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Joining Guardian as a CIO with a blank slate for improvement, Dennis Callahan has reduced IT costs, formed a collaborative partnership with the business units, and established a consistent technology direction.Dennis Callahan was content as CIO for global financial services at American International Group (AIG) when he was approached almost two years ago by The Guardian Life Insurance Company of America to be its new CIO. He was lured into joining Guardian because of the sheer challenge of "filling in a blank slate," he says.

As a result of switching to document scanning, and eventually upgrading its equipment, Blue Cross Blue Shield of Georgia has seen what its describes as a significant increase in efficiency and cost savings.The paperless office could be compared to the Loch Ness monster: People swear it exists, but no one has ever seen it. Blue Cross Blue Shield of Georgia, however, is one of the few companies that can say it has achieved this elusive goal, with the results to prove it.

Throughout much of the 1990s, the road to auto insurance accountability and compliance in the state of New York was in disarray. That's because throughout the decade, New York state officials and auto insurers watched with helpless dismay as a growing number of New York motorists circumvented a mandatory auto insurance law. They did this by carrying fraudulent insurance identification cards.In many instances, using a fake ID will only take the illegal user so far. But in New York, the inability of state databases to crack down on the activity enabled card carriers to run amok. With detection difficult, motorists saw an opportunity to create their own proof-of-insurance cards.

Back in the prehistoric 1990s, The Hartford Financial Services Group applied technology the old-fashioned way. It used a vertically oriented approach to solve problems in discreet business silos.Today, the $15-billion investment and insurance company is taking an enterprisewide viewpoint when it applies information technology. This new approach ties together disparate information technology offerings, simplifies some of the complexity of e-business and makes it easier for distributors to sell and service The Hartford's insurance products.

Over the past year, The Hartford Financial Services Group has launched several technology initiatives aimed at making life easier for distributors. Those efforts will continue this year as new features and functionality are added to The Hartford's eService and eSales programs.Last year, the company introduced the industry's first premium audit search tool available to agents through the Internet. This online tool augments the company's policy, billing and claims service capabilities available to agents through its Electronic Business Center (EBC), a secure Web extranet built exclusively for independent agents that represent The Hartford. Using this tool, agents can use the Internet to quickly determine the outcome of a commercial customer's audit and the reasons for any premium adjustment.

The insurance industry has made great strides in recent years in transacting insurance electronically. Yet there is no doubt that the barriers that still exist, whether real or perceived, must be toppled to allow insurers to join other industries in the pursuit of technological advances that provide greater choices and better service.State insurance regulators have taken the lead in addressing the barriers to electronic transactions. In the last few years, clarifications regarding electronic transactions were reviewed and guidelines issued with the release of a model bulletin by the National Association of Insurance Commissioners (NAIC). The NAIC model stated that electronic transactions should be treated no differently than paper transactions.

This year, the U.S. insurance industry will spend an estimated $6.3 billion on new information technology projects. Of that amount, the industry could save $250 million or 23% of the $1.45 billion portion it spends on staff and consultants to integrate internal and external information technology systems.The magic bullet to these dramatic savings is ACORD XML, according to a report by Boston-based Celent Communications Inc. Carriers surveyed by Celent either expected to or had actually achieved integration efficiencies of 20% to 30% when using ACORD XML standards. A few reported efficiencies on some projects of as much as 80%.

Annuities have been a mainstay product in banks since the 1980s, and over time, many providers have tried to push into the crowded channel. Has it gotten too crowded?Given the litany of failed bank-channel programs-Sage Life and Massachusetts Mutual Life come to mind-that litter the annuity battlefield, the answer looks like yes.

Faced with a whole new ball game of unprecedented federal backup for catastrophic losses caused by a terrorist attack, the U.S. insurance industry, including underwriters, reinsurers and brokers, are scrambling to interpret the new legislation and revise their underwriting programs to deal with the issues presented by the new law.The Terrorism Risk Insurance Act of 2002 will take effect upon date of enactment and provides for a sliding scale of government backup over its three-year life. While there seems little disagreement that the backstop will increase availability of terror risk coverage, its effect on pricing remains to be seen.

