Lessons from Peter Drucker

Paul Ptashnick

As I was reading our latest report: Benchmarking the “New Normal” 50 Advanced Capabilities for Property & Casualty insurers, it reminded me of a few famous quotes from management consultant, author and educator Peter Drucker. Below I have highlighted a few of his quotes and how they relate to the insurance industry.

“The greatest danger in times of turbulence is not the turbulence; it is to act with yesterday’s logic.”

As technology evolves it’s going to have a revolutionary impact on the insurance industry over the next few years. Some of these areas include the “Internet of Things,” Social Media, Big Data, Cloud, Mobile, Security and Digital. With the rapid changes in technology-enabled capabilities, it’s imperative for organizations to have access to the latest research and subject matter experts to stay on top of the latest trends.

“The best way to predict your future is to create it”.

We’re seeing larger insurers creating their own future by widening their lead in advanced capabilities in analytics, data, digital channels, modern applications and innovative business practices. In addition, some midsize insurers are also creating their own future by deploying more advanced capabilities than their peers.

“What gets measured gets improved”

As saavy insurers start deploying new capabilities in underwriting, product, distribution, analytics, etc., it’s vital for them to be able to track their own progress. Novarica is helping insurers to “measure and improve” their own initiatives with our new benchmarking tool.

“The purpose of business is to create and keep a customer.”

Technology is playing a vital role for Property & Casualty insurers in creating and keeping customers. Below are a few advanced capabilities being deployed by insurers in 2015 to help with these efforts.

  • Customer: Mobile app to view customer relationship details, balances, key documents, etc.
  • Distribution: Mobile app/mobile optimized web for producers to provide access to customer, book of business, or sales materials
  • Product: Analytics-driven product design
  • Product: Products designed to optimize buying/selling experience through one or more of the following: (a) use of pre-fill data, (b) elimination of unnecessary questions, (c) streamlined underwriting process matched to control of risk/coverage levels
  • Distribution: E-Signature
  • Underwriting: Predictive scoring based on models leveraging internal and third-party data
  • Marketing: CRM-driven campaign management that shares information across distribution, underwriting and service channels
  • Billing: Electronic bill presentment and payment
  • Analytics: Self-Service analytics based on verified and accessible enterprise data
  • Analytics: Use of Big Data tools to mine enterprise data effectively (Hadoop, NoSQL, etc.)
  • Claims: Mobile FNOL with video/GPS data capture and pre-fill

“If you want something new, you have to stop doing something old”

The capabilities listed in our Benchmarking the “New Normal” 50 Advanced Capabilities for P&C Insurers are widely available to insurers and are deployed more or less widely by them today. These advanced capabilities are being driven by a combination of five elements: analytics, data, digital channels, modern applications and innovate business practices. Successful organizations in the future will re-imagine and re-conceptualize their product, service and operation strategies in light of technological changes.

As always I welcome your feedback. Send me a message at email or to learn more about Novarica’s Benchmarking the “New Normal” 50 Advanced Capabilities for P&C insurers, download a preview

Related Reports

Leading Capabilities In Claims Drives Loss Ratio Improvements

Karlyn Carnahan

The claims process is not standardized across the industry. A wide variety of processes and new technologies are being used in the claims area, such as predictive analytics, automated straight-through processing of simplex claims, or automated reserving. Whether or not a carrier uses these techniques varies by size of carrier, by industry sector, and by the strategy, culture, and technical capability of the carrier. And there is always the question of whether these techniques actually impact the financial results and outcomes of the claims process.

I’ve just published a new report that introduces the Novarica Claims Capability Maturity Model (NCCMM). I asked 92 property/casualty insurers complete a self-diagnosis using the NCCMM. The report details what property/casualty insurers are really doing in claims today, and what effect it is having on loss ratio.

In general, personal lines companies are more likely to use sophisticated techniques to manage the claims process, with Workers Compensation carriers a close follower. Personal lines carrier results are also highly correlated with improved loss ratios – likely due to the high level of homogeneity across claims. Commercial lines and specialty carriers lag behind the leaders in terms of the technical capabilities they provide.

Correlating capability levels to loss ratio is an inexact science. Loss ratios are affected by underwriting decisions and cat losses as well as claims capabilities. But it is clear is that regardless of the sector, size of carrier, or age of claims admin system, leading capabilities in areas such as workflow, document creation, utilization of software to support investigations, and multiple channels for FNOL all are associated with lower loss ratios – and significantly so for some sectors.

Read a free preview of the report at www.novarica.com/novarica-claims-capability-maturity-model-benchmark-finds-wide-variations-in-claims-processes/

New Report Profiles 34 P&C Claims Solutions Vendors

Karlyn Carnahan

Our latest report in the Novarica Market Navigator series examines Property/Casualty Claims Solutions, which play a critical role in a carrier’s success. Accordingly, we found that 41% of large carriers we surveyed and 23% of midsize carriers rank upgrades to their claims systems among their top three projects for 2012.

