For the Telematics category

AXA: Just a One-Bullet Digital Insurer? (We Think Not)


Recently, our friend Denise Garth from SMA posted a blog on a ‘game-changing’ announcement:  AXA France and Facebook entering into a strategic partnership.  This post has quickly made the rounds and caused the count of exclamation marks in emails and tweets to increase geometrically, as other insurers try to absorb the implications of  a global insurer working so closely with the 500-kilo gorilla of social media.

With all due respect, we’d like to suggest that this should not surprise anyone who follows the progression of digital in insurance generally and AXA specifically. The Facebook agreement is another element in continuing progress that a few insurers, including AXA, are making to integrate fully with the digital world.  In so doing, these insurers are steadily transforming how they do business, and, in some instances, transforming the business itself.

We’d like your thoughts on this announcement and what it means for us all.

What is in and out of the AXA-Facebook partnership?

First, we need to note that the exact dimensions of AXA’s partnership with Facebook are not clear.  AXA’s release says that the insurer will access “dedicated Facebook resources, notably including innovation & analytics teams to help in further developing its brand presence on Facebook, particularly on mobile”.  In addition, Facebook  will “analyze the impact of AXA’s communication campaigns on this social network, and its experts will train AXA’s marketing and digital teams.”

According to Hugh Terry, editor of The Digital Insurer and a Director of Insight Consulting, there are some caveats and known unknowns.   Blogging on The Digital Insurer, Terry goes beyond the hype, noting:

  1. It is not an exclusive arrangement – just the first “international insurer”. Perhaps US insurers have similar tie-ups already?
  2. It is not a distribution arrangement – Facebook are not tying up with AXA to sell insurance
  3. It looks like a commercial arrangement whereby AXA pays to access the skills and knowledge of Facebook  analytics and innovation experts in the mobile field. The size of that team is not disclosed
  4. It appears to be centred on France – as the Facebook quote is from the CEO of Facebook in France. Tellingly there is no Facebook press release

That said, this should not be seen as busienss as usual.

AXA has been an active digital citizen…

AXA is no stranger to digital activities.

In a 2013 video, AXA France CEO, Nicolas Moreau describes how they have used to transform they way they connect with customers and prospects across a variety of channels.  “Today, people expect direct access to their insurance provider, moving from a linear, intermediated relationship to a harmonious, connected conversation involving the company, customer, and agency,” Moreau said.

In addition, AXA France has leveraged its social network skills to create  a community of small business owners, which “allows them to interact with each other and with insurance specialists, sharing content, advice, and answers to each other’s questions, ” Moreau notes.

Moreau says the the value for AXA France is that it “promotes our brand, builds customer loyalty, and transforms the way we connect with customers….which is huge.”

It’s not the media, but the message…

We don’t think that the measure for insurers is how much digital they are doing, but how well it is impacting their business.  Back in November 2013, we noted an EY report which found that two thirds of insurers surveyed had had quick wins with digital initiatives, but only 10% of respondents were realizing transformational change as a result of digital initiatives.

During a keynote presentation at the Technology Conference 2014, Michel Laurin, president of Industrial Alliance Auto and Home Insurance, discussed the role of digital engagement in his company’s Mobiliz Usage-based Insurance (UBI) offering.  In a weekly email to individual clients, Mobilz presents the driver’s own behavioural results for speeding, hard braking, etc. and comparison of the results with the balance of the “community”.   The intention is to create competition for improvement.

We see parallels here with AXA’s strategy of continuous innovation.  It is not social (or UBI, or any other technology) that is the objective.  Rather, it is the intelligent utilization, resulting in improved customer engagement and profitable growth for the insurer.

What do you think?

We’d like your thoughts.  Is the AXA announcement causing buzz in your organization?  Is that buzz likely to stimulate activity? Do you think it should?

Changing Driver Behaviour – Can UBI Deliver?

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Clearly audible amid the buzz surrounding UBI in Canada is the expectation that it will be effective in changing driver behaviour, i.e., it will help drivers improve their skills. This is exciting because a corollary of improved skill is reduced loss costs making changing driver behaviour an important selling point for insurers contemplating a push into UBI.

During a recent webinar a case was presented that examined data collected from three drivers whose performance was nominally similar but whose skills, on closer examination, differed considerably. The key takeaway being that the granularity of telematics data and the application of powerful analytical tools make it possible to identify these differences and leverage them to predict losses and properly price risk.

Research has consistently shown that when presented with the concept of UBI and the idea that adopting it could yield them a monetary benefit with no downside risk, many drivers express interest in the product. Interest is typically reported as ranging from one to two thirds of respondents with the top third very interested and the bottom third not at all. Half or more of those drivers who are very interested in UBI are also reported to be willing to change their behaviour.

Putting the Brakes on Expectations

The apparent alignment between what the technology can deliver and emerging consumer acceptance, even preference, seems very promising. But, perhaps there’s cause for gentle application of the brakes on the ‘changing driver behaviour’ bandwagon, at least with respect to programs that seek to attract the soft target of cautious, identifiably low-risk, drivers. There are a number of reasons this might be prudent.

  • Progressive Insurance first offered a UBI product in 1999 and has gathered data from more than one million cars and over nine billion miles, or fourteen and a half billion kilometres, of driving. It now captures only six months of data from its Snapshot policyholders before a renewal discount is set. Why has the company with the most experience gathering and analyzing multi-dimensional UBI data chosen to limit the number of data points it uses to assess policyholders’ driving performance? Could it be that Progressive has learned that driver behaviour doesn’t change much over time?
  •  Most new UBI programs target good drivers whose driving habits are likely to yield a discount for the policyholder. This subset of drivers is not a representative sample of the whole driving population and so the models of good driving behaviour likely suffer from sample bias. Will this approach lead to a comprehensive understanding of driver behaviour and what is needed to modify that behaviour?
  •  Behaviour change is probably best achieved with strong incentives, intense and frequent engagement, and immediacy in terms of realizing the promised benefits. Industrial Alliance’s Mobiliz is a good example. Can other programs, designed around casual engagement, periodic contact, and once-yearly realization of benefits, precipitate meaningful changes in behaviour?

UBI is in its infancy in Canada and much remains to be learned. Improving driver skill and road safety generally are laudable goals but perhaps for now should be treated as peripheral benefits rather than as program objectives or key selling points. UBI has massive potential to reshape the auto insurance landscape but it needs broad application to do so and narrowly delivering its benefit to an already low-risk group under the guise of improving driver behaviour will not adequately leverage its potential.

For a more in-depth examination of the topic, go to and download Corner Two Consulting’s white paper, Changing Driver Behaviour – Can UBI Deliver?


Colin Wright ( is a proponent of UBI and Principal of Corner Two Consulting, which focuses on UBI preparedness. Colin has extensive experience in financial services, including managing business analytics units for two leading insurers and managing Aviva Canada’s Autograph UBI pilot from 2008 to 2010. He holds an MBA from York University’s Schulich School of Business.

UBI: An Innovation in Insurance – Really?

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In 2012, the top five connected apps projected by 2020 were: car, clinical monitoring, security, assisted living and . . . “pay-as-you-drive insurance.” In 2013, usage-based insurance stayed in the top 10 predictions for Machina Research.

In support of insurance apps, telematics has definitely arrived! Globally, more than 130 insurers have launched UBI products.

Will consumers see UBI as an innovation?

First lets address a common objection – what about privacy – IBM found more people are increasingly comfortable with sharing personal information when they get something in return. Although they are less ready to share information where behavior is measured, more than half of consumers are willing to share as you will see here.  Speaking personally, I signed up for a second telematics device because on the matter of the first one I am getting something in return (mentioned in my January Intersection post).

Assuming consumers aren’t going to slow down interest and adoption of auto insurance with UBI telematics data in the product, how can insurers avoid the zero sum game?

Steps on the ladder of innovation

Instead of just improving products to comply with new regulations or to offset historical claims experience, there is now an opportunity for insurers to use technology to rethink their products and services. They can change what (and for another time how, when and where) they do for consumers enabled by capturing and analyzing data that wasn’t previously available. You can group your ideas in three categories – incremental, added value or market expanding.

