Living with the Internet of Things (and crowd funding)

Post by

Apr 23rd, 2015

Earlier this week some users of the Wink smart home hub found that their smart home hub was more useful as a door stop or brick than as a hub. A fix is being worked on and rolled out to customers but for me this looks like the teething problems of the still nascent Internet of Things movement and one of the hurdles Apple is trying to jump with the Apple Watch.

Earlier this month I received a portable handheld scanner from Dacuda. It’s not unusual for me to receive gadgets in the post but this one was particularly interesting to me as I had been one of the kickstarter funders of the item and have been following it’s creation with some interest. It piqued my interest particularly because I’d seen the technology almost two decades ago in a research lab but not seen it come to market at a reasonable price – a scanner that one moves over the page and software builds a picture of the underlying document.

This isn’t the first item funded via crowd funding I’ve bought. My keys have a tile attached to them and I’m still wearing the original Pebble wrist watch (with e-ink display). I guess this firmly places me as an early adopter in the Internet of Things, wearables and crowdfunding space. I don’t have a Wink hub although it’s sort of appealing but not available in the UK yet.

So far though it hasn’t been all clear pastures and dreams ideally realised. The Internet of Things has it’s teething problems. Let’s take the Tile for instance, a small device that emits a bluetooth and short rage wifi signal so you can track it’s location from a phone or tablet, thus, never losing it. I used to have 3 of them and now have 2, that’s right I lost one. I was rushing out the door, the school run running a little behind schedule and forgot my phone. Somewhere on the brief journey I dropped the Tile and what it was attached to. Had I had my phone with me it would have given me the location of the last place it connected to the Tile, as it was it told me the last time it saw the Tile was at home. No matter, in theory if I retrace my steps I will come in range and be alerted that it is found. This didn’t work either so I assume it was picked up. Since the battery lasts two years perhaps someone with the app will go near it and it may yet find it’s way home – but not yet. Part user error and part an unfortunate series of events perhaps, but another technology found fallible and a dream not quite realised.

The Pebble has been more successful. The fact I answer the phone when it rings is largely down to my smart watch rather than the phone these days and the wrist-borne notifications are hugely helpful. I use the misfit app on it to tell me I’m not doing enough exercise and a Withings smart body analyser at home to let me know the end result of not having done enough exercise – all great fun!

I may still invest in the Apple Watch. I have a standing desk so do stand, something misfit on my pebble doesn’t track and I feel I want to be recognised digitally for this at least.

The little handheld scanner is more work in progress. My son’s somewhat fascinated when it works and hugely interested in the errors it makes and where they are made – such is life as an early adopter. More teething issues there.

No doubt though we as a population are moving to a world where anything we buy could be connected, where we can buy a $50 hub that controls our lighting from an app and it’s failure is covered in the global (technology) press and where we can fund and follow the development of gadgets we’ve dreamt of owning for a couple of decades (even if the software needs a little more work).

So what does this have to do with insurance? The fact is the Internet of Things appears to be running apace, smart homes are being tried out by the early adopters and bugs are being squashed. Did you know with the Wink hub, the app on your phone and this $40 quirky+ge water sensor you can get alerted in real time regarding escape of water events? Ever been out of the house and come home to find the kitchen, bathroom or basement flooded? Indeed just yesterday Karen pointed out this article suggesting insurers are getting involved with smart homes.

There’s a lot of buzz around health and life insurance in part driven by the Apple Watch launch. I’m looking forward to Apple doubling down on the HomeKit API or someone credible getting there first; I’m looking forward to the same boom around the Internet of Things and insurers handing out moisture sensors to home owners. I’m looking forward to prevention and intervention products, rather than selling services after a loss.

Perhaps we just need to squash a few more bugs first.

Duh – Consumers Don’t Want to Crash Their Cars

Post by

Apr 22nd, 2015

Shocking results in J.D. Power’s 2015 U.S.Tech Choice Study released today – consumers want crash avoidance technology and are willing to pay for it!

We discovered a similar view in our recent Celent report Targeting Innovation: How Your Customers Might Respond. The data pointed to the fact that consumers want to see innovation in service before sales. Consumers are saying: “Help me, before you try and sell me.”

