Filed Under:Technology, Tech Management

Q&A: How Software Vendors View the Insurance Market (Part 1)

PropertyCasualty360.com technology channel editor Bob Hyle contacted a number of vendors in the insurance software space to gauge their opinions on carrier weaknesses, project management, and their partnership with carriers.

PropertyCasualty360.com: What specific areas do you see the most weaknesses among insurance carriers where new technology could offer the most help?

Wendy Corman, President, North America, edge IPKWendy Corman (president, North America, edge IPK): Carriers have been heavily focused on updating existing back-end systems and getting products to the Web. While these initiatives are taking place, the demand on the industry is changing and the user base is expanding beyond the traditional. 

Rather than focusing on updating existing systems, carriers should consider re-architecting their environments to best meet the growing needs to deliver functionality to any type of user through any device or Web. While portal solutions have been used by some insurers, single portal development will not solve the ‘any user and any device on any browser’ challenge.

Implementation of portals will only exacerbate the problem and leave the carriers with more pieces to support and maintain. Unfortunately, our industry is all too familiar with siloed back office systems and the challenges they create when trying to be agile and respond to user needs quickly.

(To read what other vendors have to say on these issues, check out Part 2 of the series, Part 3 or part 4.)

If the industry fails to adopt a new approach in providing users access to back office systems we’ll just see the silos created in the back office replicated on the front end—only compounding the silo problem.

Mark Cummings, Principal Consultant, FIS North AmericaMark Cummings (principal consultant, FIS Software): One area many carriers continue to struggle with is business intelligence. While most carriers will acknowledge they have an abundance of data, they’ll also admit they are not always making the best use of it.  Every carrier’s management team wants an accurate view of the company performance to analyze historical data and to understand business trends. Yet, even if they have the analytical tools, it isn’t always easy to extract key enterprise data for modeling purposes. 

As carriers continue to evaluate business intelligence offerings, the goal remains constant—present management users key and meaningful information extracted from their organization’s numerous databases and remove dependency on IT departments to develop complex reporting queries.

Over the past several years we’ve seen momentum in technology, applications and practices to help carriers acquire a better understanding of its commercial context, going well beyond typical legacy decision support tools. Business intelligence capabilities can tightly integrate querying, reporting, OLAP (On Line Analytical Processing), data mining and data warehousing. There are a variety of tools (e.g. data warehouse, cubes, pivot tables, and even elaborate commercially available dashboard packages) that can assist, but many carriers still lack the expertise to put it all together.   

Joseph Pilkerton, Founder and COO, FirstBest SystemsJoseph Pilkerton (founder and COO, FirstBest Systems): Today, the biggest weakness is in the front office. While many carriers are working to replace aging policy admin systems, many actually need a front office overhaul. Hard-to-use Web sites and complicated policy systems compel agents to answer a multitude of questions. Behind the scenes, it takes too long for underwriters to find the complete information they need to quickly make decisions, so response time lags as well.

But new insurance front-office applications, which include all agent-facing functions such as agent portals, agent connectivity and underwriting capabilities, completely transform the experience for everyone—from agent to underwriter. The agent can go online to a portal to view their entire book of business with the carrier, understand the carrier’s risk profile and quickly answer only the questions needed to submit their application and then track the status of the submission. 

And, based on their needs, the carrier can use varying levels of STP, automated workflow, agent collaboration, and knowledge management to grow the business without increasing staff. It’s a business transformation for the agent and the carrier. The agent is more satisfied and likely to give the carrier future business, and the carrier can increase written premium without increasing costs.

PC360: Are insurance carriers making the correct decisions in the area of project management to ensure they are taking the right steps from selection to implementation of software?

Mark Cummings, Principal Consultant, FIS North AmericaCummings: Selecting and implementing an enterprise platform is of critical importance to a carrier, yet not something done frequently.  This makes it all the more  imperative for carriers to establish a strong relationship with their vendor and employ good project management to track and manage resources, tasks, decisions, costs and dependencies.

Furthermore, when the carrier evaluation team presents decisions and recommendations, management is interested in more than just the final recommendation—they also want to know what went into the decision—from evaluation to justification. Carriers must be able to explain and defend their process as well as their decision. Enterprise platform decisions require not just a huge financial investment, but also have long term operational and competitive impact.

