Novarica Blog

While participating in a panel discussion on e-Signatures and customer experiences for carriers at yesterday’s ACORD / LOMA Conference is Las Vegas, I started receiving alerts from a major airline. Apparently they thought that I might appreciate an upgrade to First Class seating on the red-eye back to the east coast later in the week. After my presentation wrapped up, I confirmed that their suspicions were correct. First class sounds great … and I suddenly find myself thinking about booking my next trip with them. Apparently, I am susceptible to good customer experiences!

This all reminded me that I shortly need to begin my annual search for next year’s auto / home owners insurance carrier. I dread the effort, but I’ve learned that there are economic consequences to missing the chance to do this. Actually, for 20+ years I was a loyal customer of one carrier. Sadly, one day, I discovered that they hadn’t considered sharing savings opportunities with me. A “flip” to a new carrier resulted in a reduction in the annual premium of $1,200 for comparable coverage. Why hadn’t they bothered to try and keep me as a happy, loyal, customer? With a little bit of care they could have retained and delighted me with periodic news of an “upgrade” to my coverages. Instead, I learned that this is a part of my financial life that requires a high level of personal involvement in order to achieve an appropriate value proposition.

With the advent of modern analytical capabilities, it should be within the reach of carriers to provide an engaging and high-value customer experience that can both delight and retain customers. There was a time when Amazon-like offers of “smart people like you might be interested in this” seemed remarkable. Today they seem not only routine but may well be part of customers starting expectation for relationships they anticipate keeping. In an era of easy access to market information, carriers need to upgrade their customer care capabilities or risk losing some of their best, and potentially most profitable clients.

This monthly newsletter is sent to all Novarica clients to announce new research and activities for Novarica customers. If you do not wish to receive this newsletter on a monthly basis, please let us know at client-support@novarica.com and we’ll remove you from this update list.

EVENTS

• ACORD/LOMA. We’re presenting 6 sessions at ACORD/LOMA in Las Vegas next week. Topics include on supporting growth, modernization, core systems, e-signatures, and IT impact on business success. Check out the session descriptions here: http://blog.novarica.com/?p=1774
• Client Webinar. Reviewing recent research, ACORD/LOMA presentations, and announcing the Impact Award Nominees! Tuesday, May 14 at 2pm ET. You can register online at: https://www1.gotomeeting.com/register/168375841
• IASA. We’re presenting 4 sessions at IASA next month. Stay tuned for more info!
• Novarica Insurance IT Leadership Training Seminar. July 8-9 in Orlando, designed to increase business skills and industry knowledge for next generation of insurance IT leaders. http://www.novarica.com/seminar2013
• Save the date for the Novarica Research Council Impact Awards in NYC, August 21 and CIO Insurance Summit in Atlanta on September 11-12.

NEW RESEARCH

See all published research at www.novarica.com/research/

• Novarica Insurance Technology Research Council Meeting Report (www.novarica.com/councilmeetingreport2013). 95-page presentation-style report containing materials and discussion summary from recent Research Council meeting.
• Email Archiving and Compliance: A Checklist for Insurer CIOs. (www.novarica.com/report_email_archiving_2013). Evolving regulatory requirements and emerging technologies are putting pressure on IT organizations to update email archiving / management capabilities.
• Coming later this month:
• Business & Technology Trends in Individual Life
  (previous trends reports at www.novarica.com/business_and_tech_trends)
• 2013 Impact Awards and Best Practice Case Study Compendium
  (more info and links to last year’s free summary at www.novarica.com/impact2013)

OTHER NEWS

• Updated Website. We’ve re-launched our website, with improved navigation, new content, and a live chat function! Notable new pages include:
• Technology Vendor Index (www.novarica.com/vendor-index), a list of every vendor solution we’ve covered in an ACE Ranking or Novarica Market Navigator
• Research Overview (www.novarica.com/insurance_research), a guided tour of research reports and topics
• Current Clients quicklinks page at www.novarica.com/current-clients
• Blog. Our principals have been blogging about big data, core systems, regulatory changes, the 20th anniversary of the Web, and more at http://blog.novarica.com/

Thank you again for being a Novarica client. Please contact us any time directly or at client-support@novarica.com with any questions or inquiries.

With pending changes in technology poised to lower the barriers to customer adoption of usage-based insurance, insurers should start planning for a future that includes telematics.

Our latest report, Telematics in Insurance: Key Issues and Trends, is designed to provide an overview of current and future potential uses of telematics in insurance, including social media, gamification, and connected services; and to help insurers understand how to incorporate telematics into their strategic plans.

