Subject Root Tag

On November 13, 1999-the day after the passage of The Financial Services Modernization Act-insurance companies formed steering committees, project teams and task groups to determine what work needed to be done to comply with Title V of the Gramm-Leach-Bliley (GLB) legislation. Title V requires financial services institutions to establish privacy policies and deliver notices by July 1, 2001 to their customers informing them of how the company uses and shares nonpublic personal information. If a company shares that information with nonaffiliated third parties for marketing purposes, customers must be able to "opt-out" of such sharing. Thereafter, companies must distribute an annual privacy notice to their customers.

As a provider of group pension programs, New York-based Guardian Life Insurance Co. of America understands that when it comes to mutual fund policyholders, many have an insatiable desire for data that will help them maximize their investments.Unlike typically static health and life coverage, 401(k) plan participants regularly juggle fund portfolios on a weekly or monthly basis. Even if they don't engage in fund reallocation, group pension customers are inveterate monitors of their fund balances-many doing so on a daily basis.

As the July 1 deadline nears, insurers have developed and begun to distribute their privacy policies to customers, but most companies in general haven't thought about privacy as a component of customer relationship management (CRM), industry observers say."No one is looking at privacy from the perspective of how can we establish a value proposition in which the customers will say, 'yes, please share my information,'" says Peter Reid, privacy director at Fiderus, a Research Triangle, N.C.-based security and privacy consulting firm. Privacy can be good for business-as opposed to something that is being legislated, he says.

Because their fortunes hinge significantly on fickle Mother Nature-such as natural disasters and other weather-related occurrences-farmers are meticulous about their insurance coverage.

Extensible Markup Language, or XML, has received a whirlwind of hype since its creation in 1998, promising the ultimate universal format for all exchanges of company data.But to seasoned technology experts, this promise was initially made more than a decade ago with EDI, which also portended massive efficiencies and savings in business-to-business transactions.

Last year, the Connecticut FAIR plan purchased a software package to create, print and mail policies for property coverage. But that turned into a near-nightmarish experience of extensive problems with setup and testing of the software and lengthy delays waiting for technical issues to be resolved.

Making good on its promise to vigorously defend a lawsuit filed Feb. 20 by eHealth-Insurance Services Inc., InsWeb Corp. filed a countersuit March 22 in U.S. District Court, Northern District of California, San Jose.InsWeb is denying allegations made by eHealthInsurance that InsWeb sent a considerable number of illegitimate referrals to a co-branded Web site built and maintained by eHealthInsurance (see "eHealthInsurance Sues InsWeb," April).

During MetLife Inc.'s arduous process last year of converting to a public company, CEO Robert Benmosche told Wall Street investors that the New York-based company would increase its use of technology to reduce expenses and its non-agent workforce by 5%.

After several years of sitting on the sidelines, insurance carriers are now getting up to speed in selling products over the Internet. However, dealing with the state-based regulatory system, which requires carriers to jump through multiple hoops to engage in e-commerce on a national basis, threatens to slow their efforts to a crawl.

Darwin's theory of natural selection proclaims that the strong species will thrive, while the weak will vanish. It's not unlike carriers' Web sites, where the best ones may have the inside track on survival.In the mid-1990s, when insurance carriers were developing corporate Web sites, many discovered they could do little wrong in the eyes of their online constituency-particularly casual users with modest expectations.

When Allstate made its bold move to direct sales, the Northbrook, Ill.-based carrier handed responsibility for the endeavor to one of its most-experienced executives. Steven Groot, an actuary and a lawyer, has been rising through the ranks of Allstate for more than three decades.

Despite huge corporate investments in personal computers, electronic mail and document scanners, the paperless workplace is still a pipe dream. Indeed, the insurance industry in particular is drowning in a white sea of computer-generated documents, customer correspondence and faxes.

The insurance industry was one of the last to open its private gates to the Internet. Apprehension about exposing confidential customer information and other proprietary data to the outside world prevented insurance companies from jumping too quickly on the e-business bandwagon.

The financial success or failure of a property & casualty carrier largely depends on the company's ability to manage risk. Based on sophisticated actuarial models, carriers can formulate a risk model for virtually every type of physical risk exposure, and through these assumptions decide whether the risk is worth bearing.

Centralizing IT by creating a separate company is a strategy that USAA, Prudential and Kemper have pursued to bring greater financial accountability to their IT operations.When USAA created its technology subsidiary in January 1998, the primary objective for the standalone, for-profit company was to introduce financial discipline to the San Antonio-based organization's procurement of information technology.

Like many other technology initiatives, insurance carriers took their cue for data warehousing from financial institutions. Several years ago, banks began to dabble in warehousing campaigns geared to enhance strategy.As many carriers now begin to explore the marketing of bank products and services, they too are faced with the task of improving their cross-selling abilities via warehousing. But if history serves as an indication, they have their work cut out for them.

Insurance companies, banks and brokerages are all proceeding aggressively with their strategies to move into each others' territories and provide more financial products to their customers. Between Jan. 1, 1997 and Nov. 30, 2000, 45 insurers had filed for thrift charters with the Office of Thrift Supervision (OTS). And banks are gobbling up insurance agencies at a rapid rate.

Losses and loss adjustment expenses account for 75% of automobile insurers' total costs. Yet carriers invested only $2.5 billion in claims-related technologies in 1999-less than 1% of industrywide premiums.

In preparation for a corporate strategy meeting, a claims executive for Cleveland-based Ohio Bureau of Workers' Compensation (BWC) recently embarked on a data-finding mission. The objective: generate specific detail on all company-wide workers' compensation claims associated with railroad-related back injuries filed in Cleveland over a two-year period.Drilling down this deep for information would enable the executive to pinpoint and correct some of the inefficiencies associated with these types of claims. Once exposed, BWC could use the data to reduce its policy loss ratio and pass the savings along to policyholders.

To the casual observer, data warehousing may appear to be strictly a technology initiative. In reality, it's an undertaking that demands a close synergy between a company's business and IT leaders.The inability to realize this has doomed many warehousing ventures to obsolescence in the insurance industry. "Business leaders must define the data needs of the organization," says Jack Gohsler, senior vice president for Hartford, Conn.-based Conning & Co. "The fact that IT and business leaders have very different skill sets and points of view has made such partnerships very challenging for many companies."