The Key to Agent Automation: Knowing What Your Agent Needs

Keith Raymond

Keith Raymond

Automation that enhances the agent experience and ultimately their selling and service capabilities is fundamental to enabling their success. But with so many potential areas to focus on, from portals to licensing and contracting to mobile, it can be challenging to know what to prioritize. Here are some best practices to help CIOs and business partners focus attention on the most value-added elements of agent automation:

  • Know your agent: A successful agent is someone who puts the needs of their clients first, has a positive impact on the people and community in which they serve, and takes pride in being counted on by their clients. Knowing the motivations of an agent provides a good base for understanding where you can get the most value from your investments.
  • Create an inventory of opportunity: Given the complex array of systems that provide support for the agent, a significant step is creating an inventory. There are a mountain of touch points that leave a lasting impression for an agent.To fully realize areas of opportunity, CIOs and their teams should develop a process map covering the agent interactions with all the touch points during the course of a business day.
  • Define metrics for success: The measures of success are likely to be a combination of things like improving the efficiency of submission to commission process, straight-through processing, aggregating access via single sign-on, and reducing agent onboarding times. Whatever the ultimate metrics may be, the process of working with agents and business partners to develop the metrics helps bring all parties together.
  • Understand mobile use cases and value: Mobility for agents has grown beyond calendar and contacts to more of a full agent “mobile office.” Depending on the use case, agents may be looking to access all of their data and applications from any device from anywhere at any time. A well thought-out and well executed IT strategy can support mobile applications by leveraging an open, service-oriented architecture.
  • Consider the impact of emerging technology: For most carriers, using today’s widely available digital technology and approaches will have the most immediate value in agent automation. But there are several emerging technologies, like gamification and wearables, whose potential values should be considered for inclusion on carriers’ roadmaps for the next few years.

Agents are heavily dependent on automation for every aspect of the engagement and service functions that support the ability and sell and service a client. The more CIOs can enable them through technology and process simplicity, the easier it is for them to do what they do best: develop relationships and provide peace of mind.

For more on this topic, see my recent CIO Checklist report:

Revenge of the Mutuals?

Rob McIsaac

An interesting article came out over the weekend that delves into the consolidation that has taken place among publicly traded life insurance companies, and contrasts this trend with the relatively stable number of mutual carriers that are in the market today. We are now the better part of two decades past the period when there was a significant demutualization effort which included notable, name-brand, national carriers. In that period, we have weathered multiple recessions, one of them the worst economic downturn since the 1930s, and emerged into a world that has experienced persistent low interest rates. Taken as a whole, these factors have produced a series of economic outcomes which were outside of the planning corridors that many carriers executed against. As the article suggests, carriers face some very interesting challenges going forward. For those with long tail liabilities such as life and annuity contracts, the conflicts associated with quarterly earnings reports and maximizing shareholder value appear to be particularly daunting.

There is more to this story, however, which may suggest some additional advantages for mutual carriers. Almost without exception, life carriers are grappling with aging technology platforms which may date as far back as the Kennedy administration. The blocks of business on these platforms are themselves old, and may be closed to new business. But because they were at the heart of these businesses over multiple decades they have become, through the magic of cost accounting, blocks of business which absorb significant overhead for carriers. For many companies, these platforms represent a significant drag in terms of being able to implement new products and services effectively. At the same time, however, these platforms, if they are walled off, can become quite stable and relatively inexpensive to operate. This can meaningfully influence both operational and financial outcomes for carriers.

We recently unearthed a 1995 chronicle from MIT which provides a fascinating view of the first 35 years of policy administration utilization in North America. The fact that many of the systems that were deemed to be aging in that 22-year-old report are still being used by carriers should give cause for concern to some!

In any case, as carriers plot their technology strategy for the future, addressing these old systems and blocks of business running on them will become increasingly critical. The investments and planning horizon required to make them successful may be easier for mutually owned companies to execute than it will be for their publicly traded competitors given their respective focus on long- versus short-term results.

Even as market competitive threats loom large, it is not just a technology challenge that many life insurance carriers face. There is an accounting and a reporting issue which carriers would be well advised to consider as they put their strategic plans in place.

