New Directions in Risk Information Technology


Major providers of software used by risk managers, insurers, and brokers have had little time to relax this past year. Leading developers have successfully re-engineered software and systems that were originally designed for individual computing platforms, including mainframes, DOS-based personal computers, and UNIX minicomputers and workstations.

Now, many of the leading systems work on a variety of computing platforms, and embody "client/server" architecture. The "client" part of these systems typically incorporate some form of "graphical user interface," such as Windows 3.1, Windows 95, Macintosh, or O/S-2. The "server" part of the systems usually operate on one or more robust operating systems, such as Windows NT or UNIX, and utilize powerful, relational "SQL" data base engines, such as ORACLE, Sybase, Informix, Microsoft SQL Server, or Visual FoxPro.

The increased power and versatility of these systems has resulted in tremendous sales growth for the major system vendors. Mary Villani, Global Director of Anistics, a division of Alexander & Alexander, reports that 1995 sales of OMEGA exceeded all expectations. Her division added nearly 100 new clients during the past 12 months. Dorn, Paradigm, Pyramid, Corporate Systems, and others all report significant sales growth.

To support new clients and increasingly complex applications, many vendors are re-designing their "help desk" support. Some are evaluating whether to use specialized search engines incorporating "case based reasoning" software to improve and partially automate help desk services. One product recently released by Inference Corporation, Casepoint WebServer, uses the Internet's World Wide Web as a vehicle for providing customers with self-service options and improved help desk capabilities.

As system vendors add staff and resources to support their growing business, they face a variety of new technological challenges. Those who utilize Microsoft Windows and Office applications as part of their system are investing time and dollars to fully support Windows 95. Other developers, hoping to bring the "paperless office" closer to reality, are working closely with clients seeking new risk and insurance applications that utilize multimedia, imaging techniques, and integration of computers with telephone, e-mail, and fax.

Michelle Bausch, Senior Risk Management Specialist for Morrison Knudsen in Boise, Idaho has succeeded in combining a variety of software modules, including PRISM and CS Knowledge by Corporate Systems, with Microsoft Excel and IBM Query 400, to streamline risk management workflow, perform cost allocations and audits, and provide graphics-enhanced management summaries. She reports, "A lot of it has been trial and error. I've worked many months to make these systems work together. We plan to further integrate by writing macros, or possibly using CS Knowledge as the driver. The accuracy of information going to bureaus for our Workers' Compensation experience mod has improved a lot as a result of these efforts. Now, our e-mods are 20-30 points lower. Improved safety, as well as timeliness and accuracy of reporting have been important factors. We're better-able to forecast, and we know how much each part of the program will cost next year- which, in our business is critical." Michelle currently does not have an e-mail address, but she will gain Internet access as soon as IBM's OS/2 Warp is installed within a couple of weeks.

Perhaps the most significant development in 1995 affecting risk and insurance is the explosive growth and recognition of the Internet as the "ultimate" client/server computing platform, from which information and applications can be accessed by virtually any computing device in the world. Once the haven of academics and technophiles, the Internet has emerged into mainstream corporate strategy as a revolutionary, cost-effective way of doing business. The economics are compelling. It is becoming readily apparent that Internet technologies will transform the way insurance is transacted and the manner in which information is shared and distributed.

There are a number of different ways in which this is happening. Electronic mail, for example, allows rapid and efficient transmission of messages between risk managers, brokers, and insurers. The cost of sending such messages over the Internet can be negligible, and is not affected by distance. In fact, the cost of e-mail messaging is as little as 1/20 the cost of fax or conventional mail. Using popular e-mail systems like Eudora Pro, Pegasus, Novell GroupMail, Microsoft Mail, and Lotus cc:Mail, both text and "binary file attachments" can be transmitted in one quick operation to hundreds or even thousands of recipients.

The ability to exchange "binary file attachments" adds an entire extra dimension to e-mail. Binary file attachments can be used to transmit and share underwriting specifications, proposals, and presentations. They can include spreadsheets, "originals" of word processing documents, graphs, databases, and multimedia or slide presentations. A number of quality e-mail products can be "downloaded" for free from the Internet, including Eudora Lite and Pegasus. The minor additional cost to upgrade to commercial-grade products often is justified by features that really matter in a corporate environment. For example, one "open" e-mail system, Eudora Pro costs under $90, is written to format and protocol standards that are available to all software developers , supports message filtering, and offers both UUencode and MIME protocols for the handling of e-mail attachments. The freeware version, Eudora Lite, which also provides the interoperability of an "open" standards-compliant system, has no message filtering, and is unable to receive the "UUencoded" file attachments commonly employed in older corporate e-mail systems. Message filtering allows for certain types of e-mail or messages from selected senders to be received automatically in pre-selected "mailboxes." This avoids clogging the general "in-box" with large volumes of mail from certain sources, such as the "list servers" employed by software user support groups or discussion groups.

