Archives for December 2012

Consumers Trade Privacy for Enhanced Experience

There are some very interesting results in the recent Accenture survey: “Accenture Interactive Survey: Shoppers Prefer Personalization Over Privacy” (infographic here: The online survey asked 2,000 UK and US consumers about their preferences across various shopping channels and their use of social media networks as they research and purchase products. (Note: The fact that the results were collected via an online survey introduces a bias towards using technology, but not one that invalidates the results.) Two statistics stand out: 3 out of 4 shoppers prefer retailers that use personal information to create offers that are individual and 61% declare that they will swap privacy for a personalized buying experience. So, what does research into product retailers have to do with insurance? I argue that we have seen this movie before, during the .com boom in the late 90’s. As online retailing began, consumers developed different expectations about how they interacted with companies they did business with. For example, they expected to be able to pay for products and services through ACH or by credit card. But when it came to insurance, do you remember that there once was a debate about consumers’ willingness to pay premiums on line? Retailers had offered the function for years, but insurers lagged in adoption. I remember one argument from those in favor of the status quo: “But people want to write a check and send it to their insurance agent.”! We see where that argument went. The point is that consumers are increasingly trading privacy for a personalized shopping experience. Insurers who are investing in the development of skills to collect, analyze and operationalize social data will be positioned favorably compared to their competitors. These insurers will be able to respond to consumers as they expect their insurance purchase to be as easy as their other buying experiences.

Merry Apocalypse – Mayans, Gender Directive, Big Data, Zombies and an Insurance scenario

With only two sleeps left until the 2012 apocalypse (has it’s own Wikipedia page here) I thought it worth working through an insurance scenario regarding the end of the world as we know it. I won’t go into detail but Friday the 21st of December marks the start of the 13th b’ak’tun or (5126 years) of this, the fourth world. Apparently the third world failed and was destroyed on it’s 13th b’ak’tun. Some argue that a galactic alignment of some sort will play havoc with the earth or that we will suffer a geo-magnetic reversal and massive solar flare. Some folks argue that this, more than the start of a new century, marks the next great epoch in human endeavors.  Others suggest that it is nothing more than an occasion for a party – a new years party of sorts that only comes around every 394 years. I see that no one has noted the alignment of this date with the EU Gender Directive coming into force and the havoc that will play on insurers. This could of course align with the idea of starting a new epoch – one where insurers use usage based insurance and other schemes to greatly increase their understanding of individuals, rather than pricing on generic information and broad assumptions. Perhaps the far-sighted Mayans were in fact predicting radical shifts in attitude towards risk evaluation and perceptions on the influence of gender. So how might human civilization as we know it come to an end? A popular end of civilization scenario at the moment seems to revolve around the undead, vampires seem to get all the romantic story lines with zombies left to wipe out humanity. So how might a zombie apocalypse come about and more importantly – what would be the impact on the insurance industry? How might the zombie apocalypse come about? I think the most likely culprit we’re seeing now is more likely to be a freak marketing accident rather than a freak asteroid or radiation accident. We have and are continuing to increase our understanding of the human brain, particularly tricks and ruses to dupe customers into exhibiting the behavior we want. We understand that round symbols on products tend to be associated with sweet tastes and softness, that angular symbols have a bitter taste associated. The rise of big data and predictive analytics is providing industries across the globe with new insights  into how messages, images, sounds and video all influence human behavior, but we don’t yet fully understand the human brain. It’s conceivable therefore that in a rush to create the most viral video, to induce customers to buy more pizza/perfume/smartphones leveraging the latest tricks and wording we accidentally awaken the cannibalistic, pain resistant, brain eating behaviors we all know lie hidden deep within the limbic system of the brain. These schemes would only work on the majority of the population, not all of them. Assuming then that zombies no longer require insurance products the personal lines market would have shrunk to 20-40% of it’s original size, with small business insurance likely following suit and large corporate insurance and group life schemes needing a significant re-think. I expect this would happen over a matter of months as insurers with rights to take money from the customers ‘zombie account’ could continue to do so until either the bank stopped the process or money ran out. For those zombies still receiving benefits payments or salary this could continue indefinitely with a very low likelihood of a claim being made – although friends and relatives could claim the funds were not taken in good faith, with the counter argument that the insurer was not informed the customer no longer wanted the policy. Clearly most insurers would need to go through a radical cost reduction exercise which would normally be associated with a mass redeployment of staff. Between 60% and 80% of staff could now be zombies by this point and therefore unlikely to contest their being made redundant – certainly many would be guilty of gross misconduct –  for failing to turn up to work or attacking other employees, eating brains, etc. This leaves the significant issue of sparse insurance knowledge across the industry. This could result in a rise in outsourcing to areas less effected by the crisis that have some knowledge still in place but also a rise in the requirement for automation and straight through processing – again supporting the cost reduction exercise. Now the newly nomadic remnants of humanity would have a need for a new set of insurance products, but also would require a rethink of the distribution approach. While some agents may remain in well populated areas it seems more likely that a direct model of selling would be most appropriate. Given the focus on cost reduction and straight through processing this would likely require a self-service model driven over the Internet. Access to short range WiFi networks would be few and far between however teams of mobile maker-engineers could keep the globes cellular network going with much less effort – making mobile communications and ubiquitous smart phone and tablet technology the medium of choice, charged up regularly using solar chargers when not in areas of power. New insurance products could include:
  • Shopping insurance – trips to potentially zombie-infested supermarkets and malls whilst carrying medium to heavy weaponry brings a new set of risks. Reading through online guides from insurers and using maps of safe areas from the insurer could result in discounts on the cover.
  • Zombie syndrome insurance – assuming customers have a little notice of their impending induction into the zombie world they could alert the insurer who might pay out to friends and family as well as notify them that they’re not coming back.
Lets not forget, those insurers most affected could be commercial insurers as business continuity is affected globally and law suits are brought against the corporations and companies with liability for starting the zombie apocalypse in the first place. Now of course, Celent is here to help and advise in times such as these with reports available on BPM and business rules for automation, on mobility and mobile solutions and case studies in the effective use of technology.   Happy holidays from all here…

