IT Studies
Web Services Show Promise, But Roadblocks Remain

TowerGroup recently released its new report, The Networked Financial Institution: Connections for a Successful Business Strategy, as part of its cross-sector TowerGroup Point of View Reports (www.towergroup.com). The Needham, Mass.-based consultancy examines Web services and the current state of Internet-based networking standards and technologies.

Theres an adoption [of Web services technologies] in the insurance vertical in particular thats very encouraging, says Guillermo Kopp, director of TowerGroups Emerg-ing Technology Solutions practice. The early impact of Web services in financial services will be primarily within firewalls, but because of the desegregation that exists in insurance, theres good opportunity for use outside the firewall.

According to the report, however, spending on Web services by financial services institutions is currently minor when compared to overall technology spending. TowerGroup estimates that by 2005, Web services will still represent only $8 billion of the $350 billion spent by financial services institutions worldwide on IT. Interest in, and spending on, Web services will continue to grow, but TowerGroup projects the vision of the networked financial services institution will not be realized until the end of this decade, at the earliest.

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

Online Initiatives
Revamped Web Site Launched by ACORD

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

The primary goal of the redesign was to enhance the usability of the site, according to Rick Gillman, ACORDs vice president of corporate communications. Weve made navigation cleaner and added quick links that take people to key areas of the site directly, he says. Previously, finding some items of information was a multi-page process.

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

Non-members will be able to access ACORD case studies, regularly updated information on ACORD standards, and global initiatives as well as information about ACORD events and staff. A new feature called the News Center includes information on the latest developmentsat ACORD and contains the ACORD Presentation Center, which allows visitors to view audio and visual PowerPoint presentations. Another feature, ACORD TV, provides a menu of streaming videos featuring ACORD staff and members on various issues relating to standards and technology in the industry today.

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

IT Staffing
Technology Hiring Outlook for Insurance Strong, Index Shows

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

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

This contrasts with an expected general slowdown in the hiring of IT professionals in the fourth quarter of 2002. Overall, an eight percent increase in IT staffing is expected across all industries, with only the business services sector expecting a higher 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. Last quarter, it was 19 percent, says Robert Halfs Joel Dibble, who has been involved in compiling data for the index for several years. More interesting, for the first time in my experience working on this report, there were companies surveyed that were decreasing their staff, and there was a net hiring loss in some sectors.

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

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

Whos Using What

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

Western World Insurance Group, of Franklin Lakes, N.J., and Water Quality Insurance Syndicate, of New York City, are the latest companies to contract with Conyers, Ga.-based ImageRight for implementation of its Document Management and Workflow System.

Indiana Farmers Mutual Insurance Group has selected the Web-enabled Example Platform Product Suite from Duck Creek Technologies, of Bolivar, Mo. The insurer will use the Duck Creek solution for all lines of business, including BOP, workers comp, commercial auto, garage, property, and inland marine.

Lincoln Financial Group, headquartered in Philadelphia, has signed a seven-year outsourcing extension with Computer Science Corporation (CSC) of El Segundo, Calif. CSC will provide application enhancement, management, and production support for its VANTAGE-ONE enterprise life insurance and annuity processing system used by Lincoln.

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

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

To process claims and administer coverage, Canada Life Assurance Company, headquartered in Toronto, has licensed Genelco Group+ from St. Louis-based Genelco Software Solutions, a division of Liberty Insurance Services Corp.

Delta Lloyd NV, a member of the international insurance group AVIVA plc, has just signed a contract with FINEOS Corp., of Portland, Maine, for a multi-channel intake and claims management system.

Reading List
New Book for IT Managers Published

The new book Leadership Alchemy, co-authored by Lou Russell and Jeff Feldman (published by Prentice Hall PTR/Yourdon Press) questions the wisdom of expecting IT professionals to know instinctivelyhow to manage. The premise behind the book is that thenow-absurd idea thatan alchemist could transform common materials into gold is not unlike the concept that IT professionals can be transformed into effective managers simply by promoting them to the position.

Instead, companies should include leadership development as part of the promotion process. The book cites firsthand examples and studies of effective training, including insight from staff at insurance carriers. Most insurance companies have vast IT departments, and since the book was written with IT folks in mind, it would particularly apply to those organizations, says Vija Dixon, a spokesperson for Russell Martin & Associates, of which Lou Russell is president and CEO. The leadership principles presented are universal, but theyre not something IT people would know because theyre elevated to their position without ever being effectively trained in those principles.

