the technology imperative - The National Association of Mutual

Transcripción

Insurance
Mutual
®
A publication of
Spring 2012
Imag
ing
S
y
s
t
ems
Clou
d
Interface
While the mutual insurance
industry can be all over the
map when it comes to
technology initiatives
and implementation,
one thing is certain –
companies better
al
Socia
i
be somewhere
Med
on it.
Com
p
uting
Real-time
Technolo
g
y
Legac
y
System
s
Analy
t
ics
Telem
Back-end
Systems
atics
Inte
Pro rnet
t
Pho ocol
n
Sys e
tem
Remote
Access
Back
Office
Focus On …
Telematics
Insurer • Agent • Policyholder
Connectivity
is Crucial
Web-based
Portals
FTP
Site
Virtu
a
lizat
ion
Th
Dr umb
ive
s
The
Technology
Imperative
Mutual Insurers Move Innovation
from Transformative to Commonplace
Seeing Your Way Through
The 2012 AAIS Main Event
April 15-17 • The Lodge at Torrey Pines
Where insurance leaders explore
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• An inland marine track exploring the development of analytics
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• AAIS staff reporting on AAIS product developments and
leading roundtable discussions
Products and people you can rely on
www.aaisonline.com
Contents Spring 2012
8
20
… and more
14
24
IN this Issue:
The Technology Imperative
8
Cloud Computing
Businesses are increasingly sending their information to the sky. Cloud computing isn’t
necessarily a new way to store information, but it is by all means becoming one of the
most popular. Despite some initial confusion about how it works and concerns about
its security, the cloud is transforming the way the insurance industry works.
14 Connectivity is Crucial
The mutual insurance industry is doing business faster than ever before. Policyholders
and agents want information now, and technology makes that possible. Insurance
carriers are highly aware of this desire for instant gratification; they’re working hard to
achieve it; and they’re being recognized for their efforts.
5
Insights
A Brave, New World
6
Innovation Case Study
The Experiment That
Transformed a NAMIC Member Company … for the Better
12
Viewpoint
23Member’s
What Brought You to the Dance
Views from the C-Suite
Business Technology Rankings
28Movers & Shakers
30
The Advocacy Agenda
32NAMIC PAC
20 Gaining a Competitive Advantage
Cost of technology has, in the past, been a barrier to many smaller mutual companies.
But as more small companies are finding ways to break into the technological
business world, they’re bridging the gap between them and their large-company
competitors.
24 Focus on Telematics
The use of telematics in the insurance industry is on the rise. While telematics can
gather more information than companies might know what to do with, it offers an
abundance of benefits to insurers and policyholders alike.
Online
An online version of IN magazine
can be accessed for free at
www.namic.org/in/default.aps
Spring 2012
IN Magazine 3
To see whether a risk poses a threat,
don’t we have to see the big picture?
The future is like an iceberg. Most of the time what we can see before our eyes is
only half the story. So how do we know the unknowable? Only those with relentless
drive, expertise and foresight can see the whole picture – the risk that lies beyond.
At Munich Re, seeing more is what we do. We work in interdisciplinary teams,
each pair of eyes viewing something from a different perspective, all focusing
on the best solution. With our worldwide network we can pinpoint complex global
patterns when they arise. When it comes to grasping our future, we are never
satisfied with half the story.
To find out more about what lies beyond,
check out our website at www.munichreamerica.com
NOT IF, BUT HOW
Products and services provided by Munich Reinsurance America, Inc.
Insights by Charles M. Chamness
Chuck Chamness is president and
CEO of NAMIC. You can contact
him at [email protected].
A Brave, New World
I know that if I ask the CEO of any NAMIC member
company what their most important project has been in the
past five years, I am likely to hear the story of a successful
(or disappointing) implementation of a new system. Pick up
any insurance-industry trade publication and you are sure to
see at least one article on the topic. There is even a monthly
publication that covers only insurance and technology
(coincidentally, that is the name of the magazine). And, in this
issue of IN magazine, we peel back the layers of technology in
our industry.
Many property/casualty insurance companies have been using
automated processes since computers were first introduced.
As you will read in some of the following articles, insurers are
either in the throes of replacing their legacy systems or rolling
out new and improved systems that process work faster, better,
and more efficiently.
We are in the middle of a brave, new world.
Once upon a time, however, there were a lot of water cooler
conversations about how technology would result in lost
industries, travel agencies and stock brokerage firms among
them. It’s called disintermediation, a buzz word that came
about at the end of the last century when the Internet was new
and somewhat frightening as some technology gurus were
saying that this technological advancement would eliminate
the transactional middleman.
Fast forward 10 or so years, and, sure, technology has
streamlined certain industries, but it hasn’t caused them to
become extinct. Its effect, actually, is similar to the theory of
survival of the fittest – those who are dedicated, those who add
value and produce will survive.
Looking back through history, we see technological changes
with each era – the telephone replaced the telegraph;
television replaced radio; word processors replaced typewriters;
tapes replaced albums; CDs replaced tapes; mp3 players
replaced CDs. Each time one technology replaced another, it
didn’t necessarily kill an industry unless that industry refused
to change.
There is no doubt that information technology has been a great
asset to the property/casualty insurance business process, but
it is my opinion that there is no other insurance topic as prone
to overstatement as this one. Yes, technology has its place in
the internal workings of a business, but I don’t think “Siri” in my
iPhone is going to replace human contact.
relayed that personal interaction is a key motivator in doing
business with an insurer. Technology does not fill that basic
human need for personal relationships.
The new age of information technology is here, and it is
advancing by the minute. While our industry might have
been a little slow on the uptake with all the recent
breakthroughs, we are conceptualizing and building new
portals and management and claims systems. We are
using technology the way it should be used – to better our
communities of employees, agents, and policyholders. Our
business and information technology can and do co-exist.
However, our business has always been all about service
and relationships, even more so now as insurance products
become more personalized and more customer centric. This
makes the need for human involvement and guidance so
much more important, whether that high-touch contact is
through a phone conversation, a face-to-face meeting, or
maybe even Skype. IN
While statistics show that auto insurance is increasingly being
bought online, NAMIC found in our own recent research that
only a very small percentage of drivers prefer to buy online.
On the flip side, five times as many respondents to our survey
Spring 2012
IN Magazine 5
Innovation Case Study
The Experiment That Transformed a NAMIC
Member Company … for the Better
There are not very many people out there who relish the thought of change. Whether it is a change
in personal lives or professional lives, change can be emotionally painful. It means moving from the
comfortable … the known … to a situation that could be difficult, confusing, and, quite possibly, risky.
But in this ever-evolving world, the one constant is change. The founder of the mutual property/casualty
insurance industry – Benjamin Franklin – once said, “When you are finished changing, you’re finished.”
Siddhartha Buddha even weighed in, “Everything changes; nothing remains without change.”
By Lisa Floreancig
N
early six years ago, a whopper
of a change came to Midwest
Family Mutual Insurance
Company in Plymouth, Minnesota,
which is just 15 miles from Minneapolis.
Everyone went home … to work, that is.
The idea to go virtual was almost
an afterthought. Business overhead
was getting out of hand, particularly
because of a 24,000-square-foot
building on the books – a $130,000
annual expense. The initial thought
was to sell the building that was then
worth between $2.5 million and $3
million, and lease it back. Problem
was the annual cost for rent would
have been a bank-account-blowing
$350,000 to $400,000. So it was on to
new ideas.
“It was just a wild imagination-type deal,”
said Ron Boyd, president and CEO
of Midwest Family. “We were sitting
around a coffee table discussing how to
cut costs and somebody just wildly said,
‘Why don’t we work from home so we
don’t have this much real estate?’”
“It has far exceeded our wildest
expectations,” Boyd said. “I can’t
remember the last employee who has
left us for any reason. Turnover has
been non-existent. I know a piece of
that at least is that our employees just
really like this working relationship
and working arrangement. I couldn’t
imagine going back to the oldfashioned way where we are all
commuting to the beehive.”
Telecommuting is a broadly defined
term that includes any method of
working productively away from the
traditional office. According to a 2011
forecast from TechCast at George
Washington University, while 4 percent
of U.S. private-sector employees
currently work from home, that figure
could reach as high as 30 percent in
less than a decade.
An off-the-cuff suggestion became
reality.
There are many reasons for the
growing popularity of this new-butnot-so-new work trend. Research has
shown telecommuting creates, among
other benefits, more job flexibility,
decreases sick time and turnover rates,
reduces the need for office space, and
increases productivity.
When Boyd was first interviewed for
the spring 2007 issue of IN magazine, it
was still too early to gauge the success
or failure of the venture with any
certainty. Today is a different story.
Karen Frederick is a long-time
insurance professional with more
than 20 years in the business – and
a source in the 2007 IN article. She
began working at Midwest Family in
6 IN Magazine Spring 2012
2006. It was the move toward a virtual
environment that attracted her to the
company, and she was one of the first
employees to go virtual. “I couldn’t have
a better job. Honest to goodness, it’s
wonderful,” she said. “We have state-ofthe-art everything. It is magnificent.”
When Frederick began her tenure
in the company’s in-house workers’
compensation department, it was new
and she was the department – the
one and only employee. Frederick
was promoted last August to workers’
compensation claims supervisor, and
she now has four employees directly
under her with an additional five who
split their time between two roles. She
says that they rarely see each other, but
it’s easier than it appears.
“I’m very lucky in that I don’t have
to watch them step by step. Every
company has its little pits, but this is like
the cream of the crop, the cherry on the
top of the pie,” Frederick said.
Several recent studies have laid
out a dismal employee outlook for
the property/casualty insurance
industry. Saddled with a reputation
of being boring, backward, and just
plain unattractive as a career, the
industry is looking at a tough talent
challenge, particularly with the Internet
generation. These young up-andcomers are looking for perks such as
Lisa Floreancig first reported on Midwest Family Mutual Insurance Company’s
conversion from brick and mortar to a virtual business model. Nearly six years
later, she reports on the company’s success and some unexpected benefits.
Benefits of
Midwest Mutual’s
Virtual Business
Model
Expense ratio reduced by
7.6 percent
Positive environmental impact
including a 63 percent reduction
in electricity consumption and a
76 percent decrease in natural
gas consumption
Zero employee turnover with
30 percent growth in staffing
across seven states
A goal to transition from working
at home to working anywhere
by utilizing tablet/smart phone
technology that allows managers
even more mobility.
new-age technology and flexibility,
which is exactly what this new-age
insurance company offers.
“I think I feel more at ease. When you
are in traffic that is absolutely insane,
you are so wound up when you get to
work. You’re frustrated. You’re angry,
and you take it out on whoever calls
you first,” Frederick said. “I hate to say
that. But now, I get my coffee; I come
down here [to her home office].”
In the early days of the change,
Midwest Family had 61 employees.
Today, that number has shot up
more than 30 percent. “Truthfully,
I get more calls asking if we have
any openings because they want to
work from home. They are tired of
whatever,” Frederick said. “Everybody
wants it, this opportunity. There are
other companies that do this, but for
an insurance company to make this
drastic change, it’s been quite a hit.
