Offering Experiences: The Emerging Basis of Competition

on Jan 31 by Barry Rabkin
Tags: basis of competition, distribution channels, edgeIPK, experiences
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Can you imagine running into Steve Job’s office at Apple and exclaiming: “Steve, I just realized that the new basis of competition is being able to provide world-class experiences for our customers !” Either he would laugh you out of his office or call Apple’s security to throw you out of the company. Steve Jobs already knows that offering experiences is the way for companies to achieve stronger competitive differentiation and larger market share.

Apple, of course, is not the only company that has been pursuing this strategy. In our world of insurance, USAA, Progressive and Chubb are three insurance companies that immediately come to mind as companies providing a world-class experience for their clients.

But what about your insurance company? Of if you are a producer, what about the insurance agency or broker you work for? Does your firm provide a world-class experience? Is it planning to offer a world-class experience? (By the way, it is your customers, producers and other stakeholders who would be the ones deciding if your company offers a world-class experience.)

Let’s assume that either your company wants to offer a stronger experience or offer an experience in the first place. (Yes, every firm offers experiences. It is just that most of the stakeholder interactions are labored, awkward or otherwise painful.) What technology firm might you consider contacting that would enable your insurance company or agency / broker to offer experiences for your policyholders, prospects and others?

edgeIPK.

Who is edgeIPK? My question exactly. On Wednesday, January 27^, 2010 Wendy Corman, the newly appointed president of the U.S. division of edgeIPK and her colleagues were gracious enough to brief me about edgeIPK and show me a demo. The purpose of this post is to get across the highlights of that briefing.

Please note that I am not saying you should rush out and purchase edgeIPK’s products. But given that three of their insurance customers are Allianz, Zurich and Willis, you might want to consider reaching out to edge for a conversation, a demo and potentially creating a pilot for one of your lines of business. I’ll leave it to you to decide if you want to go their web site, find the contact information and call them.

So, what does edgeIPK offer? Edge enables insurance companies the ability to wrap and extend their functionality simultaneously to multiple delivery channels in multiple formats. That means, your insurance company can provide the same look-and-feel to producers, policyholders, prospects or others regardless of the nature and form of the interaction.

Say what? Edge enables insurer or broker functionality to be delivered in a consistent look-and-feel to the web, to mobile devices, and to laptop computers. A critically important point is that edge is ‘target platform agnostic’ so it doesn’t matter if the insurance company or broker is reaching out to people who use IE, Firefox, Safari, or other browsers. Nor does it matter what version of those browsers the target audience is using because edge (supposedly according to Wendy during the briefing) keeps up with all the browser versions and ensures the content can be correctly rendered for the target audience.

Edge capabilities can be used by marketing, distribution and call center staff in the home office as well as field office, agency or broker staff. Edge realizes insurers conduct business on a global stage and so supports multiple languages and multiple currencies. As they told me during the briefing, edge can easily handle our UK cousins use of ‘u’ everywhere as well as our US spelling. Edge supports Spanish, Chinese (Mandarin, I believe) and many other languages.

Edge uses their open presentation platform to quickly configure screens for the home office or field office user or agent or broker. Edge can configure composite screens from different applications which is particularly useful for home office call center representatives or agency support staff.

Edge focuses solely on the presentation of the information required by the insurance company or agency for their target markets. It is part of their skill set to keep up with the growing number of widgets and widget libraries. Occasionally edge will even create their own widgets for their customers when necessary. Edge also deals with security and performance to ensure that the insurance company’s target audience – regardless of end-device or browser – experiences approximately the same level of performance.

Yes, edge is new to the United States. They are in the process of building both sales and services teams here in the U.S. But based on my thirty-plus years in the insurance industry, I believe they are worth a look. Edge gets it: with the evolution of the web, the growing number of devices that clients and field personnel use, and the absolute mandate for insurance companies (and agencies and brokers) to provide a consistent look-and-feel for their policyholders, prospects and other stakeholders, edge provides the software to make that all happen.

Insurers do not have to replace their legacy systems or purchase new core administrative systems. Edge wraps around all of those systems and enables insurers to bring their ever-increasing number of Moments of Truth to the level of a world-class experience.

I’ll be checking back with edge and their insurance customers periodically to see  how edgeIPK is doing in the insurance space.  But to repeat, based on what I saw and heard (and given that Zurich, Allianz and Willis are world-class organizations themselves), I suggest you call edge and see what they can do for your company.

NYL Is Improving Agent Use of Social Media

on Dec 16 by Barry Rabkin
Tags: Compliance, LinkedIn, New York Life, NYL, Socialware
Comments: 2 Comments �

New York Life’s tag line is “The Company You keep.” New York Life (NYL) recognizes that the “company you keep” has to be involved with social media because that is where a growing number of their clients and prospects inhabit. In particular, NYL continues to build momentum and experience applying social media to strengthen their interactions and relationships with their agents and policyholders. Most recently, NYL has invested their time and resources with two social media initiatives supporting their agents: one involves using a technology start-up company and the second involves LinkedIn.

NYL is working on a Proof-of-Concept with a technology start-up company to ensure that their agents remain compliant regardless of which social media sites they use. This start-up technology company accomplishes this by getting in the middle between NYL’s agents’ dialogue and social media sites the agents want to post information. With the solution from this start-up, NYL agents can use Facebook, Twitter, Flickr, LinkedIn and other social media sites.

Is this “Big Brother” in action? NO! The life insurance industry is a heavily regulated industry by the States the insurance company does business in and by various Federal Government agencies (such as SEC or FINRA, formerly NASD). The insurance industry also must comply with industry regulations as well.

Using the solution from the start-up company, NYL is ensuring that their agents can participate in the conversations of the digital marketplace whenever they want and remain compliant to the plethora of never-ending regulations. One other benefit of NYL’s application of this solution was the immediate realization that the Compliance Department had to be brought into the (use of social media) fold from the beginning – just as it should be.

NYL’s second initiative is with LinkedIn. Working with Sales & Distribution management, NYL created a template for their recruiting managers and agents who either are using or want to use LinkedIn. The templates provide NYL agents with a way to go beyond the obvious uses of LinkedIn and get much more out of LinkedIn’s functionality. With these templates, NYL has crafted a set of Best Practices that the company and its agents can improve going forward in time. NYL is driven to facilitate the agent’s ability to put themselves forward into the marketplace in a way they can best explain their personal value proposition to their policyholders and prospects.

Also regarding LinkedIn, NYL is participating in LinkedIn’s Beta Company Profile program. NYL has added several customized features, including video to the standard algorithmically-produced page, to provide a much more robust and richer media experience for their prospective agents and employees, and of course, existing policyholders. In particular, NYL has created a customized view for prospective agent recruiting of the insurance company for anyone whose LinkedIn profile indicates having a sales background or interest in sales.  Eventually NYL wants to feature as many as 72 different sales recruiters over the course of a year.

I was told at the end of our discussion that NYL realizes their agents – social networkers by nature - are using social media. The company wants to direct those activities in a manner that benefits their agents, policyholders, prospects and regulators. They feel (correctly) that the best way to do that is to adhere to the guiding philosophy “let the community live!” But, and here are important lessons for other insurance companies, monitor the community, pay attention to the community, and most importantly, learn from the community to sharpen the company’s strategies and tactics to best meet the expectations of all of the company’s stakeholders.

What is your insurance company doing? How is it applying social media to enable its agents or brokers? What social media software (whether Socialware or others) is your company looking to best engage in the dialogue within the social mediasphere?

Naughty or Nice

on Dec 15 by Barry Rabkin
Tags: Santa Claus
Comments: 2 Comments �

Iggy ran into Santa’s office and was almost out of breath when he got there and sat next to Robby. Robby, of course, had arrived on time and he and Santa were enjoying a warm cup of hot chocolate – with those little peppermint marshmallows – and munching on some just-out-of-the-oven sugar cookies he loved so much.

Santa merrily chuckled when he saw Iggy plop down and waved off his tardiness.

“Don’t worry about it. Here, have a cup of cocoa and some cookies. Let’s get to it. You two know I need your help deciding who has been naughty or nice in the insurance industry space.”

“What do you recommend? I had asked you, Robby, to think more about the insurance industry and you, Iggy, to think about the technology companies supporting insurers.”

Santa reached for another delectable sugar cookie covered with the many-colored sugar sprinkles. “Tell me who should get what so we can finish our N & N list.”

Robby said he did have some thoughts:

• Let’s give the life and annuity insurers a large dose of hope for 2010. They are going to be regulated up one way and down the next in 2010. Plus the retirement crisis hasn’t really pushed sales as high up as it should have. probably due to the recession.
• For property and casualty insurers, predictive analytics and other modeling capabilities would be nice stocking-stuffers; plus a large dollop of reality of the necessity of federal regulation. The marketplace has moved well into a national – and really international – framework.
• For state insurance regulators we need both lumps of coal for those who think insurers exist primarily as whipping posts so they can remain in office – and lumps of sugar for those regulators who understand without reasonable capacity as defined by actuarial standards, insurers won’t be able to do business in their states in the first place

Santa put down his hot chocolate. “Anything else we need to put on the list for insurance industry players?”

Robby said there was one last item and it was a big one: “we need to leave a large saw for all insurers so they can clear a wide path in their companies to apply enterprise risk management practices and systems.”

“That’s a good one,” Santa guffawed. “And Iggy, what should go on the list for technology firms supporting the insurance industry?” Santa asked as he got up from his desk and poured More hot chocolate for Robby, Iggy and himself.  

“To begin with,” Iggy said “I want to give technology companies a large tub of white-out or white tape.” “Why,” Santa asked. “Because everytime a really new concept comes along, too many technology firms just relabel what they were already selling and say they are now offering the new concept.”

“I also want to give some of the outsourcing companies sets of small scissors to help them cut out all of those CMM levels and professional designations from their business cards.”

“Isn’t industry training important? Isn’t capability modeling important?, ” Santa asked.

“Of course it is but we know from talking to insurance professionals they really care about their outsourcers having actual, demonstrable insurance industry experience and referenceable clients whose company names carry some weight.”

“That can’t be all, ” Santa exclaimed, blowing the excess heat from his cup of chocolate and putting more of those tiny marshmallows in at the same time.

“Nope, there’s more,” Iggy said and rattled off:

• For technology firms new to the insurance industry, I’d put HBR Case Studies in their stockings. These companies have to come up with sharp and unstandable value propositions and ways to truly differentiate themselves from the existing technology players.
• For technology firms who are in a specific niche – say billing or even predictive analytics – we should give them a financial planning manual to they can prepare themselves to be acquired … or maybe directions to the nearest white knights.
• For technology firms who are creating products or services based on new technologies (say, semantic technologies), I want to give them a 48-month annual calendar because selling something new to the insurance industry is going to take a very, very loooooong time.

And that’s it, Santa. Iggy reached for two more of those sugar cookies.

What would you add to either Robby’s list for insurers or Iggy’s list for technology firms to help Santa decide what to pack in his bag in 10 days?

Classics

on Dec 12 by Barry Rabkin
Tags: experience
Comments: 2 Comments �

The other day I was thinking about some of the ‘classics’ we have had here in the Boston area regarding different types of food. Three came to mind immediately:

1. Blueberry muffins from Jordan Marsh
2. Ice cream sundaes at Baileys
3. Clam chowder at Legal’s Sea Food restaurants.

Fortunately the last classic restaurant and chowder still exists. The other two are gone into the pages of history.

What makes a food – or anything else for that matter – a classic?

I submit that the main attribute is the experience the food (or product or service) provides the customer.

But while all classics are wonderful experiences not all experiences are classics.

A company can build off of their classics. The company can generate a stream of revenue from them and broaden their footprint into other products. The experience customers feel from the classic allows companies to experiment or offer new products. Of course, not all of the company’s new products will be classics. And the company has an obligation to maintain the trust they have engendered with their customers. The new products must enable the same or similar experience the customer associates with the company.

What about insurance companies? Where are the ‘classics?’

I’d submit there are only a handful when we use the prism of considering classics – and in that case, companies known for the wonderful experience they provide their clients:

1. USAA’s customer service
2. Chubb’s exemplary attention to the high net-worth households
3. Northwestern Mutual’s focus on products (and producers which also benefits the insurer’s customers)
4. Progressive’s ability to leverage technology to benefit its policyholders from business acquisition through claim adjudication
5. ?????

Who would you add to number 5 – and beyond? But be honest and demanding before answering.

Razors and Razor Blades

on Dec 08 by Barry Rabkin
Tags: experience, Strategy
Comments: 2 Comments �

One of the most enduring strategies for a company to use is “Razors and Razor Blades.” The strength of this strategy is continually on display from razor companies like Gillette. A consumer pays a basic price for the razor and then continues to generate revenue for Gillette through the life-long purchases of razor blades.

Another example of a company using this strategy is HP with their printers. Buy the printer at a low price and then purchase ink cartridges as they run out. HP added a new twist some years ago by having a message show up on the printer (and the print function on WORD) that states a cartridge is running low.

That got me thinking that my relationship with the car dealership I bought my car from is the same type of relationship. Yes, it is entirely in my control but I always bring my car to the same dealership for service.

An example that is not in my control is my iPhone (I just love this device). I’m always on the lookout for new apps and go to iTunes to purchase (or download free) applications. For Apple, it is a win all around – for them, for their developers and for me. And the constantly growing number of apps (now over 100,000) provides a nice competitive advantage for Apple.

Well, can the “razor and razor blade” strategy work for insurance?

How about property/casualty insurers who offer concierge service after an automobile accident? Hopefully it won’t happen with the same frequency as iPhone app purchases but seen over a vast number of automobile insurance policyholders who use the concierge service, these insurers are hoping that by providing a well-tuned (no pun intended) experience, they can better manage their loss costs than having the rascally claimants go to the body shops of their choice.

Are there other insurance examples? Perhaps in the life or annuity segments? Please let me know.

Architecture of Geographic Reach for Insurance Companies

on Dec 04 by Barry Rabkin
Tags: geographic reach
Comments: 2 Comments �

When we consider the set of insurance companies based in the United States, there seem to be six types striving to succeed in their particular marketplace :

• Local: this type of insurer offers its products and services to a few counties or perhaps one state
• Regional: this type of insurer offers its products and services to two or more states
• Super-Regional: this type of insurer offers its products and services to most, if not all, of the states in a specific geographic region as defined by the U.S. Census (e.g. Midwest or Mid-Atlantic)
• National: this type of insurer offers its products and services throughout the entire United States
• International – Adjacent: this type of insurer offers its products and services throughout the US and to either Canada or Mexico (or both)
• International – Broad: this type of insurer offers its products and services throughout the US and to one or more countries around the world

As insurers in the US decide how to expand geographically to reach more customers there are several matters they need to deal with:

• Diversify risk: I would submit this is one of the primary reasons – along with economies of scale – that drive an insurance company to widen their geographical reach
• Manage more regulatory requirements: One of the pleasures of being regulated by 50 state insurance commissioners is that once an insurer has met one state’s regulatory regime, it has met just that one state’s regulatory regime
• Become locationally intelligent: expanding the reach of the insurer’s products and services to different markets mandates that the insurer becomes intimate with the consumer and business demographic profiles of that geography as well as with the skills and expertise of the available distribution channels, the economy of the geography, and the actual terrain of the geography (i.e. to better assess property risks and liability risks if the insurer is a property/casualty insurer)
• Widen distribution channel mix: Unless the insurer is using online methods to reach, sell and support their products, the insurer moving to wider geographies will also need to appoint agencies or brokers in the new geography and create new field offices as well
• Leverage product offerings: it is quite possible that the insurer can apply its same products – albeit with changes required by the state insurance commissioners’ offices – in the new geography as it sells in its existing markets. But the insurer should also take the opportunity to ‘tune’ its products and services according to its locational analysis of the new markets
• Create location-specific customer service: prime example at play here is moving to minority-majority areas where mere translation of its marketing materials is far, far from being sufficient. Additionally, the insurer should have producers in its distribution channel mix and customer service representatives who are from the cultures being targeted in the new geographies.

What would you add to these lists?

Two Perspectives Enabling Stronger Strategic Options For The Insurance Industry

on Dec 03 by Barry Rabkin
Tags: content management, context, document management, Information, media
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Getting down to basics about the insurance industry, how might someone perceive or reperceive the industry from a strategic perspective? Strategy, for me at least, is what a company does to differentiate itself uniquely from its competitors. That’s why I don’t consider core administrative systems (or one of the components of a core administrative system such as billing) to be strategic. But that is a post for another time.

The purpose of determining a perspective is to help identify those strategic elements to truly differentiate one insurer from another. It’s very much like people majoring or being expert in multiple disciplines. Reperceiving enables a fresh view; a new view; a different way of thinking.

I suggest there are, at least, two perspectives insurance companies should use when considering how to create or enhance their strategies. One is an information perspective and the second is a media perspective.

We all know that insurance is an information-based industry (not information intensive but information based). So, how might an information perspective help an insurance company differentiate itself from its competitors? Well, an insurer with an information perspective should:

• Understand that information must be shared throughout the enterprise and realize that information silos are barricades to success
• Craft an initiative to ensure that information is cleaned as it comes into, flows through, and streams outward to any and all parts of the value chains that encompass insurance decision-making and operations
• Realize that information is just  not all of that structured stuff being held (sometimes held hostage) in the various databases in every functional area
• Set a higher priority to monitor, manage and act on unstructured data whether that is text, pictures, sound or video
• Create strong search and navigation throughout the information streams for both internal staff (and I would include agents and brokers in this category for the purposes of our current discussion) and external stakeholders
• Create an information council made up of people from each business department

What would you add to this list if an insurer wanted to perceive its strategic objectives through an information perspective?

Then there is the media perspective. Of course, it is highly interdependent with the information perspective. However, an insurer that applies a media perspective would do best if it realizes it is both a consumer and publisher of information. So, the insurer would:

• Identify the media (or information channels, if you prefer) that information is produced (published) and consumed throughout the company value chains
• Look to actual media companies that are successful (e.g. Google or Amazon) and determine which processes, if any, can be repurposed for the insurance company (if the insurer is stumped at this point, they can just ask those stakeholders like their own staff or their agents or brokers how they would prefer to receive information)
• Augment their own media capabilities with existing social networking web sites (e.g. LinlkedIn)
• Begin to apply rich media authoring capabilities (e.g. Adobe’s AIR) to package and present information in a way that is more easily acceptable (not that the long, dry procedure manuals are not exciting and interesting in their own right)
• And as above, there are a host of other ways that an insurer could reperceive itself strategically by thinking of itself as a media company

What would you add to this list of media perceptions for an insurance company to consider?

Objects In Mirror Are Closer Than They Appear

on Nov 23 by Barry Rabkin
Tags: competitive dynamics
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We have all seen the statement that “objects in the mirror are closer than they appear’ and most every driver knows the statement is true. In fact, if the speed of the oncoming car behind us is faster than we are driving, the object will soon past us.

But what about objects just over the horizon that we’re not ready for? Are they closer than they appear? And if so, how do we determine what they are and get ready to deal with them?

The history of the insurance industry seems to show that insurers do not quickly respond to either objects behind them or to the soon-to-be-revealed objects just over the horizon. For insurers, objects just over the horizon include shifting demographics, changes in ethnic composition of their target markets, asset / liability matching and realizing how the impact of other industries applications of technology reshape the expectations of both policyholders and producers.

Objects from behind insurers include competitors from the insurance industry, the financial services industry more generally, other industries and even prospective policyholders themselves. When considering who their competitors are, insurers must continually keep in mind that it is both current and emerging customer needs that reshapes the competitve terrain. The old expression that people don’t want a 3/4 inch drill but a 3/4 inch hole continues to strongly resonate and should provide guidance to insurers who consider only other insurers in their specific segment as competitors.

What objects – either from behind or just over the horizon – should your company be ready to respond to competitively succeed?

DK / DE

on Nov 23 by Barry Rabkin
Tags: LIMRA, risk management, tactics
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Some years ago I attended a LIMRA Annual Conference. For those of you not on the life insurance side of the insurance house, LIMRA is a firm that focuses on life insurance marketing and distribution issues and trends. Their employees are verytalented statisticians and others with quantitative skills. Life insurers from around the world are members of LIMRA. The Annual Conference is squarely focused on CxO level executives. (I was a management consultant at the time paying a steep entry fee striving to generate business from these aforementioned senior executives).

There was a big tent speaker who I have never forgotten. He had a flip chart on the stage – his only prop for his entire presentation – and on the first page he had written DK / DE.

His themes were quite straightforward. He told the audience of assorted senior executives that their companies had no “Deficiency of Knowledge.”  However, there was a significant “Deficiency of Execution” because insurers just did not get the job done in a timely manner nor in an effective manner.

If this person was delivering a similar presentation today, he might vewry well add DRM (no, not for digital rights management). He could discuss the fact that insurers have a deficinecy of risk management …. in their asset / liability matching, in the target markets they go after (hello, coastal properties!!), and in …

Well, in what? What other areas do insurers demonstrate a deficiency of risk management? And is it still true – or was it ever true – that insurers exhibit a deficiency of execution?

Something Wicked This Way … Is Spreading Rapidly

on Nov 12 by Barry Rabkin
Tags: competition, pricing models, societal interference
Comments: 1 Comment �

How many of you saw the article that Michigan may be putting a proposal in front of voters on the 2010 state ballot that if enacted would reduce automobile, home and business insurance premiums by 20 percent. The group – the Fair Affordable Insurance Rates – needs to gather more than 304,000 valid voter signatures and clear other hurdles to put the measure on the November 2010 ballot.

A few thoughts come to mind (that I can print and publish in a ‘family-firendly’ way):

• Part of the problem here is the insurance industry’s inability to express or other wise communicate its value proposition to its customers and prospects. (Life insurers have had this problem forever and still have not solved it)
• Inform Michigan voters that its alright to roll back insurance premiums by 20% as long as you also mandate a rollback of automobile and homeowners remediation expenses by 20% – for auto parts, for auto labor, for court awards, for plaintiff’s legal fees, for rehabilitation services, for medical products, … and, of course, for all products and services insurers and their field staff and their agencies have to use to stay in business
• Leave the State of Michigan entirely – make it one giant state-government run insurance company
• Provide bare-bones coverage for automobile, homeowners and business owners

It’s bad enough that far too many politicians seem to calculate how many votes they can buy to stay in office by mandating insurance premium discounts or not allowing insurers to charge actuarially sound premiums. It will be far worse if citizens think they have the knowledge to set premium rates.

So, for those insurers who do business in the State of Michigan: what are your contingency plans? And, have you built the horrendous possibility of this spreading into your own ERM models?

Here's Looking At You, Kid !!! Insurers Should Look Forward to Web 4.0

on Oct 26 by Barry Rabkin
Tags: Augmented Reality
Comments: 2 Comments �

We all know the web is in a constant state of change, of evolution. I’ve thought of where the web has come from, where it is, and where it is headed in terms of groupings of capabilities. To me, right now, I see four groupings:

• Web 1.o – what we had initially and it was all about content. Companies used these capabilities, such as they were, to provide brochureware to clients and prospects who clicked over to their company web site.
• Web 2.0 – the sweet spot of where we are now and it is all about collaboration. I see the collaboration as having two major flavors – 1) collaboration between people expressed by social networking – and 2) collaboration between software programs expressed by web services
• Web 3.0 – the contextual web and where we are headed next. The capabilities inherent in the contextual web are semantic technologies which enable the meaning(s) of text data to be understood, managed and analyzed.
• Web 4.0 – the world of confluence where tangible assets and intangible assets come together in meaningful ways. We see the beginnings of that in some of the apps on the iPhone (and probably on the Blackberry but, alas and aghast, I don’t have one of those.)

Another instantiation of Web 4.0 is augmented reality - wearing goggles that have information available to the person wearing them to better complete various tasks. The Technology Review article the link points to discusses how mechanics can complete their jobs faster and more effectively.

But think about using AR goggles for insurance claims adjudication and management.

Using AR goggles, a claims adjuster could visit a homeowner who is claiming a loss and see both the actual home as it is now after the loss and the home as it was before the loss. The AR goggles could access information from the insurance company’s databases or sources from the web showing detailed information about labor requirements, building materials and costs.

More generally, the AR goggles could show the processes and resources needed to adjudicate the claim in a way that remediates the loss to bring the claimant’s home back to the way it was before the loss event.

Similarly, AR goggles could be used by claim adjusters for automobile claims.

Yes, augmented reality might be as far off as ten years from now but I wouldn’t be surprised if some industries – other than our slow-moving insurance industry – are using AR well before that. Would you?

Life Insurers: Managing The When & How of Meeting Clients

on Oct 21 by Barry Rabkin
Tags: FaceBook, Life insurance, LinkedIn, Location, MySpace, Timing, Twitter
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No, the above title is not a typo. I mean ‘when.’

The matter of ‘when’ has been changing over the decades. Back in the quite olden days of the husband working in an office and wife busy at home with 2.something children (and a dog),  life insurance clients or prospects could be reached after dinner if you wanted to talk to both spouses. That was ‘when’ was quite straightforward.

And so was the ‘how’ – a phone call. And that phone call was to a landline (or wireline if you prefer).

These days the ‘when’ is much trickier. Both spouses may be working; one spouse may be working and the other spouse is out of work but looking; both spouses may be looking for work; the stay-at-home spouse may be working at home or taking care of the children and off-and-about doing errands. Or possibly one or both of them are retired and gallivanting hither and yon.

Of course, the technology options that can be used to reach any of these people has become quite a full palette of possibilities.

Here’s one list of suggestions to reach potential life insurance prospects:

• Gen Y or younger Gen X: MySpace, FaceBook, Twitter (if the ‘following’ arrangements with each other are in place), texting  or other Instant Messaging (IM), or cell phone (do they even use a wireline phone?!)
• Older Gen X: FaceBook, IM, e-mail or cell phone
• Boomers: e-mail or wireline telephone (or possibly cell phone if you have a strong relationship with them)

And for those prospects of more complicated life insurance policies or annuities of some flavor – LinkedIn.

But what about a calendar service on the Web? Agents could upload documents for clients to view or print if they want. (Of course, agents could also create a document of potential meeting times and information to be reviewed, upload to a portion of their agency web site and send the URL to the prospective clients before the face-to-face takes place.)

How do you determine when to meet life insurance clients? What technologies do you use to arrange the meeting? To share information before the meeting? What technologies are your clients expecting or asking for to conduct business with you?

Yet Another Insurance Exchange Emerges

on Oct 14 by Barry Rabkin
Tags: insurance exchanges
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Business Insurance published an article  written by Sally Roberts on October 11, 2009 titled “Broker group launching online placement system.”  Yes, this is yet another attempt at an insurance exchange in a long line of such attempts. Unlike natural biological systems where evolution seems to have quite a lot of success optimizing life for existing conditions, the insurance industry hasn’t had much luck with their many attempts at insurance exchanges.

Why don’t insurance exchanges find success? For an outsider, it seems like a great idea. And obviously it also seems like a great idea for producers (the demand side of the supply / demand equation) given all of their attempts to build a lasting exchange.

The goals and attributes of this latest version, which is a partnership between the Council of Insurance Agents & Brokers (CIAB) and LexisNexis, certainly are laudable. Some key points about this latest exchange from the article:

• Improve the efficiency and transparency of the broker-insurance distribution system while enabling insurers to differentiate their products (hint: this is a key factor to the potential success of any insurance exchange)
• Intermediaries will be able to submit a proposal for coverage to any of the participating insurers [hint the number and quality of these insurers are also key factors crucial to ongoing success] or wholesalers and collaborate with them on the underwriting, pricing and ultimate insurance placement
• Aggregate data flowing through the exchange to track marketplace trends including insurance pricing, individual insurer appetites{I wonder if some insurers will be shunned if they are not ‘eating enough’ as decided by ??], and new coverage introductions, in real time

Will this insurance exchange succeed where previous versions of this species quickly became extinct?

I’d be more excited about its future if there were also quotes from insurance companies in the articles that I’ve read. Insurers, after all, are the folks with the capacity – the money – to actually cover the risks.

Insurers have been none to friendly to these exchanges in the past because they do not want to become a ‘cell in a matrix’ and put themselves in a position to be chosen primarily (only) on price. Not that producers would do that, particularly in the general liability middle market where the pilots of this exchange will begin in the third quarter of 2010.

Of course, it might only take one or two insurers to participate in the exchange to break through… or not. BTW: look at the article in Business Insurance to see the costs of participation for both producers and insurers.

So, will this new exchange last longer than its ill-fated ancestors? Time will tell but I would not put much money on it until I:

• See the names of the participating insurance companies
• Find that these insurers remain on the exchange for, well, maybe not necessarily as long as Lloyd’s exists
• Better understand the revenue and profit pools for insurers, producers, LexisNexis and the CIAB
• Have a better handle on the information-based products and services the exchange will offer the market participants

What do you think? Will this insurance exchange be the one that survives? Why or why not?

Gourmet Magazine & Modern Bride … Gone!

on Oct 06 by Barry Rabkin
Tags: digital revolution
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I imagine most folks saw the news the other day that Conde Nast has decided to shut down four magazines including Gourmet and Modern Bride. My reaction to that news was whoa…. even though I’m not a gourmet and certainly not a modern bride. I have had the same reaction to my weekly ComputerWorld when it arrives. I have been subscribing to ComputerWorld for many decades and to see it shrivel down to its anorexic state is just … well just depressing. Yes, I do research and analysis of current and emerging technology’s impact on the insurance  industry. But to see the impact of the digital revolution on these traditional magazines is another matter.

I know, I know, you’re wondering about the ’so what’ as it pertains to our insurance industry.

The ’so what’ is fairly straight-forward. You and I both know hard-copy print is going the way of the dinosaurs except the magazines won’t be leaving society any future tar pits. So, here’s the thing: how many insurance company departments and field offices have left paper behind? How many agencies are now totally digital? How many claims adjusters are going away from paper?

How fast is the insurance industry moving towards totally – or even mostly – digital operations? Or are they waiting for Modern Bride to disappear? Hold on, it just did!

What about your insurance company or insurance agency? Are you off the paper-diet yet? Why not?

Insurable Interest – What Am I Missing????

on Sep 30 by Barry Rabkin
Tags: Insurable Interest, Life Settlements
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A long time ago – about four decades ago –  in a world different from our current world, I became a life actuarial student. I first was employed as a Summer Actuarial Student at John Hancock and after graduation, Hancock invited me to come back as a full-time employee. My first assignment was in  Hancock’s Actuarial Research department. Without getting too far off-track, I only passed two tests but through the dim reaches of time thought that they taught me you should only sell life insurance products to people who had an insurable interest.

And that made perfect sense to me. I didn’t need to pass more than even one actuarial test to understand that made perfect sense. Why on earth would anybody want to purchase a life insurance policy if they did not have an insurable interest?

Fast forward with blinding speed to current times and life settlements. Why would any policyholder owning a life insurance policy want to sell that policy to someone who had no insurable interest in them? Isn’t that basically asking the fox to guard the hen-house? Isn’t that asking for “an accident” to happen to them? Whether insurers or banks or others profitably securitize life settlement contracts or agents make decent commissions from life settlements is nowhere near the issue.

It seems to me to go against all reason. As a policyholder, selling your life insurance policy creates a moral hazard or in this case, a mortality hazard.

I think this practice should be outlawed. Immediately.

Tell me why I’m wrong!

The Red Herring Of IT Spend Estimates

on Sep 29 by Barry Rabkin
Tags: IT Spend
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I don’t believe in IT Spend. That is, as an analyst I think it is a waste of time to model, estimate and project IT Spend. Whether the models are for business applications, infrastructure, storage, business intelligence or worse that anyone could think it was possible, emerging technologies.  I think IT Spend estimations and projections are a superb waste of time for everyone involved.

Why?

Insurers use IT Spend estimates as a wonderful excuse to be part of the herd. You don’t have to concentrate to hear the bleating. You have to concentrate to not hear the cacophony of me-too bleats coming from the industry. “What is my competitor spending on (fill in the blank)? Then we should be spending about the same or possibly a bit more.” Well, no, I beg to differ. It is entirely irrelevant what your competitors are spending. That should not be your primary concern (or even secondary concern).

Your primary concern should be how to meet and exceed your policyholders and producers expectations. Your primary concern should be growing your revenue stream (yes, profitably!). Your primary concern should be creating such a strong competitive position that your competitors really do wake up in the middle of the night concerned about what you are doing.

Technology firms use IT Spend estimates as a wonderful excuse to stay on track. Yup, that’s what insurers are buying so let’s offer more of that (whatever ‘that’ is). How can these technology firms break out of their box of ‘today’ if they are primarily concerned with what insurers are supposedly spending. I say supposedly because if they really believe in these IT Spend estimates and projections, I have some land in Florida I’d like to sell them.

Do you believe in IT Spend? Really? Why?

The Third Question

on Sep 25 by Barry Rabkin
Tags: strategic vision
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In the September 21/28, 2009 edition of ComputerWorld, Thorton A. May writes about organizational perspective in a column titled “Beware Neglect of the Future.” The theme of the article is the need to balance operating the company today while simultaneously preparing for the future.

What popped out for me were the three questions that Mr. May says the CIO of NetJets – Alan Cullop – asks himself:

1. Where is the organization making money?
2. Where is the organization spending money?
3. And how is that changing?

Insurance companies – whether Life & Annuity or Property & Casualty – ask the first two questions. But I would find it almost impossible if someone told me that insurers continually asked themselves the third question and enhanced their strategies or altered their tactical plans to meet the answers they would get from asking the third question.

If they did ask the third question, then insurers who offer products and services in Minority-Majority states would be going-to-market with materials and service (from business acquisition to customer service to claims management) in the native languages of the consumers in those states. The insurers would have marketing materials that were not just a simple translation from English to Spanish. Agents. brokers, customer service representatives and claims adjusters would be proficient in the native languages and preferably from the same cultural background.

If they ask the third question, increasingly more insurers would be leveraging social networks to reach out to their customers and producers. They would understand the intricacies of mySpace, FaceBook and Twitter … and yes, even be experimenting with 2nd Life.

If they did ask the third question, Life insurers would offer retirement products including annuities that had few, if any penalties, for early withdrawal.

