Tag Archives: next-gen

Innovation Awards for Solution Providers

Three solution providers have been recognized for truly ground-breaking projects and initiatives with demonstrable real-world impact, following the recognition of three insurers. SMA also published a collection of case studies on all the solution provider award submissions this year, showcasing the remarkable innovation taking place in the industry today.

The insurance ecosystem encourages the holistic spread of innovation, with insurers and solution providers working together to create new capabilities and adopt new technologies. Next-Gen Insurers that are reinventing the business of insurance for the 21st century depend on advances in four main areas: business models, infrastructure, products and services and customer engagement. The solution providers to watch understand and support these changes, helping insurers to actualize the value from the market’s shifts and ultimate evolution.

This year’s submissions for the SMA Innovation in Action Award for Solution Providers demonstrate the strides that solution providers are making in those areas. By developing creative solutions that are embracing new technologies and leveraging innovative approaches to solve important business challenges, the 2015 award winners show what kind of value insurers can gain from their solutions and their partnership.

This year’s solution provider winners are:

Livegenic, which offers a patented, mobile, real-time video platform to help insurance organizations reduce claims handling costs and improve customer satisfaction. Livegenic connects a policyholder with a claims customer service representative through live video without disconnecting the phone call. Claims professionals can see what the customer sees while on the phone, enhancing first notice of loss, underwriting, field operations and supplemental claims.

Social Intelligence, which offers a sophisticated scoring platform that leverages publicly available social media data and the Internet of Things for improved risk assessment. The solution helps insurers by aggregating data and offering access to new predictive, reliable and less expensive data sources. Social Intelligence’s Social Media Risk Scoring provides another layer of risk assessment that insurers can utilize in real time across life and personal and commercial P&C lines of business at critical stages in the policy lifecycle, including point of sale, claims filing, first notice of loss and renewals.

Wallflower Labs, which offers a patent-pending solution to reduce the number of unattended cooking fires and associated claims. Wallflower’s Electric Range Smart Cord and Gas Range Smart Valve enable ranges and cooktops to remind homeowners that they are operating, through smartphone push notifications, and to allow for remote or automatic shutoff. Wallflower solutions can also provide insights into cooking behavior and trends by capturing information about household range/cooktop use to improve how insurers price their homeowners insurance products.

By delivering new tools that help insurers to improve their businesses, the winners of this award are blazing a trail with innovative approaches and raising the bar for solution providers everywhere to provide creative offerings and help insurers achieve real-world value. This year’s submissions for the solution provider awards show the vital role that innovation plays within the industry and offer commendable examples of innovation in action.

Insurance Impacts of FIS-Sungard Merger

Here we go again: Out of the blue, FIS agreed to acquire SunGard. The joining of two more global technology firms creates another giant in the financial services space.

Why so many?

  • Power of scale. Size allows companies to consolidate overhead, with the merger of people, processes, infrastructure and product offerings, allowing for profitable growth.
  • Market dominance. Buying market share and client footprint across industries certainly is faster than organic growth, and it allows for performance balancing across industries as the market swings and shifts.
  • Diversification of offerings and clients. The broadening of offerings, rather than deepening capabilities, allows for an expanded footprint in customers across many industries.

What does this mean to us in insurance?

  • Fills the gap. Combining creates opportunities to bring together a suite of offerings that better align to the changing needs of insurers as they continue to transform and innovate toward becoming the Next-Gen insurer.
  • Reflects financial strength. Many M&As reflect the health and wealth of the financial services industry, especially in insurance. Insurance is a top target industry for many solution providers because of growing technology investments, expanding needs and demand and solutions providing more offerings.
  • Presents fewer options. As we see more solution providers consolidate, there are fewer company options. But on the flip side, the solution providers will bring together all these technologies and services.

So don’t blink, there will be more to come. We will see more consolidation – all with the goal to strengthen offerings, broaden footprints, position for growth and ultimately seize the pot of gold in insurance.

Next-Gen Analytics Drive Efficiency

Across the insurance industry, analytics has become the most heralded technology investment for insurance companies, wholesalers, brokers, agents and other intermediaries. Yet, with soft market conditions, thinning margins, intensifying competition, escalating M&A activity and rapidly evolving technology, making the right choices and investments is imperative.

Not surprisingly, many insurers and intermediaries have opted to maintain systems that have long become obsolete before jumping into what they’re led to believe may be the next generation of features.

