Core systems

Alexandria, Va. - The Independent Insurance Agents & Brokers of America (the Big "I") disagrees with, and is disappointed by, New York Attorney General Eliot Spitzer's decision that four leading companies can no longer offer incentive compensation to agents and brokers selling their products. Spitzer announced on Nov. 30 that he has notified ACE, AIG, St. Paul Travelers and Zurich that, under agreements reached with his office earlier this year, they may no longer offer this form of compensation because they have crossed the 65% "tipping point" in those agreements as to homeowners', personal auto, boiler and machinery and financial guaranty insurance. Those agreements bar carriers from paying incentive compensation to their sales forces when more than 65% of that line of insurance is sold by companies that do not pay incentive compensation. "The independent agent and broker community is greatly distressed by this development," says Big "I" CEO Robert Rusbuldt. "These carriers are now unable to use what otherwise is a perfectly legal way to compensate their sales forces, just as is done in virtually all industries across America. It is ironic that the illegal activities uncovered by Mr. Spitzer occurred in commercial lines, not personal lines, and yet, it is largely in personal lines that the fallout is being felt today. The solution imposed on carriers and agents of banning incentive compensation is totally misplaced and directed at business that was never a problem to begin with." The Big "I" continues to defend incentive compensation as a legal, legitimate form of compensation that is employed in all sales-based industries. Any compensation system can be abused, but the problem lies with those few who abuse it, not the system itself. "There is no doubt that a few bad actors in the commercial lines area abused the system, and we have always agreed that those who break the law should be punished to the fullest extent possible," Rusbuldt says. "But it is absolutely wrong and indefensible to penalize the innocent majority for the misdeeds of a handful of people. This decision will impact thousands of agencies across the country as they face reductions in compensation that will hamper their ability to create jobs in their communities, train staff, invest in their agencies, and provide consumers access to insurance. On behalf of the hundreds of thousands of agents and brokers across America who had no part in the dishonest activity of a few, we will continue to fight to preserve the right of companies to pay legal incentive compensation." Founded in 1896, IIABA (the Big "I") claims to be the nation's oldest and largest national association of independent insurance agents and brokers, representing a network of more than 300,000 agents, brokers and their employees nationally. Its members are businesses that offer customers a choice of policies from a variety of insurance companies. Independent agents and brokers offer all lines of insurance-property, casualty, life, and health-as well as employee benefit plans and retirement products. Source: The Independent Insurance Agents & Brokers of America

What do Carriers Need to Increase Market Share?

TOOL HELPS EMPLOYEES MANAGE THEIR BENEFITSPlanAdvisor, a benefits management tool from Milwaukee-based Zywave Inc., features a Plan Selector module to enable employees to review their own health costs. PlanAdvisor generates management reports without carrier data feeds, analyzes the effects of changes in the plan design and calculates projected plan costs, based on trend and claims information. It also offers benchmarking, modeling, and analysis to allow brokers to deliver information based on industry comparison data and actuarial factors, which can help clients make informed decisions.

CAPITOL SELECTS STG BILLING SYSTEMMiddleton, Wis.-based Capitol Insurance Cos. chose Renaissance Billing Solution from New York-based Systems Task Group International Ltd.'s (STG) to support billing and accounts receivable operations. The system will replace Capitol's existing billing systems and will enable the consolidation, centralization and the streamlining of Capitol's cash management and accounting operations. It will provide Capitol with advanced technology support, flexibility and configurability.

Boston - As helpful as technology can be, insurers are not immune to technology glitches. One such case, as reported by The Boston Globe, hit Blue Cross Blue Shield of Massachusetts. The Boston-based insurer found itself sending out automated phone calls to Massachusetts senior citizens with Medicare drug benefits, asking them to repay up to $1,400 because the monthly premium automatic deduction from their Social Security checks failed to work.In March, The Tampa Tribune reported that hundreds of thousands of seniors received inaccurate Social Security payments because of problems with Medicare Part D drug coverage premiums, according to The Boston Globe. Most were overpaid because the premiums were not being deducted. Others received accidental refunds that averaged $215 and were asked to return the money.

Boston - Senior insurance IT executives are increasingly focusing on strategic spending to meet market demands and showing some concern over a softening property/casualty market, according to Celent LLC's new report, "Insurance CIO/CTO Pressures, Priorities, Projects, and Plans for 2007 Survey Results.""There is continued focus on meeting market demands for speed to market and ease of doing business, and on new projects involving core systems, data mastery, and distribution," says Matthew Josefowicz, manager of Celent's insurance group and author of the report. "Budgets and staffs are generally flat or growing modestly, but strategic investments continue. However, there are some indications that large property/casualty insurers may be keeping their powder dry until they can gauge the impact of the softening market."

