Tag Archives: rfp

COVID: How Carriers Can Recover

Because of COVID-19, carriers are reeling from the moves they have to make to mitigate loss and churn, accelerate digital transformation and automation efforts and improve safety.

The pandemic caused a dramatic reduction in consumer driving with fewer cars on the road, for instance, and many auto insurance carriers issued partial refunds to policyholders. In early April 2020, Allstate reported it would return 15% of monthly premiums, more than $600 million, to auto policyholders to compensate for reduced driving due to state-issued stay-at-home orders. Most carriers also began to extend payment grace periods.  

These swift moves were designed to minimize churn, as policyholders look to save money by reconsidering coverage limits or even reducing the number of vehicles they use. These changes are likely not just short-term. The impact of COVID-19 on the economy is expected to be long-lasting and will more than likely result in the reallocation of jobs, workers and capital across firms. The unemployment rate rose to 13.3% in May compared with 3.5% in February just before the pandemic hit, as reported by the U.S. Bureau of Labor Statistics.  

What else can insurance carriers do? 

To survive and thrive during this unprecedented time, carriers must empower economic recovery and innovate and reimagine business models and services, while serving policyholders’ rapidly changing needs. Retrenching through innovation is an important and necessary step. In my experience, one way to do this is by implementing a process known as “innovation groups” that spans the organization.

Properly structured, innovation groups increase the efficiency of work processes and empower employees. If innovation is too tightly concentrated in specialized departments such as strategic innovation teams, for example, or too tightly aligned with corporate venture interests, companies generally fail to leverage the deep knowledge and expertise of day-to-day operators. The best opportunities for innovation and new technology partnerships — those that truly drive a business forward — come from the active involvement of the people who are closest to the affected end-user and are most familiar with the incumbent process or technology and its deficiencies.

To succeed with a company-wide innovation process, companies must also consider culture and look for ways to make things work as opposed to reflexively saying “no” to challenging change. The most innovative companies have a similar formula for success:

  1. They forgo hierarchical authority in exchange for collaborative teams that value data and divergent creative thinking;
  2. They create a process and an environment where employees feel safe to bring (contextually focused) ideas without fear of judgment; and
  3. They reward bold ideas that challenge the status quo, even if they fail.

Cultural shifts like these do not happen organically or overnight, so carriers must be committed.

We work closely with many of the top insurance carriers to create and implement technology-based solutions. So, I’ve provided a few suggestions based on our experience working with carriers for innovating through disruptions that can drive your business forward.

Leverage third parties to increase carriers’ technology capabilities

The insurance industry was already undergoing a significant technological shift before this pandemic. However, insurance has historically been slower than other industries to shift systems and applications to the cloud, which offers much greater bandwidth and capacity than traditional data centers. According to Forbes, many digital-first business models are the product of increased collaboration between traditional insurance companies, testing new business models, and revenue streams powered by new technologies. 

See also: Evolving Trends in a Post-Covid-19 World  

Insurance carriers are experiencing pressure to come up with solutions faster. Working with third parties accelerates innovation and allows carriers to focus on enhancing their traditional value proposition with expanded services to meet new customer expectations and the changing behaviors of a post-COVID world.

Most importantly, technology solutions can reduce operational costs by preventing fraud and automating services, freeing employees’ time for initiatives that provide more value and allowing insurance agents to acquire and maintain business more efficiently. 

Look for new ways to easily and quickly deploy AI across the business to increase accuracy and speed and to decrease costs.

Artificial intelligence (AI) has improved operations in multiple sectors of the insurance industry by lowering costs, driving efficiency across the business and enhancing the customer experience. If you’re not taking advantage of AI now, it is of utmost importance to start doing so immediately. 

According to Accenture, insurance executives believe that AI will transform their industry, with insurers investing in AI to empower agents, brokers and employees. They aim to enhance the customer experience with automated personalized services, faster claims handling and individual risk-based underwriting processes. 

Roadside assistance programs, for instance, are benefiting from AI, machine learning, automation and data transparency. For many insurers, roadside assistance is one of their highest-volume claims. So it’s vital to offer an omnichannel touchless claims process (voice, web, mobile with “hands off”) to AI-powered chatbots that provide customers with real-time information during a roadside service. New technologies for deep provider profiling and dispatching are also crucial. These digitalization efforts improve the overall roadside assistance experience and make it far more efficient. 

