Survey finds insurers ill-prepared for Y2Kgreenspun.com : LUSENET : TimeBomb 2000 (Y2000) : One Thread
Survey finds insurers ill-prepared for Y2K
Wednesday, March 31, 1999
By DAVID SHOOK
One-quarter of all insurers surveyed this year have made inadequate progress preparing for Year 2000 computer problems, according to Weiss Ratings Inc., a Florida company that analyzes insurance carriers.
"To find one-quarter of the survey respondents behind schedule is very disconcerting," said Martin Weiss, chairman of the ratings firm, in Palm Beach Gardens.
Weiss found that 253 insurance companies, about 25 percent of the 984 surveyed, were ill-prepared for dealing with the so-called Y2K bug. It is expected to occur in mainframes programmed to recognize only the last two digits of a year, rather than four digits, and would therefore read the year 2000 as 1900. While some systems can be reprogrammed, many machines have embedded microchips that must be replaced.
None of the 16 New Jersey insurance companies that responded to the survey scored below average or appeared to be inadequately prepared, but 73 New Jersey insurers failed to respond, Weiss said.
"I am even more concerned about the group that did not respond," he said. "It is highly probable that an even greater percentage of these non-respondents are behind schedule, given the tendency for better-prepared companies to come forward more readily."
The survey asked 5,453 insurance companies questions about their timelines for completing milestones in Y2K remediation and testing. Less than 20 percent responded.
The survey asked about completion dates for remediation tasks and used as reference points the Y2K standards established by the National Association of Insurance Commissioners.
Twelve percent of those surveyed received a low grade. Eighty-two companies, or 8.3 percent of those responding, have made strong progress in addressing the Y2K problem, the survey found.
Prudential Insurance Company of America, based in Newark, received an average grade, meaning the company has made adequate progress upgrading its systems. A Prudential spokeswoman said the company has met all deadlines for system testing.
Chubb Co., headquartered in Warren, did not respond to the survey.
"I think the primary reason companies are behind is because they don't realize they are behind," Lackey said. "In terms of insurance companies, a majority out there are not aware of the NAIC guidelines. Most companies are unaware of specific timeframes they should be hitting."
Lackey said the low response to the survey is probably due to the tendency for companies to resist being judged by an outside analyst.
"We have responded to some of the surveys of the rating agencies but Weiss was not one of them," Chubb spokeswoman Gail Devlin said.
Devlin said all but one of Chubb's computer systems is tested and Y2K-compliant. Testing on the remaining system will be complete by the end of the next quarter, she said.
Unlike banks, in which federal regulators are mounting a more aggressive Y2K effort, insurance companies are regulated by individual state departments that have varying degrees of attention to the problem, Weiss said.
The New Jersey Department of Banking and Insurance began its own evaluation of the state's insurance carriers' in December.
Each company was required to complete a Y2K preparation plan. Testing should have begun by September 1998, and must be completed by June 30.
"So far, we have not had to take any action," said Division of Insurance spokesman Bill Heine.
-- Y2K Pro (firstname.lastname@example.org), March 31, 1999
Kinda pessimistic for you aint it Pro?
-- Hmmph! (email@example.com), March 31, 1999.
See One Quarter of U.S. Insurers Behind Schedule
(Wow, Y2K Pro and Sysman posting the same story!)
-- No (firstname.lastname@example.org), March 31, 1999.
They say the weirdest things happen when the moon is full...and it's the eve of April 1...doo doo doo.
Probably just coincidence, but it makes for interesting conversation nevertheless. ;-)
-- Tim (email@example.com), March 31, 1999.