Claims

San Diego - New York, California, Nevada and Arizona have the highest rates of identity fraud, according to research from San Diego-based ID Analytics Inc. The analytical research—based on actual and attempted frauds rather than consumer victim reports—also shows that the highest metropolitan area rates of identity fraud are in New York, while the states with the lowest rates of identity fraud are Wyoming, Vermont and Montana.

Washington - "The considerable size and cost of catastrophes present unique challenges to participants in the insurance market. Namely, it makes management of potential liability by any single insurance company nearly impossible. In some cases, even the assets of the entire insurance industry are inadequate to reduce potential liability to commercially acceptable level." This statement comes from "An Analysis of Catastrophic Risk Insurance Proposals," a report published by The Council of Insurance Agents & Brokers, produced by Georgetown Economic Services LLC and financed by the Foundation for Agency Management Excellence (FAME)—all based in Washington. The report analyzes the various legislative proposals have been advanced to deal with the problem of insuring catastrophic risk, from natural disasters to acts of terrorism.

Despite dire warnings from health officials and risk experts, only a tiny percentage of the nation's insurance carriers have developed formal plans to keep their businesses running in the face of a deadly, long-term influenza pandemic.While 82% of carriers have prepared business continuity plans (BCP) for survival in the wake of natural disasters like hurricanes, tornadoes and floods, only 11% are ready for a pandemic, says Clare DeNicola, president and CEO of IVANS, a Stamford, Conn., company that provides communications services to insurance companies. IVANS surveyed CIOs and directors in May 2006.

ITIL, the IT Infrastructure Library, entered the North American consciousness just in time to help shift the focus from putting technology first to putting business first. It's a change that amounts to a seismic jolt to the culture of insurance company IT departments.The 30-odd volumes of ITIL, which are slated for an update next month, provide a common language for IT staffs and a framework for honing IT processes. For most insurers on these shores, the idea of ITIL gained significant momentum in 2004 and reached critical mass in 2005, IT people say.

There has been no end of bad press for the property and casualty insurance industry this month. Allegations of price gouging, faulty catastrophe models and calls for a congressional probe into post-Katrina hurricane claims flooded the news wires.Most of the negative press pointed a finger at an odd coincidence. First, the year after more than 993,000 homeowners' insurance claims were settled in the two states most affected by Katrina and, according to the Property Casualty Insurers Association, Des Plaines, Ill., the insurance industry paid $51+ billion in overall catastrophe-related claims. Then, the industry experienced a relatively catastrophe-quiet-and profitable-year.

Forget the stereotypes--ASP isn't just for small, IT-challenged carriers any more, and many of the ASP problems that gave insurance companies pause only a few years ago are being solved. Dollar savings and fast time to market are still big pluses for ASP, but today there are a lot of other reasons to consider it.The market among insurance carriers for ASPs, or application service providers, is growing by about 10% a year-slower than in most other industries-according to Marc Cecere, vice president and principal analyst for Forrester Research in Cambridge, Mass. From a supply-side perspective, that's partly because of the structure of the insurance industry and partly because of the regulatory scene for insurance companies.

MODELS UNVEILED FOR NATIONWIDE HEALTH NETWORKPrototypes for a standards-based nationwide health information network (NHIN) were scheduled for presentation at a conference last month in Washington, according to the U.S. Department of Health and Human Services (HHS).

ADOBE EXPANDS ACROBATAdobe Systems Inc., San Jose, Calif., introduced Adobe Acrobat Connect software, a Web conference and collaboration product with "always-on" personal meeting rooms. It is designed to enable workers to connect online instantly with a Web browser and the ubiquitous Flash Player software. Together with Adobe Acrobat 8 software the expanded Acrobat family accelerates the flow of business by allowing people to work together in real-time, according to Adobe. The new, extended Acrobat family brings together the two critical components of knowledge work-documents and people. Acrobat Connect enables users to choose a Web address for their online personal meeting room, with unlimited use for up to 15 participants for one monthly fee.

Not many adjusters would argue against technology as a means of easing their workload-certainly not the adjusters at Farmers Mutual of Nebraska. After all, the company's claims estimating system was efficiently processing information at the desktop. But that apparent blessing was actually part of the problem: the system processed data at the desktop and not in the field, where much of the real work takes place."Our adjusters would go out in the field and inspect the loss, noting the damage just on a piece of paper," says Jamie Fredrickson, director of Field Services. "Then they would go back to their district offices, sit down at their computers and manually re-enter all of this information to generate their estimates."

CANAL SELECTS TRUMBULL FOR SUBROGATION MGT.Canal Insurance Co., Greenville, S.C., entered an agreement with Trumbull Services, Windsor, Conn., to use Trumbull's Subrooutsource, an internally developed, advanced system designed to enhance subrogation recovery activities for all lines of business nationwide. Trumbull, in conjunction with an experienced subrogation team, will manage the entire subrogation process, leveraging the system's abilities to increase recoveries through effective resource allocation, automated workflows and a continuous improvement model.

