Companies look to the Web to dispense service and workflow benefits.
Never mind E-commerce; the insurance industry has been slow to fully embrace even the most basic benefits of the Internet. Until now, most insurance companies' Web sites provided little more than electronic versions of the company's marketing materials and a few tools people didn't want to use.
But in the past year, many insurance companies have revamped their sites and have found new ways to use the Internet to improve workflow, deliver self-help functions to policyholders for collaborative interaction, and consolidate information to provide a single face to their customers--physicians, patients, and employers.
When the nonprofit HIP Health Plans of New York launched its Web site 18 months ago, it lacked the features needed to successfully attract a sizable portion of HIP's 800,000 members. In June, the company added member self-service features such as claim inquiries, online prescriptions, ID-card requests, change-of-address forms, and benefits information. Brokers can grab instant online quotes and create sales proposals based on information, gathered from back-end systems via a Web browser, about the prospect they're pitching. Company executives say it's too soon to quantify savings, but they expect the site will slash paper-handling costs and improve customer service.
Sound basic? According to a recent Forrester Research report, the majority of health plans excel at giving Web users what they don't want. Forrester's data shows that while no members want to buy health-related products on their provider's Web site, 38% of insurers offer the capability. Also, 83% of sites offer health-related content, but only 12% of members want to go to their provider's site for it. On the other hand, while 64% of members want to conduct plan-related transactions online, only 36% of providers let them do so; 88% of members want to find plan-specific content, but only 76% of provider sites fill that demand.
Empire Blue Cross Blue Shield "believes in high touch," senior VP O'Loughlin says.
Forrester predicts that by 2003, click-to-talk features--which let a customer click on an icon, enter a phone number, and have a customer agent call back--and online help on using the site based on a user's needs will become the norm within the industry. Empire Blue Cross Blue Shield in New York already offers the feature. The "call" becomes a priority within the queue at the call center, and the responding customer-service agent gets detailed customer information on screen. The efficiencies go beyond screen pops: Customer-service agents can remotely complete forms, while the customer watches. "We believe in high touch," says William O'Loughlin, senior VP of business technology development for Empire. "With our online collaboration tools, we believe we have an insurance industry-leading application."
Dave Annis, CIO for Hartford Financial Services Group in Hartford, Conn., says his company's Electronic Business Center initiative is one of the most innovative projects the company has undertaken in the past year. The Electronic Business Center is the portal to the company's products, with integrated access to vital insurance-processing systems. Implementation is still under way, but Annis says the center has registered more than 4,700 agencies (out of 7,000), 6,000 agency users, and 750 Hartford employees to date. Agents can find product information, quote the cost of a policy, and service their customers online with such features as billing access and claims status.
Insurance companies were among the first to invest in legacy technology, but the industry's early IT leadership is now a hindrance, not a help. "We've got systems that have been built over a number of years on a variety of platforms," Annis says. As a result, many in the industry are saddled with old, proprietary systems that are expensive, difficult, and time-consuming to upgrade.
Hartford Financial Services has overcome this challenge by building what Annis calls its e-Business Architecture, an XML and middleware messaging system that lets front-office systems, Web sites, call centers, and voice-response units exchange information with many of the company's legacy systems. "I shouldn't say it makes it easy, but the end result is you have very seamless integration from a customer perspective," Annis says. "It appears as if it's all coming together in one place."
Back-end integration has been more taxing for other companies. Oxford Health Plans Inc.'s CIO and senior VP Art Gonzales says the $4.04 billion HMO in Trumbull, Conn., has the infrastructure in place to deliver services over the Web. But the test is "integrating all our back-end systems with the front-end delivery vehicle, whether it's an interactive voice-response system or the Web," Gonzales says. Oxford's recipe for integration is also a healthy mix of middleware and XML. The company writes the application code in modules so it can be reused as components in other projects. This speeds development time and shares application development throughout the company.
Object-oriented development is so critical at Kemper Insurance Cos. in Long Grove, Ill., that it's part of the CIO council's mission to help build a set of business objects to deploy across multiple lines of business, CIO Jack Scott says.
Empire started migrating away from multiple systems during its preparation for Y2K. Just before the infamous deadline hit, the company shut down four claims systems. "We've migrated onto a single high-performance claim engine," says Kenney Klepper, senior VP of systems technology and infrastructure. As a result, Empire isn't struggling to integrate and consolidate the proprietary back-end systems that plague so many in the industry. Steve Bell, VP of E-business operations at Empire, says the consolidation has paid off. In the past, broker-generated information had to pass through nearly a dozen departments, making the process error-ridden. "We found that 67% of the paperwork we received from the brokers required us to return the papers, or make outbound phone calls, because something was missing or incorrect," he says. Now that the process is online, brokers can enter the information directly, resulting in fewer mistakes.
Empire is also running a Java 2 Enterprise Edition-compliant framework, which allows for quick code reuse across the company. As a result of its successful legacy migration, Empire can more easily track a customer's history. "Every contact, whether it be by the Web, phone call, or written inquiry, is logged into our customer-management system," Bell says. "We can see how often you come in, and from what channels you came"
Still, insurance companies have a great deal of catching up to do. Says Forrester Research analyst Brad Holmes, "They're so far behind their brethren in financial services that they seem to be in a whole different era."
Revenue in millions
Income (loss) in millions
HIP Health Plans
LandAmerica Financial Group Inc.
PacifiCare Health Systems
Principal Financial Group
Massachusetts Mutual Financial Group
Hartford Financial Services Group
American Family Mutual Insurance Co.
Oxford Health Plans Inc.
Zurich North America
Empire Blue Cross Blue Shield
Anthem Blue Cross Blue Shield
Kemper Insurance Co.
Ohio Casualty Insurance Co.
Progressive Casualty Insurance Co.
Nationwide Mutual Insurance Co.
Penn Mutual Life Insurance Co.
St. Paul Companies Inc.
Blue Cross Blue Shield of N.C.
Horizon Blue Cross Blue Shield of N.J.
Allstate Insurance Co.
Capital Blue Cross
Guardian Life Insurance of America
State Farm Insurance Co.
Tufts Associated Health Plans Inc.
Northwestern Mutual Life Ins. Co.
Cincinnati Financial Corp.
Wellmark Inc. Blue Cross Blue Shield
Minnesota Life Insurance Co.
Blue Cross Blue Shield of Mass.
Farmers Insurance Group
Highmark Blue Cross Blue Shield
Chubb & Son Inc.
New York Life Insurance Co.
Trigon Healthcare Inc.
Antares Management Solutions
Pacific Life Insurance Co.
Health Alliance Plan
Union Central Life Insurance Co.
Financial data from public information sources. Figures are for most recent fiscal year.
IT employee information from InformationWeek 500 qualifying survey. Requested company footnotes at informationweek.com/855/splash.htm.
Average portion of revenue spent on IT
Portion of IT organizations that sell services or IT products to other companies
Portion of companies that say wireless E-commerce will contribute to E-business
Senior IT executive is a member of executive management committee
Average portion of customers included in electronic supply chain
How companies divide their IT budgets
New product and technology purchases
IT consulting and outsourcing
Research and development
Salaries and benefits
How often companies re-examine their IT spending plans
The Business of Going DigitalDigital business isn't about changing code; it's about changing what legacy sales, distribution, customer service, and product groups do in the new digital age. It's about bringing big data analytics, mobile, social, marketing automation, cloud computing, and the app economy together to launch new products and services. We're seeing new titles in this digital revolution, new responsibilities, new business models, and major shifts in technology spending.