Sample Record for Search: Journal of Commerce Fulltext

Text:
The crisis in data storage facing the insurance industry with the turn of the millennium could be a springboard for launching important changes in insurance data collection, according to a Nebraska Department of Insurance official.

Come the year 2000, all computers in the world are going to need to register dates with eight, instead of the traditional six, digits. Instead of 09-26-65, for instance, it will be necessary to write 09-26-2000. Most companies use the date in their computer data, and most companies use an automated way of comparing one date with another.

If a bill is overdue, for example, the computer will trigger an alert because it automatically compares the current date with the due date. But when the last two digits of the year go back to zero, false readings will result, with bills being 99 years ahead of time, and so on.

Even though it's only a matter of two digits, the problem is huge, especially for insurance companies, which have millions of policyholders and policies that need renewing every year. An expensive reforming of databases is being undertaken at present.

Alan Wickman, head of the actuarial division at the Nebraska Department of Insurance, hopes to "kill two birds with one stone" by persuading insurance companies to redesign their databases, making it possible to pass on more detailed information to statistical organizations that compile tables and observe trends.

Mr. Wickman said his work as a regulatory actuary active in the National Association of Insurance Commissioners (NAIC) work had led to efforts to figure out ways to get information about insurance premiums, claims and policyholders in more useful forms, more quickly and with more assurances of data quality.

"When we get information from insurance companies about premiums and losses, there's often a great deal of summarization that occurs," said Mr. Wickman in a telephone interview Thursday. "If we want something sliced and diced a different way, it simply can't be done."

Mr. Wickman said the NAIC was particularly looking for more information on premiums and exposures. "We're looking for losses to be entered individually into the system," he said.

On the face of it, this is the best kind of opportunism, making the most of a difficult situation. However, there are a couple of drawbacks. Not the least is the issue of cost although Mr. Wickman says the NAIC is trying to direct things so that a small cost falls on the data processing agencies, such as the Insurance Services Office and the National Association of Independent Insurers, rather than a large cost falling on the individual insurance companies.

However, it was too early to gauge the impact on information gathering bodies.

"This is really a company issue. At this time, we don't really have a position on it as it's to do with the individual company and the separate states they are in. We can't comment at the moment because it's not clear how they're going to go about this," said Susan McKenna, spokesperson for the NAII.

The other problem is that companies that spotted the year 2000 problem early already have redesigned their databases without taking the NAIC ideas into account.

Descriptors: