Archives for December 2010

It's a Relationship Business

How many times has that been said about commercial lines insurance? The prevalence of the trusted advisor model, the independent agent, is evidence of the value of an intermediary between the insured and the insurer. But, relationships are expensive and at low premium levels, not worth the investment.

Just ask the small business owner. Servicing a policyholder whose premium is in the $2,000 to $10,000 range is problematic. Agents are hard pressed to conduct risk reviews to identify emerging exposures. Risk engineering and safety audits do not have a positive payback. Technology increasingly enables companies (and agents) to underwrite policies and accept or reject them based on standard application information without underwriter intervention (commonly called straight through processing or STP), totally removing any consultative human element from the transaction.

That’s why a recent briefing was especially interesting to me. A software vendor reviewed their newly launched initiative which uses their technology to sell to and service the small business customers of one of the largest credit card companies in the world. Their program will provide an immediate quote from participating insures to an applicant who submits their information through a web browser. If help is required, there is online chat and call center support available.

The quote and issue process is very impressive and represents the best in leveraging open architecture and standards that our industry has been working so hard on for so many years. The intriguing part for me, though, is the possibility of linking the credit card history with advanced monitoring software to reach a new level of risk service for this typically underserved market.

Like an individual, a small business has a repeated and predictable buying pattern. When this patterns changes, there is the probability that the business faces new risks that may not be covered under a standard Business Owners Policy (BOP). Credit card companies use sophisticated fraud detection routines to identify abnormal buying patterns. (Who hasn’t received that scary voicemail from the Fraud Department saying “call us immediately”?) The same approach can be applied to small commercial accounts. For example, if a business begins charging international airline tickets, it is an indication that the company will soon begin selling products globally. At a minimum, the owner needs to understand the risks to the business when employee(s) travel overseas. It would be very simple to generate an email to this effect, or use the call center or an advanced interactive voice response system to contact the owner and make them aware of the insurance coverage options for such risks. This automated risk management thus replaces what usually happens in an agent relationship.

There are risks and privacy issues related to the increasing amounts of data mining that is now possible. However, when I see such a convergence of analytics, standards, automated underwriting, and technology-driven support structures, I am encouraged by the benefits which such advances can bring.

2.24.11: Celent Insurance Webinar: Creating Business Value from Business Process Management: Solutions in Insurance

Benjamin Moreland, Senior Analyst, Insurance Group This event is free to attend. Celent clients and the media will have access to the webinar’s PowerPoint presentation after the event. Please click here for more information.

A Christmas Carol from the Celent Insurance team

Unlike Charles Dickens’s marvelous work, this is not a ghost story, but it is intended to raise a Ghost of an Idea, which shall not put my readers out of humour with themselves, with each other, with the season or with me. May it haunt their houses pleasantly, and no one wish to lay it. The first of three spirits Legacy system issues continue to haunt Insurance CIOs, but never fear, Celent has a wide range of reports on the topic that continue to be relevant. And with a legacy system survey just completed, more content will be coming shortly. Many insurers face the prospect of having more insurance core systems than they need, with consolidation efforts certainly high on the agenda. Modernisation has been a repeated topic for Celent reports, and approaches have evolved over the years. Below is a selection of reports looking at elements of the problem – not least of which is assembling a case for doing the work. The Challenge of Legacy Modernisation, Part 1: A Data View, November 2008 Taking on the Legacy Challenge: A Swiss Insurance Business Case, December 2008 Controlling the Risk in Insurance Data Conversion, December 2010 The Labours of Hercules: The Challenges Facing Insurance Enterprise Architects, June 2010 And from our Banking colleagues – A Christmas Carol: Wells Fargo Sings the Praises of SOA, December 2007 “I told you these were shadows of the things that have been,” said the Ghost. “That they are what they are, do not blame me!” The second of three spirits 2010 has been an incredible year of change. The financial crisis has had a major impact, perhaps one that leaves us in mind of weakened but ever optimistic Tiny Tim. As the crisis continues to rumble on, one must ask – is this a temporary thing? Something truly of the present and soon forgotten? This topic is well covered in Celent’s report on the new normal. On a lighter note, it is fair to say that mobile has arrived as a channel for the insurance industry. With so many insurers investing in the medium, interest from customers and partners in this new direct channel seems to have evoked the imagination of the industry even more than the Internet did. Meanwhile modern insurance core systems offer more promise than ever, whether they be end-to-end solutions or components thereof. Celent’s coverage of claims vendors and PAS vendors is still of great interest as many insurers invest in their technology platforms. The functionality and flexibility in these systems are unprecedented, and now, if ever, is a great time to review a core systems strategy. Some relevant reports: Is Today the New Normal for the US Insurance Industry? October 2010 North American SnAppshot: A Look at Mobile Apps Aimed at Insurance Consumers, November 2010 North American Life Insurance New Business and Underwriting Systems, 2010, November 2010 European Claims Vendors in 2010, June 2010 “My life upon this globe, is very brief,” replied the Ghost. “It ends to-night.” The last of the spirits And so to the future, and a mysterious one it is too. There is a great shift occurring in the way people communicate, discover services, and make use of them – perhaps greater than the adoption of the Internet. The implications are not yet well understood. The more the Internet can be accessed anywhere, the more people that are creating more content and sharing more information, and the more that mobile and social technologies will play a key role. How will agents interact with customers? How will customers purchase insurance? How will claims assessors share their findings? On top of this, the way business is done is being challenged. Now it is possible to find third parties that are almost like being able to rent a piece of a business. IT services of all shapes and sizes are on offer, and IT hardware and software can be rented for nominal rates with SaaS options. The way to run enterprises large and small is changing, bringing opportunities and threats to the industry. E-Business Strategies for a New Mobile World: Considerations for Insurance, November 2010 IT Services Vendors Solutions Spectrum: EMEA Version, 2010, November 2010 IT Services Vendors Solutions Spectrum: North American Version, 2010, April 2010 Leveraging Social Networks: An In-Depth View for Insurers, April 2010 Approaching the Boiling Point: BPO, SaaS in Insurance, November 2010 Oh – and our event in London: ” New Rules of Engagement: How Digital and Social Innovation Challenge the Insurer Business Model” “.. Assure me that I yet may change these shadows you have shown me, by an altered life!” The End of It We here at Celent wish you all the best and a happy holiday period. Forgive the weak link to the great work herein and rest assured we look forward to working with you into 2011 and beyond.

