- Software integrators-driven acquisitions: large software integrators are trying to diversify their service offering through the acquisition of insurance system IP. The best example of this type of strategic move is for instance the acquisition of Wyde by MphasiS a few years ago.
- The Private Equity (PE) firms-driven acquisitions: there is a growing interest to invest in the insurance core system space for PE firms. The best examples of this type of acquisitions are the contribution of Riverside in the merger between Charles Taylor and Fadata or Waterland Private Equity investment in Keylane that now combines activities of various PAS vendors including formerly branded LeanApps, Quinity, Mantcore and more recently the German vendor called Geneva-ID.
- The core system vendor-driven acquisitions: PAS vendors understand they can grow quicker if they merge with a competitor. Sapiens acquisition of FIS Software and IDIT or Prima Solutions acquisition of Albiran a few years ago are good examples.
January 5, 2016 by Leave a Comment
At Celent, we have been writing reports profiling policy administration system (PAS) vendors for a long time. In the European, Middle East and African region (EMEA) we have covered up to 50 vendors in some of our bi-annual reports and we know there were approximately twice more active in this region of the world. The most recent report focused on life PAS in EMEA can be found here. Since our first look at the PAS market in the EMEA region in 2007 we have predicted that its fragmentation and its heterogeneity would lead to a consolidation. It is fair to say that we have been wrong with our prediction or without less humility we can say we have been right but our timing was bad. Indeed, it seems that the consolidation phase we predicted has started to materialize a few year ago but certainly not as early as we thought. In other words we have observed a surge in mergers & acquisitions over the past few years and we think it will still accelerate in the coming months. The most recent acquisition that validates our view is the acquisition of the Danish vendor Edlund by KMD Group that has been announced this week. Overall we see various kinds of acquisitions:
September 11, 2015 by Leave a Comment
Celent and Asia Insurance Review hosted the 5th Asia Insurance Technology Awards (AITAs) at AIR’s CIO Technology Summit at Le Meridien Hotel Jakarta on 1 September 2015. The AITAs recognize excellence and innovation in the use of technology within the insurance industry. This year we received over 30 nominations from Australia, Hong Kong, Taiwan, India, Sri Lanka, Indonesia, and Pakistan; as well as the Asia Pacific divisions of global insurers. There were many impressive submissions, from which our international panel of Celent insurance analysts selected the very best to receive the six awards. The Innovation Award recognizes innovation in business models or in the use of technology. The winner was MetLife Asia. MetLife Asia implemented Advanced Data Analytics to transform big data into customer insights and to deliver a more personalized customer experience – delivering the right products and services, for the right people, at the right time. They are using these insights to inform product and services development, and to deliver sales leads to agents. The company won the award because of the innovative usage of data analytics. The IT Leadership Award honors an individual who has displayed clear vision and leadership in the delivery of technology to the business. The recipient will have been responsible for deriving genuine value from technology and has demonstrated this trait with a specific project or through ongoing leadership. The winner was Girish Nayak, Chief – Customer Service, Operations and Technology at ICICI Lombard General Insurance. ICICI Lombard implemented a business assurance project to address the ever present gap between real business uptime on the ground vs technology uptime. The firm implemented an in-house customer experience center; and deployed an infrastructure as a service model in Microsoft Azure Cloud. These initiatives generate genuine value for the business. The Digital Transformation Award honors an insurer who has made the most progress in implementing digitization initiatives. BOCG Life was the winner. BOCG Life implemented the Electronic Commerce System to provide online needs analysis and policy services. Through a transparent, direct and needs-oriented process, it facilitates prospective customers applying for multiple products they need in one go, and allows customer to adjust the offer according to their budget. The company won the award because of the way it is building trust and developing long-term relationships with customers through digital transformation. The Best Newcomer Award recognizes the best new player in the insurance technology field. The winner was CAMS Insurance Repository Services. CAMS Insurance Repository Services launched the Insurance Repository to provide e- Insurance Accounts to maintain policies as e-policies. This brings new efficiencies and benefits across the stakeholders, including Policy Holders, Insurers, Agents and the Regulator. The company won the award because they demonstrated real, unique value to the ecosystem. The award for Best Insurer: Technology honors the insurer who has made the most progress in embracing technology across the organization. The winner was RAC Insurance. RAC Insurance implemented a series of projects to digitize the business between suppliers, members and RAC Insurance. These projects include Claims Allocation, Motor Repairer Integration, and a B2C platform. The company won the award because of the way technology transformed the organization’s capability by offering an exceptional, one-touch experience for their members through online channels. Finally, the New Business Model Leveraging Mobile Applications Award recognizes the insurer who has developed a new, perhaps disruptive business model involving the innovative use of mobile technology. Max Life Insurance won the award. Max Life Insurance launched mServicing and mApp which enable digital servicing of customers, sales force and operations. The company won the award because of the use of mobile technologies to increase agent activity and engagement, enable speedy issuance of policies, and enhance business quality and operational efficiency. Be on the lookout for the 6th Asia Insurance Technology Awards in 2016. We’ll post another blog when the nomination period opens, sometime around June 2016. You can also find information on Celent’s website: http://www.celent.com/aita.
