100 - Novarica · an immersive experience into one of the world’s preeminent centers for...
16
Q3 | 2019 DISTRIBUTION/ COMPENSATION MANAGEMENT SYSTEMS PROVIDERS INSURETECH FOR INSURERS: 200 STARTUP PROFILES INSURETECH STARTUP PERSPECTIVES ON WORKING WITH INSURERS 100 DATA, DIGITAL, AND CORE CAPABILITIES FOR INSURERS AI-ENABLED DATA AND ANALYTICS IN P/C UNDERWRITING: OVERVIEW AND PROMINENT PROVIDERS BUSINESS AND TECH TRENDS IN COMMERCIAL LINES
Transcript of 100 - Novarica · an immersive experience into one of the world’s preeminent centers for...
Q3 | 2019
DISTRIBUTION/COMPENSATION
MANAGEMENT SYSTEMS PROVIDERS
INSURETECH FOR INSURERS: 200
STARTUP PROFILES
INSURETECH STARTUP PERSPECTIVES
ON WORKING WITH INSURERS
100DATA, DIGITAL, AND CORE CAPABILITIES
FOR INSURERS
AI-ENABLED DATA AND ANALYTICS IN P/C
UNDERWRITING: OVERVIEW AND
PROMINENT PROVIDERS
BUSINESS AND TECH TRENDS IN
COMMERCIAL LINES
2 Novarica Research Quarterly Q3 | 2019
Contents
Research Council StudiesNovarica New Normal 100: Digital, Data, and Core Capabilities for Property/Casualty Insurers
Novarica New Normal 100: Digital, Data, and Core Capabilities for Life/Annuity Insurers
Third-Party Data in Insurance: Overview and Prominent Providers
InsureTech for Insurers: 200 Startup Profiles
Insurance Technology Strategy and Regulatory Compliance, Vol. 1
3
Executive Briefs & Reports
IT Leadership and Transformational Change: Key Elements
Personal Lines: Near-Term and Long-Term Technology Trends
Core Systems in Insurance: Building the Business Case
Enabling Innovation, Vol. 6: More Lessons from Silicon Valley
InsureTech Startup Perspectives on Working with Insurers
AI-Enabled Data and Analytics in P/C Underwriting: Overview and Prominent Providers
7
Business & Tech Trends
Commercial Lines
Defined Contribution Retirement Plans
Personal Lines
9
Novarica Market NavigatorsDistribution/Compensation Management Systems
Life/Health Claims Systems
12
Presentations/WebinarsNovarica Insurance Technology Webinar: Technology in UW and Claims
Novarica Insurance Technology Webinar: Microservices and Cloud
Webinar: Insurance IT Strategy and Regulatory Compliance: AI, CCPA, and NYDFS
Novarica Insurance Technology Webinar: Managing Transformation
14
Welcome to the Novarica Research Quarterly! Each issue provides a summary of recently published reports, including studies of insurers’ technology experiences, capabilities, and plans from our Research Council; business and technology trends; CIO best practices; vendor information in our Novarica Market Navigators; and recent webinars and presentations. All of the research summarized here is available for download by our advisory clients at novarica.com. Research reports can also be purchased individually.
If you’d like to learn more or arrange a conversation to discuss any of these topics with our senior team, please contact us at [email protected] or 833-668-2742.
3Novarica Research Quarterly Q3 | 2019
Research Council Studies
| 48 Pages
Matthew [email protected]/CEO
The Novarica New Normal 100 (3N100) is a list of 100 technology capabilities that represent the “new normal” for insurers, spanning product development, marketing, distribution, underwriting, customer engagement, billing, claims, and finance/operations functions. They are organized into digital, data, and core areas.
This report explains the 3N100 Framework and provides analysis of deployment and pilot data from a survey of 50 property/casualty insurers.
Key Points and FindingsInsurers have broadened and matured their capabilities in the last year, especially in analytics and mobile. RPA and APIs have also increased significantly, especially for large insurers.
The capabilities gap between large and midsize insurers is shrinking, but it remains stark in some areas, especially the use of digital and analytics in claims.
Larger insurers are actively piloting new analytics and AI capabilities. Midsize insurers have less pilot activity in these areas and continue to expand in areas that are table stakes for large insurers, like mobile FNOL and 360° customer view.
Topics• Using the Novarica New Normal 100 Framework
to benchmark capabilities.
• Current deployment of digital, data, and core capabilities.
• Emerging technologies and current and planned pilot activity. How fast will new capabilities become table stakes?
4 Novarica Research Quarterly Q3 | 2019
The Novarica New Normal 100 (3N100) is a list of 100 technology capabilities that represent the “new normal” for insurers, spanning product development, marketing, distribution, underwriting, customer engagement, billing, claims, and finance/operations functions. They are organized into digital, data, and core areas.
This report explains the 3N100 Framework and provides analysis of deployment and pilot data from a survey of 18 life/annuity insurers.
Key Points and FindingsMore insurers are deploying analytics. More life insurers are leveraging pre-fill data and predictive analytics, especially in distribution and underwriting.
Digital capabilities are growing in new areas like billing and claims. Life insurers are expanding their digital strategies to include a broader range of functions.
Larger insurers retain a significant advantage in digital and analytical capabilities, but smaller insurers report high levels of planned pilot activities aimed at catching up.
Topics• Using the Novarica New Normal 100 Framework
to benchmark capabilities.
• Current deployment of digital, data, and core capabilities.
• Emerging technologies and current and planned pilot activity. How fast will new capabilities become table stakes?
Matthew [email protected]/CEO
| 48 Pages
5Novarica Research Quarterly Q3 | 2019
Jeff [email protected], Research & Consulting
Insurers are increasingly interested in leveraging third-party data for analytics augmentation and predictive modeling as well as for validating and cleansing existing data.
This report reviews multiple insurance industry use cases for third-party data and examples of insurers that are investing in this area. It also includes profiles of 58 data providers that insurers use.
Key Points and FindingsDrivers of third-party data usage include AI, customer experience, cost, and regulation. The need for large data sets to train AI and customer buying experience expectations that online retailers set both stand out as relatively new motivators.
Privacy concerns have made data use transparency critical. Scandals such as Cambridge Analytica, along with GDPR and similar regulations, have increased demand for transparency in how organizations use data and for what purposes.
The hunger for data will increase as core systems incorporate more AI and analytics. The good news is that this should lead to greater efficiency and improved consumer experience.
Topics• Insurer data capabilities. Most insurers assess their
data capabilities as relatively immature.
• Insurance use cases. This report focuses on marketing, underwriting, and claims.
• Established and emerging players. Profiles include types of data and typical use cases.
| 26 Pages
Eric [email protected], Research & Consulting
Steven [email protected], Research
6 Novarica Research Quarterly Q3 | 2019
Most research and media focused on InsureTech startups is written for innovators and investors, not for insurers. This report profiles 200 InsureTech startups—including Analytics Arms Dealers, Beneficial Bots, Creative Carriers, and Digital Distributors—from the point of view of insurers. It focuses on two key questions: Does this matter to my company, and what can we learn from it?
Key Points and FindingsAI is everywhere. The space has seen a rise in insurance-specific conversation platforms, machine vision, and AI applied to predictive analytics for fraud detection, sentiment analysis, and book of business review.
Startups cover all parts of the industry. More startup founders are industry vets, which means companies are now beginning to tackle more complex coverages and back-end processes.
Startups previously positioned as competitors are becoming partners. Many startup “carriers” are licensing their platforms to allow insurers to develop niche products and branch into new lines of business, though the effectiveness of this pivot is yet to be proven.
Topics• Types of InsureTechs. Novarica categorizes the
startup environment for easy classification.
• Engaging with InsureTech. Additional approaches to InsureTech involvement exist for companies that are not ready to invest in a startup or startup fund.
• InsureTech Profiles. The 200 vendors in this report serve as a starting point for insurers learning about InsureTech.
| 123 Pages
Stephanie [email protected] Associate
Rob [email protected], Research & Consulting
Jeff [email protected], Research & Consulting
7Novarica Research Quarterly Q3 | 2019
Executive Briefs & Reports
Locke Lord LLP and Novarica look at new regulatory developments in analytics, use of data, and data security that have the potential to affect insurer technology strategy.
This edition reviews the potential effects of regulation on the use of analytics and AI in life insurance underwriting, how privacy requirements may affect insurer data governance and MDM strategies, and how third-party data security requirements may affect distribution technology strategies.
| 10 Pages
Mitch [email protected], Research & Consulting
Brian Casey Locke LordCo-Chair, Regulatory & Transactions Insurance Group
Table of ContentsIntroduction
NY Circular Letter No. 1 and Life Insurance Underwriting
California Consumer Privacy Act and GLBA
NYDFS Cybersecurity and Third-Party Service Providers
Concluding Thoughts
About Novarica
About Locke Lord LLP
Transformational change has become commonplace in the insurance industry. New administration systems, digital strategies, and emerging technology implementations create opportunities for CEOs to deliver business value while requiring that they inspire their employees to rise to the challenge and embrace change.
Authentic leaders with empathy for the people these changes impact can help lead organizations through upheaval. Honest communication can build trust and excitement for a company vision and helps define individuals’ roles in making that vision a reality.
This brief focuses on the leadership tactics necessary to realize transformational change.
| 7 Pages
Nancy [email protected] VP, Research & Consulting
Homeowners and personal auto insurers operate in a highly competitive market where technology is key to creating advantage in sales, risk management, customer experience, and cost containment.
In the near term (next three to five years), insurers are likely to prioritize technology investments to increase speed to market, offer a digital experience to policyholders and agents, and leverage analytics to improve sales and operations. In the longer term, they will have to contend with trends like climate change and demographic shifts.
This brief explores the future of personal lines over the next three to five years and beyond with a focus on the role of technology in specific functional areas.
| 10 Pages
Emerson [email protected] Associate
Chuck [email protected], Research & Consulting
8 Novarica Research Quarterly Q3 | 2019
In many cases, developing a solid business case can still be challenging. Technical risk mitigation alone is often used to justify replacement, but this can leave business decision makers feeling lukewarm about making the necessary investment to ensure a successful core transformation.
Focusing on specific use cases tied to the Three Levers of Value (“Sell More,” “Manage Risk Better,” and “Cost Less to Operate”) can allow leaders to develop business cases that build support and excitement for core replacement initiatives.
This brief includes research data showing where insurers have deployed core systems as well as case studies of more than a dozen successful core deployments that have generated quantified or clearly defined business value.
| 13 Pages
Kevin [email protected], Research & Consulting
Money continues to pour into the InsureTech market, and insurers are waking up to the benefits of InsureTech partnerships: access to technical expertise, new talent, and a low-cost way to test new technology, to name a few. Yet time and resources are precious to startups, and many insurers want to see a track record of success before entering an engagement. This combination can introduce challenges when it comes to partnering.
Novarica discussed the experience of working with insurers with more than 25 startups, ranging from early-stage to more established companies to help insurers understand the startup perspective: what’s working, what’s not, and how insurers can take advantage of partnerships.
| 9 Pages
Novarica recently concluded its sixth semi-annual Silicon Valley Innovation Tour for senior leaders, which included a series of on-site visits to high-performing companies in the Bay Area. These visits provide an immersive experience into one of the world’s preeminent centers for innovation; they explore incubators, accelerators, venture capital firms, early stage startups, and mature companies that have managed to retain innovation as a central element of their corporate DNA.
This report captures key themes that emerged from discussions during the visit in the third quarter of 2019.
| 9 Pages
Rob [email protected], Research & Consulting
Underwriters have come to rely on the many public and semi-public data sources and advances in AI. It’s now possible to take what has been a manual data-gathering process for underwriters and automate the matching, gathering, and analysis of this data, allowing it to be used in a similar manner to more traditional structured sets.
This report reviews the public and semi-public data available, the technology that is changing data collection, and how data can impact insurers’ underwriting and analysis. It also includes brief profiles of prominent providers including Carpe Data, DataCubes, Enigma, Guidewire Cyence, Intellect SEEC, Maprisk, Planck, and Terrene Labs. These data sources and vendors lean toward small commercial, but the implications are important for all insurers.
| 12 Pages
Martin [email protected], Research & Consulting
Jeff [email protected], Research & Consulting
Jeff [email protected], Research & Consulting
Stephanie [email protected] Associate
9Novarica Research Quarterly Q3 | 2019
Business & Tech Trends
Steven [email protected], Research
Key Points and FindingsCommercial lines carriers are investing most heavily in distribution, across digital, data, and core. Support for agents remains key to customer acquisition and retention, and direct sales capabilities will grow more important for small business products and program business.
Carriers are leveraging new data sources, especially in underwriting and claims to some extent. Carriers are obtaining data from drones, IoT, and telematics (automotive and commercial property) in addition to data from third-party data providers.
Commercial lines carriers are increasingly adopting AI and analytics. Carriers are using AI and analytics in claims, customer services, and underwriting to predict claims activity better, improve customer satisfaction, and improve risk selection and pricing.
Commercial lines carriers are seeing some premium increases, seeking growth through expanded jurisdictions and new products, and adopting analytics more broadly. Carriers are seeking to drive down the cost of service, refine pricing and underwriting, and pursue growth in this fiercely competitive market, especially in the small commercial and program space.
This report provides an overview of commercial lines carriers’ business and technology issues, data about the marketplace, and several examples of recent technology investments by commercial lines carriers.
Topics• Recent market and financial trends
• Active insurer landscape
• Technology issues, priorities, and examples by functional area
• Top technology priorities for 2019 and beyond
| 23 Pages
Martina [email protected], Research & Consulting
Deb [email protected] VP, Research & Consulting
10 Novarica Research Quarterly Q3 | 2019
Plan providers are focused on driving down costs and attracting new clients, all while retaining existing clients and assets through improved insights and investment performance.
This report provides an overview of defined contribution retirement plan provider business and technology issues, data about the marketplace, and 12 examples of recent technology investments by insurers offering defined contribution retirement plans.
Key Points and Findings Plan sponsors continue to be concerned about compliance and financial wellness. Lawsuits over excessive investment fees continue, and ensuring employee financial wellness is of increasing concern to employers.
Most carrier technology investment is in case installation and distribution. Onboarding requires investments in digital capabilities, data and analytics, and core systems.
Portal initiatives and communications continue to be vital. A focus on participant financial wellness across the board requires effective communications as well as reporting and analytics.
Regulatory changes will continue to impact the market. While the DOL best interest guidelines are all but gone, additional NAIC, SEC, and state regulations will replace them.
Topics• Recent market and financial trends
• Active insurer landscape
• Technology issues, priorities, and examples by functional area
• Top technology priorities for 2019 and beyond
| 21 Pages
Steven [email protected], Research
Nancy [email protected] VP, Research & Consulting
Chris [email protected], Research & Consulting
11Novarica Research Quarterly Q3 | 2019
Key Points and FindingsPersonal lines lead the way in industry experimentation with AI. A high transactional volume combined with relative simplicity makes personal lines a natural choice for AI usage, especially in claims. Increased availability of personal data from social media is facilitating use of AI.
Personal lines also lead in digitalization. Carriers are pushing the envelope in digital self-service. Carriers are also designing products for digital processes and targeting digitally oriented consumers. Generational cohorts like Millennials and Gen Z expect digital experiences.
Insurers are preparing for a very different world. Carriers are hedging their bets against autonomous vehicles by providing a broader range of services to diversify income.
The competitive pressures in personal lines have never been more intense. Traditional approaches to gain operational efficiency and to segment markets are no longer enough. Carriers are investing in InsureTechs to accelerate learning and diversify R&D efforts, using AI to speed the claims process, deepening their knowledge of the customer, reducing earnings volatility through analytics, and improving self-service capabilities. Core systems remain a high priority to establish a base for future capabilities.
This report provides an overview of business and technology issues, market trends, and more than 15 examples of recent technology investments.
Topics• Recent market and financial trends
• Active insurer landscape
• Technology issues, priorities, and examples by functional area
• Top technology priorities for 2019 and beyond
| 21 Pages
Steven [email protected], Research
Chuck [email protected], Research & Consulting
Mitch [email protected], Research & Consulting
12 Novarica Research Quarterly Q3 | 2019
Novarica Market Navigators
This report provides an overview of the available stand-alone distribution and compensation management systems currently available to US insurers. The report contains profiles of each of ten vendor solutions, summarizing the vendor organization, technology used, differentiators, client base, lines of business supported, deployment options, implementation approaches, upgrades/enhancements, and key functionality.
