CERN, where Sir Tim Berners-Lee invented the World Wide Web (sorry, Al Gore), has re-posted the first ever webpage on its 20th anniversary. http://info.cern.ch/hypertext/WWW/TheProject.html
With the 10th ACORD/LOMA Forum
coming up and my 11th consecutive appearance on the Analyst Panel (including the last independent ACORD conference), it’s interesting to reflect on the fact that the web was already 10 years old in 2003, and most insurers were still debating whether it would really have an impact on their businesses.
Accenture published a new survey this week about consumer preference on buying home and auto insurance. The headline of the press release was “U.S. Auto and Home Insurance Customers Turn to Digital Sources to Obtain Information and Quotes, but Prefer Using Agents to Buy Products.”
The first two bullets in the summary of findings were:
- Nearly three-quarters (76 percent) of consumers express a preference for setting up and paying for their auto and home insurance policies in person with an agent, and more than half (58 percent) indicate a preference for doing so via the Web.
- When asked where they prefer to obtain quotes, 43 percent of respondents choose websites, while 26 percent choose over the phone and 26 percent in person. A much smaller percentage (four percent) chooses mobile applications.
The first question seems to have allowed for multiple preferences. Despite the headline, this doesn’t look to me like a preference for agents. This looks like an openness to using agents, but a growing preference for online channels even to buy — more than 50% of consumers.
At The Life Insurance Conference this week in New Orleans, Rob McIsaac, Tom Benton and I had the opportunity to present on the topic of e-processing. The event, which is co-managed by LOMA, LIMRA, the Society of Actuaries, and the ACLI, had the largest number of carrier attendees we’ve seen in years. The topic proved popular with nearly a full house, which I found ironic since we’ve been discussing this topic for the last decade.
Our presentation focused on the “app through issuance” process, and approached the topic from three viewpoints—the high-level viewpoint of the analyst, a more narrowly focused view of bringing the theory down to reality, and the carrier’s viewpoint based on Tom Benton’s recent experience implementing a modern solution that included new business, underwriting, and issuance (among other areas). Topics included those three areas and how they can be improved through e-processing. We dived down into the implementation process and how to improve success rates through better implementation approaches and program structures, as well as developing models for execution and governance.
Additionally, we took a look at the common challenges carriers face when undertaking e-processing projects, as well as the potential pitfalls. We looked at the benefits that Tom expected from his implementation, as well as the benefits actually achieved. Overall, our joint conclusion was that these projects—though difficult—have a strong ROI and are a key aspect to staying competitive among increasingly tech savvy agents, brokers, and new distribution channels.
I’ve seen a number of blog posts and articles over the past year warning agents not to get too excited about social media, since insurance prospects still favor other sources of information over social media…like personal friends and family.
As if social media wasn’t one of the most important ways that personal friends and family communicate.
This reminded me of a general principle for insurance and financial services technology: Technology is not a “what,” it’s a “how.”
No company needs a web strategy, a mobile strategy, a cloud strategy, or a social media strategy. What they all need is an awareness of the roles that these technologies play (or will play) in how their customers want to do business and how their companies can operate most efficiently.
For example, our Social Media and Independent Distribution report this year showed that 25% of agents/brokers under the age of 40 use social media to communicate with their underwriters. But this doesn’t mean insurers need a social media strategy, it means they need to incorporate an understanding of social media into their distribution strategies.
Summaries of all reports are available for free downloads on our site. Some of our recent reports include…
Business and Technology Trends
- Business and Technology Trends: Commercial Lines. Commercial market pricing is showing a decided recovery, leading commercial lines carriers to invest in core systems replacement, agent portal functionality, and business intelligence and predictive analytics.
- Business and Technology Trends: Workers’ Compensation. A distressingly high combined ratio in written premiums for WC carriers is driving a strong interest in core claims systems replacement, business intelligence, PAS replacements, and document management upgrades.
(see full list of Business and Technology Trends Reports at http://www.novarica.com/sectorreports/)
CIO Surveys, Best Practices, and Case Studies
- US Insurer IT Budgets and Projects for 2013. Modest budget increases, core PAS replacement projects, business intelligence, agent portal enhancements, and mobile and social media pilots are all on the 2013 priority list for insurer CIOs.
