AGENTS DEMAND REAL-TIME SERVICEIndependent insurance agencies are poised for a major service breakthrough with the proliferation of real-time transactions, says a prominent participant in the industry-wide push to double real-time transaction volume in a year.
"We need to drive the implementation of real time," says Robert G. Slocum, chair of the Agents Council for Technology (ACT), an affiliate of the Independent Agents and Brokers of America (IIABA). "There's no technological reason we can't do what needs to be done to provide the level of service and information that our customers require."
ADJUSTER COURSE OFFERED MONTHLY
Greenville, S.C.-based HAVA Insurance School is offering a adjuster training classes that will help save property owners thousands of dollars in unpaid damage costs, the company says.
The six-day practical adjuster training class arms adjusters with the knowledge needed to write accurate and complete estimates. Students will learn policy and construction basics in the classroom and will also receive hands-on training when they go onsite to a mock disaster claim and learn to scope the damages, investigate, document and take pictures.
For a schedule of classes visit www.havainsuranceschool.com.
HOMEOWNERS LACK SENSE OF COVERAGE
Many U.S. homeowners mistakenly believe that standard homeowners insurance protects them from a wide array of perils, according to new research by the Kansas City, Mo.-based National Association of Insurance Commissioners (NAIC). The survey found that 33% of U.S. heads of household, who own a home and have homeowners insurance, incorrectly believe flood damages would be covered by a homeowners or property and liability policy.
PBM MEETS MANDATE
ScripNet Inc., a Las Vegas-based nationwide pharmacy benefit manager that contracts with workers' compensation insurance carriers and pharmacies to ease the availability of prescription medications to injured workers, announced its support for, and compliance with, a Texas Department of Insurance mandate that workers' compensation carriers accept eBilling from health care providers as of Jan. 1, 2008.
According to the company, ScripNet will be fully compliant with Texas' new eBilling requirements so that all pharmacies, whether on or off the ScripNet network, can bill carriers electronically for workers' compensation prescriptions.
TRIA EXTENDED, FIVE YEARS ADDED
The House Financial Services Committee passed H.R. 2761, the Terrorism Risk Insurance Revision and Extension Act of 2007 (TRIREA) by a vote of 49 to 20.
The legislation will extend the Terrorism Risk Insurance Act (TRIA) for 15 years and help spur the further development of a private market for terrorism risk insurance. After the 9/11 terrorist attacks, many insurance companies excluded terrorism events from their insurance policies. As a result, Congress passed TRIA as a three-year temporary program in 2002. In 2005, the measure was extended until 2007.
Since its enactment, TRIA has ensured the availability of affordable terrorism risk insurance in the marketplace.
TRIREA will include provisions to:
* Extend TRIA for 15 years with current co-payments and deductibles for conventional terrorism acts;
* expand TRIA's "make available" requirement to include NBC coverage;
* change TRIA's definition of terrorism to include acts of domestic terrorism;
* set the program trigger at $50 million;
* add group life insurance to the lines of insurance for which terrorism coverage must be made available;
* decrease deductibles for terrorist attacks over $1 billion and decrease the trigger after such events; and
* continue to require studies of the development of a private market for terrorism risk insurance.
CHALLENGES REMAIN ONE YEAR AFTER AML REGS
With the first anniversary of compliance passing recently, and the Internal Revenue Service committing to regulatory assessments of AML program effectiveness on behalf of the Treasury Department, results from London-based Ernst & Young's "Anti-Money Laundering Survey for the U.S.-Based Life Insurance Industry" suggest that insurers have made great strides but still face hurdles before fully implementing all of the required elements.
The survey offers insight into the current state and future plans of insurers with respect to meeting the Department of Treasury's anti-money laundering (AML) regulations that took effect in May 2006.The survey includes feedback from 16 U.S.-based life and annuity insurance companies.
CAS: ACTUARIES FACE SOLVENCY II COMPLIANCE ISSUES
The move toward Solvency II, the risk-based solvency regime in Europe, is one of the key issues attendees learned about at the spring meeting for the Casualty Actuarial Society (CAS), based in Arlington, Va.
Arne Sandström, chief actuary, Sveriges Försäkringsförbund/ Swedish Insurance Federation, provided an overview of the current solvency system in Europe and highlighted major components of the Solvency II program.
