Archive

For September, 2011

Sep 29

Pay-As-You-Drive: Interest, Support, Collateral Grow

By Insurance-Canada.ca BlogEditorNo Comments

If attendance at conferences and expansion of collateral and support material are any guide, movement toward Pay-As-You-Drive (PAYD), also known as Usage-Based Insurance (UBI) is gaining momentum.

In early September, a two-day conference entitled ‘The Future for Insurance Telematics: Smart Vehicle Technology’ attracted over 400 attendees (‘Telematics‘ is the technology behind tracking vehicle usage).  According to conference organizers, over a quarter of the attendees represented insurers in the US and Canada.  Over two thirds of attendees were senior managers or officers in their organization.  (An anonymized list of attendees by company and title can be found on the conference site.)

 

Insurance Telematics Conference Attendees by Job Title

 

A key element in moving PAYD forward is the ability to link to technology that will in fact track vehicle usage.  There have been some disconnects in the past.  However, several supplier organizations are now targeting insurers.  Telematics Updates has published a report on touchpoints between automotive technology suppliers and the insurance industry and its requirements.  A short podcast with the report’s author, David McNamara provides an overview.

Use of technology to monitor vehicle usage is still in the early days for the insurance industry.  However, as we have noted elsewhere, some pioneers are seeing significant opportunities.  Also, we have noted that ramping up to take advantage of the amount of additional data provided is a non-trivial task.  For those with an interest, the growth of collateral and support should be encouraging.

 

Sep 26

US P&C Carriers: Market Driven Use of Technology

By Insurance-Canada.ca BlogEditorNo Comments

According to a recent survey by IVANS, US P&C carriers are preparing to move forward with technology solutions which support market driven goals; allowing greater flexibility with underwriting and improving the customer service experience.  Where the independent agents and brokers fit in is less clear.

The survey, which involved 120 US  property-casualty insurance carriers, identified the top technologies being investigated or implemented.  The top item was improved underwriting solutions.  Forty nine percent of the respondents said that they either are implementing or planned to implement solutions to improve efficiency and grow the business.  Significantly, these plans included Real-Time solutions to improve turn-around with agents, but also customer portals. Twenty five percent of carriers already have a consumer portal while 22 percent are currently implementing one, and 18 percent have plans to put one in place over the next 12 months.

To support a number of these initiatives, IVANS found that carriers were looking to move beyond legacy systems.  Over forty  percent of property-casualty carriers are investing in new or upgraded policy administration systems.  Also, carriers are implementing technologies which will allow better analysis of data and some are implementing predictive modelling tools.

What does this all mean for independent agents and brokers? While there are some developments that are tied directly to agents (30 percent of carriers have recently invested in commercial lines download and one-quarter are either implementing this technology or will be integrating it into their workflow within the next year), carriers are moving forward with technology which will offer improved service to customers, either directly (consumer portals), or through agents (with ‘Real-Time’) transactions.

IVANS concludes: “IVANS survey findings indicate that carriers are focusing on infrastructure, innovation, predictive analytics and automating workflows to maintain growth and create market differentiation in an increasingly difficult economic and regulatory environment. The challenge will be for carriers to create a clear strategy on value creation that aligns technology with business strategy, and optimizes the benefits with a carrier’s business partners.”

IVANS provides the survey report for download.

Sep 22

Mobility Maturity: Clouds and Standardized Access are Trending

By Insurance-Canada.ca BlogEditorNo Comments

Efficient, effective, and quick access to data and applications is key to the success of any computing environment.  This truism may be driving the marriage of mobile devices and cloud based applications and data as next generation of insurance technology.

It is clear that the use of smart phones and tablets is growing and Canadians are among the early adopters.  In a recent survey (reported in Canada.com)  of 34,000 individuals worldwide, including 1,000 in Canada, Global research firm TNS found that 41 per cent of those polled in Canada had a smartphone, compared to 28 per cent worldwide. In regards to tablets, the survey found “seven per cent of Canadians respondents said they had one, compared to five per cent for North America overall (and) Thirty-one per cent of Canadians said they intended to purchase a tablet within the next six months.”

