Distribution Management – New Tools for Strategic Growth

Distribution Management – New  Tools for Strategic Growth

Growth and retention continue to be the top business goals affecting IT investments. Many insurers are focusing on improving their distribution practices as a key technique for driving growth.  Designing, developing, maintaining and managing productive channel relationships can create a sustainable competitive advantage.

Almost every insurer we talk to is focusing on how to grow their book of business.  Some are using underwriting strategies, some are focusing on improving customer service, and others are looking at acquisition.  Virtually every insurer we talk to is also focusing on distribution management.  They’re looking at expanding channels, adding distributors, moving into new territories and working to expand their existing channel in order to improve customer acquisition and retention. 

These multiple channels are effective at targeting different aspects of the market, but add complexity when it comes to channel management. Additionally, the explosion of InsureTech startups carries with it the potential for channel disruption. However, a wide variety of issues creates difficulties for insurers when it comes to effectively managing the distribution channel.

As an insurer begins to focus on managing their distributors more strategically, many put resources towards managing their distributors more effectively in order to extract more revenue from them. Some insurers are focused on managing the compliance aspects of distribution management – assuring the distributors have the right licenses and that state appointments are made in a timely manner.  Others are focusing on using compensation tools and techniques to more effectively stimulate production. Still others are placing their priority on servicing high priority distribution channels and improving service to distributors.  They are utilizing increasingly complex segmentation schemes and tailored programs for preferred producers as a way to retain and grow business.

But in doing so, they often run into a common set of issues.   Standard processes and automation were designed for an environment that has long since passed, one that was much more stable and predictable. In a typical insurance environment today, multiple departments perform separate tasks in the cycle making coordination of activities and integration of information difficult. This is especially problematic since producer management involves large numbers of distributors, different types of distributors, a substantial volume of transactions and data from multiple sources. As insurers expand the number and types of distributors they work with, hierarchies become more complex to manage. This is compounded by multiple jurisdictions, multiple policy admin systems, and limited reporting and analytic tools.

These conditions result in multiple issues including poor service, a lack of insight into producer performance, unreliable data, and high support costs. The inability to link information means that distributors are managed on transactions instead of strategically. Compliance issues continue to plague insurers who find it difficult to monitor licenses and process appointments in a timely manner.

Distribution management systems provide tools and technologies to help insurers with the administrative aspects of distribution management. They are most typically used by insurers with a mixed distribution channel, multiple policy admin systems, multiple jurisdictions, complex compensation programs, or some combination of these factors.  These systems encompass 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.  They provide tools and technologies to help insurers with the administrative aspects of distribution management.  They are most typically used by insurers 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 2017.   It describes what these solutions do and profiles 16 distribution management solutions that are relevant for property casualty and/or life and annuities.  There’s another report that covers all the global vendors as well.  Check it out – or send me a note if you’d like to talk about the report.  And keep your eyes on this space for an upcoming report – Reinventing Distribution – which will give tons of examples of cool stuff that insurers are doing to manage, enable, and shift their distribution channels. 

Would you spot the warning signs of a failing project?

Would you spot the warning signs of a failing project?

Every large project I have been involved with began with enthusiasm and high hopes. The go decision concludes a sizable project of its own — creating and receiving approval for the business case. The initiative begins in a celebratory fashion. The project sponsors are overrun with volunteers for the project. There are numerous kick-off meetings with a festive tone. Communication about the project occurs often promoting the merits of the project. It is sunshine and roses ahead!

Flash forward, the project communication may have slowed down to a trickle. The project team members have lost their enthusiasm, and the project has become mundane. Many times there have been as many failures as successes. It is not unusual to lose a key sponsor. At times, it may become necessary to revise the goals of the project, or, in the direst situations, abandon the future phases.

I am sure that readers are thinking, “This will not happen to my project.” I certainly hope that is true! But, if your project is on a downhill slide, there are steps that can be taken to get back on course. An important first step is a project health check.

