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September 14, 1998

Technology Is A Winning Policy

Insurers turn to the Web and sales-force automation to keep current customers, add new ones

By Karen M. Carrillo

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INSURANCE

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With data from Hoovers Online

When the Travelers Group disclosed in April that it plans to merge with Citicorp to form the $140 billion Citigroup Inc. financial services organization, many insurance companies took a closer look at what they offer customers. In its new incarnation, what had been the Travelers Group will still sell insurance-but withdeeper pockets and a sophisticated range of financial expertise to serve its client base.

Mergers such as this are adding more competitive pressures to insurance companies, which in recent years have tried branching out to finance, banking, and credit, areas that were previously left to banks and other financial institutions. Insurers more than ever are turning to IT to generate new business and keep their existing customers. They're using videoconferencing, portable computing, Webtechnologies, data warehousing, and sales-force automation software to better understand their customers' needs and help them make informed decisions about insurance.

"Insurance in the past was relatively distinct from banking. [Insurers] didn't need to put the same degree [of effort] into technology," says John Freeland, managing partner/insurance industry at Andersen Consulting. Now that the barriers are disappearing, he says, insurance companies must invest more in technology that helps broaden their financial service offerings.

The Internet is playing a big part. Cigna Corp. in Philadelphia, for instance, is offering CignaTrade Online, a trading service over the Web that provides a step-by-step guide to investment planning by assessing users' financial status, evaluating tolerances for risk, and examining financial goals. The service also lets customers access account information, enter trade orders, research investments, and access investment news. "It's an expansion into customer self-service," says Raymond Caron, Cigna's CIO.

Cigna is also beefing up its traditional offerings via the Internet. Using its HealthCare Provider Directory, users can search for physicians, hospitals, and pharmacies within Cigna's network of providers.

Metropolitan Life Insurance Co. of New York in February introduced Metgician, a service that lets users create customized Web sites to manage their insurance needs. Later this year, MetLife will test a customer-response program that uses chat rooms, and its small-business division is working on Web applications that let businesses manage employee benefits.

Another InformationWeek 500 insurance company, J&H Marsh & McLennan Inc., offers Net*Cert, a Web-enabled certificate management system that expedites the delivery of insurance certificates. These certificates provide proof of sufficient insurance coverage to interested third parties. What used to take a day or two via standalone PCs and standard mail now takes as little as 15 minutes using E-mail and the Web, says William Wilson, CIO at Marsh & McLennan, in New York.

The insurer has also unveiled Global Brokering System, which offers electronic trading through an extranet. Brokers can create and send insurance submissions and supporting documents electronically to companies. The application, accessed via standard Web browsers, is being distributed to the desktops of thousands of the company's underwriters.

Using Marsh & McLennan's InMind Client Service Applications, built with Lotus Domino and Java technologies, clients can get customized information based on their insurance and risk-management requirements. InMind provides access to industry and financial information as well as direct links to Marsh & McLennan professionals worldwide.

Chubb Corp. this spring began providing agents with the ability to track the status of claims, bills, and policies online. Chubb has also completed the design of an Internet Security Middleware Application that will be the common interface for Chubb applications for partners accessing its data over the Internet.

Chubb, in Warren, N.J., is also in the early stages of deploying an enterprise application called the Commercial Underwriting Workstation, a desktop assistant that Chubb's North America underwriters are using to access legacy systems, various Internet services, and the company's Chubbnet intranet. "It integrates legacy systems and other systems that underwriters need to get their jobs done and done better," says Gerry Geisler, Chubb's VP practice leader for IT.

Other insurance companies are using the Web to better communicate with partners such as outside sales agents. New York Life Insurance Co. is implementing Web-based sales-force automation software that will deliver more real- time information about policies and training to agents. "It's a less-expensive way of transferring information," says CIO Judith Campbell.

Marsh & McLennan executives have also noted the benefits of sales-force automation. In February, the company rolled out its sales-force automation program to about 350 salespeople; by October, another 550 will have access to the system. "What was crucial was to have the system in a centralized database," Wilson says. This lets Marsh & McLennan keep all new product and service information in one location.

One of the insurer's objectives is to help better manage and measure sales efforts. Sales-force automation "provides sales coordination so you're not having two people calling the same prospect," Wilson says.

Insurers are also benefiting from increased use of notebook computers for their mobile work forces. MetLife has issued Toshiba Pentium notebooks to more than 7,000 sales representatives. They use the devices to access groupware and E-mail, the Internet, and MetLife's intranet. The notebooks also provide access to applications stored on servers, including client management and prospecting programs and software that tracks customers' financial goals and retirement planning.

"Where technology has the most to offer is making company news and products more accessible to those who need them," says Jim Logan, MetLife's senior VP and CIO.

New York Life is exploring the advantages of a handheld appointment-management device to its sales force. This spring, it began a pilot program in which a select group of salespeople use the palm-sized devices to download Lotus Notes calendar and address files. The company will also continue to expand its use of notebooks. "We think our agents will always need a laptop to get customer information, to be able to take the information and make a financial plan, for example," CIO Campbell says.

Many insurers are exploring the use of data warehousing, data mining, and other analysis tools so they can gather more details about their customers. MetLife is using data warehousing, online analytical processing, and data mining to evaluate and measure what different agencies are selling. "The objective is to collect as much information as we can in the business arena about the agency [selling] for us and the sales activities so we can easily understand, very quickly, what agents are selling, what products they're selling to which customers, and how quickly," Logan says.

The information generated by Marsh & McLennan's Global Brokering System is also fed into a data warehouse. "Every time insurance information is placed, this information is stored in a data warehouse where it becomes a knowledge base," Wilson says. "When you're trying to capture data from a multitude of sources, you need good analysis. We couldn't do it without a data warehouse."

Some insurance companies are using videoconferencing on PCs to provide virtual on-site experts. In February, New York Life began piloting videoconferencing technology on PCs so that field sales agents can let customers talk with off-site insurance experts if the agent can't provide needed information. For example, if an agent meets with a customer and isn't familiar with a particular product, he or she can use a PC with videoconferencing links to talk to an expert right away, rather than getting back to the customer later that day or even a few days later. "The idea is to have a breadth of experts help many more people," Campbell says.

While looking toward these new technologies to improve their businesses, IT chiefs at insurance companies continue to deal with the year 2000 problem and the IT skills shortage.

Reflecting the state of year 2000affairs at many of the InformationWeek 500 insurance companies, New York Life reports that while it's making progress with code conversion, it's more concerned aboutwhether its business partners will be year 2000 compliant. "We're building business contingency plans," Campbell says. "If you look at the coding problem so that the data [is compliant], we're nearly done. But that's less than half the problem. You have all the testing and making sure [others are] compliant."

Retaining skilled IT people is another major focus. Like other insurers, New York Life has revamped its compensation program to attract and keep workers. This includes adding flexible work hours and telecommuting, and paying higher salaries.

Insurance providers are also boosting training programs for their IT staffs in the use of new systems and software, rather than looking for outside help.

Early this year, MetLife kicked off a special incentive program designed to keep IT people at the company at least through 2000. If employees stay through the first quarter of 2000, they'll receive a bonus payment amounting to 25% of their annual salary. "The next year or two will be a very tumultuous time," Logan says. "We want to make it clear to all IT professionals that we want them and need them."

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