CELENT MODEL INSURER ASIA 2017

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23 May 2017
Eiichiro Yanagawa

CELENT MODEL INSURER ASIA 2017: WHAT WE CAN LEARN FROM THE INITIATIVES

This series of posts is an outline of CELENT MODEL INSURER ASIA 2017. Part1 explains award categories.

We received a large number of entries for this competition again this year. We carefully examined these, from the end of the year 2016 to the beginning of 2017, in each of five categories.

The vision for Celent’s Model Insurer research is to try to answer an apparently simple question: What would happen if an insurer utilized today’s technology in the most effective way? Now technology is playing a more important role in every insurer’s strategy than ever before.

CELENT MODEL INSURER AWARDS consists of the following five categories, which embody the vision detailed above. In other words, these five themes are essential for any modern insurance company that wants to successfully carry out best practices.

Data Mastery and Analytics

Data has become a key source of competitive advantage for identifying profitable niches, managing risk, and improving service. New external data sources, data derived from devices, and new techniques for interpreting data are pushing the competitive boundaries for insurers at an accelerated rate. This theme recognizes projects such as predictive analytics (claims fraud, underwriting, pricing, climate analysis); prescriptive analytics (triage, sales automation, “next best action”); and virtualization (dashboards and heat maps, catastrophe management, network analysis, geopolitical risk analysis).

Digital and Omnichannel

Digital transformation is moving from person-to-person interaction toward person-to-machine or machine-to-machine. Integrating and coordinating among disparate and siloed delivery channels will be critical to satisfying ever-increasing customer expectations. Using the definition that digital automates complex tasks, allowing them to be mastered, then reproduced and distributed at no cost, this theme recognizes projects such as online customer portals; industrialization of processes; engaging user interfaces; online sales with STP; integration with business partners; leveraging social networks; and the use of mobile technology.

Innovation and Emerging Technology

Celent defines innovation as fundamental changes to products, services, or business models that break existing tradeoffs and provide value to the customer. New hardware, software, and network technologies feed insurance innovation. This theme recognizes projects such as the expansion into previously untapped markets due to technology; the use of technologies not previously used in the insurance industry; or the development of an innovation culture within an IT organization. This category also includes Insurtech initiatives which are rapidly expanding development and application of new technologies and operating models with the aim to fundamentally change current business models, financial models, and/or industry ecosystem.

Legacy and Ecosystem Transformation

Legacy technology can hinder innovation, since insurers must typically offer backward compatibility. Insurers must not only modernize, but also transform their internal systems and how they interact with customers, counterparties, and regulators. This theme recognizes projects related to core system replacement or transformation including policy administration, document management, customer relationship management, new business, illustrations, billing, claims, and rating/underwriting.

Operational Excellence

What does it take to safeguard investments in technology and improve upon IT processes? This theme recognizes projects such as successful reuse of technology for new initiatives; implementation of a non-core system such as illustrations, document automation, electronic applications, best practices in IT governance, IT operational management or IT risk management and security policies. Achieving operational excellence, requires transforming processes and systems into competitive advantages by making them leaner, faster, more flexible and of higher quality.

This post is an outline of CELENT MODEL INSURER ASIA 2017. Part 2 explains 2017 nomination status. The trends and features of the projects in this year’s entries are summed up on a category by category basis in this part.

Data Mastery and Analytics

Analytics is a domain that has been given a new birth in the financial services industry recently. The crucial role new sophisticated analytics systems play in today’s insurance comes from different factors that are driving interest:

  • New data sources: data insurance companies can leverage has exponentially grown. Data sources are found not only in internal information systems but also in external sources.
  • The need to improve technical ratios: the insurance industry needs to find new ways to improve profitability, and in mature markets growing the business has become difficult. Therefore insurance companies understand they need to make investments in core business areas including: underwriting, pricing, claims, etc.
  • Emergence of new data analysis techniques: data sciences have made considerable progress over the past decades, and the emergence of new technologies has enabled drastic improvements in data analysis techniques including big data and machine learning.

This category’s entries include the following projects, which are all ambitious and totally worthwhile.

2017 Model Insurer Asia Candidate Projects: Data Mastery and Analytics

COMPANY PROFILE

PROJECT SYNOPSIS

Life, General insurance, Wealth management and Retirement solutions

Leveraged big data analytics to change its retention approach from policy-centric to customer-centric.

