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Tuesday, November 17th
Insurers are looking to technology for competitive advantages, but their chances for success will be slim unless they are culturally inclined to react to and absorb new applications where they fill strategic needs, said Daniel M. Yellin of International Business Machines Corp., Armonk, N.Y. 
Yellin, a doctorate of computer sciences and manager of IBM's Insurance Research Center, provided several examples of insurance companies that are making better use of computer data and high-speed telecommunications to bolster profitability. He cited efforts by the Los Angeles-based Farmers Insurance Group of Cos. to improve its underwriting profitability analysis by performing "micro-segmentation" of its auto insurance customers, as opposed to the more common approach of looking only at large pools of drivers for patterns. The micro approach is allowing Farmers to identify more precisely the risk probabilities of its customer base and change the pricing accordingly. In its life insurance business, Allstate Insurance Group, Northbrook, Ill., is using data-mining techniques to generate prospect lists for its independent agents via an Internet Web server, Yellin said, speaking at A.M. Best Co.'s "Fulfilling the e-Promise" conference in Boston. "An agent can put in a ZIP code, the type of customer desired, and the type of products to be sold," he said. The query generates a list of potential customers in the agent's territory, based on information Allstate has screened for the best prospects. To make this facility work for Allstate, the insurer sets certain feedback requirements for the agent to maintain access, which in turn helps the insurer gather additional useful market intelligence. "E-business is not just about opening new distribution channels, but making the existing ones more efficient and more profitable," Yellin said. Hartford Insurance Co., Hartford, Conn., for example, is using Internet technology to produce what Yellin calls "just in time" information capabilities in its disability insurance operations to cut the amount of time it takes to get an injured work back on the job. A case management worker can now work simultaneously with a human resources professional at a company on the same forms on their personal computers to fill out and execute the paperwork faster, eliminating the need to send faxes back and forth. Yasuda Fire & Marine Insurance Co. in Japan sought help from Yellin's group to use digital cameras to streamline the auto-accident claims adjusting process. The Tokyo-based insurer wanted to eliminate the time it takes to develop and mail film, but they didn't like the vulnerability of digital images to tampering and fraud. The solution was to impose an invisible watermark on the image that would show not only whether an image had been altered, but exactly what part of the image was doctored. The next challenge for IBM, Yellin said, is to help insurers prepare for the computer architecture of the future, so that future technological advances can be adopted without causing major problems with existing legacy systems. |
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