So, why do many insurers continue to show a preference to innovate in the online quoting and the traditional product areas before service or risk avoidance? To be fair, customer experience is attracting much attention and investment. Also, some insurance providers are influencing the way their insureds drive, either directly (Ingenie) or indirectly through pricing (Progressive). But many of the efforts are not in line with the consumers’ wish that we hear over and over: “I don’t want to experience a loss and it would be very valuable to find a provider that would keep me (and mine) safe.

For example, insurers know which roads are risky and which aren’t just from the frequency of their claim data. What if they provided this information to their customers to alert them to the dangerous routes?

There is space here for leaders to innovate in loss avoidance, both in the commercial as well as the personal lines of business. The reputation for “the innovative insurer that helps its customers avoid loss” is still up for grabs.

Could this be the kick the industry needs to take mobile seriously?

Post by

Apr 21st, 2015

Today marks one of the most significant changes to Google’s algorithms seen in recent years. As of this morning, Google’s search engine will favour mobile friendly content over traditional website content. Many firms who have not invested in mobile will get caught out as they start to slide down the search result list when viewed from a mobile, possibly moving from page 1 to page 2 or 3. For firms that are reliant on online sales and service, such as small businesses and retail, this change could have a significant impact on their revenues, probably resulting in either frantic tweaking of Search Engine Optimisation (SEO) routines, a rapid investment in redesigning their site for mobile, or some other more radical action such as simply scaling back operations to match lower revenue streams.

Within the insurance industry, the greatest initial impact is likely to be felt by insurance distributors, aggregators and direct operators who increasingly rely on online sales for retail products. Many of these operators have been investing in mobile-ready sites for some time now. So, to test the progress made, I thought it would be fun to conduct a quick highly unscientific test just to see how far down the results list you had to go before you reached a site that was not listed as ‘mobile friendly’.

For simplicity (and being based out of the UK), I chose the UK personal auto market and the UK individual life market as my test case. I thought that trying to action this for other markets such as the US, France or Japan from within the UK would produce some strange results owing to my IP address location. So, excited to get going, I simply typed “Motor Insurance Quote” and “Life Insurance Quote” into my mobile.

What were the results of this unscientific test? Well, I guess that it will come as no great surprise to readers of Karen Monks’ series on the state of the web/mobile capabilities in the life market; there are more ‘mobile friendly’ sites in personal auto than in life insurance. Ignoring sponsored advertisements, I got to result #13 in personal auto before I hit my first ‘traditional web-site’, which to be fair was not a bad lay-out for a traditional site. With Life, the story was quite different. I only managed to get to #3 before encountering my first traditional site, and this time it was tough to even see where you needed to press to get started on the site from within a mobile device.

What do the results of this highly unscientific test tell us? Well, I guess you could argue, that it tells us little new about the UK personal auto insurance market. It’s a highly competitive market that has been subjected to multiple disruptions over the decades, starting with direct operators in the 1980s, then by the aggregators in the 2000s, and now by the telematics insurers. Investing in mobile capabilities, although first seen as an innovation by insurers, has rapidly become a basic requirement for survival in recent years. Consequently, this latest change by Google is unlikely to have a significant effect as the market has already moved. Insurers within this market need to just continue with ‘keeping ahead’.

However, for Life insurers, it feels like the situation is still very different and potentially ripe for disruption. There is, of course, an argument that says that Life insurers do not need to invest at the same rate in mobile capabilities compared with personal auto as customers still rely more heavily on intermediated channels. However, the counterargument to this is that even though customers may not choose to buy on-line, they may still choose to research a product online first (estimated as c.29% by Celent in 2011 – now likely to be higher). So, could this change by Google be the catalyst the life industry needs to start taking mobile more seriously and invest for the future? Sadly, only time will tell. I think I’ll diary the same unscientific test for a future date to see if there has been any movement… this space!


Next step in the Internet of Things for life insurance

Tom Scales

Post by

Apr 14th, 2015

The last seven days have been exciting for the next wave in Life insurance (and Health). Last week we saw John Hancock introduce the Vitality program into the US.

This week we have a collaboration between IBM, Apple and Medtronic, the huge maker of medical devices.

