2015 Tech Trends: Thoughts for Insurance CIOs

Tom Benton

As I was preparing a blog post on technology trends for 2015, I came across Chris McMahon’s article in INN, “Top 5 Tech Trends for 2015”. The five he chose were: core systems modernization, analytics, mobile computing, the Internet of Things and the digital customer experience. These are certainly great choices, so here are some further thoughts on these trends and their impact on the insurance CIO.

Core Systems
As mentioned in the article, interest in core system modernization remains strong for 2015. A survey of Novarica’s Research Council members last year (with results presented for both P&C and LHA insurers) found that the trend is toward faster deployments via SaaS or hosted solutions using an iterative deployment approach. Vendors are developing track records of implementation completion and are finding ways to reduce the risks of these large implementations. CIOs who are considering core system replacements should get an update on potential vendors and their current offerings, and Novarica’s latest Market Navigator reports will be available in February for LHA and P&C policy admin system vendors. 2015 may be the year to consider a replacement and prepare using lessons learned from previous successful implementations at other insurers.

Analytics
Analytics continues to be a hot area of discussion at insurers. Novarica’s report “Big Data Technologies for Insurers” notes that insurers should focus on the need first, based on business demands and strategy, before investing in specific technologies. While there have been some initial uses of big data for analytics at insurance carriers, few have integrated analytics into core insurance processes like underwriting and claims. Insurance CIOs should work with business leaders to define a strategy and the “big questions” that need to be answered by improved analytics capabilities.

Mobile Computing
Novarica’s report on “US Insurer IT Budgets and Projects 2015” noted that mobile technology is still considered an “emerging technology” area at many carriers. Insurers are struggling to leverage the “3 C’s” of mobile technology (convenience, camera and coordinates) to provide better engagement with producers and customers. CIOs need to look beyond specific mobile strategy to consider flexibility of their systems for the next wave of mobile technologies, including wearable and Internet of Things, along with the analytic capabilities needed to leverage the data these systems will generate.

Internet of Things
Just as 2014 was the year of wearables as a consumer focus, 2015 promises to be the year of Internet of Things, including connected home products, drones and smart devices. The key for CIOs is considering what data from these devices can be leveraged for improved insurance products and operations. Information governance will be a key capability for 2015 and into the future.

Digital Customer Experience
Interest in engaging customers through digital technologies is driving insurers to reconsider their customer engagement and digital strategies. Novarica’s report “Preparing for Digital Transformation” provides a checklist that includes reviewing current capabilities, strengthening project prioritization and other best practices, and adopting an appropriate culture for transformation. Many customer-focused organizations outside of the insurance industry are creating Chief Digital Officer (CDO) roles to lead these efforts. In essence this move is to provide a focus for meeting the demand for improved customer engagement using technology tools. CIOs should consider taking the lead in efforts that a CDO role would address – CIOs with a good track record of meeting business needs through effective technology deployment should be in good position to do so.

These five technology trends provide a good starting point for discussing your IT strategy for 2015. As always I welcome your feedback. To send me a note or set up a complimentary 1 hour consultation, contact me via email.

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

IBM and Apple Announce First Wave of MobileFirst applications

Tom Benton

In July, IBM and Apple announced a partnership to combine their strengths to “transform enterprise mobility through a new class of business apps—bringing IBM’s big data and analytics capabilities to iPhone® and iPad®.”

Last week they announced the first wave of MobileFirst for iOS apps, including one for insurance, Retention.

The Retention app provides tools to agents for access to customer records, analytics-driven retention risk scoring and customer interactions such as e-signature and collection of premiums. Apple also announced AppleCare for Business, providing 24/7 support for business users of the apps and their iPads and iPhones, and additional services for integration and leveraging IBM’s cloud and analytics capabilities.

While some insurers may find the initial app release of interest for agents in their distribution networks, the underlying improvement to enterprise-level capabilities is a key to further adoption of iOS apps and devices for insurance business users. Smartphones and tablets have typically been deployed using BYOD models, with support managed on a limited basis by internal IT. The IBM support services could take on that burden, freeing up IT resources.

We’ll keep monitoring the progress of the partnership and future MobileFirst app releases. As always, feel free to contact me at email if you are interested in talking about using mobile and other digital channels for customer engagement.

Related Reports

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.)

New Brief: Wearable Technology and Insurance

Tom Benton

Over the last two years, fitness tracking bands, smartwatches and Google Glass have fueled the next wave of consumer electronics:  wearable technology. Financial services firms and insurers are already starting to find innovative ways to use wearables. In my new brief, Wearable Technology and Insurance , I outline three key capabilities and some examples of how these enable innovative applications for insurers and financial services firms. 

