Innovation for dinner

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Oct 1st, 2015

In late August my colleagues Mike Fitzgerald, Fabio Sarrico and myself were in Sao Paulo, Brazil attending InsuranceTech 2015.

The objective was to spend a few days looking where the Latin American insurance industry is headed in terms of business and technology and what level of success have some insurers already achieved. As the agenda of the event suggests there were very interesting cases such as Wibe (BBVA’s digital platform for insurance) and Rimac’s transformation process among others.

Along with Mike and Mick Simonelli we hosted our innovation workshop for 3rd consecutive year and looked into the state of innovation in LATAM insurers (Report is now published). While there seems to be room for improvement, we are now discussing how to innovate and not just what innovations (or emerging tech/trends) insurers should be looking at, which was the focus for most of insurers when we first started these workshops. For me this is a huge improvement.IMG_1267

Mick’s experience as innovation practitioner at USAA and now collaborating with several leading financial institutions as innovation consultant resulted in many questions from audience. As for technologies and trends to watch we covered several, including IoT and machine learning.

Our research shows that despite much is being said about innovation there are still important barriers to overcome; noticeably “lack of top level leadership” stands out as #1.




Our research around digital also shows that most insurers are in a basic stage, but just to prove us wrong (or better said, the one example that shows it is possible to go beyond basic) BBVA Bancomer Seguros shared how they innovated by creating Wibe, their own digital brand and platform starting with auto insurance (even Uber coverage!). Wibe’s case is a good combination of digital, customer experience, execution, and leadership to bring all together in a short period of time and within an established insurer (and bank). Wibe already has +2.2 million visitors to their website, 61% using a mobile, and their youtube commercials were seen +1 million times each. This translated into +200,000 quotes and +3,000 vehicles insured since launching early this year.

Rimac’s transformation case was also a great example of leadership, vision, execution and persistence in a Tier 2 insurer. Their journey started in 2010 when they defined the strategic plan. Rimac wanted to become a customer centric insurer and for that they required to transform and simplify their IT platform, among other programs which basically touched everywhere in the company. A total of 65 sub-programs were identified just in IT.

Becoming more digital was one of the objectives, along with re-use: the idea to be able to create once and easily deploy in different channels.

Rimac’s transformation is still work in progress (does any transformation program ever end?), nevertheless they shared several indicators of success already. Digital enabled sales represent 1% of premium but they expect this to grow significantly in following years; at least the IT infrastructure is ready and available for the business to take advantage.

A common thread here seems to be execution and leadership; not time, not money (true that you need to be ready to invest; but how much will depend on the type of project). I also believe that execution and leadership are highly tied to culture; and as Mick usually notes: “Culture eats innovation for lunch”. By now I hope you figured out what I am trying to imply…

Changing culture is also an art and it can take time, as transformation programs do (5+ years?). So be ready, and start today. Or start tomorrow and get there one day late. Tic Tac, clock is ticking and the world keeps moving.


What happens when auto manufacturers stop giving away valuable telematics data for free?

Donald Light

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Sep 24th, 2015

Here’s a thought experiment.

Imagine that you manufacture some things – let’s call them automobiles. And imagine that in those automobiles you’ve installed bunches of computer systems to control steering, braking, transmission, engine performance, and even record GPS-determined locations. Let’s call these computer systems electronic control units (ECUs). And imagine that these ECUs generate streams of data that are potentially highly valuable to organizations that are interested in how safely a given automobile is being operated. Let’s call these organizations insurance companies.

And imagine that one day, a really smart person at an insurance company had the great idea that if they could capture and analyze these streams of data, they could understand automobile risks in a way that would let them price and underwrite auto insurance in a much more accurate and profitable way. Let’s call that person Flo.

And let’s say that Flo realized that the automobile manufacturers had kindly provided a little port thingy that allows her to access all this valuable and data and transmit it to her insurance company without paying the automobile manufacturers a single penny! Let’s call these port thingys OBD-IIs.

And let’s say that Flo and her counterparts at lot of other auto insurance companies go a little crazy giving their policyholders little whats-its that plug into the OBD-II thingys. Let’s call the whats-its dongles.