A project health check is designed to provide an independent and impartial evaluation of a program or project. The health check evaluates the overall health or risk profile, assesses stakeholder satisfaction, and provides practical recommendations that the team can use for reducing risk and in extreme situations, for project audit, recovery, or rescue. The health check covers all levels of the project from the business executives and sponsors to the technical team members to provide a comprehensive view. It focuses on:

• Business objectives, scope, and requirements assessment.
• Contracting and financials.
• All processes, deliverables, and communications quality.
• Exception management that includes issues, changes, and risks.
• Project data and plan assessment.
• People assessment.
• Best practices effectiveness.
• Evaluation of the technology and its feasibility and compatibility with the current and/or planned environment.

Very often, those closest to a project are the ones that have difficulty in seeing the progress. Health checks are best undertaken by third party assessors, who can provide an unbiased and balanced view and opinion.

My new report,  Staying on Track when the Transformation Road Changes, has more information on project health checks as well as the do’s and don’ts of running a successful project. I hope all of your projects are success ones!
 

Learning from the Best: Operational Excellence from a Model Insurer Viewpoint

Learning from the Best:  Operational Excellence from a Model Insurer Viewpoint

I am privileged again this year to be part of the team that judged the Celent Model Insurer nominations. My focus is on the nominations in the Operational Excellence theme. In reality, every nomination demonstrates a high degree of operational excellence. It is a tough job to choose only three winners in the category. 

You may wonder how Celent decides which nominations are the best of the best. We look at the disciples included in successful operational outcomes. Achieving operational excellence, requires transforming processes and systems into competitive advantages by making them leaner, faster, more flexible and of higher quality.

It’s not just what is done, but how it’s done. The project should have lasting effects and transform the organization in multiple aspects: Processes, Technology, Culture and Business Model

This year’s operational excellence nominations run the gamut from project methodology to straight through processing to infrastructure outsourcing.  Following are examples of a few of the nominations: 

  • A P&C insurer in the Cayman Islands moved to a virtual business. Instead of replacing their on premise infrastructure, they transitioned to a cloud environment for all systems including: core insurance operations, human resources, and call center. By moving to a third-party cloud provider, the insurer could go global to support local operations with consistent technology expertise to host and maintain the applications.
  • One of India’s leading life insurance companies which had experienced tremendous growth of 380% in the last financial year required a simple, streamlined and cost effective system to service their growing customer base and extend the enterprise for continued growth and market penetration. The company implemented a document management solution for processing new business and claims. The solution is designed so that it requires no or minimal manual intervention for the end-to-end document life cycle process.
  • An innovative testing solution created in collaboration between a North American P&C insurer and its vendor was implemented after it was found that the existing testing environment, approach and methodology was causing delays and quality assurance problems for the transformation program. The solution is a cloud based, open-source testing environment that has reduced both risk and cost by improving the quality of the testing. 
  • A North America supplemental benefits insurer adopted an Agile project methodology in response to its need of modernization and in recognition that it will undergo more change as the industry continues to capitalize on social, mobile, wearables, etc. The change brought about increased accountability, efficiency and organization that have allowed the company to be poised and ready for all opportunities, producing results at record speed.
  • A reinsurer based in Europe implemented artificial intelligence and machine learning algorithms to allow automatic verification of clauses in contracts and matching of official comments stored in a large database.  This allows experts to focus their attention on parts of the contract that have not been seen before and will allow back searching thought any collection of documents for clauses containing issues of interest as well as comparing contracts on a clause level with calculated accuracy scores.   

As you can see from this sampling of nominations, choosing the winners was hard.  However, it is easy for you to be on hand to network with and learn from the insurers and vendors who submitted the winning projects.  Please join Celent in Boston on April 4 for Innovation and Insight Day where the winners of the 2017 Model Insurer awards will be announced.  You can register here.   