  • Incremental change would be staying close to insurance services that are provided today but, doing it differently, for example, using the telematics data for real time automated crash detection – not just pricing discounts.
  • Added value would be enhancing the service and value to the individual and to the community, like knowing there really was a crash and the impact of the crash (using speed data) and the degree of injury or severity of the crash (not just from the air bag deployment) to dispatch emergency services or prevent fraudulent claims – lower the cost of insurance to all – not just individual pricing discounts.
  • Market expanding is really thinking out of the box. My insurer now has more than six months of driving data and on a monthly basis (opportunity for daily), and I can see how my driving performance is directly related to the insurance premium I pay. I suspect it’s possible to understand not just how my car was being driven – but, when it was being driven by different types of drivers – even down to one specific driver. It’s possible we can insure the driver rather than the car. This could be essential to the future business of insurance when the connected car and driverless cars will arrive in my life time.

That’s bringing innovation to insurance – Really.

Christine Haeberlin, Business Development Executive, Insurance, IBM Canada. Christine is IBM Canada’s insurance industry leader, where she is responsible for developing integrated industry solutions that achieve targeted business outcomes for insurers.

ICTC-wheel-plain-r60Editor’s Note: Christine will be presenting on Planning for Success with a Telematics Programat #ICTC2014.

It’s a Big (Data) World Out There

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Most of the buzz around big data focuses on marketing, for good reason. However, there are myriad additional applications for Big Data; separately, they are significant, and together, they can transform insurers’ external and internal activities.

Big Data and analytics will be important topics at the 2014 Technology Conference next month. In advance, we’d like your questions and comments on the role of Big Data in your enterprise.

Marketing is the starting point for better customer service…

Writing in the Expert Forum of Insurance Networking News, Chander Ramamurthy, architect at  consultancy X by 2, notes that Big Data enabled  ‘personalization’ is the hot trend: “Gathering more information about customers helps insurance companies provide more-personalized products and services.”

But these services can be extended by using additional data.  Ramamurthy notes, “Analyzing social feeds can help insurance companies better target new customers and respond to existing customers. Using big data, they can pinpoint trends, especially of complaints or dissatisfaction with current products and services.”

Driving towards service excellence and increased product offerings …

Usage Based Insurance (UBI) relies on Telematics driven Big Data.  However, it also forms the basis of new offerings which could enhance the value of the data by extending its use.

Deloitte Consulting LLP recently issued its 2014 insurance industry report which comments on the challenges and opportunities of integrating numerous data sources.   As reported in Insurance & Technology, the report suggests that mobility can offer capabilities beyond Telematics.  The study anticipates that insurer apps  will “more routinely employ time and location data to issue customized safety alerts, vendor recommendations, and perhaps even loyalty program discounts.”

Looking internally ….

Big Data can also drive internal improvements.  Ramamurthy notes that organizations can improve productivity “by recording usage patterns of an organization’s internal tools and software.”    This can lead to:

  • Creation of more useful software that better fits the organization’s needs
  • Avoidance of tools that do not have a good return on investment
  • Identification of manual tasks that can be automated.

Scoping is critical …

By its very nature, Big Data is, well, big. Ramamurthy writes, “No piece of data, regardless of form, source or size, is insignificant.”  But that doesn’t mean starting with everything.

Neal Baumann, Deloitte’s global insurance sector leader suggests that, to be effective, implementations and implementers must be focused:  “insurers should be prepared to make the tradeoffs needed to develop capabilities that they believe will provide them with strategic advantages.”

What would you like to hear at #ICTC2014?

ICTC-wheel-plain-r60The Technology Conference 2014 have a number of sessions devoted to Big Data, Analytics, and Telematics/UBI.  We’d like to give the presenters your thoughts in advance.

Let us know your expectations for Big Data in your company.  Have you started?  What results have you seen?  What are the challenges you face?

It’s a Big Topic.




The Road Ahead for Auto Insurance is Paved with UBI

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Intact’s recent announcement that it will launch a UBI program in Ontario this April is a clear indication that the model has come of age in Canada. Other telematics-enabled auto insurance programs have come to market recently in Canada, including Quindell’s Ingenie and Desjardin’s Adjusto programs, but Ontario is the nation’s largest market and Intact is the country’s largest auto carrier.

But what’s driving this adoption and why are carriers so anxious to invest in this heavily disruptive marketing and pricing model whose most likely outcome is revenue reduction of 5% or more? Does the industry expect earnings to contract permanently or do they plan to recover the lost income somehow and, if so, how?

It’s the latter and here’s why.

Rate Rollback is a Start, but then….

