Professional Documents
Culture Documents
INTRODUCTION
The developments in IT are the working wonders in all the fields of activity. It
has become possible to send and receive information almost
instantaneously. If circulars do not reach the agents on time or doubts are
not cleared quickly, or the agent does not have details of the new plans
announced in the press, the agent may face awkward situation with the
prospects.
These problems can be totally avoided with the use of IT. Insures
traditionally have been quickly to adapt latest advances in the technology.
This is happening in the areas of IT as well.
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2. The need to evaluate the liabilities under the policies in vogue at the time
of valuation.
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These were parallel records in which policy particulars were punched in the
prescribed fields.
Premium Master Cards were utilized to account for the premiums received
and then for generating lists of lapsed policies.
2. Valuation Cards
With the advent of the micro processors, the addressograph machines along
with the adrema plates and the ‘ unit record machines’ along with the
premium master cards became redundant and went out of use. Both were
replaced by a new kind of record called ‘Policy Master’ for each policy,
integrating both adrema plate and the premium master cards. Apart from
the ease with which servicing of the policies could be rendered through
micro processor operations, the speed with which the same can be
undertaken. The speed was necessary because of the tremendous increase
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in the volume of the new business and much larger increase in the number
of service operations.
For example, LIC of India has about 13 Crore of policies. Assuming that 20 %
of these are:
Under salary savings scheme, i.e. about 2.4 crore, and another 20 % in paid
up condition, there remain approximately 8 crore policies under which
premiums are received by yearly, half-yearly or quarterly. Usually, 50% are
under quarterly, about 20% under yearly and 30% under half-yearly mode of
payments, i.e. Rs 1.6 crore under yearly, 2.4 crore under half-yearly and Rs 4
crore under quarterly modes. The number of premiums accounting
transactions during a year will therefore be as under-
Duration Amount
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These appeared in mid 1980’s. They were design to save the underwriter’s
time and thereby improve the productivity. Information display systems
allows the underwriter automated access to various sources of information,
such as underwriting manuals , medical terminology, lists of medications and
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other underwriting guidelines. These systems replace the need for multiple
volumes of handbooks. They allow rapid success to the information that an
underwriter needs.
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This is where information from the application is entered into the system
depending upon the specification of the company and its field force; data
may be entered from an agent’s laptop-computer, at a regional marketing
office or at the home office. Information from the agents report,
requirements ordered in the field and MIB [Medical Information Bureau]
information could also be entered for processing
Screening
Initial Underwriting
Applications that are not approved by screening flow into the next
component are called “initial Underwriting”. This series of knowledge —
based systems defines underwriting problems and determines why the case
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required further processing. It checks for age and amount requirement and
examines the financial, non- medical and medical aspects of the case, as
well as the interaction among them. It decides if there is sufficient
information to deal with the problems, it has defined.
Requirement Processing
WORKFLOW TOOLS
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Information Display
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Management Reporting
Benefits
Underwriting system has many benefits. For underwriting they limit the
number of cases that need to be reviewed, because the system is able to
process them without intervention. In this way the technology improves the
work of underwriting by eliminating unnecessary routine cases. Several
companies have developed knowledge — based systems for this purpose
and have been very pleased with results. As an underwriting officer stated,
“This gives the underwriter to deal with more complex and time consuming
cases.”
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For the producer, service is greatly improved. This is possible because some
application can be approved by the system almost immediately, without
having to be seen by an underwriter. One company that has integrated this
type of system with its field offices is able to electronically approve
applications in less than 15 minutes. Also, the sales process can be helped
by determining all requirements {both those required for age and amount
and those necessary for a specific cause} immediately so that producers do
not have to contact an applicant a second or third time for additional
information.
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With the arrival of private insurance players, the competition has become
more intense and an important role is being played by the insurance sector.
Even though the use of information technology is not new to the insurance
sector, yet we may find tight compartmentalisation regarding the use of
information technology in various departments of the insurance companies
including the major players since last 50 years. The most visible of these
departments are accounting, policy issue and servicing, claim processing,
sales management etc. The innovations in information technology can be
effectively utilized for the following areas:
Therefore the imperative for all the insurers, especially LIC and GIC is to
build up an efficient interface between the various departments and
segments. This would reduce the paper work, improve efficiency of service
delivery and provide competitive advantage to the insurance companies.