Mobile devices are rapidly becoming a required business tool for many.  A survey by Staples found that users are taking to tablets to help balance personal and professional lives and 60 percent of survey respondents say they get more work done using a tablet.

And behind the scenes, cloud computing has matured to the point that data and applications are becoming available on demand. Mary Allen, writing in IT Canada, says:  “cloud makes possible the kind of anywhere, anytime connectivity that is prerequisite to the full mobility of our increasingly nomadic workforce.”

So, the infrastructure seems to be maturing, but what does this mean for insurance?

A recent article in Insurance & Technology notes that insurers initially responded to the rise of mobile computing by developing proprietary applications, or ‘apps’ to support marketing, on-line quotes, and claims functions.  However, according to Novarica’s Matt Josefowicz, many insurers have found that keeping up with with development for the various operating environments has been a challenge. “Core systems modernization, business intelligence capabilities and other things are taking priority, and the immediate value-add in mobile is less well-defined,”  Josefowicz says.

The response seems to be a move to the mobile web.  This allows access to applications using a standardized web browser approach.  According to the I&T article,  “David Berkowitz, senior director of emerging media and innovation at New York-based digital agency 360i, notes that some prominent web properties already are drifting away from the app model for tablets. And as developers get more adept at designing web pages for the unique user experience of a tablet, he adds, there’s less pressure to create downloadable and installable apps.”

As an example, I&T indicates that Farmers Insurance found that a number of customers were using mobile browsers to access the companies normal web applications.   As  a result, the company is migrating some of its proprietary apps to support web browser access.  Farmers manager of e-business projects Michael Leek says “What our downloadable app supports today is a one-time payment feature only. It’s not fully integrated with our account billing system,” he says. “But what we’re working on now is mobile web rather than an app, and the payment features on the mobile web will mimic what we have on the desktop.”

This mimics trends in the past away from proprietary environments to more open systems, what ACORD CEO Greg Maciag referred to as ‘plug and play’ technology in a recent guest blog post here.   All of this indicates a rapid maturing of the mobile computing model.

 

 

Sep 19

Is Commercial Lines Underwriting a Killer App for Tablets?

By Insurance-Canada.ca BlogEditorNo Comments

It is clear that Tablets have gone well beyond consumer use, and are increasingly common in business environments.   The question is:  Will there be the killer insurance application?  Perhaps commercial lines insurance is a candidate.

In a recent study of  a large mobile sales force, Gartner found that Tablet computing presents unique new opportunities in business because it actually changes user behaviour.  According to recent Gartner analysis, “Tablets do not merely present a new form factor for users, but they also create new opportunities to engage them. Tablets are not used in the same way as traditional PCs, and they are not replacing other devices, such as smartphones. Instead, they are extending computing capabilities into new locations that were not practical before, and along the way are extending the amount of time users spend in any computing environment.”

So, is there a  ‘killer app’ in the P&C insurance community?  Perhaps commercial lines sales, underwriting and service.  Back in January, we wrote about a new venture by Lombard Canada and Keal Technologies to take commercial quotes to the field, and suppoly renewal decs.  This is a good start, but to go further we think that using the communications capabilities of Tablets to take underwriting  to the field.  There is a lot of information, much of which unstructured, to be gathered and sent to underwriters.  This information can create more questions, and the process becomes iterative.

What would happen if the communication functionality of the Tablet were used to send real time information to underwriters to allow the completion of the information  at the client’s site?   And if the underwriter had questions, these could be addressed with a variety of the media devices available on the tablet.

There are a lot of things to overcome, one of which is ubiquitous access to hi-speed Internet in the field.  However, this seems to be solving itself.  Several opf the major phone carriers in the US have committed to the next generation of wireless communication, and recently Shaw Communications announced that it would move away from investing in cell technology in favour of ubiquitous WiFi. and tablets are the driving force. “As people become more and more aware of the higher cost of data, they’re going to look for alternatives to that cost, and we are that alternative,” said Shaw president Peter Bissonnette. “It’s data that’s driving tablets.”

