Archives for January 2011

Claims Investigations Using Social Media

I had a very interesting discussion with a claims investigator last Thursday at Celent’s industry networking event in London (New Rules of Engagement: How Digital and Social Innovation Challenge the Insurer Business Model – see Nicolas’ summary of the event on the Celent Blog). He went into some detail about how they were using social media in their claims work.

As background, this gentleman is the Managing Director of an independent investigation company based in London which serves the UK market. His company has expertise in both personal and commercial claims and is hired by insurance companies to detect and research suspected claim fraud.

He confirmed what I have heard from other claims investigators – their first step in an investigation is to check the social networking sites for information. What he added was a richly descriptive context in which this information is used.

The interview sounds as if it is out of a television script. Paraphrasing his comments, they went something like this:

“After obtaining some interesting information from social sites, we bring a claimant in to the office for a chat. I often say “May I make you a cup of tea?” I then lay a folder on the desk and say “Have a look at this whilst I get your drink”. I then leave the room and they invariably open the folder. In it, we have screen prints of Facebook postings, pictures, Twitter feeds, etc, all of which refute basic facts in their claim statement. Many times it is not the pictures that are most incriminating, it is the text that they have posted themselves. For example, we have discovered postings that read: “I had a great time in Ibiza. I danced all night!” (This can cast some suspicion on the status of a back injury that is paying disability!) I return with their tea and say “Have you had a look? Great. Super. Now, there are only a couple of ways this can go…one, you can sign a paper that relinquishes your claims payments and agrees to pay my fee or two, don’t sign it and we will hand this information over to the police who will begin a criminal investigation.” Obviously, almost all sign.

I felt as though I was in a television show, but a couple of specifics really intrigued me about his comments. First, when I have seen the “have a look at the folder” technique on TV, it almost always contains pictures that someone has taken without their knowledge, or transcripts of wiretaps – both collected by a third party. What is very different about this “evidence” is that the claimant posted it him/herself and offered it freely for the world to see. Something to be said for the efficiency of self incrimination.

Second, I agree that there is an uncomfortable, “big brother”, “Orwellian” aspect to this type of monitoring. I have seen some opinions that criticize insurance companies for using such tactics. My stand on this issue is that insurance fraud costs all of us money and if someone who is adding to my insurance costs can be found out through their own hand, I am all for it. Invading privacy is not acceptable, but using what is voluntarily placed in the public domain should be employed to its full use in order to match insurance rates and coverages with actual exposure.

New Rules of Engagement: How Digital and Social Innovation Challenge the Insurer Business Model

Last Thursday Celent organized an event in London, whose goal was to raise interrogations around digital and social innovation and how it challenges the insurer business model. In order to get some fresh views about this topic, we have decided to invite some speakers who are not directly involved in the financial services industry and insurance. In the first presentation, we learned how Axa UK has decided to take on the social media challenge. For the presenters Chris Denison – Managing Partner in Axa Innovation Hub – and Manjit Rana – Partner in Innovation Hub at Axa – social media is not a “must” but just another communication channel insurers need to understand and leverage where possible. Chris and Manjit explained the audience how Axa determines individual digital profiles, defines target challenges and identifies solution generators using three dimensions: business model, servicing customers and products/services. This analysis has allowed Axa to identify technology options for solving key challenges. Among others, Chris and Manjit identified interesting tool to leverage such as insurance claim validation systems and iPhone applications improving driving efficiency. According to Axa, deeper digital customers will force insurers to deal with unfamiliar technology solutions and risks.

The next speaker was Shaun Gregory – Managing Director of O2 Media. O2 is one of the leaders in the UK telecommunication industry. The key word used by Shaun during his presentation was “fan”. Actually, the goal of O2 is to “turn customers into fans”. To do so, O2 tries to leverage different kinds of social media tools to improve its product offering in the media business. For instance, the company uses a location tool to target people and inform them about stores and activities that might be of interest to them depending on their location. In addition, O2 also launched credit cards and a contactless payment system via mobile. Shaun’s message to the audience was clear: if you want to turn customers into fans you’ve got to anticipate their needs and provide them with the services that will fulfill these needs straight away.

Engaging with customers the Google way was the following presentation. Jo Hind – Head of Finance at Google – reminded the audience about some of the key innovations Google had contributed to bring to the market to make it one of the most innovative firms on earth nowadays. According to Jo, digital means interactivity and addressability. Interactivity is one of the core offering of Google and the company tries to identify all the times how technology via social media notably can address the need for more interactivity among individuals. Insurers can leverage these new tools and Jo made a special example about how companies can use intelligent billboard in advertising campaigns. Hiscox – the UK insurer – is one of the first insurers who has already used this technology.

The final presentation before the panel discussion was given by Rafe Offer, who is an entrepreneur and industry advisor. Among others, Rafe has worked for Facebook and other innovative companies active in the digital and social media industry. Rafe has captivated the audience with a simple and straightforward message: “the digital revolution is not about technology but it is about the culture of innovation”. Through different examples such as Zappos, Apple, Twenty Recruitment, Rafe convinced us that without a clear cultural commitment to innovate, a company cannot be successful.

The event ended up with a fruitful discussion panel composed of Paul Wishman – E-Commerce Director at LV=, Manjit Rana – Partner in Innovation Hub at Axa – Jo Hind – Head of Finance at Google and Craig Weber – Senior Vice President and Head of the Celent insurance practice. For more information about the questions that were discussed during this session, Craig Beattie, one of our UK based Celent insurance analyst, has been tweeting them during the discussion panel and you can retrieve them here: http://twitter.com/#!/cgbeattie

2.23-24.11: Celent Insurance Webinar: Model Insurer Asia 2011: Case Studies of Effective Technology Use in Insurance

Celent Senior Analyst Wenli Yuan 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.