In some respects, “wearables” are not new – after all, the Dick Tracy comic strip introduced their iconic “wrist radio” just after World War II.  What is new is that smartphone adoption and more efficient smaller batteries are enabling new devices and applications.

I currently have two wearables on my wrist – a fitness tracking band (the Fitbit Flex that I have been wearing since June 2013) and a smartwatch (a Pebble – I was one of the 69,000 or so who backed the project on Kickstarter back in May 2012, but I started wearing it regularly earlier this year).  I am seeing more and more people wearing these devices and with the recent introduction of Android Wear, Google’s extension to the Android operating system for wearable devices, we can expect 2014 to be the “year of the wearable”.

As wearables gain adoption by consumers, innovative insurers will find ways to use them in engaging customers.  Others should consider how wearables will fit into mobile and customer communication strategies.  Wearables are on the way – how can you leverage them for customer interactions?  Read the brief and let me know your ideas.

Mobile Matters

Rob McIsaac

It was fifty years ago that the Beatles arrived in America and changed the world. When it was happening, you knew it was somehow big, but even the most prophetic among us could not have imagined just how important it was. As a wee lad, I remember watching the Ed Sullivan show with my grandparents that night, somewhat transfixed. It was a different world on Monday.

Some years later, when Team Apple rolled out the iPhone and iPad, I recall thinking that this was interesting … but didn’t seem to solve a problem I had. My PC, laptop, TV, Blackberry, camera and stereo were all state of the art. Why would I need a new thing? Visions of another Newton danced in my head.

Boy, was I wrong.

While I still have all that other stuff, it is used far less often than it once was. And I now plug the iPhone into the stereo and control the TV from my iPad. I plug the iPhone into my PC in order to suck off the pictures.

Regardless of whose device is used now, mobile devices matter. A lot.

In fact, they have changed the world. I knew it had reached a tipping point when my wife, also a Baby Boomer, albeit one who doesn’t fancy technology, was peering over my shoulder while I was checking for flights on a laptop. In a gentle arc, her index finger gracefully touched the screen and gave it a gentle swoosh. Nothing happened.

Well, something happened. I doubled up in laughter … and realized that it is “game over”. The device is headed the way of my grandparent’s 78 rpm records and the rotary phone. They still work, but who cares?

Last week, my Greatest Generation mother announced that she was tired of going to the computer room to use the PC. What tablet should she get? Confirmation: put a fork in it.

And then I thought about other things in the last year. When I rent a car now, I get checked out on a tablet. When I went to a restaurant in China, the menu was on a tablet. When I took a helicopter ride at a local air show, the GPS hanging in front of me was on a Smartphone. When I had a chance to fly on a WWII bomber to commemorate the Doolittle Raiders, I checked in on an app … and the crew chief’s pre-flight checklist was running on a tablet as he prepared a plane built in 1942. And of course I can now pay bills, trade stocks, get my flight boarding pass and ride on Amtrak based on things I do or keep on a mobile device.

And my favorite recent experience: we recently went to see a Symphony performance. After warming up and while waiting for the conductor to arrive, a lead violinist pulled out his Smartphone and deftly flicked through some work. I wondered if he was updating his Facebook profile.

Which then gets me back to insurance which feels a bit like stepping through a time warp. I recently needed to replace a 10 year term life policy which had naturally and happily run its course. I was stunned to find just how arcane, antiquated, wasteful and expensive the whole process was. In fact, I’m pretty sure I saw no technology in use that hadn’t been invented before 1980. Heck, back then I was still buying Beatles albums. On vinyl.

I was truly astonished at the lack of progress that has been made (probably since John, Paul, George and Ringo landed) in this area. For insurers this should be a wakeup call. I’ve probably bought my last Beatles album (this Internet thing looks like it might work out …) and I’ve probably bought my last life insurance policy. When I describe the Beatles landing my kids can’t quite figure out what to make of all the screaming … but they are consumed by spasms of laughter when I describe current life carrier processes and (lack of) consumer technology.

For carriers, the time to start thinking about mobile capabilities is now. Mobile matters. And cassette decks, VCRs, reel to reel tape and the Beatles aren’t coming back. Save nostalgia for another day.

Oh, and the Beatles record label was … Apple. Imagine that.

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.

New Article: Direct Banks Are Winning Mobile-Centric Consumers

Rob Rubin

In my latest article on thefinancialbrand.com, I discuss why direct banks are winning over mobile-centric consumers. Moving forward, more consumers will adopt mobile banking and more will insist that the next institution they switch to also provide this service. In Q1 2011, under 12% of shoppers on FindABetterBank indicated they “must have” mobile banking. Today, that number is 23%.