Our key findings include the following:

• The most common application of telematics in the insurance industry is UBI.
• Telematics adoption has been around the longest on the commercial side for the managemtn of fleets, and is commonly in use with leading carriers. Personal auto use, however, is growing.
• The use of smartphones and mobile applications are changing how telematics services are offered, in addition to lowering the cost of telematics implementation.

For a free preview of the report, click here.

The annuity business has grown and changed considerably over the past decade: in particular, solutions that automate the sales process have matured significantly during this period, and have been deployed by a large number of carriers and distribution partners. Given the potential for these solutions to improve the sales experience and reduce costs for both carriers and distributors while supporting changes in compliance processes, carriers are considering broader implementations to support their business models.

In our latest study on annuities distribution tech trends, I review the drivers that lead to implementation, the products that are currently on the market, and the issues that carriers will want to consider as they frame future strategic plans in this line of business. My findings include the following:

• Carriers’ strategies are driven by the distribution channel’s adoption of technology.
• Unless a carrier controls distribution, this is a buy rather than build decision.
• Integration with other components in the sales process is a key area that should be planned for carefully.
• Because of the control distributors have, carriers that have been deploying capabilities in this space may find it necessary to support multiple platforms in the future.
• The technologies are not tremendously differentiated by functionality and all have similar future roadmaps.
• The Ebix and Aplifi products have much greater market penetration today, which could impact deployment and prioritization decision.

A free preview of the report is available online here.

Today is Novarica’s fifth anniversary. We launched Novarica at the beginning of 2008 to provide insights, information, and perspective to insurance and financial services executives, with a strict focus on the needs of our core customer communities. We believe that this relentless focus on the needs of our primary customers is what has allowed us not only to survive but also to thrive amidst the economic challenges of the past five years. From the beginning, we have been firmly committed to a business model that always treats these communities of industry executives as our customers, and never as an audience to be sold to sponsors.

Since our launch, the insurance technology strategy practice led by Chad Hersh and myself has focused on insurer CIOs and their teams as this primary community. We have built a retained client base of more than 60 insurer CIOs and IT organizations, including more than half of the top 25 P&C and Life/Annuity insurers as well as a broad range of midsize insurers. Our Research Council has grown to more than 325 insurer CIOs and senior IT executives from more than 300 different insurers.

Over the past five years, our insurance practice has published more than 200 reports for insurer CIOs and their teams. We’ve conducted more than a hundred strategic planning workshops, executive education days, and board presentations for insurers, presented our research at more than a hundred conferences and webinar sessions, and been quoted by the media on industry trends and issues hundreds of times.

We’ve also completed more than a hundred custom projects for insurers, including vendor selection projects in nearly every area of core systems, peer benchmarking reports, IT project and organizational assessments, IT strategy development, agent surveys, competitive assessments, and internal business user satisfaction projects.

As proud as we are of our service to our customers and to the industry, we’re even prouder of the team that we’ve assembled. We are proudest of their commitment to serving our clients and council members, to growing their already substantial knowledge through ongoing research, and to the integrity and independence of the information and advice that they provide to our clients personally and through our publications.

Last fall, Chad and I welcomed two new partners to this team to launch a new set of services focused on a new customer community: bank digital channels executives and senior business leaders. Robert Rubin joined us when we acquired his firm Facilitas, creator of FindABetterBank.com. This site attracts more than 45,000 active bank shoppers per month, and the data we collect from them is the basis for our new Bank Shopper Insights service. Facilitas’ proprietary bank website benchmarking methodology has become the basis of our Bank Digital Channels Strategy service. In addition, we welcomed Lee Kyriacou, a long-time partner at our parent firm, Novantas. Lee’s detailed custom industry analytics have long been a part of Novantas’ projects for its large bank clients, and we’re now able to bring a version of this proprietary analysis to a much broader client base through our new Bank Industry Insights service.

As we begin our sixth year, we plan to continue on the path that has made us successful while keeping a sharp lookout for opportunities to improve and expand our offerings to our customer communities. We look forward to continuing on our mission to provide the valuable insights, information, and perspective that our customer communities need to thrive.

I’ve just published the  latest Novarica Market Navigator  -  an overview of the available stand-alone US Property/Casualty Rating Solutions for 2012 Q4. As in our other Market Navigator reports, I’ve provided an overview of the rating solutions and vendor profiles.

