The speed at which Americans access the Internet has declined from first place to 15th since the network came into existence, according to Speed Matters, a Communications Workers of America union (CWA) non-profit outlet that just published its second annual state-by-state survey of broadband speeds. InformationWeek's report on the survey noted that while the median download speed enjoyed by Americans is 2.35 Mbps, Japan's speed is 63.6 Mbps. That decimal point is not misplaced.

The CWA says that lower broadband speeds affect American workers' and companies' ability to compete, and there is much to be said for that position. However, the organization's findings are interesting for a variety of reasons.

From the point of view of insurance carriers, the state-by-state findings may illuminate what functionality will be better to deploy or avoid deploying in states that have higher or lower speeds. The survey found a correlation between speed and population density, exemplified by the gap between Rhode Island's median download speed of 6.8 Mbps and Alaska's 0.8 Mbps. Such stark differences could make all the difference when implementing functionality for a variety of purposes, perhaps especially in the case of communications and transaction capabilities in the health insurance world.

Another thought is that if other countries have significantly higher speeds, insurers doing business in those territories will be able to deploy new kinds of functionality earlier. That could constitute a proving ground for multinational insurers who also have operations in the U.S., such as AXA, ING, Allianz and Zurich. At the very least, American insurers should keep an eye on what companies in other geographies are doing, and not just the insurers.

Having just checked out Novarica's recently published “Web 2.0 in Insurance: Finding Real Business Value Today and Tomorrow,” I couldn't help but recall Humana's use of an internal Wiki to help customer service representatives share best practices with one another. (Nor could I help but notice the report's explicitly mentioned disdain for Second Life coverage. Ouch.)

Interestingly, the report found that 39 percent of insurers surveyed said that they were already using wikis in their organizations and found the practice valuable. That number made wikis the top area (tied with AJAX) where insurers saw potential for Web 2.0 to deliver value.

So, I thought this would be a good time to revisit Humana's early pilot program in using a wiki for internal communication. This first appeared in a Web 2.0 cover story in the May 2008 issue of I&T:

Internally, Humana has leveraged the Web 2.0 concept of wikis -- Web-based collaborative editing software -- to become more agile in managing cross-functional teams. Piloted last summer across several Humana groups, the wikis proved their worth, particularly among customer service reps, according to [Greg] Matthews, [director of integrated consumer experience for Humana].

Recently, the health insurer experimented with physically placing customer service representatives in select Humana sales offices and doctors offices. Members loved the concept, Matthews says, because they were able to ask questions about their benefits at the point of treatment. It was, however, a new and different experience for the customer service reps, who previously had interacted with customers only over the telephone. When it came to servicing customers in a face-to-face environment, reps needed to overcome a learning curve, which was accelerated by the online collaborative tools.

"All of their case management [now] was handled through a wiki that they could use to share best practices and ask questions of their peers who were in the same situation," Matthews relates. "What it meant was that we had a real-time learning laboratory and repository for that data that enabled them to make changes on the fly."

For now, the wiki projects have remained internal. Going forward, however, Humana may launch customer-facing wikis, using lessons learned from its internal experiment to improve the process, Matthews says. "In a way, we're sort of in training internally to be able to leverage and make ourselves open to feedback from the outside world," he adds.

It was interesting timing, to say the least.

Just days after I spoke with Augusta Kairys, Highmark's vice president of provider relations about the Pittsburgh-based health insurer's efforts to support a higher rate of technology adoption amongst its providers, a report in The New England Journal of Medicine found that fewer than one in five doctors are using electronic health records.

That paltry sum seems all the more surprising when one considers that doctors overwhelmingly agree that EHRs and related technologies have the ability to improve quality of care. So where's the disconnect that is preventing many doctors from adopting a technology that most agree will be beneficial?

from the New York Times:

Bringing patient records into the computer age, experts say, is crucial to improving care, reducing errors and containing costs in the American health care system. The slow adoption of the technology is mainly economic. Most doctors in private practice, especially those in small practices, lack the financial incentive to invest in computerized records.
The national survey found that electronic records were used in less than 9 percent of small offices with one to three doctors, where nearly half of the country's doctors practice medicine.