I have said this is my final job. I will
never go anywhere else.”
While the bold move to telecommuting
has resulted in happy management
and a happier staff, little did executives
know that this unconventional answer
to a rather conventional problem
would have another positive result –
a healthier environment. “It wasn’t
even in our plans. The environmental
perspective was a sidelight that we
found out afterward,” Boyd said.
After some Internet research
conducted by Midwest Family, it
became apparent that there isn’t a
great deal of information about what
exactly is required to be certified as
a “green” company. “You have to
have documentation to support it,”
Boyd said. “We just felt that we could
support it on the basis of how much
less energy we were using to run our
business, not the least of which were
the 25,000 to 30,000 gallons of gas a
year our employees weren’t burning
commuting to work.”
Then there is the reduction of its
annual electricity consumption by 63
percent and natural gas consumption
of 76 percent. Paper usage has been
reduced by 65 percent. All of which
has made a big mark on the company’s
bottom line. In the past five years,
Midwest Family has decreased its
expense ratio from 33.5 percent to 25.9
percent of every premium dollar.
Before moving from the concrete
jungle into the quiet, relaxed
atmosphere of home offices, Midwest
Family’s employees lived in the area.
Now, Midwest Family has moved its
products and about one-third of its
employees to seven other Midwestern
states. Chances are good that this
number will rise as the company
enters Phase II: working from home to
working from anywhere.
“We’re going to a tablet/smartphone
methodology, where we can work
anywhere there is high-speed
wireless connections,” Boyd said. “Our
management will be much more
mobile, so they will be able to work
from a remote location in the same
method as if they would be at the hardwired system that is in their homes.”
Boyd acknowledges that there was
some hesitation and questioning of
whether embarking on this technology
journey would be a wasted effort. “You
always have the risk of trying anything
new as to how effective it’s going to be,”
he said. “It’s not a whole lot different
than going into a new state or a new
line of business. We were going to do
something different that we executed
on a calculated basis. We thought it
was going to have a good result, but we
would never know unless we tried.” IN
Spring 2012
IN Magazine 7
This cloud isn’t the condensed water
vapors that cover the sun; drop rain,
snow, and sleet; or form thunderstorms,
hurricanes, and tornadoes. No, this
cloud is a shared Internet network
that allows people and organizations
to access their information from
anywhere and from
a multitude of devices.
By Lindsay Robison
M
illions upon millions
of particles of
information are
currently floating
above your head. Dec
pages, signatures, policy language, claims
forms, payment information, you name
it, they’re up there. But don’t worry about
looking up. You can’t see them. They’re
all floating in the cloud.
This cloud isn’t the condensed water
vapors that cover the sun; drop rain,
snow, and sleet; or form thunderstorms,
hurricanes, and tornadoes. No, this cloud
is a shared Internet network that allows
people and organizations to access their
information from anywhere and from a
multitude of devices.
Cloud computing isn’t necessarily new,
but it is becoming the big thing. Many
companies might be using it without
even really knowing it has a name. A
survey conducted by Virtacore Systems
released in early 2011 found that 54
percent of respondents using cloud
computing applications didn’t identify
them as part of the cloud. Nevertheless,
businesses – mutual insurers included –
have begun to adopt it at ever-increasing
speeds. Despite some security concerns,
it is transforming the way the insurance
industry works.
In reality, most everyone has been
involved in the cloud for years, especially
when it comes to using computers on a
personal basis.
“At the heart of it is the idea that an
application runs somewhere on the
‘cloud’ – whether an internal corporate
network or the public Internet – we don’t
know or care where,” noted Geva Perry,
chief marketing officer for GigaSpace
Technologies, when writing as a guest
columnist for online IT media website
GigaOM. “But as end users, that’s not big
news: We’ve been using web applications
for years without any concern as to where
the applications actually run.”
Accessing e-mail, or anything else for that
matter, that isn’t stored on a computer’s
hard drive but can be retrieved instantly
is part of some cloud. In business, if
people use a different computer to
remotely access their work desktop,
they’ve used some sort of cloud.
It hasn’t always been known as the cloud,
though. The concept has been referred
to by different names – grid computing
– and mimicked and expanded upon
other concepts – utility computing. The
idea of utility computing surfaced at the
Massachusetts Institute of Technology
some five decades ago. Utility computing
allows its users to retrieve computing
resources from somewhere else, only
getting and paying for as much as is
needed. Cloud computing expanded
upon this model, building applications
from which companies can operate in a
virtual environment.
But cloud as we know it in today’s
business sense has really come around
in the past few years, according to
Julien Courbe, managing partner
for PricewaterhouseCoopers’ U.S.
financial service technology practice.
“The terminology has changed, but the
hype is bigger,” Courbe said. “That’s
because the adoption and the maturity
of the solutions have been significantly
enhanced in the past two or three years.”
In fact, the hype or the big news, as Perry
called it in her column, is for companies’
information technology functions
and departments. “Done right, cloud
computing allows them to develop,
deploy, and run applications that can
easily grow capacity (scalability), work
fast (performance), and never – or at
least rarely – fail (reliability), all without
any concern as to the nature and location
of the underlying infrastructure,” Perry
wrote.
Numbers back up the increasing
sophistication of the cloud and
its increasing implementation by
organizations. Nearly three-quarters
of respondents to a survey studying
technology’s effect on the property/
casualty insurance industry planned
to adopt service-oriented technology
Julien Courbe
PricewaterhouseCoopers
“
“I am absolutely
convinced that
three or four years
from now everyone
in the insurance
industry will be
using some kind of
cloud computing
solutions for their
infrastructure.
It is creating
more agility and
flexibility, and it
reduces costs.”
To find vendors that can help you
run your business in the cloud,
visit NAMIC’s Preferred Service
Organization Marketplace at
www.namic.org/pso/default.asp
Spring 2012
IN Magazine 9
The Cloud
By the
Numbers
Source: CSC
33
percent of companies adopted cloud
primarily to access information from
any device rather than to cut costs
82
percent of all companies saved
money on their last cloud adoption
14
percent of companies downsized
their IT departments after
adopting cloud capabilities
52
percent reported increased
data center efficiency
47
percent reported lower operating costs
80
percent experienced improvements
within six month of adoption
23
percent of all U.S. businesses reported
no savings after adopting cloud
35
percent of U.S. businesses
saved less than $20,000
25
percent of companies reported
being more concerned about
security after adopting cloud
infrastructure into their business
operations, according to a white paper
written by Robert Puelz, Dexter Professor
of Insurance at Southern Methodist
University.
So, that third-party vendor you work
with or have been talking to about
helping you run whatever underwriting,
claims, policy administration, or other
business function as a web-based one …
that’s your company running or thinking
about running on a cloud.
Courbe agrees with Perry’s statements.
He says companies’ speed to market can
be significantly enhanced by moving their
information to the cloud. “You want to
get into a new state or into a new region?
You want to launch a new product or
accelerate the launch of a new product?”
he asked. “You can add capacity in a
matter of minutes instead of a matter of
months.”
As long as a company has the funds to
increase its capacity in the cloud, it’s just
a matter of talking to the vendor that can
make the increased capacity happen.
Companies in all business sectors have
been moving data into this virtual
infrastructure. Cloud computing ranked
as chief information officers’ No. 1
priority again in 2011, according to a
Gartner research study. Gartner has also
predicted the cloud computing market to
reach $150 billion by next year.
While the insurance industry is definitely
a part of this market, Courbe says that
with all of the confidential information
passing between insurers and their
policyholders, the industry as a whole
has been a little more resistant and taken
a bit more time than other industries to
immerse itself into the world of cloud
computing.
It is these visions of computer geniuses
roaming around in clouds where they
don’t belong or information falling from
these technical clouds like rain drops that
have kept many insurers from sending
information upward. Courbe believes
insurers’ concerns are legitimate, but
he says the security issue isn’t as big
of a concern as it was a few years ago.
The concept’s rapid improvements and
subsequent maturity have decreased
those concerns. Therefore, Courbe
advises to not let security issues be the
be-all-end-all decision to not enter into
the cloud.
“Insurers should do due diligence,”
Courbe said, “and if insurers feel
comfortable with the security, then they
should feel comfortable moving data
there. With the right risk management
processes and policies, they can control
their data.”
Cost can be a hindrance from
entering into this technological space,
especially for small- to medium-sized
companies. But even that is becoming
less of a problem. A March 2011 study
commissioned by Edge Strategies
reported that nearly 40 percent of smallto medium-sized businesses expect to
be paying for cloud services within the
next three years. That’s an increase of 34
percent from the firm’s previous study.
If your company hasn’t entered the
cloud or thought about entering it,
Courbe advises that you consider doing
so. “There have been some trends and
hypes that haven’t materialized,” he said.
“But not cloud computing. Everyone is
moving there.”
But moving there shouldn’t be done
in haste, either. Courbe recommends
making the transformation to cloud
computing a controlled and cultural
change. Along with technology, people
and processes must be considered. He
says it is “truly a multidimensional
transformation.”
Goals can be made to roll out new
benefits into the cloud at month six,
month 12, month 18, and so on. At each
interval, companies can evaluate what
they’ve leveraged and decide if it makes
sense for them to invest more or to stop
at what they’ve accomplished, at least for
a little while.
Companies need not worry about
the timeframe of their cloud
implementation, according to Courbe.
He says that even with the rapid changes
in cloud technology, your company’s
efforts won’t be obsolete. “Leveraging
technologies won’t negate cloud,” he said.
“They will build on top of cloud and
bring it to the next level.” Whatever
that level might be, and wherever it
might be floating. IN
The smart ones
don’t get left behind.
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personal lines.
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The Smart Solution is iter8
Views from the C-Suite
We ask the important questions
and we get the answers from
NAMIC member company executives.
Business Technology Rankings
On a scale of one to 10, how technologically savvy is your company?
Why do you give that ranking?
6.5
9
8
Still Passing Paper Around
It Starts at the Top
Part of the Business Strategy
Rob Shoenfelt
Chief Information Officer
Celina Insurance Group
Celina, Ohio
Tony Laska
Senior Vice President and Chief
Information Officer
BrickStreet Mutual Insurance Company
Charleston, West Virginia
Clark Sykes
Vice President of Information
Technology
Merchants Insurance Group
Buffalo, New York
I rank BrickStreet as a nine. We embrace
technology, and we recognize the
importance and impact it has on
operational effectiveness. There are
many reasons why BrickStreet deserves
a nine, and it starts at the top. The CIO
is a direct report to the CEO as well
as a member of the senior leadership
team. We recently implemented a portal
that will service all of our business
relationships. We’ve empowered our
senior leaders and field staff with iPads,
and we’ve opened mobile interactions
on any cell phone or smartphone device.
Philosophically, we are fast followers
when it comes to the technology we
are willing to deploy. While we may
experiment with newer technologies,
we do so aware of what’s available in
the industry. We like technology that is
proven and practical in helping us solve
our business concerns.
I’d say Merchants Mutual is an
eight. Technology is a critical part of
Merchants’ overall business strategy.