And data drives commercial lines insurance.  Coincidence?  Perhaps not.

Sep 15

Seeing the Invisible – Improving Aggregate Risk Exposure

By Insurance-Canada.ca BlogEditorNo Comments

Can you see the invisible?

This was the question  posed to attendees at the Insurance-Canada.ca Webinar “Improving Aggregate Risk Exposure” on September 15, 2011.  With the assistance of improved technology and  advanced analytics, the presenters suggested that they are moving in that direction.

Sponsored by Pitney Bowes Business Insight (PBBI), and moderated by Insurance-Canada.ca, the Webinar featured presentations which highlighted the need for new insight, discussed the available technology and approaches, and provided  data and case studies highlighting the results of the application of these techniques and tools.

Sean Russell, FCAS, Managing Director of Guy Carpenter summarized recent catastrophic events globally and locally, noting the rising costs to both insurers and reinsurers.  While the events are inevitable, the impacts can be understood and planned for using increasingly sophisticated Catastrophe models from various software suppliers..

Russell noted that the need goes beyond just modelling however.  Insurers are able to gather massive amounts of information from their own data and external sources.  The challenge is to put these data into actionable format for underwriters and external sources.  To address this, Guy Carpenter & Company created i-aXs (pronounced eye-access), which was described in a Directions Magazine article as an online risk management platform which uses geospatial technologies to provide insurers with immediate access to exposure data, as well as customizable imaging, tracking, analysis and reporting tools to make better business decisions.


David Crozier, Senior Vice President – Operations for The Economical Insurance Group, noted that such applications go well beyond catastrophe management.  For example, mapping applications allow more sophisticated underwriting. allowing visualization of both commercial and personal exposures in a more holistic fashion.  This provides greater clarity in discussing risk appetite, and a higher level of consistency of decisions. The techniques are also significant in supporting claims activities, allow better fraud detection, and in risk and reinsurance management activities.

Bill Sinn, Strategic Marketing Director for PBBI summarized a five stage approach improving maturity of risk management.  these are:

1.  Data Integration – bringing together data stored in multiple locations

2. Data Quality – validating names, addresses, preferably at source of entry

3.  Data enrichment – appling additional data to the risk selection/underwriting process through geocoding

4. Data Analytics – using spatial analytics at the macro and micro level, enabled by the geocoding

5.  Actionable data – The final stage, where all data are applied to inform decisions

Sinn provided several case studies which demonstrated the value for customer,  as well as for underwriting and claims professionals.

James River Insurance is an Excess & Surplus carrier based in Richmond, VA.  The organization wanted to improve its underwriting practices, analyze potential catastrophe patterns and enhance its catastrophe management and claims response practices.  Commenting on the utilization of the approaches during a recent storm, Brian Haney, Chief Actuary for James River said:   “We were able to provide initial estimates of exposure and loss before the storm even hit the shore and then validate these through their on-site inspections.”

That’s a pretty good view of the invisible.  Copies of the slides from the presentation are available on the Insurance-Canada.ca ‘What’s your Risk’  Webinar page.

 

 

 

Sep 12

IT Response to Consumerization: Lead, Follow, AND Get out of the Way

By Insurance-Canada.ca BlogEditorNo Comments

The best advice to IT managers encountering a slew of new tablets and smart phones  walking in their doors might be: “Lead, Follow, AND Get out of the Way!”

There is a new buzzword, ‘Consumerization’, which refers to users bringing in new technology that organizations don’t formally support.  The word may be new, but the phenomenon itself is not.  There is a famous story of a consulting firm that went into a major corporation in the very early 1980s and asked the head of IT how many PCs were in the organization.  The response from the IT exec was definitive:  “We have bought 6 for IT to evaluate.”  The consultants went into the organization to do their own inventory and came back a few weeks later, have found over 1,000 PCs that had been acquired by line managers using their own discretionary budgets.  They were being used for spreadsheets. word processing, etc.

