Business Insurance RMIS Article

"RMIS Options Advancing as Buyers' Needs Evolve"

December 1, 2003

by: JOANNE WOJCIK

The movement toward enterprise risk management is driving change in risk management information system technology.

Risk managers increasingly want more than just claims-based RMIS, seeking tools that also do risk analysis, catastrophe modeling or calculate how policy limits erode.

But even though vendors are working to update their products, in many cases they still fall short of the expectations of many savvy risk managers who are used to even more sophisticated high-tech gadgetry elsewhere in their lives.

RMIS are available from three sources: insurers, brokers and independent software vendors.

Insurer-provided systems generally are the least flexible, containing mostly claims data associated with coverage the insurers provide; they also are available exclusively to the insurers' policyholders. Broker-provided systems also are available only to clients, but they can analyze data from a variety of insurers. Both types of systems are generally provided as a perk to clients, who may purchase additional options.

Independent RMIS are the most expensive but also the most flexible, able to host and customize data from virtually any source.

"RMIS systems introduced in the 1980s and 1990s were mainly claims-focused," explained Ken Ancona, national sales and marketing manager at Risk Sciences Group Inc., an independent RMIS vendor in Schaumburg, Ill. "In the new millennium, the focus of RMIS is more risk-centric so that risk managers can do risk analytics."

For example, the company's Sigma Encore Suite offers enterprise capabilities that let a risk manager make "big-picture comparisons," such as the impact on losses from an increase in production or cost per share from a particular loss. "This is what the board audit committee is looking for," he said.

"It drives us crazy how a lot of claims systems are described as RMIS," said Bob Morrell, chief technology officer at Risk Laboratories L.L.C., an independent RMIS vendor based in Marietta, Ga. "Claims is a large part, but we also track exposures, policy information, anything regarding the client's unique risk," he said.

Risk Laboratories' RiskConsole also has enterprise capabilities, advanced security features, report distribution capabilities and modules that produce reports for specific uses, such as renewals, he said.

Salt Lake City-based DelCreo Inc., a new entrant in the RMIS marketplace, has developed a system that lets risk managers integrate information from all business units, said Mark Carey, chief executive officer.

"Enterprise risk management is the trend," he said. "With Sarbanes-Oxley's internal control and incident reporting requirements, it becomes even more important that the systems that deal with risk and control are integrated. It's the way of the future."

"The reporting requirements of Sarbanes-Oxley are going to drive greater focus on core RMIS issues: accuracy in reserving; timely claim, litigation and payment data; and reports that clearly and accurately portray the firm's liabilities and exposures to accounting, auditors and senior management," said Elizabeth M. Morrell, senior risk analyst at the Southern Co. in Atlanta and chairwoman of the technology committee for the Risk & Insurance Management Society Inc.

"Without solid data underpinning your RMIS, the latest bells and whistles are just window dressing," she said.

Insurer-owned RMIS also are becoming more sophisticated to meet risk managers' changing needs.

Matt Carden, vp of RMIS Services at Travelers Property Casualty Corp. in Hartford, Conn., which offers the e-CARMA system to policyholders, said: "Risk managers want policy and billing information and paid losses that support that bill. They also want loss prevention-type information, ranging from generic white papers on how to prevent certain types of losses, to individual location surveys" and performance measurements in controlling loss frequency and severity.

Chubb Corp. also has added functions such as additional lines of business to its RMIS Suite of Products, said Richard Kaiser, who heads up business services in Whitehouse Station, N.J. "We're seeing risk managers looking at their entire program-inland marine, boiler and machinery, in addition to property, liability and comp."

AIG Claim Services Inc., a division of American International Group Inc., has added IntelliRisk Wireless, which lets RMIS users monitor claims in real time with wireless hand-held devices such as Web-enabled cellular phones and personal digital assistants.

"Risk managers travel, do claim review, go to various sites, etc. Part of their responsibility is to know what's going on with a particular claim. If they can get to the Internet with a PDA, they can get to our application and look up details of a claim, read the adjuster notes, see what it's reserved for," said Alan Louison, vp of IntelliRisk E Services/RMIS, a division of the AIG unit in Parsippany, N.J.

Liberty Mutual Insurance Co. has enhanced its RiskTrak system by adding medical disability management functions and e-mail report and alert distribution, said Alicia Rawnsley, director of marketing for RiskTrak based in Portsmouth, N.H.

With many risk managers changing insurers, brokers are gaining RMIS users.

"It has been a record year for us," said Mary Ann Latko, director of safety services at Aon Safety Logic, a unit of Aon Corp. in Glenview, Ill.

"We're seeing a better year than 2001 and 2002," said Robert G. Petrie, practice manager of Marsh Risk Technologies in Chicago. "Because of the hard market, companies are retaining more risk" and "moving away from carrier systems to independent systems."

To keep new RMIS business, brokers are also making enhancements.

For example, risk managers are asking for industry-specific features, particularly for industries such as health care, he said. In response, Marsh is developing industry-specific editions of STARS, its RMIS.

Aon has added an audit and assessment tool to produce customized inspection checklists to help clients identify exposures, Ms. Latko said. "Traditionally, risk managers focused on post-accident claims to minimize their losses. Today, they're really starting to focus on systems that can help them identify potential losses," she said.

Some vendors are responding to risk managers' demand for more detailed information by enhancing existing RMIS capabilities.

An Applied Insurance Research tool gives risk managers more detailed probable maximum loss estimates. "Some are surprised to find out they've been grossly overbuying insurance," said Tom O'Brien, catastrophe risk consultant for AIR's CATStation in Boston. "Of course, the insurance company isn't going to tell them to buy less."

But some risk managers still aren't satisfied with what's available and are building their own.

"We didn't find anything that shows how limits were being eroded on various policies over the years," lamented Brian Warren, senior claims manager at Microsoft Corp. in Kirkland, Wash.

He was frustrated by systems that required data to be input as "claims" rather than "occurrences." So he is building a system that starts with "occurrences" linked with policy language to determine if there is coverage and later builds a claim.

Small and midsize companies "that buy standard coverage aren't going to go through that much trouble," he said. "But for big companies like us, this is useful."