At our 8th annual Novarica Insurance Technology Research Council Meeting, discussion began with a definition of “digital” at the Enterprise Architecture and Digitization breakout session. Novarica stresses that digitalization encompasses the entire customer interaction lifecycle, from front-end to back-end. A common theme was that of silos: a given process might be automated, but still require manual elements to be fully executed. A example of this could be creating and exposing a form through a portal but requiring the form to be mailed in by the agent or customer and scanned in by the carrier back office. In part, this is a function of change management and budget – an agent portal project as a quick win has appeal compared to a more exhaustive transformation.
We explored how prepared carriers were for digital given the definition above. Clearly key emerging technology trends like IoT, social media, big data and cloud were pushing firms to reconsider what they needed to do to remain competitive. While some firms were doing regular Strength, Weakness, Opportunity, Threat (SWOT) reviews, many were not. All agreed that a SWOT analysis should be an ongoing effort.
As part of their digital transformation, many carriers were concerned about data quality (and thus resisting automation and subsequent “exposure”). They were also under investing in areas that will be critical to their digital success; many carriers do not have business and technology architects involved with their digital efforts or in some cases don’t even have a business or enterprise architecture group!!!
We briefly touched on security and the importance of making sure security risks are mitigated to avoid reputational, regulatory or legal exposure that could impact a digital insurer. Existing cyber security frameworks like the NIST framework released in 2014 can save carriers time and effort, by providing metrics and a framework that regulators are familiar with. Security exposure of vendor practices and products was mentioned as key to a carrier. We discussed requiring vendors to conduct security audits and report on the results, which can serve as a lever for negotiations.
Finally, we talked about the need to introduce a test and learn culture into the carriers, allowing projects to “fail fast” if they do not work well. We related this to the notion of Fast IT and how it compares with Core IT. Core IT will often use traditional waterfall methodologies and take a long time to evolve systems. In the new digital world Fast IT will behave differently. Fast IT will evolve solutions through Agile processes and allow for solutions to be “thrown-away” if they are not working out. We discussed examples like smartphone portal front-end apps for agents, brokers, or customers. All of the carriers participating felt that the Fast IT concept was new to their firms and will probably difficult to adjust to from a process and funding perspective.
After digital, we moved on to enterprise architecture. We discussed how a reference architecture can provide consistency across projects as well as help with project prioritization. This allows carriers to be proactive and not just chase the hot new technology and feeling constantly behind. Linking architecture governance, aligned to a reference architecture, to funding governance through logical gates was being done in an informal way in some carriers and not at all in others.
If you’d like to discuss enterprise architecture or digitalization further, please feel free to email me to set up a complimentary 30 minute consultation.
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- Architectural Governance: A CIO Checklist
- Preparing for Digital Transformation
- Ten Statistics About Social Media, Mobile, Analytics, Big Data, Cloud and Digital Technologies in Insurance for 2015
- Enterprise Data Initiatives Now Taking Center Stage as Insurers Look to Improve their Digital and Analytical Capabilities
- Digital Failings
Upcoming Novarica Insurance Technology Research Council Meetings
The Novarica Insurance Technology Research Council is a free, moderated knowledge-sharing community of nearly 400 insurer CIO members. Members represent a cross-section of property/casualty, life/annuity, and health insurers, and range from the very small to the largest companies in the industry. Some of our upcoming 2015 events include:
- Novarica Research Council Impact Awards
- Novarica Insurance Technology Research Council Special Interest Group: Regional Property/Casualty
- Novarica Insurance Technology Research Council Special Interest Group: Large Property/Casualty
- Novarica Insurance Technology Research Council Special Interest Group: Life