The best Policy Administration system I have ever seen

The best Policy Administration system I have ever seen
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.

The security breach of the month/week/day – and why you should consider the Cloud

The security breach of the month/week/day – and why you should consider the Cloud
I don’t want to pick on one particular company, but the breach at Anthem hits pretty close to home — our industry is under attack. Should this surprise you? Absolutely not. What is particularly concerning is that these are companies that are spending enormous sums of money to stop these intrusions.   And are still getting hacked. JPMorgan Chase, Home Depot, Target, Michaels. I list these, not just as a reminder, but because I personally was affected by all four breaches. I’m on my third credit card in just over a year because every breach forces a new one. The JPMorgan Chase and the Anthem breaches are different and more onerous. In the Target breach, and others like it, credit cards were compromised. You can close a credit card account. In the recently disclosed Anthem breach — everything was lost. Name, Address, Social Security number, employer, net worth.   In other words, everything to steal your identity. I can’t close my life and open a new one. Is there a purpose to this rant? There is.   First, the technology exists — and is reasonably affordable — to encrypt this data. Is it a big project? Of course. Do you still want me to be your customer? How is it that in 2015 critical data about me is sitting in a data center and not encrypted?   Second, one of the biggest arguments against using applications in the Cloud is that having data in your own data center is more secure. Really? Seems not. I was recently discussing running a Life insurance system in the cloud with the CIO of a larger insurer. They put forth the ‘safer in my shop argument’, so I asked them a simple question: Is your budget for security larger than Google, Amazon or Microsoft (three of the largest Cloud vendors)?   After much thought, he replied that it was not, and our discussion changed paths. So maybe it is time to rethink the importance of your own data center. Beyond just security, is it your core competency to run a data center? Does it bring new revenue into your company to run a data center? Is it cheaper to run your own data center?   I believe the answer to all three is a resounding No. So when you are out looking for new applications and technology, I suggest it may be time, or beyond time, to think differently. Oh, and start asking your personal bank, credit union, insurance company, etc.: is my data encrypted?

On the cusp: regional integration in Asia

On the cusp: regional integration in Asia
It’s 2015, the mid-point of the decade and a good time to start looking at major trends in Asian financial services over the next five to ten years. One of the major themes will be regional integration, which is another way of saying the development of cross-border markets. There are at least two important threads here: the ongoing internationalization of China’s currency, and the development of the ASEAN Economic Community (AEC) in Southeast Asia. RMB internalization is really about the loosening of China’s capital controls and its full-fledged integration into the world economy. And everyone seems to want a piece of this action, including near neighbors such as Singapore who are vying with Hong Kong to be the world’s financial gateway to China. The AEC is well on its way to becoming a reality in 2015, with far-reaching trade agreements designed to facilitate cross-border expansion of dozens of services industries, including financial sectors. While AEC is not grabbing global headlines the way China does, we see increasing interest in Southeast Asia among our FSI and technology vendor clients. From Celent’s point of view, both trends will open significant opportunities across financial services. In banking, common payments platforms and cross-border clearing. In capital markets, cross-border trading platforms for listed and even OTC products. In insurance, the continued development of regional markets. Financial institutions will be challenged to create new business models and technology strategies to extract the opportunities offered by regional integration. It’s the mid-point of the decade, and the beginning of something very big.

Driving growth through distribution management

Driving growth through distribution management
Growth and retention continue to be the top business goals affecting IT investments. However, in our current hyper-competitive marketplace with continued pressure on rates, growth opportunities for insurers are limited. Many carriers are focusing on improving their distribution practices as a key technique for driving growth. Carriers are expanding channels, adding distributors, moving into new territories and working to optimize their existing channel in order to improve customer acquisition and retention. Designing, developing, maintaining and managing productive channel relationships can create a sustainable competitive advantage. Conversely, a poorly designed or executed distribution channel strategy can create conflict, inefficiency and disruption up and down the line.   Some carriers are placing their priority on servicing distribution channels and improving service to distributors, increasingly using producer service excellence as a way to retain and grow business. Others are focused on managing the compliance aspects of distribution management – assuring the distributors have the right licenses, state appointments are made in a timely manner. Many carriers are focusing on using compensation tools and techniques to more effectively stimulate production. While in the property casualty world, most carriers work with independent agents, this is no longer an exclusive channel. Most carriers are looking at more effectively using data to manage carriers strategically rather than tactically. In addition, carriers are adding channels including wholesalers, GAs and MGAs. On the life side carriers work with exclusive agents, independent marketing firms, financial planners, banks and a wide variety of other channels.   These multiple channels are effective at targeting different aspects of the market, but add complexity when it comes to channel management.   Distribution management encompasses a wide variety of administrative functions that are focused on operational issues such as registering and licensing producers, configuring compensation plans, administering payment and reconciliation, and tracking performance.   Distribution management systems provide tools and technologies to help carriers with the administrative aspects of distribution management. They are most typically used by carriers with a mixed distribution channel, multiple policy admin systems, multiple jurisdictions, complex compensation programs, or some combination of these factors.   I’ve just published a new report Distribution Management System Vendors: North American Insurance 2015, It profiles 14 distribution management solutions. Check it out – or give me a call if you’d like to talk about the report.    

