Top Stories in Life/Annuity

Steven Kaye

We’ve just published our Novarica Industry Intelligence Brief for Life and Annuity for February 2015. These reports highlight some of the most interesting industry stories from the past month, and present them along with Novarica commentary. Commentary is available to clients only, but we’ve posted direct links to the stories below:

  • Seven insurers are working with the Greater Des Moines Partnership to offer capital and mentoring to tech startups. Full Story.
  • AXA has launched AXA Strategic Ventures to invest in tech companies relevant to the insurance industry. Full Story.
  • Capgemini’s latest World Insurance Report reveals North America has the largest drop in positive customer experience of all regions covered. Full Story.
  • Mercer has taken a 9.9% stake in vendor BenefitFocus, whose technology powers its private exchange. Full Story.
  • Observers think the US Supreme Court will be unlikely to propose new standards for retirement plan fiduciaries and their responsibilities regarding
    investments. Full Story.
  • Paul Forte, CEO of Long Term Care Partners, has proposed the establishment of a long-term care insurance exchange, more to spread risks than to lower prices. Full Story.
  • President Obama has asked the Department of Labor to proceed with redrafting fiduciary standards for retirement accounts. Full Story.
  • Prudential Group Insurance has named a VP of digital and customer experience. Full Story.
  • Smartphone-based apps are just as accurate as wearables according to a study by University of Pennsylvania researchers. Full Story.

For Novarica commentary, clients can download the Brief at http://novarica.com/february-2015-novarica-industry-intelligence-brief-life-and-annuity/

Top Stories in Propery/Casualty

Steven Kaye

We’ve just published our Novarica Industry Intelligence Brief for Property and Casualty for February 2015. These reports highlight some of the most interesting industry stories from the past month, and present them along with Novarica commentary. Commentary is available to clients only, but we’ve posted direct links to the stories below:

  • Seven insurers are working with the Greater Des Moines Partnership to offer capital and mentoring to tech startups. Full Story.
  • AXA has launched AXA Strategic Ventures to invest in tech companies relevant to the insurance industry. Full Story.
  • Capgemini’s latest World Insurance Report reveals North America has the largest drop in positive customer experience of all regions covered. Full Story.
  • The University of Iowa has found more frequent flooding in the U.S. Midwest and adjacent states over the past fifty years. Full Story.
  • A.M. Best anticipates more reinsurance M&A activity. Full Story.
  • Colorado State University is building a resilience forecasting model to help local governments mitigate the impact of natural catastrophes on communities. Full Story.
  • Senator Edward Markey warns auto manufacturers are not incorporating security measures into newer in-car systems. Full Story.
  • The federal government is creating the Cyber Threat Intelligence Integration Center to coordinate information sharing on various cybersecurity dangers.
    Full Story
  • Government agencies are seeking input on cyber risk avoidance and mitigation, as well as how to make it easier for smaller firms to obtain cyber risk coverage. Full Story.
  • Several insurers are undertaking data quality initiatives, including business ownership of data and identifying useful changes to data capture for future analytics. Full Story
  • Towers Watson disclosed in a recent survey that predictive analytics have increased retention for over half of respondents. Full Story.
  • USAA has introduced Onsight Connect, allowing policyholders to connect to claims reps via mobile devices using streaming audio and video. Full Story.

For Novarica commentary, clients can download the Brief at http://novarica.com/february-2015-novarica-industry-intelligence-brief-property-and-casualty/

Insurance Industry Remembers that Investment Dollars Buy Access to Innovation

Matthew Josefowicz

Everything old is new again. Like the E-Venture Investment Groups of the late 90′s and early 2000′s, a new crop of investment activity is springing up in the insurance industry, with the hope of giving the industry a preview of tomorrow’s capabilities and approaches.

This includes single company initiatives like AXA Strategic Ventures and American Family Ventures, as well as the Des Moines-based Global Insurance Accelerator incubator, and the recently announced ACORD Insurance Innovation Challenge showcase for start-ups.

It’s almost as if the industry woke up and realized it didn’t have to sit and wait to be disrupted from the outside. A multi-billion dollar industry can buy some of its own innovation!

Related Posts:

Related Webinar:

Seven Key Findings About the Group Life/Annuity/Voluntary Benefits Sector

Rob McIsaac

With plan sponsors becoming increasingly price-conscious, the group life, annuities and voluntary benefits sector is turning to technology to help them attract, retain and profitably serve clients. Across the industry, insurers continue to make investments spanning the Novarica Insurance Core Systems Map.

Group Life Annuity & Benefits Heat Map

Novarica has identified seven key findings in its Business and Technology Trends: Group Life/Annuity/Voluntary Benefits report. If you’re not familiar with this report, it provides and overview of group benefit providers’ business and technology issues, data about the marketplace and 57 recent examples of technology investments by group benefit providers.

