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More on iPad as Insurance Business Platform

Tuesday, July 6th, 2010

I’ve expanded on some of my original thoughts in this post on the iPad as Insurance Business Platform in this column in Insurance Networking News.

Unlike a laptop or a phone, an iPad is a good platform for entering short pieces of data or selecting from menus in an interactive form from the field. The screen real estate and text-input option is superior to both a smartphone and a stylus-based tablet, and it doesn’t require resting on a surface like a laptop. Once the camera-enabled versions emerge, both still and video image capture will enable field personnel to incorporate rich data into these forms, including audio signatures from customers or claimants validating information.

Posted in IT Strategy, Innovation, Insurance, Web 2.0, eBusiness | No Comments »

Ask the Expert Session from IASA: Emerging Tech, Mobile

Tuesday, June 29th, 2010

Catch my “Ask the Expert” segment from IASA online here.

Posted in IT Strategy, Innovation, Insurance | No Comments »

iPad as Insurance Business Platform?

Tuesday, June 1st, 2010

After a week at ACORD/LOMA, I’m starting to believe that the iPad is a real business platform (and not just the most popular booth raffle giveaway of the year!) Having one on hand to display slides in intimate meetings and review documents was excellent, but the real surprise was the number of CIOs carrying them and thinking about combining them with virtual desktops to enable field personnel and reduce hardware expenses (especially relative to laptop costs).

The iPad may be the best example of the “shareable small screen” – it’s very easy to pass back and forth in a personal meeting in a way that a laptop is not. This could well be a step towards solving the “kitchen table” problem that has bedeviled insurer’s field technology roll-outs for the last 20 years. Stay tuned…

(PS: I was pretty sure I wasn’t making up the category “shareable small screen”, but I googled it on Friday May 28 and got no examples of prior use. So maybe I am…)

Posted in Distribution, Innovation, Insurance, eBusiness | 1 Comment »

Green, IT, and Insurance

Wednesday, April 28th, 2010

I had an interesting conversation with a reporter recently about insurers “going green.” As I see it based on conversations with our clients and Research Council members, there are two kinds of green initiatives: one is primarily PR related (playing to green-conscious consumers), and the other is focused on operational savings through reduced energy or paper usage.

In a perfect world (e-statements, for example), these go together. But other than the major consumer brands, most insurers are focused on the latter. Things like data center efficiency, reduced power consumption by servers, “smart” buildings designed to use less heating and cooling energy, restrictive travel policies, and printing restrictions happen to be green, but mostly they save green.

Posted in Innovation, Insurance | No Comments »

E-business is not about “work” — it’s about results

Thursday, April 15th, 2010

At The Life Conference this week, there was an overview presentation about operations and technology trends that contrasted the “old world,” in which the carrier did all the data entry work for customers and agents, to the “new world,” in which this work is pushed out to the customers and agents. The presenter seemed to marvel at this, and shrug that hey, if that was what people wanted, that was OK, but it seemed strange to him.

Here’s the thing: e-commerce is not about the “work” — it’s about the results.

If agents or customers can get a quote or policy issued ASAP, they don’t mind doing data entry to get those results. What they don’t like is doing data entry and not getting anything for their efforts.

Similarly, customers like online self-service because they are in control. They see the information they want, when they want. They can interact with it, and they can do it all without using a call center rep. Unless call center reps are providing advice, they basically serve as an inefficient human interface layer to the company’s systems, translating voice to synaptic signals, to typing, to visual input, back to synaptic signals, and back to voice again.

Companies launching or improving their e-business systems should think less about who’s doing how much work and more about who’s getting how much value in terms of convenience, improved response time, and general efficiency.

PS, if it’s not the user getting the value, it’s not going to work.

Posted in Innovation, Insurance, Web 2.0, Webinars, eBusiness | 1 Comment »

Social Media and Insurers

Thursday, March 11th, 2010

Social Media usage is growing dramatically in carriers. It’s no longer a question of “is it relevant.” The challenge carriers are addressing is how to most effectively embed social media techniques into their marketing strategies. They are looking at how to use this new willingness of consumers to communicate and interact as a way of furthering their business strategies.