Application of IT
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The corporation has plans to redesign these kiosks to provide policy details
and accept premium payments. All these applications have definitely
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Several private life insurance companies are also utilizing the latest
technology available including creating their own web sites. A few private
web sites like ‘Bima online ‘also have been established
Technology is the most important tool in another very important area of life
insurance functions. It is valuation. The process by which the values of
various polices of insurance existing at a point of time are obtained is called
valuation’ of liabilities of an insurer was small, policy values used to be
calculated for individuals policies. But when the number of policies runs into
several lakh or crore, as a present it is extremely inconvenient to calculate
the value of each contract separately. Methods have, therefore, been
devised to collect data for each plan of insurance in a form suitable for
valuation in groups having some common characteristic like age, duration or
term to run to maturity and like. Grouping is done only if there is sufficient
number of policies to make the group of a reasonable size. For a sufficient
large life insurance organization, this work is possible only through
application of technology. It is a legal requirement today in our country for a
life insurance company to conduct an actuarial valuation every year. This
adds to importance of IT application.
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They should not only know the emerging customer profile but also the size of
the market. All these need a scientific market survey and research either
done in house or outsourced. A typical market survey report is appended
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which shows the enormity of the job. Without the support of technology, this
will be an impossible task for the company.
There has never been a time when the effective use of information
technology has been more crucial to the success of the insurance industry.
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The principles of tracking and measuring responses can pay off for the
conventional insurance industry. To find more clients, insurer needs to
consider many factors, including cash value, medium and competition. But
the need to record and study the characteristics of persistency- the length of
time we retain policies, customers and agents is most important in insurance
companies.
Data Warehouse
The proposal forms may be scanned into an imaging system. Data may be
extracted for update to computer and for automated underwriting workflow
may be implemented.
Mapping
to analyse the extent of its network i.e. the insurer can determine whether it
has too many or too few agency force in a particular area.
Video Linking
Cat Models
Catastrophic models use data from the recent natural disasters that helps
develop more predictions of insurers’ property exposures in future disasters.
Using this data curious “what-if’ scenarios of probable maximum loss (PML)
using the best estimate available at an insurer’s exposures are tested.
Finally an underwriting policy that limits the company’s exposure to
catastrophic losses is implemented.
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create new forums that can be utilised by everyone worldwide. Insurers can
browse through many useful sites on the Internet.
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Errors and Omissions liability: these risks are typically triggered by the
programmers, web hosts & web-designers, who, through negligence in their
work cause injury/damage to a third party.
Personal injury & advertising Liability: As e-commerce grows, these risks can
be triggered by worldwide web sites, and trade publishers who publish illegal
content or content which may be constructed as libel.
Director’s liability: Directors and officers often face the risk of litigation due
to numbers of factors, such as consumer protection laws, securities related
laws, and certain provisions in the corporate laws that place additional
responsibilities on directors.
Employee liability: These risks would arise from the breach of confidentiality
and rights of privacy arising out of confidential client information stored on a
particular system or website. In addition, employee can initiate sexual
harassment charges from an employee due to disturbing e-mail content.
Legal fees: Fees incurred for litigation arising out of various claims, such as
intellectual property. Many businesses on the internet mistakenly think their
internet- related exposures are covered by their existing policies.
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Even though the information technology has wide application in all the
spheres of the insurance business, yet following are the most important ones
in respective functional areas:
Marketing
Consumer Awareness
The use of Information Technology may be path breaking for the insurance
companies since conventionally the awareness of the insurance products in
India is low. With the use of Internet the information about the products and
pricing policies can be made available to the public in few seconds and much
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Customer Services
Finance
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R&D has been made an easy task with the increasing use of IT. Surveys and
research on market potential, analysis of markets, tracking with international
norms and developments are the profound areas of IT applications.
Any new adoption needs time to get acquainted with the users until they
gain enough confidence & knowledge in that system. Recent studies reveal
that consumers lack passion for insurance because of its complexity, but
despite these push backs, a growing number of insurers are intrigued by the
significant cost saving & customer-retention benefits to be gained through
online self-service. Although carriers think that by encouraging insurers to do
transactions by online services, which would reduce operational costs vastly,
they are very cynical of investing in web technology with dot-corn collapse.