Leverage insurance carrier and partner data more effectively to make more informed decisions.

All companies can do a better job of leveraging data. Leveraging data helps insurers make better and more informed data-driven decisions with regard to pricing, risk selection, fraud, claims and identifying trends. 

Carriers can be more successful in this area by working closely with their third-party partners to design and implement data feeds or warehouses where relevant data is continuously updated and exchanged in a real-time environment. Introducing or evaluating new technology systems and partners is also an excellent way to rethink or update your data strategy. These efforts can unlock sources of data that were previously unattainable and, thus, not actionable. When vendors and clients work together to share data and operate transparently, they quickly become “partners,” with shared objectives and outcomes. They continuously hold each other accountable and are more likely, and more quickly able, to uncover insights.

Fraud is another area where insurance carriers can increasingly use data. Especially in difficult economic times, “bad actors” may look for ways to gain financially from fraudulent claims. Fraud is most effectively detected through artificial intelligence, which can increase efficiency and accuracy without adding headcount. 

Improve the RFP process, which is largely seen as broken and lengthy by startups and innovative companies, to speed your process. Focus efforts on testing/piloting as quickly as possible. 

Does RFP stand for “Request for Proposal” or “Really Frustrating Process?” That depends on whether you’re asking insurance carriers or startups.

Carriers, like many others, are used to using RFPs in their procurement processes. These RFPs have worked well over the years, comparing generally commoditized solutions in an apples-to-apples fashion. They shield operators from situations that might otherwise introduce bias (.i.e, the “procurement wall”), while also aiming to create a fair and equal environment for vendor competition. Sounds great, right?

Not if you’re a startup. By definition, startup companies are funded by investors that believe in a “moonshot vision” and want to see “disruptive innovation.” Investors don’t invest in startups with solutions that only marginally improve the status quo. Now, consider a startup with a highly differentiated solution. How is it supposed to explain that differentiation in a highly structured RFP document or web form in which the questions are often outdated or incorrect, answers are pre-canned or the startup has just 140 characters to explain its wildly different business model?

Analysts have documented that insurtech opportunities frequently fail to reach the test or pilot phase due to “internal difficulties.” And when the procurement process doesn’t actually evaluate a solution, it isn’t much of a procurement process, is it? Imagine trying to compare a potential switch from Yahoo search to Google search in the 1990s. What would that RFP look like? What questions would it have asked? “How many website categories do you support?” “How many human curators add links each day?” “Include screenshots of the search box.” Anyone that tried Google search would have spotted the difference in the quality and usefulness of search results immediately. Would the RFP have communicated this difference?

See also: Step 1 to Your After-COVID Future  

To ensure your RFPs aren’t inadvertently preventing your organization from evaluating truly transformative technologies, focus on relationships and culture fit and, most important, try the technology. Make decisions based on the results. Revisit processes and make sure they open doors for innovative startups. The carriers that focus not only on fixing these “old” processes, but also introducing “new” ones will out-innovate those that do not. Some of these new processes could include startup engagement, integration and staging environments, sandboxes loaded with sample data, APIs and standardized/modern security audit processes,

A catalyst for change

The transformation of the insurance value chain as we know it — from policies, pricing and distribution to underwriting and risk management through to claims servicing and payments —will be accelerated by this pandemic and the resulting economic downturn. Use this opportunity as a catalyst to change outdated processes and technology, implement thoughtful innovation processes, seek high-value partnerships in the rapidly expanding insurtech industry and evolve company culture to come out ahead where others may stay behind.

No More Need for Best-of-Breed Solutions?

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.


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.

Ceded Reinsurance Needs SaaS Model

Ceded reinsurance management is still a technology backwater at insurers that manage their reinsurance policies and claims with spreadsheet software. These manual methods are error-prone, slow and labor-intensive. Regulatory compliance is difficult, and legitimate claims can slip through.