Just yesterday we had an inquiry from a major Life insurance company asking about a service that consolidates data from multiple users of wearables. We were not aware of a major player offering the service, but that same afternoon, this partnership was announced. As the use of wearables increases, particularly for use beyond an individual’s fitness, it will be critical for standards and services to emerge to bring this data to multiple users.

Including Life insurance companies.

Of course, we still have the obvious challenge of competition in the industry. This is great for users of Apple and Medtronic’s products, but what about people wearing a Moto 360 or Fitbit? We are not quite there yet, but everything happens with a first step.

I commented the other day to a colleague that this is the most excitement we have had in Life insurance since the introduction of Universal Life in the 1980s. The pace will only increase.

John Hancock introduces Vitality in the US – will it transform the industry?

Tom Scales

Post by

Apr 10th, 2015

Bold words, perhaps. Transform the industry?

It just might.

If you did not see the announcement, you can learn more about the program at the John Hancock Vitality website.

If you participate in their program, you can receive rewards and premium savings. The program rewards healthy activity, regular exercise, regular checkups and even reading about topics John Hancock offers. It is a program that will feel familiar, as it works similarly to other retail rewards programs, but is focused on your life style. That’s one of the benefits – it is simple and easy to use. The rewards partners are quite extensive as well.

In other words, a win-win. The insured lives a healthier lifestyle and is rewarded for it. The insurer benefits as their customers live longer, which is to their financial benefit. I love a good win-win.

The program is not actually new. It’s been in existence, in earlier forms, for a number of years. It began in South Africa, with Discovery Vitality, then moved to the UK and to Asia. What makes it even more interesting now, is the intersection of an innovative program with technology.

We have all seen technology in the fitness space. You cannot walk around a mall without seeing a Fitbit. For those that think this is a phenomenon only focuses on youth, look when you go shopping. Wearable tech is on the wrist of every age group. Celent certainly expects that to grow quickly, given the upcoming release date for the Apple Watch in the US. Today is even the day you can see one in your local Apple store.

The Vitality program integrates this information directly into the rewards, giving you credit for the exercise, just by virtue of reporting it.

There are some questions, and I was asked some of those on CNBC’s Nightly Business Review program on Wednesday night. You can view the interview here.

Some are fairly obvious – such as security. We don’t see that as an issue here, as the information shared is very limited and not information of interest to a hacker. How much I walk and my heart rate is just not valuable information to anyone.

Let’s also not forget that programs with similar components are in place today in the health insurance world. Many companies offer discounts to their employee’s insurance if they complete some basic steps. Our parent company does and my family saved a significant amount of money by participating. One better known program is Humana’s Vitality program – yes, there is Vitality again.

Another could be concern that this would limit Life insurance, or even subject you to cancellation, if you didn’t meet your fitness goals. Again, that’s not really an issue. The contractual obligations of an insurance company are very clear and neither this program, not the contract, allows that to occur. The program is also entirely optional.

In fact, what industry should we trust more than the Life insurance industry? The basic premise of life insurance is spreading risk. We pay our premiums, for years or even decades, and expect our loved ones to be taken care of in their times of greatest grief.

And they are, and have been for centuries. It is one of the reasons I like being in this industry – we help those that have just been stunned by loss.

Readers of earlier blog posts know that I enjoy technology and own and wear a very high-tech watch. I am all set for this program and many of you are too. One of my reports from last year explored this very topic, and referenced Vitality as an example. I’m pleased to see movement on the topic, particularly by a company as strong as John Hancock.

I encourage those that are interested to follow some of these links, and check out my interview, to learn more about the program. I am sure we will have more soon.

Innovation & Insight Day – a recap

Post by

Apr 1st, 2015

On March 23th Celent gathered over 350 bankers, insurers, vendors, news media, and colleagues for our annual Innovation & Insight Day. It was held at Carnegie Hall. For the first time in I&I’s history, we literally were SRO (standing room only)! It was truly an international event in an world renowned venue – I think we had people from 18 countries in attendance. We never expected such a great response to our event (and we are still scratching our heads as to why!). Although we had to improvise with an overflow room that streamed video of the main stage (thanks to all who helped us accommodate this nice problem), the main purpose of the day was never lost! We celebrated and learned from the winners who helped showcase best practices in implementing insurance technology and innovation from around the world. The event also afforded tremendous networking opportunities and provided an unbiased view of the hottest issues in this space today.

