Analysts Expound on the Needs of the Mid-tier Insurance Market
Robert Regis Hyle | February 12, 2014
Analysts Expound on the Needs of the Mid-tier Insurance Market
By Robert Regis Hyle
In each issue of ITA Pro, we will be asking a group of insurance technology analysts their view on important industry issues. This month, we have four respondents to our question. They include Kimberly Harris-Ferrante, research vice president with Gartner; Karen Furtado, partner with Strategy Meets Action; Rod Travers, executive vice president with The Nolan Company; and Pat Speer, analyst with Aite Group.
This month’s question is: If mid-tier insurers address just one technology issue in 2014, what should it be and why?
Kimberly Harris-Ferrante, Gartner
In 2014 it is imperative that mid-sized insurers focus on customer experience management. Enabling positive customer experiences through improved channel interactions and customer intelligence is critical. Mid-sized insurers have an opportunity to build better and more intimate customer relations than those larger organizations that have more complex business models, channels and are unable to do proper customer segmentation to provide tailored interactions.
Gartner has found that improving customer relations through the channel network and by providing personalized experiences is key in promoting renewals, customer satisfaction, up-sell, and loyalty—all of which are key business goals of insurers in today’s market. Carving out skill- sets in customer data management, building an omnichannel platform, and delivering segmented products aimed at unique customer demands are also elemental in the road to success for customer-centricity.
Mid-sized insurers would find greater returns on investments by taking this route in the coming year in order to insulate current relationships but target customer segments that are attracted to more intimate and personalized service.
Karen Furtado, Strategy Meets Action
The fundamental technology issue that all mid-tier insurers must deal with in 2014 is the modernization of their core systems. SMA’s research shows that for the past five years the level of investments in core systems has hit record highs among insurers. These investment patterns are encouraging, but this is a huge task for most insurers and should not be underestimated in terms of effort and importance to the future of the business.
On average, core systems can take three to five years to implement. They are complex. To gain the maximum benefits and a long-term advantage, the systems need to be fully implemented within the shortest timeframe possible. Core systems are vital to staying power and progress in this industry.
Once the core system investments have been made and a modern platform is in place, insurers are then able to shift their focus to optimizing their business processes and taking the transformation of the business to the next level. This modern environment makes it easy for insurers to plug in new technologies, such as mobile, analytics, big data, cloud, collaboration, and telematics.
The modern core system platform gives insurers the ability to transform and innovate across the entire enterprise—product development, operational business model, infrastructure support, and management of the entire customer experience. These are the areas that will help mid-tier insurers stay competitive and reach their goals.
Rod Travers, The Nolan Company
I believe the most important technology issue for mid-tiers right now is IT talent. Operating models for insurers are changing due to the rapid evolution of technology. Mobile technologies, social media, business analytics, and cloud computing are driving fundamental change in core business processes. In turn, insurers are depending more than ever on their IT team for innovation and thought leadership.
Mid-tiers are competing with larger carriers (and other industries) for the best and brightest IT talent, and they must defend their turf. In my opinion mid-tiers have an advantage. They offer IT professionals the opportunity to truly make an impact—to make a competitive difference—through innovative use of technology. In a mid-tier, an IT pro can make change happen more quickly and can personally experience the fruits of his or her efforts. Many IT professionals are looking for just that kind of opportunity and satisfaction.
To help retain your great talent and attract more, consider these steps: Set aggressive goals in terms of technology adoption and evolution within your company; reward and publicly recognize those who make a difference; and amp up your recruiting efforts even if you don’t have an immediate need. Identify new talent that can join your organization early in their career and bring their enthusiasm and fresh perspectives to your team.
Pat Speer, analyst, property & casualty, Aite Group
The technology issue that will be the most important for mid-tier insurers to address is their ability to put a strategic and tactical analytics game plan together that will enable them to accommodate, anticipate, and respond efficiently to change. Against their larger competitors, mid-tier carriers lack many of the data analytics-related technology resources that allow them to determine the most appropriate risk, price that risk accurately, and proactively deal with claims.
The application of analytics to the underwriting process could level the competitive playing field by enabling mid-tier carriers to extend their strategy beyond a book-of-business approach and evaluate risks at the individual level. The result will be a finely tuned, profitable pricing model that takes into account a host of risk variables.
A mid-tier carrier's analytics game plan would not be complete without its application to an area in which efficiencies in loss-adjustment expenses and customer satisfaction performance are essential: claims. The use of predictive analytics to identify potentially fraudulent claims, predict frequency/severity or score claims based on the probable size of the settlement in order to allocate resources to higher priority claims is well worth the investment.
Mid-tier insurers will do well to fully evaluate their analytics options, conducting cost/benefit analysis on use of in-house resources, the engagement of a consultant, working with a vendor in a partnership relationship or a combination of same.