Senior management is keenly aware of
the opportunities provided by existing
and new technologies, and they work
collaboratively with IT to realize major
business initiatives. We’ve significantly
improved our time to market. We have
successfully integrated predictive
analytics into many of our key products,
and we’re transitioning into a more
data-driven organization. We maintain
and continue to enhance a robust web
presence, and our independent agents
consistently rank it among the very
best, most intuitive websites in the
property/casualty industry. We’re also
leveraging social media for the benefit
of our independent agents and investing
in mobile technologies for both
policyholders and agents. IN
I’d say we’re a six or a seven. We have
some areas that are tech savvy and
doing some interesting and cool
things, and then we have others
that are not. We have implemented
predictive analytics into the rating
structure of our two largest products.
So I’d say we’re ahead of the game
there. But we still pass paper around
in a lot of other areas. When I
think of the most technologically
advanced insurance carriers, we
certainly lag behind some of the
giants – like a certain company who
has someone named Flo pitching
its products. But when I compare us
to insurance carriers more our size
and the functionality we provide to
independent insurance agents,
I would stack us up against any of
those insurers.
Have a question?
Just drop us a note at
[email protected]
and we’ll find the experts with
the answers.
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Products and people you can rely on
www.aaisonline.com
Insurer • Agent • Policyholder
Connectivity
is Crucial
A company that doesn’t connect
with its customers will lose out to
another company that will
By Lindsay Robison and Lisa Floreancig
Spring 2012
IN Magazine 15
Instant Gratification
They want it now. Actually,
they wanted it 10 minutes ago, but
now would be sufficient. Any later
means they’re waiting too long.
“[Customers] want to know right
now. They don’t want to wait to
get a quote,” said Jim Ochiltree,
president of property/casualty
services of IVANS, an electronic
communications service consulting
company. “These days if you walked
into a car dealership and asked how
much a car cost and the salesman
said he would have to get back to
you on it, that dealership wouldn’t
sell very many cars. So it’s really
about providing the experience for
the customer.”
With all the technological devices
that allow people to instantly access
just about any information their
hearts desire whether they’re sitting
at their desks, walking their dogs,
or waiting in line for the restroom,
everyone in society has gotten used
to getting what they want when they
want it.
“When you take a look at any
consumer survey, younger folks have
a strong desire for mobile apps and
virtuality,” said Rebecca Amoroso,
vice chairman and United States
insurance sector leader for Deloitte.
“Companies that are able to better
connect with the customers are
the ones that could really gain
market share.”
A company that doesn’t connect
with its customers will lose that
business to another company that
will. And consumers’ attitudes
toward access to insurance services
aren’t any different.
Insurers seem to be paying attention
to these attitudes, which is probably
why customer experience is
consistently mentioned on Deloitte’s
Insurance Industry Outlook. It’s
also probably why many insurance
companies are recognized each year
for their customer service efforts.
Amica Mutual Insurance Company
has dominated J.D. Power and
Associates’ customer satisfaction list,
ranking first for the last dozen years.
Technology is a priority for the
Providence, Rhode Island-based
insurer’s customer service initiatives.
Ironically, Amica uses technology to
find out what its policyholders want
when it comes to technology. The
company monitors the Internet for
mentions of Amica on Facebook,
Twitter, blogs, and other social
networking sites. Staffers monitor
the comments and questions that
come to them from Amica.com,
and they spend time on the phone
listening to policyholders and
answering questions.
“We prioritize our projects based
on what we’re hearing from our
customers,” said Lisa Melton,
Amica’s assistant vice president of
sales and client services. “Even if it
is a small change but one that could
be helpful, we look into how we can
put that into place. As far as bigger
projects, we take a temperature of
what those are and make sure we’re
supporting what the customers want.”
What Amica has been hearing is
that some policyholders want to
see a state-of-the-art website while
others want applications for their
mobile devices. People want to file
claims online and receive their bills
and policies via electronic delivery.
So the company is working on an
encompassing electronic creative
suite that it believes will satisfy all
of their customers’ desires when it
comes to working with an insurer.
“We recognize that customers no
longer want the paper and the hassle,”
Melton said. “They just want to know
the information is available at their
convenience.”
Most people outside the industry
would probably believe that it is
only policyholders who want service
instantly. But they aren’t the only
customers wanting instantaneous
information. Industry insiders know
it’s the agents who want this kind of
access as well. They are the people
most often having direct contact
with policyholders after all.
Insurers are focusing on infrastructure, innovation,
predictive analytics, and automated workflows
%
Already
Implemented
%
Currently
Implementing
Predictive analytics/business intelligence
30.2
22.6
New or upgraded policy administration system
20.8
32.1
Agent portals
69.8
13.2
Consumer portals
24.8
21.9
Personal lines download
69.8
3.8
Commercial lines download
29.8
13.5
Claims download
19.2
2.9
Real-time quoting
61.5
13.5
Improved underwriting solutions
21.2
29.8
Mobility/virtualization
17.1
21.0
Federated security
10.9
5.0
Book roll solution
11.3
10.4
Technology Investments
Source:
IVANS 2011
Carrier
Automation
Trends
Connectivity is Crucial
whatever process the agent is working
on with a customer. Real time, then,
gives agents access to a carrier’s
interface from a remote point that
allows instantaneous workflows.
Most agents incorporate multiple interface
technologies into their workflow
Real-time upload
Commercial download
Claims download
Personal download
Alerts, activities, notes
Policy document
download
DBCS download
Source: IVANS 2011
Insurance Agents, Carriers
& Technology Survey
Mobile applications
Carrier portals for agents
0
25
50
75
100
William B. Parry & Son is a
Pennsylvania-based, family-owned
independent agency that has been
in business for more than a century.
It is now on to its fifth generation
of Parrys. But its age and family
tradition don’t mean the agency is
old fashioned.
and a three-year conversation about
technology implementation, the
agency decided two years ago to end
the long-term relationship. The two
organizations’ technology mentalities
didn’t mesh and neither did their
workflows, making a continued
partnership extremely difficult.
The agency’s future is technology
based, according to Lisa Parry Becker,
who is one half of the agent duo that
makes up the firm’s fifth generation.
Both she and her brother have techsavvy backgrounds. Before coming
to the agency, Parry Becker’s
brother, Ryan Parry, worked in
the information technology world.
Parry Becker acted as chair of the
ACSnet Interface Committee and
is a frequent speaker and panelist
for insurance industry automation
issues. They expect the carriers they
work with to have their hearts set
on technology as well, and if the
carriers aren’t meeting the agency’s
technological needs, they might
part ways.
“So [technology] has changed our
carrier mix,” Parry Becker said. Parry
& Son isn’t the only agency changing
carriers and encouraging agents and
carriers alike to get into the real-time
arena. There is actually an agentindustry-wide initiative to do so.
This happened with one of Parry
& Son’s long-time carrier partners.
After 40 years of working together
In fact, Parry & Son agents have been
involved with the initiative from
its beginning, working with Real
Time/Download Campaign and the
Independent Insurance Agents &
Brokers of America’s Agent Council
for Technology. Both groups work
to make agent-carrier interaction as
efficient as possible. This efficiency,
according to both Real Time and
ACT, comes through download and
real-time technology. When agents
have access to downloads, they have
quick access to the most current
policyholder records, speeding up
Jeff Yates, the executive director for
ACT, says it has taken some time
for insurers to jump onto the realtime/download bandwagon, but
it does seem as if carriers want to
give their agents – and in turn their
policyholders – what they want. Parry
& Son has been operating with real
time and download, at least to some
extent, for nearly a decade. Parry
Becker says that when the agency
first started running real time the
only carriers that had it were the very
large ones. Now she says more than
100 carriers that she knows of have
entered into this realm.
She gives credit to the smaller carriers
entering the arena. “I’ve seen smaller
regional carriers commit to serving
their agents and roll out twelve
transactions in a year,” she said. A
couple of such companies that she
says have been on top of the real-time
initiative are Harleysville Insurance
and Lititz Mutual Insurance
Company. “They’re listening to
agents,” Parry Becker said. “They said
they heard what we want, that they
understand that we want roundtrip
rating back into our system.”
So that’s what the carriers have done,
implementing systems to bridge
all the data. “At no point are you
dumped out of the system,” said Parry
Becker.
Something like this only works to the
carrier’s advantage. The easier it is for
an agency to interact with a carrier
and the technology it offers, the
more the agency is likely to use that
system to quote a policy. The more
times a company is quoted, the more
likely it is for that carrier to get more
polices, giving all parties involved
what they want. IN
Spring 2012
IN Magazine 17
A Real Time/Download Success Story
In the tiny hamlet of Hastings,
Michigan, tree-lined streets are the perfect frame
for the historic homes that tell the story of early
beginnings. But the grand homes of years past by
no means imply that Hastings is stuck in some
sort of time warp. Even the city’s master plan
proclaims, “We treasure the old, progress with
the new.”
Hastings Mutual
Insurance
Company has a
long, rich history of
serving the needs
of its agent and
policyholders for
more than 126 years;
yet, Hastings Mutual
is also a trailblazer. It,
too, has melded the
old with the new.
“We’ve been using technology for as long as
technology has been available,” said Paul Ayoub,
Hastings Mutual Insurance Company vice
president and chief information officer. “We still
use our legacy systems that have been around for
thirty-plus years, plus a lot of new things.”
The company is currently in the throes of web
development, as most companies are these days.
Hastings Mutual is also building its portal and
making it available to its stable of independent
agents who write all of the insurer’s business.
“The challenge is to provide them the capabilities
and tools to want do more business with
us,” Ayoub said. “It’s not just how we price the
business or what products and services we offer,
but it’s also the tools we make available to them.”
agencies to quote and issue homeowners’ policies
electronically. Since that time, the company has
continued to update the system and currently has
more than a dozen lines of business available to
its agents through this tool.
While many insurers provide user-friendly
systems to their agents, agents, too, use tools that
help them manage their day-to-day business
with a multitude of insurance companies. What
many insurance companies have done, according
to Ayoub, is build interfaces between the agents’
management systems and the companies systems.
With help from Applied Systems, an agent
management systems vendor, Hastings Mutual
built an interface allowing agents to input
information into their system then upload it
to the company, or input information in the
company’s system then download it themselves.
“This isn’t all about new business and renewals,”
Ayoub said. “Agents can do midterm changes and
send them up or down, or use it for inquiry or
claims information.”
This addition to modernizing ease of doing
business has reaped more than just cheers from
Hastings Mutual’s 430 employees and its stable
of independent agents. It also was the reason for
The multiline carrier went paperless in 2003,
when it began scanning mail for underwriting
into the OnBase®
system, allowing several
departments to be working
The War on Keystrokes
on the same electronic
Because independent agents often work with several different insurers at once,
document simultaneously.
they want to be able to get a quote from each one in order to offer their cusA few years later, the
tomers the best option. But they want those quotes quickly and easily without
having to access each carrier’s quoting system individually.
company purchased two
OPEX mail extraction and
This is what Jeff Yates, the executive director for the Independent Insurance
scanning workstations that
Agents & Brokers of America’s Agents Council for Technology calls “the war on
automatically open mail,
keystrokes.”
extract the content of the
Having to access each carrier’s website “just takes too much time,” Yates said.
envelopes, and, based on
“[Agents] want to be able to enter the data once and have it populate in all
scanning, interpret the
their carriers systems. Ideally, they’d have a roundtrip of the quote.”
document to determine
An industry-wide implementation will take a lot of cooperation among insurwhere it should be directed.