The Insurance Team recognized fifteen model banks across five categories: Digital; Data Mastery; Legacy and Ecosystem Transformation; Innovation and Emerging Technologies; and Operational Excellence. We produced our annual Model Insurer report which highlights all fifteen Model Insurer case studies, including our Model Insurer of the Year, LV= (from United Kingdom). Clients may download the report at

Here is the list of Model Insurers for 2015:
Data mastery and analytics
Celina Mutual Insurance Company: Mastering machine learning for predictive analytics
Farm Bureau: Incorporating predictive analytics in workers compensation underwriting
Markerstudy: Using big data analytics to compete in the UK market

Digital and omnichannel
ICICI Prudential Life Insurance Company: Complete digitalization initiative
Security First Insurance: Developed personalized videos for homeowners policyholders
Società Cattolica di Assicurazione: Creating an omnichannel experience called Click2Go

Innovation and emerging technologies
Achmea Australia: Managing Farm Risk on the Farm
American Family: Implemented a company-wide idea contest to spur mobile innovation
Citizens Property Insurance Corporation: Building a clearinghouse to redistribute property risks

Legacy and ecosystem transformation
MetLife: Life insurance for the middle market
Pennsylvania Lumbermens Mutual Insurance Company and Indiana Lumbermens Mutual Insurance Company: Combining two affiliated insurers’ rating and policy administration platforms
Virginia Farm Bureau Mutual Insurance: Achieving results with a new end-to-end suite

Operational excellence in non-core systems implementation
Aegon Netherlands Centralizing and leveraging document management

Operational excellence in IT Management
Hiscox: Building a successful, continuous delivery pipeline

Model Insurer of the Year: LV=  Fast Track innovation

In addition to our model insurer panels we had excellent keynote speakers. Debra Jasper and Betsy Hubbard of Mindset Digital used about 300 [sic] slides in 45 minutes to prod us all to rethink how we present ourselves, not just in person, but through emails and social media. One concrete hint: think about five sentence emails ( Closing out the day was Suresh Ramamurthi, the Chairman of CBW Bank, who showed us what a sub $20mm asset bank can do by completely rethinking its technology platform. And we even had a 14 year old violin prodigy, Elli Choi, kick off the event; remember, we were in Carnegie Hall!

Celent also thanks our sponsors: Saffron, Mindtree, Indra, Guidewire, Wipro Digital, Inetco, and RGI Group, who together with our media partners Bank Technology News and Insurance Networking News, helped make the day a success.

We’re already starting to think about next year’s event; it’s not too early to start submitting nominations. We’ll be sending out hold the date announcements shortly.


The other auto insurance telematics shoe drops: who wants to be adverse selection lunch for Progressive?

Post by

Mar 27th, 2015

Until now US insurers have intentionally restricted the impact of their telematics programs by holding riskier drivers harmless.

In other words, insurers told policyholders in their telematics programs that their premium could only go down or remain the same. Higher risk drivers’ premium would not be increased even if the telematics device revealed driving behavior which actually deserved a higher premium.

But now the world has changed. In its 2014 annual report US telematics leader Progressive dropped this bombshell: “. . . we are affording more customers discounts for their good driving behavior while for the first time, increasing rates for a small number of drivers whose driving behavior justifies such rates” (Celent emphasis). See Bloomberg for the full story.

Progressive is saying that when its telematics data indicates a higher premium for a given policyholder, it will charge that higher premium. If that policyholder can find a lower premium at another insurer, Progressive is quite happy to have that other insurer issue that policy, leading (on average) to higher losses, for a lower premium. In insurance this is known as the other insurer experiencing adverse selection.

At its most basic level, being a successful insurance company is simple. Understand the risks that are submitted to your underwriters, and charge the right premium for those risks. Progressive is not a stupid company. With this announcement Progressive is signaling that its Snapshot telematics program lets it charge a more accurate and higher premium to certain risky drivers—and it jolly well will do it.