- Enterprise Architecture in an Agile World
- Top 10 Tips for Securing Your Mobile Devices and Sensitive Client Data
- Industry Insight: 4 Global Insurance Trends in Digital, Data, Content Services and Security
- Diving Deeper into Prioritizing Your Strategic Digital investments
- Why Content Rules
- How Mass Personalization Will Open the Small Business Benefits Market
- At Year End 2017, Will Your Organization Be Protected from Cyber Risks?
- Do Insurance Bots Dream of Mitigating Risk?
- Conditioned to Respond
- Managing & Mobilizing Insurance Data in a Connected World
- Race to the Finish Line
- New Tools, New Opportunities in Claims
- ITA LIVE: Reaching Insurance Industry Crossroads
- Advice to Insurance IT Leaders: Keep Your Eye on the Ball
- New Date, Venue for ITA LIVE 2017
- Guidewire Makes Major Push to Small and Midtier Market by Acquiring ISCS
- Insurance Disruption is Happening Right Now
- Insurity Adds Strategic Investment Partner, General Atlantic
- Beyond Transformation: The Convergence of Finance, Risk, and Actuarial Functions
- The Rapid Evolution of Consumer Protection Regulation
- Talent Hunt: Finding, Attracting, Retaining Top People
- Insurers Flexing Their Distribution Models
- Technology Driving Disruption in Insurance
- Fear of ‘Next Bubble’ Challenges Life, Annuity Carriers
- Technology Allows Commercial Lines Insurers to Stand Out
- Single Sign-on Viewed as Biggest Tech Challenge for Agencies
- ISCS Observes 20th Anniversary; Scurto Predicts Major Changes Ahead
- Policyholders and Their First Impressions
- Progressive Making Progress on the UBI Front
- High and Dry: Insurers Search for Disaster Recovery Plans
- Insurers Sign The (Un)Dotted Line
- Reflections of a Retired Insurance CIO
- Mobile Device Management Just One Answer to BYOD Issue
- Lessons from GEICO and Progressive on Winning the Critical Buying Stage
- You Are a Target for a Cyber Attack
- Web-based Systems are the Next Evolution in Claims Technology
- Gaining a “Wow” Experience from Web Users
- Time to Shift from Business/IT Alignment to Business/IT Alliance
- Healthcare Insurers Changing to Consumer Model
- Organization is the Key for Selecting Software Vendors
- Analysts Expound on the Needs of the Mid-tier Insurance Market
- Finding the Cure for Obamacare’s Website
- New Software Solutions Benefit Insurers on the Inside and Outside
- Products, Market Impede Investment in Systems for Life Insurers
- Combatting Cyber Threats: Predict, Prevent, Persist
- The Future of Telematics Heads Beyond Insurance
- The Shame in Cyber Security Lapses
- Building Policy Administration Systems for the Future
- Insurers Look Into The Eyes of Their Policyholders
- It’s a New Dawn for the ITA
INSURANCE IT NEWS
- Desjardins General Insurance Group Deploys EIS Suite for Commercial Lines
- Acuity Modernizes Customer Communications Management with OpenText Exstream and ValueMomentum
- COUNTRY Financial Joins Roost’s Home Telematics Program
- Roost partners with The Weather Company
- Majesco Launches Majesco Digital1st Insurance, an Innovative Next Generation Platform Solution as the Foundation of a New Business Unit
- New Release of EIS Group’s ClaimCore System Delivers Dental Claims Management
- Westfield Streamlines Commercial Lines Underwriting Through New Verisk and Duck Creek Technologies Integration
- MADISON MUTUAL INSURANCE CHOOSES ROOST HOME TELEMATICS SOLUTIONS
The Email Chat is a regular feature of the ITA Pro magazine and website. We send a series of questions to an insurance IT leader in search of thought-provoking responses on important issues facing the insurance industry.
ITA is pleased to present the 2014 Webinar Series. We have many topics for you to choose from and attendance is open to all ITA members. The webinar topics are current and exciting — ranging from predictive analytics to telematics and will focus on the direction insurance carriers need to follow for the future. All webinars are presented by insurance IT professionals along with some of the leading analysts and consultants in the field. There is no cost to attend an ITA webinar. For more information and to register for the webinar, click the “title” of the webinar below.
BLOGS AND COLUMNS
It has become a common refrain over the past few years to view the practice of enterprise architecture (EA) as something that time has passed by, much... READ MORE
One important trend in society over the past decade is our increasing ability to create and consume a seemingly unlimited amount of digital content... READ MORE
You have surely heard it said that small businesses are the growth engine for America. Today, the phrase has a special ring to it for benefits... READ MORE
With stagnant growth and lingering low interest rates, the life insurance industry faces a challenging future... READ MORE
Finding insurance carriers willing to write commercial lines risks has always been a challenge for producers... READ MORE
As Guidewire Software prepares for the start of Connections, its 11th annual user conference that begins on Nov. 2, Brian Desmond, chief marketing... READ MORE
Fraud detection has always been and will continue to be a critical component of claims management. Learning the lessons from current claims Straight... READ MORE
- Vendor Views