Part of the answer of course is that Ontario has mandated an auto rate rollback of 15% over the next two years and UBI is certainly one way for carriers to comply while attracting the better (safer) drivers whose driving behavior warrants larger discounts. Telematics also holds the promise of being able to reduce accident rates and lower claim frequency and related costs.

However, telematics programs impact virtually every area of the insurance enterprise and require significant investment for what is likely to be a small fraction of all policies in force for at least several more years.  So are carriers betting that anticipated reductions in claim costs will offset the new investments required plus the reduction in income? Not likely!

Claims Costs and Expenses Targeted

Claim costs represent about 80% of all auto insurance costs and the vendor supply chain (body shops and auto glass firms, car rental companies, salvage pools, IAs, attorneys, etc.) comprises the majority of these costs.  We can expect (and are already seeing) increasing pressure on these vendors to reduce costs through formal carrier procurement organizations that will leverage carrier volume, coupled with technology-enabled process improvement tools including vendor performance management.

In addition, industry cooperation in pooling data for fraud detection and deterrence through advanced analytics (i.e. CANATICS) has the potential to remove several more points in fraudulent loss costs.

Finally, Customer Engagement and Consolidation

And one of the anticipated longer-term potential insurance industry benefits of strong usage-based adoption is the ability to monetize the telematics channel with policyholders through much greater customer engagement and the sale of a tiered menu of in-car and other safety, security and travel related services.

Finally, the continuing consolidation in both the carrier and vendor services industries, which is being driven by the demand for greater efficiency through economies of scale, can be expected to add a few more points of income improvement.

So the usage-based insurance traction we are now seeing is just one of the many dramatic changes the auto insurance ecosystem is undergoing – it just happens to be one that engages and impacts consumers most directly – and features a higher degree of pricing fairness than previously existed.


Editor’s Note: Stephen Applebaum, Principal, Insurance Claims Solutions, is a subject matter expert in insurance information ICTC-wheel-plain-r60technology as applied to the North American Property & Casualty insurance industry ecosystem, including the claims supply chain.  Stephen will be presenting on Innovating in Claims at the Technology Conference 2014

Telematics: Thinking Beyond Discounts

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Telematics insurance announcements continue for Canada.  Up to this point, the enticement for drivers has been price.  However, there are indicators that price efficiency is only a start for customer engagement with Usage-Based Insurance (UBI) programs.

The Technology Conference will provide a forum for examining alternative approaches.  In a run up to that, we are looking for your input.

Mandated discounting for Ontario automobile insurance stimulates UBI

Last year, the Government of Ontario mandated reduction of automobile insurance premiums by 15%.  For some insurers, use of UBI was part of a response.

Intact Financial had announced the launch of a telematics program in Quebec last fall for its Intact Insurance and belairdirect brands.  As reported in, Intact Financial is moving this program to Ontario in April, which will assist it in meeting the premium reduction goals, focusing on “discounts to safe drivers.”

Driving safe-driving behaviour with instant feedback

Safe drivers can be defined in traditional methods, such as miles driven to work and number of tickets representing driving infractions.  Telematics can monitor these  and other criteria more effectively than through the traditional self-reporting.

Progressive Insurance – which is regarded by many as the leader in implementing Telematics-based insurance in the US – uses this model.  The insurer installs  devices for a prescribed period, during which it captures enough data on speed, hard braking, distance, and time of day.   From these data, Progressive determines the appropriate rating for the car and driver, and removes the device.  Premiums going forward reflect this rating.

Some insurers are taking a different stance, using the telematics devices to dynamically change rating/premium based on current driving behaviour.  We have posted on a few  examples of this approach, including UK based ingenie and Mobiliz, from Industrial Alliance in Quebec.  Both programs target young drivers, rewarding safe driving with lower premiums on a monthly basis.

Beyond premiums

Telematics devices, as a location based tool, lends itself to a number of ancillary services.  The most obvious are on site automobile services, including battery charging, flat tire changes, keys locked in car.  The organization best known for these services is planning to leverage its position.

Last September, CAA South Central Ontario announced that it would be implementing Telematics to serve its members for automobile assistance and its insureds with a planned launch is coming in first half of this year.  It looks like a win-win-win opportunity for CAA, CAA Insurance, and CAA’s members.

Cindy Hillaby, Vice President, Membership and Automotive Services at CAA SCO noted, “Our promise to our members is to provide them with roadside safety, peace of mind and value for their membership. Telematics provides us with new opportunities to use technology to deliver on that promise more effectively while providing members with an extra level of care and convenience.”

