Compliance

Insurance industry experts will argue for a long time about exactly how much the Sarbanes-Oxley Act (SOX) has cost the insurance industry. They probably can agree, however, that those costs are significant.Carriers incur the costs making sure they comply with the act, which aims to make corporate executives responsible for the accuracy of their financial statements and for the internal controls that minimize errors and reduce fraud.

SITE SELLS POLICIES ON GROWNUP TOYSMarkel American Insurance Co., Waukesha, Wis., launched a Web site that provides a single access point to customers seeking to insure motorcycles, boats, personal watercraft and ATV.

AGENTS AND BROKERS ADOPT NEW RPOST E-MAIL SERVICELos Angeles-based RPost U.S. Inc. says independent insurance agencies and brokerages are adopting RPost as a service platform for outbound e-mail. Confronted with errors and omissions (E&O) liability exposures, agents and brokers need technology that enables them to optimize electronic communications while minimizing risk. By shoring up the security gap, RPost Registered E-Mail messages offer speed, security, accountability and personal liability protection in a cost-effective solution that can be used for an average cost of 59 cents per message. The company's services provide the e-mail sender with legally valid evidence of what e-mail content and attachments were sent and received, by whom and when.

MASSMUTUAL UPGRADES PRODUCT MACHINE SOFTWAREThe disability income insurance area of Massachusetts Mutual Life Insurance Co. (MassMutual), Springfield, Mass., upgraded to version 3.1 of Product Machine, a set of tools designed to enable users to build, design and publish products.

Records and information are at the core of every transaction undertaken by any organization. Any inadequacy in this area - including noncompliance with regulations such as the Sarbanes-Oxley Act - can threaten an organization's ability to conduct business.Still, many organizations lack effective policies and procedures for systematic control of recorded information and, as a result, risk legal liability and extensive penalties for non-compliance with record-keeping regulations.

Hartford, Conn. - The surety business has recovered from a slump that began with the 2001 recession, according to a new study by Conning Research and Consulting Inc. "The combined ratio climbed more than 40 points and stayed there for the next three years," says Mark Jablonowski, an analyst at Conning, which has headquarters in Hartford. "While the recession and tightening credit resulted in skyrocketing losses, the property-casualty underwriting cycle also contributed to the problem." Those views are examined in a study called "The Surety Market: Taking Care of Business." It's Conning's first analysis of the surety segment, a business the company says has iinfluence well beyond its size because of its importance to construction and regulatory compliance. According to the study, a huge increase in losses during the 2001 to 2003 period wasn't just from claims reported but also from claims that developed badly and a falloff in recoveries and other claims mitigation, says Stephan Christiansen, Conning director of research. The situation turned round in 2004 and 2005, Christiansen observes, adding that 2006 showed continued improvement and the future looks good, too. Capacity is returning to the market but with a renewed appreciation for underwriting discipline, says Christiansen. "That new-found discipline, along with attention to automation and technology [that is]driving cost control," he says, "lead us to a positive forecast for the surety line over the next few years, with premium growing at least as fast as GDP." Source: Conning Research and Consulting Inc.

Rochester, N.Y. – Many Americans are satisfied with how their personal health information is used, but a substantial number express reservations about the confidentiality and security of their health data, a new survey shows.

Washington, D.C. – America needs a public-private partnership to protect families from a devastating, massive hurricane or earthquake, the head of a coalition that includes insurers said in testimony this week before Congress. Such catastrophes have dulled the industry’s appetite for insuring against such events, said another witness, a representative of an agents’ and brokers’ association.

Washington - The National Association of Professional Insurance Agents (PIA) has asked its members to challenge the U.S. Chamber of Commerce’s recent endorsement of optional federal charters for insurers.

London - Senior executives and risk professionals consider data loss the most significant threat and key issue to address in operational risk management planning, according to a global risk briefing report conducted by the Economist Intelligence Unit (EIU) and sponsored by London-based ACE European Group Ltd. (ACE).More than 40% of the 181 respondents said their organization focuses more on loss of data than other issues—including systems failure, human error and even natural disasters.

