On October 17, Novarica facilitated its Special Interest Group Meeting (SIG) focused on Annuities in Des Moines, Iowa. The SIG was hosted by Principal Financial Group, led by Assistant Vice President of IT and CIO of the Retirement and Income Solutions Business Unit Patti Kliegl. 11 IT leaders in the annuities space gathered from both the Midwest and the East Coast to discuss trends and obstacles they’re seeing across the industry. Key topics included shifts in distribution, emerging data security regulations, attracting and retaining talent, and organizational structures.
Distribution
With direct-to-consumer initiatives growing more common across the broader insurance industry, there is some rebranding of annuities occurring, with “personal pension” products being offered. Participants reported seeing consolidation of IMOs, as well as additional distribution expansion in the form of growth in banks and broker-dealers. Another trend discussed was a hybrid of self service and direct interaction with advisors to complete purchases. Participants also noted that tech is augmenting this contract holder-advisor relationship.
Security
Changing legislation such as New York State’s fiduciary rules and additional state regulations are forcing annuity IT leaders, like their industry peers, to take a long look at what data they are storing and how the data is being secured. One carrier representative noted that they are working with an external group to categorize different attributes based on how big of a risk the information presents. Seven security elements (such as social security number and credit card number) are categorized at various risk levels and encrypted at the attribute level. The group also discussed the need to update purge definitions to eliminate liability for holding on to old data. Other data security measures include tokenization of PII data and deidentification via a masking algorithm.
In addition to meeting compliance standards, participants discussed the phishing tests and firewalls they are using to ensure their companies are using best practices from the top down. Some IT leaders in the group had struggled to convince their business unit partners of the benefits of regular phishing tests; those who had successfully implemented such measures suggested putting the risk into real dollar amounts. Additionally, the group discussed how bringing a CISO on board (as stipulated by the New York rules) had increased their ability to prioritize security efforts.
Digital
While digital adoption rates are on the rise across all lines of business, those in the annuity space are struggling to get agents to fully convert to using an e-app. The members of the group reported seeing about 20-25% of their submissions coming through an e-app channel, which mirrors the industry average. This is one of many hurdles annuities CIOs face when attempting to increase their product time to market. While one participant touted their speed to market as a key differentiator, most of the group agreed that IT was typically not the obstacle in improving time to market.
Talent Management
Agile, and scaled Agile, is gaining popularity across all lines of business. The group discussed how a mix of Waterfall and Agile is acceptable as long as the results needed to meet overall goals are delivered. Everyone agreed that Agile encourages collaboration across IT and business teams while encouraging a more flexible, nimble infrastructure. It was noted that with these new delivery methodologies come new leadership and review styles. Some carriers are using scrum leaders as part of the management chain while others have working leaders that support management functions for staff not part of the leader’s scrum team and others yet discussed that they have strictly management leadership that are not part of scrum teams.
No matter the organizational style, talent was a common challenge across all participants. The group noted that hiring employees skilled in security as well as .NET and Java developers is costly; some are looking to build these skill sets internally. The group asserted that their biggest challenge collectively is getting the right mix of tech skills and business knowledge. One key factor that was of high concern is that a large group of highly skilled people will soon be leaving the Insurance IT marketplace as they reach retirement age. Participants agreed that overall, the insurance industry isn’t doing a good job of backfilling these roles.
IT leaders in the annuities space are working hard to overcome challenges and modernize their market. To take part in the next SIG focused on annuities, join us for the 2019 Novarica Insurance Technology Research Council Meeting.
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