“Know your customer” may well be the mantra of the 21st century. Consumers are becoming more sophisticated and are placing greater demands on agents and their carriers. With the right balance of technology and personal attention, insurance companies can achieve a competitive edge in servicing their customers through an enhanced understanding of consumer expectations.
In 1998, Vermont-based Co-Operative Insurance Companies was faced with a download challenge of sending personal lines policy detail and proprietary accounts receivable information to its 43 agents. Using an open Internet Protocol solution for conveying data such as spreadsheets and reports, Co-Operative was able to accomplish both goals. In April 1999, the company implemented the download of personal lines policies to its agency force.
In a survey conducted by Cyber Dialogue, an Internet database marketing company, 80% of Internet users who carry healthcare insurance said they would manage their health benefits online, if given the opportunity. Up to 78% are interested in managing their benefits through an insurance carrier’s Web site. Of the estimated 10.3 million Internet users who anticipate changing their insurance coverage within the next year, 37% would be “very or somewhat likely” to switch carriers in order to manage their benefits online. Furthermore, of the Internet users surveyed, 67% would use the Internet to check insurance coverage, 40% would like to file claims online, and 56%would like to check claims status. Despite the fact that 90% of all Internet users have health insurance, insurance carriers have been slow to develop online communications tools. Only 8% of insured Internet users are actually their insurance company’s Web site, and 68% are not even aware of whether or not their insurer has a Web site.
Role of Agent in the Internet Age
While few predict that the Internet will sweep away all traditional sales and distribution roles, new technology is focusing a much harsher spotlight on the value all players bring to the distribution chain. At a recent Technology@Work conference, participants shared their views on how they are enhancing their value to remain competitive and meet the demands of a rapidly changing insurance market.
“The Internet is a conduit. It’s a sales opportunity, a way to communicate, and it’s a part of our lives,” said one of the participants. “Each generation is more engaged in the Internet than the one before. It’s important to our survival to be involved with this medium. We see it as a challenge and an opportunity.” He mentioned that his company employs 75 people and provides commercial, personal and employee benefits. Currently, the agency utilizes the Web for online interactive quotes for auto and its next step is to bring this offering live and provide a chat line for its customers. “It’s all about the customer,” he added. “Today, customers are in charge. Our vision is that we are going to be manned 24 hours a day. We’ll be on the customers’ time not
ours.”
Another participant agrees that a business focused on customer service is essential to survival. “We have a place in the marketplace as agents,” he said. “Value-added service is the key.” In 1996, his insurance agency developed a website which, while at the time was not interactive, was a strategic step in developing a presence in the online world. Now, the agency has some interactive offerings, which enables its customers to communicate with agents via e-mail.
It was noted that some agents are ahead of the game in automation compared to some insurance carriers. We believe part of the stagnation in the insurance industry to move toward electronic business is the concerns insurance carriers and agents have about security and their ability to invest large sums in their own internet applications.
“We have first hand experience with security concerns,” said the president of an insurance agency. “With one password for the agency to get into a company, somebody can leave but still have access to data via the password.” Whether it be to protect against security breaches or to enhance agency/company interface, new technology is being developed to address these challenges that will enable insurance agents to interchange their roles in addressing both their traditional and electronic customers.
Insurance Agents & Technology
While online insurance purchasing is still in its infancy, many agents are taking an interest in leveraging the Internet as a useful tool. Some agents view the Internet as a threat, but the majority sees possibilities for marketing and selling to large groups, as well as improving service with rapid online communications. By using the Internet as a sales tool, agencies can provide customers with fast, secure service for their policies, 24-hours-a-day, seven-days-a-week.
Many Internet tools are well established and can easily be leveraged for the insurance marketplace. These include websites, search engines, links, banner advertisements, electronic mail and discussion lists. The vast majority of agents are already communicating electronically with insurance carriers. Only a small percentage of agents said they do not communicate electronically. The majority of agents is connected, or is getting connected to the Internet. Many link up to use e-mail and tap the vast information resources of the World Wide Web.
