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″]

Creative Disruption – The Votes Are In!

Creative Disruption – The Votes Are In!

In preparation for the Creative Disruption event in Boston on November 3rd, Celent surveyed insurers to gather their views on using creative disruption to bring sustained, fundamental change to their organizations. By creative disruption, we mean implementing the initiatives that are required to fundamentally alter how insurance products are developed, implemented, and serviced.

With over 90 insurer responses, the two areas with the highest potential value for disruption are customer service experience and product design. These processes will be explored in depth at the event, as insurance IT executives present how their organizations used tools such as modern policy administration systems and agile development to deliver materially different results to their business. For more information on the event, please visit http://celentinsurance.eventbrite.com/. If you cannot attend, you can follow the event on Twitter at #creativedisruption.

Celent Model Insurer 2012 – Submissions being accepted

Celent Model Insurer 2012 – Submissions being accepted
Innovation: The term innovation derives from the Latin word innovatus, which is the noun form of innovare “to renew or change” . Innovation generally refers to the creation of better or more effective products, processes, technologies, or ideas that are accepted by markets and society. Innovation differs from invention or renovation because innovation generally signifies a substantial positive change compared to incremental changes.
Is that possible in Insurance technology? Celent thinks it is and that is why every year we recognize insurers who have effectively used new technology in areas such as policy administration, claims, distribution, or underwriting (to name a few) in an innovative and successful way. Innovation in insurance may not be as world changing as the cotton gin, the microprocessor, or the iPad, but if a technology change has a substantial and measurable change on a company’s revenues, expenses, processes or people, then it is innovation and we want to know about it.
Therefore, again this year, Celent is gathering leading real world examples of the effective usage of technology in an insurance company. These case studies are presented as “Model Insurer Components” — components of a theoretical model insurer’s IT systems and practices. These components help insurers improve performance and meet market demands. In general, they represent the way things should be done. To nominate an initiative at your company as a model insurer component, please use the following link to the submission form. Please note that vendors are welcome to assist their client insurers with their nominations. However, all nominations must include insurer contact information, and all follow-up will be done primarily with the insurer, not the vendor.
We hope to hear from you soon! Award winners will be announced at Celent’s Insurance Innovation & Insight Day in Boston in January 26, 2012.

Some considerations around innovation

Some considerations around innovation
Innovation! What does it really mean to be innovative for an insurer? Does innovation deal mainly with insurance products or does it concern also processes? Are there external elements or factors that contribute to facilitate innovation? According to me, innovation relates to both products and processes: Product innovation: In European life insurance for instance, as the market for asset protection and retirement planning grows, insurers are increasingly adopting an aggressive strategy of product innovation. They plan to maintain control over customer acquisition and distribution by managing the distribution lifecycle. While variable annuities may not be the shining star in the next few years, insurers remain under pressure from consumers and professional intermediaries to continue to innovate. Process innovation: One of the business frustrations has been that IT constrains business agility. Adding new products, new channels, making process changes or responding to new regulation must happen on a critical path determined by the technology assets and infrastructure. In this context process innovation can be an important source of competitive advantage for an insurer. In both cases, product or process innovation, IT is not necessarily a “must have”. IT is only an enabler that can help companies give birth to an innovation. But are there other factors to be considered that help innovations succeed or contribute to change the insurance competitive landscape? Past examples in other industries tend to prove that at least two parameters have a direct impact on innovations’ success or failure: Timing: to be visionary is very important but to implement a new idea or a concept too early can lead to bad results. Successful innovations are the ones that have an impact on a large mass of people and not only a handful of passionate thinkers. Insurers should carefully consider timing and analyse carefully the readiness of the market when thinking to initiate innovations. Dynamic view: some innovations are self-imposed through changes of market conditions. For instance as Web 2.0 technologies push people behaviour to change, insurance players have to understand that even in their own industry the Schumpeter “creative destruction” theory can apply. Blogs, chats, social networking are currently changing the way insurers interact with their customers and diminishing the importance of face-to-face meetings with agents especially in the general insurance sector. Celent’s mission is to keep an eye on how the insurance industry apprehends innovations, analyses and evaluates them as well as how insurers decide to implement them. Our goal is to help insurers identify initiatives that will help them gain competitive advantages in the long run and to do so it is important they understand what the term “innovation” really means and what factors can play a crucial role in making an innovation succeed or fail.

Micro-insurance — Thinking innovatively in targeting the uninsured

Micro-insurance — Thinking innovatively in targeting the uninsured
On a recent trip to South Africa, I was interested to see some innovative ideas targeted at the uninsured, currently around 90% of the population. South Africa, along with other emerging economies, face many structural challenges impeding the broad adoption of insurance. Remote areas of the country have poor road and communication infrastructure. Almost two-thirds of the population have no bank account. Accessibility to financial services is low as is the understanding of the value of such offerings. In a bid to rectify this, the government put in place targets back in 2003 for the financial services industry. The banking sector had to introduce a low cost bank account, now in place, and the insurers had to commit to massively increasing accessibility to insurance. The low cost bank account, called Mzanzi, is standard debit-card based account attracting no service fees. The insurers have accepted the challenge and plan to increase current penetration rates by 180% over the next five or so years.

In my conversations with South African insurers, it’s clear that whilst committed to these targets, tapping into the previously uninsured market remains immensely challenging. The innovation is mostly occurring in the area of products and premium collection. Tying product requirements to the needs of the uninsured is a sure-fire way of garnering interest. House, motor policies have little relevance for those who own none of these assets. However, household contents policies, funeral policies and term life are of interest.

One of the constraints for insurers has been and still is the collection of premiums. With many people not having bank accounts, credit/debit payments or direct debits are just not possible. Mobile phones are being used in one or two cases to purchase insurance. Voucher cards, paid for by cash upfront, offering term life insurance can be bought at supermarkets and other consumer outlets.

Technology can play a role in supporting this small but growing market. Low-cost policy administration and claims systems can form the heart beat of such an operation supported by a flexible product configuration tool. There is little need for broker/agent or consumer portal technology. Products in these markets such as shack insurance, life insurance for a month, or crop insurance may seem unusual but can be supported through the use of modern packaged tools. One of the more unusual product characteristics is the method of premium collection. For example, premium paid upfront, or monthly, or paid via a mobile phone account (or other third party collector). This flexibility needs to be supported a modern product configuration tool.

In South Africa, as in some other emerging countries, tapping the previously uninsured is a government enforced social objective and this has focused insurer’s attention on this challenging area. Micro-insurance is unchartered territory and as such it’s not possible for insurers to look to established markets for best practices. Successful insurers in these markets will continue to innovate in areas of product design and premium collection and this analyst will be keeping an eye on how this market evolves.