I’ve also laid out the key components carriers look for when exploring rating solutions.  Rating solutions vary in the capabilities they offer,  but systems generally include the following features:

• Rule Definition and Management: The heart and soul of a rating system, rating algorithms are typically defined and maintained separately from rating tables. Many vendors have multiple or infinite rate tiering options.
• ISO/NCC Support: More and more solutions are designed specifically to support ISO rate and many include support for ISO Electronic Rating Content.
• Product Design and Development Tools: Solutions generally include templates that can be leveraged for building new lines or insurance products. The solution should be able to handle versioning and update management with date-based product definitions to ensure the correct rates and forms are being utilized.
• Testing, Modeling and Product Analysis: One key factor is a testing utility that supports debugging, modeling, and displacement testing to analyze the impact of changes in your pricing structure. Debugging reports should show the details used to create rates, allowing business users to identify those areas to tweak and refine as well as to find any errors.
• Compliance: Change control functions track and document all the changes that have been made, when, and by whom. Look for the ability to audit rate creation, rules creation, and versioning.
• Business Intelligence Analytics: These capabilities vary widely, but all solutions have some level of pre-build standard reports and ad hoc analytic tools to deliver operational and performance reports.
• Workflow: Most of the solutions in our report include some level of workflow, allowing tasks to be generated and assigned manually or automatically.
• Web Quoting Tools: Common capabilities are agent-focused and web-based quoting options. Less common are consumer-focused web-based quoting options.
• Multicarrier Comparison Functionality: Some rating engines are designed as comparative raters, returning multiple premiums from multiple carriers. An insurer should consider how many states are supported and the number of carrier rates available through the comparative rater.
• Forms Design and Production: The system should support custom applications and forms including editing and upload. One key factor is an application and forms library that can support both standard and customizable applications and forms.

A preview of the report is available online here.

For our latest report in our Novarica Market Navigator series, I looked at available loss control solutions for US insurers. Loss control is a unique service that property/casualty insurance carriers provide—typically for commercial accounts, or very high value personal insurance properties.

Loss control solutions are used to manage the various tasks involved with the loss control function. There are several key areas that are commonly addressed in these solutions, including the report itself, recommendation management, and scheduling functions, which include time tracking, and analytics. There is a wide variance in the level of functionality provided across the different solutions.

In our research, we identified six key components carriers look for—or should be looking for—when selecting a loss control solution:

• Reporting functionality. Document creation capabilities are fundamental in a loss control solution, and the solution must include a forms repository that accommodates multiple types of reports (desk surveys, inspections, service plans, etc.)
• Recommendation management. Carriers want to improve their ability to track and manage recommendations, and look for a solution with a library of common recommendations that can be easily inserted into a report.
• Workflow management tools. These are usually built into a loss control solution, and offer the supervisor the ability to assign and track work to consultants based on workload and geography.
• Reporting and analytics. All solutions we reviewed in our report provide some level of pre-built standardized reports. A few systems support the ability to query data inside the loss control report, such as finding all policyholders that received specific recommendations or have high quantities of flammable liquids. This capability is growing in popularity as carriers are using predictive modeling tools to identify emerging pattenrs.
• Mobile capabilities. These are generally browser-based tools, allowing loss control consultants to access them easily from remote locations. Carriers should look for those that allow a consultant to work while offline and synchronize the data at a later time.
• Specialized tools. Some solutions can support premium audit services as well as loss control—using the scheduling, calendaring, nad report generation functions in a manner tailored ot the specialized work that auditors perform.

A preview of the report is available by clicking here.

Electronic signatures have secured their place as a strategic capability for insurers. From a business perspective, they are rapidly moving from a differentiator to a requisite for competitive parity in the marketplace. With that in mind, Novarica has just completed its latest research report, E-Signature in Insurance: Overview and Key Issues. The purpose of the report is to provide insight into the current state of the e-signature environment, present some high level best practices, and provide an overview of the vendor landscape for insurer CIOs.

For many organizations, the move towards electronic signatures is still daunting and the organizational inertia is still difficult to overcome—particularly in the face of uncertainty in corporate compliance and legal departments and in dealing with the wide range of significantly different implementation patterns. However, for most organizations, the challenges can be overcome by the collecting efforts of business, IT, and legal/compliance by working through each of the steps of the e-signature process, understanding the issues, and bringing their unique perspectives to the table. Furthermore, the ecosystem around e-signatures has improved significantly with strong vendor solutions, a clearer legal environment, and successes by early movers.

A preview of the report is available by clicking here.