New York - Most corporate board members talk the talk about the importance of information technology to their company, but fewer are taking actions to align IT with overall corporate strategy. This is the overarching message coming out of a new survey, "The Board and Information Technology Strategies," by Deloitte Consulting LLP, a subsidiary of Deloitte & Touche USA LLP, a New York professional services provider, and Corporate Board Member magazine. The survey respondents also suggested a distinct and positive correlation between the attention paid to IT and corporate performance. The survey was conducted in the fall of 2006 and involved more than 450 directors of publicly traded companies with revenues of more than $1 billion. Financial services companies represented 19% of the mix, 7% in insurance. The directors responded to questions ranging from how often their boards discuss IT strategy to how they think IT has affected their companies' ability to effectively meet their business objectives. A significant gap does exist between the emphasis the board seems to place on IT and the things they are doing to address it, Larry Danielson, a principal with Deloitte Consulting who focuses primarily on the insurance industry, told Insurance Networking News. "This indicative of an insurance company board's comfort zone," says Danielson. "Boards are seasoned individuals who are asked to apply judgment on many different topics. In this regard, technology is a misnomer, because it's often thought of in the highly technical arena of software and hardware, when it's really about overall strategy, business change and improvement." According to the Deloitte & Touche report, directors and senior executives blame this gap on the number of other things that have been hitting the insurance company board's agenda, namely regulatory compliance and top line growth. "Top line growth varies by segment," says Danielson, "but clearly the life area faces some hurdles. With the influx of Baby Boomers seeking better retirement returns, life insurers are struggling with what to do, because their infrastructures are not designed in similar fashion to a typical investment firm. An investment company's business model is such that they can see every day where they stand financially." Some of the key findings and trends from the survey include: * Boards are not involved to the degree they believe they should be in IT; directors did not indicate a commensurate level of activity with the level of recognition of IT's importance.* Ten percent of boards relegate IT matters to a board committee. * Only 11% of boards discuss IT at every meeting. * Fourteen percent of boards are "completely and actively involved" in IT strategy. * Directors who report a higher level of involvement in IT matters have a better understanding of IT's importance to their business and their performance. * Directors report that effectiveness in executing on IT strategy correlates to better financial performance. Furthermore, the survey found that even though 22% of the respondents blame various aspects of IT strategy for their companies' inability to achieve its goals, 52% say their board will be spending no more time on IT over the next three years than it does now. The findings also indicated that when the CEO leads the discussion, boards are more completely and actively involved in IT. "In the not so distant old days, technology was more of a support system than an actual business strategy. Today technology and IT are key business strategies and typically are accompanied by capital budgets reaching as high as a billion dollars in larger companies," said TK Kerstetter, president and CEO of Corporate Board Member, a Brentwood, Tenn. publisher. "The days of not understanding IT in the boardroom are gone, and I expect we will see more CIOs and CTOs invited to serve as board members in the years ahead." According to Danielson, this may not be the ultimate solution for insurance companies, but it's a start. "It's important to get senior people to talk about technology," he says, "and as an adjunct, board members need to be better educated. They need a better understanding on lead-time for IT project completion, potential technology pitfalls and ultimate benefits. It's really about managing expectations upward." Source: Deloitte & Touche USA LLP

An insurance trade group has joined a chorus of New York officials in asking Congress to renew the Terrorism Risk Insurance Act, which is set to expire at the end of this year.

Washington - Insurers are urging Congress to preserve a federal anti-trust exemption granted to the industry in 1945. The exemption has come under scrutiny by legislators in the aftermath of Hurricane Katrina, insurance trade associations say.

DIRECT MARKETING TOOL ENHANCEDMelissa Data announced the addition of multi-platform capabilities to the Canadian Address Object, a complementary product to the Rancho Santa Margarita, Calif. company's Data Quality Suite, a direct-marketing tool that verifies and corrects address, phone and contact data.

With so much business conducted via the Internet, executives at Winged Keel Group Inc. decided the staff had to save each-and-every e-mail message, simply to keep the boutique life insurance and long-term disability firm on the right track."We are a technologically advanced company, so a lot of our business was being conducted via e-mail," says Pramod Navani, managing director of operations at the New York-based insurer. "A few years ago, our company instituted a rule that no one was allowed to delete e-mails."

STRATEGIC GOALS GUIDE IT SPENDINGSenior insurance IT executives are making strategic investments, but budgets and staff size are generally flat or growing only modestly.

INSURER AUTOMATES INTERNAL CONTROLSPhysicians Mutual, based in Omaha, Neb., selected OpenPages FCM for its financial controls management initiatives. OpenPages FCM is an enterprise financial controls management solution designed to reduce time and resource costs associated with ongoing financial reporting regulations. It is expected to reduce Physician Mutual's time and costs associated with efforts to comply with changes to National Association of Insurance Companies financial reporting regulations. "OpenPages allows us to automate our ongoing assessment and monitoring of internal controls and ensure that compliance initiatives align with our business strategy," says Barbara Bergmeier, senior vice president of internal audit, Physicians Mutual.

Washington – Republican House Minority Whip Roy Blunt of Missouri is scheduled to address the Independent Insurance Agents & Brokers (the Big “I”) Legislative Conference & Convention in April.

Kansas City, Mo. - The National Association of Insurance Commissioners (NAIC) Property and Casualty Insurance (C) Committee's Catastrophe Insurance Working Group will evaluate modeling for multi-state funding of catastrophes such as hurricanes or earthquakes, reports NAIC. The agreement came out of a meeting to discuss catastrophe preparedness and the potential development of a multi-state catastrophe fund.

New York - A group of companies from around the world, including Swiss Re, Allianz, ING, Marsh & McLennan Companies and Munich Re, endorsed a statement for affecting climate change at the levels of policy and industry, particularly in regard to creating sustainable energy systems necessary for achieving economic growth.