Subject Root Tag

It's been a tumultuous year for Safeco Corp. In January, former CNA executive Mike McGavick was named Safeco's new president and CEO. In July, Michael LaRocco was appointed president and chief operating officer of the insurer's $2.6 billion personal insurance business. And in September, Yom Senegor, from Accenture, was named CIO.

What if you could determine when policyholders were considering switching to another carrier and then identify which of those customers were profitable enough to justify trying to keep them? And what if you could determine the effectiveness of a marketing campaign while it was in progress, changing your strategy before investing a lot of money?

Insurers such as Seattle-based Safeco Corp. and The Hartford Financial Services Group, Hartford, Conn., are providing Web-based tools for agents to target key prospects (see pg. 28). Many insurers are also using the Internet for target marketing by building portals for specific affinity groups.For example, The Prudential Company of America launched www.prufn.com for the affluent community; Farmers Insurance Group launched teachers.farmers.com; and Metropolitan Life Insurance Co. has a Web site for parents of children with special needs.

In its most basic form, Webster's dictionary defines "customer" as "one who buys goods and services." In many businesses across Corporate America, this definition-however vague-serves as a roadmap to a more holistic internally developed interpretation.

In its attempt to create an enterprisewide view of its customers, the numbers were stacked heavily against New York City-based MetLife Inc.: a customer base amassing 100 million customer records stored in more than 30 disparate back-office systems.Furthermore, MetLife has three vastly diverse organizations-a retail bank, a mutual fund company and a newly-acquired property/casualty insurer. Data is spread across five different lines of business-property/casualty insurance, banking, institutional, brokerage and mutual funds.

Web-to-host is a relatively simple approach that insurers often overlook as they scramble to build a Web presence for internal, business-to-business, and public-facing applications.However, many companies now realize that by adding browser access to existing back-end applications, they can quickly and adequately Web-enable mainframe and midrange applications.

Over the past four years, independent surveys that measure and project online insurance trends have delivered what's become a recurring diagnosis: When it comes to the functionality of their Web sites, carriers remain a step behind banks and brokerages.And while two new reports conclude that carriers have made strides in narrowing the Internet gap, the reports also highlight the industry's continued e-business shortcomings.

Life and health insurers to date have been slow to sell policies online. But within the next four years, carriers will sell $12.8 billion in life and health products on the Internet-up from $1.1 billion last year.That's the conclusion of a forecast released by IDC, a Framingham, Mass.-based technology research firm. The growth in online life and health insurance sales will be spurred by several factors, according to IDC.

Although insurers are just now wading into the Web-based small business insurance market, research indicates this approach has great potential to improve carriers' revenue streams.There are an estimated 5.7 million small businesses in the U.S. with annual revenues between $50,000 and $500,000, says Matthew Josefowicz, an analyst with New York-based Celent Communications. He is the author of a recent report, titled "Web-Enabling Small Business Insurance Policy Origination."

It began as a mail-order business in 1922, providing automobile insurance to U.S. military officers who moved often and could not get coverage from other carriers. Today, United Services Automobile Association, better known as USAA, ranks as one of the best companies in America for providing customer service.With 4.5 million customers and $62.5 billion in assets, USAA placed first as the most reputable financial services company in America in the Financial Services Reputation Quotient study conducted by Harris Interactive, American Banker (a Thomson Financial publication) and the Reputation Institute. USAA also recently received top awards in the life, auto and home insurance categories from readers of Worth magazine.

Many Web experts frown upon screen-scraping technology because, in Internet time, screen-scraping is a slow, cumbersome process. But Anne Castro, chief design architect at Blue Cross Blue Shield of South Carolina, doesn't buy into that argument.The service her company is providing on the Internet is not "a moment-in-time service," she says. "It's a file cabinet of all the business people have with us."

While recently examining data stored within one of its auto policy databases, executives with New York City-based Metropolitan Insurance Co. uncovered a troubling glitch. It was an irregularity that any seasoned IT troubleshooter would certainly have appreciated.

Allstate Insurance Co. has received nothing but kudos from analysts for the boldness and vision of its Good Hands Network-the name the Northbrook, Ill.-based carrier gave its integrated call center, Internet and agent sales strategy.But some agents don't like Allstate's multichannel strategy-especially the part that cost them their jobs. On August 1, 27 current and former agents filed a class-action lawsuit in federal district court in Philadelphia, charging Allstate with nine violations, including breach of contract, breach of fiduciary duty, intentional age discrimination and retaliation in violation of federal laws.

r some insurance carriers, the Year 2000 compliance aftershocks are still lingering. But one such carrier, Charlotte, N.C.-based Royal & SunAlliance USA, hopes a court ruling in July spells the last Y2K trembler it will have to absorb.A Delaware Superior Court dismissed a lawsuit filed in August 1999 by Unisys Corp. The Blue Bell, Pa.-based computer giant, which has a commercial general liability (CGL) policy through two Royal & SunAlliance co-insurers, sought to recover more than $35 million in Y2K expenses to bring its computer networks into compliance.

The "Good Hands" people want to grab a bigger share of their customers' wallets. Allstate Corp. plans on launching its long-anticipated Internet bank by September 30 with a host of retirement, savings and investment products.Initially, the Northbrook, Ill.-based company is training its 2,000 agents in California and 1,200 agents in New York to refer policyholders to the new bank, which recently received a full-service thrift charter from the Office of Thrift Supervision.

Allstate isn't the first carrier to combine insurance and virtual banking. In February 1998, Principal Mutual Life Insurance Co. opened Principal Bank, and in November 1998, State Farm Insurance Cos. launched State Farm Bank.Although both banks still limit their marketing efforts to current policyholders, they still have achieved sizable growth in the past year. Principal Bank now has 34,300 accounts and $975 million in assets. The bank also has $900 million in deposits from checking, savings and CDs, in addition to issuing some 23,000 Visa credit cards.

Mark Popolano compares the difference between being CIO and being chief technology officer at American International Group this way: As CTO, he was the navigator of technology; now he is the technology pilot."As CTO, you have to be very savvy to understand the nuances of technology," he explains. "The CIO has a greater responsibility across the organization to help steer the direction of technical processes."

Because they typically provide customers with unequivocally sound advice on investment strategies, securities brokers and other financial planners rarely have to respond to an implication known as caveat emptor, or "buyer beware."

Over the last two years, a number of Web sites have formed expressly targeted to brokers with expertise in the small-business insurance segment. One of the providers that has withstood the dot-com purge is BenefitMall.com, a Dallas-based online exchange for small-business employee group benefits plans.The provider, which saw its premium volume increase 40% last year, owes its success to a couple of strategies, chiefly the formulation of an internal executive management team that combines experience in both IT and insurance. With a proprietary rating and quoting engine in place, brokers can get quotes from multiple carriers and submit an application through BenefitMall in the format that a particular carrier requires. Brokers don't pay a fee to conduct business with BenefitMall, but carriers do-paying a commission based on premiums sold.

The myriad complexities that comprise reinsurance lines often make it difficult to conduct business via the Web, industry observers say. However, buying and selling reinsurance offline is plagued by its own deficiencies- notably excess paper processing and other accountability issues surrounding the process.Providers of independent Web-based reinsurance exchanges believe they have a more efficient process of exchanging risk globally.