Insurance: More Info Moving Faster

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September 22, 1997

INSURANCE:
More Info Moving Faster

Getting data moving quickly can spell success for insurers
By Karen M. Carrillo
IW 500 slug he ability to stand out through improved customer service and new products has become standard policy. For insurance companies, which compete with a growing number of high-powered financial-services firms, IT has become the great differentiator.
Among the major IT initiatives of InformationWeek 500 insurance companies are the use of data warehousing to find new marketing opportunities, imaging and workflow to help reduce pap erwork and speed processes, enhanced call centers to better handle customer inquiries, and the Internet and intranets to improve communications and information access both for office workers and agents in the field.
CIOs in the insurance business see tremendous potential in the Internet, not only for marketing products and services and for contacting prospective clients, but also for letting customers access account and other policy information via Web sites.
Metropolitan Life Insurance Co.'s Property & Casualty affiliate, for example, provides a Web service that gives customers detailed rate quotes for auto insurance policies as part of a pilot program that it plans to expand nationwide by year's end. Getting nearly instant quotes and other data on insurance offerings whenever customers access the Internet from a PC will increase their satisfaction, says Jim Logan, senior VP and CIO at MetLife in New York. He says MetLife plans to begin letting customers open policies via the Web early next year.
New York Life Insurance Co. is providing its customers with "personal folders" on the Internet that consist of information on health care, life insurance, and investment options based on the customers' individual interests and needs.
At Cigna Corp. in Philadelphia, the past six months have seen the addition of capabilities to its Web site that let users find information about different funds and their performance, make calculations on 401(k) retirement accounts, access a savings account goal planner, and examine college tuition savings plans. Another IW 500 insurer, Principal Financial Group in Des Moines, Iowa, is letting 60,000 of its more than 1.5 million 401(k) plan participants view account information over the Internet. The service will be rolled out to all 401(k) plan participants by April 1998. Principal also plans to let customers transfer funds and change investment options over the Internet.
Insurance companies also use intranets and extranets to better communicate with geographically dis persed offices and field representatives, as well as to deliver sales information and training manuals electronically to agents.
In May, Prudential HealthCare, a business unit of the Prudential Insurance Company of America, deployed a pilot project at Netscape Communications that provides Netscape employees with an ID and password to gain access to personal account information, including the status of claims. The service also lets users change primary care physicians, locate doctors or dentists participating in a health-care network, and download claim forms.
"Users can handle their own requests and save time," says William Friel, senior VP and CIO at Prudential in Newark, N.J.
Industry observers say insurers also use imaging and workflow as they try to cut down on paper. "Imaging has become a much more important tool, primarily for data warehousing and for better organization of policyholders' files," says Pat Finnegan, VP and senior credit officer at Moody's Investors Service in New York. Last D ecember, Principal's pension department, which sells 401(k) plans, began deploying on 2,000 workstations an imaging and workflow project called Express Processing. The project will help Principal improve record-keeping services such as entering employee payroll deposits or processing withdrawals.
"Express Processing will enable us to process this mountain of paper quickly and accurately to continue providing excellent service as plans and investment options become more complex and the volume of activity grows," says Michael Gersie, senior VP and CFO at Principal.
Faster Service
MetLife has a $50 million workflow and imaging project under way to help handle large volumes of mail from customers by scanning the mail and storing and retrieving it from electronic folders. The project was started in July with more than 400 users, and it's expected to grow to 3,500 users.
State Farm Insurance in Bloomington, Ill., also uses imaging for incoming mail such as payments and other documents. "It h elps provide faster service to our customers and reduces costs," says Robert Kendrick, assistant VP of business and information systems at State Farm.
Another technology that's proving useful is data warehousing, which lets insurers learn more about their customers' needs. Principal's group medical operations in December began using an Oracle database in tandem with the Internet to deliver pertinent financial documents to desktops. Principal uses data warehousing for financial analysis and to look at trends in premium and claims data. "The goal is to get more information to the local marketing people," says Gersie.
Chubb & Son Inc., a property and casualty subsidiary of Chubb Corp. in Warren, N.J., uses Oracle's Universal Server as the foundation for its catastrophe-management system. The Universal Server supports the Environmental Systems Research Institute's geographic information systems. Using the system helps Chubb underwriters make decisions when writing policies. "It allows us to underwrite a risk by taking a look at the location and knowing if it's an earthquake, brushfire, or a hurricane zone," says Chuck McCaig, Chubb's CIO.
Insurance companies also have major efforts under way to enhance their call centers. One strategy is to provide customer-service personnel with customer profiles, so that when calls come in, the service representatives are ready with useful information and quick answers to queries about policies.
The call-center operations at MetLife have been consolidated from 22 service locations to four, enabling greater efficiency. All four sites are linked with telephone switches that allow call-center operations to quickly route incoming calls to the right office and customer-service consultants. MetLife is also developing an application that gives all of its customer-service reps information on any of its products.
At Prudential, call-center operations have been opened at four locations to handle queries and requests that had previously been handled in numerous field off ices. These operations, in conjunction with Web-based information services, will create what Friel calls a virtual call center. "What we're driving toward is to provide customers with access to information, whether it be through a customer-service representative or over the Internet," says Friel.
State Farm opened its first call center in July. To help service customers on a personalized basis, State Farm reps will be given detailed information on a wide variety of insurance plans and services. "The driving force is improving customer service," says Kendrick. There are plans to open two more call centers, one this fall and the other early next year.
Cigna's call center, which receives 50 million calls a year, is also being upgraded. "There's a lot of work to improve the customer representative systems and call management," says Raymond Caron, senior VP and CIO. Cigna intends to provide representatives with the client data they need, so customers won't need to wait for a return call.
Mobile employe es are also gaining capabilities, including the ability to complete the sales process at remote sites by using signature capture software. Principal's group pensions sales force "carries all customer data on laptops, but what was missing was capturing the signature. It's the last item you need to complete everything," says Gersie.
Sign Anywhere
American General Life and Accident Insurance Co., a division of American General Corp., also uses signature capture technology. "We get a lot of legal information. We wanted to have a secure signature capture," says Michael Betts, VP of IS at American General Life in Nashville, Tenn. A system the company is using from PenOp Inc. in New York "eliminates paper handling from salesmen and improves the accuracy of the entire process," Betts adds.
One of the top priorities for insurance companies is dealing with year 2000 code conversions. The price of fixing source code for year 2000 compliance has soared, and people capable of doing the work are becomin g scarce.
Virtually all major insurers are working on 2000 fixes. Cigna has made 2000 compliance its top IT priority, with the goal of completing conversions by the end of 1998. Principal is spending about $20 million to fix code and plans to spend the next two years conducting extensive testing, says Gersie. MetLife has established a centralized year 2000 team to back up its efforts and has allocated an additional $25 million to support its work. Prudential estimates that it will cost $110 million to convert 165 million lines of code, and hopes to complete the necessary conversions by the second half of 1998.
But insurance CIOs say year 2000 work drains an already short supply of skilled IS work ers. "There is a shortage of qualified IT people, and retaining qualified IT staff is creating some turmoil driven by year 2000," says Chubb's McCaig. "The growing need for skilled IT personnel is at its worst," adds Judith Campbell, who has been CIO at New York Life since June.
Despite these challen ges-or maybe because of them-CIOs in the insurance business view this as an exciting time. They know they're a critical part of their companies' efforts to compete in what is becoming a broader financial-services industry.

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