Claims

The need for insurers to evolve in today's competitive marketplace is at an all-time high. Whether expanding to reach an untapped niche, or improving systems and practices just to keep the pace, carriers are constantly in need of setting goals and brainstorming effective ways of reaching them.One such company, New York-based XL Insurance, recognized a gaping hole in the U.S. casualty marketplace throughout the late 1990s and early 2000s and, in January 2004, made a strategic decision to swiftly expand into the casualty risk management business by offering a portfolio of risk-sensitive products. The impediment: limited internal resources and a rigid time frame in which to implement new solutions. And, for XL's rapid, creative and successful response to the problem, the company was named third-place winner of Insurance Networking News' 2007 INNovator award.

Los Angeles - Citing the potential benefits of saving more than 300 lives and hundreds of serious injuries each year, Farmers Insurance Group Inc. announced its support of the new Federal motor vehicle safety standard #214 by the National Highway Traffic Safety Administration (NHTSA), which requires automakers to conduct new side-impact crash tests. "Farmers fully supports this effort as a means to protect our customers," noted Kevin Mabe, economist for Los Angeles-based personal lines carrier Farmers. Mabe explained that the standard mandates a new crash test for automakers that mimics a 20-mph impact at a 75-degree angle. Additionally, NHTSA has introduced guidelines for automakers to provide head protection for rear seat passengers. Vehicles under 8,500 pounds must provide safety measures to comply with the test by late 2012. Heavier vehicles, from 8,500 to 10,000 pounds, have an additional year to fully meet regulations.

Chicago — Arup, a global multidisciplinary engineering and consulting firm, has joined with Chicago-based Aon Corp. in a strategic alliance that brings to the marketplace a pre- and post-loss consulting service that offers clients an independent, global catastrophic risk management solution.

New York — Richard Mucci will join New York Life International, New York Life Insurance Co.'s overseas arm with operations in eight markets, as chairman and chief executive officer of International on Oct. 8, 2007. He succeeds Joseph Gilmour, who decided to leave the company.

New York — The Guardian Insurance & Annuity Co. Inc. (GIAC), a wholly owned subsidiary of The Guardian Life Insurance Co. of America, New York, announced today that Boston-based DALBAR Inc. has awarded the company with the DALBAR Seal of Excellence for Transaction Processing for the third year in a row. The DALBAR Seal is only awarded to those firms that consistently exceed customer expectations for service levels.

New York — Switzerland-based Zurich Financial Services Group named Kevin Dunham as senior vice president and global relationship leader for the Western region of its Global Corporate in North America business unit. Dunham is based in Glendale, Calif., and will manage accounts primarily in the Southwest and Western United States.

Jersey City, N.J. — The U.S. property/casualty insurance industry's net income after taxes rose 10.7% to $32.6 billion in first-half 2007 from $29.4 billion in first-half 2006. Fueled by the industry's net income, policyholders' surplus—insurers' net worth measured according to Statutory Accounting Principles—increased $26.5 billion to $512.8 billion at June 30, 2007, from $486.2 billion at year-end 2006.

Orlando - Blue Cross of Idaho wanted more information on what treatments its members were receiving and whether providers were following established clinical guidelines.

Needham, Mass.–A new research report from TowerGroup Inc. says insurers should go above and beyond current regulatory requirements when dealing with the issue of annuity suitability.

Branchville, N.J. - Selective Insurance Group Inc. announced that its principal subsidiary, Selective Insurance Company of America, made several management changes as part of its leadership development process that created new roles for existing officers.

Lansing, Mich.–A new Web-based sales and training tool from Jackson National Life Insurance Co. (Jackson) is designed to help simplify the process of selecting an optional living benefit within Jackson’s family of variable annuities. The Living Benefits Selection Center (LBSC) enables registered representatives to get instant, client-approved output based on a client’s profile information after answering a handful of qualifying questions. The tool also features multimedia presentations, fact sheets and side-by-side comparisons of Jackson’s optional living benefits.

Stamford, Conn.—A recent release from Pitney Bowes Inc. announced its Pitney Bowes Group 1 Software and Pitney Bowes MapInfo business units, acquired separately, will combine into a single software company. The move is effective immediately, and the businesses will merge operations over the next several months.

Washington, D.C.—Life insurance producers could save hundreds of millions of dollars annually in licensing fees if Congress enacts legislation creating an optional federal charter (OFC) system for the insurance industry, according to a new study by Dr. Laureen Regan, associate professor with Temple University’s Fox School of Business and Management