Larger practices have been much quicker to adopt the technology. But even among practices of 50 or more doctors, only about half have implemented EHR technology. As the New York Times article points out. Adoption has been slowed, mostly, because doctors aren't able to justify the costs from a business perspective. For the most part, the (financial) benefits of EHRs will be realized by insurers and hospitals.

Private and government insurers and hospitals can save money as a result of less paper handling, lower administration expenses and fewer unnecessary lab tests when they are connected to electronic health records in doctors' offices. Still, it is mainly doctors who bear the burden making the initial investment.

"We have a broken market for electronic health record adoption because the people who gain financially are not the people who pay," said Dr. Blackford Middleton, a health technology expert at Partners Healthcare, a nonprofit medical group that includes Massachusetts General Hospital in Boston.

Hopefully, that last sentiment will cause more insurers to follow Highmark's lead in providing financial assistance to doctors who implement EHRs. Just because insurers won't "own" this bit of technology, doesn't mean they won't benefit from it. And as such, this could be an area worthy of more of insurers' technology investment dollars.

In early May, I learned something in a New York Times article that completely blew me away: the first digital camera was actually invented way back in the 1970s. It was invented -- albeit in a clunky, rudimentary form -- by Steven J. Sasson, an Eastman Kodak electrical engineer.

So what took so long for digital photography to truly take-off? Well, at least part of the blame has to be shouldered by the camera companies themselves, who for eons had depended heavily on the sales of film.

from the NYTimes:

“My prototype was big as a toaster, but the technical people loved it,” Mr. Sasson said. “But it was filmless photography, so management’s reaction was, ‘that’s cute — but don’t tell anyone about it.’ ”

And just this week, another Times piece -- one that highlights the work of Jay Harman, an Australian naturalist – openly wondered: “What of someone invented a better mousetrap and the world yawned?”

from the NYTimes:

Mr. Harman is a practitioner of biomimicry, a growing movement of the industrial-design field. Eleven years ago, he established Pax Scientific to commercialize his ideas, thinking that it would take only a couple of years to convince companies that they could increase efficiency, lower noise or create entirely new categories of products by following his approach.

It has been a longer and more circuitous path than he first imagined. Despite glowing publicity and a remarkably photogenic technology, Pax Scientific has not been an overnight success.

“When I started I thought that this would take 6 to 12 months,” Mr. Harman said. What he found instead were companies that had little interest in redesigning their products, even in the face of the promise of double-digit increases in efficiency.

Presently, Kodak has vastly improved its digital product development and, with energy conservation a hot topic, Harman’s ideas are getting increased attention. Still, one has to wonder what it would have taken for a company to recognize the value and opportunity that these innovations represented earlier.

It’s likely, I think, that the main thing holding companies back from large-scale innovation is fear of the unknown. And in many ways, that fear is warranted. It’d be irresponsible in many ways to abandon tried –and-true business models (like film) for an unproven technology (like, in 1970, a digital camera).

In certain pockets though -- including those that can directly relate to insurance -- the Web has taken a lot of the risk out of the innovation equation. Last year, for instance UnitrinDirect set up shop in Second Life, an online virtual world. Just this month, Aviva USA will begin using its presence in Second Life to recruit new agents to its producer community.
It’s possible, that one or both of these could falter. Second Life could drop in popularity or Second Life users may ultimately decide that they’d rather not want to interact with insurers in a virtual world.

However, with these innovative efforts, perhaps failure (for lack of a better term) is an option. In both cases, these investments represent less than one percent of the carriers’ annual marketing budgets. That’s a small price to pay considering that, if something like Second Life truly takes-off, the virtual world could become a viable new distribution channel or marketing channel for carriers.

Such a low cost no doubt has helped Aviva USA and UnitrinDirect marketing and technology teams justify these efforts to their business partners. In a way, it’s allowed insurers to innovate on the fly. Another way to put it: its let some insurers build a new mousetrap, without having to tear down the old one just yet.

While discussing some of the limits of mobile technology for the insurance sales force, an industry consultant recently pointed out that, regardless of how advanced today's mobile devices are getting -- it'd be difficult to envision an agent or broker ever giving a sales presentation on a BlackBerry. Literally. It'd be difficult to envision such a presentation, given the limited size of the screen.

