Integration Key to Competition
While leveraging the value of legacy systems, insurers are turning to Web services and document management to increase efficiencies, reports InformationWeek research.
The insurance industry is working hard to work smarter. That is the conclusion to be drawn from a review of the 39 insurance companies ranked among the InformationWeek500, an annual compilation of the most innovative IT organizations across the U.S. (visit the InformationWeek500 homepage at www. informationweek.com/956). Many insurers are consolidating IT systems to cut operational costs while turning to Web services to better serve business partners and customers. But they're not abandoning the massive investments they've made over the years in legacy hardware.
A staggering amount of integration and system consolidation is taking place throughout the industry. HIP Health Plan of New York ($2.9 billion in revenue, New York) is using Web technologies to simplify sales, quote generation, underwriting, enrollment and benefits administration. The health insurer says the effort has driven down business costs and is the foundation of its 316 percent increase in underwriting revenue for 2002. Los Angeles-based Farmers Insurance Group says it has connected in real time over the Internet with all its suppliers and business partners. The $2.8 billion-a-year multiline carrier says it has saved $5 million as a result.
The industry also is turning to Web services to make systems hum more efficiently and to provide new services to partners and customers. Web services have changed the way Allstate Insurance Co. (Northbrook, Ill., $118 billion in assets) thinks about legacy systems.
"The key for us is the quickness [with which] you can bring new ideas to market," says Cathy Brune, senior vice president and chief information officer. "We were at a point of seriously considering how many systems we'd have to dig out and start new. When you have systems running 4 million transactions a day-and they're never down-why would you want to mess with that?"
Allstate wanted to avoid the work and cost of building all new systems. So, asks Brune, "why not set up the best components within our legacy systems as a Web service?"
Imaging and document management applications also continue to play a crucial role for companies seeking to increase efficiencies and cut down the costs of handling paper. HIP is increasing its use of optical copy readers, saying the technology is cutting processing costs and increasing efficiencies. About 40 percent of HIP's claims are received on paper.
Antares Management Solutions (Westlake, Ohio), an IT and business process outsourcing company for insurance, says document imaging technology has let it simplify a variety of processes. Again, it's about doing more with less, while striving to compete in an ever-competitive environment.
This article originally appeared in InformationWeek, a sister publication of Insurance & Technology.
An award winning writer and journalist, for more than 20 years George Hulme has written about business, technology, and IT security topics. He currently freelances for a wide range of publications, and is security blogger at InformationWeek.com. View Full Bio
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