Straight Through Chicago

Last week’s LIMRA/ LOMA Retirement Conference in Chicago provided an interesting overview and update for what is happening in the industry today. Jim McCool from Charles Schwab noted the importance of having carriers move to establish trust with consumers, and the need to de-clutter and simplify products and business models. He highlighted the example of Apple as a company that has taken a potentially complex space and made it elegantly simple with a terrific user experience that inspires trust and confidence.

This was a great build on a presentation I had an opportunity to deliver at the conference on Straight Through Processing.

The reality in the United States is that 10,000 Baby Boomers are now reaching retirement every day, something that will persist for the foreseeable future. The opportunity for carriers to prepare for this is now. Further, with low interest rates and continued cost pressure, finding ways to reduce operational expenses while improving customer experience (for both agents and customers) is critical.

Another reality is that customer experiences are increasing being set by companies like Apple, Facebook, Google and Amazon. They have perfected ways to make complex things simple, easy to use, innovative and “delightful” to customers. With expectations set there, business practices that are dependent on paper and rooted in the 1950′s are increasing arcane and inaccessible to agents and customers alike. The need to drive toward electronic applications and electronic signatures is crucial for carriers across lines of business. It is both a crucial step toward better customer experience now … and a precursor to bring able to deliver on meaningful mobile capabilities.

This was an opportunity to highlight findings from a recent Electronic Signatures Executive Brief we published.

When asked if there was a potential crisis due to aging in the producer community, the executive panelists at the conference’s main session noted that there is. Allianz, Schwab and Wells Fargo all acknowledged the problem and highlighted approaches they are taking to prepare for a new generation of advisors.

In some places, the agent / advisor community is actually aging faster than the general population at large. This also highlights the importance of creating better and more compelling user experiences for both producers and end clients. Moving to simplify business process, allowing for the electronic execution of transactions and “going mobile” are all key to this. Carriers will continue to need to compete for advisor “mind share” which will require experiences that can be concurrently compelling to multiple generations of users. All of this, of course, ties back to the Hot Topics we see for insurers in the near future.

The Apple analogy continues to resonate, particularly if carriers want to truly remain relevant in a highly competitive environment.

While there are certainly complexities inherent to the life insurance, annuity and retirement plans segments of financial services, the future is clear: STP is moving from being innovative to becoming a “cost of doing business”. Hope is not a strategy and indecision is not a winning game plan.

New Report: Insurer IT Services Providers

Thuy Osman

Rob McIsaac and I recently published a Novarica Market Navigator report on Insurer IT Services Providers. The report gives an overview of some of the major IT services providers to North American insurers and contains a brief profile of each provider, including information about the company’s experience with different types of clients in different functional areas. Providers profiled in the report are: Accenture, Agile Technologies, Capgemini, CastleBay Consulting, CGI, Cognizant, CSC, Dell Services, Deloitte, Edgewater, EY, HCL, HP, HTC, IBM, iGATE Patni, Infosys, L&T Infotech, MajescoMastek, MphasiS, msg global solutions, NIIT Technologies, NTT Data, PwC, Return on Intelligence, Slalom Consulting, Syntel, TCS, ValueMomentum, Vertex, Virtusa, Wipro and Zensar.

With the market becoming more competitive, having a technology partner that can provide the right level of resources to support business initiatives is a crucial tool for CIOs. Novarica’s recent report Insurance IT Outsourcing Update (January 2014), based on a survey of 95 insurer CIOs, found that outsourcing is a part of nearly every insurer CIO’s toolset. 85% of respondents report at least some IT outsourcing. Instead of simply outsourcing for cost reduction, which was the trend in the past, insurers are now outsourcing to meet peaks in demand, get specialized skills and enable new capabilities.

This makes it even more important for CIOs to evaluate service providers not only on the number of resources available, but the type of skills and level of experience the provider has in a particular functional area. Careful evaluation will ensure that CIOs find the right partner to support the organization’s strategy for growth going forward.

Please note that this report is focused on North America, and presents only North American (US/Canada) resources and client experience numbers from these vendors, most of which are global. Each profile gives a summary of the provider’s capabilities and experience to help insurers sort through their many potential partner options, and Novarica’s team can help insurers assess potential partners in more detail through our retained advisory service.

New Report: Business Intelligence Solutions for Insurers

Martina Conlon

The continuing hype around “Big Data” is focusing ever more attention on insurers’ data management and BI capabilities. Analysis of data, creation of predictive models, and the ability to take action based on the outcome of those models has always been at the core of the insurance industry. But BI tools and platforms, big data technologies and the availability of data analysts and scientists is spurring interest and adoption even further.

On Friday, Lis Maguda and I published the updated Novarica Market Navigator report on Business Intelligence Solutions for Insurers that profiles the solutions and tools in this space. The report contains a brief profile of each vendor solution: 4Sight Business Intelligence, Cover-All, Guidewire Software, IBM Corporation, InEdge, Information Builders, Innovation Group, InsFocus, Insurity, Microsoft, Policy Administration Solutions, SAP, SAS, SNL iPartners, Tableau Software, and Yodil. Most of the solutions profiled in this report provide insurance-specific models, dashboard, and reports. A few offer industry-agnostic tools to enable the insurer to develop their own custom BI environment, and a few others offer both tools and insurance data models/visualizations. All offer products that can accelerate delivery of a robust BI environment.

Business intelligence continues to be one of the most common areas of investment for insurers. The rising tide of Big Data threatens to overwhelm enterprises that have not yet gotten the most out of “little data” (structured enterprise data). Implementing a comprehensive analytics and business intelligence environment is a major step on the road to data mastery. Many insurers recognize that leveraging internal, external, and big data is the key to improving their business performance, and are investing accordingly. This report can assist insurers in assessing the options for enabling this critical capability.

Document Creation and Customer Communication Management (CCM)

Sarah Bogan

Our new report looks at document creation/CCM vendors. While the document capabilities of core systems like policy administration and claims haven’t advanced much recently, document creation solution vendors have been investing in their core solutions to make them more intuitive and easier to use by adding better approval workflows and supporting more customer communication functionality, including better multichannel support. In addition, vendors who have historically focused more on document creation solutions or print processing offerings are expanding their footprint to include a more holistic CCM approach, focusing more enterprise-oriented customer experience. Cloud-based options are also proliferating.

The vendors and their offerings are as unique as the carriers and their needs. Our new Novarica Market Navigator, US Document Creation/CCM Systems can help insurers navigate the document creation / CCM vendor landscape. It captures vendor demographics, technology, solutions components, vendor service offerings and typical implementation approaches as described by the vendor.

New Report: IT Security Update

Tom Benton

IT security has been a hot media topic during the past year;  NSA program revelations, retailer credit card breaches and password hacking at popular websites, just to name a few. These high-profile news stories are just the tip of the iceberg - the Identity Theft Research Center recorded over 600 data breaches, including mandated reporting from healthcare entities.

Novarica recenty completed a survey of 95 Novarica Insurance Technology Research Council member CIOs with questions about top security concerns, mobile device security, frequency of external audits and budget/spending levels.  The results are available in a new report, IT Security Update.  Among the key findings:
  • Most insurers plan to increase spending on IT security in 2014
  • External threats are the primary concern
  • Some insurers still don’t do annual external security audits
For more information on the survey results and the report, please contact me at tbenton@novarica.com.

Novarica Industry Intelligence Briefs

The growth of real-time (or near real-time) risk measurement, insurers embracing outsourcing, carriers and reinsurers pursuing growth through specialization, and Google as potential threat to homeowners writers. Those are just some of the items in the upcoming Novarica Industry Intelligence Briefs.

Published twice a month as PDFs for subscribers, the Briefs provide Novarica analysis and summaries of market, company, regulatory, and technology news in various sectors of the insurance industry, including commercial lines personal lines, life & annuities, and retirement & wealth management.

We developed these briefs at the request of several clients who wanted an easy way to consume and share impotrant industry news internally. They can easily be printed out and shared with executives, providing a quick and easy summary of major industry news with Novarica’s informed opinion as well.

For information on subscriptions, please contact Matthew Josefowicz (mj@novarica.com) or Chad Hersh (chersh@novarica.com).

P&C Billing Systems

Martina Conlon

Lis Maguda and I have published a new Market Navigator report on P&C Billing Systems. This report provides an overview of the 17 available billing systems for US property/casualty insurers, summarizing the vendor organization, client base, technology used, differentiators, lines of business supported, implementation approaches, key functionality and more.

Vendors included in the report are Accenture, Bill It Now, CodeObjects, CSC, Exigen, Guidewire, Insuresoft, Insurity, MajescoMastek, MphasiS-Wyde, OneShield, Oracle, Sage, SAP, SpeedBuilder Systems, StoneRiver, and TCS.

While policy replacement projects remain the highest priority most insurers in 2014, about a quarter of these policy projects include a full billing system replacement. Some insurers will purchase and implement billing as a stand-alone system, to focus on improvements in internal efficiencies and customer satisfaction. Billing continues to be an important part of insurers’ agent service and customer service strategies. Many insurers in the market are looking for a loosely coupled suite for policy and billing, while some opt for a best of breed billing solution. This reports highlights these product offerings.

A modern billing system should provide an easy-to-use, robust platform for billing operations and the execution of common, streamlined processes. Carriers usually gain flexibility around billing options and faster time to market for change. Real-time capabilities can dramatically improve customer service and satisfaction, and a modern billing system is a key part of a enterprise technology transformation. Benefits are numerous, as are the options in this market for P/C insurers.

Check out the report at novarica.com/nmn_pc_billing_2013. Let me know if you have any questions or if you would like to discuss it with me – you can reach me directly at mconlon@novarica.com or send email to inquiry@novarica.com

Project End Zone: Business and Tech Trends in Workers’ Compensation

Karlyn Carnahan

Years ago, a carrier I worked for launched a project called Project End Zone whose goal was to move Workers’ Compensation into the profit zone. That project could easily be initiated at many carriers today as the Workers’ Compensation combined ratio has been above 110 for several years now according to AM Best.

Today, with premiums starting to recover and rates increasing 9 quarters in a row, carriers are continuing their efforts to grow their books of business while driving down the loss ratio and doing that in a way that delivers operational efficiency. Most carriers are moving down multiple paths. Investing in agent portals continues to be a high priority to drive ease of doing business and enable multiple channels. Policy administration system replacement is becoming more important to WC carriers in order to enable straight through processing of small policies. Claims administration system replacement continues to be a high priority to assure consistency in claims handling. And analytics, especially predictive modeling, is becoming a critical enabler for WC carriers.

While these are the highest priority initiatives, WC carriers are investing in a wide variety of other initiatives. Whether CRM solutions, Pay-As-You-Go, or enabling mobile a wide variety of creative initiatives are in progress and more are planned for 2014.

You can read more about the latest business and technology trends in my most recent report Business and Technology Trends: Workers’ Compensation.

New Report: Why Institutions Win New Customers

Rob Rubin

We recently published our 8th volume of Bank Shopper Insights. In Volume 8, we take a look at the reasons why institutions win new customers. In Q2 2013, a snapshot survey was fielded on FindABetterBank, a consumer website that captures people through organic search while they’re actively shopping for a new bank or checking account. The sample we used was comprised of 5,250 respondents who went through our comparison our tool, completed the survey, and went on to choose checking accounts. Some findings that we uncovered from this survey were:

  • Forty-five percent of Q2 2013 shoppers selected a national bank. Consumers selecting a national bank were more likely to indicate that convenient branch and ATM locations were an important consideration. Many of these shoppers also indicated that positive feedback from friends and family also played into their decision.
  • Most national banks have abandoned free checking products. Only 3 of 14 banks with 1,000 or more branches currently offer a free checking product and these institutions account for 45% of selections. But 55% of accounts selected overall are free checking accounts. Therefore, when other institutions on the site are selected, it’s most likely because they offer a free checking account.
  • Fee-conscious consumers are most likely to select smaller institutions or direct banks. Shoppers selecting free checking accounts are most likely to cite low fees as a primary motivation. These accounts are largely offered by smaller banks and credit unions as well as direct banks.

Find the full report here: Why Institutions Win New Customers

2014 Insurance IT Budgets and Projects: More of the Same, Plus Increased Activity in Mobile and Big Data

Matthew Josefowicz

We’ve just published our fifth annual study of insurer CIOs’ budget and project plans for the coming year. The good news is that more insurers are increasing their IT budgets slightly, although with IT spending ratios are still within historical norms, which indicates budgets are tracking projected growth rather than being dramatically expanded. We’re also seeing more activity at least at the level of pilot projects in mobile and big data (real big data, not just analytics).

In general, the story for 2014 is one of continuity rather than change. Project priorities are the generally the same as 2013 — for more than half of respondents in this year’s survey, the top two priority projects for 2014 are the same as for 2013. The most common top priorities continue to be policy administration systems, business intelligence/analytics, portals, and (for property/casualty insurers) claims. There are slightly more CRM, more GL/Financials projects in insurers’ top-three priorities, and we believe investments in both areas are being driven by data/analytics strategies.

Self-assessment of current capabilities continues to be modest, and while self-assessment does not distinguish between one respondent’s high standards for itself and another’s delusional self-satisfaction, fewer than half of insurers consider themselves to have strong capabilities in most areas. Which is to say that most insurers are primarily investing in IT to get up to the bar, not over it.

The full report has 17 charts analyzing survey responses by size and sector of company. It is online at http://www.novarica.com/InsIT_2014