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Customer Service Setting RMIS Vendors Apart:
But Industry Still Isn't Close To Adopting A Data Standard To Streamline Processes

by Amanda Milligan

Buyers of risk management information systems have the luxury of being more discriminating today than in the past, RMIS industry experts say.

However, the industry is not yet close to agreeing on a data standard, which would simplify reporting and data conversion.

Today's RMIS is constructed to enhance the user's ability to analyze data, not just collect it. And because many systems offer basically the same features, RMIS-savvy risk managers are selecting systems that not only meet their technological needs but also have superior customer support.

It is possible to ``spreadsheet'' product features, but not customer service, said Rick Betterley, president of Betterley Risk Consultants in Sterling, Mass. "At the end of the day, I can get out of most any system the information that I need. What I look for is who's got the service and the track record.''

The typical client is not a newcomer to RMIS and wants to replace an outdated system, said Eileen Oswald, executive vp and national sales manager for Envision Technology Solutions, a Salt Lake City-based RMIS vendor that is a joint venture between a unit of Near North National Group and CNA Technologies.

Most systems are obsolete after five to seven years, and "companies are looking for technology that is poised for future growth,'' Ms. Oswald said.

But, she noted, "the technology is only one part of the solution,'' and she said customer service is an area on which the entire industry needs to focus.

"Service is still a difficult niche to fill,'' said Anita Schoenfeld, a consultant in the Dallas office of risk management consulting firm Tillinghast- Towers Perrin. "I think most vendors will say that's their biggest challenge.''

But some vendors are improving customer service efforts, Ms. Schoenfeld said, by offering clients technology that makes the systems more user-friendly, such as data updates via e-mail, browser-based installation that eliminates hard disk installation, and system support help desks.

At American International Group Inc., for example, a potential client meets not solely with computer engineers but with a team of professionals from different areas of the insurance industry, such as claims, underwriting and risk management.

"The techies obviously have a role in a RMIS, but it's not talking to the customer,'' said Alan Louison, the Parsippany, N.J.-based vp of AIG Claims Services Inc. AIG also puts on free seminars for clients three times each year to assist them in using AIG's RMIS.

Scott Harper, executive vp-development for Envision Technology Solutions, said the company typically hires three customer service employees for every one system development hire.

"Even the Internet is assisting in customer service,'' said David P. Duden, national RMIS practice leader for Deloitte & Touche L.L.P. Mr. Duden also operates RMIS/Lab out of the firm's Hartford, Conn., office, where clients can test various RMIS products. Many vendors, he said, are taking the approach that buyers are gaining services and solutions rather than just a product.

Round-the-clock knowledgeable service and "flexibility that doesn't cost an arm and a leg'' is what Pam Oliver expects from a RMIS provider. Ms. Oliver, based outside Waco, Texas, is administration specialty team manager for Claims Management Inc., a third-party administrator based in Rogers, Ark. Not readily finding such service and affordable flexibility in the RMIS market, the company decided to develop a RMIS internally, said Ms. Oliver.

"If I have an emergency, I can't afford in my business to have something down when my customer is out there needing help,'' she said.

Widespread consumer understanding of World Wide Web-based technology has prompted many vendors to adopt an Internet-friendly approach. Intranets, extranets and the Internet have brought the world closer, enabling remote staffers to communicate more efficiently with one another, said Dave Tweedy, principal of Tweedy Risk Consulting Inc. of Barrington, R.I.

"There are a lot of advantages you get from going with a (browser-based RMIS),'' said Mr. Tweedy. "It enables a multinational risk manager to get remote locations involved.''

But Envision's Mr. Harper noted the need for Web-driven products is sometimes more perceived than real. "Risk management is usually centralized,'' he said, and rather than using a browser to print a report, speed can be conserved by having the RMIS on a local area network or a wide area network.

Instead of making the entire RMIS accessible to the client through a browser, Envision's intranet RMIS allows the user to file incident reports, send out follow-up notes on incidents when more information is needed, attach electronic notes to claims and post weekly reports, Mr. Harper explained. Another trend in the RMIS industry is the integration of the RMIS with other systems within the customer's company, such as linking into general ledger accounts and human resource databases.

"I think RMIS vendors are doing a really good job building bridges to. . .company databases,'' said Mr. Tweedy, adding that the dangerous aspect of this functional feature is that if the other databases are not Year 2000-compliant, it would make the RMIS non-compliant through a "domino effect.''

Most RMIS vendors are prepared for the Year 2000 problem, but they are still part of the compliance scramble as clients ready themselves. "We envision 1999 being an extremely busy year for RMIS vendors,'' said Susan Scheffe, the Lisle, Ill.-based director of reporting for RMIS vendor Corporate Systems Inc. of Amarillo, Texas.

Because much new business involves a client that is upgrading or replacing an existing RMIS, a vendor must be adept at data conversion. But despite much talk about instituting industrywide data standards that would streamline reporting procedures and ease the data conversion process, the RMIS industry has not reached a consensus on which of several existing standards is the most feasible to implement.

Mark Dorn, chief executive officer and president of Livonia, Mich.-based DORN Technology Group Inc., is a proponent of industrywide RMIS data standards and has even developed one of the standards. He supports a standard because it would give a client more portable data, allowing the client to more easily update its RMIS. A standard also would simplify the management of data for a multiple- insurer client.

"It's a pretty holistic view of what risk managers need to manage data on a large scale,'' according to Mr. Dorn. He admits, however, that the industry has been more focused on the movement toward the Internet than on establishing such a standard.

Mr. Betterley likens the industry data standard to buying a new car with a leather interior. "I think it's a feel-good product,'' he said, but not an essential component to a RMIS.

"Everyone says they need a standard and they need data quality improvements, but there's not a consolidated effort toward that,'' said Ms. Scheffe. At the same time, she expressed concern that some of the talk about standards is agenda- driven.

There also is disagreement about who should spearhead the data standard effort.

"I think there's genuine interest, but until you get the insurers at the table, it's not going to happen,'' said Mr. Tweedy. "The insurers have the data. Whoever has the data rules, and they do.''

AIG's Mr. Louison said that because of the extensive time and cost involved in converting data, even a compromise between opposing forces would be a step forward. "It's certainly a Herculean task,'' he said.

Others say it will take the involvement of the risk management community and, specifically, the New York-based Risk & Insurance Management Society Inc., to institute a data standard.

The efforts of the RIMS data standard task force have been stalled by insurers and brokers with proprietary systems that don't want to make it easier for their RMIS clients to switch among vendors, said Susan Meltzer, first vp of RIMS. She oversees the committee's progress. Ms. Meltzer is also the assistant vp- insurance and risk management of Toronto-based Sun Life Assurance Co. of Canada. "To be quite frank, it hasn't totally gotten off the ground because it's a difficult thing to approach,'' she said.

There is a need for data standards, said Ms. Meltzer, and risk managers need to be more demanding about how their information is kept.

Because many risk managers rely on an insurer or broker to provide a RMIS, the cost of which is often rolled into the premium, insurance industry consolidation is also a concern, said RMIS professionals.

"Right now, I don't think it'll change the landscape terribly,'' said Tillinghast-Towers Perrin's Ms. Schoenfeld. "But when the going gets tough, the tough sell (RMIS) off. It's a question of core competency.''

Blending corporate philosophies and consolidating competencies is always a challenge for the newly paired companies after a merger or acquisition. But for RMIS clients, whose data management hangs in the balance of decisions about which system to support, this internal chaos can be alarming.

"There's been a little bit of fear in the buyer's mind as to whether the system is going to be there in a year,'' said Mr. Harper.

Not only are there fewer choices in systems due to mergers and acquisitions, but the RMIS market itself is mature, and that places high barriers in front of potential entrants into the market, experts say. RMIS vendors are forming partnerships with vendors with specialty niches rather than trying to be everything to everybody, said Deloitte & Touche's Mr. Duden.

Additionally, as the definition of risk management grows to encompass non- traditional insurance risks, such as currency exposures and credit and reputation risks, systems will have to meet these needs, Mr. Duden said. "The systems that help them identify, measure and control (risk) will expand.''

Mr. Tweedy agrees. "If risk management becomes expanded to include business risk and financial risk, I think you'll see an increase in dollars generated. At this point, I think it's flat, but the interest is still there.''

Mr. Dorn is also confident that, as the costs of insurance, health care and litigation continue to rise, "that leaves risk managers to look for ways to reduce cost and improve performance.''

"I think we've just scratched the surface on what we can provide,'' he said. "The risk management community has shown an enthusiasm for a higher level and getting the most out of this technology as it relates to doing their job.''