Insurance industry changing with conditions.

• Author: Brandon, Lynne
• Position: Special Advertising Section - Risk management information systems

Think your business has it rough? Consider the insurance industry. In recent years, it has dealt with regular business problems as well as unpredictable forces such as terrorism and weather. Little wonder, then, that many in the industry have turned to new ways of doing business to stay successful. Profitability and adjusting to new technologies, legal reform and state regulation are all challenges for North Carolina companies.

As one of the world's top risk-and-insurance companies, New York-based Marsh has more than 38,000 employees, annual revenue of $5.9 billion and clients in more than 100 countries. One way Marsh has ensured its ability to meet client needs is by using new technology.

Since 1990, the company's risk-management information-services software, STARS, has helped clients manage the data and work flow associated with risk, insurance, claims and legal matters. Its commitment to serving clients is strong, and Marsh invests more than $6 million a year in software development. It's getting results. STARS was ranked first on Business Insurance magazine's 2003 list of the country's largest risk-management information system vendors, and Marsh was ranked by InformationWeek as the best technology innovator in the insurance industry in consecutive years. "The use of risk-management information systems is a trend in technology that can substantially increase an organization's efficiency," says Robert Hunter, managing director of Marsh's North Carolina operations, which are based in Charlotte.

The insurance sector has had to address terrorism since the Sept. 11, 2001, attacks on the World Trade Center in New York and the Pentagon in Washington, D.C. Although the federal Terrorism Risk Insurance Act enacted in 2002 affected many organizations, the vast majority still do not have terrorism coverage. The act requires insurance companies to offer coverage for acts of domestic terrorism. In return, the federal government assumes some of the financial risk. The secretary of the treasury must certify an event as an act of terrorism before it qualifies for a TRIA payout. Businesses also can purchase stand-alone terrorism-insurance policies that don't require government certification. Government participation has helped lower the price of terrorism insurance.

In a recent survey of 2,400 U.S. businesses, Marsh found that rates dropped by 42% from the second quarter of 2003 to the fourth quarter. It is not surprising that during the same period...