Case Study Highlight: Core Systems Replacement at CSAA

Chuck Ruzicka

As we approach the announcement of the Novarica Impact Awards in the fall, we will be highlighting one Impact Award nominee each week on our blog. The Novarica Impact Awards are voted on by over 300 members of the Novarica Insurance Technology Research Council, making them the only purely peer-reviewed awards program in insurance technology.

Many of the 2016 Impact Awards nominees cited cross-functional teams, with resources familiar with multiple business areas, and the use of Agile methodology as keys to a quick and successful delivery. Many projects focused on systems consolidation and speed, combining disparate core systems to improve product development and time to market.

This week, we look at a CSAA core systems replacement initiative.

Multiple acquisitions and expanded partnerships among AAA regional clubs left CSAA with a large, complicated integration architecture that spanned multiple legacy core systems. CSAA needed to replace and consolidate these systems in order to improve infrastructure and policy service, as well as cut costs while laying the groundwork for growth. The project required over fifty internal and external integrations of the organization’s six PAS and three billing systems. While this was a substantial organizational challenge, the company ultimately credits success to its prioritization of the project and use of top project management. Moving program analysts into sustaining operations roles and establishing support and advisory were also key factors. Ultimately, the replacement initiative reduced time-to-market for new products by 50% and decreased underwriting expense ratio by 1%. CSAA also reported a savings of $26 million as a result of retiring two legacy systems, and its DPW increased from $2.6 billion to $3.2 billion.

For more detail on this project and more than 30 others, including cases from MetLife, AIG, Michigan Millers, and Aflac, see Novarica’s Best Practices Case Study Compendium 2016.

Case Study Highlight: Rapid Product Launch at Legal and General

Tom Benton

As we approach the announcement of the Novarica Impact Awards in the fall, we will be highlighting one Impact Award nominee each week on our blog. The Novarica Impact Awards are voted on by over 300 members of the Novarica Insurance Technology Research Council, making them the only purely peer-reviewed awards program in insurance technology.

2016 Impact Awards nominees consistently cited cross-functional teams, resources familiar with multiple business areas, and the use of Agile methodology as keys to a quick and successful delivery. Many projects focused on systems consolidation and speed, combining disparate core systems to improve product development and time to market.

This week, we look at a Legal and General initiative to enable rapid product launch.

Legal and General sought to expand the reach and market presence of its pension risk transfer product within the United States. Legal and General updated existing systems to include 90% of the most common retirement and annuity products in just 100 days. Agile methodology and program structure created a common team understanding of the initiative, and both were critical to the rapid delivery of the project. The team also notes that internal communication was always open, frequent, and responsive, and that executive support from the project sponsor was consistently supportive. Subject matter experts that provided user feedback were also valuable assets to the project. The finished project includes improved payment processing, new business onboarding, and product build-out. Despite its short timeline, the project remained on budget at $1 million and also changed 80 COBOL and 150 Delphi programs. Since its delivery, the new system has allowed for the addition of over $500 million in new business within six months.

For more detail on this project and more than 30 others, including cases from Aflac, Heritage, Michigan Millers, and Trustmark, see Novarica’s Best Practices Case Study Compendium 2016.

Insurers Need to Focus on Time to Value for Core System Replacements

Jeff Goldberg

Insurance core systems are not going to last thirty years anymore. That’s one of Novarica’s key messages about core system replacement. The pace of change, as always, is increasing, and a system an insurer puts in place today will have a lifespan of about ten years. Sometimes systems stick around longer than their actual lifespan–as a platform for legacy data or as a system that’s been offloaded to a BPO–but the new policies and claims will be flowing elsewhere.

At the same time, the time to implement new core systems has been increasing. Modern core systems have made huge improvements: they are configurable, have open architectures, accessible data, and help drive best practices at an organization. Unfortunately, insurers are spending years putting them into production. On average, mid-size insurers take 2-4 years (if not longer) for a complete implementation of all lines and states. These long timelines are partially driven by insurers looking to take a slow rollout approach to minimize risk. It’s also because insurers take too much advantage of the flexibility in configurable modern solutions.

Whatever the reason for these long timelines, it’s made more alarming when one considers the lifespan of the system. A system that will last ten years takes 4 years to implement? That means an insurer spends almost half the system’s lifespan putting it into production! This is not a sustainable trend.

