Category: Claims

A new Internet insurance marketplace is up and running, created by Riskebiz Internet Services Inc. The new site will provide links to web related services for insurers, brokers, adjusters and other insurance professionals. The new site uses UDDI, a set of XML protocols and infrastructure, as a tool for searching based on line of business, licensing or geographical location, states a company press release. The UDDI project, which is comprised of 300 business and technology leaders working to develop web-based communication for e-business, has also created a global business registry to allow companies to publish and source web based services, including Riskebiz.UDDI acts as a translator between insurance software systems and applications. “Insurance e-commerce across the Internet has been hindered by the inability of insurers and agents/brokers to (cost) effectively make their computers and software talk to one another,” the release goes on to say. “Riskebiz’s UDDI initiative will improve the ability of web based insurance software to connect to other software, thus profoundly increasing the efficiency of integrating web based applications and business process.

Both Chubb and Allstate recently announced estimated catastrophe losses for the second quarter of 2001, predicting a heavy hit from Tropical Storm Allison. The Chubb Corporation (NYSE: CB) reports an estimated US$80 million in pre-tax cat losses, equaling US$0.29 per share after tax, most of which the company attributes to Allison. This compares with second quarter 2000, when cat losses were just US$24.3 million.The company also expects to report second quarter operating earnings of US$0.75 to US$0.80 per share, as compared with US$1.00 per share for the same period last year. These results will be officially announced near the end of July.The Allstate Corporation (NYSE: ALL) was similarly affected by flood damage as a result of Allison, as well as other severe spring storms south of the border. The company expects pre-tax cat losses in the range of US$536 million for the quarter, or about US$0.48 per share after tax, with about US$446 million a result of the spring storms. However, when compared with 2000, the results show an improvement year-over-year. For the first half of 2001, cat losses are expected to total US$618 million, or US$0.55 per share, compared with US$749 million for the first half of 2000, or US$0.64 per share

A tornado struck Quebec’s Lac-St-Jean area last night, causing damage to approximately 15 houses without any personal injuries resulting. St-Gedeon, which is located north of Quebec City, is reported to having suffered the most damage with downed power poles and trees. Hydro-Quebec says about 900 of its consumers lost power last night. The electricity was expected to be back up and running by today.

Homeowners of Chisholm and Slave Lake, located 150 kilometers north of Edmonton, Alberta, will be covered under most insurance policies for additional living expenses they incurred when the areas in question were evacuated as a result of a forest fire which broke out toward the end of May this year, according to Jim Rivait, a regional vice president of the Insurance Bureau of Canada (IBC). Latest loss reports at the time indicate that the "Chisholm fire" had scorched almost 350 square kilometers making it the largest of six out of control forest fires in the province.

Following a fairly mild earthquake which shook the Queen Charlotte Islands and surrounding areas in British Columbia in early February, a second quake of a much greater magnitude of 6.8 on the Richter Scale occurred in the northern part of Washington state in the U.S. at the end of the same month. Although the tremor was felt as far north as Alaska, it caused little damage within B.C. As one insurance CEO observes, “there were surprisingly no business interruption claims out of B.C., the only claims that came in were for really small losses, like things that had fallen off of a shelf”. The Insurance Bureau of Canada (IBC) is still investigating potential insured losses, including structural damages which may have been caused to buildings. Crawford Adjusters says that it is also monitoring claims arising from the incident (see Insight of this issue for further details).

The Washington state quake did result in about US$1 billion in insured losses, according to the Insurance Information Institute (III). Overall, between US$2 billion to US$4 billion in damage is estimated to having been caused by the tremor, with most of loss suffered in the state’s capital Olympia (closest to the epicenter) and Seattle.

Asbestosis, tobacco and pollution related liability exposures were identified by panelists at the recently held Casualty Actuarial Society (CAS) annual meeting as being the top three risks facing U.S. insurers in coming years.

Although asbestosis claims subsided in the early 1990s, the latter part of the decade saw renewed activity, according to Jennifer Biggs, a consulting actuary at Tillinghast-Towers Perrin. “In the late 1990s, filings have gone crazy…Ultimately, the industry loss from asbestos in the U.S. could easily exceed US$40 billion.”

Recent years have seen an increase in claim filings and higher settlement amounts, she observes, largely resulting from tort reform and its impact on accelerating the time frame for filings. The role of more aggressive attorneys specializing in asbestos litigation has also been a contributing factor to the rise, Biggs surmises. In that respect, she notes that the number of defendants has risen from approximately 300 in the 1980s to several thousand today. “The defendant list continues to expand since asbestos was used in a variety of products, including yarn and thread, brake linings, to roofing materials and paints.”

