What are your top IT priorities for the next six to 12 months? 

The short answer is, we’re always focused on opportunities to bring value. Along the lines of Datos Insights’ “Three Levers of Value,” we look for ways to lower costs, improve risk management, and expand our sales and distribution channels. 

We’ve finished rollout of our SkyVUE underwriting platform for most of our property/casualty lines and will be targeting surety and stop-loss next. The platform has brought great results, and we want to continue to leverage it.

Next, we’re going to take our first foray into agency portals, starting small with an administrative portal. From there, we plan to build it out and eventually expose parts of the underwriting workbench so we can delegate authority for transactions like endorsements.

Of course, there’s also generative AI. For us, we’re approaching it as both a bottom-up and a top-down initiative. The first step is just socializing it, giving education and training, upskilling staff, building an internal community with some guardrails. From that bottom-up perspective, we want users to discover the best ways to use it in their own processes.

All of those elements add up to a systematic rollout so we can continue to leverage GenAI as we go. I think GenAI is going to be the way we do business. There’s going to be a lot of incremental and tactical innovations. I want to support both those and traditional major, disruptive changes from IT. 

How are you engaging or planning to engage with generative AI? How do you think insurers more generally might use and benefit from these tools? 

AI is good at some things but not suited for other things. Anything that requires transparency, anything that has to be auditable, like rating or decision-making—you can’t leave it to AI. 

Summarization and identifying patterns to make unstructured data accessible and usable—I think those are the easiest use cases. Things like submissions, account and policy level information, FNOL, and claims information. On the legal side, contracts and language around claims that went to litigation. And on the compliance side, filings and wordings on exclusions and endorsements.  

Part of why I want to democratize Skyward’s use of GenAI is because I think some of the best ideas will come from the people who actually use it on their desktops. Our org is good at reacting to where the business sees value. We want to spark interest and then support them moving forward. We want to up our “AI IQ” as a company.  

It has to be a safe sandbox. IT will define tool choices. That will cut through some of the uncertainty and fear so that ideas can percolate. It’s similar to our work on SkyVUE: we released an MVP and then asked underwriters what features they wanted. We’re leaving 20% to 40% productivity improvement on the table if we don’t embrace GenAI.  

Tell us a bit more about that underwriting project. Skyward was recently recognized with a Datos Insights Insurance Technology Impact Award for your SkyVUE platform. What aspects of your business and/or your IT team made building your own underwriting workbench the right approach? 

To have sustainable differentiation from our competitors, we needed to focus outside of core. The underwriting platform was a natural choice. We felt vended solutions often fell short and wanted to be in control of our destiny and of our presentation layer. We wanted to have as much influence as possible on the underwriters’ daily tasks to give them the tools they needed. 

I’m very intrigued by headless systems. These platforms square away the functionality so you can make an interface and workflow that are intuitive. You don’t have to build the process around the underlying technology. It also helps stave off technical debt. When you need to swap out the policy admin system, controlling the presentation layer means the interface might not change much, which makes the transition easier.

Our pace and speed requirements were probably more than what a vendor could handle. With everyone adopting APIs and microservices, I could plug in bits and pieces to solve specific problems. It was all about agility and time to value. We had underwriters saying, “This is the quickest I’ve had a response from IT in my 30 years of underwriting.” And these guys come from major companies, ones with effective IT environments. 

What do you see as some of the biggest challenges ahead when you think about the role of technology and some of your opportunities to use technology to improve the business?  

Getting generative AI right is a big challenge, and I think you see what we’re doing to get it right and what we’re working with.

I am really excited by what’s happening on the ingestion automation side. There are some products where there’s been tremendous improvement over the last year. Training times are down, pricing is coming down. Intake ingestion may become commoditized, in fact. 

I’m excited about workflow since it now feels like workflow is becoming truly end to end. Every time we automate functions, initially, those automation elements can stand on their own—things like formatting, auto/property schedule intakes, automating policy information. With the end-to-end capabilities, I now have a framework that I can hang stand-alone things on. Leveraging that is a key priority for those day-to-day desktop innovations that keep things moving forward. 

How is your company and your team handling return-to-office? Has the transition to remote work affected the way business and IT teams collaborate? 

We’re true hybrid now. Face-to-face interactions get more challenging, like onboarding, mentoring, and training. It’s solvable, but it’s something you need to plan for. It has helped with access to talent. People want to work and have flexibility; hybrid allows us to offer that. 

The ways in which work is prioritized in a hybrid environment are also interesting. When you’re on-site, you can get pulled to what’s right next to you. I find that now that I’m not sitting right next to accounting, HR, and legal, I focus more on the business.  

I did a study when I first got here five years ago and found that 30% of IT’s time was being spent on drive-by requests from people who just dropped by. In a physical office, the people who sit near you drop by more often, and your work gets pulled in those directions. 

How have you and your team leveraged your Datos Insights relationship?  

I use them for level setting, understanding how the industry is approaching technology and where they’re placing their bets. It helps establish credibility when I speak to the board to be able to back up my ideas with professional research.

I annually bring in Datos—Martin Higgins and Deb Zawisza this year—to facilitate a meeting with executive business leaders about opportunities. Martin had some really good resources to help us understand where the opportunities were, what AI was and wasn’t good for.  

I’ve known Datos Insights’ experts for a long time. With the longer-term relationship, the advice gets better. They understand our company deeply, and they’ve worked in insurance companies themselves, which provides very helpful background knowledge. It’s a deep and useful relationship.

