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In the late 1990s and into 2000, several carriers and third-party providers began to recognize online calculator tools as invaluable in helping consumers perform needs analysis for life insurance."We have come to believe that few consumers have the patience or the understanding to spend a lot of time filling in forms to get the information they need," says Terry Burt, president of Canton, Mich.-based Interlinx LLC. Interlinx operates a Web site, www.budgetlife.com, that provides dynamic marketing and pricing data on a stable of life insurance products from more than 150 carriers.

It may be an old joke, but it's not a laughing matter: The only people who really understand the legacy policy administration systems running at most insurance carriers have either retired or passed on.Nonetheless, most carriers are reluctant to replace these systems, preferring to live with the devil they know, even though their systems may impose limits on their operational flexibility.

Insurance CIOs report that the emerging mix of legacy and Web systems in their enterprises creates a set of integration challenges that dominate their list of IT priorities. Not only are these integration challenges technically demanding, they're becoming increasingly critical to the business of insurance.Spending on enterprise application integration (EAI) in the insurance sector reflects growing levels of commitment to achieve legacy-to-Web integration. Gartner Dataquest forecasts that worldwide spending on EAI-related services in the insurance sector is poised to grow from $654 million in 2000 to more than $1.7 billion in 2005.

Insurance is an important component of modern economic life. The logical outcome of the millions of policies in force today is a proportional number of claims to pay for covered losses.From an operational cost and policyholder perspective, the claims handling process is the heart of property/casualty insurance. It's true that performing risk analysis, selling policies and retaining customers are important issues for carriers.

Layton Christensen's best-selling book, "The Innovator's Dilemma," discusses how business leaders at large companies have usually underestimated the long-term impact of disruptive technologies. This trait certainly applies to insurance and the Internet.Insurers' unsuccessful efforts of using the Internet as a lead-referral channel in the late 1990s have soured senior executives' current perception of the Internet. However, recent successes by companies, such as John Hancock's strategy to sell term life insurance online and innovations by some property/casualty carriers in claims processing, is beginning to turn the tide. By 2005, maturing Web services technologies and data intermediaries will become key business drivers for carriers.

The outsourcing of information technology is proving to be popular with carriers these days, reversing the industry's historical apprehension of working with third parties. But experts caution that time will tell how widespread the concept becomes.In January, PacifiCare Health Systems Inc. became the latest insurer to chart this course by completing a 10-year, $1.2 billion venture with Armonk, N.Y.-based IBM Corp. and Boston-based Keane Inc.

Insurers have invested significant amounts of capital on technology based on the belief that those investments will improve their top- and bottom-line performance. However, new research indicates that carriers are experiencing mixed results to date and they're seeking refined metrics to measure how technology is impacting their operations.Those are some of the conclusions of a recent survey of 248 North American financial services firms conducted by Tillinghast-Towers Perrin. The survey is the second in a series of industry studies conducted by the management and actuarial consulting firm intended to learn how new technologies are impacting carriers' performance, and how carriers are measuring the success of IT implementations.

When Allstate Insurance Co. announced its aggressive new business approach in November 1999, analysts praised the company for its bold leadership in the New Economy.

Biometric technology is in the throes of an identity crisis. Biometrics relies on matching algorithms that analyze the physical or behavioral traits that differentiate one individual from another, such as fingerprints, the retina or iris of the eye, or the patterns of an individual's voice.Through its use, financial institutions could reduce costs related to identity theft, while simultaneously assuring consumers that their financial assets are protected.

When Philip Swift responded to a classified ad for Fireman's Fund Insurance Co., little did he know how that decision would change his life.Swift, living at the time in Liverpool, England, accepted the offer to work for the Novato, Calif.-based carrier, but in the back of his mind he believed his stay in the United States would be short.

It's easy to define what manufacturers produce and sell. Toy makers make toys. Auto manufacturers make cars. Pharmaceutical companies make drugs. But what do insurance companies do?

When Florida Combined Life decided to become a primary player in the dental PPO and fee-for-service business in that state, it had two major challenges: an aggressive timeline and an inflexible claims system.The Jacksonville, Fla.-based subsidiary of Blue Cross Blue Shield of Florida had been offering dental coverage as an ancillary product to its health insurance offerings, and it had been paying dental claims through its health claims system. But that system was inflexible, and would not meet the company's future needs, says Charles Brody, dental division vice president at Florida Combined Life.

Five years ago, Security Insurance Co. was suffocating under the weight of paper files. The company's file room was packed to the point where the company had to place file racks in hallways, consuming office space that cost $20 per square foot.Space constraints weren't the only problems that the Alpharetta, Ga.-based carrier's paper filing system created. Call center representatives had to put customers on hold and ask a file room clerk to retrieve the caller's file just to answer routine questions. Moreover, only one person at a time could work on a customer's file during the underwriting process, a situation that didn't foster high worker productivity.

The expression "the sum of the parts is greater than the whole" has many tried-and-true applications. PwC Consulting is contributing its own technology-driven version of this axiom, and insurance carriers are in line to benefit.Last year, PwC Consulting, a business unit of New York-based PricewaterhouseCoopers LLP, unveiled an e-business solution for property/casualty insurers that the global management and consulting firm believes will alter how carriers invest in technology.

As it faced the unenviable task of selecting and then implementing a systems integration solution across its various business components, Cincinnati-based American Modern Insurance Group discovered a modern approach to an age-old problem.In late 2001, AMIG adopted a program known as the Virtual Insurance Community (VIC), the brainchild of PwC Consulting, a business unit of New York-based PricewaterhouseCoopers LLP. VIC is a pre-integrated, component-based e-business solution designed for processing insurance transactions.

In 1999, when PwC Consulting formulated the blueprint for its Virtual Insurance Community (VIC), one dynamic that drove the initiative was its ability to provide insurance carriers with a pre-integrated best-in-class technology solution.The global management and consulting firm, a business unit of New York-based PricewaterhouseCoopers LLP, developed VIC as a component-based e-business solution for property/casualty insurers-eventually to be offered to life, annuity and group health carriers. And while the Virtual Insurance Community offers best-of-breed solutions spanning a myriad of technology applications, carriers that adopt the program-via licensing or via an application service hosting model-will still be able to deploy various applications that they previously have built and mapped within their IT infrastructure.

As insurance carriers expand into financial services and provide multichannel access for customers, many agents are not going along with the new program.Both State Farm Mutual Automobile Insurance Co. and Allstate Insurance Co. were sued in November by their agent associations. The agent associations are claiming the carriers have breached their contracts with the agents by increasing agents' production quotas, reducing their commissions, coercing agencies to forward their phones to call centers, and selling insurance directly to customers over the Internet.

More than nine months after it was created, Wilmington, Del.-based Fusura Inc., a Web-based personal lines insurance agency formed by global insurance giants AIG, Kemper and Prudential, is finally preparing to go live.As it prepares to launch-expected to be no later than March 31-the consortium capitalizing the venture can't be accused of rolling out the program too hastily. Since its celebrated formation was revealed, Fusura has witnessed its share of tweaks and modifications-from putting a permanent executive team in place to choosing its technology platform.

With more than 20 years of IT experience in the insurance industry, June Drewry has a vast knowledge of technology. Nevertheless, she insists she is not a high-tech wizard.In fact, when she talks about her responsibilities as executive vice president and CIO for Chicago-based Aon Corp., she peppers her conversation more with relaxed chuckles than with dry techno-speak.

Millions of potential buyers are using the Web to shop for insurance.That's why carriers are reassessing how to use the Internet to build their brand.