New York City has been a leader in the future of healthcare. Listing calories on menus, banning soda sales in sizes larger than 16 ounces and now requiring a designation on menus for any items with more than 2,300 mg of sodium (or a teaspoon of salt) are, if you haven’t figured it out, great ideas. While they seem a bit big brother-ish, I applaud the intent. Today’s healthcare is a losing battle. Incentives are completely misaligned. Providers get paid for dispensing care, and we keep introducing better — and more expensive — solutions that cure health conditions that inevitably develop as we age. Today’s usage of the word "healthcare" is “care for the sick.” The only way we are going to solve our cost crisis is to change healthcare to mean “well care.” By aligning incentives to encourage well care, the system will be a lot less frictional. So, how would this work? The HMOs of the 1980s and 1990s had it right. Provider reimbursement rates would be based in part on compliance by their patients. And providers would be free to decline to treat patients who, because of lifestyle choices, would affect their compensation. Public awareness and support of this new well care normal can be tied to affordability, and I would envision a new class of coverage developing for those who opt in to a well care lifestyle. Accountability would be directly tied to affordability and also to provider choice. Seemingly insurmountable issues call for creative solutions. We need to change course now.

A bright market pundit could probably offer up her ideas on just which day it was that insurance distribution fell markedly out of sync with retail technology and consumer expectations. Was it the day Amazon was launched? Was it the day that the first app was purchased on the app store? Did it involve Google search engine optimization or the switch from print to email or social media marketing? It is interesting and a little painful to think about, but most experts would say that, of course, it wasn’t just one day or one event. It has been building slowly, silently and stealthily…where the insurance industry allowed the friction of change to impede modernization and place itself at risk. Shifting consumer mindsets and rapidly evolving markets, like tectonic pressures, built up along a fault line, and then one day the ground shakes. And it didn’t stop shaking. Now the industry is waking up and finding itself on a precipice in the midst of continual, seismic shifts. A new business environment has arrived. The environment is different because of the complexity, breadth and depth of converging factors and global changes. To an industry steeped in centuries of tradition, this new business environment represents significant disruption. The shifting and realigning of fundamental elements of the business require us to erase the idea that we can ease our organizations into the new era with minor adjustments. Instead, we need to match the rhythm of perpetual aftershocks with a model that sways to the beat of a new agenda. We need to reinvent the insurance business model so that it is built to predict seismic activity and capture future opportunities. Today’s insurers are moving from product-driven to customer-driven strategies; from reliance on limited distribution channels (such as agents) to an array of channels based on customer choice; from line of business silos to customer experience threads for all products across all lines; from simply containing risk to providing personal risk management; and from siloed solutions focused on transactions to a platform portfolio that bridges together real-time interaction across all products and services for customers, giving them an Amazon-like experience. Together the changes represent a disruption in the industry’s traditional market rhythm. The industry’s response demands two concerted efforts:

• First, it requires optimizing the front end with a digital platform that orchestrates customer engagement across multiple channels.
• Second, this multi-channel environment must be supported by an optimized back-end that effectively manages the growing array and complexity of multiple distribution channels beyond the traditional agent channel.

