It began as a mail-order business in 1922, providing automobile insurance to U.S. military officers who moved often and could not get coverage from other carriers. Today, United Services Automobile Association, better known as USAA, ranks as one of the best companies in America for providing customer service.With 4.5 million customers and $62.5 billion in assets, USAA placed first as the most reputable financial services company in America in the Financial Services Reputation Quotient study conducted by Harris Interactive, American Banker (a Thomson Financial publication) and the Reputation Institute. USAA also recently received top awards in the life, auto and home insurance categories from readers of Worth magazine.

While recently examining data stored within one of its auto policy databases, executives with New York City-based Metropolitan Insurance Co. uncovered a troubling glitch. It was an irregularity that any seasoned IT troubleshooter would certainly have appreciated.

Allstate Insurance Co. has received nothing but kudos from analysts for the boldness and vision of its Good Hands Network-the name the Northbrook, Ill.-based carrier gave its integrated call center, Internet and agent sales strategy.But some agents don't like Allstate's multichannel strategy-especially the part that cost them their jobs. On August 1, 27 current and former agents filed a class-action lawsuit in federal district court in Philadelphia, charging Allstate with nine violations, including breach of contract, breach of fiduciary duty, intentional age discrimination and retaliation in violation of federal laws.

r some insurance carriers, the Year 2000 compliance aftershocks are still lingering. But one such carrier, Charlotte, N.C.-based Royal & SunAlliance USA, hopes a court ruling in July spells the last Y2K trembler it will have to absorb.A Delaware Superior Court dismissed a lawsuit filed in August 1999 by Unisys Corp. The Blue Bell, Pa.-based computer giant, which has a commercial general liability (CGL) policy through two Royal & SunAlliance co-insurers, sought to recover more than $35 million in Y2K expenses to bring its computer networks into compliance.

The "Good Hands" people want to grab a bigger share of their customers' wallets. Allstate Corp. plans on launching its long-anticipated Internet bank by September 30 with a host of retirement, savings and investment products.Initially, the Northbrook, Ill.-based company is training its 2,000 agents in California and 1,200 agents in New York to refer policyholders to the new bank, which recently received a full-service thrift charter from the Office of Thrift Supervision.

Allstate isn't the first carrier to combine insurance and virtual banking. In February 1998, Principal Mutual Life Insurance Co. opened Principal Bank, and in November 1998, State Farm Insurance Cos. launched State Farm Bank.Although both banks still limit their marketing efforts to current policyholders, they still have achieved sizable growth in the past year. Principal Bank now has 34,300 accounts and $975 million in assets. The bank also has $900 million in deposits from checking, savings and CDs, in addition to issuing some 23,000 Visa credit cards.

The myriad complexities that comprise reinsurance lines often make it difficult to conduct business via the Web, industry observers say. However, buying and selling reinsurance offline is plagued by its own deficiencies- notably excess paper processing and other accountability issues surrounding the process.Providers of independent Web-based reinsurance exchanges believe they have a more efficient process of exchanging risk globally.

At a time when U.S. companies are cutting back on health care benefits and the number of uninsured Americans continues to grow, Web-based companies are stepping up their efforts to attract individuals and small-business owners.It's estimated that 43 million Americans do not have health insurance. In targeting this untapped market, Web-based insurance companies continue to expand their products and service offerings, and are actively pursuing more partnerships with both online and offline insurance providers, financial groups, civic organizations and other businesses.

Although asset management is a relatively new focus for carriers, they're on a steady course for targeting affluent customers with a wave of products and services.As the U.S. economy caught wind during the past decade, more consumers joined the ranks of the affluent population. Recognizing this socioeconomic shift, insurance carriers began steering their business strategies toward asset management services.

ess than a year after launching an ambitious program targeting small-business owners via the Internet, Wausau Insurance has shut down its eWausau operations.The decision was stunning, given that the company in April partnered with InsureZone to offer its products to banks and Web portals.

The Internet will continue to be a major focus of insurers' technology spending plans, according to the findings of a new global survey of insurance industry leaders.The survey, conducted by The Economist Intelligence Unit and PricewaterhouseCoopers, reveals that spending on technologies supporting e-business initiatives will increase 89% over the next three years. More than 150 leading insurance providers including carriers, agents/brokers, reinsurers, banks, broker-dealers and dotcoms, participated in the study.

Although the insurance market has proved to be a hard nut to crack for dot-com startups, that hasn't deterred new entrants from trying to gain a foothold on the Internet.One of the more recent entrants is NetInsurance, an online insurance agency that, claiming to be the first operation of its kind, offers customers the ability to comparison shop for and buy auto insurance in a single online session.

Conseco Inc. has undergone rapid change in Gary Wendt's brief tenure as chairman and CEO. In 10 months at the helm of the Indianapolis-based insurance and consumer finance company, Wendt has overseen the disposal of $1.7 billion of assets-including a $122 million stake in the Argosy Gaming riverboat-and the elimination of 2,000 jobs at Conseco Finance.In April, the company stepped up its efforts to rein in expenses by announcing plans to shift some of the company's call center servicing and back-office processing to India. Related to this decision, Conseco is acquiring exlService, a firm specializing in these functions which is based in Hyderbat, India.

Following in the footsteps of the American Bankers Asso-ciation Insurance Association (ABAIA), which proposed an optional federal charter for insurers, Washington, D.C.-based American Council of Life Insurers (ACLI) has released its own draft proposal-this one geared to the life insurance industry.The draft-which was assembled by about 30 working groups involving more than 200 ACLI member companies-calls for the creation of the National Insurer Act, the National Insurer Solvency Act and an Office of National Insurers in the Department of the Treasury.

On November 13, 1999-the day after the passage of The Financial Services Modernization Act-insurance companies formed steering committees, project teams and task groups to determine what work needed to be done to comply with Title V of the Gramm-Leach-Bliley (GLB) legislation. Title V requires financial services institutions to establish privacy policies and deliver notices by July 1, 2001 to their customers informing them of how the company uses and shares nonpublic personal information. If a company shares that information with nonaffiliated third parties for marketing purposes, customers must be able to "opt-out" of such sharing. Thereafter, companies must distribute an annual privacy notice to their customers.

As the July 1 deadline nears, insurers have developed and begun to distribute their privacy policies to customers, but most companies in general haven't thought about privacy as a component of customer relationship management (CRM), industry observers say."No one is looking at privacy from the perspective of how can we establish a value proposition in which the customers will say, 'yes, please share my information,'" says Peter Reid, privacy director at Fiderus, a Research Triangle, N.C.-based security and privacy consulting firm. Privacy can be good for business-as opposed to something that is being legislated, he says.

Extensible Markup Language, or XML, has received a whirlwind of hype since its creation in 1998, promising the ultimate universal format for all exchanges of company data.But to seasoned technology experts, this promise was initially made more than a decade ago with EDI, which also portended massive efficiencies and savings in business-to-business transactions.

Making good on its promise to vigorously defend a lawsuit filed Feb. 20 by eHealth-Insurance Services Inc., InsWeb Corp. filed a countersuit March 22 in U.S. District Court, Northern District of California, San Jose.InsWeb is denying allegations made by eHealthInsurance that InsWeb sent a considerable number of illegitimate referrals to a co-branded Web site built and maintained by eHealthInsurance (see "eHealthInsurance Sues InsWeb," April).

After several years of sitting on the sidelines, insurance carriers are now getting up to speed in selling products over the Internet. However, dealing with the state-based regulatory system, which requires carriers to jump through multiple hoops to engage in e-commerce on a national basis, threatens to slow their efforts to a crawl.

Despite huge corporate investments in personal computers, electronic mail and document scanners, the paperless workplace is still a pipe dream. Indeed, the insurance industry in particular is drowning in a white sea of computer-generated documents, customer correspondence and faxes.