Compliance

Say the word "conversion" in a roomful of insurance technology professionals, and you'll likely hear a cacophony of moans, groans and expletives.That's because converting policy data from one administration system to another is tedious, stressful, time-consuming and costly.

BUSINESS SOFTWARE DEVELOPMENT SERVICES FOR ATLANTICNew York-based Atlantic Mutual Insurance Co. chose MFX to provide business software development, maintenance and enhancement services from MFX's data center facility in Roanoke, Va. MFX hired the application support staff previously supporting Atlantic Mutual's proprietary business software applications. The new team will support Atlantic Mutual, as well as gain knowledge and exposure to MFX's proprietary products including WriteNow, ClaimsAssure and RiskVault. Atlantic Mutual's proprietary business software applications will continue to be owned by Atlantic Mutual.

Washington - Congressman Ed Royce (R-CA), a senior member of the House Financial Services Committee, introduced legislation that would create an optional federal charter regulatory regime for life and property/casualty insurance providers. The National Insurance Act of 2006, is companion legislation to S.2509, which was authored by Senators John Sununu (R-NH) and Tim Johnson (D-SD)."The National Insurance Act would create a federal regulatory agency within the Treasury Department; however, it would leave the current state regulatory system in place. An insurance provider could choose to be regulated by the 50 states or by the Office of National Insurance," says Royce. "This concept is not new--the banking system has lived under such a framework for much of our nation's history."

Boston - Liberty Mutual Group enhanced its online workers compensation claims management to provide faster service and better outcomes. The Boston-based insurer provides those responsible for managing a claim instant online access to all of the related documents, while protecting the privacy of confidential medical information."We made a great claims management system even better by slashing the time required for documents from outside resources--such as medical reports, bills and even digital photos--to be available in the system," explains Kevin Carson, who manages the new process. "What took days can now happen in seconds. Outside partners can now send electronic versions of these reports, which instantly become part of our system. Other providers still send paper documents, which we now scan into the system within a day of arriving at Liberty Mutual."

Boston – A new probabilistic model designed to help insurers better understand the location of their exposures relative to high risk areas and to estimate potential losses from wildfires is now available from AIR Worldwide Corp., a Boston risk modeling company. The U.S. Wildfire Model is designed to help insurers, reinsurers, and intermediaries manage wildfire risk both for individual policies and entire portfolios of properties in California. Nationally, wildfires have cost the insurance industry more than $5 billion since 1980 with a majority of the losses occurring in California. The 2003 Cedar and Old wildfires in Southern California, for example, cost insurers more than $2 billion. Together, the fires burned more than 750,000 acres, destroyed 3,700 homes and resulted in the deaths of 24 people. In 2006, more than 8.7 million acres have burned in Western states to date, equaling the acreage burned in all of 2005, one of the worst years on record. “The growth in insured losses from wildfires is a result of the same broad demographic trend we’ve observed with respect to other perils—namely, increasing property development in high risk areas,” said Dr. Jayanta Guin, vice president of research and modeling at AIR. “In the case of wildfires, we are witnessing property growth in the buffer zone between wildlands and the urban environment. According to U.S. Fire Administration statistics, nearly 40 percent of new home development in the Western United States is occurring in this wildland-urban interface, putting more insured property at risk every year.” Insured losses from wildfires are influenced by factors such as local fuels, topography, weather, and the vulnerability of affected structures. AIR’s model employs high-resolution fuel (vegetation), topographic, and weather data. The model incorporates 13 burnable fuel types at 30-meter resolution accounting for variations in moisture content, fuel loading, and horizontal continuity. Since fire spread is influenced by topography, AIR has incorporated high-resolution USGS digital elevation data. The model also considers the effect of wind speed and direction, including the Santa Ana winds in Southern California and the Diablo winds in the northern part of the state. The AIR model also estimates the mitigating impact of firebreaks created in the course of fire suppression activities, as well as the exacerbating impact of impaired road access. The flammability of roof and siding materials is the primary determinant of a structures’ vulnerability to fire. The AIR model accounts for a wide range of residential and commercial constructions and takes into account mitigating factors, such as fire resistant roofing and siding materials, to build an estimate of damage and loss. AIR’s probabilistic wildfire model is based on a robust stochastic catalog of potential future events that provides insurers with full probability distributions of loss and the ability to generate loss costs. The model is available now for AIR’s CLASIC/2, CATStation, and CATRADER catastrophe risk management systems to analyze exposures in California. Future releases of the model will expand its coverage to other Western states. Source: AIR Worldwide Corp.

London - Eighty percent of major European insurance companies have begun their Solvency II implementation program, and, two-thirds (61%) see it as a means to improve all aspects of their risk management across the whole business, according to London-based Ernst & Young Global Ltd. However, while the benefits are welcomed, there is still much work to be done."The 2006 Solvency II Readiness Survey: Readiness and Beyond," published by Ernst & Young's Global Insurance Center, interviewed senior managers with responsibility for Solvency II in 54 of Europe's largest insurers, spread across 16 countries, with an average asset size of 110 billion Euros.

Boston - Markets in Financial Instruments Directive (MiFID), a European Union (EU) directive going into effect by November 2007, may affect the conduct of business and approach to operational risk of insurers that operate within the EU and who either provide or procure outsourced services.The directive will require that U.S. financial institutions—including insurers--operating within the EU that outsource an operational function to:

Silver Spring, Md. - Companies have a long way to go when it comes to determining their organizations' technology strategy to meet compliance requirements, according to a survey conducted in June of 741 end users from number of vertical industries, including banking, finance, healthcare and insurance. Partly because of media "over-emphasis" on Sarbanes-Oxley and HIPAA, end users have a "disturbingly narrow view" of compliance as a broader issue and what it means for their organizations, says AIIM, a Silver Spring, Md., enterprise content management association and author of the report.In its analysis, AIIM indicates that survey respondents have an intuitive feel that "something" is wrong within their organizations relative to managing electronic information, but are having a difficult time mounting a systematic and disciplined approach to meet the challenge.

