Customer service

Unlike many insurance companies that reach a point of pain with old technology, Berkley Risk Administrators Co. LLC (BRAC) was not under duress when it decided to migrate to a new platform.

Great-West Healthcare began using computer-based training to teach new sales reps about its products and services. The company is now using online training for its claims examiners, call center reps and HIPAA compliance across the organization.Spending on employee training has not been felled by budget axe wielders. That's according to the American Society of Training & Development (ASTD), Alexandria, Va., which also found the percentage of total training dollars spent on e-learning jumped from 8.8% in 2000 to 10.5% in 2001-the largest increase in four years.

Why would a company's separate business units buy goods and services independently if centralizing procurement can produce volume savings that go directly to the bottom line? Why would a company route paper requisitions for approvals when they can be automatically distributed over the Internet in seconds? Why would a company keep service contracts in file cabinets across the organization when they can be archived electronically with a complete history of all the negotiations that took place? And, what insurance executive wouldn't want to know more details about the company's spending activities?Volume discounts. Shorter procurement cycle times. Less paper. More informed purchasing decisions. These are the main reasons electronic procurement and sourcing have gained popularity in the past few years across many industries, including insurance (see "Procurement And Sourcing Software Gains Popularity," page 30).

When executive recruiters at Los Angeles-based Farmers Insurance Group need to fill a vacant position, posting a print version of a job opening to attract prime candidates is regarded as an option-albeit an increasingly obsolete one.Call it an evolution from a "dinosaur" methodology to a "monster" opportunity. That's because at Farmers, a host of job-recruitment Web sites-from Monster.com to Insurance-pros.net-are bringing the lion's share of new claims executives. With such a success rate, it's no surprise that the Web has stepped forward to become the predominant tool of choice to fill staffing.

Five years ago, customer relationship management was the business strategy that financial services executives were embracing. The promise of technologies that could improve sales, marketing, customer service, customer retention and-most importantly-revenue was an alluring selling point to senior executives concerned about increased competition in a changing financial services landscape.

Insurance agents and carriers both know that capturing new business centers around offering fair and competitive prices. Most understand that pulling in customers also hinges on the ability to issue coverage swiftly and accurately.Paul Bouwers, principal of Pella, Iowa-based Pella Insurance Agency, never had difficulty finding competitive quotes for auto or homeowners insurance through his many insurer affiliates. But when it came to maximizing the service behind new or existing business, Bouwers had a burning desire to get policies in the hands of Pella's customers much faster.

Boston-based John Hancock Financial Services Inc. was an early adopter of e-procurement and e-sourcing technologies.In 1998, the company implemented an e-procurement solution from iPlanet, which was acquired in 2002 by Santa Clara, Calif.-based Sun Microsystems Inc. Then, in 2001, John Hancock deployed e-sourcing software from Frictionless Commerce Inc., Cambridge, Mass.

When the call arrived at PMA Insurance Group's customer contact center in Allentown, Pa., it was unlike most of the in-bound inquiries normally fielded at the sprawling facility."The agents at our contact center assist injured workers seeking claims-related indemnity or medical payment status," explains Meg Schumer, assistant vice president of call centers for the Blue Bell, Pa.-based mid-size property/casualty insurer. "But in the midst of a call, an individual informed one of our agents that he was contemplating ending his life. Our agent began to talk the individual through the crisis-basically got him to calm down-and then sought intervention from crisis counselors, who took it from there."

Acordia Inc., the insurance agency arm of Wells Fargo & Co., sent a clear message in September that its integration with Wells Fargo is complete and it is once again an active buyer of agencies.Last month, Acordia announced three deals for agencies in Texas, Nebraska, and Pennsylvania. These purchases came on the heels of the purchase of a fourth agency, in Omaha, Neb., in August.

The Providence Insurance Co. inaugurated the insurance agency system in the United States back in 1803. That's when the vessel and cargo insurer-one of the first insurance companies established in this country-decided to expand, and appointed the nation's first independent agent.

