Insurers Write New Tech Policy - InformationWeek
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Insurers Write New Tech Policy

Companies look to the Web to dispense service and workflow benefits.

InformationWeek500: InsuranceNever 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.

William O'Loughlin

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."

Closeup Insurance
Rank Company Revenue in millions Revenue Change Income (loss) in millions Income Change IT employees
17 Humana Inc. $10,514 4.0% $90 124.0% 1,422
20 HIP Health Plans $2,410 8.4% $72 885.4% 190
41 LandAmerica Financial Group Inc. $1,802 -12.0% ($81) -248.7% 930
62 Aetna Inc. $26,819 21.3% $127 -82.3% 2,800
66 PacifiCare Health Systems $11,468 14.8% $161 -42.3% 956
71 Principal Financial Group $8,885 2.1% $620 -16.4% 1,983
92 Massachusetts Mutual Financial Group $15,340 23.0% $740 67.0% 2,300
108 Hartford Financial Services Group $14,703 8.7% $974 13.0% 3,440
114 American Family Mutual Insurance Co. $4,388 6.3% $237 -16.1% 959
116 Oxford Health Plans Inc. $4,039 -1.9% $266 -17.0% 218
126 Zurich North America $6,594 34.3% $327 -26.7% 7,240
143 Empire Blue Cross Blue Shield $4,200 15.8% $190 58.4% 770
159 Anthem Blue Cross Blue Shield $8,500 44.6% $226 31.4% 1,493
172 Kemper Insurance Co. $4,800 17.1% $115 -31.5% 755
177 Ohio Casualty Insurance Co. $1,737 -8.6% ($79) -169.4% 432
189 Progressive Casualty Insurance Co. $6,771 10.6% $46 -84.4% 1,946
192 Nationwide Mutual Insurance Co. $32,834 17.5% $331 -37.1% 1,285
203 Marsh Inc. $4,780 5.7% $944 17.1% 1,800
228 MONY Group $2,182 -0.8% $225 -9.7% 278
242 Penn Mutual Life Insurance Co. $1,221 9.6% $139 74.2% 115
254 St. Paul Companies Inc. $8,608 13.7% $993 19.1% 1,305
278 Cigna Corp. $19,994 6.8% $987 41.2% 3,100
283 Blue Cross Blue Shield of N.C. $2,074 6.3% $67 356.5% 420
289 Horizon Blue Cross Blue Shield of N.J. $2,198 - $97 - 224
301 Allstate Insurance Co. $29,134 8.1% $2,211 -18.7% 2,778
314 Capital Blue Cross $1,334 -9.5% $34 36.0% 370
315 Guardian Life Insurance of America $6,569 4.6% $563 73.2% 645
349 State Farm Insurance Co. $47,863 7.2% $408 -60.5% 6,967
366 Tufts Associated Health Plans Inc. $2,000 - - - 2,200
394 Northwestern Mutual Life Ins. Co. $15,382 9.2% $1,829 36.8% 1,250
395 Cincinnati Financial Corp. $2,331 9.5% $118 -53.6% 350
401 Wellmark Inc. Blue Cross Blue Shield - - - - 270
404 Minnesota Life Insurance Co. $1,965 11.6% $235 33.9% 428
408 Blue Cross Blue Shield of Mass. $2,883 39.7% $110 80.3% 120
411 Farmers Insurance Group $3,446 5.4% $725 7.1% 1,338
417 Highmark Blue Cross Blue Shield $9,000 9.8% $242 253.0% 1,280
418 Chubb & Son Inc. $7,252 7.7% $715 15.1% 10,600
421 New York Life Insurance Co. $11,676 11.9% $1,205 117.1% 1,250
428 Trigon Healthcare Inc. $2,612 11.3% $112 447.4% 525
446 Lutheran Brotherhood $3,221 9.2% $128 -12.9% 315
449 Antares Management Solutions $1,089 13.6% $29 35.4% 815
454 Torchmark Corp. $2,516 13.0% $362 32.2% 100
463 Pacific Life Insurance Co. $4,417 42.9% $1,615 9.6% 420
475 Health Alliance Plan $1,100 10.0% $28 20.0% 90
487 Union Central Life Insurance Co. $1,131 -1.2% $35 80.5% 150

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

SnapShot 500/Insurance
Inside companies
Average portion of revenue spent on IT 4%
Portion of IT organizations that sell services or IT products to other companies 31%
Portion of companies that say wireless E-commerce will contribute to E-business revenue stream 47%
Senior IT executive is a member of executive management committee 89%
Average portion of customers included in electronic supply chain 35%
How companies divide their IT budgets
New product and technology purchases 18%
IT consulting and outsourcing 16%
Research and development 3%
Salaries and benefits 34%
Applications 18%
Everything else 11%
How often companies re-examine their IT spending plans
Daily 2%
Weekly 4%
Monthly 53%
Quarterly 31%
Twice a year 5%
Annually 5%

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