What should an insurer looking to replace a core system do about this?

  1. Focus on reducing implementation timelines with the vendor. Push them for reasonable but aggressive milestones, but remain skeptical unless they’ve proven those timelines with other clients.
  2. Look at time-to-value. Understand the difference between getting everything into production and getting something of value. Even if there’s a longer timeline for the whole project, an insurer should be live and seeing real results early on in the implementation.
  3. Accept the system’s built-in best practices. Any time the team considers configuring the system away from its out-of-the-box behavior, someone should be pushing back and asking whether that change is really necessary.

There is some good news. When an insurer chooses a new core system, the goal isn’t just to find the best system for today but the best system going forward. A vendor will continue to improve and expand their offering, so understanding the product roadmap is just as important as understanding the current feature set. It’s the insurer’s job to work with the vendor to take frequent upgrades and keep the system up-to-date.

If an insurer follows the upgrade path, putting the time and resources into continual modernization, that means in ten years’ time the system they put in place today will hopefully have evolved and grown into a new system that reflects the latest trends and technology. So a ten-year lifespan doesn’t necessarily mean that an insurer will need to start a brand new vendor selection and replacement project. The new system in ten years might be with the same vendor they started. On the other hand, if the insurers hasn’t kept up-to-date, then they will find themselves running the next legacy system. The cost of upgrade will have grown so expensive that it’s as expensive as bringing on a brand new system. So either the insurer puts the time and resources into upgrading all along or they put that into another system replacement project in ten years.

This means an insurer looking to replace a core system should follow one more rule:

    4.Talk to the vendor about their upgrades and how to start on the right upgrade path early and often. If the overall implementation timeline is more than a year, then the insurer should go through at least one upgrade before that initial project is even complete.

As an industry we need to focus on getting a faster time to value for core system replacement projects. But we should also be making sure the systems we put in place today don’t become legacy before the system is even live.

Adapt or Die? Not Really.

Matthew Josefowicz

There’s a lot of hype along the lines of “adapt or die” when it comes to legacy systems replacement for insurers. Unfortunately, the urgency in this statement is misleading. Legacy systems are not a Y2K problem – there’s no ticking time bomb. And legacy systems or not, it takes an insurance company a long time to die. Policies are sticky. Renewal rates are high as long as you don’t raise premiums or stop paying claims.

A more accurate, but maybe less catchy, slogan might be “Adapt or Decline.” Without digital channels, effective data analytics, and agile core systems, insurers will face declines. Their agents and customers will first tolerate and then resent their poor communications capabilities. Their actuaries, underwriters, and claims adjusters will start to under-perform the market for lack of data and analytical capabilities. Their product freshness will grow stale compared to more agile peers as core systems inhibit speed-to-market.

Legacy replacement is not about avoiding death – it’s about making the hard decision to arrest the decline sooner rather than later.

Related Research:

The 13 “Don’ts” of Core Systems Implementations

Chuck Ruzicka

Implementing a new core system is always a learning process for an organization. While every insurance company is different, all of their system implementations tend to encounter the same sorts of difficulties. In my most recent executive brief, I outline the following 13 common mistakes to avoid in core systems implementations. Keeping these 13 “Don’ts” in mind will help to reduce the risk associated with these challenging transformational projects.

