Last week Novarica had the opportunity to host a Regional Roundtable in Des Moines, Iowa. Centrally located to a large group of carriers in the Midwest, we had more than 30 registrants for the session, which drew participants from as far as Minneapolis. Needless to say, these events are extremely fruitful, not only for sharing new Novarica research and allowing carriers to communicate some of the issues, challenges, and successes they are presently working through, but also as a rare networking opportunity with insurer IT leaders and their peers.
As we have previously highlighted, this is a fascinating time to be associated with technology in the insurance world. A near perfect storm of technology advances, demographic changes, regulatory issues, and competitive threats is creating a sense of urgency that may not have existed for generations, if ever. That, in turn, produces an environment much more open to the possibility of investments in technology and transformative change. On the other hand, as one participant eloquently phrased it, “the technology part is pretty easy, it is the people and cultural stuff that’s so hard!” Prophetic words, indeed. The discussions took us through the following key areas:
- There’s a high degree of interest in RPA, but your mileage may vary significantly. Robotic Process Automation has attracted a significant level of interest in carriers across all lines of business, although how, exactly, RPA is applied can lead to dramatically different results and levels of satisfaction. Highly repetitive tasks that have limited variability or narrow margins for error may be best suited as use cases. Highly complex and varied tasks that create significant nuance in results may be less desirable in terms of having meaningful operational or financial impact. Put another way, bad process that is made to go faster may lead to unintended and unhappy consequences.
- Core system replacements across all lines of business are on the move. There are, however, near universal issues and opportunities. Every line of business engaged in the event mentioned that they are engaged in active projects in the core arena or are developing plans to move forward in the near future. While Guidewire and Duck Creek dominate many of the P&C efforts, a number of modestly sized operations mentioned the desire to find commercial alternatives that were more in line with their price tolerance. For life carriers, a range of options were mentioned, with the noteworthy recognition that “convert on renewal” is not an effective execution strategy. This led to an interesting discussion of the vale of block analysis work that can lead to a range of tools being used. Sage advice came from a carrier deep into an implementation now. While an SI is very important for delivering results, you simply cannot outsource project management. CIOs that attempt to are likely to find themselves in a very uncomfortable place.
- Agile as a methodology is alive and well, but highly varied. Almost all carriers at the event expressed a desire to have more agility and the implementation of Agile as an SDLC appears to be alive and well. And highly varied. Variability can be key, especially when working with vendors who may have a completely different definition for both approach and definition. All MVPs are not created equal! Also, we had a lively discussion around work spaces and ergonomics. Remembering that Agile is a joint IT/business unit event is key; creating have and have-not work spaces, for example, is the very antithesis of a best practice. Also, the group broadly discussed the different reactions they’ve gotten from employees of different demographic cohorts as they have moved away from traditional work arrangements. Addressing environmental and cultural issues can be key to seeing desired outcomes in terms of throughput and performance. One carrier noted that IT and non-IT jobs are starting to merge, and we had a broad discussion of metrics for management and communications. A recent Novarica report on KPIs may be very instructive in this regard. We also had a fascinating discussion on other processes (e.g., budgeting, planning, performance management) that remain annual events which effectively translate into being very “waterfall” in nature. Unless and until these processes change, they will represent a drag on organizations becoming more agile in the true sense of the word.
- Talent management remains a very high priority item, as well as changing the nature of “work.” Whether it is generally tight labor markets, or the quest to find specific skills, carriers remain challenged to find the human capital they need. Internship programs are proving early views into people ahead of college graduations, although some carriers have noted the need to actually hire people ahead of a diploma, lest they lose the best and brightest to someone else. Also, tapping into resource pools like concentrations around university communities is proving popular. Another tactic employed by carriers is to develop relationships with schools that allow for the directing of the curriculum in such a way that talent can more immediately become productive inside a carrier environment. These can also be great opportunities to raise a company’s “brand awareness” within the educational community. Interestingly, some companies are using virtualization technology to make it easier to create a pseudo co-location environment for Agile teams that span multiple physical locations. Armed with early successes in these spaces, they are now looking to revisit the idea of rural sourcing for some types of talent. While new sources of talent are certainly important, recognizing that “legacy” human resources policies may not fit the bill anymore is a reality that many now face as a drag on their staffing continues to be a real concern. It turns out transformation speaks to many different functional areas, not just technology.
- Hosting options vary, but cloud solutions are clearly in the future state forecast. The move toward cloud-based systems, across both the technology stack and the range of carriers participating in the session, irrespective of line of business, is moving forward quickly. Peripheral systems such as CRM, financial and human resources suites, and e-mail platforms led the way, but now core systems covering functions such as policy, billing, and claims are increasingly the norm. This changes a number of paradigms for carriers, altering the demands on IT, legal, and vendor management as they adapt to a new and different way of creating effective contracts for carriers providing the appropriate protections. The trend is being pushed along by vendors that increasingly prefer the model as well as a recognition that trading capital costs for operational expenses can create better governance models.
The timing for this meeting was nearly ideal, given that many carriers have already embarked on 2019 budgeting and planning efforts. We talked at some length about the patterns in which technology advances emerge across financial services in the United States. This reflects both the value of having far better developed peripheral vision than is typically the case for companies in any specific line of business as well as the importance of encouraging organizations to look at themselves from the outside in (rather than the other way around). Another key takeaway: the urgency for change will not slow down in 2019. Buckle up for what promises to be a fascinating ride.
Check out more upcoming Novarica events at https://dev-novarica.pantheonsite.io/events.
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