Three Things Your RFP Won’t Tell You

For those new to the insurance industry, the length and complexity of the system-purchasing process must seem overwhelming and, at times, unnecessary. Overkill might come to mind, but the much-maligned request for proposal (RFP) process drives technology selecting and purchasing in the risk-averse insurance industry. For core administration systems (policy, billing, and claims), RFPs can provide an organized approach to working through and scoring dozens of seemingly viable alternatives. But three vitally important things are often neglected in the RFP process, all of which should be primary considerations for a long-term partnership with a system vendor:

  1. Consider how well the base system meets the needs of the organization. Most systems have out-of-the-box entry screens, workflows, reports, and processes that can speed implementation and production. While some level of customization is almost always requested, remember: More customization means longer timelines, higher costs, tougher upgrades, and more complicated maintenance. Weigh what’s available vs. what’s possible.
  2. Pay attention to the ways configuration tools work and how such tools will be used during implementation and for ongoing system and product maintenance. The capabilities of configuration tools are frequently overlooked because vendors typically set up the first few lines of business. So, configuration tools aren’t given the same scrutiny as policy, claims, or billing functionality. Consequently, post-implementation, insurers rely on vendors to make changes and updates or give those responsibilities to IT staff members. Either way, the capabilities of the configuration tools will affect time to market for future changes or new lines of business.
  3. Sending an RFP to a number of prospective vendor partners is like speed dating in the hope of finding a few good candidates. But technology aside, don’t overlook cultural and philosophical rapport. Differences in work ethic and responsiveness have caused many projects to fail in discord and dysfunction, especially if communication is reduced to procurement or consulting channels, rather than direct interaction between stakeholders and vendors. After contracts are signed and the project kicks off, two companies will aspire to be long-term partners. That only happens through cultural compatibility and alignment of goals. That compatibility and alignment of goals can only be achieved through extensive, open communication. And that communication, ideally, should be conducted face to face.

Take the Time, Not the Headache

A popular corporate axiom says, “There’s never time to do it right. But there’s always time to do it over.” When it comes to core system replacements and implementations, that’s a recipe for disaster. Insurers may never recover from the time and money lost to a bad vendor relationship. That’s why underwriters, claims examiners, accountants, executives, and IT staff member have to be comfortable with the vendors and the systems they select.

Conducted conscientiously, the RFP process can ensure appropriate compatibilities between insurers, vendors, and systems. If you take the time to do it right, you’ll save yourself the headache later.

The Truth About Customer Experience and Digitalization

We love a good panic as much as the next bunch. But we have to admit we’re not precisely sure what all the fuss is about when it comes to customer experience, particularly in the insurance industry. We completely understand its justifiably increasing importance. But self-service portals have been around long enough to have become entry cards or table stakes for most insurers and their software vendors. And mobile apps have proliferated quickly enough to have become de rigueur. So, what’s up?

Digits By the Numbers

According to a post from Lightico:

81% of companies expect CX to be the key battleground in the race for market dominance. Meanwhile, a McKinsey study shows that a whopping 70% of consumers base their opinion of a business on the quality of its CX. The importance of customer experience is true across product and service categories, and even more so when providers are selling intangible benefits … Digitization effectively shifts the focus from antiquated, manual processes to consumer-focused, digital processes.

The post refers to claims processing specifically, but its generalizations abide across all insurance transactions and interactions. But if insurers are conducting business on the Internet — if they’re already making information accessible and interaction possible with portals and mobile apps — isn’t that digitalization? We grant that more automation might be warranted. The refinement and extensions of automated processes are always evolving and improving.

According to Wikipedia:

The modern binary number system, the basis for binary code, was invented by Gottfried Leibniz in 1689 and appears in his article Explication de l’Arithmétique Binaire. The full title is translated into English as the “Explanation of the binary arithmetic”, which uses only the characters 1 and 0.

Granted, it took a while for those two digits to comprise the substance of our computer and mobile-phone communications. But we’ve clearly been at this for a while. It makes you wonder how it ended up in the spotlight now, doesn’t it?

We’re Getting There

We don’t know. But what we do know is that digitalization is well underway. The customer experience improves with every incremental expansion of digitalization. And anyone who’s not playing the digitalization game is not going to win the Customer Experience Sweepstakes.

Since it’s 2020, chances are you’re already in the game. Everything else is a matter of degree.

Don’t panic.

When Should You Pull the Plug?

One of our professional colleagues who shall remain unnamed shared an email with us the other day that qualified as the written equivalent of a cold call, and an inappropriate one at that. This is what it said:

Dear Sir,

I tried to call you, but you didn’t pick up. Because I didn’t want you to miss out, I’m sending you a transcript of how our call would have gone.

You: Hello.

Me: Hi. I’m calling from Cirrus MegaSystems, developer of thinware for insurance. Can I steal 2 minutes?

