INSURANCE NEWS FLASH September 01, 2014
Table of Contents Sales & Marketing ................................................................................................................. 3 Finance.................................................................................................................................. 8 Technology .......................................................................................................................... 13 Strategy .............................................................................................................................. 19
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Sales & Marketing Allstate Insurance launches massive new marketing campaign August 28, 2014 | Live Insurance News http://www.liveinsurancenews.com/allstate-insurance-launches-massive-new-marketingcampaign/ THE INSURER HAS ANNOUNCED ITS COLLEGE FOOTBALL SWEEPSTAKES AS WELL AS ITS TWITTER CHALLENGE. In celebration of the 10th anniversary of its “Good Hands®” field goal nets, Allstate Insurance has announced the launch of its huge College Football Sweepstakes, with a top prize of $100,000, a trip to the insurer’s Sugar Bowl®, as well as to the College Football Playoff National Championship. THAT INSURANCE MARKETING CAMPAIGN IS COMPLEMENTED BY THE LAUNCH OF TWITTER CHALLENGE. This is the 10th year in which Allstate Insurance has put up its “Good Hands®” Field Goal Nets. They have been raised in football stadiums in colleges across the United States. They are meant to stand for the coverage that that insurer provides to all of its American customers. These iconic field goal nets are now “synonymous with field goals and extra points,” said a press release from the company. THIS ALLSTATE INSURANCE ANNIVERSARY HAS ALSO BROUGHT WITH IT THE “IT’S GOOD SWEEPSTAKES” LAUNCH. Allstate Insurance Sugar Bowl It is designed to be the start of a college football celebration that will run for the entire season. This sweepstakes will come with one exciting grand prize for a winner and three of his or her friends. It will include a trip to New Orleans, next year, for the 2015 College Football Playoff Semifinal at the insurer’s Sugar Bowl®, ahead of a trip to Arlington, Texas, where the winner and his or her friends will sit with Kirk Herbstreit from ESPN for the 2015 College Football Playoff National Championship. To top off this grand prize package, the winner will also be the recipient of $100,000. According to the Allstate vice president of marketing, Pam Hollander, “To celebrate ten years of the “Good Hands®” Field Goal Nets, Allstate wanted to do something special for fans by giving them the chance to attend two of the biggest college football games of the year.” She added that the insurer “shares its enthusiasm for college football” alongside the millions of other fans across America. This sweepstakes is the way that Allstate Insurance has chosen to celebrate the fans of the sport, and the “passion and loyalty” that they bring to the game. It started on August 25 and will continue to run until December 7.
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New profit center for agents: Extended warranty coverage? August 27, 2014 | Property Casualty 360 http://www.propertycasualty360.com/2014/08/27/new-profit-center-for-agents-extendedwarranty-cov?ref=rss Just because your buyers are driving older, higher-mileage cars doesn’t mean there’s nothing for you to sell them. Consider the extended warranty. That’s the message behind EFG Companies’ new Simplicity Vehicle Protection product, introduced Monday, that offers extended warranty protection for older vehicles, potentially covering costly repairs for drivers who routinely keep their vehicles beyond 100,000 miles. Five different coverage levels are available and all include alternate transportation, trip interruption coverage, an unlimited number of cliams, roadside assistance, transferability, nationwide coverage and choice of decuctible. EFG Companies is positioning this offering as a potential profit driver for agents. “Competition and pricing pressures from carriers continues to squeeze agency profitability,” said Mark Rappaport, President, Simplicity Division of EFG Companies, in a statement. “A large number are adding complementary revenue streams to increase the value they offer customers,” “With Simplicity Vehicle Protection, insurance agencies have a unique opportunity to set themselves apart from their competition while increasing profitability and customer retention.” And the potential market here is large. According to Experian’s “Automotive Market Trends” report, a full 28.3% of cars on the road today are from the 2001 model year or earlier, which is 6.2 percentage points higher than it was in 2008. Short story, drivers are keeping their cars longer and maintenance is a growing concern.
3 ways to win competitors’ dissatisfied P&C customers August 26, 2014 | Property Casualty 360 http://www.propertycasualty360.com/2014/08/26/3-ways-to-win-competitors-dissatisfied-pccustomer?ref=rss Personal lines property and casualty insurers have every reason to be nervous. Recent research conducted by Accenture indicates that 40% of P&C customers worldwide are at least somewhat likely to switch to a new provider for their auto and home insurance in the next 12 months. These insurers are not delivering what customers want: more relevant, convenient and cost-effective products and experiences. Insurers are battling to prevent their existing customers from hearing the call of lower premiums and a wide array of new and competing offers. Carriers that take a more aggressive approach--using digital innovation to offer customers better prices or better experiences--can keep their own customers and lure other customers away from competitors.
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Price and value for money are still the key reason for switches among insurance customers, cited as important or very important in switching decisions by 87% and 80%, respectively, of those surveyed. Increasingly, price and value for money are likely to become integrated into how the total customer experience is rated. Innovation will become increasingly important, not only to help insurers keep pace with customer expectations but also to meet the challenge of providing better value for money. Only those insurers with digital capabilities and a flexible operating model will be able to adapt effectively to the changing demands of customers. This will help them retain (and further penetrate) their existing customer base, but also attract the large number of dissatisfied customers who plan to leave their less farsighted providers. To win these dissatisfied customers, P&C insurers need to give careful thought to how they move from selling products to providing useful experiences. Survey respondents stressed the importance of personalization, with 41% expressing a willingness to pay more for personalized advice and better coverage. And, even though most customers consider their risk profiles to be average or low, 44% of respondents saw it as critical that their insurance providers help them manage that risk. Three key elements attract these dissatisfied customers:
1. Property and casualty insurers must respond to the new customer dynamic. While good businesses have always tried to put the customer first, the outreach in the past has been from the company to the customer. Digital technologies have changed that dynamic completely. Customers now have the ability to compare a provider’s products and overall customer experience with those of its competitors, both within the industry and across industries. Control has passed to the customer, increasing the importance of the experience the insurer offers the customer. Carriers must offer information and advice through channels of the customer’s choosing and ensure an integrated experience on the customer’s terms.
