Insurance Innovation?? Michael Raynor to Speak at Celent Event

Insurance Innovation?? Michael Raynor to Speak at Celent Event

It has always been ironic to me that insurers have “lost the plot” on technology innovation. After all, insurance companies were among the first companies to implement systems to solve practical business problems. Of course, this was in the day when mainframes demanded entire floors in company headquarters buildings. These early systems have, in many cases, become a legacy that is proving hard to cast off.

Today, Celent is working with insurers and their vendor partners to change this. With the pressure to grow and to meet escalating consumer expectations, innovation is more important than ever. With tools such as geocoding, predictive analytics and automated fraud detection, new opportunities are also available for the taking.

Other industries are working hard to solve the innovation puzzle and we are very excited to have one of the biggest names in the field, Michael Raynor, join us on September 13 in New York for A Celent Insurance Symposium-Creative Disruption: Technology and the Future of Insurance (#creativedisrupt). Michael’s most recent work is The Innovator’s Manifesto, a fascinating exploration of how to execute innovation in a deliberate and disciplined way. He is going to share his thoughts on how insurance can approach innovation more effectively and what support they will need from their vendor partners to do so.

At Celent, our modest goal is to help insurers regain their position as a leader in applying technology to solve their customers’ problems. This is an exciting step on that journey.

Customers are the Disruptive Force in Insurance

Customers are the Disruptive Force in Insurance
Insurance has traditionally been known as a risk-adverse industry and thus the last to employ new technologies. This characteristic is more a comment on the old culture and way of doing business than really being risk adverse. Customers are now forcing insurers to deal with a change at a rate that is faster than they are comfortable. Customers have become a disruptive force in insurance. When I was in the enterprise architecture team in a large insurer, the business drivers always included lower TCO (with respect to IT), improved ease of doing business and business agility. However, ease of doing business was primarily focused on Independent agents, CSRs and underwriters. The actual policy holder was an afterthought to the policy process. Insurers created better UIs and in some cases enterprise portals to allow their agents, CSRs and underwriters easier access to their systems and better collaboration between these groups. While the policy holder was important, the agent was the insurance customer and the policy holder was the customer of the agent. Then insurers opened up Pandora’s Box and enabled policy holders direct access to submissions, claims and more recently self-service. The problem is that their systems were not designed for policyholder access. In addition, these customers have a level of expectations that most insurers are not ready for. Almost overnight, insurers realized that they had entered a world where the company no longer “owned their brand”, they could only manage it. Customers own the brand. Two examples show this change very dramatically. First is the well-known United Breaks Guitars YouTube incident . A customer, Dave Carroll, saw United baggage handlers damage his guitar and when he could not get satisfaction, create a creative YouTube video for the world to see. It went viral in a matter of days and by the time United was ready to fix the problem, the horse had escaped the barn. United now uses the video for training purposes. United learned the customer owned the brand the hard way and now they work hard to manage it. A friend recently told me of a Moen faucet that they had bought. They didn’t get around to actually installing it until months later and it did not work. When he called, he was told that the warranty had expired and there was nothing that they could do. He tweeted his experience and within 10 minutes, received a tweet from Moen asking him to call them to allow them to fix the problem. Within hours, a service rep was at his door with a new faucet and installed quickly. All Moen asked is that he tweet his satisfaction about the fix which he was happy to do. Moen obviously was monitoring the social network and acted quickly to manage their brand. While neither of these experiences have anything to do with insurance, they show the power of the customer. The same customer that now has and is demanding the same level of service they get from other industries. They could care less about legacy systems. They could care less about integration issues and complex environments and systems. They know what they get from other places they purchase items and expect nothing less from insurance. CIOs now state that customer experience trumps features and functions when selecting vendor systems. They are willing to go with 80% of their desired features and functions if the vendor can deliver an excellent customer experience. These statements come from two CIO panels I have recently viewed, one in insurance and one outside of insurance. The customer is turning the insurance business model on its ear. While agents, CSRs and underwriters have put up with the old status quo with small improvements, insurers that do not quickly adapt will become extinct. It has been said, the problem with insurance is dinosaurs lay dinosaur eggs. The customer ice age hit quickly. Which insurers will evolve at this new break-neck pace being demanded by the true customers and which will slowly die off?

Technology, innovation and insight in insurance

Technology, innovation and insight in insurance
Last week we held the innovation and insight event in Boston where we discussed creative disruption and emerging technologies and their effects on the insurance industry. Since coming back to the UK a few press releases and blog posts have caught my eye that feed well into this discussion. The first is from Robert Scoble, among other things a technology commentator and blogger. His post, 2012 brings a pause in the disruption sounds contradictory to our view but a quick read of his post provides a great view of the level of change we’ve seen in the last 8 years. Think back 8 years, to the phone you had, the way you interacted with the Internet – with the TV even. In the last 8 short years we’ve seen the birth of the social web, the rise of the smart phone, of apps (and their stores and markets), of gesture based interactions (the Wii and then Kinect were launched in this timescale) and now the IPO of facebook which launched in 2004. The pause in disruption points to a lack of jaw-dropping disruptive technology at the start of 2012 and a consolidation in the industry, a refining of these hugely disruptive themes into concrete business models and a maturing therein. I have to agree. CES 2012 saw bigger TV’s, TV’s with gesture control and further merging of mobile, tablet and laptop devices. Even Apple, the great innovator, presented the iPhone 4S as something they could ship in huge numbers rather than go for massive change. One technology I would watch is 3D printers, which are still gaining ground slowly but mostly in geek and maker communities – given another decade and cheaper prices I think this will seriously disrupt insurance and retail models. For now, we may be waving phones to make payments and having screens we can bend and see through – but consumer electronic developments in the last 12 months lack the technological disruption of past years. This pause is good news for the insurance industry in that makes this the perfect time to step back, take a look at the opportunities and possibilities these great waves of change have on our business models, our products and the way we interact with customers. Insurers across the globe have already made great strides in interacting with customers through social networks and understanding how to leverage them. Insurers are also experimenting with apps, mobile and connected devices. Telematics looks set to enter the mainstream in many markets, where the question is less how should we do it but now which method. It was interesting also to see these articles regarding AXA, repositioning it’s brand as innovative within the UK, making use of social technology and games to educate businesses on the value of insurance. Perhaps not the first insurer, but the articles are indicative of recent and continued investment in this theme from the insurance industry. The recent past – whether you call that 8 years, a decade, two decades – this short time has been an incredible period of change, insurers are already disrupting their industry and Celent contends there is no better time to review how the industry can leverage adoption of emerging technologies to creatively disrupt not only their internal perceptions and process, but the entire market.