The new customer experience – or how so many carriers are getting journey mapping wrong

The new customer experience – or how so many carriers are getting journey mapping wrong

Journey mapping, the process of defining the customer experience, is an activity that has been gaining in popularity over the last two years.  Carriers are using this technique to document the existing customer experience in order to identify areas to improve.  The underlying assumption is that a superior customer experience will drive retention and perhaps improve new business.  Which makes sense.  After all, it’s pretty evident that customers are demanding a different relationship model from their insurers.  They are looking for more transparency and simplicity. They are increasingly self-directed and financially literate.  And they are demanding increasing participation. 

Their expectations are increasingly driven by experience in non-insurance categories.   I can see where my uber car is real-time – why can’t I tell if my claim check has been issued.   I can custom assemble a new pc online with instant knowledge of all the options available and the price associated with them – why can’t I tell what additional insurance options are available and what they cost.   I can get recommendations from Amazon on what I might like and what others like me are purchasing – why can’t I get  good recommendation from a carrier to help me compile the best package of coverages, terms and conditions to suit my profile. 

While efforts have been made to drive effectiveness for insurance processes from an internal perspective, there are still many areas where improvements are possible from a customer perspective. So carriers are working to define an extraordinary experience for customers. They’re defining personas, mapping the new business acquisition process, the billing process, claims, complaint handling, customer inquiries, and all the major processes that occur when customers interact with carriers. 

But that’s the problem. Carriers are focusing on optimizing all those places where the customer and the carrier interact.  Now don’t get me wrong. There is nothing wrong with this.  Carriers should make sure that interactions are optimized.  Focusing on automating decisions, automating correspondence, and using workflow to assure tasks are completed in a timely manner can have a dramatic effect on delivering a consistently good experience.  Omni channel, real time, digitization – all those trendy words – are very relevant here. But it’s not enough.

If you really want to build loyalty, think about the customer experience when they aren’t interacting with you. Let me give you an example. 

Allstate has a target market of motorcycle riders, and has a mobile app for them called GoodRide.  The app is available for both Allstate customers and non Allstate customers.  It helps riders keep track of all repairs and maintenance.  They can plan a ride –  checking weather, locate gas, and even find others to ride with as it is integrated to social media. They can track their ride by adding notes, adding photos and tracking miles ridden. There’s even a gamification element that awards badges.   And by the way, they can report a claim, check proof of insurance and pay their bill.  So this application really looks at what motorcycle riders are looking to do outside of the insurance interaction and embeds the insurance interactions within the full context of the customer’s life and where insurance itself plays a role rather than simply looking at the interactions discreetly.

In the commercial lines world, a similar application could be industry based and provide tailored risk management materials, an “Ask an Expert” corner where customers can check in with risk management consultants,   create a Facebook-like collaboration mechanism for customers to talk to each other,  arrange discounts on products relevant to the industry.  and of course, access their policy online, pay a bill, pull a loss run or handle other interactions. 

Expanding the customer experience beyond the pure insurance interactions makes a carrier more relevant to a customer by engaging in their everyday lives and looking for ways of adding value within context.  And it creates a way to have an ongoing conversation with a customer – building personal loyalty. 

So – is customer journey mapping a good idea?  Of course.  Are carriers thinking big enough? That is a different question.

What I will say, is exactly what I told a carrier earlier today –  The secret to organic growth?  Deliver a customer experience that your competitors can’t match. 

The Evolving Role of Architects

The Evolving Role of Architects

In the last couple of weeks I’ve had the great opportunity to spend time with IT architects of various sorts both inside and outside of the insurance industry. The discussions have been illuminating and offer different visions and futures both for technology that supports insurers and for the future of the architecture function in insurers.

One of the main events that allowed for this conversation was a round table held in London with architects from insurers. The main topics were the relevance of microservices style architectures to insurance, the role of the architects in AI and InsurTech and the future role of architects at insurers. Another event that offered an interesting contrast was the inaugural London Software Architecture Conference which I'll call SACon below (Twitter feed).

Microservices

I won't fully define microservices here but briefly it’s an approach to delivering software where each service is built as it’s own application which can be scaled independently from other services.