On the insurance front, Matthew Turack, Vice President, Insurance for CAA SCO said, “Our planned telematics offering will enhance CAA auto insurance offers, bring fairness to insurance, reward better driving behaviour, and lead to safer roads.”

 Many Telematics flowers blooming at #ICTC2014

ICTC-wheel-plain-r60The Technology Conference 2014 will provide required background on Telematics generally and will do some deep dives into the directions different insurers and telematics suppliers are taking. Check out a sample of the telematics stream. We also have Michel Laurin, president of Industrial Alliance Auto and Home Insurance, as one of our keynote speakers, addressing the topic of Technology Enabling Transformation.

What do you think?

We’re interested in your thoughts about the present and future of Telematics-UBI  in Canada.  We always welcome your comments below.  In addition, there is a survey underway to gather information for release at the conference and publication on the site (and likely comment in this space).

UBI Opportunities and Industry Consolidation: Find Both at #ICTC2014

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ICTC-wheel-plain-r60It seems the potential demand for usage based insurance in Canada just got a whole lot bigger last week.  And consolidation is accelerating the opportunities.  The 2014 Technology Conference (#ICTC2014) will be a good place to get more information on trends and directions in this important area.

UBI providers are consolidating

Desjardins is already in the market with Ajusto and their less well known product Intelauto.  Of course you’ve heard, Desjardins has acquired the Canadian arm of State Farm.

Around the world it’s been estimated that 10-30% of drivers will opt in and install a telematics device in exchange for something of value such as discounted insurance premium.  Now that Desjardins has grown from about $2 billion in premium to almost $3.9 billion – and in respect to State Farm’s business, most of the premium is automobile – an increasing number of the population are going to get to take control of their driving behavior to influence what they pay in insurance.

And this brings unique opportunities…

So what are the opportunities?  Here’s my personal case study:  I started with only one telematics device in one car in our household – now we have two.  I told my siblings about what it was giving me and they are both insured by State Farm.  It’s interesting that they may soon have an opportunity to jump in.

So what did I learn today, and where can we learn more?

My experience personally and professionally is that telematics offers many new opportunities that enable insurers to be more creative about insurance products and services and how they interact with their customers.  I am looking forward to learning more about this at #ICTC2014 in March.  And look forward to meeting you there!


Christine Haeberlin, Business Development Executive, Insurance, IBM Canada. Christine is IBM Canada’s insurance industry leader, where she is responsible for developing integrated industry solutions that achieve targeted business outcomes for insurers.


Editor’s Note:  Christine will be presenting on Planning for Success with a Telematics Programat #ICTC2014.


ICTA2014: The Total Connectedness of IT All

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ICTA-121x57In preparation for an upcoming meeting of the Technology Awards (ICTA) Jury, we have had  the opportunity of reviewing all of the nominations for insurers. We are struck by two related themes. First, it is not a specific technology or implementation that is important, but how systems and processes can be brought together to achieve objectives. Second, these objectives have more to do with the customer world then the inner world of the insurer.

The message to us is clear:  Award-winning insurers will be those whose business and technology focus has shifted from incremental progress gained from internal improvements to more fundamental innovation which will be tested in the real world outside the doors of the enterprise.

The ICTA Jury will be selecting finalists soon, so we won’t be citing specific nominees now.  But here are some of elements that have come through the nominations.

External focus = Customer engagement, Broker partnership

External technology focus is nothing new for insurers.  Independent distribution companies have sought linkage with brokers to reduce inefficiencies and direct marketers have emphasized point solutions which could serve their internal needs while improving look and feel of customer service.

What seems different now is the focus on the end customer and how to maintain engagement through continuous improvement.  For example, one insurer seeking an award with its Telematics implementation phrases all of its advantages from the standpoint of the customer, lower premiums, more customer specific underwriting, continuous improvement of service, etc.  We think this is more than marketing spin.

Broker companies are making a similar shift.  Connectivity solutions used to be limited to linkages between the insurer and the carrier to reduce friction costs.  Now the common purpose of serving the end customer is targeted and carriers are developing shared services to allow brokers to put out customer facing solutions with the broker’s branding that connect directly to the carrier.

