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:

News and Views: Brexit, Home Automation, Data Security, the DOL, and Customer Satisfaction

Novarica’s team comments on recent insurance and technology news

Britain has voted to leave the European Union.

Mitch Wein

Novarica comment by Mitch Wein, VP of Research and Consulting: “Yesterday, the UK voted to leave the EU. Nigel Farage, the UK Independence party head, declared it “Independence Day”. What does this mean for multi-national insurers? The impact is far reaching. Consider regulations regarding data, financial product definitions, privacy, and the overall regulatory framework including capital requirements. Access to Europe’s single market, some 500 million people, will be impacted by tariffs which will be placed on transactions over the existing VAT. And what about employees that come from the EU and work in London? What will be there status going forward? Brexit only highlights the importance for global companies of maintaining flexible, globalized IT operations to be able to handle unforeseen events. Risk and contingency planning is key. Much to sort out. Stay tuned.” More from Mitch on the potential impact of the Brexit is here.

Home automation can help save on claims and Esurance launches mobile app for self-service home inspections.

Matthew Josefowicz

Novarica comment by Matthew Josefowicz, President and CEO: “These two stories are nice examples of how ubiquitous, low-cost communications changes what’s possible within the insurance value proposition. Personal lines insurers can go from providing loss reimbursement to loss avoidance in a way they never could have before. I especially enjoyed the Esurance story, because I’ve been using the idea of self-service home inspections via smartphone video in conference presentations as an example of new potential capabilities for the last several years. Nice to see it happen in the real world!” More from Matt on the arrival of the future here.

The digital currency Ethereum dropped in value due to a huge attack.

Jeff Goldberg

Novarica comment by Jeff Goldberg, VP of Research and Consulting: “Ethereum is a cryptocurrency that many believe will surpass Bitcoin as the choice for businesses dealing in more complex contracts due to its ability to allow the creation of programmatic “smart contracts” on top of its blockchain base. Emerging technologies always have some stumbles during their maturation, but in the case of cryptocurrency, a technology stumble means direct losses of millions of dollars rather than a few hours of downtime. This isn’t necessarily a repudiation of Ethereum, but rather a reminder that there’s a difference between the security of a platform and the security of applications built on top of that platform. Even if the underlying blockchain is secure, those who participate in smart contracts on Ethereum will also need to trust the party that designed and programmed the contract. Eventually there will be a variety of standard base contracts that have been vetted by the community for security, and businesses will be able to adapt them to their needs rather than start from scratch.” More from Jeff on Blockchain here.

15% of agents at Citizens Property Insurance Corp face termination if they don’t sign new data security compliance agreements.

Mitch Wein

Novarica comment by Mitch Wein, VP of Research and Consulting : “The NAIC issued its Preliminary Draft Data Security Model law in March, 2016 for comment. This model law draft will become the basis for state laws and regulations over the next few years as each state adopts a version of it. The model law makes clear that insurers will be liable for data breaches. It also specifies minimum requirements largely based on the NIST framework, and gives policyholders the right to have class action lawsuits. The insurers know this is coming and are now working to minimize their financial exposure to these new regulations. The Citizens appointment agency agreements are holding agents responsible in the event that a customer’s data is breached due to the fault of the agency’s cyber-security practices. Citizens is establishing a minimum requirement for agents. Of course, the agents will sign these agreements in order to continue to sell Citizens’ insurance products. However, if a breach occurs, Florida’s Citizens Property Insurance Corp would be the deep pockets for a lawsuit, not the small agent. Citizens would try to get the money back from the agent but the agent may or may not have the money. It is also unclear as to whether small family-run agencies have the expertise to deploy the technology protections required.” Learn more about Novarica’s IT Security Planning Workshops here.

Variable annuities sales dropped by nearly 20% in Q1 and the DOL ruling will have some other side-effects.