But it was when Hastings
Mutual began developing
an online agency tool,
Policy Express, in 2005 that
the company and its agents
experienced major impact.
The online tool allows the
insurer’s more than 1,000
ance companies and then among insurers and agents. But Yates believes the
carriers’ and agents that decide to wage the war on keystrokes will do nothing
but benefit from it.
“Agencies that have implemented improvements within their management
systems, download, and real time and have gone paperless to the best extent
possible are in a much better position to weather the storm,” Yates said.
“These productivity enhancements will free up time that has had to be dedicated to routine processing. Agents can spend it with clients instead.”
Connectivity is Crucial
one of the several technology awards the insurer received
last year.
“We’ve been a recipient of the Applied Systems Interface
Partner Award five years in a row because we always strive
to implement more and more of that capability so it is
easier for agents to do business with us,” Ayoub said. “We
have been very fortunate to be recognized because we
have been doing this for quite some time.”
The award honors achievement in dedication to real-time
rating communication with independent agencies, and
Hastings was specifically cited for interface advancements
on download and real-time rating. The company also was
recognized at 2011 TENCon, the technology education
and networking conference hosted by the Applied Systems
Client Network.
To further assist agents in their work with Hastings Mutual,
the company created a tool it dubbed “Assist-a-User” in
which an agent in need of help gets more than a verbal walkthrough of the solution. Hastings Mutual has remote access
to what the agents are seeing on their computers allowing
the insurer to mimic what the agents are doing, and then
“physically” show agents the correct way to do a process.
“These are not our employees, they are independent. They
don’t work [just] for us. They sell with other companies,
so we came up with a creative way to work with them
so we could see what they are doing on their screen,
but at the same time not be intrusive on their own
equipment,” Ayoub said. “It is all through our website
portal application, and we can literally watch what they
are doing. We use it to help figure out a problem, but we
can also use it from a training perspective.”
The cutting-edge Assist-a-User program was submitted
to the InformationWeek 500 for consideration for
inclusion in the exclusive listing of the top 500
technologically innovative companies. More than
1,200 businesses throughout the U.S. corporate world
were examined. Hastings Mutual now shares a slot on
the list with companies such as Microsoft, Levi Strauss,
and Procter & Gamble.
“People always think of insurances companies as conservative
…. Well, one thing that people have to remember – we
are an e-commerce business because most of us actually
sell business through our websites and insurance portals
that our independent agents use to write business with
us,” Ayoub said. “ … we [the insurance industry] need to
remember that we are e-commerce companies, too, so we
need to have the best tools that we possibly can out there.” IN
Getting in the Game; Staying on
Budget
Becoming part of the technology imperative can be
an expensive process. Depending on the type and
extensiveness of implementation and the size of a
company, costs could easily reach the six- or sevenfigure mark. That may seem like an insurmountable chunk
of change to some, but if it is the way all other insurers
seem to be heading, spending that money may be the
only way to stay competitive.
But getting into and staying in the technology game
isn’t just a shot in the dark, nor is it a game of follow
the leader. It takes a strategy and time to implement.
Privilege Underwriters Reciprocal Exchange’s CIO
Stuart Tainsky says the company’s IT people meet
frequently to make sure the company’s strategies are
being met and discuss what they need to do to realign or
remain on the strategic plan.
It’s important to do what works for your company’s
culture. Based on how your company does business and
how much money you have to spend, you can decide
if it’s best to build technology internally or outsource it.
Then you can figure out how quickly to roll it out. Working
with vendors can be extremely helpful. iter8, a Canadabased technology solutions company working exclusively
with insurance companies, has customers that have seen
high rates of return.
“This is because they’re implementing what we would call
best-of-breed portals,” said David Gallagher, iter8’s vice
president of marketing. “They cover all the areas – growth,
ease, collaboration – and they’re getting fantastic results.”
Vendors run the spectrum on pricing, but they can help
companies implement the technology they need without
breaking the bank. Some vendors mesh better with
larger insurance companies’ budgets, while vendors on
the lower end of the price spectrum could be the better
option for smaller-budget companies.
“Working with a third party is actually a very lucrative
and modern route for implementing technology,” said
Sanjay Mohan, who heads up the insurance industry
unit for business technology consulting company
Infosys. “Consider the fact that it is not housed by you or
administered by you, it might come at a much lower price
point than buying software and installing it. It will also
speed up time to market for insurers.”
With vendors and cloud computing, companies only
need to pay for what they use. The costs of installation,
maintenance, and upgrades to the system fall to the
vendor, lowering the costs to the carrier.
Technology might be a critical entity in the insurance
industry, but, as iter8’s Gallagher says, it’s really just an
enabler. It’s the means to get to what’s always been the
insurance industry’s goal – to serve the policyholders in
their times of need.
Spring 2012
IN Magazine 19
Gaining a
Competitive
Advantage
By Lindsay Robison and Lisa Floreancig
It’s no secret that smaller
businesses come with
smaller budgets. It’s
also no secret that
more money buys more
things. But smaller
companies that add
technology solutions into
their strategic planning
and do it in a financially
savvy way are bridging
the gap between small
and large companies.
Lindsay Robison is the managing editor of IN magazine. You
can contact her at [email protected]. Lisa Floreancig is
NAMIC Public Affairs Director – State Affairs. You can contact
her at [email protected].
T
echnology as a whole isn’t
really a phenomenon, not a
new one anyway. Some of
the most common things we
use today were once the newfangled
devices people weren’t so sure
about. Telegraphs, radios, televisions,
calculators, telephones, desktop
computers, the Internet? These things
that seem either to be outdated or
ordinary parts of our lives were neither
way back when. But now it’s difficult
to imagine doing business in our
industry – or living any other part of
our lives, for that matter – without
these technologies.
“Insurance companies are essentially
information processing and
communication organizations. And
as such, they’re dramatically affected
by information technology,” said
Matthew Josefowicz, partner and
managing director at Norvarica, a
consultancy providing technology
information and insight to bank and
insurance executives. “There are a lot
of information technologies we don’t
think about because they have been
around for fifty or a hundred years,
but they were equally transformative
at the time.”
Cloud computing, predictive analytics,
telematics, social media … they’re all
part of the current transformative
technology and becoming
commonplace when it comes to
the insurance industry. It seems
technology is nothing if not imperative.
“It is a major initiative in general,” said
Rebecca Amoroso, vice chairman
and United States insurance sector
leader for Deloitte. “Cost reduction,
gaining market share, growing books
of business, and understanding the
customer are significant objectives,
and technology is front and center of
all of them.”
Policyholders want it. Agents want
carriers to have it. Insurers need
it. Technology is here to stay, but it
is dynamic at the same time. While
the mutual insurance industry
can be all over the map when it
comes to technology initiatives and
implementation, one thing is certain –
Companies better be somewhere on it.
Smaller Mutuals Embrace Technology
N
ow that the “Net Generation”
– those 88 million Americans
who are the first to grow up
surrounded by digital media
– have eclipsed Baby Boomers in terms
of both size and impact, the need for
online, real-time interaction has moved
from being something that’s nice to
have to something that is vital to the
success and longevity of an insurance
company. Most property/casualty
insurance companies have entered
Technology, then, is paramount to
insurers that want to stay relevant,
move forward, and grow. Privilege
Underwriters Reciprocal Exchange
in White Plains, New York, just might
be the model company when it comes
to this. When the reciprocal insurer
opened its doors six years ago, it was
a relatively smaller company. Not
as small as some, but by no means
as large as other insurance-carrier
competitors that have become
household names.
But from the getgo, technology
took a priority in
PURE’s business
strategy, according to
Stuart Tainsky, the
insurer’s senior vice
president and chief
information officer.
“It’s easy to look at it up front and
say,‘There is no way we can afford
this.’ But when you look at the agents’
satisfaction, the ease of doing business
from an agent’s standpoint, can you
afford not to?”
the world of portals, web inquiries, and
back-end software, but these things
cost money, quite a bit of money.
It’s no secret that smaller businesses
come with smaller budgets. It’s also
no secret that more money buys more
things – technology included – that
allow companies to compete. So there
are still a few smaller insurers that
continue to sit on the sidelines.
Those companies that refuse to
incorporate technology, are frightened
of it, or shy away from it because of
budgetary concerns stand to lose … big
time. But smaller companies that add
technology solutions into their strategic
planning and do it in a financially savvy
way are bridging the gap between small
and large companies.
Denise Garth, senior vice president
of strategic marketing and industry
relations for global software and
outsourcing solutions consultant
Innovation Group, remembers one of
organization’s clients well. It is a small
property/casualty insurer that calls
the western part of the country home
– the part of the West ravaged by last
summer’s storms. The company took
a hit in the wake of the catastrophes,
but in the end it withstood the storms.
“Without technology that provided
them a whole different set of reporting
[tools], they would not have been able
to manage their adjusters,” Garth said.
“They would not have been able to
manage the claims.”
All of PURE’s core
systems function in
technologically savvy ways. Everything
from quoting to policy issuance is a
web-based application. This affords
ease of access to those inside the
company as well as to outside agents
who sell PURE’s products.
“From the onset of the company, we
said we needed to invest appropriately
in technology,” Tainsky said. “Because
technology will help us reach our goal.”
Perhaps PURE’s half a dozen years
on the books have given it a bit
of an advantage when it comes
to technology applications and
implementation. Because of its relative
newness, the company hasn’t had to
worry about updating or completely
changing legacy systems that can
sometimes stifle a company’s
technological advancement, and they
recognize that.
“We’re able to develop processes not
around existing systems or hindrances
of existing systems,” he said, “but
in the way we know is right for our
development.”
Just because the company is newer
than many others in the industry
doesn’t mean its staff has less
experience. Many of PURE’s employees
are seasoned veterans in insurance
and the technology initiatives that have
occurred within the industry. Because
of this, they’ve been able to see what
works and what doesn’t and pool that
knowledge into the company’s ability
to achieve its goal – which was to
rapidly expand from a small carrier to
one with a national presence.
That goal is being reached at an
incredible pace. PURE has gone from
its smaller regional-carrier beginnings
to writing business in more than half
of the United States. Policyholder
numbers have increased from a little
more than 2,000 in the first year to now
more than 13,000. Last year proved
to be extremely successful for PURE
as the company went from doing
business in 13 states at the beginning of
the 2011 to 30 by year end. The plan is
to add even more as 2012 moves along.
“All of this, we have been able to do
through technology,” Tainsky said.
Obviously, all of this comes at a cost,
and for some insurers, especially
smaller regional companies, it can be
a huge hurdle. “Pricing sometimes can
be difficult,” admitted Paul Stueven,
manager/treasurer of Fairmont
Farmers Mutual Insurance Company
in Fairmont, Minnesota. “It’s easy to
look at it up front and say, ‘There is
no way we can afford this.’ But when
you look at the agents’ satisfaction, the
ease of doing business from an agent’s
standpoint, can you afford not to?”