However, some recent breakthroughs in the mobile technology industry could make some agents reconsider such a notion. According to the New York Times, several companies are working on pocket-sized digital projectors that could plug into mobile devices.

from the NYTimes:

The microprojectors, still in prototype, use light-emitting diodes, lasers or a combination of the two to cast a display of up to 50 or 60 inches, or perhaps even wider, in darkened spaces and 7 to 20 inches or so when there is ambient light.

...

The projectors may be particularly useful for business presentations — for example, when road warriors need to show a product video to small groups. No coordination would be needed to arrange for a screen. Instead, a patch of wall within a cubicle or restaurant could serve for an impromptu presentation. In a pinch, a manila folder — or even a napkin — would work, too.

The Times filed this story under the "Novelties" category and, indeed, the emergence of such projectors may be nothing more than a superfluous add-on for the majority of today's insurance producers. After all, the gains in ease of use and efficiency are minimal compared to giving sales presentations with today's most common piece of equipment – the laptop computer.

Eventually though, I think the mobile device will supplant the laptop as the weapon of choice for producers. Year by year, the younger agents entering the field are more and more likely to have used a BlackBerry or Palm Treo device in their personal lives. So as those devices become more advanced, it stands to reason that the next generation of agents will be most comfortable doing business on those devices.

Advancements like pocket-sized projectors and mini-projectors embedded into cell phones and other devices will only serve to hasten that shift.

I promised myself that I wouldn't mention any New York Times articles in my next few blog entries -- not after mentioning the newspaper twice in recent posts -- but I couldn't help myself last week, after coming across an article headlined "Insurance Fears Lead Many to Shun DNA Tests."

According to the article, some people are avoiding DNA tests that could indicate genetic predispositions to certain health problems because they fear that it could affect their health insurance coverage – under a form of "genetic discrimination"

from the New York Times:

Such discrimination appears to be rare; even proponents of federal legislation that would outlaw it can cite few examples of it. But thousands of people accustomed to a health insurance system in which known risks carry financial penalties are drawing their own conclusions about how a genetic predisposition to disease is likely to be regarded.

As a result, the ability to more effectively prevent and treat genetic disease is faltering even as the means to identify risks people are born with are improving.

While the implications of this news has obvious implications for health insurers, I wonder if, in a way, this strange phenomenon could foreshadow what lies ahead for other parts of the insurance industry.

In late 2007, I had a conversation with Chad Hersh, a senior analyst in Celent's insurance practice. We discussed what the future of insurance technology could entail, such as increased and continued use of predictive analytics and mobile technologies. When it came time to discuss the slightly more distant future, the conversation shifted to "smart dust," which Hersh described as tiny sensors, built into a home or building, that communicate with one another to monitor things like the structural soundness of a property and communicate that info to a property owner or insurer.

The practical application of such a technology is obvious. Maybe we could anticipate bridge or building collapses. Perhaps we could identify if a given property was more susceptible to wind damage than another. In a similar way, GPS devices could monitor driving habits -- giving the general public (and, of course, underwriters) a better idea of how safe a specific driver is.

The key though, will be how the general public perceives these advances. Some will no doubt embrace these technologies and view them as an opportunity for reduced insurance rates, not to mention safer building and roads. However, I expect -- based on the distrust many in the public have for insurers -- more could view these advancements as invasions of privacy: one more way for those no-good carriers to justify a rate increase.

If this recent DNA-related news has taught us anything, it's that consumers are wary of the new technologies that insurers will use – even those that can make a direct positive impact on their overall well-being.

"I don't remember giving permission for a party, Joel." That memorable line, spoken by the father of Tom Cruise's Joel Goodson character in "Risky Business," may be delivered increasingly to insurance investigators if insurers begin to hold homeowners liable for damages related to house parties advertised on social networking sites, such as Bebo.com.

U.K.-based Sterling Insurance Group made a public statement in reaction to the latest notorious example of the growing phenomenon of out-of-control house parties.

"The worrying trend of teenagers vandalising and damaging homes after house parties have been advertised on social networking sites such as Bebo, MySpace and Facebook, has led policyholders to question whether their homes are covered for similar activities," comments Sara Greenland, associate director of personal lines, Sterling Insurance Group.