When John Kellington joined the Ohio Casualty Group in May 2001, he knew exactly what challenges awaited him. That's because Kellington had worked for Ohio Casualty previously as a consultant for IBM Global Services to help transform the carrier's legacy systems."I knew that Ohio Casualty Group had excellent operating systems capabilities," says Kellington, chief technology officer of the Fairfield, Ohio-based carrier. "The major issue was that the IT department was having a difficult time delivering new business applications and functionality in the appropriate timeframes."

When insurance carriers talk about an insurance-sellingprogram designed around "bricks and clicks," it usually implies that services are offered both offline and online.While this remains the primary application, Baltimore-based Zurich North America Small Business has taken the concept in a different direction. Through development of its Buildersrisk.com Web site, the global insurance giant provides "clicks" that literally insure "bricks."

Web services, the Internet standards-based approach to software distribution, promises to greatly simplify enterprise integration for insurance carriers and their business partners. To take advantage of this new technology, companies are faced with choosing a Web services platform-namely Microsoft's .NET or J2EE, which is based on Sun Microsystems' Java programming language.Some industry observers predict that large carriers with multiple back-end legacy systems will migrate toward J2EE, while small carriers, typically entrenched in Microsoft's operating system for their business applications, will choose .NET. Mid-sized carriers are up for grabs, they say.

Unlike many other insurance contracts, annuities are marked by significant fluidity where accounts change daily, weekly and monthly. When an accountholder makes a change, the service provider must be prepared to hold up their end of the bargain.This isn't always easy. A report commissioned by Edison, N.J.-based NaviSys Inc. states that "many potential customers fear the loss of control of their money as an immediate annuity essentially locks up those assets for the rest of their lives."

Industry analysts predict that small-business owners will spend more than $40 billion on commercial insurance this year-as much as one-third of the total commercial insurance market. Most of this lucrative business is going to a few captive carriers, leaving independent agents and their carriers to divvy up the rest.Yet, consumer studies indicate that small-business customers want a broad choice of products from multiple carriers-something they can't get from a captive agent. What's preventing the independent agency system from snatching such a blatant opportunity?

Ask most financial services distributors their sentiments about selling and servicing annuities, and a good number of them might reveal their own personal horror stories about a promising selling opportunity gone bad.Many producers face an uphill climb to precisely crafting annuities for both personal and institutional customers. Influenced both by state regulation issues and corporate strategy decisions, annuities often undergo a myriad of permutations in their design. With a product line that's often a moving target, brokers have found it tough to pinpoint products for customers' needs.

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.

The life insurance industry recognizes the Internet will be a valuable tool to help it compete in the future. But there is still a long road to travel before life carriers can become true e-businesses.That's the conclusion of a recent study conducted by the American Council of Life Insurers, Washington, D.C. The study, "Life Insurance and Electronic Commerce: Present and Future," examines several key issues related to the Internet, such as electronic signatures and cyber security. The focus was primarily on insurer-to-consumer initiatives.

Although the use of credit scores as an underwriting tool for auto and homeowners insurance is now an established practice, consumer groups, legislators and regulators still have not had their final say on the matter.Indeed, state lawmakers across the nation can look forward in 2003 to consideration of numerous measures to curb the practice-and in some cases outright ban it.

In law enforcement, the most egregious acts of theft are often solved more quickly than cases of simple theft. That's because law enforcement officials often devote vast resources to bringing high-profile crimes to justice.High-profile insurance fraud also is often solved expeditiously for the same reason-the resources committed to the big-dollar cases are significant. But when it comes to common fraud, insurers have found that the jury's out on their overall ability to identify and curb it.

Insurance industry lobbyists acknowledge that the financial services industry could come under some expensive and restrictive privacy compliance rules next year if Congress follows through on plans to hold extensive hearings on the issue.Indeed, Congress could decide to write new laws mandating that consumers be allowed to "opt-in" to sharing of financial data given to one unit of a financial services company with another unit. Currently, the policy at both the state and federal level is that consumers have the right to "opt-out" of companies' cross-marketing programs.