Insurers recognize they need a better solution, and there’s progress. While quite a few insurers have implemented a ceded reinsurance system in the last few years, many more are planning to install their first system sometime soon. They want to have software that lets them manage complex facultative reinsurance and treaties and the corresponding policies and claims efficiently in one place.

Insurers looking to upgrade any kind of system have better choices today than ever about how and where to implement it. While licensing the software and running it on-premises is still an option, virtually every insurer is considering putting new systems on the cloud in some way. Nearly every insurer expects vendors to include a SaaS or hosted option in their RFPs.

That’s not surprising. A 2014 Ovum whitepaper said 52% of insurers it surveyed are currently earmarking 20% to 39% of new IT spending on SAAS, while 21% are spending 40% to 59%.

The definition of SaaS is not set in stone, but let’s try for a basic understanding. SaaS normally means that the insurer pays the vendor a monthly fee that covers everything—the use of the software, maintenance, upgrades and support. The software is hosted more often at a secure cloud provider such as Amazon Web Services that offers a sound service level agreement.

A ceded reinsurance system is an especially good candidate for a SaaS or a hybrid solution (more on that later). It’s an opportunity for insurers and IT professionals to get comfortable with SaaS on a smaller scale before putting a core system such as a policy administration system in the cloud.

SaaS is attractive for several key reasons. One is that it can save money. Instead of paying a large upfront fee for a perpetual software license, the insurer just pays a monthly, all-inclusive “rental” fee. The software vendor and the cloud-hosting vendor provide both the application and underlying software (such as Oracle or WebSphere) and servers. All the insurer needs is a solid Internet connection. And if your building is hit with a flood or earthquake and has to close, business won’t stop, because users can access the system from almost anywhere.

Having the experts run, maintain and upgrade the software is another big advantage. Instead of having internal IT people apply patches and updates, the vendor—which knows its own software better than anyone else—keeps the application going 24/7. Because it is doing the same thing for many customers, there are economies of scale.

Lower upfront costs and the ability to outsource maintenance to experts mean that even small and medium-sized insurers can afford a state-of-the-art system that might be out of reach otherwise. But even big insurers that have the money and funds to buy and staff a system can still find SaaS to be a compelling option. Whether the insurer is big, small or mid-sized, SaaS offers a platform that may never become obsolete.

Additionally, going the SaaS route can get your system up and running faster, as you won’t need to buy hardware and install the system on your servers. How long it will take depends on the amount of customization required and on the data requirements.

Scalability is another plus. When the business grows, the customer can just adjust the monthly fee instead of having to buy more hardware.

A 2014 Gartner survey of organizations in 10 countries said most are deploying SaaS for mission-critical functions. The traditional on-premises software model is expected to shrink from 34% today to 18% by 2017, Gartner said.

While these are powerful advantages, there are some real or at least perceived disadvantages with SaaS. Probably the biggest barrier is willingness to have a third party store data. A ceded system uses nearly all data from the insurance company, sometimes over many underwriting years, and executives must be comfortable that their company’s data is 100% safe when it’s stored elsewhere. That can be a big leap of faith that some companies aren’t ready to make.

A hybrid solution can be a good way around that. More common in Europe, hybrid solutions are starting to catch on in North America. With this model, the software and data reside at the insurer or reinsurer, which also owns the license. The difference is that the vendor connects to the insurer’s environment to monitor, optimize and maintain the system. As with SaaS, the insurer’s IT department has little involvement with continuing operations. All that is work is outsourced.

How much access does the vendor have to the insurer’s data and systems under a hybrid solution? There are various options, depending on the insurer’s comfort level.

What’s the right solution for a ceded reinsurance system to your company? Each company is unique, and the best answer depends on many factors. But whether you go the on-premises route, choose SaaS or use a hybrid solution, you’ll get a modern system that handles reinsurance efficiently and effectively. Your company is going to benefit greatly.

Time to Rethink Usage-Based Insurance

“Do no harm.” That’s part of the doctor’s oath, and it was the underlying thinking behind Progressive’s launch of usage-based insurance (UBI) into the U.S. insurance market back in 2010. The message was straightforward – try our Snapshot device, and your insurance premium can only go down; how far down depends on how well you drive.