But the really great thing is that the automobile manufacturers are still not charging Flo and her peers a single penny.

And let’s say that the automobile manufacturers, one day decide that this internet mobility thing is here to stay, and that it could be a really great way to deliver more value, and deepen their relationships with the people who buy their cars. And to do all this stuff, the automobile manufacturers are going to make cars that connect to the internet! Let’s call these kinds of cars, connected cars.

And lastly someone at an automobile manufacturer says, “Oh Dear Dearborn” or “Oh Cool Cupertino” “We could make a bundle of cash by taking a big slice out of the increased profit margin that Flo and her friends have created by charging them very large fees to get access to the ECU data. Or better yet, we could hire some actuaries and data scientists and enter (or re-enter) into the auto insurance business ourselves—and Flo can go make a big bet on smartphone-based telematics.”

Ok, so here’s the thought experiment. If your were an investor, named Warren, looking for a growth stock, would you invest in an auto insurance company?

Why private equity investment in insurance makes sense

Tom Scales

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Sep 16th, 2015

As many of you know, the latest buzzword is FinTech. Considerable money is coming to vendors that are attempting to define the next major technological leap in financial services. This chart, from CB Insights, shows the explosive growth in FinTech investments. It is an exciting time.

CB chart

What I find interesting is that Private Equity firms are also finding the more traditional insurance market interesting. For example, Moelis Capital made an investment in Insurance Technologies last fall. Insurance Technologies focuses on the front-end of Life insurance, including illustrations and electronic applications.

More recently, Moelis Capital announced an investment in FAST Technologies, which focuses on the Life Policy Administration System (PAS) space.

Another example is Thoma Bravo, which announced in August that they had purchased iPipeline, another competitor in the front-end space.

To me, these investments make sense. They may not be as technologically sexy as something like roboadvisors, but the market is ripe for improvement. The age of the policy administration systems in use is somewhat staggering, with systems that have been in production for decades. On the front-end, the Life insurance market is still surprisingly dependent on a paper application.

As someone who has been a part of this space for many years (measurable in decades), it is nice to see that the market finds room to improve.

Insurance IoT – you can sense the disruption: Innovation Roundtable summary

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Sep 14th, 2015

We held another in our series of Innovation Roundtables in NYC last Friday. These are small gatherings, attended by insurers and banks, meant to provide an open forum for a deep discussion of a chosen topic. As Mick Simonelli, one of the facilitators put it: “The format provides a chance for innovators to come out of their day-to-day battles, take a tactical pause, gain some perspective and share their knowledge with other practitioners.”

This edition was focused on the Internet of Things in insurance. More than any other previous Roundtable, the threat of disruption amongst the group was very prominent. The discussion was best summarized by one participant: “We have been doing the business of insurance according to “effects analysis” for 300 years. That is, actuaries and underwriters have been looking backwards and projecting what contract terms (rates, guidelines, etc.) should be going forward. IoT in insurance will provide new territory, which is as yet unclaimed by any provider. It will allow insurance to move toward “causal analysis”: what are the true causes of loss and in what interventions can be undertaken to avoid them?” Much of the discussion was about how insurance risk professionals can accomplish casual analysis using IoT tools and techniques. However, there was also a recognition that other entities, outside insurance, may figure this new approach out before insurers. This may be the well-know data firms such as Google, Amazon, etc., or may be a group of data scientists yet unknown.

Other main points from the session include:

  • These practitioners report that they sense that the velocity of change around IoT is different than what has been seen before. Unlike other changes in insurance, decision-makers cannot wait for the data to roll in and the “case to be proved” or it will be too late to respond. Companies reported that they have lost partnership deals with start-up firms because they were unable to make a decision in a timely manner. This dynamic supports the need for a “dual governance track” that has been reflected in Celent’s innovation research.
  • Donald Light presented Celent’s model of IoT, and the group engaged in a good deal of discussion about what part of that ecosystem insurers will want to “own”. There was recognition of the incredible predictive value of the data that will be produced by IoT. However, it was pointed out that what has happened in commercial lines fleet IoT applications is that insureds prefer to retain control over the data as the value for them of using it to manage their fleet vastly outweighs any premium discount that might be awarded. It remains to be seen if this will play out in other lines of business.
  • Regarding commercial lines applications of IoT, it was notable that the group spent as much or more time discussing these opportunities as it did discussing the usual suspects – auto telematics, connected home, and health/lifestyle. Celent sees this as a further maturation of IoT in insurance. The consensus of the group was that commercial IoT is not yet widely addressed and is beginning to be a focus for their companies going forward.
  • A lack of cross-industry integration standards was recognized as a significant barrier to expansion. The participants expressed that there is a need (and opportunity) for a data standards group to facilitate this between insurers and potential device providers. Without such agreement, progress will be more expensive and will take longer than it should.