In a company press release, Russell is quoted as saying, Too often, IT professionals are promoted into management roles for their technical expertise, while leadership is really more about leading people and projects. Companies give very little attention to leadership development for IT managers. They send managers to workshops that dont reflect the realities of the IT world. Or managers learn the strategies but lack the agility and flexibility to adapt it for the innate unpredictability and chaos of technology. 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-based research and advisory firm, examines the lack of adoption of e-signatures in insurance. The report notes that relatively few insurers are using e-signature technology today, even though the E-SIGN bill became law in 2000, making e-signatures the equivalent of wet-ink signatures, and most states subsequently passed similar laws. The report estimates support for e-signatures in insurance will reach a maximum of only low double digits in the next 18 months.

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

Also, a lack of case law regarding e-signatures has made some carriers reluctant to adopt them, and insurers in general remain culturally tied to the concept of wet-ink signatures. According to Weber, insurers should instead be focusing on managing the risks associated with any type of signature they accept.

There are all types of risks people take with their wet-ink signatures they dont think about, Weber says. Are you absolutely certain the person signing the application over the kitchen table is the applicant? You cant be.

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

There are two main groups of users today, Weber says. There are online insurers that are transacting business electronically by virtue of their business model, and there are companies that want to provide better service to their agents and attack the problem of cycle time.

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

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

At eHealthinsurance, customers shop for health insurance among multiple carriers and apply online. Cycle time has been reduced from 21 days to 20 minutes with increased carrier satisfaction. For Zurich, as part of its TeleLife process, the agent enters term life pre-application data on an agent extranet. The company has found it saves between $5 and $10 per application processed and agents are satisfied.

Celents research is available to its subscribers at www.celent.com. For more on why e-signatures have had 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 about technology in the insurance industry.

How do you make a small fortune in insurance? asked Dennis Chookaszian, retired chairman and CEO of CNA Insurance. You start with a large fortune.

With that, Chookaszian, whose insurance career has included stints as a CIO, CFO, and CEO, opened the second annual Tech Decisions Exposition and Conference (TechDEC) held in conjunction with the ACE-SCLA conference and sponsored by The National Underwriter Co., parent of Tech Decisions. Chookaszian was the keynote speaker for the joint openingof TechDEC and ACE-SCLA, held Sept.12-14, at the Gaylord Palms Resort and Convention Center in Orlando, Fla.

Chookaszian spoke of the changes in the insurance industry he has seen during his career, particularly the move from multi-line carriers to those specializing in a single line of insurance. In 1980, he said, 11 of the 20 largest carriers in the U.S. in net written premium did at least 10 percent of their business in all three 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. He cautioned the technology leaders not to get ahead of the real world when it comes to implementing technology, particularly mobile or wireless connections, but he believes technology should be a powerful driver in business and the world. People havent moved their lives fully into the world of technology yet, Chookaszian remarked. But technology must change so we can move forward.

The closing session of TechDECfeatured a panel discussion on Smart Strategies for Picking the Right Technology, with panelists including Judy Johnson, vice president of insurance information strategies for the META Group; Glenn Headley, CIO of Republic Insurance; and Craig Lowenthal, vice president and CIO of The Hartford Financial Products.

Johnson insisted there is no right technology for insurers. An important factor for choosing a software solution is, How tolerant of risk is your company? she asked. She also stressed the importance of aligning the technology with your business or alliances rather than making changes in your business plan to accommodate new technology.

Headley said looking for the newest technology isnt always the correct decision. Older technology may be a better fit for your company for a better ROI, he asserted. He also cautioned insurers from entering into development deals with software companies for new products unless the software developer is putting up all the money. You dont want to enter a deal with a company that doesnt have a product, he advised.

Lowenthal said decisions on selecting software have to involve the business side. If a company buys new software, and it is never used correctly, the business is wasting money. Usability plays a significant role in selecting technology, he said.

Both Lowenthal and Headley agreed the CEO has to be involved in the decision process. Lowenthal said his CEO has to clear any important purchase made for the company. Todays CEOs are a lot sharper on technology than they were 10 years ago, Headley noted.

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

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

Special Reports /

Technology Decisions, October 2002, Industry Intelligence : Industry Intelligence

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