2. Insurers must align business models and technology to support a better customer experience. Many insurers are spending vast sums of advertising money to convince customers that insurance products are simple, and can be bought simply. They are, essentially, trying to move insurance out of the low-frequency, high complexity category into one that is higher frequency and lower complexity--more like buying a T-shirt and less like buying a house. Additionally, retailers, internet giants and other non-traditional competitors are starting to target the personal lines insurance market. They have the potential to insert themselves into the insurance value chain, monetizing their “traffic”--whether in person or digital--as well as their knowledge of the customer to target relevant and personalized insurance offers. Insurers must determine the appropriate business model to serve the needs of the customers they are targeting. They then need to ensure that their business capabilities, technology, and organization are aligned to consistently deliver differentiated customer experiences that matter to their targeted customers.
3. Insurers need a broader concept of their business. Visionary insurers should be prepared to conceptualize their business more broadly, building online communities and offering noninsurance services. They must also be willing to create ecosystems of partners who together can provide the total, personalized and convenient experience today’s customers expect. Some insurers may choose to expand their role to offer a much wider customer experience, spanning new markets and new targets.
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Dissatisfied customers represent a huge risk to P&C insurers, but they also represent a tremendous opportunity. Only companies that transform both their technologies and their business models will be positioned to deliver the experiences their customers demand. These companies can then go to the next level, providing integrated customer experiences that address unmet customer needs rather than just providing products for them to buy.
ACE Life partners with AEON to offer life insurance through telesales channel August 22, 2014 | The Jakarta Post http://prnw.cbe.thejakartapost.com/news/2014/ace-life-partners-with-aeon-to-offer-lifeinsurance-through-telesales-channel.html ACE Life, the global life insurance division of ACE Group, today announced a partnership with AEON Insurance Service (Thailand) Company Limited to jointly offer a range of life, personal accident and health insurance products to AEON Thana Sinsap (Thailand) PLC’s customers countrywide via telemarketing. With the opening of ACE Life Telemarketing Call Center at Ted’s House Building, customers can conveniently purchase life insurance on the phone. To provide innovative products via this newly launched distribution channel, ACE Life has launched the ‘Two in One Protector’ plan specifically for this new segment of customers. It provides death coverage from sickness and accident, dismemberment and total permanent disability from accident. Premiums start from as low asseven baht per day with medical expense benefit of 15,000 baht per accident. Kevin Goulding, Regional President of ACE Life in Asia Pacific said, “Thailand is one of the core markets for ACE Life inAsia Pacific and our partnership with AEON signifies a milestone in our company’s strategy to expand our distribution channels. Committed to strive for better service to our customers, we aim to deliver value added financial protection solutions to our Thai customers.” Sally O’Hara, Country President of ACE Life Assurance Public Company Limited commented, “We are delighted to be partnering with AEON Insurance Service (Thailand) to provide innovative life insurance products to AEON Thana Sinsap (Thailand) PLC’s customer base. Our partnership leverages ACE Life’s multi-channel business and service model inThailand and we look forward to building a long and rewarding relationship with AEON.” <http://photos.prnasia.com/prnh/20140821/8521404707> Kevin Goulding, Regional President of ACE Life in Asia Pacific (center) and Sally O’Hara, Country President of ACE Life in Thailand (left) together with Sakarabhop Dhivarakara, Managing Director of AEON Insurance Service (Thailand) Company Limited (right) presided over the grand opening ceremony of the “ACE Life Telemarketing Call Center” at Ted’s House Building on August 6, 2014 ABOUT ACE LIFE IN THAILAND ACE Life Assurance Public Company Limited (ACE Life) is part of the ACE Group, one of the world’s largest multiline property and casualty insurers. With operations in 54 countries, the ACE Group provides commercial and personal property and casualty insurance, personal accident and supplemental health insurance, reinsurance and life insurance to a diverse group of clients. ACE Limited, the parent company of the ACE Group, is listed on the New York Stock Exchange (NYSE: ACE) and is a component of the S&P 500 index. The ACE Group’s core operating insurance companies are rated AA for financial strength by Standard & Poor’s and A++ by A.M. Best. Specifically to meet the needs of financial protection and security of its broad range of customers,
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ACE Life in Thailand (ACE Life Assurance Public Company Limited) offers a comprehensive range of quality life insurance products and services. The company partners with financial institutions and other companies to tailor individual policies for their clients and employees while ACE Life’s team of over 2,500 agents service and support customers throughout the nation.
Aflac Japan introducing enhanced cancer insurance product August 20, 2014 | Aflac News Releases http://www.aflac.com/aboutaflac/pressroom/pressreleasestory.aspx?rid=658 COLUMBUS, Ga., Aug. 20, 2014 /PRNewswire/ -- Aflac Incorporated (NYSE: AFL) announced today that Aflac Japan will introduce a cancer insurance product called “New Cancer DAYS” on September 22, 2014. New Cancer DAYS provides enhanced coverage, including outpatient treatments and multiple cancer occurrence benefits. At the same time, premiums for this product have been lowered for most ages. In 1974, Aflac Japan pioneered supplemental cancer insurance. This year marks Aflac’s 40th anniversary in Japan.