September 9, 2015 by Leave a Comment
If you are like me, you have at least 15 passwords or PINs that you must remember. Passwords are a necessary evil of the digital world. I have a user ID and password for everything from accessing my child’s homework assignment to checking my bank balance. Most annoyingly, the passwords never have the same expiry date so they are never synchronized. I, like many others, ironically keep my passwords in an app that requires a password. One financial services company, Manulife Financial, has come to the rescue by providing the ability to access your accounts by using only your voice. I say ‘hallelujah’! Celent is often asked by insurers about voice recognition IVR and will now be able to point to a working model. Nuance Communications is providing the voice recognition technology. The software stores the customer’s unique voice patterns and characteristics. When accessing the account through the call center, the caller repeats a passphrase and access is granted when the voice is matched to their stored ‘voiceprint.” This is an optional service, but I am sure everyone will want to take advantage of having one less password to remember. Insurers continue to look for ways to increase customer loyalty, improve the overall customer experience and reduce call center costs. With the introduction of the voice recognition IVR, Manulife has addressed all three salient points. New uses for biometrics will continue to lead the insurance world into the future one innovation at a time.
August 28, 2015 by Leave a Comment
There are lots of cues and clues to differing cultures across the insurance industry and it’s IT neighbour – one of the most obvious is dress code or at least communal agreement on how one should dress. For a chap in London it should be relatively easy, as the character Harry Hart put it in the film Kingsman, “The suit is the modern gentleman’s armour.” However, recent changes and external influences in London have left me in something of a wardrobe quandary. For example – the data scientist community and the digital community. I went to the first Strata event in London in my usual suit and tie and swiftly realised that I looked like I a fish very much out of water. Here jeans, t-shirts and the odd tattoo were the order of the day. My most recent visit to the conference I managed to correct my attire although didn’t acquire new tattoos just for the conference (perhaps next year). Oliver Werneyer’s observation at our event in February this year that one needs a good beard to fit in with the start up crowd is also well founded. Also in London we have Lloyd’s of London with a strict dress code and a requirement for a tie to be worn at all times. More Kingsman territory, clearly one can’t dress for both communities on the same day. In between we have an increasingly relaxed view of the suit attire or even simply trousers and shirt. Despite having a pretty good collection of ties these are now largely optional (although I still generally carry one around as wearing them varies by client and frankly I quite like wearing a tie to a meeting). What I don’t have of course is a pocket square – something I rarely have seen adopted before this year (perhaps I wasn’t paying attention) but I’m increasingly seeing a square used to add a splash of colour in the absence of a tie. Thus, we have the title of this post – I have nothing to wear! Fortunately, London is unlikely to see the weather required for hawaiian shirts and shorts to become the order of the day (albeit I may have something that might fit that bill should it come to pass). Circling back to culture though, the need to blend these clearly different and shifting cultures together in one organisation is crucial in a modern insurer. Aviva has gone to the extent of creating a digital garage in Shoreditch – the heart of the jeans wearing community, if I may use such a broad brush – to draw in talent to the organisation. Hiscox too has been going to great pains to attract the right talent, along with many other insurers in London seeking to bridge these cultures. Are you allowing for a varied culture in your organisation? How flexible are you in dress code and working practices across different communities? Have you ever set to preparing for a meeting and realised you simply have nothing to wear? Would love to hear your stories on changing insurance, if only so I know it’s not just me.
