Paul Webster, Business Consultant at SSP for Insurers, looks at the questions that organisations should ask when choosing a new insurance IT platform and what they should consider.
This process has traditionally involved selection centred on a functional and technical scoring exercise. Usually underpinned by formal Request for Information (RFI) and/or Request for Proposal (RFP) steps where invariably all vendors score similarly. This is because these exercises typically question the technology provider on “hygiene factors”, rather than focusing on the real business case. To select the best technology partner, buyers should look beyond core features and functions and aspire to future innovations like digitalisation. Digitalisation may be a current buzz word in the industry but it is happening and companies that don’t evolve and adapt their strategies will cease to be competitive.
According to a Cap Gemini survey 78% of companies across all industries see digital transformation as being the key to their business over the next two years. According to Gartner only 50% have actually defined a digital strategy. Many companies claim to be ‘digital’ but actually when you look closely, it is much more than augmenting existing systems and adding a web portal onto an existing back- office solution. Being ‘digital’ should encompass many assets and technology buyers should consider these when looking at changing systems.
The world of internet platforms has evolved from being focused on e-commerce and developed to user experience platforms (UXPs). With the ever-changing demands of the customer, interactions and the customer journey are more important than ever. The need to worry about different versions of Windows or Internet Explorer is fading. Insurance customers demand the ability to research and purchase their insurance using many different devices (laptop, tablet, smartphone etc.), each of which use specific browsers (Chrome, Safari, Firefox etc.) and have their own specific sizing requirements. The technology that you are looking at needs to support responsive design where the user experience is automatically tailored to device.
Look at www.kiwibank.co.nz for example. When minimised and maximised, the browser screen in various sizes on a laptop or desktop, dynamically chooses to re-size for the appropriate window size. As Bring Your Own Device (BYOD) gains in popularity, internal users should be considered. Is there a restriction on the functions an internal user can access dependent on whether they are logged onto the local network or using their own device away from the office?
According to Gartner, within the next five years Customer Experience Management (CEM) is at the top of CEOs priorities as an important area of investment for business improvement in relation to technology. CEM solutions are used to design unique customer experiences by using scoring algorithms to define key outcomes. Vital in identifying appropriate customer segments for targeting, they give a wide range of business users access to the customer insights needed to make speedy data-led decisions.
Another buzz word of the moment, ‘Big Data’ means very little on its own. It’s the insights derived from the data that allow insurers to make more informed underwriting decisions, improve the accuracy of pricing, customer segmentation and market/product direction. But many insurers and brokers are struggling to make meaningful use of any data and others simply can’t access it at all. Data enrichment enables insurers to provide a superior insurance purchasing process, not only in terms of risk management but also to simplify the acquisition process.
In the UK alone it is already possible to augment risk data automatically with credit information, DVLA driving history and claims information. This combined with usage-based driving scores; the availability of data will only continue to increase. This is why it is important that insurers choose a solution that can retrieve this information dynamically. As an example, an entrepreneur was recently looking at setting up a new motor insurance enterprise. He had only five questions prepared and planned to get all other policyholder and risk information from other sources, even to the point of checking occupation details using Linkedin.
Another consideration for insurers is Social Media. The insurance industry is now beginning to get to grips with the power of Social Media and in particular the effect it has on brand. Research tells us that consumers prefer Twitter when generally commenting about their insurance experiences (good and bad) but are still using blogs to spread their views on how their claims were handled. How can insurers manage this behaviour and how can they use it positively? There is so much insurance-related data to be found in Twitter, Facebook, Google and other social media channels but the question is, how can insurers access it and use it meaningfully? Existing business intelligence and dashboard reporting has always looked at structured data retrieved from local databases. The future winners will be those able to use ‘Google search’ like tools to look at both structured and unstructured data to drive innovative strategies and tailor products to suit customer behaviours.
In Personal Lines, telematics has been a hot topic of conversation for the last few years. It has been credited with curing a multitude of evils, including fraud prevention, loss reduction and risk mitigation. Although still evolving, insurers need to understand and develop the benefits it can deliver thoroughly. An interesting proposition from Carrot has introduced a new way of doing things, where drivers are rewarded for good behaviour with benefits such as cash rewards that are credited to a specific payment card that can be used in stores around the world.
There are many options in the market that include the use of both hard-wired devices and mobile apps and these will develop as investment based on market demands continues. Telematics and Usage-Based Insurance (UBI) are here to stay and technology needs to keep pace with its journey.
Distribution as a topic is not new and has been around for some time. But in this ever-connected world, with the blurred lines of intermediary and insurer (including those in between) it will only continue to complicate the question. Again some vendors claim to resolve this by ‘plumbing’ portals or websites on top of their existing policy administration platforms but this is only a short-term solution. For example, while broker portals still have mileage, it is challenging to convince brokers to re-key quotation details into various insurer portals (and indeed their own broking solution) to retrieve comparative quotes. The best distribution solutions allow for a multitude of options including trading platforms, real-time rating via quotation hubs, EDI as well as varying bordereaux import options including MGAs, where business is commonly obtained from a variety of coverholder entities that may submit risk information in a wealth of formats. This becomes particularly important as regulation demands access to granular risk information, in Europe specifically when Solvency II is eventually implemented.
Linked to distribution is product manufacturing. Speed to market is crucial when launching new insurance products but many other factors have to be considered. Does the technology support a “build once, distribute to many” approach where insurance products are built once but accessible from all channels? Does the product build process support a decreasing reliance on developers to make product and rating changes? Is it possible to copy and clone existing products to create schemes? Can proposed product changes be prototyped and tested quickly? Connecting the insurance value chain remains significant as underwriters demand growth, access to distribution, better risk selection, increased efficiency and closer alliances with their intermediaries. Likewise many brokers struggle with access to market, pressures on commissions, poor insurer service as well as competition from the likes of aggregators.
Whatever the priorities for purchasing new technology, the process is no longer about the IT manager or CIO overseeing the production of a comparative checklist. Nor, should it be solely based on whether the system can or cannot support Multi-Currency or Out of Sequence Endorsements, followed by a long drawn out haggle on price. Typically what is forgotten is the requirement for a real trusted advisor to work alongside the insurer to help develop technology strategies that add real value to the overall and future success of the insurer, MGA or broker.
Lastly, some believe that the traditional role of the CIO is dying out and will be replaced by the newly created Chief Digital Officer, Chief Customer Officer, Chief Innovation Officer and other digital positions. Either way, the best decisions should now being made based on strong business strategies where delivering value is the name of the game.
About the AuthorMore content by Paul Webster