Security risk

New York - More than three-quarters (77%) of the 100 insurance executives representing the property and casualty and life sectors, along with key market participants who attended Standard & Poor's Ratings Services' 23rd annual insurance conference favored an optional charter for insurance regulation."It is not surprising that the conference participants selected optional federal charter with the emphasis on optional," says Standard & Poor's Insurance Practice Leader Grace Osborne. "The insurance market is becoming increasingly global in scope, and the U.S. insurance industry does not have a single voice to advocate U.S. interests with the foreign regulators and various accounting regimes."

The word "governance" has come to prominence in insurance IT circles in just the last few years, partly in reaction to the spate of federal regulation rained down by the Sarbanes-Oxley Act of 2002, the Gramm-Leach-Bliley Act of 1999 and the USA Patriot Act, which became law in 2001."The need for governance didn't become apparent until Sarbanes-Oxley and the others came along," says Karen Pauli, senior analyst in the insurance research practice at the Needham, Mass.-based TowerGroup. "SOX made it mandatory to know what's going on."

U.S. CONSUMERS WANT CONTROL OF E-HEALTH RECORDSAmericans show a strong interest in controlling their own electronic medical records, according to a national survey released at a health IT conference.

ARCOT SYSTEMS AND ADOBE WORK ON DIGITAL SIGNINGSunnyvale, Calif.-based Arcot Systems Inc. has collaborated with San Jose, Calif.-based Adobe Systems Inc. to create a new option for digital signing in Adobe Acrobat software and Adobe Reader software using "Roaming Digital IDs."

PURE CHOOSES ONESHIELD FOR POLICY ADMIN SYSTEMPrivilege Underwriters Reciprocal Exchange (PURE), a startup with headquarters in Plantation, Fla., has selected software from Westborough, Mass.-based OneShield Inc. to support administration of new insurance products. PURE deployed OneShield's Dragon platform to manage the end-to-end policy administration of PURE High Net Worth Insurance personal lines product offerings.

New York - In an effort to involve its members in government affairs and lobbying initiatives, the New York-based Risk and Insurance Management Society Inc. (RIMS) launched the RIMS Legislative Action Center on its Web site at www.RIMS.org/LegislativeAction."RIMS has made it easy for risk professionals to become more active in government affairs," says Terry Fleming, member of RIMS Board of Directors and director of the division of risk management for Montgomery County, Md. "RIMS is recognized in government as the voice of risk management, but we need members to become more supportive. RIMS Legislative Action Center will provide the risk management industry with the tools necessary to reach out to members of Congress and make their voice heard."

Washington - Life insurance costs could be reduced by billions of dollars annually under an optional federal chartering system, according to a new study, comprised of research from Steven Pottier, associate professor of insurance at the University of Georgia's Terry College of Business.

Tokyo - Most Japanese insurance companies are now pursuing new customer and product strategies due to regulatory reforms that are opening the banking sector as a distribution channel for insurance products, according to an Accenture survey of senior executives at one-third of the insurance companies operating in Japan.

London - Regulatory overkill is the greatest risk facing the global insurance industry, according to London-based Centre for the Study of Financial Information's (CSFI) latest Banana Skins survey, in association with PricewaterhouseCoopers (PwC) LLP, New York.

North Richland Hills, Texas - Katherine "Kay" Phillips, who joined HealthMarkets in July 2006 as vice president and deputy compliance officer—Corporate Legal, was promoted to chief compliance officer and associate counsel. In her new capacity, Phillips will have responsibility for and direct compliance programs for North Richland Hills, Texas-based HealthMarkets.

Oakbrook Terrace, Ill. - The Computing Technology Industry Association (CompTIA), a provider of vendor-neutral certifications for technology professionals, announced that five more companies in the printing and document imaging business are supporting development of a professional certification for the industry’s technicians.

Johnston, R.I. - Financial executives at the world's largest companies expect the severity of their most prevalent business risks to remain constant or intensify through 2009, according to the "Managing Business Risk Through 2009 and Beyond" study commissioned by commercial and industrial property insurer FM Global, Johnston, R.I. Executives identified the top three biggest threats to their organizations' revenue as competition, followed closely by supply chain disruption and property-related risks. The study also reveals a range of emerging risks that, while not among their primary concerns today, executives say could pose challenges in the years ahead. The study findings include the perspectives of more than 500 financial executives in North America and Europe-including CFOs and treasurers-who work for companies with at least US$500 million or more in annual revenue. Among the key findings:-- Of financial executives in the study, 62% expect risk from competition to increase through 2009, while only 4% expect it to decrease. -- Nearly one-quarter of financial executives expect supply chain risk to increase through 2009, while only 8% expect it to decrease. -- The top five emerging threats for corporations include changes in competition, government and regulatory developments, pricing volatility, variable client demand and political threats. --In the years ahead, finding enough time, money and people will be the biggest challenge to implementing a strong risk management program, said 56% of financial executives. -- More than one-third of financial executives expect a significant challenge in getting senior management to make risk management a top priority. -- Attitudes about managing business risk vary significantly among financial executives in France, Germany, North America and the United Kingdom. Consequences of Risk "This year's study results are a forceful reminder that managing business risk is a continuous, dynamic process, and not something a company can afford to be complacent about," said Ruud Bosman, executive vice president at FM Global. "Successful organizations proactively identify and address the threats they face today, while never losing sight of emerging risk on the horizon." More than one-half of the financial executives warn that a disruption to their top revenue driver can mean a loss of competitiveness, which can translate into both a loss of market share and reduction in their company's valuation. Additionally, almost one-quarter of executives report such a disruption could result in employee layoffs and/or an adverse impact on the local economy. Other top potential consequences executives cite include having to exit a line of business, undergo leadership changes, witness their company's credit rating downgraded, or face regulatory scrutiny or legal action. "As the financial executives interviewed for this study warn, the price of a major business disruption can far outweigh the cost of effective risk management," says Bosman. "Organizations that may be tempted to shortchange their risk management efforts face potential consequences ranging from the severe-a loss of competitiveness-to the catastrophic-having to cease operations altogether." Differing Country Views While financial executives in Europe and North America share many of the same concerns about the state of business risk, the study reveals a number of significant differences between the attitudes of executives based in the United Kingdom, and those of senior management in France, Germany, and the United States and Canada. For example: -- A higher percentage of North America-based financial executives are concerned about risks related to supply chain and property than their counterparts in Europe, who tend to focus more on risk related to competition. -- On average, 59% of financial executives say a loss of competitiveness is the most serious consequence of risk affecting their top revenue driver; however, only 37% of financial executives in France feel the same way. -- While nearly two-thirds of executives in the United Kingdom and North America cite downside risk as posing the most prevalent threat to their revenue, the same applies to only 45% of Germany respondents. -- U.K.-based financial executives routinely express more pessimism than their counterparts elsewhere: Of U.K. executives polled, 62% worry about a loss of competitiveness compared with 51% of all other respondents. -- Of U.K.-based respondents, 24% say a disruption can lead to exiting a line of business or ceasing operations all together, and 21% say it can lead to leadership changes. By contrast, only 10% of all financial executives worry about exiting a line of business or ceasing operations as a result of a major business disruption, and only 8% worry about leadership changes. The study is available online at http://www.protectingvalue.com. Sources: FM Global, PR Newswire

Des Plaines, Ill. – The nation's property and casualty insurance companies are calling for a united front in the fight against fraud after completing a two-year study that showed the industry’s efforts have been fragmented and inadequate.

New York - Insurers have made great strides in combating money laundering but many have yet to apply the power of IT to the problem, a trend some experts see as troubling.

Kansas City, Mo. - The National Association of Insurance Commissioners (NAIC) has adopted a model law development framework as part of an effort to respond to state, federal and international regulation.

Washington - Federal, state and local governments, the private sector, and American citizens themselves must be substantially better prepared to face the devastating impact of future mega-catastrophes, according to The Financial Services Roundtable, headquartered in Washington.

Minneapolis - As part of the association's Executive Education Program, the Insurance Accounting & Systems Association (IASA) will present the 3rd Annual CIO Roundtable program on Tuesday, June 5. This exclusive, "by invitation only" event will feature expert educational sessions sponsored by IASA associate member companies, including: AT&T, Document Sciences, Duck Creek Technologies and OnBase Insurance Solutions by Hyland Software. Admittance to the CIO Roundtable is complimentary to any qualifying chief information officer registered to attend the 2007 IASA Annual Educational Conference & Business Show, June 3-6 in Minneapolis.

Washington - Americans show a strong interest in controlling their own electronic medical records, according to a national survey released at a health IT conference.

Feeble information technology systems simply won't meet the Herculean challenges faced by workers' compensation insurance carriers. It's a lesson executives learned the hard way at Crawford & Co., an Atlanta-based third-party administrator (TPA) that handles workers' compensation claims.After identifying the need for software to help with regulatory compliance, Bob Stevens, Crawford assistant vice president of operational compliance, recruited a purchasing team. The team embarked upon the typical purchasing path-searching the Internet for software systems, gathering software information at trade shows and listening to vendor demos.

Malvern, Pa. – Members of the CPCU Society (Chartered Property Casualty Underwriter designation) now have access to an online tutorial that offers fundamental information about captives, the association reports. In its CPCU Society's May CPCU eJournal monthly electronic publication, "Captive Insurance Industry-What is it? Where is it? Why is it Important?," the association attempts to explain the mysteries of the captive insurance industry in plain English, starting with the history of captive insurance, the differences between captive insurance companies and traditional insurance companies, and the future market for captive insurance. The issue was written by Dennis Childs, CPCU, ARM, AMIM, ARe, RPLU, ASLI, MSIM. Childs is currently assistant vice president, commercial lines, product development, for Ohio Casualty Group. He received his CPCU in 1986 and has 35 years of experience in the insurance business in various underwriting and marketing roles with national carriers. Childs holds a B.A. degree from Transylvania University, and an M.B.A. from Boston University, with a specialization in insurance company management. Childs says that captive insurance companies have several definitions, but for the purposes of this article, he uses the following, from Kathryn Westover of the International Risk Management Institute: "A captive insurance company is a company that is wholly owned and controlled by its insureds; its primary purpose is to insure the risks of its owners, the primary beneficiaries of its underwriting profits are its insureds.” Beginning with the history of the captive insurance industry-with the first captive formed in Bermuda in 1963-Childs explains the multiple reasons behind the formation and subsequent growth of the captive insurance industry. He says the primary reason for the increase in popularity of this form of insurance was "the failure of the traditional insurance companies to meet the needs of an ever-growing and complex business unit." Childs also explains where the more popular captive domiciles are located and why captive insurance companies are important to the insurance industry and to commerce in general. Some current market status facts that Childs presents include the following:* There are 4,355 captive insurance companies worldwide.* Bermuda is the leading captive location of domicile, with 1,400 captives.* Currently 65 percent of Fortune 500 companies utilize a captive to meet at least one or more of their insurance needs.· Tillinghast estimates that the captive market now has $30 billion in annual premiums, and $130 million in assets worldwide. Childs concludes with some comments on what the future may hold in this area of insurance, saying "to meet the needs of corporate risk management for innovative and unique solutions to individual risk management, the need for captive insurance solutions will continue." The CPCU Society is headquartered in Malvern, Pa. Source: CPCU Society