Digital Platforms

New technologies and competitive pressures are gradually prying open the doors to carriers' rating systems, long locked away in the silos of proprietary or homegrown systems. These rule-driven systems, designed to evaluate potential policyholder risk and price policies accordingly, are increasingly being called upon to integrate with multiple channels, back-end systems and front-end portals to provide real-time or close to real-time pricing for customers.These changes are being driven by a number of factors, relates Craig Weber, an analyst with Boston-based Celent LLC. Rising customer and agent expectations, for one, are pressuring carriers to provider faster, more accurate and more flexible quoting. In addition, there is continuing pressure to keep a lid on IT spending, causing carriers to look for more efficient solutions.

COLONIAL SELECTS IWORKSColonial Life & Accident Insurance Co., Columbia, S.C., selected iWORKS NAVIGATOR, a life insurance and annuity illustration system from SunGard Data Systems Inc., Wayne, Pa. SunGard's iWORKS NAVIGATOR Illustrations is an integrated, Web-based or desktop solution designed to enhance the sales process and incorporates functionality for life insurance and annuity illustrations and quotes.

Los Angeles - Citing the potential benefits of saving more than 300 lives and hundreds of serious injuries each year, Farmers Insurance Group Inc. announced its support of the new Federal motor vehicle safety standard #214 by the National Highway Traffic Safety Administration (NHTSA), which requires automakers to conduct new side-impact crash tests. "Farmers fully supports this effort as a means to protect our customers," noted Kevin Mabe, economist for Los Angeles-based personal lines carrier Farmers. Mabe explained that the standard mandates a new crash test for automakers that mimics a 20-mph impact at a 75-degree angle. Additionally, NHTSA has introduced guidelines for automakers to provide head protection for rear seat passengers. Vehicles under 8,500 pounds must provide safety measures to comply with the test by late 2012. Heavier vehicles, from 8,500 to 10,000 pounds, have an additional year to fully meet regulations.

Chicago — Arup, a global multidisciplinary engineering and consulting firm, has joined with Chicago-based Aon Corp. in a strategic alliance that brings to the marketplace a pre- and post-loss consulting service that offers clients an independent, global catastrophic risk management solution.

Windsor, Conn. and Atlanta — The boards of directors of LIMRA International Inc. and LOMA approved a proposal to unite two of the world's largest insurance and financial services trade organizations and will submit a recommendation to their members for a decisive vote."Bringing LIMRA and LOMA together will be good for the industry, our members and our dedicated employees who serve our members," says Robert Kerzner, president and chief executive officer of LIMRA. "Building on our well-established strengths, we can create a new and exciting organization with limitless possibilities to meet the industry's needs, whatever they may be, now and in the future."

New York — Richard Mucci will join New York Life International, New York Life Insurance Co.'s overseas arm with operations in eight markets, as chairman and chief executive officer of International on Oct. 8, 2007. He succeeds Joseph Gilmour, who decided to leave the company.

New York — The Guardian Insurance & Annuity Co. Inc. (GIAC), a wholly owned subsidiary of The Guardian Life Insurance Co. of America, New York, announced today that Boston-based DALBAR Inc. has awarded the company with the DALBAR Seal of Excellence for Transaction Processing for the third year in a row. The DALBAR Seal is only awarded to those firms that consistently exceed customer expectations for service levels.

Orlando, Fla. – Insurance carriers who make transient improvements and do not focus their resources on innovation and differentiation will meet with failure, according to Bill Pieroni, operations vice president for State Farm Insurance Co., Bloomington, Ill.

New York — Switzerland-based Zurich Financial Services Group named Kevin Dunham as senior vice president and global relationship leader for the Western region of its Global Corporate in North America business unit. Dunham is based in Glendale, Calif., and will manage accounts primarily in the Southwest and Western United States.

Jersey City, N.J. — The U.S. property/casualty insurance industry's net income after taxes rose 10.7% to $32.6 billion in first-half 2007 from $29.4 billion in first-half 2006. Fueled by the industry's net income, policyholders' surplus—insurers' net worth measured according to Statutory Accounting Principles—increased $26.5 billion to $512.8 billion at June 30, 2007, from $486.2 billion at year-end 2006.

San Francisco—Insurance customers won't tolerate difficult navigating, endless loops that prevent transactions or other Web site challenges, according to survey results released by San Francisco-based Tealeaf Technology Inc. According to the survey, conducted by Rochester, N.Y.-based Harris Interactive Inc., about nine out of 10 consumers conducting transactions online (within a number of industries) have experienced problems. This year's survey highlights online consumer intolerance, as 42% of those who have experienced problems when conducting online transactions have switched to a competitor or abandoned the transaction entirely, and another 52% who have experienced bad customer service from a company's contact center, following an online issue, have completely stopped doing business with the company.

Detroit–Blue Cross Blue Shield of Michigan (BCBSM) says it plans a significant expansion of its health care electronic data interchange clearinghouse and portal.

Manchester, N.H. – Physicians in New Hampshire are being offered a variety of incentives to participate in a statewide e-prescribing program, the latest initiative by the Blue Cross Blue Shield organization designed to improve patient safety, control costs and reduce medication errors. Anthem Blue Cross and Blue Shield in New Hampshire and the New Hampshire Citizens Health Initiative, created by Gov. John Lynch, launched a statewide electronic prescribing, or e-prescribing, program for every physician office in the Granite State, reports the insurer. This follows the announcement made in February by Blue Cross and Blue Shield (BCBS) of Illinois to expand its e-prescribing initiative throughout Illinois. In January, Anthem BCBS announced it would expand the effort in Ohio. Those efforts are ongoing. More than 3 billion prescriptions are written annually in the United States, with medication errors resulting in $77 billion in costs and 7,000 deaths per year (Institute of Medicine, 2006). Yet fewer than 22% of physicians nationwide use the basic capabilities of electronic prescribing, according to the Centers for Medicare and Medicaid Services (CMS). CMS estimates that the use of such technology could eliminate as many as 2 million harmful drug events each year. Electronic prescribing pilots have demonstrated that up to 2% of all prescriptions transmitted this way are changed before being administered to the patient because e-prescribing has alerted the physician to potential safety problems. E-prescribing enables a licensed practitioner to generate a prescription electronically, and then transmit it to a pharmacy. Through this new program, Anthem is offering physicians access to free e-prescribing software, a free mobile pocket PC and a discounted wireless telecommunication plan that will enable them to access real-time patient eligibility, formulary and medication history information from any Internet-enabled PC, or anywhere a cell phone signal is available. Physicians with these tools can write and renew prescriptions anytime, anywhere, for all of their patients, not just Anthem members. “Physicians will now have ample information at their fingertips to help them ensure the safety of their patients, to work more efficiently and to save their patients money on prescriptions,” says Lisa Guertin, president, Anthem Blue Cross and Blue Shield in New Hampshire. Last fall, Gov. Lynch announced his goal to make New Hampshire the first state in the nation where all prescribing health care providers are able to prescribe medication electronically. “Electronic prescribing will help ensure patients get the best possible medication to meet their needs. That will reduce medical errors, save lives and reduce health care costs,” he said. “That is why, working through the Citizens Health Initiative, I’ve made electronic prescribing a priority. This effort will help us meet our goals of making New Hampshire the first state in the nation where all health care providers are able to prescribe medication electronically.” The Anthem e-prescribing program, supported by Sprint and the National E-prescribing Patient Safety Initiative, will include access to a patient’s eligibility, formu aries, adverse drug event alerts and medication history, including medications prescribed by physicians outside of the practice. Most electronic medical record (EMR) systems have e-prescribing capability, however, to date, that technology has not been widely used, and often has not supported the ePrescribing process, reports the insurer. In addition to accessing e-prescribing via EMR systems, prescribers can use smart phone/personal digital assistant devices or stand-alone, Web-based applications. “Not only is this program expected to help reduce medical errors and improve patient safety by providing drug-specific information, it also will help eliminate confusion among drug names and improve communication between physicians and pharmacists,” says Elizabeth Malko, M.D., medical director, Anthem Blue Cross and Blue Shield in New Hampshire. The technology also will allow physicians to send new prescriptions to the pharmacy of the patient’s choice, as well as process refill requests from those same pharmacies. Anthem Blue Cross and Blue Shield in New Hampshire is working with a number of organizations to implement the program, including: The New Hampshire Citizens Health Initiative National E-prescribing Patient Safety Initiative Sprint RxHub LLC, which is providing the technology infrastructure that supports the secure exchange of patient-specific prescribing information between physicians and pharmacy benefit managers, and the transmission of the electronic prescriptions to mail-order pharmacies; SureScripts, operators of the Pharmacy Health Information Exchange, which facilitates the electronic connection between community pharmacies and physicians; and Anthem’s pharmacy benefit management company, which plays a key role by helping to ensure physician access to information, including benefits, eligibility, formularies and medication history. Information about the program was mailed to all New Hampshire physicians in late August. Those who adopt the program will be provided with orientation and training from Anthem. Participating providers who enter into a two-year service agreement with Sprint also will receive a free hand-held device courtesy of Sprint (The HTC 6800 Windows Mobile Device). Sources: Anthem Blue Cross Blue Shield, INN news archives

