Policy adminstration

Insurance is an important component of modern economic life. The logical outcome of the millions of policies in force today is a proportional number of claims to pay for covered losses.From an operational cost and policyholder perspective, the claims handling process is the heart of property/casualty insurance. It's true that performing risk analysis, selling policies and retaining customers are important issues for carriers.

Insurers have invested significant amounts of capital on technology based on the belief that those investments will improve their top- and bottom-line performance. However, new research indicates that carriers are experiencing mixed results to date and they're seeking refined metrics to measure how technology is impacting their operations.Those are some of the conclusions of a recent survey of 248 North American financial services firms conducted by Tillinghast-Towers Perrin. The survey is the second in a series of industry studies conducted by the management and actuarial consulting firm intended to learn how new technologies are impacting carriers' performance, and how carriers are measuring the success of IT implementations.

It's easy to define what manufacturers produce and sell. Toy makers make toys. Auto manufacturers make cars. Pharmaceutical companies make drugs. But what do insurance companies do?

When Florida Combined Life decided to become a primary player in the dental PPO and fee-for-service business in that state, it had two major challenges: an aggressive timeline and an inflexible claims system.The Jacksonville, Fla.-based subsidiary of Blue Cross Blue Shield of Florida had been offering dental coverage as an ancillary product to its health insurance offerings, and it had been paying dental claims through its health claims system. But that system was inflexible, and would not meet the company's future needs, says Charles Brody, dental division vice president at Florida Combined Life.

Five years ago, Security Insurance Co. was suffocating under the weight of paper files. The company's file room was packed to the point where the company had to place file racks in hallways, consuming office space that cost $20 per square foot.Space constraints weren't the only problems that the Alpharetta, Ga.-based carrier's paper filing system created. Call center representatives had to put customers on hold and ask a file room clerk to retrieve the caller's file just to answer routine questions. Moreover, only one person at a time could work on a customer's file during the underwriting process, a situation that didn't foster high worker productivity.

The expression "the sum of the parts is greater than the whole" has many tried-and-true applications. PwC Consulting is contributing its own technology-driven version of this axiom, and insurance carriers are in line to benefit.Last year, PwC Consulting, a business unit of New York-based PricewaterhouseCoopers LLP, unveiled an e-business solution for property/casualty insurers that the global management and consulting firm believes will alter how carriers invest in technology.

As it faced the unenviable task of selecting and then implementing a systems integration solution across its various business components, Cincinnati-based American Modern Insurance Group discovered a modern approach to an age-old problem.In late 2001, AMIG adopted a program known as the Virtual Insurance Community (VIC), the brainchild of PwC Consulting, a business unit of New York-based PricewaterhouseCoopers LLP. VIC is a pre-integrated, component-based e-business solution designed for processing insurance transactions.

In 1999, when PwC Consulting formulated the blueprint for its Virtual Insurance Community (VIC), one dynamic that drove the initiative was its ability to provide insurance carriers with a pre-integrated best-in-class technology solution.The global management and consulting firm, a business unit of New York-based PricewaterhouseCoopers LLP, developed VIC as a component-based e-business solution for property/casualty insurers-eventually to be offered to life, annuity and group health carriers. And while the Virtual Insurance Community offers best-of-breed solutions spanning a myriad of technology applications, carriers that adopt the program-via licensing or via an application service hosting model-will still be able to deploy various applications that they previously have built and mapped within their IT infrastructure.

With more than 20 years of IT experience in the insurance industry, June Drewry has a vast knowledge of technology. Nevertheless, she insists she is not a high-tech wizard.In fact, when she talks about her responsibilities as executive vice president and CIO for Chicago-based Aon Corp., she peppers her conversation more with relaxed chuckles than with dry techno-speak.

In 2000, insurers rode an information technology investment wave that was largely fueled by ambitious dot-com providers eager to plant their flag in the online insurance market.A year later, insurers jumped off the wave. The dot-com shakeout that intensified in 2001 meant that more than $15 billion in technology demand had suddenly evaporated. Moreover, a sliding economy contributed to a significant IT spending spiral-reducing healthy double-digit growth in 2000 to a less-than-stellar 3% growth rate last year.

When it comes to information technology investments in the insurance industry, there is a clear delineation of priorities predicated on the sector of business in which a carrier operates.Underwriting, pricing and products are the most important IT priorities for property/casualty insurers, while distribution reigns supreme for life insurers, states Tillinghast-Towers Perrin's e-Track report on insurance technology investments, which polled 248 large and mid-size carriers across North America.

Louisiana State University Health Sciences Center thought it had an efficient claims submission system. Half the claims from the nine-hospital integrated delivery system in Baton Rouge go to Medicare or Medicaid. Staff used to load the claims on magnetic tape each week and ship them to the government payers.

In March 2000, seven major health care payers started earnest negotiations to create a joint company to enable providers to communicate with the payers via the Internet.By July 2000, MedUnite was formed with a goal of offering services within a year. MedUnite launched its services last September, only six weeks behind its original schedule. However, it's a different company from what was originally envisioned.

Electronic bill payment and presentment (EBPP) has experienced a mixed bag of interest among consumers, with payments of insurance premiums ranking low on their online bill-payment priority list.In fact, insurance carriers, along with utilities, telecommunications and mortgage companies, are among the businesses that are lagging behind in the expansion of EBPP, according to a recent report by Stamford, Conn.-based consulting firm Gartner Inc.

Insurance companies spent more than $20 billion this year on new technology. But which technologies are the most innovative and will have the greatest impact on carriers' success?The Internet won't replace agents or call centers, nor will it become the preferred method for purchasing insurance. But it certainly is becoming an integral part in carriers' efforts to market, support and sell insurance policies to customers, and to attract new policyholders.

Most Americans will never forget where they were when they first heard news of the September 11th terrorist attack. For 62 Allstate claim handlers, they will remember they were attending training workshops at the carrier's

When the World Trade Center came under attack, David Annis was thousands of miles away from The Hartford Financial Services Group Inc.'s offices at Seven World Trade Center. In fact, Annis, the company's group senior vice president and CIO, was not able to return to the United States for more than a week to oversee recovery efforts.However, thanks to the combination of disaster planning, vendor support and quick work on the part of the carrier's crisis management committee, all 330 employees who worked for the five Hartford business units were working at alternative sites the following Monday.

Disaster preparedness is subject most often discussed in the aftermath of a major natural or manmade disaster.Although most major corporations have comprehensive disaster recovery plans in place, the unprecedented events of Sept. 11 clearly demonstrate importance of updating and testing those plans frequently.

In late August, Chicago-based global insurance brokerage and consulting firm Aon Corp. redesigned its corporate Web site so customers, employees and other affiliates could more easily and quickly find content and navigate the site.As part of the project, Aon's portal team also implemented a set of Web development techniques that would enable internal Web designers to reduce the turnaround time to post new and pertinent data and graphics onto the site, located at www.aon.com.

When disaster strikes, insurance companies immediately mobilize their catastrophic ("cat") teams to deal with the accompanying sudden increase in claims.The aim is to provide expedient customer service to policyholders who have been injured or who have lost property or loved ones-and rightfully deserve compensation from their insurance company.