Key Findings

1) Top technology initiatives for group and voluntary insurers include agent and customer portals (including enrollment) and core policy administration, including benefits administration. The need for effective sales and marketing tools across multiple channels is key to drive enrollment, and robust flexible group administration is also vital. Carriers are opting for incremental upgrades over “big bang” core system transformations. Vendors must grow their understanding of individual markets, as well as the linkages between billing and enrollment.

2) True sales growth is a challenge in group business, with much activity consisting of carriers trading business or increases in group term life face amounts rather than cases or lives covered. Group annuities reportedly also saw declining sales. At least one carrier is experimenting with offering cheaper long-term care insurance coverage for lower benefits in an attempt to drive uptake.

3) Private exchanges are emerging as a new distribution channel for voluntary products, though enrollment is modest to date. The need for brokers to make up for caps on commissions and high deductibles for traditional health coverage may lead to more activity in this arena.

4) Group annuity contracts are seeing increased interest as some carriers are offering US employers the chance to offload some or all of their defined benefit plan liabilities in exchange for purchasing group annuity contracts.

5) Lower priority technology initiatives include billing, BI, claims, CRM, distribution management, document creation and management, rating, underwriting workstations, and specialized components. While lower priority, many of these components can contribute both cost savings as well as more efficient handling of transactions and payments. The lower priority of investment in BI should not be read as an indictment of its potential, as plan sponsor reporting and analytics capabilities, the ability to analyze participation, and understanding channel and producer productivity and profitability remain important.

6) Mobile devices continue to make inroads. Both members and plan sponsors see benefits, such as the ability to submit claims or view policy information.

7) Critical success factors for carriers continue to be sound product design; better tools for enrollment, marketing and sales to individuals; powerful and adaptable administration systems; marketing and sales across multiple channels, and continuing improvement of administrative systems to drive cost savings and efficiency.

With customer expectations changing across the industry, driven by changes in the technology ecosystem within the industry and across the economy, insurers need to plan to incorporate these paradigm shifts into their business and technology strategies for 2015. Or else plan to be taken by surprise! If you have any questions or comments, please feel free to send me a note at email.

Ten Statistics About Social Media, Mobile, Analytics, Big Data, Cloud and Digital Technologies in Insurance for 2015

Matthew Josefowicz

It can be hard for Property & Casualty and Life/Annuity insurers to sort the hype from reality when it comes to areas like social media, mobile, analytics, big data, cloud, and digital capabilities.

Recently, Novarica released its “Hot Topics” report which is designed to show adoption rates and provide insurance carriers with insights on six “hot topic” areas: social media, mobile, analytics, big data, cloud and digital. This report is based on a snap poll conducted in November 2014 of 90 members of the Novarica Insurance Technology Research Council, a moderated knowledge-sharing community of insurer CIOs and senior IT executives.

Deployment-Hot-Topic-Areas-Insurers

As you can see from the chart above, deployment rates have grown in the year since Novarica’s last study on these topics. Big data deployment rates, while still under 20%, have more than doubled over the past year, and mobile has increased in every category, with the largest percentage increase in deployment for policyholders. Analytics usage in modeling has increased by nearly a third, but there’s still a persistent gap in analytics usage between large and small insurers. Some other relevant statistics of note include:

1.) 40% of respondents have deployed social media in some areas of marketing

2.) 27% of respondents have active or planned mobile pilot projects for distributers

3.) 44% of respondents have deployed analytics to provide real-time scoring in some areas

4.) 16% of respondents have active or planned pilot big data projects

5.) 18% of respondents have deployed in some areas SaaS for core applications

6.) 72% of respondents said Agent e-business was part of their digital strategy

7.) 67% of respondents have no formal ROI for analytics already deployed but its value is widely recognized

8.) 10% of respondents have well deployed and widely understood mobile plans

9.) 29% of respondents have deployed digital or digital strategy in some areas

10.)36% still trying to understand the value of social media data analysis

The six “hot topics” included in this report share two main characteristics. First, they enable potentially disruptive changes in one of more areas of the insurance value chain or traditional company operating models. Secondly, they are discussed more than they are embraced or understood.

As we noted last year, today’s “Hot Topics” are tomorrow’s basic capabilities. Increased, but still uneven, deployment rates in mobile, social, big data, and other areas indicate this evolution is continuing, and that some companies are evolving faster than others.

For more information about the latest “Hot Topics” download a free preview or contact me via email for a complimentary 30 minute consultation.

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Peer Review: What areas are insurance CIOs focusing on in 2015?

