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Insurance & Technology: The Blog« March 2008 | Main | May 2008 » April 29, 2008Insurance Web Portals and Online Self-HelpEven considering wikis and social networking and user generated content, I still think the most important development to emerge from the Web 2.0 movement has been users increased tendency to go online for self-help and to seek educational opportunities to handle their everyday problems. This isn't earth shattering stuff, but in more and more cases, people are eschewing the more traditional ways of seeking out answers and, instead, developing trusted relationships with Internet sources. Don't understand a word in a book you're reading? Forget Merriam-Webster and try dictionary.com. Need to learn the basics before you start investing? Who needs a financial planner when there's The Motley Fool? Have a book report due tomorrow on Isben's A Doll House? Why waste time searching Barnes & Noble for a Cliffs Notes, when you can check out SparkNotes? Speaking of Barnes & Noble, the bookseller has recently made a major splash in the realm of online self-help with the launch of Quamut.com, a (poorly named) Web site that offers how-to information on a wide array of topics. There's already HowStuffWorks.com, not to mention Wikipedia, a site that can bring curious Web surfers up to speed on just about any topic or subject imaginable. However, as a recent New York Times article points out, B&N is banking that users will view Quamut's content as coming from a trusted source.
Other popular Web sites have demonstrated a similar belief -- that users are more inclined to visit sites that can provide info from trusted, expert sources, as opposed to anonymous users. For instance, The New York Times Company owns About.com pays over 700 freelancers to cover 70,000 topics.
A big part of the Web 2.0 concept is trust in numbers. That's why a site like Wikipedia -- with its seemingly infinite number of anonymous contributors -- can become a trusted source of information. Still, I can help but agree with people behind Quamut.com, About.com and other sites that actively seek to put some credibility behind their content. As users seek to educate themselves online more and more, a self-help site that can deliver piece of mind to visitors, by establishing itself as a clearing house for expert advice, could see its page view and unique visitor numbers sky rocket. And that brings us to the insurance industry. To a typical person, insurance can be a complicated subject and also one with major implications to their financial and, in some cases, physical wellbeing. I know that if I was looking to make an insurance buying decision, I wouldn't want to just trust the online, anonymous masses. I would, however, trust someone with decades of insurance experience... you know, like just about any insurance carrier with long-time established brand recognition. Maybe that's something for insurers to keep in mind when developing their Web portals. Capturing new business via the web is key, as are enhanced online customer service capabilities. Perhaps though, there's something more important to be gained by becoming users' go-to destination for trusted insurance advice and information.
Posted by Nathan Conz at 05:38 PM | Comments Predictions: More Hurricanes in 2008, Ice Age to FollowThe P&C industry has enjoyed a respite over the last couple of Atlantic hurricane seasons, following two successive record-breaking years that resonated in the public imagination not only because of the politically charged dimensions of Katrina but also the notion that global warming was contributing to increasing frequency and severity of the storms. While 2008 is unlikely to rival 2004 and 2005, it nevertheless poses the greatest natural risk faced by insurance companies this year, according to EMB, a San Diego based actuarial consulting firm. EMB substantiates that claim in part by citing the latest report by Colorado State University’s Dr. William Gray, co-authored by his colleague Philip J. Klotzbach. The authors state in the report’s abstract: Information obtained through March 2008 indicates that the Atlantic hurricane season will be much more active than the average 1950-2000 season. We estimate that 2008 will have about 8 hurricanes (average is 5.9), 15 named storms (average is 9.6), 80 named storm days (average is 49.1), 40 hurricane days (average is 24.5), 4 intense (category 3-4-5) hurricanes (average is 2.3) and 9 intense hurricane days (average is 5.0). The probability of U.S. major hurricane landfall is estimated to be about 135 percent of the long-period average. EMB’s consultants argue that insurers need to prepare for this heightened risk, factoring it in with all the other natural events that threaten to damage property through the end of the year. “Companies should not be resting on their laurels when developing risk management strategies and determining prices. Instead, insurers need to factor in issues surrounding climate change and must look to incorporate long-term weather trends into their pricing,” says Tom Hettinger, managing director, EMB America. Hard to argue with that, despite EMB’s obvious interest in making the point. The climate change reference is interesting, however, given the ongoing controversy surrounding the redoubtable Dr. Gray’s skepticism on that score. Given the social dimension of science-related activities, the continued resistance of renowned scientists such as Gray gives one pause. It’s only too easy to imagine scientists toeing the fashionable global warming line in the interest of receiving grants or simply not looking foolish to their peers. The layman's skepticism is further reinforced by the cold weather that seems to be more than just a North American phenomenon. From where I sit, the winter seems to have been prolonged right up to the present. A hail storm struck as I wrote, and Mt. Hood's Timberline Lodge, which boasts average snowfall of over 400 inches, has recorded 810 inches as of April 28. Some experts warn that global cooling is the real problem - all the more since as opposed to global warming, cooling will decrease agricultural productivity. Others challenge them, etc., etc. In the long run, it's hard to see how much it matters. According to a program I watched with my son the other day, whatever global warming may amount to, it will just be a blip between the last Ice Age and the inevitable next one, due to scrape New York City off the map sometime within the next 10,000 years. By that time, every last reinsurer will be located in temperate Bermuda, and all the direct insurers will have found more southerly headquarters as well. I can still remember when Swiss Re began talking in serious tones about global warming and chuckled to myself how the company's posture might have seemed to enlightened members of the mainstream media to be quite forward-looking for the hidebound, capitalistic insurance industry. But of course whether the world faces global warming, global cooling or some heterogeneous form of "climate change," it's all good for an industry that manages risk. Posted by Anthony O'Donnell at 04:50 PM | Comments April 22, 2008MassMutual Creates New Workplace Environments To Match IT Transformation EffortGreetings from Massachusetts, where I’ve just completed a series of face-to-face interviews with several technology and business executives at MassMutual for an upcoming Carrier Confidential feature. The Springfield, Mass.-based carrier is in the midst of an ambitious and far reaching technology transformation effort and while the nuts and bolts of that initiative (including SOA and ECM implementations) dominated many of the conversations, MassMutual’s technology leadership made sure that the topic of workplace culture was discussed as well. In part to facilitate the kind of collaboration and cross-department outreach that is needed to support these large technology and process transformation, MassMutual has taken time to reassess its work environment. And in two specific programs, says Rich Pedersen, MassMutual’s corporate vice president and division head for US insurance group systems, the company has completely changed it workplace layout to address those needs. “We’ve changed completely the lay out of the room [in these cases]. There are big open spaces and big overstuffed chairs,” Pederson says. “It’s a much more conducive place for creative work and for doing that out-of-the-box type thinking.” Also as part of that effort, IT and business workers were co-located in the same space to facilitate alignment between the two groups. Overall, the goal is for open spaces and non-hierarchical seating. “You can see from one end of the room to the other. It’s that open, expansive kind of feeling and it’s just a different way than [how] a traditional insurance company might have approached it even five years ago,” Pedersen says. As someone who has worked in both stuffy, uninviting workspaces and in more open, collaborative areas (the I&T offices share much in common with MassMutual’s new spaces, although I wouldn’t mind a more “overstuffed” desk chair.) I believe that these efforts are more important than most realize. If you treat someone like a cubicle monkey, don’t be surprised when they act like one. And, on the other hand, when you place your intellectual capital in a collaborative environment, don’t be surprised if you start to see better partnerships formed and more innovative ideas. “It’s a move away from that expected conservatism towards a more collegial environment,” explains MassMutual deputy CIO Bob Casale. “People seem to respond well to that.” Posted by Nathan Conz at 05:11 PM | Comments Alignment From The Top: Great CEOs and CIOsAs the editors of Insurance & Technology work on this year's Tech-Savvy CEO (June) issue, our thoughts have been turning to the qualities of both individuals and company culture that make for IT/business alignment -- which in turn drives the greatest impact for each technology dollar spent. One would like to think that the SOA craze and associated developments are helping to forge a common business and technology language, but the consultants and analysts I speak to remain skeptical. For now, what appears to matter most is the relationship that CIOs have with line-of-business heads and the CEO, and how well the latter understands the utility of IT to his or her company's strategic goals. As much progress as CIOs have made over the last decade in making their mark on strategic direction, their ability to bring their influence to bear remains dubious. That being the case, "it is critical that the ultimate strategic leadership of the insurer -- the CEO -- understand the potential enablers IT brings, since they are often the only leader that can get past the tyranny of the ROI model," says Chuck Johnston of Oracle. "The ROI model often stifles tectonic change since it is not predictable." Nevertheless, "tectonic" change may be what insurers need to achieve. As challenging as the previous year may have been, insurers face an even tougher time going forward as new economic pressures and regulatory issues compound existing challenges. As the margin of competitive victory narrows, visionary leadership that leverages an understanding of IT to carve out greater efficiency, more precise pricing and compelling service to distributors and customers will be increasingly important. The best of insurance CEOs seem to understand this, as I trust I&T's Tech-Savvy CEO issue will demonstrate. Some of our honorees are more hands-on in their technology interest, some less so, but all are close observers of the evolving role of technology in the service of business, especially as it pertains to customer- and distributor-facing applications. It's too late to submit nominations for this year's Tech-Savvy CEOs, but we encourage you not to hesitate to share with us any outstanding chief executive officer you may know about so that we can consider him or her for next year. It is just the right time to send us your nominations for this year's Elite 8 and next year's Elite 8 International. I&T has honored many fine insurance IT officers over the years, but