Life in the Cloud – vendor activity is high

Life in the Cloud – vendor activity is high
Few technologies are talked about as much as cloud computing. Cloud services may top the list of technology buzzwords used in corporate board rooms, by Wall Street analysts, in the trade media and within insurance IT organizations, but it often is talked about as an emerging technology – one that is potentially transformative but still little used. The level of general interest in cloud computing is understandable. It promises tremendous flexibility, tempting economic advantages, and unending operational efficiencies. To that end, insurance carriers are dependent on the cloud offerings available. Only if vendors are offering products on the cloud can carriers take advantage of them. So where are the vendors? Do all vendors have cloud applications? What options are available for insurance carriers and are they aligned with carriers on the importance of cloud apps? What challenges do vendors face, and what are their plans for the future? I surveyed 41 vendors to provide answers to these questions as well as to understand pricing models, platform investments, and their expectations of where the market is going. Cloud has grown from an emerging trend to the way of doing business for most vendors in a remarkably short time. While vendors may believe they are leading the competition by offering a cloud solution, the reality is that cloud options are now the norm. Vendors have moved swiftly to create cloud offerings and those that don’t have some type of offering are rare. Although these offerings are common, that doesn’t change the very real and significant concerns that carriers have, particularly around privacy issues and performance. Yet carriers interest in cloud computing continues to gain traction as a way of managing costs, improving efficiencies, and offering opportunities to transform the business. Despite the high interest, vendors who wish to be successful in selling cloud options to carriers will have to address concerns in three key areas: privacy and data integrity, reliability and performance, and may want to provide tools to help carriers learn to manage and govern their cloud offerings. This rapid evolution is not without its challenges for vendors. Customer-facing challenges are of high concern for vendors include issues such as managing the release cycle across multiple clients balancing front end, customer facing features reliability and performance enhancing features, and the impact of a changing target market customer base. Vendors are also concerned about identifying the right pricing model. Managing the shifting business model from license and professional service fees to subscriptions is formidable for many vendors. In addition, cloud creates notable organizational challenges, especially competing for scarce engineering resources. Cloud is expected to generate significant levels of revenue, and vendors that have not put their cloud plans together may want to begin to build a roadmap for the future. Check out the report – Life in the Cloud: Vendor Plans and Priorities

Same old, same old – which vendor did I just see?

Same old, same old – which vendor did I just see?
As part of my role as an industry analyst, I attend a number of vendor sponsored analyst meetings. Some are vendors entirely focused on the Financial Services space, but most are larger vendors with a much broader perspective. The meetings are interesting, as we hear from their leadership team about their perspective on both modern technology needs as well as what their company is doing to meet those needs. What surprises me, and perhaps it should not, is how the presentations are so generic and common. We see the same buzzwords: Cloud! Digital! Mobile! Innovation! Yes, usually with the exclamation points. I honestly believe you could change the logo from one vendor to another and their CEO could happily and easily give the presentation. Worse, at a recent conference, three different executives gave essentially the same presentation but with different slides. At least they agreed. The vendors do differ, however, on their approach to these meetings. I have a new theory on how to rate these vendors, which is based in humor, but I often wonder if it could be validated with data. 1) Let me talk to your customers The majority of the vendors hold their analyst days completely separate from the customer meetings. Usually they are back-to-back, so the customers are nearby, but they don’t let us talk to them. My scoring system would rate a vendor higher based on their willingness to let us mingle in a completely uncontrolled manner with their customer base. An example could be:
  1. Analysts attend the customer meeting and are given total access to the customers
  2. Analysts attend part of the customer meeting and are scheduled with select customers in a controlled manner
  3. Analysts attend a separate meeting, but are given one-on-one access to company leadership
  4. Analysts attend a separate meeting, attend lectures on how great they are and go home
One vendor gets the highest rating because they combined 1 and 2. We were in shared sessions, shared meals and shared entertainment plus they scheduled one-on-one meetings to discuss projects interesting to my specific speciality. 2) How well do you organize a meeting? If you claim to be the company that should come in and revolutionize my company, you ought to be able to manage a decent meeting. The best meetings are well-organized with personalized agendas that focus on the analyst’s speciality and with one-on-one meetings with the right people. The worst meeting I recently attended started off poorly when they didn’t have a name badge for me and cancelled my hotel room. I certainly didn’t feel loved. Worse, they never did get me a badge or an agenda, so I suspect I missed many one-on-one meetings. Since that was the last session of the day, I did the only thing I knew to do. I went home. One vendor put the analysts front and center, at tables, and each spot had both power and a wired internet connection. Outstanding. 3) What are your production values and who are your presenters? Again, if you want to transform my company, you should be able to do an amazing job in your pitch. You should at least upgrade to purchased photos from clipart. I am amazed at the number of presentations that look like they were prepared on the plane ride to the meeting. Some don’t even have the company’s logo. Oh, and don’t forget, I’ll recognize the templates that come with Microsoft Office. Perhaps even coordinate the presentations to ensure they are not all the same, or worse contradictory. At the other end of the spectrum are the professionally prepared presentations, clearly not done in Powerpoint, that include appropriate use of videos, etc. The vendor mentioned above again wins this prize as their materials were outstanding. They also understood that they needed to be both informative and entertaining to keep our interest. The corollary to production values is the concept of who is presenting. At a recent meeting, I heard from a range of company execs but noticed one thing was missing. Not a single customer presented. At the other end, virtually all the presentations were customers, sharing their unique, positive experiences with their customers. I suspect you get the point by now. Hopefully any vendors reading our blog will too. To the vendors: Feel free to call me to discuss! (exclamation point mine). If you’ve read this far, you’re probably wondering what this has to do with financial services or research. Well, nothing, but now you know a little more of the pain that we go through for your benefit.  