Hartford, Conn. - Claims effectiveness is fast becoming a differentiating competitive feature among property/casualty companies as new measurement and process controls change the way claims are quantified, according to a new study by Hartford, Conn.-based Conning Research & Consulting Inc.The study, "Property-Casualty Claims Management: Unlocking Value" is based on a survey of senior property/casualty claims executives and on statutory data analysis. It examines changes in the insurance environment, and particularly in claims, including technology, staffing, outsourcing, regulatory and catastrophe issues.

Needham, Mass. - In 2007 and beyond, the global financial services industry will increasingly grapple with three major strategic shifts: reinventing financial services at its core; repurposing financial services relative to the global diversity of a changing customer base; and helping restore confidence in an uncertain world, according to a series of research reports from Needham, Mass.-based TowerGroup.The reports examine the top business drivers, strategic responses and technology priorities that will fuel core sectors of the global financial service industry in 2007.

Washington - The U.S. Department of Justice recovered a record $3.1 billion in fraudulent claims in fiscal 2006, with 72 percent of the recoveries in health care. A single hospital chain, Dallas-based Tenet Healthcare Corp., paid back $920 million in one of the year’s largest settlements with the federal government, according to the Justice Department.

Philadelphia - With a focus on customer service, Philadelphia Insurance Companies launched a new corporate Internet site, www.phly.com. The Philadelphia company, which designs, markets and underwrites specialty commercial and personal property and casualty insurance products for select target industries or niches including nonprofit organizations; the health, fitness and wellness industry; select classes of professional liability; the rental car industry and more, says the new Web site will provide self-service functionality to all agents and policyholders. The project quickly evolved into an Internet "program," reports the company. The creation of a program provides the framework to efficiently and strategically prioritize and bundle enhancements that will ensure alignment with business goals. The new Philadelphia Insurance Web site is designed to make doing business easier for a select group of "preferred agents" and a broader network of independent agents, which consists of 38 regional and field offices across the United States. The new site includes enhanced menu navigation, and updated search functionality. Also enhanced is the site's login authentication, now featuring one login per agent or customer. Visitors to the site can browse policies, view claims, invoices, active lists, quotes, and auto ID cards. The carrier also added an online payments feature. The project goals included an aggressive timeline, and the carrier's IT department and automated services division (project management/business requirements group) collaborated using in-house tools to manage information. The ultimate goal, says a company representative, is to provide feedback capabilities that enable a two-day response to any incoming question. Source: Philadelphia Insurance Companies

Cincinnati - A technology overhaul is continuing at Cincinnati-based Great American Insurance Co. with the decision to replace the company’s policy and customer system of record.

Sydney, Australia - Insurance Australia Group Ltd. (IAG), announced its intention to make its global operations carbon neutral within five years."As an insurance company we have been very concerned about the risks and impact of climate change on our community for a number of years," says Mike Hawker, IAG's CEO. "We have been working on ways to reduce our own CO2 emission footprint, alerting the community about the risks of climate change, and researching opportunities for our customers to benefit from CO2 reducing activities. We are furthering our efforts, by announcing our intention to be carbon neutral within the next five years."

El Segundo, Calif., - Insurers feel the need to develop original approaches to attracting and retaining customer in various market segments. During a two-day conference hosted by Computer Sciences Corp. (CSC), a few insurers gave examples of these approaches.Panelists at the conference noted that insurance marketing programs must appeal to three distinct generational groups: Generation Y (ages 18-29), Generation X (ages 30-40) and baby boomers (ages 41-59). Each group has distinct demands for service; therefore, insurers must offer different Web-based services that address their consumers' varying levels of comfort with technology.

Blue Bell, Pa. - Almost one in every three of the more than 1,700 senior-level corporate and technology leader respondents in a new international survey do not trust their companies' own abilities to handle private or sensitive information, and that same number are either unsure or don't believe that most of their business partners consider them to be trusted enterprises.These and other findings are part of a broad research project from Blue Bell, Pa.-based Unisys Corp., called the Unisys Trusted Enterprise Index, a survey designed to measure the importance, impact and influence of trust, privacy and security within the corporate world. Conducted in partnership with the Ponemon Institute, an Elk Rapids, Mich.-based privacy research organization, the study also found that despite a growing awareness of risk management and security issues in the corporate world, more than one-third of companies polled do not task senior leaders with protecting the trust that customers, investors and even their own employees have in those companies.

Hartford, Conn. - Aetna Inc. is offering an interactive voice response (IVR) system called Voice2Form to enable members with both Aetna disability and medical insurance to provide consent to participate in the insurer's Integrated Health and Disability (IHD) program. Aetna's integrated informatics studies show that the IHD program may reduce short-term disability durations by as much as 10.7% or 5.6 days per claim.

Orlando - The latest release of ISO HomeValue, a residential replacement cost estimator, now allows personal lines insurers to assess catastrophe risk for individual properties using Boston-based AIR Worldwide Corp.'s (AIR) industry standard catastrophe models. The goal, says the companies, is to provide access to essential catastrophe risk data from a single web-based application, ISO HomeValue enables improved underwriting decisions. "After the large hurricane losses of 2004 and 2005, companies were reminded of the importance of assessing a property's catastrophe risk as part of the underwriting process," says George Davis, vice president at AIR. "However, most personal lines insurers have historically had very limited and inefficient ways to assess the catastrophe risk for individual properties. Now, ISO HomeValue provides residential underwriters with immediate catastrophe risk information at the individual property level in a seamless manner." By accessing AIR's catastrophe models from within ISO HomeValue, underwriters can generate real-time estimates of catastrophe risk, as characterized by the estimated average annual loss. Insurers can use this assessment of the catastrophe risk to automate, for example, simple issue/decline decisions, rating plan selection, and price adjustment under consent-to-rate procedures. ISO HomeValue captures a variety of property characteristics necessary for catastrophe modeling, including location, construction, building type, and year built. Additional property characteristics that may mitigate damage-such as storm shutters for hurricane risk-can also be entered to assess rate credits for such structures. In many cases, basic property data can be automatically pre-filled using the ISO PushPin database. ISO PushPin contains specific and detailed data on key building features for more than 50 million residential properties in the United States. Agents, underwriters, and inspectors can enter additional property information into ISO HomeValue to enhance the completeness of the data. "By employing ISO HomeValue to gather and maintain high quality property data, insurers can obtain more reliable estimates of an individual property's catastrophe loss potential, in addition to its replacement cost," continued Mr. Davis. Source: AIR Worldwide Corp.

Boston - Insurance carriers have invested heavily in project management, but large projects continue to fail. A new approach is required, according to a new report, “The 18 Month Rule: Avoiding the Endless Project.” The Boston-based insurance practice of research firm Celent LLC released the report this week as a guide to address the pitfalls of large IT projects.

New York - More than three-quarters (77%) of life insurance CFOs cite the growing level and complexity of regulations as their biggest concern for the market and economic environment in 2007, according to the latest CFO survey from the New York-based Tillinghast business of Towers Perrin. Interest rates were a close second, with 70% of respondents citing concerns about potential volatility in rates as a key challenge.

Minneapolis - Thanks to the combination of rules-based management and mobile healthcare technologies, patients with long-term health conditions may be on the road to a faster recovery based on receiving early detection, continuous remote care, prediction of care demands, and quality of life improvement.Swedish technology company Kiwok AB is integrating Blaze Advisor business rules management technology from Fair Isaac Corp., a Minneapolis provider of analytics and decision management technologies, to enable intelligent out-of-hospital monitoring of patients via Kiwok's mobile healthcare monitoring network.

Waltham, Mass. - Results of a study analyzing the actual compliance-training records of more than 2.5 million employees (working at approximately 350 companies) who completed online ethics and compliance courses cite financial integrity as the respondents' number-one compliance issue. Insurers represented 10 of 350 companies studied, or roughly 153,000 employees, notes study author Integrity Interactive, a Waltham, Mass., provider of Web-based tools for managing and mitigating corporate ethics and compliance risk. The study reveals the top-12 ethics and compliance training topics addressed by major companies in 2006. Leading corporations have begun to address compliance risks proactively instead of waiting to react after problems arise, say the findings. The Integrity Interactive study quantifies which ethical violations companies fear most, identifies emerging compliance risk-management trends, and provides concrete examples of how top compliance-training topics map to corporate governance scandals dominating business headlines today. Financial integrity is the top compliance-training topic covered by major corporations today. Financial integrity has been among the Top-3 most-popular course topics every year since 2000, and also tops the most-popular list for the present decade, reflecting the persistent determination of many companies to proactively prevent compliance violations such as backdated stock options and inaccurate financial reports. Proper use of computers ranks second on the list of ethics and compliance topics, reflecting the desire of companies to protect their leaders, employees, and themselves from embarrassing, inappropriate, or even illegal uses of computers, the Internet, instant messaging and related information technologies. Four new concerns surfaced in the study: Sarbanes-Oxley & internal controls (ranked #6) and data safeguarding (ranked #8) appear in the top-12 list for the first time. The popularity of these course topics reflects corporate efforts to respond to important legislation adopted in recent years at the national and state levels. Human rights (ranked #10) and privacy (ranked #12): These two also appear on the top-12 list for the first time and constitute powerful evidence of senior management's desire to respond to broader values-based concerns gaining traction in society as a whole. Another aspect of the study revealed that company size influences risk-management priorities. Very large corporations (90,000+ employees) have made financial integrity their leading priority. Large (10,000+ to 90,000 employees) and mid-sized (1,000 to 10,000 employees) companies cite mutual respect as their top priority (closely followed by proper use of computers). And mutual respect appears among the top-3 most-popular training priorities for companies in all size buckets (mid-sized, large and very large). The near-universal applicability of the mutual respect course explains its popularity with companies of different sizes. Antitrust (a risk-area of particular concern to sales and marketing personnel) is another compliance-training topic popular with companies of all sizes. Source: Integrity Interactive Inc.