Fast forward five years of “Flo” hammering way at the virtues of UBI: Progressive claims $2.5 billion in annual premium emanates from UBI, and nearly every tier 1 carrier emulates Progressive’s format…and Progressive has announced, in March 2015, that it is going to charge higher premiums for the worst-behaving drivers, effectively dumping the concept of “Do no harm.”


And why not? As the pioneer of UBI in the U.S., Progressive has accumulated the trip data of millions and millions of customers over a number of years – tens of billions of miles of journey data coupled with hundreds of thousands of claims – giving the company unique insights into the behaviors that cause accidents. Based on listening to customers, the marketing program has now shifted from “Plug it in. Drive. Save.” to the concept of “Rate suckers” – bad drivers getting a free ride on the premium that safe drivers pay.

Progressive’s research showed that 89% of drivers would be upset to find out that their premiums were subsidizing bad drivers. So loading the premiums of bad drivers backs up the marketing message and should further fuel the positive selection of good drivers moving to Progressive, while chasing away the bad drivers to cheaper, less-data-savvy carriers. This adverse selection for Progressive’s competitors will eventually move the market to fully data-driven underwriting over the medium term.

All this goes to show is that UBI is not your typical Insurance product. Key to success for Progressive has been:

  1. the ability to accurately model the risk and develop a compelling pricing model based on the new data made available from the telematics device
  2. creating an attractive customer proposition and educating the market in the benefits of the proposition with a targeted campaign
  3. implementing the operational processes that deliver on the promise of the marketing message

Many insurers get dazzled by the telematics gadget and technology and lose sight of the fact that success really turns on delivering a compelling customer proposition fueled by deep customer insight. I find it intriguing that many UBI programs are still being run by IT departments, as the proposition will only be truly successful when the strategy, marketing, product development and operations teams become involved.

I have run a number of telematics engagements, and the technology is quite straightforward. Arguably, the hardest part is finding where to plug in the telematics sensor on the vehicle. Usually, data starts to flow almost immediately, and drivers start getting scores the following day.

However, that UBI plugging-in and data flow marks a “moon landing,” as your relationship with the insurance customer will be forever changed.


Let’s face it, in the past a customer usually shopped for the cheapest price of motor insurance, bought it and then tucked the policy away in the glove compartment of the vehicle with little or no contact with the insurer until it came time to claim or renew. With UBI, the insurer provides customers with a companion mobile app (and website) that gives daily feedback on their driving skills and opens up a range of value-added services like:

  • Real-time vehicle location viewing
  • Teen safety monitoring (geo-fencing)
  • Driver feedback (rating, score) — continuing tips to improve driving style and reduce accident risk
  • Trip replay capability, with mapping
  • Driver behavior indicators (harsh braking, reckless driving, acceleration) within trip
  • Logbook – trip information – tax and fuel log expense claims
  • Parking meter reminder
  • Vehicle fault notifications
  • eCall (emergency/panic button) and bCall (breakdown)

You may have noticed I have skirted the issue of “push” marketing offers, which this connectedness will certainly open up. If handled with the mindset of truly benefiting the customer, then this could be a good thing, but it’s a fine line between good and “spam.” I have advocated elsewhere that dynamic affinity offers, when coupled with a high degree of personalization, will present much greater value to the customer rather than the scatter-gun coupon books that typically prevail today.

In China, over the last 18 months, quite a few insurers have piloted UBI propositions in advance of the deregulation, and affinity offers – value-added services – have figured prominently. Most have offered a flat 10% insurance discount for simply trying out UBI.

PICC, in partnership with Tencent and Shell, launched the “Lubao” box in early 2014. It’s a plug-in device that connects to a mobile App that displays the current status of the car, runs routine diagnostics, offers advice on fuel-saving driving techniques, provides discounts on Shell products, provides road-side assistance and funnels all that data back to the insurance company and its partners. Seems like a dress rehearsal for rolling out a full “Progressive-style” pay-how-you-drive insurance program when regulations allow.

Other insurers have offered time-saving features like streamlining the payment of traffic violations, which I am told can be quite inconvenient in China.

