides auto, home, farm and business insurance. The implementation of CSC's property and casualty insurance software follows its move last year to replace its legacy system with CSC's POINT IN policy administration and claims components. The POINT IN policy administration component provides Ohio Mutual with an integrated, paperless system for rating, underwriting, reinsurance, and billing and collection. The advanced claims component automates claims assignment and tracking. The company, which writes more than $120 million in premiums each year, reports a surplus of more than $67 million. CSC reports that the carrier also achieved the largest annual net operating profit in the company's 104-year history.

San Diego, Calif. - Abovehealth, a healthcare information technology company, has founded The Dolphin Group, a "think tank" comprised of industry peers who wish to discourse on the unique problems facing IT executives in the healthcare information industry. The group held its inaugural event in Las Vegas in conjunction with last month's America's Health Insurance Plans (AHIP) Institute 2005.

Minneapolis - UnitedHealth Group will acquire Cypress, California-based Pacificare Health Systems, Inc., the company announced today. The acquisition, expected to be financed 27% in cash and 73% in shares of UnitedHealth common stock, is valued at $8.1 billion in stock and cash plus $1.1 billion in PacifiCare debt to be retired at closing. The deal would close in late 2005 or early 2006, pending approvals from federal regulators and shareholders of PacifiCare. Minneapolis-based UnitedHealth, one of the nation's largest managed-care companies, plans to expand its West Coast presence and its involvement in the Medicare market. According to Chicago-based Fitch Ratings, approximately 1.8 million, or 57% of Pacificare's 3.2 million members are located in California, which is a state where UnitedHealth has historically lacked a competitive market share. In addition, UnitedHealth will be acquiring the largest player in the Medicare Advantage program, reports Fitch. Pacificare will add approximately 720,000 Medicare Advantage members to UnitedHealth's existing Medicare Advantage membership of approximately 345,000 and will give an additional boost to UnitedHealth's plans to participate in the Medicare drug benefit beginning in 2006, says the ratings firm.

Salt Lake City - GE Healthcare, a $14 billion unit of General Electric Company that is headquartered in the United Kingdom, and Intermountain Health Care, a Salt Lake City-based integrated health care system, announced the organizations' joint project to develop a new advanced electronic medication administration record, also known as an eMAR, which will better enable collaboration among a patient's care team.

Hartford, Conn. - Personal automobile and homeowners market leaders are employing a new mix of tactics as they compete for growth, according to two new publications by Conning Research and Consulting Inc., Hartford, Conn."Personal lines market leaders are more aware now than last cycle of the price points that damage profits," said Bruce Hale, analyst at Conning Research & Consulting Inc. "Modest price cuts are common in personal automobile, while the homeowners line is showing flat to minimal rate increases in most states. These measured actions are affordable for insurers because of recent strong profits. The aggressive competition is occurring in data modeling and branding. Market leaders are outsmarting their rivals in risk selection and staking a superior position in the mind of the consumer."

New York - MetLife Inc. reports completion of its $11.8 billion acquisition of New York-based Citigroup's Travelers Life and Annuity Co. and nearly all of Citigroup's international insurance businesses. The New York carrier paid Citigroup $10.8 billion in cash and about 22.4 million of its own shares, which are valued at roughly $1 billion. Travelers Life and Annuity Co., which is based in Hartford, Conn., reported 2004 sales of $822 million. Once the deal is closed, Citigroup says it will record a $2 billion gain in the third quarter.

Over the past three years, publicly held companies in the insurance industry have become painfully familiar with the stringent requirements of the Sarbanes-Oxley (SOX) corporate governance law.A senior-level executive with Chicago-based global brokerage firm Aon Inc., confirmed that the company's audit fees skyrocketed 53%, from $10 million in 2003 to $15.3 million in 2004. And, with annual revenue of $800 million and income of approximately $73 million, RLI Corp., a Peoria, Ill.-based specialty insurer, absorbed Section 404 compliance costs last year of $1.9 million.

