Straight-through processing, normally a concept associated with Wall Street trading, has begun to be appear in the personal home and auto lines of the insurance industry. It's a sign that automation is penetrating more deeply into insurers' operations.

The industry also is using wireless technologies to improve its ability to acquire and retain customers. And many companies are taking more stringent precautions to protect customer data.

INSIDE INSURANCE Average portion of 2005 revenue spent on IT 3.0% Companies spending more on IT this year than last 62% Buying directly from foreign suppliers 10% Centralizing control of IT operations in past 12 months 45% Bringing outsourced functions in-house in past 12 months 7%

For customers, straight-through processing means giving information to an agent and a short while later having an insurance policy in hand. This is made possible by running data about new customers through a rules engine that's part of an automated underwriting system.

Acuity, A Mutual Insurance Co., which did $692 million in business in 12 Midwestern states last year, implemented its Automated Servicing of Insurance through Superior Technology system for its property and casualty lines in 2004. Agents trained on the system can complete a customer's policy with only one visit to the agency's office.

While the agent fills out an online application, the system does background checks and prompts the agent to ask questions to clarify information as it's discovered. By the time the agent is done, the system has collected what it needs to evaluate the data. A rules engine applies the appropriate underwriting standards and gives a thumbs-up on the policy in about 70% of the cases. "By the time the customer is done answering the agent's questions, we're done collecting everything we need," CIO Neal Ruffalo says.

Acuity's system shows how the industry is tying back-office systems into real-time interaction with customers. Wireless technology also is helping insurers work in real time. Mobile applications let representatives of HIP Health Plan of New York sign up customers at work. HIP signed 650 employees in five days at the warehouse of an online grocer in the New York metropolitan area. Seven sales reps were equipped with tablet PCs that collect digital signatures and send signed forms back to headquarters and Bluetooth-enabled printers that print out forms with sign-up information for customers. Each of the enrollees received a membership card the next day.

"We grabbed them on the loading dock, inside the warehouse, and in the company cafeteria," says Pedro Villalba, chief technology officer. The mobile sign-up app has brought $1.4 million in new premiums to HIP.

Allstate Insurance Co. is using wireless technology to provide a quick response to hurricane victims, a high-profile activity that's cementing the insurer's relationship with customers. "Customer retention rates are at their highest level for the 29 years I've been with the company," says CIO Catherine Brune.

Adjusters took laptops to the homes of Hurricane Katrina victims in Louisiana, Mississippi, and Alabama and uploaded the data they gathered to headquarters via one of 20 mobile vans positioned around the storm's impact area. The vans provided satellite links in areas without phone or cell service, shaving days off the time customers had to wait for their settlement checks to arrive.

Using wireless and satellite links "is the next logical step" for the catastrophe teams fielded by major home insurers, says Donald Light, analyst with Celent LLC, insurance-industry market researchers. Such links, he says, can cut the wait for settlements by as much as 80%.

	I.T. BUDGET BREAKDOWN Hardware purchases IT services or outsourcing Research and development 16% 14% 4% Salaries and benefits Applications Everything else 38% 17% 11% Data: InformationWeek Research

Illustration By Paul Watson

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	INSURANCE * Acuity, A Mutual Insurance Co.   Aflac * Allstate Insurance Co.   Arkansas Blue Cross and Blue Shield   Blue Cross and Blue Shield of N.C.   Blue Cross Blue Shield of Florida   Blue Cross Blue Shield of Mass.   Capital BlueCross   Chubb Corp. * Cigna Corp.   Cincinnati Financial Corp.   CNA Financial Corp.   Farmers Insurance Group   Firemans Fund Insurance Co.   Health Care Service Corp. * Highmark Inc.   HIP Health Plan of New York * Horizon Blue Cross Blue Shield of N.J.   Humana Inc.   Liberty Mutual Insurance Co. * Marsh Inc. * Ohio Casualty Group   Pacificare Health Systems Inc.   Progressive Casualty Insurance Co. * Securian Financial Group Inc. * The Guardian Life Ins. Co. of America   The Hartford Financial Services Group Inc.   Transatlantic Holdings Corp.   Tufts Associated Health Plans Inc.   Unitrin Inc.   Willis NA * denotes a top 100 company