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Reinsurance firms are gripped by a series of major challenges, from increased consolidation in the industry to the rise in securitization and the greater risk primary insurers assume. Although the firms' brokers remain intent on winning clients by accentuating the personal touch, many reinsurers are aggressively adopting technology to confront the stiff obstacles they face.A principal new challenge for reinsurers is the rise in the use of securitization to support life insurance products. Both life and P&C insurance firms are turning to securitization to access capital markets, which has helped lead to a decline in recurring reinsurance since 2005, according to the recent study, "Emerging Trends in U.S. Life Reinsurance: Challenge or Opportunity," from the Hartford, Conn.-based firm Conning Research and Consulting Inc. While recurring reinsurance increased significantly from 1995 through 2000, it flattened out from 2001 until 2004, and then began declining in 2005. "To the extent that some primary insurers, initially several larger ones, use securitization as a substitute for reinsurance, it presents a threat to reinsurers," the study notes.

DIRECT-TO-CONSUMER INSURER CHOOSES RULES MANAGEMENT SYSTEMPrecedent Insurance Co., a subsidiary of American Community Mutual Insurance Co., headquartered in Livonia, Mich., chose Redwood Shores, Calif.-based Corticon Technologies' Business Rules Management System as a critical component in the development and management of Precedent's direct-to-consumer healthcare insurance solution. Precedent plans to deliver a suite of health insurance solutions called REMIX, which includes "Coverage on Demand" plans that charge the insured for only the health insurance coverage they need.

Remember the tale of the boiling frog? As the fable goes, a frog placed in a pot of boiling water will frantically clamber out. That same frog, however, will sit placidly in a pot of tepid water. It will remain there even as the water is slowly heated. Gradual changes go unnoticed, with the frog never recognizing the impending disaster as the water reaches the boiling point.Liken the pot of tepid water to legacy claims systems. P&C insurers are beginning to take a closer look at their systems, but will they act in time or wait on the sidelines and continue claims as usual?

RE: July, 2007 Insurance Networking News' Cover Story: Keeping Agents Honest Legally and Ethically: Dear Editor,I read your feature article on Keeping Agents Honest (Legally & Ethically) in the July issue and generally have to agree with your statements. There are some important areas that you have left out, or had not considered. The "other unethical - though maybe not illegal- sale practices" could just easily be directed at the companies that offer the products. The "Death Spiral" is intentional in the way the product is conceived by the company. The basic assumption for term life and its pricing is that the company will not have to pay claims, the policy will expire first. You talk about how companies have to keep a sharp eye on independent agents, and that it is hard to prove fraud, but companies do find fraud and cover it up all of the time. The first reaction is to protect the reputation of the company, not the customer or the general public. In my own town we had an agent that was "let go" by a direct writer, allegedly for fraud. That agent then opened an independent agency and got appointments from some companies. Within two years other agents were receiving complaints about not getting policies, about paying premiums at the agency, but not getting anything from the company until they had a claim, etc. These complaints were sent on to the companies involved. It took almost another year before the agent lost his appointments and was back on the street looking for another opportunity, and he found it in another nearby city, working for a direct writer (a different one). Why, one must ask, were the companies willing to allow this person to keep his license? If any one of them had reported their actions to the Department of Insurance action might have been taken to revoke that license. Companies are as responsible for the fraud committed by agents, captive or independent, if they refuse to report that fraud to the state DOI. Are they really interested in cleaning house, or just protecting their names? Sincerely, Jim Gislason, CPIA Account ExecutiveUnited Insurance Services, Inc.509 Main St.Vincennes, Ind. 47591 Dear Editor, I feel compelled to respond to your article that portrays "independent agents" as unethical thieves. While there may be a few agents that act unethically there are far more that are honest and truly work hard to do the best for their customers. My family and our agency have represented the independent agency system honestly and ethically for over 75 years and we greatly offended by your defamation of our character and ethics. Your article was poo rly written and the three examples you provide do nothing to prove that actual "independent agents" were involved in any of them. Could it be that the examples you gave were actually "captive agents" like State Farm, Farmers, Allstate, and Geico? I ask that you immediately take my agency Martin Insurance, Inc. 1122 Idaho Street Lewiston, ID 83501 off of your mailing lists and never send another copy of Insurance Networking News. I also want you to know that I will be emailing a copy of your article to the Independent Insurance Agents and Brokers of America to see what they have to say about your portray of their members. Mike Martin Jr.Martin Insurance, Inc.Via E-mail

A study of European insurance policy holders by Cambridge, Mass.-based Forrester Research Inc. revealed an overarching reluctance to manage their accounts online. Given many of the major carriers’ desire to drive more customers to the Internet for routine sales and service interactions, the data points to an uphill battle.

