The internet, e-commerce and virtual businesses are reinventing the risk management information system (RMIS) industry as we speak. A Wall Street guru recently said: “Businesses that don't convert to an e-business model won't be around in the next five years.”
What does this mean to risk management professionals today? First, they must understand and embrace the changes taking place. For example, they should know about the new ways to buy, integrate and employ RMIS products and services. Second, they should keep up with the latest RMIS developments to help them improve their overall job performance. This includes the capabilities that help reduce transactional expenses such as the costs of claims processing via internet-based reporting and processing systems. Other hot RMIS developments are benchmarking tools that help establish best practices to reduce leakage in the claims management process. Ultimately, all RMIS applications are designed to reduce insurance premiums and capital outlays that flow from risk management program inefficiencies.
New RMIS tools are also focused on enterprise risk management (ERM). They are helping companies view more of their business risks, not only those applied to traditional insurance mechanisms and self-insurance models. The big payoffs for ERM are improved cash flow, revenue growth, capital management and allocation. Look for new RMIS tools to pull all this together, helping users re-engineer their businesses in the process.
Application service providers (ASPs), internet-based software applications/databases, are emerging as attractive alternatives for businesses that want to outsource some or all of their systems requirements and responsibilities. Rather than house, maintain and manage RMIS applications internally, more and more companies are moving to these third party, external sources for their information technology needs.
As RMIS capabilities continue to expand, the challenge for risk managers is to leverage the new e-business offerings. The challenge for RMIS products and services developers is to keep at least one step ahead of insurance carriers, self insureds, agents, brokers and other financial services professionals who continue to expand the boundaries of what they want and need from RMIS tools. Developers who do not respond to this challenge will be gone in a lot less than five years – some are already history.
The biggest advance in RMIS applications over the past two years has been a move from client-server to thin-client, browser-based applications. One of the facilitators of this has been three-tier component object model (COM) technology. Microsoft's Visual Studio, the COM creation tool of choice by leading RMIS developers, lets users easily create new Windows and internet applications from virtually all existing databases, without the need to reprogram their current business rules.
Internet applications let risk management departments open data entry to human resources, line managers and other corporate offices. Third party administrators and insurance companies can use them to provide real-time access to their client's data via the internet. For example, CSC's RISKMASTER.Net internet product uses a combination of ASP, XML, HTML, DHTML, Java Script and VB Script (technologies that facilitate data integration from diverse sources) to deliver an application that supports both Microsoft's Internet Explorer and Netscape's Communicator browsers with a Windows 2000 Server.
Providing an efficient ASP RMIS product depends on selecting the best complementary technology. In most cases that means the product must be designed with COM and support a high-end database such as SQL Server 2000 or Oracle 8i. The web server must provide scalability as the number of clients grows; Windows 2000 Server supports web farms, which provide fault tolerance load balancing between multiple web servers.
The technology used to provide an internet reporting system has not yet been standardised. Some RMIS applications use third-party reporting products such as Crystal Reports, and the recommended approach is to use a report server based on your current Windows reporting system. Windows 2000 Server allows for creation of a reporting server that processes reports and delivers them via e-mail to any internet e-mail user. For non-RMIS users requiring reports, data should be generated in either PDF, HTML or XML format and attached to the e-mail.
For internet product users, the reports may also be left on the server and accessed through the product. XML, the data standard for exchanging data over the internet, is an important option if the data needs to be converted for use in another system.
Regulatory compliance forms change on a regular basis and can be very costly to keep updated. Electronic data interchange (EDI) has been adopted by many US states for first reports and subsequent reports of injury. However, this only handles a small subset of the forms produced daily for a workers' compensation claim. In California, there are over 100 state forms that may be used in order to administer a claim. Adobe Acrobat's Portable Document Format (PDF) can be used to reduce the cost associated with producing and maintaining state forms. Clients can type information directly onto the form using Acrobat and the information is automatically attached back to the claim in the RMIS system for future reference. This solution lets clients use virtually any printer for producing forms, reduces errors associated with manual processing and allows for faster claims processing.
Until recently, RMIS user issues were tackled as individual events by RMIS support centres. Now, with the emergence of client relationship management techniques and leaner, higher-skilled staffs, we're seeing a dedicated team approach to maintain closer working relationships with RMIS users. Support counsellors are now assigned to specific users, as are sales representatives and account managers who all work together on behalf of users. The goal is to better serve clients as their needs change over time. By taking this approach, RMIS providers are intimately aware of each client's information technology system and the history of their RMIS issues. As a result, all concerns are handled much faster and more efficiently. RMIS providers who practice this approach are also able to anticipate issues, which can save their clients time and money.
While the support industry survived potential Y2K meltdowns with flying colours, it now faces other big challenges. For example, operating system manufacturers have abandoned 16-bit technology, leaving RMIS developers little choice but to move on with them. As a result, support counsellors are responding now to both 16-bit and 32-bit technology issues.
They also are handling delicate migration issues related to the move from 16-bit to 32-bit technology. A priority now is developing and implementing a plan that lets users make the migration with minimal impact/interruption to their business operations. In the next year, smart RMIS users will make the transition from 16-bit to 32-bit because, like the move from DOS to Windows, those who don't will soon find themselves left behind as the technology curve keeps advancing.
If you are using a RMIS application now, it's time to employ your system on the internet. If you are about to purchase a RMIS application, make sure it has a browser-based edition. The internet offers too many benefits to work any other way for most users.