Together, these two efforts compose a “2D Strategy” for insurers to succeed in this new business environment of customer engagement and channel choice. What composes the 2D Strategy? It is simply digital and distribution. Majesco’s new thought leadership report, "A 2D Strategy: Distribution and Digital for High Performance," discusses this two-pronged strategy in more detail. But first, let’s spend some time diagnosing the developments that have led the industry to this point. We see four fundamental drivers: • New expectations are being set by other industries; the “Amazon effect” • New products are needed to meet new needs and risks distributed in new channels • Channel options are expanding • Lines are blurring between insurance and other industries New Expectations Customer expectations based on their experiences with other companies and industries are setting a new bar for customer experience and are a key driver in expanding distribution choice. What are these companies doing that customers like so much? Fundamentally they offer choice, create delight and surprise and make both a personalized and emotional connection. – Amazon and Netflix have a huge variety of products and use data and analytics very well to know what customers would like, before they even know it themselves. – Southwest makes things simple and transparent and has a great culture that creates a welcoming environment for customers. – Google is the very essence of surprise and delight – every time you do a search you never know what you’ll find. – Costco customers experience a “thrill of discovery” every time they go there and have access to “members only” deals on a large variety of products and services – including insurance. Availability creates a seamless line between online and in-store. – Apple designs all of its products and services to create a feeling of simplicity, function and elegance and makes shopping, buying and servicing available through multiple channels. Underpinning these new expectations is the use of technology, with mobile as a key enabler. Why? Simply put, mobile empowers customers. It used to be called the third screen (behind TV and the PC), but now it’s the first screen. Pew says that 68% of all American adults have a smartphone now, and some younger age groups are hitting saturation levels. Other studies show that more than 40% of organic search engine traffic now comes from mobile devices, and 50% of insurance shoppers start their shopping process using mobile. We frequently talk about mobile enabling ANYTIME and ANYWHERE interactions. Recent Google research quantified the times and places consumers use mobile for researching and purchasing products. Usage levels generally increase as the day progresses, peaking in the late evening. But if you look at the first two and last two parts of the day together, an estimated 46% of mobile research time is spent in the early morning, late evening or when customers are in bed — not an ideal time to meet with an insurance agent. A majority of this activity is done at home, but almost as much is done outside of the home. Customer experiences created by other companies and customer empowerment created by technology are powerful forces shaping customer expectations and driving the need for insurance companies to adopt a 2D strategy. In my next blog I’ll explore the other drivers on our list: new products, expanding channel options and blurring industry lines.

Personal auto liability is U.S. property/casualty insurers’ largest line of business, and personal auto insurers face a long and daunting list of challenges. But many of those challenges will merely alter competitive dynamics within auto insurance markets, enabling the best insurers to gain market share at the expense of weaker competitors (e.g., those insurers that master telematics and the associated big data issues can look forward to stealing share from those that don't.) Unlike the majority of other challenges, the advent of autonomous vehicles threatens all personal auto insurers, because liability will shift from vehicle owners to auto manufacturers or those who provide the systems and software that enable autonomous driving. Simply put, the market for personal auto liability insurance is likely to shrink dramatically at some point, with a number of auto manufacturers already committing to accept liability when their autonomous vehicles are at fault in accidents. None of this would be of any consequence if the cost of autonomous vehicles placed them out of reach of the typical consumer. But technology costs for autonomous vehicles are plunging. According to a recent article in the Washington Post, the cost of LIDAR (the "eyes" for autonomous vehicles) is poised to drop from $75,000 to a mere $500 or less. (See here) Yes, it will be years before autonomous vehicles constitute the lion's share of the vehicles on the road, and today's personal auto liability insurers have some good years ahead of them. But change is coming, and, as Sun Tsu said, all battles are won or lost before they are ever fought. Is it really too soon for personal auto liability insurers to begin positioning for the world just now coming in to focus on long-range scanners?  

As the insurance industry continues its slow but steady journey into a digital future, the skills required by the insurance workforce of tomorrow will also change. Here is my take on some of the insurance jobs we can expect to see in (I hope) the near future.

Digital Forensic Investigator

It's happening more and more - fraudsters submit an insurance claim only to have it thrown out because someone's discovered footage showing the whole thing was staged. My two favorite examples of recent times are the pregnant woman case and the Bugatti Veyron case. With more of our lives shared online, it's easy for insurers to check our digital alibis, and digital forensic investigators (basically people who get paid for trawling social media) are the mechanism to do this.

Cyber Actuary

Cyber insurance is becoming a must have for corporations, but it won't be long until it becomes a must have for individuals, as well. To effectively price this insurance, a new breed of digital natives with actuarial skills will be required to work out the risk and loss associated with a personal hack of your Facebook, Twitter, Instagram, LinkedIn and email accounts.

Drone Pilot

If you're currently working as an insurance assessor, I recommend you start learning how to fly a drone. On any given day in the future, you could have five drones at your command, each one automatically programmed with a flight path of claim sites to visit. As each drone arrives on site, you take manual control to get a good look with the on-board camera. Same job, but no more climbing roofs or visiting wreckers.

Telemedicine Nurse

Panel doctors beware! Five years from now, most medical examinations will be done at your local "telemedicine booth," where you'll self-assess using the same tools a doctor would use. A live telemedicine nurse, located anywhere in the world, will be on a video conference screen located in the booth to guide you through any tricky parts and to verify that it's actually you taking the tests.