Staying on top of the latest Property/Casualty and Life/Health/Annuity insurance technologies and trends can be a pretty daunting task. In order to provide our clients with more insight into what their peers are focusing on in 2015, Novarica has compiled a list of its top ten most downloaded reports for the year to date.

There are two main benefits of this top ten list: it will save you time by highlighting only the hottest topics, and it allows you to see if your organization is on track with its IT strategy or if something is being overlooked. The top ten list below covers a variety of topics in critical areas, including: digital, reinsurance, policy administration systems, social, mobile, big data, analytics and much more.

Top Ten Most Downloaded Reports

1.) Life/Health/Annuity Policy Administration Systems
2.) Property/Casualty Policy Administration Systems
3.) Preparing for Digital Transformation
4.) Benchmarking the “New Normal”: 50 Advanced Capabilities for P&C Insurers
5.) “Hot Topics” for Insurers: Social, Mobile, Analytics, Big Data, Cloud, and Digital
6.) Report Rationalization: A CIO Checklist Report
7.) Internet of Things Update: An Executive Brief
8.) US Insurer IT Budgets and Projects 2015
9.) Architectural Governance: A CIO Checklist
10.) Business and Technology Trends: Reinsurance

In 2014 alone Novarica released over 30 reports. If you’re a Novarica client, downloading reports from list above is a great way to get up to speed on the latest trends and guidelines. For more information about Novarica’s published research, visit our online library or contact email.

Related Novarica Services

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Trends in P/C and L/H/A Policy Administration Systems for 2015

Martina Conlon

In Novarica’s US Insurer IT Budgets and Projects 2015 report, survey data showed that nearly 40% of Property & Casualty and Life/Health/Annuity carriers are currently replacing or planning to replace a policy administration system.

Core-Policy-Administration-Replacement-Chart

There are various reasons why P/C and L/H/A insurers are focusing their efforts on replacing policy administration systems, including:

  • The need to improve product development speed — and enhance product capability—to pursue new opportunities, or to accommodate market demands
  • The need to improve product development flexibility to enter profitable new niches whether in Life or P&C.
  • The need to attract and retain not just top producers, but also the new generation of producers who won’t stand for the challenges presented by legacy solutions.
  • A desire to find more cost-effective ways to support the ongoing operation and management of core-systems capabilities and reduce the sizeable costs associated with simply keeping legacy systems on aging brittle, platforms.
  • A desire to real-time processing, increase automation and gain internal efficiencies
  • Increased data accessibility demands as business intelligence and data analytics become a significant part of insurers’ strategic objectives. In order to better set rates/pricing, reduce fraudulent claims, and generate other predictive models, core system data must be available for analysis, whether within the system or via export and transformation.

Novarica’s recent research indicates that carriers continue to aggressively seek to replace their existing policy administration systems, or in some cases add a new system to the mix. The P/C policy administration market continues to flourish for those vendors with in-demand systems and reflects a number of trends most of which remain unchanged from last year.

While sales of L/H/A core systems have continued to lag the pace of their P/C counterparts, the level of interest has steadily grown, and growth in sales of core systems is likely to follow. In fact, the pattern of investment profiles for L/H/A carriers is following a very similar path to what has already happened for P/C carriers, albeit at a somewhat delayed pace, undoubtedly a consequence of the relative risks associated with implementation and the challenges related to in-force block conversions.

With a variety of vendor solutions available, choosing the right solution that best fits your needs can be a complex process. A great way to start is by checking out our latest Market Navigator Reports on Property/Casualty and Life/Health/Annuity, blog posts (links below), trends in policy administration webinar recording, as well as our vendor selection services.

To learn more the latest policy administration trends or to see how Novarica can help you with your vendor selection project, contact me via email for a complimentary 30 minute consultation.

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Top Stories in Life/Annuity

Steven Kaye

We’ve just published our Novarica Industry Intelligence Brief for Life and Annuity for January 2015. These reports highlight some of the most interesting industry stories from the past month, and present them along with Novarica commentary. Commentary is are available to clients only, but we’ve posted direct links to the stories below:

  • David Coons, EVP of executive search firm The Jacobson Group, reports that according to the firm’s research the insurance industry will need to hire 400,000 people to be fully staffed in 2020. Full story
  • Insurance Technologies, LLC sold a controlling interest to a private equity firm, Moelis Capital Partners. Full story
  • Ebix has resolved its outstanding issues with the IRS, with a resulting jump in shares. Full story
  • AIG has introduced a new life product, with optional riders including the ability for policyholders certified as critically ill or retirees to draw down
    against benefits. Full story – Best’s Review subscription required
  • Hannover Life Reassurance is partnering with LTCG to provide support services for the long-term care insurance portion of life/LTC hybrid products,including claims management (and access to historical claims and underwriting data), product development, state filing, and teleunderwriting. Full story – Best’s Review subscription required
  • MetLife has had success combining Facebook Custom Audiences with its own behavioral, call center, CRM, and demographic data to identify potential prospect segments, and testing what content does and does not work. The insurer has already seen its cost per lead almost cut in half and its lead-to-sale ratio more than double. Full story
  • Researchers at several universities are piloting the use of FitBits to better predict post-spinal surgery recovery times. Full story – free registration required.
  • New York state enacted legislation establishing a long-term care awareness program for consumers and making it easier to use life insurance benefits for end-of-life care. Full story
  • A Guardian Workplace Benefits Study finds most employees do not find their employers’ communications helpful for selecting benefits. Full story
  • MIB Group findings suggest that while applications (and thus sales) were down for 2014, looking at 4Q 2014 vs. 4Q 2013 applications and for the last 3 quarters of 2014 vs. the comparable quarters in 2013 they are beginning to turn around. MIB suggests a combination of marketing to younger customers and improved customer service via technology are to be credited. Full story

For Novarica commentary, clients can download the Brief at http://www.novarica.com/january-2015-novarica-industry-intelligence-brief-life-and-annuity/ .

Top Stories in Property/Casualty

Steven Kaye

We’ve just published our Novarica Industry Intelligence Brief for Property and Casualty for January 2015. . These reports highlight some of the most interesting industry stories from the past month, and present them along with Novarica commentary. Commentary is are available to clients only, but we’ve posted direct links to the stories below:

  • Google has been licensed as an insurance agent in 26 states.
    Full Story.
  • David Coons, EVP of executive search firm The Jacobson Group, reports that according to the firm’s research the insurance industry will need to hire
    400,000 people to be fully staffed in 2020.
    Full Story.
  • MetLife has had success combining Facebook Custom Audiences with its own behavioral, call center, CRM, and demographic data to identify potential
    prospect segments, and testing what content does and does not work. The insurer has already seen its cost per lead almost cut in half and its lead-to-sale ratio more than double. Full Story.
  • Researchers at several universities are piloting the use of FitBits to better predict post-spinal surgery recovery times.
    Full Story – free registration required.
  • Progressive has a partnership with OnStar now for UBI, with OnStar offering optional driving assessments to customers along with tips on improving their driving and the option to share their data with Progressive for potential insurance discounts. Full Story.
  • A Bain study on P&C carriers found that few carriers are good at both acquiring and retaining customers. Full Story.
  • CNA’s building a common enterprise data architecture, including internal and third-party sources of structured and unstructured data, a post-ETL space for data, and a space for integrating particular datasets for analytic processing either via traditional data warehouses or for use in dynamic operational issues not amenable to rules-based processing. Full Story.
  • 41 states have approved the Verisk Telematics Safety Scoring driver discount program, a behavior-based program that offers a set of analytical tools for telematics and usage-based insurance programs. Full Story.
  • Over half of respondents to a Princeton Survey Research Associates International survey of 1,001 American adults would not want to enroll in a
    Pay-As-You-Drive (PAYD) insurance program. Full Story.
  • A researcher at Digital Bond Labs has found security weaknesses in Xirgo Technologies’ OBDII device, used in Progressive’s Snapshot UBI program.
    Full Story.
  • Metromile is providing per-mile insurance for Uber drivers now.
    Full Story.

For Novarica commentary, clients can download the Brief at http://www.novarica.com/january-2015-novarica-industry-intelligence-brief-property-and-casualty/ .

Finding Gold in a Tough Market

Steven Kaye

An article in PropertyCasualty360.com points out the benefits to carriers of adopting by-peril rating, which allows carriers to understand the interrelationships of various perils and property-specific risks. Homeowners has traditionally been a notoriously volatile line of business, so anything carriers can do to smooth out profitability and losses is a significant win. By-peril rating can be used to cherry-pick more attractive risks, or to do a better job of weeding out undesirable risks, up front. Carriers can offer lower rates for properties built according to more modern building codes, or with risk mitigation measures in place. They can more precisely target their marketing initiatives as well. ISO research showed carriers using by-peril rating both grew their market share and had lower loss ratios than peers not using by-peril rating. With preliminary financials for 2014 indicating a deterioration in P&C underwriting results, the potential softening of the commercial lines market, and personal lines arguably being a commodity business, carriers must seize on any advantage to grow profitable exposures.

Carriers, particularly smaller ones, should not underestimate the challenge of obtaining data of sufficient volume and granularity. They should line up and verify potential data sources, ensure that data and related services are compatible with their business processes and systems, and compare vendor service levels and check references.

For more of Novarica’s thoughts on the use of master data management and analytics in personal lines insurance, or by insurers generally, check out some of our related research or send us an email.

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