Unexpected Competition: Only A Heartbeat Away!

Rob McIsaac

At Pegaworld this week, Dr. Mark Boxer, Global CIO at Cigna Insurance, delivered a powerful keynote address on the evolution of healthcare and the supporting technology in the United States. While acknowledging a range of challenges in the healthcare system today, he likened this to the opening lines from “A Tale of Two Cities”: it is The Best of Time and The Worst of Times, concurrently. The Best of Times component is characterized by the flood of new technology which is fundamentally allowing them to create and participate in a digital ecosystem that is like nothing we have ever seen before. The implications for other forms of insurance, including life carriers, are significant. The competitive game is about to get a whole lot more interesting.

The use of wearable technologies and related devices are anticipated to create a range of new connection points between customers and the carrier which allow for a far more interactive form of engagement. Through the use of these capabilities, Dr. Boxer talked about the transition from “sickness care” to “wellness care”, which allow them to refine how healthcare is integrated into consumer lives while making the process interactive. Monitoring of issues (e.g., diabetes, activity levels, etc.) is allowing them to create a lower cost model that has better outcomes. That’s a significant result that offers the promise of fundamentally re-architecting the nature of the relationship with their customers.

He also noted that their approach to client engagement starts at the point of “enrollment”. And, of course, this is the exact same enrollment process that Group Life carriers are participating in to gain mind, and wallet-share, from plan members. And therein lies a potentially significant challenge for traditional Group (and Individual) insurance carriers.

As we watch the transition from Group to Voluntary Benefits emerge, concurrently with demographic shifts that alter the face of tomorrow’s customer, there’s a clear wakeup call that is warranted. While many carriers continue to incrementally address issues related to aging technical environments in fairly traditional ways, considering like-structured companies as the future state competition, there are new threats that are emerging quickly. The Cigna depiction of how they anticipate weaving themselves into the daily lives of customers, where they are both receiving and sending information that is value added in both directions, is instructive. And, of course, armed with all the data and the digital relationship, the potential to cross sell other things to health insurance customers seems intuitively obvious. Being able to extend from traditional health coverages into other forms of coverage (e.g., life, disability, critical illness, etc.) seems a relatively modest extension of capabilities.

Which means that Group / Individual Life carriers, who anticipate that the voluntary benefits market will be a future state growth engine, may suddenly find themselves facing off against an unexpected … and unexpectedly well prepared … foe. The Internet of Things isn’t a theoretical construct or something that might impact insurance some day. It’s coming faster than many think. This will become very, very interesting!

As a result, the Tail of Two Cities metaphor could have a somewhat different meaning than Dr. Boxer intended. Armed with these capabilities, it could be the Best of Times for well prepared carriers … and the Worst of Times for those who fail to effectively plan for and integrate the “IoT” into their own operational fabric.

Creating an Enterprise Blueprint and Roadmap for Insurance Carriers

Mitch Wein

On our most recent webinar: “IT Strategy and Architecture” we talked about how the demands on insurance IT have never been higher. Insurer IT groups are tasked with delivering an ever-expanding set of capabilities, including digital transformation, faster speed-to-market, better distributor and customer service, and better analytical capabilities.

Unfortunately, too many insurers are dealing with the challenges of overly complex IT environments and brittle or redundant systems that cripple their ability to deliver business value rapidly or cost effectively.

A vision is needed to address the business transformation, while leveraging technology trends and leading industry solutions. From this, a roadmap of projects must be defined to implement that vision, while keeping the business running.

Creating an Enterprise Blueprint and RoadMap for Insurance Carriers

Creating an Enterprise Blueprint and RoadMap for Insurance Carriers

All too often there is a disconnect between business and IT, but having a common purpose and common understanding throughout IT and other business units enables true teamwork. Novarica’s new IT Strategy and Architecture consulting offering can help insurers protect their long term investments, while guarding against Business/IT disconnect.

For more information, please view our webinar recording or email me to set up a complimentary 30 consultation.