Do you remember Name That Tune?

Can you name a song in 6 notes or less?  Click on the link and see if you can do it . . .  Name That Tune  (Hit your back button to return to this blog.  The Answer will be at the bottom!) Can you write a whole story in 6 words or less?  Ernest Hemingway once wrote an entire short story that was 6 words long (For sale: Baby shoes, never worn). What about defining something in 6 words or less?  Can you do that?  How would you define Innovation if I told you it had to be done in 6 words or less? Innovation: The difference between leader and follower. Ok, so I will admit it’s not that original.  It is paraphrased from Steve Jobs.  But he epitomizes innovation to me. So how about you?  What is your six word definition of Innovation?  We are having a contest to see who has the BEST definition.  Will that be you?  Visit our LinkedIn group  ( to see what other have said and add your definition.  Winners will be announced at Innovation & Insight Day on February 27, 2012 at the Boston Sheraton Hotel. The Fine Print 1. (Legitimate) hyphenated words count as one word. 2. You may use a maximum of six words. You may use fewer, but under no circumstances should you use less than one. 3. Creative use of spaces within made-up words may be allowed at the discretion of the judges. 4. The use of pictures is not permitted (after all, a picture is worth a thousand words). 5. Some settling of contents may occur during shipping and handling.     Name That Tune Answer:  Silver Bells

12 Gifts of Celent

Here we on the twelfth day of the twelfth month of twenty twelve. (A friend helpfully pointed out we’re 800 years late for 12 12 1212). A quick look at Wikipedia shows the importance that 12 has had in our history, almost regardless of place of birth or religion it seems. It seemed a good time to reflect on the year past using 12 gifts, one for each month of the year past. (That’s right, a vaguely holiday period themed blog post reviewing the last year…) The first gift of Celent – Model Insurer 2012 January saw our Innovation and Insight day in Boston along with the Model Insurer awards which were covered in our blog post here and the report is available here and the Model Insurer Asia report here. In addition we hosted webinars on SOA and introduced Creative Disruption. January also saw a range of reports and webinars (like this one and this one) regarding policy administration systems and billing systems. Meanwhile, Celent was asking: Telematics-Based Insurance: Has Its Time Finally Arrived? and The big unanswered social media question – where’s the money? The second gift of Celent – Deal trends and the state of the financial services

In February we published the life and pensions reports on deal trends in North America and in EMEA. We also share The State of the Financial Services Industry 2012 to our clients as well. Donald Light’s report on the New Normal while not from this month is worth revisiting here.

On the blog we asked in Technology, innovation and insight in insurance if 2012 would see an absence of innovation from the technology side, certainly plenty of updates and patent squabbles but perhaps little game-changing. We’re still waiting on Google Glasses and Augmented reality and motor insurance – one step too far?