- Best Practices Case Study Compendium 2012. These case studies, the fruit of the first annual Novarica Research Council Impact Awards, provide a useful set of examples of impactful IT projects. They offer insurer business and IT executives detailed examples across a broad range of diverse industry initiatives.
Novarica Market Navigators
- Property/Casualty Rating Solutions. Profiled vendors include: Accenture, AQS, Camilion, CGI, Decision Research Corporation, Instec, OneShield, Oracle, SISTRAN, StoneRiver, and ValueMomentum.
- Insurance Distribution Management Solutions. Profiled vendors include: Callidus, CSC, MajescoMastek, Navagate, Oracle, Outline Systems, SAP, SunGard, Trilogy Software, Varicent, Vertafore, and VUE.
Executive Briefs and Checklists
- Minimizing Project Risk Checklist. Insurers’ core missions are tied to managing risk in a cost effective and predictable manner. This brief illuminates common factors that contribute to IT project failure and offers a checklist to reduce project risk.
- Insurance IT Transformation Checklist. In order to survive and thrive in the future, CIOs need to facilitate and support business transformation efforts. This report provides a roadmap of things to consider for a transformational program.
The Economist has a new article on the transformational role of 3rd-party data in insurance, Insurance data: Very personal finance. It’s a good article and worth a look just to see how this issue is being presented in the general business press.
For more on this, see our new reports on:
and our blog posts on:
Mary Meeker of KPCB put out her annual “State of the Internet” presentation yesterday. If you haven’t already checked it out, it’s online here.
The most compelling section for me starts on slide 29, “Re-Imagination of Nearly Everything – Powered by New Devices + Connectivity + UI + Beauty – Where we are now…” Most of the slides in this section focus on media & content businesses, personal content management (photos, notes, scrapbooking), and similar areas that have been transformed by the ubiquity of the internet and mobile connectivity, but there are also slides on business collaboration, payments, and other areas.
For example, slide 68 is the re-imagining of personal borrowing and lending, comparing the bureaucratic bank lending process to the streamlined and flexible technology-enabled peer-to-peer lending process.
While Ms. Meeker doesn’t offer a slide on insurance, many of the slides in the Re-Imagining section spoke to coming changes in the insurance market, and resonated (for me) with my recent post on simplifying the customer experience and preparing to manage new levels of complexity in data and operations.
Slide 85 is titled “Magnitude of Upcoming Change Will be Stunning – We are Still in Spring Training.” While the focus is on info tech and internet businesses, many of the points Meeker raises here will have a game-changing impact for insurers, including
- “Fearless and Connected Consumers”
- “Unprecedented combo of Focus on Technology AND Design,”
- “Beautiful/Relevant/Personalized Content for Consumers”
Insurers need to be actively planning for how they will adapt to this rapidly changing world.
Good discussion on today’s webinar about mutli-channel communication with Generali. One of the biggest challenges for insurers is that unfortunately, new channels don’t necessarily displace old ones across the board. As this chart from our multi-channel survey report shows, agents gravitate towards the most convenient channel for each task.
My key takeaways for webinar attendees today:
- The nature of the insured/distributor/company relationship has changed due to the increased flow of information
- Distributors and customers expect rich information, speed and convenience, choice of channels with consistent experience
- There are no more acceptable excuses for delays, inaccurate, or inaccessible information.
- Insurance companies are investing to keep up with these increased expectations.
There was an interesting article in the New York Times on Friday about younger shoppers in department stores preferring to interact with iPad apps rather than salespeople to get additional information and guide their purchasing.
While this may be horrifying to traditionalists like the MIT professor in the article who claims “that shoppers lost something intrinsic to the human experience when they avoided salespeople,” the money quote is this one:
“There’s a tendency to believe that if you talk to somebody, they’re going to waste your time or sell you something you don’t need,” said Ricardo Quintero, global general manager of market development for Clinique, which uses touch screens at its counters. “It’s taking the pressure off.”
In the age of information scarcity, commissioned sales people were a valued information source for customers — because they were the only accessible information source. Now, in the age of information super-abundance, there are alternative ways for customers to get information, ways that are more responsive, and have more information available than the best informed salesperson. It turns out many customers prefer not to interact with a channel that has incentives to sell them something they may not really want or need.
The question for insurers is, how are they going to adapt their sales experience to attract these buyers?
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.