General insurance

Created an agriculture insurance system with use of best practices and experience of field data management.

Digital and Omnichannel

Digital is a phenomenon affecting every process and operation in insurers as well as the ecosystem of partners and their customers. The increasing abundance of data, the sheer number of gadgets, cameras, and sensors, and the role of advanced analytics is reshaping what is available and reasonable to expect in real time. Insurers want to transform their processes and make them digital to meet the changing expectations of staff, suppliers, and customers. Industries around the globe either leverage digital technologies or find themselves having to respond to digital disruption.

Digital transformation is a vast topic that insurers globally have tried to address for many years. Celent defines digital transformation as the strategy of transferring as many manual tasks as possible into digital activities. This strategy can be achieved in different ways, including:

  • Automating processes.
  • Selling products online.
  • Leveraging mobile devices and mobile technologies in general.
  • Dematerializing documents and communication materials.

Digital requires a different way of thinking about business and forces insurers to challenge each manual process and each check and balance. The insurer must test to see if these are truly required, and if so, how they might be digitized. Many insurers have sought to bring straight-through processing to parts of their claim process, to leverage digital channels to capture information, and to update their customer. It takes a different level of commitment to try to drive that thinking all the way through the process.

This category received the highest number of entries this year. Every insurance company in Asia seems to be trying to aggressively adopt digital technology. Moreover, we found many digital transformation examples, which vary depending on the insurance company’s profile, competition, and customer base. Accordingly, we can say that the projects in this category show the most potential. We sorted the entries into five sub categories and have introduced a representative project from each one in the list below.

2017 Model Insurer Asia Candidate Projects: Digital and Omnichannel

THEME CATEGORY

COMPANY PROFILE

PROJECT SYNOPSIS

Support agent channel

General insurance

Developed a mobile app for agents, enabling them to tap the market without depending on back office staff for quotes and writing policies

Omnichannel

General insurance

Implemented an OEM Integration platform to enable OEMs and insurance aggregators instant policy servicing in their respective applications without any manual intervention by the insurance company.

Multiple channels

Life insurance

Implemented a mobile app to provide end-to-end sales tools that enable instant policy issuance, bundled with good customer experience.

Service

Health insurance

Created a digital office with a self-service portal for customers and an online distribution tablet solution for advisors.

Enterprise-wide

General insurance

Promoted computerization to create the next generation agency business model, without forgetting the humanity of employees, agents and customers.

Innovation and Emerging Technology

Innovation continued to gain traction. Changing customer expectations, digital transformation, growth needs in the face of resource scarcity, and environmental concerns are impacting every industry, including financial services. These changes accelerate the growth of the sharing economy and the demand for new customer value.

For example, the rise of sensors and intelligent digital ecosystems blur the boundaries between the digital and physical worlds and generate massive new data sources. Next generation analytics and artificial intelligence are coming on stream to harness that data and provide new services to prospects and clients.

Celent’s research on innovation plans in financial services for 2016 (Innovation Outlook 2016) found that the pressure to discover new sources of value for customers will continue. In 2017, implementing known solutions in these areas to gain parity with competitors will continue to be a priority.

In Innovation and Emerging Technologies, we can see the history of each company’s projects and their future strategy. Innovations are becoming more and more important, particularly from strategic perspective, as is obvious from the projects in this year’s entries. On the other hand, innovations should not be transient events but persistent changes in a set routine, which will lead to improvements in corporate quality. We have introduced two of the projects below that prove how important and effective innovations are for companies to grow.

2017 Model Insurer Asia Candidate Projects: Innovation and Emerging Technology

COMPANY PROFILE

PROJECT SYNOPSIS

Insurer's innovation centre

Created an innovation framework and culture to generate new revenue streams from new business models and digital capabilities based on customer insight.

Digital insurance company that is a joint venture partnership between Insurer and Bank

Implemented an end-to-end insurance software in the cloud deployed by a single software vendor.

This post is an outline of CELENT MODEL INSURER ASIA 2017. Part 3 explains 2017 nomination status, following Part 2. The trends and features of the projects in this year’s entries are summed up on a category by category basis in this part.

Legacy and Ecosystem Transformation

The benefits of modernizing core legacy systems are clear and compelling

  • Gaining a competitive advantage — or achieving competitive parity.
  • Reducing operational and IT costs.
  • Making better underwriting and claims decisions.
  • Seizing analytic advantages when information and processes become completely digital.