Integration is key …

The trade off between ‘doing it quick or doing it right’ seems to be over for the nominees.  Virtually all of the offerings take an expansive, inclusive view of the implementations.

Application level compatibility is taken for granted.  All nominees that utilize web solutions are emphasizing their adaptability to mobile technologies and commitment to support multiple browsers while maintaining a common look and feel.

Data integration is also a given.  Independent distribution carriers emphasize CSIO compatibility and the direct distributors are offering XML based data for the consumers.

As, or more significantly, nominees are seeing tighter linkage between product information, technology support, and training.  Several of the nominees are featuring educational support for the products and the delivery mechanism in the same on-line libraries.

Can the rest of us take a hint? What do you think?

If we had to generalize, it would seem that these nominees have a solid view of the connected, integrated world to be, and are taking steps, and making investments to make sure they have a place in that world.

ICTC-wheel-plain-r60We’re curious… is this a more general trend?  One place to find out is at the 2014 Technology Conference.  The ICTAs will be given at the end of the first day.  We’d look forward to seeing you there.

Meantime, we’d like your thoughts.  Is the industry moving in the direction of the nominees?

Insurance and The Internet of Things

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Last week, we penned some thoughts on trends in insurance and technology for 2014. These included items which have received attention in this space and elsewhere: Modern Admin Systems, Cloud Technology, and Telematics/Usage-Based Insurance. We added in one that is just climbing out of the geeky world and hitting the horizon of business: The Internet of Things (or IoT).

We believe that implementations of IoT will have far-reaching impact on the insurance world in a number of ways; some are technology-related, some business-related. We will be monitoring developments and will offer our comments periodically. Our purpose today is to introduce IoT and provide some thoughts on its reach. As we explore this new world, we value your contributions.

What is the Internet of Things?

The Internet is a network of networks, allowing users to access  resources such as data and applications on other networks.  IoT  broadens this by expanding ‘user’ and  ’resources’ to include applications, devices, processes, etc.

There are lots of stand-alone applications which are forming the thin edge of the IoT wedge into insurance.  Telematics is an example.

Inside the modern automobile, telematics devices gather data from the vehicle’s components measuring mechanical performance, and from the driver measuring behaviours. These data are packaged and sent off to remote sources which process the data for human analysis (underwriting, e.g.), but can also interact with drivers, in the form of warnings about behaviour, or revised bill estimates for insurance in the event that the behaviour triggers  premium changes.

Quoted in LiveScience, SAP Research’s Stephan Haller defines the Internet of Things as “a world where physical objects are seamlessly integrated into the information network, and where the physical objects can become active participants in business processes.”

Gathering Clouds of a Sensor Storm

The IoT world is sensor driven.  These devices are getting smaller and more intelligent.  They can gather data, send and receive data, and make basic decisions on the data that they gather.

Taken together, groups of sensors, communicating amongst themselves, can begin to emulate human characteristics like understanding, extrapolation, and decision making based on their surroundings.  Autonomous (driverless) vehicles are one example.  Drones used for delivering Amazon packages are another.  IBM’s Watson beating humans at Jeopardy shows the capacity of technology to participate in an interactive environment.

What does this mean for the business of Insurance?

So, how will IoT impact the business world and the business of insurance?  Thomas Meyer, Insurance Lead for Accenture in Europe, Africa and Latin America, wrote on his blog about the opportunities in a world with a changing risk profile based on IoT Technology:

In the commercial and industrial space, the Internet of Things could be used by insurers to transform the way they approach the risk assessment and management of, say, utilities clients. Moreover, this data could be used to provide value-added services to customers—alerts about predicted equipment failure, say, or a plant’s capacity to accommodate extra load to take advantage of a spike in demand. This last service would be relevant to a power utility selling energy on the spot market, for example.

In addition to increasing underwriting knowledge, IoT driven services could be a new source of revenue for insurers that comes from managing risk rather than simply underwriting it.

What does this mean for Insurance Technology?

Most current insurance technology is based on processing well-defined data in relatively small amounts in order to provide users with actionable (by the user) output.  The IoT will challenge that paradigm.

First, data from a swarm of sensors will be big, very big, and not always well defined.  According to Sara Angeles, writing in BusinessNewsDaily,

The Internet of Things will be a data machine. This means that companies will have to rethink how they collect and analyze information — not only will decision-makers need to learn and adapt to a new form of data intelligence, but the amount and type of information produced by IoT will also introduce new or expanded roles for data analysts, strategists, and even customer service.