  1. Don’t Expect Too Much from Solution Providers and SIs. While they have experience, neither the solution provider nor the SI should be asked to lead or manage the entire project. Carriers must maintain overall ownership of the project.
  2. Don’t Ignore Solution Provider Recommendations. Solution providers are the experts in what their system can and cannot do. Respect their expertise. Carriers should explore configuration approaches exhaustively before thinking about asking for system changes.
  3. Don’t Create Win/Lose Situations. Micro-managing solution provider staffing, costs, and actions can be counterproductive. Instead, insurers should manage outcomes and agree on work processes and how transparency will be created. The end goal of a successful implementation should be a strategic partnership.
  4. Don’t Be Afraid to Create a Backlog. It is better to go live faster with a base system and learn from it than to go live later with a feature rich system that may be underutilized. Insurers should communicate this clearly to business users, assuring them that the initial release is not the final product, and that backlog items will get delivered.
  5. Don’t Ask to Change the System until You Understand It. Insurers should examine configuration options extensively—most modern systems can meet most needs through configuration rather than customization. Insurers should be open and understand suggested alternatives.
  6. Don’t Over-Engineer Your Workflows. Too many carriers build multiple business rules and notifications only to take them out in their second releases. Insurers should understand work queues and query capabilities, and ask whether business users would prefer query and queue tools or rules and notifications.
  7. Don’t Build Unnecessary Control Reports. Many companies have hundreds of reports that modern systems make obsolete. Modern systems accomplish all these with filters and views within work queues.
  8. Don’t Perpetuate Legacy Master Data. Legacy systems with poor data structures or configurability often made it easier to embed payment types, LOBs, and other business data into fields meant to do something else. Insurers should clean up these tangled data structures rather than perpetuate them.
  9. Don’t Convert Data When You Don’t Have To. Carriers should understand the cost for converting historical policy data and detailed transaction data before committing to expensive conversion projects. Data warehouses, document management systems and legacy inquiry environments can often be viable and much cheaper sources of the required data.
  10. Don’t Treat This as a Part-Time Job for Senior Leaders. Insurers need to free up their best people and backfill for them to get these projects done fast and right. Full-time project managers, adequate-skilled BAs and adequate testing resources must be assigned to complement the development team and solution provider resources.
  11. Don’t Skimp on Environments. Having too few environments can create artificial constraints that delay the development effort and limit the productivity of a carrier’s most expensive resources.
  12. Don’t Be Afraid of Risks, Manage Them Instead. Carriers can manage implementation risks by resourcing teams adequately, investing in quality assurance, creating transparency, and having the end users review deliverables from each sprint. The financial risk of cost overruns must also be managed. Successful carriers assign portions of the overall program budget to each project and work stream in advance.
  13. Don’t Expect the Organization to Change on Its Own. Many individuals within an organization will be apprehensive about the impact of the changes that implementation projects will trigger. Carriers should align the organization by communicating the need for change and the benefits to be achieved. The end goal is a culture that embraces and contributes to change.

Implementation projects are often painful and downright ugly. Ironically, carriers typically end up better prepared for the project after they complete it than before they start it. Avoiding these 13 “don’ts” can help insurers avoid pitfalls sooner rather than later.

Novarica Council Gathers Insurer CIOs to Address The First Year of the Future

Matthew Josefowicz

Nearly 70 IT leaders from more than 50 insurers gathered last week at the 9th Annual Novarica Insurance Technology Research Council Meeting to participate in panels and workshop sessions with their peers, get insights from Novarica’s senior team, and attend keynote sessions from outside experts on operational transparency and cyber-security.

The First Year of the Future

We dubbed last year “The Year the Future Arrived” for insurance, when nascent trends like wearables, Internet of Things, consumer internet giants’ interest in the sector, and a growth of direct sales beyond personal lines became a reality. This year, the clock is no longer counting down, but counting forward.

Keynote: Nine Trends and Issues…


My keynote focused on our Novarica Nine for 2016 and Beyond, looking how these and other trends are shaping the industry, as well as what kinds of technology strategies insurers are taking to address these trends, and how they are managing their IT organizations to deliver these capabilities.

…100 Technology-Enabled Capabilities


We also reviewed our expanded “Benchmarking the New Normal” framework, which we will publish this summer, looking at deployment rates for 100 key technology-enabled capabilities across functional areas like product, marketing, distribution, customer engagement, billing, claims, and finance/operations and technology areas like data, digital, and core.

CIO Panel: Core, Agile, Evolving Customer and Employee Dynamics

Our CIO Panel, which included Kate Miller of Unum, Scott McClintock of OneBeacon, and Paul Brady of Arbellla, addressed strategic issues ranging from core systems replacement to embracing agile development to redesigning their organizations to make insurance IT an attractive career option for millennials.

Operational Transparency for External and Internal Customers

Our guest keynote, associate professor Ryan Buell of Harvard Business School, presented his research on operational transparency and its impact on customer service to a tremendously responsive and engaged group. We’d invited Dr. Buell to join us because his research is so applicable not just to the insurance customer experience, but to the relationship between IT and other business units. See this recent post for more on this session

Novarica Research on Core Transformation, Data, Digital

On the second day, the Novarica panel of Rob McIsaac, Martina Conlon, Mitch Wein, and Jeff Goldberg from our team discussed some of their recent research and customer projects in areas like core systems selection, transformation project assurance, data strategy, meeting agents’ digital needs, and a wide range of other trends and best practices.