If they did ask the third question, insurers would …………….?? Well, what do you think they would do?

eInsurance Symposium 2009

on Sep 10 by Barry Rabkin
Tags: eInsurance Symposium
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Next week I’ll be attending the 2009 eInsurance Symposium in Dallas September 15 – 16. I plan to post at least one blog entry when I get back.

Practicality vs Serendipity

on Sep 10 by Barry Rabkin
Tags: Analytics
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Is your insurance company more concerned with being practical? Having the right tools, systems and capabilities available to run the business as effectively and efficiently as possible? Only replacing the business systems that can make the business run even smoother? Having an approach to decision-making and analytics that is entirely practical? That means running the same reports again and again although against new data (one dares to hope it is this at a minimum)? Using the same hypotheses to generate analytic reports and presentations?

Or … and here we take  as an adventurous journey as the one Alice did down that rabbit-hole (or through the looking glass, if you prefer), does your insurance company value serendipity? Accidently coming across new questions, new hypotheses and of course, new ways to report and present the results of analytical queries? Does your insurance company understand the competitive imperatives behind those moments of aha that come with getting dirty with the data provides?

Better yet, does your insurance company realize that it always needs to balance practicality with serendipity … and that balance doesn’t mean 50/50 but at times, like in recessionary times, more effort is really demanded in the adventure zone than in the practical zone.

Well, what does your insurer value? And are you concerned that a steady diet of practicality will result in your insurance company being left behind its competitors if not fading away into the history books yet to be written of once-great insurers who, well, who just couldn’t keep up in a rapidly changing marketplace?

(Re)Allocating Insurance IT Investments

on Sep 07 by Barry Rabkin
Tags: Analytics, cloud computing, insurance IT investments, legacy systems
Comments: 3 Comments �

You’ve probably all heard of something like “if you were king – or queen – for a day what would you do?” Well, if someone waved that magic wand, made me king for a day in charge of insurance IT investments and told me that my actions would stick even after the crown disappeared, I would make some changes.

First, I’d get rid of the legacy systems. You know, those core administrative systems that are 20, 30 or 40+ years old. Yeah, they work but that’s not enough. Insurers need systems that can leverage current and emerging technologies significantly quicker than their existing legacy systems.

More importantly, insurers must have core administrative systems that can meet, if not exceed, changing customer and producer expectations. I’d either rip-and-replace them or  move these core administrative systems to the cloud. Yes, I mean the whole enchilada –  we would use a ‘platform-as-a-service’ encompassing software, hardware and, of course, storage as a service.

I’d set strong SLAs and tell all of my providers to watch The Godfather several times so they would get the basic concept of the implications of missing our company-required SLAs.

Next, I’d ensure we have systems (again in the cloud) necessary to make it easy for our producers, policyholders and prospects to conduct business with the firm. I’d apologize to all of our agents and brokers for breaking  our promises to quicken the pace of onboarding, licensing, appointments and training  (not to mention quoting and rating) that we so eloquently (and often) articulated to them  but have never fulfilled.

And I’d make sure we had the systems in place to capture and send data across the value chains between their agencies or broker firms, our field staff and our home office departments by leveraging the Web and eliminating paper. Snail-mail banished. Part and parcel, I’d implement electronic signatures [it has only been legal since Clinton was president] to enable the acceleration of onboarding, business acquisition, claim management and whatever other business functions needed authorizations.

Next I’d tackle analytics. Decision-making is critical for current and long-term strategic health. That means having robust analytic capabilities. And that means we must have the systems – and competencies – to use analytics. But analytics encompasses both structured data but also unstructured content. I’d ensure we used predictive analytics for modeling – incorporating spatial intelligence (i.e. location data) – but also text data mining.

Product development, target marketing, claim management, reinsurance (what mix of ceding and assuming?) and customer service are dependent on expert use of analytics (or would be if I was king for a day). I’d build an area of analysts that were expert in statistical analysis and using the capabilities of semantic technologies.

I’d also make sure we used all of our cloud capabilities enabling our operational engines and analytic systems to work together to support eDiscovery and compliance requirements.

If I was king for a day and could reallocate my insurance company IT investments, that’s what I would do.

What would you do?

Balancing Acts

on Aug 31 by Barry Rabkin
Tags: Insurance commerce
Comments: 4 Comments �

Insurance companies have to balance many operational activities simultaneously if their company is to successfully compete in the marketplace. But there are two major balancing acts insurance executives have to constantly maintain – and both of them involve keeping three plates spinning at all times, albeit at different speeds.

The first balancing act is keeping the cost control, compliance and profitable growth plates spinning. Too many times, insurers will take the pulse of recessionary times or even stable economic times and decide to keep the control and compliance plates spinning, letting the profitable growth plate falling to the hard ground and breaking into uncountable and unmanageable pieces. There are some insurers who decide to grind the profitable growth plate pieces into dust for fear of not getting the investments they need from new products, better customer service, or learning to leverage new or emerging technologies. These insurers we can label acquisition-bait.

The second balancing act is as important as the first balancing act, particularly for life insurers who keep policyholders for decades. This act is the need to balance the complete time horizon from the distant past (of when their oldest policyholders first came on-board as clients) to current time to the future. Life insurers have to continually offer products and services in the  ‘language’ and ‘tone’  expected by the policyholders. That means life insurers can’t expect their oldest policyholders to feel comfortable imprisoned in voice-mail jail or lost in the search maze of the firm’s web site.  On the other hand, insurers need to provide their Gen X and Gen Y policyholders – and prospects – with products and services delivered in all manner of web streams and capabilities.

Insurers must coordinate all aspects of commerce across time … and ensure that each policyholder group is served in a way that exceeds their expectations. And simultaneously, insurers must never let the ‘profitable growth’ plate spin out of control and crash into untold numbers of pieces.

Will insurers be able to maintain both balancing acts? What do you think?

Brushing Back The Tide

on Aug 30 by Barry Rabkin
Tags: change, technology
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Back in 1996/1997, I delivered a presentation as a META Group analyst to a room full of insurance business and IT people.  The occasion was META’s annual conference – Metamorphosis (you’ve got to love the name) – and the theme of my presentation was the current and impending impact of the Internet on the insurance industry.

During the Q & A, one of the attendees from the insurance industry asked me ‘if there were any ways we could we stop it?’ I asked ’stop what?’ He replied ’stop the Internet from impacting the insurance industry.’ I was taken aback for a few seconds… and then replied ” well yes, but first we need to get some brooms and stop the ocean from hitting the beach.”

Why is our industry so afraid of change? Why can’t we see that we need to leverage current and emerging technologies to build or strengthen our competitive advantage?

Technology Phases

on Aug 06 by Barry Rabkin
Tags: technology stages
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As I have progressed throughout my insurance career, I have noticed that insurers go through five phases of applying technology. The fifth stage may seem like a bit of a stretch but then not that many years ago, the fourth stage might have seemed to be really out there but we can identify examples from industry – even if it isn’t the insurance industry – where there are applications blossoming in the fourth stage.

Before discussing the five stages, visualize a graph with an X axis and a Y axis. The X axis marches away from the left-most point representing the historic past (which for insurers using technology means the 1960’s or slightly before) and the Y axis moves ever upwards from little or no EE (representing the confluence of effectiveness and efficiency) to higher and higher amounts of EE.

The Five Stages

1. Insurers first apply the technology – whether hardware, software or telecommunications technology – to speed up the obvious. You know, it’s the “hey now we can do such-and-such process even faster than before’ … but who asks if the process should be done at all. But I digress.
2. In the next stage, insurers then apply the technology to discard the useless. This comes about learning that even some processes sped up, well, are not worth doing at all. But really, how many processes or activities are really discarded? Enough to warrant my attention to define a second stage.
3. In the third stage, insurers finally start to pay attention to their operational processes. In this stage, insurers use the technology to reshape existing processes … they wring out inefficiencies and ineffectiveness … not too much because we don’t want to overdo by ridding ourselves of too much legacy (remember it’s not just legacy systems; it is also legacy procedures, legacy protocols, and as importantly, legacy people)
4. In the fourth stage which we are seeing with the emerging capabilities of analytics, insurers embed intelligence into their processes.
5. Finally – because I haven’t yet identified a sixth or subsequent stages – insurers will use technology to create cognizance. This goes beyond embedding analytical capabilities into processes to actually creating processes that “understand” and can act on that understanding. In the evolution of the web, this is what the semantic web will deliver once it has moved from potential to actuality.

In reality, these are not step stages but rather are interdependent and interlocking.

Where is your insurance company today? What stage – and why do you think so?

Maginot Line, Part II

on Aug 04 by Barry Rabkin
Tags: risk landscape
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Lloyd’s recently released a new 360 Risk Insight report with the Economist Intelligence Unit titled “Global Business Leader Survey: Risk Priorities and Preparedness.” The authors state that “the report explores corporate risk attitudes around the world … and is based on worldwide survey of more than 570 board-level executives.”

All well and good.  Fairly extensive reach of executives and industries across the globe. Again, quoting from the report: “The respondents were asked to score a series of key risks within five categories in relation to the priority level for the risk in their organization and the degree of preparedness to manage it.”

Troubling

But here is my problem.

I direct the reader of this report to Chart 5: Global Risk Chart and ask you to consider at least the following seven risks:

1. Corporate liability (ranked #8 on the chart)
2. Reputational risk (#9)
3. Fraud and corruption (#15)
4. Information security breach (#16)
5. Theft of assets / intellectual property (#18)
6. Rapid technological change (#19)
7. Cyber attacks (#20)

For each of these seven risks, these board-level executives have stated (of course, through the magic of weighted averages) that their company is prepared at a higher level than the risk priority. In other words, their companies are prepared to deal with these risks.

Oh really???

Can any customer – whether corporate or consumer – who really understands the pace and concomitant risks of the ever-quickening pace of the digital marketplace believe this is true? These corporations can deal with all these digital marketplace-related risks now in 2009? How many of these corporations understand the impact of social networking?  How many can accurately value their intangible assets flowing through their own digital value chains as well as the through the myriad streams and ponds of the web? How many of these corporations really know when their systems have been hacked and information stolen? Are they truly ready to leverage the ever-quickening rhythm of technological change?

Maginot Line (Original)

The French thought they learned a lesson from World War I.  So they built the Maginot Line to stop the Germans from advancing during World War II. Unfortunately the Germans took another route and conquered France anyway.

Lessons abound throughout history that using ideas from the past to compete successfully in the “now” or in the future will not work.

Circling Back

I fear most, if not all, of these executives are shaping their risk management practices by “fighting yesterday’s war.” They are ignoring the issues and implications of the digital marketplace on their businesses both today and tomorrow. They do not understand they are not truly prepared to face the changing risk landscape being significantly altered through the disruptive force of the web.

Am I wrong?

What is insurance – really?

on Jul 21 by Barry Rabkin
Tags: Definitions
Comments: 1 Comment �

Let’s see how many definitions or descriptions of insurance we can develop.  For starters:

• Insurance is a risk-transfer mechanism that enables a person or company experiencing a loss to recoup all or some of the financial burden
• Insurance is a legal contract – it is a compilation of terms, conditions and restrictions
• Insurance is an information-based legal contract with a financial wrap (i.e. the payment of a claim as long as the loss adheres to the terms, conditions, restrictions and retention levels of the contract)
• Insurance is the fuel of the capitalistic engine – without insurance,  nothing is built, nothing moves (thank you, Joe Plumeri for that one)
• Insurance enables trade to happen – it is the glue or trust of the trade relationships

What would you add?