Agents are currently using the Internet primarily to gather information. Smaller percentages are actively going online to market products and services and to generate sales leads. Many agents have also realized the value of connecting internally and have installed local area networks (LANs) at their business sites. Novell appears to be the most popular choice for this purpose.
Information is essential to an insurance agent’s ability to conduct business. In an era where information travels at light speed, more demands are being placed on agents to provide quick, responsive service to customers. To keep pace with the rapid and profound changes within the industry as well as those within the electronic marketplace, agents require enhanced communications tools to exchange information with their carriers and customers.
The role of the insurance agent will likely continue to evolve as an advisor to consumers. Providing additional information to what a consumer may find on a carrier Web site will be essential to building consumer trust in the online market. The agent will also need to remain focused on meeting the needs of “traditional” consumers, which will likely continue to represent the majority of an agent’s customers. Although the needs of online and traditional consumers may be similar, agents’ outreach to the two groups will differ. Agents typically have something in common with their traditional customers. For instance, the customer may have been referred by a common acquaintance or both agent and customer may reside in the same town. These associations serve as the foundation to a business relationship built on trust. On the other hand, it is unlikely agents will have any common denominator with customers that were directed to the agent by a carrier’s Web site. And this new business from carriers to agents is likely to grow.
Electronic commerce has a lot of explaining to do
Everyone has information in their in-house systems that can be understood, but confusion starts when you begintrading that information with your business partners. A data dictionary eliminates this confusion because everyone knows what the data means. As new technologies evolve and new requirements develop, there’s a need to have all the business knowledge available in a format that’s more accessible. Choosing the right tool for the dictionary will be one of the most challenging parts of the whole project. The tool picked to capture that knowledge will have to be simple enough to learn quickly, but at the same time, flexible enough to feed new technologies that we can’t imagine today.
According to The Tower Group, a research firm based in Needham, Mass., information technology investment in property and casualty insurance grew at approximately a 4% annual rate over the five-year period ending in 1998. Spending is expected to reach $11.4 billion in 1999, the firm says.
The insurance industry is gaining ground on the Internet, according to a recent website study. In just six months, the number of carriers offering electronic feedback forms for customers has soared from 25% to 62%. In addition, 55% of carriers now provide interactive e-mail for their customers, compared to just 29% revealed in benchmark Web site study completed in February 1999.
Imagine turning on your lawn sprinkler or lights from your PC at work. What may seem like just another clip from a television cartoon is no longer farfrom reality. Trends in computing will continue to make daily activities more convenient, whether they be where we work, live or play.
“As we move between tasks and environment we’ll be able to maintain continuity,” Roger Dudley, vice president and general manager of AT&T Global Network Services Americas. “Every device is going to have something in it. A whole line of appliances with intelligent embedded devices such as irons and washing machines, for instance, is being made available.”
Advances in networking technology are providing every insurance company the
opportunity to improve the core of its business. Today, technology has the power to redefine the entire customer experience, from information seeking through ordering’ delivery and support. This will certainly make the need for insurance companies to re- engineer business processes to reap the benefits of technology.
Contextual computing would extend the reach of the digital world to a much broader range of access points. For example, a driver could use commute time to catch up on e-mail and personalized news through an in-car system with speech synthesis and agents. Spontaneous computing is also on the horizon. Work we do at work at home or the office will be more seamless than it is today. For example, VXML, or voice extensible mark up language, will enable an individual to use any type of phone to access an intranet or extranet, and through interfaces, pull data that today can only be accessed from a personal computer. They will be wired wireless or into an infrared connection. They’ll have access to information anywhere, anytime.
In settling an insurance claim, a claims adjuster could use a personal handheld device, which has a video-plugin. This device would allow the individual to film the damaged auto, complete an assessment and report the assessed value of the claim.
Voice, keyboard or computers will foster spontaneous and continuous information. These advances will open up opportunities for productivity. Small business will look just like a big corporation because it will have access to the same types of information.
Network capability is a must have for insurance companies. It will enable companies to take technology and apply it to all insurance processes. This, in turn, will bring reduced cost of operation and more creative applications and services to the marketplace; all of which will lead to a higher level of customer satisfaction.
