Core systems

Tokyo - Most Japanese insurance companies are now pursuing new customer and product strategies due to regulatory reforms that are opening the banking sector as a distribution channel for insurance products, according to an Accenture survey of senior executives at one-third of the insurance companies operating in Japan.

Zurich, Switzerland – Swiss Re entered into an agreement that gives it the right to sell the new business operations of Tomorrow, the recently re-branded GE Life to LV= (formerly known as Liverpool Victoria). Subject to the exercise of the appropriate option, and satisfaction of various regulatory and other conditions, the sale is expected to be completed in December 2007.

London - Regulatory overkill is the greatest risk facing the global insurance industry, according to London-based Centre for the Study of Financial Information's (CSFI) latest Banana Skins survey, in association with PricewaterhouseCoopers (PwC) LLP, New York.

North Richland Hills, Texas - Katherine "Kay" Phillips, who joined HealthMarkets in July 2006 as vice president and deputy compliance officer—Corporate Legal, was promoted to chief compliance officer and associate counsel. In her new capacity, Phillips will have responsibility for and direct compliance programs for North Richland Hills, Texas-based HealthMarkets.

Boston - John Hancock reports that it has enhanced its JH Illustrator software system, giving producers the ability to complete life insurance applications electronically. The company, which formulated this option based on building on an application wizard added to the software system last year, reports that, except for the producer and client's signature, it has essentially eliminated all handwriting from the application process. "Life insurance applications, especially at the higher end of the market, are complex, requiring numerous forms and a great deal of information," said Naveed Irshad, vice president of product management, John Hancock Life Insurance, a wholly-owned subsidiary of Canada-based Manulife Financial Corp. "Historically, much of this information has been filled in by hand. It was a time consuming task that we have all but eliminated. The only handwriting producers and customers will need to do is adding their John Hancock when they sign the application." He said John Hancock is committed to ensuring that doing business with the carrier is as easy and efficient as possible for producers and their clients. "Being able to enter data once by computer and have it pre-populate the rest of the application and then being able to type in any additional information will be an enormous time saver for producers," Mr. Irshad said, noting that the company is committed to additional investments to improve producer communications. After producers insert information in JH Illustrator for a policy illustration, this information automatically populates the appropriate fields on the life insurance application. The system also pre-selects and pre-fills supplemental forms that need to be included with the application. Once the forms are pre-filled, producers are prompted to save the application on their computer and fill in additional required information based on the case input directly within JH Illustrator. Unlike paper applications where the client needs to initial any changes, the enhancements let producers make and save changes neatly and quickly. In addition, because producers type in the information, the application that producers print out for the client's signature will be far easier to read. JH Illustrator also now includes an asset allocation option that allows producers to include a client's responses from a risk tolerance questionnaire and generates the appropriate asset allocation for the client's risk tolerance level and time horizon. Sources: John Hancock Financial Services, PRNewswire

