Archives for January 2012

Celent honors twenty-four Model Insurers for 2012 – Will your insurance company be next in 2013?

Celent announced the winners of its sixth annual Celent Model Insurer awards on Thursday, January 26, 2012 in Boston, MA. http://www.celent.com/reports/event-presentations-celent-2012-insurance-innovation-insight-day-featuring-celents-model. On hand were nearly 150 insurers and technology vendors. Celent Model Insurer Award nominations are open to insurers across the globe and recognize insurers who have successfully demonstrated key best practices in the use of technology within the product and policyholder life cycle and in IT infrastructure and management that a “model insurer” would use. Each award winner’s technology initiative is presented as a Model Insurer Component – components of a theoretical model insurer’s IT systems and practices.

Representing insurance technology “best of the best”, the 2012 Celent Model Insurer Awards honored projects in eleven categories. There were common themes in the award winning projects: an emphasis on innovation and emerging technologies like mobile, telematics, and geospatial risk management tools; a continuation of insurers using SOA/Web Services and ACORD standards as insurers build lasting, integrated solutions; and the increased digitalization of processes as insurers go green and automate process flows.

This year Celent received well over 80 submissions each representing a different technology initiative. Twenty-three Model Insurer Components and one Model Insurer of the Year were named. Nationwide Insurance won Celent’s Model Insurer of the Year recognition for their successful Catalyst Program, a five year consolidation of two $1 billion commercial property & casualty companies. Nationwide’s Catalyst program was successful because of several key best practices including: a strong IT/business alignment; the use of a multi-phase roadmap with “builds” in flight simultaneously; the successful adaptation of the IT department from being a maintenance organization to a systems deployment factory; and the use of effective change management throughout the organizations ensure business readiness.

For more information on the Celent’s 2012 Model Insurer Awards please visit http://www.celent.com/reports/model-insurer-2012-case-studies-effective-technology-use-insurance. Our media partner, Insurance Networking News, has posted a slideshow of the event on their website at http://www.insurancenetworking.com/gallery/celent-innovation-insight-day-recap-29868-1.html.

Nominations for Celent Model Insurer Awards are accepted year-round. We will accept nominations for 2013 beginning February 2, 2012. The deadline for nominations is November 1, 2012. Will your recently implemented project be recognized as a Model Insurer in 2013? Submit and find out!

A Good Day for Guidewire, for the Insurance Software Sector, and for Insurers

Today’s IPO for Guidewire is important for Guidewire, the insurance software sector, and for insurers that buy new software.

For Guidewire the IPO will provide access to public equity markets and working capital—as well as funding additional internal development in its products and technology. As Guidewire is now a publicly traded company, its customers and prospects will have more visibility into its financial status.

For the insurance software industry, the IPO highlights the importance of modern software as an enabler of growth and competitive advantage for property/casualty insurers facing a tough global economic environment.

The listing may also attract more investor interest from private equity, venture capital, and institutional investors in the entire insurance software sector. The very active run of acquisitions and spin-offs we’ve seen for the past 18 months will continue, and perhaps accelerate.

A higher profile among investors and more money invested will make the insurance software sector stronger and more competitive, and should lead to more innovation and value delivered to its customers, the insurers.

Does Private Mean Secret?

Today, the U.S. Supreme Court issued a very interesting decision which identifies, but does not resolve, the complicated issues of privacy in the digital age (U.S. v. Jones, opinion found at http://www.supremecourt.gov/opinions/11pdf/10-1259.pdf ). The case deals with the use of a GPS monitoring device to gather information about a suspect. A concurring opinion issued by Justice Sotomayor foreshadows the work that will eventually need to be done regarding the privacy conundrum in the age of smartphones, blogs, and big data mining. She recognizes that, in the past, the Fourth Amendment protection against unreasonable search and seizure has assumed “secrecy as a prerequisite for privacy.” She points out that, in today’s society, we all provide data in public exchanges of emails, social network postings, etc., when we engage in commerce, communication, or for convenience. However, her opinion is that persons providing data in this manner may not want the data used for broader purposes. The current law of the land as interpreted through past judicial decisions does not limit the use of the data if it was voluntarily (eg. not secretly) given / obtained. She, and other justices on the court, use the Jones decision to highlight the need to bring clarity to privacy issues in the digital / mobile age.

These decisions will directly impact the use of data in insurance transactions such as claims investigations and underwriting. Not being a lawyer, I cannot weigh in with an informed prediction about which way the court will rule, but my intuition is that it is going to be difficult to establish a standard of privacy that can be applied based on the intent of the person offering the information. When and where we can expect privacy is very different in this age of digital communication and I can tell that the issue will be difficult to resolve.

The big unanswered social media question – where’s the money?