When customers have increased computer capabilities, their demands are likely to soar. As companies step up to make customers’ lives easier and meet these growing demands, they will gain customer loyalty.
Many experts are predicting a dramatic growth of electronic business within the next five years. Although this offers many opportunities for insurance companies to broaden their market share, it also brings many challenges. The primary barrier to expansion on the Internet is the lack of privacy and security.
Insurance companies are not early adopters of technology, and in order for insurance business to be conducted full scale on the Web, companies have to be convinced transactions are secured. The ability to do business with an insurer over the Web is going as fast as it possibly can today. The problem is that people don’t understand the risks with information being transferred between agent and carrier. If an incident occurs, it’s going to have a chilling effect. Those companies that make sure their electronic communications are secure will be the winners in this game.
Everything provided between a company and agent is considered sensitive, and every company has a tremendous amount of guidelines they have to meet everyday, whether it be legacy or Internet. It’s not the security of just the data - people may want to sabotage your entire company. Not many companies are prepared for this. It is hoped that the industry will be prepared with proper security measures.
There are many issues of identity, confidentiality, privacy and trust, blocking the insurance industry from realizing the full potential of the Internet. Responding to this challenge requires the introduction of an industry-wide e-business security trust model that utilizes Public Key Infrastructure (PKI) to provide digital certificates to authenticate users and protect the integrity and confidentiality of data. The process of insurance transactions can be much more efficient by doing it entirely electronically using digital certificates that will allow you to issue a legally binding insurance contract over the Web.
Insurance and the Internet Economy
Information technology is at the core of virtually every aspect of business. Are you using technology to drive growth and profitability? In today’s net economy, the fundamental measures of business value are being challenged. Bricks-and-mortar companies in nearly every industry are facing challenges from start-ups that bear little resemblance to traditional ways of doing business. For the insurance industry, companies capitalizing on new business models, powered by new technology, can possess alternative ways of reaching and servicing customers effectively.
Companies within the insurance industry are undergoing a transformation as they embrace e-business. They are leveraging Web technologies to reduce costs, improve operations and broaden their markets. However, issues of identity, confidentiality, privacy and trust can keep the insurance industry from realizing the full potential of Internet technologies. To succeed, traditional companies must not only adjust to new technologies, but learn to exploit them to increase sales and improve customer service. Yet, this can be a daunting task. Insurance companies face tough choices about how much to invest in still-emerging technologies with huge up-front costs, and profits that remain only theoretical. In addition, the insurance industry is expected to report changes in their policies electronically.
Internet Consumers are coming to Online Insurance
Consumers are becoming increasingly comfortable with purchasing products and services over the Internet. There has been a dramatic increase in the number of consumer goods ranging from books to CDs purchased online which is inspiring numerous vendors and service providers to offer even more. As with all new things, online retail will soon become old hat for consumers and they will look for new opportunities.
The next logical steps consumers will be taking in online purchasing will be banking and insurance. Simultaneously, as retail purchasing becomes more frequent among veteran Internet users, more non-Internet consumers will be attracted to doing business online. And so the surge of Internet users will continue.
The level of those interested in buying consumer goods is climbing. Sixty-one percent of consumers expressed interest in purchasing consumer goods online, compared to 50% one year ago. This is notable among most age groups, in particular the 18-34 age bracket. The number of consumers interested in online banking is also significant (43%), but still has room to grow. In fact, the survey points to a decrease among all incomes and age groups who are less interested in online banking than they were a year ago (44%). Those between the ages of 25 and 34 are most likely to be interested in banking (55%), while those over 55 are least likely to be interested. Security factors may be one of the major reasons consumers are still hesitant about managing their bank accounts online.
Security, as well as the complexity of insurance products, may also explain why consumers have been slower to embrace insurance purchasing online. Twenty-six percent of consumer respondents said they would be interested in purchasing auto or homeowners insurance online. This number may not be as high as those consumers interested in consumer goods since insurance is not a commodity and it is not tangible. To add to the complexity, insurance agents need to be licensed to sell insurance and there are different rules that need to be followed in different states. And the Internet doesn’t stop at state lines. Insurance carrier and agent Web sites must take this into account in order not to produce quotes for ineligible prospects. This illustrates the major difference between providing a contractual service over the Internet as opposed to consumer goods. Nevertheless, the strong interest in purchasing consumer goods indicates that banking and insurance will be the next wave.