The Costs of Hiding From Vendors

“Bob” is not the real name of the person in this story. But the rest of the story is true.

“Good afternoon, Bob [last name]’s office.”

“Hi, this is Craig Weber from Celent. Is Bob in?”

“Uh, yes, he is. May I ask who is calling?”

“Uh, Craig Weber?”

“Oh, right. And you’re with?”

“Celent. [pause] We’re an analyst firm, and you all are clients.”

“I’m sorry, how do you spell that?”

“Celent. C-E-L-E-N-T. Celent.”

“Right. And you say we are clients of yours?”

“Yes, Bob has engaged us for our subscription-based research service.”

“Bob did? Are you sure? Did he, like, sign the contract? I don’t remember seeing that.”

“Well, I don’t know offhand who signed the contract. But he sure brought us in. We’ve known Bob a long time. We’ve done a lot of work for him through the years.”

“OK, well what’s this call about?”

“I need to talk to Bob about a consulting project that he emailed me about.”

“OK, well, that’s fine. Sorry for all the questions. I just can’t put anyone through to Bob without making sure who they are.”

As vendors, we get this reception from executive assistants a lot, from insurer clients and non-clients alike. It seems that the vendor community must be hounding the heck out of insurance execs, so much so that there are virtual bouncers protecting email accounts and very inquisitive personal bouncers (EAs) guarding the phones.

It is understandable, for sure. Out of 100 vendor calls to an insurance exec, how many would prove to be immediately valuable if the connection were made? Two? Five? It’s a low number, even on the best of days. But the first problem is that it’s definitely not zero.

There are two other problems with this arrangement. First, it is a minor inconvenience for the people within related entities, like Celent and Bob’s company. But more importantly, it has created a mindset where if Bob doesn’t go exploring—and he is probably so busy in his day to day that he will not go exploring often, if ever—then Bob doesn’t maintain a good feel for new and interesting things that are going on in the industry. A world view that is completely inward facing is a real issue.

I don’t have a great solution at the ready. Issuing secret verbal passwords to business partners? Having execs use fake names on the company’s automated switchboard? No, life is complicated enough already, so adding another layer seems like a bad idea. But there is clearly a cost when every conversation begins with a game of 20 Questions. In this, the age of information overload, we all need to find a way to stay in the flow.

Location, location, location….. be-ware!

A recent conversation with a concerned aunt reminded me how location-aware and enabled our world has become. My aunt was worried that her teenage children were being a little too forthcoming about family movements on the social network sites. She knew her daughter had posted about an impending family holiday. She’s right to be worried.

Legal & General’s latest digital criminal report highlights once more the dangerous of the proliferation of location-aware services like Gowalla, Foursquare and Facebook places. The report notes that the younger you are, the more likely you are to give information away concerning your whereabouts, with nearly six out of ten 16-24 year old sharing their holiday plans – which could be a cause for concern for parents, and certainly my aunt.

For those with malevolent intentions, the process is surprisingly simple. Few people are aware that anyone can purchase private address information, which is based on the electoral role. Armed with this data, notifications of when people are away, photos of housewarming parties showing contents of house, and pictures of animals indicating the likelihood of cat flaps or open windows, the burglar has a pretty easy job. This poses an increasing claims threat for insurers and an opportunity in educating consumers.

Another side of location-aware technology is more benign. Advertisers can target consumers by location using services such as Ji-Wire , which launched in the UK last month. Its deal with BT Openzone means it is has access to users of Wi-Fi networks in more than 4,000 ‘hotspots’ – and can target them with localised ads when they log on. One of the first advertisers is insurance firm Hiscox, who signed up this month and will integrate its digital media campaign with local poster activity. Using location aware services can open a whole new world of advertising for insurers in a digital media world (See Celent’s digital media report)

Whether on the defensive or the offensive, the time has arrived to understand the opportunities and threats of location aware services in new media.

Our event in London– New Rules of Engagement: How Digital and Social Innovation Challenge the Insurer Business Model — will cover this topic in more details. We hope to see you there.

SOA Removes the Fog from Cloud

A lot has been made about Cloud computing recently; even to the point of asking if it is more fog than cloud. The focus of these discussions is strictly on the technology which is where they miss the point. It is reminiscent of the early SOA discussions.

Celent defines Cloud computing as the use of computing resources, typically a server or part of a server, over the Internet. The implications of this are: companies can leverage a vendor’s server offerings to build or expand their server capabilities; focus is on hardware, not software; and carriers need to package up an image of their software to install it quickly.

While technically speaking, Cloud solutions do leverage the Internet and virtualization, neither of which is new. However, if using these technologies is so easy, why do companies, especially insurance companies struggle with gaining the benefits of Cloud themselves? I believe the answer is identical to why many insurance companies were not as successful with SOA, lack of strong governance and understanding of the full picture.

Many companies when trying to implement SOA solutions, focused strictly on WS-* standards and SOAP, although inconsistently across the enterprise. Companies that have been successful in their SOA journey have realized that SOA is more than technology and standards; it also includes architecture, organization, governance, strategy and process maturity.

Insurers that believe Cloud, and more importantly, SaaS is nothing more than invocating functions over the Internet and using virtualization for cost effective infrastructure implementations will miss the benefits of Cloud and continue to struggle with application and infrastructure upgrades and cost savings. Similar to SOA, insurers must look at their architecture, organization, governance, strategy and process maturity to decide if a private cloud is more effective than a public cloud solution. The advantage that most Cloud vendors provide is that they will do this for you if you cannot or do not.

Cloud, technically speaking, may simply leverage the Internet and virtualization, old technologies, but do not be fooled into thinking that is all it is.