Insurance

The typical profile of a perpetrator of fraud has been that of trained con artist who plans his or her scheme in a calculated fashion. But a new study depicts insurance fraud not only as a sophisticated ring carried out by professionals but as an act often executed by mainstream insurance customers.The study, by Bermuda-based consulting and technology solutions provider Accenture, found that nearly one in four U.S. adults say that overstating the value of claims to insurance companies is acceptable, and more than one in 10 say they approve of submitting insurance claims for items that were never lost or damaged or for treatments that were not provided.

When GE Capital announced to the world that it had saved $400 million in 1999 by applying six sigma principles throughout its organization, Marla Friedman listened.Then, as senior vice president of operations at Allstate Financial, she shared this impressive news with her boss Tom Wilson, the firm's president at the time.

When it mapped out a "scorecard" listing of requirements for a new annuity administration system in early 2000, Security Benefit Group Inc. was living in the green eye-shade era of COBOL, two mainframes and "bolt-on" systems.To make matters worse, the carrier's IT department was trapped beneath a mountain of application changes.

The most important aspect of getting the back-office policy administration system up and running in eight months-without delays, excuses and empty promises-was a project protocol that Security Benefit Group followed."The piece that made it successful was project management guidelines that we followed," stresses David Keith, senior vice president and CIO for Security Benefit Group, Topeka, Kan.

The term "insurance card" is often equated with health insurance coverage, but a small and growing legion of insurers are issuing plastic to policyholders for more than just a doctor visit.Property and casualty insurers are finding advantages in dispensing branded stored-value debit and credit cards to customers for bigger ticket claims, particularly catastrophic homeowners claims.

Insurance companies have a unique set of challenges to overcome in creating efficient operations. Because of increased competition, insurers are being forced to narrow their focus to the core competencies at which they excel. At the same time, carriers must offer greater product and service offerings and faster distribution to meet increasing customer demands.And, because service industries such as insurance are so dependent on information, the increasing digitization of data is forcing these companies to redefine how they operate. Therefore, to be successful-and to prosper-in this digital environment, organizations must reshape their business models.

The insurance industry is facing a seemingly insurmountable challenge: The leading companies need to invest in new technology simply to keep pace with escalating customer claims.But the cost of replacing policy administration, claims, product management, billing, producer management and customer/account information systems is more than any one company can bear. More importantly, it is a cost that the insurer's own customers will not fund.

When it mapped out a test-pilot strategy to use e-signature software and digitize its Medicare supplement insurance forms, Banker's Life and Casualty Co. set some very lofty goals."We wanted to reduce non-value added activities, increase productivity, improve service to our policyholders, decrease unit costs, reduce cycle time and improve both compliance and suitability," says project manager Jason Uyder, a black belt in process excellence for Banker's Life and Casualty Co.

Understanding how and when consumers want to receive financial advice is an important aspect in gaining the upper hand in the competitive field of financial planning.By implementing automated systems to expand advice delivery channels, life and annuity insurers can remain competitive with other financial services institutions.

Since buying Acordia Inc. in 2001 and creating the nation's largest bank-owned insurance agency, Wells Fargo & Co. has not been a big player on the agency acquisition scene-but that should change, thanks to the deal-minded focus of the agency's new head.Acordia intends to further tie itself to its San Francisco bank parent through continued cross-selling and acquisitions in the bank's West Coast stronghold, according to the agency's new chief executive officer, Kevin W. Conboy.

If you build it, they will come. But, if you want to make sure they flock to it, ask them to design it for themselves. Essentially, that's what Zurich North America did when it began developing its state-of-the-art underwriting workstation-an integrated online platform that the Schaumburg, Ill.-based commercial insurer began rolling out last year.Currently, approximately 250 large-account property underwriters are using the workstation, which houses the company's best underwriting practices, provides underwriters access to data they need from internal and external sources, and enables collaboration and knowledge-sharing between risk engineering, claims and field offices.

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.