Hartford, Conn. - The economics of distribution channels in personal auto insurance can be difficult to understand, and this can present both opportunities and challenges in a softening rate market, according to a new study by Hartford, Conn.-based Conning Research & Consulting.

Ipswich, Mass. - The Customer Respect Group, an international research and consulting firm that focuses on how corporations treat their online customers, released findings from its Third Quarter 2007 Online Customer Respect Study of the Life Insurance Industry.

New Delhi and The Hague, the Netherlands - Insurers outside the U.S. are actively creating partnerships in a business affecting the banking and insurance industries.

Philadelphia – To support high-quality patient care, Philadelphia-based Independence Blue Cross (IBC) is providing physicians with enhanced data about members with chronic conditions.

Needham, Mass. – 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.

Washington, D.C. - NAVA has struck an alliance with Atlanta-based Financial Services Institute (FSI) to automate electronic annuity sales for independent broker-dealers. The alliance is the latest in a series of actions that play into NAVA's straight-through processing (STP) initiative, a comprehensive set of standards for managing new annuity business electronically. With the goal of reducing redundancies and costs, and increasing efficiencies across the industry, the STP standards, published in December 2006, address e-signatures, e-document management and regulatory acceptance, and includes built-in compliance capabilities to help prevent unsuitable sales. NAVA and the FSI, a membership association of broker-dealers that serve registered representatives who are independent contractors, will work together to augment the STP standards and enable broad adoption among FSI members. The group comprises 110 broker-dealer member firms with more than 130,000 independent registered representatives.NAVA reports that independent brokers represent a significant and fast-growing channel for the distribution of variable annuities - FSI members account for more than 36% of all annuity sales. Mike DeGeorge, NAVA's general counsel, told INN that one of the group's goals is to have broader participation from the independent channel. "FSI gives us access to a larger group of advisers," he says. "We have similar alliances with ACORD, and we've been working with the American Council of Life Insurers." DeGeorge says that NAVA already counts 19 of the top 20 insurers on its executive council, including Allianz Life, Hartford Life, Pacific Life, Principal Financial, Prudential Financial, Transamerica Life and Wachovia Securities. Major wire houses, such as UBS and Morgan Stanley, along with 10% of the bank channel, are also involved, DeGeorge adds. NAVA is also in the process of working with other trade associations as well as federal and state regulators to secure wide-spread acceptance and approval of STP."We want to let them know what we are doing and why we are moving to electronic commerce," DeGeorge says.The group is now working on implementation guides for the standards, model consent documents, and on suitability standards that provide common interpretations of regulatory requirements.This series of actions, reports DeGeorge, is designed to encourage more brokers, advisers and representatives to sign on. "Now it's paper intensive, time-consuming process," he says. "Reps feel it's a good product, but hard to sell because of all the paper. We want to make it easier for the consumer-make it less like buying a house with all the paper-retirement planning can be made very easy with this." Source: NAVA

Pearl River, N.Y. - Building upon the success of its initial rollout, the insurance standards body organization ACORD announced the expansion of its testing and certification facility to include test capabilities for ACORD Reinsurance & Large Commercial (RLC) Placing message implementations.

Hartford, Conn. - A new, automated system introduced by The Hartford Financial Services Group Inc. significantly hastens the creation and modification of personal lines insurance policies.

