Archive

For June, 2011

Jun 30

Legacy Systems Modernization – Celent Survey Provides A Dose of Cultured Reality

By Insurance-Canada.ca BlogEditorNo Comments

Just when we thought there was nothing but good things to say about legacy systems modernization, along comes a report by Celent’s Craig Weber based on a recent survey of industry participants.  It’s a needed dose of reality, we think.  Here’s some of the headline information from the preliminary results (thanks, Craig, for sharing them).

First, there is a disconnect between vendors’ and practitioners’ perceptions of the effort required for, and results from, modernization projects.  For example, 68% of vendors have a ‘rock solid’ belief that their clients will achieve hard dollar savings from such projects, whereas only 23% of insurer respondents have the same level of confidence.   There are similar disconnects with regards soft dollar benefits and success rates.

Reading some of the literature in the past few years, one would tend to believe that the old surround and supplement strategy (e.g., building new front ends to legacy systems) had gone away.  The Celent results suggest that’s not quite the case.  While the majority of respondents feel that a full replacement of legacy technology would improve functionality more than the surround strategy, the latter was competitive in certain functions, such as supporting new service models or new distribution channels.

So, does this mean that insurers have become less concerned about legacy systems?  Hardly.  When it comes to support, over 50% of respondents feel that the lack of developers skilled in legacy technologies (COBOL, Assembler, etc.) either is a critical problem now or will become so within 3 to 5 years.  More significantly, one in six (17%) believe it is critical now.

But when it comes down to it, the respondents don’t blame technology, or resources, or weak business cases for the challenges in legacy modernization projects.   When asked what was the factor which contributed to modernization projects under-performing, the most commonly cited (by 64%)  element was: ‘difficulty in changing the culture’.

“We have met the enemy, and he is us.”  -Pogo

 

 

 

 

Jun 27

Mobile Apps Take the Lead

By Insurance-Canada.ca BlogEditorNo Comments

It seems that all those folks you see pushing buttons on mobile devices are doing more – much more – than texting friends or tweeting what they had for lunch.  And there are implications and opportunities for insurers and brokers.

Flurry Analytics,  which provides accurate, real time data to developers about how consumers use their mobile applications, recently reported “that, for the first time ever, daily time spent in mobile apps surpasses desktop and mobile web consumption.”  Flurry adds, “This stat is even more remarkable if you consider that it took less than three years for native mobile apps to achieve this level of usage, driven primarily by the popularity of iOS and Android platforms.”

It is important to note the specific apps that are drawing consumers’ attention are not directly related to insurance purchasing.   Flurry’s analysis found that  “Games and Social Networking categories capture the significant majority of consumers’ time. Consumers spend nearly half their time using Games, and a third in Social Networking apps.”   That said, it is clear that mobile apps are taking a rapidly growing portion of consumers’ attention.

We are seeing a small, but growing number of insurers developing apps for mobile devices.  We highlighted a few Canadian companies that are mobile pioneers in a previous post. Some (or most, or all) of these initiatives will likely fail to get traction with the consumers.  But if the past is any guide,  there will be a success (or two, or three) and it will provide the sponsoring organization will competitive advantage.  And even those who have invested time, but have not succeed, will have gained knowledge an experience.

This new data suggest that the investment of these pioneers is aligned with the direction that consumers are taking.

 

Jun 23

Brokers and Social Media – Is the Breakthrough Coming?

By Insurance-Canada.ca BlogEditorNo Comments

The buzz with social media continues to grow louder in the business and trade press.  But a big question that remains is:  How will this impact Canadian insurance generally and insurance distribution specifically.  There is some evidence that while insurance brokers are not far along the adoption path,  a breakthrough may be in sight as some Canadian leaders are suggesting the technology is a key element in addressing a significant problem facing the channel.

Painfully little actual measurement  of social media utilization  within the insurance industry has been published.  However, there was a recent survey of Independent Agents in the US  by the networking and services provider,  IVANS which provided some data.  Key findings were:

  • 52% of Agents don’t use social media now
  • 38% of agents have no plans to use social media.
  • 27%of agents say they use it for marketing purposes and 14 percent use it to provide enhanced customer service.

Certainly not a ringing endorsement for the technologies from the agent force.

However, Canadian brokers are being told (if they didn’t already know) that their market share is eroding and that a new breed of customer is emerging which is demanding a new type of sales and service orientation.

At the Ontario Young Brokers Conference (as reported by CITopBroker Magazine), Randy Carroll, President of the Insurance Brokers Association of Ontario  (IBAO) and Bryan Yetman, IBAO Chairman, provided statistics on the gradual, but consistent,  erosion of brokers’ market share to the attendees.