A recent report by the Data Warehousing Institute claims that the annual cost of poor data quality for U.S. industries is $611 billion. This includes direct costs of analyzing and correcting data errors and indirect costs as well.For instance, when errors become exposed to customers and regulators, fines can follow and the backlash can force an avalanche of expensive changes to how an insurance company conducts its business.

With almost 60% of its homeowners insurance business consisting of coverage for homes valued at $1 million and up, Novato, Calif.-based Fireman's Fund Insurance Co. understands that appraising affluent homes is an extremely tall order.Expensive dwellings don't come equipped with run-of-the-mill furnishings. Often, such homes feature rare and exotic items ranging from Pella French doors, Italian granite countertops, premium carpeting and elaborate building materials.

If you ask a group of independent agents to name the technologies on the top of their wish lists, you likely will hear a different answer from each.Some agents want carriers to improve their Web portals, making it easier for agents to obtain quotes and make inquiries and endorsements on carrier sites. Others want carriers to provide real-time transactions through their agency management systems-via so-called "bridges." This way, they never have to leave their agency systems to conduct their business.

AnnuityNet Inc., the top-selling Web-based annuity distribution provider, has worked diligently over the past two years to distance itself from its nearest competitor-Info-One/VARDS.Deploying a dynamic front-end Internet distribution platform emphasizing "paperless accuracy," Herndon, Va.-based AnnuityNet has leveraged its technology to enable it to increase its sales of both fixed and variable annuities from 164,500 by the end of 2002 to 243,000 by the end of July.

Ten years ago, telecommunications costs were typically the 14th or 15th line item for insurance companies, says Johnny Podrovitz, CEO of MSS Group Inc., Castle Rock, Colo. "Now, they're the third or fourth."

Harvard Pilgrim Health Care serves more than 765,000 members, 22,000 medical providers, 2,000 employees and a community of independent brokers. With so many disparate constituents to accommodate, the Wellesley, Mass.-based provider decided in 2002 that it was time to deploy Internet applications that could offer a higher level of Web customization-not standardization.Developing Web portals proved to be the answer.

When Farmers Insurance Group conducted testing on a Web-based customer self-service program, the Los Angeles- based property/casualty insurer considered implementing a capability that would enable customers to make changes to their policies.Farmers executives recognized the value of self-service capabilities. After all, enabling a customer to instantaneously make a change to their auto or homeowners policy represents the spirit of customer self-service. But earlier this year, as Farmers executives examined the concept further, they uncovered a flaw with the concept: Giving customer unfettered access to make changes was considered an affront to Farmers' agents.

The nation's largest insurers together received a mediocre score for online customer respect. But the good news is: The banking and securities sector, as well as Fortune 100 firms overall, didn't ace the test either.This assessment comes from The Customer Respect Group Inc., a Bellevue, Wash.-based research company that studies the Web sites of Fortune 100 and Fortune 1000 companies. The group gave insurers among the Fortune 1000 a 6.8 overall customer respect index (CRI) for their Web sites, while financial services firms scored 6.7 and Fortune 100 firms scored 7.0.

With trading volume reportedly far below management's expectations, Web-based reinsurance risk-trading hub inreon was terminated in early May, leaving two players to service the global online reinsurance risk-trading market.London-based inreon was launched in December 2000 as a partnership between global reinsurers Munich Re, its U.S. subsidiary American Re, and Swiss Re. But according to industry sources, the decision to close inreon down came when the reinsurance giants concluded that the service would have a difficult time turning a profit-both short- and long-term.

Blue Cross Blue Shield of South Carolina (BCBSSC) in January introduced a new program that many believe could revolutionize the Web-based self-service model.The program, known as Blue-By-Design, is a consumer- driven health plan (CDHP) that gives members the power to make their own healthcare decisions, says Terry Povey, director of Web business development, market research and statistics, for the Columbia, S.C.-based health insurer.