Orlando, Fla. – More than 2,300 attendees gathered in Orlando this week for the ACORD/LOMA 2007 Forum. Since the two organizations presented its first joint forum four years ago, the insurance industry has moved at a faster clip, with technologies such as Service Oriented Architecture, business process management and straight-though processing taking center stage. The show's theme, "Identify, Innovate, Inspire," was evident throughout the conference, highlighted by topics presented in more than 80 sessions over the three-day conference. Outside of session time, traffic was brisk in the exhibit hall, where more than 180 solution providers demonstrated their wares. Greg Maciag, CEO of ACORD, told members of the insurance industry's official standards body that it has never been more critical to get everyone onboard as to the value standards play in the industry's success. "True competitive advantage is available to those who break down silos and barriers in order to enjoy the cost and time savings inherent in standards' use," he said. During the conference, LOMA, which claims 1,200 members in the life, health and other financial services sectors, launched its Corporate Learning Solutions Practice, a program designed to provide members with updates on solutions such as online courses and certificate programs specifically geared toward their professional needs. On Monday, May 21, Insurance Networking News, a SourceMedia Company, and Financial Insights (an IDC Company) released the results of the 2007 InsureTopTech awards to a standing-room only crowd outside the exhibit hall. As an official ranking of top solution providers based on an industry-wide poll of insurers, InsureTopTech is being called the "voice of the market." Several in attendance remarked that it seemed by design that the InsureTopTech awards followed the "Identify, Innovate, Inspire" theme of the conference. During her opening remarks, Insurance Networking News' editor in chief Pat Speer explained the significance of the awards. "The fact is, in a world in which the technology vendor community is shifting and contracting, insurers do have options, and they can use this vendor ranking to make well-informed buying decisions. Our readers who voted in this important program extended their voices in a chorus, making it possible for insurers to do just that." The overall winner, Guidewire, San Mateo, Calif., took home awards in five categories (see below for all categories and related winners). Most Adds Value1. Guidewire2. Sircon3. Hyland Software Up-and-Coming 1. Guidewire2. Hyland Software3. CSC Keep the Business Operating1. Guidewire2. CSC3. IBM Keep Insurer Informed Through Analytics1. Business Objects, Cognos (tied)2. IBM3. SAS Help Maintain Financials1. Peoplesoft (Oracle)2. Fiserv3. CSC Help Develop / Enhance Products1. Hyland Software2. Guidewire3. IBM Help Provide Quality Customer Care1. Guidewire2. Hyland Software3. AT&T, Avaya, Sircon (tied) Optimize Workflow and BPM1. Hyland Software2. IBM, ImageRight (tied)3. Ravello Other Areas (middleware, system integration, outsourcing, hardware)1. IBM2. HP3. Oracle, Dell (tied) The Identify, Innovate, Inspire, theme was also prominent during the Tuesday, May 22 CIO Roundtable general session, moderated by Maciag, who was joined on the stage by Ann Purr, LOMA's second vice president, information management; Saad Ayub, chief information officer for sales and service applications at The Hartford; Jeff Carlson, senior vice president, CIO for the Domestic Life Companies of AIG; Paul Fox, CIO, Guy Carpenter; and Ursuline Foley, senior vice president and CIO, XL Reinsurance. Maciag presented a number of challenging questions to the group, but received the most passionate responses to the question: do vendors understand our business, or do carriers need to do a better job of explaining their requirements to them? "They are getting better," said Carlson. "The days of us looking at a monolithic application are over. We are in a component world now and vendors recognize this." Foley maintained that vendors face a dilemma, especially in the life insurance area. "They are tight with our users' groups," she said. "They need to respond to users on a day to day basis but also look at taking the platform further. To a large degree, [vendors] are losing an opportunity. They need to provide more service oriented architecture components for the future." For more information about the ACORD/LOMA 2007 Forum, please visit www.acord.org. Sources: ACORD, INN

New York - Three-quarters of consumers are very satisfied with the service provided by their insurance agents and remain committed to working with them in the future, according to a new survey of 1,000 American consumers commissioned by IBM.U.S. consumers want personalized service and human interaction from their insurance providers, says the survey, which comes at a time when agent-based carriers are facing increased competition by direct channels and direct-only insurance carriers.

Oakbrook Terrace, Ill. - The Computing Technology Industry Association (CompTIA), a provider of vendor-neutral certifications for technology professionals, announced that five more companies in the printing and document imaging business are supporting development of a professional certification for the industry’s technicians.

NEEDHAM, Mass. - TowerGroup has picked 22-year insurance industry veteran David West to lead the firm's Insurance practice.

Stamford, Conn. - Agents claim time savings of more than 50% when carriers provide industry-standard, real-time solutions for processing transactions, such as quoting, billing and claim inquiries, loss runs, and policy views, according to a survey by a software vendor.

