Novarica Impact Awards 2015

Matthew Josefowicz


Today we announced the nominating committee for the 2015 Novarica Research Council Impact Awards.

This will be our 4th annual celebration of case studies of effective technology initiatives by insurers, as recognized by a peer jury of hundreds of insurer CIO members of the Novarica Insurance Technology Research Council.

An average of 40 case studies per year are submitted for publication in our annual Case Study Compendium, and the best ones are nominated for awards by our committee of CIOs. Unlike other industry awards, no vendors, journalists, or consultants (including the Novarica team) have a vote in selecting nominees or winners.

Past nominees and winners include: AIG, American Safety, Allstate Life & Retirement, Amica, Assurant, Brickstreet Mutual, Capitol, Cincinnati Financial, Encompass Insurance, Erie Insurance, Foresters, Great American Insurance Group, ICW, Legal & General of America, Oregon Mutual, Patriot National, Penn Mutual, PURE Insurance, RLI Insurance, Tokio Marine, XL Group, Zurich North America, and others.

Rules and submission forms are online at http://www.novarica.com/impact2015

We’re looking forward to hearing about your successes and honoring them next spring! Please contact us at inquiry@novarica.com with any questions.

Evolution or Revolution: Insurance in Flux

Mitch Wein

I am very excited to have joined Novarica, and to have a front-row seat to the 2015-2018 Insurance Revolution. What do I mean? There are some key themes flowing through the evolution of technology generally that will 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. These changes are on top of the regulatory changes sweeping the insurance industry like the Affordable Care Act, HIPAA and privacy regulations.

But to focus on the technology changes:

  • The “Internet of things” implies all things being IP enabled, including things that P&C Insurers think about, Auto, Home, Facilities, and even human beings through wearables like the iWatch or Google Glass.
  • Social media opens new ways to communicate to the customer and to understand the customer’s needs.
  • Big Data implies the collection of large data both internally and externally and acting on it through workflow and customer interaction.
  • Cloud implies a virtualization of where the software and platforms resides, introducing security and regulatory considerations.
  • Mobile becomes the preferred interaction mechanism for the customers, brokers, agents, etc. The customers “moments of truth” take place in an omni-channel environment.
  • Security is within everything done by insurers, agents, packages, services, etc.

Ultimately, all of this turns the insurance industry into a digital industry. So, what does this mean for me within Novarica? Of course I will be participating in the creation and delivery of key Novarica advisory services including strategy development, vendor selection, benchmarking, and IT assessments. I’ll be adding my extensive international and enterprise architecture experience to Novarica’s collective expertise.

But my particular focus as I help drive and create these services will be to help overlay the trends listed above and evolve the offerings and delivery to our customers to take these into account. I will be working with the rest of the team to create new offerings that speak to the trends above like digital readiness, architecture governance, IT roadmap development, and large project implementation planning and risk mitigation.

Evolution of Revolution – for all a little of both. For me…lots of fun. I look forward to hearing your thoughts – contact me at mwein@novarica.com!

Novarica Quick Quote: Legacy Systems

Matthew Josefowicz

We’re continuing our series of Slideshare presentations we’re calling Novarica Quick Quote. Each one is designed to convey a single important idea related to how technology is changing the insurance industry. Each one is meant to be consumed in 15 seconds or less, and our hope is that our clients and council members will find them to be a useful tool to stimulate strategic discussions.

This week’s installment is on Legacy Systems.

You can check out all of the presentations in this series at http://www.slideshare.net/novarica/

Program Business Growth Outstrips Overall Commercial Market Growth

Matthew Josefowicz

Interesting article in PropertyCasualty360 today about how Program Business has now grown to $30B and is experiencing faster growth than the overall commercial lines market.

Hmmm…maybe there’s something to this idea of aligning products, market segments, and distribution strategies after all.

Novarica Quick Quote: Build for Change

Matthew Josefowicz

We’re continuing our series of Slideshare presentations we’re calling Novarica Quick Quote. Each one is designed to convey a single important idea related to how technology is changing the insurance industry. Each one is meant to be consumed in 15 seconds or less, and our hope is that our clients and council members will find them to be a useful tool to stimulate strategic discussions.

This week’s installment is called “Build for Change”

You can check out all of the presentations in this series at http://www.slideshare.net/novarica/

Baked Ham and How “Best Practices” Reflect the Best Available Technology…

Rob McIsaac

Both organizations and the people who comprise them are, to a significant degree, a function of their experiences. As time progresses we learn what works, and what doesn’t. We explore strategic alternatives and consider decisions which reflect an appropriate balance of risks and rewards in order to allow us to optimize results based on a specific set of criteria.

Both insurance companies and their employees also learn from their mistakes. The corporate form of “don’t touch that stove” may actually tie to business ventures gone sideways, technical investments gone bad or M&A events that spectacularly failed to hit their mark. No matter what it is, these experiences inform future decisions unless (or until) they fade from the conscious memory.

Of course these events have a corollary which focuses on what worked, and these “winning” strategies and tactics also form a foundation for future success. In fact, for many organizations, the past many times is deemed to be a predictor of the future, so long as it gets put into the right context. This also means being in a position to draw the correct lessons from past experience, and avoiding the temptation to confuse “correlation” with “causation”.

The correct lesson extraction may, in fact, be the tricky part.

I heard a story recently which brings home the point. In prep for a holiday dinner that involved a ham, a spouse noted that the ham had been cut in half before put in the oven. Why?

“Because that’s what my mother did” came the reply. Asking the mother-in law-why she did it produced a similar, inter-generational,: “because that’s the way my mother did it”.

Blessed with the opportunity to ask the grandmother-in-law why the ham was cut on half got to the root of the matter. And the response for the ages: “because my oven was too small for a full ham to fit!”

Which gets back to many insurance carriers as they consider options for future business process changes and the technology investments, including core systems, that will support them. As carriers look to replace platforms from an earlier era, rather than focusing on what is possible to do with modern tools , they continue to plan for a world that was heavily informed by what worked in the past, failing to appreciate the limitations created by the environment of a different day. Rethinking business processes and related structures can dramatically improve operational and financial results, but not if they are arbitrarily constrained by legacy limitations.

As carriers embark on technology stack replacements they need to understand their own half-a-ham stories and proactively work to explode them for the myths that they are. Getting outside of the company, perhaps outside of the industry, can be particularly helpful and instructive for CIO’s and their teams today. Last year, I had a chance to visit the BMW assembly plant in Greer, SC. This is an amazing facility that is essentially business process and industrial choreography on steroids. The last time I’d seen a plant like this was in the late 1960’s watching Chevys come down the line. This was like Star Wars (my new experience) meeting Charles Dickens (my recollection from a bygone era). It was hard to imagine that these were the same types of places.

Building a state of the art, 21st century car, in a plant rooted in the lessons of Henry Ford, would be impossible. Insurance carriers face a similar dilemma as they get ready for a new and every more competitive environment. Game on!

Novarica Quick Quote: Product, Market, and Channel Alignment

Matthew Josefowicz

We’re experimenting with a new series of Slideshare presentations we’re calling Novarica Quick Quote. Each one is designed to convey a single important idea related to how technology is changing the insurance industry. Each one is meant to be consumed in 15 seconds or less, and our hope is that our clients and council members will find them to be a useful tool to stimulate strategic discussions.

This week, we look at Product, Market, and Channel alignment, which we’ve also blogged about in more detail.

IT Security Update: Financial Services Now In The Spotlight

Tom Benton

News about a major bank security breach dominated the weekend, and new developments continue to emerge.

How should insurance CIOs and CISOs respond to this news? In Novarica’s IT Security Issues Update earlier this year, a significant percentage of insurers revealed that they had not conducted an external audit of IT security in the past year. The report concluded that insurers should consider audits more frequently than annually. This recent news may prompt them to consider how frequently access permissions are reviewed along with what processes they have in place for monitoring access to sensitive data and key customer systems.

As many insurance CIOs go into annual budget cycles, some consideration should be given to funding of audits, educating IT and business staff on IT security and investing in security monitoring and other security tools.

It may only be a matter of time before a major insurer is in the news for a data breach. Some consideration should be given to how your company would respond if this happened to you. What are your communication and response plans for an IT security incident? Use the recent news of breaches to be better prepared and protected.

Strategic Alignment for Insurers

Matthew Josefowicz

As part of my presentation this week to the annual PCI Technology Conference on Technology Trends in Insurance: Change, Legacy, and Disparity, I discussed the need to align product, segment, channel, and process/technology in insurance.

Although some insurers have been discussing this need for a long time, changes in the data environment and information technology capabilities, and attendant changes in customer expectations, make this more important than ever.

Novarica PCI Tech Presentation 2014b

  • Product. Insurers need to broaden their definition of product. There is a disconnect between the way insurers see their products, which focuses exclusively on coverages and pricing, and the way customers see the product, which includes the overall experience of buying and being a customer. Insurers need to start from this customer perspective in order to design a product that effectively meets a market need for more than fair coverage at a fair price.
  • Segment. All business is program business. Insurers already have experience in aligning product, segment, and channel – it’s called “program business.” The insurance industry needs to apply this approach to the rest of their product portfolio.
  • Channel. Different segments will buy different products through different channels. Insurers should make sure they’re leveraging the right channels to sell the right products to the right segments, and not assume that they can push any product to any segment through their preferred channel.
  • Process and Technology. All of the above is only possible with the right processes and technology that are aligned to support the creation and delivery of the right products to the right segments through the right channels. Insurers should re-examine their processes in the light of currently available information technology capabilities and the experiential needs of their target market segments.

Only by aligning these four areas will insurers be able to compete for modern customers. For more insights from my presentation, Novarica clients can download the full deck here.

Wearables Update: the Apple Watch

Tom Benton

The tech world has been waiting in anticipation the last few weeks to find out what Apple’s latest offerings will be. While everyone expected a new iPhone model (and got two actually – the iPhone 6 and a larger screen version, the iPhone 6 Plus) and the next version of the iOS operating system (iOS 8), the key question was whether the long-rumored iWatch would be presented at the fall product announcement event on 9/9.

Apple did announce their new Watch offering at the event, and found ways to differentiate their offering through providing various editions for specific markets/purposes, and providing ways to use watch functionality beyond telling time without a phone connection, such as heartrate monitoring and ability to respond to gestures, etc. Also, the Apple Watch will leverage Apple’s new Apple Pay service to allow wearers to pay for items at such retailers as Whole Foods and Macy’s.

However, the device is not yet available (probably shipping early next year) and will be at a price point higher than competing devices – starting at $349. Apple device users expect a premium price, but may be confused by the three “editions” of the watch: a standard smartwatch (“Apple Watch”), a rugged sport version (“Apple Watch Sport”) and a fancier fashion-focused edition (“Apple Watch Edition”). Also, by not shipping until next year, Apple may lose significant ground to other smartwatch offerings – the Pebble, which has been generally available for over a year, Samsung’s many offerings and new Android-wear devices such as the Moto 360 which became available late last week and sold out in a few hours.

So what will the impact be on insurers? In my report on wearables, I mentioned that smartwatches can be used for customer engagement and collecting information about the wearer’s activity, useful for determining their level of fitness and general health. Apple’s Watch offerings will fuel the growing consumer interest in wearables, leading to a critical mass of users who will demand they are supported by all businesses they work for and purchase from, including insurers. Wearables are becoming another important communication and engagement channel for insurers, and need to be considered in digital and customer experience strategies as well as considered in IT application and architecture roadmaps. As current systems struggle to support mobile channels, future systems should be planned with wearables taken into consideration.

By the way, after Apple’s announcement I asked around to various demographic groups at the Insurance CIO Summit, which I am attending this week in Atlanta. Few said they would be interested in buying the Apple Watch – some were not yet interested in wearables, others felt there were other offerings that were available that they would consider and others took more of a “wait and see” approach. One interesting response was from a younger Gen-Xer who continues to wear a fashion watch, and said she would not be interested in the Apple Watch because she expected it not to look as fashionable (for instance, she found my Pebble “unattractive”). Clearly people choose what they wear on their wrists for many purposes, so Apple’s approach of multiple offerings may prove to be a good strategy. However, they will need to provide relevant apps and educate consumers on why their smartwatch provides capabilities that wearers can’t live without. (Is my Pebble watch really that unattractive? Hmm.)