In some Asian markets, women’s safety while driving has been seen as a good landing place for the UBI proposition, with a “panic” button being built into the app. In other markets, where organized fraud is rampant, UBI provides the data to effectively be a silent witness to what really happened and protect the interest of the customer and the insurer. In Ireland, a fraud ring was systematically targeting drivers on country-side round-abouts and making phony whiplash claims at more than $20,000 per person. The data from the UBI device would help stamp out those kinds of claims, sparing the customer from the resulting increased premiums and months and months of mental anguish during the claim settlement process.

In several markets, the advent of UBI has been the key to making insurance affordable for young drivers and families with young drivers. And in Europe, where discrimination based on gender was banned several years ago, a new insurer, Drive-like-a-Girl, launched a telematics proposition quite similar to Progressive’s, where anyone with good driving habits (driving like a girl) earns a discount, eliminating the need for proxy rating factors such as age and gender.

The UBI proposition winds up being quite beneficial all around. Firstly, the community wins with improved road safety and easier-to-understand motor insurance contracts – pay for what you use. Secondly, customers win with cheaper insurance, with the ability to control the cost by improving their skills, plus they get a whole range of new features from vehicle fault monitoring through to faster claims settlement. Finally the insurer wins, as it accurately monitors risk and uses data to find new ways to engage customers – moving the conversation from price to value and establishing life-time brand associations with customers.

Do no harm. It’s certainly a good starting place as it gets you thinking from the customer’s perspective, but UBI presents a whole lot of value simply waiting to be unleashed for everyone. Just find what’s most important for your customers, and you should have a success when you launch your own UBI proposition.

See you in the parking lot. 🙂

3 Sales Myths That Are Killing You (And You Probably Don’t Even Know It)

You don’t have to sell everyone and you don’t have to serve everyone. The idea that companies should chase every piece of business out there and that if they don’t they’re leaving money on the table is antiquated. The negative impact of chasing the wrong prospects and serving the wrong customers is huge. To change your approach you may have to remove the myths that you may believe. Here are three:Myth #1: The Law Of Large Numbers
“More means more” is the core of this myth. More prospects means more sales … The only time that I see this myth become truth is not when you are a salesperson, but when your role is truly just order taking. Order taking means that the purchasing energy is driven by customer demand, not salespeople demonstrating value and securing new customers and contracts. All prospects are not created equal and the most successful salespeople who truly sell are successful in part because they prune their list, reducing the number of prospects regularly.Myth #2: The Funnel (Hotel California) “You can check in any time you like, but you can never leave…” These lyrics from The Eagles song “Hotel California” are just as true for CRM and sales tracking systems. There is a belief that once a prospect has been added to the list of qualified targets that companies should continue to communicate, sell, participate in RFPs and generally pursue those companies. I was in a session recently during which a company’s leadership bragged about chasing a deal for a decade. What a waste. Think of it: Ten years of newsletters, trade shows, prospecting campaigns, RFP participation and so on. How much margin would there need to be above regular business margin to pay for the huge investment made?

Myth #3: Money Is Money (Even When The Client’s A Jerk)
Some clients are just not worth having. I see companies clinging to the old idea that “the customer is always right,” allowing low-profit and bad-cultural-fit clients to eat away at their businesses. A great quick read is Robert I. Sutton’s book, “The No Asshole Rule.” It was written about employees but is every bit as true for customers. The negative blast zone in a company that a bad employee or a bad client creates is far more damaging than the revenues they produce.

Here are quick reality checks for you to test how your company is doing in regards to these myths:

  • How many prospects in your pipeline have been there longer than 15 months without an order? Fifteen months may be the wrong window, but there is a period after which the prospect is just an expense, not a real opportunity.
  • How many of your clients violate “The No Asshole Rule?” Determine how they became customers and then figure out how to avoid those prospects in the future.
  • Do you have a threshold for your salespeople as to how many prospects they can have active in their pipeline at any one time? Salespeople can be blocking real activity by “claiming” prospects when they haven’t made progress after a defined period. They can’t land the opportunity and your company is not landing another client either because your salesperson is tied up in a dead pipeline.

Myths are fiction passing as facts. Clean out the myths and you can refocus your sales efforts.