Carriers are using Social Media (Blogging, Tweeting, Facebook, Forums, User Generated Content) for a variety of reasons:

creating brand awareness
managing the carrier reputation (and intervention in customer service problems)
building customer loyalty
education for loss prevention purposes, and
basic SEO – piggybacking on the high ranks of channels such as YouTube, Facebook or Twitter to drive traffic to their site.

I follow over 120 carriers on Twitter, over 140 agents on Twitter, and a number of companies on Facebook. Some that are doing particularly interesting things? Allstate for sure! Geico, Liberty Mutual with their Project Responsibility, Nationwide (although their efforts are mostly internal with their You2.0 initiative), USAA (55K followers on Facebook), Progressives blog strategy, Lexington’s podcasts, or Utica’s focus on the independent agent are all good examples! And there are plenty more!

If you’re thinking about dipping your toe in the social media pond, I recommend

Secure your Twitter, Facebook, and LinkedIn domains early.
Evaluate carefully the potential role of social media in the context of an overall marketing strategy. That is to say, figure out WHAT you want to do before you figure out HOW to do it.
Identify compliance issues that impact your organization and create processes and policies to assure efforts observe the regulatory requirements.
Create governance processes early that include guidance for employees on their personal use of social media with respect to referencing your company.
Identify the metrics you’ll use to measure success – and how you’ll obtain those metrics.

I’ve just published a report that describes the different types of social media being used in the insurance industry today, outlines key governance and compliance issues to consider, and suggests some key metrics to measure the success of different initiatives. It also includes real-world examples of successful initiatives from US insurers across different lines of business.

I would love to hear from you on your own social media efforts – kcarnahan@novarica.com

Posted in Innovation, Insurance, Web 2.0 | 1 Comment »

“What we have here is a failure to communicate”

Wednesday, February 3rd, 2010

From my latest column in Insurance Networking News:

More than 40 years ago, Paul Newman’s prison guard in the film, “Cool Hand Luke,” made famous the phrase, “What we have here is a failure to communicate.” Yet, today, a quick Google search of the phrase will pull up more than 400,000 hits.

With the quantum leaps in communication technology over the last 10 years, the failure to communicate effectively has become a mortal sin, whether you’re talking about communication within an organization or between an organization and its partners or customers.

…

But enabling this kind of communication takes changes in practices and behaviors as well as technology. In addition to its impact on customer and agent communication, these changed expectations have a significant potential impact on the way IT leaders will manage their own organizations and their relationships with their business counterparts, in four key areas: information accessibility, skills inventory, activity transparency and customer communication with business counterparts.

Read the complete article here.

Posted in Article Links, Innovation, Insurance, Web 2.0 | 1 Comment »

Tectonic changes coming to 401(k) industry

Wednesday, January 27th, 2010

Changes will impact plan participants, sponsors, advisors and product manufacturers, resulting in an industry-wide reshuffling.

Register for Webinar on Feb 17 at 2 pm ET.

January 28, 2010 (New York) – According to a new report from research and advisory firm Novarica (www.novarica.com) , a new development in the 401(k) space may put trillions of dollars into play for advisors and plan manufacturers, while also exposing legal and fiduciary liability for plan sponsors. Due to the new BrightScope.com web site and database, the lack of transparency that has always pervaded the 401(k) industry is rapidly becoming a relic of the past.

Americans are relying more and more on their 401(k) plans for funding their future retirements. Bad or expensive plans are costing American workers too much in terms of delayed retirements and lower plan balances. BrightScope has developed a database and rating engine to score and benchmark plans, and provides detailed data that explicitly tells employees, sponsors, advisors and plan manufacturers just where their current plans fall short.

According to the report, the roll out of BrightScope will result in:
Sponsors moving to purchase more cost-effective and attractive plans to meet their fiduciary duty to plan participants.
Participants gaining better investment and retirement outcomes from their 401(k) plans as they pressure sponsors to provide benefits and utilize lower-cost plans similar to others among their peer group firms.
Advisors will be able to sell more-competitively based on the transparency of plan data showing the current costs of both the overall plan and the underlying investment choices.
Manufacturers will be forced to develop lower-cost plans to reflect a more transparent and competitive marketplace. Due to the BrightScope solution, plan and investment option costs are projected to rapidly decline in the 401(k) industry.