The trick lies in educating insurers about the concept and benefits of
eservices in this sector. Driving client to initial online self-service experience
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into something more interactive by call services that would involve human
interactions will certainly have a greater impact. This balanced approach is
how most insurers are enabling online self-service that not only make sense
for policyholders, but also provides support for intermediaries and agents.
The main challenge for any health company’s website would be bringing all
sections of people to view their site.
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INTRDUCTION
Losses due to insurance fraud and abuse affect every business and every
risk manager. The stakes are high: according to the Insurance Information
Institute, 10% of claims payments are fraudulent, resulting in $24 billion
dollars in losses each year. Worker’s compensation claims alone are
responsible for about $5 billion in losses each year. Unfortunately, most of
this fraud is never detected, or it is discovered after claims are paid when
recovery of these lost dollars is both expensive to do and unlikely to happen.
Insurance fraud detection has taken a giant step forward with the
introduction of the same sophisticated technology already used by most
banks and credit card companies to stop fraud, saving companies in these
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The challenges of addressing the fraud and abuse problem- and the different
technologies that can be used for this purpose- can perhaps best be
understood through a framework of detection and review. While detection is
the process of identifying and prioritizing suspects from the available data,
review entails confirmation of fraudulent/abusive activity and the process of
taking corrective actions such as blocking of payments, recoupment of paid
dollars and prosecution.
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suspects in the first place- has received less attention and currently offers
the greatest opportunity for benefit if addressed in a comprehensive fashion.
The mission is to find insurance fraud and abuse; once we do that, we can
take a variety of actions to recover payments already made and prevent
future in appropriate payments. Our starting point is the mountain of
historical transaction data (i.e. claims master-file information, payment
transactions, medical/payment detail, policy information, etc).
Detection
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The job of a detection system is to filter the Entire Ocean and scoop out a
small pond containing a significant fraction of the total fraud so that the ratio
of fraud to non-fraud is much more in our favor than it was in the “ocean”.
Fishing in a well-stocked pond translates into substantial savings because we
can use the system to focus expensive human expertise on reviewing those
claims that are most likely to pay off (in settlements, averted future fraud
and abuse or successful prosecution). We stop wasting effort reviewing false
leads, and we prioritize effort to inspect the most important cases first.
Review
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The review process gathers the evidence that human experts need to
confirm fraud and abuse. Because of the complexity of detecting provider
fraud and abuse, no system can be 100% accurate in selecting fraudulent
claims. Once the detection system has generated a pool of suspects, expert
claims adjuster or fraud investigator are needed to review suspects, conduct
the appropriate investigation and bring the case to closure. The experts may
use technology to help them navigate through, visualize or analyze the
detailed data behind a case. Detection can be linked to the “front end” of the
fraud-fighting process, while review is analogous to the “back end”.
Many tools offered to assist in the fight against fraud and abuse, such as
those allowing for the review process. Other technologies, such as those
involving link-analysis (looking at the activity of individuals coming in contact
with a particular individual) are also most useful after a suspect has been
identified. While these techniques can be important, for example
investigating rings to which given suspect initially come from? Further, more
the reality is that most fraud and abuse is opportunistic and does not involve
elaborate rings. A detection system is necessary to uncover suspicious
activity in the first place.
These are good first steps, but there is much room for improvement. There is
a great potential for insurance organizations to identify more fraud and
abuse and identify it closer to its onset. Because detection has received far
less attention than review, this paper will focus on the application of
technology to the detection problem.
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APPROACHES TO DETECTION
Rules (or red-flags) are often developed to identify “suspect” claims. For
example, neck injuries are more likely to be fraudulent than head injuries.
Hence, a “rule” may identify neck injury claims as suspect. However, even
though neck claims have a higher risk of fraud than head claims, it is still the
case that far more neck claims are valid than are fraudulent, so the rule may
be refined to future restrict the claims identified as suspect (e.g. an
employee on the job for less than one year).
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The result is a model that can recognize the highly complex and subtle
differences between “good” and “bad” patterns of behavior.
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TECHNICAL CHALLENGES
A host of tech accompanies the task of insurance fraud and abuse detection.
An abusive solution to the problem requires a comprehensive approach
enabled by a variety of technologies that addresses these technical
challenges head-on. Some of these design issues include;
Because fraud may not exist at the time the claim is submitted, or because
evidence of abuse may not yet be apparent, a system must each claim over
and over on an ongoing basis.
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In many cases, only a small number of known examples of fraud may exist in
the historical data. One must be able to handle such situations when
developing the detection system.
• Prioritization of suspects
• System Maintenance
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Both internet & intranet enables users to do the following at any time (24
hours, 365 days)
• Send & receive letters, which are called e-mail. Every person will have
an “e-mail id”, which is his address in the net.
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If the insurer has an intranet, the agent can, sitting at his place of work, be
attending the insurer’s office, making enquiries about status of proposals or
claims or discussing with any other agent, for clarification or advice,
whenever he wants to do it. The physical distance between the agent & the
office will not be of any consequences at all. The benefits to agents will be:
He can receive all circulars & instructions issued by any office. All delays on
account of postal transmission, being forwarded from one level to another,
dispatch department absence of peons, wrong addresses, misplaced through
oversight, lost in transit etc., are avoided.
Communications to & from the office will be immediate through e-mail & at a
low cost.
Benefits to PolicyholderslProspects:
Prospects can get benefit through the internet in the following ways- They
can get details of the various policies, the benefits there under, the
premiums payable etc.,
• Prospects can get advice on the suitable insurance plan for themselves.
• Policyholders can get information with regard to the status of the policy,
the premiums due, the bonuses attached, the surrender values or loans
available, revival possibilities, nearest office for any further transactions.
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The LIC has included in its websites, for the benefit of the prospectus and the
policyholder, information to health issues
KISOKS
The LIC has installed kiosks in more than 100 locations covering its divisional
headquarters. The kiosks provide information on policy status, product
information about all products including group insurance products. These can
he used by persons, who do not have their own computers and cannot
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access the internet. They can be operated 24 hours a day and do not require
any supervision like the ATMs of banks.
The touch-screen kiosks were installed in some of the branch, divisional and
zonal offices of LIC. By this facility the customers can obtain information
about LIC, its performance, schemes and statuses of policies by the touch of
the screen.
The kiosks are interactive and user-friendly. Such kiosks are also to be
installed in bus and railway stations and in busy thoroughfares of major
towns and cities. In due course, payment of premium will also be made by
dropping cheques and DDs in drop-in boxes.
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The breach of personal information is a serious problem in the US. In the past
two years alonc, data breaches have affected approximately 100 million
Americans, a consumer watch group reports. Some people may have been
affected more than once and not all of them were victims of identity fraud, of
course, but the growing number of data losses points out the continuing
exposure to consumers and businesses.
It’s not surprising since laptops are a target of thieves. Cyber Angel Security
Solutions, a national security technology firm, reports that 10% of all laptops
are stolen in the first 12 months and 90% of those computers are never
recovered. Half of the companies in the US had their laptops stolen in the
last year and almost 90% of all corporate crimes are linked to stolen laptops.
To fight identity theft, 32 states have passed laws that require businesses to
respond to the breach of personal information under their control. Federal
legislation is pending. Most of the laws require businesses to warn victims
about potential ID theft and fraud. In many cases, the warning must he
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issued within days and include the news media. Businesses may have to pay
to monitor personal credit.
A data breach can seriously harm tie brand and a; eta business. Although it
can be expensive to notify and assist victims of a data breach, the risk of
notifying people affected can be far worse. In today’s environment, a
business that experience data breach must protect itself from both the risk
to its reputation and the cost of providing services to those exposed to
identity theft and fraud.
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At this time, there are a few data compromise coverage forms being offered.
At least one monoline form appears aimed at large accounts, and at least
one packaged firm is designed for middle marker and Main Street accounts.
One of these combines first and third party coverage and the other is first
party only. With corporate managers citing data breaches as their No. 1
concern in a recent poll, data compromise should he an area of further
development and innovation, in the coming months.
• Personal services for eligible insured such as a helpline, credit checks and
case managers for the victims of ID fraud.
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Another issue is for the insurance industry to take action so that we are not
fooled ourselves. It can and does happen that insurance companies issue
policies to people who are not who they claim to be. Worse yet, insurers may
claim payments to imposters. Identity verification is not always easy, but our
industry must take steps to protect personal information and prevent claim-
related identity fraud.
