Tag Archives: Novarica

Testing Requires Its Own Transformation

As new technologies like mobile are used and the need for agility and speed rises, so does the need for new testing techniques; otherwise, testing will hold implementations and organizations back. Just as today’s systems are modernizing, new testing methods and tools are rapidly advancing the quality and speed of development and implementation.

To assess the current state of testing and reassess the need for insurance-specific testing, Majesco recently reviewed modern testing processes. What we found makes a case for modernizing enterprise-wide testing.

Moving from static to dynamic

Insurers need to have core systems that will be able to add capabilities, products, workflows and more through configuration. They will need an overall approach to system quality that will allow for continuous updates. Robustness and stability will need to be tested to bolster quality assurance (QA), and a whole new world of testing will arise to cover the various software areas that will be added to the enterprise. Not only will testing needs grow, but also a dynamic framework for understanding enterprise-wide testing will be mandatory.

See also: Baseline Testing Provides a Win

Minimizing risk

Many organizations are worried about the risks involved in transformation and their inability to have clarity around operations, development, migration and the investments involved. Insurers are realizing that they need a well-designed QA process. Three key components are coming to light:

  • Previously tried-and-true approaches are no longer best practices in testing. (For example, the waterfall approach to development and testing will no longer provide the results needed.)
  • A single testing partner with a framework and methodology and domain expertise is vital.
  • The end goal is to employ a single platform that works with a variety of approaches and tools in a way that enables agility and speed.

Reaping the benefits

As digital enhancements grow and system touchpoints and channels are on the rise, test types are also becoming broader. Manual testing is still needed. Automated testing is more frequently employed. Performance testing and digital testing are more important than ever. To cover all types of testing, insurers need an automation framework that is structured, simplified and process-based. They need a system that “learns” and provides long-term efficiency by allowing for the repeatability of tests while increasing the speed with which tests can be executed.

See also: Inventing Your Future: A 3 X 3 Approach

A modern testing framework will give insurers prompt developer feedback and will support agile development. Testers will have the capability to build automation in parallel to application development. They will give users the ability to conduct continuous and recurring regression tests. Business analysts will be able to get more involved in testing. Scriptless automation techniques will provide business users with their own test automation capabilities. These are just a few of the ways that a modern testing platform will bring insurers into the future and give them a competitive edge.

To dig more deeply into the benefits of expert testing in the transformation process and beyond, download Majesco’s recently released white paper, Putting Insurance Testing to the Test. In addition to Majesco’s testing overview, supplemented with industry perspectives from the research firm Novarica, readers will find a valuable example of an agile-friendly test automation approach as well as a helpful list of distinct service elements that should be taken into consideration when picking an IT testing partner.

This article was written by Dan Mets.

What Limelight Shows on InsurTech’s Future

Limelight Health, the winner of our start-up Showcase at our first Insurance Disrupted | Silicon Valley, gives a sense of what’s to come with innovation in insurance.

Limelight Health has a product called QuotePad, which is one of the first real-time, mobile, all-in-one quoting platforms for health insurance and benefits professionals. (The others highlighted at the Showcase are RigGroupHubroostJumpstart RecoveryZenehomeSureify.)

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Jason Andrew, CEO of Limelight, says what his company is doing is a harbinger of even bigger changes: “We are witnessing one of the largest transformations in the history of a multitrillion-dollar industry. New technology is changing the game for the entire insurance ecosystem. Quicker, more seamless data integration is changing the insurance process, from the way consumers research and purchase insurance to how claims are underwritten. As a result, companies large and small are sprinting to keep up with the demand for agile and integrated technology platforms that can harness this growing data volume and extract real value from it.  The largest carriers are now paying attention to big data, spending more money on research and bringing on data scientists to analyze and shape the future of insurance. “

As the industry moves from a legacy framework to a series of more connected systems with intelligent logic built in, all parties involved in the selling and decision-making process will be allowed to spend more time executing decisions and much less time on the administrative work that is a large and protracted part of the process today.

Andrew says, “For the health insurance market, which is fragmented with a lot of outdated systems that don’t connect or communicate easily, and where redundancy often leads to a high probability of error, we see this as being where QuotePad will make a significant impact on the insurance industry.”

Limelight Health was born in February 2014. Before that, the insurance technology boom had not fully launched, and it took several years of pitching, partnering and persistence to gain the attention of an industry that now supports the cause. Prior to 2014, no one was really interested in investing in insurance.

What we now know as #insuretech and #fintech was not the sexy vertical it is today. And we’re just getting started.

If you’re in the industry you are probably keenly aware of some of the changes that are coming, but not all. Please consider joining us for future Insurance Disrupted conferences, with our start-up Showcases. The next will be held March 22-23 in Silicon Valley. ITL readers receive a 15% discount here.

Organizer and host of Insurance Disrupted Conference: Silicon Valley Insurance Accelerator – SVIA

Innovation Partner: Insurance Thought Leadership

Conference sponsors: Aflac, Munich RE, Captricity, Zendrive, XL Innovate, Saama Technologies, CRC Insurance Brokers, Novarica

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E-Signatures: an Easy Tech Win

While industry analysts and thought leaders speculate on the adoption and impact of telematics, driverless cars and the Internet of Things on insurance, it is worth revisiting how we are doing with more mainstream technologies. Electronic signatures and e-apps have been around for years, yet paper-based applications remain the norm. A survey of 113 insurance professionals conducted late in 2014 by e-SignLive and PC360 revealed only 33% of respondents are using e-signatures.

Because insurance is a regulated industry, “paper” work is inevitably at the heart of all we do. For that reason, any effort to digitize the business of insurance needs to start by eliminating paper and manual signatures. From there, digital records and the data they contain can flow seamlessly through distribution, policy administration, ratings, billing, claims and other core systems. Digital insurance is not a theoretical, utopian concept. It is not only possible – it is being done with great success.

E-signatures are a relatively quick and easy technology to add to your existing core systems and workflows. Yes, it is possible to get started overnight, but don’t let the minimal investment of time and money fool you – the impact of going digital is significant for everyone involved.

BENEFITS FOR CARRIERS

Full Visibility

Digital transactions have unique advantages over paper. When your business mails out a paper package for a customer to sign, you have no control once the documents leave your hands. Similarly, if your business takes place through the agent channel, you have little control over the process. Were the proper procedures followed at every stage of the process?

The blind spot that exists with paper is eliminated online. Insurance companies gain real-time visibility into what is taking place at the time of signing. Overnight, you can monitor the status of in-progress transactions, track drop-offs and transactions about to expire and analyze trends in customer behavior.

NIGO Rates Bottom Out

In the digital world, customers go online, get quotes, choose coverage and complete an application through the channels and devices of their choice. They enter application data electronically, and workflow rules are enforced to ensure an error-free application.

Overnight, this eliminates the average 60% Not-in-Good-Order (NIGO) rate that occurs with paper-based new business applications. It saves the industry hundreds of millions of dollars, in hours that no longer have to be spent fixing documents. This is significant, considering that an error-free digital process costs a third to a fourth of what a process with errors costs.

Easily Demonstrated Compliance

Once your new business applications become completely digital, compliance teams will be one of the biggest winners. By automating, they gain the ability to:

  • Capture digital audit trails, including an active audit trail that allows you to replay any transaction exactly as the customer experienced it;
  • Minimize exposure to risk because of misplaced or lost documentation;
  • Make the process of demonstrating compliance less resource- and time-intensive.

Online transactions with strong audit trails provide a record of every action taken by customers. You know when they signed, how they signed, how much time they spent reading each page, what IP address they transacted from. Plus, audit trail data can be extracted for analytics purposes and even greater insight into your business.

Once your company has gone digital, you no longer spend weeks preparing for audits and market conduct exams, identifying paper files or getting them out of storage. How would your VP of compliance react if you told her that you could quickly pull any signed record from a database of millions of documents, guarantee it is in good order and replay the entire transaction to prove that your company followed all regulatory rules?

Virtually All Legal Disputes Defused

When carriers think about going digital, many have concerns over legal risk. Fortunately, the legal framework has been in place since 2000. Case law has shown that if the process is clear to the signer, and signer intent is properly established, the courts will accept e-signatures and e-records as evidence.

A top auto insurer can attest to the fact that e-signatures decrease the risk of legal disputes compared with paper signing. This carrier has been capturing customers’ signatures electronically for the last 10 years and has only seen one case involving e-signed records go to court – despite more than one million customer inquiries.

Costs Cut

Keeping transactions digital helps your bottom line. Gartner Research reported on a large carrier’s digital process, noting, “E-signatures saved $10 per transaction, with the potential of annual recurring savings of millions of dollars. This includes costs for mailing, postage, paper handling and processing.” There were 275 million life insurance policies in force in the U.S. in 2013. Multiply that by $10, and the potential industry-wide savings climb into the billions.

Immediacy

Across all channels, closing the deal when the customer is ready and engaged is critical. By offering e-signature capability on its website, one global insurer is able to convert visitors immediately and avoid dropoff rates that occur when the process falls to paper.

This is as advantageous for new business and renewals as it is for claims. Clearly, the immediacy of submitting a signed claim from a smartphone on the spot is a differentiator. For the customer, that means faster resolution in moments of stress – ultimately improving satisfaction and increasing retention.

BENEFITS FOR CUSTOMERS

Customers want convenience and speed and a company that is easy to do business with. McKinsey recently confirmed that, “more than 80% of insurance customers began their shopping process using direct channels. Online is increasingly the initial channel of choice even among customers who value the agent relationship.”

Clearly, expediting the process of buying insurance is important across all channels. Someone who starts insurance shopping on Google Compare may very well still appreciate having an informed agent talk him through the policy options, but not if that means dropping back to an antiquated, paper-ridden, offline process.

Keeping the transaction digital just makes it so much easier to purchase, renew or modify a policy. Carriers repeatedly find that e-signatures help lower NIGO rates, increase customer loyalty and boost referrals. In fact, one insurer experienced a 14% higher retention rate with customers who e-signed their new business policy.

BENEFITS FOR AGENTS

Both captive and independent agents spend too much time on administrative work. Insurance Journal reported that, “Only about one-third of producers spend more than half their time selling […] Instead, they are spending more time than they think they should on administration and client service.”

Even when using a modern agency management system or e-app, productivity is lost when you have to print to paper for signatures. Those applications must then be photocopied, shipped, faxed, chased down, corrected, scanned and archived. All of this creates a huge time and productivity drain. The good news is, e-signatures save as much as 90% of the time and cost of administrative labor.

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GOING DIGITAL MAKES SENSE FOR INSURANCE

Clearly, the insurance industry is moving down the path to digital. However, the pace of change is accelerating, and carriers and producers that don’t offer a fully digital process online and on mobile devices will be left behind. Analyst firm Novarica sums it up best: “The time for insurance carriers to take concerted action with an e-signature strategy is, in Novarica’s view, now. The technology, legal framework and customer expectations have all reached a point where carriers need to proceed in order to compete.”

7 Imperatives for Moving Into the Cloud

For property and casualty insurance carriers, growth is hard-fought in an environment of compressed margins, regulatory scrutiny, increased competition and customer expectations for anywhere/anytime service. Add unsteady economic conditions, low interest rates that decrease investment income and catastrophic losses from significant events such as Hurricane Sandy into the mix, and insurers are finding that their tried-and-true business methodologies that worked well pre-2008 are in desperate need of a facelift. Growth is especially challenging for insurance carriers with inflexible legacy technology systems, as well as small and mid-size carriers that lack the resources to make the product and operational changes they need to remain relevant and profitable.

