Archives for September 2012

Digital Insurance and the Customer: Mind the Gap!

Let’s play Jeopardy together! If the most frequently given answer from a panel of insurance customers is “Don’t know,” what was the question?

It was: “Which UK insurer do you think is the most innovative?”

For those who think that is an exaggeration of the common opinion that the insurance industry is not innovative at all, let me tell you that the second most frequently given answer was “None.”

As Jo Hind – Industry Head, Finance at Google – explained during the first presentation of the Digital Insurance and the Customer: Mind the Gap! event Celent organized in collaboration with Google, the pace of change is accelerating. More and more people are using digital communication means to get information about financial products, including insurance policies, and among others mobile devices are getting great traction. To pave the ground for the rest of the event, Jo left the audience with simple but relevant questions to insurers: How important is mobile to the insurance business? Are insurers optimizing and planning for the four-screen world (computers, TVs, pads, and smartphones)? How can insurers engage better with their customers? Are products offered by insurers meeting consumer expectations?

When Craig Beattie followed Jo’ s final interrogations with the Celent views on the customer, Google, and UK car insurance based on research he and Catherine Stagg-Macey published recently, we – in the audience – could not anticipate that the phlegmatic British analyst would provide the audience with such an insightful and dynamic analysis of the reasons for and consequences of the changing behaviour of insurance online shoppers. After this moment of brilliance, it was time for people to take their breath and enjoy the networking break to exchange about what had just been exposed to them by Google and Celent.

The audience had opportunities to share their thoughts during the discussion panel session which ended the whole event. Ian Morgan – Industry Leader Financial Services at Google – moderated the session, which saw Jem Eskenazi – CIO of Groupama Insurances, Ollie Holden – Solution Delivery Director at LV=, Catherine Stagg-Macey – Head of EMEA Celent insurance, and Jo Hind debate about mobile and digital insurance predictions. The audience was asked to provide its opinion on these predictions before they were discussed in more detail with the panelists.

Let’s play Jeopardy again! What question related to the Celent event summarized above will result in the following answer? “Certainly.” It is: “Are insurers who were present in the audience going to view digital insurance and the customer differently from now on?”

Creative Disruption in Action – 2012 Event

Thursday September 13th. The clock indicates 6 past and the day is over. I walk out from what has been a very busy conference room. My head still spinning around so many ideas and concepts speakers and audience have interchanged in the context of our 2012 Creative Disruption Event.

Phrases such as “Excellent- thought provoking”, “Interesting topic that we all struggle with in our respective organizations. Good tools to bring into prioritization discussions and to reframe conversations about change”, set the tone of the audience feedback.

How to discover a new or underserved market to approach with a new value proposition based on the use of a specific and unique technology was the common theme along the day and definitely this is a topic that attracts the industry’s attention but also one where it still has problems executing it.

One of the many take away of this event, besides the signed free copy of “The Innovator’s Manifesto” by Michael Raynor, is the insight on how to deliberately pursue creative disruption.

It is very interesting that the day started with a fresh wake up call for insurers in terms of how consumers perceive that they are not being bold enough in addressing their needs and especially not taking advantage of the new technological means to interact and serve them. While this might be the general perception we are starting to see how some companies, generally new players, are walking along the direction of creative disruption.

UK based ingenie for example shared with us how they have addressed the needs of a specific segment of consumers (young drivers aged 17-25) usually not considered by traditional players because of risk. ingenie offers a fresh approach to insuring young people. With the use of telematics they treat every young driver as an individual. Just drive well, and you could pay less for your car insurance. The cost of your insurance is reviewed every three months and offers incentives to those that change and adopt a better driving pattern. With the combination of technology and a clear understanding of their consumers, they have come up with a new solution and business model that changes how they manage the risk of youthful drivers.

It seems it is under the most challenging situations that creative disruption emerges. When faced to a challenge and with the application of the right technology, some people discover a new market or how to make money out from one that was considered unattractive, like in the success stories we learned from Tom Hammond, Executive Vice President, Agency Operations of BOLT Insurance Agency; John Roblin, Former CIO, Chubb Insurance and current Chairman & CEO, Cover-All Technologies; and Davinder Singh, Head of Third Party Distribution and Products for DLF Pramerica Life Insurance Co., Ltd from India.