Agents, it seems, want to do business
with the companies that are easiest
to work with and that allow them to
gain the most business. In the current
business environment, technology
is part of the answer, if not the only
answer, to make agents happy.
Fairmont Farmers has made keeping its
agents happy a major focal point in its
business plan. First on the company’s
to-do list was to invest in a quoting
and application system. Then came
an imaging system, and, finally, an
FTP site – a standard network protocol
used to transfer files securely from one
host to another over a network such
as the Internet. These investments in
technology not only cut the company’s
paper consumption drastically, it
cut the time commitment and staff
resources needed to produce a policy.
RAM Mutual Insurance Company,
in Esko, Minnesota, has been doing
its part getting up-to-date on the
technology front as well. In 2005, the
more than seven-decade-old company
Spring 2012
IN Magazine 21
Smaller Can Mean Faster
Large insurance companies that have large bottom lines can put more money into a technology department
and into their technology initiatives and solutions if they choose to do so. This gives them a 1-0 advantage
over their smaller counterparts.
But according to several experts, smaller companies aren’t necessarily the underdog. In fact, it is precisely
their smaller size that can bring them into a tie with larger competitors. Because smaller companies have fewer employees and fewer
executives, they often have fewer hoops to jump through, making their speed to market that much quicker.
“Smaller companies have a luxury that they can be nimble and humble enough to make decisions and changes much quicker,” said
Imran Ilyas, a partner with PricewaterhouseCoopers’ Advisory Services’ insurance practice. “Large carriers we work with sometimes
have five to seven years of journey to complete a transformation. The smaller carriers we’re working with can be finished with their
journeys in eight to fifteen months, depending on what they want to do.”
converted to a paperless system. But RAM recently ramped up its efforts,
focusing the most attention on top-of-the-line online raters. Steven
Knutson, the insurer’s president and CEO, says technology is critical
for his company and the insurance industry in general. Like Fairmont
Farmers, RAM’s executives know being technologically savvy is a must
in order to stay in agents’ good graces.
“[Agents] won’t even look at you if you don’t have an online rater with
upload and download capabilities,” Knutson said. But because his
company is making the effort to do so, Knutson also says RAM is
competing on a more level playing field with larger insurers.
Nearly two decades ago, a cartoon of two dogs drawn by Peter Steiner
appeared in The New Yorker. The illustration showed one dog sitting
in front of a computer, paws on the keyboard, while a second dog sat
on the floor watching. Under the illustration it said “On the Internet,
nobody knows you’re a dog.”
A similar sentiment could be applied to smaller insurance companies’
experiences with agencies. If a small insurer has a technology or web
presence similar to that which many larger companies offer, agents
won’t know – or care – about the company’s direct written premium,
unless they really look for it.
This is true for Pennsylvania-based independent agency William
B. Parry & Son. The agency’s owners have worked so diligently to
implement technology into their business case that carriers not
matching their standards don’t make the cut. But as long as a carrier
is giving the agency what is needed to easily create a partnership,
carrier size doesn’t matter, according to Lisa Parry Becker, one of the
family-owned company’s agents. In fact, she’s encouraged by the
technological capabilities being implemented by some of the smaller
mutuals Parry & Son works with. Several of them have already been
rolling real time and downloads into their systems.
“It’s really the mentality of the company and if they subscribe to
[technological] advancements,” she said. “It depends on how they want
to support their agents and which part of the process they want to buy
into. So I think there is a lot of opportunity for smaller regionals that
embrace it.”
And for the smaller carriers that have embraced the opportunity, Parry
Becker says the gap between them and larger insurers is definitely
closing. “If they’re in the mix,” she said, “they’ll get quoted.” IN
A Little Help
While many larger companies manage everything
from independent adjusters to implementing their
own technology in house, smaller companies can
benefit greatly from third-party help.
Rural Computer Consultants in Bird Island,
Minnesota, has been providing back-office
accounting and interfaces to fuel distribution and
insurance industries for nearly three decades, and
Kevin Sheehan, the company’s executive vice
president and a 2011 SBA Small Business Person
of the Year recipient, has seen what happens when
some companies try to develop their own systems.
“They’re going to be at a disadvantage,” Sheehan said.
“It comes under the heading of ‘pennywise, pound
foolish.’ Companies may have computer systems
they have developed for themselves, but those are
going by the wayside because they realize it takes a
lot to develop software. They can’t develop what we
have, not one–tenth of what we have, close to the
price we offer it.”
Denise Garth, senior vice president of strategic
marketing and industry relations for Innovation
Group, advises smaller insurers to create a partnercentric relationship with vendors rather than seeing
themselves as vendors’ customers. “You need a
partner,” Garth said, because “it’s not going to be
all about price. It’s going to be about service and
relationships.
“I think it [the financial crisis] has opened up an
opportunity for a resurgence of the small regional
insurers because they know their customers,” Garth
continued. “They know their market. They pride
themselves on personalized service. They are
involved in their communities. In some ways that
is what a lot of people are going back to. It is the
personalized service and value that you can get that
can really make a difference,” … with some help from
vendors mixed in. IN
Member’s Viewpoint by Mark Splinter
Mark Splinter is president &
CEO of Mutual of Wausau
Insurance Corporation.
What Brought You to the Dance
When I was young, my friends and I would
stop by a cozy local store that sold hunting
and fishing equipment. It was family operated
and the employees could answer any question
about any product. The place was always busy,
and the owners were successful. But bigger is
better, right?
“We need to
embrace the
new technology
that can help us
compete for the
next 100 years. We
just need to be sure
that we don’t lose
the advantages that
brought us to the
dance.”
If you have questions for
other NAMIC members
about how they implement
technology, check out
NAMIC’s Online Exchanges.
It’s an easy way to ask for
and share industry insights.
Visit www.namic.org/forums/
default.asp.
The owners built a new store five times bigger
than the original and diversified their products.
They hired cheap staff who knew nothing about
what they were selling. Perhaps the owners
thought they had to grow to survive. But the
place went broke within two years. Had the
owners figured out how to grow without losing
the original product knowledge and customer
relationships, the store might still be around.
In my dad’s words, always “remember what
brought you to the dance.” This was my first
lesson in business management, and something
I still think about.
Mutual of Wausau – and most other insurers
like us – has survived because our size allows
us greater knowledge of our risks than bigger
companies have of theirs. Like the sports shop,
we know our business. We know our customers.
They know us. It’s worked to our advantage for
more than 135 years. But we wanted to grow.
So the questions became: What are the key
ingredients to survival that we can’t lose sight
of as we grow? And how much longer would
we be around if we didn’t fix our spread of risk
problems, expense ratio issues, and lack of
products that could compete in this auto-home
discount world?
Last year we got a call about a merger with a
fellow mutual. This company was pretty big – 60
percent of our size – and financially troubled.
But it has a great history and wonderful staff. We
know from experience that any merger can be
a huge undertaking, but, ultimately, we decided
we would merge … in a new way… via technology.
Many of the new technology tools weren’t
available or affordable to us the last time we
went through a merger. But with this new
technology, the merging company’s office will
stay open and our staff will be provided the tools
needed to do any job from either office. If we
use these tools correctly, we just might be able to
grow without growing ourselves out of business
like the sports shop.
To make the merger successful we plan to:
• Implement a computer network via a fast
fiber connection so everyone has access to
all programs and files;
• Share customer file documents via our imaging and workflow systems so tasks can be
assigned regardless of location;
• Buy a web-based processing system so
payments, endorsements, and new business
can be entered and accessed anywhere;
• Install a new Internet protocol phone system,
which will make communication between
the offices easier; and
• Limit our territory to 100-mile circles around
each office with claims and loss-control
work divided by region in order to provide
quick, efficient responses.
We identified several advantages to this “circle”
approach, including increased spread of risk,
reduced future expense ratios, and better developed portals and programs. There are some
disadvantages, including a slightly higher expense ratio than if we had all staff in our Wausau
office and potential communication challenges
between offices. But, we decided the pros far
outweighed the cons.
Technology has been a competitive advantage
for big companies for a while. Perhaps now is
the time that we smaller mutuals use these tools
and gadgets to expand our shops. We are trying
to have the best of both worlds – to grow in
territory and product lines but keep our intimate
knowledge. Only time will tell if our plan will
work out or if we just bought into it “hook, line,
and sinker.”
No matter how we approach the market challenges, we need to face our obstacles and limitations and fix them through technology and any
other method we can think of. But, in the end,
technology is just a tool and not the goal. IN
Spring 2012
IN Magazine 23
Focus on Telematics
Driving New Opportunities
By Dave Willis
Y
ou’re too late. That’s the message
for insurance carriers that wanted
to be telematics’ early adopters.
“In my opinion, 2011 has served as the
tipping point for telematics and usagebased insurance,” says Robin Harbage,
director of usage-based insurance
sales and marketing at consulting firm
Towers Watson. “Until now, a few key
players were pushing quite hard. Today,
almost all major players have a public
program or internal pilots.”
Telematics is the integrated use of
telecommunications and informatics,
or information technology, for
application in vehicles…. Property/
casualty professionals generally tie
telematics with usage-based insurance,
where underwriting models and
decisions incorporate dynamically
captured data about driving behaviors
and vehicle usage.
Eleven of the top 12 U.S. personal auto
insurers offer usage-based insurance
or a similar product, according to
a December 2011 Moody’s Investor
Service report. Collectively, these
insurers wrote more than $100 billion
in direct premiums in 2010, which
represents more than 60 percent of the
personal auto insurance market.
“Insurance companies that implement
usage-based insurance products,
particularly early adopters, are expected
to gain a competitive advantage,
because the data collected through
telematics devices will enable
companies to better match pricing
with risk” said Enrico Leo, assistant
vice president of the Property/Casualty
Insurance Group for Moody’s,
Insurers that missed the early-adoption
window but are still interested in
understanding telematics can learn
from those that started early. By
recognizing the benefits, challenges,
possible approaches, and other
Dave Willis is a New Hampshire-based freelance insurance
writer and frequent IN magazine contributor.
considerations of companies before
them, they can better plot their own
paths.
Starting the Journey
Amica Mutual Insurance Company
is exploring telematics. The company
has a working group that has done
research and planning when it comes
to this technology. Employees attended
conferences, met with vendors,
examined devices and learned how
they work, looked at models that
incorporate telematics into policy
rating, and met with state government
officials.
This due diligence helped the company
“better understand what others are
doing and how a telematics program
would fit into our business model,”
according to Lynn Malloney, Amica’s
assistant vice president of pricing and
product development.
Zurich Services Corporation is further
along in its journey. A year ago, the
company launched a program for its
commercial insureds. Dubbed “Zurich
Fleet Intelligence,” the program has
met broad acceptance, partly because
trucking firms, especially larger ones,
have been using telematics for years to
drive gains in productivity. Telematics
devices help fleet managers with
everything from fuel economy to traffic
jam avoidance to dynamic scheduling
and more.
