Worker compo chief keys up for challenge of free market

By Richard Braddell

WELLINGTON - Identifying trends early and doing something about them is the key to making money in insurance, says the new chief of the Crown entity @Work, which has been set up to compete against the private sector in the workers' compensation market.

Sam Knowles, once head of the Bank of New Zealand's retail financial services and more recently the global product manager at the Melbourne headquarters of the National Australia Bank, says the automation of processes not only drives down costs.

It also vastly improves the ability to gather new kinds of information that can be used for marketing or to identify trends in accident experience or rehabilitation costs.

"You collect all the information as you go along, the letters and their imaging, and put it into structures so that it comes up when you need it," says Mr Knowles of a process he distinguishes from the more familiar data mining, which involves separate searches of databases.

@Work's systems will operate in such a way that 70 per cent of employers - those with their ACC history, their insurance number from the Department of Labour and an appropriate Inland Revenue form - will be able to use them without human intervention.

Work on getting the state-owned enterprise going has been under way since January, with Mr Knowles taking up his position last month.

@Work will automatically become the workers' compensation insurer for all those employers who do not get round to taking private cover.

Such contracts will be for an initial three months, at which point Mr Knowles hopes the customers will be sufficiently satisfied to stay.

Retaining business will owe much to pricing and service, and Mr Knowles reckons @Work will be competitive since it has what he considers the most detailed "pricing engine," developed by actuaries who "really understand ACC data."

The 30 per cent of applications that do require human input will be assessed by staff from GIO, the Australian insurer which is one of @Work's strategic partners.

On the distribution side, @Work is also using GIO, State Insurance and brokers, along with its own direct selling; in claims and injury case management, it is forming relationships with a number of "very good" providers.

But in the end, the market is still shrouded in uncertainty. @Work is expected to get a large part of the market by default, perhaps as much as 30 per cent.

To Mr Knowles, that is a matter of conjecture. Although the new company has received a large number of inquiries, there are still a few weeks to go before it is known how many will turn into tangible business.