Why do Carriers feel the need to turn to Analysts for key decisions such as PAS replacement?

I have been pondering this more and more – I mean the sell prop seems so good at the onset. An Analyst firm is agnostic, so we are lead to believe, they spend every waking moment researching the exact topic, they do countless rfps and they promise to be right by your side all the way to….that’s the nub isn’t it, to the end of the selection. So let’s not even think about the fact they do not have to live with the decision let us really focus on the value prop.

So we look to an analyst because all they do is research and that seems to me to be yet another problem, if you never actually go through the whole process how can you truly have a full understanding? I am not talking about asking carriers and CIOs about lessons learned; I am talking about learning them for yourself and having the key knowledge to really know how the “theory” reacts in the “real world”.Let’s take a fun example – if you decided one morning to reenact William Tell with modern weapons, who would you want to take the shot……shall we review the candidates?

Candidate 1) A man that analyzes weapons every second of every day, he knows every single moving part, the exact interactions, the kick, the muzzle velocities, heck he even talks to sharp shooters about the guns longevity, it’s reliability and confidence….seems to be the perfect candidate – he knows everything with the one exception of ever actually aiming and pulling a trigger.

Candidate 2) A US Army Ranger sharp shooter, he knows all he needs to know about the weapon, he may not know the exact rifling pattern but he does not need to he has something different; he knows exactly how the weapon reacts, the wind, the elevation and air pressure, the distance and drop of flight – he knows where the bullet will end up in the real world, not on paper.

So forget the original question – let’s have a new one – you are an Insurance CIO with an apple on your head and a lot to lose, who takes the shot at the apple? Who do you choose? Interesting thought…….

Does Claims BI Just Mean “Bodily Injury?”

Anyone in the insurance claims industry that works on BI is not talking about Business Intelligence. Rarely is BI ever applied in insurance claims to mean business intelligence because most carriers only use business intelligence generically to examine closure rates, expense payments, and contact rates. Business intelligence is most often used primarily to analyze data in other business units like agent performance, product profitability and policy discounts.

By properly applying business intelligence and measuring analytics in the claim handling process, carriers have the opportunity to review and grade adjusters for improvement and development of claim adjudication best practices. Monitoring and reviewing claim handling practices will ensure adjusters are performing quality investigations resulting in fair and proper claim settlements for the carrier and the insureds.

A claim is the core of why people purchase insurance products – to get reimbursed when they incur a loss. A claim becomes a personal touch point with the insured, as well as a prospective insured when third parties are involved. How many carriers have used claimants switching to them after a claim to advertise their service? Leveraging analytics to generate business intelligence on claims processes, insured retention, and claimant satisfaction, as well as measuring things like allocated loss expenses, the number of claimants with attorneys, and post closure actions, can be used more directly and efficiently to impact the success of claims handling.

Of course you may not want all of your insureds since there are those that are working to use insurance claims to make money. Properly applied analytics and techniques can detect patterns and trends in claim participation, injuries, supplemental repairs, etc. I know of one specific case where analytics found that a claimant was paid five times for a single leg amputation, and another where a doctor was treating an average of 1,600 patients per day. Business intelligence can also capture the effectiveness of independent medical exams on claim settlements, better understanding and control on reserves, back to work rates, and therapies to move claimants from total disability to partial disability.

The next logical step is moving into predictive modeling.  Properly applied claims analytics helped one western insurer realize their return on investment in a matter of months, when they could proactively augment and deploy needed field staff to respond to several catastrophic storms.

By improving best practices, identifying fraud early, and employing predictive modeling, not only will customer satisfaction be effected, but this will also trigger claims closing more quickly and at lower costs, increasing the number of claim files adjusters can handle and lowering loss ratios. In this tough economy, lowering loss ratios by even as little as 1% can have a big impact on a company’s bottom line.

Agent Mobility As A Customer Touch Point Opportunity

Agents still say ease of doing business is the key to working with a carrier.  But that means different things to different people, and certainly different things between agent and carrier.  For years carriers have been working to streamline operations within their organizations to make life easier for agents.  Recognizing and implementing standardization such as the use of ACORD forms for applications was an initial step.  Then there was integration between the carrier’s systems and the agency’s management systems that allowed agents to submit applications through online integration.  Finally came the age of the real time online portal where agents can log in to carrier systems and submit applications directly.  How much easier can it get than that – A LOT.

All of these technological advancements are offered by almost every carrier.  So what becomes the differentiator to an agent when they can place business with multiple carriers?  It’s still ease of doing business.  Which carrier allows me to get a quote the easiest by entering the fewest data points and then complete that application and close the business fastest?  Many agents try to close business in volume because more volume means more premiums, which means more commission.
 
Most of this work is done by agents within the confines of their office.  They can make visits to customers and prospects to talk about other offerings, but then many have to make a follow up appointment to review the quote requested in the meeting.  How about the chance encounter in the supermarket or the church social when you don’t have a computer with you?  This is where insurance agent mobility comes in.

The ubiquitous smartphone is always available and at the ready within its holster.  There are many carriers, such as Amica, Nationwide and Travelers, that have developed smartphone apps for insureds, but not as many allow agents to access information that way.  MassMutual, as an example, developed E4 (Electronic Enhanced Enrollment Experience) which allows agents to enroll retirement plan participants entirely over their smartphone.

If I can check in to, or change my flight on a mobile web site for an airline using my smartphone, shouldn’t an agent be able to get a quick quote for a prospect, file an endorsement for an insured, or even bind coverage and email the policy documentation to their customer?  Imagine the response by the insured to the agent when after about a 2 minute conversation, the newly insured’s phone beeps because the email with all the policy documentation just arrived in their inbox.

Wow, that was easy.

This is a major opportunity, not only for the agent, but also the carrier, to utilize the latest technology to make things easier not only for the agent, but the insured.

Technical Debt – Managing near term technical “borrowing” to prevent bankruptcy

In my recent client engagements, I’ve discovered that increased flexibility (in product development / deployment, mobile capabilities, back office integration, etc.) is still top of mind. But, as organizations weigh options for meeting their specific business needs, tailored, custom build efforts may be required when system replacements or refacing/modernizing front ends fail to meet long term business objectives.

Often times, proposed modifications are defined to bolster existing systems as a short term, quick win solution, until a more permanent solution can be afforded.Carriers who elect to undertake custom build efforts in-house are faced with balancing the following resource challenges:

1. Retaining full-time resources with sufficient expertise in both initial custom development and ongoing maintenance efforts.
2. Enlisting external consultants who have both System Development Life Cycle (SDLC) expertise and significant industry expertise.

Either approach drives the carrier to consider the cost of ensuring quality design and development practices against tight budgets and competing business priorities.

Although a quick fix enhancement may seem to be the cheapest route, a Software Productivity Research study from 2010 found that a patch is only less expensive through the early rounds of coding. After that, it is significantly cheaper to code — and significantly more cost effective to maintain — for the longer term solution.

Most concerning is the tendency for organizations to prioritize the short term objective without fully considering the potential long term ramifications.  I can see the value of targeted modifications to existing systems for a short term, short expected lifecycle goal.  However, it seems that regardless of the intended short term lifecycle for these “Band-Aids,” the modifications are exercised years longer than planned.  The term “technical debt” has been top of mind in many discussions I’ve had recently, where we face the challenge of helping carriers fully scrutinize their options and understand the consequences of their decisions. Carriers performing more internal development need to understand that any short cuts made for an immediate patch MUST be structurally reworked in order to repay the technical debt instigated to get the fix up and running.

For example, in one instance, an organization has been weighing options to achieve a business goal given several unknown future factors.  Options included expanding an internal system – which evolved through bolt-on requests and had become a critical system – or building these capabilities within a new system.  The technical debt factor was paramount in this case, as the expected lifecycle of the selected solution weighed in heavily.  Given the uncertain future state, a short term solution may work for a year or two, but the probability of a three+ year expectancy drives a far more strategic approach.  Any short term patches made to the existing system would become exponentially more costly to support as the system remains in use.

This doesn’t mean that there can’t be quick fixes applied to meet an immediate need, but carriers should look beyond the next quarter and evaluate their debt repayment plan before making the decision to implement a quick fix.  Nearly every carrier I’ve worked with has an internal system that grew to be a critical platform and now requires full time business and IT resources purely for maintenance alone.  As the cost to maintain such a system grows, so does the cost to replace it. Carriers must consider the true long term benefits and ramifications of their development efforts and make strategically sound decisions to meet both short term needs and long term business goals.