July 6, 2015 by Leave a Comment
Choosing a vendor can make your head spin. There are so many things to consider. I know I have been tempted to create a dartboard and throw a dart to make the final decision. After hearing multiple presentations, most with similar pitches, the result can be “vendor soup.” So how do you decide? There are three things that I consider when making a decision that have nothing to do with the system itself. It is important to keep in mind that each insurer is unique, and there is no single answer that is right for all. The goal is to find a partner who is a good match for you.
- Delivery Approach
- What is the project methodology?
- What is the development methodology?
- Do you want the vendor on-site during the entire project?
- How involved do you want the vendor to be with requirements and user testing?
- How involved do you want to be with construction and unit testing?
- Will the delivery schedule match your in-house schedule – not too short or too long?
- How often does the vendor provide fixes?
- How will the vendor work with your current vendors and/or outsourcers?
- What is the vendor’s experience providing system deliverables along with the existing business priority deliverables?
- What is the experience in the domain?
- Are you more comfortable with a mid-size or large vendor?
- Will the project team be dedicated to your project?
- What is the profile of the staff who will be assigned to the project team? How deep is the bench?
- What percentage is on-shore vs off-shore?
- Will the project require 24×7 support to meet deadlines?
- Who will be the main contact? How many domain experts are available?
- What is the turn-over rate for developers, project managers, business analysts and business architects and is there a good mix of each of the skill sets?
- What is the organizational structure?
- What is the governance structure? How are issues escalated and resolved?
- Are the vendor’s values and behaviours a match for your company?
- Industry Experience
- How long has the vendor been selling systems? How many similar sales has the vendor made?
- Does the vendor have the capacity to run multipe projects simultaneously? Can the vendor provide successful references?
- Does the vendor use system integrators?
- Do the estimated time frames match the actual time frames for the implemented projects?
- Do the projects expected benefits match the actual benefits?
- Is there an active user group?
- What is the vendor’s financial strength?
- Will the vendor provide thought leadership and best practices from actual experiences?
- Is there a five year roadmap? Is the roadmap innovative or does it reflect the addition of common features or functions?
July 1, 2015 by 1 Comment
Today’s blockbuster announcement of Ace buying Chubb will have a lot of industry ramifications—some of which will play out in the IT sphere. No doubt there has already been an IT assessment element in each insurer’s due diligence efforts. Between now and the effective date of the merger, there will be a lot of planning focused on:
- Efficiencies and platform rationalization–aka “let’s figure out what is the right number of core systems, which core systems will be the survivors, and how data conversion and integration will work”
- Cloud, SaaS, data management/stores, and analytics
- Professional service and SI support capabilities that can scale to the new Chubb
- Which systems will best support a digital roadmap
- Design highly configurable and agile systems that feature ease of integration
- Have enough scale to meet the needs of bigger and bigger insurer customers—grow, merge, or wither
June 26, 2015 by Leave a Comment
I love spotting ironies such as how this years Strata | Hadoop World conference (the UK one) spent more time discussing Apache Spark and whether it was a successor to Hadoop or another tool in the box than it did discussing Hadoop and it’s applications. It was great to see members of the insurance industry there amongst the retailers and banks as well. “But wait?!?!!” I hear you say, “Hadoop isn’t all that old is it?” Herein lies the great challenge for the CIO faced with requests for open source tools. These are dynamic, social projects without the same stickiness as those legacy systems insurers spend time worrying about. Not only do users / consumers / fans of open source software shift between projects but the contributers / developers do too. With the rising use of tools like R, Python, Linux, GIT, Hadoop, Spark, Docker, Capistrano and all manner of wacky projects on the go and being adopted by insurers how should a CIO respond? Prohibition tends to lead to shadow IT and surprises down the line far more unwelcome than managing some new software. The key advice is to understand these types of projects can be more transient than other enterprise software. Experiment with them but be careful of expensive, enterprise installations that are hard to extract later down the line. In truth insurer adoption of some of these technologies will outlive the fashion for them but it still requires planning for their removal or worst case, their ongoing support. I promised analytics in the title too didn’t I? Well Spark is all about real time analytics and is having an interesting impact in the machine learning and predictive modelling space. It gets around some of the issues with interacting with Hadoop while still delivering performance. With open source projects survival of the fittest is the order of the day, far more so than in classic insurance software markets. Hadoop has it’s place, with many insurers globally investing in it.We will see new fashions in analytics approaches and more opensource tools I’m sure. Some will follow the Dodo. For those interested in Hadoop have a look at my report from 2011, when Hadoop was new and cutting edge. It seems it requires an update.
