As I&T senior editor Anthony O'Donnell said when he introduced the first session of our 2007 Executive Summit, "The Need for Speed: Product in a Day," speed to market is a perennial topic, that we often report on.

However, as Anthony also noted, the topic has seen a kind of resurgence recently. Perhaps that's because many insurers have undertaken related product development initiatives, and as a result, best practices are beginning to emerge — thus driving speed to market discussions in a new direction.

Speaking of best practices, Michael Hicks, VP of US wealth management, Hartford Life took time in his part of the presentation to urge attendees to view speed to market as more than just a technology issue and instead as a two step process—with an invention and an implementation stage.

In the invention stage, when actuaries are determining what exactly they want to develop, Hicks says there are big opportunities to speed up the overall process. Many look at speed to market opportunities in the technology realm, but the opportunity, in the case, is on the front end.

While working at Lincoln National, Hicks says the insurance carrier put together a detailed guide of capabilities. Then the IT organization would work with the product organization to develop understanding around those capabilities.

"It really became a boon to our speed to market because it allowed our actuaries to develop products around existing capabilities and features, versus having to build one-off features that may take significant amounts of time," Hicks explains.

Hick says that Hartford Life has focused their speed to market efforts on the front end of the process as well, by bringing together different departments early on in the process. However, IT had to earn its place in those early discussions.

"Service and IT had to invite themselves to the table and really show what they were going to add from a value perspective," Hicks says. "But bringing those cross-disciplines together and validating concepts really has helped set expectations on the front end. It helps insurers architect solutions and avoid over-engineering and over-complicating the process."

Later on in the presentation, Robert J. Reynolds, director, life product management, Minnesota Life said the key to improving speed to market is to ensure that the right process and the right people are in place. "It's a constant evolution that we're all struggling with and trying to improve upon all the time," Reynolds says, while also identifiying legacy systems as a speed to market barrier, especially as it relates to a lack of reusability.

In part to break through some of those barriers, Minnesota life purchased a new SOA-enabled system. Meanwhile, process changes are underway that will streamline the hand-offs that occur during product development.

"We're going through a revamping of our process right now. There are about 400 people that get involved in a product's development from all over of the company – although there might be about ten to 15 on the core team. There are a lot silos and, to me, that means a lot of hand-offs."

Also important is the culture within a given company. "It's critical that your culture be willing to make the necessary changes to take most advantage of the new technology that is out there, or you will not get there," Reynolds says.

So, in the end, the key may be how a carrier's culture adapts to the new way of doing things. "That is a whole lot of new," Reynolds says of Minnesota Life's new system and its new process, "and there's a whole lot of change management going on to support that. Don't underestimate how important that is. If you don't address that along the way, you could fall flat on your face."

It often seems as if the theme at insurance industry conferences is nagging and haranguing –- pointing out all the things insurance companies do wrong when it comes to technology. But so far at this year's Insurance & Technology Executive Summit, the messaging has more to do with pointing out opportunities -– areas of potential growth and profit for carriers, if only they can gather the technology, financial and personnel resources to capitalize them. Nowhere is this more striking than on the topic of globalization, and two leading industry figures challenged the Executive Summit audience on Monday to change their perspectives on globalization and what it means for insurance.

Identifying the "three Rs of insurance that drive everything -– risk, revenue and regulation," David West, research area director, insurance, TowerGroup, pointed out that "globalization gives us the opportunity to transfer risk," but added that those risks are extremely diverse and complex in the global arena. They include currency risk (especially in light of the ongoing decline of the U.S. dollar) and operational risk (especially related to outsourcing).
An enterprise risk management approach becomes essential when a carrier is operating globally, West said. "You have to create platforms to measure and monitor risks around the globe, or you will be overexposed," he stressed.
From a revenue perspective, the obvious opportunity is the one to sell new products, West noted. But this requires agility -– "You have to have an agile platform so it doesn't take a year to develop new products," he said.
Scott McKay, CIO and SVP, operations and technology, Genworth Financial, agreed that this is the form of globalization most U.S.-based insurance companies understand, but also pointed to operational globalization (through outsourcing partners, for example), and financial globalization -– "actually the first kind of globalization that impacted insurance companies" through their investment operations, he added.
Also on the financial side, TowerGroup's West argued that globalization can help insurers "reduce costs through rightsourcing -– placing [different] aspects of your business in the right place" and taking advantage of "opportunities to send business or portions of your processes to where it makes the most sense."
There is a regulatory aspect to globalization, too, and West contended that U.S. companies are "not on a level playing field" in this regard. The Solvency II initiative underway in the EU is an effort to equalize things, he added. According to Genworth's McKay, there is actually "regulatory arbitrage going on" around the globe, point to Bermuda as a base for reinsurance as an example.
McKay agreed that a global approach to regulation can be a kind of double-edge sword. While there is a focus on creating a more level playing field, he said, some markets also want to use regulation as a way to gain an advantage –- for example, in the form of lower tax rates.
McKay emphasized that globalization is "going to keep happening faster and faster," and stressed that companies that reject globalization are going to lose out competitively. But that doesn't mean it will be easy for companies that do recognize the opportunities. "Competing in the world today means having the right capabilities," he said. "You've got to serve markets, consumers, and producers. You need strong, highly analytical people, [and an ability to do] modeling on a real-time basis."
Success in the global marketplace also means a company (including its management and workforce) has to "embrace paradox," according to McKay –- understanding that there are a number of tradeoffs between growth and balancing risk. That means addressing questions such as:
- How do I localize for growth but centralize for efficiency?
- How do I work with both entrepreneurial and mature opportunities in business?
- How do you move fast & respond but maintain control?

By Katherine Burger

It’s not often one hears a note of unqualified optimism on behalf of what IT can contribute to an insurance enterprise, but Deborah Smallwood, chief transformation officer, ICW Group Insurance Services did just that as a reflection on her experience of driving a rapid technology transformation of the San Diego-based property/casualty insurer, as part of her presentation"Just Do It: Making Insurance Company Transformation a Reality," at Insurance & Technology's Executive Summit, held this year at The Phoenician, Scottsdale, Ariz. “We’re the hub of the insurance industry,” Smallwood said of CIOs, whose technology serves as the circulatory systems for insurance companies. “We are in a position to really transform the industry.”

Smallwood was brought on board at ICW to transform that company, after an engagement with the carrier as a TowerGroup analyst and consultant. While the ICW was making money, its leadership felt it needed to change, both in view of a hardening market, and of the likely effects of the burgeoning technological superiority of competing companies over the long haul.

Her evaluation of the company’s current state was not the stuff that optimism is made of. “I found that we had no clear business strategy, no clear alignment between IT and business, no governance, no project management, and that the company was very manual,” she said. “We had over 800 focus reports and numerous data stores.”

Despite the generally backward state of the company’s processes and technology, Smallwood judged from her analysis that, “the gaps were bridgeable.” She was subsequently given authorization to drive a change to bring ICW from “laggard” to “fast follower” status, from a technology point of view. “In six to nine months we had to reorganize to align business to IT, have a single entry point from the business into IT, and develop a common strategy between the business and IT,” she reported.

The initial transformation effort involved enlarging the IT organization from 80 to 130 professionals, along with 25 consultants. ICW also forged partnerships with Insurity, CSC, and IBM. Those partnerships, Smallwood asserted, have driven the introduction of project management disciplines and methodologies, supported the institution of an architectural blueprint and have already been instrumental in “delivering major projects that were out of control.”

One of these was a runaway data warehouse project that has now seen a successfully completed first release. The new data warehouse will, among other things, provide the basis for reducing the number of the aforementioned 800 reports.

Reflecting on the success so far at ICW, Smallwood drew some observations about IT’s role for insurance companies today that she believes should motivate transformational efforts. She said she had learned that, “IT best practices, methods and techniques are mature; ramping up IT is doable, fast and achievable; we are masters at it all and masters of change.”

Smallwood then cautioned that transformation was evolutionary and that “we are never done.” In developing a vision for change, she added, “you always have to know where you’re going, but you need to adapt as you go.”