Insurance

Electronic bill payment and presentment (EBPP) has experienced a mixed bag of interest among consumers, with payments of insurance premiums ranking low on their online bill-payment priority list.In fact, insurance carriers, along with utilities, telecommunications and mortgage companies, are among the businesses that are lagging behind in the expansion of EBPP, according to a recent report by Stamford, Conn.-based consulting firm Gartner Inc.

Insurers can't understand the benefits of wireless technologies unless they experiment with it, as Progressive Insurance has done for the past year. At the same time, the lack of industry standards, coupled with current limits on how much data can be transmitted and received by mobile devices, limits the types of services that wireless devices can support."This is a technology that consumers are dying to use, except for claims and servicing," says Jamie Bisker, a senior insurance analyst with TowerGroup, Needham, Mass., and author of the recent report "Wireless Realities In Insurance."

Insurance companies spent more than $20 billion this year on new technology. But which technologies are the most innovative and will have the greatest impact on carriers' success?The Internet won't replace agents or call centers, nor will it become the preferred method for purchasing insurance. But it certainly is becoming an integral part in carriers' efforts to market, support and sell insurance policies to customers, and to attract new policyholders.

Most Americans will never forget where they were when they first heard news of the September 11th terrorist attack. For 62 Allstate claim handlers, they will remember they were attending training workshops at the carrier's

When the World Trade Center came under attack, David Annis was thousands of miles away from The Hartford Financial Services Group Inc.'s offices at Seven World Trade Center. In fact, Annis, the company's group senior vice president and CIO, was not able to return to the United States for more than a week to oversee recovery efforts.However, thanks to the combination of disaster planning, vendor support and quick work on the part of the carrier's crisis management committee, all 330 employees who worked for the five Hartford business units were working at alternative sites the following Monday.

Disaster preparedness is subject most often discussed in the aftermath of a major natural or manmade disaster.Although most major corporations have comprehensive disaster recovery plans in place, the unprecedented events of Sept. 11 clearly demonstrate importance of updating and testing those plans frequently.

In late August, Chicago-based global insurance brokerage and consulting firm Aon Corp. redesigned its corporate Web site so customers, employees and other affiliates could more easily and quickly find content and navigate the site.As part of the project, Aon's portal team also implemented a set of Web development techniques that would enable internal Web designers to reduce the turnaround time to post new and pertinent data and graphics onto the site, located at www.aon.com.

When disaster strikes, insurance companies immediately mobilize their catastrophic ("cat") teams to deal with the accompanying sudden increase in claims.The aim is to provide expedient customer service to policyholders who have been injured or who have lost property or loved ones-and rightfully deserve compensation from their insurance company.

Unlike other types of insurance claims, individuals who file a homeowners claim know that cash reimbursement is imminent. Even the promise of a claim payment within 48 hours isn't swift enough to satisfy an individual who has been forced from their home.

The insurance industry received repeated criticism for failing to develop e-business capabilities quickly enough during the dot-com frenzy. Now, it appears that insurance companies are catching up with competitors in other sectors of the financial services industry.That's a conclusion of a recent survey of 150 North American financial services organizations conducted by Chicago-based research and consulting firm Andersen (formerly Arthur Andersen).

As the financial cost of the Sept. 11 terrorist attacks on New York and Washington, D.C., continues to rise, the ramifications for insurers remains unclear. Indeed, while carriers certainly have the financial reserves to cover estimated losses, industry observers say the wounds suffered from the devastating attacks will take many months to heal."While the hit to the economy will obviously put expense pressure on many companies, I think the disaster itself will have the effect of changing company priorities," says John Hodge, chief information officer for NAC Reinsurance Corp., Stamford Conn. The company is a subsidiary of XL Capital Ltd., which estimates its losses from the attacks at $700 million (see chart).

It's been a tumultuous year for Safeco Corp. In January, former CNA executive Mike McGavick was named Safeco's new president and CEO. In July, Michael LaRocco was appointed president and chief operating officer of the insurer's $2.6 billion personal insurance business. And in September, Yom Senegor, from Accenture, was named CIO.

What if you could determine when policyholders were considering switching to another carrier and then identify which of those customers were profitable enough to justify trying to keep them? And what if you could determine the effectiveness of a marketing campaign while it was in progress, changing your strategy before investing a lot of money?

Insurers such as Seattle-based Safeco Corp. and The Hartford Financial Services Group, Hartford, Conn., are providing Web-based tools for agents to target key prospects (see pg. 28). Many insurers are also using the Internet for target marketing by building portals for specific affinity groups.For example, The Prudential Company of America launched www.prufn.com for the affluent community; Farmers Insurance Group launched teachers.farmers.com; and Metropolitan Life Insurance Co. has a Web site for parents of children with special needs.

In its attempt to create an enterprisewide view of its customers, the numbers were stacked heavily against New York City-based MetLife Inc.: a customer base amassing 100 million customer records stored in more than 30 disparate back-office systems.Furthermore, MetLife has three vastly diverse organizations-a retail bank, a mutual fund company and a newly-acquired property/casualty insurer. Data is spread across five different lines of business-property/casualty insurance, banking, institutional, brokerage and mutual funds.

Web-to-host is a relatively simple approach that insurers often overlook as they scramble to build a Web presence for internal, business-to-business, and public-facing applications.However, many companies now realize that by adding browser access to existing back-end applications, they can quickly and adequately Web-enable mainframe and midrange applications.

Over the past four years, independent surveys that measure and project online insurance trends have delivered what's become a recurring diagnosis: When it comes to the functionality of their Web sites, carriers remain a step behind banks and brokerages.And while two new reports conclude that carriers have made strides in narrowing the Internet gap, the reports also highlight the industry's continued e-business shortcomings.

Life and health insurers to date have been slow to sell policies online. But within the next four years, carriers will sell $12.8 billion in life and health products on the Internet-up from $1.1 billion last year.That's the conclusion of a forecast released by IDC, a Framingham, Mass.-based technology research firm. The growth in online life and health insurance sales will be spurred by several factors, according to IDC.

Although insurers are just now wading into the Web-based small business insurance market, research indicates this approach has great potential to improve carriers' revenue streams.There are an estimated 5.7 million small businesses in the U.S. with annual revenues between $50,000 and $500,000, says Matthew Josefowicz, an analyst with New York-based Celent Communications. He is the author of a recent report, titled "Web-Enabling Small Business Insurance Policy Origination."

It began as a mail-order business in 1922, providing automobile insurance to U.S. military officers who moved often and could not get coverage from other carriers. Today, United Services Automobile Association, better known as USAA, ranks as one of the best companies in America for providing customer service.With 4.5 million customers and $62.5 billion in assets, USAA placed first as the most reputable financial services company in America in the Financial Services Reputation Quotient study conducted by Harris Interactive, American Banker (a Thomson Financial publication) and the Reputation Institute. USAA also recently received top awards in the life, auto and home insurance categories from readers of Worth magazine.