we're confident that more and more CIOs and other senior technology executives are rising up to distinguish themselves. There is no question that outstanding people continue to rise in the ranks, evidenced by the appointment, since late last year, of numerous new CIOs at some of the industry's leading companies, including New York Life, State Farm, UnumProvident, Chubb, MetLife, Safeco and Northwestern Mutual -- to say nothing of the numerous CTOs, VPs of IT and divisional CIOs eligible for the Elite 8 award. Whether the reader is a technology executive, a business officer or a vendor, I&T's Elite 8 (domestic and international) and Tech-Savvy CEOs are a great way to honor distinguished colleagues and by doing so enjoy a little reflected glory. Posted by Anthony O'Donnell at 03:10 PM | Comments April 15, 2008MassMutual Attracts New Agents, Dispels Common Insurance Myths Using Web SiteOne of the nice things about writing a blog, in addition to writing for the print edition of Insurance & Technology, is that I get to do this: I’m currently working on a story for the next issue of Insurance & Technology on a new MassMutual Web site that seeks to recruit and retain agents by connecting visitors to the site with actual MassMutual employees and agents. The video-intensive site, in part, seeks to dispel the negative stigma attached to the insurance agent profession. Scott Capurso, director of net field force growth at MassMutual, describes that stigma as the “Groundhog Day effect,” after the 1993 Bill Murray comedy which features some memorable appearances by a sleazy insurance agent (as seen in the above clip). Of course, Capurso could have just as easily named the stigma “The Incredibles effect” after the digitally animated Disney film: I guess what I found interesting about MassMutual’s project is that the company has started to fight back against those prevailing views of insurance workers – not with boring rhetoric or even with slick ad campaigns. What better way is there to dispel the negative stigma that surrounds insurance workers than with actual insurance workers? Posted by Nathan Conz at 03:47 PM | Comments Survey Says Wall Street Likes Insurance IT SpendIn the not too distant past, it was reasonable to question whether senior insurance executives adequately appreciated the difference that forward-looking technology investment could make in corporate performance. While that appreciation may remain imperfect -- at least to the mind of most insurance CIOs -- a sign that progress has been made may be discerned in some very interesting findings of a recent Accenture study of the opinions of equity analysts. The short version is that these guys are not only aware of the importance of technology to insurers' success but they rate technology investment as one of the best ways an insurer can put its capital to use. Accenture tapped Institutional Investor Market Research Group to ask 108 insurance equity analysts in 14 markets globally about their opinions on a variety of topics, including capital utilization priorities, critical industry challenges and profit and growth strategies. Among the fairly unsurprising results were that P&C analysts predict increased M&A but look more favorably upon organic growth; and that life insurance analysts are keen on expansion into emerging markets. Among the survey's surprising findings were P&C and life insurance analysts' bullishness on operational efficiency or "transformational" programs — which at 77 percent ranked only slightly behind share buybacks (83%) and well ahead of product and service innovations (56%) in respondents' identification of important uses of capital. Also striking was analysts focus on the legacy systems problem, for both life and P&C. Eighty-five percent of P&C analysts identified "aging technology systems/modernizing IT" as among the most important issues and challenges facing insurers in the next three years, behind climate change (89%) and ahead of new regulations and reforms (76%) and several other issues, such as cross-border competition, terrorism and geopolitical instability, and changing customer demographics. Life analysts expressed a similar opinion, ranking aging systems (92%) just below growing risk to investment portfolios. The survey also found that:
Commenting on the significance of the findings, Accenture's John Del Santo suggested the emergence of an awareness, not only among analysts but more generally, that insurance, like other financial services sectors, is essentially an information processing business. "It's always been sort of known and expected that large, diverse financial services institutions are really, at their core, an information and data processing capability," Del Santo says. In the minds of many industry observers, he adds, "insurance companies are falling into that same space where the expectation is that they are going to have standardized, world-class information processing and data mining capabilities on the back end." If insurance companies haven't traditionally lived up to such expectations, it's likely because technology has been considered more of an operational handmaid and service provider rather than a strategic driver -- even by company leaders. Clearly that has changed, especially in the upper echelon of the industry, where companies are placing bets on transformational technology investments. Del Santo can't say when insurance equity analysts began to think this way, since this survey represents the first time Accenture has polled them collectively. However, it is clear that the analysts believe they need to move further down this road, as 82 percent of respondents acknowledged that the insurance analyst community would benefit from more education on new technologies and their role in business performance. That ought to be reassuring for insurance technology executives aiming to persuade insurance CEOs, line-of-business heads and board members of the importance of realizing the "world-class" processing and data mining standard cited by Del Santo. Posted by Anthony O'Donnell at 12:44 PM | Comments April 08, 2008Allstate’s Savvy Online PRWhen people do something wrong, their inclination is to conceal it. That being the case, reading the following press release from an outfit called Consumer Watchdog raised a red flag, even as it piqued my curiosity:
Leaving aside the headline’s atrocious length, its message jars: it finds fault with an entity that seems to have done something commendable by giving the public a thorough look into its inner workings. In the lead paragraph the press release affirms that the carrier made 150,000 pages of documentation available over its Web site. “Was Allstate forced to release the documents?” I asked myself on reading this, but the text acknowledges (if reluctantly) that the carrier’s revelations were voluntary. The press release’s text includes extravagant judgments to the effect that, for example, the documents “expose a business strategy of systematically underpaying claims,” etc., and that those documents “reveal the company’s ‘Us versus Them’ attitude toward its customers,’” but no specifics are cited. It goes on in high dudgeon to allege that "Allstate's 'good hands' are stealing from customers' pocketbooks." A visit to Allstate’s site naturally yields a diametrically opposite take on the event, with a press release headed “Allstate Acts to Dispel Inaccurate Portrayal of Claim Practices.” While the Allstate release begs many questions, it nevertheless makes a plausible case in sober language, in contrast to the exaggerated, propagandistic style of the Consumer Watchdog release. It may be that the carrier fought court battles to keep the documents secret, as Consumer Watchdog claims. Or not. Without further investigation, one can only speculate, guided by the relative prima facie credibility of the two press releases. What is not a matter of speculation is that Allstate did release this mass of evidence for public perusal. Whatever the ultimate rights and wrongs of the case, Allstate has not only made use of the preferred communication channel of anyone likely to care about these matters but has done so while releasing a staggering amount of internal documentation. That act will make a positive impression on those who will dig no further as it makes the material available for those who will dig and sets a precedent for greater corporate transparency at a time the public is clamoring for it. Posted by Anthony O'Donnell at 04:38 PM | Comments April 01, 2008Projecting the Future of Mobile Salesforce TechnologyWhile discussing some of the limits of mobile technology for the insurance sales force, an industry consultant recently pointed out that, regardless of how advanced today's mobile devices are getting -- it'd be difficult to envision an agent or broker ever giving a sales presentation on a BlackBerry. Literally. It'd be difficult to envision such a presentation, given the limited size of the screen. However, some recent breakthroughs in the mobile technology industry could make some agents reconsider such a notion. According to the New York Times, several companies are working on pocket-sized digital projectors that could plug into mobile devices.
The Times filed this story under the "Novelties" category and, indeed, the emergence of such projectors may be nothing more than a superfluous add-on for the majority of today's insurance producers. After all, the gains in ease of use and efficiency are minimal compared to giving sales presentations with today's most common piece of equipment – the laptop computer. Eventually though, I think the mobile device will supplant the laptop as the weapon of choice for producers. Year by year, the younger agents entering the field are more and more likely to have used a BlackBerry or Palm Treo device in their personal lives. So as those devices become more advanced, it stands to reason that the next generation of agents will be most comfortable doing business on those devices. Advancements like pocket-sized projectors and mini-projectors embedded into cell phones and other devices will only serve to hasten that shift. Posted by Nathan Conz at 02:49 PM | Comments Paulson's Blueprint Rekindles OFC DebateLike a mountain peak that seems to recede as you approach it, the prospect of the establishment of an optional federal charter (OFC) to replace a strictly state-based regulatory system for insurance remains in some indefinite future, despite our continued conversation about it. This is not to say that the OFC will never get here, only that we're still some way off from predicting its arrival. That remains the case despite the proposal of an OFC in Treasury Secretary Henry Paulson's preliminary blueprint for a streamlined financial services regulatory system headed by the Federal Reserve. However, Paulson's recommendations have certainly brought renewed intensity to the OFC debate, and they have probably made OFC more likely to happen by popularizing the notion of unified federal oversight for financial services—and that would probably have been the case if no specific recommendation for OFC had been made. Reactions to Paulson's recommendation for an OFC were predictable: the American Council of Life Insurers (ACLI) applauded what it characterized as a more efficient and modern framework; the Property Casualty Insurer Association of America (PCI) agreed about a need to streamline and modernize, but not at the expense of a state-based system that accounts for real differences from state to state and region to region. Both associations make valid points, so one wonders whether they might both be accommodated. That is what the "optional" part of OFC pretends to do, but in a market where OFC prevails, larger companies will have an advantage at the expense of small regional players. As the federal government steamroller gears up, organizations such as PCI and the Independent Insurance Agents & Brokers of America will need to win converts to their argument that state regulation has and will continue to serve consumers interests better, not just their own. Posted by Anthony O'Donnell at 02:22 PM | Comments
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