Given the importance of these decisions and subsequent implementations, more carriers are using specialized procurement staff and/or third-party consultants to help with these efforts.  Engaging resources with some expertise to help carriers through this process is becoming almost mandatory. Specialized resources can help define and prioritize selection criteria, establish activities to objectively evaluate potential solutions, determine success criteria, and assist in documenting and presenting the results.  

Joseph Pilkerton, Founder and COO, FirstBest SystemsPilkerton: We talk to a lot of carriers who feel overwhelmed and confused. They know they have a problem with, say, underwriting, but they can’t figure out how to solve it.  They’re thinking, “Do I need a custom solution? Do I need a new policy system? How do I manage front-office processes like underwriting? Do I need a document management solution to store and index my documents?” 

In many cases, carriers actually need to improve and automate their underwriting processes in order to improve the agent experience, process more business in less time and increase underwriting discipline. Instead of a back-office system or document management system that simply paves the cow paths, they need a modern front-office solution that incorporates industry best practices and ships with business logic. And often, they’re surprised to learn that this system exists today and doesn’t require a toolkit or custom development, so they can get up and running fast, to get to benefit as quickly as possible.

The most important steps are to dig deep and understand the root cause of your challenges and then determine the right strategy and technology to solve that problem. 

Wendy Corman, President, North America, edge IPKCorman: What do they need to do better? With a plethora of project management processes and certifications, there are a lot of opportunities for carriers to leverage experienced resources to assist from the onset of software selection—and they should take advantage of the available expertise. These resources may be internal to an organization, a service of a third-party vendor, or a combination of the two. The industry is already challenged when it comes to the best approach to evaluate and choose from a lot of great software solutions (and, some not so great solutions). The buyer needs to consider the entire implementation project, the long term implications, and the associated potential challenges and risk. Carriers should not only evaluate the functional capabilities and underlying technology of a solution, but they should also take the time to evaluate and reference the vendor’s track record for project implementations, methodologies, and ongoing support. 

PC360: Do most insurance carriers look at you as a partner in the solution process or as a vendor? Please explain. 

Joseph Pilkerton, Founder and COO, FirstBest SystemsPilkerton: Our relationship evolves as it matures. In the beginning, prospective customers may think of us as “just” a vendor. But we strive to go beyond being a mere vendor to be a trusted advisor. Our systems have been designed entirely from the client’s perspective. 

For example, our underwriting sciences team has incorporated underwriting best practices into our solutions and we deliver software applications that can be configured by the client, putting them in control. We develop our software using a proven agile development process that clients can rely upon and our software is delivered with a proven professional services methodology that delivers configured and finished systems in months, not years. 

Given the mission criticality of our system, we strive to be more than a vendor. We believe we are a trusted advisor to our partner-customers. 

Wendy Corman, President, North America, edge IPKCorman: Although we all play different roles during the vendor selection process, it is important to remember that we are responsible for helping each other make good decisions that will advance all efforts in this industry. With that, all vendors should act as if they had a stake in the carrier’s decision; educating and providing examples during the evaluation process. A good vendor is one that can assist with information to help the buyer determine the best fit. A true vendor partner is one that can step aside and provide other vendors to consider when they are not the right solution for success.

Mark Cummings, Principal Consultant, FIS North AmericaCummings: All carriers want a partner rather than a vendor since ‘partner’ implies high value and a common goal. However, carriers define the term partner differently. The extent to which a carrier is willing to provide insight into their operation and communicate with their solution providers is a strong indication of how they define ‘partner.’ 

There are carriers offering their solution provider insight into their operations. Decisions are made with complete and shared knowledge, targeting a win-win for all.  These carriers realize an informed solution provider is better able to add value.  They also realize that when they or their vendor is successful, the other benefits as well; creating a synergy and level of trust between carrier and solution provider.

Then there are those carriers who (unfortunately) view a partnership as requiring a winner and a loser or a way to extract great discounts.  These carriers will often make decisions without having offered the solution provider insight into the organization, goals, limitations, and priorities. When the solution provider lacks the benefit of the big picture, and when carrier communication is lacking, everyone is at a disadvantage.  In this situation, projects tend to be more reactive and rarely result in success.

 

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