Internet of Things Solution Architect

It's already possible to control many Internet-connected things in your home - televisions, fridges, air-conditioners, door locks, lamps and pet food dispensers - using smart phone apps. So, in theory, it should also be possible for these devices to notify you when they've been stolen (televisions), had food spoil because of a power failure (fridges) or been broken into (door locks), or when a pet stops eating and falls ill (pet food dispensers) - all of which are also insurable events. The challenge for IOT solution architects is to take the data and use it to trigger automated claim applications and approvals. It's an exciting (though less private) future.

Have we missed anything?

These are just a few of the jobs that insurers can expect to start recruiting for shortly, if they haven't already. Do you agree? Have we missed anything? Please comment below!

Financial education is crucial when it comes to helping employees understand the roles that optional products such as disability, critical illness and accident insurance play in protecting their financial futures, but education isn't enough. Making it easy for employees to sign up is equally crucial, to increase enrollment. Insurers can increase the opt-in for optional products by streamlining the enrollment process with modern technology. Let's take a look at four ways use of technology can increase enrollment through greater efficiency and awareness.

1. Provide quotes through the enrollment system. The fewer barriers to entry that employees have, the more likely they are to sign up for optional products. By having quote data sent through the enrollment system, you remove the necessity of employees having to enter data multiple times. They can get quotes and sign up for benefits through the same system. Providing instant quotes and more options for plan comparisons reassures employees they're getting a good deal.

2. Have a portal site for opt-in. With a specially designed user-friendly worksite portal, you can automate quoting, proposal generation and enrollment. When employers make enrollment mandatory and employees are required to log in to the portal site, employees are more likely to review the options available to them and sign up even if they initially intended to simply opt out. You can up-sell and cross-sell worksite marketing and optional individual products on the employee enrollment portal site. Employees can select what products they require and the payment method.

3. Allow for digital signatures. Providing authenticated signatures on multiple paper documents can be frustrating for employees and employers. Digital signatures are the perfect tool for collecting authenticated signatures on multiple documents while saving time and reducing waste. The technology is pretty standard and straightforward once you've made the commitment to digital signatures.

4. Ensure electronic data delivery for medical underwriting. In some cases, medical information is required for underwriting worksite products. This can be difficult and time-consuming to collect and dispense unless you allow electronic data delivery. Electronic data delivery also shortens the interval between underwriting and quote delivery, ensuring a better customer experience. Achieving electronic delivery requires integrating various systems and making sure they have seamless connections. It takes work, but isn't a massive project.

Insurers that have invested heavily in legacy systems often resist change, but these systems cause problems that are costly and time-consuming to fix-and can cost insurers clients. (According to Claims Journal, 59% of senior executives surveyed in 2015 admitted that they had to spend "considerable amounts of time" dealing with IT issues in legacy systems.) If your legacy system won't let you streamline enrollment, it's time for a change. No matter how you choose to increase awareness and participation in worksite optional products, make sure that you have the technological infrastructure in place to make enrollment fast, efficient and accurate. It makes a big difference.

The good news from the PCI Tech Conference in 2015 is that futurists like Vivek Wadhwa give the insurance industry at least three to five years before it is disrupted beyond recognition by data, analytics, the Internet of Things, self-driving cars, 3D printing, hyper-aggressive technology companies and essentially free energy.

The bad news is, many large insurers are still planning five-year technology transformation initiatives to shed their legacy burdens and take advantage of today's technology.

Insurer CIOs understand the challenge. They need to mitigate the effects of yesterday's inheritances. They need to address today's business needs, and they need to prepare the organization for tomorrow. They need a deep understanding of all three timelines, and the ability to help others understand.

CIOs need a new set of skills and new kinds of relationships. As one speaker put it, CIOs need to be communicators and story tellers as well as effective managers. They need visionary business executive partners who are willing to embrace the opportunities that technology creates, in the ability to deliver innovative products to changing markets. CIOs also need technology partners who will not just deliver today's solutions but co-evolve with the CIOs to meet tomorrow's challenges.