· Tom shared how BOLT applied the use of the right technology they had developed to serve the smallest businesses. The challenge was the fragmentation of the selected market and that it is dominated by independent agencies. They applied marketing and affinity strategies and created a call center with licensed agents using their software. They use this comparative rating to get all of the top insurers they have in their portfolio transparently compared and offered to their customers.

· John took us into a journey of discovery on how Chubb had created one of their most successful products. In a challenging situation, thinking to discontinue personal lines, they figured out there was an opportunity with the high income segment of customers who prioritize prevention on top of claims payment. They worked all aspects of the business. Processes were rethought to make it simple to customer. They worked on every “touch” and point of contact with customers, including the insurer-agent relationship. Underwriting was focused on the person and not exclusively on the peril. They emphasized on prevention during the inspection process where they could work in tips, loss control ideas and ensuring that all gets covered. While today, with the existing technology and systems, this is might look much simpler back then it was a great challenge.

· Davinder exposed maybe the most challenging situation in terms of execution as he shared how DLF Pramerica untapped the opportunity of selling insurance in rural India 4 years ago. The challenge was how to serve a high cost business (fragmented distribution – market of 600,000 villages and 33 dialects), with a low average written premium per policy and no banking institutions presence to support the required financial process. They used technology and straight through processing to close the deal in one step without need of further interventions. They also relied on local people to sell simplified products as a way to introduce insurance in the villages and they also looked into other industries best practices. DLF Pramerica is currently serving villages in rural India covering 11 languages.

Fostering creative disruption requires focusing on people, vision leadership and execution. Mike’s and Jamie’s presentation and review of Celent’s innovation model came very handy to understand this linkage.

The objective of Celent’s Innovation Model is to effectively manage insurance innovation, so we can always have the chance to ask the right questions and be sure that our project portfolio has the correct balance of improvements, innovations and disruptive initiatives. It provides a framework for insurers on how to build a path to create disruption.

After reviewing many cases of effective use of technology in insurance we have concluded that it is hard to find a handful of them that could be considered disruptive. Recently, we were able to take an insurer’s pilot strategic initiatives (for life insurance) and map them into the framework with a result of no initiatives to be found in the disruptive category.

It is understandable for some companies to show this type of project portfolio at some given point in time. It is also certain that it must not be pursued without being sure that you have the required execution capabilities, but it is healthy to start discussions around disruptive initiatives at some point, or other competitors will come up with an initiative that will threaten our established position.

This model will help business and IT to have the right discussions. Companies have traditionally looked into technology from an in-to-out perspective; technologies that implemented in the inside could have some impact in the outside. Examples of these are PAS, Claims, Billing, BPMs, Agent/Customer/Prospect Portals and BI/Analytics.

Consider the UK market for example, the auto insurance industry started mainly as broker based, then evolved into direct insurance. It got somehow more sophisticated with the segmentation of net worth customers and then disruption came in again with telematics and products based on pay how you drive (moving away from pay as you drive which could also be considered disruptive at its time) but still all of these mostly triggered by an in-to-out perspective of technology.

If something has changed radically in the last few years is how technology has invaded our daily life. Computers are everywhere, even in our phones and they are re-defining how we interact with others. Consumers are demanding a new way to interact with companies, which need to come up with business models and processes that take advantage of these technologies but also provide the user experience and level of service they now expect from this digital world. This view of outside technology impacting inside the companies brings a whole different perspective.

Today we are looking on how aggregators and Google’s very recent move into the industry might be the first signs of a new disruption for the Insurance Industry.

It is in these times that companies require the vision, leadership, methodologies and toolsets to drive the execution of creative disruption initiatives. The risk is for other new players to displace you from your current market position.

Printing Body Parts: Frankenjet??

I read with great interest the article in The Wall Street Journal today about bioprinting ( This offers great hope for critically ill patients and possible future relief for those of us whose natural sinews are reminding us of the law of entropy (read aches and pains). It also should give some pause to actuaries who are forecasting mortality tables for the next fifty years.