"In the beginning of this decade, there were many systems introduced and proposed in Europe, including in Denmark, the Netherlands, the Swiss Solvency Test in Switzerland and in the U.K.," he said. "All of these systems have influenced the Solvency II project."
According to Sandström, risk management is one of the key pieces in the new system. "The managers and the board have to take an active part in the whole process," Sandström says.
The actuarial function also is part of the solvency system and focused on expressing an opinion on items such as underwriting policy and risk management and the calculation of technical provisions.
COMPPHARMA OFFERS PBM FIRMS SERVICES
Formed to enable pharmacy benefit management (PBM) firms specializing in workers' compensation common industry to share the cost of researching and developing solutions for industry-wide issues, CompPharma LLC, Madison, Conn., is developing a 50-state database of laws and regulations affecting workers' compensation PBM firms.
It has retained the law firm of Chicago-based Lord Bissell & Brook LLP to create the database, monitor the legal landscape and regularly update the data.
"Member PBMs access the database by subjects or states," says Joseph Paduda, president of CompPharma. "It goes beyond citing regulations to adding commentary and clarification."
Members set research priorities, with the first round of research focused on mandatory generics, the definition of a pharmacy, and the licensure of PBM firms and third-party administrators. Workers' compensation networks and pharmacies, and employer direction also are being addressed. The first phase of the database will be completed by fall 2007.
The database saves PBM firms the time and cost of conducting this research, giving CompPharma members a head start on the legal implications of their existing or planned operations or plans, according to Lord Bissell & Brook Partner, Michael Coleman. "The database aids, but does not replace, PBMs' legal counsel or compliance efforts," he says.
CompPharma is investigating other issues that drive the costs of pharmacy in comp, such as capturing the first fill of workers' comp prescriptions and working with manufacturers on the appropriate use of various medications.
ERM TAKING ROOT IN EUROPE
Though still nascent, enterprise risk management (ERM) programs are becoming more established amongst European insurers, a report from Standard and Poor's (S&P) has found. In its report, "Enterprise Risk Management Assessments on Europe's Insurers," S&P surveyed 70 European carriers about their adoption and use of ERM programs.
A marked shift in insurers' attitudes about ERM has occurred since 2005, when S&P started researching it and found the idea was foreign to most insurers. "Standard & Poor's is seeing greater interest by insurers in establishing ERM systems not only to meet regulatory requirements but also to boost their competitive advantages," it states.
The study, which consigned insurers to one of four classifications, found that 86% of insurers have "adequate" ERM programs in place. Two percent earned a "weak" ranking while 12% earned "strong" or "excellent" ratings.
U.S. COMPANIES IMPROVING RISK MANAGEMENT
Large U.S. companies have improved their ability to identify and manage potentially critical business risks, according to the 2007 U.S. Risk Barometer study released by Los Angeles-based Protiviti Inc. However, there is still room for improvement, the report shows.
Nearly half of executives rated their organizations less than "very effective" at identifying and managing significant risks, leaving them vulnerable to unanticipated losses, reduced productivity and business disruptions.
Among companies that rated themselves as "not very effective," 77% are planning at least some changes to their risk management capabilities during the next two years, and 14% plan significant changes.
Nearly half of the "not very effective" companies noted that a single event prompted the decision to change. This finding is important because it implies an ad hoc, reactive state for companies lacking high confidence in their risk management capabilities.
The 2007 U.S. Risk Barometer study, which surveyed 150 senior-level executives in a number of industries, found that customer satisfaction, the regulatory environment, information systems and IT security, and changing markets make up the first five of the top 10 risks as determined by the study.
According to the survey, the top performers are likely to utilize the following risk management best practices:
- Rigorously deploy a formal risk management policy, a formal risk assessment process and a risk monitoring and reporting process across the organization;
- Formally integrate risk assessment processes and risk responses with the activities of the business planning and strategy-setting processes;
- Quantify risk and evaluate their risk profile; and
- Assign to a chief risk officer (or an equivalent executive) the primary responsibility for coordinating risk management policy, execution and reporting.
ANALYSTS ADVISE INSURERS TO SPEED UP DEVELOPMENT
To remain competitive in the life and annuity industry, insurers should exploit technology to create more innovative products and introduce them faster, according to insurance industry analysts speaking at El Segundo, Calif.-based Computer Sciences Corp.'s Life and Annuity Users' Forum.