"I will invest in any technology initiative that increases our agility," said one insurer CEO who understands. But far too many CEOs are still at a loss as to how to quantify the value of technology and continue to manage their technology investments as if spending more than 5% of premium on IT were a greater sin than letting the future pass them by.

Meanwhile, while the conference was in session, Google Ventures announced an investment in innovative health insurer Oscar. The clock is ticking in insurance, and it's not counting down anymore. It's counting forward.

Many will pinpoint 2015 as a pivotal year - the turning point in the transformation of the business of insurance. External influencers and rapid technology advancements are resulting in major shifts in strategy, areas of focus and investment. Many insurers are thinking big - beyond the typical incremental change and toward bold moves that will establish them as leaders in the digital age.

Here are the top 10 trends that laid the foundation for this pivotal year and positioned the insurance industry for an amazing 2016 and the years beyond. The trends are dominated and enabled by technology developments, which continue to be interwoven into the fabric of insurance. The trends are:

1. Digital transformation is taking hold, even in insurance.
2. Innovation and innovative thinking have no boundaries.
3. Huge $dollars$ being are being poured into start-ups.
4. New ecosystems are emerging.
5. Distribution channels are under strain, leading to shifts in investments.
6. Core modernization is required and continues to consume insurers.
7. Positive shifts are occurring in customer focus and priority.
8. New tools, data and models are being embraced but are still a struggle to adopt.
9. Many technologies are maturing and being adopted - cloud, analytics...
10. Tech advancement is still outpacing the ability to consume.

Insurance executives can no longer ignore or play down these trends. Although the terms "disruption" and "transformation" are popping up everywhere, they are no longer buzz words but reality.

It would be a mistake to dismiss the magnitude of the shifts. As one senior industry executive put it, "Our industry will be substantially different five years from now. Companies that do not aggressively transform will be at risk of failing."

This view is shared by many industry leaders, who sense that the tide is shifting in the new digital era. Unfortunately, many others are hoping to ride out the rest of their career without driving change, an approach that is risky.

The full research brief describing the trends is located here.

It's no secret that there is a newfound aggressive and competitive environment in insurance. A combination of outside competition focused on disrupting the distribution channel and an increase in tech-driven carriers is fostering this environment, and adapting to this change goes beyond just adopting technology. Everything hinges on a carrier's ability to shed its conservative approach to business - both internally and when communicating to customers.

Although fairly new in the U.S., insurance price comparison sites are rising in both popularity and sophistication, enabling consumers to compare policies from insurers down to the last dollar in a matter of seconds. Carriers shouldn't fear these sites but should be prepared with a strategy that allows them to stay successful amid this disruption.

Regardless of the changes happening, insurance still remains a complex purchase, and brand trust is a valuable way to differentiate your company. Nicholas Weng Kan, CEO of Google Compare, shares that there is a level of comfort that customers need before they make the commitment to buy a policy; that is why more than half of sales still happen after a conversation with an insurance expert.

So how do you gain trust for your brand? The catalyst for success in modern business is through transparency, which breeds trust - something insurance desperately needs. According to a recent Ernst & Young study, insurance suffers from lower levels of trust than any other industry, with 57% of consumers expressing dissatisfaction at the lack of interaction from their insurer.

Below are steps carriers can take to elevate trust in their brand:

First Step: Get to Know Your Customer

An important aspect of successful businesses today is the ability to create a relationship with the customer. Carriers don't have the bandwidth to treat each customer with interpersonal attention but can still understand who they are and what they want. Through the use of analytics, carriers have quick access to valuable information about a customer. Brands that don't begin adopting these technologies to match customer needs can't keep up with those that do.

Netflix obliterated Blockbuster by using advanced analytics to know customers better. The same dynamic differentiates between the data-driven and traditional carrier: Once the customer acquisition approach is more segmented and targeted, carriers can also deliver the right price based on a more accurate risk profile.

While pricing may not be everything, competitive pricing is necessary. The E&Y survey found that 50% of consumers change their insurer because of price. Insurance is already a complex business that lacks linearity, and price is an important consideration for all customers. The most competitive carriers leverage predictive analytics as a useful tool to help distinguish the poor risks from the good risks so they can focus on the customer relationships that will benefit their business in the long term.