New York - American International Group, Inc. (AIG) today named Anastasia Kelly executive vice president, general counsel, and senior regulatory and compliance officer.

Chicago - Aon Consulting, the human capital consulting organization of Chicago-based Aon Corp., report that Anne Kemp and Kathleen Skapik have joined the electronic discovery business unit. This unit is part of the IT Risk Consulting group, a division of the company's Financial Advisory and Litigation Consulting Services practice.

Fort Collins, Colo.- Colorado State University’s hurricane forecasters now predict this year's hurricane activity "will be slightly below the long-term," according to a revised forecast issued Friday.

Many publicly traded companies are in their third year of dealing with the Sarbanes-Oxley Act (SOX)--the law that makes corporate executives responsible for the accuracy of their financial statements and for the internal controls that minimize errors and reduce fraud.After going through the rigorous process of documenting and testing those controls, such as the segregation of duties and appropriate access to financial systems, many of these companies-including insurers-spent far more on the effort than they ever imagined.

STUDY SHOWS POOR USABILITY OF WEB HOME PAGESAccording to a recent study by Oak Park, Ill.-based Vox Inc., home page usability of many insurance companies isn't up to snuff. The study analyzed the positioning of key customer and user elements, such as insurance quote and "find an agent" functions. Each company was given a rating based on a set of usability and benchmark criteria. One exception to the overall findings is 21st Century Insurance Co., Woodland Hills, Calif., which recently redesigned its home page. The study, conducted in the first quarter, reviewed content and where it was positioned on the page, comparing 12 insurance providers: State Farm, Allstate, Progressive, Geico, American Family, Liberty, 21st Century, Country Financial, AIG, Nationwide, AAA Chicago and USAA.

WEB-BASED POLICY PROCESSINGAgent X Press, a suite of processing capabilities, is designed to enable small insurers to support their agents and MGAs with Web-based policy processing. The suite from Wyncote, Pa.-based IDP Inc. is available to new and existing clients of IDP's VISION 21 policy management system. Agent X Press' functionality includes online policy inquiry for billing and claims information; and quoting, application submission and issuance. Agents enter a customer's name or unique identification data, such as policy number. They can then obtain the status of a bill or a claim, or obtain an accurate quote, within seconds, according to IDP. Subsequent to providing a quote, Agent X Press will permit the agent to electronically submit the application to further speed the process.

Palo Alto, Calif. - Nearly two-thirds of security executives believe they have no way to prevent a data breach, according to research by the Ponemon Institute, an Elk Rapids, Mich.-based privacy and information management research firm. What's more, most respondents believe their organizations lack the accountability and resources necessary to enforce data security policy compliance.The survey report – "National Survey on the Detection and Prevention of Data Breaches" – was sponsored by Palo Alto, Calif.-based PortAuthority Technologies Inc. and examines the responses of 853 randomly selected, U.S.-based information security professionals to questions related to data protection and prevention within their organizations.

Boston - Dozens of new insurance activities, such as 'green' building credits and incentives for investing in renewable energy, are emerging to tackle the causes of climate change and rising weather-related losses in the U.S. and globally, according to a new report issued this week by the Boston-based Ceres investor coalition. But the report also states that more insurance companies need to be offering similar services to minimize losses and make the most of business opportunities related to climate change.

Washington, D.C. - As the country approaches the first anniversary of Hurricane Katrina next week, the American Insurance Association (AIA) and ProtectingAmerica.org were at odds as to how best to proceed with a national catastrophe agenda.

Needham, Mass. - In the wake of 2005--the worst year on record for insured catastrophe damage in the United States with losses estimated at $56.8 billion--the federal government, insurance carriers, and the general public are coming to a point of convergence about the need to rethink catastrophe management beyond the much publicized issues around hurricanes, according to new research from TowerGroup.In a report titled "Property and Casualty Insurance: Convergence in Catastrophe," the research and advisory firm finds that without a concerted effort by all parties to support a holistic solution to catastrophe management, the dire predictions of insolvency in the insurance sector and general economic upheaval across the United States may come to fruition.

New York - Guy Carpenter & Company Inc., a global risk and reinsurance specialist and part of the Marsh & McLennan Cos. has published a report, titled, "Nanotechnology: The Plastics of the 21st Century?," which provides an overview of the emerging science, its potential benefits for the global economy, and associated risks and implications for the insurance industry.A team of technology, environmental and casualty specialty professionals from Guy Carpenter and Dr. Robert Blaunstein, national director of loss control and underwriting manager for American Safety Insurance Co., prepared the report.

Kansas City, Mo. - The Interstate Insurance Product Regulation Commission added another state to its growing list of members, as Massachusetts became the 28th state to sign the Interstate Compact. Gov. Mitt Romney signed legislation into law today that allows Massachusetts to become a member of the Commission.Currently, 28 states have joined the Interstate Insurance Product Regulation Commission. The compacting states are Alaska, Colorado, Georgia, Hawaii, Idaho, Indiana, Iowa, Kansas, Kentucky, Maine, Maryland, Massachusetts, Minnesota, Nebraska, New Hampshire, North Carolina, Ohio, Oklahoma, Pennsylvania, Puerto Rico, Rhode Island, Texas, Utah, Vermont, Virginia, Washington, West Virginia and Wyoming.