Talking to the Board, Talking to Millennials (and How the Two are Related)

Matthew Josefowicz

As insurers increasingly become tech companies that sell insurance, ensuring that the highest levels of management understand that technology is a source of competitive advantage rather than a risk should be on every CIO’s list of priorities for 2016.

Our annual Quick IT Benchmarks report provides Insurer CIOs with data on the state of IT spending and initiatives at their operational peers. These benchmarks are designed to provide both an opportunity for self-assessment and a tool to help CIOs communicate with senior management at their companies. In a recent report on Technology and Corporate Governance in Insurance (check out the webinar here), we found that few corporate boards have the experience to manage IT in a strategic way, yet that’s precisely what will be required over the next few years as boomers retire and millennials take their place in society.

This generational change, and the change in mindset it will necessitate in insurers, is the real theme of our recent report on the Internet of Things. While the IoT is not exactly pervasive yet, the larger point is that it’s symptomatic of a change in the expectations consumers, agents, and employees have of technology. Proactive, usability driven, smart – how many insurer’s systems currently measure up to these expectations?

Related Research

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.

Why Aren’t Insurers Doing More With Their Data Strategy?

Jeff Goldberg

While the business intelligence space has matured greatly in the last decade, it has been and remains an area where insurers need to work with a variety of platforms and tools to build out their capabilities. This requires a mix of technical skillsets, business expertise, and vendor relationships. While few efforts at an insurer are more complex or time consuming as a core system replacement, a major BI initiative will eventually touch all aspects of an organization. I will be presenting more on this topic in a webinar on December 1, 2015.

Today there are more vendors that provide a full business intelligence suite which includes the data layer, the industry-specific data models, the presentation and visualization tools, and the pre-built insurance reports and dashboards. But these suites still need to be tailored to and integrated into the rest of the insurer’s environment. Some policy administration system vendors are either pre-integrating with or releasing their own business intelligence suites. This does simplify the deployment but adds another variable to the “suite vs best-of-breed” decision, and until these options have more production exposure most insurers are still opting for best-of-breed.

For now, most of these approaches don’t provide some of the ancillary but very important data and analytics areas such as predictive modeling tools and the models themselves, the use of aggregated third-party data sources, or the emerging area of big data. And no matter what approach an insurer takes, it is a near-universal condition that there will be siloes of historical data that need to be considered with or migrated into the new BI solution, and that will take time and effort.

So despite plethora of vendor options and the general acknowledgement across the industry that good business intelligence is key to ongoing success, why aren’t more insurers further along in their data strategy?

1. Most insurers struggle with multiple legacy systems and siloes of disparate data, and they are still at the first steps of bringing that data together.

2. The data that does exist in the organization is of variable quality or completeness. New systems don’t immediately solve that problem without a broader plan in place.

3. Insurers and core systems have traditionally looked at data from a policy view, complicating the effort to move to new models that tend to take a 365 degree customer view.

4. Many insurers still have no formal data governance in place and lack organizational agreement on data definitions.

A good vendor partner can help put the framework and some tools in place to solve the above four roadblocks, but it requires more than just technology. It requires process and cultural change, which can’t be driven solely by IT.

Many insurers are still looking for a data champion to help push a strategy across the organization and get buy-in from other business leaders. As organizations mature, this data champion role is often formalized as a Chief Data Officer (CDO), and that person typically has a strong data background. But for insurers who are still looking to get a data strategy off the ground, it’s most important to find a leader who is respected in the organization and who is passionate about the value that good business intelligence can bring, even if they have little data experience themselves.

Related Reports:

  • Business and Technology Trends: Business Intelligence
  • Novarica Market Navigators: Business Intelligence Solutions
  • CIO Best Practices for Effective Board Communication

    Frank Petersmark

    While studying for my PhD in history I came across hundreds of examples of good and bad leadership. The one thing all good leaders had in common was their ability to clearly communicate and get people to take action. Each of these leaders had their own unique styles. For example, John Kennedy and Winston Churchill would use words, Napoleon and Henry VIII would use actions and Rosa Parks and Mahatma Gandhi would use silence.

    So what does all of this have to do with how CIOs and their boards of directors communicate with each other?

    One of the differences between more successful and less successful CIOs is their ability to communicate effectively with their boards. Being able to communicate effectively with your board will help make securing organizational support for IT initiatives, such as funding and resource commitments much easier, as well as achieving the strategic goals of IT, which, if aligned properly will benefit the entire organization.

    Developing a common communications approach is a critical part of the CIO function. The checklist below is a great place to start for board meetings, presentations and for an IT leader’s overall communications with their board members.