Washington–Insurance industry associations are giving mostly favorable reviews to the passage of H.R. 2761, legislation that would extend and expand the Terrorism Risk Insurance Act (TRIA). The bill, which passed the lower chamber yesterday by a vote of 312-110, aims to extend TRIA for 15 years, and expand the number of lines covered within it.

New York–A new study says human error, and a failure to address security on an enterprise-wide basis, are undermining efforts by top financial institutions to safeguard data.

Orlando - Blue Cross of Idaho wanted more information on what treatments its members were receiving and whether providers were following established clinical guidelines.

Washington – The Office of Management and Budget has released a “statement of administration policy” threatening a presidential veto of legislation aimed at extending the Terrorism Risk Insurance Act (TRIA).

Pearl River, N.Y.–Insurance standards association ACORD has chosen John Kellington as senior vice president.

Needham, Mass.–A new research report from TowerGroup Inc. says insurers should go above and beyond current regulatory requirements when dealing with the issue of annuity suitability.

New York - New York Life Insurance Co. announced that Craig Merdian has joined New York Life International (NYLI) as executive vice president and chief financial officer. Meridian reports to Chairman and Chief Executive Officer of New York Life International Joseph Gilmour.In his new role, Merdian is responsible for managing several core functional areas, including all financial, accounting, investment and actuarial matters for NYLI. Additionally, he is a member of NYLI's Senior Leadership Team, which is responsible for establishing management policies in all areas of the NYLI's business and affairs.

Branchville, N.J. - Selective Insurance Group Inc. announced that its principal subsidiary, Selective Insurance Company of America, made several management changes as part of its leadership development process that created new roles for existing officers.

Lansing, Mich.–A new Web-based sales and training tool from Jackson National Life Insurance Co. (Jackson) is designed to help simplify the process of selecting an optional living benefit within Jackson’s family of variable annuities. The Living Benefits Selection Center (LBSC) enables registered representatives to get instant, client-approved output based on a client’s profile information after answering a handful of qualifying questions. The tool also features multimedia presentations, fact sheets and side-by-side comparisons of Jackson’s optional living benefits.

Menlo Park, Calif.—Fourteen percent of chief information officers polled for the Robert Half Technology IT Hiring Index and Skills Report expect to add IT staff in the fourth quarter of 2007, while 2% anticipate cutbacks. The net 12% hiring increase compares to net increases of 15% projected last quarter and 10% projected last year. The majority of respondents, 83%, foresee no change in fourth-quarter hiring.

Stamford, Conn.—A recent release from Pitney Bowes Inc. announced its Pitney Bowes Group 1 Software and Pitney Bowes MapInfo business units, acquired separately, will combine into a single software company. The move is effective immediately, and the businesses will merge operations over the next several months.

