Archives for May 2011
6.22-23.11: Celent Insurance Webinar: 2011 Asia Insurance CIO Survey: Pressures, Priorities, and Practices
- Optimism leads Pessimism by a score of 13 to 2. The Pessimism coaching staff is still plotting its comeback at IASA, but I have to say that the odds of getting Pessimism into the win column are very low.
- Las Vegas oddsmakers agree, as they are shifting the action away from Optimism’s likely win to a discussion of how soon Optimism can deliver benefits from specific projects. Our take, from many conversations at ACORD LOMA, is that compressing the project benefit timeline to 9 to 12 months (down from 12 to 18 months previously) is a high priority for many carriers.
- The strongest players for Optimism were Core Systems Renewal and Improving The Customer Experience. Fans of these players seem to be coming out of the woodwork rapidly, and Celent expects game jerseys with these names on the back to be hot sellers for the balance of 2011.
- Of course, BI and Analytics are making strong contributions as well, which is a continuation of the game summary from last season. Many carrier general managers have their scouts out looking for more data sources and the tools to help BI and Analytics perform better on the field, so this story should continue to develop. (Our upcoming Data Mastery report is looking at these trends closely.)
- Three rookies–Mobility, SaaS, and Social Media–all had strong contributions at ACORD LOMA, and they appear to be fresh and ready for IASA as well. Carriers who were prescient and bought the rookie cards for these three probably may find those cards to be quite valuable, sooner than later.
The use of telematics devices in insurance have been around for several years, with companies like Aviva (UK) and Progressive (US) taking on the pioneer role in early 2000s. But there have been many dissenters. One large insurer told me that they didn’t see the point in telematics offerings and it would cannibalise their current motor book. And so it seemed whilst top motor insurers own majority of the market, we would see little change in Europe.
Then along comes that pesky driver of change – regulation. The European Commission has already mandated new cars manufactured in Europe have to have a black box device. This is part of a pan-European initiative called e-Call which links up emergency services across the region. So if you are holidaying in France, in a new car, and have an accident, your telematics device makes a call into the local emergency services. The idea being that quick responses to accidents will save lives.
Earlier this year, came another directive. The European Court of Justice ruling on banning the use of gender in insurer pricing is to come into effect in December 2012. The furore over this announcement from the insurance industry is understandable and this will require a fundamental change in how risk is underwritten. The immediate affect is the women will see their premium rise, by as much as 50%, which has consumer groups up in arms.
And so we come back to the topic of telematics. The convergence of these factors make telematics more viable if not the only way forward for motor insurers.
The industry has learnt much about telematics since the early part of the last decade. There are a variety of ways to gather data from black boxes, and not all data is required to be kept and stored. Consumer attitudes, whilst still varying regionally, seem less hardened to the idea of being monitored. There are several companies offering turnkey solutions to insurers – from installing the device, collecting the data and providing the analytics.
Perhaps the biggest shift is from what has been called pay-as-you-drive to pay-how-you-drive. The first model based on utility pricing can’t take into account the difference in risk between young and experienced drivers. It doesn’t take into account the different risk of country roads and highways. Behavourial based pricing is the evolution from the utility model. It’s now the right time to review telematics. Niche brokers and insurers will look to use this proposition as a market differentiator, and the large motor insurers will be required to review telematics to be able to meet impending legislation. Celent plans to write more on this in the summer.
Celent recently conducted its third Peer Networking Event, exploring the topics of Enterprise Content Management (ECM) and Digital Commerce. Alternative approaches, successes and gaps were actively exchanged by the 40 participants, representing 13 carriers. We would like to thank The Hartford Insurance Company for hosting the session.
The morning kicked off with a presentation by Ben Moreland, Celent Senior Analyst, which summarized the results of research on ECM in insurance. Among the many data points reviewed, the most active discussions concerned moving away from metacode formats and responding to personalization and prioritization requirements by the business. Numerous practical solutions were shared. One company detailed their use of a middleware utility to aggregate and control output from multiple administration platforms.
A presentation by one of the attendees followed which described their ECM platform and detailed the technical and governance challenges involved in managing a complex environment. From the comments exchanged between participants, it was clear that a goal common among many insurers is to rationalize and consolidate products and platforms. In addition to making the correct technical decisions among many alternatives, the softer dimensions of governance and change management are key success factors in modernizing content management.
The afternoon included a great deal of networking and a panel discussion that dealt with the transition to digital commerce. The panel included both IT and business representatives as well as an executive from the banking industry. They outlined the successes and challenges in their efforts to deliver a consistent experience across digital channels, integrate digital and analog customer service touchpoints, and provide personalization of the user experience. A fascinating approach used by a North American bank to self-fund its digital commerce development effort was outlined.
In all, a great deal of practical information sharing and great networking took place in a very productive and relaxed environment. Celent is in the process of planning additional peer networking events, so please stay tuned for announcements about upcoming events. If you are a carrier and would like to host a Celent Peer Networking Event, please contact Chuck Smith at firstname.lastname@example.org.