The issue is where to focus. Selecting the right platform essentially comes down to assessing an organization’s current and future information needs and matching them to today’s technology offerings.

To put this in a wider context, let’s take a closer look at some of the dynamics currently facing the commercial insurance marketplace.

Broker and Agent Challenges

Competition

Brokers are moving aggressively to build their business across all market segments, industries and geographies.

Consolidation

The pace of M&A is accelerating among mid-sized and smaller broker/agents. This affects all players – whether you are an acquirer, likely to be acquired or face direct competitors with added capabilities or resources through M&A transactions.

Focus on Maintaining or Improving Margins

All players are driving not only for market share but for growth that will deliver higher margins. Accordingly, competition among brokers and agents is intensifying for the most profitable business segments.

Drive for Efficiency

With the sustained soft commercial insurance market, brokers and agents face an imperative for greater efficiency and improvement in workflow structure.

Rising Client Expectations

Despite generally lower rates for insurance coverage, clients continue to have higher service expectations of all their providers.

Reconciling Old and New Technology

Brokers and agents must balance the need to incorporate technology against the cost of development, implementation and integration of any new system with legacy systems.

Insurer Challenges

Strengthening Distribution Network

Many insurers are working to develop and expand business with national, regional and local brokers and agents.

Navigating Competition

Insurers face intensifying competition for all types of business, especially in profitable coverage lines and with high-margin client segments.

Emerging Risks and Opportunities

Evolving risks provide opportunities for innovation both in terms of creating products and improving existing coverage lines.

Maintaining Individual Producer Relationships

Insurers want ways to address a lack of visibility of accounts and account owners at national, regional and local brokers; to remain effective, they must keep up with contact changes at brokers, shifting responsibilities of client managers.

Growth vs. Retention

With each renewal, insurers must balance need for client retention with a drive for new business.

Better Data and Feedback

To meet aggressive growth goals, insurers need improved market intelligence and feedback on product offerings and potential solutions for improving both retention and capturing new business. They also can gain from formal feedback mechanisms to track reasons for lost business. 

Building solutions: Meeting the industrywide need for tech-based analytics

In recent years, global brokers have developed and implemented proprietary systems that enable them to capture details of individual placement transactions on a global basis and gain insights on pricing trends, terms and conditions, market penetration, client and carrier characteristics and success rates.

This information also yields substantial benchmarking data for senior management, individual brokers and marketing executives. For insurers, these analytical capabilities have proved invaluable in developing and refining insurance products and services, targeting industry segments more effectively and operating more profitably.

Within the U.S., however, the largest global brokers still account for only about 20% of the overall commercial insurance marketplace. As insurers strive to expand their business with national, regional and local brokers and agents, they need similar robust analytical capabilities to achieve efficiencies.

Today, most insurers have access to a variety of technology-based solutions for tracking and analyzing various types of claims. However, beyond what’s currently available from the largest brokerages for their own business, insurers generally lack similar solutions for identifying and managing their incoming business and continuing clients across the spectrum of their broker and agency relationships.

The next generation of analytical platforms will enable insurers to track, manage, understand and evaluate business obtained from each of their brokerage and agency relationships. Insurers will be able to pinpoint producers at each broker directly responsible for placing business by geography, client size, industry sector and other delineators.

With a clear line of sight across their entire portfolio, insurers will have enhanced abilities to develop and roll out new products and policy features, especially those targeted to specific industry sectors or client types. They will be able to get rapid feedback on why they lost business or failed to win new clients.

Meanwhile, as mentioned, brokers and agents face similar challenges with respect to their accounts and underwriter relationships. Given the number and spread of clients in their books, brokers want solutions that enhance their efficiency and ability to service and grow their business.

New platforms also will offer brokers and agents the ability to track and monitor their business, as well as to strengthen and expand their relationships with insurers. Individual producers will be able to view their own accounts and benchmark them against those of the same size, geography, industry and other factors.

This, in turn, will help brokers and agents identify and address gaps in client programs, expand the insurers providing quotes for individual clients and specific coverage lines, negotiate pricing terms and conditions more effectively and elevate overall service delivery and performance.

The same platforms will offer views for broker/agency senior leadership that will detail account profitability; help assess performance by producer, office or region; and make informed decisions about resource allocation, sales, marketing and planning. After a merger or acquisition, the systems will help accelerate business integration, including the development of consistent service delivery across the combined book.

