The dot-com crash certainly has extinguished the e-commerce hype, but it hasn't dampened carriers' desire to implement Internet technologies.For the second consecutive year, four Internet categories ranked at the top of Insurance Networking News' "Best of the Newest" survey, a poll of 19 technologies rated by industry experts. The executive panel rated each technology based on its impact on carriers' operations and its level of innovation.
Internet Security/Privacy, last year's top choice, narrowly was edged out by Intranets/Extranets, which placed third in the 2001 survey. Web Services, one of two new technologies added to this year's survey and one of the hottest technology topics across all industries, placed third in the "Best" survey, followed by XML and Middleware.
Most major carriers are successfully using secure networks such as intranets and extranets to extend their information links with agents and policyholders and for remote education. These networks are increasingly being implemented as concerns about Internet security mount.
"This (technology) will be very big as soon as investment dollars free up," says Michael LaPorta, senior insurance partner for Deloitte Consulting, Stamford, Conn. "The savings from e-enabled education are immense-no travel time or costs. Also, agents can learn on their own schedule when it won't interfere with customer calls.
"And, electronically linking companies and brokers can accelerate placement of complex industrial risks in the property/casualty segment and facilitate third-party distribution of financial products," LaPorta adds.
"Our primary 'Net' investments at Nationwide are in the intranet/extranet space," says Kelly Cannon, a vice president at Nationwide Insurance, Columbus, Ohio. "All new applications for internal or agency use are being developed for these environments. We expect this trend to continue."
Extranets are important conduits for the exchange of structured and unstructured data, says Ben Bengston, partner, with IBM Business Consulting (formerly Pricewaterhouse Coopers), New York. "Best traction has been with larger carriers and brokers, but it will move down the food chain," he adds. "Communities of exchange and knowledge will continue to grow."
Internet delivery, which slipped to sixth place in this year's "Best" survey, remains a mixed bag for carriers.
"Using the Web to communicate more efficiently and effectively with customers, employees, agents and other service providers will maximize efficiency and effectiveness in all aspects of what insurers do-selling and underwriting policies, providing service and processing claims," says Todd Eyler, a senior analyst with Forrester Research Inc., Cambridge, Mass.
Others believe that Internet sales of policies will remain a far reach for carriers.
"Business-to-consumer sales of anything other than auto and simple term policies is still a dream," LaPorta says. "Most customers are more comfortable with an agent, broker or financial planner assisting them."
Business-to-business applications are more likely, he adds. Using the Internet for group benefits enrollment and claims has a big upside, LaPorta explains. Another area that could explode, he adds, is workplace marketing of products such as auto, home and voluntary benefits products.
Feeling secure
One of the chief reasons why carriers are developing intranets and extranets is because of their fears that the public Internet has too many security holes to safely transmit sensitive data. Not surprisingly, Internet Security/Privacy rated a close second in this year's "Best" survey.
"Carriers are really focused on this problem," Eyler says. "The interesting angle is how to make external Web services more secure with new standards such as SAML."
"Security breeds confidence," says Ben Salzmann, CEO of Acuity, Stevens Point, Wis. "There are huge costs associated with downtime, and any decrease in reputation translates into lost business."
Security and privacy are two complex issues that insurers must tackle, explains Barbara Koster, vice president and CIO of Prudential Financial, Newark, N.J. "One is a question of protecting information and resources from outside attack, and the other involves retrofitting existing applications to conform with new legislation. Both require continual attention and investment," Koster says.
Virtual private network connections are being used, she adds, to turn the Internet into a communications pipeline for business. "Internet portals can tailor the experience more precisely to the community being served."
System integration
Web services, a new category in this year's "Best" survey, involves more than just "retrofitting" existing applications. It involves the integration of various legacy system applications based on open Internet standards.
"This is how you modernize without the cost of a giant replacement and conversion project," explains Deloitte Consulting's LaPorta. "Workflow can be enhanced, processing costs reduced and service improved by 'fronting' the legacy system with user-friendly Web interfaces." Although Web services are receiving much attention from carriers, the choices and decisions they make-in particular selecting which platform vendor to run with-will take some time to evolve, IBM's Bengston says.
Nationwide's Cannon, who gave Web services a perfect "10" for its impact, says the carrier is well-positioned for Web services. "Over the years, Nationwide has consistently invested in maintaining and renovating legacy systems. This has positioned us very well to leverage those investments through integration with the Web via Web services," he explains.
Middleware, another popular approach to system integration, placed fifth in this year's survey, moving up one place from last's year's "Best" survey. Middleware, explain's Nationwide's Cannon, is the "glue" that binds the carrier's applications. "We use standard tools, implemented consistently across the architecture, to integrate our applications and provide a manageable, scalable environment."
"This technology is important for at least two reasons," Bengston explains. "First, the need to encapsulate and extend legacy systems, and second, carriers are unhappy with the cost of implementation and ownership of 'enterprise' software and want to integrate smaller 'best of breed' solutions."
Traditional technologies
Although technologies that are new and different continue to be popular with businesses, certain traditional tools, such as claims administration and call center technologies, continue to score well with insurers.
"Claims processing is an area that requires vigilance to make sure that it is making a positive contribution to the customer experience," says Jamie Bisker, research director with the TowerGroup, Needham, Mass. "Insurers need to be careful to manage customer expectations and use proven and practical technological solutions. Making the adjuster more efficient is the goal, not just using the latest gadget."
Administration tools are unfortunately a small piece of a larger problem, explains Mark Popolano, CIO of American International Group (AIG), New York.
"Re-engineering the business process, integration into call center back-ends, Webification of the front- and back-office center, artificial intelligence for fraud detection, and interactive tablets for the claims agents will drive the savings and improvements in future claims handling. The entire problem needs to be examined end to end to optimize and improve customer service."
While few carriers are spending large amounts of capital to re-engineer claims, IBM's Bengston explains, most are focusing on incremental improvements in the areas of claims procurement, claims financial tracking and analysis, and fraud detection/mitigation.
Nationwide's Cannon says the carrier has made "significant" investments in technologies to improve claims management. "Some of our best results have been from Internet-based claims administration tools and from analytical tools running on top of our data warehouse," he says.
Making the call
Call center technology is another category that received mixed reaction from survey participants. AIG's Popolano, for example, believes the integration of Web voice and unified messaging "will bring a level of sophistication to the marketplace."
Others, such as Cathy Ellwood, director of development for agency technology services at Nationwide, believe that carriers haven't tapped into call centers' potential. "I'm afraid that call center technologies are going to be implemented just like CRM, except they will probably cost more," she explains. "If carriers aren't willing to thoroughly plan how they are going to use the technology at a very detailed level, they won't realize the benefits-but they will incur the costs."
Perhaps the biggest factor in running a successful call center is training the representatives to properly use the tools at their fingertips.
"Although technology sets the stage, call centers also need to utilize staff training to ensure business benefits," adds Susan Cournoyer, a senior analyst with Gartner Inc, a Stamford, Conn.-based research and consulting firm. "The shift to a profit-center attitude-and profit-center success-will be facilitated by carriers that invest not only in technology but also in people."