For more information about the Core category of our Insurance Technology Impact Awards, read our report, Insurance Technology Impact Awards Case Study Compendium 2023: Core Initiatives.

Dan Bodnar has served as Skyward Specialty’s Chief Information and Technology Officer since August 2017. Since March 2021, Mr. Bodnar has also served as Director of subsidiaries Houston Specialty Insurance Company, Imperium Insurance Company, Great Midwest Insurance Company, and Oklahoma Specialty Insurance Company. Since August 2021, he has served as Director of the subsidiary Skyward Service Company. Prior to joining Skyward Specialty, Mr. Bodnar was a Property and Casualty IT Consultant at insureCIO, an information technology services company servicing the property and casualty insurance industry, from March 2015 to August 2017. Before that, Mr. Bodnar was at Argo Insurance Group and HCC Insurance Holdings, two specialty insurance companies, successfully building specialty insurance technology teams and platforms.

Mr. Bodnar holds a Bachelor of Computer Science from Trinity University (San Antonio). In addition, Mr. Bodnar has more than 20 years of experience working in the insurance technology industry. 

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IT practice case studies create improvements at the organizational level. They include initiatives like centers of excellence, internal innovation groups, internship and recruiting programs, and new rollout or integration methodologies. These projects can create tremendous value, but it’s sometimes hard to measure, as it comes in the form of improved organization agility, better training and knowledge sharing, or effective recruiting pipelines.

IT Practice Projects Help Organizational Transformation Efforts Succeed

One clear trend from recent years is IT practice case studies that support transformational infrastructure investment with new processes and controls to promote uptake and engagement. That’s the case for three of this year’s featured projects, which align with a larger movement driving transformation across the industry. As you’ve probably already guessed—it’s insurers undertaking enterprise cloud migrations and supporting them with new IT practices to promote a “cloud-first” organizational strategy and ensure project success.

I mentioned last week in discussing core projects that cloud has become the environment of choice for most insurers. Even as cloud becomes more popular, best practices for legacy migrations are still being worked out across the industry. Challenges can include technical debt, poor legacy documentation, vast numbers of records to migrate, and new security and user access procedures. Adding to the complexity is that even as general principles for successful cloud migrations become clear, each insurer’s particular environment is different, so each will have its own unique challenges to navigate.

Projects like those of West Bend Mutual, Risk Administration Services, and winner AmeriTrust—all of which instituted new IT controls to manage their cloud migrations—show how crucial formal IT frameworks can be for enabling success. Mock migrations, clear communication, and close IT/business alignment are all crucial elements for the transformation itself. Ensuring a smooth transition likewise requires clear go-forward processes and workflows so that organizations know how to use their new tools effectively.

Enterprise Strategies Are IT Strategies

Cloud migrations are an especially clear example of a new insurance technology truism: Enterprise strategies are IT strategies.

Major strategic initiatives are whole-company efforts. In the 2020s, most new strategic directions are undergirded by technology: new capabilities that make it possible to model risk, do business, and serve customers in new ways. More and more, these initiatives need to be worked out with IT, not articulated separately and then thrown over the wall as a list of requirements or demands. In an effective insurer strategy conversation, IT has a crucial role of guiding business leaders by identifying technological opportunities and pointing out what’s possible and how it can be achieved.

Midsize property/casualty winner Celina’s case study makes this clear. The company wanted to establish an enterprise focus on customer experience, taking an “outside-in” approach to interrogate user interactions and workflows. But this effort was intimately tied to IT, since technology is the first point of contact for almost all customer interactions, from apps to websites to IVR. Celina found that even small tweaks in UX (e.g., the phrasing on a single field on an FNOL form) could have a major impact on customer satisfaction. These changes are ultimately implemented by IT, so it makes sense that IT has a seat at the table to better guide what tweaks can be made and what easy changes might bring strong results.

IT Practices Drive IT Strategy Success

The Impact Awards program as a whole is designed to spotlight the business impact that effective insurer IT organizations can create. While measuring the value of IT practice projects can be a challenge (how do you put a number on “everything is easier now?”), they exemplify the new paradigm for technology in insurance: Everything is digital, everything is data, everything is core, everything is technology and the business capabilities it creates. And for effective IT units to function, clear processes, procedures, and practices are a must. To check out all six IT practice case studies, read Insurance Technology Impact Awards Case Study Compendium 2023: IT Practice Initiatives. Interested to see what’s happening in the world of data, digital, and IT practices? Find information about all of this year’s Insurance Impact Awards winners here.

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Core projects involve systems that perform the key functions that allow insurers to run their business—policy administration, billing, claims, and underwriting systems (with or without external rating engines) are all included. These projects enable strategic capabilities that allow insurers to achieve their long-term goals, and they tend to be both high-cost and high-risk, with timelines that can span years. Core projects can impact almost every process or transaction an insurer needs to sell and service policies.

Core efforts also tend to be diverse, including not only transformations and migrations but also greenfield efforts that enable new products, business lines, or territories. As such, core projects don’t lend themselves to a single overarching trend. But there are a few key takeaways that characterize the 2023 Impact Award core projects:

1. Core systems are fueling product growth

This year’s case studies include both established insurers undertaking core systems deployments to support new product lines as well as startup insurers and brokers with de novo company launches. These types of projects tend to fare pretty well because their impact is obvious—insurers go from selling nothing to generating millions in revenue. But this growth is underpinned by core modernization, creating greater speed to market. Ease of making product changes is also a factor here: Modern core systems product models make it easier to tweak or iterate on existing products, allowing insurers greater flexibility as they try to capture the market.

2. Underwriting is a priority

Perhaps unsurprisingly, given the focus on implementing core systems projects to support new lines of business and new companies, underwriting and rating these products are also clear priorities. These underwriting projects also touch data capabilities (so that systems have the information and algorithms they need to accurately rate policies) and digital capabilities, since these efforts are often focused on providing faster and more responsive service to distribution partners. Large property/casualty winner West Bend Mutual Insurance’s project to modernize new business submission falls into this category.

3. Cloud is key

A majority of this year’s core projects (13 of 22) were implemented in cloud environments, aligning with a broader trend of insurers embracing cloud. As recently as five years ago, cloud core system deployments were viewed skeptically; today, the situation has reversed—cloud is the presumptive environment unless an insurer has a clear reason to favor an on-premise deployment.

A final shout-out is owed to our life category winner, AAA Life Insurance Company, whose win comes from automating a policy conversion process to migrate large sets of legacy polices as part of a larger transformation effort. This is an area that’s not often discussed but is a persistent issue for life insurers struggling to modernize their environments. (Property/casualty insurers, by contrast, more typically roll business onto their new platforms during renewal.)

To check out all 22 core case studies, read Insurance Technology Impact Awards Case Study Compendium 2023: Core Initiatives. Interested to see what’s happening in the world of data, digital, and IT practices? Find information about all of this year’s Insurance Impact Awards winners here.

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Unlike digital projects, data tends to be a smaller category, since it so often captures projects that are intensive, multi-year efforts: things like training algorithms to automate underwriting decisioning or migrating an on-premise data warehouse to a cloud data lake environment. “Easier” data projects might be setting up a self-service data mart where business users can independently use reporting tools like Tableau to get their own analytics and insights.

Data projects are large, complex, and difficult, but they’re also crucial and unavoidable.

What’s clear from this year’s Impact Awards data case studies—and from the digital and core case studies, for that matter—is that practically anything an insurer would like to do ultimately comes down to effective data and analytics capabilities. Accurate, available data is the secret key to all the other capabilities insurers want to implement.

Take midsize property/casualty winner Mosaic Insurance (now a back-to-back Impact Award winner!). Mosaic implemented an underwriting portal to improve customer experience for high-end specialty lines customers. Creating the speed the team wanted required Mosaic to embed AI-based decisioning capabilities within the portal so the system could quote, bind, and issue policies automatically. What seems like a digital initiative on its face (“let’s sell specialty insurance online”), is actually a data initiative, since the algorithm is such a crucial component of the overall function.

To that point, the data used to train an algorithm must also be high quality, and any third-party data invoked in the new business process must be reliable. Fellow winner CNA is an example of the latter. CNA wanted to provide faster quotes, and its path to doing so was to build an AI-enabled automation solution to improve data extraction from forms.

These needs also extend beyond new business. Life winner Lincoln Financial wanted to improve customer experience, but what the team built was a holistic customer data view, since the core of that customer experience is being able to serve accurate information about accounts, on demand, to the portal or channel where the customer wants to view it.

It’s data all the way down.

Whether an insurer wants to sell more, manage risk better, serve customers more effectively, or differentiate itself from the competition with superior user experiences—all of it ultimately comes down to data and analytics capabilities.

Want to provide a superior distribution experience by providing instant quotes? Underwriting components are typically core, but you definitely need good data and good analytics.

Want to improve customer experience by pre-filling fields for your digital FNOL user flow? That’s partly digital, but you need to be able to pull that information from a data lake.

Want to save on claims costs by more effectively flagging potential fraud or more accurately predicting claim severity? Pure data and analytics, but it will have a clear impact on profitability for that book of business.

Insurers, like everyone else, are rightly paying a lot of attention to generative AI and large language models like ChatGPT. But at baseline insurers need data that’s accurate, reliable, and available, as well as algorithms that are trained on quality data and that produce decisioning that can be trusted. More and more, data is core, data is digital, data is everything.

To check out all 13 data and analytics case studies, read Insurance Technology Impact Awards Case Study Compendium 2023: Data Initiatives. Interested to see what’s happening in the world of digital, core, and IT practices? Find information about all of this year’s Insurance Impact Awards winners here.

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While spotlighting insurer IT efforts is worthy in itself, the Impact Awards catalog more than 65 insurer technology projects, providing a deep, industry-wide look into how insurers are using technology and what their priorities are.

Digital projects are typically faster to implement and quicker to demonstrate value than core or data projects are, so they’re a perfect place to start this blog series diving into how insurers today are innovating. Digital case studies are especially useful for seeing how insurers are responding to policyholder and agent expectations around ease of use, customer experience, and convenience.

From that perspective, a clear theme emerges from this year’s digital case studies: Insurers are investing in digital technologies to create capabilities that meet customers where they are, in ways that go beyond web presence and mobile apps alone.

Customer Expectations Are Shaping Digital Projects

To provide a little background: Digital capabilities often overlap with popular new technologies, but there’s a proud year-in-year-out tradition of insurers winning digital Impact Awards “simply” by creating some form of online sales. In 2022, for example, Pie Insurance won for an agent portal for small commercial lines. In 2021, Columbia Insurance Group won for its cloud-based agent portal. In 2020, Merchants won for online quoting integrated via API to a legacy back end.

These are excellent projects, and these insurers did an exemplary job creating online capabilities that many companies struggle with. They also prove that digital projects don’t have to be flashy to create impact—going from “we can’t sell online” or “we can, but…” to a functional portal or website can generate millions of dollars of revenue, and many insurers are still building out these features.

This year’s digital case studies show that insurers are starting to push to the next level, with an awareness of the growing need to meet consumers where they are, when they want, and to be ready to sell anytime, anywhere. The winners include insurers embedding their point of sale in loan closing platforms to offer just-in-time coverage, creating new online quote paths to allow customers to start on a website and tag in agent help when needed, and creating device-agnostic e-apps that allow agents to choose their preferred channels.

Improved Digital Experiences Are Differentiators

These themes are echoed in the featured case studies as well: digital quotes, digital document scanning apps, apps for customer engagement and wellness, digital concierge services for brokers, remote risk inspections, unified submissions processes integrated with core policy systems, IoT-enabled leak sensors, accelerated information for agents… Over and over, insurers are recognizing the need to meet customers on multiple channels, in a way that’s convenient and intuitive, and they’re appreciating that they need to create those experiences to stay competitive.

We’ve come a long way from expecting agents to conform to idiosyncratic new business processes or asking customers to log into one portal to access policy details and another to pay bills. Digital insurance in the 2020s needs to move beyond hanging out a shingle and having a great website or agent portal. Those are table stakes. Insurers are recognizing that the bar for great experience is higher and that those great experiences are differentiating. It’s an exciting time, and I’m already looking forward to the 2024 Impact Awards season to see more of the transformation happening across the industry.

To check out all 24 digital initiative case studies, read Insurance Technology Impact Awards Case Study Compendium 2023: Digital Initiatives. Interested to see what’s happening in the world of data, core, and IT practices? Find information about all of this year’s Insurance Impact Awards winners here.

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The confluence of riskier driving, costlier auto components, supply chain disruption, and inflationary pressures created a 2022 that was the worst in many carriers’ histories, with a number of auto insurers posting combined ratios above 100, including some high-profile industry leaders with ten- and eleven-figure losses.

Rising claims costs have knock-on effects across the insurance organization. For one thing, they make it difficult to rate policies (it’s tough to price when you can’t accurately project loss costs). Reinsurance costs are also going up, and on the regulatory side, many carriers can only raise premiums so much to offset this increase.

Claims losses are the largest single cost center within an insurer, so they’ve always been targets for cost savings, and insurers have a range of technological options for addressing rising claims costs. Broadly speaking, these include solutions that create savings through operational efficiency, cost leakage control, and accident reduction.

Mitigating Rising Claims Costs

For several years, insurers have invested in digital and data capabilities to improve operating efficiency and control cost leakage. But one of the key takeaways of 2022 is that claims costs are challenging even when an accident is well understood and adjusted quickly. Because insurers can’t control factors like component shortages, shipping delays, and rental car availability, claims costs are never fully in their control nor fully predictable.

For that reason, carriers may want to give additional attention to accident-reduction technologies like advanced driver assistance systems (ADAS) features, telematics, and driver behavior modification solutions.

ADAS features are generally out of an insurer’s control, although some players are looking to quantify their effect on overall safety to more accurately rate policies (for example, Swiss Re).

Telematics is an area gaining ground among insurers looking to better understand their risk profiles. It’s extremely useful for identifying when drivers make unsafe maneuvers; by discouraging these behaviors (such as by lowering a driver score or discount), insurers can motivate drivers to be safer.

Improving Driver Behavior

When it comes to actually helping drivers build better driving behavior, there’s effective driver behavior modification, which helps drivers practice safer habits like hazard detection, risk perception, and speed and space management. The latter go beyond watch-and-forget driver training videos by offering interactive modules that test skill development and offer immediate feedback, a critical element for learning.

These don’t have to be either-or propositions. In fact, these solutions can combine effectively to supplement one another’s strengths: Telematics can be used to identify dangerous driving actions, for example, and then driver behavior modification modules can be used to help drivers build safer habits. To complete the cycle, insurers can then use telematics to monitor how the driver’s skills have improved and whether more training is needed.

Using Technology for Accident Prevention and Claims Cost Reduction in Personal Auto, a newly published white paper commissioned by ADEPT Driver and produced by Aite-Novarica Group, examines these accident reduction solutions in the context of rising claims costs. Read the full white paper here to learn more.

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When we surveyed insurers on their experience with self-service capabilities in 2021, we found that they were prioritized most heavily in high-volume, low-value lines, such as personal, small commercial, and individual life lines of business. This makes a lot of sense—these lines are under heavy cost pressure and are increasingly sold direct, so profitability is tied to throughput. Agents don’t want to spend longer servicing these policies than they have to, so convenience is a competitive differentiator.

That wasn’t as true for lines that were traditionally more intermediated. Standard commercial and specialty lines, in particular, didn’t see a major emphasis on self-service capabilities. It wasn’t uncommon for lots of new business to arrive via email.

In our most recent survey, that looks like it’s beginning to change. More insurers say at least some of their new business and policy servicing capabilities are done via self-service. It also looks like a larger share of agents are using those capabilities, perhaps younger agents who are more comfortable conducting business online, as their older cohorts age out of the agent force.

And price-pressured but not yet fully-commoditized lines? Agent self-service capabilities are more important there than ever: Utilization for self-service transactions has expanded across not just personal lines but also small commercial and individual life. These lines are still targets for direct sales and disintermediation, but agents remain important, and agents increasingly expect speed, convenience, and efficiency from their carrier partners.

Not all transactions need to be enabled for self-service right away, but consumer and distributor expectations will continue to grow. Insurers should align their investments to the demands of their distributors and customers when prioritizing capabilities.

To dive into the full insights from our latest study on self-service and digital payments in insurance, read our report Self-Service and Digital Premium Payment Rates in Insurance. Insurers can use this report to benchmark their enablement of self-service transactions against peer organizations that sell similar products, while solution providers can use it to understand insurer priorities and activity around self-service transaction enablement to align their product features and marketing with insurer needs. You can also contact me here if you have questions about changes in self-service capabilities in the insurance industry.

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STP offers insurers benefits in speed, consistency, and productivity, enabling them to support greater transaction and application volume without increasing headcount. Automated resolution of simple business frees up experienced underwriters and claims adjusters to focus on more complex cases. It can also improve customer experience by providing fast decisioning and more streamlined digital experiences, which help insurance apps stand alongside those offered by banks and other companies.

Thanks to steady insurer investment in better third-party data and modern core systems, STP is becoming more common in insurance underwriting and payment processes. This is most notable in lines which tend to be commodified, under cost pressures, or sold directly, including personal lines, individual life, annuities, and some small commercial products. These lines hit a sweet spot for STP where several interrelated factors combine to make it feasible and desirable:

• Risks are well understood, which makes modeling easier.
• Data is easily accessible and generally reliable.
• Speed is essential in order to be competitive.
• Margins are thin, which means productivity and volume drive profitability.

STP rates in lines that don’t correspond to these characteristics, like standard commercial and specialty lines, are also on the rise, although for these lines, STP tends to be focused around specific, tightly defined products where insurers’ experience gives them deep knowledge of the corresponding risks.

Enabling STP, and investing in the technologies that support it, has benefits beyond just allowing fast and reliable transactions. Human underwriters and claims experts can use third-party data that will also feed an algorithm, and distribution partners will appreciate the digital channels that support easier transactions. Even the process of creating the business rule framework or algorithms that determine if a policy or claim can be processed straight through has value in forcing insurers to truly understand their rating factors, workflows, and data.

Aite-Novarica Group’s new report, Straight-Through Processing in Underwriting and Claims: 2023 Update, tracks STP and digital claims payment rates for seven major insurance lines of business and provides an overview of technologies insurers have applied to enable STP. It updates our 2021 report on the same topic.

Insurers can use this report to benchmark their own STP and digital claims payment rates, and solution providers can use it to understand the extent to which insurers have automated these lines to better target prospective clients. Read the full report to learn more on developments in this area, and please reach out to me at hhuberty@datos-insights.com with any questions.

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Our discussion centered on current trends in the deployment of emerging technologies, with a focus on AI technologies including machine learning, image recognition, voice recognition, and unstructured text. We highlighted four key trends for insurers working with AI capabilities.

Deployment Rates of Emerging Technologies at Insurers

How many insurers leverage a new technology is a product of several factors: how new or established the technology is, how clear its value is, how well understood its applications to insurance processes are, and how readily it can integrate with existing processes. 2023 is similar to years past in this regard, with new technologies deployed at roughly 25% to 35% of insurers. Larger insurers tend to have higher deployment rates for new technologies than their midsize counterparts.

Maintaining Strategic Priorities in an Uncertain Year

Both life/annuity/benefits (L/A/B) and property/casualty (P/C) carriers are expecting a more challenging IT budget year. Broadly speaking, they plan to maintain their focus on strategic initiatives, absorbing higher staff and technology costs while staying the course on key priorities. This does create less flexibility to experiment with new technologies, and as a result, pilot rates for emerging tech are down in 2023 relative to prior years. No particular technology saw its pilot rate crater, but most are down 5%-10% relative to 2022 and earlier.

AI Is a Hot Topic for Both P/C and L/A/B Carriers

One tech that isn’t going anywhere is AI. There’s broad consensus that AI-based technologies have clear value for insurers; consequently, pilot rates aren’t falling off much here. In the P/C space, there’s particular interest in image recognition, especially for aerial imagery to support property underwriting. Automated text ingestion is another area of active investment. Among L/A/B carriers, there’s more interest in voice recognition for customer service and sentiment analysis.

Moving From Pilots to Production

For all emerging technologies, the decision to deploy requires strategic intent and purpose. It’s vital for carriers to think about the specific use cases for new technologies in their organizations. It’s also crucial to consider where using an emerging technology effectively may require rethinking business processes and workflows. Ultimately, technologies are tools, and tools need to be used properly to be effective.

Aite-Novarica Group’s Emerging Technology in Insurance report tracks adoption rates, planned pilot activity, and use cases across more than a dozen technology areas. It provides a brief overview of each technology, with actual or potential applications for insurers, and includes insights based on Aite-Novarica Group’s conversations with insurer technology executives. Visit our website to access the full reports for P/C and L/A/B insurers. If you would like to discuss this research further, contact me at hhuberty@datos-insights.com.

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Aite-Novarica Group’s Insurance Technology Impact Awards exist for just this reason: to create clear summaries of successful insurer technology projects that created real business impact. Each year, CIO members of our Insurance Technology Research Council recognize exemplary projects in the core, digital, data, and IT practice categories.

On Thursday, October 6th, I hosted a panel discussion featuring representatives from this year’s core category winners to learn more about their journeys and how they executed these successful projects. Panelists included Kim McGregor of Ohio National Financial Services, Matt Wilcox of Encova, and Davindar Gill of Tokio Marine Highland. While each project was unique, a few key themes emerged over the course of our conversation:

1. Legacy system risk isn’t just technological, it’s organizational.

Any CIO managing legacy core technology knows that aging systems pose technological risk via outdated interfaces, cumbersome processes, and security gaps. They also often impose heavy maintenance costs.

These technological risks are interrelated with personnel risks. One form this takes is training: The older your systems are, the harder it is to find people who understand them or are willing to learn how to support them. One panelist was obligated to lure a past employee out of retirement to manage a legacy system during their core transformation process. Another noted that upgrading from a green screen mainframe system to a browser-based core system brought major benefits for training.

2. Leveraging technology can de-risk dependencies.

Core transformation can also manage key person dependencies in other areas of the company. Tokio Marine Highland implemented a cloud-based flood underwriting engine, in part to de-risk its rating process by codifying the flood expertise that up to then had lived within a handful of expert underwriters. Creating a new underwriting tool institutionalized that knowledge to ensure continuity should those employees move on.

As to the cost of maintaining legacy systems, one panelist shared, “When we finally sunset the legacy systems, we will save over US$10 million per year.”

3. Unforeseen complications can be opportunities.

Each core technology project faced delays and interruptions. One panelist’s project had a target launch date of June 2020 and needed to pivot to a virtual environment amidst the COVID-19 pandemic. Another panelist’s project faced a lack of knowledge among staff and was delayed in order to bring in some experts and hold trainings. This delay ultimately helped the project team understand the new technology better and provide more accurate requirements to the vendor.

4. Project methodology and people are critical to success.

Panelists shared their advice for taking on large technology projects. One emphasized the benefit of seizing small wins: “We broke the project down into smaller problems, and as we solved for those smaller things, we gained confidence and trust among the team.” While not every project used Agile, a consistent theme across Impact Awards case studies is that short sprints can help requirements and outcomes stay aligned for complex projects.

Another panelist highlighted the importance of trusting the project team—of “putting the right people in the right places, giving them the authority to make decisions, and trusting them to do what they are good at.” Talent management was a shared challenge on these projects, as many insurers have lost knowledge workers recently.

5. Changing technology implies changing processes.

One final key theme is that new technology can’t produce impact in a vacuum: It has to be used effectively, so revising processes and ensuring effective change management is critical. One panelist noted, “We challenged the team to come to the table with fresh ways of thinking and new ways of doing things.” Doing things in a new way will take some adjustment, but having an engaged project team and experienced project manager can help manage the change.

These core system project winners were chosen as standouts from among 16 submissions for consideration in the 2022 program. For the full list of 2022 Impact Award winners and links to all four case study compendium reports, please visit Insurance | Aite-Novarica.

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Aite-Novarica Group’s 11th annual Insurance Impact Awards program reviewed 65 examples of insurer IT initiatives that delivered real business impact; this year’s report on IT practices includes nine case studies. Each of these projects was supporting a different business goal, but distinct trends emerged across these case studies.

IT practice initiatives improve efficiency by creating standardization.

This year’s case studies reflect the impact insurers can create by bringing discipline to complex processes, such as product rollout, partner integration, and change management. These efforts create business value by promoting reuse, limiting one-off work, and creating a standard practice. 

For example, Acrisure developed a standard framework to integrate acquired business entities in its technology platform and executed consolidation, cybersecurity, and integration projects. The program enabled the insurer to consolidate 50% of its business to common platforms in two years, creating US$4.3 million in annualized savings.

Most IT practice initiatives focus on how tools are used and how work gets done.

IT practice initiatives often focus on informing how project teams collaborate internally as well as how they collaborate with business partners. Practices of this type can improve communication and ensure final projects meet business needs.

Amerisure, for instance, expanded its strong Agile practices by establishing dedicated Agile teams and automated its software development via DevOps practices to improve delivery speed for business and technology solutions. The initiative improved average time to market by 13% for solutions and 34% for non-project work requests.

IT practice initiatives can add substantial value.

Articulating the value of IT practice initiatives in hard metrics can be challenging as they often require rethinking business processes and innovating organizationally. Many key performance indicators (KPIs) may not directly translate. Nevertheless, successful IT practice initiatives can create substantial benefits by reducing friction, improving agility, and disseminating knowledge across the whole enterprise.

Knights of Columbus established and scaled an intelligent automation program to reduce manual processing, save costs, and create efficiency. Matured over two years, the program has processed more than 260,000 transactions, saved more than 13,000 hours in manual processing, and realized more than US$1.2 million in annual savings.

Our 2022 Insurance Technology Impact Case Study Compendium on IT Practice Initiatives outlines nine total case studies, providing concrete examples of ways insurers can leverage technology to create business value. Access to the report can be found here, and companion volumes on digital, data, and core projects are also available.

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Panelists representing the Impact Award Winners for Data and Analytics were Mark Dash, Chief Technology Officer, Information Management and Technology at Penn Mutual; Laks Krishnamoorthy, Vice President, Enterprise Data Management at EMC Insurance Companies; and Abhijeet Kuray, CIO/CTO at Mosaic Insurance. Successful data and analytics projects used an iterative approach, had collaborative/multidisciplinary teams, and benefitted from modern data tools.

