IT Studies
Web Services Show Promise, But Roadblocks Remain

TowerGroup recently released its new report, The NetworkedFinancial Institution: Connections for a Successful BusinessStrategy, as part of its cross-sector TowerGroup Point of ViewReports (www.towergroup.com). The Needham,Mass.-based consultancy examines Web services and the current stateof Internet-based networking standards and technologies.

Theres an adoption [of Web services technologies] in theinsurance vertical in particular thats very encouraging, saysGuillermo Kopp, director of TowerGroups Emerg-ing TechnologySolutions practice. The early impact of Web services in financialservices will be primarily within firewalls, but because of thedesegregation that exists in insurance, theres good opportunity foruse outside the firewall.

According to the report, however, spending on Web services byfinancial services institutions is currently minor when compared tooverall technology spending. TowerGroup estimates that by 2005, Webservices will still represent only $8 billion of the $350 billionspent by financial services institutions worldwide on IT. Interestin, and spending on, Web services will continue to grow, butTowerGroup projects the vision of the networked financial servicesinstitution will not be realized until the end of this decade, atthe earliest.

Carriers can facilitate the realization of this vision byencouraging their distribution network to work through a common setof XML Web services standards and by offering a Webservices-enabled front end, according to Kopp. I dont believedemanding agents or service providers to be fully online [with Webservices] is a workable proposition. Michael P.Voelker

OnlineInitiatives
Revamped Web SiteLaunched by ACORD

ACORD recently launched its redesigned Web site (www.acord.org)for access to and download of ACORD forms and information. Therevamping was the culmination of a 12-month process of review andinput by internal ACORD departments and the ACORD members whofrequent the site.

The primary goal of the redesign was to enhance the usability ofthe site, according to Rick Gillman, ACORDs vice president ofcorporate communications. Weve made navigation cleaner and addedquick links that take people to key areas of the site directly, hesays. Previously, finding some items of information was amulti-page process.

ACORD has updated information about the organizationsinitiatives to develop standards for all lines of business andadded new pages dedicated to industry events and news.Additionally, a single sign-in security process has replaced theuse of multiple passwords to provide access to ACORD forms,standards downloads, and the benchmark calculator. This newsecurity component establishes all permissions at the firstsign-on, giving users a personalized experience that shows on onepage what information they have access to, Gillman explains.

Non-members will be able to access ACORD case studies, regularlyupdated information on ACORD standards, and global initiatives aswell as information about ACORD events and staff. A new featurecalled the News Center includes information on the latestdevelopmentsat ACORD and contains the ACORD Presentation Center,which allows visitors to view audio and visual PowerPointpresentations. Another feature, ACORD TV, provides a menu ofstreaming videos featuring ACORD staff and members on variousissues relating to standards and technology in the industrytoday.

The current design represents the first of a multi-phased siteredesign. Future changes will include such additions as a solutionprovider directory and multi-language support. MPV

IT Staffing
Technology Hiring Outlook for Insurance Strong, IndexShows

Given the financial results of the insurance industry in 2001,it would seem logical insurers would be looking to curtail thehiring of staff, including in information technology. However,growth of IT jobs in insurance will continue to outpace the rest ofthe market through the fourth quarter of 2002, according to therecently released IT Hiring Index, produced by Robert HalfTechnology, a Menlo Park, Calif.-based recruiting service.

The index, created from an independent survey of 1,400 CIOs froma stratified random sample of U.S. companies with 100 or moreemployees, reports that solid employment gains are expected in thefinance, insurance, and real estate sector, where a net 14 percentincrease in hiring is expected.

This contrasts with an expected general slowdown in the hiringof IT professionals in the fourth quarter of 2002. Overall, aneight percent increase in IT staffing is expected across allindustries, with only the business services sector expecting ahigher increase than financial services, at 20 percent.

While growth in IT staffing at insurance companies continues,the pace of growth is still off from previous quarters. Lastquarter, it was 19 percent, says Robert Halfs Joel Dibble, who hasbeen involved in compiling data for the index for several years.More interesting, for the first time in my experience working onthis report, there were companies surveyed that were decreasingtheir staff, and there was a net hiring loss in some sectors.

The indexs authors also determined companies are hiring moreselectively and bringing in specialists on a project basis.Applicants who have the precise combination of technical skills andindustry experience required for a position and who can clearlycommunicate how their skills will impact a companys bottom linehave a distinct advantage in the current market.

Dibble adds that CIOs reported the subset of IT that willexperience strongest growth will be in the area of networking.Robert Half Technology has not, however, given an opinion as tojust why the financial services sector has continued to rank in thetop of IT staff growth industries, and has not compiled dataspecific to insurance carriers in the larger subset of financialservices. MPV

Whos Using What

The Bermuda-based Arch Capital Grouphaslicensed RightRisk, a fully automatedinsurance distribution system,from ePolicy Solutions, Inc., of Torrance, Calif.,for some of its affiliates that are part of the Arch CapitalPlatform. RightRisk rates, quotes, binds, and issues policiesonline at the producer, sub-producer, and customer levels.

Western World Insurance Group, of FranklinLakes, N.J., and Water Quality InsuranceSyndicate, of New York City, are the latest companies tocontract with Conyers, Ga.-based ImageRight forimplementation of its Document Management and Workflow System.

Indiana Farmers Mutual Insurance Group hasselected the Web-enabled Example Platform Product Suite fromDuck Creek Technologies, of Bolivar, Mo. Theinsurer will use the Duck Creek solution for all lines of business,including BOP, workers comp, commercial auto, garage, property, andinland marine.

Lincoln Financial Group, headquartered inPhiladelphia, has signed a seven-year outsourcing extension withComputer Science Corporation (CSC) of El Segundo,Calif. CSC will provide application enhancement, management, andproduction support for its VANTAGE-ONE enterprise life insuranceand annuity processing system used by Lincoln.

Capitol Indemnity Corp., a Wisconsin-basedcommercial lines carrier, has contracted with AQS,Inc., of Hartland, Wis., to use its policy administrationsystem V³ Galileo. The Web-based system will connect allparties in the policy underwriting process to automate thetransaction in a policys life cycle.

Allianz Life Insurance Co., Ltd., based inSeoul, Korea, has gone into production with the Web version ofForeSight Enterprise, point-of-sale management software fromInsurance Technologies, of Colorado Springs,Col.

To process claims and administer coverage, Canada LifeAssurance Company, headquartered in Toronto, has licensedGenelco Group+ from St. Louis-based Genelco SoftwareSolutions, a division of Liberty Insurance ServicesCorp.

Delta Lloyd NV, a member of the internationalinsurance group AVIVA plc, has just signed a contract withFINEOS Corp., of Portland, Maine, for amulti-channel intake and claims management system.

Reading List
New Book for IT Managers Published

The new book Leadership Alchemy, co-authored by LouRussell and Jeff Feldman (published by Prentice Hall PTR/YourdonPress) questions the wisdom of expecting IT professionals to knowinstinctivelyhow to manage. The premise behind the book is thatthenow-absurd idea thatan alchemist could transform commonmaterials into gold is not unlike the concept that IT professionalscan be transformed into effective managers simply by promoting themto the position.

Instead, companies should include leadership development as partof the promotion process. The book cites firsthand examples andstudies of effective training, including insight from staff atinsurance carriers. Most insurance companies have vast ITdepartments, and since the book was written with IT folks in mind,it would particularly apply to those organizations, says VijaDixon, a spokesperson for Russell Martin & Associates, of whichLou Russell is president and CEO. The leadership principlespresented are universal, but theyre not something IT people wouldknow because theyre elevated to their position without ever beingeffectively trained in those principles.

In a company press release, Russell is quoted as saying, Toooften, IT professionals are promoted into management roles fortheir technical expertise, while leadership is really more aboutleading people and projects. Companies give very little attentionto leadership development for IT managers. They send managers toworkshops that dont reflect the realities of the IT world. Ormanagers learn the strategies but lack the agility and flexibilityto adapt it for the innate unpredictability and chaos oftechnology. MPV

E-Signatures
Insurers Slow to Sign On, Report Shows

In a new report titled E-Signatures in U.S. Insurance: Overview,Issues, & Case Studies, Celent Communications, a Boston-basedresearch and advisory firm, examines the lack of adoption ofe-signatures in insurance. The report notes that relatively fewinsurers are using e-signature technology today, even though theE-SIGN bill became law in 2000, making e-signatures the equivalentof wet-ink signatures, and most states subsequently passed similarlaws. The report estimates support for e-signatures in insurancewill reach a maximum of only low double digits in the next 18months.

The reasons for low adoption rates are several, according toCraig Weber, Celent analyst and author of the report. First,confusion exists in the industry about just what constitutese-signatures. They consist of not only digitized representations ofan actual signature or a typed name in an online signature field,but also clickstream information, such as I accept buttons, andtelephonic systems including keypad entry of accountinformation.

Also, a lack of case law regarding e-signatures has made somecarriers reluctant to adopt them, and insurers in general remainculturally tied to the concept of wet-ink signatures. According toWeber, insurers should instead be focusing on managing the risksassociated with any type of signature they accept.