A final discussion point was perhaps the most exciting. The group is tracking the manner in which IoT is changing the profile of the skills required in insurance. Actuarial science is giving way to data science as more predictive techniques and more non-traditional data sources are used. The participants discussed forming a consortium of insurers to partner with NYC-area universities to establish an insurance data scientist training program. Stay tuned!

The world’s most connected human

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Sep 14th, 2015

I recently read about Chris Dancy, Chief Digital Officer and Senior Vice President of Healthways, Inc. and “The world’s most connected human.” In my line of business and as an avid NPR listener, I really should have heard of him earlier than now. If you haven’t heard of him and you are reading this blog, you should know about him, too.

Chris utilizes up to 700 sensors, devices, applications, and services to track, analyze, and optimize his very existence every minute of every day. I listened to a few of his interviews (I am a curious person!) and found that he has been doing this self-tracking for nearly six years. You can really say he was on the cutting edge of this idea of a quantified self before most people even heard of the FitBit. According to Chris, this quantification enables him to see the connections of otherwise invisible data. As a result, he has experienced dramatic upgrades to his health, productivity, and quality of life.

So what does he track? In a NPR interview while wearing five sensors (FitBit, Nike Field band, BodyMedia sensor, Wahoo TICKR, and his phone) Chris talked about how he has become ‘one with the data’ because he has seen the benefits of understanding his moods, heart rate, and overall health. He admitted that it’s not for everyone, but being a data junkie he said this behavior fit right into his interests. He expanded what he measured because he was interested in the data for which companies are willing to give discounts. If a company was willing to give him a $600 discount for seeing a doctor, going to the gym, and eating better, he wanted to know what data were they considering and what benefits he would derive as a result of knowing what the data said. He also said something very key: “If you can measure it, someone will and that someone should be you.”

So why has he intrigued me so much? Because he said in 2013 that he believed the idea of a quantified self would be ubiquitous in five years. And it would expand beyond the fitness worlds and health care implications to the physical workplace and other industries. He saw sensors as being omnipresent in giving people feedback while they work. Examples could be environmental sensors that let someone change the lighting in their office to reflect a mood one had while on vacation or track ambient sound so that the sensor notifies you to reflect on the tone of voice used in a conversation. The goal, of course, is to have a more productive work environment.

Chris Dancy’s rationale for wanting to know more about the data companies use to give discounts intrigues me the most. Many health insurance companies give discounts for proving that you lead an active lifestyle and for years now, consumers have been able to send driving data to auto insurance firms who offer reduced rates for good driving via a dongle that is plugged into their car’s onboard diagnostics port. Recently this practice moved into the realm of life insurance. John Hancock has become the first life insurer to offer ratepayers a discount when they use Fitbit wristbands that enable exercise tracking. John Hancock policyholders who wear a Fitbit and connect it to the internet can get discounts of up to 15% on their life insurance policy as part of Hancock’s partnership with Vitality, a service provider that integrates wellness benefits with life insurance.

I already consider myself a quantified being because I track my fitness daily through my FitBit, and use that data to push myself to walk more and be more active. I am not sure I believe that my work environment needs sensors to make me more productive at work, but maybe they would. I don’t share my FitBit data with anyone yet, but I would be willing in the right circumstances. My insurers are not asking for my data which to me means that many insurers are not ready to accept the data. As mentioned above, John Hancock is the first life insurer; maybe others are soon to follow.  Will it happen in the next three years?  My gut instinct says no but I hope to be proven wrong.