Don Metz

Novarica comment by Don Metz, VP of Research and Consulting: “The first quarter 2016 drop in variable annuity sales of 18% and dramatic increases in indexed annuities with a 35% increase and fixed annuities with a 48% increase reflect the ongoing turbulence in the annuities market that will likely remain for some time. With the surprise inclusion of indexed annuities under the BICE in the final rule the potential for even greater turbulence is high. While many are pointing to the recent DOL fiduciary rule announcement as the principal driver of this shift, the reality is that variable annuity sales have been steadily declining for several years. Consumers continue to be concerned about overall market volatility and manufacturers continue to be challenged by the persistent low interest rate environment, neither of which appears to be calming down in the near term. These issues also mask a broader shift in the market as the investment goals of the baby boomer generation shifts from accumulation to payout as they retire and preservation of capital and income guarantees become crucial. This shift is exacerbated by a next generation that is more cautious in their investments and more skeptical of market volatility. The DOL fiduciary rule along with these broader market and consumer issues indicates that the annuities industry may be subject to a high degree of turbulence for the foreseeable future.” More from Novarica business and technology trends in annuities is here.

Study Finds Customer Satisfaction is Falling for Large Auto Insurers and Rising for Small Ones.

Chuck Ruzicka

Novarica comment by Chuck Ruzicka, VP of Research and Consulting: “Customer perceptions of the insurance industry are falling despite large investments in analytics and digital technology. Pricing increases are offsetting improvements in service in the customer’s mind. While these trends are consistent across the industry, they may be creating an opportunity for smaller or regional insurers to gain some ground on larger, more national brands as consumers become open to alternatives.” More from Novarica on business and technology trends in personal lines is here.

Brexit: How will Multi-National Insurers Sort it Out?

Mitch Wein

Yesterday, the UK voted to leave the EU. Nigel Farage, the UK Independence party head, declared it “Independence Day”. What does this mean for multi-national insurers? The impact is far reaching. Consider regulations regarding data, financial product definitions, privacy, and the overall regulatory framework including capital requirements. Access to Europe’s single market, some 500 million people will be impacted by tariffs which will be placed on transactions over the existing VAT. And what about employees that come from the EU and work in London? What will be their status going forward? Let’s look at some specific areas:

Lloyd’s of London has worked in a single market, confirmed by the Solvency II regulations, for many years. The Prudential Regulatory Authority (PRA), a UK-specific regulator, has been allowed to regulate Lloyd’s across all of the EU countries through a “passport permission system”. This allowed Lloyd’s to write business but not keep funds and capital reserves in those other countries to meet future insurance liabilities in those countries. Using this approach, combined with Letters of Credit and Bank Guarantees acting as “regulatory capital”, actual capital can be placed in the most efficient way across the continent. Regulatory reporting just has to be done to the UK PRA, and not other regulators in other EU countries. This will all go away with Brexit unless a treaty is signed country by country to allow this approach. Even Solvency II itself may change when the UK designs its own specific version of the law, which it will have to do.

The concept of Home state “passports” with home state regulatory supervision is used by carriers and brokers across the EU. There will now be multiple regulators, multiple reserve requirements per country, currency risk, additional tariffs and additional regulations impacting product design. In the new reality, the benefits of the London market dissolve unless they are added back, country by country. This will take years and will result if differences across each country. Potential higher capital requirements in the UK vs. the EU may mean from financial products offered by multi-national insurers to people on the continent may not be offered to people in the UK.

All multi-nationals insurers hire people from different countries and move them around. This is especially true for the top continental insurers. However, the immigration status of EU citizens in the UK or likewise UK citizens in the EU is now undetermined. This may force multi-nationals to move certain businesses out of the UK in order to retain key talent. The increase in UK taxes that is expected will also act as a disincentive to people who may have considered moving to London.

Brexit highlights the importance for global companies of maintaining flexible, globalized IT operations to be able to handle unforeseen events. Each multi-national insurer should be doing comprehensive contingency and risk planning and maintain flexible operations that can be moved if needed. Products and services need to be designed in a way that the customer is insulated from major events in order to retain confidence. Back-office operations need to have the flexibility and capacity to move people and processes globally.

However, every cloud has a silver lining. The Governor of the Bank of England has said there will be higher interest rates in the UK. This will partially offset the higher regulatory cost since capital will be able to make more money.

Watch for volatility in multi-national insurer share prices, especially those with UK products and operations.

Something in the Air

Frank Petersmark

I recently had another opportunity to participate as a judge for the ACORD Insurance Innovation Challenge, this time held in New York. As with the last round, the event brought together a number of interesting startups who each had five minutes to pitch their ideas and approaches, and another five minutes to field questions from the judges. And once again, a few winners were chosen who now move on to the finals competition in conjunction with ACORD’s annual meeting later this year. On the surface this is encouraging news for the industry, as bright and capable people from outside the industry recognize that there are opportunities for improvement. However, it’s also a fair question to ask if those in the industry really understand the amount of energy, effort, and money others are investing to disrupt their status quo, and in the process to potentially make a lot of money.