A usual response of IT then was not different from  now:  ‘Close the Doors!  These represent security threats!’  The practical fact is, this reaction doesn’t work. In past, employees would sneak in  ‘unauthorized’ computers by putting them in their briefcases.  Now, they  slip them in their coat pockets.  This the age of mobility.  And, as we wrote in January,  insurance professionals are finding uses for it.

And it used to be the case that IT could control access to networks via cables.  Now, we are moving to a wireless, tablet driven world.  (The recent story about Shaw abandoning cell strategy in favour of building out its WiFi capabilities is testament to that.)

So, how can IT cope if users are selecting their own devices and communications methods?  It does have responsibility for security and data integrity.  A recent article by Nathan Clevenger in IT World Canada offers some useful advice.  First, Clevenger suggests that IT has to recognize that it is not the only authority.  He cites a case study involving Hyatt Hotels and its CIO Mike Blake.  He writes:

“I believe Blake has demonstrated that the ‘consumerization of IT’ is ultimately a positive trend for corporations. It may involve painful changes in the status quo of corporate IT, including, as Blake said, how IT groups have to ‘shed our arrogance’ to give the underlying technology a chance to succeed. But this trend provides the business, the entire company, and even the whole economy with an improvement in efficiency, productivity, and profit.”

Clevenger cites other examples and concludes that the benefits far outweigh risks, but only if IT can take a different attitude and focuses its skills on how ‘foreign’ devices can be welcomed into the corporate effectively and safely.    He concludes: “Based on the opinions of those I spoke with, it is the role of IT to evaluate the opportunities that come with consumer technologies, weigh the risks and benefits, and define a strategic plan for the future.”

It may be a different role, but likely more important, and probably more interesting.

Sep 08

Will Insurance Respond to Consumers Communications Demands?

By Insurance-Canada.ca BlogEditorNo Comments

Do we have a failure to communicate?

A recent survey by Thunderhead Communications, conducted by YouGov,  and reported in eMarketer asked US Internet users whether various service providers communicated with them in their preferred digital channels.  Thirty nine percent said that insurance did ‘Well’ or ‘Fairly well’, which was above gas providers (27%) and Landline phone providers (38%).  However, Insurance ranked  well below Cable providers (45%), Mobile phone providers (50%), and, significantly, Banks (54%).

In December last year, we reported on a Fiserv survey which suggested that  consumers were turning more to digital channels for communication a, but financial institutions were lagging in response.  Fiserv concluded: “Now it’s time for financial institutions to embrace social media. Leveraging social networks, financial institutions can foster deeper, more personal relationships, resulting in more profitable and loyal customers.”  The above data seem to suggest that US banks might be getting this message.

The YouGov survey went deeper into insurance communications and asked whether consumers would find it useful if insurers communicated using various digital channels.  Over 70% indicated email would be useful, one-fifth indicated mobile media (Text/mobile apps) would be useful, and 11% indicated social media would be useful.

These results align with recent work done by Accenture, reported in Insurance & Technology, which segmented responses by demographics.  The research, involving 7,000 respondents in 13 countries, found that “more than three-quarters (76 percent) of respondents below 35 years expressed interest in using mobile devices to text insurers to receive updates on claim requests, or to interact with agents and brokers through smart phones equipped with video capabilities, compared to less than half (46 percent) of respondents over 45 years.”

The authors of the study, John Del Santo and Edwin Van Der Ouderaa, suggest that consumers are leading insurers in adoption of digital communications and that this “has led to what we call a ‘looming expectation gap’ between what consumers want from their insurers and what they feel they are receiving.”  This, the authors believe, will impact loyalty and ultimately profitability in growing market segments.