An "official" guide to writing applications for the mobile web?

Mobile insurer apps have seen a great deal of press and investment in the last year, it’s about time the mobile web saw some attention too. Every insurer that Celent has spoken to about mobile apps has also invested in the mobile web – that is to say that insurers are working towards ensuring their existing web sites also work with smart phones, tablets and other portable devices. The World Wide Web Consortium, the international standards body behind other internet technologies, has published a best practices document for building applications in the mobile web. For each of the 32 best practices and the 3 additional advisory notes the document offers advice on what the best practice is and how to achieve it. Also available are a simple set of reference cards for the best practices that may be more useful to developers and of course, there is a mobile friendly version of the material as well. This document then is a must read for e-business and technology leaders in insurers and for the service providers working with them. In our recent research, we have found that the top insurers all have some sort of mobile app and that these have functionality that stretch across the full life cycle of an customer from a person looking to purchase a car or looking for information about insurance products through quoting, finding agents, buying insurance and all the way to making a claim. Many of the apps make novel use of smart phone features such as location information and the ability to store data. Since these capabilities are coming to the mobile web with the arrival of HTML5, this set of best practices can only grow in significance. The document has existed as a proposed recommendation for some time with a veritable who’s who of the Internet involved in it’s authorship. The document moved to a full recommendation on the 14th December 2010. The document can be found here: http://www.w3.org/TR/mwabp/ and the reference card here: http://www.w3.org/2010/09/MWABP/ The cheat sheet site is available here: http://www.w3.org/2009/cheatsheet/#mwbp

1.27.11: Celent Insurance in London: New Rules of Engagement: How Digital and Social Innovation Challenge the Insurer Business Model

Celent senior analysts, Insurance Group Admission to the event is free for Celent clients, insurers, technology firms, and the media, but space is limited and pre-registration by Thursday, January 20 is required.

Please click here for more information.

2.11.11: Celent 2011 Insurance CIO Roundtable: Insurers and the New Normal

Celent senior analysts, Insurance Group

Admission to the event is free for Celent clients and the media, but space is limited and pre-registration by Thursday, February 3 is required. Non-clients can attend for a fee of USD $495 for just the CIO Roundtable or $750 for both Model Insurer and the CIO Roundtable. Celent will contact non-clients after they register for credit card information. Please click here for more information.

2.10.11: Celent 2011 Model Insurer Summit: Exchanging Ideas on Effective Use of Technology

Celent senior analysts, Insurance Group

Admission to the event is free for Celent clients and the media, but space is limited and pre-registration by Thursday, February 3 is required. Non-clients can attend for a fee of USD $495 for just the Model Insurer event or $750 for both Model Insurer and the CIO Roundtable. Celent will contact non-clients after they register for credit card information. Please click here for more information.

1.13.11: Celent Model Insurer Asia Summit 2011: Exchanging Ideas on Effective Use of Technology

Celent senior analysts, Asian Financial Services Group Admission to the event is free for Celent clients, insurers, technology firms and the media, but space is limited and pre-registration by Wednesday, January 5 is required. Conference hotel reservations, if required, are recommended by Thursday, December 16, 2010. Please click here for more information.