Warren, N.J.–The Chubb Group of Insurance Companies has created ePolicy, a secure electronic insurance policy, to streamline the delivery of personal insurance policies and reduce environmental waste.

Washington, D.C.—Life insurance producers could save hundreds of millions of dollars annually in licensing fees if Congress enacts legislation creating an optional federal charter (OFC) system for the insurance industry, according to a new study by Dr. Laureen Regan, associate professor with Temple University’s Fox School of Business and Management

London - Karen Clark, considered the founder of modern day catastrophe risk modeling, has received the Review Worldwide Reinsurance Awards' Lifetime Achievement award for outstanding long-term contributions to the reinsurance industry.

New York - Insurers of all sizes hoping to take a proactive approach to cracking health claims fraud seem to understand the stakes: According to estimates from the federal government and issues-based groups such as the National Health Care Anti-Fraud Association, as much as 10% of all healthcare expenditures in the United States, or $170 billion, may be lost each year to fraud, waste and abuse. Carriers still struggling to keep up with claims fraud may also do well to recognize that there is yet another piece of ammunition available. From its research laboratories in New York, IBM has pooled data mining and analytics technologies to create a software-as-a-service product designed to identify potentially fraudulent and abusive behavior before a claim is paid, or retrospectively analyze providers' past behaviors to flag suspicious patterns. Non-profit provider Excellus Blue Cross Blue Shield in Rochester, N.Y., which counts two million members, is the latest carrier to contract with Big Blue to thwart fraud. The company will use IBM's on-demand Risk Identification Analysis Service to review pharmacy-related claims to uncover complex schemes. Some of these schemes may include collusion, inappropriate billing practices, prescription forging, prescription pad theft and members who are "doctor shopping." "Make no mistake about it-someone who knowingly commits insurance fraud is no different than any other person who steals," says Flora Allen, corporate director, special investigations unit, Excellus BlueCross BlueShield. "Fraud affects everyone's bottom line, so we aggressively and proactively pursue recoveries and convictions because we are protecting our members' premiums." Although the stakes are high for Allen and her organization, which processed somewhere between 51 and 52 million claims in 2006, there is no real way to calculate the hard and soft costs, she says. "We are only as good as what we can find," she told Insurance Networking News. "Adding the Risk Identification Analysis Service from IBM to our existing investigative arsenal improves the analytical capabilities we need to find and identify the most egregious offenders." That arsenal includes a fraud hotline, which is available to all members, and a link on the company's Web site where anyone can provide anonymous tips. The insurer also participates with law enforcement task forces, and shares that information the U.S. attorney's office. Based on IBM's Fraud and Abuse Management System (FAMS) technology, which was developed by IBM Research and consultants in collaboration with leading healthcare organizations, the Risk Identification Analysis Service uses a combination of data mining capabilities, visualization techniques and reporting tools to identify questionable behavior before a claim is paid. It replaces traditional manual processes by sorting though tens of thousands of providers and tens of millions of claims in minutes-ranking providers as to their degree of potentially fraudulent, wasteful, abusive or questionable behavior. Allen says their company does not consider whether, as a whole, fraudulent claims are on the rise or may be decreasing. "When it comes to fraud, it's an issue that always appears larger than life and we are getting better at discovering it." IBM hopes that by designing the offering as an on-demand service, it will appeal to insurers of all sizes. "By providing these powerful data mining and advanced analytical capabilities as an on-demand service, we are able to offer this investigative capability to smaller healthcare payor organizations, or government healthcare insurance entities, which may prefer to use this advanced analytic capability as a service, because of the lower demands on their staff and IT capabilities," says Mark Ramsey, global data analytics leader, IBM Center for Business Optimization. "It can also easily be used by larger, private payors looking to use this capability as a service instead of implementing the FAMS solution internally." In addition to pharmacy claims, the service can analyze approximately two dozen other specialties such as cardiology, home health care, gastroenterology and durable medical equipment suppliers. Sources: Excellus Blue Cross Blue Shield, IBM

Columbia, S.C. - BlueCross BlueShield of South Carolina plans to electronically integrate personal health records with medical care plans and make these available in real time to BlueCross members and their health care professionals.