Like last time, many of the startup ideas were aimed at disrupting the traditional relationships and processes long held in the industry – between agents and policyholders, or carriers and agents, or even eliminating agents and/or carriers altogether. A few others were focused on interesting niches like on-demand insurance, roadside assistance, and medical support as part of travel insurance. There were also a number of people from inside the industry in attendance, and in informal conversations with many of them, they commented on the validity of many of the startup ideas, but didn’t know how they might get their companies to embrace them for fear of offending existing constituencies.

It all reminded me of the old Thunderclap Newman song from 1969, “Something in the Air,” which reached number one in the U.K. and has been subsequently recorded by many other artists. The song is about the many changes occurring in the late sixties, and the notion that the only way to survive the changes was to band together behind the changes, lest they wash over individuals, perhaps violently. The analogy is a valid one, as it often feels like most of the industry believes that disruption is occurring, and that it might even be a good thing, but the disruption is affecting others and hasn’t reached their doorsteps quite yet. That’s a dangerous mentality, and the hope here is that it’ll change before it’s too late. Disruptive change is coming to the industry, but if you’re waiting for a big bang it usually doesn’t happen that way. Rather, it’s piece by piece and bit by bit – like most revolutions are – until one day, sometimes before you know it, things have changed. And of course by then it’s too late – just ask people who used to be in the music or photography industries.

One of the ways the industry could more proactively deal with the many disruptions coming its way is to have more industry-wide discussions about them, and about the opportunity to more smoothly move the industry into the new world of customer centricity as a way to stay relevant with a rapidly changing demographic. That would require a shift in thinking and behavior for the industry, and an acknowledgement that the changes in the air will eventually touch everybody – small, medium, and large insurers.

From our perspective, our recent research on the relationships between insurance CIOs and their boards of directors, and our view that the industry should appoint more board members with deep technology experience to their boards, is reflective of where the industry needs to go. There are even a few carriers that have begun to appoint board level technology committees as way to place the competitive and market implications of a well-executed technology strategy in their proper place – at the strategic top of the company. Such actions would go a long ways toward promoting industry-wide discussions about the changes to come. We’ll be presenting our research on this topic at the NAMIC Annual Convention on September 25-28, 2016 in Vancouver, BC, Canada.

News and Views: Blockchain for Cat Bonds, New M&As, Activity Trackers, and Critical Illness

Novarica’s team comments on recent insurance and technology news

Allianz implements Blockchain for Cat Bonds

Jeff Goldberg

Novarica comment by Jeff Goldberg, VP of Research and Consulting: “As we discussed in a blog post earlier this week, Novarica expects that Allianz’s implementation of Blockchain will be the first of many explorations of Blockchain use for insurance policies with simple payout structures. Any time an objective third-party “oracle” can give definitive information that will trigger a fixed payout or default to an insurance contract, a blockchain model will work well. Blockchain could provide a trusted and objective way to handle insurance contracts as long as all parties can agree on how to properly trigger claims, and the simplicity and transparency of the process would benefit the entire industry.”

Two insurance technology M&A stories this week point to the same trend. Insurity announced its acquisition of Tropics, (following on the heels of its recent acquisition of Oceanwide), and Ebix offers to buy Patriot National.

Matthew Josefowicz

Novarica comment by Matthew Josefowicz, President and CEO: “We are increasingly seeing insurance technology companies pursue a portfolio strategy, maintaining parallel products or suites to support different buyers with different needs. As we discussed in a recent blog post, the diversity of the insurance marketplace means this will likely remain an attractive approach for growing through acquisition for some time to come.”

3 in 10 Americans would be willing to share activity tracker data with insurers

Tom Benton

Novarica comment by Tom Benton, VP of Research and Consulting: “As with the early use of UBI devices by auto insurers, wearable devices may offer a way to gather data on policyholder behavior, but insurers need to do more work to determine correlations to risk and pricing. LIMRA’s Insurance Barometer study indicates that at the moment, a willingness to share such data correlates heavily with early adoption and an interest in fitness, suggesting a strong likelihood that selection bias will affect any policy marketed on the basis of activity tracking.
As we wrote earlier this year
, wearables and IoT are starting to play a larger role in customer engagement.”