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Finance Enstar Group has signed an agreement with US-based Blue Cross and Blue Shield to acquire Companion Property and Casualty Insurance Company for around $218m August 27, 2014 | IBR http://commerciallines.insurance-business-review.com/news/enstar-to-acquire-companionproperty-and-casualty-insurance-for-218m-270814-4354193 Bermuda-based Enstar Group has signed an agreement with US-based Blue Cross and Blue Shield to acquire Companion Property and Casualty Insurance Company for around $218m. Based in South Carolina, Companion is an insurance group writing property, casualty, specialty and workers compensation business. In addition, the company offers fronting and third party administrative services. Enstar intends to finance the deal through a combination of cash on hand and debt financing. Enstar Group CEO Dominic Silvester said: “We are pleased to announce our agreement to acquire Companion, which continues the successful expansion of our property and casualty business in the U.S.” Subject to governmental and regulatory approvals and satisfaction of various customary closing conditions, the transaction is expected to be completed by the end of 2014 fourth quarter. Enstar plans to integrate the acquired business in its property and casualty legacy business, in order to provide better services to the firm’s policyholders. The company, along with its Torus subsidiaries, are also evaluating possibilities for policy renewals of certain Companion business into Torus. Enstar Group and its operating subsidiaries, through a network of service companies, manage various insurance businesses in Bermuda, the US, the UK, Continental Europe and Australia. Since 2001, the company has acquired around 60 companies and portfolios. The firm’s active underwriting businesses include the Atrium group of companies, which manage and underwrite specialist insurance and reinsurance business for Lloyd’s Syndicate 609 and the Torus group of companies.
RSA to sell Hong Kong, Singapore businesses for $216 million August 22, 2014 | PropertyCasualty360 http://www.propertycasualty360.com/2014/08/22/rsa-to-sell-hong-kong-singapore-businessesfor-216
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Bloomberg) -- RSA Insurance Group Plc agreed to sell the insurance businesses of its branches in Singapore and Hong Kong to Allied World Assurance Co. for about 130 million pounds ($216 million) in cash as it retreats from markets. The sale of RSA Singapore and RSA Hong Kong will result to a gain on sale of about 110 million pounds and an addition to the group’s tangible net assets of 95 million pounds, boosting capital, the London-based insurer said in a statement today. The transactions will be completed early 2015. RSA Chief Executive Officer Stephen Hester is seeking to reverse a decade of acquisitions that saw RSA expand in more than 30 countries. The former banker said last month that he’s ahead of a three-year plan to remake the insurer as he mulls further asset sales in the wake of an accounting scandal in Ireland last year and a 775 million-pound rights issue. “The transaction builds further on the momentum of our recently announced disposal in the Baltics, Poland, Canada and China and represents continued progress against our aim of tightening the strategic focus of the group,” Hester said in the statement. “Further disposals are targeted over the next 12 to 18 months to complete this process.” The shares rose 0.1 percent to 437 pounds at 8:44 a.m. in London. They have gained 7.7 percent this year after slumping 27 percent in 2013. First-Half Profit RSA said on Aug. 7 that it had a pretax profit of 69 million pounds in the first half after a loss of 494 million pounds in the second half of 2013. Hester, who took over from Simon Lee who quit in December amid an accounting scandal involving the company’s Irish business, plans to resume dividend payments in the full year. The company operates in France, Belgium, Germany, Italy, the Netherlands, Spain, the U.K. and Ireland after selling its eastern European and Polish assets to PZU SA in April. It also owns businesses in the Middle East and India. RSA’s Singapore operations had total assets of 236 million pounds with net written premiums of 66 million pounds at the end of 2013, according to the statement. Hong Kong had total assets of 185 million pounds and net written premiums of 47 million pounds. Both businesses had a pretax profit. Both transactions need regulatory approval in the respective countries. Allied World Assurance, based in Zug, Switzerland, will pay about 93 million pounds for the Singapore business and about 37 million pounds for Hong Kong operations. RSA said that senior management are expected to remain within the respective businesses at completion of the sale.
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SCM Insurance Services acquires Granite Global’s property and casualty businesses August 26, 2014 | IBR http://commerciallines.insurance-business-review.com/news/scm-insurance-services-acquiresgranite-globals-property-and-casualty-businesses-260814-4352790 SCM Insurance Services has acquired property and casualty (P&C) businesses of Granite Global Solutions, for an undisclosed amount. The acquired businesses include national adjusting firm Granite Claims Solutions and medical assessments and health services provider Granite Health Solutions. SCM also acquired risk mitigation and investigation services provider CKR Global and forensic engineering and environmental consulting company Rochon Engineering. SCM Insurance Services CEO and FCIP president Larry Shumka said the two companies are stronger together and poised for further growth and opportunity. “This transaction is consistent with SCM’s philosophy of building strong, autonomous brands, and a larger, more diverse company will better serve our customers with a portfolio of best-in-class services,” Shumka added. SCM will add claims, health and investigations businesses to its corresponding business units. The company will also add ClaimsPro, Cira Medical Services and Forensic Investigations Canada (FIC) to these businesses, while Rochon Engineering will continue as a standalone company. Granite Global Solutions president and CEO Murray Wallace said: “SCM brings scale and a focus on leading-edge technology that will make the combined entity a force in the industry, serving both insurance and corporate markets with the best possible solutions.” TorQuest Partners owns majority stake in SCM Insurance Services, while US-based Genstar Capital is the majority shareholder of Granite.