May 12, 2015 by Leave a Comment
Today CCC announced the acquisition of DriveFactor which provides a device independent platform for telematics data and analysis. Why is an auto physical damage estimation and analytics firm acquiring a telematics platform provider? Well, you could say that telematics is hot, and all personal and commercial insurers writing auto insurance are scrambling to build market share. That is true enough. You could also say that telematics data is going to be increasingly valuable in determining causation and relative responsibility for auto accidents: how fast was each car driving around a corner, who braked first, and how hard, etc.? That is also true. But that is not the whole story. The year is 2018. I am driving a new car, and I am in an accident. My car knows it is damaged. It also knows which systems and parts were damaged and need repair or replacement. And it knows the fastest, best, and least expensive way for that to happen. It might even know about the probability of personal injuries among my car’s occupants. This is all pretty valuable information. Who is my car going to give this information to?
- Its manufacturer? My insurance company? Emergency responders? Towing companies? Auto repair facilities? Or software companies that estimate the cost of repairs?
April 29, 2015 by Leave a Comment
The easiest way to grow your book of business is to keep your customers happy. Retention goes up, cross sell goes up, and you will get referrals. This isn’t a big revelation. Carriers know this. The key to keeping customers happy is to create a top-notch customer experience. But insurance is complex. Consumers have a greater number of choices today than ever before and consumers are accessing carriers through more channels than were ever available in the past. This complicates the picture at the same time that expectations are increasing. Customers expect that the carrier knows the details of every prior interaction they have had. That is hard to do when customer data is fragmented across multiple systems. Customer experience includes many facets – advertising, the acquisition process, claims and of course, the quality of customer care. Carriers are looking for tools to help them provide a superior customer experience regardless of the channel the customer chooses to use at the time. That is probably why we are seeing a huge increase in the interest in Customer Relationship Management tools especially by small and midsize carriers who haven’t invested in this type of software before. Customer relationship management systems are one of the components in many insurers’ application maps. Although CRM solutions are not unique to the insurance industry like policy administration or claims systems, they are still key technologies used to manage relationships with customers, whether customers are defined as agents/distributors, claimants, end policyholders, or prospects. There are literally hundreds of CRM solutions available today from firms large and small, well-known and obscure. I’ve just published a report focused on enterprise solutions for larger-scale organizations similar to most US insurance firms. The report does not include CRM solutions that are appropriate for small organizations such as independent agencies or advisors. It also does not address horizontal solutions that are not specifically targeting the insurance industry with tailored capabilities. There are a wide range of CRM solutions on the market for insurers to choose from. A wide range of features and functionality are available. These systems are used in various capabilities within insurance carriers — from producer management, to call center support, to managing leads and campaigns. Integration with other systems will be needed to provide the most value to a carrier. There is no single best CRM solution for all insurers. There are a number of good choices for an insurer with almost any set of requirements. The right solution for a carrier depends on how the carrier plans to use the solution. Some carriers use CRM solutions as a front end to all the core applications. It is the entry point for a call center representative to access all data for those who are calling. Other carriers use CRM solutions to manage interactions with the distribution channel. Still others use it primarily to manage outbound marketing campaigns and may extend this capability to the external distributors. System selection also may be driven by how the carrier defines “customer.” Some carriers define the customer as their agency or broker-dealer firms. Others define the customer as the final purchasers of the insurance policies and annuities. Some solutions may be better at handling some business models than others (e.g., 20 million end user clients vs. 200 