Direct Writers And Reinsurers Looking For That Perfect Match

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Online dating services are not the only Web-based initiatives attempting to unite disparate partners seeking a long-term relationship. Life insurers and reinsurers are currently exploring new ways to connect in cyberspace. The process, however, has not been a romantic walk in the park. So whats keeping these two crazy kids from finally getting together online?

According to Paul Heinrod, president of eReinsure, New York, a Web-hosted applications provider for the reinsurance market, the industry focus was stuck on the property and casualty market, only recently shifting to the life and health side of the business.

“The issues are simple: being able to process things efficiently, reducing cycle time, reconciling premium issues, streamlining operations” says Heinrod. “But only a limited number of Web-based solutions have been rolled out.”

Heinrod says eReinsure is beginning to explore opportunities on the life and health side of the business.

Terry Pahl, CEO of e-Nable corporation, an MIB Group subsidiary in Westwood, Mass., that provides underwriting support system solutions to the life insurance industry, says the delay in getting reinsurers and life carriers together online is because reinsurers do not suffer from the same legacy problems as life insurers. The legacy dilemma leaves companies to weigh the benefits of continuing with their current systems or opting to develop new platforms.

“Utilizing Internet technology effectively has been a challenge for the primary life insurers due to the very real issues surrounding both the nature of securing medical information for underwriting purposes and the enormity of the legacy system problem,” says Pahl.

On the other side, Pahl says that “reinsurers, acting as early adaptors in areas such as real time pharmaceutical information as well as having the luxury of very little in the way of legacy issues, have been able to more quickly take advantage of the technology now available in order to bring real-time technologies into play.”

Despite the ability to deliver data electronically, “getting the data correct” is not as simple as it sounds. Pat Bresina, vice president for marketing and communications at Transamerica Reinsurance, Charlotte, N.C., says, “Data formats remain a big problem due to a lack of data standardization.”

Bresina acknowledges that industry working groups have been formed to address standards for electronic submission, operating within organizations including the American National Standards Institute and the Association for Cooperative Operations Research and Development. The goal, she points out, is to leverage the information technology advances made within the life industry at large by the ACORD Life Insurance Data Model.

Derek Scannell, chief information officer at Swiss Re Life and Health America Inc., Armonk, N.Y., acknowledges his company has been “passive” on the life and health side with regard to ACORD, but with the acquisition of Lincoln Re, it is now keen to be more actively involved.

According to Scannell, “Lincoln Re has been more active and we have every intention of using some of our new colleagues from Fort Wayne to help us in this endeavor. I think standards will have an impact prospectively as more and more companies adopt XML. ACORD is an important body to lead the industry in standardization around messaging.”

Scannell characterizes XML as the “biggest single technology” in reinsurance. “What Swiss Re is looking at is using XML to act as the stable hub in this process,” he says. “XML together with the increased adoption of standards will allow the industry to be in a position to reduce expense costs on both sides of the equation, insurer and reinsurer.”

As reported in the July 22 National Underwriter, a life reinsurance data hub initiative for reinsurers and insurers facilitated by the American Council of Life Insurers, Washington, and technology provider, ri3K, London, is in the process of being rolled out.

The data hub, due to be up and running by the end of September 2002 and fully operational by September 2003, will allow data to be exchanged electronically between direct writers and reinsurers without requiring manual re-keying.

Another initiative, to streamline facultative life cases online, was introduced by Agora Insurance Network Solutions last summer.

Originally a technology project by CNA Life Re of Chicago, and later acquired and spun off by Munich American Reassurance Company, Atlanta, Agora introduced AgoraRe.com to enable life insurers to exchange case documentation and data with reinsurers securely over the Internet.

Although the current initiatives trend more towards controlling costs, insurers and reinsurers are also seeking to leverage technology to boost the topline.

Six months ago, Transamerica Reinsurance, and Primary Knowledge Inc., New York, formed a joint venture company called Quantitative Data Solutions to provide access to data and processing capabilities that would enable an automated underwriting and policy issuance process with nearly instantaneous results.

“Our aim is for real-time decisioning and electronic policy issuance,” said Michelle Moloney, vice president of business development for Transamerica Reinsurance. “This would make possible life insurance that is real-time issue, more affordable and non-invasive.”


Reproduced from National Underwriter Life & Health/Financial Services Edition, August 26, 2002. Copyright 2002 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.