Point, Click, Claim.

Technology companies are getting into the claims- and benefit-management business. They're offering online solutions to insurers with the promise of cutting costs and keeping customers happy.

More application service providers are entering the claims- and benefit-management fields. Instead of offering client-side software products, they operate on the Internet and sell themselves as a service, allowing insurers to use the latest technology without paying for new systems.

In a July survey by Insurance Networking magazine's Web site, 56% of insurers said their organizations were increasing their reliance on application service providers.

This option especially appeals to insurers that want to embrace the Internet to improve cross-marketing efforts but realize that achieving this internally from a legacy system is a real challenge, said Steve Fecko, senior vice president, marketing and business development, for RewardsPlus, the on- line benefits-delivery firm. "That's why the preference often is to work with a company that already provides these services and get to the market faster and with fewer distractions," he said.

One newcomer, ACV Online www.acvonline.com) says its use of the Internet to expedite the claims process for homeowners insurance reduces insurers' costs and increases customer satisfaction. The Seattle-based provider recently introduced applications that include an asset inventory, which allows policyholders to go online and create an inventory of their personal property before a loss occurs.

Making Online Claims

ACV's massive product database includes price and source information on items in more than 1,900 categories, covering everything from antiques and collectibles to furniture, appliances and apparel.

"In the event of a claim, policyholders simply access their online inventory and check the boxes for the items stolen or destroyed, then click on 'submit to my adjuster,'" said Greg Lenke, vice president of sales, ACV Insurance Services Inc. "The file comes into the insurance company s e-mail as a claim to be set up, but there is no data entry--the customer has already done the work. The adjuster simply opens the file, prices the items with ACV's online catalog and pays the claim."

With this system, "you have some critical people who need to be connected to each other," Lenke said. As a result, policyholders can see faster resolution of claims, insurers can accelerate the adjustment process and retailers have the opportunity to sell into a large marketplace, he said.

ACV Insurance Services calculates that an insurance company with a 1% market share and 2,500 personal property claims a month with an average loss payment of $1,289 a claim can expect to save more than $5 million annually with this service.

Soon the service expects to handle replacements online in real time, with policyholders and adjusters able to replace items simply by clicking a button. The product then will be shipped to the policyholder by a sourcing vendor. This will eliminate the need to handle replacement receipts or calculate additional payments, ACY said. Another new player in this arena is Project Time & Cost Inc.'s ptc-NET, an Internet-based, repair-management technology with a managed-contractor network. This technology is designed for property/casualty insurers in homeowners and light-commercial lines.

Ptc-NET (www.ptc-net.com) offers a software program that contractors can use to estimate the cost of repairs; a database of costs for which contractors sign up; and Internet interfaces that allow the contractors, once they reach estimates, to download them to adjusters.

Introduced in 1999, this technology is now available in 100 metropolitan areas, comprising about 90% of the U.S. population, said Gene Brooks, chairman of the board of Project Time & Cost, Atlanta.

Savings and Speedy Repairs

Brooks founded Project Time & Cost, an 18-year-old cost-management firm, which has worked extensively with the U.S. Department of Defense in developing databases and cost-engineering programs for the Army, Navy and Air Force. The firm introduced its job order contracting system, which contains a database of up to 40,000 line items covering 95% of things that might need repair--including sidewalks, roofs or drywall on military bases. It also includes a database of costs associated with those items and guide specifications that eliminate the need for architects' designs to fix a sidewalk crack or repair a leaky roof. The system has expedited repairs, which traditionally were taking up to four months, Brooks said.

That basic concept underlies ptc-NET, which is designed to provide substantial savings for insurers by streamlining and controlling the repair process. "Every insurance company has different business processes in how they manage their claims, and this is a claims-management tool-it's not a claims-management system," Brooks said.

The program can provide savings of 3% to 8% in an insurer's indemnity payout--the actual amount paid for repairs, Brooks said. Additional savings can appear in the loss-adjustment expense, basically the claims-handling process. The amount saved there depends on how much the carrier is willing to change its work-flow processes, Brooks said. This system can reduce an insurer's loss-adjustment expense by as much as 25%, he added.

Brooks noted that some carriers are using the Internet-based technology to allow claims adjusters to increase the number of cases they handle each month.

Online Adjusting

It works like this: Contractors estimate repairs and send digital photographs over the Internet to the adjuster. The adjuster downloads the photos, compares them and estimates the damage, communicating online or by telephone with the contractor to resolve any differences in their estimates. Then the adjuster hits a button, which issues a work order, and the contractor starts repairs the next day.

"There's very little potential for conflict among the homeowner, the contractor and the carrier," Brooks said.

Some carriers are using this tool mainly to increase customer satisfaction, since the service can shrink the average claims filing and repair process from three months to less than two weeks, he said.

The company is engaged in precontractual pilot studies with as many as 30 insurance companies. It already has a contract with Allstate, the nation's second-largest personal-lines carrier, which is embarking on a new technology rollout nationwide. While Allstate has the resources to develop its own claims-management tool, the insurer opted instead to go with ptc-NET's established program, Brooks said.

