Performance Anxiety

The pages of Insurance & Technology are filled with case studies and success stories—articles about how insurers solved problems and improved service through technology implementations and investments. But sometimes it's the flip side—the tales of systems failures, confusion and missteps—that catch one's attention. These are the stories that make me wonder if anyone's actually paying attention.

For example, last month Aetna Inc.—which made a strategic decision a few years ago to specialize in health insurance and managed care—announced it has been paying some claims twice and paying medical bills for people who are no longer members (due to "communication lapses" within the claims management organization). Aetna CEO Dr. John Rowe estimated the company has overpaid millions of dollars, although he was unwilling (or maybe unable?) to specify the exact amount. "I think there is a great sense of urgency" about this situation, Rowe told attendees at an annual investor conference. Glad to hear that!

What's been identified as the main cause of this problem? You guessed it—faulty IT. About 11 percent of the claims Aetna receives need further review or additional information before they can be processed, according to Rowe. Of these, half are duplicates, occurring when healthcare providers use more than one method to submit claims forms. An Aetna spokesperson says the firm will take a more "disciplined" approach to identifying and preventing overpayments.

Meanwhile, in the securities industry, two big exchanges recently experienced systems crashes. Nasdaq had a failure of its Small Order Execution System following installation of a new CPU and related software to its mainframe cluster. The system was down for 30 minutes, forcing brokers to take orders by phone, rather than trade electronically.

A week later, a "routine" software upgrade to the New York Stock Exchange's Post Support System disrupted communications between the trading floor and two remote data centers, which halted trading for about 90 minutes. The exchange wasn't fully operational until the end of the day. At press time, it still wasn't clear what had gone wrong.

Yeah, yeah, no one expects technology to be 100 percent reliable 100 percent of the time, occasional crashes are inevitable, user patterns are changing, rapid expansion and growth put a strain on systems, vendors don't stand by their products, blah blah blah. If your "core competency" is health insurance, how can you not handle claims? If your reason for being is trading, how can trading be halted?

We operate today in what might be called the "no-excuses" economy. There's no excuse or reason for anything less than absolutely consistent and excellent performance. The pressure is on—and will be on CIOs, in particular—to execute, or else.

Katherine Burger is Editorial Director of Bank Systems & Technology and Insurance & Technology, members of UBM TechWeb's InformationWeek Financial Services. She assumed leadership of Bank Systems & Technology in 2003 and of Insurance & Technology in 1991. In addition to ... View Full Bio