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.
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 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.
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.