New York - Insurers of all sizes hoping to take a proactive approach to cracking health claims fraud seem to understand the stakes: According to estimates from the federal government and issues-based groups such as the National Health Care Anti-Fraud Association, as much as 10% of all healthcare expenditures in the United States, or $170 billion, may be lost each year to fraud, waste and abuse. Carriers still struggling to keep up with claims fraud may also do well to recognize that there is yet another piece of ammunition available. From its research laboratories in New York, IBM has pooled data mining and analytics technologies to create a software-as-a-service product designed to identify potentially fraudulent and abusive behavior before a claim is paid, or retrospectively analyze providers' past behaviors to flag suspicious patterns. Non-profit provider Excellus Blue Cross Blue Shield in Rochester, N.Y., which counts two million members, is the latest carrier to contract with Big Blue to thwart fraud. The company will use IBM's on-demand Risk Identification Analysis Service to review pharmacy-related claims to uncover complex schemes. Some of these schemes may include collusion, inappropriate billing practices, prescription forging, prescription pad theft and members who are "doctor shopping." "Make no mistake about it-someone who knowingly commits insurance fraud is no different than any other person who steals," says Flora Allen, corporate director, special investigations unit, Excellus BlueCross BlueShield. "Fraud affects everyone's bottom line, so we aggressively and proactively pursue recoveries and convictions because we are protecting our members' premiums." Although the stakes are high for Allen and her organization, which processed somewhere between 51 and 52 million claims in 2006, there is no real way to calculate the hard and soft costs, she says. "We are only as good as what we can find," she told Insurance Networking News. "Adding the Risk Identification Analysis Service from IBM to our existing investigative arsenal improves the analytical capabilities we need to find and identify the most egregious offenders." That arsenal includes a fraud hotline, which is available to all members, and a link on the company's Web site where anyone can provide anonymous tips. The insurer also participates with law enforcement task forces, and shares that information the U.S. attorney's office. Based on IBM's Fraud and Abuse Management System (FAMS) technology, which was developed by IBM Research and consultants in collaboration with leading healthcare organizations, the Risk Identification Analysis Service uses a combination of data mining capabilities, visualization techniques and reporting tools to identify questionable behavior before a claim is paid. It replaces traditional manual processes by sorting though tens of thousands of providers and tens of millions of claims in minutes-ranking providers as to their degree of potentially fraudulent, wasteful, abusive or questionable behavior. Allen says their company does not consider whether, as a whole, fraudulent claims are on the rise or may be decreasing. "When it comes to fraud, it's an issue that always appears larger than life and we are getting better at discovering it." IBM hopes that by designing the offering as an on-demand service, it will appeal to insurers of all sizes. "By providing these powerful data mining and advanced analytical capabilities as an on-demand service, we are able to offer this investigative capability to smaller healthcare payor organizations, or government healthcare insurance entities, which may prefer to use this advanced analytic capability as a service, because of the lower demands on their staff and IT capabilities," says Mark Ramsey, global data analytics leader, IBM Center for Business Optimization. "It can also easily be used by larger, private payors looking to use this capability as a service instead of implementing the FAMS solution internally." In addition to pharmacy claims, the service can analyze approximately two dozen other specialties such as cardiology, home health care, gastroenterology and durable medical equipment suppliers. Sources: Excellus Blue Cross Blue Shield, IBM

Columbia, S.C. - BlueCross BlueShield of South Carolina plans to electronically integrate personal health records with medical care plans and make these available in real time to BlueCross members and their health care professionals.

The Hartford P&C Co. built a single consumer view for both its new business and its renewable policies, including a customer application that gives it instantaneous information about its customers. Its personal lines business also has been able to bring together some 30 different third-party data sources in the company and put them into one source.The Hartford's personal lines now has a single manner in which it processes motor vehicle reporting (MVR) across the entire company. The insurer built a single service that enables The Hartford to get immediate access to data across the company and work real-time with the states provided to gather MVR information. That service is now used in six different places across the firm, for everything from renewal purposes to billing purposes. Meanwhile, The Hartford's commercial lines business has made great strides in automated decisioning, improving its billing and creating new automated underwriting. The carrier's agents are now able to receive information in real time and provide quotes to commercial customers quickly.

AGENTS DEMAND REAL-TIME SERVICEIndependent insurance agencies are poised for a major service breakthrough with the proliferation of real-time transactions, says a prominent participant in the industry-wide push to double real-time transaction volume in a year.

PPS SOFTWARE SUITESkywire Software, a Frisco, Texas-based provider of software products for the insurance industry, announced the availability of a reporting tool for PPS, its policy production system for managing general agencies and wholesalers.

How can carriers capitalize on the convergence of service-oriented architecture (SOA) and business intelligence (BI)? Insurance Networking News asked Mark Gorman, strategic research advisor, insurance, and David West, research area director, insurance, for TowerGroup Inc., Needham, Mass.INN: More and more carriers are seeing the value of SOA for BI (i.e. business intelligence services). Why? What are the drivers?

Among insurers of all sizes, everything is a process. Evaluating whether a process is efficient and cost-effective is oftentimes painful, because it means that workers need to rethink how they are going to work and, ultimately, change the way they function. Insurers that implement business process management (BPM) face challenges-and certain successes-associated with that change. In June, Boston-based research firm Celent LLC invited representatives from a small, medium and large insurance company to a meeting in Chicago where they shared their implementation stories.Celent Senior Analyst Donald Light, and insurance practice group Managing Director Matthew Josefowicz led the group in its discussion of what it takes to manage through the numerous challenges associated with continuous improvement and successful BPM implementation.