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Arlington, Va. - As insurers scramble to minimize risk and make the most of business opportunities related to climate change and other severe weather-related losses, the National Science Board, Arlington, Va., is asking for $300 million in additional funds to help fund a multi-agency effort to improve hurricane science and engineering research. In a draft report released yesterday, "Hurricane Warning: The Critical Need for a National Hurricane Research Initiative (NHRI)'' the report calls for "a determined effort to maximize our understanding of hurricanes and ensure the effective application of science and engineering outcomes for the protection of life and property,'' the report states." And while no individual weather event can be attributed to global warming, a growing body of new scientific data show that rising temperatures are likely increasing the intensity of hurricanes, and other extreme weather events in the U.S. and globally. Hurricane-related losses in the U.S. totaled $168 billion in the last two hurricane seasons, and 1,450 storm-related deaths were reported, according to the report. Analysis performed by the science board found that most hurricane-related funding is focused on short-term forecasting efforts, with less than 2% aimed at improving structural design and engineering for buildings. Annual funding for the government's "focal point'' for storm analysis, the National Oceanic and Atmospheric Administration's Hurricane Research Division, has never exceeded $5.1 million, states the report, and its staff has declined by 30% in the past decade. "Billions of tax dollars have been provided for rescue, recovery, and rebuilding after hurricanes strike," notes the board. "Also important is national investment in the creation of new knowledge, and more effective application of existing knowledge to reduce these enormous public outlays, loss of life, and the associated societal disruption caused by hurricanes." The National Science Board, the governing board of the National Science Foundation (NSF), was established in 1950 to promote the progress of science, advance the national health, prosperity, and welfare, and secure the national defense. One lawmaker, referencing the report, has introduced bipartisan legislation to implement a national research initiative designed to better research, predict and prepare for hurricanes. U.S. Senator Mel Martinez, R-Fla., crafted the proposal working from recommendations presented by the National Science Foundation's new draft report. The bill's original cosponsors include Senators Mary Landrieu, D-La., David Vitter, R-La., and Bill Nelson, D-Fla. "Hurricanes, by far, cause more economic damage to a more widespread area than any other natural disaster. This bill takes sound, scientific recommendations and builds from them a foundation for better, more coordinated research," said Martinez. "Given the enormous cost associated with hurricanes, we ought to better coordinate research and information about hurricane prediction, observation, the vulnerability of structures and how we might develop better evacuation plans." The legislation would place responsibility for implementing and overseeing the NHRI on the National Oceanic and Atmospheric Administration (NOAA) and the National Science Foundation (NSF). The bill sets out specific goals for NHRI research, including predicting hurricane intensification, storm surge, rainfall, and inland flooding, improved observations, assessment of vulnerable infrastructure, interaction of hurricanes with engineered structures, improved computational ability, improved disaster response and recovery, and evacuation planning. The proposal also would establish a National Infrastructure Data Base in order to provide a baseline for developing standards, measuring modification and loss, and establishing public policy to better understand hurricanes and tropical storms. A Science Board task force has studied the issue of nationwide investments in hurricane science and engineering since December 2005. Its report warns that relative to the tremendous damage and suffering caused by hurricanes, the federal investment in hurricane science and engineering is insufficient, and as the board document exclaims, "Time is not on our side." Sources: Sen. Mel Martinez, The National Science Board, and Insurance Networking News Archives

YOUNG INDEPENDENT AGENTS WANT MORE TECHNOLOGYYoung independent insurance agents identify technology to help them more easily write business and service customers as the second most important thing-after competitive rates-carriers can offer an independent insurance agency. Drive Insurance Group of Mayfield Village, Ohio-based Progressive Casualty Insurance Co. discovered this while conducting a survey of more than 750 young (40 years of age or younger or those who have been in the industry less than 10 years) independent agents. The majority of young independent insurance agents (79%) say technology has been significant in helping them grow their business. Other results from the survey showed 11% have an interactive Web site where customers can quote, buy and contact them. Thirty-four percent have a static Web site where people can learn more about their agency and the services they provide, and 40% don't have a Web site at all.

VOICE SELF-SERVICE AND CUSTOMER INTERACTION MANAGEMENTThe customer interaction management software suite from Genesys Telecommunications Laboratories Inc., headquartered in Daly City, Calif., enables SAP solutions to integrate with voice self-service functionality from Genesys' Voice Platform. The integration of voice self-service with the back and mid-office is designed to simplify access to SAP solutions and make them available to a larger set of users across the organization.

After surveying a cross-industry spectrum of companies, Lori Sechio confirmed what she already suspected: 95% of them had inaccurate information on the number and configuration of their IT assets-a discrepancy that could put these firms at risk of Sarbanes-Oxley (SOX) noncompliance if they were publicly held and did not implement a rigorous IT asset management (ITAM) program."We looked at our client base over the past two years, and 95% of the time the technology assets they had on their books did not match what we actually found," says Sechio, CEO of TekMethods, a Tampa, Fla.-based IT asset management (ITAM) services firm.

