11:36 AM

Cash-Crunched Sector Bets On E-Services

Insurers turn to Web portals and document-management systems

Nearly every U.S. business sector was affected by the terrorist attacks last year, but few were hammered as hard as insurance. Insured losses from that tragedy will prove to be the single most costly disaster ever. Estimates range upward of $70 billion, and they encompass all areas of the industry, including reinsurance, property and casualty, and health. By contrast, Hurricane Andrew, which held the most-costly record, soaked the industry for about $20 billion.

Following the attacks, insurance companies bolstered their IT investments in business continuity and disaster recovery. They also increased spending on document-management systems, as firms with offices in major cities contemplated not merely the loss of communications services or electricity for several days, but the loss of entire buildings and all the knowledge stored on the paper within. Despite the tragedy and the cash crunch the industry is experiencing, IT spending -- which is flat to slightly down -- is still humming along at a steady, yet slower pace.

Insurers who made this year's InformationWeek 500 ranking are investing in technology that provides a quick and tangible return.

Insurance companies are cutting down on paperwork by simply tying back-end systems to agents' Web portals that provide customers with self-service tools, which improve customer service and cut costly phone time in call centers. "There's been a backing away from large CRM and E-business projects," says Judy Johnson, VP for insurance information strategies at the Meta Group.

Another technology investment focus for the past year is document management, Johnson says. "There's been a huge resurgence in imaging. 9/11 shook up a lot of insurance companies, and they started asking not what happens if they lose a server, but what happens if they lose an entire building."

John Steber, executive VP and CIO at HIP Health Plan of New York, says "E-enabling" customer-service transactions through the company's Web site and interactive voice-response services have paid off by letting members easily and inexpensively locate and change health-care providers, check claims, and enroll dependents. As a result, HIP Health Plan handles 15% of its customer-service transactions electronically, saving the company $12 million in administrative expenses.

RankCompanyRevenue in millionsIncome (loss)
in millions
1HIP Health Plan of New York$2,254$90244
6Humana Inc.$10,195$1171,329
7PacifiCare Health Systems Inc.$11,844$19304
48Anthem Inc.$10,120$3422,200
52Principal Financial Group$8,818$3592,561
74Progressive Corp.$7,488$4112,410
79Cigna Corp.$19,100$9893,600
96Hartford Financial Services Group$15,147$5,0703,360
97Blue Cross Blue Shield of North Carolina400
99Horizon Blue Cross Blue Shield of N.J.$2,484250
113American Family Insurance Group Co. $4,714 $101 1,017
132Aetna Inc. $25,191 ($280) 3,000
139Ohio Casualty Group $1,902 $99 355
154Cincinnati Financial Corp. $2,561 $193 400
166Guardian Life Insurance Co. $6,947 $170 715
198Marsh Inc. $5,200 $1,100 1,900
212Minnesota Life Insurance Co. $1,801 $70 450
225Kemper Insurance Co. $5,026 $121 718
237Capital Blue Cross $1,198 $42 290
249State Farm Insurance Co. $46,700 ($5,000) 6,530
253Allstate Corp. $28,865 $1,158 3,792
267New York Life Insurance Co. $22,514 $1,086 1,450
275Antares Management Solutions $1,600 $9 415
281Nationwide Insurance Enterprise $11,313 ($109) 1,384
285MONY Group $2,130 ($61) 294
303LandAmerica Financial Group Inc. $2,170 $60 775
308Pacific Life Insurance Co. $3,653 $241 500
332Northwestern Mutual Insurance $15,345 $650 950
344Health Alliance Plan $1,300 $26 123
350Farmers Group Inc. $2,900 $580 1,500
353Blue Cross of Massachusetts $3,725 $132 158
364Chubb & Son Inc. $7,754 $112 1,820
404Converium Reinsurance NA Inc. $2,500 ($367) 160
418Mutual of Omaha Insurance Co. $4,213 $80 962
460Torchmark Corp. $2,710 $393 150
479Markel Corp. $1,774 $126 150
Financial data is from public sources and company supplied.
Revenue is for latest fiscal year.
Employee data is from InformationWeek 500 qualifying survey.

Average portion of revenue spent on IT4%
Companies providing customized solutions to customers42%
Companies seeking IT patents, trademarks, or copyrights31%
Hardware purchases20%
Services or outsourcing16%
Research and development2%
Salaries and benefits30%
Everything else11%
Average year-over-year revenue change-12.3%
Average year-over-year net income change-75.6%
DATA: InformationWeek research
See year-over-year shifts in business-technology practices for this industry. Compare and contrast this year's data with last year's.

Return to the 2002 InformationWeek 500 homepage

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