With the Facebook IPO looming thoughts are returning to how social websites will actually generate money. Sure, Facebook is used globally, has an extraordinary number of users and is the top social network in a growing number of countries – but how is it likely to make revenue? Advertising revenue has always been the principle answer here, whether it’s Twitter, MySpace or any other social network. It worked for Google and it could work here too – couldn’t it? I think it’s interesting that the revenue model for LinkedIn is quite different. There is advertising there but the main focus is around recruiting people and getting recruited. Those people who want to find the best talent pay a little extra to access features that make it easier to do just that – find the best talent. For Facebook however, people use the site for lots of different purposes so it’s harder to hold back such targeted functionality. Actually I think Facebook could learn from Apple and Blizzard – the games company behind World of Warcraft. Blizzard made $1 million in 1 hour by selling a flying horse in their game. The horse was actually no better than ones you could find in the game, and you already had to be able to ride one (so probably had something similar already) in order to buy. It was kind of pretty and just a few dollars so, despite offering no value or advantage in the game millions of players bought it for real world dollars. Zynga and a number of other social game developers have taken this further with the possibility of playing games for free, but paying a little cash to be able to play the game faster or have that one extra thing that looks quite pretty. Virtual goods available at a low price are now a huge market. What does this mean for Facebook? There’s a scam going around on Facebook at the moment promising to be able to turn your Facebook page pink rather than the usual blue. People are clicking on it because they want it – I have little doubt that if Facebook charged $0.10 to change the colour of Facebook profiles we would see them make $1m in less than an hour. Actually though, that’s not even the sweet spot here. If Facebook were able to control the payment method as Apple does in the App store then they could take a little revenue from everyone using their platform, from all the virtual purchases (again, as Apple does on all those little purchases through apps and in the app store). Facebook is starting to do this already – this is what Facebook credits are about. In my view it’s not in Facebook’s interest to offer Facebook branded products (save except for caps or t-shirts possibly), but rather to corner social commerce, to create a platform where it’s easier and more convenient to purchase items in Facebook credits – all the while seamlessly sharing the purchases and implicitly recommending products to their friends. What does this mean for insurers? One is do the virtual goods need insurance? Personally I’m not sure about digital equine & aviation insurance in World of Warcraft or virtual farm insurance in Farmville, but Eve Online did have space ship insurance built in. Does anyone remember Second Life and the virtual businesses operating in it? The second and more important one is that Facebook will become a platform for doing business. The infrastructure is already in place, the opportunity is too great and the current client base too large for this to be ignored. Today Facebook credits are just for games, tomorrow why wouldn’t young drivers top-up their pay-as-you-go car insurance on Facebook? All the while sharing the product and provider with their friends as they do it. Facebook isn’t going to be the next virtual shop on the high street, it will be a new high street on which established brands and new brands build their shops.

Chartis' New Chief Scientific Officer Position

The creation of a Chief Science Officer position at Chartis may be an inflection point in how analytics are used in insurers. By now all large insurers (as well as many midsize and smaller insurers) have made, and are making analytics investments.
There are three basic elements in analytics:data, tools, staff skills. For an insurer’s analytics investment to pay off, insurers must get better at building deep and accessible data sets, using available tools, and balancing enterprise and lines of business skills.
With the creation of the Chief Science Officer position, Chartis is making a commitment on all three fronts. Other insurers are likely to follow.

2.29.12: Celent Insurance Webinar: Emerging Insurance Technologies: General (P&C) Insurance

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Is It Just Me? #1: Insurance Commercials

Is it just me, or are most commercials for property/casualty insurance on American television really dumb, pointless, and worst of all ineffective?

I’ll assume that everyone reading this post knows something about insurance products and the process of selling those products. So take your own “Is It Just Me?” test.

After you watch the next five or ten insurance commercials on the tube, ask yourself a few questions.

· What are they selling? Does this commercial actually identify an insurance product?

· Have they given me some good reasons for buying that product?

· Do they show prospective buyers and customers as intelligent and sympathetic–or as stupid and/or overweight and/or ridiculous?

· And if the latter, why should I want to do business with a company that has such a low opinion of its customers?

There are exceptions of course. Some commercials are both entertaining and informative (think GECIO and AFLAC). But all too many, apparently have two goals:

· Demonstrating how clever (or worse edgy) the people who made the commercial are

· Making insurance as obscure and offensive as possible

Is it just me?

SEC Busts Broker Dealer Offering Securities on LinkedIn

The Securities and Exchange Commission (SEC) announced yesterday that they have brought charges against a broker dealer for offering fictitious securities for sale on social sites. There are several good messages involved with this announcement. First, the person charged was caught before completing a sale. There is no more proactive protection than that. Second, this demonstrates that the people responsible for overseeing financial transactions are active on social media and that they are “listening”. I continue to be concerned that budget constraints will negatively affect social media monitoring and enforcement. Finally, it is a chance to reinforce the regulations that FINRA already has in place for the use of social media for legitimate purposes.

The announcement is located at http://sec.gov/news/press/2012/2012-3.htm The posting also includes a useful summary of compliance issues for companies to consider regarding social media (a National Examination Risk Alert titled “Investment Adviser Use of Social Media”).

I wish the authorities all the best in continuing to be successful in these endeavors. If there is a next Bernie Madoff, let him do his damage outside the realm of social sites.