When I started in IT at insurance company MetLife in 1970, my background was as far away from insurance as you could possibly imagine. I was an engineer, and I had studied towards a doctorate in solid-state physics.
I decided that, in order to succeed, I had to understand what made the business go, what contributed to the top line and bottom line. So I took the same courses that somebody who sells the product needs to take, and passed 10 different exams to become a chartered life underwriter. Once I understood how we created and sold insurance products I knew I could use technology to influence business results.
This orientation toward business results - driving new sales and productivity, increasing customer retention, reducing administrative costs and increasing profit - became my success formula for creating value with IT. MetLife was the first large life insurance company to automate its sales offices, and it gave us a competitive advantage. At the time, a lot of people were sceptical of the initiative, but because of my knowledge of how agents made sales, I was able to make the case to the executive vice president of individual insurance operations as to how different the world would be if we took advantage of the then emerging mini-computers to move systems out to the sales offices.
It's All About the Numbers
By far, the largest expense in the insurance business is paying claims. The obvious question becomes: 'How can IT help the business drive that cost down?' When we do so, we drive those savings right to the bottom line. The impact can be measured in millions of pounds.
For a health plan like Humana, we accomplish this by providing tools that offer transparency to patients about healthcare utilisation, its costs, and options they can discuss with their doctor such as the potential to switch to a lower-cost generic drug. We implemented an IT-enabled programme called 'maximise your benefits' that creates value both for our members and the company. We use outbound automated calling, personalised monthly statements and pop-up customer care screen alerts to advise our members of opportunities to switch from a brand-name medication to a generic. We also let members know that they could save money using our mail-order facility to fill recurring prescriptions instead of going to a pharmacy. We then use analytics to measure the results, for example by tracking whether individual members took our recommendations. We can see which type of message is most effective in changing behaviour, and calculate savings. The results have been significant, and are directly attributable to IT.
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