 The third gift of Celent – The views of the CIO If you wanted views from the CIO the you could ask for more with 2012 US Insurance CIO Survey: Pressures, Priorities—and Innovation, Insurance in France 2012: The CIO Perspective and Insurance in the United Kingdom 2012: The CIO Perspective published in March 2012. There were also reports on illustration systems and collaboration in insurance this month too. On the blog we warned of The Impending Insurance Architect Crisis and the dangers of social data – If only we could trust data available on social networks…  The fourth gift of Celent – A view to the future For our life and pensions customers April saw a report looking at the future trends in policy administration systems and also the release of our emerging technology report (the general insurance / P&C version is here). Celent also took some time to look at the digital customer and trends uk motor insurance with Google. Blog posts this month continued the theme with 2022: The coming of age for Generation Y and What is the true price of technological progress? The fifth gift of Celent – The end of auto insurance (and on a lighter note, software deal trends) Beware the ides of March perhaps, but it was in May that Celent provided a scenario for the end of auto insurance based on technologies that mitigated the need for this cover. Of course May also saw the annual Acord Loma conference and our reports on software deal trends here, here and here. On the blog we were discussing Straight Through Processing and Product Development: Lessons Learned and (who could forget) The State of Europe. Of course regarding the latter the Euro-zone’s issues are clearly fixed and no longer of concern. The sixth gift of Celent – Pragmatism in Claims Management In June Celent published the results of a consumer survey examining the reality of attitudes in claims management and what customers really wanted. In addition, Celent examined the opportunities around modern distribution management systems and at the vendors offering solutions regarding Solvency II. Celent was also present at IASA in June along with other events. On the blog in June Celent observed that Customers are the Disruptive Force in Insurance and (some of us) were watching Apple, When a developer conference catches the worlds attention… The seventh gift of Celent – Data Mastery In July Celent published it’s Data Mastery Spectrum Overview 2012 providing insight into how to deal with data and also looking at the vendors that support insurers with tools. Also in July Celent looked at Strategies and Options for Managing Closed Blocks – a key issue in the life industry as so eloquently phrased by Karen in the blog post, Are closed blocks life insurers’ nuclear trash? The Asia team had a busy month with The Advent of Social Media in the Japanese Financial Industry, 2012 Asia-Pacific Insurance CIO Survey: The Year Ahead and Deal Trends in Property and Casualty Policy Administration Solutions: 2012 Asia-Pacific Edition. Blog posts this month were varied including – Insurance Innovation?? Michael Raynor to Speak at Celent Event, Apple still does laptops, Microsoft does tablets and Google does iOS Apps and Data … Outside In. The eighth gift of Celent – Lessons in successful PAS replacement Two case studies published this month held key insights into successful PAS replacements – as well as possible some pitfalls to avoid. While both are life and pension system examples the lessons from Leveraging SaaS to Tackle the Legacy Challenge and Seven Lessons from a Successful Platform Transformation will hold import for all. The blog posts this month looked to the future and disruption with Creative Disruption in Action: Changing the insurance outlook for young drivers and Changing the rules in online insurance. The ninth gift of Celent – Events galore! September 2012 saw events such as A Celent Insurance Symposium-Creative Disruption: Technology and the Future of Insurance and Celent, in association with Google, presents Digital Insurance and the Customer: Mind the Gap along with Webinars and other events. The blog posts at Creative Disruption in Action – 2012 Event and Digital Insurance and the Customer: Mind the Gap! provide insight into the days. In addition we published reports on claims systems in Europe, e-business solutions and annuities. Blog posts included the quirky Printing Body Parts: Frankenjet??, the tech-related What the insurance industry can learn from the iPhone 5: A study in frictionless upgrades and the architecture related New Challenges require a New Mindset for Insurance. The tenth gift of Celent – Insight into the French auto insurance market Many would say that the UK car insurance market is the most advanced although as noted in the UK focused report earlier in the year it is a little bit broken. Nicolas Michellod’s look into and insights on The French Market for Online Car Insurance provide an alternative view on how car insurance markets can evolve with the adoption of the Internet and e-commerce. I could also have picked out Celent’s first Latin American Policy Administration Systems 2012: Life, Annuities, and Health ABCD Vendor View as the key gift here – certainly a territory of increasing interest. Blog posts this month were varied including Agoraphobia and Insurance Cloud Models: Don’t Be Afraid to Play Outside, EU wins Nobel Prize but it’s a tough time for European insurers and Why Billing Matters. The eleventh gift of Celent – Perceptions on Innovation and a hint of sarcasm Celent’s consumer research on Innovation in Insurance: A North American Consumer View and Innovation in Insurance: A UK Consumer View provide insights into how the insurance industry is perceived by their customers. The hit of sarcasm comes from long suffering analysts writing How to Give a Really Bad Demo: Ten Worst Practices from Actual Experience. There were plenty of other reports in November including ones on fraud, claims system deals, how AXA used technology during the England riots, electronic applications and issue and e-signatures in South Korea. The twelfth gift of Celent – Vaguely holiday related wrap up blog post(s) And some other blog posts including Self-Service or Self-Serving? and Why the customer experience matters – and December isn’t even finished yet.   So there it is, a twelve gifts for you. We did look at repeating the top 10 searches theme or the Christmas carol one but who could pass on 12 gifts on 12/12/12? It’s been a phenomenal year once again – still full of challenges, change and interesting times. Have a great season as the year comes to a close. We look forward to working with you in the new year and beyond.  