    • Speak their language, not IT’s
    • Keep things simple
    • ABC – Always Be Contextual
    • Talk about organizational benefits derived, not technology functionality and capabilities
    • Present options, but clear about which one is best and why
    • Don’t hide the risks
    • Paint a picture of what the organization looks like after the effort
    • Recap and ask for support, and if necessary, sponsorship
    • Return with progress reports – good, bad, and ugly

    On Thursday, September 24th at 2 p.m. (ET) I will get into more detail and provide additional insights into the best practices above. This 30 minute webinar will be open to all insurance CIOs and IT executives. To secure your spot, visit:

    I would also like to invite Novarica clients who haven’t downloaded my new CIO Checklist Report: Best Practices in Board Communications for CIOs to download it today at:

    New Webinars for August and September

    Paul Ptashnick

    We’ve been averaging two free webinars per month this year, covering topics ranging from Hot Topics in Insurance IT, Trends in Policy Administration, P/C Claims, Master Data Management, Report Rationalization, Big Data & Analytics and much more. These recordings may be viewed at: (Current clients may also download the slides).

    In August and September we’ll be hosting three more webinars. These 30 minute webinars will cover trends, issues and best practices for Small Insurance Carriers, P/C Billing and CIO Board Communication. Registration is open to all insurance professionals.

    Challenges and Best Practices for Small Insurance Carriers
    Tuesday, Aug 11, 2015
    2:00 – 2:30 PM (EDT)

    Trends in P/C Billing
    Tuesday, August 18, 2015
    2:00 – 2:30 PM (EDT)

    Best Practices for CIOs in Board Communication
    Thursday, September 24, 2015
    2:00 – 2:30 PM (EDT)

    In addition hosting our own webinars, we frequently appear on webinars hosted by media outlets or others. For example, on August 20th, Jeff Goldberg, VP of Research & Consulting will be participating in an Insurance Networking News webinar titled “Core System Modernization: Approaches and Options”. Registration and additional information is available at:

    Over the next few months we’ll be adding more webinars and meetings to our event calendar. To stay on top of the latest events, make sure to bookmark and subscribe to our Newsletter at

    An Honest Look at the State of Big Data in Insurance

    Jeff Goldberg

    With the recent publication of Novarica’s Analytics and Big Data at Insurers report, it’s time to take an honest look at the state of big data in the industry. One of the most telling–and disappointing–charts showed that of the insurers working with big data, seventy percent were using traditional computing, storage, database, and analytics technology, meaning they’re working with SQL databases in their existing environment. Of all the other technology options (Hadoop, NoSQL, columnar databases, etc) only a small percentage of insurers use them and almost no insurer uses them extensively.


    Compare that to the percentage of insurers who say they are using big data sources, which is significantly higher than the percentage of insurers using big data technology. This includes third-party consumer or business data, geospatial data, weather data at the top the list, with audio/video data, telematics, social-media content, and internet clickstreams lagging behind. But what’s really happening when those big data sources are loaded into a traditional structured database? Most likely, a few key elements are pulled from the data and the rest is ignored, allowing the so-called big data to be treated like “small data,” processed along with all the policy, claims, and customer data already being stored. For example, while a weather feed might be coming with minute-by-minute updates, most insurers are probably just pulling region condition along with daily temperature highs and lows, filtering it down to a subset that stores easily. While I’m not saying such reduced data doesn’t augment an insurer’s understanding of incoming claims (for example), it’s far from what we think about when we imagine how a big data analysis of the weather might impact our understanding of insurance claim patterns.

    There’s no denying that there are a few exciting use cases of insurers truly leveraging big data, but it’s still extremely limited. The industry as a whole is getting much better at data analysis and predictive modeling in general, where the business benefits are very clear. But the use cases for true big data analysis are still ambiguous at best. Part of the allure of big data is that insurers will be able to discover new trends and new risk patterns when those sources are fully leveraged, but “new discoveries” is another way of saying “we’re not yet sure what those discoveries will be.” And for many insurers, that’s not a compelling enough rationale for investing in an unfamiliar area.

    And that investment is the second problem. The biggest insurers may have the budget to hire and train IT staff to work on building out a Hadoop cluster or set up several MongoDB servers, but small to mid-size insurers are already stretched to their limits. Even insurers who dedicate a portion of IT budgets to innovation and exploration are focusing on more reliable areas.

    What this means is that insurers–no matter how many surveys show they anticipate its adoption–will likely not see a significant increase in big data tech. However, that doesn’t mean the industry will let big data pass it by. Instead, much of the technology innovation around big data will need to come from the vendor community.