QBE to sell assets, $750M in shares as profit drops August 20, 2014 | Property Casualty 360 http://www.propertycasualty360.com/2014/08/20/qbe-to-sell-assets-750m-in-shares-as-profitdrops?ref=rss (Bloomberg) -- QBE Insurance Group Ltd. plans to raise about $750 million in a share placement and sell assets including part of its lenders’ mortgage insurance business in Australia after reporting an 18% drop in earnings. The insurer, which earns about three quarters of its premiums outside Australia and New Zealand, will sell $600 million in shares to institutions and raise about $150 million through a share purchase plan, it said in a regulatory filing. QBE will also sell its U.S. agency business and seek partners for two
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Australian equivalents, it said. The proposals, along with a debt refinancing, will raise about $1.5 billion, chief executive officer John Neal said in a call with reporters. “The measures by QBE aren’t a bad way to plug the hole in the balance sheet,” T S Lim, a Sydneybased analyst at Bell Potter Securities Ltd., said by phone. “You can’t have continued write-offs without asset sales and capital raisings.” QBE posted its first annual loss in 12 years in 2013 after writedowns in its North American operations. The Sydney-based insurer’s share price has declined 7% this year, dragging its market value lower than competitors Suncorp Group Ltd. and Insurance Australia Group Ltd. Net income dropped to $392 million for the six months ended June 30 from $477 million a year earlier, in line with its forecast July 29, the insurer said today. Last month, QBE boosted its Latin America claims reserve by $170 million due in part to increased workers’ compensation claims in Argentina. 2015 IPO The company plans to sell shares in QBE Lenders Mortgage Insurance Ltd. through an initial public offering in 2015. The unit, acquired in 2008, had net tangible assets of about $1.2 billion as at June 30, QBE said. It’s the nation’s second- largest mortgage insurer by premium income behind Genworth Mortgage Insurance Australia Ltd., according to data from Australian Prudential Regulation Authority. Genworth raised a $583 million in May in an initial public offering. Its shares have risen 36% since listing. QBE will finalize the sale of its Central and Eastern European operations as part of its sale of noncore assets, the insurer said. “Companies such as Suncorp have demonstrated that selling non-core assets helps lift returns in the long run,” Lim said. “QBE has finally realized that they have too many operations around the globe.” Balance sheet QBE made more than 135 acquisitions since 1982 and has operations across 43 countries, according to its website. Suncorp sold non-core assets such as real estate unit LJ Hooker and the RACQ insurance joint venture in the year to June 2010 and split its banking arm into core and non-core the previous year, according to a regulatory filing. The capital raising and asset sales are “intended to significantly improve our capital strength and balance sheet resilience,” QBE’s CEO Neal said in the statement. The measures will support “more predictable and sustainable earnings for shareholders.” The insurer will also repurchase and cancel $500 million of convertible subordinated debt using the proceeds of the capital raising, it said in today’s statement. Following a review of its investment strategy, QBE will extend its risk-asset exposure to around 15% of its portfolio from about 2% as at Dec. 31. It will also extend the duration of its fixed-income assets to three years from about six months.
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Profit falls The insurerâ&#x20AC;&#x2122;s gross written premium fell 10% in the six months through June to $8.5 billion, mainly due to declines in Europe and North America. It expects full-year gross written premium of $16.6 billion to $17.0 billion. QBE will pay a 15 Australian cent interim dividend per share representing 42% of the half year profit and down from 20 cents a year earlier. The shares are on a trading halt today. Sydney-based competitor IAG posted a 59% increase in net profit to A$1.23 billion for the year ended June 30 on higher investment income, the insurer said in a regulatory filing today. Suncorp reported a 49% increase in full-year net income last week.
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Technology PEMCO boosts efficiency and experience with CGI August 28, 2014 | Insurance & Technology http://www.insurancetech.com/architecture-infrastructure/pemco-boosts-efficiency-andexperience-w/240168940 Seattle-based PEMCO Mutual Insurance Company has chosen to implement Ratabase 8 rating and product configuration software from CGI. The solution will support business lines throughout multiple states. PEMCO will use the most recent version of Ratabase to decrease the time needed to implement rate changes. In doing so, it plans to improve speed to market, efficiency and agent experience. With greater productivity features, the insurer’s Product Management team can better control the timeline for changes and reduce dependence on its internal IT staff. “In a highly competitive auto marketplace, rating speed is critical,” said William McCarter, director of CGI’s U.S. Insurance Solutions Group, in a statement. “CGI’s Ratabase 8 will help PEMCO generate new business while retaining existing customers, in part by putting this powerful rating capability where it’s needed most – in the hands of business users.”
South Africa’s Discovery insurance partners with U.S. Telematics Company August 27, 2014 | Insurance & Technology http://www.insurancetech.com/business-intelligence/south-africas-discovery-insurancepartne/240168932 Discovery Limited (Johannesburg, South Africa) and Cambridge Mobile Telematics (Cambridge, Mass.), have entered a strategic partnership for usage-based insurance programs. Cambridge’s technology taps into sensor data from smartphones, cars, and other connected devices. Discovery’s current telematics program, Vitalitydrive, currently uses a proprietary onboard device called DQ-Track; indications are that the company plans to expand that to other hardware options. “We are very excited to partner with CMT given its breadth and depth of expertise in the field of mobile telematics,” says Discovery CEO Anton Ossip, in a statement. “Over the past year and a half, Discovery Insure worked very closely with CMT and its MIT-based experts to develop a smartphone app that allows anyone with a smartphone to monitor their trips and driving behavior through telematics technology. This technology has incredible potential for gathering significant and relevant data from a large group of drivers to learn more about the behaviors that contribute to road fatalities and injuries.” Most of Discovery’s clients are in South Africa, but the company also claims business in the U.K., U.S., China, Australia and Singapore.
