What's New in Cybertalk?

by Jean Gora
June 1999

Note: CyberTalk is a column that appears monthly in LOMA's Resource, the magazine for insurance and financial services management. To see more contents of the magazine and to see how to subscribe, click on RESOURCE. 

Executing Core Processes on the Internet

More and more Internet sites allow the execution of core insurance processes. This month’s CyberTalk reviews several of the most interesting. One—ChannelPoint—is an employee benefits Internet mall that not only allows distribution; it also allows product design and pricing. The other—Cyber$ettle—allows online negotiation and settlement of disputed claims. Travelers Insurance, one of the insurance companies that uses Cyber$ettle, also allows claim filing through its own Web site.

The sale of employee benefits products, particularly health insurance, is typically complex. Each sales proposal may require the analysis of a complex set of variables. Turn-around time for a proposal can be as long as three to five weeks.

ChannelPoint automates important facets of the process and makes them accessible via the Internet. It can accommodate the sales of all types of insurance including health, life, disability, dental, vision, and property/casualty insurance. Backers of the site include Andersen Consulting and Intel plus an assortment of venture capital firms (Capital Z Partners, Mohr, Davidow Ventures, Pacific Venture Group and Validus Partners). It already has a group of major health and other insurance customers including CAREINGTON International, Guardian Life, HIP Health Plans, Physicians Health Services, United HealthCare, Foundation Health Systems, USLife, and Regence Blue Cross/Blue Shield. In addition to Andersen Consulting, ChannelPoint has the following major business Partners: First Consulting Group, KPMG Peat Marwick, and USWeb/CKS.

ChannelPoint

ChannelPoint has two primary sections, ChannelPoint Commerce, and ChannelPoint Insure.

In ChannelPoint Commerce, the company has positioned itself as an Internet exchange provider that delivers products furnished by insurance carriers to multiple retailers or directly to end customers. It can support retailers including insurance brokers, banks, other financial institutions, insurers themselves, or even Web portals. It can accommodate work site marketing. It also plans to function as an Internet insurance mall the way InsWeb and InsureMarket do, but it has not yet added that functionality to its Internet site. In addition, it will allow various retailers to offer its services through their own sites or Internet store fronts developed by ChannelPoint but carrying the retailer’s brand.

ChannelPoint Commerce does more than route information between retailers (or end customers) and sellers; it also includes its own internal smart content generation engine. That engine uses plans and policy descriptions, pricing models, and business rules to develop proposals or other content tailored to the requirements of different audiences.

A section of the service is targeted at brokers. This section allows them to automate rating, price quoting, response to RFPs, proposal preparation, and enrollment. It permits comparison of dozens of carriers with respect to policy provisions and prices. It can also make cross-carrier physician network searches using information supplied by the carriers. Carrier participation in the service also ensures that pricing and underwriting rules are up to date. The broker service also permits online enrollment of clients. The broker service begins operation in the New York area in June.

ChannelPoint also offers a service designed to support worksite marketing. It allows employers to offer their employees choices of products from multiple carriers. Employees can compare products from multiple carriers and make online purchases through the Internet. The service incorporates typical needs analysis tools. This approach reduces employer administrative costs. It also allows employees to access their data even if their positions change.

For direct sales to end customers (businesses or individuals), ChannelPoint will operate an Internet market that incorporates many of the features mentioned above. This site will enable online sales and online payments.

Carriers that supply products for distribution through ChannelPoint’s services can receive data regarding broker inquiries, sales, and buying patterns.

ChannelPoint’s Back-End Products

In addition to providing electronic commerce capability, ChannelPoint offers a group of back-end software products: Insure Rating, Insure Quote, Insure Data, and Insure Risk.

• Insure Rating enables electronic rate generation close to the point of sale. It provides actuaries with the calculations they need to price proposals and generate final rates. It enables business owners to maintain and activate various rating factors that affect product pricing. Its calculations make use of census information, proprietary rating methodologies, regulations, and industry underwriting rules. It permits the consolidation of rating systems across multiple lines of business.

• Insure Quote automates the price quotation process. It can accept incoming RFPs, scan and interpret relevant census data, and match the plans or benefits requested with the benefits package supplied by a carrier. It then rates the plans based on group demographics and faxes a proposal to the prospect.

• Insure Data automates the enrollment process, flagging missing or incomplete information so that account representatives do not have to examine all enrollment forms. It also employs Intelligent Character Recognition to read documents that are then stored in an electronic case workbook. It provides brokers with ICR-capable fax forms that enable the automatic correction of subsequent information.

• Insure Risk enables the automatic assignment of risk factors and rates on the basis of a review of group demographics, medical histories, and other case information. All relevant risk data is stored in a single database. The system is intended to decrease the turnaround time associated with case processing.

The ChannelPoint Insure system is being designed so that it can accommodate links to other databases in the future. For example, carriers will be able to link enrollment and underwriting information to a database that might offer medical advice and physician referrals to group members.

Cyber$ettle

Cyber$ettle is another service that makes use of the Internet’s ability to bring multiple parties together in ways that improve the efficiency of the traditional insurance process. Conflicts between claimants and insurance companies arise frequently. Claimants often believe they are entitled to greater benefits than their insurers do. When the insurers refuse to pay more, claimants often file lawsuits. Insurance litigation is time-consuming and expensive for insurance companies. Insurers, therefore, may be willing to settle claims for higher sums than they originally intended because they want to avoid the cost of litigation. The settlement process has traditionally been paper-based or, more recently, fax-based. Parties to the dispute file offers and counter-offers. The process is time-consuming.

Cyber$ettle, developed by two lawyers, offers an Internet-based automated dispute resolution service. Either the insurer or a claimant can initiate the dispute resolution process. The insurer files three offers. The claimant files three demands. An automated attempt is made to match an offer and a demand. If they are within $5,000 or 30 percent of one another, a match is considered to have been made, and the parties split any remaining difference. If the offer or demand differs by more than 30 percent or $5,000 in all three rounds, settlement does not occur. If the settlement offered is the same or greater than the demand, the claim is settled for the demand amount. Offers and demands that do not result in settlement are not disclosed, so that if settlement does not take place, future actions by either party are not affected.

One of the leading insurance users of Cyber$ettle is Travelers Property/Casualty Insurance. Travelers has become one of the first insurers to allow online claim filing of homeowners or personal auto insurance policies through its Web site. The claimant fills out a form on the Travelers site and submits a claim that is automatically routed to a local claim service center. A Travelers claim processor then contacts the claimant by telephone to take additional information. If disputes arise during the claim process, Travelers may make use of Cyber$ettle. According to Business Insurance (April 12, 1999), ten to fifteen percent of the claims it has referred to Cyber$ettle successfully reached settlement through the service.

The two very different services of ChannelPoint and Cyber$ettle show how the Internet is invading core insurance business processes and improving them.

See previous issues of CyberTalk in the CyberTalk Archives.

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