By PATRICIA VOWINKEL, who has worked for national media outlets for more than 20 years
For the better part of the 1970s, just getting claims data off paper files and into computer systems was a major step forward.
As companies began the transition from paper to computers, they "pulled" claims data and policy information from mainframes and reviewed it in tabular reports--often printed--but it was not particularly timely and it did not allow for much analysis.
"Until computers really took off, there were really a lot of paper reports produced and distributed," said Frank Radack, manager of the customer loss information group at Liberty Mutual. "There's all sorts of jokes that are occasionally told around here about the size and number of boxes that were needed to deliver the annual loss development reports to particular customers."
Fast forward 30 years and risk managers are now receiving critical data on a real-time basis and using data mined by today's risk management information systems to help prevent future losses, not just analyze events after the fact.
Many of these changes have been driven by both advances in technology as well as the evolution of the role of the risk manager.
"Risk managers are having to try to balance a lot," said Bill Diaz, president of CS STARS, the RMIS operation of Marsh. "They're expected to be on top of all these different things, their own internal risks, external risk, supplier risk," he said.
"Five to ten years ago, the primary focus was just pulling some claims data from a couple of TPAs (third party administrators) into a reporting system--now, there is a very broad portfolio of risks that they are trying to manage within an application," Diaz said.
This technological revolution has had a dramatic impact on risk management. The amount of information available and the speed with which risk managers can get it has helped to slash claims costs, save countless hours of work, identify cost drivers, improve safety and get employees back to work quicker.
"Through technology, we have moved from enabling, twenty years ago, a macro understanding of your insurance program and insurance costs, to using technology to really get a micro understanding of what's happening in your organization, where the costs are and how to go about reducing costs," said Mike Strietelmeier, second vice president, Risk Management Information Services at Travelers.
Additional innovations are in the works that will push the boundaries even further, providing an expanded amount of real-time and even interactive information, accessible just about anywhere via mobile devices, to risk managers as well as brokers, agents and other organizations involved in the risk management program.
Risk management information systems are available today through many of the big insurance companies and brokers as well as through other vendors. Some of the big RMIS systems include CS STARS, the RMIS operation of Marsh, Aon eSolutions' Risk Console, Liberty Mutual's RISKTRAC and Travelers' e-CARMA. Chubb also has a suite of risk management information systems, including RMIS Dimensions, Loss History Analyzer and ClaimView.
These systems are Internet-based applications that bring together data about claims, policies and properties. Early systems, however, ran on mainframes and provided only limited loss information.
One of the earliest risk management information systems was launched in 1967 by Corporate Systems Inc. of Amarillo, Texas, according to Diaz. Corporate Systems was acquired by Marsh, the parent of CS STARS in 2004.
The market got its start "based on corporate customers' need to aggregate information," Diaz said. "From the late 1960s up through the better part of the 1990s, it was really focused around this idea or need for consolidating claims information so clients could manage their claims on a post-loss basis," he said.
"Those early systems, especially out of Corporate Systems, were really designed to automate the creation of loss runs," said Eric Wild, executive director of Strategic Product Delivery at CS STARS. "It was purely reactive, post-event record keeping,"
The technological sea change really began in the mid-90s as the use of personal computers at the office became widespread and all of those computers became interconnected through the Internet. "We've moved to a point now where everything is delivered through portal technology, using browser-based access to get access to the most timely information that we can make available to our customers," said Kyle Schick, manager of customer loss information at Liberty Mutual.
These days, risk managers don't "pull" the information, but get it "pushed" to them over Web-enabled devices as soon as it's available, said Matt Carden, vice president of risk management information services at The Travelers Companies, Inc.
"They want to know if a claim just took a big turn and they want to know immediately because the information is actionable if it's immediate," Carden said. "If it's old information, there's nothing they can do about it," he said.
"It could literally make the difference between settling a claim or a claim going into litigation," said Strietelmeier.
Today's systems also go beyond "post-event" analysis. "It's not just pulling together retrospective reviews of data," Wild said. "It's now actionable information that's pre-loss information rather than being purely post-loss, post-claim," he said. "The users of the systems are using this in a predictive fashion, they're taking past experience and predicting where we're going to go in the future," he said.
Other emerging trends in risk management information systems include:
-- Increased Collaboration
-- Expanded External Data
-- More and Better Graphics and Dashboards
As the role of the risk manager has expanded, so has the number of people and organizations using risk management information systems.
Risk managers today rely on a number of partners outside of their organization to help them with their risk management tasks and all of them need access to the RMIS.
One focus is on "tying together disparate parties--risk managers working with multiple brokers vendors, insurers, TPAs, third party consultants, as well as a lot of different constituents at their own firms--to pull data together in a meaningful way so that people can collaborate and try to solve their risk issues," Diaz said.
At CS STARS, systems that once focused primarily on claims and policy data are now expanding to include information about external risks, such as severe weather, earthquakes, terrorism and geopolitical uprisings, Diaz said.
Systems are now taking information about these external threats and overlaying them on top of the traditional risk portfolios to provide a better view of how these external threats will impact an organization.
Risk managers, for instance, will get asked about the impact of events such as the recent earthquake in Chile. "If you know where your suppliers are, if you know where your operations are and the relative impact, then you can answer," Diaz said. "It's the external events that impact your risk portfolio that we find interesting, and believe will emerge as a critical component of risk analysis."
Another emerging trend is for systems to provide more and better graphics ? better charts, dashboards, mapping capabilities. These applications give risk managers a better ability to visualize trends.
Travelers, for instance, has introduced a number of different dashboards in the last few years that provide users with large amounts of data displayed in charts and graphs.
"It allows for more focused analysis," Carden said. "It's much more interactive in terms of the drill down, there's a far greater capability in terms of drilling through the data," he said.
These and other developments are giving risk managers and their organizations more information than ever before. Mapping and graphics capabilities are transforming the data from just numbers on a page into compelling charts that can provide real insights. Real-time data is providing risk managers with actionable information that can help to mitigate losses and auditing and compliance capabilities are giving risk managers information that can be used in a predictive way to prevent losses.
In risk management information systems, information equals power.
"You could argue information management is the key component to the insurance value chain," Diaz said. "If you don't have this data, how do you make any decisions?"
May 1, 2010
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