Microservices as a way of delivering software was the default approach at the SACon. There were sessions where architects sharing stories about why sometimes you had to work with a monolith or even making the case for not having the services in discrete applications. Meanwhile at the round table the monolith was the default still with the case being made for microservices in some parts of the architecture.

There are use cases where microservices make a great deal of sense, particularly in already distributed systems where a great deal of data is being streamed between applications. Here the infrastructure of microservices and the libraries supporting the reactive manifesto such as Hysterix and Rx* (e.g. RxJava) and indeed one insurer related their use of microservices to support IoT. Others discussed using this style of approach and the tooling surrounding these architectures to launch new products and increase change throughput but in all cases these were far from replacing the core architecture.

For now microservices is not the default for insurer software but is certainly a tool in the box. An observation or two from SACon from those looking to adopt: First it doesn’t solve the question of how big a service or a component is, something architects need to discuss and refine and; Second, microservices needs a great deal of automation to make work, a topic covered in our DevOps report to be published shortly.

Architects and AI

I have a background with training and experience both in computer science, AI and machine learning. One thing that I noticed going to the analytics conferences where AI is discussed is the absence of IT representation – plenty of actuaries, MI/BI folks, marketing folks – was this a place for architects?

Most insurers present at the round table had activity within the organisation for AI. For the most part only data architects are involved in this discussion – AI being distinct from business and applications architecture for now. It’s my opinion that AI components will form part of the wider applications architecture in the future, with AI components being as common place as programmed ones.

Architects and InsurTech

Here is an area where architects can more immediately contribute in a meaningful way both in reviewing opportunities and unique capabilities from InsurTech firms and in discussing integration where acquisition rather than investment is the goal.

The challenge here of course is the age old challenge for architects – to have a seat in the discussion the architect function needs to demonstrate the value it can bring and it’s internal expertise.

Finally, one amusing discussion I had was with a few architects from startups. As I discussed legacy systems they also related seeing legacy systems in their organisations – albeit the legacy systems were 2 or 4 years old rather than 20 or 40 years old. The intriguing thing here was the reasons for them becoming legacy were the same as insurers – availability of skills, supportability and responsiveness to changing demands. It may hearten architects at insurers that start ups aren’t immune to legacy issues!

 

 

Life Insurance Automated Underwriting – A 25 Year Journey

Life Insurance Automated Underwriting – A 25 Year Journey

Automated underwriting has come a long way in the last 25 years. It may be surprising that there was automated underwriting 25 years ago. At that time, it was called ‘expert’ underwriting. The idea was right, but the timing was wrong. The underwriting engines were black box algorithms; there was no user interface; data was fed from a file to the system; programming was required to write rules; and specialized hardware was necessary to run the systems. Not surprisingly, this attempt at automating underwriting was dead on arrival.

The next major iteration occurred about ten years later. Automated underwriting systems included a user interface; rules were exposed (some programming was still required to change the rules); data interfaces were introduced to collect evidence from labs and the medical inquiry board; underwriting decisions could be overridden by the human underwriter; and workflow was provided. Some insurers chose to take a chance on this new technology, but it was not widely adopted. There were two strikes against it: cost and trust. The systems were expensive to purchase, and the time and costs involved in integrating and tailoring the systems to a specific company’s underwriting practice could not be outweighed by the benefits. The lack of benefits was partially because the underwriters did not trust the results. Many times this caused double work for the underwriters. The underwriters reviewed the automated underwriting results and then evaluated the case using manual procedures to ensure the automated risk class matched the manual results.

Moving ahead fifteen years to today, changes in the underwriting environment place greater demands on staff and management. Staff members are working from home, and contractors are floating in and out of the landscape, all while reinsurers are knocking on the insurer’s door. There are now state-of-the-art new business and underwriting (NBUW) systems that address the challenges associated with the new demands. The solutions do not just assess the risk but provide workflow, audit, and analytics capabilities that aid in the management process. Rules can be added and modified by the business users; evidence is provided as data so that the rules engine can evaluate the results and provide the exceptions for human review. Subjective manual random audits of hundreds of cases evolve into objective, data-driven perspectives from thousands of cases. Analytics provide insights on specific conditions and impairments over the spectrum of underwritten cases to provide a portfolio view of risk management. Underwriting inconsistencies become easy to find and specific training can be provided to improve quality.

