Archives for December 2011

Mind the Gap. Are Insurers and Vendors in Latin America on the same page about SaaS and Cloud Computing Usage and Adoption?

Almost with the end of the year around the corner we are yet immersed in some very important reports for all of us which, by the way, will be produced integrally with Latin American focus for the first time. The CIO Report and the Policy Administration System ABCD Vendor View Report are on their way.

From our past and recent discussions with Insurers and Vendors about different topics around technology, architecture, trends, features and functionality something has been driving my attention: It seems to be a gap in the perception about usage and adoption of SaaS models and Cloud Computing in Insurance, at least in Latin America. While the detailed reasons and how large is the gap between Insurers and Vendors will be part of a report next year, initial findings point in the direction that Vendors perceive more benefits from adopting these models while Insurer’s CIOs do not feel the pressure and do not have it as a priority.

A SaaS approach, applied to a Policy Administration System for example, appears as a perfect fit to the business model of many Vendors. SaaS enables Vendors to target small and medium Insurers as they can consistently manage a single scalable version of the solution and offer support very cost effectively with prices that fit smaller Insurers wallets.

On the other side, CIOs seem to feel more comfortable with on-site, self-controlled environments. Hardware and communications prices are more accessible to them providing more processing power and bandwidth for their dollars that a few years ago. In some countries even regulation presents a challenge to these type of offering as regulators still question where the system and the data needs to reside.

Something to consider is that Insurers in this region have yet not been exposed to much SaaS and Cloud offering so the perceived associated benefits and the price difference between traditional on-site and the new alternatives is still a discussion to mature.

Another aspect that might help to build the bridge and cross the gap is that core system replacement is starting to show increased trends and it will expose Latin American Insurers to new architected solutions with technology and functionality much more flexible and robust but at the same time more complex to administrate. Specially smaller Insurers will need to consider how to remain competitive, improve processes and deliver better quality products and services through diverse and new distribution channels at a cost they can bare.

Interesting times to come as we unveil what to expect in the region. In the meanwhile if you are interested in participating in the Latin America CIO Report or the Policy Administration System Report please let me know. Also feel free to reach me at jmazzini@celent.com with your comments and thoughts around SaaS and Cloud Computing usage and adoption.

Happy Holidays!

A holiday gift from Celent – Top 10 searched for terms and links to reports

Last year we offered a Christmas Carol themed post summarising some thoughts on the past, present and future. This time around I figured I’d go for one of the end of year top ten style posts that pop up as folks take a moment to look back at the year. So here I present a view on the top 10 searches insurance folks made on the Celent web site. 10. Model Insurer (Click on the words to do the search) In at number 10 are explicit searches for the model insurer series of reports. We’re still working hard on this years but here’s some links to last years and the one the year before. This year we’ll be holding the Model Insurer event in Boston along with our insight and innovation day. The model insurer reports can’t be beaten for offering a view of successful investment in change and technology across the insurance industry. Also take a look at the Model Insurer Asia report and 2012 event. 9. Fraud Sadly as pressure increases on the financial system, on wallets everywhere then the propensity for fraud increases. 2011 has seen an unprecedented rise in ill-feeling towards the financial services sector as a whole so it’s no wonder that fraud is on everyone’s agenda. Look out for work by Donald Light and Nicolas Michellod in 2012 on modern fraud systems across the globe.   8. CRM or Customer Relationship Management Insurers have made great strides in moving from policy and agreement centric thinking to a more rounded view of the customer. With ever increasing ways of reaching customers and intermediaries, of simply transacting business this focus on technology to support the customer relationship is clearly still a focus. 7. Claims Clearly a key focus for any insurer, from the systems supporting claims to the latest trends in claims analysis. In 2011 Celent examined the impact social media was having on claims and how insurers are interacting with claimants. We also looked at location intelligence solutions and below are just some of the reports looking at various angles of this key function. Look out in 2012 for the XCelent reports on claims system vendors.   6. Outsourcing 2011 has seen a more pragmatic approach to outsourcing in the insurance industry globally. Strategic outsourcing is still a key tool for any large organisation and this is reflected in the term appearing in our top ten. The CIO survey series of reports (which will be refreshed in the new year) offer insight into CIO’s views on outsourcing globally.   5. Policy Administration Ah the big core system question. What was interesting to me was this wasn’t number one, still number 5 is pretty high up the list. Searches in this area were looking for advice on the core systems themselves, building a case for them as well as general trends. This year we published the 2011 reports on policy administration systems around the globe, each offering a different perspective on what’s available as well as what’s required.   4. IT Spending In at number 4 is IT Spending – how are folks splitting their hard earned currency between projects? A key question on the minds of CIOs and others. A key insight into this is offered in the CIO interview series of reports as well as our emerging technology report – aimed at identifying technology gaining interest and investment from the insurance industry – take a look.   3. Asia – or rather searches for India, China and Japan A significant number of searches were for specific countries, the three top countries were India, China and Japan. Asia is a very diverse market and there is a great deal of opportunity in the region, not only financially but also in learning how insurance problems are being solved in these very different markets. Personally, I find one of the great things about working for a global company like Celent is the breadth of view it affords.   2. Social Number two in our list is social, social media and social networks. Technology is helping people to interact and changing the way they communicate. Customers, agents and members of insurers staff all expect very different things from an organisation now in a Twitter and Facebook world than just 10 short years ago. In addition, the relationship between the insurance industry and the vendors and service providers supporting it is changing. In all this newly collected and aggregated information there lies privacy and brand-busting dragons but also great opportunity for those intrepid enough to sail the social seas.   1. Mobile I recently tried going around London for the day without my phone – it was hell! The debacle this year regarding the Blackberry outage created a wave of such feelings, although raised some counter blog posts as journalists recounted how they spent more quality time with their family without answer emails. Regardless of for better or worse, humankind has wed itself firmly to being constantly connected through mobile devices. This is a global phenomenon from geeks seeking the latest 4G android handset, executives and music lovers with their iphones or Kenyan farmers with simpler phones, mobile has changed the we communicate, interact with technology and each other and will continue to do so – the insurance industry is still feeling the impact and in many cases still leading the charge in changing peoples lives for the better through mobile technology.   So there it is, a top 10 for you. I haven’t included links to the webinars, peer networking events and other events through the year but the links to each of the search terms will provide you with those. It’s been a phenomenal year of challenges, change and interesting times. Have a Merry Christmas, a Happy New Year or indeed just a great season – depending on what you’re celebrating this Winter. We look forward to working with you in the new year and beyond. Oo, look, I wrote an end of 2011 post without mentioning the Euro crisis – oops…