The authors cite survey data which show “more than three-fifths (61 percent) of respondents said that it was very important for their insurer to provide prompt and effective service, or to answer requests in a timely manner, but only 32 percent of respondents were very satisfied with their insurers’ ability to deliver such service. And, while 53 percent of respondents stated that access to the information they need whenever they need it is very important to them, only 29 percent felt very satisfied with their insurers’ capacity to provide assistance on a 24-hour, seven days per week basis.”

The Fiserv study last year concluded “Now it’s time for financial institutions to embrace social media. Leveraging social networks, financial institutions can foster deeper, more personal relationships, resulting in more profitable and loyal customers.”

Data suggest consumers are trying to communicate that to us.

 

 

 

 

Sep 05

Claims 3.0: The Future of P&C Claims

By Mark Breading SMA Strategy Meets Action1 Comment

Editor’s Note:  In August, Karen Furtado, from SMA-Strategy Meets Action, offered her views on the near-term impacts of modern technology on claims processing.  She referred to the coming state as Claims 2.0.  In this post, Karen’s colleague, Mark Breading, takes a longer view he calls ‘Claims 3.0.’

Recent research by Strategy Meets Action on property and casualty claims paints an interesting picture of insurer plans for the next three years. The transformation that will take place over this time period will move insurers to a more sophisticated level that SMA calls Claims 2.0. This transformation will encompass a shift in the marketplace, a shift in mindset, and a real shift in requirements as insurers make major improvements in their processes for handling claims and the capabilities that enable them to deliver greater efficiency, improve service, and capitalize on information.

SMA expects the transformation of claims over the next decade to be even more comprehensive and game changing – moving insurers to an advanced state that SMA defines as Claims 3.0. While the transformation to Claims 2.0 will significantly enhance efficiencies and the effectiveness of the claims handling process, the evolution to Claims 3.0 will fundamentally alter the nature of how claims are managed. Claims management will become more proactive, real-time, collaborative, and analytics-based. The focus will gradually shift from reactive claim handling to proactive loss management. Ultimately, claims professionals have the potential to take a more active role in risk management and to work more closely with underwriting. Let’s explore the reasons for these coming advances, assess the impact of the transformation, and discuss realistic expectations for what the future of claims operations should be.

 

Reasons Claims Will Transform Significantly

Predictions for major transformation in the claims arena have been made in the past, but the industry has moved slowly. Why should we expect new predictions to be any different? SMA has identified four key factors that demonstrate advancements and convergence that are driving significant change.

  • Real-time risk information – The instrumentation of trillions of “things” enables the connection of a steady stream of information about the current state of those items. Miniature sensors attached to or embedded in vehicles, houses, appliances, clothing, and even living things are able to collect information about physical characteristics including location, temperature, speed, weather, and other factors on a real-time basis. This information can then be sent via GPS to insurer systems to assess the implications for risk and even enable proactive loss prevention.
  • Powerful analytics – Thanks to a burgeoning new breed of sophisticated analytics technologies that are easy to use, the collection of massive amounts of real-time risk information can drive powerful insights and be used to spot trends and reveal new insights.
  • Social media and mobile technologies – Technology is no longer solely the province of IT experts behind glass walls. Social media capabilities enable everyone to communicate and collaborate, and mobile technologies facilitate information exchange and communications anywhere on the planet.
  • Customer demands and the quest for competitive advantage – All the new technology and information capabilities provide significant opportunities for insurers. Yet, there is no overwhelmingly compelling reason to change for the sake of technology alone. The ultimate reason that dramatic change will occur is the customer, who will demand new products, services, and methods of communication. Customer demands and expectations will change the levers for competition.

These four factors will combine to create a new claims environment that is very different from what is common among insurance organizations today.

