Special Interest Group 2015: Annuities

Rob McIsaac

Earlier last week, we hosted our first special interest group meeting focused exclusively on annuities. Increasingly we have found carriers value opportunities like this to spend dedicated time on very specific lines of business. We were certainly not disappointed this time! One carrier noted that “This is the first event I’ve ever been to that is focused only on annuities, and I’m very excited about that!” Indeed.

For the event, we shared updated information from our Business and Technology Trends report series. The market continues to evolve as new products are brought to bear which improved competitive positioning for carriers but which may test existing technology infrastructures in ways that were not anticipated in the past. One of the key business drivers for the future is “time to market” for new and enhanced products and, in many cases, legacy systems are simply not up to the task of supporting new variations in product features or distribution channels. A variety of approaches for dealing with this were discussed by the group.

Another key issue area relates to electronic applications and the broader subject of Straight-Through-Processing. We used the meeting as an opportunity to unveil new research that we’ve done highlighting carrier deployment patterns and experiences with both electronic applications and electronic signatures. This research will be part of a future Novarica publication but the preview at this session provided for a highly engaged interaction. One of the things that we were particularly pleased with was our ability to share “lessons learned” with the various vendors which can provide key information to other carriers as they put together their own implementation plans.

Another area which prompted lively discussion was security. No doubt fueled by concerns associated with recent breaches at places like Target and Anthem, CIOs are acutely aware of the potential risks and challenges. In addition to talking through some of the characteristics of current environments, we explored a range of best practices which carriers can consider in their future investment plans. The use of ethical hacking as a means of exposing, in a controlled manner, important gap areas was particularly interesting.

This was the third in our series of special interest group meetings and we are particularly pleased with the level of interest and engagement that they are providing. If you would like to review the agenda or discuss the research material we shared at the session, please let me know. You can reach me directly at email.

Our next webinar for a specific line of business will be on Wednesday, March 18th at 2 p.m. (ET), and will focus on the business and technology trends we are seeing in the group insurance space. If you would like to participate, please make sure to pre-register today to secure your spot.

This is also a good time to remind Research Council members that our annual meeting is coming up at the end of April in Providence, RI. We already anticipate that there will be time dedicated to a follow-up discussion between the annuity carriers that participated in last week’s session. We look forward to seeing you there!

Project Plans Have a Shelf Life

Rob McIsaac

Recently, while making a run through the refrigerator for a late night snack, I happened to notice that almost everything has a “use by date.” While I don’t suspect things become poisonous on that date, the quality does appear to trail off at some point, ultimately leading to the product in question morphing into something else. In reality, some of these changes can happen mighty quickly! Think about how fast fine wine can turn into something that more closely resembles vinegar. Both useful fluids, but hardly interchangeable.

All of this got me to thinking about technology-dependent projects at insurance carriers. Regardless of how much time has gone into planning an effort, working to achieve IT/Business alignment, appropriate levels of sponsorship and the necessary architectural review–every project as designed and planned has a natural “shelf life.” If pursued outside of that window, the results of the initiative may well be significantly different than what was originally conceived and approved.

How can this be?

Projects are complex combinations of components that, when assembled correctly, lead to the desired outcome for a carrier. The elements that drive this include:

  • Technical: Versions of code change, infrastructure morphs and other projects that drive the core of the business can make assumptions invalid.
  • People: This has implications for both carriers and vendors. Having the right resources, at the right time, are crucial. Trying to field the B Team can add notable risk.
  • Political: Every significant change event requires executive sponsorship, organizational support and resource commitment. If an effort loses these elements due to changes in the political environment it can make a tough project impossible.
  • Vendor:  Vendors are in the business to make money and to keep things running on their end requires managing a pipeline of projects and a pool of resources. Delaying from agreed upon plans can lead directly to an effort to “crash” their plans. While a very large vendor may have capacity for this, small ones most certainly do not.

Get these right, and the project has a reasonable chance for success based on all the best practices from program/project management. Alternatively, taking a project and allowing it to sit in a shelf to be picked up and executed at some future date can have wildly unpredictable results. Context can change, support can change, even the fundamental business problem can change which, in worst of all possible worlds, can lead to a carrier “solving a problem that nobody has–anymore.”

In order to avoid this, carriers should have the courage of their convictions. Once a project is approved, organizations need to move smartly and efficiently toward execution. If an organization has legitimate reasons for holding up on an effort, they should take the time to re-plan and re-validate before pulling the trigger.

Failing to do this can lead directly to truly unfortunate “Ready, Fire, Aim” events that can have adverse career implications.

It’s All About The Customer Experience!

Rob McIsaac

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.

May Client Newsletter

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.


  • 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.


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:


  • Updated Website. We’ve re-launched our website, with improved navigation, new content, and a live chat function! Notable new pages include:
    • 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.

New Year’s Resolutions – Just Get a Little Something Done!

Greg Wittenbrook

Many of us have made New Year’s resolutions and often the same one year after year. Alongside our resolution to get rid of the extra baggage in the caboose, there is likely one to finally implement that solution that can help move your organization forward.  Like the over-stuffed caboose, everyone seems to want to do something about it but nothing seems to get done. In that light I am going to throw out a simple resolution – Get Something Done.

If you are reading this, you probably are someone that is generally pretty good at getting things done. Despite this, most organizations have a laundry list of projects that people want and know can benefit the organization but still have trouble moving forward. Budget, time, complexity, or culture may be getting in the way.  If so, rather than try to accomplish lots of big things, focus on accomplishing something. Pick a couple of areas and find a little nugget of value that can be done; then Do It!