Carroll  emphasized  changing consumer attitudes as prime drivers: “Many consumers don’t care if you’re an advocate or on their side,” said Carroll. “We need to transition brokerages to do business how [consumers] want [us to]. We need to open a door so consumers that don’t deal with you today do so in the future.”

Yetman concurred, asking rhetorically:  if the majority of brokers shopped online, why would their customers be any different.   Yetman stressed that Brokers that don’t embrace technology lose business.  He encouraged brokers to actively embrace Social Media tools for both marketing an customer service.

IVANS provided similar commentary.  Its report concludes with respect to Social Media: “Agents who actively engage customers in the social media space are more likely to develop positive customer relationships that can lead to referrals. In addition, agent and carriers can both leverage the customer feedback they gain through these conversations to improve their products and services.”

Perhaps these data and exhortations will be the push needed to establish Social Media within the broker community.  And where brokers go, insurers are fast followers.

 

 

Jun 21

Corporate Culture and Social Media

By Insurance-Canada.ca BlogEditor1 Comment

There is increasing evidence that use of social media has the capability to improve customer service, enhance marketing, and even streamline internal processes for insurers and agents/brokers.  So why isn’t the insurance industry beating a path to the new media?  Perhaps we have a culture clash.

Karen Furtado, partner at Strategy Meets Action (SMA). Furtado shared her comments on Social Media and Insurance at a Duck Creek’s “Channeling Energies” conference (covered in Insurance Networking News.  According to Furtado, there are endless opportunities, including customer/agent engagement, referral leads, customer service improvements and branding.

However, Furtado notes that the opportunities come with challenges.  “Insurers need to understand, based on primary goals, who will take responsibility for its development and upkeep.  Should this fall to the HR department? To Marketing? Or should IT take ownership?”  These can be challenges to the organization’s culture.” Furtado also suggests that some insurer managers may not understand, nor support,  social media use by employees on company time

Corporate culture was the subject of  a recent post on an influential marketing blog, The BuzzBin, entitled. “It’s not You, it’s the Culture.“  Commenting on leadership, the blog’s author,  Priya Ramesh noted that top-down leadership can limit uptake of social media which would benefit the organization: “The head of the organization definitely impacts the social media adaption rate. The key decision-makers need not be social media savvy but their realization and acceptance is hugely instrumental in steering the company in the right direction.”

We don’t know of any survey among leaders in the insurance community in Canada on Social Media, but a recent survey of independent agency principals in the US by IVANS, indicated found 52% of agents do not currently use Social Networking tools and further 38 percent of agents say have no plans to do so. That would suggest that there is at least a significant minority of agencies where the corporate culture is a barrier for the immediate future.

For those organizations which have a desire to move forward, SMA’s Furtado has some solid recommendations:  “The first step is to create and communicate rules of how to interact on behalf of the company,” she said. “Next, depending on what you want to accomplish, create a team that can “own” the initiative, monitor its progress and build on it, creating additional avenues for growth.”

 

Jun 16

Managing ‘Big Data’ Requires Hardware, Software, and Greyware

By Insurance-Canada.ca BlogEditorNo Comments

Recent articles in the trade and business press suggest that the latest buzzword in the Data Management community – Big Data – has big implications for insurance executives.  Hardware and software are required.  But the real key asset – grey matter – might be in short supply.

Wikipedia defines Big Data as: “a term applied to data sets whose size is beyond the ability of commonly used software tools to capture, manage, and process the data within a tolerable elapsed time. Big data sizes are a constantly moving target currently ranging from a few dozen terabytes to many petabytes of data in a single data set.”

What are these data? A recent column in The Economist provides a good summary of a few drivers: “Last year people stored enough data to fill 60,000 Libraries of Congress. The world’s 4 billion mobile-phone users (12% of whom own smartphones) have turned themselves into data-streams. YouTube claims to receive 24 hours of video every minute. Manufacturers have embedded 30m sensors into their products, converting mute bits of metal into data-generating nodes in the internet of things. The number of smartphones is increasing by 20% a year and the number of sensors by 30%.”  In other words, Big Data are the stuff of day to day business and personal activities; the stuff that insurance professionals are increasingly relying on to for marketing, underwriting, risk management, claims handling.