The federal government may try to disable critical illness insurance

Rob McIsaac

Novarica comment by Rob McIsaac, SVP of Research and Consulting: “For many carriers, the advent of the ACA and the associated exchanges for connecting with customers also meant the advent of voluntary benefits that could complement or replace traditional group benefits, and Critical Illness products in particular have seen growth as a result. While these products are hardly new, the potential for them to become confused with the minimal protection products envisioned by the ACA appears real. Carriers will have to ensure that they are understood to be supplemental coverages rather than “runarounds” for the ACA in order to keep them in the product mix and on the exchanges in the future. For carriers, considering their go to market plans for the future as well as their product development plans for the upcoming enrollment cycles should be a key part of the current planning process.

Another element that may be in play here is the generally low levels of
awareness or understanding that Millennials have about health insurance options
. Given that all options are clearly not created equal, the regulatory push may be further fueled by a desire to concurrently elevate awareness of what actually constitutes an effective option.”

More regulatory changes are afoot as principle-based reserving starts in 2017.

Mitch Wein

Novarica comment by Mitch Wein, VP of Research and Consulting: “Current static, formula-based approaches to reserving have led to under-reserving or over-reserving for products due to increasing product complexity, and the difficulty of accurate reserving has proven to be a barrier to the creation of new products. The new Principle-Based reserving model will allow for more product flexibility by making sure that the reserve more accurately reflects the risks instead of being based on a formula. Lowering regulatory barriers to product flexibility will inevitably increase the competitive pressure on carriers to remove technical barriers to product flexibility.”

CAT Bonds on Blockchain, More Will Follow

Jeff Goldberg

Bitcoin has generated a lot of press due to its volatile value and the often dramatic nature of news stories regarding heists or illicit usage. But many people, Novarica included, have long considered the underlying technology, called blockchain, to be the real area of interest and potential future platform for the insurance industry. Allianz’s recent implementation of a blockchain-based CAT bond shows exactly how the technology can be used not to disrupt the industry, but to build trust and accountability in an existing marketplace.

One of the values of blockchain is that it creates a transparent and structured marketplace for executing contracts. In the case of Bitcoin, the contracts are about the transfer of cryptographic currency, but that’s only one application. Since the insurance industry is based on trusted contracts, blockchain seems like a natural fit. However, most insurance policies still require adjudication before payment (such as a claims adjuster working with a body shop to determine car repair costs), and that doesn’t fit in with a model that’s intended to take the subjective nature out of an agreement.

A CAT bond exists to dilute the risk held by the insurer by putting it on the bond investor. Unlike an adjudicated claim, the trigger for payment or default with the bond is typically driven by objective factors, such as a hurricane or other natural disaster striking a specific region. These post-event actions happen without regard to specific losses, so there is less need for subjective review. This means a blockchain implementation can manage a contract, maintain the financial stake, and properly transfer ownership in a secure and transparent way based on the original agreement.

Novarica expects other policy types with simpler payout structures to explore a blockchain model. Any time an objective third-party “oracle” can give definitive information that will trigger a fixed payout or default to an insurance contract, a blockchain model will work well. A critical illness policy would fit this model, as long as both the insurer and the insured trust a third-party medical examiner to serve as the arbiter of the illness. A flight insurance policy that pays out if a flight is cancelled would work in this approach since flight data is publicly available, such as the winning entry from a 2015 blockchain hackathon. And “personal cat bonds” might become an option, with homeowners purchasing simplified policies that insure against disasters, relying on the National Weather Service as the adjudicator. As one example, the insurance startup Jumpstart Recovery provides quick relief after earthquakes, and fits that potential blockchain model.

These use cases might expand in the future as more of the technology we work with gets smarter. Cars will be able to make immediate assessments of their repair costs after an accident and report them to the blockchain for automated payout. Similarly, a connected home might not only be able to monitor and help prevent water leakage, but also estimate damage when inevitable accidents do occur.

The key lesson is that blockchain can be a trusted, transparent, and objective way to manage insurance contracts and handle payouts, as long as both parties can agree on how to properly trigger claims. Consumers will benefit from a simpler purchasing model and a quicker payout. Insurers will benefit from automated processing and a lower transaction costs. And the entire industry will benefit from a process that’s readily available and clear to all.

Related Reports:

Three Trends in Insurance Software M&A: Verticalization, Suites, Portfolios

Matthew Josefowicz

Greetings from IASA!