More retailers offer products on the Internet than in previous years. The increase in the availability of online consumer goods has piqued consumer interest to browse and purchase products online. Findings from IVANS survey indicate this trend will continue and consumers will begin to explore other areas, such as insurance, to a greater degree. As the insurance industry “catches on,” it must be prepared for the onslaught of future Internet consumers.
The insurance industry can learn some lessons from its financial services counterparts. The financial industry has been somewhat quick to jump on the Internet bandwagon. Charles Schwab provides a perfect example of the curse of success. The company wanted to expand its reach and began offering stock transactions online. Consumer response was overwhelming. It was so overwhelming that the technology infrastructure Schwab had established was not capable of responding to the demand. Today, Schwab processes more than four million transactions online a month and it is struggling to match its technology infrastructure with meeting customer demands.
Insurance companies can learn a lot about preparing for e-commerce from Schwab’s experience. Consumers must feel confident that the “electronic” company they are doing business with is secure and reliable.
However, insurance transactions are more complex than buying consumer goods and managing a bank account on-line. Consumers bank and purchase goods on a regular basis; many conduct these tasks daily. As these functions move online, consumers become comfortable with the medium quickly because they are buying goods or banking online regularly. Insurance, on the other hand, is an infrequent transaction. Most consumers purchase auto and homeowners insurance once a year and rarely file claims. In addition, most insurance companies do not yet even have the capability to conduct any transactions online.
Securing Consumer Trust
In order for e-commerce to truly be effective for the industry, consumer trust must be secured. The smallest violation of customer’s trust would be devastating and could destroy the industry’s history of credibility.
The trust that is today gained from the personal attention of insurance agents will need to be strengthened by sound e-commerce security architecture throughout the insurance distribution system to serve the new e-market. As more consumers come online, more information will be exchanged between agents and carriers.
With the sophistication of computer hackers, companies are more likely to be vulnerable than consumers to security threats and are at greater risk for losing consumer trust. For example, if a hacker obtains information on jewelry from a consumer’s homeowner’s policy, the overall loss may be minor, but to the consumer it is huge. Such breaches in security can destroy an industry’s credibility. A common, security solution that involves Public Key Infrastructure (PKI) is one of the steps the insurance industry can take to ensure consumer data remains protected. By issuing and verifying digital certificates, PKI enables data to be securely and privately exchanged through a trusted authority. As the industry moves from a paper-based operation to electronic, customers can be afforded increased efficiency, but they need the confidence to send proprietary information over the Internet.
Consumer Education
The insurance industry also needs to address the intellectual vs. emotional phenomenon. Even though consumers may hear about the convenience of online purchasing, their habits may be too difficult to break. That may explain why the younger generation, 18-34 age group, are more likely to explore conducting business transactions online in all categories. They have grown up with computers and are generally more comfortable with the new medium. The computer is relatively new for older generations and they may have more trouble making the transition from the traditional ways of conducting business.
According to a Pre-Teen Caravan survey conducted by Opinion Research, 95% of pre-teens ages 6 to 11 say that they use a computer at either home or school, while 62% report usage both at home and at school. Over 55% of pre-teens say that they use the Internet. Internet usage increases as the kids get older, 73% of children ages 9-11 report using the Internet (compared to 37% of 6 to 8 year olds.) Also, going on-line appears to be slightly more common among boys than girls. While 59%of the boys interviewed say they have used the Internet, only 50%of the girls say they have.
Access to the Internet
More consumers (42%) are surfing the Internet at home compared to only 29% in 1998. More people in all age groups have access to the Internet at home. The survey found that the more educated a consumer is, the more likely he or she will have access to the Internet at home.