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Xpertdoc, OneShield announce partnership August 25, 2014 | Insurance & Technology http://www.insurancetech.com/management-strategies/xpertdoc-oneshield-announcepartnership/240168916 Their agreement will enable P&C insurers to access technologies that improve product delivery. Xpertdoc Technologies, provider of document output and customer communications solutions, has joined forces with P&C core system technology provider OneShield. Their partnership will allow insurers to access technologies that improve product delivery for their customers. It also eliminates the need for insurers to go to market for document composition and output capabilities after the lengthy core system replacement process. [Do you aspire to the C-suite, or some other spot in upper IT management? Then bulk up your credentials around today’s most pressing IT movement, digital business, at the InformationWeek IT Leadership Summit. ] “This partnership comes after proving the integration of the Xpertdoc Client Communication Management solution with OneShield Insurance Software would provide for a seamless technology offering in a live client environment,” says Varsha Bhat, responsible for Xpertdoc’s partner solutions, in a statement. “We have a mutual goal of helping insurers grow and modernize their business while enabling them to deliver better customer service. Having a shared philosophy and approach with our clients was an important factor in deciding to partner together.”
Using predictive analytics in litigation management August 22, 2014 | Property Casualty 360 http://www.propertycasualty360.com/2014/08/22/using-predictive-analytics-in-litigationmanagemen?ref=rss Analytical assessment of data continues to expand in the workers’ compensation claim management process. It is generally accepted that 15% - 20% of all claims make up 80% of overall total costs. Recent trends are focusing on identifying the “15% - 20%” claims early in the process by going beyond traditional benchmarking. The claims identified through the analytical process are projected to get worse based on historical results on similar claims and factors unique to the specific claim. Oftentimes, these claims become more complicated because of injury migration and causation disputes, complex medical diagnoses and treatment, and increases in the temporary and permanent disabilities. Because of the complexity and developmental attributes, these claims generally require more litigation. Consequently, applying the predictive analytics to the litigation process and engaging the right attorney in the claim before litigation gets out of control can effectively impact litigation costs and the overall claim outcomes by helping to modify the predicted outcomes. Litigation management is an ongoing process that begins before the injury occurs, requires diligent oversight throughout the litigation, and should result in an objective and subjective assessment focused on the overall litigation outcomes. Pre-injury management begins with the need to fully
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understand the nuances involved with the applicable jurisdictions, as some are definitely more prone to litigation than others. This knowledge should be applied in establishing processes and procedures to best manage the claims and where possible limit the claimant’s perceived need for representation. Historically, litigation management has centered on pre-injury procedural aspects, such as negotiating the lowest hourly rates or pushing for discounts, whether it be a percentage of the bill or a flat rate. Hourly rates are important, but the concept of getting what you pay for cannot be discounted. The attorney with a lower rate and fees could end up with inferior outcomes that result in overall higher claim costs. If not monitored, lower rates and discounts could also result in nonessential litigation to make up the lost revenue due to lower rates and discounts. Best practices and litigation guidelines usually delineate procedural aspects like timeframes for submitting reports, limits on travel expenses and limits on time spent for various components in the litigation process. Evaluating legal bills for adherence to rates and litigation guidelines can be an administrative nightmare for adjusters and as such, utilization of a vendor to review bills and make sure they are in compliance is advisable, so long as the associated costs are justified. Selecting the right attorney is very important and should not be based on personal relationships alone. Simply put, some attorneys are more experienced in complex litigation matters and claim assignments should be made accordingly. Identifying claims through the predictive analytics process can help guide the selection and ensure that the right attorney is selected for each claim. Equally important, it is critical to make sure the adjuster understands that their responsibility is to manage the litigation process as opposed to turning it over to counsel and/or letting the litigation control the claim. Once an attorney has been selected, it is critical that a realistic budget and a well-defined litigation strategy are established. Once the strategy is in place, the adjuster must remain cognizant of developments and associated litigation costs and make adjustments when necessary. The overall cost of defense should be considered in disposition plans as it makes no sense to litigate a claim for two years only to settle for an amount you could have settled for at the onset of litigation. Post-litigation management has traditionally involved minimal benchmarking that compares litigation costs against historical results. Unfortunately, these efforts are generally more focused on the costs as opposed to overall outcomes. Oftentimes claims are closed without assessing whether pre-litigation goals were met, how close the budget came to the actual costs, whether the litigation duration was appropriate and most important, a determination on whether the selected counsel successfully mitigated the overall claim costs. Very little time and effort is currently given to analyzing litigation outcomes and the actual impact the attorney had mitigating the overall claim costs. Once implemented, an assessment on the overall litigation and claim outcomes can help determine the best attorney for future claims and ultimately, keeps the litigation management focused on the “big picture”– total claim costs. In closing, benchmarking, predictive analytics and psycho-social analyses are ever-growing elements within the workers’ compensation claim management process. There is a wealth of data that can be very helpful in identifying when claims should be assigned to an attorney and determining the best counsel for each case based on their expertise. Incorporating the data assessment with a postlitigation outcomes-based assessment will have a significant and positive impact on the entire litigation process and more important, the total cost on the claims.