There is some good news for insurers regarding the raw processing power required for Big Data:  According to Bill Kenealy writing a  recent post in Insurance Network News, “the relative maturity of the use of business analytics in insurance, not to mention the considerable investment insurers have made in data warehousing, this challenge (handling Big Data)  seems surmountable.”  So, if we’ve invested intelligently in data management over the past decade or so, we have, or at least understand, the required foundation.

But will we be able to use the data?  Kenealy notes that “a shortage of the analytical and managerial horsepower, not technology, is the more immediate concern for insurers.”  The Economist notes:  “Big data has the same problems as small data, but bigger. Data-heads frequently allow the beauty of their mathematical models to obscure the unreliability of the numbers they feed into them. (Garbage in, garbage out.) They can also miss the big picture in their pursuit of ever more granular data.”

In short, insurers need a blend of grey matter: experienced common sense managers and analysts who understand the business, the data, and the processes to complement statisticians with deep technical skills.  Kenealy provides a final cautionary note:  “unless insurers are willing to make the outlays to secure the human capital necessary to turn these increasingly vast amounts of information into insight, they may find Big Data too big to swallow.”

Gulp?

 

 

Jun 14

Social Business and Insurance – A Natural Fit?

By Insurance-Canada.ca BlogEditorNo Comments

IBM is marshaling significant resource to articulate a vision of ‘Social Business’.  While this is intended to span different industries,  the approach seems well-suited to address the many demands being made on the traditional insurance business model (and the tools and techniques associated with it).  We will break this out in a several posts over time, and would really like to get your thoughts.

So what does IBM mean by ‘Social Business’?  Simply put, the underlying premise is this:  ‘This approach shifts the focus from static content and other temporary artifacts to the source of the energy, creativity, and decision making that moves the business forward: people. As a result, people not only find what they need, but also discover valuable expertise and information they weren’t even looking for that might solve a problem in a new way.’  IBM cites a number of studies which suggest that business users are already moving to Social networking tools to do work in a better, more productive, and more personally rewarding manner.

IBM believes that this is already benefiting businesses.  While a number of organizations are positioning social networking strategies as sales and marketing tools, the real gold comes in enabling all facets of the organization:  ‘ Rather than a way to gain fans or followers, a Social Business uses software and hardware tools to create new pathways centered on people and the relationships between them―helping to solve the persistent problem of searching for the information needed to accomplish tasks, make decisions, and inspire new ideas.’

What types of organizations relies more on the relationships between people than insurance?  And who spends more time and energy looking for information to accomplish tasks than insurance professionals?

IBM offers a wealth of resources on its website to understand Social Business and suggests approaches for different enterprises.  We will use this space to offer our views on how this relates to specific segments of the Canadian insurance industry.  And we will be looking for your thoughts as we go.

Are you using social media technologies for either internal or external business communications/transactions?  Do you think social business is a model for insurance?

 

 

Jun 09

Democratizing through Modern Technology: Solutions for the Large at Heart

By Insurance-Canada.ca BlogEditorNo Comments

A very wise mentor of mine once noted that insurance is a very egalitarian enterprise. There are few barriers to entry for any organization – small, start up, or whatever – that has a real vision of either an under-served market segment or a better processing method.  It now seems that vendors of technology are realizing that this egalitarianism extends to their offerings; that there is a very vibrant market for enterprise systems for smaller insurers.

A recent article in Insurance & Technology noted that there are an emerging number of vendors which are targeting this market segment, including Echo Ridge Partners which has been supplying policy administration systems to smaller organizations for the last year, to very well established suppliers, such as  Insurance Data Processing, Inc. which has over 60 years experience supplying solutions to smaller carriers

A scan of recent wins by Policy Administration system vendors (see the list in Insurance-Canada.ca’s Directory of Policy Management) confirms that there is sales activity in the small and niche segments of the industry. It is clear that while these organizations do not have the scale (e.g., number of users) as larger carriers, they do have all of the needs (policy processing, customer/distributor service, reporting, etc.).  Take SSQ, for example.  This is a $150 Million Quebec direct writer, which recently licensed Guidewire’s full suite of products – Policy Administration, Billing, and Claims.  According to the announcement of the licensing, SSQ has achieved double digit growth by servicing its 140,000 policy holders and  has “three major objectives: prioritizing growth, improving profitability and developing new markets. These objectives require core system flexibility and scalability.”

Moreover, as the soft market continues, the needs for continuous improvement in efficiency, and greater attention to service are the same for large and small alike.  As IDP President and CEO Bob Blitshtein told I&T, its  InsuraSphere Agent Portal “allows insurance companies to grow their revenues by giving agents the real-time quoting capabilities they’re asking carriers for.”