Personal attention is a key indicator for insurance companies. Although the Internet provides an “invisible” space, customer service cannot be ignored. In fact, the most successful websites on the Internet are those that provide a high level of service to consumers. For instance, calls to Federal Express’ 800 line have decreased since the company began offering its services over the Internet. However, the company didn’t put up a cyber-wall between itself and its customers. It ensured customers that help was still just a phone call away. If a Federal Express customer has a problem that can’t be solved online and the problem needs immediate attention, the company’s call center is ready to help.
Since insurance can be a complex issue, it is understandable that personal attention would be the number one reason why consumers are hesitant to file an insurance claim online. Unlike buying a consumer product, there is not as much satisfaction in filing an insurance claim. A claim indicates that there has been an accident or a burglary, for example. Perhaps this adds to the need consumers have to interact on a personal level with an agent. The need is more urgent. Personal interaction provides a comfort level that someone is actually there who understands and can guide them through the transaction. As insurance companies increase their education outreach, more consumers may feel confident to submit claims online.
As more people become less wary of conducting transactions online, the more transactions there will be, and this includes insurance. Therefore, insurance companies must ensure consumer loyalty is protected by tightened security measures that also include a personal touch.
Although insurance can be a complex transaction, less than 10% of all consumers think filing an insurance claim via the Internet would be too complicated. This finding indicates that Internet consumers are open to new ideas. They just need someone to show them the way.
E-commerce is more than broadening a market by offering products and services via online technology. Personal attention, consumer education and consumer confidence in online security are essential for insurance companies to realize the full potential of the Internet. Consumers are more sophisticated and are placing greater demands on agents and their carriers. Nontraditional sources of insurance are increasing, and it is more important than ever that insurance companies secure their niche in the e-market.
Investment in sound technology is one small corner in the ever-expanding world of the Internet. Indeed, consumers will always want alternative ways to communicate whether it be a phone call, e-mail, regular mail or via the Internet. But whatever the technology, it cannot replace human contact. It is the right balance of technology and personal attention that will provide insurance companies an online competitive advantage.
Healthcare and Technology
The true value of electronic commerce in the healthcare industry has long been blocked by security concerns and the fragmentation of the industry itself. But now, driven by the call for reform and the need to stay competitive, the healthcare industry is finding new ways to fulfill the potential of information technology.
Healthcare has long since lagged behind other information-intensive industries in IT spending, however, that trend is expected to change in the next couple of years. Increasing member demand for service quality has heightened the need for healthcare organizations to improve quality of clinical care and quality of information they provide.
In a market study conducted with senior information systems executives of healthcare companies throughout the United States in 1999, it was found that 59%of the executives interviewed say that the public Internet is a viable network for exchanging mission-critical information with business partners, and nearly half feel that the public Internet is a viable network for exchanging mission-critical information with consumers. Clearly, healthcare companies are recognizing the value that Internet technology can bring to their organizations.
Obstacles
It is true that privacy and security are the primary barriers to healthcare organizations expanding the use of Internet-based technology. When dealing with sensitive material such as patient records, security should be a concern. In general, healthcare IT executives say that security alone should not be a barrier to realizing the benefits of Internet-based technology. The industry needs to define common security architecture for organizations to follow, so that systems can be modified to insure security will not hold back the vast improvements technology has to offer.
Current and Future Uses of Intranets
An Intranet is defined as an internal network that uses browser-based applications. Over half of the healthcare organizations surveyed are currently using an intranet. In the next five years, that number is expected to grow to an astounding 77%. Healthcare intranets allow easy access to information throughout the organization. Allowing information to be accessed in a client server environment has made healthcare Intranets valuable tools for sharing news and information, like technical news or policy changes, and for human resource applications.
And, healthcare companies have even bigger plans for intranet applications in the future. At least nine in ten organizations that currently have an Intranet indicated that they would use their Intranet for human resource applications, knowledge management applications, or training applications in the future.
Current and Future Uses of Extranets
The potential for extranets in healthcare is enormous. An extranet, which electronically connects communities of users, used for communicating with partners in the delivery network could drastically reduce the time spent on eligibility verification and authorization. Processes that today take hours can be reduced to seconds when every trading partner is electronically connected. This is the level of service today’s demanding consumers expect. To the consumer it is irrelevant where the information exists, and bureaucracy in the delivery of care is an inconvenience.