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Improving claims management with advanced integration August 22, 2014 | Insurance & Technology http://www.insurancetech.com/claims/improving-claims-management-with-advance/240168907 Advanced integration is a large, complex process that involves core claims management systems and expert point solutions. Core claim systems and expert point solutions historically have been loosely integrated, which has resulted in issues such as lengthy implementation cycles, inefficient claims processing and the inability to use data assets from various systems. Times are changing such that advanced integration of these large and complex processes can be achieved when organizations partner together and leverage technology to achieve a single user environment. There are multiple benefits of advanced integration for the Property & Casualty (P&C) insurance industry. These benefits include appropriate single-user environments, optimized claims handling processes, application of multiple data assets for improved alert capabilities, and enhanced task automation opportunities. Letâ&#x20AC;&#x2122;s explore what advanced integration might look like from a technology perspective and how specific technology advances and feature enhancements will benefit the P&C insurance industry. Single-User Environment For insurance adjusters, one painful reality of their job is the need to switch between multiple software systems in order to find all the relevant information on a specific claim. Itâ&#x20AC;&#x2122;s critical to have all pertinent data in one spot to reduce and/or eliminate this quest for data. By creating a seamless user interface, adjusters can quickly access the information they need. Through deep integration of expert point solutions, adjusters will be able to access a robust set of data on one screen, eliminating the need to toggle back and forth among various applications. Having screens embedded into one application makes data available to adjusters when they need to quickly make educated decisions. Advanced integration helps to alleviate this industry pain point by bringing data from various places into one cohesive ecosystem. By implementing this type of integration solution, P&C carriers can access embedded analytical capabilities and leverage this wealth of information in their decision support systems. Data Integration In some cases, the transfer of data from one system to another occurs in a batch format, which sends flat files at standard intervals. Since data is delayed until the next scheduled transmission time, adjusters do not have access to real-time information. One technology improvement resulting from advanced integration is the application of a common format of data exchange. That way, data can be routed to the appropriate expert point solution. Advanced integration enables real-time data transmission through web services, which are used to get more information from the claims system into the expert point solutions. When data is received at a quicker rate, adjusters can use that valuable information to react much faster and process claims more easily. Data integration is also useful during the payment portion of the claim. A multi-directional flow of data exchange helps to expedite paying providers, since the payment information is readily available. Faster payment to medical providers helps to increase provider satisfaction and decrease
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payment inquiry phone calls or resubmission of invoices, allowing adjusters to focus on more important tasks. Data mining is another benefit of advanced integration. By leveraging data mining capabilities, P&C adjusters and their managers are able to get a more realistic picture of potential problems and can receive alerts in plenty of time. When important data is located in various systems, adjusters aren’t able to see potential problems in a timely manner. Advanced integration helps to provide a deeper understanding of what’s occurring, and offers the means to take action early on so that problems can be reduced or eliminated. Workflow Optimization Optimizing workflow is another important consideration for P&C carriers looking to increase efficiency and deliver a higher level of customer service for their policyholders. The ability to leverage an increased set of data has advantages for P&C carriers. Historically, only a basic set of information has been exchanged between systems. With advanced integration, a richer set of data is available in the workflow, enabling automated decisions instead of routing to adjusters to look up information. Advanced integration helps create a central control system that acts as an organizer of work for claims processing. The tight integration between the core claims system and expert point solutions enable the development of expert adjusting tools that help to not only increase adjuster efficiency due to reduced turnaround time, but also to help increase policyholder satisfaction. Quicker response times by adjusters provide valuable information that can help policyholders during a difficult time, with better outcomes as the result. Optimized workflow also provides management with the chance to proactively manage lost cost opportunities and drive process efficiencies throughout the claims workflow. The ultimate goal of optimized claims handling can be greatly enhanced through advanced integration, due to the greater insight that’s available, increased adjuster efficiency, and workflow enhancements. By effectively segmenting claims assignments early in the claims process, claims handling resources can properly managed. Implementation Benefits Yet another benefit of advanced integration is the creation of a smooth implementation path. IT departments within P&C insurance companies are excited about using the new systems since prebuilt integration provides a new level of simplicity and reduced time spend during implementation. IT resources are often stretched thin with a myriad of projects to complete in addition to shifting priorities. Just getting on a schedule to implement new components can be challenging due to limited resources that are already allocated. Scheduling upgrades and testing is eliminated with advanced, pre-built integration, so the implementation process is much simpler and less costly. Prebuilt solutions also reduce the risk of the project, since there is no need to hire external system integrators, reducing the complexity of the overall implementation. [Learn more about how IT benchmarking leads to long-term value at Interop New York’s session IT Benchmarking: Why You Don’t Do It But Should! on Thursday, October 2] Future Possibilities The technology improvements achieved through advanced integration help to increase adjuster efficiency, empower better decisions, and deliver a better customer experience. Besides the few
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benefits listed in this article, there is a world of opportunity lying within advanced integration. For example, with improved data flow between the core claims systems and expert point solution, richer data sets will be available for both adjusters and managers. With a more robust set of data available, reporting will likely be enhanced. The capacity to access more complex analytics through the core claims system, presented to users at just the right time, positively impacts adjustersâ&#x20AC;&#x2122; critical decisions. A newer and hot area of interest is fraud detection. Again, with real-time data available, more detailed analyses will be available for review, helping to better detect fraud cases. Better fraud detection will help with a reduction in claims severity and positively impact to the bottom line for P&C insurers. Scott Smith, Director of Professional Services Consulting, Mitchell International, currently serves as a director in Casualty Solutions Group (CSG) product management, focusing on technology and platform solutions that provide the architecture for Mitchellâ&#x20AC;&#x2122;s casualty products. Ajit Viswanathan, Senior Product Manager, Innovation and Design, Mitchell International, is currently part of the innovation team at Mitchell.