.In our report, Underwriting Investments that Pay Off, Karen Monks and I found that the differences between insurers who are minimally automated and those that are moderately to highly automated are substantial.  For minimally automated insurers, the not in good order (NIGO) rates are four times higher, the cycle times are 30% longer, and the case manager to underwriter ratio is almost double compared to the metrics for the moderately to highly automated insurers. This outcome may not reflect your specific circumstances, but it is worth preparing a business case to understand the benefits. With the advances in the systems and the advantages provided for new business acquistion, there are few justifications for any company not to seek greater automation in their underwriting.  

To learn more about the adoption of current NBUW systems and the functionality offered in them, please read our new report, What’s Hot and What’s Not, Deal and Functionality Trends and Projections in the Life NBUW Market or join our webinar on this topic on Thursday, September 29.  You can sign up here.

 

 

The privacy bomb and cost of personal data debt

The privacy bomb and cost of personal data debt

I often hear architects talk about technical debt but it strikes me that a different debt is waiting for insurers.

Imagine a world where the regulator says that a customer owns data about the customer, regardless of where it is stored. The key observation here is the decoupling of ownership and control with storage. Most regulators have gone nearly this far and made statements about consumer ownership of consumer data, so perhaps it's not out of step with reality. This is discussion so far but perhaps the technology hasn't caught up with the intent. If we ignore the limits of technology …

There are perhaps 3 models emerging:

  • A. The data remains where it is and is controlled from there. Requires APIs…
  • B. The data moves as customer moves. Requires data standards…
  • C. Customer data is held in a shared environment. Requires APIs and data standards

Let's take a moment to really think that through for an insurer. If you hold data about a customer in your systems, that data is owned by another party. Ownership here is a complex word – it implies but is not limited to controlling access to the data, determining appropriate use of the data, revoking access to the data, determining how long that data is kept.

Scenario A
What if the storers are obliged to provide these controls to the owner of the data and actually – what if that obligation exists regardless of whether that owner is a customer?

Such a scenario may make it prohibitive for insurers to capture and store data directly. What would the world look like in such a scenario? Insurers would request access to customers data and have to disclose why they want the data, what they will do with it and perhaps the algorithms used  in order to offer products. Such a world might favour insurers with simpler pricing algorithms that are more expensive but customers understand what is being done with the data.

If we take it a step further, in theory there would be intermediaries emerge who help manage consumer data and help consumers simply share their data with trusted partners. I would suggest most people would not dig into the detail of who is sharing what so a service that says, "we've found these 15 services that only use the data in these ways and we've packaged that up for you" would be most welcome.

If however, we take existing businesses into this world then suddenly enterprises will be faced with the issue of how do they offer appropriate controls and management around the data already in place.

The standard already exists for sharing information in this way leveraging OAUTH as is used by Twitter, LinkedIn, Google and Facebook.

Scenario B
The cost for doing migration and conversion will lie with the party holding the data. A different type of debt.

This is the model the insurance industry is assuming will come to pass but it requires shared data standards which are harder to implement than API standards. There is also the issue of potentially lossy data migrations – I.e. The quality of the data is reduced in the migration – will this be 'OK' from a regulatory point of view?

Further this is more confusing for a consumer since the mechanism and means to manage access to the data will change each time there is a move. An approach intended to increase portability and movement could become an inhibitor as consumers grow concerned about retraining.

In theory though, this would allow insurers to differentiate on trust and service – a place where they already play.

Scenario C
The greatest challenge with a shared environment is who is the trusted party? Google, Twitter, Facebook and LinkedIn among others have made moves into authentication but they don't hold all the data and regulators in multiple countries are seeking to grasp control and this is a topic for Insurtech startups as well.