Connecting all parties of the delivery network is major service improvement, improving not only internal processes, but overall customer satisfaction. The majority of health companies currently using an extranet are using it for eligibility verification and claims processing. These functions leading to eliminate paper handling are the primary benefits to extranet usage.
What the Future Holds for Technology in Healthcare?
In the next five years we will see a major transformation in the networking landscape of the healthcare industry as more companies invest to improve their infrastructures. Without comprehensive process-oriented information exchange systems, healthcare organizations’ ability to compete in an increasingly information intensive environment will diminish. In a business where the majority of the day to day activities are related to the capture and manipulation of information, the migration to an improved information exchange system is necessary to reduce the cost of sharing and distributing data.
Although the Internet offers incredible opportunities for electronic commerce, it is clear that consumer demand for online products and services varies widely depending on the industry and the complexity of the transaction. When it comes to purchasing insurance, consumers prefer the human touch, according to survey findings. Although consumers are interested in purchasing goods and certain services on the World Wide Web, there is a distinct lack of interest in conducting insurance transactions online.
The insurance industry still has some way to go in convincing consumers to buy or submit policies and claims online. Only 6% of Internet users are seriously interested in purchasing insurance online. However, half indicated that they would be comfortable submitting their claims electronically if their own insurance company or agency started an electronic claim submission program. Of the 47% who are not interested in filing claims via the Internet, 50%said that they prefer more personal attention, 34% have security issues and 8% say it might be too complicated.
The survey results reaffirm the value of independent insurance agents who provide the personal attention respondents say they prefer. This preference may be a result of the significant individual variables involved in insurance purchases which often involve deeper thought processes that affect long-term, life decisions.
The survey findings relate to the three major steps needed to be taken by consumers to facilitate electronic commerce in the insurance industry. First, the survey examines the level of Internet access at home. A willingness to purchase insurance online is examined next. Lastly, respondents were presented with a hypothetical situation of their current insurance carrier or agency providing the ability to submit claims online. Each area produced some differences among gender, age groups, household makeup and income levels, and education.
There are many debates over whether or not the Internet will be the primary marketplace for insurance sales and transactions in the future. While the survey reveals that consumer preference for conducting insurance transactions online ranks low relative to buying goods and banking online, it is expected that this will gain momentum in the near-term.
Today, a Web presence for insurance companies and agencies is critical. At the very least, the Internet provides excellent opportunities to build new brand awareness. And, at the leading edge, it offers an entirely new way to provide-and enhance-customer service and sales. While many companies and agents began Internet initiatives with basic, informational sites, it is important that they plan for the next phase of online commerce now.
Transactional sites will be the key to the future for many companies and agents, whether they are designed to actually sell policies, service customers, or provide a higher level of information, marketing and consultative selling to new markets. A quick scan of the industry reveals that leading companies have many interactive applications under development and in use, including application submissions, first report of claims, policy updates, rate quoting and sales.
Insurers are looking to technology for competitive advantages, but their chances for success will be slim unless they are culturally inclined to react to and absorb new applications where they fill strategic needs.
There are several examples of insurance companies that are making better use of computer data and high-speed telecommunications to bolster profitability.
A Los Angeles-based Farmers Insurance Group of Cos., to improve its underwriting profitability analysis, is performing “micro-segmentation” of its auto insurance customers, as opposed to the more common approach of looking only at large pools of drivers for patterns. The micro-approach is allowing Farmers to identify more precisely the risk probabilities of its customer base and change the pricing accordingly.
Another life insurance group, is using data-mining techniques to generate prospect lists for its independent agents via an Internet Web server. An agent can put in a ZIP code, the type of customer desired, and the type of products to be sold. The query generates a list of potential customers in the agent’s territory, based on information the group has screened for the best prospects. To make this facility work for the group, the insurer sets certain feedback requirements for the agent to maintain access, which in turn helps the insurer gather additional useful market intelligence.
