Insurers Speak Up for VoIP

Intrigued by the possibility of lower costs and greater flexibility, a number of insurance carriers are moving toward IP-enabling their traditional PBX systems.

For years, frustrated computer users have been snarling colorful words at their desktop computers. But before the advent of voice over Internet protocol (VoIP), these threats and expletives had fallen into a void. Now, users who are given the ability to communicate via VoIP are having more productive conversations while directing kinder, gentler words at computers equipped with speakers and microphones.

Although the insurance industry's use of the protocol-which sends voice in packets over data networks-has been limited, more carriers are beginning to explore the benefits of transmitting VoIP, explains Mark Wooley, vice president, contact center proficiency leader, Cap Gemini Ernst & Young (CGE&Y, New York). Aside from the significant cost savings associated with the protocol, insurance technologists are drawn to its flexibility, Wooley notes.

"Carriers can enjoy the benefits of a single voice and data network. This type of infrastructure requires less people for maintenance, and with IP, insurers can save on their long-distance calls," says Lawrence Byrd, convergence strategist for communications solutions provider Avaya (Basking Ridge, N.J.). And that is not all, he adds: "Although customers who deploy VoIP save money, the bigger benefit is location transparency, because it enables linkage of locations and people."

For many insurance carriers, the prospect of inexpensively linking branch locations, agents and adjusters-no matter their location-is just cause for exploring some form of use of this alternative to more rigid, traditional public-branch-exchange (PBX) systems. "If [telephony] changes are required across multiple sites with a PBX, the administrator must dial into, or visit, each site to make the changes," CGE&Y's Wooley says. Alternatively, "many VoIP solutions grant universal access."

And the protocol not only is aiding insurers in their day-to-day work scenarios. Some are recognizing that "in disaster recovery situations it's a lot easier to reroute information across IP," contends David Fuller, product marketing director, Interactive Intelligence Inc. (Indianapolis), a provider of multi-channel customer interaction management solutions.

So if the protocol seems tailor made for the service-oriented insurance industry, why aren't more carriers making the call for VoIP? According to Wooley, risk-averse carriers remain apprehensive because the technology is still developing. And although voice sent over IP can be secured, carriers-subject to strict privacy regulation-fear that sensitive information will be sent by voice over data networks and could possibly be hacked into.

Too Good To Be True?

But the most prominent factor preventing VoIP replacement of PBX systems is carriers' "if-it-isn't-broken-don't-fix-it" mentality, especially since "many [insurers] made significant upgrades to their telephony systems in 1999 and 2000 because of Y2K," explains Avaya's Byrd. "PBX systems have a lifetime of 15 to 20 years, so when exploring their [telephony] options carriers are less likely to throw [them] away." And Elizabeth Ussher, author of the META Group (Stamford, Conn.) study "Framework for an IP Telephony Decision," reports that IP telephony will not be sufficient for PBX replacement through 2007.

Although complete PBX replacement is usually out of the question, in other kinds of scenarios the technology is making sense. VoIP is springing up as carriers dabble in experimental pilot programs and start from scratch with greenfield operations, relates CGE&Y's Wooley. Additionally, insurers looking to leverage their existing PBX systems while reaping the benefits of VoIP are working towards IP-enabling their traditional systems.

Des Moines-based Principal Financial is one of those carriers. The insurer has IP-enabled parts of its PBX system in a project aimed at promoting the educational process, relates Randy Nyberg, director, IT, Principal Financial ($116.3 billion in assets under management). "Principal is currently exploring the possibilities with IP telephony," he says. "We are learning about capabilities and how to leverage them as we move forward." So far, the carrier has "realized that [IP telephony] offers advantages in the areas of disaster recovery and call centers."

Principal's initiative has included the installation of VoIP capability at two of its locations. The insurer is utilizing VoIP phones leveraged by Cisco (San Jose, Calif.) Call Manager and Unity Voice Mail in its Appleton, Wis., offices. Additionally, four Avaya IP phones have been installed at its Des Moines facilities. Calls made from these phones-which look like traditional handsets-are connected to a 100-MG Ethernet and routed to the carrier's Avaya 8700 PBX, also located in Des Moines.

In order to make this integration possible, Principal Financial had to undergo only some minor configuration changes. "I know that it didn't take a long time to make this work," reports Nyberg, who experienced very little apprehension when approaching the low-risk project. Presently, Principal plans to implement a Web-enabled interface that would allow access to a corporate phone book or database via a screen on the IP-based telephones. "The screen doesn't look or work like a browser"-it is actually just a display screen, clarifies Nyberg.