In Q3 2013, direct banks were 38% more likely to be selected when shoppers indicated mobile banking was a must-have feature than when shoppers indicated they “don’t care” about mobile banking. The top reason that “must-have” mobile shoppers cited for choosing their online-only account was low fees. Shoppers who “don’t care” about mobile banking were 28% more likely to choose an institution because of their convenient branch locations than “must-have” mobile banking shoppers. It’s becoming evident that mobile-centric shoppers aren’t as interested in paying for convenient branch locations.

As people continue to adopt mobile banking apps for their everyday banking activities, direct banks’ lower costs, technology-oriented services, and higher deposit rates will appeal to a larger share of consumers. Does this mean that fewer consumers will choose institutions based on the convenience of their branch locations? How will network banks and credit unions respond to this disparity in order to maintain their market and deposit share over direct banks?

See full article here: http://thefinancialbrand.com/34721/direct-banks-winning-mobile-centric-consumers/

Lessons Learned from China: A Look Into a Mobile Future

Rob McIsaac

I recently had the chance to spend a truly remarkable time visiting China. The trip was pure pleasure … an opportunity to spend time with our son and daughter in law, a Chinese national, and her family. The trip spanned the ultra-modern and “Westernized” city of Shanghai, the inland manufacturing hub of Hefei, the ancient villages of Anhui province and a lot of ground in-between.

This is in many ways a country of contrasts. It is concurrently an ancient land with a clear fix on tradition with functional technology thousands of years old and a land that has embraced leading edge technology to support explosive growth. With 1.3 billion people, 24 million of them living in Shanghai alone, it is easy to see why finding “better” or more efficient ways of doing things is top of mind. The congestion and traffic are truly impressive, making time a commodity that is highly valued and the much vaunted “drive for education” is very much in clear evidence.

American and German brands are very much present too, with traffic jams full of Buicks and Fords, going bumper to bumper with VW’s and Audis.

But what may be the most striking thing of all is the absolute degree to which mobile technology dominates daily life. In every village and city, in every train station and traffic jam, wireless devices are at the fingertips of every generation one sees. Young children and grandparents alike are doing the business of daily life on mobile devices that appear in a dizzying array of form factors and colors. Heads down on trains or, perhaps at once both humorously and frighteningly, while weaving through downtown traffic on scooters, the devices are a way to simply get things done.

The other interesting feature was surprisingly fast and omnipresent Wi-Fi access. Even at the chalet once used by Chairman Mao as a retreat in the peaks of the Yellow Mountains, I was able to jump online and check on email (so I didn’t completely disconnect from life back in America!).

Are there lessons learned from all this? Absolutely. While mobile capabilities may be of varying importance to different insurance lines of business today, there’s little doubt that this is the future. Once “spoiled” by the ability to do anything (and everything) on a piece technology customers can slip into a pocket, it seems that going back to fixed position desktop devices is an unwelcome step into the Way Back machine.

While it may not represent the same kind of risk as a burning PAS platform or responding to an avalanche of regulatory changes, it should nevertheless be top of mind for CIO’s and their IT organizations as they participate in business strategy developments. There may be a reasonable runway in front of some carriers now to consider options and approaches … but there’s little doubt that mobility is the future. In some parts of the broader financial services world, IT organizations are already considering the notion of deploying mobile platforms first (or at the very least, concurrently with other form factors). Time is a terrible thing to waste!

February New Research Round-Up: Mobile, CIO Best Practices, ACE Rankings

  • Mobile in Insurance Beyond Personal Lines: Current Trend and Expectations. Mobile has spread far beyond personal lines, with significant growth projected for this year and beyond for policyholder and agent/broker capabilities across the industry. Based on a survey of 75+ CIOs.
  • Bring Your Own Device (BYOD) in Insurance. BYOD is growing in insurance, but large and midsize insurers are taking different approaches. Based on a survey of 75+ CIOs.
  • Moving Into Mobile. 3-page interview with Novarica partner Chad Hersh from this month’s Best’s Review on mobile trends in insurance. Clients and non-clients may download the full article for free.
  • Contract Development Planning Checklist. The latest in our CIO best practices checklist series.
  • Novarica ACE (Average Customer Experience) Rankings of 37 insurance software solutions, including solutions from Agencyport, Cincom, ECCA, FirstBest, Guidwire, Hyland Software, Innovation Group, Insuresoft, Intuitive Web Solutions, iPartners, Maximum Processing, MULTICO, Napersoft, NxTech, Oceanwide, OneShield, Optical Image Tech, Perceptive Software, Silanis, StoneRiver, SunGard, Thunderhead, Vertex, and Vertafore.