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Strategy Insurance industry may see more losses due to earthquakes August 27, 2014 | Live Insurance News http://www.liveinsurancenews.com/insurance-industry-may-see-losses-due-earthquakes/ NEW REPORT HIGHLIGHTS THE GROWING RISKS ASSOCIATED WITH EARTHQUAKES The Insurance Information Institute has released a report predicting that losses associated with earthquakes will continue to rise in the U.S. There are many factors contributing to growing losses, including a higher degree of urban development in areas of the country that are seismically active. Older buildings are also exposed to earthquake damage due to the fact that they do not comply with current building codes. These factors are driving up the financial burden that earthquakes represent for the insurance industry. NEW SEISMIC MAPS IDENTIFY 16 STATES AS BEING AT HIGH RISK FOR A MAJOR EARTHQUAKE The U.S. Geological Survey has updated its seismic maps recently, showing that 42 states are not considered to be at risk for significant activity, with 16 states being falling into the “high risk” category. The agency notes that seismic activity is particularly high and somewhat dangerous along the west coast. The agency’s updated maps also show that the financial risks associated with earthquakes along the east coast are growing. MOST HOMEOWNERS INSURANCE POLICIES DO NOT COVER EARTHQUAKE DAMAGE According to the Insurance Information Institute, conventional homeowners, renters, and business insurance does not cover the damage caused by an earthquake. The organization notes that this type of coverage is sometimes only available as an endorsement or as a completely separate insurance policy. An estimated 7% of homeowners throughout the U.S. currently have any form of earthquake coverage. Uninsured homeowners could be exposed to a great deal of financial risk in the event of a major earthquake. EARTHQUAKES MAY BECOME MORE EXPENSIVE FOR THE INSURANCE INDUSTRY TO DEAL WITH In California, earthquake insurance is somewhat more popular than it is in other parts of the country. The majority of the most devastating earthquakes in the country’s recent history were based in the state and homeowners are quite aware of the danger that these disasters represent. Despite awareness of earthquake damage, an estimated 12% of homeowners in the state have adequate insurance coverage. This lack of coverage may become quite problematic for the insurance industry in the future.
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NAIC adopts new corporate governance disclosure rule; Trouble brewing for insurers? August 25, 2014 | Property Casualty 360 http://www.propertycasualty360.com/2014/08/25/naic-adopts-new-corporate-governancedisclosure-ru New rules have been adopted by the National Association of Insurance Commissioners’ Financial Condition Committee that would allow regulators to gain greater insight into insurers’ corporategovernance practices. The model act—the Corporate Governance Annual Disclosure (CGAD) Model Act—calls for U.S. insurers to provide “a detailed narrative describing governance practices to their lead state or domestic regulator by June 1 of each year,” the NAIC says, adding that “strict confidentiality measures” would be in place to protect the confidential and sensitive information insurers would be providing. In particular, the NAIC says items “required to be described within the corporate governance disclosure” include: •
The insurer’s corporate-governance framework and structure including duties and structure of the board of directors and its committees.
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The policies and practices of its board of directors and significant committees including appointment practices, the frequency of meetings held and review procedures.
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The policies and practices directing senior management, including a description of defined suitability standards, the insurer’s code of conduct and ethics, performance evaluation and compensation practices, and succession planning.
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The processes by which the board of directors, its committees and senior management ensure an appropriate level of oversight to the critical risk areas impacting the insurer’s business activities including risk management processes, the actuarial function, and investment, reinsurance and business strategy decision-making processes.
The NAIC is expecting that states will start requiring disclosures at the beginning of 2016, with all states and territories on board by 2019, the NAIC told PC360. But industry reps say they are concerned about duplication and the prospect of a bureaucratic nightmare for larger companies. Some of the information is already required by other agencies, and Adam Kerns, assistant general council for the American Insurance Association (AIA) says there have only been minor fixes to this redundancy issue. Others are hinging their support on reducing the workload for insurers. “The model law requires an annual confidential filing that other companies are filing elsewhere,” Steve Broadie, vice president of financial policy at Property Casualty Insurance of America (PCI), tells PC360. “Putting things in an annual filing standpoint, it duplicates existing requirements. There’s a problem overall with companies being required to do the same thing twice in regulatory requirements.”
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The strongest language in the CGAD, dealing with companies’ classified information, was closely watched by many groups including the AIA and PCI. “There have been problems with other model laws in the states where folks have tried to adopt different confidentiality language. Florida proposed an alternative that would give less protection, but we voted against it,” says Broadie. Despite whatever issues may remain, the CGAD appears set to clear its final hurdle: passage by the Executive and Plenary Committee, which will vote on its adoption in November. “Everybody has had their two cents already,” says Kerns. “It’s in a good spot to be adopted.”