Discussion Groups of CIO Members Focus on Their Key Issues

Special interest group discussions for group voluntary benefits, individual annuities, individual life, personal lines, specialty, commercial lines, and workers comp explored recent research relevant to each sector. In discussions co-led by a Novarica expert and a CIO chairperson, these groups addressed topics like enrollment standards, impact of the DOL fiduciary ruling, market dynamic changes, ISO rating, and core systems vendors.

Cyber-Security Threat Evolution and Preparation

Distinguished professor and Department of State cyber-security adviser Dr. John Savage gave a closing keynote on the cyber-security, emphasizing the importance of managing security beyond perimeter protection and staying engaged with industry groups to monitor the evolution of new threats globally.

Knowledge-Sharing and Networking

novarica-councilCouncil members valued the opportunity to network and learn from each other in a private, vendor-free environment, and many of the special interest groups have already made plans to meet again later this year. We’ll be publishing a report summarizing the discussions and panels next month, and the 10th Annual meeting will occur in late April, 2017.

For more information on joining the Council, senior insurer IT executives are invited to visit and request membership. Membership is free and has no obligations.

Policy Admin, Corporate Governance, and Disrupted Distribution

Matthew Josefowicz

Policy administration system replacement and evaluation activity is at an all-time high across the industry. Across both life/annuity and property/casualty, policy administration systems vendors are offering suites that include not just traditional policy and rating functions, but billing, claims, portals, documents, and business intelligence capabilities.

Yesterday, we published our 2016 Novarica Market Navigator on P/C PAS solutions (complementing the LHA edition published last month). This report covers more than 50 vendor solutions, with individual profiles averaging more 10 pages, providing detailed information on the functionality of all of the sub-components on the system. These reports also include single-page executive summaries for each vendor.

Together, they provide more than 900 pages of research on these important vendors. Jeff Goldberg and Tom Benton will review and discuss this research in a webinar on Wednesday at noon.

Large strategic projects like policy administration system replacement highlight the importance of corporate governance when it comes to technology strategy. According to our recent research, 89% of insurer CIOs say their board members don’t know the right questions to ask about technology, and end up overfocusing on risks rather than opportunities. Frank Petersmark and I will discuss this on a webinar on March 28.

Life and retirement board members will have a lot to think about as the new DOL regulations take effect, requiring sellers of retirement products to act as buyer fiduciaries, and completely disrupting distribution in this marketplace. Several large insurers have cited this change as the reason for divesting their distribution arms, and more change is afoot. Rob McIsaac has been discussing this with our annuity and retirement Council members, and shares his thoughts in a new executive brief.

Policy Administration Systems: A Gateway to the Future

Rob McIsaac

With a rapidly changing and fragmenting market place for insurance, core replacement is becoming increasingly essential the L/H/A space.  Updating of legacy systems is important for capabilities like customer experience, BI/analytics, and product innovation which become key differentiators in an increasingly competitive, and transparent, world.

In response, vendors for L/H/A policy administration systems are offering more options for implementation to lower risk and cost. However, so many options can make the selection process seem daunting.  Our most recent Novarica Market Navigator report provides an unparalleled 284 pages of detail about the current market and the vendors in it.

When selecting a solutions provider for a policy administration system, there are a number of factors that carriers need to consider. A well-developed system should integrate downstream and back office systems. It can support either single or multiple lines of business, and it may also interface with single or multiple distribution channels. The system may also offer a suite of capabilities, and if it doesn’t, it should be designed to interface with solutions providing those other mission critical capabilities.

The future has arrived, and L/H/A carriers have renewed their focus on policy administration system replacement in 2016.  Although there are many factors and options to consider the reality is that carriers across most lines of business now are recognizing that the technical platforms that have served them well in the past simply lack the flexibility or capacity to deal with an evolving economic environment.  This new Market Navigator report can be a “must read” for those developing strategic plans for the future.

Related Reports

  • Life/Health/Annuity Policy Administration Systems 2016