IBM’s Watson Health Cloud suggests that the medical industry is looking more deeply into how to capture, analyze, and use the multitude of medical data that is created every year, some of which is from fitness trackers and other sensors.  Maybe Watson’s analysis and cloud availability of data will yield better methods of underwriting for insurance. Yet, going back to Chris Dancy . . . during one of the NPR broadcasts Robert Wachter, author of the Digital Doctor, said that today very little of the extraordinary amount of data Chris was capturing is truly useful to doctors or insurers. I guess if that changes, Chris will be ready.


Announcing the winners of the 5th Asia Insurance Technology Awards

Neil Katkov

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Sep 11th, 2015

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:

Voice recognition access means one less password

Colleen Risk

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Sep 9th, 2015

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.

Model Insurer 2016 accepting nominations

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Sep 4th, 2015

In its tenth year, Celent’s Model Insurer Award program has grown from a small idea into a big deal for our analysts and the insurance technology world. Not only are insurers across the globe recognized with the premier award in the analyst community for successful implementations of technology projects, but the awards are giving out a Celent’s marquee event Innovation & Insight Day. With over 400 attending at venues like Carnegie Hall, the event has grown to be a ‘must attend’ event for many companies.
Celent’s Model Insurer and Model Insurer Asia award programs run annually from September until March/April. Nominations are currently being accepted via two online forms:
Model Insurer: All insurers across the globe are invited to submit a nomination for Model Insurer.


Model Insurer Asia: Celent Asia conducts the Asia Pacific specific program to identify the potentially unique “Model Insurer” solutions that have recently been deployed in the APAC region.


The awards are given to insurance companies which have successfully implemented a technology project in five key areas:

• Digital and omnichannel technologies
• Legacy and core system implementation
• Data mastery and analytics
• Innovation and emerging technologies
• Non-core system implementation best practices/IT management best practices


For the first time this year Celent is offering a report that describes the Model Insurer program in detail. We hope that any and all questions an insurer or vendor might have regarding the program will be answered in the report.


After four years of running the program, I am passing the baton to Colleen Risk. I will be actively involved in the transition year. Colleen and I both are available to answer questions about the program.


Celent, Colleen and I welcome all insurers to review your successful IT projects from the past one to two years and submit the project for an award. If you win, you will be among some great company at Celent’s Innovation & Insight Day in 2016.


The magic of statistical analysis in insurance (or the weather needs to be more predictable)

Tom Scales

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Sep 1st, 2015

My colleague and I were all set to go to West Palm Beach this week for the LOMA TECH conference. We were looking forward to participating in the inaugural event and were both speakers.

Then the weather intruded. Our friends at LOMA had a tough decision to make on Friday as Hurricane Erika was coming through the Caribbean. The storm had already done considerable damage and caused many deaths. Since the projected path covered the entire state of Florida, there was considerable concern. Once the governor of Florida declared a state of emergency for every county in Florida, LOMA made the only decision they could and postponed the event.

Why do I blog about this today? Because it is Tuesday, the day Erika should be decimating Florida, and I am sitting just outside Tampa enjoying a beautiful sunny day. Not a rain shower in sight.

My point? This is just one example of many of the challenges facing in the insurance industry. Our industry relies on an immense amount of data. We use historical data and averages and every kind of statistical analysis we can to ensure that our customers and the insurance companies are in a win-win situation (as much as they can be in the situation where they need their insurance).

This is a classic example of how all that analysis is wonderful, on average and over time, but can be completely inaccurate in a single event. Your mortality may suggest you will live well into your eighties, but you, as an individual, may not. My homeowners insurance, living in Florida, includes a significant cost associated with the storm that may never come. The county in which I live, Pinellas, which includes Clearwater and St. Petersburg, was last hit by a hurricane in 1921. Yet Tampa is number 4 on the National Oceanic and Atmospheric Administration (NOAA) list of cities most vulnerable for a hurricane. In fact, they state Tampa has an 11% chance for a hurricane every year.

That is the problem with probabilities. An 11% annual chance, but no hurricane for 94 years.

I find the entire process fascinating and continue to marvel at how well our industry does and how wonderfully they protect their customers. At heart, though, I still consider much of it to be magic.

An invite to London and nothing to wear

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Aug 28th, 2015

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.