The carrier has been maintaining telephony capabilities for over a year now. Although it's been pleased with results thus far, Nyberg doesn't see complete PBX replacement in Principal's immediate future. "We are a very large organization, so full PBX replacement isn't an option yet," Nyberg says. "We aren't ready for that because, so far, there hasn't been any real business need for replacement."

Greenfield Operation

Unlike Principal Financial, at AVIVA Life Insurance Co. (North Quincy, Mass, $4.3 billion in assets) it was clear after a full exploration that a VoIP platform was the only choice for supporting the organization's telephony needs, reports Greg Partyka, chief technology officer. The carrier had been divested from its P&C group (now known as OneBeacon) in 2001 and needed to build a telephony system from scratch.

Partyka was attracted to the economies of scale that could be gained from a single voice and Internet provider, especially since he was limited to an IT staff of 12 that needed to support two locations. Also, for a company of AVIVA's size, the price of implementing an IP telephony system was comparable to costs associated with implementing a brand new PBX system. Although he concedes that a PBX implementation would have been the safer choice, "it would have been the wrong choice," Partyka says.

However, since business managers weren't convinced by Partyka's confidence in the protocol's potential, the CTO spent months researching the technology and figuring out how to mitigate risks associated with VoIP, such as power outages and scalability. Then he presented the risk-mitigation strategies, which included installation of battery back-ups and plans to keep a certain number of telephones running on a PBX on each user's desktop for a limited time period as a safety net.

Partyka's proposal was approved and the IP telephony platform-which utilizes Interactive Intelligence's call center and 3Com's (Santa Clara, Calif.) Superstack NBX VoIP solution-has been live for a year. "We are experiencing lower costs now and that is always a plus," Partyka says. Currently AVIVA is wrapping up testing of an IVR (interactive voice response) capability that was easy to build, thanks to the telephony system, Partyka relates. "IVR is inherent to the platform," he explains.

But the past year hasn't been all smooth sailing for AVIVA, which has experienced a few bumps in the road. "If the VoIP server crashes for any reason, the phones go down," says Partyka. "I can probably count on one hand the number of times the voice server has gone down in the past year." And although it has happened only a few times, one time is too many for a system supporting the company's call centers. In an effort to prevent such occurrences, "we take a more conservative approach with our VoIP servers" than with other corporate servers, Partyka relates.

Power to the Branches

Like Partyka, State Compensation Insurance Fund's (SCIF, San Francisco, $9.5 billion in assets) telecom manager, Bryan Townsend, approached his recent telephony decision with an open mind. "We were opening a new location that would house between 40 and 60 employees," explains Townsend. "And we had an existing PBX and voicemail system that we wanted to use."

Townsend had to either purchase a brand new PBX system or IP-enable a branch location by purchasing and connecting an IP platform to its existing Avaya G3Si PBX, which was housed a few miles down the road, relates Townsend. Although he wasn't married to the idea of implementing a VoIP solution, "I wanted to begin to explore the technology, and this seemed like a good location because it wasn't too large and I knew the branch's IT group could work well to support this," he says.

The VoIP option turned out to be the most cost-effective solution. The carrier implemented an Avaya S8300 VoIP module, which is connected via tie trunk (a telephone line used for making connections) to its existing PBX. The implementation was completed in a week. "It was a lot more affordable than purchasing a whole new PBX system for an office this size," Townsend says.

Although, "because of all the horror stories you read in trade magazines," he was a bit hesitant at the beginning of this project, Townsend reports that "we've had really good success with Avaya." Since its initial IP-enabling PBX project, Townsend and his team have implemented the technology in three more branch locations.

Still, looking to the future, Townsend doesn't see a full PBX replacement in SCIF's horizon. "Sure, I've thought about it, but if it isn't broken, I'm not going to fix it," he says.

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Calling Security

Although most companies send VoIP traffic over their internal IP networks that are secured by firewalls, mobile workers often access the corporate VoIP via the less-secure Internet. In this type of situation, "many organizations use virtual private networks (VPNs) to encrypt the data in order to provide security," explains Chuck Rutledge, vice president of marketing, Quintum Technologies (Eatontown, N.J.), a provider of VoIP telephony solutions.

Voice that is sent over IP can be compressed or coded before it is sent, relates Rutledge. "A stream of digits can be reduced by an algorithm that will remove redundant information," he explains. "Less information is being sent but it still represents the entire phone call."

But sensitive information is not the only security concern that insurers must evaluate. Risks associated with denial-of-service attacks must be mitigated, as well. These attacks are made with the intent of flooding a network with so many additional requests that regular traffic, including voice sent over IP, is either slowed or interrupted. Although advanced network security tools and processes offer the necessary protection against these attacks, many companies have not invested adequately in the tools and skill sets necessary for protection, according to Mark Wooley, vice president, contact center proficiency, Cap Gemini Ernst & Young (New York).