The Internet makes underwriting easier and improves customer service

Charles Babcock, Editor at Large, Cloud

September 17, 2004

5 Min Read

Dogged by slow processes, insurance companies are pushing technology deeper into their organizations in order to speed up customer service and sign hard-to-find individual policyholders. In addition, a few companies have been able to build systems that cover some aspects of underwriting, an area that has resisted attempts at automation and remained in the hands of nurses and other medically trained claims processors.

Blue Cross and Blue Shield of North Carolina, for example, is able to instantly sign up 8% of its individual applicants online, after they answer questions through a system that solicits appropriate follow-up queries to some of their answers. If an applicant indicates that he's a diabetic, the questionnaire follows up with queries about what medicine is used and how frequently it's taken. The insurer's underwriting system scores the form, applying rules formerly used by nurses and medical staff, says Gary Bolt, VP of individual sales.

Blue Cross and Blue Shield of North Carolina wants to expand the number of cases its rules engine can cover. "We hope to improve on the 8%," Bolt says.

The Hartford Financial Services Group uses the Web to give independent insurance agents tools that help them submit business for quotes. Hartford's Icon 2.0 system, launched in June, offers online guides on which sort of risks Hartford prefers to insure. Once an agent goes through questions that properly classify the type of risk, Icon 2.0 poses a series of underwriting questions that must be answered to insure that risk. The agent answers these questions in the quote-submission process, speeding service to the customer, says Ben Moreland, Hartford's manager of application infrastructure delivery.

"Insurance equals a promise [of payment], which is [based on] information. We have to have the technology to drive that information," Moreland says.

Other insurers are using the Web to find the previously hard-to-locate individual buyer. Property and casualty insurer Aetna boosted its membership by 95,000 in the second quarter, particularly among individuals and small businesses "where Aetna has historically experienced low penetration," chairman John Rowe said during the company's second-quarter earnings call.

That growth in customers stems from Aetna's Quoting and Renewal System, which automatically performs the underwriting analysis to correctly price a policy. The system helps agents and brokers provide a quote to customers "the same day the applicant's information is received," says Chris Hakim, an Aetna general manager. The quoting and renewal system, Hakim says, "has changed the way we do business."

INDUSTRY LEADERS Company Revenue in millions Income (loss)
in millions Allstate Insurance Co. $32,149 $2,705 New York Life Insurance Co. $25,700 $695 Cigna Corp. $18,808 $668 The Hartford Financial Services Group Inc. $18,733 ($91) Aetna $17,976 $934 Liberty Mutual Insurance Co. $16,618 $851 Northwestern Mutual $16,545 $692 Anthem Inc. $16,477 $774 Humana Inc. $12,226 $229 Progressive Corp. $11,892 $1,255 Aflac $11,447 $795 Aon Corp. $9,810 $628 Principal Financial Group $9,404 $746 Highmark Inc. $8,105 $76 The Guardian Life Ins. Co. of America $6,732 $218 American Family Insurance Group $6,064 $155 Oxford Health Plans Inc. $5,452 $352 Horizon Blue Cross Blue Shield of NJ $5,082 $171 Pacific Life Insurance Co. $4,668 $418 Blue Cross Blue Shield of Mass. $4,496 $244 Nationwide Financial Services Inc. $3,935 $398 HIP Health Plans of New York $3,370 $275 Transatlantic Holdings Corp. $3,341 $304 Allmerica Financial $3,264 $87 Cincinnati Financial Corp. $3,181 $374 Blue Cross and Blue Shield of N.C. $3,094 $196 Markel Corp. $2,572 $123 Tufts Associated Health Plans Inc. $2,400 $57 Willis NA $2,004 $414 Minnesota Life Insurance Co. $1,827 $44 Ohio Casualty Group $1,700 $76 Capital BlueCross $1,675 ($26) American Re Corp $1,603 $262 American United Life Insurance Co. $1,004 $62 Arkansas Blue Cross & Blue Shield $907 $52 Acuity, A Mutual Insurance Co. $616 $43 AvMed Inc. -- -- Massachusetts Mutual Life Insurance Co. -- -- Financial data is from public sources and company supplied.
Revenue is for latest fiscal year.
Dashes indicate companies requesting financial information not be disclosed.

SNAPSHOT INSIDE COMPANIES Average portion of revenue spent on IT 3% Companies using radio-frequency identification 6% Companies globally sourcing products and supplies 28% HOW COMPANIES DIVIDE THEIR I.T. BUDGETS Hardware purchases 13% IT Services or outsourcing 12% Research and development 3% Salaries and benefits 39% Applications 20% Everything else 13% INDUSTRY FINANCIALS Average year-over-year revenue change 13% Average year-over-year net income change 209% 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.

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About the Author(s)

Charles Babcock

Editor at Large, Cloud

Charles Babcock is an editor-at-large for InformationWeek and author of Management Strategies for the Cloud Revolution, a McGraw-Hill book. He is the former editor-in-chief of Digital News, former software editor of Computerworld and former technology editor of Interactive Week. He is a graduate of Syracuse University where he obtained a bachelor's degree in journalism. He joined the publication in 2003.

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