Some see Blockchain as a possible solution – the data in a shared open place, but secured and encrypted.

At this point this seems like the least likely solution, requiring the greatest cooperation and investment from the industry and governments. Regulators at this point seem to be supporting the other two.

Which will come to pass
There is a clear trend with private data becoming more valuable, but the cost of storing it is becoming more onerous. Regardless of which of the scenarios comes to pass or if some other scheme emerges – insurers must balance the cost of storing the data and the value it may bring now and in the future.

Re-inventing underwriting: New ingredients for the secret sauce

Re-inventing underwriting: New ingredients for the secret sauce

Innovation is exploding across all aspects of underwriting and product management. New technologies are transforming an old art. But if there is one lesson to be learned, it is that carriers whose systems are not already capable of handling these changes will be alarmingly disadvantaged.  I've just published a new report looking at innovation in underwriting. 

Underwriting is at the core of the insurance industry. It is the secret sauce of the insurance industry. For hundreds of years, this process was accomplished through the individual judgement of highly experienced underwriters. Insights were captured in manuals of procedures and carefully taught to succeeding generations. 

Over the last few years, carriers have been heavily engaged in replacing core policy admin systems enabling a fundamental transformation of the underwriting process.  Gone are the days of green eye shades and rating on a napkin.  Gone are the days of identical products across the industry.  Gone are the days of standard rating algorithms used by all carriers. 

Carriers are using their newly gained technology capabilities to create dramatically different products, develop innovative processes driving efficiency, improve decisions, and transform the customer experience.  This transformation of underwriting is enabled by the ability to use business rules to drive automated workflow, but even more importantly this is a story about the fundamental transformation of insurance through the application of data.

This report looks at underwriting and product management and describes some of the newest innovations in each area with specific examples provided where publicly available.

What you’ll see is that almost every aspect of the underwriting and product management functions are being fundamentally transformed as carriers find new ways of utilizing and applying data. Carriers are using their newly gained technology capabilities to create dramatically different products, develop innovative processes driving efficiency, improve decisions, and transform the customer experience.

Key findings:

  • Carriers are using product innovation as a competitive differentiator and are experimenting with new types of insurance products that go well beyond basic indemnification in the event of loss.  Parametric products, behavior based products and products that embed services to prevent or mitigate a loss are becoming more common.
  • Predictive analytics are being used to better assess risk quality and assure price adequacy, as well as to control costs by assessing which types of inspections are warranted, or when to send a physical premium auditor, or when to purchase third party data.
  • Individual risk underwriting hasn’t gone away for commercial Ines, but the characteristics that are driving it are more quantified, requiring more data and more consistent data. 
  • The role of the product manager is changing dramatically to one of managing the rules rather than managing individual transactions.  This requires new skills and new tools. It also will drive changes in how regulators monitor carriers underwriting practices. 

We expect to continue to see innovative technologies being deployed in underwriting and product management over the next 3-5 years – especially in the following areas:

  • Carriers will continue to focus on product differentiation.  The Internet of Things will facilitate more behavior based products and more parametric products. Carriers will find new ways of embedding services within the product, or as part of the remediation after a claim. 
  • The role of the product manager will change dramatically focusing on deep understanding of rules.  Vendors will need to provide tools to better analyze the usage rates, the impact, and the stacking of rules. 
  • We’ll continue to see a massive eruption in the amount and types of data available.  Unstructured data such as in weather, car video, traffic cameras, telematics, weather data, or medical/health data from wearable devices will become even more available.  Carriers will invest in managing and analyzing both structured and unstructured data.  Implementation of reporting and analytic tools as well as supporting technologies – data models, ETL tools, and repositories – will continue to be major projects.
  • New technologies will create new exposures, drive new products, and generate new services.   From wearables, to advanced robotics, from artificial intelligence to gamification and big data, carriers will be applying physical technologies as well as virtual technologies to drive product development and risk assessment.