The article explains a little about this experimental printing technology that gave me a clearer picture than I had previously had of what printing body parts is really like. The article states, “in lab tests, bioengineers printed…patches of beating cardiac muscle” and “scientists are printing small 3-D clusters of liver cells suitable for toxicity testing.”

The possibility of printing body parts will offer additional challenges too. These are more of a social kind, particularly once the production of such moves into wider use. My mind wandered back to my cubicle days in an insurance company headquarters where thirty or so people shared a network printer. I remembered the cold sweat that broke out when I printed my Final Four Men’s Basketball Tournament bracket and ran to the nearest printer to find that it was not there. “Oh no, where did I last print a document? Ooops, was that the color-coded project Gantt chart using the advanced printer next to the CIO’s office? Arrggh!”

Imagine what complications will arise as researchers begin to share these expensive printers. I can hear the complaints now: “Bob went to lunch and left a beating heart on his desk again and I can’t shut it up. It’s really getting on my nerves and I can’t concentrate on my work.”

Every network printer naturally has a graveyard of documents next to it, you know the stacks of unclaimed, abandoned printouts next to it. In the future, these will be real graveyards, piled with miscellaneous body parts looking for a home.

Then there will be the opposite problem of the body snatcher. We have all had that critical, confidential piece of printed work that was picked up by mistake (or, in more ruthless corporate cultures, on purpose) by someone else. What happens when you print a couple of arteries and go to the printer to find them gone, swept up with the stomach and intestine bits produced just prior? Do you hit print again, or begin a search of the floor to find the wayward tubes?

Finally, there is the infrequent user problem who has a private printer in their office (this is usually the boss). On the day, the personal printer is out for repair and the administrative assistant is not at their post. Boss needs just two copies of an important piece of work. Since the boss doesn’t use any kind of printer very often, confusion results and instead of printing 2 copies, he/she prints 200 (typing numbers into that little box next to “number of copies” is so hard!). These days, no problem if 198 copies of a graph are tossed into the network printer graveyard. But, what do you do with 198 fingers, legs, or knees?

I shudder when I think of the mass confusion and hysteria coming, but am sure that, somehow, Office Administration will work out an elegant solution.

Please reply with your horror stories in the land of Frankenjet. In the run up to Halloween, we’ll do a follow up post of the best ones received!

What the insurance industry can learn from the iPhone 5: A study in frictionless upgrades

Lately people have joined Apple events hoping for something completely new and outlandish, some perhaps hoping Apple will slip up and over the last couple of years there has been talk of disappointment after then events. Indeed it’s becoming so hard for Apple to keep anything secret now that there are few surprises – but many are overlooking that Apple have done enough and done it very well on each occasion. One of the key things that struck me from yesterday’s event was how the attention to detail had removed the friction in the upgrade. For so many things in life when I upgrade there is a trade-off. Sure, there’s the initial cost of the upgrade but often I find I’m faced with weighing other priorities too – I recall thinking quite carefully about upgrading my PC from XP to Vista, about what my second Android phone would be (full disclosure – I have an iPhone 4 now). I was weighing up different screen sizes, different UIs, hardware requirements, software compatibilities, etc. For me the upgrade from iPhone 4 to 5 feels like a no brainer. It’s thinner and lighter and has all the stuff I like about the iPhone 4 and they’ve managed to cram in some more features as well. How often is that the case with enterprise software? Actually, there are very mature insurance systems out there that offer a great upgrade experience and bring business value with each upgrade. It’s actually one of the key features I extoll when working with clients as a sign of maturity, the readiness of the technology and the business value of these systems. Gone are the days when an enterprise might buy a “Symbian phone” to find it’s hardware and software are no longer supported – it remains a good phone but it will never have the new features needed in a year, 2 years – and 5? Today, the insurance industry can buy software that isn’t legacy by the time they’ve rolled it out. For those vendors to the insurance industry who don’t think too hard about your roadmap and upgrading your customers in the future, look to Apple. They are about to make a great deal of money because they looked at their install base, what their customers do and want, and removed the friction from the upgrade. Customers get everything they loved about their current product and it’s smaller, lighter, faster, makes better calls, takes better pictures, runs apps faster and more besides.

