Data Initiation Helps Define Digitization in Insurance

Data Initiation Helps Define Digitization in Insurance
My colleague Karen Monks and I have published a report on digital transformation in insurance recently. The main objective of this report was to identify differences in terms of digital transformation in insurance between different continents. However we have quickly noticed that the term “digitization” can generate confusion in insurance professionals’ mind. Celent defines digital transformation as the strategy of transferring as many manual tasks as possible into digital activities. This strategy can be achieved through different ways, including:
  • Process automation.
  • Selling products online.
  • Leveraging mobile devices and mobile technologies in general.
  • Dematerialization of documents and communication materials.
In addition, we believe that data gathering through all sorts of tools, and therefore data management and analytics, play an important role in digital transformation efforts. This been said I personally think there is a priority insurers should define when embarking in digital transformation initiatives. First of all I recommend them to set up a basic constraint as the corner stone of their digitization initiatives portfolio prioritization: data must be entered into their information system only once (not two, three times but only once). With this in mind they should reexamine all their core processes and find out where data leading to the same information is entered more than once. When this analysis is done they can start defining initiatives that will reduce these repetitive tasks. You’ll be surprised to see how this simple principle can generate drastic improvements to processes and drive higher automation, efficiency, etc. When doing this, I also advise insurers to question whether the unique initial data entry into their information system can be done differently. With this advice I am trying to get them think of what I call the second wave of digitization. Indeed, to me digital transformation initiatives nowadays assume that human action is the initial generator of new data within an information system. However with the Internet of Things concept that my colleague Donald Light explained in two reports recently (here and here), insurers can also automate the initial data entry by leveraging connected objects. No need for human action any longer then! To me there is a digitization sequencing insurers need to respect between these two phases. Indeed I think it is easier to generate value from the Internet of Things concept if an insurer has already well thought how to minimize repetitive tasks consisting in entering new data within their information system. Therefore I do think that insurers who have already done a great job at minimizing these tasks initiated by human action and who have an appetite to leverage the Internet of Things will be the leading insurers going forward.  

Watch out. Apple with Mayo is heading your way

Watch out. Apple with Mayo is heading your way
Hmmm . . . That combination is pretty tasty in a Waldorf salad, but it’s a bit hard to think of other recipes that do appeal. The Apple Watch is very attractive—one analyst hoped it would be stylish enough to wear to the Oscars. (I’ll let everyone know what I decide to do next year). But from a healthcare and health insurance Internet of Things perspective, questions still remain. Early information is that the Apple Watch’s biomonitoring functions are pretty modest: pulse and movement (and distance?). Did anyone say fitness band? Somehow “killer app” doesn’t sound quite right in this context, but that is the real question in terms of making people with serious medical conditions (or serious medical vulnerabilities) want to buy the Apple Watch. In roughly ascending order of technical and ergonomic challenges—temperature, blood pressure, glucose levels, blood chemistry of all different types, urine analysis, and (why not?) genome-driven personalized medicine—are off in the future, in some cases well beyond the horizon for a wearable (time telling, messaging, location-revealing) device. Meanwhile there is always next year’s Oscars. btw: about the Mayo:    

You can take a horse to water but a pencil must be led: The challenge of “What does Digital really mean for the industry”?