However, modernizing core legacy systems is easier to think about than to do. Modernization projects are costly: both in terms of cash out-the-door and in terms of staff resources (full-time or part-time assignments to design and implementation teams, backfilling those vacated positions). Technical complexity is usually high due to substantial amounts of IP (intellectual property) embedded in the rules, product definitions, and processes; as well as long established integration protocols (often point to point) with other internal operating and back-office systems.

This category has also reached its highest number of entries. In Asia, a large number of legacy modernization projects are being implemented. Even though they differ according to the company, what is common among them is use of cloud computing. They apply it to a common system platform throughout the company in order to standardize their system. Three representative projects are introduced below.

2017 Model Insurer Asia Candidate Projects: Legacy and Ecosystem Transformation

COMPANY PROFILE

PROJECT SYNOPSIS

Life insurance

Implemented a new business application to replace six disparate application systems, and to remove scalability and dependency issues.

General insurance

Implemented a new claims system to streamline and improve processes and system infrastructure, increase operational efficiencies, and provide better customer service.

General insurance

Implemented robotic business process automation and launched a chatbot to automate the business process as well as resolve customer queries accurately and efficiently.

Operational Excellence

Implementing new projects and technologies delivers demonstrable results. However, insurers also can generate significant financial improvements by improving the way they do business and the way they operate within the organization.

Sometimes operational improvements are generated by modifying the internal processes to be more efficient. Sometimes simply increasing collaboration and relationships between business and IT can result in operational improvements. While there are technology systems (project management tools, asset management tracking applications, etc.) that are helpful in this area, the most critical elements to success are best practices, organizational structures, and corporate culture.

All Model Insurer projects have some element of organizational excellence embedded within them; otherwise they would likely not have succeeded. Winners of the Model Insurer Asia in this category are insurers that have demonstrated excellence in a project specifically targeted at building a lasting foundation for IT management and operational excellence.

Asian insurance companies are trying to achieve a more modernized operational model and enterprise integration through the modernization of legacy systems. For insurance companies to develop and sell new products or services, the ability to make use of modern technology and establish excellent operational models is essential. Three examples that have achieved this are introduced below.

2017 Model Insurer Asia Candidate Projects: Operational Excellence

COMPANY PROFILE

PROJECT SYNOPSIS

Life insurance

Implemented a project tracking and management system incorporating project management best practices to ensure a drastic reduction in the problems faced by end users.

Life insurance

A Smart sales platform which automates end to end sales process from Target Planning – Activity Management – Lead Management – Sales Fulfillment – Performance Dashboard.

This post is an outline of CELENT MODEL INSURER ASIA 2017. Part 4 sums up this year’s entries in terms of 2017 nomination status and offers valuable insights, which we hope will be utilized effectively.

Conclusion

What can other insurers learn from the Model Insurer Asia initiatives?

Key learnings from the Model Insurer Asia case studies include:

  • Digitalization requires insurers to challenge each manual process and each check and balance to see if they are truly required, and if so, how they might be digitized.
  • Predictive analytics combined with infrastructures allowing insurers to exploit massive amount of data coming from various sources will be key investments insurers will pursue going forward.
  • The benefits of modernizing legacy systems are clear, but the process is neither easy nor often successful. Different methods may be used to achieve success, but all include strong oversight and clear direction. The most critical elements to any project’s success are best practices, organizational structures, and corporate culture.

Celent intends that by aggregating examples of best practices and achieved success metrics from across the industry, we can illustrate the degree to which insurers are making effective use of technology today and provide inspiration to insurers contemplating how to improve their own technology strategies.

Readers should take two key messages from the next report bellow. First, no one insurer does everything right. Rather, most insurers do some things right. Second, effective use of technology is more important than pursuing technology for the sake of technology. These are common among Model Insurer Asia 2017 winners.

--- This event celebrates the success of the Model Insurer Asia winners. In addition, we will preview the Model Insurer Asia Report.

Celent Innovation & Insight Day Asia featuring Model Insurer Asia Awards

--- New release:

CELENT MODEL INSURER ASIA 2017: CASE STUDIES OF EFFECTIVE TECHNOLOGY USE IN INSURANCE

Insight details

Content Type
Blogs
Location
Asia-Pacific