Subject Root Tag

Until last month, the strongest positions regarding modernization of insurance regulation have been proposals for an optional federal charter for insurance companies. But another compelling-and opposing-perspective entered the debate in August, when the Alliance of American Insurers published a report that firmly argues against federal regulation for property/casualty insurance."Optional federal chartering entails a significant risk of adverse and unexpected consequences, no matter how carefully and narrowly initial legislation is crafted," the report concludes. "The better and more prudent policy is to reject federal chartering and encourage and support further modernization of state regulation."

Michael Keller's mission is to create a collaborative IT environment, maximize ROI on technology investments and deliver value-added services.With the rapid increase in the number of companies under the Nationwide Financial Services Inc. umbrella, Michael Keller had a formidable mission in his first year: create a cohesive, collaborative IT community within Nationwide to leverage capabilities, maximize return on IT investment and deliver more value-added services.

When insurance companies explore implementation of top-of-the-line mobile computing solutions, many concede that laptop is technology no longer on their short list for consideration.Once regarded as a viable option for conducting business remotely, laptops lost ground to other hand-held options, such as Web-enabled wireless phones, two-way pagers and Personal Digital Assistants (PDA).

Despite the growth of online self-service, call centers remain the most common way for customers to interact with companies. New technologies promise ROI by focusing on the performance of the people who deliver service to the customer-call center agents.Driving customers to the Internet for self-service is an effective way for insurers to reduce the high costs of providing information and processing transactions off-line. The fact is, most customers still prefer to call and talk to a human being-the most expensive customer-service channel.

There's no question about it: A contact center is an expensive operation. Not only has the technology become more complex and costly over the past few years, but training and licensing agents-who leave at a clip of 25% to 40% annually-impact a carrier's bottom line.It's no wonder many insurers decide to farm out some or all of their customer care functions-to the tune of $1 billion per year, according to research from IDC, Framingham, Mass.

To many insurance carriers, back-end processing of small-business insurance through accurate underwriting has long been a source of frustration.On the front end, providing thorough servicing for demanding business policy owners can represent another challenge. In the middle, furnishing independent agents with automated tools to build small-business volume has seen its share of tribulations.

Technology upgrades are often characterized by cautious experimentation and taking relative baby steps-especially among insurers.National Grange Mutual Insurance Co. (also known as Main Street America Group) has certainly weathered its fair share of technology trends. Founded in 1923, the Keene, N.H.-based company has established a portfolio worth more than $500 million in premium through its network of 1,100 independent agents. The property and casualty insurer serves the East Coast from Maine to Florida.

Despite the economic slow down and the many challenges faced by the insurance industry, carriers increased their total IT budgets in 2002 by an average of 7%. On average, 35% of this spending is devoted to new projects and strategic initiatives, according to a study by Celent Communications, Boston.Many insurance companies cannot afford to not update their existing systems. In a mature and highly competitive marketplace like the U.S. insurance industry, operational efficiency and flexibility is key to profitability. To achieve these goals, insurance companies must take advantage of new technological capabilities in every step of the insurance business process or risk falling behind their competitors.

A major step in streamlining agent licensing across the states was taken in August when the National Association of Insurance Commissioners (NAIC) made the preliminary determination that at least 35 states had met the reciprocity requirements for nonresident producer licensing under the Gramm-Leach-Bliley Act (GLBA).At press time, the Kansas City, Mo.-based NAIC was expected to officially certify those states at its meeting in September in New Orleans.

Depending on the specific application, electronic networking hubs have experienced a checkered history within the insurance industry. Hubs devoted to the claims side of insurance, for example, have met with a great deal of success in that they've enabled affiliates in the claims value chain to communicate quickly and effectively in settling claims.In launching what is touted as the first electronic networking hub to serve the life reinsurance segment, Washington, D.C.-based American Council of Life Insurers (ACLI) is hoping to "revolutionize the reinsurance business process," the association states.

At a hearing in June before a subcommittee of the U.S. House of Representatives, Joseph J. Gasper, president and COO of Nationwide Financial Services Inc., gave a telling example of the regulatory hurdles insurers face when trying to launch new products.It went like this: Nationwide had developed a new annuity last year for contract owners interested in market timing. The Columbus, Ohio-based insurer filed countrywide for product approval, but seven months later, approval was still pending in five states-four of which were major markets for the new product.

Ever since Gramm-Leach-Bliley passed in November 1999, momentum has been building to reform the state-based insurance regulatory system. The landmark legislation, which allows banks, insurers and brokerages to merge and compete with one another, also ordered the states to enact uniform producer licensing laws by November 2002 (see "Here Come The Feds, May 2001).Yet, although the law mandates uniform producer licensing, it essentially left the rest of insurance regulation to the states. And, according to many in the industry, the state-based system puts insurers at a disadvantage-especially when they're trying to compete nationally with banks and brokerages.

Most insurers and reinsurers espouse a belief that new business doesn't always equal good business. To most insurance providers, the honeymoon period with a new customer ends as soon as claims activity intensifies.

For years, paper-based processing for a commercial insurance policy has made it exceedingly difficult to assess risk and issue accurately priced coverage. Moreover, many insurers and reinsurers have had a hard time fully analyzing client data due to the lack of disclosure by the client.But Schaumburg, Ill.-based Zurich North America launched in February a Web-based solution-called the Business Interruption Coverage calculator-which will be an integral part of its underwriting procedure for business interruption coverage.

As two bastions of tradition, neither the legal profession nor insurance carriers eagerly jumped onto the Internet bandwagon in the late 1990s.But now, the dust of the dot-com wreck is settling, and carriers and their counsel are beginning to see where it makes sense for them to use online technology to manage legal costs and improve collaboration.

Technology budgets traditionally have been an easy target for firms looking to lob off expenses and improve their bottom lines. And, while carriers-especially property/casualty insurers-are experiencing tough financial times, they are not slashing their IT budgets, according to the findings of an exclusive Insurance Networking survey of 82 carriers, agents, brokers and services firms.Nevertheless, carriers and agencies are taking distinctly different paths this year, with carriers ratcheting up spending on internal development, while agencies are cutting back on custom software and increasing packaged installations.

Realizing that generating new insurance volume doesn't necessarily ensure profitability-and may even suppress it-State Farm Mutual Automobile Insurance Co. began implementing a strategy to suspend writing new homeowners policies in 17 states.The Bloomington, Ill.-based insurer is also setting the wheels in motion to fully exit the New Jersey auto insurance market over the next five years. State Farm's geographic retrenchment comes on the heels of a reported $5 billion net loss incurred since 2001. The losses were marked by rapidly increasing claims costs due to an inordinately high series of natural disasters-from hailstorms to flooding.

Despite many advances in agency automation over the last few years, insurance agents are frustrated with many aspects of the technology designed to make their lives easier. This is a conclusion of a survey conducted early this year by the ACORD User Groups Information Exchange (AUGIE).Nearly 9,000 agents and customer service representatives participated in the survey. And, according to the results, not only are agencies burdened by keeping their agency management systems updated, agents also are irritated by the chore of duplicate data entry and the costs and training issues associated dealing with carriers' proprietary systems.

Individuals who have experienced an auto accident or incurred damage to their vehicle often discover that the road to swift claims settlement is a bumpy, winding and volatile one.

Claims processing capabilities within the automobile insurance segment is not unlike a car itself-hitting on all cylinders is essential to ensure high performance.In 1999, Mayfield Village, Ohio-based Progressive Insurance Co. debuted TotalPro, a Web-based claims processing application that can be activated by both internal affiliates and Progressive policyholders.