About Catherine Stagg-Macey

Failing is the first step of Innovation

Failing is the first step of Innovation
Most cultures reward and encourage success. Growing up, we learn quickly to highlight our brilliance and down play our mistakes. The corporate world we operate in only reinforces that. Do you remember how many times you had to fall off your bike before you could ride it successfully? You had to fail before you got it right. Had you been laughed at or criticised in those moments of lying on the asphalt would you ever have picked yourself up and tried another time? Being an innovator or supporting innovation in your organisation requires a willingness to embrace failure.  And I mean really embrace it. It means allocating money to ideas that have no apparent business case. It means creating certain spaces for staff to experiment with no fear of retribution (think Google’s 20% idea). It means falling of your bike, again, scraping your knees, in the knowledge that at some point, something might come of the endeavour. From failure comes huge learning for the people and the organisation. Failure uncovers a gold mine of information that you had no access to before you started. Many readers will nod sagely at what appears to be obvious. But my experience tells me that most of us go out of our way to avoid failure. We have been institutionalised to only ever succeed (or at least be seen as succeeding) at every step and at every endeavour. Don’t believe me? Here’s my challenge for you – write your own failure CV. Look back on your career, and write up each failure and what you learnt from it. My own experience and that of friends shows me that putting pen to paper to outline our failures is remarkably hard because of our conditioning. And this is symptomatic of our unwillingness to see failure as the necessary stepping stones of innovation. I remain convinced that we need to face failure head on. Failure is good. Embracing failure will allow us as leaders to unlock the innovation potential that currently lies dormant in our companies. ______________________________________________________________________________________ Our competition for “Innovation in 6 words” is still open. We have received over 110 submissions so far! You can check out your competition here. To take part in the discussion, join our LinkedIn discussion group (Innovation is…) devoted to the topic.  To participate in the challenge, e-mail your definition to Erica Ferguson at eferguson@celent.com using the subject line “Innovation is” along with your contact information. We will be announcing the winning entries during our Innovation & Insight (I&I) Day on February 27, 2013. Regular readers of our blog know that I&I is a flagship Celent event. As always, it will host a variety of Celent and non-Celent speakers and will be a great opportunity to network with the industry peers. If you’d like to see the full agenda and learn more details, please visit our registration site.

Why the customer experience matters

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.

What is the true price of technological progress?

What is the true price of technological progress?
Over one hundred years ago, Jung predicted man’s struggle with his humanity in the face of industrialisation. He wrote quite eloquently about the rise of depression resulting from us struggling to redefining our self-worth having lost our sense of purpose to the rise of the machines. A century later, we face another wave of technological change that will surely deeply impact society. The Economist outlines the case for the third wave of industrialisation with the introduction of 3D printing in manufacturing. Here at Celent, we’ve been pondering the wonders (and impact on insurance) of growing your own clothes and flying cars. We should take the time to celebrate and marvel at the ingenuity of man to continuously drive such innovation. Man’s innovation has opened up new ways of working as a society and new opportunities for the individuals within that society. More recent innovation has brought us new ways of communicating, and new tools to do it with. But Sherry Turkle *, MIT professor makes a great case for the true price of this connectedness. In her research, she interviewed a 16-year-old boy who relies on texting for almost everything says to her, “Someday, someday, but certainly not now, I’d like to learn how to have a conversation”. Skype has recently pushed out a huge ad campaign throughout the London tube highlighting where we could use Skype calls, and making digs at Twitter (“140 characters doesn’t equal staying in touch” and my favourite “”When did it become okay to text Mom Happy Birthday?”). When did we lose the courage to have conversations face to face? As Ms Turkle says, human relationships are messy and demanding but who hasn’t felt the joy of having a truly open and honest conversation with another human being. It’s a poignant moment in mankind’s evolution when we reflect on just how much time we spend giving the right/perfect impression of ourselves to the outside world. Technology allows time to fine tune what we say, to reflect only the joyful and perfect moments in our lives. I’ve seen this in other aspects of my life and in many ways these are more egregious points. I expect these are familiar to you too:
  1. 1. The HR department who makes an announcement of significant organisational restructuring via a group email – and only via email. (When did it become OK to end personal or professional relationships via email or texts?)
  2. The Divisional head who lambasts his team via email for bad behaviour when it’s really only directed at one team member. (When did it become ok to use technology to be a lousy manager?)
  3. The family at the restaurant who don’t talk to each other over dinner as they are too busy typing into mobile phones, or watching TV on tablets. (When did it become ok not to talk to each other at dinner?)
Another beautiful point made by Ms Turkle is that face to face conversation unfolds slowly and this teaches us patience. It worries me that our attention span seems to get shorter as the years go by. Information needs to be delivered in short sharp chunks otherwise boredom sets in. Can we truly absorb what is going on around us with one eye on the TV and another on the Blackberry? I expect this post is not what you might expect from a technology analyst. And you are wondering the link to insurance – a mandatory requirement in most of our blogs. But my point is just that – insurance is about personal relationships, about people often in times of crisis. This is personal. Life is messy and imperfect – let us not use technology to recast the world into something it is not. Let’s not trade our humanity for progress. * Sherry Turkle is a psychologist and professor at M.I.T. and the author of the fascinating “Alone Together: Why We Expect More From Technology and Less From Each Other.” Check TED.com for her presentations.

