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.

CIOs Discuss Industry and Operational Issues at Novarica Council Meeting

Matthew Josefowicz

More than 30 insurer CIO members of the Novarica Insurance Technology Research Council gathered at the Omni Providence yesterday to discuss industry and organizational strategic issues.

 

The morning opened with a general discussion of technology trends shaping the industry and how insurer CIOs are helping to position their companies to compete in this new environment. Major topics of discussion include evolving channel preferences and customer expectations, as well as the increased use of third-party data in underwriting, and the “shift to the left” of risk selection from underwriting to marketing. Members also discussed the importance of aligning market segment, product offering, and channel strategy, and the necessity of flexible and agile systems to support new developments.

Despite these challenges, IT spending and staffing levels continue to fall within historical norms. Members discussed the findings of recent Council studies on Budgets and Projects for 2013 and Quick IT Benchmarks.

In this challenging environment, optimizing business/IT partnership is more important than ever, and was the next focus of discussion. Members talked about the challenges of driving organizational innovation from within IT, especially in the face of complacency from some business leaders. Some members pointed out the high general correlation of senior business leaders’ age and interest in driving change through IT.

Another key topic of discussion was big data and analytics. Most of the participants agreed that while true “big data” (unprecedented volume, velocity, and variety of data) has yet to impact most insurers, the “big data” hype has re-focused attention on the value of data and analytics in general.

Members are increasing their use of third-party data for pre-fill and speeding the underwriting process by reducing manual data collection.

Members also noted that vended core systems are starting to include more analytical capabilities in traditional transactional and record keeping systems like policy administration systems and claims.

Core systems replacements were another hot topic of conversation, as nearly every member attending had recent completed, was currently planning, or was in the middle of a major core systems replacement project. Members noted the increased need for speed in phasing component-by-component replacement projects and the more limited life-expectancy of modern systems given the accelerated rate of change in both IT and insurance. Members also discussed best practices in managing vendors, and the importance of monitoring configurable systems with the same discipline traditionally applied to code-and-test systems.

Afternoon breakout sections included active discussion of cat-modeling and impact of changing weather patterns on underwriting, as well as discussions of the impact of changing financial and health care regulations.

Our next Council event is the presentation of the 2013 Impact Awards in NYC on August 21. We look forward to seeing our members there as well!

Novarica Research Council Impact Awards: Nominating Committee Announced

Matthew Josefowicz

The deadline for the 2013 Best Practices Case Study Compendium and Impact Awards is at the end of this month, and we’ve already received our first submission! We’re looking forward to many more by the end of the month.

I’m very pleased to announce the members of the 2013 Novarica Research Council Impact Awards Nominating Committee. These insurer CIOs will review all submissions and select the nominees for vote by the full council of 300+ members.

The committee members are:

  • Alexander Bockelmann, Fireman’s Fund
  • Don Desiderato, New York Life Investment Management
  • John Heveran, Liberty Mutual
  • Nimesh Mehta, National Life Group
  • Peter Moreau, Amica
  • Murali Natarajan, RLI Corp
  • Tony Paris, Pioneer State Mutual
  • David Shaw, Sammons Group
  • Samir Srivastava, The Hartford
  • Wayne Umland, Glatfelter Insurance Group
  • Richard Wiedenbeck, Ameritas
  • Andy Wood, Wilton Re

The submission form for the 2013 compendium and awards is online here, and you can download a summary of last year’s report here.

Top Five Disruptors in the Next Five Years for Insurers

Matthew Josefowicz

While managing short-term business needs is a critical role for insurer CIOs, another important part of the job is keeping an eye on the horizon to help insurers prepare for change. We recently contacted 70 insurer CIOs to ask them to look five years out and consider the biggest potential disruptors to their businesses. We also asked what steps they were taking today to prepare.

Most of the responses fell into into five major categories: regulatory changes, shifting market needs and expectations, the financial environment, increased catastrophes, and the emergence of big data and the increased importance of analytics.

As Yogi Berra famously said, “It’s hard to make predictions, especially about the future.” But for insurers, a highly probable future has more regulations, more demanding consumers, more challenging investment markets, more catastrophe losses, and much more data to be consumed, managed, and analyzed effectively.

For more, see our new report here: http://www.novarica.com/top_5_disruptors/

December New Research Roundup

Summaries of all reports are available for free downloads on our site. Some of our recent reports include…

Business and Technology Trends

  • Business and Technology Trends: Commercial Lines. Commercial market pricing is showing a decided recovery, leading commercial lines carriers to invest in core systems replacement, agent portal functionality, and business intelligence and predictive analytics.

(see full list of Business and Technology Trends Reports at http://www.novarica.com/sectorreports/)

CIO Surveys, Best Practices, and Case Studies

  • US Insurer IT Budgets and Projects for 2013. Modest budget increases, core PAS replacement projects, business intelligence, agent portal enhancements, and mobile and social media pilots are all on the 2013 priority list for insurer CIOs.
  • Best Practices Case Study Compendium 2012. These case studies, the fruit of the first annual Novarica Research Council Impact Awards, provide a useful set of examples of impactful IT projects. They offer insurer business and IT executives detailed examples across a broad range of diverse industry initiatives.

Novarica Market Navigators

Executive Briefs and Checklists

  • Minimizing Project Risk Checklist. Insurers’ core missions are tied to managing risk in a cost effective and predictable manner. This brief illuminates common factors that contribute to IT project failure and offers a checklist to reduce project risk.
  • Insurance IT Transformation Checklist. In order to survive and thrive in the future, CIOs need to facilitate and support business transformation efforts. This report provides a roadmap of things to consider for a transformational program.

Novarica Research Council Impact Awards 2012

Here’s an overview of our Impact Awards program. Deadline for information submission is June 30. Download the submission form here.


Novarica Research Council Impact Awards Information

The awards will be judged by all 300 members of the council, making them the largest peer-jury awarded recognition in the industry.

Nominees from for the award will be selected from a collection of case studies that we’re currently working on by a nominating committee of Research Council members, including Andy Wood (Wilton Re), Dan Simpson (Trustmark), Eric Bulis (SBLI USA), Larry Fortin (Millers Mutual Group), Mark Berthiaume (Chubb), Pete Moreau (Amica), Piyush Singh (Great American Insurance Company), Reuben Broadfoot (LifeMap), Sal Abano (Tower Insurance), Stuart Tainsky (PURE), and Tim Billow (ING).

CIO Council Meeting Report Published and New Impact Awards Announced

Matthew Josefowicz

More than 50 insurer CIOs gathered at the latest meeting of the Novarica Insurance Technology Research Council meeting last week in Providence, RI.Today, we’ve published a report that includes the materials presented at the meeting, plus summaries of the discussions. Current clients and council members can download the report for free. Non-member insurer CIOs are welcome to apply for membership here.

We’ve gotten great feedback from the meeting, including the following attendee quotes:

It gave me the opportunity to hear what others are doing, get some valuable lessons learned and gave me a second wind to continue to work through the relationship building process and governance issues. Well done!

The quality of the discussion and the thoughtfulness of both the attendees and presenters was high. The length of the meeting was just right. I liked having a chance to talk informally with people at the dinner the night before as well.

The Novarica Council event is the only place where the door is shut and CIOs from around the industry speak openly and honestly about how to solve real world problems…without being pitched hard by sales folks.

Novarica Research Council Impact Awards

Also, at the meeting, we unveiled our new Novarica Research Council Impact Awards, which will be judged by all 300 members of the council, making them the largest peer-jury awarded recognition in the industry.

Nominees from for the award will be selected from a collection of case studies that we’re currently working on by a nominating committee of Research Council members, including Andy Wood (Wilton Re), Dan Simpson (Trustmark), Eric Bulis (SBLI USA), Larry Fortin (Millers Mutual Group), Mark Berthiaume (Chubb), Pete Moreau (Amica), Piyush Singh (Great American Insurance Company), Reuben Broadfoot (LifeMap), Sal Abano (Tower Insurance), Stuart Tainsky (PURE), and Tim Billow (ING). For more on the case studies and awards, click here.

 

Growth of IT-Enabled Capabilities and Impact on Claims

Matthew Josefowicz

Just wanted to share a slide from this week’s webinar on claims and customer experience. While modern and flexible core claims systems are at the root of improving claims experience and financial results, insurers are also benefiting from other IT-enabled capabilities when it comes to claims.

On the webinar, I presented a version of this chart from our report on the Growth of IT-Enabled Capabilities, with call-outs highlighting the impact of each of these areas on claims and customer claims experience (click the image to enlarge).

While claims systems are the critical element of improving the claims process, other data and communications investments are critical assets as well.

 

Insurance CIOs as Enterprise Value Creators

Matthew Josefowicz

Insurance is an information business, and the CIO has a critical role in creating value for the insurer enterprise. But the nature of how different CIOs embrace that role, the different types of value they can create, and the tools they use to create that value varies widely. Our new report, Creating Enterprise Value as CIO presents a look at how more than 100 insurer CIOs see their role in creating value and the factors that support or inhibit them in their mission.

Some of the key findings of the report are:

 

  • Most CIOs see their most important contribution in terms of supporting strategic initiatives or improving operational efficiency. Only about 20% see driving innovation as their primary area of value creation.

  • Business/IT relationship and business/IT alignment are cited by more than 1/3 of CIOs as the most important factor in enabling them to create value. But those who see themselves primarily as innovators are twice as likely to credit their technical knowledge or management skills than their relationship with the business.
  • While CIOs are most likely to look to their own IT staffs and other insurer’s IT staffs for future leaders, the innovators are much more likely than others to consider cross-pollinating with the business organization.
  • On average, more than half of insurers’ IT budgets are devoted to building new capabilities and transformative or innovative initiatives, rather than maintenance.
  • More than 40% of insurer CIOs think their business leaders have a poor understanding of enterprise IT issues, but only 24% see that as a problem.

More Banks Increasing IT Spend in Small Business Than Any Other Area

Matthew Josefowicz

One of my Novantas colleagues will be previewing some of Novarica’s upcoming research today at the 16th Annual Small Business Banking Conference that shows more banks will be increasing IT spend in small business than in any other business area for 2012. (Read full press release here)

With small business consistently cited as a potential source of job growth, it’s exciting to see banks gearing up to support this critical sector with new technology capabilities. While much of the investment will be around channels (including online, mobile, and branch), we’re also seeing investments planned in analytics and straight-through processing, which should help banks expand their ability to loan to small businesses.

This research was conducted among CIO members of the Novarica Banking Technology Research Council. Full results will be published next week.