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This lag was due to lack of relevant and adequate content. Traditional
insurers, while leveraging on new information technologies, have been slow
to utilise the Internet as an alternative distribution channel. All the largest
insurers have been focused on static marketing presence online,
encompassing product information, FAQ’s and quotes. Only a few insurers
have added the ability to submit applications online. This lack of participation
in the e-business revolution is seen across lines. The insurance companies
attribute two factors for the slow take off. First and foremost, insurance is a
product that is sold and not bought. The Internet is perceived to be a buyer’s
medium, with online customers able to search quickly and for the most
competitive prices and variety of products. Insurance is one product that
cannot be easily commoditized. The more personal the selling process, the
greater the difficulty in using the net as a medium for selling. Insurance is
one product, which involves personalised selling. The process of insurance
sales requires a series of face-to-face interactions.
International Trends
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The Gartner Group in a study conducted by them says that in a year 25% of
all customer contacts and enquiries for enterprises will come via the internet,
e-mail and online forms. Bancassurance customer service, which has been
almost exclusively done via the telephone (96% of all transactions), will
become increasingly e-mail based in the next four years; decreasing
telephone related service by 28%.
E-Insurance in India
The intriguing question before all associated with the insurance industry is
that will it be possible for private companies or even public sector monoliths
to sell insurance online in India in the near future? Insurance companies will
probably have to wait for Internet penetration to increase and the still
ambiguous e-commerce rules to take concrete form. However, what is not
debatable is that new private entrants will change the rules of the game for
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the Indian insurance business, both in the life and the non- life segment,
unfolding opportunities for software engineers and professional agents.
Online insurance will also help companies reduce costs and keep premiums
low, a prerequisite in a price sensitive market like India. The government,
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Most Web sites offer contact numbers of their branch officers where we can
get further details of the products on offer. The Agent locator feature,
available on maxnewyorklife.com, iciciprulife.com and on bimaonline.com
help one locate an insurance agent most accessible to you based on a search
facility. One would expect downloadable proposal forms on insurance web
sites, but these are missing in most cases. Only Iicindia.com seems to offer
downloadable proposal and claim forms for a few of the schemes.
E-insurance provides multiple benefits to the insurer and the existing and
prospective insured:
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• Growth of net: it is estimated that India would have about 150 million net
users by 2010. These figures represent a huge buying potential.
• Cross sells: when linked with other financial products, a portfolio approach
to investment, savings and risk coverage will increase cross sells and
customer loyalty and retention.
• Costs: in the beginning c-insurance will be a cost factor rather than a profit
driver, but in the long run it will be a cost reducing factor.
Electronic insurance will not only provide many benefits but will also pose
business and technological changes.
Business Challenges
disintermediation of this relatively high overhead for these low face value
products. This means that prices can be lowered and more insurance can be
sold by reducing the transaction costs of the exchange.
• Insurance customers what do they want: Customers could get better and
different service through the Internet. It is possible to obtain quotes from a
number of companies. In some cases, the Internet provides rating agencies’
evaluation of insurers. The Internet and outsourcing can provide additional
cost savings to the consumer. Technology can bring the customer closer to
the insurance contract, by removing layers of inefficiencies. Consumers will
also obtain price comparisons for relatively generic contracts, such as life
insurance and rates for a standard set of auto insurance coverage for given
vehicle and driver characteristics. Consumers also could have access to
internal records to see where their claims are in terms of payment, when
their next annuity payment is due, and how their mutual fund is performing.
This can be done without calling a burdensome voicemail system, being put
on hold, or finding a person who can give them the desired information
efficiently.
• The Death of Insurance Agent: One of the reasons why insurers have been
slow to use electronic commerce could be the fear of swallowing up the
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agent’s business. The Internet does not necessarily imply the death of the
agent. Many insurers are examining their agent’s role in the process and arc
also developing direct contacts with the insured through their web presence.
Agents could enhance their advisory role to consumers as their paper and
money processing functions diminish.