There are all types of risks people take with their wet-inksignatures they dont think about, Weber says. Are you absolutelycertain the person signing the application over the kitchen tableis the applicant? You cant be.

Therefore, the report presents a strategic framework to helpinsurers assess the risks and benefits of e-signature acceptance.It features case studies illustrating successful e-signatureapplications at American General (AG), Zurich Life, National HealthInsurance (NHI), and eHealthinsurance.

There are two main groups of users today, Weber says. There areonline insurers that are transacting business electronically byvirtue of their business model, and there are companies that wantto provide better service to their agents and attack the problem ofcycle time.

More carriers should be usinge-signatures to help meet customerexpectations of convenience and speed, says Weber.

AG and NHI are using a biometric signature approach. Agents forthese companies collect the client application and signature oneither a pen-based PC (AG) or a tablet PC (NHI). Both companiesreport cycle time has been reduced by up to 50 percent, with 35percent of new business issued without human intervention forAG.

At eHealthinsurance, customers shop for health insurance amongmultiple carriers and apply online. Cycle time has been reducedfrom 21 days to 20 minutes with increased carrier satisfaction. ForZurich, as part of its TeleLife process, the agent enters term lifepre-application data on an agent extranet. The company has found itsaves between $5 and $10 per application processed and agents aresatisfied.

Celents research is available to its subscribers atwww.celent.com. For more on why e-signatures havehad slow acceptance, see Trends & Tech, p. 16. MPV

TechDEC
Technology Driving Changes in Business and the World
Second annual TechDEC draws IT leaders to discussions abouttechnology in the insurance industry.

How do you make a small fortune in insurance? asked DennisChookaszian, retired chairman and CEO of CNA Insurance. You startwith a large fortune.

With that, Chookaszian, whose insurance career has includedstints as a CIO, CFO, and CEO, opened the second annual TechDecisions Exposition and Conference (TechDEC) held in conjunctionwith the ACE-SCLA conference and sponsored by The NationalUnderwriter Co., parent of Tech Decisions. Chookaszian wasthe keynote speaker for the joint openingof TechDEC and ACE-SCLA,held Sept.12-14, at the Gaylord Palms Resort and Convention Centerin Orlando, Fla.

Chookaszian spoke of the changes in the insurance industry hehas seen during his career, particularly the move from multi-linecarriers to those specializing in a single line of insurance. In1980, he said, 11 of the 20 largest carriers in the U.S. in netwritten premium did at least 10 percent of their business in allthree segments of the industry (P&C, life, and health). Today,no insurer falls into that category.

Technology has grown as the industry has changed, he noted.Speed and execution are driving changes in insurance technology. Hecautioned the technology leaders not to get ahead of the real worldwhen it comes to implementing technology, particularly mobile orwireless connections, but he believes technology should be apowerful driver in business and the world. People havent movedtheir lives fully into the world of technology yet, Chookaszianremarked. But technology must change so we can move forward.

The closing session of TechDECfeatured a panel discussion onSmart Strategies for Picking the Right Technology, with panelistsincluding Judy Johnson, vice president of insurance informationstrategies for the META Group; Glenn Headley, CIO of RepublicInsurance; and Craig Lowenthal, vice president and CIO of TheHartford Financial Products.

Johnson insisted there is no right technology for insurers. Animportant factor for choosing a software solution is, How tolerantof risk is your company? she asked. She also stressed theimportance of aligning the technology with your business oralliances rather than making changes in your business plan toaccommodate new technology.

Headley said looking for the newest technology isnt always thecorrect decision. Older technology may be a better fit for yourcompany for a better ROI, he asserted. He also cautioned insurersfrom entering into development deals with software companies fornew products unless the software developer is putting up all themoney. You dont want to enter a deal with a company that doesnthave a product, he advised.

Lowenthal said decisions on selecting software have to involvethe business side. If a company buys new software, and it is neverused correctly, the business is wasting money. Usability plays asignificant role in selecting technology, he said.

Both Lowenthal and Headley agreed the CEO has to be involved inthe decision process. Lowenthal said his CEO has to clear anyimportant purchase made for the company. Todays CEOs are a lotsharper on technology than they were 10 years ago, Headleynoted.

In between the opening and closing sessions, technology leaderswere able to sit in on a variety of discussions on issues importantto their business, such as remote workers, claims, fraud detection,policy processing, and outsourcing. There were over 60 technologycompanies with booths in the exhibit hall to show attendees some ofthe technology available on the market today.

TechDEC 2003 is set for Seattle, Wash., from Oct. 26-28, 2003.Robert Regis Hyle