Major advancements in technology, including dramatic decreases in data storage costs afforded by the cloud, will make new analytics platforms more affordable and accessible to insurance companies, brokers and agencies of all sizes. Ultimately, the widespread availability, real-time information, feedback and robust capabilities of the next generation of analytics platforms will propel the insurance distribution system into the 21st century.

Stay tuned.

Core Transformation – Start Your Engines!

Ready, GO, set! That might not describe every core modernization project, but it certainly can seem that way in today’s fast-moving environment. Now that the insurance industry recognizes modernization as an indispensable tool for remaining competitive, it is worthwhile to take a step back and look at the technical capabilities that insurers really need from modern core systems to fulfill the potential of core transformation.

First, it helps to define what exactly a modern system is today. This is trickier than it sounds because the definition of “modern” has changed in recent years – and will continue to change. Core systems that were considered modern in 2010 are already showing their age, as recent systems have far outpaced their capabilities. Strategy Meets Action (SMA) defines a modern system as an application that includes robust configuration capabilities usable by both IT and business users, uses standardized application programming interfaces (APIs) to facilitate integration of new systems and technologies and leverages service-oriented architecture (SOA) principles to enable scalability. Each of these capabilities is crucial to being able to use core modernization as a launch pad for core transformation.

In our recent study on trends in policy administration, an amazing 94% of P&C insurers reported that product configuration capabilities are a required feature in a new policy administration system. This is a requirement across the industry for all core systems. Configuration capabilities are so important because they are critical to accelerating speed to market and speed to service. An insurer’s ability to react to market changes and take advantage of new opportunities is limited by the amount of time it takes internally to roll out new products and services or modify existing ones. Robust configuration tools not only make configuration easier but also spread it throughout a wider portion of the company, reducing the bottlenecks that often occur when all changes must be coded by a programmer. In a market where products and services are more personalized, configuration within policy, billing and claims becomes an essential tool.

Core systems today are required to dynamically integrate with various internal and external systems and new and real-time data, as well as big data. SMA’s research reveals that, as the sophistication of the solutions on the market has grown, insurers are often using third-party solutions for ancillary systems like business intelligence, agent portals, new business and document management. The number of data sources continues to grow significantly each year, including maturing and emerging technologies like telematics and the Internet of Things (IoT) that generate large quantities of data ripe for analysis. Data from these and other new technologies have myriad uses, including to rate a risk, personalize a service or present a new product offering. Specific solutions depend on integration with the core, and reducing the time and effort demanded by integration promotes the consideration of, for example, a business intelligence (BI) solution capable of vastly more in-depth analysis than the integrated BI component of a PAS, or an external data source that provides information that an insurer otherwise could not use. Easing the friction of integration benefits insurers well into the future, because easier integration today also translates to less arduous integration with systems and applications not yet imagined.

The most modern solution on the market is only as good as the book of business it can manage. With transaction volume and speed increasing, insurers must have scalable systems capable of meeting new and increasing demands, which requires leveraging SOA principles. Not only do insurers gain the ability to use a modern system’s capabilities with an increasing number of transactions, they also can extend the life of the system by enabling it to expand. When demand spikes after a catastrophic event or when a new market opportunity is identified, the system is well prepared to manage it. Cloud capabilities are presenting real alternatives to provide the scalability needed to successfully handle peak workloads, both anticipated and unexpected.

These three critical components of a modern system are not just what insurers need today – they prepare insurers to adapt to the future. Modern core systems with these capabilities can evolve along with the insurer. Insurers need to be able to shift their technology environment as needed to meet the future’s unknown opportunities and challenges, and that requires the ability to create products, integrate the latest systems and technologies and scale in concert with an insurer’s book of business. When the need arises for integration of artificial intelligence, for example, or processing millions more transactions per hour than ever before, the capacity is already ready and waiting. Once insurers know they can depend on their core systems to support them through market changes, they can focus their attention on optimizing their current processes and innovating to become a Next-Gen Insurer.

The order is important – ready, set, go. No matter how fast you want to move, you need to plan and then execute! Don’t let technology drive you – embrace the change and adopt technology with your future vision in sight.

car insurance disruptive

Cars: What’s Driving Disruption and Change

The SMA research report The Next-Gen Insurer: Fueled by Innovation identified the major influencers within and outside the industry that are reshaping the business of insurance. It cautioned that if insurers chose to ignore, or even put off, the inevitable need to change along with the rest of the world, they would be taking a chance and creating risk for the survival of their businesses. Well, as it turns out, ignoring it is no longer an option.