If the leading policy administration software executives were a bit surprised to see a standing-room-only crowd at their ACORD-LOMA Insurance Systems Forum session in Orlando on May 23, it's because they had yet to see results of a general session poll that would occur the following day: a full 46% of voting attendees reported policy administration systems as a high investment priority (see page 10).The topic for discussion for the session, "What Do the Experts Say About Administration Systems?," was finding cost-effective ways to merge systems and reduce complexity and associated costs.

The good news coming out of the ACORD-LOMA Insurance Systems Forum, held May 22-24 in Orlando, Fla., is: The role of standards is strong and growing for top-ranking carriers. The not-so-good news is: For many other carriers, it's still a struggle to get buy-in for standards from the business side.According to a survey conducted by ACORD of its top 25 members-chosen based on A.M. Best data for premiums and market penetration-90% currently have a strategy in place to implement ACORD standards and 93% have plans to do so this year.

In software buys that have risen fairly steadily over the past eight quarters, core systems appear to be carriers' priority, according to a report released by Celent Communications Inc., Boston.Celent's goal in conducting its research, "Insurance Software Deal Trends 2003-2004," was to find out what types of insurers (by size and lines of business) purchased application and infrastructure packaged software during that time period. The study also looked at the business processes supported by these deals, as well as some of the broad trends in terms of deal activity.

To the Agents Council for Technology (ACT), anything is possible."We want to do everything we can to accelerate agent, carrier, and vendor implementation of money-saving technologies," says Jeffrey Yates, executive director for ACT, which is an operating unit of the Independent Insurance Agents & Brokers of America (IIABA), Alexandria. Va.

A survey of life insurance CFOs conducted by the Tillinghast division of Towers Perrin revealed that significant changes in insurance distribution are likely.In March, the Stamford, Conn.-based services firm asked more than 70 executives about the issues underlying distribution and remuneration concerns.

Think back to 1978. Pete Rose of the Cincinnati Reds had his 3,000th major league hit. The first test tube baby was born. Poland's Karol Wojtyla became Pope John Paul II. Nearly 1,000 people committed suicide in Jonestown, Guyana. And Egypt and Israel signed the Camp David peace accord.In the same year, the P&C industry made its last profit from underwriting for 25 years. That's right: Not until last year did the industry's combined ratio again fall below 100-which means for more than two decades, P&C losses exceeded premium earnings.

Two primary trends are emerging that are impacting the state of underwriting in the P&C market. The first is the drive to reduce complexity. New technology is simplifying systems and reducing the amount of manual document-handling between carriers and agents. The second trend is an increased use of data-driven decision-making for more predictable underwriting results.This is the conclusion of research conducted by TowerGroup, a Needham, Mass.-based research and advisory firm to the financial services industry.

MassMutual Adds ERISA Advisory TabTo help plan sponsors stay apprised of fiduciary obligations and minimize their fiduciary liability, MassMutual Retirement Services, Springfield, Mass., has added a new ERISA Advisory tab to its Total Retirement Center (TRC) online. The ERISA Advisory tab replaces the Plan Info tab that was previously on the Web site. All plan-level compliance information is still available within ERISA Advisory under the Consulting Services section. In addition, plan sponsors now have access to qualified retirement plan reference material and important testing and reporting information in one location.

A number of auto insurance carriers adding real-time rating capabilities and other agent- and consumer-friendly enhancements have decided to give The Progressive Group of Insurance Companies a run for its money.

New York - Integro Ltd., a risk management brokerage firm, today announced that Craig Lowenthal has joined the company as managing director and chief information officer. Based in the company's New York headquarters, Lowenthal will be responsible for the applications, infrastructure, telecommunications and technology operations for Integro Ltd. worldwide. Lowenthal has been a technology professional in the insurance industry for more than 16 years, most recently serving as vice president and chief information officer for Hartford Financial Products, a company of The Hartford. He previously held positions with Credit Suisse First Boston and Deloitte & Touche. Lowenthal is active in the Insurance Accounting & Systems Association (IASA) and the Long Island chapter of the Association of Information Technology Professionals (AITP). He is a member of the AICPA, and the NY State Society of CPAs.