This comes as no surprise. For many carriers, claims solutions were installed twenty years ago or more, making them hard to maintain and rendering the claims handling process a labor-intensive one. Whereas carriers had a limited number of choices for modern systems a few years ago, there is now a broad range of claims solutions available. These solutions include features that support automated processing and management of claims functions, and provide integrated workflow management and task or process management.

P/C carriers see claims as an area to invest in to drive growth and improve operational efficiency, and with a surge in the number of feature-rich solutions, carriers are acting to modernize. Indeed, we estimate in our report that P/C carriers completed between 50-60 claims systems new sales last year, and that 65-75 will be selected in 2012.

Like Novarica’s other Market Navigator reports, this one includes a survey of the current solution provider marketplace and profiles 34 vendor solutions. A free preview of the survey is available online.

Growth of IT-Enabled Capabilities and Impact on Claims

Matthew Josefowicz

Just wanted to share a slide from this week’s webinar on claims and customer experience. While modern and flexible core claims systems are at the root of improving claims experience and financial results, insurers are also benefiting from other IT-enabled capabilities when it comes to claims.

On the webinar, I presented a version of this chart from our report on the Growth of IT-Enabled Capabilities, with call-outs highlighting the impact of each of these areas on claims and customer claims experience (click the image to enlarge).

While claims systems are the critical element of improving the claims process, other data and communications investments are critical assets as well.

 

2011 Claims Market Navigator posted – over 30 solutions included

Karlyn Carnahan

Claims technology continues to play a crucial role in a carrier’s ability to differentiate, control costs, and deliver a consistent level of high service. Carriers continue to replace claims systems at a heavy pace. In fact, over 30% of carriers surveyed by Novarica say that claims is one of the top three projects they are focusing on for 2011. With over 30 solutions out there, making a choice of which software to consider can be a daunting task. As a first step, take a look at the market navigator I just published. It provides an over view of key features typically found in claims admin systems – and highlights those that are more unusual. You will also find a profile on each of over 30 stand-alone claims solutions. If you’re considering replacing your claims system, this is a good place to start doing your research.

Mobile Claims: Volumes Growing, Capabilities Widespread by 2013

Matthew Josefowicz

While mobile still accounts for a small subset of communications with policyholders, Travelers recently reported in INN that the number of mobile claims have tripled between 2010 and 2011.

In reviewing claims data comparing the first four months of 2010 versus the same time period in 2011, the number of claims filed via mobile devices more than tripled. As part of the claim study, Travelers found that 70% of claims filed through mobile devices related to personal auto insurance, 28% were personal insurance property claims and the remaining two percent were business insurance property claims (.5%) and business insurance auto claims (1.5%)

Insurance Networking News

Our recent report, Paper, Phone, Email, Web, Mobile, finds that close to 10% of P&C insurers will have FNOL mobile capabilities within 6 months, and more than 20% will have them within 24 months.

 

P/C Claims Systems

With the insurance industry facing the slowest growth rate since the 1930’s, P&C carriers are looking for ways to improve operational effectiveness and to drive growth, and claims is one of the key areas they’re investing in. In fact, over 30% of carriers in our latest surveys  say that claims is one of the top three projects they’re focusing on for 2010. And while we estimate that 30-40 new claims systems were purchased by US insurers in the last 12 months, P&C insurers now have more than 20 active solutions to choose from.

My latest report, Novarica Market Navigator: US P/C Claims Systems 2010 (Q2), published today, is designed to help insurers rapidly understand their options and prioritize their evaluations. The report is summarized online at http://www.novarica.com/report_pcclaims2010_nmn/

The quality of a carrier’s claims service heavily impacts the customers’ view of the carrier because other than the bill, claims are typically the only contact a customer has with a carrier. And a bad claim experience is one of the top reasons for non-renewal. In today’s competitive environment, where retention is a critical imperative for carriers, claims handling is a major source of competitive advantage for property-casualty companies. Claims administration systems are being replaced at an increasing pace in the insurance industry. While many carriers have already upgraded and others are in the middle of a claim replacement project, a majority of carriers are in the planning phase for a core claims system replacement.

Vendor solutions profiled in the report include: Accenture, Aon eSolutions, BlueWave Technology, Brightwork, CSC Advanced Claims, CSC Exceed Claims, DAVID Corporation, Decision Research Corporation, Exigen, FINEOS, Guidewire, Innovation Group, ISCS, LexisNexis, MajescoMastek, Oracle, Paradox Technology Solutions, P&C Insurance, Ravello Solutions, SAP, StoneRiver Claims Workstation, StoneRiver PowerSuite, Tropics Software Technologies.