You: What do you want?

Me: We replace aging and inadequate core systems to modernize operations and improve the policyholder experience.

You: Well, we’re in the middle of implementing another system.

Me: Since you’re a customer of Amerisurica Worldwide, I thought their bad reputation might compel you to jump ship.

You: Things haven’t yet gotten ….

Me: A lot of Amerisurica customers are in the same boat. Cirrus MegaSystems would be a perfect fit for you.

You: I’m not ready to begin looking at other alternatives yet.

Me: Let’s schedule a demo anyway. It’s never to early to begin developing another plan in case things don’t work out.

Say what you want about the guy who wrote that email, but he was persistent. And he definitely put the cold in cold call.

Numbers Don’t Lie

We know the reality. Almost 40 percent of our new customers over the past four years came to us after failed or failing implementations. There are reasons for those failures, of course — a lack of defined goals, under-estimations of the effort, the resources, and the time required, and many more. And those reasons suggest there needs to be higher degrees of cognizance and vigilance about whether and when to find another vendor before more good time and money gets thrown after bad, before you burn through your budgets and the patience of your Board, and before heads start rolling.

You can’t allow vendors to stuff themselves down your throat. But at the point at which you start to sense trouble with an implementation, start preparing to pull the plug. And make sure you have a Plan B.

The company or the job you save may be your own.

(Inter)Mediating Claims

Back at the turn of the century, with Y2K behind us and a new millennium of technology ahead, we were hearing the term, disintermediation, quite a bit. The prevailing assumption was that technology and e-commerce (remember e-commerce?) would replace the agents from which people had theretofore purchased insurance. Even as late as February of 2015, Insurance Business America proclaimed, “One in four insurance agents will be gone by 2018.” It would appear that prognostication hasn’t exactly borne out. And it’s a pretty safe bet the Big “I” didnt get the memo. But we’re not wading into that particular debate.

Rather, we’d like to share some surprising (at least to us) statistics from Forrester’s Consumer Technographics® North American Healthcare Topic Insights 2 Survey, 2019 (US), in which 4,699 US adults were surveyed online. More specifically, we want to share findings in four different claims-related activities. Here they are:

  1. When filing a claim 41 percent of respondents said they use digital self-service tools. The other 59 percent preferred to work with a person.
  2. When checking the status of a claim, 61 percent used digital self-service tools, while 39 percent preferred to work with a person.
  3. To check the status of a payment, 74 percent used digital self-service tools, while just 26 percent sought the information from a person.
  4. To dispute a transaction, only 32 percent of respondents used digital self-service tools, while 68 percent sought the help of a person.

Given that evidence, it appears that most people are increasingly comfortable with going online to file, check, and verify payment of their claims. But they clearly don’t want to be disintermediated from their money.

What’s the Upshot?

It’s often said that insurance constitutes the selling of a promise; that is, the insurer (or, in this case, the agent), by way of contract (the policy), is selling the promise of making the policyholder whole in the event of a loss. As it pertains to the contract and the mechanics of its fulfillment, folks are getting accustomed to our bold new technological world. And when it comes to providing information to all parties to claims transactions (insurers, agents, and policyholders), we’ll put our software up against anyone’s. But if a policyholder has a beef with a claims transaction, somebody better be by the phone.

Disintermediation? Not quite yet.

Ready By Design

The outbreak of the coronavirus constitutes a profound test for the insurance industry. More pointedly, it’s a test of your company’s ability to continue operations without staff members being in the office. The fact is, now more than ever, insurers will have to rely on the contingency plans they put in place and the software they use to ensure disaster recovery and business continuity. And now more than ever, insurance is essential, from the strategic complexities of assessing risks to the tactical simplicity of printing documents.

In anticipation of operational interruptions of any sort, more than 10 years ago we developed the capabilities for entities to act as virtual insurers. There’s no need for bricks and mortar, other than a mailing address for legal purposes. All processes and transactions could be completely conducted online. All printing and check issuance could be outsourced. As a result, and because the Finys Suite is an online system, your employees can do their jobs without coming into the office. Print still goes out. Checks still go out. Claims still get processed. And for most of our customers, we  manage all the hardware and software they need to run their core systems.

There’s More

Because of the capabilities we’ve developed, all our employees are now working from home. All implementation and development work is being completed without significant interruption. We’ve developed some new management-reporting protocols. We’re gathering specifications for two new implementations that will begin this month. And our sales efforts continue apace, albeit without travel.

It’s not our intent to exploit the difficulties caused by the coronavirus pandemic. Rather, it’s our intent to take responsibility for doing what we can to help the industry we love and serve weather this storm and serve its constituents as comprehensively as possible. Yes. We’re a software company. Yes. We did prepare ourselves and our customers for an eventuality such as this. But it’s not our intent to take advantage of it.