New Challenges require a New Mindset for Insurance

Celent conducted another successful Peer Networking Event (PNE), this time in Atlanta, Georgia. The event was well attended by insurers from around the area and even had representation from a bank. The PNEs are designed to bring together insurers to discuss topics that they find of interest, either due to immediate concerns or future direction. The structure of the forum allows for open and candid discussions between the participants.

The two topics that were discussed during this PNE were emerging technologies and the architecture concerns to incorporate and integrate these new technologies into the existing environment with which carriers must deal today. Celent provided its perspective and insight into these areas and the group engaged in a lot of interactive dialog. Carriers were interested in what others are doing with respect to telematics, customer sentiment and the use of external data. There was a growing concern expressed about how to deal with the large amounts of varying data and how to incorporate that information into the business decisioning process. For example, one carrier wanted to know if anyone had experience with data aggregators to help deal with the Big Data challenge that is beginning to hit the insurance industry.

Another concern expressed is how to maximize the user experience for policy holders, agents, and CSRs (Customer Service Representatives). The insurers said they face a challenge with their ability to integrate across their systems to provide the level of experience that users have come to expect with Google, Facebook and Amazon. They also discussed the significant advantages available to specialty insurers by leveraging more customer data to better underwrite risks.

There was a high value discussion regarding the need for IT to educate the business on the art of the possible. Regarding emerging technologies, IT needs to better understand the business and take a seat at the table to help drive the business and help them understand what is truly possible; what is still just a concept; and the true impact to the business of the emerging technologies that are so hot in the press.

Celent proposed that in the future insurance IT landscape, all that carriers will own is the architecture and the information. This generated good debate around the role of enterprise architect and the role of the business architect. Only three of the carriers in attendance have a formal, mature business architect practice. Others described their business architects as really business SMEs (subject matter experts). The insurers also observed that IT architects and insurers rarely talk about human capital. Carriers need to develop an IT human capital plan related to IT architecture skills. A central theme of the day was that the role of the insurance IT architect is definitely changing as we move forward.

One carrier presented their EA (Enterprise Architecture) journey. They have been moving away from business siloed architectures to a true enterprise architecture, responsible for the enterprise, not just a single line of business. They created an EA roadmap and established an EA governance group that was quite effective. The surprising aspect of their efforts was the speed (six months) in which they established and matured their EA governance group. Some of the key reasons for this are that the EA governance committee consists of senior executives from IT and business and all projects must go through a practical EA review. The governance process enhances the project deliverables and has not become a bottleneck for project delivery. Their focus is on their value proposition and how they can help drive their company to achieve the business goals.

In the afternoon, another carrier presented their system modernization efforts and the journey that they have come over the last couple of years. As with most carriers, they have a myriad of systems and had a lot of manual processes. They found it took longer than expected to get the first line of business up, but new lines now only take 5-9 months (reduced from 18 months previously). They have rationalized many of their systems and continue moving forward on improving the back end and introducing portals and improved customer experience on the front end. A key lesson learned was to fix underwriting first and then focus on the back end process systems, such as Claims and finance. Other lessons learned included:

o Need 100% commitment from the business

o Change/fix the process, not the system

o Define your requirements based on the new business process

o Decide what you want to do, then pick the tool (not vice versa)

o Define reqs up front before selecting an implementation partner

o Be realistic about data conversion time and effort

o Dedicate a Project Manager from underwriting full time

o Do not convert policy data! Convert policies at time of renewal.

o Allow projects to fail

o Define your requirements well before working with a vendor; otherwise, they cannot understand what you want

The PNE confirmed to all the carriers in the room that they are all struggling with variations of the same issues. It also confirmed that you cannot face these new challenges with the old Insurance mindset or culture and provided practical steps that have been taken to make the needed transitions.

The next PNE is scheduled for October 26, at RSA Canada in Toronto. The two topics for discussion will be Insurance innovation and Big Data in insurance. The event is open to all carriers. Check the Celent site ( soon for event and registration details. Based on the last several PNEs, you won’t want to miss it!