A new threat on the horizon for insurers is tobacco litigation, says Phillip Miller, a consulting actuary with Tillinghast-Towers Perrin. Between 1954 to 1983, there were around 300 tobacco litigation cases filed with no sustained verdicts or paid indemnity. In contrast, the 1990s produced more than 1,500 suits, with roughly 1,225 of these pending by the end of 1999. Furthermore, there have been recent court verdicts in favor of plaintiffs which raises the question, “will the next wave of suits be a tidal wave?”

Insurer involvement in tobacco litigation has thus far been limited, Miller notes, with carriers denying that cover exists under standard policies. Other than an action taken by the Ligget Group against 33 insurers for recovery of defense costs and payments from primary, excess and umbrella, and advertising liability policies from 1970 to 1979, tobacco companies have not sought to regain compensation from their insurance companies, he observes. This, however, could change depending on the outcome of the Ligget case as well as any significant swing in favor of plaintiff actions sustained on appeal.

The spread of computer technology in the business world brought with it the promise of the “paperless” office. But, as it turns out, a great future of hyper efficiency and zero waste has become buried under a mountain of paper.

As the volume of paper documents continues to pile higher at many insurance businesses, it becomes increasingly difficult and time-consuming to access information and process it efficiently. This state of affairs is so entrenched as the norm that many companies fail to recognize the enormous costs they are bearing, along with the significant impact on customer service.

To compete in today’s fast-paced, 24/7 world, insurance companies need to share knowledge efficiently and effectively – internally, with customers and with suppliers – so they it can interpret information and put it to use faster than others.

Documents are the DNA of knowledge. Think about the essential role that documents like applications, payments, photographs, and claims play in improving customer service, loyalty, and profitability. The challenge is how to manage that information and share it effectively, especially when so much of it is paper-based.

Take Algoma Insurance Brokers of Sault St. Marie, Ontario. It handles numerous documents that guide its insurance decisions. For example, photos of a wood stove in a home give underwriters visual information about insurance risks, including details about location, installation, and condition. Similarly, home inspection reports contain valuable information about insured assets that must be tracked and filed. Add to that the industry updates that Algoma teams need to serve their clients responsibly, and the result is a paper stockpile that occupies more than 2,000 square feet of storage.

Managing documents efficiently on an enterprise-wide scale involves creating a single system in which all elements – computers and their application software, networks, the Internet, scanners, printers, networked copiers, fax machines and multi-function devices – operate seamlessly.

With the advent of digital documents and networking, this is now possible. As a result, insurance companies are transforming the way business knowledge is gathered, analyzed, stored and retrieved.

For Algoma, the path forward began by using digital cameras to photograph customers’ insured assets, instead of standard photography. Using digital photography, Algoma discovered how valuable it was for customer teams to have quick electronic access to those photos. Digital image files accessible from desktops put an end to frustrating, time-consuming physical searches to locate paper photos to support business decisions or claims.

But this as just the first step, Algoma and other insurers are making the transition to an all-digital document infrastructure. Now paper documents can be digitized and stored in digital document repositories, revolutionizing the way information is shared across the enterprise. The promise of a “paperless” office is becoming a reality.

In the past, insurance companies would copy and distribute paper documents through internal mail to a limited list of recipients determined by the sender. Today, Algoma and other companies are scanning paper documents and filing them in a “knowledge repository” on the company intranet, allowing quick and easy access to information by anyone in the organization.

According to Ross Weatherby, Algoma’s technical administrator, the company is saving up to $40,000 per year in labour costs with its digital document centre. Documents that have lasting value are automatically scanned and digital filing software allows employees to easily search records and databases by key words, customer names and numbers. Weatherby estimates the technology paid for itself in the first three months of operation in salary savings alone.

Experience with insurance companies around the world indicates that approximately 1.5- 2% of net written premium (NWP) is direct document spend, including equipment, labour, services and supplies. In fact, if you factor in other indirect costs – queue times, professional productivity losses and business process impacts – up to 15% of NWP can be associated with documents related to the policy issuance and administration process. That is money directly off the bottom line!

By partnering with experts in document services and solutions, insurance companies can better manage information, whether it is on paper or already in digital form. Now knowledge can be moved quickly from where it is stored to where it is needed, with technology that supports the way an organization works.

Today’s competitive environment requires that organizations share information more effectively than ever before. Digital document solutions can help manage knowledge to improve productivity, deliver better customer service, and reduce costs.

The Wired World welcomes your feedback. Contact us, via E-mail at <vspencer@corporate.southam.ca”>b>vspencer@corporate.southam.ca