Editor's note: Fast-forward to 2020. China is the world's dominant economic power. Columnist Peter Rousmaniere is granted an interview with Finn Halogen, a Finnish grad-school dropout recently hired to run the claims operation of a Chinese insurer, Shuang
Peter Rousmaniere: Finn, here it is 2020, and you're the top dog at a Chinese insurance company with 15 percent of the U.S. claims market. Just five years ago, you were a grad student in "Googology" at Berkeley. Big jump?
Finn Halogen: Not really. The company hired me while I was still in school to, like, model the absorption of its American claims operations scattered in Wisconsin, Florida and Arizona.
PR: How difficult was it for the acquired companies' claims teams?
FH: Not many took our offer to relocate to our outsourcing in Albania. In two years, we laid off 75 percent of the adjusters. It was tough. But we had this claims-management business model we knew would work in the end.
PR: Tell my readers about the model.
FH: We have this system of giving injured workers what most really want--not a check but a financial plan with custom options, training and personal insurance going out decades. We treat them like customers, not like numbers or liabilities. Last year, claimant-centered revenues were triple our premium revenue from employers.
PR: So you deliver faster claims closure. What's your tail like?
FH: You're not making a pass at me, are you?
PR: No, I'm sorry. You really are from a different generation.
FH: Indeed. Hell, I'm not even into insurance that much. Between us, I barely understand claims. We just do IT better. Our administrative costs are half the competition's. Because we're so strong with IT, I see the claims industry in a completely different light. My name, after all, is Halogen.
PR: Nice pun. How did you sweep the competition solely on IT?
FH: We built the actuarial, claims, safety and medical systems in one piece. Then we hired a third of Albania's high-school graduates and taught them English. Other insurers secretly outsourced as early as 2005, but it was half-hearted. We do it right. We know, too, that the only way the market can grow is to serve the huge federal workers' comp programs. Our bid for this contract was the lowest. Shuang Li runs the entire workers' comp systems of India and Russia. It would have been embarrassing not to get the guest-workers program business.
PR: What do you hope to do as head of claims?
FH: What else? More cost-cutting and IT. Is insurance about anything else? I mean, we have expenses now down to 10 percent of premium. That's a model, the only one worth following in my opinion. Of course, it's a lot easier when the parent company in Shanghai is clearheaded about how IT and global services cut administrative costs, control losses and squeeze out the effects of--what is it called?--the insurance cycle?
PR: Yes. By the way, how's your Chinese? What do you think of the meaning of Shuang Li?
PR: It means "double happiness." After all, we are talking about a marriage between a Berkeley dropout from Finland and the workers' comp market's 800-pound gorilla, which has gobbled 15 percent of the U.S. claims market while outsourcing administrative costs to high-school graduates in Albania. Ain't that phat--oops, I mean flat.
PETER ROUSMANIERE,a Vermont-based consultant and writer, is the workers' comp columnist for Risk & Insurance®.
February 1, 2006
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