Risk

New York – It’s understood that the actuarial department has vast computing needs and a heavy reliance on actuarial modeling, valuation and supporting technology. But stochastic modeling requirements for financial reporting, pricing and risk management are causing a growing desire to benefit from the move toward high performance computing. This, coupled with the need to pull actuarial executives out of the data preparation and calculation mire so they can focus on financial analysis and business decision support, is creating a significant push toward greater actuarial/IT alignment. These were but some of the insights that came from a recent Actuarial Transformation Roundtable, released by the Insurance and Actuarial Advisory Services (IAAS) practice of Ernst & Young LLP yesterday. The group, which brought together senior actuaries and IT professionals, focused on ways to better align the two departments in order to meet the heightened business/management demands created by competition as well as increasingly complex products, extensive Sarbanes-Oxley (SOX) compliance requirements, the shift from rules-based to principles-based valuation and the growing volume of data in general that must be integrated and managed.

Carmel, Ind. - W. Mark Johnson joined the Conseco Inc. as senior vice president and chief compliance officer. Johnson will direct compliance functions at all Conseco locations, overseeing activities at Conseco Insurance Group, Bankers Life and Casualty Co., and Colonial Penn Life Insurance Co. His responsibilities include compliance training; distribution monitoring and enforcement; company licensing; Health Insurance Portability and Accountability Act, Gramm-Leach-Bliley and state privacy regulations; market conduct audits and state examinations; and review of certain sales/advertising materials.

Rochester, N.Y. - Corporate executives worry most about data security and terrorism, according to survey results from Rochester, N.Y.-based Harris Interactive Inc. Harris Interactive asked senior executives of large corporations ($1 billion plus revenue) to share their worries about typical crisis situations. And 61% named compromise of corporate information system one of their biggest worries.Data breaches drew a number of headlines in 2006. Security experts report that high-profile data breaches, growing sophistication among cyber criminals, increased media attention and unprecedented legislative activity have changed perceptions and practices around identity theft in 2006.

Around the world, CEOs at insurance companies are slowly coming to the conclusion that they need smoothly running IT departments if their companies are to remain competitive. As a result, IT projects and budgets are getting some respect and are becoming less likely to fall victim to arbitrary cuts, according to analysts in North America, Europe and the Asia-Pacific region.The newfound respect is coming at a time when IT departments face intense regulatory pressure in Europe-and tamer but still formidable rules in the United States, China and Japan, according to reports from Boston-based Celent LLC. Pressure also arises from the need to service customers and distributors in real-time transactions and with rapid information flow, Celent says. Those functions can strain internal legacy systems, prompting insurers in mature markets, such as the United States, Europe and Japan, to update communications systems and core data environments.

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.

It's the same old adage: a penny saved is a penny earned. For many insurers, that means a boost in 2007 outsourced services. But for an up-and-coming group of carriers, that penny translates to a one-pence, kroner, deutsche mark or Euro.Across the globe, interest in business process outsourcing (BPO) services continues to increase, chiefly because insurers must continue to seek ways to achieve operational efficiencies and take advantage of growth opportunities.

How will changes in federal rules on e-discovery affect insurers? To find out, Insurance Networking News talked with Jon Neiditz, an attorney with Lord, Bissell & Brook. Neiditz has helped more than thirty insurers and reinsurers adjust to the amended rules.INN: How will the Federal Rules of Civil Procedure (FRCP) alter the way companies manage information?

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.

Washington - A third conference in the movement to start a standards-based nationwide health information network (NHIN) is expected to include demonstrations of health information exchange prototypes and discussion of business models.

NASHVILLE, Tenn. – The nation may remember 2006 as the year the Democrats won the mid-term elections, Gerald Ford and James Brown died, and data breaches made an indelible mark on American business in general and the insurance industry in particular.

Harrisburg, Pa. - Pennsylvania National Mutual Casualty Insurance Co. enhanced its online quoting and application system for personal lines products, as part of its strategy to jump-start profitable personal lines growth.Some of the technology enhancements include quick-hit automation and workflow improvements, including automatically ordering Insurance Bureau Score reports, automatically assigning plan tiering and simplifying and streamlining the application process by eliminating duplication. In addition, product enhancements include streamlining auto and homeowner underwriting guidelines to make them easier to use and less cumbersome, and revising underwriting guidelines to broaden underwriting appetite for selected risks to be more competitive.

Chicago - Chicago-based insurance broker Aon yesterday became the latest in a series of companies to participate in technology mergers as it announced its intent to acquire Valley Oak Systems (VOS), a San Ramon, Calif., provider of claims management software, services and support for the insurance industry. The acquisition reflects Aon’s desire to supplement its risk management portfolio. Valley Oak, winner of the IASA 2006 Technology Achievement Award, is best known for its iVOS system, which includes medical bill review, policy underwriting, case management, billing and event management capabilities. "Aon's acquisition of Valley Oak Systems continues Celent's predicted roll-up of the insurance software industry,” says Donald Light, senior analyst with Boston-based Celent, LLC. “While most acquisitions of independent insurance software vendors have been by larger software vendors, such as Milwaukee-based Fiserv buying Insureworx, Oakland, Calif., this time it is a major broker doing the deal.” The purchase InsureWorx, a policy and claims administration technology provider, gives Fiserv an end-to-end policy and claims administration offering for workers compensation. Other recent mergers in the insurance technology space include the San Diego-based Websense Inc., acquisition of PortAuthority Technologies, Inc., Palo Alto, Calif., and Ra'anana, Israel, for approximately $90 million in cash. PortAuthority will combine its information leak prevention technology with the "ThreatSeeker" malicious content identification and categorization technology from Websense. The deal will create a single source for companies looking to prevent the unauthorized use or disclosure of confidential data while simultaneously protecting users and data from external malicious threats. The Aon-VOS merger will benefit Aon’s unique position as a large brokerage firm. By integrating and sharing data with RiskConsole, Aon’s RMIX offering, the Aon-VOS deal enables the Chicago broker to create what the companies claim to be the only end-to-end browser-based offering in the marketplace. The acquisition of VOS follows a similar deal cut in 2004 by Aon’s with Risk Laboratories, LLC (RiskLabs), Marietta, Ga. Aon expects to consummate the VOS deal by January 31, 2007. Light believes that, from a marketing and sales perspective, the acquisition makes sense. “Valley Oak's customer base includes a great many risk management units in large employers who self-insure workers' compensation,” he says. “Aon's brokerage business targets that same group of risk managers. Aon's challenge will be to give Valley Oak the resources and freedom to keep its offering fresh and valuable to self-insured employers, as well as other customers such as insurers and third party administrators." Sources: Aon, Celent, INN archives

New York - Eliot Spitzer of New York nominated Eric Dinallo, General Counsel of Willis Group Holdings, to serve as New York State Insurance Superintendent in the new administration.Dinallo, 43, will replace Howard Mills, who was appointed in 2004 by Republican Governor George Pataki. In 2003 Dinallo resigned as chief of Spitzer's Investment Protection Bureau to become head of regulatory matters for Morgan Stanley, and was hired as general counsel for insurance broker Willis Group Holdings Ltd. in March.

Naperville, Ill. - The thieves who made off with computer tapes containing the names and Social Security numbers of 130,000 Aetna Inc. customers appear unlikely to exploit the information, the Hartford, Conn.-based health insurer says. "There is no indication that data theft was targeted," Aetna says. Aetna announced yesterday that a lockbox containing the computer back-up tapes was stolen in late October from the Naperville, Ill., satellite office of a vendor, Addison, Texas-based Concentra Preferred Systems. Concentra audits medical clams and performs other cost containment services for insurers, and the tapes contained information on customers of "several" other undisclosed carriers, according to published reports. Information on an undetermined number of WellPoint Inc. customers may have been stolen in the burglary, reports say. "We believe the total number is an extremely small percentage of our membership," a spokesman for Indianapolis-based WellPoint says. In a report on the incident, Aetna quotes law enforcement officials who say the burglars also stole cash, pharmaceuticals, DVDs and movie passes, and did not appear to be looking for information to use in fraudulent schemes. The law enforcement agency characterized the perpetrators as "common thieves" looking for cash and other property to pawn. The thieves forced their way into the space occupied by Concentra, as well as the offices of five other businesses in the suburban Chicago building, Aetna says. Property was taken from all the tenants. Concentra officials, who notified Aetna of the loss on Nov. 3, say retrieving the data from the tapes would require a complex combination of commercial equipment and specialized software. The data was stored in unlabeled, difficult-to-understand formats, Concentra says. "These tapes cannot be used on a standard PC," Concetra officials say. Concentra reconstructed the data on the tapes and turned it over to Aetna on Nov. 10. Aetna's IT team worked around the clock to determine what information was stolen. They found the data included member names, hospital codes and either Social Security numbers or Aetna ID numbers for about 130,000 people. The names and Social Security numbers of about 750 medical workers were also on the tapes. Aetna is apologizing and notifying members and providers whose personal information was on the tapes. The insurer also is arranging free credit monitoring to help detect any misuse of the information. Concentra is offering a $10,000 reward in connection with the theft, according to published reports. Source: Aetna Inc.

New York - Ameriprise Financial Inc. has promised to hire a consultant to review company laptop policies as part of an agreement with Massachusetts securities regulators. A year ago, the theft of one of Ameriprise’s computers exposed the personal data of more than 150,000 clients.

The National Association of Insurance Commissioners (NAIC) is urging Congress to create a Natural Catastrophe Commission that could establish a disaster fund, strengthen and enforce building codes, and provide community support.

Kansas City, Mo. - The National Association of Insurance Commissioners (NAIC), the trade group for state insurance officials, has established a Web site to provide motorists with tips on purchasing auto insurance.

Chattanooga, Tenn. - An insurance company was among the four winners of the 2006 Process Innovation Awards. UnumProvident Corp., a Chattanooga, Tenn., disability insurer, received the honor for work in Sarbanes-Oxley solution compliance.

Washington – If lawmakers such as Sen. Trent Lott, R-Miss., and Rep. Cliff Stearns, R-Fla., as well as the National Automobile Dealers Association (NADA) get their way, insurance companies will be forced to disclose total-loss vehicle claims information to the general public. Thanks to catastrophic storms such as Katrina and the recent flooding in the Pacific Northwest, the public is more aware of the problem of flooded and totaled vehicles being resold to unsuspecting buyers. Lawmakers believe that a rule mandating disclosure of total-loss vehicles is one way to manage the problem. In the 109th Congress, Lott and a bipartisan list of colleagues sponsored S.3707, the Passenger Vehicle Loss Disclosure Act, to require that insurance companies permanently red-flag totaled, flooded or stolen vehicles. Rep. Stearns introduced a similar bill, H.R. 6093, in the House of Representatives. Seattle-based PEMCO Insurance last month announced that it voluntarily reports cars totaled with flood damage to CARFAX, an auto database available to consumers. Other insurance companies are expected to evaluate their reporting procedures. Sen. Lott also affirmed his plans to reintroduce legislation in the 110th Congress to reduce title fraud and title washing of insurance-totaled vehicles. According to lawmakers, although an insurance company may declare a vehicle a “total loss” due to water damage, severe accident, theft, etc., these vehicles often are sold at salvage auctions. They are then rebuilt and re-enter the market with clean titles, so consumers, wholesale auto auctions and dealers may have no way to learn about the total loss. The bill would require insurance companies to reveal the reason for the total loss (flood, collision, stolen, etc.), the date of total loss, the odometer reading on that date, and whether or not the airbag deployed. The NADA-supported effort by lawmakers would permanently red-flag these vehicles, reducing the likelihood that the “total loss” vehicles will end up back on the street. This federal legislation would not preempt state titling laws or require changes in state laws. “With more than five million vehicles totaled by insurance companies just last year -- more than half a million of them coming from the Gulf Hurricanes of 2005 -- something has to be done to permanently notify consumers about these severely damaged vehicles," said David Regan, Vice President of Legislative Affairs for NADA, McLean, Va., was quoted as saying. Sources: PR Newswire, Yahoo News, The National Automobile Dealers Association