Why the customer experience matters

At Celent, we have the opportunity to sit through several dozen demos a year of core systems. And in most demos, I find myself having sympathy for the ultimate end-user. The first thing that pops into my head is not how powerful the system is (and they often are), but how grateful I am not to be an underwriting assistant (or claims adjuster or CSR) that would have to learn how to navigate this application in front of me. The industry spends much time poking fun at the green screens from the previous century (ok, of this year in some insurers, you know who you are!). But the navigation and thought for the user experience has progressed little from those days. In the worst cases, it seems that the green screen has simply been re-coded in .NET along with easy access to specific screens through magic keys like F7. A Harvard Business Review blog highlighted some interesting facts about Android and iOS. Whilst Android outsells Apple phones, Apple iOS users conduct more e-business than their Android colleagues. So what is that about? The blog goes onto explain that it is the manner in which Apple devices support customer engagement that result in these same users doing more e-commerce. The fact that the face of core systems is misaligned with what might work best for the user is in my mind related to how we as an industry frame, discuss and talk about customers. Susan Scott  makes some great points on how we talk about customer centricity instead of customer connectivity. She points out certain tells of organisations that get this wrong. Do you recognise any of these? They include relying on  software to build relationships, using language that turns the customer off, and use of the term “customer facing” (If we don’t all care deeply about the customer of our business, then what are we doing?) Most insurer websites can be found wanting, as can the internal systems that staff use when they interact with these customers. For a smart industry, the link between customer engagement and user experience appears to be a blind spot. Inspired by companies that do get it right, I believe we should set a higher bar on the expectations. This is more than aesthetics. And let’s not forget the real skill in getting really engaging customers through technology.  Let’s not leave it up to the smart geeks who’s real skills are the wiring of the system.

Self-Service or Self-Serving?

Ever since we discovered that the internet could be more than just a document repository or shop-front, we have been investing in smart ways to engage our customers better and improve the user experience.  Self-service via a laptop, tablet or mobile device clearly has huge benefits to both the customer who now has access to information at their fingertips and insurers who are able to strip out significant costs from their business through outsourcing process to the customer and redirecting inbound calls. So, when an insurer progresses down the path of implementing ‘self-service’, who benefits most?  Are propositions and solutions designed primarily around what the customer wants or are they skewed more towards reducing the insurer’s cost base? I’m sure that there may be people reading this who argue that this is clearly a pointless question as the answer is “Both. It’s a win-win for all”.       However, when reflecting on my personal experiences of being part of proposition development teams for both mass-market and HNW propositions, the starting assumption has often been how best to minimise touch for the mass-market via self-service in order to satisfy their needs at a minimum cost to the insurer (measured through call centre volume reduction and staff time), and then how to tailor the HNW propositions with the addition of personal services (such as personal account managers and claims handlers) on the assumption that wealthier customers demand a more personal relationship and are willing to pay for it. In a recent Celent survey into customer preferences for technology use at the point of service (both in the US and the UK), some interesting findings resulted when comparing customer service preference with household income.  To make it easier to see, I’ve created the following mini-chart which combines the findings from both US and UK consumers.   These findings suggest that there may be a correlation between household income and the desire for self-service.  The findings also appear to indicate that there is a reducing reliance on ‘human touch’ for wealthier consumers.  Simply put, the wealthier an individual is, the more likely that they are to use ‘self-service’ and the less likely they are to seek out ‘human touch’ in the form of additional personal services.   Conversely, for complex transactions, the less wealthy an individual is, the more likely they are to seek out either face-to-face or call centre interactions as opposed to ‘self-service’. So, what could this mean for proposition development and assumptions for “self-service”? If insurers are pursuing ‘self-service’ from a perspective of reducing their own costs on the assumption that this is what the consumer wants too, then maybe these insurers are missing a trick? (especially if they are targeting the mass market / less wealthy individuals who either lack the confidence or frequency of contact to maximise adoption).  Likewise, if insurers are pursuing HNW individuals through layering on personal services to their proposition, then maybe their design effort could be better invested in improving the user experience or access to on-line tools? Clearly, there is more research that insurers can do to either validate or challenge these initial findings, such as investigating the relationship between wealth and financial confidence, the different types of insurance products (clearly auto insurance is likely to have a different profile to annuities), differing personal experiences of “self-service”, the diffusion process, etc.  In the meantime, prior to finalising 2013 plans, maybe there’s just enough time to challenge assumptions around customer expectations for “self-service” and squeeze in any last minute adjustments.