The available technologies to support property casualty insurance are exploding. Shifting channels, new data elements and tools that can help to improve decisions, provide better customer service or reduce the cost of handling are of great interest to carriers.  Investments are being made across all aspects of underwriting and product management. Staying on top of these trends is going to continue to be a challenge as new technologies continue to proliferate.  But if there is one lesson to be learned, it is that carriers whose systems are not already capable of handling these changes will be alarmingly disadvantaged.

For carriers who are already moving down this path, this report will shine a light on some of the creative ways carriers are transforming the process of underwriting.  For carriers who have not begun this journey, this report may be a wakeup call. The pace of change is increasing and carriers who continue to rely purely on individual underwriting judgment will find themselves at a disadvantage to those who are finding new sources of insights and applying them in a systematic manner to improve profitability. Wherever you sit, this rapid pace of change is exciting, empowering and galvanizing the insurance industry.

Who has the best life insurance new business and underwriting system?

Who has the best life insurance new business and underwriting system?

Celent has published a new report, North American LHA New Business and Underwriting Systems: 2016 ABCD Vendor View, in which Celent profiles fourteen providers of new business and underwriting systems. Each vendor responded to a request for information. Seven vendors met the criteria for inclusion as a potential Xcelent winner. The seven vendors eligible for the awards provided a demonstration and briefing of their billing solution.

Due to the ongoing economic conditions that continue to have an adverse impact on life insurance application volumes, insurers have strong interest in reducing the cost of acquisition, processing and issuing life insurance applications. Automating the new business and underwriting functions are critical components in reaching a level of straight-through processing (STP) for new business. Insurers hope that these systems will help reduce unit costs and improve margins. Celent believes that these initiatives are necessary to help the insurers address growth, service, and distribution mandates, in addition to reducing the cost per policy issued.

After years of development that started almost 30 years ago, automated underwriting systems have become highly flexible in allowing insurers to define and configure underwriting rules and workflow. Most systems include or integrate into eApplications. Data from the applications drive reflexive questioning and identify risk classes associated with application data. They offer high levels of automation when gathering third party medical requirements and flag risks when the third party data results are outside of the ranges set by the rules. They also can deliver decisions to the point of data entry or to an underwriter.

New business image

The interest in new business and underwriting systems is on the upswing. Deciding the best new business and underwriting system is unique to each insurer. The goal of the report is to provide detailed information so that an insurer will be able to make an informed decision on which systems may be the best for them.

A golden day for insurance: Celent 2016 Model Insurer winners

A golden day for insurance: Celent 2016 Model Insurer winners

In the historic Museum of American Finance, surrounded by golden exhibits including gold bars, a gold Monopoly game and even a gold toilet(!), the 2016 Celent Model Insurers were announced yesterday.  Part of our annual Innovation and Insight Day, we had over 150 insurance professionals in attendance (and over 300 in total), it was a great day for networking, idea sharing, learning about award winning initiatives and hearing inspiring speakers talk about the future of financial services. 

Yaron Ben-Zvi, CEO and co-founder of Haven Life, was the Model Insurer key note speaker. He discussed how Haven is using technology to reach a younger, digital-savvy customer with a life insurance experience that meets their expectations. He spoke about the journey from ideation to reality for their term insurance products which can be purchased online in only 20 minutes. He encouraged the audience to “think big but start small” and to apply the learnings along the way.

The Haven Life presentation was followed by the main event, the announcement of the 2016 Model Insurer winners. Every year, Celent recognizes the effective use of technology projects in five categories across multiple business functions.  We produced our annual Model Insurer Case Study report which clients may download here.  This year there were fifteen insurers recognized including Zurich Insurance, the Model Insurer of the Year.  Here are the winners: 

Model Insurer of the Year   

Zurich Insurance: Zurich developed Zurich Risk Panorama, an app that allows market-facing employees to navigate through Zurich’s large volumes of data, tools and capabilities in only a few clicks to offer customers a succinct overview of how to make their business more resilient. Zurich Risk Panorama provides dashboards that collate the knowledge, expertise and insights of Zurich experts via the data presented.