New York - European and Asian life insurers are outpacing their North American counterparts at streamlining and centralizing their policy administration systems--the core systems that support and deliver insurance products for their customers, according to a global survey of more than 100 insurance technology professionals, which was commissioned by Bermuda-based Accenture.

Dayton, Ohio - Anthem Blue Cross and Blue Shield launched a pilot e-prescribing program in two Ohio communities in an effort to reduce medication errors and the time physicians spend managing prescriptions.Currently, less than 22% of physicians nationwide use the basic capabilities of e-prescribing, according to the Center for Medicare and Medicaid Services (CMS), Baltimore, Md. CMS estimates that the use of such technology could eliminate as many as two million harmful drug events each year.

Atlanta - LOMA has released a new edition of Life and Health Insurance Underwriting, for the first time in downloadable PDF format, the life research and education association reports. The revised textbook introduces risk assessment principles applied to underwriting individual and group life and health insurance and provides a thorough introduction to underwriting terminology and concepts. The text is assigned reading for LOMA’s underwriting course, UND 386.

Boston - A new report recognizes 39 insurance companies as “Model Carriers” for “doing everything right” in technology initiatives. The companies, which were cited in a report by Boston-based Celent LLC, were invited to a Model Carrier Summit, which began today in New York.

San Francisco - Advances in medical technology are a main factor driving the trend of increasing health-care costs, and industry stakeholders, insurance companies fundamentally among them, agree that improved evaluation methods are needed to better measure the benefits and risks of new technologies and procedures in order to avoid misallocation of health-care dollars. A wide range of health care industry stakeholders--from medical institutions and insurance companies to Medicare and other administrative agencies--agree on the need for a new review system, says Rita Redberg, MD, MSc, director of Women's Cardiovascular Services at UCSF Medical Center and professor of clinical medicine in the UCSF School of Medicine, San Francisco. Redbert examines this subject in the January/February 2007 edition of the health policy journal Health Affairs, which devotes the full issue to cardiovascular medicine.

Newark, Calif. - Risk Management Solutions (RMS) a provider of products and services for the quantification and management of catastrophe risks, scrambled to respond to charges leveled by the Tampa Tribune that its CAT models rely on "faulty science," and that insurance companies are using the models to justify huge rate increases in coastal areas. In a letter to Insurance Networking News, Dr. Robert Muir-Wood, chief research officer of RMS, Newark, Calif., disputed the January 7 article entitled "Insurance Risk Forecast Called Faulty," stating, "We at RMS were stunned by the article's inaccuracies and one-sidedness." Contributing to the dispute is a change made in March 2006 to the RMS model that takes a 'medium-term' (five-year) forward-looking view of risk for estimating potential catastrophe losses. To date, catastrophe model results have typically been based on a long-term historical average baseline. Jim Elsner, a professor of geography at Florida State University and one of four experts on a panel that provided input to the model's development, criticized the results, telling the Tampa Tribune that it contains assumptions that are "actually unscientific." In response, RMS confirmed convening two separate meetings one with Elsner and one in which Elsner, citing an affiliation with an RMS competitor, was absent. In the October 2005 meeting, RMS hosted a meeting of four hurricane climatologists to develop a consensus forecast of the overall level of U.S. hurricane activity expected over the next five years. "The consensus involved weighing the opinions of the four experts, having first provided them with detailed statistics on historical hurricane activity and landfalls. All four scientists, including Professor Elsner, gave their sign-off on the outcome of this process. RMS then took the results of this forecast and implemented them in its hurricane catastrophe model," Muir-Wood told INN. "RMS climatologists took responsibility for determining where the extra hurricanes would be expected to form, while preserving the overall target activity rates established by the expert panel," he said. "A press release and white paper were issued describing this work in detail. Again, all four experts were asked to review and approve both documents, to ensure that their involvement was appropriately represented. The RMS regional landfall rates were not challenged by any of the panelists. While it is now recognized that Professor Elsner has developed his own theories on how hurricane activity translates to regional landfall rates, he did not challenge the RMS landfall rates developed after the 2005 expert elicitation." As reported on March 23, 2006 in Insurance Networking News, RMS justified its updated five-year model, which predicted an increase in modeled annualized insurance losses by 40% on average across the Gulf Coast, Florida and the Southeast. Modeled annualized insurance losses in the Mid-Atlantic and Northeast coastal regions will increase by 25% to 30%, relative to those derived using long-term 1900-2005 historical average hurricane frequencies, INN reported. "This new view of risk is driven by an increase of more than 30% in the modele frequency of major (Saffir-Simpson Category 3-5) hurricanes making landfall in the U.S. to account for current elevated levels of hurricane activity in the Atlantic basin, which are expected to persist for at least the next five years. When compared with a pre-2004 historical baseline, as has been previously employed for quantifying insurance risk, the increases in modeled annualized losses are closer to 50% in the Gulf, Florida, and the Southeast," reported INN. Taking into account that eight storms have hit the area in the last two years, RMS stated that the increased frequency and intensity of hurricane activity in the Atlantic Ocean Basin, as observed since 1995, is driven by higher sea surface temperatures in the tropical North Atlantic and by associated changes in atmospheric circulation. These warmer temperatures are expected to translate into a continuation of high activity in the basin, leading to a greater potential for hurricanes to make landfall at higher intensities over the next five years. "Hurricane activity in the Atlantic basin has been running far above the historical average in 9 of 12 years since 1995," Muir-Wood told INN. "As one metric, the annual number of the most intense storms (Category 3-5) has been more than twice that of the average annual number between 1970 and 1995." In October 2006 RMS organized the second of these annual expert meetings on hurricane activity rates, inviting all four of the scientists involved in the first meeting, reports RMS. "Only Professor Elsner declined, citing that he was under contract with a company affiliated with our main competitor," Muir-Wood told INN. The second meeting involved a total of seven climatologists, and went into greater depth than the first meeting, employing the results of 20 different statistical and climatological forecasting methods, said Muir-Wood. "The activity rate forecast for the next five years that came out of this meeting was almost identical - within 1-2% - of the projection of the first year's meeting," Muir-Wood stated. Despite the charges leveled by Elsner, RMS will continue to run an annual hurricane climatology expert elicitation procedure to ensure that RMS hurricane models reflect the most current view of hurricane risk, said Muir-Wood. "The five year perspective, may in future years, be decreased if this is suggested by the best scientific and statistical evidence available at that time," he added. Since the January 7 Tampa Tribune article appeared, further coverage in the popular press has linked questions about the catastrophe models to the rate increases being employed by insurance companies. Yesterday, two Florida Cabinet officers asked for more information about "a dramatic change in hurricane damage forecasting used by the insurance industry." In the Tampa Tribune's January 9 edition, Gov. Charlie Crist and Chief Financial Officer Alex Sink challenged RMS to provide the background for their model creation. "All of the material produced at these [annual expert] meetings, as well as the details of how activity rates were implemented, have been documented and are in the process of being published in peer-reviewed scientific literature," Muir-Wood told INN. RMS is the official model for the Florida Hurricane Catastrophe Fund, which was created after Hurricane Andrew hit in 1993. The fund provides backup coverage for private insurance companies. "RMS has built its reputation on the principles of providing neutral and unbiased information on risk," concluded Muir-Wood. Sources: Tampa Tribune, The Kansas City Star, Risk Management Solutions, Insurance Networking News archives.