The party in question was described in a Daily Mail story entitled "The teen party where 50 yobs trashed the house and even drugged the family puppy." Homeowners Robert and Julia Anscomb reported more than £5,000 worth of damage.
Mr. and Mrs. Anscomb also reported feeling "totally violated" by the extensive damage to their home resulting from what was supposed to be "a quiet sleepover with a couple of friends" of 15-year-old Gemma Johnson, Mr. Anscomb's stepdaughter, who is yet to reappear at the family home.

As to whether homeowners such as the Anscombs are covered, Sterling Insurance Group's Sara Greenland only says that most insurance policies require policyholders to demonstrate reasonable care. "Policies may be invalidated if a policyholder or family member had acted recklessly and was aware that their actions could result in theft or damage to property," she explains.

The Anscombs didn't exactly act recklessly, but policyholders in their place might be construed to have been negligent, Greenland implies. "With their being several high-profile examples of significant damage to homes caused by partygoers who had been invited through networking sites, if the policyholder was aware that their children were planning such a party, there may be grounds for the insurer arguing that they had not taken reasonable care, and the damage would not be insured," she says.

Clearly the Anscombs were unaware that young Gemma was planning "such a party," but they were aware that she was planning some kind of party. It's a stretch to hold parents responsible for being aware of their children's online invitations to parties, especially as sites may go in and out of fashion and existence. However, if privacy requirements permit, it seems like a pretty good idea for insurance companies' special investigative units to keep an eye on social networking sites such as Bebo.com via Web crawler technology that can correlate policyholder addresses to party invitations.

Having just written about how insurers' view information security, I took special interest in a recent New York Times article, entitled Researchers Find Way to Steal Encrypted Data, that reported that a Princeton University group has discovered a frighteningly simple way to steal encrypted data stored on computer hard disks. You know, like the encrypted data that some insurance carrier employees have on their laptops.

from the New York Times:

The technique, which could undermine security software protecting critical data on computers, is as easy as chilling a computer memory chip with a blast of frigid air from a can of dust remover. Encryption software is widely used by companies and government agencies, notably in portable computers that are especially susceptible to theft.

...

The move, which cannot be carried out remotely, exploits a little-known vulnerability of the dynamic random access, or DRAM, chip. Those chips temporarily hold data, including the keys to modern data-scrambling algorithms. When the computer's electrical power is shut off, the data, including the keys, is supposed to disappear.

This got me thinking about something WellPoint vice president and chief security officer Shamla Naidoo told me when I spoke with her for my recent feature: "What we see as challenges today may no longer have the same priority in three to five years if insurers find there are new risks they haven't considered yet."

Could this recent news regarding the vulnerability of encrypted data be one of the new risks to which Naidoo was referring?

Whenever I interview insurers about new mobile initiatives, including those that involve laptops, I always ask how they plan to keep their customers' private information secure. And 99% percent of the time, the only security measure that's in place is encryption.

That used to be enough, it seems, but perhaps that's not the case anymore. A few insurers have already taken the next steps to secure sensitive data on laptops and mobile devices. Some have the capability to remotely wipe a device that is reported stolen or missing. Others have leveraged biometrics to make it exceedingly more difficult to access a device.

Hopefully, others will follow suit. There are many technology areas where it is advantageous for a carrier to be proactive rather than reactive, but none where it is more critical than information security.

At least up until 2005, global warming was often cited as the likely culprit of increasingly devastating Atlantic hurricanes, as with other weather and climate phenomena. Rising ocean temperatures were thought to provide more energy, powering increasingly powerful storms. It’s a simple enough formula, and rising insurance claim costs seemed to bear it out. However, according to a recent announcement from the National Oceanic and Atmospheric Administration NOAA, it's simply not the case.

There may be ample reason to believe that climate change is occurring and that it is taking the form of warmer temperatures worldwide. However, the NOAA says, increased hurricane-related losses are due not to stronger storms but to greater concentration of people and more valuable property in storm-prone areas:

“We found that although some decades were quieter and less damaging in the U.S. and others had more land-falling hurricanes and more damage, the economic costs of land-falling hurricanes have steadily increased over time,” said Chris Landsea, one of the researchers as well as the science and operations officer at NOAA’s National Hurricane Center in Miami. “There is nothing in the U.S. hurricane damage record that indicates global warming has caused a significant increase in destruction along our coasts.”