Second Step: Learn to Cater to the Millennial Generation

Millennials have overtaken the baby boomers as the largest consumer base in the country, at 75.3 million strong, and it is clear that they aren't satisfied with the insurance buying process. According to the 2015 Capgemini World Insurance Report, less than 30% of insurance customers around the world enjoy a positive customer experience, with North America seeing the deepest decline in satisfaction.

Millennials crave transparency and a buying process that is painless and streamlined. Trust is bred when they know their insurers have their best interests at heart and care about their well-being, as well as the causes that are important to them. Above all, Millennials demand efficiency and personalization. Using innovative technologies to interest and retain Millennials is key to gaining their trust. Not only will this breed a positive experience, but it limits the amount of confusion from the consumer, thus creating fewer touch points for the insurer or agent.

Last Step: Be Transparent

The industry holds tightly to how products and services are priced. That's just not going to work any more. Customers are sophisticated and expect insurance agents to connect them to information. Agents and insurers won't garner consumer trust with a "black box" buying process.

Consumers have moved on from the notion that they are better off when an expert makes choices for them, but they do want to be guided by experts and understand what is happening in each step of the process. According to another E&Y study, nearly 70% of global customers feel they initiate the purchase of new policies because of the availability of digital channels. Based on results, it was inferred that difficulty in accessing information contributes to customers leaving their current carrier.

If insurers continues to be secretive about how they conduct business and price their policies, then many of the new insurance innovations run the risk of being perceived negatively by consumers. For example, Internet of Things has broken into homeowners, with partnerships between Nest and well-known insurers such as Liberty Mutual, but if the pricing structure and benefits aren't clearly defined, there is a chance of a consumer backlash.

A Consumer Reports article earlier this year found that insurance is receiving criticism for using credit information to price personal auto policies. Of course, credit information is a strong indicator of loss and a smart predictive factor for any auto insurer, and it's used by many different industries. However, there is perceptual damage, leaving the industry blindsided by critics who assume that secrecy must automatically mean untrustworthy.

Insurance needs to find the right balance between doing a good job managing risk and developing a more innovative and transparent culture. Creating a positive consumer experience involves being more transparent about price and clearly defining the benefits and service offered by the carrier. Almost 40% of consumers are either not confident or only somewhat confident that they have the appropriate coverage. This should be a wake-up call to the industry that all aspects of customer engagement need attention.

For 3,500 or more years, mankind has been searching for the mythological elixir of life, the Fountain of Youth, the philosopher's stone, pool of nectar, etc. that will defeat aging and extend life, if not achieve immortality.

According to Wiki, "The elixir of life, also known as the elixir of immortality and sometimes equated with the philosopher's stone, is a mythical potion that, when drunk from a certain cup at a certain time, supposedly grants the drinker eternal life and/or eternal youth."

All around the globe from 400 BC on, alchemists from India to China to Europe were seeking the elixir of life. Many thought gold was an essential ingredient.

The Fountain of Youth, also known as the water of life, was part of the search for the elixir of life. That search was in full throttle during the crusades and was carried to the New World by Spanish explorers, the most famous of whom was Ponce de Leon in the 1500s. Even the Mayans had legends about waters of eternal youth.

The search for the elixir of life didn't end there.

In the 19th century in the U.S., many believed that bathing in special springs had healing powers. During that era, people flocked to eureka springs, hot springs, healing springs and many, many more. So-called healing spas are still very popular today.

"Snake oil" salesmen were peddling various cure-alls into the 20th century. A search on the Internet will reveal a large number of "promising" balms and salves, some of which actually worked for minor scrapes and burns.

If you're over 60 or so, you may recall Carter's Little Liver Pills. They were advertised to treat biliousness and other ailments. The FTC made the company drop the word "liver" from the name. Carter's Little Pills are still sold, but as a laxative.

If you watched the Lawrence Welk show, you saw ads for Serutan, which is "natures" spelled backward. It’s a "vegetable hydrogel."

Today, the search for an elixir of life, by various names, is still in high gear, and salesmen abound.

People still pursue the same goal of longer and healthier lives through a mix of vitamins, supplements, wellness, incentives, education, exams, tests, etc. that will push the time of their death out a few years.