Using an Iterative Approach

All our panelists described the use of an iterative approach as instrumental to the success of their projects. One panelist described the process as a “careful, surgical approach with lots of retroactive verification studies.” When implementing new predictive models, for example, one panelist described their iterative process as “turning the knobs”–start the amount of data put through the model at a threshold, see if the model is behaving as expected, then turn the threshold dial up.

Collecting end-user feedback in each iteration was also a core part of the project rollout. Whether an iteration was six months or one week, panelists described meetings with product owners in the business to receive feedback and set priorities for the next iteration. One panelist stated that engagement from underwriters had become so proactive that they would reach out with feedback before the meeting was even set. Data is most useful when it’s providing insights that are applicable and actionable. Part of focusing that lens is successive iteration.

Collaborative/Multidisciplinary Teams

Iterative approaches lead to effective collaboration, and collaboration between business and IT was a major success factor in these data projects. Project teams sought participation from the business as end users, but also at other stages throughout the project. For example, one panelist described how subject matter experts within the business were identified to assist with data validation and with ensuring data quality during the conversion process.

These projects benefitted from collaboration among team members as well. One panelist described their use of a multidisciplinary project team: “We assembled a blended team, which was new for us–software engineers, data science engineers, an actuary, a medical director, and others.” This team composition allowed team members to learn from each other throughout the project.

Modern Data Tools

Panelists agreed that the success of their data and analytics projects hinged on the availability of modern data tools. One panelist stated, “The kind of processing we had to do was possible with the tech available today, but we would not have been able to do it five years ago.”

Another panelist pointed out that modern tools have become more widely accessible, even for smaller companies: “A large component of our success is due to how technology has evolved, which helped with data acquisition, and we could quickly integrate with multiple data sources with APIs. It has been much more available and affordable for a small size company to be able to quickly access this technology.”

For the full list of 2022 Data Initiatives Impact Award winners and the full case studies for the winners and applicants in this category, read Insurance Technology Case Study Compendium 2022: Data Initiatives. To learn more about our Insurance Technology Impact Award series, please reach out to me at hhuberty@datos-insights.com.

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Aite-Novarica Group’s 11th annual Insurance Technology Impact Awards on data initiatives include 17 case studies. Each case study details business goals, project sponsors, team structure, project timeline, tools and technology used, challenges and success factors, and business impact delivered.

Data warehouse, reporting, and analytics capabilities remain top priorities for all insurers.

Data and analytics capabilities are near the top of insurers’ business priorities. Roughly half of all carriers continue to invest in business intelligence and data repository features in 2022, often in conjunction with core system and digital experience transformation efforts.

Mosaic Insurance, a midsize property/casualty Impact Award winner, is an example of an insurer taking a data-first approach to build a new underwriter experience from the ground up. Mosaic wanted to provide real-time data and analytics for its specialty lines underwriters, with data drawn from a large range of third-party sources, so it implemented an API-based analytics platform. Stood up in six months, the platform increased efficiency by 5% and generated US$6.4 million of new business.

Data initiatives are about making data useful and analyzing it.

Data and analytics projects are fundamentally focused on accessing and using information. Challenges around insurer data and analytics are often not about the lack of data; for many insurers, especially in the large property/casualty sector, data that’s siloed or trapped in legacy systems can pose its own unique challenges: There’s plenty of data, but it can be difficult to make that data useful.

Large property/casualty Impact Award winner EMC Insurance Companies implemented an enterprise data modernization project to service its operational, regulatory, and analytical data needs. The 30-month project delivered a modern enterprise data warehouse in the cloud, migrated 380,000 policies and billing data from 11 lines of business, and transformed legacy data at a 99% success rate.

Artificial intelligence (AI) and machine learning (ML) remain areas of active investment.

Insurers continue to actively invest in AI/ML, with roughly half of this year’s data projects including AI or ML elements. Applications spanned fraud analytics, claim severity estimation, automated decisioning, and more effective sales team targeting.

This year’s life/annuity/benefits winner, Penn Mutual, developed autonomous and semi-autonomous ML-enabled predictive models to improve automation and application throughput. The model enabled immediate or next-day decisions on 50% of applications and supported 28% sales growth without hiring new underwriting staff.

Data initiatives often deliver the highest value.

Data and analytics projects are some of lengthiest and most complicated projects insurers undertake, especially if AI or ML components play a role. But data initiatives are often among the efforts with the highest value. Modernizing data environments, creating new reporting tools, and training algorithms or ML models can all create substantial impact. Understanding this impact can be a critical path toward defining and measuring the value new data technologies deliver.

Insurance Technology Impact Case Study Compendium 2022: Data Initiatives provides insurance business and IT executives with examples of ways they can leverage technology to create business value. Solution providers can also use these case studies to frame the ways their products can create value for their insurer clients. Access to the report can be found here.

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Aite-Novarica Group’s 11th annual Insurance Impact Awards program features 65 examples of insurer IT initiatives that delivered real business impact. This year’s report on core initiatives highlights 16 case studies. Each case study details business goals, project sponsors, team structure, project timeline, tools and technology used, challenges and success factors, and business impact delivered.

Core systems projects create real impact.