Insurance carriers must navigate an environment that rewards nimbleness and flexibility, but to do so requires that insurers modernize their current systems and processes. Consider the example of bringing a new product to market. At most insurers, the process may take six months or more, with a price tag reaching seven figures. By the time the product is ready to launch, the dynamics in the market have shifted, or perhaps a new regulation has been legislated. The insurer has two equally unappealing choices: Launch the product as is and never realize a return on investment, or delay launch and retool the product, increasing the R&D price tag and losing potential revenue and market share.

There is a better way: Updating legacy systems with flexible and scalable Software as a Service (SaaS) computing capabilities allows P&C insurers to rapidly capitalize on opportunities and support growth. This article presents seven imperatives for the P&C insurance industry based on industry research and analysis, and outlines how a SaaS implementation can address each imperative.

IMPERATIVE 1: INCREASE SPEED-TO-MARKET 

In an Accenture survey of insurance industry professionals, more than seven of 10 (72%) respondents indicated that it takes their organization six months or more to launch a major product. In today’s constantly changing environment, six months is a long time indeed, and it’s likely that the market looks different than when product development began. However, insurers that are able to rapidly offer innovative products and services through multiple channels can take advantage of shifts in the market and exploit the slowness of competitors. Today, “slow and steady” doesn’t win the race.

Compared with legacy system-based product development, which requires coding, scripting and testing, a SaaS infrastructure by design incorporates more nimble and configurable software, significantly reducing development time and eliminating the cost of hiring a vendor or consultant to make coding changes. In addition, SaaS provides rapid provisioning of live and test environments to further increase speed-to-market. Lastly, SaaS requires minimal investment in hardware, software and personnel. Insurers can use a pre-configured infrastructure to reduce development costs by more than 80% over comparable legacy systems, according to Donald Harrell, senior vice president of marine, exploration and production for Liberty International Underwriters. This, in turn, reduces the risk for product launches.

IMPERATIVE 2: QUICKLY RESPOND TO MARKET AND COMPETITIVE CHANGES

Those insurers not able to turn on a dime may be in trouble because so many of their competitors are preparing to invest in technologies and processes that will help them design, underwrite and distribute products and services more quickly. More than 80% of insurance CEOs are planning to increase investment in technology, and more than 60% plan to develop their capacity for innovation. Innovation must continue after product launch, and SaaS allows insurers to retool products as market drivers dictate.

The ability to revamp an existing product is particularly attractive to small or mid-size insurers launching products to a relatively small target market. With SaaS, insurers are able to bring niche products to market that would otherwise not deliver enough ROI to justify the investment. Likewise, if a product is not profitable, an insurer can make changes and quickly reconfigure the product rather than being forced to offer an unprofitable or marginally profitable product because it’s too costly to make changes.

Insurers can also more effectively price products. SaaS is charged on a subscription or consumption basis, so costs are more closely aligned with the revenue being generated by the new product.

IMPERATIVE 3: REDUCE COSTS TO MAINTAIN PROFITABILITY

As the U.S. economy slowly improves, P&C profitability is starting to improve as well. However, there is little cause for celebration. Fitch Ratings warns insurers that the current pricing cycle may be running out of steam, forcing insurers to cut expense levels to maintain profitability. Now is the time for insurers to put in place cost-saving strategies. With a SaaS infrastructure, insurers can innovate and offer new products and services without incurring capital expenses.

Rather than implement an expensive technology infrastructure, SaaS allows insurers to leverage preconfigured infrastructure and reduce IT resource requirements, staffing and professional services fees. In fact, SaaS up-front costs are typically less than 20% of the development costs of legacy systems. SaaS pricing models have also matured, giving insurers access to a variety of bundled and unbundled pricing options.