We’re all in this together. And if we pull together, we’ll move more weight across the finish line of this pandemic.

The coronavirus is now. We can’t know what might be next. But we’re ready for it, by design.

Please let us know how we can help you be ready now and for the future.

Fly(wheel) By Night

From conversations you’ve had with us, conversations you’ve had about us, and the messaging you’ve been exposed to (particularly in our blog posts), you’ve likely gotten the gist of our corporate culture. We aren’t a huge operation, but we consider that a strength. We aren’t a small operation, but we’ve managed our growth judiciously. As our workload increases, we’re able to scale our staff-counts to accommodate that growth. We’re not a start-up. We’ve been consistently providing a sound product for almost 20 years.

When we first heard about the recent lawsuit involving Peloton and Flywheel, we thought Peloton was using its size to crush a smaller competitor. We’re familiar with the feeling of having competitors much larger than we are. But we’ve been lucky that they’ve played fairly. There are plenty of big fish out there to which we might have been easy prey to unscrupulous competitive practices, especially in our early days. We sympathized with Flywheel. It seemed as if the big fish ate the little fish.

But as time went on, we learned the facts of the case. As the details began to emerge, we read this article. In particular, this quote from an internal Flywheel message that Peloton obtained during the case:

Discovery has now revealed that Flywheel engaged in an organized and illicit scheme, involving a significant number of Flywheel executives and employees, to obtain ‘as MUCH secret intel on Peloton as we can’ during the time it was designing and preparing to launch its infringing Fly Anywhere Bike.

The Morals of the Story

The little fish tried to steal intellectual property and market share from the big fish. That’s a different story. Stealing is one way to get ahead, but it’s not a way we’d ever respect or espouse. Peloton is fortunate to have had the size and the legal team required to stand up for itself.

The facts of this story also reminded us we may not always have correct first impressions. Open minds preclude rushes to judgment. And more facts yield better opinions.

We may not be the biggest, the smallest, or the newest fish in the policy administration sea. But, we’re happy to be swimming in it, with fair competitors, with conscientious customers, and with partners that honor our relationships.

Deceiving To the Core

A recent review of trends for strategic initiatives in the insurance-industry showed core transformations remaining relatively flat over the period between 2015 and 2020. At first, we wondered why: Is it because the need is constant and is being addressed relative slowly and, perhaps, consistently? Especially in light of the fact that so much marketing communication and trade advertising seems devoted to legacy-system replacements and core transformation, we would have expected that particular initiative to be trending upward more steeply. We would have been wrong. Here’s why:

A Closer Look

On further review, we discovered that roughly 85 percent of all insurance companies are in the process of replacing their core systems. They’re all at different stages, of course. But since core-system replacements typically take so long, the fact that the trend line stays relatively flat become less surprising. And in more than a few cases, the replacement systems take so long to implement they’re obsolete before the transitions are complete.

Given those realities, it’s much more constructive, much less frustrating, and much less expensive in the long term to treat modernization as an ongoing process of continuous improvement. That’s why we don’t recommend standard buy-and-license models to our customers: Core transformation isn’t— and shouldn’t be considered — a once-and-done thing.

One More Thing

There may be some confusion between initiatives typically characterized as digital transformation or as core transformation. From the perspective of modernization, though, those terms may be red herrings. Everything today is digital. If it’s not, it’s quickly on its way to obsolescence. What that means is that insurance companies, particularly insurance companies that run multiple core systems, have to prioritize the value they’ll derive from modernizing each of them. (What are the chances any core transformation won’t be digital?) It’s entirely possible that their usage of or dependence on some of those core systems is so small they don’t warrant updating or modernizing. So, the companies continue to run them, as is, until a better option comes along.

While core-transformation trends may be appear to be flat, they’re flat at a very high level. And they’re flat at a very high level because, in most instances, modernization is and should be ongoing.

Don’t be deceived.

The BI (Big Issues) with BI (Business Intelligence)

You’d be forgiven if you thought business intelligence (BI) — along with its two close pals, data and analytics — were chief preoccupations for insurance companies. You’d be forgiven because, according to one study we’ve seen, between 2015 and 2020, somewhere in the neighborhood of 80 to 90 percent of property/casualty insurers considered BI and data analytics to be strategic initiatives. And you’d also be forgiven because Information Age published this:

Data analysis is one of the historical pillars of insurance. Actuaries have used mathematical models to predict property loss and damage for centuries. When they sell policies, insurers collect large data-sets about their customers that are updated when those customers make a claim. In recent years, as insurers have sought to become more relevant to their customers and more efficient, they have realised the strategic importance of their data investments. They want to harness data analytics to improve customer experience significantly, whilst cutting claims handling time and costs, and eliminating fraud.

You’d be forgiven … but you wouldn’t be correct.