Novarica believes that the BrightScope ratings will eventually have a similar impact to the Morningstar ratings on mutual funds, identifying future winners and losers in the 401(k) industry.

“America is looking to defined contribution plans, such as 401(k)s, to replace the defined benefit pension plans, and to take the stress off Social Security,” states Robert J. Ellis, Principal and head of Wealth Management at Novarica, and lead author of the report. “The problem was that, for most of the industry participants, the lack of transparency meant that plans were more expensive than they needed to be. Especially bloated were the fees charged on the underlying investments. BrightScope.com, combined with new Federal regulations, will change all that for the betterment of American workers’ retirement outlooks, but current providers will need to adjust to a radically altered marketplace.”
The 14-page report is available from Novarica at http://www.novarica.com/report_brightscope_401k.shtml . Mr. Ellis will also be hosting a webinar discussing the report on February 17 at 2 PM Eastern. Interested attendees may register online at https://www1.gotomeeting.com/register/760027265 .

Posted in Economy, Innovation, Press releases, Wealth Management, Webinars | No Comments »

Notes from the CIO Insurance Summit

Monday, December 7th, 2009

Greetings from the CIO Insurance Summit in Scottsdale!

Last night’s reception was very interesting. It was good to see so many old and new friends, clients, and Research Council members. We’ve had many great conversations already. Insurers are definitely not sitting still when it comes to their technology strategies. CIOs here are launching new core systems, creating totally new capabilities to support changing business models, and driving real change in their organizations.

In my role as MC, I presented a short version of our work on Paradigm Shifts in IT and Insurance to help set some context for the discussions and workshops today and tomorrow. The presentation included a preview of results from our latest quarterly poll of our research council, which had 94 insurer CIO and senior executive participants. The full report is coming later this week. (August edition is online here)

The evening closed with a great after-dinner presentation by John Golden, a former CIO at CNA and founder of LiveActive on learning to climb mountains after receiving a knee transplant. I’ve seen many “inspirational speakers” at various insurance technology conferences, but rarely one with direct experience as an insurance CIO. It definitely made it feel more real for this group!

Posted in IT Strategy, Innovation, Insurance | No Comments »

Target payout funds – a substitute for variable annuities?

Friday, November 20th, 2009

Mutual fund product manufacturers like Vanguard, Schwab, and Fidelity launched target date payout funds to great fanfare in 2008. These funds, designed for retirement income and as a lower-cost replacement for variable annuities, have had significant problems. Just like the target retirement date or life-cycle funds that failed so abysmally in the downturn, they represent a poor substitute for variable annuities with guaranteed withdrawals.

Problems with the target date payout funds include:

No guarantees – only insurance companies can guarantee return of investment and withdrawal amounts. The dropping NAV of a target payout fund impacts the ability to return all the investment. Furthermore, much of the return is actually return of investment, reducing the ability to earn sufficient amounts to make future payouts.

Funds can reduce future payout percentages, unlike annuities where the withdrawal benefits are locked in as a percentage of the original investment or higher amount.

Even the mutual fund companies are now backing off their claims of a low-cost variable annuity replacement. Stated one Vanguard spokesman, “No one should have any illusions that we are guaranteeing income. People need to understand the role of these products — they’re a disciplined mechanism to draw down from mutual fund-based investments.” Mutual fund investments that, at the time of withdrawal, may be significantly below the original amount invested.

For mass market and mass affluent investors, there are better options. For scheduled payouts, investors gain equivalent benefits through bond or CD ladders. For guarantees that enable such things as paying the mortgage or eating, the variable annuity, especially those with lower fees, remains the better choice. Insurance and brokerage firms need to invest marketing dollars to counteract the slick marketing of the payout fund manufacturers and contrast the lack of history and potential retirement risk with the time-tested strategies in ladders and annuities. These firms should also prepare new wholesale marketing pieces to assist advisors in guiding their clients in the better direction.

Posted in Distribution, Innovation, Insurance, Wealth Management | No Comments »

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