Carrier staff are invited to join Celent’s Peer Network on Linked in by going here http://www.linkedin.com/groups?gid=3886663&mostPopular=&trk=tyah. The group provides a forum for insurer IT and business strategists to share ideas and network.
My email inbox has been even more active than usual this week. It seems that many of you—from all over the globe—received an invitation to Celent’s CIO event in Paris. And the best part was that the invitation went out once in English, and a second time in French!
My apologies to those of you who are not in proximity to Paris. While Paris is lovely in May, we didn’t expect many of you who live elsewhere to make the trip just for our event. Process and technology issues resulted in that email going out to a wider audience than we intended.
Reflecting on this experience triggers a few observations. First, I am grateful that so many of you read your Celent emails, in any language. Second, I’d like to assure you that our goal is to repay your trust by effectively and consistently delivering value to your email inbox. We have just added a person to the Celent team who will focus on how we interact with you electronically, so you should feel improvements almost immediately. Finally, this event reinforces our view that digital marketing is a powerful tool that can also amplify even the slightest misstep. Maybe I could have just said that to you directly instead of demonstrating it with a misstep in French?
But as my high school French teacher always said, in a rhyme that otherwise is a head scratcher: “C’est la vie. C’est la guerre. Ce n’est pas une pomme de terre.” (That’s life. That’s war. That’s not a potato.) And don’t be surprised if you get a more appropriate invitation to another Celent event, closer to you. We’ve got a full calendar for the balance of 2011.
For those of us with limited artistic talent, paint by numbers may seem like a great way to display creativity. But there are those lines that you have to stay within and someone else is telling you what to paint. Is it really a creative outlet? Would a blank canvas allow that creativity to flow more freely?
For an insurance company, there is a similar concern when the IT department opts to buy versus build. The IT department of many insurers believed for a very long time that customized in-house development was the only way to develop systems that would meet their unique needs. They prided themselves on differentiation and customization. But, the result of that pride is a myriad of legacy systems that today are very hard to change or replace.
Today many vendor core processing systems offer customizable code and rules. If the systems are truly configurable, it should be possible for the insurer to customize and differentiate their system to meet their needs. If the system allows the insurer to make it their own, both in the IT department and the business areas, the insurer should be able to create a system that is unique to that insurer. It can potentially have less overall costs if the cost of not being able to change or update the old systems with new products, processes or rules is considered.
Listening to a panel of insurance company CIOs recently, it came to me that once an insurance company begins to see the benefits of configurable systems how can they not be sold for future change of all their systems? One insurer talked of how the business areas were beginning to recognize the benefit of the configurable software in that the business areas could make the changes they typically requested from IT when the business area wanted it. That left IT to concentrate on all the items that can get the organization moving faster such as product (speed to market), customer (speed to respond), and corporate strategy (speed to adjustment). The insurer was living a business/IT transformation with the implementation of vendor systems.
Quite often it is the inability to change that prevents a user from accepting something new. But if the benefits of the new system are such that the users begin demanding the same of all the systems, could paint by numbers be better than a blank canvas?
Celent’s 2011 Insurance Software Deal Trends reports will be published shortly. We’ve noticed a large uptick in the number of insurers engaging in core systems deals this year. Perhaps creativity can be found within the lines begun by someone else. And, no one says you have to use the colors others they give you.
At my prior position, I worked with a lot of vendors and their product teams. We were usually on the leading edge of SOA development and strategy and one of the most common requests I had of the vendors was, “can you just bring together some other insurance clients so we can talk without you?”. Vendors will usually tell you that their product can do just about everything, so you learn to take their claims with a grain of salt. They may have known their products, but the insurance industry environment is unique in many ways, especially in dealing with large transactions and legacy systems.
Celent is now providing this as a re-occurring event, called the Peer Networking Event, across the country with very positive success. The goal is to bring carriers together, enterprise architects and C-level execs, to openly discuss non-IP issues, strategies and directions and thoughts without any vendors in the room. This is especially valuable in areas like mobile technology, ESB (Enterprise Service Bus) best practices, legacy modernizations strategies, Enterprise Content Management, digital commerce and more. Celent provides an industry overview and perspective, initiates the dialogue and then gets out of the way.
This Friday, May 6th, insurers are welcome to join many carriers at The Hartford to discuss Enterprise ECM and digital commerce issues and opinions. The ECM discussion will center around the age-old problem of eliminating correspondence, service paperwork, and paper case files. A key goal is often straight-through processing (STP), which requires digitization of content. But improved handling of digitized content still represents a huge opportunity for most insurers. The first tier of benefits only scratches the surface of what is possible with next-generation ECM strategies.
The digital commerce interaction will address how insurers must achieve consistency in how they represent parties and roles across digital and non-digital channels. Personalization of the user experience for that party/role and a consistent, strongly-branded user experience across the many digital touch points are worthy goals.
For more information and registration (Insurance Carriers Only), go to Celent Peer Networking Event. If you cannot make this one, keep an eye out for one of our future ones being organized elsewhere across the country!