Top Stories in Life/Annuity for May 2015

Steven Kaye

We’ve just published our Novarica Industry Intelligence Brief for Life and Annuity for May 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:

  • MassMutual is cutting the term life application process from weeks to minutes using third-party data and algorithms. Full Story.
  • The National Association of Retirement Plan Participants offers a ranking of plan providers based on how well they help employees save for retirement. Full Story.
  • Employers offering voluntary benefits recognize the importance of mobile enrollment, according to a LIMRA survey. Full Story.
  • John Hancock’s purchase of Guide Financial gives them AI and behavioral finance tools to help both advisors and their clients.Full Story.
  • Will employers see more lawsuits from employees over excessive fees charged for retirement plan investments? Full Story.
  • HR software provider Zenefits is threatening benefits brokers’ business – and the market is rewarding it handsomely. Full Story.
  • The SEC may require mutual fund providers to provide disclosures of the effect of rising interest rates on the bond holdings of investors. Full Story.
  • NAIFA is trying to block implementation of the Department of Labor’s latest fiduciary ruling, and there may be some hope. Full Story.
  • Legal & General America launched a website to educate consumers on the need for life insurance and its real costs. Full Story.
  • Behavioral finance is all the rage, and LIMRA used it to understand why consumers don’t buy life insurance and how they can be encouraged to do so. Full Story.

For Novarica commentary, clients can download the Brief at:


Previous Novarica Industry Intelligence Briefs for Life/Annuity

Top Stories in Property/Casualty for May 2015

Steven Kaye

We’ve just published our Novarica Industry Intelligence Brief for Property and Casualty for May 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 Novarica clients only, but we’ve posted direct links to the stories below:

  • Munich Re and HSB are sponsoring the Plug and Play Accelerator’s Internet of Things Accelerator. Full Story.
  • Google Compare asks more questions of consumers, not less. But is this a good idea for carriers? Full Story.
  • Government-imposed limits on profitability – not just for health insurance anymore? Full Story.
  • Corporate risk managers expect widespread use of drones in ten years – or much less. Full Story.
  • Insurers offer savings to consumers in return for information shared from their iPhones, including location and vehicle make and model. Full Story.
  • GuideOne is installing sensors in insured properties to provide advance warning of equipment failure and resulting losses. Full Story.
  • Forget self-driving cars, what about self-driving trucks? Or planes? Full Story here and here.
  • ACE is providing predictive modeling and analytics to claims adjusters to help them nip potential high-severity claims in the bud. Full Story.
  • Chinese conglomerate Fosun follows its purchase of Meadowbrook by acquiring the remaining shares of Ironshore. Full Story.

For Novarica commentary, clients can download the Brief at:

Previous Novarica Industry Intelligence Briefs for Property and Casualty

Major Trends in Global Insurance and Reinsurance and IT Implications

Mitch Wein

I recently attended the Insurance Insiders Conference in New York. The presentation and discussion panels focused on three major areas of disruption in the global insurance and reinsurance industry: capital and regulation, competition, and technology.

Capital and Regulation

  • Large parts of the world are awash with capital looking for a place to be reinvested. This includes a large increase in alternative capital (ex. Diversified pension funds, endowments). Diversified capital allocation models are guiding where the money is going.
  • CAT Bonds (risk-linked securities that transfer a specified set of risks from a sponsor to investors) are growing. CAT insurance pricing is at an all-time low
  • Increased global regulation may cause a retreat from long-term products since not all firms are being treated equally (ex. SIFI-systemically important financial institution)


  • Rate reductions are persisting, especially in Property. However, Professional Liability is stable. A low interest rate environment will remain in the short-term. There is more price decreases on new business vs. renewal. The will be continued activity in M&A in insurance. There has been an industry consolidation in the Lloyds Marketplace
  • Foreign Insurers are exiting the US because of higher capital requirements-especially in the US Life and Annuity segment
  • Opportunities are emerging to transfer risk from the public to the private sector.


  • Advanced predictive analytics in reinsurance is helping to optimize returns for strategic capital
  • Increasing amount, frequency and types of data is driving innovations in specialty lines like drone based claim inspection for catastrophes and crop damage
  • Cyberrisk mitigation is gaining in importance and has led to a focus on enterprise risk management. Related areas of growth are privacy liability and network security. However, the risks around cyber are not well understood by underwriters. Additionally there is a risk of duplicate and overlapping regulations in this area.

Even in the first two areas, technology’s impact is being felt. The use of new technology allows not only more scale, but also enables firms to diversify, triggering M&A’s to exploit synergies. What was very clear was that global insurers and reinsurers can no longer think of themselves as somehow insulated from the effects of the rapid changes in information technology that are disrupting the more consumer or commodity lines of the market. Global insurers and reinsurers need to incorporate a deep understanding of technology issues, both internal and external, into their strategic planning.

Predictions of Insurance Future from 2011 are Materializing…

Matthew Josefowicz

In January 2011, I wrote a post on this blog highlighting three glimpses of the future of insurance. The three issues I called out were:

  1. Underwriting without questions, as illustrated by the Aviva/Deloitte pilot project featured in the WSJ in November 2010
  2. Agents optional, based on general trends, with the specific example of the NAIC basically throwing agents under the bus
  3. Maximum profitability, as illustrated by the industry’s acceptance of the minimum Medical Loss Ratio provision of PPACA

I asked insurers to:

Consider a future in which:

  • Underwriting requirements come from third-parties, not your own efforts
  • Intermediaries are only one channel among many
  • Your total loss numbers are constant from year to year at a mandated level

Is that a future in which your organization could survive?

I believe the first two, which seem far out now, will be commonplace by the end of the decade. I will be happy to buy the drinks at the 2020 IASA show if I am wrong.

The third is much more contingent on political winds. But if health insurers capitulate on this point, P&C and life insurers need to clearly differentiate themselves from health insurers in terms of public perception or face the risk of operating with the same constraints[emphasis added].

As we’ve pointed out in recent posts, agents are already just one channel among many, even in previously unthinkable lines of business like small commercial. I also recently came across an example of underwriting without questions, MetLife’s Xcelerate system, as reported in IIReporter.

Perhaps most concerning for insurers, however, is a recent example that indicates the third item — government-mandated maximum profitability — is not too far off. The ban by Florida and several other states on “price optimization” is an indication that political pressures may bring a PPACA model to P&C.

However insurers choose to try to address these changes, they cannot ignore them much longer. The industry is changing rapidly, and insurers must ensure that they can adapt their business models and the technology capabilities that support their business models.

Novarica Research Update: M&A and Insurer Accelerators and VC Funds

Matthew Josefowicz

With investor money flooding the insurance technology sector and tech company M&A activity at a fever pitch, Novarica has published two new reports: “Insurance Software M&A Update 2015 Q2” and “Insurer Accelerators and VC Funds: Buying Innovation”.

With the recent acquisitions of Agile Technologies and Cover-All by Majesco, Oceanwide by Insurity, and CCC Information Services and Mitchell International by a private equity firm, as well as a slew of other acquisitions over the last 24 months, there is continued activity in this still highly fragmented sector

Novarica’s “Insurer Software M&A Update 2015 (Q2)” brief provides an update on the M&A in the insurance software sector with an overview of the main participants, information about recent transactions, and predictions for future activity. Solution providers discussed include: Accenture, Capgemini, Cognizant, Computer Sciences Corporation (CSC), Ebix, Guidewire, HP, IBM, iPipeline, Insurity, Majesco, Microsoft, Mphasis, Oracle, SAP, Sapiens, StoneRiver, TCS, and Vertafore. A free preview of this report is available at: http://novarica.com/manda2015/

Insurance Software Mergers and Acquisitions 2015

Insurance Software Mergers and Acquisitions 2015

Not to be outdone, several insurers have established either accelerators or venture capital funds in recent years. The idea of insurers with dedicated venture groups is not a new one. The need to find alternative avenues for growth and for investment returns, combined with a fear of technology companies disrupting insurers’ business models, has led to renewed interest. Insurers interested in establishing their own groups should be clear in what the goals and risk profiles of these groups should be.