Core systems projects deliver business value in many ways. They can optimize workflow by enabling automated application of business rules or straight-through processing (STP). They can improve risk management via invocation of analytics, algorithms, and third-party data. These projects can also create measurable savings or revenue by enabling new products, saving staff hours, or reducing legacy system maintenance costs and risk.

This year’s life/annuity/benefits winner, Ohio National, deployed a new core system platform to support new product expansion, self-service, and improved efficiency. The platform has added over US$50 million in new premium and decreased new business times by 20%, with nearly 12,000 new applications to date.  

Core systems projects to support new lines (or new companies) are common.

One of the key themes of this year’s compendium is that many insurers are implementing new core platforms in support of new lines or de novo companies, often in short time frames. For example, a startup specialty program administrator, TIMBY SPECIALTY Insurance Solutions, leveraged a cloud-based policy administration system and a third-party program administrator development platform to launch two trucking products nationally in 105 days. The company has quoted over US$100 million in premium six months after launch.

Many insurers are implementing cloud to support the growing needs for agility and capacity.

Insurers often undertake core system implementation or transformation projects to support new and existing products, enable STP, and improve third-party data availability, among other goals. Product speed to market remains a top priority for many insurers, especially in the large property/casualty sector.

Core modernization is increasingly taking place in the cloud as insurers look for core systems that can support the growing needs for agility, capacity, and on-demand scalable computing power. Many insurers are shifting to “cloud-first” infrastructure strategies.

Tokio Marine Highland, this year’s midsize property/casualty winner, is one of the most unique case studies featured in the Impact Awards. The insurer built an underwriting engine in the cloud to codify its private flood underwriting expertise and calculate flood risk and premium for U.S. addresses, exposed via API. Developed in six months, the tool has reduced processing time from 24 hours to minutes and generated US$1 million in revenue as a pay-for-use service.

Core system initiatives are challenging, but rewarding in the long run.

Core systems projects tend to be complex projects that involve years-long transformation efforts. Most projects last 18 months or more and require integrations to existing enterprise technology. Migrating books of business from legacy systems can add an extra layer of complexity.

As challenging as these initiatives can be, core systems ultimately enable all other business processes. Core system modernization is a key to preparing for the future and a tremendous step toward enabling insurers to leverage technology to sell more, manage risk better, and cost less to operate.

Insurance Technology Impact Case Study Compendium 2022: Core Initiatives provides insurance business and IT executives with examples of ways they can leverage technology to create business value. Solution providers can also use these case studies to frame the ways their products can create value for their insurer clients. Access to the report can be found here.

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Aite-Novarica’s 11th annual Insurance Technology Impact Case Study Reports highlight 65 examples of insurer IT initiatives that have created real impact on insurers’ business, premium, and profitability. This year’s report on digital initiatives features 23 case studies that provide concrete examples of insurers using technology to sell more, manage risk better, or reduce operating costs.

Each case study outlines the business need, project team, project phases and timeline, tools and technology used, challenges and success factors, as well as business impact delivered.

Life/annuity/benefits insurers focus on digital experience.

Digital capabilities have been an area of strong focus for life insurers for several years. The COVID-19 pandemic and its related lockdowns further highlighted the aspects of the life insurance sales process that were not completely digitized. Life insurers have invested accordingly.

The 2022 Life Digital case studies reflect the importance of enabling digital sales and creating polished digital user experiences. Major themes include digital customer engagement, streamlined digital direct sales (via a new brand identity), and digital customer journeys.

This year’s life insurer winner, Sun Life, built an impressive digital engagement app for ongoing customers. Life insurance is traditionally a very low-touch product, but Sun Life demonstrates the benefits carriers gain from investing in its policyholder relationships.

Large property/casualty insurers focus on digital connectivity.

Digital connectivity for sales and customer support is a major 2022 priority for property/casualty insurers. According to Aite-Novarica’s 2022 Property/Casualty Insurer IT Budgets and Projects report, 50% of large property/casualty carriers were planning agent portal investment, and 70% of these carriers were planning customer portal investments.

Case studies touch on distributor ease of doing business (e.g., new business applications, digital platforms for agents), improved availability of rating and pricing results, and increased investment in digital claims experience.

Everest Re won this year’s large property/casualty insurer award with a web-based user interface that allows actuaries to deliver pricing results from pricing models and determine rates and ROE impact in real time. As this case study demonstrates, digital projects that support sales efforts also enable internal resources to act efficiently.

Midsize property/casualty insurers focus on user experience.

The main area of focus for midsize property/casualty insurers in 2022 is digital experience for both agents and policyholders. Case studies include agent marketplaces, portals, and a lead-generation application, as well as initiatives to enable new communications channels and digital payment capabilities.

This year’s winner, Pie Insurance, continues a long tradition of insurers that have had success implementing digital portals for online sales. While digital experiences of all kinds are increasingly important for property/casualty insurance, it’s also important for carriers to keep in mind that being able to sell quickly and easily can generate tremendous impact.

Digital projects generate bottom-line business value.

Understanding the impact of technological initiatives is as much about how value is defined and measured as it is about the actual lift the new technology generates. Digital projects generally don’t create value by helping insurers directly manage risk, but they can generate bottom-line impact by streamlining legacy workflows or eliminating time-consuming manual steps.

Insurance Technology Impact Case Study Compendium 2022: Digital Initiatives provides insurance business and IT executives with examples of ways they can leverage technology to create business value. Solution providers can also use these case studies to frame the ways their products can create value for their insurer clients. Access to the report can be found here.

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