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

Finding the Benefits in Social Media

Karlyn Carnahan

I was recently asked, “How does social media really impact the insurance and re-insurance industry? While a lot of money has been spent, is it providing any benefits? Do we understand how it could provide benefits?” Here’s the answer I gave.

I see Social Media currently being used in the insurance industry in a wide variety of ways. Certainly, marketing and brand building by posting content on Facebook, Twitter, LinkedIn, YouTube, etc. are major uses. Carriers who focus on personal lines are using it to build their brand directly with consumers. Carriers who focus on commercial lines are focusing on industry sectors, not necessarily through public tools like Facebook, but more often through their own private forums.

Carriers who work with independent agents are often providing training, tools, and content to help the agents improve their own social capabilities. This is often provided as a benefit for their preferred sectors.

Carriers also put a lot of work into using social media to manage their reputations: watching for positive or negative mentions of their name in order to intervene.

Beyond brand building, though, carriers are also using social in Human Resources: posting jobs, targeting candidates, and for background searches.

Carriers are using social for claims; a lot of work in the fraud area is happening here. Generally, they are using it to determine the circumstances of the claim: what really happened. Was it vandalism? Or did the homeowners teenagers have a party? They use social to identify behaviors after the claim that may be contraindicated by the specific injury: you said you hurt your back, but you posted photos of yourself doing the limbo at a party. And they’re using it to find unreported sources of income when it comes to WC. Each line of business has specific areas that social can be used for fraud identification.

Social media is also being used for distribution management, both targeting and communicating with agents, but also on the sales side of targeting and communicating with specific accounts (think LinkedIn).

While there’s a lot of talk about using social media for underwriting, we’re definitely in the early stages of that. Most carriers who are doing this are doing it on a one off basis, and generally finding exposures or behaviors that they were unaware of, such as the commercial account who has added an exposure when no class code was included on the policy, the life customer who is engaging in risky behaviors, or the photos of the homeowner’s dog that show that it’s a particular breed.

Over time, I believe we’ll see a lot more work in using the content for underwriting trending and analysis, such as analyzing twitter feeds to monitor disease progressions or catastrophes.
In addition to looking at social media externally, a lot of carriers are using social media techniques inside the organization to drive improved collaboration, and are seeing significant benefits from that including improved decisions, faster decisions, and improved employee satisfaction.

Technology is not a “what,” it’s a “how.”

Matthew Josefowicz

I’ve seen a number of blog posts and articles over the past year warning agents not to get too excited about social media, since insurance prospects still favor other sources of information over social media…like personal friends and family.

As if social media wasn’t one of the most important ways that personal friends and family communicate.

This reminded me of a general principle for insurance and financial services technology: Technology is not a “what,” it’s a “how.”

No company needs a web strategy, a mobile strategy, a cloud strategy, or a social media strategy. What they all need is an awareness of the roles that these technologies play (or will play) in how their customers want to do business and how their companies can operate most efficiently.

For example, our Social Media and Independent Distribution report this year showed that 25% of agents/brokers under the age of 40 use social media to communicate with their underwriters. But this doesn’t mean insurers need a social media strategy, it means they need to incorporate an understanding of social media into their distribution strategies.

 

 

Social Media Strategies for Independent Agent Distribution

Karlyn Carnahan

Novarica’s latest research report, Insurer Social Media Strategies for Independent Agent Distribution, addresses the use of social media by insurers with independent distribution. Surveying insurers that write through independent agents as well as independent agents themselves, we looked at social media usage rates, the different rates for different uses, and the preferred platforms (especially Facebook, Twitter, and LinkedIn) for various uses.

We found that a striking majority—more than 70%–of the insurers we surveyed have some presence on Facebook, Twitter, or LinkedIn. However, 40% or more have no official social media policy in place—a fact that could create compliance risk and limit the company’s ability to capitalize on social media activity.

Additionally, about 30% of insurers responded that they use social media for one-to-one communication with both agents and policy holders. This suggests that some of the critical communication that used to take place via telephone or email is migrating to social media platforms. This data is notably split by age, as 25% of agents under 40 report using LinkedIn to communicate with specific underwriters at their insurers, double the percentage of those over 40. More communication may migrate to social media platforms, then, as baby boomers move into retirement and are replaced with GenX and Millenials.

The report concludes with a discussion of six ways insurers are supporting agents’ social media efforts, as well as four key recommendations to ensure insurers best leverage social media within their distribution strategies. Insurers that write through independent agents must understand that changes in communication platforms and behaviors will affect their most critical capability: their ability to manage relationships and communicate effectively with their distribution partners.

A free preview of the report is available here.