Novarica’s “Insurer Accelerators and VC Funds: Buying Innovation” brief looks at current trends and issues in this space and provides a list of recent examples of accelerators, incubators, and insurer venture funds active today. The need to find alternative avenues for growth and for investment returns, combined with a fear of technology companies disrupting insurers’ business models, has led to renewed interest. A free preview of this brief is available at: http://novarica.com/insurance-vc-buying-innovation/

For more information about these reports, please contact us at inquiry@novarica.com

Overcoming Reluctant Users: Part II

Jeff Goldberg

Back in January I blogged about an issue that comes up frequently when talking to insurers about change management: how to handle end users who don’t want to move to a new system. It’s a frustrating (and yet common) experience, with one, two, or a handful* of people not “getting” the value of a change that everyone else** believes in. A reluctant user doesn’t necessary throw up roadblocks or even complain too loudly, but a lack of positive engagement can still slow down or hinder a project.

  • *If it’s more than a few end users, then there are bigger problems that need to be addressed.
  • ** If “everyone else” is actually a code word for “just management,” see the above comment.

My original blog post received a lot of feedback, with some people questioning why a company would implement a new system that end users are reluctant to adopt. While I’ve tried to clarify that there’s a difference between reluctance from all end-users and reluctance from just a few, it also got me to wondering about the different reasons users might have for pushing back on change. There is obviously no common person called “end user,” and in fact every company is made up of a variety of different people with different motivations. There are power users who don’t want to start from scratch, users who fear for their jobs, users who question IT’s ability to deliver, users who are scared of change, and other scenarios that get in the way of a successful transition.

In response to this, we looked to the experience Novarica has had helping insurers prepare for new system implementations, talked to various CIOs who have gone through change management problems of their own, and also thought back to those times when we had been reluctant users ourselves. And so that initial blog post has now been expanded to a full report. It covers different scenarios and complications that cause some end users to resist a new system, and it aims to help an insurer plan for the kind of change that everybody can rally behind.

On Monday, June 22nd at 2 pm (ET) I will be speaking more about this subject on our CIO Series Webinar: Preparing for Digital Transformation and Overcoming Reluctant Users. Interested participants may pre-register online at: https://attendee.gotowebinar.com/register/120109254

Related Reports

Insurance, Big Data, and Game Changing Cost-Bases

Steve Papa
Board Partner
Andreessen Horowitz

Last week at the Novarica Insurance Technology Research Council Meeting, I got the chance to present and discuss some thoughts about how Moore’s Law has the potential to affect insurer value propositions and business strategies.

With chips getting faster and cheaper all the time, insurers have the opportunity to consider both incorporating new data sources and adding value-added services that would have been prohibitively expensive just a few years ago.

Screen Shot 2015-05-04 at 10.51.39 AM

To draw on another industry, take the example of Google Chromecast, a $40 device that has completely disrupted the Smart TV market. What if auto insurers leveraged this technology to provide a free, limited satellite radio device and to insureds who maintained a high driving score through a gameification app enabled by the same device?

As technology, data, and connectivity get cheaper and cheaper, insurance itself may migrate to being more like a SaaS offering and less like something that’s bought once and forgotten.

Is 2015 is the year the future arrives for insurance and technology?

Matthew Josefowicz

Last week, we held our 8th annual Novarica Insurance Technology Research Council Meeting (see here for Council info, agenda, and press release). This week, we’ll be blogging about some of the discussions and presentations.

One of the general themes of the Council meeting was the acceleration of the rate of change in technology and the effects on the insurance industry. As we pointed out in the keynote presentation of Novarica research, there’s a strong case for considering 2015 the “Year the Future Arrived” for insurers.



There are now real live examples of many of the things that industry watchers have been predicting for the last five years and more. To paraphrase Hemingway, changes comes slowly at first, and then all at once. Insurers and insurance IT leaders who are not prepared for rapid change need to start preparing now.

Clients and Council Members can download the full slide deck from the keynote presentation here.