Johnston, R.I. - Financial executives at the world's largest companies expect the severity of their most prevalent business risks to remain constant or intensify through 2009, according to the "Managing Business Risk Through 2009 and Beyond" study commissioned by commercial and industrial property insurer FM Global, Johnston, R.I. Executives identified the top three biggest threats to their organizations' revenue as competition, followed closely by supply chain disruption and property-related risks. The study also reveals a range of emerging risks that, while not among their primary concerns today, executives say could pose challenges in the years ahead. The study findings include the perspectives of more than 500 financial executives in North America and Europe-including CFOs and treasurers-who work for companies with at least US$500 million or more in annual revenue. Among the key findings:-- Of financial executives in the study, 62% expect risk from competition to increase through 2009, while only 4% expect it to decrease. -- Nearly one-quarter of financial executives expect supply chain risk to increase through 2009, while only 8% expect it to decrease. -- The top five emerging threats for corporations include changes in competition, government and regulatory developments, pricing volatility, variable client demand and political threats. --In the years ahead, finding enough time, money and people will be the biggest challenge to implementing a strong risk management program, said 56% of financial executives. -- More than one-third of financial executives expect a significant challenge in getting senior management to make risk management a top priority. -- Attitudes about managing business risk vary significantly among financial executives in France, Germany, North America and the United Kingdom. Consequences of Risk "This year's study results are a forceful reminder that managing business risk is a continuous, dynamic process, and not something a company can afford to be complacent about," said Ruud Bosman, executive vice president at FM Global. "Successful organizations proactively identify and address the threats they face today, while never losing sight of emerging risk on the horizon." More than one-half of the financial executives warn that a disruption to their top revenue driver can mean a loss of competitiveness, which can translate into both a loss of market share and reduction in their company's valuation. Additionally, almost one-quarter of executives report such a disruption could result in employee layoffs and/or an adverse impact on the local economy. Other top potential consequences executives cite include having to exit a line of business, undergo leadership changes, witness their company's credit rating downgraded, or face regulatory scrutiny or legal action. "As the financial executives interviewed for this study warn, the price of a major business disruption can far outweigh the cost of effective risk management," says Bosman. "Organizations that may be tempted to shortchange their risk management efforts face potential consequences ranging from the severe-a loss of competitiveness-to the catastrophic-having to cease operations altogether." Differing Country Views While financial executives in Europe and North America share many of the same concerns about the state of business risk, the study reveals a number of significant differences between the attitudes of executives based in the United Kingdom, and those of senior management in France, Germany, and the United States and Canada. For example: -- A higher percentage of North America-based financial executives are concerned about risks related to supply chain and property than their counterparts in Europe, who tend to focus more on risk related to competition. -- On average, 59% of financial executives say a loss of competitiveness is the most serious consequence of risk affecting their top revenue driver; however, only 37% of financial executives in France feel the same way. -- While nearly two-thirds of executives in the United Kingdom and North America cite downside risk as posing the most prevalent threat to their revenue, the same applies to only 45% of Germany respondents. -- U.K.-based financial executives routinely express more pessimism than their counterparts elsewhere: Of U.K. executives polled, 62% worry about a loss of competitiveness compared with 51% of all other respondents. -- Of U.K.-based respondents, 24% say a disruption can lead to exiting a line of business or ceasing operations all together, and 21% say it can lead to leadership changes. By contrast, only 10% of all financial executives worry about exiting a line of business or ceasing operations as a result of a major business disruption, and only 8% worry about leadership changes. The study is available online at http://www.protectingvalue.com. Sources: FM Global, PR Newswire

