Increase customer conversion rate by offering network risk assessments at no charge to organizations looking for coverage of $5m or above.
Done.
New business model helping AIG better service its customers and mitigate the risks associated with the Internet.
AIG eBusiness Risk Solutions (AIG eBRS) is the global leader in identifying, evaluating and managing Internet-related risks. AIG eBRS offers a comprehensive suite of products and services combining insurance, information services and technology that support eBusiness at its most sensitive touch points: network security, trade credit, identity and credit card fraud. AIG eBRS offers insurance, technology and information solutions against a range of threats including unauthorized system use, disclosure of confidential data and denial of service.
Shattering the e-insurance paradigm
e-Business offers exciting opportunities in the new economy, but it also includes risk – liability claims, errors and omissions litigation, extortion, network security failures, loss of property and e-business interruption. The effects can take a heavy toll on a company's profitability, brand, corporate image and stock value. By reinventing the insurance paradigm, AIG and Unisys provide an innovative approach to helping companies protect themselves.
AIG is the leading U.S.-based international insurance and financial services organization and the largest underwriter of commercial and industrial insurance in the U.S. Its member companies write a wide range of commercial and personal insurance products through a variety of distribution channels in approximately 130 countries and jurisdictions worldwide.
AIG eBusiness Risk Solutions (AIG eBRS) is the global leader in identifying, evaluating and managing Internet-related risks. Now, working with Unisys, the company has responded to one of the key challenges facing the insurance industry, the growing demand for services and products that insure businesses against breaches in Internet security, data corruption and downtime. Ty Sagalow, executive vice-president and COO, AIG eBusiness Risk Solutions, says: "We needed a partner with the vision to change the rules in this rapidly growing marketplace, but who was also prepared to share the risk in a completely new form of business partnership. Unisys helped us come up with a stunning solution."
Businesses worldwide are crying out for an innovative solution to lower the cost of online crime. Once connected to the Internet, an enterprise's systems are vulnerable to internal and external attacks that could steal, damage or destroy vital information. But the move towards globalization and e-commerce means that most businesses need to deliver non-stop availability to customers and partners. The moment a database or network is disabled, the meter starts running on lost revenue and customer goodwill.
A new vision
How do you protect your business against hackers quickly and cost-effectively? AIG responded with the launch of AIG eBusiness Risk Solutions, a division that offers insurance, technology and information for organizations that want to protect their information systems. The company enables businesses to insure against security failures that result in unauthorized system use or access, disclosure of confidential information, transmission of computer viruses or denial of service through its innovative product, AIG netAdvantage. Through this program, customers can even claim against the cost of a public relations campaign to restore confidence in the wake of a security breach. The company also offers insurance for e-merchants for charge-backs arising from the fraudulent use of credit cards, cargo insurance when goods ordered at online exchanges are lost or damaged in transit and online trade credit insurance for B2B transactions.
AIG eBRS immediately recognized that to guard against unacceptable claim losses, it needed applicants looking for high-limit policies, to undergo an assessment of their network's security. But the assessments to look for weak points in the network on each new application were costing AIG's applicants $50,000 each. Sagalow says, "In many cases, this was unworkable for the applicant. Typically, risk managers would need to get budget approval from the chief technology officer or chief financial officer to pay for the cost of a third-party to assess the security of their network. This greatly impeded the insurance underwriting process resulting in lost opportunities and lower revenue for AIG."
Sharing risk and success
The company was determined to break away from this customer-burdened, expensive and inflexible business model – but it needed an innovative and committed business partner to make this vision reality. Unisys was a natural choice, having worked with AIG in many business-critical areas. "We were totally aware of the Unisys commitment to projects in the past, but we were even more impressed with the speed and creativity of their solution to this challenge. It takes a player like Unisys to change the game rules - that's what makes them such a great company to work with." In brief, Unisys and AIG developed a shared-risk business model and a business process methodology that includes both a Web-based security assessment tool and an onsite assessment. Unisys Internet risk assessment consultants examine an applicant's systems and interview key management personnel, such as chief security officers, network managers and HR executives. The consultants also prepare an extensive report and a security scorecard.
AIG can now offer these services to applicants at no charge and with no obligation to take on AIG as the insurance provider – as long as the policy limit applied for is $5m or above. So how can AIG and Unisys make a business case for providing a $50,000 assessment at no cost to the applicant? Its success is based on clarity of vision, determination to break away from received business wisdom and sheer willpower. Sagalow explains: "AIG and Unisys are equal business partners in every sense of the word, especially in the way that we share the risk in this project. We don't make any money unless customers follow up the report with business, and Unisys has sacrificed a flat fee in favor of a percentage of any premiums. Together we calculated that as long as one in three companies followed up the assessment with business then this approach would be profitable." Clearly the market has embraced this new approach. The initial success rate shows more than 75% of those assessed have become customers since the service was officially launched in early 2001.
With 1,200 customers and operations in the US, Canada, Europe, Asia and South America, the new service will cement AIG's reputation as the most forward-looking provider of insurance services and products in the world. But as Sagalow points out, none of this would have been possible without Unisys. "This partnership between an insurance company and an IT services provider is totally unprecedented. Thanks to Unisys we have a solution that has blown the competition out of the water and dramatically increased our business conversion rate as well as customer profile." As a result, Sagalow expects that the AIG/Unisys relationship will expand, to include other areas of business, "Both companies complement each other perfectly – it's a beautiful combination that can only go from strength to strength," he says.