Don’t Let Your Enterprise Overhaul Plan Implode Like the Red Sox….A Disgruntled Fan Vents

You have your architecture design all laid out; the proper resources have been secured and contracted for the duration; the development starts off a little rocky, but quickly smooths out, and you’re sailing along through the project.  Everything’s firing on all cylinders while you’re blowing through all the deliverables with ease, and you can see the potential success coming; you near the end of the project in System Integration Testing – when it all falls apart like the 2011 Red Sox.

On paper, the project plan looked flawless with plenty of time allotted for each stage, including contingency.  Your Agile development method had been tried and tested, and everyone understands his or her role.  You can do everything right to position your company for success, yet fail in the execution.

There are many factors that contribute to the success or failure of a project:

• Focus and Concentration
• Expertise
• Reserves
• Communication
• Team Chemistry

It all starts with focus and concentration.  A system replacement project is a full-time job, and if people become distracted by other issues, such as production support responsibilities or competing projects, those distractions impact the quality and timeliness of the system replacement. Just like a pitcher who’s distracted by off-field issues or his next contract can start throwing meatballs, your project resources can be sucked into other issues and neglect their tasks at hand.

Aligning individuals with the correct task for their skill sets is key.  It’s difficult for a project to be successful if resources are overwhelmed by learning new technology. Confused employees beget faulty implementations that must later be fixed or replaced. If a player’s used to playing center field, and you stick him in left with a large wall behind him and much closer to home plate than he’s accustomed to, you’ll be stuck with defensive problems that cost games.  Similarly, it’s also important to have depth and reserves available to fill-in.  Should resources be unable to complete the work, you need competent people available to step in and allow the project to continue without causing a misstep.  If one of your best young pitchers goes down with a back injury, or your “All Star” third baseman is sidelined with a hernia, you need to have people available in AAA who can step in and hold their own to keep things moving in the right direction.

I love the Agile development methodology.  There’s constant communication – everyone meets every day, short sprints of development and delivery meetings, easy to follow tracking reports on tasks, publicly displayed reports on progress – everyone knows what’s going on. Constant communication yields accountability and support. If people see that they may be lagging behind, they’ll put in more time to compensate. If others are ahead of schedule, they may be able to help those whom are lagging. However, the danger is that if one group does lag behind, it can also draw others into that quicksand. They may say, “If the others are behind and no one cares, why should I kill myself to get my own work done?”  Therefore, it’s important to keep everyone motivated with accountability and let everyone know where everything stands.  This methodology also applies to enterprises as a whole.  If your pitchers are throwing so poorly that they can’t get past the fourth inning, it can create derision in the clubhouse. Your DH might start telling players, “If you can’t get the job done, we’ll have to play relievers instead.”  Or, if your new “star” left-fielder can’t get on base and use his speed to score, you need to communicate to the team why those players are still in those positions.  The oft-quoted definition of insanity is “doing the same thing over and over again and expecting different results.”

Not enough can be said about team chemistry.  Team chemistry is most important when the chips are down.  That’s what helps get you out of the doldrums and put you back on top of your game.  The team needs support from management, not only in providing the proper tools to accomplish their tasks, but also to let off steam for a respite and work together on something completely different.  Take a Friday afternoon off for the team to play volleyball on the back lawn with a BBQ lunch, or a laser tag session to get their minds thinking about something else and staying fresh.  In order to achieve success, everyone must pull together.  Get them to socialize with each other and build that rapport where they want to support each other.  Keep everyone working closely, lock them in the same room if you can, because that will help build those close relationships amongst the team.  You can’t have everyone only concerned about their performance and not working together.  You can’t have 25 guys-25 cabs.  When it gets to the end and you’ve lost 19 of the last 24 games, there’s no character there to save you.  Team members will give up on each other and graduate to a self-fulfilling prophecy of loss.  A player might say, “If pitching lets up another long ball, I’m not going to try my hardest to catch the ball.”  The defense gets lazy, balls aren’t played properly, and more runs score.  In those situations, you need to “Cowboy Up” and do whatever you can to win.  You need to cheer for each other and not expect the worst to happen.  If you expect the worst, you’ll make it happen.

Simply putting the plan together doesn’t mean it will be successful. You have to do all things well in order to make it happen and achieve success.

(Personally, this blog entry has been very cathartic.)

CRM for Insurance — Creating a Facebook network or just another MySpace?

As I travel around the country meeting with dozens of both  Life and Annuity and Property and Casualty insurance firms, I am seeing two all too common themes:

1. A majority of insurance firms are talking about the business value a CRM solution could bring to their enterprises
2. These firms are talking, not taking any action

That being said, a few have dipped their toes in the water, usually just to manage one piece of agent or insured data, with limited or no system integration, and thus limited user adoption.  Others are taking a bit of a different tactic, in that they agree they need a central place for agent and insured information, but are focusing on aggregating that information in some form of a data warehouse.  This type of solution tends to result in very few workflow capabilities or any sort of action, because it is by design an area where data is sent and manually manipulated and analyzed for some sort of action to be taken later, utilizing yet another system.

This brings me around to the critical question: is a CRM solution for the insurance industry a Facebook network or just another MySpace?

The answer, from my perspective, lies within the occurrences above. The insurance industry tends to create siloed areas where  information resides, in  this case, either an unintegrated CRM system or a data warehouse with some sort of reporting technology on it.  If this practice continues then I believe CRM will go the way of MySpace, like so many   hot topics and big  ideas, and just fade away.

In order to make CRM the Facebook type success it could be in the insurance industry, the industry itself needs to take on some of that Facebook mentality.  I am not suggesting we start sharing our photos and weekend plans….. Instead, we give CRM a successful future by integrating it with multiple systems to create a centralized place to host a 360 degree view of the individual insureds. Insurance firms can then layer on Agent information and link their book of business by “friending” (or utilizing the multiple hierarchies in CRM) to connect to their insureds and create an insurance-based social network.

Once firms have this insurance-based social network of information, the true value of CRM can be seen by utilizing workflow, reporting, marketing and mobile capabilities to drive new sales and better customer service.

What was MySpace again?

Virtualization in Insurance

The Power of a Desktop in the Palm of Your Hand

Is Desktop-as-a-Service a Subset of IT-as-a-Service?

I read this blog recently, and it prompted some reflection on the possible applications for time- and cost-saving benefits in the insurance industry.

There are two basic types of insurance carriers from an IT perspective

1. Carriers that sell insurance and use IT to support their business goals
2. Carriers that are an IT shop that also sell insurance.

Though these types of carriers are very different, virtualization is a concept that benefits both.  Virtualization enables carriers with smaller IT shops to effectively leverage improved support efficiencies and more flexibility and allows larger IT organizations to redeploy resources for bigger projects like core system upgrades.

“Virtual desktops,” the keystone of visualization, free a user from hardware burdens by introducing “greater synergy, efficiency, and agility.” This allows users to embrace a mobile and more flexible work style.  This versatile technology applies to a variety of scenarios. With the help of an iPad or Galaxy tablet connected via WiFi to the local area network (LAN) and radio-frequency identification (RFID) tags, doctors have all of their patients’ records at their fingertips. A similar approach benefits insurance agents when visiting customers. With mobile desktop in tow, Claims Adjusters carry their office with them, and Underwriters spend more time in the field reviewing referrals with Agents.

Desktop-as-a-Service as a Subset of IT-as-a-Service has its own benefits. With virtual desktops, new users easily and quickly enter an established network with their own legacy systems already on their desktop.  It becomes easier for an agent to catch a plane to another office, log in, and there’s his desktop, ready to provide personal office functionality.

Lastly, as a part of efficiency improvements, virtualization minimizes the cost of hardware upgrades not only for those of whom work remotely, but for all users in an office.  Because all applications run on servers, users operate smaller systems without a large hard drive and processor.  In addition, any application and operating system problems users experience are addressed without requiring IT to visit the remote machine.

Sorry, Nick Burns the computer guy! You’ll be out of a job.

Star Trek: The Next Generation Policy Administration Insight from Scottie

Cheese Log Star Date 9/14/2011…..

“She cannae take any more, Captain, that’s all she’s got. The core cannae take any more stress.”

The Cheeseship Enterprise Crew

This is the ever-present line when Captain Kirk would yet again request Scottie to do the unimaginable and provide more power from the warp core. Believe it or not, this is the guide to Policy Administration for all Comic-Con attendees and other extreme fans who like to dress in Star Trek costumes for their weekend barbecues.
However, where is this all leading? Well, why did Kirk always call upon Scottie? Because Scottie had nothing else to do in the show and was supposed to be a main character?   Or more likely, because it’s common to look to the very core of the Enterprise to solve all of our issues?
In hundreds of years, when the USS Enterprise exists, will we always look to the core of our enterprise for the only solution? It has dawned on me that over time, Policy Administration systems and the need for additional functionality or performance have caused people to rush the conclusion that the PAS must be replaced. Most often these decisions are made without the proper planning and expertise to consider the entire enterprise, nay even the universe of solutions outside your enterprise that may either avert the need for such a project or indeed “buy significant time.”
Enterprise planning and the must-do precursor to a successful PAS project is oft overlooked with two major issues arising

• The Policy Admin replacement may not be the best idea for your enterprise at this time
• If Policy Admin replacement is the correct path then considerable Enterprise modernization and improvements abound as “low hanging fruit” to the project, oft overlooked and left to rot

So before you call on Scottie and shout at him for more and more or before you decide to buy the new Romulan warp core, I suggest you take a step back to see if, in fact, the Enterprise has other solutions to get you where you need to go. If not, make sure you take full advantage of the upgrade.
Cheese Out.

Hello, Newman.

The U.S. Postal Service is in dire financial straits and, like many businesses, in danger of shutting down completely if it doesn’t cut costs.

Would you be able to cope with a postal meltdown?  Would your policyholders still receive policies and bills?  Or would you have to migrate to UPS or FedEx for all your correspondence because you still haven’t been able to conduct all your transactions electronically?

By now, most carriers have been conducting business with their policyholders and agents offering electronic delivery of everything from applications to renewal notices. But there are those that still require some transactions to be conducted by “snail mail.” If the U.S. Postal Service were to shut down as early as this year, what would they do?  Would the burden of these transactions then be rest with the agents, and if so, how would they react?  Would those carriers be the carrier of choice when they’re not so easy to do business with because of these manually necessary steps.

Obviously, the first step for most carriers is delivering policy documentation leveraging a modern document generation tool, very quickly followed by a method to accept premium payments online and set up automated account withdrawals. Both of those are fairly straightforward projects that can be done relatively quickly and easily.  But the more complicated transactions of policy amendments and audit reporting are where many carriers lag behind.  That’s where the postal shut down would really hurt. Policies like Worker’s Comp or General Liability that require businesses to report remuneration and sales figures on a regular basis rely on communication, and if that cannot be done electronically, it will become much more complicated and a longer process if paper documents have to be sent around.

You don’t want your agents to become your Underwriting Assistants and bill collectors.  You want them to stay out there pushing your products and generating business.  You want to be the carrier that’s easy to do business with and the independent agent’s carrier of choice.  If not, you may find that you’ll need to start a postal department to handle all those deliveries to policyholders.

Is Legacy Modernization Just Procrastination?

There is no doubt that replacement of core systems for insurers has been very popular over the past six years or so.  With the advancements in technology enabling vendors to provide solutions that are configurable, and more easily maintained with “plug and play” technologies that can be upgraded by less technical resources, insurers are taking advantage and moving in to new lines of business and new territories, expanding their footprint.  It allows many small and mid-size insurers to better compete with the leviathans who once staved off competition due to their enormous IT staffs.

But many of these insurers have been in business for scores of years, and have successfully relied on their older technology.  Does the advancement in technology along with ubiquitous connectivity mean that the mainframes and older technology systems just have to go?  Does just refacing the green screens with new web-based user interfaces mean that the carriers that do so are just procrastinating and putting off the inevitable?

A recent blog in Tech Digest posed that question to which I would reply, “Why?  If it ain’t broke, don’t fix it.”  With the horrible economy, many people who need a bigger house aren’t dumping the one they have and buying another, they simply add-on.  The core systems within a carrier are very similar.  If the system you have now works well for its use and if you want to expand in to new lines, you don’t need to rip out that old system and pay for an expensive funeral, just add-on and integrate.  This will start your company down the path to more flexibility which can be supported by a system that is specifically designed to bring all your information into one place – Policy360 based on CRM.

Utilizing a system designed to bring data together from multiple sources allows you to keep your existing technology, leverage the capabilities of new systems, and present and manage that information in a much more accessible and user friendly manner.

Is plastic surgery on your legacy systems really just putting off the inevitable?  Or is presenting a fresh look that sees into the future allowing you to keep costs down while expanding service and capabilities.