A new and innovative way to issue life insurance? Is that possible?

A new and innovative way to issue life insurance? Is that possible?
Hartford Life just introduced Issue First, a new way to provide immediate life insurance protection. Get this . . . the policy is issued before underwriting. The upper limit on face value and age is $2 million and 66, respectively, so they are not just targeting small policies or young insurers. The Hartford estimates that on average it takes 48 days to issue a permanent policy; that’s almost two months! But with Issue First, the policy is issued in as little as five days if the answers to eight medical questions meet the eligibility requirements. The Hartford’s agents must be loving this. Five days. That’s a huge reduction in time for the prospective policyholder. For The Hartford it means fewer withdrawn applications. And, from what they have found in a historical review on non-Issue First cases that 95% of the time, a final Issue First rate would have been the same or better than originally illustrated. For the policyholder it means immediate life insurance coverage without a higher price tag. At the completion of underwriting, the policyholder can accept the final rate, which may be the same, higher or lower than the initial illustration, or exercise a free-look and receive a full return of premiums. So why is this so new and innovative? Well, first I don’t know that anything like First Issue has been done before. It’s changing the way that insurance has been issued for decades. Second, the Hartford analyzed the wealth of data they had to determine that the risk of this process was worth undertaking to speed up the policy issuance process and to grow their business. Lastly, they are changing a process that they see is unfriendly to prospective policyholders even if it means that they are disrupting the way they have always done business. Disruption. Innovation. Words that are not normally attached to insurance. Celent recently hosted a Creative Disruption Workshop in Boston where this topic was discussed. See the video: http://vimeo.com/31409934 Although innovation and disruption are not typically associated with insurance, there were several examples presented where both have happened. For example, Progressive changed the way car insurance is priced which in turn has had a lasting effect on the industry. Telematics and ‘pay as you drive’ is changing how car insurance is underwritten and priced. Forward looking ideas like replacing a call center with a Watson like system were suggested as potential future disruptions. Hartford Life’s Issue First can be considered another such example. Can you think of other examples? I’d like to hear of them. And if your example has an IT project associated with it and you think it is worthy of an award, why not nominate your insurer and the project for Celent’s 2012 Model Insurer Awards. Nominations are being accepted now at https://oliverwymangroup.wufoo.com/forms/celent-model-insurer-2012-selfnomination-form/.

Stirring The Creative Disruption Pot

Stirring The Creative Disruption Pot


One of the great things about being an analyst is that you’re expected to challenge the status quo on behalf of the companies you work with. The analyst-as-gadfly model was on display at Celent’s Creative Disruption workshop in Boston last week. Someone later told me, “You looked like you were having fun!” I surely was.

Celent’s message of “healthy discomfort” as a driver of positive change seemed to resonate with attendees, both carriers and their vendors. It came into virtually every conversation in some way. Here are a few nuggets I noted throughout the day.

  • Disruption is generally respected but only lightly pursued. Like “change” and “agility,” disruption is a term with positive connotations for most people. But when you ask companies what they are doing to make it a reality, you mostly hear the sound of crickets.
  • Agile methodologies are enabling change. And they’re not all about technology. They seem to serve as a signpost that corporate cultures are changing, giving staff a reason to rethink their traditional behaviors.
  • Vendors have an important role to play in driving change. This is well understood, by players on both sides of the vendor/carrier relationship. But it’s easy to revert to old models, where vendor and insurer interests are in opposition rather than being aligned.
  • Leadership will determine where disruption can thrive. Front line staff are thirsty for productive change. Being part of something bigger and more exciting is on most people’s wish lists, even if they don’t know it yet.  But absent some passionate vision from the top, “big D” disruption projects are doomed.

You can expect more coverage from Celent on this topic in the coming months, as we think it is vitally important. Your ability to keep operational concerns and creative, disruptive thinking in a healthy balance will be essential for you to get to the top of a competitive heap.

Creative Disruption Videos

Creative Disruption Videos
Celent’s Creative Disruption event last week was very well received. For those of you who couldn’t make it, I thought you might like to see the 3-minute videos that set the tone for several segments. (To view these over a slow Web connection, click on the HD button to toggle high definition off.) Special thanks to National Western Life’s CIO, Mike Hydanus, and Oregon Mutual’s CIO, Bryan Fowler, who shared their views on creative disruption on camera. Also thanks to Jim Kuhn, SVP from USAA, who talked about the Business Case. The Case for Creative Disruption Technology trends and consumer behaviors suggest we need to rethink our sales and servicing approaches. [vimeo clip_id=”31409934″] Speed & Agility Overused cliches? Maybe. But success stories are emerging. [vimeo clip_id=”31409842″] The Business Case Mixing art and science is the best way to get your business case right. [vimeo clip_id=”31399458″]