But, alas, the human body and its organs simply wear out over time. No insurance plan, wellness plan, patient education program or prevention combination can defeat the inevitable. As we age, our bodies just wear out. For example, the reason brain aneurysms and strokes occur in the elderly is that blood vessels get thinner and more fragile with age. The same applies to other vascular diseases. Joint diseases are common as we age. Why? Joints just wear out over time. Dementia is usually related to aging. The list goes on and on.

According to NIH data, all cancer rates begin to skyrocket at about age 65. That is partially the effect of age-related diminishing immune systems. Our immune systems wear out as we age.

Companies are paying huge dollars to elixir of life promoters today, when all the facts show the elixirs just doesn’t work as advertised. Such companies’ intentions are good, even noble, but doomed to fail. Lesson: Whatever you seek, someone will find a way to sell it to you.

We are all going to have a mortal illness someday unless we die sooner from something like an auto accident. My grandfather died at age 99. Every organ in his body was failing. His kidneys were failing, as were his vascular system, his brain and his liver. Why? He simply outlived his body. I've known a number of good people who died a miserable death after years in nursing homes. I wouldn't wish that on my worst enemy.

Another factor driving up costs in the U.S. has been the creation of the emergency phone number system -- dialing 911 and having a life-saving trained team show up at your door in a few minutes. The 911 system saves live, no doubt, but there have been unintended health cost consequences.

If one survives a heart attack, the average cost is about $250,000. Because of the 911 phone system, some 80-year-olds are surviving three heart attacks in nine months just to die from the fourth one, adding $750,000 of cost to their last 12 months. Now, healthcare providers are even putting ventricular assist devices in people like that to keep them alive for one more day. The cost for that procedure alone is $900,000.

I'm not making a comment on the morality of deferring an elderly person's death for nine months at a cost of $750,000 to $2 million. But we need to have an adult conversation in America about how we are going to pay for all this. By any measurement, Medicare and Social Security are both totally unsustainable unless huge changes are made that will affect everyone. Beware of proposed changes that promote intergenerational rivalries.

This chart shows death rates by age). When people hit about age 50, the death and sickness rates begin to skyrocket.

This chart shows leading causes of death. See the strong correlation to aging and heart disease. People are simply outliving their hearts and blood vessels. In 1900, people rarely died of heart disease because they didn't live long enough to develop chronic conditions. Most of the chronic diseases we worry about are simply a consequence of aging. They are irreversible. As with the Hydra of Greek mythology, if you defeat one chronic condition, three others will pop up.

The third chart shows health spending by age; again, disease correlates to aging. That will always be the case until someone comes up with a way to prevent aging or finds an "elixir of life." That chart also illustrates the massive, wasteful spending on end-of-life care in the U.S. compared with peer countries.

People born in the U.S. today can expect to die along a bell curve centering on age 80. If we all do everything we can possibly do to be healthier for all of our lives, there will be slightly fewer deaths around ages 78 or 79. (A great source of information on this topic is Nortin Hadler’s The Last Well Person: How to Stay Well Despite the Health-Care System.)

In any case, if you are able to add a year to your life it will, obviously, be added to the end. For most people, that will mean another year in a nursing home, in assisted living or as an invalid at home. (For a Washington Post article on just how nasty nursing homes can be, click here. Again, I would not wish that on my worst enemy.) People sometimes tell me about someone who was more or less healthy and independent at age 90. For every person like that there are a hundred in nursing homes or dementia units.

Most people retiring today don't have enough in savings to support themselves for more than a few years, let alone enough to pay for assisted living or nursing homes when they are elderly and frail. Medicaid nursing home budgets are likewise unsustainable. Don't count on that. For many people, living a year or two longer will simply mean being a burden to your children for another year or two, both financially and emotionally.

What about your children's lives? Do you really want them to have to look after you well into their 60s? At that age, they should be concentrating on their own welfare.

As people age into their 80s and 90s, many become demanding in an irrational way. Some people aged 55 and up are relieved when their elderly parents pass away, but often with feelings of guilt. Most people have witnessed this in their own families.

Someday, researchers may discover a way to delay the effects of aging. Personally, I believe such is the province of science fiction. If aging is ever reversed, God help us. That would be very destructive to mankind.