Fosun International in talks to buy Swiss Re’s US life insurance unit August 20, 2014 | South China Morning Post http://www.scmp.com/business/companies/article/1577246/fosun-international-talks-buy-swissres-us-life-insurance-unit Fosun International, the investment arm of the mainland’s biggest closely held conglomerate, is in talks to acquire a United States life insurance arm of Swiss Re, people with knowledge of the matter said. Fosun was seeking to buy Aurora National Life Assurance for between US$400 million and US$500 million, the people said. A deal had not been reached and the talks could still fall through, they said. Zurich-based Swiss Re began working with Barclays last year to sell Aurora, a life insurance and annuity provider based in Hartford, Connecticut, the people said. Wilton Re, the Bermuda-based reinsurer that is backed by Canada Pension Plan Investment Board, had also expressed interest in Aurora, one person said. Fosun Group, backed by Guo Guangchang, is on an acquisition spree that has ranged from Australian energy companies to New York city office buildings. The group, which considers insurance is a key line of business, said it would acquire 20 per cent of Ironshore, the Bermuda-based insurer which filed in June for a US initial public offering. Fosun International, which is publicly traded in Hong Kong, is the primary vehicle for these acquisitions. Fosun also operates a life insurance joint venture in China with Prudential Financial, and acquired 80 per cent of Portugal’s Caixa Geral de Depositos’s insurance unit in January. Representatives for Swiss Re, Fosun, Canada Pension Plan, and Barclays all declined to comment on the sale of Aurora. A spokesman for Wilton Re did not return a call seeking comment on its interest in Aurora. Swiss Re, which is based in Zurich, has been selling assets as it restructures its global operations. Aurora had more than US$3 billion in assets and serviced more than 88,000 life and annuity policies
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at June 2012, according to its website. It was part of SRLC America, which Swiss Re sold in 2012 to London-based insurer Prudential.
MetLife Announces Rate Cuts To Term Life in order to boost life insurance sales in an era of slow growth marked by low interest rates. August 20, 2014 | InsuranceNewsNet.com http://insurancenewsnet.com/innarticle/2014/08/20/metlife-announces-rate-cuts-to-term-life--a546130.html#.U_23psWSxc0 MetLife, which missed its second-quarter earnings estimates, has announced rate reductions on some of its guaranteed level term insurance products as the company seeks to boost life insurance sales in an era of slow growth marked by low interest rates. Rate changes do not apply to all ages, rate classes, coverage amounts and level-premium periods, the company added. Despite posting second quarter net income of $1.34 billion, an increase from $471 million in the year-ago period, MetLife delivered operating earnings per share of $1.39, below consensus estimates of $1.41 per share, according to Zacks Equity Research. Gene Lunman, MetLife’s senior vice president of Retail Life and Disability Insurance Products, said the lower rates would help make life insurance more accessible to more people. “By continually evaluating our life insurance portfolio, we are able to evolve our product offerings to help consumers protect themselves and their families, and provide financial professionals with products that can meet the needs of a wide array of customers,” he said. Consumer surveys reveal that many people, by their own admission, are uninsured and underinsured for life insurance coverage. With a level-term insurance policy, premiums for coverage amounts don’t change for as long as the policy is in force, usually 10, 20 or 30 years. Premiums will remain level for buyers of coverage in excess of $100,000, MetLife said. Policyholders will also have the opportunity to convert their policies to permanent life insurance policies, which will cover them for the rest of their lives. Term life policies are the easiest and simplest protection products to buy. They appeal mostly to young adults with new families. Insurance companies have found selling term life insurance policies slow going in an era of low interest rates and strong equity markets. First-quarter term life annualized premiums shrank 4 percent, face amounts dropped 4 percent and the number of policies sold dipped 6 percent compared to the year-ago period, according to LIMRA’s U.S. Individual Life Insurance Sales Summary report. Overall life insurance industry sales dipped in the first quarter compared to the year-ago period, LIMRA also found.
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Annualized premium and face amounts each shrank 7 percent, and the number of policies sold dropped 5 percent in the first quarter compared to the year-ago period. Only variable universal life policies, which have an investment component, recorded an increase in sales in the first quarter compared to the year-ago period, LIMRA said.
Metlife is closer to possible ‘systemically important’ designation August 20, 2014 | DOW JONES http://new.dowjones.com/scoop/metlife-one-step-closer-possible-systemically-importantdesignation-sources/ Victoria McGrane and Leslie Scism reported that the Financial Stability Oversight Council was planning to announce Wednesday it had closed the evidentiary record it had been compiling on MetLife to determine the company’s designation, according to sources. This pushes the Insurance firm one step closer to being designated as systematically important. The council will now be able to vote on the company’s designation. The story as it was reported on Dow Jones: August 20, 2:14PM EDT: Closing Record Is Necessary Procedural Step Before Council Can Vote on Designation 2:14PM EDT: FSOC Council of Regulators Has Voted to Close Evidentiary Record on Met — Sources 2:14PM EDT: MetLife One Step Closer to Possible ‘Systemically Important’ Designation — Sources 2:27PM EDT: MetLife Is Closer to Possible ‘Systemically Important’ Designation By Victoria McGrane and Leslie Scism A panel of top government officials has moved MetLife Inc. one step closer to possible designation as a “systemically important financial institution,” according to two people familiar with the matter. The Financial Stability Oversight Council, a panel created under the Dodd-Frank financial-system overhaul act, is expected to reveal as early as Wednesday afternoon that it has closed the evidentiary record it has been compiling on the New York insurer. The panel won’t reveal the name of the institution at issue, but MetLife has publicly acknowledged that it has been talking with the Washington group about its possible consideration for many months. Treasury Secretary Jacob Lew leads the council. A spokeswoman for the U.S. Treasury declined to comment.
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