The Insurance Accounting & Systems Association (IASA), Durham, N.C., announced today that their members have elected Mark Robison as president for the fiscal year that will begin on July 1, 2005. Robison has risen through the ranks of IASA holding various management team, leadership and volunteer positions within the association during his many years of volunteering. Currently, he serves as vice president and treasurer of Brotherhood Mutual Insurance Company, a Fort Wayne, Ind., a niche regional P&C carrier insuring America's churches and related ministries. Robison joined Brotherhood in January, 1994. Prior to joining Brotherhood, he worked as a manager for Ernst & Young, LLP serving insurance clients, and also within the firm's information systems consulting practice. Robison is a Certified Public Accountant, a Chartered Property Casualty Underwriter, a Fellow, Life Management Institute and holds the Associate in Insurance Accounting and Finance designation from the Insurance Institute of America.

Washington - The Terrorism Risk Insurance Act (TRIA), a temporary program introduced after the Sept. 11 terrorist attacks, has served its purpose and is probably stunting the development of the private insurance market, Treasury Secretary John Snow wrote in a letter to the Senate Banking Committee summarizing the agency's conclusions regarding TRIA.

Genworth Financial is streamlining its operations. The $103 billion company, which serves the lifestyle protection, retirement income, investment and mortgage insurance needs of more than 15 million customers, operates in 22 countries, including the U.S., Canada, Australia, the U.K. and more than a dozen other European countries.

San Mateo, Calif. - Siebel Systems Inc. is stepping up efforts to tackle the rise in fraudulent claims, the San Mateo, Calif., provider of customer-facing solutions reports. Analysts estimate that fraud in the U.S. has jumped 63 % in the past four years, and more than 25% of current U.S. insurance claims contain some element of fraud, contributing to an annual cost of at least $44 billion.

Hartford, Conn. - Aetna has entered into an agreement to acquire HMS Healthcare, a regional health care network. The acquisition will enable Aetna to strengthen its local market presence - particularly in Michigan and Colorado - by providing access to highly competitive health care networks. In addition, Aetna also enters the market for providing network access to other health plans in those states. Aetna will acquire HMS for approximately $390 million, subject to customary post-closing adjustment, and expects to finance the transaction from available cash. Aetna expects to close the transaction during the third quarter of 2005. The privately held HMS, which is majority owned by entities affiliated with KRG Capital Partners, operates under four trade names. PPOM, based in Southfield, Michigan, manages and provides access to networks throughout Michigan and parts of Ohio and Indiana. Flora Health Network operates in Ohio, Indiana and Kentucky. Sloans Lake Preferred Health and Mountain Medical Affiliates, based in Denver, manage and provide access to networks in Colorado. Source: Business Wire

Kansas City, Ks. - General Electric Co. (GE) has unveiled a plan to reorganize its 11 business groups into six. The reorganization places GE's largest Kansas City area operation, GE Insurance Solutions, in the corporate giant's commercial financial services division, headed by Michael Neal. Neal, 52, previously was president and chief executive of GE Capital Corp. and has worked in a variety of GE jobs, both in the United States and overseas, since 1979. GE's insurance operations will continue to be headed by Ron Pressman, president of Insurance Solutions in Kansas City. The new commercial financial services group will also include the parent company's leasing, real estate, corporate financial services and health care financial services operations. The restructuring also touched GE's top management ranks. Three senior executives, including Neal, were promoted to vice chairman. The company did not disclose what changes, if any, the reorganization would mean for Insurance Solution's 850-member Kansas City area work force. GE says its Insurance Solutions, formerly known as Employers Reinsurance Corp., is the world's fourth-largest reinsurance company. The other divisions created by the realignment are GE Infrastructure, which includes energy, transportation and aviation manufacturing operations; GE Industrial, which includes industrial chemicals and technology operations; NBC Universal, the company's broadcasting and entertainment operations; GE Healthcare, which includes medical technologies; and GE Consumer Finance, a global collection of financial services providers. Securities analysts quoted by Reuters and other news services said that the changes play important roles in GE's transition to a more technology-driven company.