Needham, Mass. - As the insurance industry becomes more immersed in service oriented architecture (SOA) technologies, few outside organizations are available that provide peer review, guidance and cross-industry advice. Penn National Insurance, a Harrisburg, Penn., mutual company that provides a wide range of insurance, however, seems to find such an organization. Penn is among 31 others joining the newly formed SOA Consortium since it's inception on May 1, signaling the onslaught of business organizations across vertical markets requiring SOA-related information.

AGENTS DEMAND REAL-TIME SERVICEIndependent insurance agencies are poised for a major service breakthrough with the proliferation of real-time transactions, says a prominent participant in the industry-wide push to double real-time transaction volume in a year.

PPS SOFTWARE SUITESkywire Software, a Frisco, Texas-based provider of software products for the insurance industry, announced the availability of a reporting tool for PPS, its policy production system for managing general agencies and wholesalers.

Over the last 20 years, the advances enabled by financial modeling are impressive. Insurers have made improvements in risk management, capital optimization, product development and other important aspects of their business with the help of financial models. The critical importance of financial models has never been more evident.Products today are increasingly complex, and the pressure to manage, measure and report risk continues to grow. As a result, models viewed as highly sophisticated just a few years ago are now inadequate to meet today's needs. However, keeping pace with these demands is becoming increasingly difficult.

Outsourcing in financial services is increasing year over year, according to results from two surveys. The surveys also indicate that offshoring is increasing due to cost savings and quality of work.Offshoring is saving the financial services industry an estimated $9 billion each year. This number is up from an estimated $5 billion a year ago, propelled by a 1,800% increase in headcount in lower-cost countries over the last four years, according Deloitte Touche Tohmatsu's fourth "Deloitte Global Financial Services Offshoring Report."

VALUATION SOLUTION REDUCED CLAIMS SETTLEMENT CYCLEPlymouth Rock Assurance Corp., Boston, selected San Diego-based Mitchell International Inc.'s, Total Logic Valuation as the company's total loss valuation solution to deliver a customer-centric loss claims process.

Westlake Village, Calif. - Policy retention is critical to the financial success of auto insurance carriers, and a customer's experience with their provider is the most important element—outweighing brand image—in generating policy renewals, according to the "J.D. Power and Associates 2007 National Auto Insurance Study."The study measures customer satisfaction with auto insurance carriers across five factors. In order of importance, they are: interaction, policy offerings, billing and payment, price and claims.

Boulder, Colo. — IT risk management is no longer strictly about mitigating the negative threats surrounding IT, a new study finds. The study was published by Boulder, Colo.-based independent IT management research and consulting firm Enterprise Management Associates (EMA).

New York – Two life insurers recently appointed a number of executives. ACE Life Insurance Co., a business of Bermuda-based ACE Ltd., named Jim Gibbs as vice president and chief underwriting officer and Bruce Horton as vice president and chief marketing officer. Gibbs joins ACE from Optimum Reinsurance Co., Dallas, where he was senior vice president, underwriting. His previous experience includes positions at SCOR Life US Re, Dallas, and Munich American Reinsurance, Atlanta. He is a past president of the Southeastern Home Office Underwriters Association, and he has been a speaker at many industry gatherings, addressing both underwriting and actuarial groups on various topics.

Chicago – A new study evaluates the home pages and usability of 14 major auto insurance providers’ Web sites to examine customer expectations and discover where companies succeed or fail in attracting and retaining customers.

Armonk, N.Y. - U.S. consumers want insurance companies to more effectively communicate new products and services available to them, provide customized policies to better meet their needs and bring their customer experience up to par with other industries, according to an IBM study of more than 3,000 P&C insurance policyholders. Yet, despite boasting one of the largest demographics of loyal and satisfied customers of any industry, few insurance companies are looking for new and innovative ways to connect with their customers to enhance their experience and drive organic growth.