Recently, the provider has been reaching out to midsize insurers--carriers with gross premium revenues in the $10 million to $1 billion range--that lack the resources to develop systems like this on their own.

Employee Benefits Management

In the realm of employee benefits management, RewardsPlus was among the first Internet entries with a business model that attempts to fit the needs of three key parties in a benefits transaction--the provider, the employer and the employee.

RewardsPlus (www.rewardsplus.com) has specialized in designing portals at clients' workplaces to install Web-based marketing, communication, selling and administration of voluntary benefits, which pick up where traditional benefits leave off. (See "On the Job," page 43.)

The prices of these voluntary benefits are automatically deducted from employees' paychecks at no cost or extra labor for the employer. By pooling the buying power of employees across the United States, RewardsPlus says it can give group rate savings of up to 25% over independently purchased services.

In September, the 4-year-old Baltimore-based start-up announced the upgrade of its SureEnroll Web-based core benefits platform. This can be used by human-resources and benefits professionals as a software solution to eliminate the administrative burdens of benefits enrollment for health, retirement and supplemental benefits. With this platform, employees can access benefit forms, summary plan descriptions and other educational material, receive coverage the day they are eligible and make status adjustments immediately. By eliminating the need for so-called open enrollment audits, SureEnroll can cut administration costs roughly in half for an employer, RewardsPlus said.

"With our model, the solution is really about self-service," Fecko said. "We make employers' lives easier by doing away with transactions. We aggregate and consolidate enrollment of all benefits into a single Web-based platform."

RewardsPlus' strategy also allows employers to offer other kinds of insurance, such as auto insurance and pet health insurance, at the worksite. "Employees spend about six hours of work each week in nonwork-related duties, such as dealing with elder- or child-care issues, shopping for things, accessing auto insurance," Fecko said. "This eliminates a lot of nonproductive time." It also makes for an easier work week for employees, a factor that does not go unnoticed by employers eager to retain their personnel. Most people who change jobs these days do so for lifestyle reasons, he added.

RewardsPlus works with large corporations, and it is interested in working with smaller organizations through marketing partnerships or distribution channels. "There's a huge unmet need in the smaller market, where it's more expensive to manage benefit programs," Fecko said.

Smashing Information Together

Like the founder of ptc-NET, David Karabinos came to develop eHealthClaim, a self-service health benefit management site, in a roundabout way. He assembled outsourcing deals and joint ventures around high technology, but had no background in health care. But when he visited his elderly mother in her Huntsville, Ala., home about two years ago and saw the mass of medical claims paperwork lining her kitchen counters, his thinking took a new turn.

"I walked in and she threw her hands up and said, 'Son, I'm going to stop going to the doctor,'" Karabinos recalled. He realized her health care would deteriorate as the result of an administrative problem. "I thought, if somebody could smash this information together and make sense out of it for her, this poor lady could go back to a doctor."

Thus, eHealthClaim was born. Karabinos and his executive team first saw it as a business-to-consumer operation. But they soon realized that the greater value for consumers would be an inclusive approach, providing them with a connection to the health insurance systems, "because consumers don't have information, they don't have connectivity, and it takes hours to get questions answered," he said.

The company, which sells a consumer-focused, online suite of software services to employers and insurers for their members and employees, was formed in April 1999. It launched its Web site (www.ehealtbclaim.com) and products in the second quarter of 2000, said Karabinos, chief executive officer of HealthClaim Solutions Inc., the corporate legal entity for eHealthClaim.

The service allows consumers to track health claims and benefits online; provides clinical and wellness information from Internet health-care sources; gives consumers tools to simplify medical and insurance terminology, costs and codes; allows payors to streamline human-resources administrative activities and reduce operating costs; and allows employers to provide a competitive health benefit offering.

Those insurers that use the service can benefit with cost reductions and improved customer relations, Karabinos said.

Good Return on Investment

The service's recent proposal for a large, midmarket company predicted a 98% return on investment. "That's huge," he said. "What does that mean? We're going to strip a lot of cost out of their back office, out of their customer-service operation--we do printing, postage, distribution costs."

So far, eHealthClaim has six insurers under contract and expects to add six more soon. It focuses on the midsize and third-party administration market. The provider has signed nearly 260,000 employee lives, representing employer groups nationwide, Karabinos said. Early users include Wire-speed and Entrust, a third-party benefits administrator.

Only six months ago, eHealthClaim encountered confusion and resistance to buying an outsourcing solution on the Web, especially in the health-care industry, Karabinos said. But companies' attitudes toward using an application service provider are changing, he added.

"Customers we talk to realize that if they go with an [application service provider] solution instead of buying software and hardware and trying to do it all themselves, they'll get up and running faster and, [in the] long term, cheaper, because the total cost of ownership is much lower for the customer," Karabinos said.