Insurance

In the insurance industry, a great deal of emphasis is placed on customer relationship management, and rightly so. But as Matthew Piroch, chief information officer for Highmark Life & Casualty Co. sees it, CRM would be difficult to achieve without ERM-employee relationship management.Pittsburgh-based Highmark Life & Casualty is a provider of life, workers' compensation, stop-loss and disability insurance to 2.2 million individuals through group policies. The company was established in 1990, with Piroch coming on board in 1998 as manager of relationship management. He was appointed CIO last May.

Yom Senegor believes information technology is not some business department that you keep locked up in the basement of an organization and manage solely as a cost center."IT plays an extremely critical role in the long-term success of an insurance company and is an integral part of the business," says Senegor, senior vice president, CIO and chief corporate strategist of Seattle-based Safeco Corp., a $7-billion insurance and financial services company.

When Blue Cross Blue Shield of South Carolina wanted to streamline its call center operations to improve productivity, it did not re-invent the technological wheel. Instead, the Columbia, South Carolina-based insurer implemented state-of-the-art software to leverage its existing IT systems.The intuitive, single browser-based interface simplifies data gathering and interpretation for its more than 350 customer service representatives.

With a $900 million annual IT budget spread across 14 business units, Nationwide Financial Services cannot afford a lot of duplication and misguided spending. However, the Columbus, Ohio-based insurance giant also needs to encourage and fund cutting-edge technology deployments to maintain its market leadership.Over the years, insurance companies have made many attempts to rein in the growth of their information systems. To promote standardized architectures, IT executives have attempted to centralize purchasing, restrict hardware purchases, or prevent "rogue" software purchases and installations that don't fit in with the master plan.

The concept of adaptive enterprise architecture is being extended outside of Nationwide Financial's vast IT structure. As part of the process, IT executives at Columbus, Ohio-based Nationwide are involved in corporate merger and acquisition decisions."We don't play a deal-breaking role in acquisitions, but we're a significant voice at the table," explains Srinivas Koushik, vice president and chief technology officer for Nationwide Financial Services. "We'll report on whether we can integrate the other company's systems."

"No more easy money for criminals, just hard time." With those words, President George Bush signed into law the most sweeping corporate reform legislation since the New Deal of the 1930s.Under the new law, the stakes for white-collar crime have increased dramatically, with the CEOs and CFOs of America's corporations now required to attest under oath to the accuracy of their financial statements under the threat of million-dollar fines and prison sentences.

It seems that everyone is jumping on the wireless bandwagon. From cell phones to PDAs to wireless pagers, both professionals and consumers are seeking new, more efficient means of communication. The fast-paced growth of wireless technology in other industries hints at the tremendous potential benefits these solutions may hold for insurance.With wireless technology, agents can have a continuous connection to their information resources, management staff can monitor business from any location, or instantly respond to time-sensitive communications, and clients can look forward to faster response times. That means support issues that once took 24 hours and two or three phone calls can now be resolved in a matter of minutes via wireless e-mail.

After the technology exuberance of the late 1990s, the current conservative approach to IT spending seems like a hangover after a big party. But IT spending by carriers in the coming year isn't all that bleak.Depending on whom you ask, carriers on average are expected to increase their IT spending by up to 8% each year over the next few years, including this year. Last year, property/casualty and life/health carriers together spent approximately $18 billion on information technology, and they will spend $19.3 billion this year, according to Celent Communications, a Boston-based research and advisory firm.

The shortest distance between two points is a straight line. And in processing their business, insurers have found that progressing from point A to point B typically involves a straight-line approach.But there's a hitch: While the line might be straight, there's a great deal of manual redundancy and human error that lurk in the middle. By identifying technology that supports automated-or straight-through-processing (STP), carriers and their affiliates are ferreting out inefficiency and embracing a simpler method to execute transactions, billing and claims settlement.

Last February, PwC Consulting unveiled an intriguing concept known as the Virtual Insurance Community (VIC), an end-to-end component-based e-business solution designed for property and casualty insurance carriers.One major distinction that set VIC apart was its vast array of services, including Web portal development, application hosting and front- and back-office components.