Being here at the largest tradeshow for insurance enterprise software vendors is a nice backdrop to discuss this morning’s announcement that Insurity is acquiring Tropics, and the third major trend in insurance software M&A that this latest acquisition highlights.

We’ve written before about verticalization and the importance of suites. Today’s announcement is a good example of the third trend, portfolios.

Three Trends in Insurance Enterprise Software M&A

A Portfolio strategy means maintaining a portfolio of separate core systems or suites that are designed to serve different niche markets. In a portfolio strategy, a company maintains multiple product lines to support different customer profiles and serve different market segments. This contrasts with a typical tech M&A model where acquired products are absorbed into the buyers’ main offering suite, in some cases undergoing an extensive re-architecting.

A Portfolio strategy can work well in a diverse marketplace like the insurance industry, where different buyers can have very different needs. In addition, maintaining a portfolio of parallel products or suites can be easier than consolidating into a single product or suite that meets all buyers’ needs.

News and Views: DOL Ruling, Driverless Cars, and Targeting the Gig Economy

Novarica’s team comments on recent insurance and technology news

Another legal challenge to the DOL fiduciary ruling was filed this week, this time by ACLI and NAIFA.

Rob McIsaac

Novarica comment by Rob McIsaac, SVP of Research and Consulting:  “While there continue to be legal challenges raised against the DOL fiduciary responsibility rules that were announced earlier this year, the probability of the actions changing the trajectory of the rule changes appears to be low. Carriers we have spoken with remain very interested in the issue, and the impact of the legal action, but the vast majority are not changing their own preparations to address the operational, product and technical issues. By the time any legal actions are concluded there simply would not be enough time to react, so the best course of action now is to proceed on the assumption that no changes will result from the courts. A growing number of carriers are moving toward a business model that will only allow for the sale of indexed annuities through broker dealers. That will put the indexed and variable annuities on an equal footing in the mind of these manufacturers while transferring more of the fiduciary responsibilities to distribution entities.”

First, self-driving cars, now, self-driving construction equipment.

Mitch Wein

Novarica comment by Mitch Wein, VP of Research and Consulting: “I was just reading about Komatsu’s IoT enabled construction machinery, which can receive data from drones over worksites and autonomously dig at the correct angles without human operators, and thinking about potential ramifications for the insurance industry. First, the surety bond business can leverage this technology to price bonds more efficiently based on the same drone information and reduce construction risk from delays, thereby impacting the underwriting and pricing of the bond. Second, autonomous construction vehicles reduces construction workers, lower risk to humans and to carriers covering these workers via workers comp. There will also be a shift in liability, from the construction company who manually operated the equipment to the equipment manufacturers ( the people who make the construction equipment) and the drone operators. Finally, the data form these construction sites can be aggregated and ingested into actuarial modeling. This is just the beginning…wait until 2020!”

The world’s first driverless car insurance policy just launched in the UK.
Toyota has asked owners of some recent Lexus models to go to a dealership for a software fix.

Chuck Ruzicka

Novarica comment by Chuck Ruzicka, VP of Research and Consulting: “Fully driverless cars are at least a few years from being common on our highways, but we are already living with cars full of software that already pose some of the same questions. The first driverless car policies have been developed with coverages for unapplied software updates, satellite outages, and loss or damages in case a car gets hacked. Regulators are working to define when a car can be at fault for an accident, and it’s already easy to imagine situations today when a car might be. The auto industry has a history of introducing software bugs in early versions of new automation, and the ethics issues software programmers must deal with compound the complexity of driverless car software development. I wonder when car owners and manufacturers will get appropriate coverages in their current insurance policies.”

A new insurance startup is targeting the “gig economy”.

Jeff Goldberg

Novarica comment by Jeff Goldberg, VP of Research and Consulting: “The “gig-economy” has long been stuck in an in-between state for the insurance industry, a cross between personal and commercial behavior that standard policies typically don’t cover. Insurers have been focusing on this blended approach for ride-sharing drivers, but the need will increase as more industries adopt a similar model. It makes sense that Bunker Project Inc, a newly-seeded company out of Silicon Valley, would attempt to help solve the insurance complexities caused by so many of their disruptive peers. While entrenched industries tend to fear disruption, that disruption often comes with opportunities to offer new products to new customers.”