E-business is not just about opening new distribution channels, but making the existing ones more efficient and more profitable. Another insurance company, for example, is using Internet technology to produce what is being called “just in time” information capabilities in its disability insurance operations to cut the amount of time it takes to get an injured worker back on the job. A case management worker can now work simultaneously with a human resources professional at a company on the same forms on their personal computers to fill out and execute the paperwork faster, eliminating the need to send faxes back and forth.
Yasuda Fire & Marine Insurance Co. in Japan sought help from a specialized group to use digital cameras to streamline the auto-accident claims adjusting process. The Tokyo-based insurer wanted to eliminate the time it takes to develop and mail film, but they didn’t like the vulnerability of digital images to tampering and fraud. The solution was to impose an invisible watermark on the image that would show not only whether an image had been altered, but exactly what part of the image was doctored.
Tremendous Uncertainty
The insurance industry has been leery of engaging in online insurance sales transactions because they are uncertain about the implications of such activities, conducted within a regulatory framework that when it was created did not envision the emergence of the Internet nor the issues it raises. There is tremendous uncertainty regarding how certain on-line activities will be viewed and treated under the current regulatory system.
One major impediment to on-line insurance sales is the absence of legislation all over the world recognizing the validity of digital or electronic signatures. A number of countries have enacted legislation permitting the use of digital signatures, although its scope often applies only to communications with public agencies.
The growth of e-business is staggering - predictions from organizations such as Gartner show growth rates exceeding 100% per year into 2003. Accordingly companies within the insurance industry are undergoing a transformation. They are also beginning to leverage Internet technologies to:
• broaden their markets by extending their reach externally to a variety of business partners;
• enter new markets through collaborations or expanded services made possible
with Web-based interactions;
• increase employee productivity with easier access to corporate information and services; and
• reduce costs through improved operations that integrate traditional information systems into e-business designs.
As companies discover the benefits of Web technologies, they also uncover the corresponding challenges. Exposure of valuable corporate systems and information to an ever-growing population results in increased risks and a new dependency on security. Security becomes a protector as well as an e-business enabler.
A GIGA Information Group study shows that the top two barriers to adoption of electronic commerce in business are lack of security/trust, and concerns about privacy. User IDs and passwords are prevalent in applications today.
When deploying e-business security solutions companies need to trust that:
• the person or server they are communicating with is who they say they are (authentication); proper authentication also facilitates the ability to identify whether a user has permission to access information (access control)
• the data traversing the Internet or VPN is kept confidential, and cannot be made available to unauthorized entities (confidentiality)
• the data traversing the network remains in tact and is not altered or destroyed along the way (data integrity)
• an individual cannot deny that he or she sent a message (non-repudiation).
One of the most well-known security measures today is Public Key Infrastructure (PKI). Already employed in many enterprises worldwide, an industry Public Key Infrastructure provides policies and practices to assure the ability to trust the technology (digital certificates) that has been deployed to employees or business partners.
Examples on Insurance Industry Security Needs
Requirement: Protect Reputations
The sale of insurance products is largely dependent on the degree of trust that the customer places on his/her chosen supplier (agent or company). According to executives in the industry, the key requirement for an Internet security solution is to properly protect the information entrusted to insurance industry participants — carriers, agents, brokers, insurance information providers and other trading partners. Even information that is not considered highly sensitive, such as customer address or a phone number, must be protected. The unauthorized disclosure of any client information would be devastating to a company’s or agent/broker’s reputation. And since insurance companies typically deal with more than one agency, there are similar issues related to the protection of agency information. Properly implemented security technologies can contribute to an insurance company’s ability to deploy new ways of doing business.
Requirement: Improve User Identification and Access Control
Access to a company’s data and application is based on identifying the user. New security measures must correctly match the user with the proper access to programs, products and information. Many in the industry feel that the current user ID and password process is outdated and inadequate. Help-desk personnel say that the number one problem call is password resets, due to users’ having too many passwords to enter and too many passwords to remember. The proliferation of system passwords often results in users posting IDs and passwords next to computers, or choosing easily remembered (thus easily hacked) IDs and passwords.