Choosing a New Claims System?

Choosing a New Claims System?
Few carriers are doing nothing when it comes to claims. Year after year, we continue to see significant activity as carriers replace or enhance their claims solutions. The reasons for such activity are plentiful. Claims systems are aging which means that they are expensive to maintain. Older systems generally are much less flexible than modern systems with robust configuration environments. Business rules are regularly embedded in code, which reduces a carrier’s agility in making changes rapidly. They often are decoupled from policy or customer systems so accessing and aggregating data across these systems can be difficult. They were initially designed to focus on managing the financial aspects of claims not the customer service aspects of claims. It’s also getting harder to find resources that can or want to work on older technology. Meanwhile, carriers replacing core claims admin systems are trying to achieve multiple goals. Insurers’ corporate objectives fall into three broad categories:
  • Getting bigger by growing the top line. A policyholder who feels that a claim was handled quickly and fairly is a policyholder who is much more likely to renew.
  • Getting leaner through higher productivity and expense control. When specific tasks (such as accessing external data or generating forms and correspondence) are automated, an adjuster’s time is focused on the remaining tasks and decisions.
  • Getting smarter by adjusting claims more accurately. Through workflow and rules, a new core claims system gives claims adjusters much improved tools to make the right decisions and take the right actions.
Selecting and implementing a new core claim system can contribute to the achievement of all three corporate objectives. Donald Light and I have just published a report that profiles the available claims solutions in North America. The report provides an overview of the different basic, advanced and technical features a carrier can evaluate. It also provides detailed profiles of the different vendors. Some of the vendors qualified for a more in depth profile that includes customer reference checks and our opinion of the solution. If you’re thinking about beginning a claims replacement, check out the report here. It’s a great place to start your research process. Then give us a call. We will be happy to chat in more detail about any of the solutions and help you as you move through your selection process.  

Majesco is Moving Fast

Majesco is Moving Fast
Majesco (formerly MajescoMastek) is bulking up fast. On December 12 it acquired Agile Technologies business; and on December 14 it announced a merger with Cover-All. The resulting entity will have revenue greater than $100 million; and more than 150 insurance customers globally. Scale has always been a plus in the insurance software business. It speaks to a demonstrated ability to create and maintain insurer relationships. Technology firms with more customers have broader and deeper IP; and more resources to invest in getting better. That said, size alone is no guarantee of success. Smarts and agility and foresight are not correlated with size. Majesco has moved quickly to create a big player with impressive resources. Now comes the harder, but necessary, work of integration, vision, and creating value for current and future customers.