The new SMA research report, The Changing Auto Insurance Landscape: Influencers Driving Disruption and Change, underscores that disruption to the auto insurance industry is inescapable. Multiple influencers have converged, primarily from outside the industry, and are in the early stages of transforming the automobile industry and subsequently the auto insurance business. The new examples like driverless/autonomous vehicles, the connected car, car apps and shared transportation are disrupting traditional business, risk, product, pricing and customer assumptions while setting off the first wave of a broader disruption that will challenge the industry. Together, they reveal a growing wave of disruption in the auto insurance segment. This was emphasized by the announcements made at the Consumer Electronics Show (CES) in Las Vegas in early January 2015.

Insurers reward customers with discounts for multiple auto policies, offer discounts for pay-as-you-drive (PAYD) or pay-how-you-drive (PHYD) programs and offer more discounts for additional coverage such as homeowners, umbrella, or others. The same is true for commercial insurance – business owners will look for a package of insurance that includes bundled discounts.

But consider what Mark Fields, Ford’s CEO, noted to the media at the 2015 CES show. Fields sees Ford as a mobility company rather than an automotive company, delivering a wide array of services and experiences via the auto instead of the mobile phone. This reimagined business model will have rippling effects across other industries, including insurance.

So how will insurance see itself going forward? How will insurance reimagine itself? The impact will drive insurers to think bigger and reimagine their businesses as they ride this wave of change toward becoming a Next-Gen Insurer.

The transformational potential of each influencer individually is great, but when combined they are game-changing. Each is individually beginning to disrupt insurance in varying degrees by redefining or reducing risk; redefining vehicle needs and uses; creating product and service needs; and affecting traditional revenue, pricing and operational models. Even more importantly, influencers are reshaping customer expectations by providing new experiences to create, retain and grow customer relationships and loyalty. Here are some potential implications for insurance:

  • Will insurance models move away from the driver to the vehicle or manufacturer?
  • What new services can be provided based on connected car or smartphone applications to engage with customers differently?
  • Will auto driver usage data come from Google, Apple and auto manufacturers rather than traditional industry data providers? Will this new data redefine risk, pricing and underwriting models?
  • Will insurers need to rethink partnership strategies to deliver new services?
  • How will risk models and ultimately pricing models be affected?
  • How will these affect operational, unit cost, revenue and profitability models?

The last two questions are especially significant based on the changes that are already happening in driverless/autonomous vehicles, the connected car, car apps and shared transportation. Using some of the statistics and projections from these examples featured in the new report, the hypothetical potential financial impact on auto premiums is profound. Collectively, the impact to the top 10 personal auto insurers that represent 70% of the direct written premium (DWP) could put 60% of existing DWP revenue into play. What’s more, this does not include potential lost revenue because of new products and services that may be offered by other companies and industries.

Even if the impact is only half of this, the operational and profitability models based on historical auto insurance assumptions are significantly disrupted. And those assumptions are starting to become irrelevant. Rather than waiting for automotive, technology and other industries to determine where this revenue will go, insurers must begin to plan today.

Another inevitable result will be felt in the traditional customer relationships that will be further challenged by the emergence of new services and providers around the shared economy, connected car and driverless vehicles. Opportunities to strengthen customer relationships will be strained and diminished as these companies redirect customer relationships and revenue away from traditional insurers.

The impact of these influencers; the emergence of new services; and their effects on customer relationships, old business models and revenue and profitability models are causing insurers to seriously consider these underlying, but very strategic questions: How are insurers going to recapture the disrupted revenue stream? Will it be through new products and services that generate new revenue in new ways? Will insurers become product manufacturers/underwriters for these emerging companies? Or will insurers adapt and become broader providers of insurance and service capabilities? How will you retain customer relationships and loyalty within this disruption? Are you preparing scenarios and plans to respond to these changes over the next three to five years?

These changes have uncovered a challenging new business landscape. The inevitable disruption of auto insurance is taking the industry in new and surprising directions. How you respond is strategically important for your companies’ relevance and competitiveness. So, fasten your seat belts! It is going to be a fast and interesting ride!