It's a great time for P&C carriers to be considering a new policy administration system, as features critical to return on investment, such as customer relationship management and data mining, become relatively standard features in these systems, according to Boston-based Celent Communications. In a report released this week designed to help insurers understand the marketplace, Celent cites additional incentives: a drop in prices, faster implementations, and more plentiful vendor options.

Chicago - Companies want clean, accurate enterprise data to enhance analytics capabilities, say business and IT professionals in a recent survey conducted by Chicago-based data warehousing consultant Knightsbridge Solutions. More than 2,000 respondents among all levels of business and IT functions and industries completed the survey, entitled the "2005 BI Peer Review," this past spring.

Jupiter, Fla. - If life and health insurers maintain their chokehold on technology spending, it shouldn't be a case of pleading poverty. Just-released figures from Weiss Ratings show that profits in that sector climbed nearly 30% last year, the second consecutive year of growth.

Chicago - Brokerage giant Aon Corp. has appointed Bill Pieroni global chief information officer. Pieroni joins Aon from IBM, where he was head of that company's global insurance industry practice. He has extensive technology and industry experience, working with insurance companies and other clients on complex information and technology issues. Pieroni, whose appointment is effective Monday, June 20, will have responsibility for global Aon IT-related activities. He will be based at the firm's headquarters in Chicago.

Northbrook, Ill.-Michael J. Roche has been promoted to senior vice president of Allstate Insurance Co. with responsibility for Allstate Protection technology and administration . Allstate Protection combines the Allstate and Encompass property and casualty offerings through Allstate and independent agencies, respectively. Roche is also now a member of the Allstate senior management team.

Chicago - The third annual study conducted by Chicago-based Foley & Lardner LLP on the costs associated with corporate governance reform shows that the average cost of being public in 2004 increased 33 percent over 2003 for a company with annual revenue under $1 billion.

While CRM systems can get an organization 90 percent of the way toward reaching its customer relationship management objectives, the systems do not answer the key question of "why," according to CRMDirectory.com, a customer management website.

Washington - The Independent Insurance Agents and Brokers of America, Alexandria, Va., says a proposal to establish an optional federal charter for insurance regulation is not the "best or right solution for regulatory reform in the industry." The association of 300,000 business owners reacted yesterday to a letter sent by 135 insurance, national and regional finance companies to the Senate Banking Committee in support of a charter. "The lack of a federal insurance regulator is especially troublesome," the letter stated. The group asked the Committee to consider the fact that, because insurance is solely regulated by the individual states, "there is no Federal regulatory agency to represent the financial regulatory interests of the U.S. insurance industry."

Alexandria, Va.-During the past year, the Agents Council for Technology (ACT), working closely with ACORD and agency management system user groups, has undertaken a major initiative to make commercial lines download more accurate and effective for independent insurance agencies and brokers.ACT's commercial lines download work group, which drew broad participation from carriers, vendors, agents, and user groups, has released a series of important recommendations toward this end.

Oakland, Calif.-A review of hurricane trends by EQECAT Inc. shows a more than a one in three chance of large hurricane catastrophe losses in the United States in the current season, based on current forecasts by the National Hurricane Center (NHC)."Although the current season might not be as severe and unusual as the 2004 season, the potential for large losses in 2005 is likely to be troubling to insurers and reinsurers, which will have to cover the potential hurricane damage claims," says Tom Larsen, senior vice president of EQECAT.