Emerging Technologies in Insurance

Insurance companies have always been risk averse to quickly adopting new technologies. It is not uncommon for technologies to be mature in other industries and still be low on the adoption scale within insurers. However, as the rate of change has rapidly accelerated over the last decade, carriers are in the uncomfortable position of having to determine much faster which new technologies to invest in, and which to continue to watch. Unfortunately, the window to watch has dramatically shrunk before an insurer is playing catch up and has lost market opportunities. Celent recently hosted a Creative Disruption workshop which focused on how insurers can more quickly adopt and leverage new approaches to solving existing problems, basically changing the behavior in thinking about, solving and implementing new solutions to existing and novel opportunities. It was highly recommended that insurers include in the their project portfolio projects that included some of the less mature, emerging technologies, as well as the changing roles and organization structures that would be needed to gain the maximum benefit of the new paradigm shift. (See “Stirring the Creative Disruptive Pot” http://173.203.189.67/insurance/2011/11/stirring-the-creative-disruption-pot/) In order to help Insurers better understand which emerging technologies have the greatest potential, it recently released its inaugural Emerging Insurance Technologies report (http://www.celent.com/reports/emerging-insurance-technologies) which provides a snapshot of the adoption rate of 24 technologies that insurers are implementing or evaluating. It breaks down the emerging technologies into 4 quadrants, namely, Growth and Retention, Risk and Compliance, Efficiency and Expense Control and Claims Indemnity Control. While many of these technologies will have impact on several of these business areas, each has a primary impact on one of them. In addition to the Emerging Technology Report, Celent has also just published “Big Insurance Data: Drawing Lessons from Amazon, Google, and Facebook” (http://www.celent.com/reports/big-insurance-data-drawing-lessons-amazon-google-and-facebook), which is one of the fast growing technologies and potentially largest impact to insurers as the amount of data continues to grow exponentially. As more data is machine generated, as opposed to human generated data, through mobile appliances, third party data, web logs, etc., the ability to mine the data and find useful business insights becomes very expensive and/or time prohibitive. This report looks at three leading big data users, Amazon, Google and Facebook, to provide learnings and benefits to carriers through their successful use of these technologies, such as MapReduce and Hadoop. Celent claims that the game has changed and the old ways of looking at issues and opportunities will not work going forward for insurance technologies. The rate of change has progressed to uncomfortable levels, forcing carriers to react faster than they are used to. In addition, the technology changes are affecting roles, such as more configuration changes and setups to applications being done by the business instead of mostly or totally by IT and affecting organizational structures as well. Knowledge is the greatest asset going forward as it has always been – it’s just the use of it is on hyperdrive.

The Implications of Going Driverless

Google recently received a patent for a driverless car that can handle the challenges of the open road. (Story: Google Granted Patent for Driverless Car Technology) I love this story, and the implications.

The NTSB’s proposed ban on texting will require a rewrite. Unless my autopiloted car and my smartphone are sharing computing power or connectivity, I’m assuming my texts sent while underway won’t impact safety. Of course, by the time this system is operational, texting will most likely have become passé.

The field of play for telematics is about to get more complicated. Sure, you can track where my car went. But was I at the helm, or was my car driving itself? And what if I get out of the car to let it park itself? Does that still count as me driving, for insurance purposes?

If my car can drive itself, under what circumstances will I even decide to go with it? For example, for many daily errands (e.g., picking up the dry cleaning, grocery shopping, taking the kids to football practice) the main value-adds I bring are navigation and execution of the route. Take those away, and I might choose to do something else.

We’re one step closer to answering one of life’s Big Questions. Namely: Are men or women better drivers? The answer may turn out to be neither, assuming that Google gets the product right. With R2D2 as our chauffeur, my wife and I will have to find something else to debate. Related question: Will my autopilot car stop and ask for directions when it gets lost, or will it just drive around hopelessly? For tradition’s sake, I propose to make that a user-configurable feature. I’d hate to have my car out-perform me in such an obvious manner.

2.7.12: Celent Insurance Webinar: Business-Oriented Architecture: SOA Refocused

Celent Senior Analyst Benjamin Moreland 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.

1.17.12, 1.31.12, and 2.14.12: Celent Insurance Webinar Series: EMEA Life and Pension Policy Administration Systems

Celent Senior Analysts Jamie Macgregor and Nicolas Michellod This event is free to attend for Celent clients, flex-plan clients, and the media. Non-clients can attend for a fee of US$195. If you are unsure of your client status, please contact Chris Williams at +44 207 228 4432 or cwilliams@celent.com. Please click here for more information.

1.10.12: Celent Insurance Webinar: An SOA Evolution, Insurance Edition

Celent Analyst Craig Beattie This event is free to attend for Celent clients, flex-plan clients, and the media. Non-clients can attend for a fee of US$195. If you are unsure of your client status, please contact Chris Williams at +44 207 228 4432 or cwilliams@celent.com. Please click here for more information.