Calling all UK General Insurers with a cool tech story!

Calling all UK General Insurers with a cool tech story!

Once again, Celent has teamed up with the Insurance Times for the 2012 Technology in Insurance Awards. These awards are the only dedicated insurance technology awards in the United Kingdom for general insurance. Last year’s awards were a huge success in recognising some terrific successes in our industry. We had 140 people attend a cocktail award’s ceremony in the iconic Gherkin building. LV=, Chartis, Ingenin, and HOV Global services were just a few of last year’s winners. Judges included Google, CEO of RSA, Editor of Insurance Times, and your own Celent analyst, myself.

This year, we have a two new categories which reflect the changing nature of technology:

– Best use in Social media

– Best use of analytics

So the important dates for your diary are:

We look forward to this year’s interesting and exciting nominations, and recognising the superstars and stellar effort that is made every year in our industry. Good luck!

Augmented reality and motor insurance – one step too far?

Augmented reality and motor insurance – one step too far?

Growing up, I was fascinated with the TV shows of Star Trek and BattleShip Gallatica. The combination of strange looking aliens, interesting planets, and tele-transportation had me captured. It is perhaps not surprising that I ended up in the field of Computer Science. And so my inner geek was intrigued at the news in the press this week reporting the impending release of Google’s glasses.

The future may be closer than we think with this example of augmented reality features moving into the real world of you and me. (Much can be said about the impact of technology on the consumer when we have to use “real” to describe the world we live in).

Through these glasses, Google will be able to project a wide range of data onto your vision of the world, including adverts. Using GPS features, the glasses would know where you are in the world, and offer up data from your social connections on buildings and business around you. Using facial recognition software, the glasses could offer social data about the person in front of you.

The cynic in me rails against the practicalities of this all. Walking down any busy street requires my full attention to ensure my safety from cabs, pick pockets and SMSing locals. How could my mind possible deal with another stream of data through the glasses overlain on this already busy reality?

And perhaps this is just too much data. Aside from the neurological constraints of the brain processing this volume of information, there are serious concerns from consumer groups about the lack of safe guards. As the NYTimes article notes, American consumer privacy groups are lobbying for the suspension of use of facial recognition software until such a time as adequate safe guards are in place. And quite rightly so.

In the world of insurance telematics, there is huge interest if little current evidence that the mobile phone could take the role of the blackbox device in future propositions. Google glasses could play a similar role in telematics as the device offers many of the features of a smartphone. This could be an example of one technology leap-frogging another in its application.