Vendors Embrace Mobile Technology

Vendors Embrace Mobile Technology
The adoption of mobile technologies is accelerating. Smartphones rocketed from a 10% adoption rate to 40% in just two and a half years, faster than any technology except television, and tablets are moving even faster, blowing away all previous adoption standards. Carriers are increasingly turning to their software vendors to create mobile access to core functionality for employees, agents, and customers. But where are the vendors? Do all vendors have mobile applications? Are they aligned with carriers on the importance of mobile apps? What challenges do vendors face and what are their plans for the future?   I surveyed 39 vendors to provide answers to these questions as well as to understand pricing models, platform investments and their expectations of where the market is going. This report examines mobility attitudes among vendors, the status of mobile solutions, the methods and staffing models used for deployments, statistics around marketing including typical pricing models, and an assessment of the significance of the challenges vendors face as they move into the mobile market.   IT leaders at software firms clearly recognize the importance of mobility to drive their businesses forward. Almost 70% see mobility as mission critical or important to their organization today.   Today the majority of vendors do not generate revenue from mobile applications. Many are not yet charging for mobile solutions but include the product in the overall price of the software. Vendors clearly intend to change that practice. More than half expect mobile to generate 1-20% of their overall revenue within the next three years. This may be optimistic, but clearly, vendors see strong growth and market momentum for their enterprise mobility business.   However, the explosive growth in the mobile technology landscape has created unmistakable challenges for vendors entering this market. Challenges fall into three categories – those related to the technology and the devices themselves; those that relate to the organizational changes and cultural issues inherent in mobile such as obtaining staff and managing changing organizations; and challenges that are focused on market acceptance and pricing models   Increasingly, carriers are asking about mobile capabilities as part of their evaluation process when selecting new vendor solutions. Vendors looking to move into the mobility market can learn from those who have gone before them. Those who have not yet put their mobile plans together may want to begin to build a roadmap for the future.  

Personalization in car insurance is just around the corner

Personalization in car insurance is just around the corner
In a 2013 survey in Latin America we asked CIOs about their views on the use of Telematics and UBI. We wanted to know if these were currently in their plans and if they believed that they would have any use and impact by 2016. Despite UBI and the use of Telematics has been well received in UK, Canada and the USA, we found that Latin American insurers were not so optimistic about it. Very, but very, few were in the process of investigating it or considering running a pilot, and the vast majority (overwhelming) said they were not doing (and would do) anything about it in the 3 year timeframe. In our conversations with insurers some would be very cautious about how it could be introduced, particularly on how attractive this would be for a producer to sell. Particularly, successful incumbents reacted as if this had no chance to succeed and that they would not be the ones to try it, as they believed it would negatively impact their current portfolio (lose customers). Others would say that in Latin American countries the burglary component of the premium is significant, while the collision component not so much, and therefor UBI would not bring advantages in price to customers. All these typical reactions from incumbents to an innovative and disruptive idea that provides the means to personalize the rate to reflect the real risk that the driver represents. Pay as you drive, pay how you drive and more lately manage how you drive are value propositions that target to personalization (of risk) and loss prevention, two of the major trends we see in insurance in the future. As any disruptive initiative, it only takes one to be bold enough and then change the dynamic of the market. We were conscious about some limited amount of initiatives that were being considered during 2013 in the region and our position was that the 2013 survey results would change completely as soon as UBI and Telematics was taken seriously in the region by at least one player (regardless of the size). We also kept thinking about leading incumbents. Good for them if this did not succeed. But what would happen if they started losing the good risks towards an insurer with an UBI value proposition? For sure their revenue would be affected. But then, how would the leading incumbent’s portfolio look like if only the high risk drivers stayed? Not a pretty scenario, ha? Some interesting facts that occurred since last year. The few pilots are taking shape; research is also indicating that in fact specific segments of customers pay more for car insurance just for being younger or a combination of factors that have nothing to do with the real individual risk; the use of telematics has seen its first implementation in a producer distribution model, moving away from being exclusively a direct insurance proposition (or targeted by a few specialized brokers); and last week Baseline Telematics, a leading provider of telematics based solutions, and Sistran, a leading provider of core insurance solutions, made available to Latin American insurers a combined offering with all the required technology for insurers to quote, sell and price insurance policies entirely based on the actual driving habits of a driver (mileage and behind-the-wheel behavior), which is obtained through a telematics device installed in the driver’s vehicle. Guess what? Not surprisingly our 2014 survey (in edition) shows that, as we anticipated, the perspective on UBI and Telematics has changed completely in Latin America! Around half of the respondents indicated that they believe that in 2014 these technology will have some kind of impact or at least will be tried as a pilot, but most importantly, the view 3 years from now (2017) is that the majority believe it will be of use and impact in underwriting, rating and claims (against only 20% that indicate no use expected). Solutions as the one presented last week enables monthly billing, with a variable premium based entirely on the usage of the vehicle (kms/miles) as well as the behavior of the driver (acceleration, braking and excessive speed). The objective is to attract the best drivers and rehabilitate (or eventually get rid of?) the more risky ones. The goal is to decrease exposure to risk (cost reduction), perfect your technical margins, and gain market share. It seems now that the market has aligned in the right trajectory and personalization in car insurance is just around the corner. Will leading incumbents take their chances? Will this be the opportunity for others to grow in market share and quality of their car insurance portfolio? Does any of this resound familiar to you in any given market you may be? If you are interested in the topic, feel free to contact us. Also, these are some of our reports related to this subject: