Ten Statistics About Social Media, Mobile, Analytics, Big Data, Cloud and Digital Technologies in Insurance

Matthew Josefowicz

It can be hard for Property & Casualty and Life/Annuity insurers to sort the hype from reality when it comes to areas like social media, mobile, analytics, big data, cloud, and digital capabilities.

Recently, Novarica released its “Hot Topics” report which is designed to show adoption rates and provide insurance carriers with insights on six “hot topic” areas: social media, mobile, analytics, big data, cloud and digital. This report is based on a snap poll conducted in November 2014 of 90 members of the Novarica Insurance Technology Research Council, a moderated knowledge-sharing community of insurer CIOs and senior IT executives.


As you can see from the chart above, deployment rates have grown in the year since Novarica’s last study on these topics. Big data deployment rates, while still under 20%, have more than doubled over the past year, and mobile has increased in every category, with the largest percentage increase in deployment for policyholders. Analytics usage in modeling has increased by nearly a third, but there’s still a persistent gap in analytics usage between large and small insurers. Some other relevant statistics of note include:

1.) 40% of respondents have deployed social media in some areas of marketing

2.) 27% of respondents have active or planned mobile pilot projects for distributers

3.) 44% of respondents have deployed analytics to provide real-time scoring in some areas

4.) 16% of respondents have active or planned pilot big data projects

5.) 18% of respondents have deployed in some areas SaaS for core applications

6.) 72% of respondents said Agent e-business was part of their digital strategy

7.) 67% of respondents have no formal ROI for analytics already deployed but its value is widely recognized

8.) 10% of respondents have well deployed and widely understood mobile plans

9.) 29% of respondents have deployed digital or digital strategy in some areas

10.)36% still trying to understand the value of social media data analysis

The six “hot topics” included in this report share two main characteristics. First, they enable potentially disruptive changes in one of more areas of the insurance value chain or traditional company operating models. Secondly, they are discussed more than they are embraced or understood.

As we noted last year, today’s “Hot Topics” are tomorrow’s basic capabilities. Increased, but still uneven, deployment rates in mobile, social, big data, and other areas indicate this evolution is continuing, and that some companies are evolving faster than others.

For more information about the latest “Hot Topics” download a free preview or contact me via email for a complimentary 30 minute consultation.

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Peer Review: What areas are insurance CIOs focusing on?

Staying on top of the latest Property/Casualty and Life/Health/Annuity insurance technologies and trends can be a pretty daunting task. In order to provide our clients with more insight into what their peers are focusing on in 2015, Novarica has compiled a list of its top ten most downloaded reports for the year to date.

There are two main benefits of this top ten list: it will save you time by highlighting only the hottest topics, and it allows you to see if your organization is on track with its IT strategy or if something is being overlooked. The top ten list below covers a variety of topics in critical areas, including: digital, reinsurance, policy administration systems, social, mobile, big data, analytics and much more.

Top Ten Most Downloaded Reports

1.) Life/Health/Annuity Policy Administration Systems
2.) Property/Casualty Policy Administration Systems
3.) Preparing for Digital Transformation
4.) Benchmarking the “New Normal”: 50 Advanced Capabilities for P&C Insurers
5.) “Hot Topics” for Insurers: Social, Mobile, Analytics, Big Data, Cloud, and Digital
6.) Report Rationalization: A CIO Checklist Report
7.) Internet of Things Update: An Executive Brief
8.) US Insurer IT Budgets and Projects 2015
9.) Architectural Governance: A CIO Checklist
10.) Business and Technology Trends: Reinsurance

In 2014 alone Novarica released over 30 reports. If you’re a Novarica client, downloading reports from list above is a great way to get up to speed on the latest trends and guidelines. For more information about Novarica’s published research, visit our online library or contact email.

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Trends in P/C and L/H/A Policy Administration Systems

Martina Conlon

In Novarica’s US Insurer IT Budgets and Projects 2015 report, survey data showed that nearly 40% of Property & Casualty and Life/Health/Annuity carriers are currently replacing or planning to replace a policy administration system.


There are various reasons why P/C and L/H/A insurers are focusing their efforts on replacing policy administration systems, including:

  • The need to improve product development speed — and enhance product capability—to pursue new opportunities, or to accommodate market demands
  • The need to improve product development flexibility to enter profitable new niches whether in Life or P&C.
  • The need to attract and retain not just top producers, but also the new generation of producers who won’t stand for the challenges presented by legacy solutions.
  • A desire to find more cost-effective ways to support the ongoing operation and management of core-systems capabilities and reduce the sizeable costs associated with simply keeping legacy systems on aging brittle, platforms.
  • A desire to real-time processing, increase automation and gain internal efficiencies
  • Increased data accessibility demands as business intelligence and data analytics become a significant part of insurers’ strategic objectives. In order to better set rates/pricing, reduce fraudulent claims, and generate other predictive models, core system data must be available for analysis, whether within the system or via export and transformation.

Novarica’s recent research indicates that carriers continue to aggressively seek to replace their existing policy administration systems, or in some cases add a new system to the mix. The P/C policy administration market continues to flourish for those vendors with in-demand systems and reflects a number of trends most of which remain unchanged from last year.

While sales of L/H/A core systems have continued to lag the pace of their P/C counterparts, the level of interest has steadily grown, and growth in sales of core systems is likely to follow. In fact, the pattern of investment profiles for L/H/A carriers is following a very similar path to what has already happened for P/C carriers, albeit at a somewhat delayed pace, undoubtedly a consequence of the relative risks associated with implementation and the challenges related to in-force block conversions.

With a variety of vendor solutions available, choosing the right solution that best fits your needs can be a complex process. A great way to start is by checking out our latest Market Navigator Reports on Property/Casualty and Life/Health/Annuity, blog posts (links below), trends in policy administration webinar recording, as well as our vendor selection services.

To learn more the latest policy administration trends or to see how Novarica can help you with your vendor selection project, contact me via email for a complimentary 30 minute consultation.

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Top Stories in Life/Annuity

Steven Kaye

We’ve just published our Novarica Industry Intelligence Brief for Life and Annuity for January 2015. These reports highlight some of the most interesting industry stories from the past month, and present them along with Novarica commentary. Commentary is are available to clients only, but we’ve posted direct links to the stories below:

  • David Coons, EVP of executive search firm The Jacobson Group, reports that according to the firm’s research the insurance industry will need to hire 400,000 people to be fully staffed in 2020. Full story
  • Insurance Technologies, LLC sold a controlling interest to a private equity firm, Moelis Capital Partners. Full story
  • Ebix has resolved its outstanding issues with the IRS, with a resulting jump in shares. Full story
  • AIG has introduced a new life product, with optional riders including the ability for policyholders certified as critically ill or retirees to draw down
    against benefits. Full story – Best’s Review subscription required
  • Hannover Life Reassurance is partnering with LTCG to provide support services for the long-term care insurance portion of life/LTC hybrid products,including claims management (and access to historical claims and underwriting data), product development, state filing, and teleunderwriting. Full story – Best’s Review subscription required
  • MetLife has had success combining Facebook Custom Audiences with its own behavioral, call center, CRM, and demographic data to identify potential prospect segments, and testing what content does and does not work. The insurer has already seen its cost per lead almost cut in half and its lead-to-sale ratio more than double. Full story
  • Researchers at several universities are piloting the use of FitBits to better predict post-spinal surgery recovery times. Full story – free registration required.
  • New York state enacted legislation establishing a long-term care awareness program for consumers and making it easier to use life insurance benefits for end-of-life care. Full story
  • A Guardian Workplace Benefits Study finds most employees do not find their employers’ communications helpful for selecting benefits. Full story
  • MIB Group findings suggest that while applications (and thus sales) were down for 2014, looking at 4Q 2014 vs. 4Q 2013 applications and for the last 3 quarters of 2014 vs. the comparable quarters in 2013 they are beginning to turn around. MIB suggests a combination of marketing to younger customers and improved customer service via technology are to be credited. Full story

For Novarica commentary, clients can download the Brief at http://www.novarica.com/january-2015-novarica-industry-intelligence-brief-life-and-annuity/ .

Top Stories in Property/Casualty

Steven Kaye

We’ve just published our Novarica Industry Intelligence Brief for Property and Casualty for January 2015. . These reports highlight some of the most interesting industry stories from the past month, and present them along with Novarica commentary. Commentary is are available to clients only, but we’ve posted direct links to the stories below:

  • Google has been licensed as an insurance agent in 26 states.
    Full Story.
  • David Coons, EVP of executive search firm The Jacobson Group, reports that according to the firm’s research the insurance industry will need to hire
    400,000 people to be fully staffed in 2020.
    Full Story.
  • MetLife has had success combining Facebook Custom Audiences with its own behavioral, call center, CRM, and demographic data to identify potential
    prospect segments, and testing what content does and does not work. The insurer has already seen its cost per lead almost cut in half and its lead-to-sale ratio more than double. Full Story.
  • Researchers at several universities are piloting the use of FitBits to better predict post-spinal surgery recovery times.
    Full Story – free registration required.
  • Progressive has a partnership with OnStar now for UBI, with OnStar offering optional driving assessments to customers along with tips on improving their driving and the option to share their data with Progressive for potential insurance discounts. Full Story.
  • A Bain study on P&C carriers found that few carriers are good at both acquiring and retaining customers. Full Story.
  • CNA’s building a common enterprise data architecture, including internal and third-party sources of structured and unstructured data, a post-ETL space for data, and a space for integrating particular datasets for analytic processing either via traditional data warehouses or for use in dynamic operational issues not amenable to rules-based processing. Full Story.
  • 41 states have approved the Verisk Telematics Safety Scoring driver discount program, a behavior-based program that offers a set of analytical tools for telematics and usage-based insurance programs. Full Story.
  • Over half of respondents to a Princeton Survey Research Associates International survey of 1,001 American adults would not want to enroll in a
    Pay-As-You-Drive (PAYD) insurance program. Full Story.
  • A researcher at Digital Bond Labs has found security weaknesses in Xirgo Technologies’ OBDII device, used in Progressive’s Snapshot UBI program.
    Full Story.
  • Metromile is providing per-mile insurance for Uber drivers now.
    Full Story.

For Novarica commentary, clients can download the Brief at http://www.novarica.com/january-2015-novarica-industry-intelligence-brief-property-and-casualty/ .

Finding Gold in a Tough Market

Steven Kaye

An article in PropertyCasualty360.com points out the benefits to carriers of adopting by-peril rating, which allows carriers to understand the interrelationships of various perils and property-specific risks. Homeowners has traditionally been a notoriously volatile line of business, so anything carriers can do to smooth out profitability and losses is a significant win. By-peril rating can be used to cherry-pick more attractive risks, or to do a better job of weeding out undesirable risks, up front. Carriers can offer lower rates for properties built according to more modern building codes, or with risk mitigation measures in place. They can more precisely target their marketing initiatives as well. ISO research showed carriers using by-peril rating both grew their market share and had lower loss ratios than peers not using by-peril rating. With preliminary financials for 2014 indicating a deterioration in P&C underwriting results, the potential softening of the commercial lines market, and personal lines arguably being a commodity business, carriers must seize on any advantage to grow profitable exposures.

Carriers, particularly smaller ones, should not underestimate the challenge of obtaining data of sufficient volume and granularity. They should line up and verify potential data sources, ensure that data and related services are compatible with their business processes and systems, and compare vendor service levels and check references.

For more of Novarica’s thoughts on the use of master data management and analytics in personal lines insurance, or by insurers generally, check out some of our related research or send us an email.

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Don’t Get Tripped by a Tipping Point!

Rob McIsaac

Late last year I had the opportunity to spend time exploring Silicon Valley in depth which created a new-found appreciation for the form and function of innovation that comes from that singular location. The interconnectedness and leverage that has been created by having a unique combination of talent, financing, risk taking and competition is impressive. The number of companies tied to financial services looking to form innovation centers in this unique environment continues to grow.

Another observation from that tour was the rather surprising connection between technology innovation and utilization in areas focused on entertainment. The recognition that HP’s first big order fulfilled out of “The Garage” went to Walt Disney is a point well taken.

Recently I had a chance to see this point of intersection from a different perspective, this time at the Disney World complex. This is another eye opening event that has some potentially key insights for financial services purveyors. It is not a story about magical mice but rather about technology advances and adoption. Insurance carriers would be wise to take note.

As a veteran of Disney trips, I didn’t expect to be amazed in any way. I was wrong. Visiting as an adult observer with too much time on my hands (translation: no kids to manage) afforded an opportunity to watch how new technology has changed the operation of the properties and the way customers interact with them. For example, upon entering the grounds, you are given a stylish armband that looks like a high end Fitbit device. This is how you track your reservations, book special events, manage your tickets and connect with groups on the property. It is also your virtual wallet. Wherever you go, simply touch the wristband to a reader and you are magically able to proceed.

Of course the flip side of this is that Mickey (or a delegate) pretty much knows where you are all the time. As a result, workflow capabilities are optimized. Buses seem to be at the right place at the right time. Support staff placement is optimized. Wait lines are minimized. There’s a smart phone app that helps manage the experience on those moments when you need a keyboard. For anyone with a Fitbit (or equivalent) on the other wrist, the learning curve is essentially zero.

But that wasn’t even the best part. Upon entering a place where value is consumed from the wrist-wallet, such as entering a park, they have deployed two-factor authentication. In addition to reading the wristband there are fingerprint readers everywhere. Scan your wrist, read your index finger and you are “good to go”. It is smooth, clean and fast. More to the point, Disney is now training tens of thousands of new people every day on how to use the technology. They are also setting a high bar for what a good, effective, non-intrusive security experience can be like. In a word, it is “slick”.

The implications for insurance are broad and potentially represent a tipping point which also happens to coincide with the number of Millennials in the US exceeding the number of Baby Boomers for the first time. People are ever more willing to give up personal information for the promise of a better deal, an enhanced experience and better service. Holiday trips can now join Amazon shopping experiences as a place where things just seem to work well and a byproduct of it all can be targeted messaging that can affirm that “smart people like you” found value in this next call to action.

Returning to a world dominated by last century technology, and last century experiences, will increasingly seem quaint and out of touch with a new reality. The fact that they are slow and painful may seal a deal of irrelevance.

Is it any wonder that Google appears poised to move into the insurance space or that Silicon Valley VC firm Andreessen Horowitz sees insurance as a business that is poised for disruption? Being tripped by a tipping point can be hard to recover from. Just ask Kodak.

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Making a Project Succeed with Users Who are Reluctant to Adopt a New System

Jeff Goldberg

When planning for change management or a core system replacement, we focus a lot on getting buy-in and sponsorship from leadership. But even though end-users may be required to go along, getting their support is critical to success. So how do you handle it when the users of a system are reluctant or even openly resistant to change?

1. Get input and review from key users before the project begins. Make them feel some ownership and buy-in, even if they aren’t part of the decision making process. Include them in updates as the project proceeds so that they have time to prepare and, hopefully, get excited. Remember that time spent in up front education not only helps get reluctant users involved, it also reduces training time at the end.

2. Plan for proper training that includes not just how to use the project, but also what the values of using it are. If you can’t articulate the values before the project begins then something is wrong.

3. Implement a plan to push still-reluctant users. Have dates for shutting off replaced systems, metrics to track how people are using it, and firm incentives (both positive and negative) for adopting the system.

4. Especially with data and Business Intelligence, never forget that usability and design matters when getting users to adopt a new system. Integrate the new system into the existing daily process. Make it easy to use. Design isn’t an afterthought, it’s a key component of driving adoption and avoiding support request and mistakes.

As always I welcome your feedback. If you have any questions or comments, please feel free to send me a note at email.

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The future just keeps getting closer…

Matthew Josefowicz

In case you were wondering when the great disrupters in Silicon Valley would turn their attention to the insurance industry, wonder no longer, and read this post on the Andreesen Horowitz site from 1/22/15.

How about an insurance company that empowers you to make smart lifestyle decisions? Examples: the car insurance company that routes you around dangerous intersections; the home insurance company that automatically summons a plumber when it detects water on the floor near the water heater; or the health insurance company that connects you with friends that are also trying to lose weight?

By encouraging us to keep safe, insurance companies can keep their payouts low. And we all bask in the glow of an insurance company that has our best interests at heart — because even though our interests are really aligned, it doesn’t always feel that way

Combined with the recent news about Google’s recent moves in auto insurance, it’s pretty clear that tech is starting to smell blood in insurance.

The barbarians are coming. Insurers need to suit up.

The barbarians don’t care about tradition, or the way it used to be, or what yesterday’s customers liked. They see only need and opportunity. Insurers need to adopt this mindset quickly.

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Enterprise Data Initiatives Now Taking Center Stage as Insurers Look to Improve their Digital and Analytical Capabilities

Mitch Wein

With insurance carriers of all sizes and lines of business focusing on improving their digital and analytical capabilities to meet customer expectations, the importance of enterprise data has never been greater.

Over the last 3-5 years data has once again become a key focus of the insurance industry. Data is now seen as a key enabler of the insurance industry’s evolution into a fully digitized provider of risk services focused on customer, not product.

When data is collected from either internal or external sources, the CIO becomes responsible for its storage, management and use. This becomes highly complex in today’s world since data is both structured and unstructured and is controlled by various legal and regulatory considerations, as well as internal security and risk policies. Based on the direct experience of Novarica’s senior team and its Council members, the following best practices should be considered when initiating an MDM initiative.

  • Create policies around data and how the data should be managed and controlled.
  • Establish organizational structure for data.
  • Link MDM architecture to business goals and objectives.
  • Consider supplementing internal data in an MDM infrastructure with enriched data and external big data
  • Determine what system or process creates the official data of record.
  • Determine the senior level project sponsor and who pays.
  • Deploy multi-year MDM programs in an incremental fashion.

MDM is more than a technology. It is a program of work involving an assessment of business needs, a data sourcing strategy, a data cleansing strategy to address quality, an architecture and integration initiative, data documentation and classification, as well as an organizational evolution for data governance and ownership. The goal is to create a single view of the master data which can then be referenced by all systems, reporting, and business processes.

Novarica’s experience has shown that the data governance and ownership dimension is often the hardest aspect of this program after identifying a business sponsor and developing a solid business case. Who manages the data, who owns the data, and who is ultimately accountable are difficult challenges that must be addressed.

If your organization is in the process of implementing an MDM program or if your efforts have stalled, please send me an email to set up a complimentary 30 minute consultation.

Recent Novarica CIO Checklist Briefs

  • Master Data Management: A CIO Checklist
  • Architectural Governance: A CIO Checklist
  • Preparing for Digital Transformation: A CIO Checklist