Last week, representatives from nine northeastern insurance carriers braved rush-hour traffic to attend Novarica’s Boston Regional Roundtable. Following coffee and breakfast, President and CEO Matthew Josefowicz presented on the latest industry technology trends. Then, Matt and I led the carriers in a discussion, along with VPs of Research and Consulting Deb Culliton, Martin Higgins, and Paul Vancheri.
We examined common challenges members of the industry face. The group shared strategies, solutions, and best practices. Key topics included business relationship management, innovation, distribution channel disruption, integration strategies and compliance, as well as cloud and AI strategies.
Business Relationship Management and Agile
The group first focused on inter-departmental trust issues. Many carriers mentioned an “us vs. them” that arises between IT and business departments. Agile implementation often worked to mend these relationships. However, it often took time to rebuild trust and for some employees to adapt to the framework. One participant noted that, if any animosity remained, it was now an issue of “project team vs. project team.”
Some carriers used hybrid Agile models in individual pockets. Others worked to roll out Agile business-wide. In either case, they deemed it crucial to first align the business with the Agile value proposition. Some carriers noted that, in some cases, higher-ups were uncomfortable relinquishing control over decision-making. Consensus was that driving decisions down to the lowest-level authority required is critical for the success of an Agile framework.
Prioritizing and Funding Innovation
Some carriers created designated innovation councils to determine how well services align with corporate strategy. However, this method alone sometimes lead to a great deal of discussion without much subsequent action.
In some cases, carries found that adding in hands-off, less-structured approaches to innovation lead to more actionable results. Some cited tinker-time as a way to breed innovation, noting it can detract from regular work schedules if not properly managed. Others found hackathons to be an effective hands-off method to breed actionable innovation. Further, companies that tied hackathons to business objectives saw efforts fix internal problems and produce external solutions. Merging hackathons with existing business needs also increased the likelihood of funding.
Some organizations also partnered with InsureTechs to fund entrepreneurial innovation projects. Here, a focus on quick wins was often more beneficial than on long-term, large-scale endeavors. Small, noticeable changes were easier to fund and implement.
Distribution Channel Disruption
Life and annuities carriers noted a rise in distribution channel disruption. This is in line with what the P/C side has had to deal with for the past 15 years. Cross-industry challenges included difficulty supporting the technologies distributors prefer.
Standardization and product simplification have relieved some of the pressure for personal lines. The wealth side still has to contend with variegate technology needs. This is especially true for complex and annuity products.
Integration Strategies and Compliance
Carriers agreed that out-of-the-box integrations without custom coding were best to start. While it could cost more, it made future upgrades more straightforward to support. Many suggested that organizations change business processes to align with new tools rather than rely on custom code to keep business processes the same. If product or code changes became necessary, carriers suggested partnering with vendors. If critical enough, vendors could then bring necessary changes to market.
Carriers also expressed frustration over the lack of vendor-designed regulatory compliance. Most insurers combine manual user knowledge and code rules for broad compliance requirements. Carriers also face increased regulatory pressure from states themselves. One noted that states now leverage regulatory compliance as a revenue source. As such, carriers can no longer afford to freeze regulatory maintenance.
Cloud and AI Strategies
A few carriers discussed artificial intelligence projects and pilots across risk and fraud. These projects leveraged machine learning, natural language processing, and data analytics in risk scoring and counter-fraud. Consensus remained that general AI solutions still can’t handle back-end processes. Conversely, carriers noted that purpose-built AI solutions continued to make headway.
Carriers also noted greater interest in and comfort with cloud, especially on the security end. Pros included immediate generation of cost-saving metric and greater alignment with innovation initiatives. While these benefits excited carriers, peripheral concerns remained.
On the accounting side, carriers commented that it was unclear whether cloud qualified as capex or opex. They also advised caution during cloud provider selection. Some carriers found that companies who claim to offer cloud or SaaS services don’t meet these qualifications in practice. Additionally, carriers agreed that cloud infrastructure expertise remains rare and high-demand across the industry.
For information about upcoming Novarica Regional Roundtables, see https://dev-novarica.pantheonsite.io/events/.
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