As banking companies from coast to coast buy agencies to get into the property/casualty insurance business, Fifth Third Bancorp, for one, is getting out.In late December, the Cincinnati-based regional banking company announced it agreed to sell its property/casualty insurance operation to Hub International Ltd., an insurance agency based in Chicago, for an undisclosed amount of cash.

Still in its infancy, knowledge management technology has the potential to help carriers deliver a consistent brand image and high-impact advertising to target audiences.Advocates of knowledge management systems have long pointed to the many benefits insurance carriers could derive from the technology, but one area frequently overlooked is brand image.

Joining Guardian as a CIO with a blank slate for improvement, Dennis Callahan has reduced IT costs, formed a collaborative partnership with the business units, and established a consistent technology direction.Dennis Callahan was content as CIO for global financial services at American International Group (AIG) when he was approached almost two years ago by The Guardian Life Insurance Company of America to be its new CIO. He was lured into joining Guardian because of the sheer challenge of "filling in a blank slate," he says.

As a result of switching to document scanning, and eventually upgrading its equipment, Blue Cross Blue Shield of Georgia has seen what its describes as a significant increase in efficiency and cost savings.The paperless office could be compared to the Loch Ness monster: People swear it exists, but no one has ever seen it. Blue Cross Blue Shield of Georgia, however, is one of the few companies that can say it has achieved this elusive goal, with the results to prove it.

Throughout much of the 1990s, the road to auto insurance accountability and compliance in the state of New York was in disarray. That's because throughout the decade, New York state officials and auto insurers watched with helpless dismay as a growing number of New York motorists circumvented a mandatory auto insurance law. They did this by carrying fraudulent insurance identification cards.In many instances, using a fake ID will only take the illegal user so far. But in New York, the inability of state databases to crack down on the activity enabled card carriers to run amok. With detection difficult, motorists saw an opportunity to create their own proof-of-insurance cards.

Back in the prehistoric 1990s, The Hartford Financial Services Group applied technology the old-fashioned way. It used a vertically oriented approach to solve problems in discreet business silos.Today, the $15-billion investment and insurance company is taking an enterprisewide viewpoint when it applies information technology. This new approach ties together disparate information technology offerings, simplifies some of the complexity of e-business and makes it easier for distributors to sell and service The Hartford's insurance products.

Over the past year, The Hartford Financial Services Group has launched several technology initiatives aimed at making life easier for distributors. Those efforts will continue this year as new features and functionality are added to The Hartford's eService and eSales programs.Last year, the company introduced the industry's first premium audit search tool available to agents through the Internet. This online tool augments the company's policy, billing and claims service capabilities available to agents through its Electronic Business Center (EBC), a secure Web extranet built exclusively for independent agents that represent The Hartford. Using this tool, agents can use the Internet to quickly determine the outcome of a commercial customer's audit and the reasons for any premium adjustment.

The insurance industry has made great strides in recent years in transacting insurance electronically. Yet there is no doubt that the barriers that still exist, whether real or perceived, must be toppled to allow insurers to join other industries in the pursuit of technological advances that provide greater choices and better service.State insurance regulators have taken the lead in addressing the barriers to electronic transactions. In the last few years, clarifications regarding electronic transactions were reviewed and guidelines issued with the release of a model bulletin by the National Association of Insurance Commissioners (NAIC). The NAIC model stated that electronic transactions should be treated no differently than paper transactions.

This year, the U.S. insurance industry will spend an estimated $6.3 billion on new information technology projects. Of that amount, the industry could save $250 million or 23% of the $1.45 billion portion it spends on staff and consultants to integrate internal and external information technology systems.The magic bullet to these dramatic savings is ACORD XML, according to a report by Boston-based Celent Communications Inc. Carriers surveyed by Celent either expected to or had actually achieved integration efficiencies of 20% to 30% when using ACORD XML standards. A few reported efficiencies on some projects of as much as 80%.

Annuities have been a mainstay product in banks since the 1980s, and over time, many providers have tried to push into the crowded channel. Has it gotten too crowded?Given the litany of failed bank-channel programs-Sage Life and Massachusetts Mutual Life come to mind-that litter the annuity battlefield, the answer looks like yes.