Imagine our world populated by a billion or more centenarians. Imagine a nation with an average age of 65. Imagine yourself at age 90 with a 120-year-old parent or two. Who will look after whom? Will 70-year-old children or their 45-year-old children be able to look after and support such parents, grandparents and great-grandparents? The news from Asia is that many young people are no longer willing to support their centenarian parents or grandparents today, let alone great-grandparents.

What should we all do then? Simple. Spend less time wringing your hands over which illness will get you in the end; rather, make the most of the time you have. Worry will never add a day to your life.

The Romans had a blessing: May you live well and die suddenly.

Every five years or so, the insurance industry changes course. Hard market, then soft market. Keep the lights on, then innovate. Build, then buy. Outsource, then in-house. Best-of-breed, then suite.

Unlike with most politicians, some measure of this waffling is certainly beyond the control of insurers truly in the thick of it. However, other preferences reflect the uncertainty of markets and economies, the fluctuation of consumer expectations and demands and what some may call downright desperation to stay ahead of the curve.

Technology has long been recognized as an enabler, and it definitely fills that role when planned for strategically and implemented well. As the industry has taken up the challenge of providing faster, better, more personalized service to consumers, the demand for technology to facilitate the necessary processes has increased, as well. Core system modernization has become a top priority for insurers across all lines of business (LOBs). This means analyst firms and consultants are being engaged at a staggering (and expensive) rate to help spec out requirements, develop the request for proposal (RFP) and narrow things down to a very short list.

Interestingly, the biggest question for most insurers is not whether all of the core administration systems need to be replaced, but rather how and when is the best time to do it. Enterprise rip-and-replace projects traditionally come with a big stigma, a heavy dose of fear and bit of skepticism. Can it be pulled off successfully? With advances in technology such as the move toward cloud for deployment, the incorporation of configuration tools that promote insurer self-sufficiency and better implementation methodologies, the dark skies are definitely clearing.

Today's most modern enterprise suites provide better integration, better capability and better results than niche-focused solutions of the past. While suite components can, by and large, all be implemented individually, pre-integration, reliance on a single data repository, use of a common architecture, an ensured upgrade path and common user interfaces mean these solutions still have a serious competitive edge over standalone systems. But does this really mean there is no more need for best of breed?

Better Integration

Once famous for creating silos and building "kingdoms" within the enterprise, insurance technology has come a long way. Recognition that insurance processes could be completed faster, and with greater assurance of accuracy, if every relevant employee was looking at the same information, insurers are turning to enterprise suites as the solution of choice. The core administration (policy, billing and claims) components of most modern enterprise suites offer increased integration and conveniently draw information for customer service representatives (CSRs), agents and underwriters from a single data or document repository. Further, by building on similar workflows, user interfaces (UIs) and processes, enterprise suites minimize change management issues and decrease downtime needed for training.

Better Capability

It's pretty common to hear technology vendors talk about how their solutions let insurers concentrate on core competencies, but rarely is this turn of phrase actually applied to technology vendors. Insurance suites of the past typically built out full, robust capability for core administration processes, but only invested in the bare minimum when it came to supporting processes, functions and components. The best enterprise suites available today not only handle, but excel at, providing capability for peripheral processes that support core administration, including reinsurance, underwriting, document/content management, accounting/general ledger, agent/producer and consumer portals. This depth of capability was once only available to insurers through best-of-breed solutions, but now only highly customized situations and processes require such niche-focused systems.

Better Results

Even though everyone suspects it's a much higher number, best guesses throughout the industry say that insurers replace core administration systems only once every eight to 10 years. That low frequency hardly allows internal IT staff to gain any kind of proficiency in implementation methodologies or change management. The tightly integrated nature of suite components eases implementation challenges measurably, and at the end of the day, once you get into a groove, why get out? By taking advantage of teams already established for one replacement project for another, insurers can lessen business interruption significantly. Plus, using an agile implementation methodology that incorporates iterative releases will eliminate the scope creep and missed expectations inherent to waterfall projects.

Conclusion

Five or 10 years ago, it may have been necessary to buy a best-of-breed technology solution to get capability specific to a certain LOB or process. However, modern enterprise suites, whether implemented together or individually, today offer the same robust capability once offered only by best-of-breed solutions, but with better integration, faster access to critical data, significantly easier upgrades and ultimately, better results.