Technological Challenges
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LIC has been one of the pioneering organisations in India who introduced the
leverage of Information Technology in servicing and in their business. Data
pertaining to almost 10 crone policies is being held on computers in LIC. The
computers were introduced in 1964 in LIC. Unit Record Machines introduced
in late 1950’s were phased out in 1980’s and replaced by Microprocessors
based computers in Branch and Divisional Offices for Back Office
Computerisation. Standardisation of Hardware and Software commenced in
1990’s. Standard Computer Packages were developed and implemented for
Ordinary and Salary Savings Scheme (SSS) Policies.
Network on any given working day. Such Networks have been implemented
in other cities also.
All 7 Zonal Offices and all the VLN centres are connected through a Wide
Area Network WAN). This enables the customer to view his policy data and
pay premium from cur branch of an MAN city. As at May 2002, there were 91
centres in India with more than 1200 branches networked under WAN.
IVRS, functional in 58 centres all over the country, enables customers to ring
up LIC and receive information (e.g. next premium due, Status, Loan
Amount, Maturity payment due, Accumulated Bonus etc.) about their policies
on the telephone. This information could also be faxed on demand to the
customer.
Website
Information Kiosks
LIC has set up Interactive Touch screen based Multimedia KIOSKS in prime
locations in metros and some major cities for dissemination information to
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Info Centres
It has also set up call centres to provide information about our Products,
Policy Services, Branch addresses and other organisational information.
If your company is like most carriers, you have legacy system silos and
patchwork processes for various product lines. This lack of integration
creates islands of information, which necessitates extensive manual handling
and staff paperwork.
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• Frequent data errors and broken process steps require time—time that
costs you money.
Adobe can help remedy the situation. The Adobe solution for insurance
application helps you improve service while reducing costs, meeting
policyholder needs, and increasing agent loyalty—so you can dose more
business.
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• When wet signatures are required, you can print forms out and then
easily revert back to an intelligent, automated process while
maintaining full integrity of the original form data.
Build data validation and calculations into all application processes. Support
for eXtensible Markup Language (XML) and ACORD XML standards helps
efficiently integrate this information into your enterprise applications. Adobe
Document Services also offer a flexible front end, so you can adapt easily to
the latest regulatory policies, to minimize the business disruption and
expense of compliance.
Beyond the wide range of benefits delivered by the solution, Adobe also
partners with industry leaders such as IBM and Documentum, so that you
can extend Adobe supported insurance solutions throughout your enterprise.
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With free Adobe Reader software, your internal staff as well as independent
brokers and agents can access documents and forms as needed. Reviewers
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can easily add comments without altering the original, and agents as well as
customers can see and respond to these comments, avoiding redundancy
and saving cycles. Password protection and other built-in security features
can be added to control access and ensure data integrity at every step. This
efficient workflow translates into to faster reviews and underwriting, and
improved service.
The Adobe solution for insurance application improves the quality of your
service to agents, brokers, and customers—making it easier for agents to sell
more policies, decreasing abandonment rates, and enhancing your
profitability.
• Revenues increase because you and your agents and brokers can
efficiently handle more business.
For many drivers, the seemingly endless round of phone message and paper
work that follow traffic accident can make the job of resolving on insurance
claim feel as damaging as the accident itself. For insurance carriers auto
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Today, innovative technologies from Microsoft are transforming from the way
auto insurance claims are processed. Based on the power of the
Microsoft.NET framework these technologies open the door of integrated IT
system that link programs and applications built of any platform and written
in any language. Streamlining the flow of data and bringing new levels of
efficiency to the business of claim processing.
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The ability to utilize XML and web services has established process claims as
a market place leader. Not only does the solution streamline claims
processes. It also extent and enhances the value of existing legacy system
functionality through seamless integration with outside services.
And because legacy system can access this new functionality transparently,
Training and support costs are minimal. Process claims’ claims port system
focus on areas of material damage to reduce loss-adjustment expenses,
increases efficiencies, and improve customer satisfaction, and they are
configured to meet the specific business requirements of individual insures.
Today, innovators are taking advantage of technologies like this to automate
business processes and transform insurance claim processing.
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CONCLUSION
The supporting technology require will be real time, rather than batch,
longitudinal rather than episodic; will require connectivity rather than be self
contained; will be interactive; will rely on large relational databases.
Thus the insurance services without technology will be like tea without
sugar. Therefore both need to be integrated in order to provide quality
service & also to tap the insurance market.
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BIBLIOGRAPHY
Books:
Magazines:
Websites:
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