Unlike some market innovations,
regulators welcome what telematics
offers. Harbage explained that
“regulators almost bend over backward
to help insurers,” as long as insurers
are transparent to policyholders about
what they’re collecting and how they’re
using it. The reception is warm because
telematics replaces proxy variables with
data that actually shows why losses
occur. But caveats exist. “California, for
example, allows insurers to rate based
on miles driven, but does not allow
other data elements to be collected by
the device, like location data,” explained
Peter Cameron, an assistant vice
president with Amica.
Why Engage?
Telematics-related personal lines
activity is growing quickly. Adopters
say marketplace leaders are moving
forward aggressively because they
don’t want to get left behind. “Many
remember the 1990s when Progressive
came out with credit-based rating,”
Harbage noted. “The company enjoyed
several years of rampant growth
because it had a segmentation tool
nobody else had.”
Others cite potential business quality
loss. For instance, some carriers worry
about being out-segmented because
others are attracting the best insureds.
There is a self-selection bias: people
who want to be in these programs are
generally better risks, and telematics
helps insurers price them better.
Cameron calls telematics a “game
changer” in terms of where and
how policies will be rated and what
companies will charge for premiums.
Jim Noble, Zurich’s motor fleet line of
business director, says telematics helps
underwriters complete the risk portrait
because in-vehicle intelligence helps
them better understand
what’s going on out on the
highways.
Cost, Challenges,
and Concerns
Cost of entry has tempered adoption
of telematics for many carriers. There
are system development costs, costs for
offering incentive discounts, and costs
associated with the devices themselves,
not to mention costs to communicate
vehicle information.
Getting devices into the vehicles is
another potential cost issue. Either
consumers install their own devices
or professionals need to be paid to do
the job. “The federal government is
rumbling about making this required
equipment in the future, so that would
remove that speed bump,” Cameron
noted.
But as more carriers get involved, cost
seems to be less of a barrier. “A year
ago, people said, ‘I know I should do
this, but I’m waiting until costs come
While they may have missed
the window to be an early
adopter, waiting may have
been a good idea for some.
But telematics delivers more
than just underwriting data.
Zurich Fleet Intelligence
uses it to help build a safety
culture that the company
calls a crash-free culture. Vehicle
information allows fleet managers
to see which drivers are most at risk,
why those drivers are risky, and what
fleet managers can do about it. Other
insurers, including personal lines
carriers, are offering additional safety
services and conveniences built around
telematics and vehicle connectivity.
Such bells and whistles appeal to
Amica team members as they explore
options. “We like the emergency calling
and vehicle-tracking features, and
especially the teen-driver programs,
which can help families with new
drivers,” Malloney said.
Perhaps most attractive is the effect on
drivers. “One of the virtues of telematics
is the ability to improve the driving
behavior of our policyholders,” said
Bryan Cook, a senior assistant vice
president at Amica. The ability to show
drivers when they engage in risky
behaviors that lead to accidents and
cause premiums to go up is one of the
more positive aspects. Better driving
reduces loss costs.
down, and then I’ll be a rapid follower,’”
Harbage explained. “Now they’re not
sure they can wait, so they are making
investments.”
While they may have missed the
window to be an early adopter, waiting
may have been a good idea for some.
Costs are coming down fairly rapidly,
according to Harbage, who likens it to
Moore’s Law, which says data storage
doubles and costs drop by half every
three years. Cameron concurs. “As
the market embraces this, prices
are coming down,” he said, “so the
equation is changing in terms of what
makes sense.”
Harbage says insurers are finding
ways to implement telematics
effectively and break even or profit
from their investments within 12 to 18
months. Noble believes the return on
investment becomes apparent fairly
quickly and the money argument goes
away.
Privacy isn’t quite the concern it used
to be either. A survey conducted by
Spring 2012
IN Magazine 25
Focus on Telematics
Towers Watson found that nearly
two-thirds of drivers would be willing
to alter driving behavior to get a 10
percent discount. Of these, 76 percent
would allow a monitoring device in
their vehicle.
harmonize data between different
telematics providers, so it is meaningful
to underwriters and customers. It goes
beyond reporting events and includes
understanding the calculations that go
into the event.
“For people who are ready to disclose
all of their personal information just to
download free apps on their iPhone,
there’s less of a concern,” Malloney said.
“We have only touched the surface of
what we can learn from the vehicle and
what telematics can do for us both from
a risk management perspective and for
productivity,” Zurich’s Noble said. “We
need to help customers understand what
telematics can mean to them outside the
insurance program.”
Perhaps the biggest challenge is the
use of data. The devices can record
tremendous volume and varieties
of data that can vary in frequency,
accuracy, and validity. So carriers don’t
always know up front what information
they should collect. “It’s not as simple as
plugging something in and capturing
data,” Harbage said. “Think about the
end result. What do you want to do
with the data?”
For some firms, including Zurich,
the challenge is finding a way to
It takes a lot of information to do pricing,
and telematics devices actively collect
information on a second-by-second
basis on every trip. Because of this, data
is gathered in terabytes, which amounts
to 500 two-gigabyte thumb drives.
There is so much data available, and
carriers need to figure out how to create
a system to store it, determine what they
need, and then analyze it. Even if they
Predictive Analytics
What can a Facebook profile, tweets
on Twitter, or a connections list on a
LinkedIn page tell you? How can the tone
of someone’s voice during a customer
service call be used for training purposes?
What does it mean for an insurer if the
majority of its policyholders get the oil in
their vehicles changed every 5,000 miles?
Apparently a lot.
Telematics may be a big craze at the
moment, but there are other technology
trends on the verge of breaking into the
big time. One of these other technologies
– predictive analytics to be exact – has
been around for some time, but now, in
addition to using recordable statistics,
it’s using people’s social and behavioral
characteristics to help insurers do business
more accurately.
Previously analytics have used very
structured data. But it is unstructured
data – like what shows up on social media
sites, in the tone of a voice, or in consumer
habits – that seem to be where analytics
are going.
figure all that out, they need enough of
the right data to build a pricing model.
Systems constraints come into play,
too, given the breadth and quantity of
data generated. “In the past,” Harbage
explained, “you’d collect thirty or forty
pieces of information, do some data
verification and then, unless they
endorsed the policy mid-term, nothing
would happen until the next renewal.”
To most insurers, going through
a system conversion that would
allow the volume of data telematics
devices collect could be daunting. But
telematics service providers, or TSPs,
can hold the data. Harbage’s firm, for
instance, can help insurers analyze and
understand data Towers Watson has
pooled, which comes from insurers of
all sizes.
Making It Work
With a couple of years of planning
and a full year of telematics activity
+ Social & Behavioral Character
“All of these different outlets allow insurers
to come up with different negative and
positive sentiments about their brand,
what people think about them, and what
people are purchasing,” said Anand Rao,
a principal who specializes in predictive
analytics for PricewaterhouseCoopers’
Insurance Advisory Services.
While audio analytics are becoming
commonplace, social analytics aren’t so
much so, at least not yet. Rao sees this
aspect of analytics becoming very prevalent
within the next couple of years. Because
social analytics are not static, it makes it
more difficult to come up with algorithms
to calculate them.
“The system learns by having a huge
number of training examples,” Rao
said. “So if you have millions of training
examples … the system gets smarter.”
Considering the number of people who
are going social in virtual and real-life
networks, it would seem logical that
sophisticated algorithms would already
exist. However, given the complexity, real
time, and unstructured nature of the data,
algorithms are now in the process of being
developed.
Futurist and business author and speaker
Jack Uldrich agrees that data mining and
predictive analytics are important trends,
but he also believes they’re still works
in progress. “We’re collecting so much
information on individuals now,” he said.
“But we haven’t been able to turn it into
useful insight. But we’re at the cusp of a
real revolution, of being able to sift through
all of this information and come to some
real insight.”
But another issue comes into play –
invasiveness. Should insurers be allowed to
check up on what their policyholders are
talking about, what they’re buying, and
how they’re behaving? PwC’s Rao seems
to believe privacy shouldn’t be a concern
right now.
“Companies have started to use these
[predictive analytics], but given the
STATEMENT OF OWNERSHIP, MANAGEMENT, AND CIRCULATION
under his belt, Noble suggests carriers
ask themselves what they want
to accomplish. “Don’t just take up
telematics for telematics sake,” he said.
“Decide how to embed telematics into
what you do to improve company
performance. This requires answering
business questions around customer
service, revenue, marketing, and
underwriting and making sure
telematics fits in with the entire
strategy.”
Harbage agrees and advises to use
telematics devices as tools. “You
wouldn’t go to your toolbox and select a
screwdriver, then go find something to
do with a screwdriver,” he said “It’s the
same with telematics. Decide what you
want to do and then go to the toolbox
and choose the tool that’s right.”
Zurich wanted to accomplish three
things. It wanted to better understand,
in real time, risky behaviors inside the
vehicle that would drive underwriting
decisions. Second, it wanted to help
insureds understand what drives their
risk and help reduce it as much as
possible. Finally, Zurich wanted to help
customers use technology in ways
unrelated with risk but that would
enhance their operational profile.
Noble points out that telematics fill a
gap. “You still have all the information
you have been using, plus vehicle
intelligence,” he said “You’re not
just looking in the rearview mirror.
Intelligence gathered will dramatically
change the industry and how we
underwrite in the future.”
Harbage says time is of the essence,
and insurers that believe they should
explore telematics someday should
recognize the substantial lead time
required for implementation. “It could
take months just to get started, or more
likely, years,” he warned. “And you can’t
afford to be too far behind.” IN
ristics
regulatory environment, they’re not using
it to price risk,” Rao said. “That obviously
needs to be filed for approval and so on.”
Right now, Rao says insurers are using
these analytics to learn how and where to
advertise and who to target. “[Insurers]
can look for keywords and phrases to use
in ads and social media to see how people
respond,” he continued. “Based on that,
companies can tailor their messages to be
more precise.”
money from companies that try to maintain
them; agents and consumers want seamless
distribution channels, which older systems
either cannot do or have a difficult time
doing; and vendors offering these services
are maturing and doing a better job.
“These make for more of a risk appetite,
and it is much easier to take on large
initiatives than it was three or four years
ago,” Ilyas said.
Then there is the technology that is
replacing many insurers’ legacy systems.
While legacy is normally a positive word,
in insurance operations it often means
hindrance to doing business effectively
and efficiently. Therefore, enhanced
technological policy administration is
quickly becoming an important product for
insurers to invest in.
Because speed to market is so important,
vendors offering modern web-based policy
administration have a good argument
to get more carriers to take on this
technological investment. But it is going
to be an investment for carriers. Ilyas says
large-market carriers can expect to spend
2 percent of their direct written premiums,
and mid-market and small insurers might
be paying as much as 4 percent or more.