You can take a horse to water but a pencil must be led:  The challenge of “What does Digital really mean for the industry”?
Recently, I facilitated a roundtable discussion on “What digital really means for the industry”. Over the last couple of years, we’ve run many similar roundtables on the topic. Each time we run one, it never ceases to amaze me around the lack of a common definition for what digital really means, not just across the industry between firms but also between individuals within the same firms. In fact, I’m sure that there is a PhD paper waiting to be written on the topic. One of my favorite set of questions at these events is to first ask the delegates how they define “digital” and then to follow-up by asking if this definition is shared across their organization. Generally, when you ask the first question, you get very articulate and clearly well-thought through strategic response that makes 100% rational sense. Then, when you ask the second question, you often get a look of despair or, at best, frustration with their colleagues who “just don’t get it” or are “pulling in different directions”. Well, I might be exaggerating a little here but hopefully you get the idea. From the experience of asking this question repeatedly over the last couple of years, it seems to me that there are two challenges around “what digital really means for the industry”. The first challenge relates to opportunities presented by technology, which range from the mundane (such as good old fashioned ‘Straight Though Processing’ and even the application of newer more exciting mobile technologies in customer engagement) through to the extreme (such as new device enabled propositions and business models fueled by the Internet of Things). This is the “what?” challenge, the one that we hear most about and the one that we can articulate the best. It’s tangible. You can see it. You can experience it. You can recognize what others are doing that you are not. There is no mystery around this challenge and you can build a program of change to address it. The second challenge is a more subtle one. It is “as old as them thar hills” and can be aptly summed up by the saying “You can take a horse to water but you can’t make it drink”. It’s also one that this industry, as well as others to be fair, have been struggling with every time there is a step-change in pace and direction. If you know where you need to head to, bringing the rest of the organization along with you is the next big challenge, especially when you’re a large and complex one. This is the challenge of “How?”. When discussing the topic with one insurer, he shared with me his view that “digital” is merely a term used to get his team to think differently about the way things are done. To stop his team thinking about the way they do things today and start thinking about what could be instead. For me, this was a refreshingly honest perspective. It was not about the devices, the technology or the Apps, it was about re-envisioning his business. To achieve this takes great leadership and mustering support around a shared vision. This brings me back to the title of this blog. Stan Laurel couldn’t have said it better (or maybe worse?) in “Way out West” … “You can lead a horse to water, but a pencil must be led”. Maybe now is the time to move the debate on to talk more about the “pencils” and the vital role that leadership has to play in addressing successful Digital Transformation? I’d be interested to hear your views about where the challenges around digital really lie for you.

Celent Predictions for 2014

Celent Predictions for 2014
It’s clear that my colleagues and I see 2014 as something of a tipping point, a water shed for established and new technologies  to take hold in the insurance industry. I’ll try to summarise them succinctly here. Expect to see reports on these topics in the near future. Celent’s 2014 prediction focus on:
  • The increasing importance and evolution of digital
  • The rise of the robots, the sensor swarm and the Internet of Things
  • An eye to the basics
The first topic area is labelled digital but encompasses novel use of technology, user interfaces, evolving interaction, social interaction (enabled by technology) and ye olde customer centricity. Celent predicts vendors would market core systems as customer centric again, but this time meaning digital customer centricity. Celent expects to see core system user interfaces to acquire more social features along with a deeper investment in user interfaces leveraging voice, gesture, expression and eye movements. A specific digital UI example was the wide spread adjustment of auto damage claims (almost) entirely done through photos. In addition, gamification use for both policyholders and brokers will be adopted or increase in use for those early adopters. Celent further predicts greater investment in digital and that comprehensive digitisation projects would start to drive most of the attention and budgets of IT. The second topic I’ve called Robots and Sensors, while digital there is a significant amount of attention and specificity. The merger or evolution of the Internet with the Internet of Things accelerates with devices contributing ever more data. Celent predicts this rise of the Internet of Things or the sensor swarm, will push usage based insurance policies to other lines of business, not just telematics based auto policies that UBI is currently synonymous with. Celent further predicts that the quantified self movement and humans with sensors will in 2014 yield the first potentially disruptive business model for health insurance using this data. As an aside the increasing use of automation, robotics and AI will see broader adoption in the insurance industry. For those reading my tweets, Celent predicts 2014 will see drones used for commercial purposes. I hope we won’t have the need, but wonder if we’ll see drones rather helicopters capturing information about crisis stricken regions in 2014. The final topic I’ve called the basics. Celent predicts insurers will continue to focus heavily on improving performance of the core business – a good counterbalance to the hype around digital and a good pointer to where to focus digitisation efforts. At Celent we have noted a pragmatic interest in the cloud from insurers and we predict increasing complexity in hybrid cloud models, to the benefit of the industry. A little tongue in cheek but finally, Celent suggests that industry will finally find a business case for insurers adopting big data outside of UBI. Avid readers of the blog will be happy to see we haven’t predicted an apocalypse for 2014.   A special thanks to Jamie Macgregor, Juan Mazzini, Donald Light and Jamie Bisker for their contributions.