By STEVE MARLIN, a writer who specializes in technology issues
At a time when many software companies are having a hard time differentiating themselves from competitors and unifying disparate product lines, Aon eSolutions is noteworthy for being able to execute on its vision of being a one-stop shop for risk management and claims processing.
It's completed the integration of Valley Oak Systems, a provider of claims-processing software for corporations, third-party administrators and insurers, into its broad suite of risk management products. The market appears to have embraced it: In 2008, eSolutions captured 140 new clients, representing 24 percent revenue growth over 2007.
Target Corp. has been using Aon's RiskConsole for six years for electronic reporting of safety incidents involving employees and customers, as well as any incident involving property damage.
It also uses RiskConsole to track and manage product safety and recall programs. "It's been a fabulous relationship," says Diane Howden, safety integration process leader at Target. "The ability to customize and flexibility were the main reasons we chose to go with Aon."
"Prior to implementing RiskConsole, it could take 40 minutes to report an incident. With electronic reporting, we can report in 15 minutes," Howden says. Data integrity is also much improved. "We can analyze data to identify cause and effect relationships," she says.
Valley Oak's flagship product, the iVOS claims system, integrates claim management, medical bill review, policy underwriting, case management, billing, events management and other related functions for multiple lines of insurance.
RiskConsole empowers clients with risk-management intelligence to make strategic business decisions. They can identify high-risk, high-priority areas to develop preventative measures, reduce premiums by submitting more complete and accurate information, and streamline the renewal process by pushing data collection to the field.
The integrated RiskConsole-iVOS platform provides an enterprisewide view of risks and exposures, plus improved claims-handling efficiency; fewer high-cost, high-frequency claims; and enterprisewide accountability for claims and risk management.
Aon eSolutions belongs to a class of companies that provides software for risk management, policy and claims administration, compliance management, regulatory reporting, billing, and maintenance services to carriers, self-insured companies, and third-party administrators.
The software improves the operational and financial performance of insurers by improving the processes of risk-acceptance and loss-mitigation--enhancing risk selection, automating underwriting, reducing claims severity and cycle time, increasing efficiency, reducing expenses and improving outcomes.
"Valley Oak has one of the leading positions in the market for claims and risk management reporting and analytics used by self-insured, TPAs and pools," says Donald Light, senior analyst at Celent.
Valley Oak is taking advantage of Aon's distribution network and its existing relationships with insurers and third-party administrators to grow and expand. "By leveraging the distribution network of Aon, we're able to make a push into larger companies, as well as insurance carriers," says Valley Oak CEO Randy Wheeler.
The company's newest product, iVOSc (for iVOS Carrier Edition), is aimed at property/casualty insurance companies. The core modules, which include policy administration, claims management and billing, enable insurers to transform business operations and modernize technology platforms.
"It's an interesting example of a technology company that grew up in one market crossing over to a related but separate market," says Light.
The Valley Oak acquisition allows Aon to offer clients a broader range of claims management tools and capabilities. "There are lots of inefficiencies in the property/casualty insurance process, from underwriting, to administration, to billing," says Kathy Burns, CEO of Aon eSolutions. "We view iVOS as an operational platform that improves best practices and enables companies to build intelligence into the system."
Mission-critical information and best practices tend to reside in the minds of insurance professionals or in paper-based files, unable to be leveraged across the entire enterprise. "Working closely with insurance companies, we've engineered insurance intelligence--that is, insurers' unique knowledge and procedures--into the product," says Wheeler.
iVOSc represents "a huge push into the carrier space, based on leading-edge technology plus the knowledge and understanding of the needs of carriers," Wheeler says. Valley Oak implementations in the insurer market have more than doubled over the last year.
The company's use of advanced technology such as Web services enables insurers to mix and match software components to create a system tailor made for their environment.
"They've built iVOSc using the Java J2EE framework, which is a modern tech platform," says Celent's Light. "It's easier to maintain and integrate with internal apps or data sources than other solutions that were written in other languages."
The product is also "noteworthy for lots of usability features for everyday insurance processes," says Light. "You can do a lot of personalization that makes it easier for claims adjusters to do their job quickly."
The iVOSc platform includes component sets that IT departments can use to customize the product. Developer Set provides IT departments with maximum system control. Integration Set provides a complete set of connectors to enhance system integration. Rules Engine Set offers both embedded and third-party rules to automate workflow. Reporter Set enables insurers to report on and analyze data to improve profitability, growth and performance.
"The systems are built to be highly configurable for those customers that have strong in-house IT support," Burns says. For those that don't, Aon can perform the customization for them. "We take a consultative approach, employing best practices to configure the system to meet their needs."
For Connecticut Interlocal Risk Management Agency (CIRMA), which provides workers' comp, property/casualty and automobile coverage to Connecticut municipalities, iVOS has "provided a way to leverage IT instead of being hindered by IT," says Bruce Wollschlager, president and chief executive officer at CIRMA.
In workers' comp, CIRMA previously had two separate systems--one for claims management and a second for policy administration. The result was separate silos of information and a manual, spreadsheet-based approach to underwriting member policies.
With the adoption of the iVOS policy administration and claims management systems, CIRMA has achieved an integrated IT platform that enables data integration, sharing of information and a high level of automation.
From a management perspective, iVOS reports provide real-time risk intelligence to effectively manage CIRMA's book of business, replacing an archaic system that relied heavily on manual processes. As a result, the company is able to maximize its ability to analyze risk for optimal member plans, retention and market growth, as well as meeting financial objectives.
CIRMA's workers' comp premiums are based on payroll and an experience modification factor. With iVOS, collecting and auditing member payroll is now seamless, with data electronically uploaded into the system and iVOS automatically pulling together real-time claims and policy information for actuarial reports.
Using the system's sophisticated rating engine, CIRMA automatically computes each member's experience modification factor and calculates premium rates. The rating engine is designed to allow insurance carriers and risk pools to plug in their unique rating algorithm or premium calculations to automate underwriting and pricing.
iVOS has enabled CIRMA to handle an increased volume of claims without jeopardizing performance or requiring additional staff. Automation and workflow management tools have increased adjuster productivity, allowing them to focus on high-priority tasks, such as investigations and communication rather than administrative tasks.
Streamlined operations have helped CIRMA to keep its administrative expense ratio low--at 13.6 percent, versus an industry average of 22 percent. For members, this means a larger percentage of premium dollars goes to paying actual claims and providing value-added services. "We're now able to utilize claims, risk and underwriting data to improve our core deliverable,"Wollschlager says.
The next step is to implement the iVOS policy administration system in CIRMA's liability-automobile-property line.
May 1, 2009
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