New policy administration has become
important for three main reasons, according
to Imran Ilyas, a partner with PwC’s
Insurance Advisory Services’ insurance
practice. He says the legacy systems drain
There isn’t a magic number regarding the
expense. But it all comes down to being
smart about what an insurer needs in order
to do business more efficiently without
hurting the bottom line. IN
1. Publication Title: IN
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Spring 2012
IN Magazine 27
Movers & Shakers
Promotions
Grange Insurance, Columbus, Ohio,
announced in February that David
Wetmore was elected as the company’s
newest chairman. Wetmore takes
over for Michael Parrot, who had
been chairman since 2007. Parrot
will remain on the board as chairman
emeritus until February 2013. It was
also announced that after a 27-year
stint on the board, Philip Stichter will
retire when his term expires.
Robert Bates took over
as president and CEO
of Southern Mutual
Church Insurance
Company, Columbia,
South Carolina, in
January. He succeeded
Robert Bedell III, who
retired after 26 years with the company.
Before receiving this promotion, Bates
spent the previous 11 years as SMCI’s
executive vice president.
Selective Insurance Group,
Branchville, New Jersey, appointed
Amy Carver to the position of
executive vice president and chief
human resources officer. Carver has
extensive experience in the HR area
from several different organizations,
including Computer Sciences
Corporation, Integrated Performance
Consulting, and Wachovia Corporation.
Larry Jansen, CPCU,
has been named
president and chief
executive officer at
Grinnell Mutual
Reinsurance Company.
For the past 10 of his 33
years at Grinnell, he has
served as the Iowa company’s senior
vice president of direct underwriting
and production. Jansen also serves as
president of Grinnell Select Insurance
Company and Big M Insurance Agency.
Prior to Grinnell Mutual, he worked
for the Maryland Casualty Insurance
Company and Hawkeye Security
Insurance Company. Jansen is a past
president of the Mutual Insurance
Association of Iowa, a trustee of the
Iowa Automobile Insurance Plan, and
is currently the chairman of the Iowa
Fair Plan.
CompWest Insurance Company, San
Francisco, California, announced in
November that Bryan Bogardus is the
company’s new president. He is now
responsible for establishing strategies
in the western territories. Bogardus
served as a senior vice president for
SeaBright Insurance Company before
joining CompWest.
Terrie Pohjola, vice president of
associations and programs for
Appleton, Wisconsin-based SECURA
Insurance, was named one of Business
Insurance’s Women to Watch. Pohjola
has held several high-ranking positions
in finance, information technology,
and sales during the nearly 20 years
that she’s been with SECURA.
American Modern Insurance
Group, Amelia, Ohio, appointed
Manny Rios as its new president
and CEO last November. He took
over responsibilities from Anthony
Kuczinski, the group’s chairman
who had been acting as the interim
president and CEO since early 2011.
Rios has nearly three decades of
insurance-industry experience, and
was serving as senior vice president
and chief underwriting officer at
USAA before taking the job with
American Modern.
Community Support
Jewelers Mutual Insurance Company,
Neenah, Wisconsin, partnered with
Sarah’s Hope Jewelry to raise money
for charities during the 2011 holiday
season. The Hope for the Holidays
contest allowed consumers to share
their holiday charitable giving
stories. Those with the best stories
received jewelry from the Sarah’s
Hope collection, and Jeweler’s Mutual
donated money to the winners’ favorite
charities.
The Main Street America Group,
Jacksonville, Florida, donated more
than 500 toys to Toys for Tots in several
cities where the group writes business.
The company’s employees provided
the toys during a two-week drive. The
insurer and its employees also donated
nearly one ton of non-perishable
goods during its annual Thanksgiving
food drive.
Liberty Mutual Insurance, Boston,
Massachusetts, donated $30,000 to the
American Society of Safety Engineers
Foundation. The insurer’s gift will help
fund the Liberty Mutual Safety Research
Fellowship Program, which encourages
research in occupational safety and
health and provides an outlet for safety
professionals to guide research on
industry needs.
Accolades
California Capital Insurance Group,
Monterey, California, made Ward’s
list of the Top 50 property/casualty
insurers for 2011. Ward honors the top
companies in property/casualty and
life and health categories. CIG was just
one of more than 3,000 companies
evaluated by Ward.
Tom Dials, former
CEO of Armed Forces
Insurance, Leavenworth, Kansas, received
the Ad Astra Award
from the Kansas
Association of
Property and Casualty
Insurance Companies last fall. KAPCIC
honored Dials for his long service to
the Kansas insurance industry. He
retired from AFI at the end of 2011.
If you have company or employee achievements and
recognitions you’d like to share, e-mail details and
photos/logos to [email protected].
Belvidere Mutual Insurance Company,
Belvidere, Illinois, was honored by
the Illinois Association of Mutual
Insurance Companies in 2011 for
reaching a milestone anniversary.
Last year marked Belvidere’s 135th year
in business.
Anniversaries
Midwest Employers Casualty
Company, Chesterfield, Missouri,
celebrated its 25th anniversary in
2011. During its quarter of a century
in business, MECC has introduced
a benchmarking report and
implemented a number of online risk
management services as well as several
other programs that the company
credits in its success.
Hochheim Prairie Mutual Insurance,
Yoakum, Texas, unveiled a new logo
during its annual agent conference
last fall. The new logo was designed to
celebrate the company’s 120 years in
business as well as its Texas heritage.
Expansions
Church Mutual Insurance Company,
Merrill, Wisconsin, announced in
December that it has expanded its
senior living market for its agents and
brokers. The company wants to add
producers in several eastern states:
Connecticut, Maine, Massachusetts,
New York, North Carolina, Vermont,
and West Virginia.
Privilege Underwriters Reciprocal
Exchange, White Plains, New York,
announced in December that it
expanded its coverage to high-value
homes in Louisiana. PURE now serves
more than 13,000 affluent policyholders
in 30 markets across the nation.
Liberty Mutual Group, Boston,
Massachusetts, announced that its
branch in Guangzhou, Guangdong
Province in China issued its first
policy in December. This is the
insurer’s fourth operation to open
in China. Liberty Mutual is the first
foreign property/casualty company
to serve Chinese consumers as
well as commercial and industrial
organizations.
Partnerships And
Acquisitions
The MEMIC Group, Minneapolis,
Minnesota, announced in midDecember that it has acquired
Vermont-based Granite Manufactures
Mutual Insurance Company. Granite
Manufacturers will be renamed MEMIC
Casualty Company.
SFM Insurance Company,
Bloomington, Minnesota, and the
Independent Agents & Brokers of
America announced in December
that SFM joined the Trusted Choice
program. SFM is now one of the
65 insurance companies that call
themselves a Trusted Choice partner.
New Products
The Main Street America Group,
Jacksonville, Florida, introduced its
commercial product line that includes
the Main Line Business Owners
policy to agents throughout Indiana
who represent Grain Dealers Mutual
Insurance Company, Indianapolis,
Indiana. Main Street America and Grain
Dealers began their affiliation in late
2009. In addition to this product line,
Grain Dealers’ agents have access to
sell Main Street America’s commercial
auto, workers’ compensation, and
commercial umbrella products.
The MEMIC Group, Minneapolis,
Minnesota, introduced a new data
security coverage last November.
Cyber Solutions, which was made
available in January as an endorsement
to eligible physicians’ and hospitals’
policies, provides coverage for data
breaches and invasions of privacy, and
other information technology risks.
Hastings Mutual Insurance Company,
Hastings, Michigan, chose Identity
Theft 911 as its commercial data breach
service provider. The Security Breach
Response Coverage is an enhancement
to Hastings Mutual’s commercial and
business owners policies. The coverage
includes breach response strategy
guidance and access to Identity Theft
911’s data breach experts.
Associations and
Councils
The National
African
American
Insurance
Association’s
Indiana
chapter held
its inaugural
celebration
last fall. The association is dedicated
to empowering African-American
insurance professionals as well as
increasing the number of African
Americans in Indiana’s insurance
industry. Several of NAAIA of
Indiana’s officers are part of the
NAMIC membership. They include
Henry Pippins, president of Grain
Dealers Mutual Insurance Company,
as president; James Seay, sales
manager for State Auto Insurance
Group, as vice president; Dennis Gill,
claims examiner for State Auto, as
correspondence secretary; and Tiffany
Daly, account executive for Grain
Dealers, as recording secretary.
CSC, Falls Church, Virginia, established
a new council in late 2011. CSC’s
Insurance Cybersecurity Advisory
Council will help insurers develop best
practices and technology strategies
to mitigate the risks of cyber attacks.
CSC’s capabilities include a global cyber
strike force team that quickly responds
to incidents and provides cyber
forensics training and analysis.
Spring 2012
IN Magazine 29
The Advocacy Agenda
Don’t Let Your Guard Down
Emerging Legal Issues in Social Media Should Keep Insurers on Their Toes
By Lindsay Robison
I
magine this: It’s 2 a.m. and a
policyholder can’t sleep. He’s
stewing about the claim he’s filed
with your company. Something
he assumed was covered in his policy,
in fact, was not. He’s angry. He believes
he’s been misled, and he wants to do
something about it.
In the past, the only ways for him to
express his opinion was to call his
agent, your company, or your call
center – if you have one – during
business hours or compose a letter, put
a stamp on it, and mail it in. With the
advent of e-mail, his opportunity to
share opinions became quicker. And
now, with social media, his ability
to complain becomes instantaneous
and public.
So a few minutes after two in the
morning – when you, your call center,
and agents have long since closed up
shop and are not thinking about the
office for at least another few hours –
this policyholder posts his disgruntled
feelings on your company’s Facebook
page.
Facebook, Twitter, LinkedIn, and
other social media outlets have
mainly been looked at as marketing
department tools. But they are so much
more than that, according to Susan
Stead, a partner at Nelson Levine de
Luca & Horst and a member of the
firm’s regulatory practice group in
Columbus, Ohio.
Customers will sometimes post
personal information on company
pages, which runs the risk of privacy
issues. Agents might include insurer
logos on their pages, which can lead
to brand reputation and/or trademark
issues. Then there’s that not-sopleasant 2 a.m. Facebook post.
Does this policyholder’s social media
rant count as a formal complaint?
Stead says it most likely will. “I tell my
clients that if that happens, I think the
regulators are very likely to treat that
as a complaint,” she said. “At the end of
the day, a department will probably say,
‘Yes, that was a complaint, you should
have recognized it.’”
He’s allowed to do this. You should
want to know when a customer isn’t
happy, and social media is an easy
way to share this kind of information
with anyone who will listen … or, more
accurately, read. And social networking
is a huge craze. The Economist
reported in 2010 that if Facebook’s
membership was a physical nation, it
would be the third largest country in
the world; and membership has grown
since then.
If the answer is, in fact, yes, does the
time clock to respond begin counting
down the second that disgruntled
policyholder hits the “post” button?
What if you don’t check your social
media pages but every couple of
days? How long might a complaint
be there before you see it? What if
the complaint never makes
it to one of your company’s
pages but is rather shared on
the policyholder’s own social
media site? Does that count?
While social media comes with its
advantages, it also brings up many
issues. Some issues are things many
of you haven’t even begun thinking
about. But you probably should be if
you’re using or contemplating the use
of social media.
These are legitimate questions
that don’t seem to have concrete
answers quite yet because they’re
still emerging issues. They are,
however, things many within the
insurance industry should be and are
paying attention to.