Data Mastery & Analytics

Asteron Life: Asteron Life created a new approach to underwriting audits called End-to-End Insights. It provides a portfolio level overview of risk management, creates the ability to identify trends, opportunities and pain points in real-time and identifies inefficiencies and inconsistencies in the underwriting process. 

Celina Insurance Group: Celina wanted to appoint agents in underdeveloped areas. To find areas with the highest potential for success, they created an analytics based agency prospecting tool. Using machine learning, multiple models were developed that scored over 4,000 zip codes to identify the best locations.

Farm Bureau Financial Services: FBFS decoupled its infrastructure by replacing point to point integration patterns with hub and spoke architecture. They utilized the ACORD Reference Architecture Data Model and developed near real time event-based messages.

Innovation and Emerging Technologies

Desjardins General Insurance Group: Ajusto, a smart phone mobile app for telematics auto insurance, was launched by Desjardins in March 2015. Driving is scored based on four criteria. The cumulative score can be converted into savings on the auto insurance premium at renewal.

John Hancock Financial Services: John Hancock developed the John Hancock Vitality solution. As part of the program, John Hancock Vitality members receive personalized health goals. The healthier their lifestyle, the more points they can accumulate to earn valuable rewards and discounts from leading retailers. Additionally, they can save as much as much as 15 percent off their annual premium.

Promutuel Assurance: Promutuel Insurance created a new change management strategy and built a global e-learning application, Campus, which uses a web-based approach that leverages self-service capabilities and gamificaton to make training easier, quicker, less costly and more convenient.

Digital and Omnichannel

Sagicor Life Inc.: Sagicor designed and developed Accelewriting® , an eApp integrated with a rules engine; which uses analytic tools and databases to provide a final underwriting decision within one to two minutes on average for simplified issue products.

Gore Mutual Insurance Company: Gore created uBiz, the first complete ecommerce commercial insurance platform in Canada by leveraging a host of technology advancements to simplify the buying experience of small business customers.

Operational Excellence

Markerstudy Group: Markerstudy implemented the M-Powered IT Transformation Program which created an eco-system of best in class monitoring and infrastructure visualization tools to accelerate cross-functional collaboration and remove key-man dependencies.

Guarantee Insurance Company: In order to focus on their core competency of underwriting and managing a large book of workers compensation business, Guarantee Insurance outsourced its entire IT infrastructure.

Pacific Specialty Insurance Company: Complying with their vision is to become a virtual carrier, meaning all critical business applications will be housed in a cloud-based infrastructure, PSIC implemented their core systems in a cloud while upgrading infrastructure to accommodate growth in bandwidth demands.

Legacy Transformation

GuideOne Insurance: GuideOne undertook a transformation project to reverse declines in its personal lines business. They launched new premier auto, standard auto, and non-standard auto products, as well as home, renter and umbrella products on a new policy administration system and a new agent portal.

Westchester, a Chubb Company: Chubb Solutions Fast Track™, a robust and flexible solution covering core business functionality, was built to support Chubb’s microbusiness unit’s core mission of establishing a “Producer First,” low-touch mindset through speed, accessibility, value, ease-of-use and relationships.

Teachers Life: Teachers Life has achieved a seamless, end-to-end online process for application, underwriting, policy issue and delivery for a variety of life products. Policyholders with a healthy lifestyle and basic financial needs can get coverage fast, in the privacy of their own homes, and pay premiums online in as little as 15 minutes.

The quality of the submissions this year is a clear indication the industry is turning a corner and embracing transformation, digital initiatives, innovation and valuing data analytics.  It is inspiring to see the positive results the insurers have achieved and a pleasure to recognize them as Model Insurers for their best practices in insurance technology.

How about your company? As you read this, are you thinking of an initiative in your company that should be recognized? We are always looking for good examples of the use of technology in insurance. Stay tuned for more information regarding 2017 Model Insurer nominations.