Vendors included: Duck Creek, DXC, Ebix, IBM, Infosys Limited, Majesco, Policy Administration Solutions, SAP, and Vertafore.
| 79 Pages
Deb Culliton [email protected] VP, Research & Consulting
Chuck [email protected], Research & Consulting
13Novarica Research Quarterly Q3 | 2019
This report provides an overview of the available claims systems and suites for US life/health insurers. The report contains profiles of nine vendor solutions, summarizing the vendor organization, technology, differentiators, client base, lines of business supported, deployment options, implementation approaches, upgrades/enhancements, and functionality.
Vendors included: ClaimVantage, Concentrix, DXC, EIS, FINEOS, Intellect Design Arena, Majesco, SAP, and Vitech Systems Group.
| 83 Pages
Nancy [email protected] VP, Research & Consulting
Deb Culliton [email protected] VP, Research & Consulting
14 Novarica Research Quarterly Q3 | 2019
Presentations/Webinars
The growth of new digital, AI, and analytical capabilities is transforming claims and underwriting. Smarter core systems, the Internet of Things, collaboration, and self-service are making inroads, and insurers are investing in these technologies and capabilities to drive improved operating results. This webinar covers current deployments and planned pilots, case studies of successful initiatives, and best practices.
Insurance industry cloud deployments are increasing. 63% of carriers plan to expand application cloud migration in 2019. At the same time, microservices architecture promises to better leverage cloud environments with boosted scalability and increased fault tolerance. Issues include security, complexity, troubleshooting, and support. This webinar covers the implications and best practices for insurers in this increasingly important area.
Alan [email protected], Research & Consulting
Deb [email protected] VP, Research & Consulting
Jeff [email protected], Research & Consulting
Martin [email protected], Research & Consulting
15Novarica Research Quarterly Q3 | 2019
Locke Lord LLP and Novarica look at new regulatory developments in analytics, use of data, and data security that have the potential to affect insurer technology strategy. This webinar covers the potential effects of regulation on the use of analytics and AI in life insurance underwriting, how privacy requirements may affect insurer data governance and MDM strategies, and how third-party data security requirements may affect distribution technology strategies.
Successful transformation programs demand careful planning and an enterprise-wide understanding of required changes to business practices. Collaborative planning improves the chances of a successful implementation and optimizes the business results. Managing in-flight projects requires clear communication, accountability, and decision-making authority. This webinar reviews best practices and case studies of transformational programs.
Mitch [email protected], Research & Consulting
Brian Casey Locke LordCo-Chair, Regulatory & Transactions Insurance Group
Theodore Augustinos Locke LordRegulatory & Transactions Insurance Group
Benjamin Sykes Locke LordRegulatory & Transactions Insurance Group
Rob [email protected], Research & Consulting
Martina [email protected], Research & Consulting
Novarica helps more than 100 insurers make better decisions about technology projects and strategy through research, advisory services, and consulting.
We serve clients in life/annuity/retirement, property/casualty, workers’ compensation, and reinsurance. Our clients range from Fortune 100 insurers to small regionals and specialty companies. Although most of our clients prefer we keep their names confidential, a partial client roster includes Amica, AXA XL, GenRe, Grange, Hanover, Penn Mutual, ProSight, Sammons, SECURA, and SunLife.
Our senior team has direct experience as senior IT executives at firms including AIG, Arbella, AXA, Guardian, Liberty Mutual, MetLife, Marsh, Progressive, Prudential, Travelers, Voya, and others.
We publish frequent, independent, in-depth research on trends, best practices, and vendors. Our research projects are directed by our senior team and leverage the knowledge of more than 300 insurer CIO members of our Research Council. All reports are available to our clients without seat license restrictions.
Our Strategy-as-a-Service advisory services provide on-demand phone and email consultations on any topic in insurance or technology (as well as full access to our library). Our clients have told us it’s like having a team of experts down the hall—for a flat annual fee that is a small fraction of the cost of a single employee.
Our consulting services include vendor selection, benchmarking, project assurance, and IT strategy development. They are based on our deep knowledgebase, extensive relationships, personal experience, and proven methodologies. Our clients get rapid, actionable insights and guidance delivered directly by our senior team.
© 2019, Novarica, Inc. All rights reserved.
linkedin.com/company/novarica
@novarica
novarica.com/podcast
Novarica, Inc.280 Summer Street, 6th FloorBoston, MA [email protected]