New York - In the latest insurance company merger, American International Group, Inc. (AIG) and 21st Century Insurance Group announced they have entered into a definitive merger agreement by which AIG would acquire the 21st Century shares it does not currently own at a price of $22.00 per share in cash, for a total purchase price of approximately $813 million. Last week, INN reported that Liberty Mutual Group is acquiring Ohio Casualty Corp. for $44 per share in a transaction valued at about $2.7 billion. Ohio Casualty Generated $1.4 billion in net written premium in 2006 and had pre-tax income of $300 million. With combined net written premium exceeding $7.3 billion after the transaction, the newly formed company will be the largest regional provider of property and casualty products distributed through independent agents in the United States, said a Liberty Mutual representative. The AIG and 21st Century deal is expected to enable AIG to expand its existing direct-to-consumer auto insurance business, an area in which 21st Century is has shown strong results in California. Martin Sullivan, President and Chief Executive Officer of AIG, said, "We are pleased to enter into this transaction, which we view as a win for all parties. It allows us to combine our expertise and resources to grow this business and it allows 21st Century shareholders to monetize their investment at a compelling value." New York-based AIG already owns, through its subsidiaries, approximately 60.8% of the outstanding shares of 21st Century, Woodland Hills, Calif. Upon completion of the transaction, 21st Century will become a wholly owned subsidiary of AIG. The 21st Century board of directors unanimously approved the merger agreement following the recommendation and approval of a special committee comprised of directors of 21st Century who are independent of AIG. The $22.00 per share price represents a 32.6% premium over 21st Century's closing price on January 24, 2007, the last trading day before the public announcement of AIG's proposal to acquire the publicly held shares of 21st Century and a 39.8% premium to 21st Century's average closing price for the twelve months prior to January 24, 2007. The AIG-21st Century merger, expected to be completed in the third quarter of calendar year 2007, is subject to customary conditions and approvals. The exact timing is dependent on the review and clearance of necessary filings with the Securities and Exchange Commission. The transaction is subject to the affirmative vote of the holders of a majority of the outstanding shares of 21st Century. AIG has agreed to vote or cause to be voted all of its and its subsidiaries' 21st Century shares in favor of the merger. Sources: AIG, Associated Press, INN archives

Needham, Mass. – For service-oriented architecture (SOA) to fulfill its potential, carriers and vendors need to become more aggressive in establishing enterprise governance, in adopting process and data standards, and in testing and managing service-oriented solutions, according to a study by TowerGroup, a research company based here.

Mountain View, Calif. – Vimo.com, an Internet comparison-shopping site for health insurance, shows that premiums are higher in states regulated by "guaranteed issue," which requires health insurance companies to accept applicants regardless of their health.

Stamford, Conn. - A study of catastrophic life insurance conducted since the September 11 (9/11) tragedy confirms that the life insurance industry's catastrophe reinsurance buying habits and risk management needs have changed significantly over the past five years. The study, conducted by Towers Perrin, explores how the life insurance industry's practices have evolved, what factors are driving the changes, and the industry's level of satisfaction with the exposure management tools currently available."In the years following 9/11, there has been a lot of discussion regarding how the life catastrophe market has changed. This survey provides important and non-anecdotal industry data about how insurers are managing their risk concentrations, and how they are evaluating reinsurance and risk retention strategies. The overwhelming sentiment among insurers is that coverage is still expensive relative to the perceived risk of life catastrophes," says Michael Plappert, vice president with Towers Perrin's life, accident and health practice, which is housed within the Reinsurance business.

Dearborn, Mich. - The Auto Club Group (ACG) plans to launch a Web-based service that provides special limited-time discounts and offers to AAA members. The program, DynamicDeals, gives consumer product and services companies an opportunity to provide discounts and savings to AAA's 4.1 million members throughout the Midwest.DynamicDeals, which is set to launch on June 1, 2007, will operate in conjunction with the Auto Club's current member savings program, Show Your Card & Save, but will be more oriented toward time-sensitive, targeted savings opportunities.

Des Plaines, Ill. – The nation's property and casualty insurance companies are calling for a united front in the fight against fraud after completing a two-year study that showed the industry’s efforts have been fragmented and inadequate.

WARREN, N.J. - When agents and brokers suggested that stories about losses are an effective way to illustrate the need for specific insurance products, the Warren, N.J.-based Chubb Group of Insurance Cos. listened.

New York - Insurers have made great strides in combating money laundering but many have yet to apply the power of IT to the problem, a trend some experts see as troubling.

Kansas City, Mo. - The National Association of Insurance Commissioners (NAIC) has adopted a model law development framework as part of an effort to respond to state, federal and international regulation.