More than 350 insurance industry executives attended the users' forum in Naples, Fla. The event featured more than 150 sessions on topics ranging from industry trends to how product configuration software can reduce time to market for insurance products.
"Insurers that are unable to assess their customers' needs, build products to support them and deliver them quickly to the sales channels will find it difficult to compete," says Kimberly Harris-Ferrante, research vice president at Stamford, Conn.-based Gartner Inc. "Product configuration technologies let insurers craft and test new products with less IT involvement, improve integration between the product engine and policy administration systems, and improve product management through the use of a central product library."
Matthew Josefowicz, managing director of Celent LLC's insurance practice, also addressed attendees. "Improving time to market for life and annuity products with their rapidly proliferating features, minimums and guarantees is a widely acknowledged competitive necessity," he says. "The ability to innovate products is worthless without the ability to get those products to market rapidly."
The need for more finely tuned products was identified in the November 2006 report "Insurance CIO/CTO Pressures, Priorities, Projects and Plans for 2007: Survey Results" from Boston-based Celent. Celent presented the results of the survey at the conference.
INSURERS SEEK INNOVATIVE TECHNOLOGIES
A recent online survey on P&C insurance technology reveals that leading carriers have become adept at dealing with customers and business partners online.
However, virtually all carriers recognize there is room for improvement and that they must continuously improve their underlying technology.
The results from a survey conducted by Cedar Rapids, Iowa-based technology provider Fiserv Insurance Solutions Inc. indicates critical business needs and the projects and technologies insurance carriers have underway to address them.
Seventy-five percent of respondents agreed that one of their next three large-scale projects would involve their core system for maintaining insurance coverage information. Access to complete and immediate information allows the carrier to respond more effectively and efficiently.
Sixty-seven percent said an agency interface or comparative rating system would be on their list of projects planned. Billing and claims projects to make things smoother for the customer tied at 42%.
Respondents-consisting of 24 CIOs and/or technology executives-noted that the top three most important technologies for their organization included a data access layer (67%) that enables easier availability of decision-making information, business process management (46%) to streamline processes for highest efficiency and Java technology (42%).
"The survey results show an increasing focus by P&C insurers on effectiveness as well as efficiency," says Todd Eyler, chief technology officer of Fiserv Insurance Solutions. "The most important technology focus is now on data accessibility so companies offer the best insurance products for their markets and make better decisions using business intelligence/analytics applications. Property/casualty insurers want to improve effectiveness in key areas, such as their pricing and rating approaches, customer segmentation and marketing approaches, and underwriting and claims outcomes. This level of focus on data and analytics is a new emphasis for most P&C insurers."
Survey respondents indicated that improved customer service, enhanced business management and ease of conducting business with a carrier were the most important business requirements for innovation.
CARRIERS SEARCH FOR BALANCE IN CLAIMS PROCESSING
Leaders in claims operations are beginning to break away from traditional processes and seek technology to assist them in managing a complex business process that has, to date, been extremely people-intensive, according to new research from TowerGroup, Needham, Mass.
Claims departments have been historically reluctant to adopt technology solutions, perceiving technology as incapable of duplicating the decision-making process of an experienced claims adjuster.
The research finds that although some claims executives have driven a new vision into their operations, most claims organizations still struggle to strike a balance between adopting new technology and maintaining an intimate connection with their customers, agents and brokers. The pursuit of competitive advantage and ever-increasing consumer expectations requires service points to be frictionless and seamless.
Yet, the claims process is also being impacted by the loss of expertise due to the retirement of claims adjusters from the baby boomer generation. The loss of these adjusters will increasingly threaten the claims capabilities of many carriers during the next 10 years, intensifying the drive to more effectively leverage technology, according to the research.
TowerGroup believes the greatest benefit of technology to P&C claims operations will be automated information support for decisioning rather than the full automation of processes. The right technology, including incorporation of predictive analytics, will enable claims adjusters to achieve a new and superior level in the claims service experience.
Karen Pauli, a senior analyst in the TowerGroup Insurance practice, authored the report "Technology Direction in US P&C Insurance Claims Operations: Transforming a People Business." The research finds that leaders in the claims business are moving toward a new set of imperatives that will provide the granular management needed in today's business environment.
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