The NOAA source goes on to cite a report in Natural Hazards Review (which sounds more sensational than it reads) that finds that economic damage has been doubling every 10 to 15 years. In a passage minus the global warming but reminiscent of the apocalyptic tone of many global warming-related statements, NOAA's curiously named Landsea says,

“Unless action is taken to address the growing concentration of people and property in coastal hurricane areas, the damage will increase by a great deal as more people and infrastructure inhabit these coastal locations."

Perhaps the only adequate action would be to cease subsidizing the folly of people who insist living in danger zones. But that's not likely to happen. In the meantime people will continue to dwell on the beauty of their chosen landscape and nurse deep denial of the hazards. The temptation can be great; more a mountain than a beach person myself, I was captivated by the possibility of living in Government Camp, Oregon, while staying there for a couple of nights in January. Then I thought of the potential sudden changes to which that landscape is prone.

Assuming that more homeowners and commercial property owners gravitate to dangerous beauties, insurers' best bet is continue to refine their use of geographic information systems both to manage their concentration of risk and to more precisely assess natural hazards within any given territory. Carriers that can both locate lower risk segments of small areas and more accurately identify and price pockets of hazard will have a leg up on their competitors.

The key to getting the most out of GIS, as with other technologies that leverage predictive analytics, is data.

"The latest advancements have nothing to do with improved GIS technology per se. The advancements are coming from better data," says Bill Raichle of ISO. "Out of the box, a GIS is about as exciting as a blank Excel spreadsheet. But when an insurer can add their mix, their internal policy and business level data with high-quality, real-world, GIS risk and market data, new views of the business become possible."

Thanks to its legal team, Horizon Blue Cross Blue Shield of New Jersey recently placed itself in the middle of a swirl of controversy about social networking Web sites and the privacy issues they create.

From Sarah Perez on ReadWriteWeb:

When Dawn and Bart Beye's 15-year-old daughter began showing signs of an eating disorder, they immediately took action. The Beyes enrolled the girl in a treatment program they thought was covered by insurance. Three weeks later, their insurance provider, Horizon Blue Cross Blue Shield of New Jersey, informed the couple they would no longer pay for the child's treatment. Horizon claimed the disorder is not biologically-based, but emotionally-based, and therefore, not their responsibility to cover. The Beyes sued. And in what could have been a dangerous precedent-setting lawsuit, Horizon subpoenaed the daughter's online writings from MySpace and Facebook to prove it.

Due to pending state legislation that could render the entire argument moot, Horizon recently moved to dismiss this particular case.

Certainly, cases like this do nothing to help the insurance industry's public reputation. (After all, it's difficult to side with a company seeking to deny coverage to a young girl with an eating disorder by invading her MySpace account). Yet, the lesson to be learned here isn't about public relations, it's about privacy.

As Perez points out, the carrier's actions provide further evidence that what an individual says online is not private. We should all be cognizant of that fact.

Many, however, are not. Take, for instance, this recent New York Times article, "How Sticky Is Membership On Facebook? Just Try Breaking Free."

from the NYTimes:

While the Web site offers users the option to deactivate their accounts, Facebook servers keep copies of the information in those accounts indefinitely. Indeed, many users who have contacted Facebook to request that their accounts be deleted have not succeeded in erasing their records from the network.

"It's like the Hotel California," said Nipon Das, 34, a director at a biotechnology consulting firm in Manhattan, who tried unsuccessfully to delete his account this fall. "You can check out any time you like, but you can never leave."

There's a couple things to take away from this.

1.) A 34-year-old biotech consultant isn't exactly a good representative of Facebook's user group. And that becomes abundantly clear when he starts making references to Eagles songs.

2.) This entire article is about how people are concerned that they can't fully erase personal data that they willingly volunteered to a public web site.

This, to me, seems ridiculous. Facebook users are 100 percent responsible for how much or how little personal data they share. Anyone who is even half-paying attention should realize that once something is posted to the Web, it can be exceedingly difficult to take it back.

As insurers increasingly embark on Web 2.0 projects, they should be careful in how they enroll people and what information they allow individuals to share.

As fickle as customers can be in reality, they're even more fickle in virtual reality. What an individual shares publicly online is, of course, not private. For some reason though, individuals tend to ignore this until what they share can be used against them. Then, they blame the nearest corporate entity for disregarding their privacy.

Regardless of what insurers' user agreements says (and Facebook's explicitly mentions that it will save the information in deactivated accounts), if customers feel like they've lost control of their own personal information, they won't be pointing at themselves.

They'll place the blame squarely on the shoulders of their insurer. So, if you're a carrier with a new Web 2.0 presence, proceed with caution.

It appears that Keith Brannen, second VP of IT - advanced technology group, isn't Aflac's only BlackBerry guru.

I interviewed Brannen about the recently launched MobileAflac initiative for this month's feature story on mobile salesforce technology, but I didn't speak with Margaret Genet, an Aflac operations analyst that CIO magazine describes as the company's "technology concierge."

Apparently Genet has been teaching the Columbus, Ga.-based insurer's executives how to be more efficient on mobile devices and applications. "I guarantee if you talk to [Margaret] for 15 minutes, she will tell you 30 tricks you didn't know that will save you time," Aflac CIO Gerald Shields told the magazine.

Check out the article for the complete list of Margaret's BlackBerry tips and shortcuts, but here's a list of the tips we found most useful:

From CIO magazine:

"In e-mail inbox, press the S key to search for a sender or a word within a subject line, and any mail folder regardless of message was sent or received."

"To enable automatic spell checking of e-mail messages, click the Options icon on BlackBerry home screen. Then click Spell Check and select the Spell Check E-Mail Before Sending option."

"To do a manual spell check, click the BlackBerry Menu key within a composed message and select Check Spelling."

"Display a list of the last 20 pages visited by hitting the I key."

At last November's I&T Executive Summit, Deb Smallwood (then with ICW group, now with Smallwood Maike & Associates) quickly polled the audience during her presentation. First, she asked how many in the crowd were baby boomers. Then, how many were a part of Generation X.

And as you might imagine, each question led to a significant number of raised hands. Finally, she asked how many considered themselves members of Generation Y.

Only one hand went up. It was mine.

Looking back, I shouldn't have been that surprised. After all, how many twenty-somethings do you expect to see at an event aimed at the CIOs, EVPs and heads of lines of business of the insurance industry? Still, it did illustrate an interesting, larger point: today's insurance industry is top heavy with older workers.

I think that, for the most part, insurance execs have recognized that the industry is heavy on older workers and that, as those workers edge closer to retirement, their organizations could be at risk of a workforce shortfall. As a result, many insurers have launched "recruit and retain initiatives" to attract younger workers and keep them at the company. Many of those initiatives are specifically targeted towards young IT professionals – a relatively small group whose skills are highly sought after by just about any industry.

While attracting recent college graduates and other younger workers will undoubtedly be a key to solving the potential problems caused the impending baby boom retirement blitz, a recent Wall Street Journal article has me wondering if insurers are largely ignoring an even more obvious part of the solution – retaining and recruiting older workers.

Many experts, the WSJ's Erin White reports, say firms are overlooking older workers "who can be wooed to continue working" as potential employees.

Consider the following excerpts from the article:

Only 18% of U.S. employers reported having a strategy to recruit older workers, and only 28% cited a plan to retain older employees at their own firms, according to a survey of 1,000 U.S. companies in late 2006 by Manpower Inc., a staffing and employment-services firm.

and

Employers who ignore older workers now will suffer as boomers near retirement age, says Melanie Cosgrove Holmes, a vice president at Manpower. By 2012, nearly one in three U.S. workers will be over 50, according to AARP, a group for people age 50 and older. "Progressive companies that are looking ahead...are the ones that are going to be most successful," Ms. Holmes says.

What's more, the article also identifies that, along with higher salary expectations and health care costs, many companies are hesitant to recruit older workers because they don't want to teach them new skills.

Of course, for insurers' IT departments, many of which are still heavy on legacy systems and coding, older workers could be a blessing much more than a curse. Recent college graduates may know the latest and greatest in computer science, but they likely were never taught how to support a policy administration system that was implemented during Martin Van Buren's first term (ok, maybe not Mr. Van Buren, but perhaps Mr. Carter).

