Insurance

Everybody likes to talk about the weather, but nobody wants to do anything about it.The same axiom could be applied to U.S. insurers' approach to customer service. Most insurers will declare that customers represent the lifeblood of their business, but what are they doing about it? The proliferation of siloed databases across organizations-compounded by multiple systems and processes-inhibits insurers' ability to quickly identify cross-sell and up-sell opportunities and provide quality customer service.

Three years ago, The Baltimore Life Insurance Co. implemented an automated sales and underwriting system in conjunction with striking a marketing deal with a large membership organization. The Owings Mills, Md.-based carrier believed the affinity deal could drive unprecedented new premium growth for its death benefit products through a concerted campaign of television ads and mailers."It was a significant opportunity," says Garry Voith, Baltimore Life's assistant vice president and director of distribution technology and marketing.

When Citicorp and Travelers Group merged in October 1998, banking and insurance experts universally hailed the deal as the beginning of a new era in financial services in the United States: the one-stop financial superstore.Indeed, given the emergence of technologies that enable companies to slice and dice customer data to pinpoint cross-sell and up-sell opportunities, the Citicorp/Travelers combo was viewed at the time as a powerhouse that would set the stage for similar deals.

Fireman's Fund Insurance Co. has been no stranger to technology outsourcing initiatives over the past three years. But the term "outsourcing" might be an inaccurate depiction of what the carrier's senior IT team regards to be its mandate. Instead, Fireman's Chief Technology Officer Diane Comer views these agreements as "strategic partnerships."In January, the Novato, Calif.-based carrier announced two major initiatives involving technology firms that provide Fireman's Fund with a comfortable degree of internal decision-making latitude. Under a seven-year, $157-million contract with IBM Global Services, Fireman's Fund plans to implement IBM's on-demand computing technology. One of the key distinctions of IBM's on-demand computing is that it enables clients such as Fireman's to pay for only the computing power it uses within a shared-services arrangement. Fireman's Fund projects savings of about $10 million a year in IT-related costs from this advantage.

Although the specter of organized crime rings receives the brunt of the publicity, the proliferation of "garden variety" insurance fraud continues to badger insurance companies.In their efforts to implement best-practices claims management, fraud and buildup (the inflation of an otherwise legitimate claim) added between $4.3 billion and $5.8 billion to auto injury settlements in 2002, representing between 11% and 15% of all dollars paid for private passenger auto injury insurance claims that year.

Credit-scoring significantly improves insurance pricing accuracy when combined with other rating variables in predicting risk. That's the conclusion of a study commissioned by the Texas Department of Insurance (TDI).In December, the department released its preliminary findings, which showed poor credit scores were associated with more claims activity, and blacks and Hispanics on average have lower credit scores than whites (see Feb. issue, page 8.)

It's no surprise that the workers' compensation market has been challenged by a host of issues that have driven costs skyward for carriers and agents. According to the Council of Insurance Agents and Brokers (CIAB), Washington, D.C., commercial property/casualty insurance premiums continued to decline significantly during third quarter 2004.

If an application works well for a business, why risk staff and financial resources on a replacement system that may prove to be substandard? That's the quandary carriers are addressing, many of whom have invested tens of millions of dollars in systems and software to track, store, and manage data on their policyholders, finances and product lines.Indeed, many insurers are still using software originally written in the 1970s and 1980s for mainframes, but which continues to support critical operations. The issue often boils down to whether to stay with the big iron-and its high administration and upgrade costs-or migrate to more distributed, commodity-priced systems such as Unix, Linux, or Windows.

SIMSBURY, Conn.--Looking to meet a growing financial need, The Hartford Financial Services Group is introducing a new last survivor universal life insurance policy to help affluent couples transfer their wealth to children and other loved ones. Hartford Advanced Last Survivor UL is a flexible premium universal life policy that is issued by Hartford Life Insurance Co. and Hartford Life and Annuity Insurance Co., subsidiaries of The Hartford. Last survivor policies insure two people, typically couples, and pay a death benefit upon the second death. Hartford Advanced Last Survivor UL provides affordable, permanent life insurance protection with an available secondary guarantee for the death benefit. The death benefit guarantee for Hartford Advanced Last Survivor UL is based on the claims-paying abilities of Hartford Life and Hartford Life and Annuity.