 

Results of Transformation to Claims 3.0

What new business capabilities will result from the intelligent deployment of new technologies and information to meet customer demands? At the macro level, SMA projects that four major new areas of capabilities will increase the ability of insurers to better manage risk:

  • Increased collaboration for risk management between claims professionals, underwriters, and customers. Risk management will become more of a continuum – an ongoing activity starting before the risk is underwritten, extending to the period while insurance is in effect, and covering loss incidents and restoration efforts.
  • Increased interaction with customers. The wealth of information and insights available about specific risks, events, and behaviors will be parlayed into communications, advice, and alerts that go directly to customers and to partners in a position to influence and guide.
  • Increased impact on the insurance product. Risk management and loss mitigation efforts in real-time mode will influence how insurance coverages are packaged, priced, and serviced.
  • The emergence of the “super-adjuster.” These new technology, information, and communications capabilities will not replace the claims adjuster. Rather, they will significantly amplify his or her expertise and experience. The adjuster-of-the-future will be an information-enabled combination of an advisor, adjuster, and marketer – capable of extraordinary efficiency and superior effectiveness.

These new business capabilities offer exciting new potential for insurers. The Claims 3.0 vision may seem like a far-fetched pipe dream – light years beyond where most claims organizations are today, and new technology capabilities have a tendency to excite people and invariably result in hype. Let’s look at realistic expectations for how the future of claims might unfold in the next ten years.

 

Realistic Expectations for Future Claims

The reality is that the technology to enable the transformation to a Claims 3.0 environment is available today. While it is unlikely that the entire industry will accomplish the movement to the Claims 3.0 vision in the next ten years, pieces of this vision are already emerging at more than a handful of individual insurers. It is highly likely that most leading insurers will lay out a strategic plan that incorporates many of these elements and many will make major strides in achieving the business strength that the Claims 3.0 world provides. The insurers that are the most able to move rapidly to this new state of claims capabilities will have the potential to change the rules of the game and leap ahead of their competitors.

 

About the Author

Mark Breading, a Partner at SMA, is a recognized expert in advanced technologies and their implications for the insurance industry. Mark has exceptional knowledge of data and analytics, customer communications in insurance, and advanced technologies including mobile and social media. Mark can be reached at mbreading@strategymeetsaction.com.

Sep 01

Customer Service Bar Raised: Social Media Increases Information Flow In Disasters

By Insurance-Canada.ca BlogEditorNo Comments

Social media are showing their value in helping respond to disasters, and some insurers are taking note.

Writing on Forbes direct marketing network, Don Ball provides personal insight in his experiences with the Washington earthquake and Hurricane Irene.  When the earthquake hit, ball notes, “Like many on the East Coast, I did not immediately think earthquake when I heard rumbling and felt the shaking. Instead, I feared that an explosion had occurred in our nation’s capital. I needed accurate information fast; however, the phone companies could not handle the bandwidth increase, and the broadcast news outlets had a time lag.”

Ball reports that the channel that did respond was social media “Almost immediately, trending Twitter feeds were reporting ’5.8′and ‘earthquake.’ And then came the Facebook messages and images posted by family and friends. I immediately felt relief, knowing that I did not have to evacuate, stockpile water, wear a mask and track down family.”

Shortly there after, Ball experienced Hurricane Irene coming up the East cost.  Like many others, he discovered a unique map offered by the GIS vendor, esri, which supplied mash up of first hand information from YouTube, Facebook, Twitter and other sources along the path of the storm.

Ball concludes, “While businesses debate the utility and relevance of social media, it has become clearer to me based on my experience last week that this vehicle offers a super-condensed ‘occurrence’ to reporting time frame of humanly relevant information that I need.

Deb Smallwood, Founder of SMA-Strategy Meets Action, comments on this in her most recent newsletter.  “Leading insurers have been taking a proactive approach by using social media to help their policyholders with hurricane preparedness tips and letting them know that they are ready to help as needed. The bar for customer care is forever being raised. The ability to interact and exchange information in real-time, coupled with quick and smooth claims settlement after the storm will build brand image, and at the same time, mitigate loss exposure.” (emphasis supplied.)

Proper disaster response requires pre-disaster preparedness.  If you don’t have a social media communications strategy, can you expect to meet the new level of the customer service bar?

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