    We’re already seeing a growing number of third-party vendors that provide tools and tech to do better analysis and get deeper understanding from big data, a second-generation of big data startups. Most of these vendors, however, expect that the insurer will already have a Hadoop cluster or big data servers in place, and (as we know) that’s exceedingly rare. Instead, vendors need to start thinking about offering insurers a “big data in a box” approach. This could means SaaS options that host big data in the cloud, appliances that offer both the analysis and the infrastructure, or even just a mix of professional services and software sales to build and manage the insurer’s big data environment on which the licensed software will run.

    We’ll also begin to see insurance core system vendors begin to incorporate these technologies into their own offerings. The same thing has happened for traditional data analytics, with many top policy admin vendors acquiring or integrating with business intelligence and analysis tools. Eventually they’ll take a similar approach to big data.

    And finally, some third-party vendors will move the entire big data process outside of the insurers entirely, instead selling them access to the results of the analysis. We’re already seeing vendors like Verisk and LexisNexis utilize their cross-industry databases to take on more and more of the task of risk and pricing assessment. Lookups like driver ratings, property risk, and experience-based underwriting scores will become as common as credit checks and vehicle history. These third-party players will be in a better position to gather and augment their existing business with big data sources, leveraging industry-wide information and not just a single book of business. This mean that smaller insurers can skip building out their own big data approach and instead get the benefits without the technology investment, and they can compete against bigger players even if their own store of data is relatively limited.

    So while the numbers in Novarica’s latest survey may look low and the year-on-year trend may show slow growth, that doesn’t mean big data won’t transform the insurance industry. It just means that transformative change will come from many different directions.

    On Tuesday, July 14th at 2 pm I’ll be hosting a Business Intelligence and Analytics webinar, which will review the recent report, go into more detail on big data, and cover how insurance is being transformed by the growth in available data and information both inside and outside the enterprise. For more information, visit:

    Related Report

    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.

    New Webinars Announced for April

    Business & Technology Trends: Specialty Lines
    Thursday, April 16th from 2 – 2:30 p.m. (ET)
    Presenter: Mitch Wein, VP of Research & Technology
    Pre-registration required

    The specialty lines marketplace continues to be extremely competitive and requires a significant amount of operational flexibility to meet the needs of the insurer and the insured. Across the industry, insurers continue to make investments across the Novarica Insurance Core Systems Map to drive growth and improve operational efficiencies. On Thursday, April 16th Mitch Wein will provide in-depth analysis on current business and technology issues in specialty lines, data about the marketplace, and examples on how specialty insurers are leveraging technology to help attract, retain and profitably serve clients.

    IT Benchmarking for Insurers
    Tuesday, April 21st from 2 – 2:30 p.m. (ET)
    Presenter: Matthew Josefowicz, President & CEO
    Pre-registration required

    External benchmarking data is an important tool for insurer CIOs in both self-assessment and communication with senior business management. Benchmarking data can provide critical support for spending and budgeting decisions and can highlight potential areas of concern. On Tuesday, April 21st Matthew Josefowicz will present findings from the Novarica Insurance Technology Research Council Quick Benchmarking Poll, which takes a “Supply and Demand” approach to IT, allowing organizations to gain a better understanding of the significance of peer data.

    Related Blog Posts

  • 5 Technology Initiatives for Specialty Lines Insurers in 2015
  • Commercial/Specialty Underwriting Automation: Cui Bono?
  • Related Reports

  • Business and Technology Trends: Specialty Lines
  • Quick IT Benchmarks for Insurers 2015
  • 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!

    Webinar: Group Life/Annuity/Voluntary Benefits

    Rob McIsaac

    In my last blog post I wrote about seven key findings from our Business & Technology Trends: Group Life/Annuity/Voluntary benefits report. In this post I would like to quickly highlight some of the top technology priorities, which I will be covering in more detail during our webinar on March 18th at 2 pm (ET).

    Technology is playing an ever larger role in insurers’ ability to attract, retain and profitably serve clients in the group life, annuities and voluntary benefits space. Some of the top initiatives include:

    • Solid product design that attracts a broad audience
    • Tools to help plan sponsors or enrollers to sell, market, or enroll individuals
    • Robust flexible group administration capabilities
    • Multi-channel marketing and sales
    • Administrative capabilities such as the ability to quickly and efficiently process and post payments

    Novarica research has concluded that success for carriers will revolve around these technology priorities. To learn more about these initiatives in more detail, as well as the latest trends and issues in the Group Life/Annuity/Voluntary Benefits space, pre-register for our webinar on Wednesday, March 18th at 2 pm (ET). I look forward to seeing you there!