New York--Tower Group, Inc. today announced the appointment of Joseph P. Beitz to a newly created position as Managing Vice President, Program Underwriting, reporting to Michael H. Lee, Tower Group, Inc's President & Chief Executive Officer. Mr. Beitz's primary responsibilities will be the production and management of new program opportunities for the company, which will be underwritten by its own insurance company and through other insurance companies for which its managing general agency produces premiums.

TAMPA, Fla.-- SCI, a national leading Professional Employer Organization (PEO), announced today that it has renewed its agreement with top-rated insurance carrier Zurich, North America to provide workers' compensation coverage for its client company employees effective March 1, 2005, through February 28, 2006. "Our renewal with Zurich, once again, reflects the continued strength of SCI as a leading provider of PEO outsourcing services in the marketplace," said J.C. Dominguez, president, SCI. "We continue to improve our performance and refine our processes to exceed customer expectations. Working with the best companies in the market will allow us to extend the best products and services to our clients; Zurich is just one example of that."

PEARL RIVER, NY--ACORD and XBRL examine the need for data standards and their own roles in the overall communications flow in their newly released white paper, "XML Standards and the Insurance Value Chain." The document focuses on the flow of data within the insurance value chain and the importance of data standards to transport the information along the path for financial reporting and regulatory compliance.

CHATTANOOGA, Tenn.--In response to a rapidly growing voluntary benefits market, UnumProvident has announced enhancements to its critical illness and individual short term disability insurance products. The specified critical illness insurance now includes the option of base or enhanced coverage. Base coverage features a benefit payout for heart attack, stroke, permanent paralysis, kidney failure, organ transplant or coronary artery bypass surgery. Enhanced coverage includes all conditions listed under the base plan, plus an additional benefit if diagnosed with cancer. Enhancements also include increased benefit amounts for covered children, and, for eligible employee groups, the first $10,000 in coverage is guaranteed-issue (some restrictions apply).

Arrowhead General Insurance Agency Inc. announced that Chuck Brady has joined the company as president of the professional liability division, located in Torrance, Calif.

Over the next 18 months, employees will be spending more time online--not surfing the Web or checking e-mail but rather logging onto their company Web site and signing up for employee benefits with a click of the mouse. According to MetLife's recently released 2004 Employee Benefits Trend Study, employee self-service on the Internet is an important benefits strategy, particularly among large employers. As a result, companies expect a huge surge in e-benefits use over the next two years.

ALTAMONTE SPRINGS, Fla.--As some insurance carriers tinker with proprietary policy download solutions in their electronic interfaces with independent agents and brokers, agents are seeing increased workflow time as well as other unanticipated issues, according to the Applied Systems Client Network (ASCnet), the user group of Applied Systems agency management technology. "Agents are paying the price for unconventional download," said ASCnet President Robby Dunn. "For years, IVANS, trade associations, carriers, agents and their vendors have worked side-by-side to integrate common, multi-company communication components, develop file retrieval and update processes, and establish clear agency support services. We all saw the advantage of an industry solution. Competing on technology in this space did not make economic or business sense then, and it still doesn't."

Newark, Calif.--Risk Management Solutions (RMS), a provider of products and services for the management of catastrophe risk, today announced that it will fund technology improvements for the Florida Coastal Monitoring Program that will support its collection of real-time wind speed data during major hurricanes. The Florida Coastal Monitoring Program (FCMP) is a joint venture to develop full-scale experimental methods to quantify near-surface hurricane wind behavior and resulting loads on residential structures. The program's aim is to provide data necessary to identify methods to cost-effectively reduce hurricane wind damage to residential structures.

SIMSBURY, Conn.-- The Hartford Financial Services Group, Inc., one of the leading sellers of group life and disability insurance in America, has acquired 100,000 group life and accident policies from the Union Labor Life Insurance Co., a subsidiary of ULLICO Inc. The $29 million purchase is a strategic acquisition by The Hartford's group life and accident insurance businesses, according to Richard Mucci, executive vice president of The Hartford's Group Benefits Division. The Hartford sells group life and accident policies through Hartford Life Insurance Co. and Hartford Life and Accident Insurance Co.

ATLANTA, GA--The year 2005 should be challenging, with additional complications from regulatory and legislative issues, say members of the LOMA Board of Directors. LOMA's Resource magazine surveyed members of LOMA's board for their views on what the industry can expect in 2005.

Conshohocken, PA--RippleTech, a provider of security, compliance and systems management solutions, announced today the launch of the LogCaster for Sarbanes-Oxley solution.