As sensors start appearing in a wide variety of devices, the Usage-Based Insurance model will encompass other insurance lines and systems will be tasked with supporting these.

What do you think?

We think that IoT will be disruptive and will drive fundamental changes.  We will follow its evolution in this space.

One thing will stay the same:  We value your thoughts.  Are you seeing the IoT providing opportunities, threats, or …?  Let us know in the space below.


2014 in the Headlights

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It’s time for our annual attempt to read tea leaves for the coming year. We’ve picked a few of the major developing areas. We also see a larger trend which may begin to manifest itself in 2014.

We’d like your thoughts on our prognostications and we welcome your forward-looking thoughts.  Have a read and let us know what you think.

Core Systems Replacement Continues, with a Fiscal Twist

Let’s start with the easy stuff:   Converting legacy administration systems to modern technology will continue.   These are big projects, usually driven by necessity (the aging technology simply can’t serve the business any longer).  Once initiated, these are difficult to stop.  The adage ‘in for a penny, in for a pound’ comes to mind.

Two recent surveys  - the first by systems developer Insurance Global Operations, the second from consultant/analyst firm SMA – suggest that someplace between 25% and 30% of P&C insurers in the US have embarked on conversion from legacy to modern administration systems. Research from analyst firm Novarica concludes that 2014 insurer IT budgets will continue investment in these projects as a priority area.

However, there is increased fiscal discipline being applied to maintain a tight scope. Novarica’s Matt Josefowicz says, “most insurers are primarily investing to get up to the bar, not over it.”

The Clouds Beckon

Business needs for flexibility and scalability, and increased focus on customer centricity, will continue driving insurers (and some brokers) to cloud based solutions for sales, marketing, and even core business systems.

Last November, we wrote on the success of in championing the cloud model and leveraging success in its core focus (CRM) into larger arenas of business administration systems.  Other suppliers are coming to the table with the cloud song on their lips.

William Hanby, CIO of mid-west US carrier, Rockford Mutual, recently described his company’s journey to Insurance & Technology.  Hanby’s requirements for a system to replace the legacy administration systems, included:

  • a modern technology architecture,

  • a rules based systems to provide flexibility to adapt to changing market needs,

  • scalability to support the company’s aggressive growth plans.

These requirements meant one thing for Hanby: A cloud-based system.  Hanby also noted that the cloud solution would save the organization money in maintaining the physical infrastructure.

Telematics/UBI and Analytics – Marketing in the Driver’s Seat?

There has been a lot of discussion about two related topics this year:  Big Data Analytics and Telematics/Usage Based Insurance (UBI).  Perhaps more discussion than documented implementation.  However, we see that  quiet work behind the scenes will lead to action in 2014.

And we see much of the the lead coming from Marketing, supported by IT.  In a recent overview of tech trends, Gartner said:

“Organizations have struggled dealing with big data on both fronts: IT needs to manage it effectively and the business side needs to know how to use it. This tends to leave big data static.

“However, big data is a problem that only gets worse the longer you ignore it.”

In 2013, we noted that, as insurers shift from product focus to customer focus, Marketing is being given increasing scope and responsibility, encompassing areas that previously rested with IT (see, e.g., Can Marketers Drive a New Business Model for Insurance?).

We see Telematics/UBI and Analytics being two of these.  IT will likely maintain control at the infrastructure level, including security.  But the days of IT having sole control over tools, applications, and access to third party data are numbered.

Zen and the Art of Infrastructure Maintenance: The Total Interconnectedness of it All

Finally, we see an emerging trend for Insurance/IT that could redefine the role of IT as it disrupts other areas of the insurance enterprise, including product development, marketing, service delivery, and claims.

This trend is based on ‘The Internet of Things’, or ‘IoT’, for short.  We see some very interesting scenarios possibly playing out in the Canadian insurance community.    We will have a separate post on IoT in the near future.

What do you think?

2012 Technology ConferenceWe’ve given you a sample of some of the major trends we see for 2014.  These will be showcased at the 2014 Technology Conference in March. You can see our agenda in progress and get additional information through the 2014ICTC Overview Page.

We’d also like your view of trends for 2014.  Put on your Future Goggles (or is that Googles?) and leave a comment below.

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