From a business standpoint, it may seem easier to drive revenue from a few large sales than from many small ones. However, as anyone who has sold to large organizations (especially large insurance organizations) will attest, the sales cycle is significantly longer, and frequently the margins are not as atractive.

For the industry generally, it is good to see the movement of modern systems to a wider range of insurers.  With greater capabilities at the base level, we can actually envision more industry wide solutions.  There’s hope for SEMCI yet.

 

Jun 07

Keys to Competitiveness: Innovation and Data Anytime, Anywhere

By Insurance-Canada.ca BlogEditorNo Comments

As the soft market in virtually all parts of the industry continues, being competitive has gone from being a platitude that’s important to long-term growth to a principle that’s critical to day-to-day survival.  We recently saw two articles which gave clear direction to help IT understand its role in competitive positioning, and IT Management understand its role in creating a culture of competitiveness.

The first was a blog post in Insurance & Technology by George Foulke, vice president of U.S. business IT for MetLife.  According to Foulke, the role of the technologist in the new world is to “deliver solutions that improve our companies’ competitiveness and top and bottom lines.”  For Foulke, this translates to delivering solutions targeting the customer.  He writes,  “By bringing a customer-centric view to everything we do, our customers — including agents, whether captive or independent, as well as end customers/policyholders — can do business with our companies in ways that they prefer.”

In concrete terms, that means that IT must embrace the technologies that they sometimes fear:  Mobile, consumer-focused applications and technologies such as tablets and smart phones.  Foulke writes:  “These devices can completely change the way agents interact with insurers, each other and their customers. … This is what end customers — and, increasingly, your producer force — expect.”

Foulke notes that these devices must provide robust Customer Relationship Management (CRM) facilities, which provide the following data elements: Claims Information, Account Origination, Lead Management across the organization, and Cross Selling information.

The second piece came from Ed Fenwick, SVP for The Robert E. Nolan Co., writing in Insurance Networking News.  Fenwick notes that Innovation has to be translated into actionable terms for firms to be competitive.   He articulates three characteristics for organizations to employ to bring Innovation to action:  Identify candidates for Innovation (what problems to solve); tasking the right person to lead the initiative; and tasking (empowering) a small group to implement the innovative solution.

Fenwick concludes with an exhortation that is seems a personal challenge to every IT manager.  He writes that his prescription “may seem like an oversimplified plan of action, but it covers the major points that are required for success. In these times, insurance companies face several difficult challenges that have no precedent, ranging from expense management to successful growth strategies to survival.”

 

 

Jun 04

Websites or Agents? Why Not Both!

By Insurance-Canada.ca BlogEditorNo Comments

An old debate has resurfaced with the rise of social media … Is this a new channel that replaces agents and brokers?  As with most good things, the answer is both yes and no.  New US research suggests smart insurers and agents/brokers would do well to exploit the middle ground.

Since the beginning of the commercial internet, in roughly 1995, we have found ourselves in conversations with insurers who look at the possibility of using web sites as alternative to agents for the marketing and sale of insurance.  With notable exceptions, experiments in this area have resulted in spectacular failure.  The reason is simple, for all but the simplest risks, consumers need and want help with selecting insurance products and purchasing the appropriate coverages.

As reported recently in Insurance & Technology, in  the 2011 J.D. Power and Associates US Insurance Shopping Study found that insurance shoppers are increasingly using insurer’s websites for research on products.  Significantly, 54% report getting quotes.  However, in the actual buying process, the consumer still turns to an agent to complete the transaction.

This research was reinforced by an Accenture study, reported in Insurance Networking News, which found that overall, consumers still prefer completing the transaction with agents.  Event in the 24-34 year old demographic, 59% of respondents prefer buying from agents.

However, this is not to say that agents and insurers can minimize the importance of the internet generally or social media specifically.  Both studies emphasized the importance of referrals from trusted sources as a significant factor in the buying decision.  Erik Sandquist, a senior executive in Accenture’s Insurance practice, was quoted as saying. “Before buying, more and more consumers perform their own research online, compare options and seek recommendations from others, using social media sites or referral sources.”

And the need for such referrals is becoming more important.  The J.D.  Power study found that churn is increasing, reaching the 2008 levels.  This they attribute the the aggressive marketing efforts of insurers.  According to Jeremy Bowler, senior director of the global insurance practice at J.D. Power and Associates, “In 2010, the (US) insurance industry spent $5 billion on marketing and advertising, with the top four companies alone spending more than $2.6 billion.”

 

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