If other leading auto insurers’ telematics data leads to the same conclusion, they will have to follow Progressive’s lead. Eat or be eaten.

Google and the insurance consumer

Post by

Mar 6th, 2015

Today’s announcement of Google Compare Auto Insurance for California will be valued by consumers. Hopefully, it will also spur the industry to action.

Celent research has identified that consumers, in general, highly value convenience in purchasing financial services products. In the report Innovation in Insurance: A North American Consumer View, we asked consumers why they chose their preferred service method when looking for help with financial services products. Nine percent said their choice was driven by a desire for “Better Results” while 26% chose both “Convenience” and “Ease”. In short, these consumers would rather have service fast and easy, even if it is not the best result!

Innovation graphic5


We have also surveyed consumers about their preference to do business with companies which are viewed as innovative. In Making Innovation Matter, we found that the innovation reputation of a company means a great deal to those consumers who are most active in managing their finances and also to those who are “Highly Digital” (use more than 7 digital services on a routine basis).


Innovation graphic2Innovation graphic1


Google’s reputation for ease of use and also for innovation makes for an excellent fit with these declared consumer preferences. The fact that they have partnered with BOLT, an experienced insurance provider, will combine subject matter expertise with their world-class digital skills. (Read more about BOLT in this Celent report: BOLT Insurance Agency: Changing the Small Commercial Insurance Service Paradigm)

It will be good for the industry if this move motivates the bystanders to seriously pursue sustained, deliberate innovation as a response. As we documented in Innovation in Financial Services Firms: The Leadership Gap, there is a real mismatch between insurance customers’ expectations and insurers’ business strategies. In our surveys, insurance professionals repeatedly say that they believe that innovation will be critical critical to satisfying consumer expectations. However, they also say that it is only important (not critical) to fulfilling their strategy. Critical to the customer, but only important to strategy — not a good position for incumbent firms in a traditional industry.

customer importance

strategy import

From the industry veterans at Celent, here’s hoping Google’s entry shakes things up!

Round up of Making Innovation Happen – London

Post by

Feb 27th, 2015

On Wednesday the 24th Celent hosted our event Making Innovation Happen in Insurance : Hedging Against the Future. The aim of the event was to move beyond the call to action, beyond the cries that innovation is necessary to discuss some practical ways insurers could innovate or have innovated. The feedback suggests we were able to do just that.

Jamie Macgregor welcomed our guests and introduced the day, swiftly followed by Mike Fitzgerald setting out Celent’s view on how innovation is not a dark art, but something that insurers can cultivate.

Read more…


Celent Innovation & Insight Day Preview

Post by

Feb 26th, 2015

Celent’s Innovation and Insight Day is about a month away, and everyone at Celent couldn’t be more excited. We have great external speakers bookending the day, and we’ll be exploring exciting technology implementations with 15 Model Insurers in five categories (plus Celent’s Model Insurer of the Year):

  • Digital and Omnichannel
  • Legacy and Ecosystem Transformation
  • Data Mastery and Analytics
  • Innovation and Emerging Technologies
  • Operational Excellence in Non-Core Systems and IT Management

Our first speakers, Betsy Hubbard and Debra Jasper, are from Mindset Digital, an online social media training firm. As financial firms grapple with their approaches to social media, Betsy and Debra’s perspective, delivered in a completely different style than what most banks are used to, will provide ample food for thought and some concrete next steps.

Celent analysts will be presenting research throughout the day as winners are announced and cases are discussed.  Jamie MacGregor will also offer his perspectives on the state of innovation within the industry as well as where he sees the industry moving over the next few years.

Ending the insurance day will be Rod Willmott, Innovation Director at LV=, one of UK’s largest insurers and the third largest motor insurer.  Listen as Rod discusses how LV= established a “Fast Track Innovation” process to facilitate rapid responses to business needs and to accelerate strategic business objectives that were previously considered too challenging or costly to consider.

Registrations are running well ahead of last year, and our Carnegie Hall venue may well get to Standing Room Only (although you won’t be able to buy tickets at TKTS on Monday morning). We hope to see you there on March 23rd; to learn more and to register, please visit our I&I day site.

model insurer logo