Insurance Networking News asked James Bisker, global insurance industry leader, IBM Institute for Business Value, to define knowledge-based, expert and artificial intelligence systems and provide insight into how they can benefit insurance industry operations.INN: There has been some confusion in the marketplace about knowledge-based/expert and artificial intelligence systems. Can you clarify?

Say the word "conversion" in a roomful of insurance technology professionals, and you'll likely hear a cacophony of moans, groans and expletives.That's because converting policy data from one administration system to another is tedious, stressful, time-consuming and costly.

BUSINESS SOFTWARE DEVELOPMENT SERVICES FOR ATLANTICNew York-based Atlantic Mutual Insurance Co. chose MFX to provide business software development, maintenance and enhancement services from MFX's data center facility in Roanoke, Va. MFX hired the application support staff previously supporting Atlantic Mutual's proprietary business software applications. The new team will support Atlantic Mutual, as well as gain knowledge and exposure to MFX's proprietary products including WriteNow, ClaimsAssure and RiskVault. Atlantic Mutual's proprietary business software applications will continue to be owned by Atlantic Mutual.

Washington - Congressman Ed Royce (R-CA), a senior member of the House Financial Services Committee, introduced legislation that would create an optional federal charter regulatory regime for life and property/casualty insurance providers. The National Insurance Act of 2006, is companion legislation to S.2509, which was authored by Senators John Sununu (R-NH) and Tim Johnson (D-SD)."The National Insurance Act would create a federal regulatory agency within the Treasury Department; however, it would leave the current state regulatory system in place. An insurance provider could choose to be regulated by the 50 states or by the Office of National Insurance," says Royce. "This concept is not new--the banking system has lived under such a framework for much of our nation's history."

Boston - Liberty Mutual Group enhanced its online workers compensation claims management to provide faster service and better outcomes. The Boston-based insurer provides those responsible for managing a claim instant online access to all of the related documents, while protecting the privacy of confidential medical information."We made a great claims management system even better by slashing the time required for documents from outside resources--such as medical reports, bills and even digital photos--to be available in the system," explains Kevin Carson, who manages the new process. "What took days can now happen in seconds. Outside partners can now send electronic versions of these reports, which instantly become part of our system. Other providers still send paper documents, which we now scan into the system within a day of arriving at Liberty Mutual."

Boston – A new probabilistic model designed to help insurers better understand the location of their exposures relative to high risk areas and to estimate potential losses from wildfires is now available from AIR Worldwide Corp., a Boston risk modeling company. The U.S. Wildfire Model is designed to help insurers, reinsurers, and intermediaries manage wildfire risk both for individual policies and entire portfolios of properties in California. Nationally, wildfires have cost the insurance industry more than $5 billion since 1980 with a majority of the losses occurring in California. The 2003 Cedar and Old wildfires in Southern California, for example, cost insurers more than $2 billion. Together, the fires burned more than 750,000 acres, destroyed 3,700 homes and resulted in the deaths of 24 people. In 2006, more than 8.7 million acres have burned in Western states to date, equaling the acreage burned in all of 2005, one of the worst years on record. “The growth in insured losses from wildfires is a result of the same broad demographic trend we’ve observed with respect to other perils—namely, increasing property development in high risk areas,” said Dr. Jayanta Guin, vice president of research and modeling at AIR. “In the case of wildfires, we are witnessing property growth in the buffer zone between wildlands and the urban environment. According to U.S. Fire Administration statistics, nearly 40 percent of new home development in the Western United States is occurring in this wildland-urban interface, putting more insured property at risk every year.” Insured losses from wildfires are influenced by factors such as local fuels, topography, weather, and the vulnerability of affected structures. AIR’s model employs high-resolution fuel (vegetation), topographic, and weather data. The model incorporates 13 burnable fuel types at 30-meter resolution accounting for variations in moisture content, fuel loading, and horizontal continuity. Since fire spread is influenced by topography, AIR has incorporated high-resolution USGS digital elevation data. The model also considers the effect of wind speed and direction, including the Santa Ana winds in Southern California and the Diablo winds in the northern part of the state. The AIR model also estimates the mitigating impact of firebreaks created in the course of fire suppression activities, as well as the exacerbating impact of impaired road access. The flammability of roof and siding materials is the primary determinant of a structures’ vulnerability to fire. The AIR model accounts for a wide range of residential and commercial constructions and takes into account mitigating factors, such as fire resistant roofing and siding materials, to build an estimate of damage and loss. AIR’s probabilistic wildfire model is based on a robust stochastic catalog of potential future events that provides insurers with full probability distributions of loss and the ability to generate loss costs. The model is available now for AIR’s CLASIC/2, CATStation, and CATRADER catastrophe risk management systems to analyze exposures in California. Future releases of the model will expand its coverage to other Western states. Source: AIR Worldwide Corp.