Reality Check

According to Deloitte’s 2020 Insurance Outlook, “The vast majority of insurer IT spending still goes toward maintaining legacy systems.” So, the fact of the matter is that most insurers haven’t begun serious tactical initiatives to make the most of BI and data-analytics capabilities because they have other, more pressing concerns like the expectations of their agents, their policyholders, and their employees. And if insurers are saddled with legacy systems out-of-date enough to prevent them from meeting those expectations, BI and data analytics slide down the priority list a bit. And there are other considerations.

Most BI and data analytics applications are targeted at, best suited for, and most affordable for large insurers with huge volumes of data. But medium-sized and smaller insurers have affordable options that will at least let them relate claims to premiums, adjust loss-cost multipliers and rates, and weed out bad risks. But trying to layer capabilities like BI and data analytics on to legacy or poorly designed systems — and/or on to inadequate underlying architectures — adds technical challenges that may not be worth the risk and cost.

So, the big issues with BI and data analytics are antiquated systems, poorly designed systems, degrees of technical difficulty, and scarce resources.

Until those big issues are resolved, strategic BI and data analytics initiatives aren’t likely to become tactical, operational initiatives.

Digital Transformation: Part Two

Sixteen months or so ago, we published a post about digital transformation. In that post, we suggested this:

One of the most constructive things we might do is ignore all the commotion about digital transformation. While organizations might need to transform (more likely they need to adapt and evolve), digital transformation has become all but indecipherable because it can’t be defined consistently. And it can’t be defined consistently because it’s too broad and, so, too vague.

Since the phrase hasn’t gone away, we decided to re-examine the notion of digital transformation, to look at it a little more deeply than we might have the first time. More specifically, since we’ve been communicating digitally for two or three decades, we wanted to figure out if there’s anything besides jargon and marketing hype going on here.

Butting Agendas

Two objectives seem to be converging and conflicting here. Objective #1 is to look at thing from the perspective of the prospective buyer; that is, insurers are facing pressure to:

  • Be more customer-focused
  • Be more responsive to policyholders and prospects
  • Provide greater access to policy- and claim-related information
  • Provide more options and opportunities for self-service.

But they’re facing the sobering realities of Objective #2 — getting their core systems to function at levels sufficient to achieve Objective #1. If products remain difficult to change, if integrations continue to be a challenge, and if BI isn’t meaningful enough to improve operational decision-making, customer behavior, responsiveness, accessible information, and self-service capabilities become tough nuts to crack.

Those brittle systems force insurers to try to bolt digital communication capabilities onto them, rather than designing their systems — or buying systems that are built — around digital communication. Case in point: When we wrote Finys, distribution channels were our focus. Maybe we should have called what we were doing digital transformation. We didn’t. But it means the system is designed to provide a completely digital experience — to operate from the perspective of its users, regardless of who’s using it — to agents, to policyholders, to TPAs, and to anyone in any authorized role in the insurance company.

By Any Other Name

Maybe instead of digital transformation, what’s really going on is core modernization with the addition of more digital capabilities.

It doesn’t matter what we call it. What matters is that many insurers need to get it done.

It’s Not Rocket Science

Since we’re software developers — and given the world’s tendencies toward complexity — we thought it might be a good idea to take a crack at simplicity. So, here goes:

The Finys Suite is effectively a property/casualty policy administration system … with a few operational goodies added on. More specifically, the Suite includes all of the capabilities required of a policy admin system:

  1. Rating
  2. Quoting
  3. Binding
  4. Issuing
  5. Endorsements
  6. Renewals
  7. Workflows to manage 1-6.

Then we added:

  • Claims to make it easier for insurers to keep their promises of financial protection to their policyholders
  • Billing to make it easier for insurers to automate the calculation and collection of premiums, fees, and taxes
  • Business Intelligence to make it easier for insurers to aggregate, analyze, and report from their data to improve decision-making
  • Portals and mobile accessibility to make it easier for insurers to share information; allow agents, vendors, and policyholders to serve themselves; and to reduce service costs while increasing customer satisfaction
  • Design Studio to make it easier for insurers to configure and manage the Finys Suite and the products they build with it.

Science Meets Art

Did the Suite take a degree of technical proficiency to develop? Yes. Did it require knowledge of the insurance industry and its operational processes? Yup. Did we architect the Suite so it will scale as insurers grow? Uh huh. Did we apply a little foresight to ensure the Suite is flexible enough to accommodate insurers’ needs in the future? We did that, too. Did our years of experience developing software and working in and around the insurance industry help? Well, they didn’t hurt. Did we decide to treat our customers the way we’d choose to be treated. Yes. Quite deliberately. And that’s made all the difference.

The science of designing and building rockets is as complex as it gets. But an effective property/casualty policy administration system doesn’t have to be anywhere near that complicated. By combining the science of technology with the art of customer care, we found out it doesn’t take rocket science.

It just takes a little Finys.