Seattle – Teenagers may liken Teensurance to George Orwell's all-knowing “big brother.” But Safeco is hedging its bets that parents will appreciate its new technology and services designed to help protect their teen drivers as they gain experience behind the wheel, and drive competitive advantage in the process. Safeco released its Teensurance product, which employs a set of online tools based on an on-board GPS and notification technology called the Safety Beacon. This new bundle of tools enables families to take proactive steps to monitor their teen’s behavior behind the wheel. Parents can set speed, distance and curfew limitations. A real-time notification service tells parents when their teen drivers are in danger. Teensurance is available to customers with Safeco auto insurance policies, and includes free installation of the Safety Beacon, which is guaranteed for two years. Safeco’s goal with Teensurance is to keep communications open about driving and the responsibilities that come with having a driver’s license. “Teensurance is a proactive solution to help our customers keep their families safe on the road, and the first in a series of Safeco innovations that push beyond traditional insurance to impact our customers on a broad scale,” said Jim Havens, vice president of consumer solutions at Safeco. The Teensurance program’s set of tools includes set “safe driving” zones to gradually ease new drivers into the driving experience; the ability to unlock a car door remotely using a simple code; access to 24/7 roadside assistance, a parent/teen contract and pertinent educational materials, including a “TeenDash” survey. Source: Safeco

New York – Aiming to capitalize on the record pace of mergers and acquisitions (M&A), Zurich has created a new business unit designed to cater to the companies involved. The unit, part of Zurich's global corporate business division, will offer customized products and services to help companies manage M&A transaction-related risks, the company says.

London - 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.

Boston - A new research report from financial research and consulting firm Celent predicts that online sales of insurance will double by 2011. Titled "Online Insurance Sales and Marketing: What's Happening and What's Next" the report projects that the Web will play a increasingly prominent role in personal insurance purchases.

Edison, N.J. - In the latest of several insurance-specific outsourcing vendor mergers and acquisitions, insurance software provider MajescoMastek has acquired Indianapolis-based Vector Insurance Services LLC (Vector), a technology solutions provider and third-party administrator that focuses on the North American life & annuity insurance industry.

London - Navigating the international regulatory landscape and addressing the challenges of catastrophe exposure reporting are among the subjects that will be broached when ACORD convenes its London Forum in October. ACORD is intending that the forum be a "meeting of the minds" that will unite insurers, reinsurers, solution providers, brokers and cedents from the UK, EU, and US. Dennis Mahoney, Chairman of Aon Global, is slated to deliver the keynote address. The forum will be held at Gibson Hall in London on October 17 and 18.

Waterloo, Ontario - Manulife Financial reports that it is launching the Canadian insurance industry's first new business notification feed that meets new national standards for delivery of information to agencies and their advisors dealing with the company. The feed, once processed, allows agencies and their advisers to view the underwriting status of policies on a daily basis, greatly reducing time spent on inquiries and follow up calls about their clients' applications. The process is the first to meet new guidelines outlined by the Canadian Life Insurance Electronic Data Interchange Standards (CLIEDIS). "This is a significant advance in service to our Managing General Agencies and National Accounts. These organizations are focusing on improved technologies to increase their office and business efficiency so they can spend more time working with clients," said Andy White, AVP, Distribution Systems, Manulife Financial. New Business Notification feeds provided through this new standard contain current advisor, policy and underwriting status of new business pending policies, based on the Canadian Insurance Transaction Standardization (CITS) Pending Case Status Implementation Guide from CLIEDIS. The Canadian Life Insurance Standards Association coordinates development of public standards for the Canadian life insurance industry. A distributor's feed will be available for download to its back office system through a phased launch on Manulife's advisor Web site, says the company. Manulife Financial is no stranger to best practice IT models, as the company has already made commitments in the areas of ITIL and CMMI, and expects their business units and subsidiaries in 19 countries to follow suit. For example, as reported in Insurance Networking News (December 2006), Manulife-Sinochem Life Insurance Co. Ltd., a joint venture of Canada's Manulife Ltd. and China Foreign Economic and Trade Trust & Investment Co., designed a customer-oriented service at the front-end, which requires CRM system support at the back-end. "Their product design is closely connected with the IT system and the IT accommodates the product quite well by playing a supporting role," says Thomas Wong, chief analyst at Beijing-based Analysys International. Source: Manulife Financial, Insurance Networking News