Insurance: The Original Crowdsourcing

Jeff Goldberg

Crowdsourcing and insurance may not seem like a likely pair, and AIG’s latest move to offer “Crowdsourcing Fidelity” to protect investors on crowdfunding platforms against fraud could be erroneously interpreted as an attempt to capture attention via the embrace of the latest technology trend. But what is insurance if not the oldest form of crowdsourcing in the world? The insurance industry has always understood the purpose of pooling capital resources across many individuals in order to manage towards the greater good.

AIG’s “Crowdsourcing Fidelity” offering is not, of course, the use of crowdsourcing for insurance purposes, but rather a protection for people who make equity investments through those platforms. So far the occurrence of fraud in the crowdsourcing arena has been very low, making such a product a good bet for AIG, though these trends can always change as crowdsourced projects grow more common. Plus the line between a fraudulent effort and a simple failure by a crowdsourcing project may be difficult to discern, especially when the spurned investors have a deep-pocketed third-party to look to for indemnification. AIG won’t be paying out just because you invested in a foolhardy venture as long as they can claim the team building the prototype put in a good faith effort to make your dreams for a holographic dog-sitter come true.

On the other side, it seems like there is also an opportunity to sell a D&O product tailored to entrepreneurs who are funding their business via a crowdsourcing site. If an equity crowdsourcing site automatically covers to cost of the fidelity insurance, one can expect that the fund-seeker would want or be required to have the complementary protection. It makes sense that a crowdsourcing site looking to build trust might even demand proof of such coverage before allowing a project to raise investments.

It’s also only a matter of time before more startups or even entrenched players start looking at crowdsourcing sites as way of building the insurance risk pool itself. In fact, peer-to-peer insurance startups, such as Lemonade, are really doing just that. Once again: what’s old is new. Just because it’s presented in the language of disruption and Silicon Valley and modern entrepreneurship doesn’t really mean the concept is a radical transformation of the insurance business. Insurers need to be flexible and agile enough to take advantage of new business models and distribution channels, but the concept of collecting premiums to create a pool of capital to balance risk across a diverse group of investors is as old as the industry itself.

News and Views: Insurer VCs, DOL Ruling, Vendor M&A, and Cyberinsurance

Novarica’s team comments on recent insurance and technology news

The VC arms of Liberty Mutual and the XL Group were part of a $3.2M investment round in Notion, a company that makes home-monitoring sensors.

Tom Benton

Novarica comment by Tom Benton, VP of Research and Consulting: “Startups like Notion are seeing the insurance market as one with low barriers for innovation but high potential for funding and market growth. As more fintech and insurtech companies develop solutions with application for traditional insurance processes, carriers should monitor insurtech developments, evaluate how to apply these new solutions, engage with startups via accelerators and VC funds and transform internal operations to be prepared to meet the challenges of future insurtech disruption.”

The SEC is also looking at a new set of rules that will raise the investment advice standards for registered reps while also authorizing non-governmental advisor examinations.

Rob McIsaac

Novarica comment by Rob McIsaac, SVP of Research and Consulting: “The regulatory environment that carriers will face in the future continues to evolve, driven partly by continued reaction to some aspects of the environment that contributed to the financial crisis of 2008. As we’ve shared in reports earlier this year, the DOL regulations implemented earlier this year will have a meaningful impact on IT investment plans for annuity carriers and the distributors who sell both variable and indexed products. The potential SEC regulations will continue to evolve into 2017 and beyond, but may be an important item for carriers and distributors alike to incorporate into their intermediate term planning.”

Duck Creek Technologies has acquired AgencyPort.

Matthew Josefowicz

Novarica comment by Matthew Josefowicz, President/CEO: “With nearly all core systems vendors offering a broad range of increasingly adequate components that can be installed with or without the core administration system, it becomes harder for insurers to make a compelling case to mix-and-match solutions from different vendors in order to fill out their application portfolios… We believe that suite providers are likely to continue to snap up smaller component providers in order to provide clients with a full menu of pre-integrated components that best meet their clients’ evolving needs.” More from Matt in this recent blog post.

CoverHound is launching, a new online brand for cyber insurance.

Mitch Wein

Novarica comment by Mitch Wein, VP of Research and Consulting: “CoverHound is attempting to make buying cyberliability insurance easier for small businesses, following in the steps of other direct sellers of small business insurance, by focusing on simplifying the product and buying process. The other interesting innovation here is shifting the underwriting from the buying entity to their security vendor, which reduces the cost to evaluate individual risks.”