IMPERATIVE 4: AUTOMATE AND STREAMLINE UNDERWRITING

A survey of insurance professionals by FirstBest Systems found that 82% of respondents believe that their insurer’s underwriters spend less than half of their time actually underwriting, with the majority of underwriter time spent on data collection and administrative tasks. Insurers understand that giving underwriters the automation tools they need to do their jobs effectively is key to improved underwriting, but many believe that the technology is problematic, with 81% citing lack of data integration as limiting underwriting productivity. In contrast to legacy underwriting systems, SaaS allows insurers to easily incorporate rules to automate the underwriting process and increase underwriting ratios and revenues.

SaaS also allows for streamlined data integration as opposed to off-the-shelf packages that often need extensive modification, thus eliminating a major stumbling block to optimal productivity for underwriters.

IMPERATIVE 5: SUPPORT NEW DELIVERY CHANNELS

Mobile technology continues to be top-of-mind for many carriers, with more than 60% planning to add new mobile capabilities for policyholders and agents. Notes Novarica partner Matthew Josefowicz, “As the use of smartphones and especially tablets displaces the use of desktops and laptops in more areas of personal and professional life, support for these platforms is becoming critical to insurers’ abilities to communicate electronically across the value chain.” The problem for carriers is that legacy systems were not designed to run on mobile devices. However, SaaS, with its more modern coding, is able to provide both a better user interface and operational efficiency for smartphones and tablets. SaaS allows insurers to distribute products through a variety of new channels (e.g., banks, car dealerships) that would not be possible with legacy systems.

Creating and recreating websites and portals quickly and inexpensively means that insurers can more readily compete with “disrupters” that use a direct-to-consumer model. Insurers can design multiple portals for different geographies, languages and associations in near-real time. Deloitte reiterates the importance of mobile and other delivery channels for insurers: “No one can afford to take their distribution systems for granted. More insurers are likely to grow bolder in exploring alternative channels to capture greater market share, catering to the needs and preferences of different segments while cutting frictional costs.”

IMPERATIVE 6: COLLABORATE WITH THIRD PARTIES

Insurers are increasingly relying on third parties for a variety of integration services, including regulatory compliance, sophisticated data analysis, geo-location capabilities for risk assessments and risk ratings for more accurate underwriting and risk pricing. Integration between carrier legacy systems and third-party providers is typically problematic because of proprietary file formats and other issues that make it difficult to share data. In contrast, SaaS provides links to existing interfaces for access to third-party databases. Integration reduces costly, error-prone and time-consuming manual intervention.

IMPERATIVE 7: IMPROVE THE CUSTOMER EXPERIENCE

The majority of insurers (91%) believe that future growth depends on providing a special customer experience, according to Accenture’s survey. However, getting the relevant and up-to-date data they need to give customers a personalized experience is a critical challenge for 95% of respondents.

In the same survey, only 50% of insurers say that their carrier leverages data about customer lifestyles to determine the products and services most likely to meet customer expectations; 70% rate themselves as “average” or “weak” in their ability to tailor products and services to customers’ needs. A similar number (64%) give themselves low ratings for their ability to provide innovative products and services. Poor service — or even average service — is no longer acceptable. Consumers are accustomed to personalized experiences such as shopping on Amazon or booking airline tickets on a travel site, and expect a similar type of experience from their insurer.

Thomas Meyer, managing director of Accenture’s insurance practice, says, “To pursue profitable growth, insurers need to achieve the kind of differentiation that allows organizations like Apple to charge a premium while building customer loyalty. As Apple has shown, the answer is consumer-driven innovation that creates an exceptional user experience.” SasS enables insurers to access the data points they require to differentiate their products throughout the customer experience. In a market commoditized by regulations and related factors, insurers that can leverage SaaS to deliver a straightforward, simple process to customers will give themselves a competitive advantage.

 CONCLUSION

In an accelerated market where change is the new constant, P&C insurance carriers cannot afford to continue to do business as usual. Imperatives such as speed-to market, responsiveness to customer demands, new delivery channels, cost reduction and improved underwriting make it necessary for insurers to explore new methods of providing products and services to customers. SaaS, with its flexibility, scalability and low cost, is a technology imperative if carriers hope to grow and remain competitive.

For the full white paper Oceanwide, click here.