agencies), though most would claim to be able to handle all levels of “customers.” Therefore, the ability to build and maintain appropriate hierarchies (agency or broker-dealer, agent or advisor, household or individual) within CRM solutions is an important aspect to examine. An insurer seeking a new CRM solution should begin the process by looking inward. Every insurer has its own unique mix of distribution channels, geography, staff capabilities, business objectives, and financial resources. This unique combination, along with the organization’s risk appetite, will influence the list of vendors for consideration. Some vendors are a better fit for an insurance company with a large IT group that is deeply proficient with the most modern platforms and tools. Other vendors are a better fit for an insurance company that has a small IT group and wants a vendor to take a leading role in maintaining and supporting its applications. We recommend that insurers that are looking for a CRM system create narrow their choices by focusing on four areas:
- The functionality needed and available out of the box for the way the carrier plans to use the system and the customer types desired. Check to see what is actually in production.
- The technology — both the overall architecture and the configuration tools and environment.
- The vendor stability, knowledge, and investment in the solution.
- Implementation and support capabilities and experience.
April 27, 2015 by 6 Comments
Those that know me well know that I am a generally upbeat guy, but can also be piercing in my analysis of technology. This is something that the vendors with which we work expect — absolute honesty in reviewing their systems and technology. They don’t always like my position, but they’ll hear it. Our insurer clients expect the same, as they are often betting their company on vendor technology. So let’s just say I rarely gush over a system. I can usually find a pretty major flaw at least in the presentation of the system. Today I had the opportunity to see a system that was new to me. This is a part of a research report that our team is writing and we are seeing a number of demonstrations. They’re short — just an hour — and scripted to cover some pretty focused areas. Some of the vendors have nice technology, but really struggled with the hour limitation. Other vendors manage quite nicely within the hour, but don’t excite me with what they showed. A demonstration I saw today managed to do both — they managed the demonstration into the time flawlessly and, more importantly, I was just blown away by the system. There are some fundamentals that we review. Among these are: Configuration This is the heart of any system. Many systems are very configurable, but most of them that I have seen are so clunky, or confusing, that configuring them is a chore. They may be advertised as configurable by the end-user, but not any end-user I have ever met. The system today was incredibly flexible, but they configuration was done in such a way that it expressed the business need to the user in their own terms. There was a lot to configure, but everything was easily reuseable. Even better, it handled the complex chores like multi-language and multi-currency simply, even in the same transaction. Contact/Customer management Many systems try to aggregate people, but this system treated every relationship as a powerful contact. Providers, agents, insureds and companies are managed in a powerful CRM and the information maintained seamlessly changed depending on the relationship. User experience So many systems we view look like they screens were designed by a programmer and, worse, could only be used by a programmer. I saw a system recently that was powerfully configurable, but almost indecipherable to use. This system has an easily understandable UI, complete with integrated workflow and management of attachments to any contact. Better yet, it is all HTML5 and seamlessly adapts to mobile devices, particularly tablets. Reporting Have you ever dreamed of a system where the end-user could easily pull information out of the system? This is that system. The query tool was simple, but powerful and the entire user experience revolved around personalized dashboards. I can’t comment on whether it can scale with this power, but it was very impressive. I’ll leave it there, as I could go on, but my colleague and I were both very impressed. The one area for improvement is the cloud — the current release does not run in a major public cloud, but they indicated this is on their roadmap. I’ll finish with one observation — I’d buy this system for my company. I don’t have a stronger compliment. If you’re reading this, and you’re with a vendor, and I didn’t see your demo today, well, you have a fierce competitor.