Even if you are uncomfortable with my Star Trek proposition of glasses as a telematics device, as an industry, we need to recognise that this will be another marketing channel to our personal lines customers. This presents an opportunity of the most personalised form of marketing available. As insurers get a handle on marketing in digital channels, understanding the value of marketing in augmented realities will be next.

But if for you, like it is for me, this may well be just too much information. For the moment, I will forgo opportunities of augmented reality and stick with mere reality. And maybe catch-up on old episodes of Star Trek.

60 weeks to the RDR deadline – but who's counting….

60 weeks to the RDR deadline – but who's counting….

This week, Celent hosted a London event on the UK regulatory topic of Retail Distribution Review (RDR) that will impact the entire life insurance industry. As Jamie Macgregor, pointed out, there are a little over 50 planning weeks until the deadline for implementation.

Matt Browne from the FSA covered key points and intentions of the regulations, and reminded the audience that this is the time to take action, not to debate. The essence of RDR is to fix the retail long term savings and investment market which many consider is not working for the mass market customer.

Jamie Macgregor presented key points from Celent’s recent research. Insurers that were interviewed for this paper highlighted that 2012 will be a “horrible year” with the barrage of regulatory deadlines including Solvency II, EU gender directive and RDR whilst continuing to focus on new propositions for growth and profitability. The level of change and effort in Q2 and Q3 will be massive. Even with the delay in Solvency II regulations, many organisations are still committed to the same level of project effort to meet the revised deadline.

It is Celent’s view that the biggest risk facing product providers is around orchestrating the end-to-end delivery of the change program across multiple partners both upstream and downstream. This risk is then made worse by dependency on outsourced relationships within product providers and the visibility of their readiness. Effective communication across all parties involved will be a critical success factor of many programmes.

Martin McKenna from Focus solutions presented a view from a distribution perspective. He noted that IFAs had originally seen the regulation as a threat but that there was a shift in views. IFAs are starting to see this as an opportunity to de-risk the business model. It’s clear that IFAs don’t have the capacity to serve HNW, the mass affluent and the mass market . IFAs will refocus their businesses towards what they see as high value clients and this may result in orphaned clients . This is a great chance for new players to enter the market, particularly those with strong brands. New distribution opportunities become available like online only, retail outlets , and mobile. Martin went on to note that whilst the appetite for advice will still be there, consumers will want to choose companies they know and trust. This creates a space for larger brands like banks and insurers to offer products directly to the customer. His view was that the winners would be those companies who could understand the cost of servicing the customer, and who had the scale and brand to respond to the market opportunities.

Kevin Okell from Altus discussed the view of the product provider. Kevin noted that RDR was considerably more than just switching off commissions. Rather, it meant and required a change in the provider operating model. In the new RDR world, advice and a product transaction are two distinct, and potentially unrelated, entities. The rules that allow providers to facilitate the payment of advice between customer and adviser only adds to the complexity of the processes and supporting systems that must be changed. Ultimately, the cost associated with this complexity needs to be covered from somewhere, and it is likely that the consumer will end up paying through increased product administration charges.

And so with the views from the FSA, Celent, IFA and provider, the delegates left with much to think about. Celent will continue to monitor and write on this topic as we count down to 31st December 2012 .

I never predicted a riot – The English summer that proves the value of location intelligence tools

I never predicted a riot – The English summer that proves the value of location intelligence tools

In the usually quiet English summer, the country has been hit by a series of riots in several major cities. Whilst politicians and social commentators offer up the analysis of how it all happened, and homeowners and small business clean up the chaos, insurers are counting the costs. There are estimates of £200 million in claims to be picked up by the sector but the true cost of this wont be known for some months.

If there was ever a business case for the use of geographic information systems in insurance, this must be it. In the UK, the top 10 insurers in commercial and personal property together earn approximately 85% of the premium in this sector. This is huge exposure indeed. Unlike several other areas around the world, the UK is not known for large natural catastrophes. So riots and the occasional flood are the country’s reminder to insure.