Some insurers are already seeing the light. MetLife, for instance, is mentioned in the WSJ article as a member of the AARP's "National Employer Team." New York Life is also a part of the program. Under the "National Employer Team" label, older workers can search for job opportunities at those insurers through the AARP web site.

As a whole though, most plans in place to curtail any pending workforce shortages focus solely on attracting younger workers. And while that is clearly the best long-term solution, insurers can still shore up immediate experience and employment gaps by taking a look at older workers…

To use the 2007 I&T Executive Summit as an example: why go after the one representative of Generation Y, when there is a room full of baby boomers willing to raise their hands?

In light of the publication of Senate Majority Leader George Mitchell’s report on illegal performance-enhancing substances in Major League Baseball, it’s a little embarrassing that Billy Beane’s success with the Oakland A’s figures so prominently in the early pages “Competing on Analytics: The New Science of Winning,” by Tom Davenport and Jeanne Harris.*

I say “a little” because the fact that the A’s were apparently competing not only on analytics but, at least to some extent, on steroids, does not negate the book’s argument. It does, however, invite meditation on the limits of the analytic approach to competition and may also clarify questions of “art versus science” in the use of analytics for automated decision-making.

Beane’s success, popularized in Michael Lewis’ “Moneyball,” clearly owes a great deal to his analytical approach, despite the use of steroids by some of his players. In any case, his success is only one of many examples of analytical competition adduced by Davenport and Harris.

Ultimately, the application of analytics to measure various kinds of performance is little more than an extension of accounting. One wouldn’t rely on intuition to track business transactions, and all the advocates of analytical competition are arguing is that one take a similarly empirical and mathematical approach to measuring what works or doesn’t. The emergence of this approach is thus not the result of brilliant insight so much as it is simply a natural consequence of the recent availability of large amounts of data for analysis. Given insurers’ increasing ability to access enormous stores of potentially valuable data hitherto locked away in their systems, the concept of analytical competition—often through the vehicle of Davenport and Harris’ book—is justifiably popular among insurance technology executives.

However, the Moneyball example shows that it’s possible that variables other than the ones identified can distort the outcomes of analysis. And as with the use of any metrics, one has to choose the right ones: irrelevant hypotheses generate worthless conclusions. In that respect, intuition may supply what a purely analytical approach cannot. Also, one must never lose sight of the effects of chance.

“In an area where you haven’t found an independent variable closely linked to a dependent variable, there’s room for chance and other factors,” is how David West, research director, TowerGroup, puts it.

While individual anomalies are very unlikely to trump statistical tendencies in the long run, West’s point underscores the need to understand precisely what one is and is not measuring, and what the full range of possibility—not just probability—is when applying analysis.

The general principle is that “‘on any given Sunday’ any team can beat any other team,” West says. In application of that principle, he adds that, “this Sunday, Miami is will ultimately remain the only undefeated team in history when they spoil the Patriots’ season.”

*Patriots coach Bill Belichick is also mentioned in the book (p78), but his cheating involved the effective use of analytics rather than their distortion.

I've spent a lot of time recently talking with colleagues and insurance industry insiders about reaching potential customers in younger demographics. Most of those conversations, unsurprisingly, have involved carriers connecting with customers via their Web sites. However, a recent story out of the Philippines serves as a reminder that there are other ways for insurers to expand the scope of their multi-channel distribution models.

According to the Sun.Star Cebu (a Cebu City, Philippines-based newspaper), Sun Life Financial has partnered with ePLDT, a communications technology company, to introduce Lakbay ProTXT and Family ProTXT, two "pre-paid card"-style personal accident insurance products that can be purchased through text message.

According to the Sun.Star article though, ProTXT cardholders can, through a text message, choose to purchase insurance for a period of 15 days to a year. Riza Mantaring, chief operating officer of Sun Life Financial Philippines, told me via e-mail that Sun Life is currently piloting the products, which sell as pre-paid cell phone cards. The card can be activated via cell phone.

Meanwhile, clients can access policy information by texting a keyword along with their policy number and PIN to Sun Life Mobile. If clients have an electronic wallet on their cell phone, they can pay premiums from the phone as well.