The road seems less bumpy these days for insurance carriers that use state-of-the-art automated compensation to calculate and track agents' commissions. A single streamlined third-party system can replace a hodgepodge of legacy software and manual processes, users say, helping to reduce clerical work, increase accuracy and improve reporting. Moreover, carriers report that the software opens up a whole new world of analysis that pinpoints the true sources of profit and helps identify and retain the best agents.The accuracy rate for commissions at Blue Cross Blue Shield of Florida, for example, has improved from 80% before introducing up-to-date automated compensation to 95% after the implementation, says Linda Lamb, BCBSF vice president of sales business management. The remaining errors arise from data entry miscues or software problems outside the system, she says.

INSURER ENHANCES ONLINE DATAThe Empire Life Insurance Company (Empire Life) enhanced Trilogy, its universal life product that continues to evolve to meet the changing financial and wealth management needs of Canadians. The enhancements represent the largest number of revisions to the product since Trilogy Universal Life was introduced in September 2000. Better delivery of information is achieved through a completely revised client statement and with new online investment information.

RECORDING SOFTWAREWitness Systems Inc., a Roswell, Ga.-based global provider of workforce optimization software and services, enhanced its Impact 360 IP Recording solution, featuring tripled channel capacity, unified recording management and a centralized administration tool. Designed for interactions in enterprise and contact center environments, Impact 360 now features TDM and IP recording under a single management tool. The software operates across IP, TDM and mixed telephony networks, designed to help customers ensure all their calls are recorded, whether for compliance and liability, sales verification or quality assurance purposes. Impact 360 IP Recording allows the recording of SIP-based calls. Also new to Impact 360 IP Recording is tripled channel capacity, which results in fewer servers. The solution introduces centralized administration capabilities, which provide access to all the vital Impact 360 IP Recording configuration settings, enabling customers to centrally manage all of their Impact 360 recorders regardless of location.

GRAIN DEALERS UPGRADE POLICY ADMIN CAPABILITIESGrain Dealers Mutual Insurance Co. upgraded its policy administration capabilities with Policy Decisions from Insurity, a Hartford, Conn.-based ChoicePoint company. Policy Decisions is designed to incorporate complete policy-lifecycle administration services-from application intake to rating and underwriting, from policy issuance to renewal and reinsurance-on a single Web services platform. Grain Dealers looked at competing systems that promised improved access, says David Patterson, assistant vice president and director of Information Services for the Indianapolis-based property-casualty insurer, but Insurity had several advantages that clinched the deal. At first, agents will access it to do their own quoting for commercial policies. The longer-term plan is to provide self-service access to agents for policy maintenance.