Hartford, Conn. - Many commercial lines insurers imagine a world of potential success by applying to their businesses the predictive modeling techniques now widely used in personal lines, according to a new survey-based study by Conning Research and Consulting, Hartford, Conn. "It is clear from our survey results that commercial insurers are inspired by the advances in predictive modeling that are revolutionizing the personal lines marketplace," said Stephan Christiansen, Conning's director of research. "Since the commercial lines industry is still in the early stage of exploration of predictive modeling, it is not yet clear whether the early and aggressive pursuit of the right combination of data and tools will lead to a permanent competitive edge." The Conning Research study, "Commercial Lines Predictive Modeling: Searching for the Lift" identifies the environmental contrasts between commercial and personal lines, current activity in commercial lines predictive modeling implementation, potential barriers, and likely outcomes in this search for predictive modeling competitive advantage. "Certainly, predictive modeling has become a key tool in personal lines, but that is not necessarily predictive of a success in all commercial lines," Christiansen said. "Our research shows that insurers and modeling vendors perceive strong opportunities in some segments, weaker opportunities in others. And while there are barriers to successful implementation, our analysis has identified potential solutions for these hurdles." Source: Insurance Newslink

London - Eighty percent of major European insurance companies have begun their Solvency II implementation program, and, two-thirds (61%) see it as a means to improve all aspects of their risk management across the whole business, according to London-based Ernst & Young Global Ltd. However, while the benefits are welcomed, there is still much work to be done."The 2006 Solvency II Readiness Survey: Readiness and Beyond," published by Ernst & Young's Global Insurance Center, interviewed senior managers with responsibility for Solvency II in 54 of Europe's largest insurers, spread across 16 countries, with an average asset size of 110 billion Euros.

Boston - Markets in Financial Instruments Directive (MiFID), a European Union (EU) directive going into effect by November 2007, may affect the conduct of business and approach to operational risk of insurers that operate within the EU and who either provide or procure outsourced services.The directive will require that U.S. financial institutions—including insurers--operating within the EU that outsource an operational function to:

Silver Spring, Md. - Companies have a long way to go when it comes to determining their organizations' technology strategy to meet compliance requirements, according to a survey conducted in June of 741 end users from number of vertical industries, including banking, finance, healthcare and insurance. Partly because of media "over-emphasis" on Sarbanes-Oxley and HIPAA, end users have a "disturbingly narrow view" of compliance as a broader issue and what it means for their organizations, says AIIM, a Silver Spring, Md., enterprise content management association and author of the report.In its analysis, AIIM indicates that survey respondents have an intuitive feel that "something" is wrong within their organizations relative to managing electronic information, but are having a difficult time mounting a systematic and disciplined approach to meet the challenge.

New York - American International Group, Inc. (AIG) today named Anastasia Kelly executive vice president, general counsel, and senior regulatory and compliance officer.

Chicago - Aon Consulting, the human capital consulting organization of Chicago-based Aon Corp., report that Anne Kemp and Kathleen Skapik have joined the electronic discovery business unit. This unit is part of the IT Risk Consulting group, a division of the company's Financial Advisory and Litigation Consulting Services practice.

Hartford, Conn. - Property/casualty carriers in the U.S. can expect another year of overall industry underwriting profit in 2006, matching the results of 2004, according to the latest Conning Research and Consulting Inc. forecast report for the P&C industry, which provides a first look at results through 2008.

Fort Collins, Colo.- Colorado State University’s hurricane forecasters now predict this year's hurricane activity "will be slightly below the long-term," according to a revised forecast issued Friday.

IT INFRASTRUCTURE OUTSOURCING CONTRACTThe Netherlands subsidiary of Blue Bell, Pa.-based Unisys Corp. has expanded its relationship with long-time client REAAL Insurance through a new five-year outsourcing contract with a value estimated at $11.6 million (U.S). By managing the company's IT infrastructure, Unisys will provide support 24 hours a day, seven days a week, to REAAL and its agents. REAAL hopes to achieve significant cost reductions through consolidating infrastructure outsourcing services under one vendor. REAAL will consolidate its hundreds of existing support contracts and suppliers to one central contract with Unisys, and will reduce the number of services suppliers from 20 to one.

Many publicly traded companies are in their third year of dealing with the Sarbanes-Oxley Act (SOX)--the law that makes corporate executives responsible for the accuracy of their financial statements and for the internal controls that minimize errors and reduce fraud.After going through the rigorous process of documenting and testing those controls, such as the segregation of duties and appropriate access to financial systems, many of these companies-including insurers-spent far more on the effort than they ever imagined.