IT Professionalism in the financial services industry

Before working in insurance I worked in other sectors where it was common to quote the number of certified or accredited engineers working on a project. Usually these were mixed discipline projects involving mechanical, electrical and software engineers, but having chartered engineer status was an advantage regardless of discipline. Also any relevant certifications were highly sought after too. My experience of the UK financial services industry is that such accreditations, certifications and recognition at a professional level are sought after only at an operations level. Here ITIL certification and relevant vendor certifications are king and rightly so. Chartered status is gaining some ground but is less well regarded in financial services than in other industries. In the developer, architect and IT strategy community there is much less clarity on what certifications, skills and professional status really means. I personally feel that these disciplines are less well defined and harder to examine against. Not to say that they are more important than the other disciplines, but perhaps they are less well understood. ITIL has something to offer in the IT strategy space, TOGAF is of use to architects of a variety of disciplines and there are various platform and vendor specific certifications that could help across all the disciplines. There must of course be balance. Certification schemes and membership of professional organisations that come at a cost to the industry must bring clear value. I think that overall IT professionals in the insurance industry that I speak with are naturally pragmatic and cost sensitive. Now that the role of the financial services industry in the financial crisis and the ongoing Euro crisis is bringing a spotlight on the industry, perhaps there is value in all the supporting disciplines in reflecting on what professionalism means, what is IT professionalism, how it can be nurtured, measured, grown and how it can contribute to the industry we support.

Strong Step Forward for Life and Annuity SaaS Solutions

Every now and then a strategic alliance occurs that makes a lot of sense. Today, McCamish Systems, an InfoSys BPO company, and Pegasystems announced a strategic partnership that will leverage the best of both their solutions, namely, McCamish’s VPAS Life and Pegasystem’s BPM technology. (See http://www.businesswire.com/news/home/20111207005172/en/McCamish-Systems-Infosys-BPO-Company-Announces-Strategic for full announcement.) McCamish VPAS Life is a policy administration system driving their BPO offering. VPAS Life provides full end-to-end processing from new business fulfillment and underwriting STP to claims. Pegasystems BPM technology is a robust BPM and case management solution providing configurable business process solutions, standards based integration solutions, strong rules capabilities and process metering and monitoring.

VPAS Life was evaluated in a recent Celent NA Policy Administration Systems report, with a solid showing in advanced technology, breadth of functionality and customer base. (See http://www.celent.com/reports/north-american-policy-administration-systems-2011-life-health-and-annuities-abcd-vendor-view for the full report.) However, it was also noted that “with a mature data model and an older code base, there are limitations to what can be achieved via configuration–for most applications, customized coding will be required.” In addition, while customer feedback was positive, the front-end, case management and workflow capabilities are not best of breed solutions.

Pegasystems has been a leader in the BPM and more recently case management solution space, providing a powerful, configurable platform on which to build insurance processes and applications. While they have provided a framework in which large insurers have begun to wrap and build core solutions through their Insurance Industry Framework, there is still a lot of work to do to create system of record core systems. In addition, due to the robustness of the framework, Pegasystems’ solutions require high level skill sets.

This all leads back to the McCamish-Pegasystems partnership. Each solution compliments the other’s perfectly to provide a potentially, industry leading, and possibly changing, life insurance and annuity solution. McCamish will leverage the Pegasystems framework to provide a configurable and powerful BPM, case management insurance framework to enhance their already strong insurance experience and solution. McCamish will be able to take advantage of the speed to market Pegasystem Insurance framework provides, addressing some of the hurdles that small to mid-size insurers face with framework solutions by providing it as a SaaS offering and through InfoSys already has a strong Pegasystem BPM center of excellence.

While the actual implementation is yet to completed, and thus true benefits realized, Celent views this alliance as a potential game-changing partnership that will greatly enhance the SaaS options for all insurers, but especially for small to mid-size carriers in the life insurance and annuity market.