Some corporate networks and value-added networks, like America Online and Compuserve, utilize richly-featured, "closed" e-mail systems, using proprietary formats that are effective for messaging within the organization, but rely on "gateways" to translate information to or from outside entities. But, according to Einar Stefferud, Chief Visionary at First Virtual Holdings Incorporated, "closed systems also present another problem. Since none of us lives in a vacuum, we must be able to communicate with others who use different e-mail systems. Communications between closed e-mail systems and our Internet example require gateways, which perform protocol and semantic content translations. Since the two sides of any gateway rarely ever embody matching [definitions], there is no possible way to deliver e-mail that has not suffered some distortion or damage in the gateway." Examples include the corruption of binary file attachments, loss of character set information, and elimination of formatting. There is nothing more frustrating than sending or receiving an important document as an attachment to an e-mail message, only to find that the recipient has an incompatible system that turns the attached document into a mass of hieroglyphics and happy faces! So, when communicating by e-mail for the first time with an organization, be sure to learn whether special "tags" or addresses are required for receiving or sending e-mail over the Internet, and try sending an attachment in both the MIME and UUencode formats as a test. This will avoid considerable aggravation, and will enhance your ability to communicate in a truly high-value manner.

Over the past few years, many of the major insurers and brokerage firms have implemented a variety of "groupware" products, such as Lotus Notes or Novell Groupwise, over proprietary local area and wide area networks. These systems combine an applications development capability, document management database, messaging systems, collaborative workgroup computing tools, and multiple layers of security. They are transforming the workflow patterns of basic business processes, and provide powerful analytical, communication, and presentation tools in the hands of underwriters, brokers, and service providers. Such capabilities are changing the role of the traditional office. Increasing numbers of professionals are able to fully interact with co-workers and clients from remote locations, home offices, and non-traditional workplaces. This often results in considerable savings of time and expense, together with increased effectiveness.

Companies that establish "Intranet" networks may be able to achieve many of the benefits of groupware products at considerably-reduced costs. The Netscape browser, for example, is being used as a simple, cheap (free) way of accessing a wealth of information available on text databases available on computers throughout the world through the World Wide Web. Many organizations are employing these tools as a way of establishing their own "Intranets" to distribute secure information among a variety of internal users, as well as to selected, password-enabled outside vendors and clients. According to statistics maintained by vendors, over 70% of all web server software sold in 1995 was for support of Intranet networks. Doug Kaye, President of Rational Data Systems in Novato, California, tells us that he was able to save more than 80% of the cost of a nationwide client's proposed wide area network, that would have used proprietary software and leased lines, by using inexpensive web browsers and Internet access instead. The acquisition of Collabra Software by Netscape in the fall of 1995 promises to bring collaborative computing tools into the forefront of Internet usage.

Carol Harrington, Risk Manager of Sun Microsystems in Palo Alto, California, is using Sun's Intranet to disseminate and update information that normally would be found in corporate risk management and safety manuals. Employees are able to get information on their desktop computers on a variety of insurance questions. Thanks to an e-mail link between the system and the Sedgwick Group, Sun's sales personnel are able to expedite the issuance of certificates of insurance and bonds they need to make bids. In most sales situations, a fast response is vital. The increased degree of self-service made possible by the internal web site helps makes it possible for a small risk management department to keep pace with a very fast-growing company.

Program Beta, a Joint Powers Authority based in Oakland, California recently implemented a custom-featured Risk Management Information System that tracks incidents that occur at any of its 64 district hospital members, in order to improve safety and improve the quality of care. "Now we can do our rating directly from the computer, and automatically produce billing forms," says Leslie Pollard, Manager of Technical Services." However, incident reports presently consist of paper forms that are submitted by each hospital, and are manually input to the Anistics OMEGA system. "We're just starting to research how the Internet or scanning technologies might be used to enter the information more efficiently. Also, we're looking at different ways in which our members can gain access to charts and management summaries on the data we manage. Perhaps an "Intranet" web page, instead of direct dialup by long distance, could provide an easy, inexpensive way for our members to view and input their information."

Octel Communications, has set up a "risk management hot line." "Our risk management department of two people in a rapidly-growing company of 3,000 must be creative and use technology in order to handle the growing volume of inquiries from within. Based on the telephony systems our company designs, we have established a 24-hour mail and faxback system," says George Redenbaugh, Risk Analyst. Internally, we also use Lotus Notes is used by offices that are on Octel's wide area network to handle requests for certificates of insurance and processing of loss reports. "As we build our database with claims data from previous insurance carriers, we hope to develop risk retention programs and do financial modeling."

The diversity of solutions to risk management problems is underscored by recent developments in e-mail technology. According to Nathaniel Borenstein, Chief Scientist at First Virtual Holdings Inc., "currently, e-mail is fundamentally a passive, one-way mechanism, where the receiver views the message and then responds to it with a new message. A technology that changes all this is 'active messaging,' in which e-mail messages include computer programs in a standardized interactive language. When a user reads such a message using appropriately enabled e-mail, the program automatically executes, performing complex interactions with the user and his or her environment." Such a method provides yet another way of managing and processing requests for information to and from companies' risk managers. An open, cross-platform language for active messaging and other e-mail-enabled applications (at the level of Notes and Telescript) is called "Safe-Tcl. It is freeware, and is available for download from the Internet address in the directory mrose/safe-tcl.

The pace of change is so rapid, that many providers of technology refer to two months as an "Internet year." Improved ways of managing old tasks seem to emerge almost daily. But cultural change takes longer. And, for those in the forefront of these developments, there's certainly not much time to relax!

Copyright ( 1996 RISK & INSURANCE. 747 Dresher Road, P.O. Box 980, Horsham, PA 19044-0980 Reproduced with permission of David Shadovitz, Editorial Director (215) 784-0910. The content herein is a portion of "The Next Wave," appearing in RISK & INSURANCE, March, 1996.

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