In the Bunsfield oil depot explosion which impacted a large area of neighbouring commercial and residential properties in London, RSA was able within a few days to estimate the damage to their policy holders and the likely payout in claims.

Months later, with all claims finally in, the estimation was within a handful of percentage points of the actual amount. This accuracy is important to policyholders and shareholders alike. It means accurate allocation of reserves and not holding up capital unnecessarily.

GIS systems or location intelligence solutions provide valuable data at the point of underwriting and claims assessment at a portfolio level. For the commercial property underwriter, the solution provides maps highlighting other insured properties in the area. Depending on the appetite for new risk given the aggregate risk for the area, the underwriter can then decide to proceed or not. Making this decision without the support of spatial data would be nigh on impossible.

For assessment of likely claims, GIS systems offer similar strong business advantage. Plot the area of impact of the riot or flood, and the system is able to sum up all current exposure in that area. This assessment of the aggregate risk can also include items not typically post coded such as bridges and public toilets which large property insurers.

GIS solutions have already proven their value to the insurance sector. Some of the systems are out of date or not integrated to underwriting systems to support real time decision making. With legacy modernisation imposing a major drag effect on insurers IT budgets, GIS solutions may have to wait some time to attract the correct level of investment.

In the coming quarter, Celent will publish a report on GIS vendors in the insurance sector.

Key European GI Policy Admin Report published

Key European GI Policy Admin Report published
The European Insurance team has been working hard over the Spring and Summer to produce one of our key reports Policy Administration Systems for General Insurers in Europe 2011. It’s a topic of great interest to insurers wanting to replace their core underwriting system, and vendors wanting to have a view of the competitive landscape. This report uses Celent’s ABCD vendor view, which is a standard representation of a vendor marketplace designed to show at a glance the relative positions of each vendor in four categories: Advanced technology, Breadth of functionality, Customer base, and Depth of client services. The report also has the first four PAS systems XCelent Awards for Technology, Functionality, Customer Base, and Service. Since the first report in 2005, activity level has remained high among both insurers and policy administration system vendors. In the two years from January 2009 to January 2011, over 130 insurers had licensed a new policy administration system. Since 2007, the UK market has seen seven new entrants primarily from the United States. This adds to an already crowded space. And of these vendors, most (50%) are small with less than 10 clients and under $10 million in annual revenue. So the vendor market remains fragmented and challenging for the insurer buyer to navigate. Recent acquisition announcements of Accenture/Duck Creek and Sapiens and IDIT are not surprising. We can expect further consolidation in a tough market. Look out for the upcoming European PAS deal trends report which will explore this trend in more detail.

Telematics is back .. and this time, it's here to stay

Telematics is back .. and this time, it's here to stay
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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.

Paris and San Diego in the Springtime, and London in the Fall…

Paris and San Diego in the Springtime, and London in the Fall…
For the Celent insurance team, May appears to be all about events. We will be hosting the “Celent Insurance in France: The CIO Perspective and Adoption of Social Media by French Insurers” in Paris on the 19th May. We have an exciting line up of hearing views on the value of Social networks for insurance from Generali, and then Google’s view on the Consequences for French Insurers’ Marketing Strategies. This will be followed by a panel discussion. The event will be in French with simultaneous translations. If you can’t get to Paris, perhaps San Diego is a possibility. The Celent team will be in full force at the ACORD Loma 2011 conference in San Diego this year. We’d love to catch up with you there at our booth, or around at the show. We all look forward to the new venue this year. And if “Spring has sprung, and the grass has riz” and you’ve no time to get to Paris or San Diego, there is always London in the fall. The Celent and Insurance Times UK GI Tech awards will be held at the Gherkin in London on the 22nd September. We look forward to catching up with you at one of these events.