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Internet
Technology: Boon or Bust for Public Risk Managers? 
By Randy Wheeler
There’s no doubt that the hard market has brought a
scarcity of coverage, an expansion of exclusions and a significant
increase in premiums for public entities. As a result,
these organizations are struggling to find new ways to protect
their assets.
Today’s public risk managers are being asked to do
more with less. They not only handle risk financing, but also
must focus on overall risk management strategies, such as
safety programs, educating staff members on new policy and
procedures, developing proper loss control strategies in key
areas and determining the effectiveness of each initiative.
To improve performance, risk managers need a more
rapid and effective means to identify risks before they result
in significant losses, to monitor key performance indicators,
improve communications and share information among all
stakeholders involved in the risk management process. To
meet these needs, risk managers would significantly benefit
from the connectivity, transparency and real-time benefits
that Internet technology delivers.
Technology
as a Tool; the Internet as a Vehicle
Public risk management has always been
achieved through a lot of common sense backed up by good data,
but where
does this data come from? And how can risk managers get
their hands on it?
Organizations are now looking to the Internet as a way
to more directly and immediately facilitate the accessing and
sharing of information with key decision-makers. After all,
one bad claim can result in thousands, even millions of dollars
in losses. To identify and control these losses, public
entities must utilize Internet systems to achieve connectivity,
transparency and real-time notification:
Connectivity—Public entities have long been in search
for convenient, cost-effective connectivity with individuals
that need to communicate, including claims adjusters, risk
managers, nurse case managers, supervisors and excess carriers.
In this way, they can share information as it develops.
Traditionally, decisions to connect these individuals were
based on the costs of building a connectivity infrastructure,
typically utilizing dial-up or dedicated lines.
Today, the cost savings achieved by true Internet connectivity
vs. building a “private” network can be measured
in the thousands of dollars per location saved each year.
Even for entities with a private network already in place, utilizing
Internet-based solution for risk management and
claims administration still pays for itself in a few months.
These systems are also flexible, and easily adapt to new
offices or remote users that may be connecting from a PC,
Mac, PDA or even a mobile phone.
Transparency—In our consumer-driven society, convenience
is of utmost importance. Everyone wants easy access to
the information they need, without being bothered with
where the information came from or how it was compiled.
Internet systems are vital to delivering critical information
where and when it’s needed most. At the sametime, the transfer
and management of this information
remain transparent. Instead of having to access multiple
applications with different system requirements, user IDs
and passwords, users simply retrieve what they need from
one site. This saves an incredible amount of time, money
and hassle.
For instance by using an Internet system,
public entities have lowered both their training
and installation costs for software, hardware and
networking needs and achieved increased information
transfer as users are more likely to use the
application when using only one site.
A good example of transparency is a claims
administration system that automatically accesses
the latest labor codes, compensation rates, medical
bill repricing schedules and PPO contracts. The
user doesn’t have to “perform” an information
update from their workstation, nor does the IT
department have to manage multiple batch data
interfaces.
One public insurance pool now accesses
information for several data sources from a single
site, streamlining communication between the
pool, various members and their third-party
administrators (TPA). At one time, the pool had
utilized administrative staff members to fax information
back and forth, create spreadsheets to
track and create reports, and to obtain information
from a variety of Web sites. After deploying the
Internet system, the pool was able to re-deploy
one FTE per each member to more productive
roles, and significantly improved their claims outcomes.
The savings in improved outcomes is more
difficult to measure, but far exceeds the administrative
savings.
Real-time notification—Keeping up with the
latest, most important losses and developments
within an organization is a critical issue. By using
Internet-based business rules, a public entity can
instantly inform its risk manager of an urgent
claim or loss through native Internet tools like email
or via wireless notification to a pager or cell
phone. For instance, if a significant loss occurred,
such as a fire at a school, the system would instantaneously
notify key decision makers and managers
about the incident, so they could initiate
appropriate response measures.
Real-time notification allows risk managers
and executives to be better informed, prepared for
meetings, and compliant with statutory timelines.
For instance, many tasks and functions in workers’ compensation
run on mandated timelines. If these deadlines are not met,
a public entity can be liable
for penalties. With real-time notification, public
entities can improve communication, and thereby
reduce penalties on late regulatory reporting, late
payments or late reporting on excess claims. As a
result, a lot of savings have been achieved and
penalties averted through real-time notification.
The Lay of the Land: Knowing
What Internet Systems Are
Available
Many of today’s risk managers, feeling comfortable
with the Internet in other areas of their lives,
are more inclined to use the latest Internet tools
for risk management. However, it’s important
to understand the various types of systems that
are currently available and the benefits and
disadvantages of each:
Internet-enabled—Many public entities have
Windows-based or mainframe-based applications
that utilize the Internet for remote access and to
drive one or two functions. For the most part,
however, public entities cannot fully leverage the
Internet’s real-time capabilities for their risk management
functions using this model.
Application service providers (ASPs)—An
ASP allows companies to access their system for
a “subscription” cost. The ASP handles the
installation, housing, maintenance and upgrades
to the system. Many of these applications are
client-server or mainframe applications that have
been modified to run over the Internet, utilizing
middleware technology, which not only creates
additional technology expenses, but also creates
vulnerabilities and/or problems in an organization’s
firewall security.
Truly Internet-based/Browser-based—The latest
applications have been specifically designed to
run over the Internet. A browser-based system as its
name suggests only requires a browser—which is a
standard option on most PCs. Since browser-based
applications do not require middleware, they are
more cost-effective, secure and offer an improved
Internet model. It allows for immediate access to
information at anytime, from anywhere. More companies
are looking to browser-based technology to
solve their risk management needs.
Owning & Accessing Claims Data
Public risk managers not only need access to
claims information in order to analyze losses and
key performance indicators, but they also need to
monitor the claims process as a risk factor in and
of itself. Claims process inefficiencies add significantly
to claims costs. Many public entities are
now purchasing their own browser-based claims
administration system to ensure that the claims
process is managed efficiently and to also have ultimate
control over their claims data whether they
are self-administered or TPA-administered.
Later, if a public entity decides to use another
or an additional TPA, no data conversion is
required; the new TPA simply logs on over the
Internet to the entity’s browser-based system. In
addition, public risk managers would not have to
rely on the TPA to provide risk management
reports, instead risk managers would have direct
access to the information they need, when they
need it. Internet-based business rules can also be
set up to immediately notify individuals when certain
types of claims or activities have occurred, so
a proper response can be initiated.
Tracking Key Performance
Measures
Until recently, few public entities had systems in
place to capture the full range of data to analyze
losses and to understand the effectiveness of their
risk management initiatives. Today’s integrated
claims administration and risk management
systems available via browser-based technology
now allow public entities to have a centralized
data repository from which they can monitor key
performance measures.
By leveraging the Internet’s connectivity,
these measures are more readily accessible and
can be utilized to identify potential opportunities
for improvement and to formulate new initiatives
that further reduce losses. If a key performance
indicator is at a critical risk level, real-time notification
can be leverage to automatically inform the
appropriate decision maker or manager.
The Future of Internet Technology
The connectivity, transparency and real-time
nature of browser-based systems can help public
entities institute effective claims administration
and risk management strategies. The quality
of any initiative depends almost entirely on
individuals receiving the “right” information to
do their jobs effectively. The Internet has
become a powerful tool that enables the access
and sharing of information among all stakeholders.
Public risk managers who use browserbased
technology can drive their risk management
initiatives with greater business intelligence,
simplicity, and control.
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Kevin Confetti