Internet Changes Insurance Back Offices

Computerworld - For 128 years, five generations of Maloys provided casualty and property insurance to businesses in New York. But when it came time for Richard Maloy Jr. to take over the family business from his father, the company was doomed. "I killed it," Maloy readily admits.
The problem? Maloy was bitten by the technology bug when he was running the company's Princeton, N.J., office and selling insurance to high-tech firms.
"If you hang out with these [tech] guys long enough, you get inspired by what they do," Maloy said. "You just want to become one of them."
But moving the agency online wasn't simple.
The problem, according to Todd Eyler, an analyst at Forrester Research Inc. in Cambridge, Mass., is that individual insurance carriers haven't been able to simplify and standardize application forms. The most likely place for that innovation is with the agents, he said.
"The carriers tend to react and not be proactive," he said. "But if they have an agent that writes a lot of business for them and comes in with an idea that makes them more efficient and can bring in more business, they will listen."
To take advantage of the new possibilities, Maloy got his father to sell off the family business. He then formed Insurance Revolution Inc. (www.insurehightech.com) to concentrate on high-tech clients.
Electrifying Forms
Since it's an uphill struggle to get all the carriers to agree on a single application form, Maloy decided to jump-start the process by streamlining the communications with one of his carriers, St. Paul Cos. in St. Paul, Minn. The first step was to simplify paper forms and turn them into XML fields to be used in online forms and electronic data transmission. This part will be up and running by next month, he said.
Meanwhile, Maloy is working with his other carriers - including American International Group Inc. (AIG) in New York, Atlantic Mutual Cos. in Madison, N.J., and four others - to add their requirements to the system.
"Once we get it to three or four carriers, we start to pilot with other agents," he said. "Right now, we have 35 good-size agencies interested in using this platform." Though the e-commerce initiatives get the most attention, it's the improvements in the back-office processes that are driving the industry to the Internet.
"Everyone focuses on the sexy sites, the graphics, the portals," said Scott Alexander, AIG's chief e-business officer. "But below the water line are the operational efficiencies, increased data quality and transfer, multiple system connectivity. . .. That's where the opportunity to really affect the bottom line is."