I’ve put together a few ideas to help out…

  • Project Management – Kill a project that doesn’t have sufficient commitment or a business case that has been limping along because no one wants to call the baby ugly.
  • Mobile – Do a simple pilot project, perhaps some benefit calculators or a business dashboard.  Have some web services sitting around? Build a simple front-end.   Show that you have the capability to play in this space.
  • Social Media – Work with a social analytics company to demo their capabilities.  The tools are easier to use and more useful than your business partners may realize.
  • Vendor Management – Call a key vendor and have a very frank and open conversation about each other’s challenges.  Jointly solve the problem that has been brushed under the rug for awhile.
  • Infrastructure – Find that thing that it was decided a couple of years ago that it didn’t make sense to virtualize—and virtualize it.
  • Agile – Do a pilot.  You don’t have to commit to more than that but find out if it is right for you.  Get a coach in to help and do a few agile iterations.
  • Websites – Use free tools to evaluate your websites from a SEO/usability/accessibility perspective.  Use the tools to find out what people are really using your sights for.  Bring in someone with some usability skills to help.
  • Metrics / Alignment – Revisit your metrics.  Kill metrics that no one actually cares about or don’t really mean anything.  Grade yourself harder.   Look at all projects and tie back to business goals.
  • Culture / Innovation – Do a hackfest or innovation contest.   Invite the business in to discuss how projects are helping actual customers.   Have leadership cook breakfast for the staff.  Demonstrate all of the work complete by the team in the last month/quarter and discuss how it helps the business and why.
  • Enterprise Architecture – Kill off one of those pesky technologies that won’t go away.  Create a basic business component model.  Update your inventory of systems and technologies.

While you may have moved beyond most or all of these suggestions, that area that you haven’t been able to make any progress in is lurking and waiting.  So, take a new look at all of the things that you want to accomplish but haven’t been able to and find a little something that you can do.  Who knows what it will lead to?  Whatever these things are for you, resolve to just get something done.

Telematics: Key Issues and Trends

Thuy Osman

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.

Annuities Distribution Technology Trends

Rob McIsaac

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.

Customer Centricity: An Idea Whose Time Has Come

Rob McIsaac

While carriers have talked about customer centric business models in the past, surprisingly few have made significant progress in this space. The “prizes” are real and easy to describe: more engaged customers, better retention and perhaps the ultimate goal: greater levels of cross selling which translates into increased profitability.

In the market today, other industries are honing their craft in this arena through a combination of analytic capabilities, tools deployed for mobile customer utilization and cross channel capabilities that allow customers to start a transaction in one place and then shift “lanes” when the spirit move them. With another record setting online shopping holiday season now behind us, retailers like Amazon have continued to reset, forever, what we will think of as a good customer experience. Traditional competitors struggle to survive being “Amazoned”.

Concurrently, large US banks have been aggressively crafting their own customer-centric strategies. This now includes similar channel shifting capabilities, allowing customers to decide themselves what a “great” experience should feel like. For leading banks, this now includes providing value added advice and enabling channel-agnostic transactions which demonstrate a clear understanding of what it means to view a financial institution from the outside in … rather than the other way around. Informed, enabled and empowered customers remain loyal to a firm that anticipates their needs; somewhat paradoxically, this investment can lead to better profitability from improved service.

Leading insurance carriers are now waking up to this idea of customer centricity and putting meaningful resources behind actions targeted on attracting and retaining high value customers. Today, this is perhaps most clearly evidenced by P&C carriers that have moved to integrate web properties, call centers and mobile apps. Several have now created compelling and engaging experiences for clients while using technology to create competitive advantage for themselves. By using data analytics they are also able to share targeted advice with customers while position themselves to offer “next best ideas” that can introduce an Amazon-like component to interactions. By integrating social media into this mix they further enable a business model that allows customers to do business whenever, and however, they want.

This is possible for life and annuity carriers too, but it will require dedication of time, talent and resources. One of the largest US-based L&A carrier’s recent creation of a customer-centric strategy with an EVP-led enabling organization provides a potential glimpse into the future. There are emerging signs of integration between web and social media capabilities that are foundational to a customer centric, experience driven, model. While a small number of other carriers are also showing similar commitment to planning for the future, many are not. Another very large US-based L&A carrier hasn’t set up a Facebook capability to date; searching for them introduces a different company based in the UK with a surprisingly similar name. Another has no presence for their American operations although they do have a strikingly robust offering for customers in Lebanon.

As retailers and banks discovered, crossing the tipping point when mobile and social capabilities go from interesting curiosities to mission critical tools can happen surprisingly quickly. Insurance carriers should factor this into near term plans and budgets. This isn’t like fine wine; the problem won’t get better with time. Making up for lost ground later can be both difficult and expensive. Conversely, some of the investments in regulatory, compliance and security initiatives that are highly dependent on data analytics (e.g., Know Your Customer, transaction monitoring) can provide a meaningful down payment for customer centric initiatives, given that both are dependent on strong data analysis capabilities. This, in turn, can provide a terrific collaboration opportunity for CIO’s and their marketing counterparts. Now is a great time for meaningful action; the future will be here before we know it.

Novarica Celebrates Five Years

Matthew Josefowicz

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.

US Property/Casualty Rating Solutions: The Key Components

Karlyn Carnahan

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.