NAMIC hosted a highly participatedin State of the States webinar last
November regarding this issue. Stead
led the conversation and shared with
NAMIC-member participants the
most recent news when it comes to
insurance and social media. She also
fielded numerous questions – the
most asked in a SOS webinar to
date. NAMIC has been following the
moves of regulators when it comes
to these issues.
The National Association of Insurance
Commissioners formed a Social Media
Working Group that has been exploring
the possible regulatory issues that
come from social media usage. The
working group has drafted a white
paper with facts and recommendations,
but the NAIC has yet to take a solid
position or propose regulations.
Marsha Brown, NAMIC’s regulatory
affairs counsel, who has followed the
SMWG says the group’s members have
shied away from concretely starting
down the regulatory path because of
the constant changes in technology
and social media.
Their dynamic
nature makes it
difficult for
regulators
to make
rules that
can be
kept.
NAMIC’s Successful Communications Strategy
Some of the NAIC’s recommendations
look very similar to the Financial
Industry Regulatory Authority’s
guidance. But FINRA has taken a
more aggressive path to social media
regulation. This regulatory authority
has taken stances on methods of
recordkeeping and supervision of
social media sites, use of data feeds,
and links to and from third-party sites.
According to Stead, one of the things
the NAIC has followed FINRA’s lead
on is keeping existing rules that apply
to social media. The commissioners
have also supported FINRA’s
recommendations when it comes to
third-party interactions. But again,
nothing has yet been set in stone, and
NAMIC’s Brown doubts anything will
be concreted until problems arise.
NAMIC’s best advice: “If you’re going
to jump into social media, you have
to jump in responsibly,” Brown said.
This means designating people to
watch the sites you launch, to watch
them constantly, and to have a chain
of command on how to handle the
complaints that come in from social
media sites.
Stead agrees. She says that because
we now live in a 24/7 world, and
a dynamic one at that, companies
have to constantly monitor their
social media sites and to be wary of
everything that’s posted. In the past,
she said, “you could put up a website
and just leave it. You can’t do that with
social media.”
And another thing: be ready for
regulation. Just because regulators
haven’t taken a stance yet, it doesn’t
mean that won’t change. With the
speed at which technology changes,
regulators’ attitudes could follow suit.
Whatever happens, NAMIC will be
ready. “We haven’t yet had to do much
other than provide information to
members,” said Neil Alldredge, NAMIC’s
senior vice president of State and Policy
Affairs. “But there will be issues, and we
will be involved.” IN
With more than 1,400 member companies and somewhere in the range
of more than 200,000 employees within those companies, electronic
communication has been extremely beneficial to NAMIC. It’s allowed the
association to contact a large number of members at once. NAMIC also uses
technology to advocate on behalf of its members and encourages members
to use it to advocate for themselves as well.
Despite the ease of using
e-communications to alert,
educate, and call members
to act and to call upon the
nation’s state and federal
legislators, technology is
only part of the package of
NAMIC’s advocacy efforts.
37
Advocacy Update newsletters e-mailed to members
170+
member advisories and action alerts
20
States of the States webinars (since 2009)
1,349
“It is important and it helps
participants in States of the States webinars (since 2009)
leverage our resources and
multiply our impact,” said
Jimi Grande, NAMIC’s senior
vice president of Federal
and Political Affairs, about NAMIC’s technology efforts, “but it should
not [completely] replace good, old-fashioned face-to-face meetings with
legislators. There are a number of Congress members I don’t e-mail. I go
around and meet with them and tell them what I think.”
That sentiment is the reason NAMIC is in its 27th year of the Congressional
Contact Program. From March until July each year, association members
descend upon Capitol Hill, to sit down with their respective legislators and let
them know what is important to the mutual insurance industry. “Nothing will
ever be more effective than that,” Grande said.
The technological advancements have broadened the many opportunities
to quickly get in touch with others. But, at times, things can get lost in
translation or lose impact when legislators’ offices get bombarded with
e-mails the politicians might never personally see. So face-to-face or phone
contact never hurts, on federal- or state-advocacy levels.
Therefore, NAMIC encourages members to use the phone as part of their
communications arsenal. “E-mail has made it easier to contact legislators, but
often with state legislators, they’re not so distant from constituents that they
won’t pick up the phone,” said Neil Alldredge, NAMIC’s senior vice president
of State and Policy Affairs. “Some of them answer their own phones, so it
doesn’t hurt to pick up the phone to call and have a conversation.”
Phone, e-mail, face-to-face, and even social media conversations need to
be viewed as individual tools that make up an entire communication package
when it comes to advocacy. “Not one of these things is the silver bullet,”
Alldredge said, “but together they work.” IN
Neil Alldredge is NAMIC’s senior vice president of State & Policy Affairs. You can contact him at (317) 875-5250 or [email protected].
Jimi Grande is NAMIC’s senior vice president of Federal & Political Affairs. You can contact him at (202) 628-1558 or [email protected].
Spring 2012
IN Magazine 31
NAMIC PAC by Irica Solomon
Irica Solomon is NAMIC’s political director.
Contact Irica at [email protected].
If You’re in Business, You’re in Politics
This is especially true in the insurance industry. We’re affected by the
decisions made in Washington because they affect our companies and our
policyholders. The same holds true in state houses as it does in the nation’s
capital.
In a short eight months, our nation will be heading to the polls to choose
who will be making those decisions, and it is important that you get
involved. You have numerous ways to participate in the legislative process.
NAMIC offers many of them, but only one will directly help to elect proindustry candidates – and that’s the NAMIC PAC.
NAMIC PAC gives NAMIC members the opportunity to pool resources to
support federal and state candidates who share our industry’s legislative
views to promote a financially sound, competitive, and private insurance
market.
NAMIC members have generously contributed to the effort, and taken
pride in their participation. Tricia Mickley, secretary/treasurer of Mount
Carroll Mutual Fire Insurance Company, says she recognizes the need for
something like the PAC because smaller companies cannot advocate alone.
“We need to make [legislators] aware that we are out there and that we’re
serving our policyholders, representing them,” she said. “[Contributing to the
PAC] is just a small part that I can do to keep that going.”
“If we don’t tell our story to legislators and
those outside the industry, we can’t expect
anyone else to do that …. That involves being
politically active, supporting candidates that
have common interests.”
– John J. Bishop
Chairman, President, and CEO
The Motorists Insurance Group
The PAC has experienced record growth in the last few
years, making it one of the fastest-growing political
action committees in America. Last year alone, 61 new
companies had employee participants involved in the
PAC, bringing the grand total to 191 companies and 977
individual contributors in 2011.
We should be proud of what we’ve accomplished. The
industry has a successful story to tell but to succeed
in this tough environment, we must pull together and
have resources to weather the political storms. NAMIC
PAC can help make sure our story is out there.
“It’s our industry. It’s my industry. It’s my business and
my livelihood,” said Henry R. Gibble, president and
COO of Lititz Mutual Insurance Company. “If my
business isn’t heard in political circles, then I’m not
heard. It is important for us to be there as an industry,
and the PAC enables our seat at the table.”
Without that seat at the table, decisions about our
industry will be made without our input or our interest
in mind. IN
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IN Magazine Published by the National Association of Mutual Insurance Companies
NAMIC Mission
Letters to the Editor
Post a comment on an article at
www.namic.org/spring12
Letters to the editor should be directed to:
Brent Bahler, editor-in-chief
IN Magazine
3601 Vincennes Road
P.O. Box 68700
Indianapolis, IN 46268
Fax: (317) 879-8408
[email protected]
Author’s name, title, company name, phone number, and
e-mail address should be included. Letters may be edited
for length and clarity.
Subscriptions
For new subscriptions, renewals, gift subscriptions, or
change-of-address notification, please e-mail
[email protected] or call (317) 875-5250.
Advertising Sales
The National Association of Mutual Insurance Companies strengthens
and supports its members and the mutual insurance industry by its
leadership in advocacy, public policy, public affairs, and member services.
NAMIC Officers
Chairman
James J. Kennedy
President & CEO
Ohio Mutual Insurance Group
Bucyrus, Ohio
Chairman-Elect
Jerry G. Zenke, PFMM
General Manager & Treasurer
Mound Prairie Mutual
Insurance Company
Houston, Minnesota
Vice Chairman
John J. Bishop
President & CEO
The Motorist Insurance Group
Columbus, Ohio
Secretary | Treasurer
Christopher P. Taft
President & CEO
Preferred Mutual Insurance
Company
New Berlin, New York
Immediate Past Chairman
Sandra G. Parrillo
President & CEO
Providence Mutual Fire
Insurance Company
Providence, Rhode Island
Charles M. Chamness
President & CEO
NAMIC
Indianapolis, Indiana
For advertising information, please e-mail Amy Thornburg at
[email protected] or call (317) 875-5250.
IN Magazine Volume 99, Number 1
This product was printed
using 100% Green Power.
www.hardingpoorman.com
Staff
Customer Service
Publisher
NAMIC
www.namic.org
IN (ISSN: 1931-7727) is published four times per year by the National Association of Mutual Insurance Companies (NAMIC), 3601
Vincennes Road, P.O. Box 68700, Indianapolis, IN 46268-0700, (317) 875-5250.
Editor-in-Chief
Brent Bahler
[email protected]
Managing Editor
Lindsay Robison
[email protected]
Graphic Design
Mary A. Hannum
[email protected]
Contributors
Lisa Floreancig
[email protected]
Dave Willis
IN magazine strives to inform, entertain, and inspire its audience: mutual property/casualty insurers and those who work with them.
IN’s articles reveal and explore issues, challenges, trends, and personalities central to the purpose of mutual insurance and related
business.
Published articles are intended for informational and educational purposes only and do not replace independent professional judgment.
Statements of fact and opinions expressed are those of the author or individuals quoted by the author and may not reflect the opinion
or position of NAMIC.
IN magazine is not responsible for or otherwise liable for the content or representations made in any advertisement. We reserve the
right to reject advertising that is deemed to not be truthful or in good taste, or which is inconsistent with the mission of NAMIC. All
advertising is subject to the terms and conditions set forth in the advertising contract.
Correction of factual error(s) of previously printed editorial information will be published at the earliest available opportunity.
IN magazine welcomes submissions and often assigns articles to freelance writers. Basic criteria for such submissions and
assignments include relevance to the mutual insurance industry, timeliness, and quality. Actual publication will depend on space
availability. NAMIC will not publish advertorials or articles that promote a single company or its products and services. NAMIC
reserves the right to edit any article for space, clarity, and style. For more information on writer’s guidelines, please e-mail
[email protected].
Comments from readers are also welcomed and should be submitted to [email protected]. Reader name, phone number, and
e-mail address must be provided to be considered for publication.
For permission to reproduce any articles from IN magazine or its predecessor, Property/Casualty Insurance magazine, or to order any
back issues of IN magazine, e-mail [email protected].
Periodicals postage paid at Indianapolis, Ind., and additional mailing offices. Annual subscription rate is $30. Copyright 2012. All rights
reserved. Printed in the United States. Send address changes to IN magazine, P.O. Box 68700, Indianapolis, IN 46268-0700.
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the technology imperative - The National Association of Mutual

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