Mantaring explained that, while it has only average transportation and communications systems, the Philippines has an advanced cell phone infrastructure and one of the highest text messaging rates in the world. The country has about 40 million cell phone users, but only 1 to 2 million internet users. "We realized that servicing via the cell phone could become an effective means of generating sales," Mantaring wrote.

While Mantaring reports that there are no immediate plans to apply the text messaging approach in other markets, this seems to me like the kind of concept that could pop up in North America sooner rather than later. Young people are increasingly comfortable communicating to one another via text message, and it stands to reason that, as they mature, they'll be just as comfortable purchasing insurance that same way.

Maybe it's time to add another channel to your multi-channel distribution strategy.

In the age of e-commerce, insurers need to look beyond their own industry for examples of online customer engagement. This goes for examples both to emulate and avoid. My recent online experience with Zagat.com falls, unfortunately, into the latter category.

In New York City for the fourth meeting of the IT Strategies Executive Roundtable, I had need of some Manhattan-focused restaurant intelligence. Where to go but Zagat? (Useful trivia: Zagat rhymes with “Cat in the Hat”—as I once heard an heir to the Zagat empire say on a New York radio station.)

Zagat is the authoritative source for New York restaurant information and has expanded over the years to cover other geographies. One of the ways restaurants prove their credentials as establishments that matter is to display their Zagat review in the window. For the discriminating New York restaurant customer, if you’re not in Zagat you don’t exist.

Like other long-standing information-providing businesses, such as newspapers, Zagat had to cope with the consequences of an online world. The company’s revenues came principally through sales of their books containing all the restaurant information. If memory serves, they provided full information online for a time. They eventually transitioned to a pay site model, which was probably unavoidable.

Today they charge a subscription fee of $24.95 annually and $4.95 for 30 days. As a business traveler only planning to be in town for a few days, the latter figure seemed perfectly reasonable. The site provided the means of subscribing using credit card information.

What did not seem reasonable was that Zagat would automatically renew the subscription at the expiration date. Although Zagat was upfront about the renewal itself, only by reading the fine print of the subscription agreement could one learn that canceling the automatic renewal would be more difficult than the convenient online subscription process:

Your Subscription will continue and renew automatically, unless terminated by ZAGAT or until you notify ZAGAT by telephone or mail of your decision to terminate your Subscription.

Surely many tourists and business travelers could benefit from a temporary subscription and might even be willing to pay the $4.95 for a mere week. Why make the default assumption that the subscription ought to continue and effectively put obstacles in the way of those who don’t want to renew?

As a user of the Internet, I may be used to getting a great deal of content free, but I was willing to pay for this particular service. I was not willing to have to work hard to get these people to stop extracting funds from me. The effect of this practice for the temporary user was to feel ensnared by trickery to pay indefinitely for a service that would be useless once one left the geography. If other consumers react the way I did, Zagat is harming its brand. Zagat may be an authoritative source of the information in question but, to invert an adage, sharp practice can negate a multitude of virtues.

The general customer relations message is that trust is essential to a brand. If there is a specific e-commerce lesson to be learned, it is that trust is even more important in a channel selected for its convenience. Consumers use the Internet to get things done quickly; don’t use their haste as an opportunity to exploit them. Opt-in or opt-out functionality should always favor the consumer’s interest.

The announcement on July 17th that MajescoMastek has acquired Vector Insurance Services is further evidence that the Indian parent company Mastek is working hard to find a place at the North American insurance technology vendor table.

Late last year MajescoMastek announced the appointment of Billy McCarter as president of the Edison, N.J.-based company. The former Fireman’s Fund CIO — and Insurance & Technology Elite 8 honoree — had most recently been front man for Torrance, Calif.-based ePolicy solutions (acquired in July 2006 by ChoicePoint and then folded into the Insurity brand).

McCarter took the MajescoMastek show on the road to the ACORD/LOMA Insurance Systems Forum in Orlando. There he expressed the belief that MajescoMastek would benefit from having an American front man.

With the Vector acquisition, MajescoMastek gains even more local expertise, targeted to the life & annuities sector. Vector provides policy acquisition, administration and processing solutions to North American carriers, counting several of the region’s largest L&A carriers as its clients, according to a MajescoMastek source. The acquisition complements MajescoMastek's existing L&A capabilities, which include its Elixir policy admin platform.