Boston – Liberty Mutual Group has made its acquisition of Ohio Casualty Corp. official. Liberty first announced its intention to purchase the Fairfield, Ohio-based carrier for $44 per share in cash in May.

Washington – The heads of two insurance industry associations have issued a joint letter urging the National Governor’s Association to drop their opposition to the National Insurance Act.

Silver Spring, Md. – AIIM, the Enterprise Content Management Association, is expanding its certificate training program to include two new programs for business process management and information organization and access. The new programs are designed to provide organizations with the skills and knowledge to improve their business processes and optimize enterprise search and findability. Online courses will be available starting September 10 by going to www.aiim.org/training. More than 4,200 participants attended the Silver Spring, Md., organization’s first two certificate programs—on electronic records and enterprise content management, reports John Mancini, AIIM president. “This led us to look at related certificate programs that would help end-users make smart information management decisions," he said. Each AIIM certificate training program consists of three designation levels (practitioner, specialist and master level) across four programs (enterprise content management, electronic records management, business process management and information organization and access. Source: AIIM

Stamford, Conn. – A rapidly shifting, increasingly consumer-centric insurance market is no safe harbor for health insurers, a new research note from Gartner, Inc. contends.

Stamford, Conn. – Nearly 90% of CFOs believe that the cost of compliance with Sarbanes-Oxley (SOX) outweighs the benefits, according to the latest survey from the Tillinghast business of Towers Perrin.

Novato, Calif. and Armonk, N.Y. – Allianz of America (AZOA), parent company of Allianz Life Insurance Company of North America, has signed a $330 million-, 7-1/2-year outsourcing agreement with IBM to handle information technology (IT) operations of the life insurer.

Pearl River, N.Y. – ACORD has released the first three of its standardized producer appointment forms.

Washington—Eight more insurance companies have signed on as sponsors of the National Association of Professional Insurance Agents’ (PIA) agent branding program, Local Agents Serving Main Street America.

Washington, D.C.– The National Association of Mutual Insurance Companies (NAMIC) pointed to a new government report showing a direct correlation between credit scoring and risk. A study released by the Federal Reserve Board comes on the heels of a report by the Federal Trade Commission (FTC) that also said credit scoring is not unfairly discriminatory.

Silver Spring, Md. — Insurers are recognizing the savings associated with installing distributed scanning and capture technologies, according to a July 2007 survey by AIIM, who specializes in disseminating information about enterprise content management.

New York — The need to comply with Section 404 of the Sarbanes-Oxley Act (SOX) is only having a minimal effect on enterprise risk management (ERM), new research has found.

New York - A subsidiary of New York-based American International Group, Inc. (AIG) has entered into an agreement to acquire Wurttembergische und Badische Versicherungs-AG (Wuba), its major subsidiary DARAG Deutsche Versicherungs- und Ruckversicherungs-AG (DARAG) and other minor subsidiaries from entities associated with J.C. Flowers & Co. LLC. Subject to regulatory approval from insurance and cartel authorities, the transaction is expected to close later this year. Terms of the agreement have not been disclosed. "We are pleased to have reached an agreement to acquire Wuba and its subsidiaries," said AIG President and Chief Executive Officer Martin J. Sullivan. "The transaction both reaffirms AIG's commitment to growing in the German marketplace and greatly enhances our insurance offerings to small and medium sized companies." Based in Heilbronn, Germany, Wuba offers property and casualty, marine, personal lines, and accident & health insurance through its 2,500 broker relationships across the country. "Wuba is an experienced and highly respected German insurer with a strong brand," said Nicholas C. Walsh, Executive Vice President of Foreign General Insurance for AIG. "We plan to continue their commitment to superior customer service, broker focus, distribution management and technology." AIG serves commercial, institutional and individual customers with insurance products, with operations in more than 130 countries and jurisdictions. Source: AIG