A Good Hub Helps the World go Round

(as published in Alberta Broker, Aug/Sept 2001 issue)

By Doug Grant CIP, Principal, Insurance-Canada.ca

A heading in the April 3 issue of KPMG Insurance Insider
Alert caught my eye. “KPMG Analysis: Online Claims Settlement Grows Despite
Dot-Com Meltdown
” By Gregory Crawford (April 3, 2001)

(beginning of extract…) A report released by Forrester
Research earlier this year on the auto insurance industry found that most of the insurance
companies it interviewed were investing in claim reporting systems.

“Insurance companies really are the ones that have the
ability to run the (claims) process,” says Todd Eyler, the Forrester analyst who
authored the report. “The customer wants to go to them and trusts them. The insurance
company is the one that’s in a position to manage the whole claims process. That
being said, they’re not very good at developing the solutions for each part of that process.”

Applications from providers like ClaimsDesk and the other
companies are what insurance companies will seek as they upgrade their claims processing
functions into a fully networked and technology-rich environment, Forrester’s Eyler
says. He expects insurance companies to create – over the next several years –
what he calls claims hubs, a single point of contact for all parties involved in a claim.
These hubs will centralize claims-related data, automate workflow for simple claims and
evaluate claims performance. All of which he expects will save the companies money.

“I think there will be a lot of little niche players
that create specific types of products, applications and tools that fill in gaps in the
claims hub,” Eyler explains. He says the online dispute resolution companies will be
used mainly for the simple, smaller value property claims – a small dent on a car or
minor damage to property. “Claims hubs will allow adjusters to automate a lot of the
smaller claims and focus on the half-million- to million-dollar bodily injury claims where
the money is.” (…end of extract)

A central hub providing a function for a group of users has
a long history. The intersection of two roads occasionally gave rise to a new village. We
have all experienced the traffic congestion resulting from hubs of commerce.

From the roaring twenties, telephone switchboards, or hubs,
were manually operated. With rapidly increasing telephone traffic, load projections
predicted that every adult in North America would be needed as switchboard operators to
meet the demand. Instead came the automated switchboard. Think of the sophistication of
modern switches to deal with volumes from voice, fax and Internet traffic, plus many Telco
added “optional” features.

A competitive edge through faster transaction speeds begat
couriers in general and The Insurance Courier Services (ICS) for our own Canadian
vertical. Good transportation technologies and methods, efficient package handling
equipment, and regional and central hubs have enabled fast and inexpensive delivery.

I think of my days as an employee in a large organization.
The proliferation of computer applications required the use of multiple userids and
passwords, and often presented different user interfaces – awkward and unproductive.

In the Internet world we experience the same issue today
where sites with security requirements are userid and password protected. Can you remember
all of your userids and passwords? I can’t!

The Internet has brought us the Intranet portal.
Personalisation and web-enabled applications through the portal have brought us single
logon for many applications – a simple but significant usability improvement.

Online banking has evolved from an account perspective to a
cross-functional customer portal with access, one logon, to most of that bank’s
customer-facing applications. Beyond a single bank interface, we now see financial firms
offering cross-institutional aggregation – a single database and inquiry showing your
total financial position in many banks (wish I had that much money!).

What about P&C insurance hubs

Royal Sun Alliance developed Claims Analysis System on the
Internet (CASi) based on a datamart or warehouse of information they had maintained for
some years. Available to Risk Managers in commercial customers, this tool allowed inquiry
and analysis of the insured’s claims, from multi-year loss trend analysis to specific
claim notes. Some insurers have opted to allow the risk manager to authorize access to the
same information by his broker. Marsh Inc. offers aggregation with their STARS System —
offering a risk manager a view of coverage and loss information across many insurers where
his various covers have been placed.

RSA has used the same datawarehouse and analytical
technology to develop analagous function to employees for RSA business functions, and to
brokers for book of business details. By drilling down, historical transaction details can be seen.

For broker interface, ICEnet and CSIOnet, as hubs, reduced
the management issues around transfers of data among multiple trading partners. The CSIO
portal takes the hub online and further. One simple function is a single logon to multiple
carriers, making a CSR’s task easier and more efficient. Doing comparative quotes in or
through the network moves the responsibility of having accurate quotes back to the
companies, however they choose to implement it. Over time, if rating is done in only one
engine the opportunity for discrepancies is removed. (If you wear two watches, you don’t
know what time it is unless they happen to both show the same time). The opportunity for
guaranteed final price, after comparative quotes, using only one rating engine per
company, is a new function.

As the portal builds — there will be difficulties and
issues — it will open the doors to many more processing improvements in the industry.
Some of these will bear fruit only with improvements in the broker-company partnerships.
It will evolve, slowly, but it will come.

The dot.com’s had their day – without a proper long-lasting
business case. The real promise of Internet e-business, transaction and service
improvements by linking multiple parties in a single process, is starting to arrive – even
in insurance. Somewhere hidden, as they should be, are multiple layers of hubs.

I hope you have had a good summer thus far and wish you a good early fall – till we meet again!