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 And if insurers are saddled with legacy systems out-of-date enough to prevent them from meeting those expectations, BI and data analytics slide down the priority list a bit.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.

Our New Year’s Resolutions

Since it’s the time of year at which most people are proclaiming the things they resolve to accomplish in the New Year, we figured we might as well take a crack at ours. So, here they are, in prioritized order:

  1. We resolve not to make any New Year’s resolutions.
  2. We resolve not to express any indication of our resolve not to make any New Year’s resolutions until the first full week of the New Year.
  3. We resolve to do everything we might have positioned as a New Year’s resolution (professionally speaking) as part of the natural course of our doing business.
  4. As part of the natural course of our doing business, we resolve to grow our Innovation Advisory Board to include representation from the companies that became customers in 2019.
  5. As part of the natural course of our doing business, we resolve to continue to improve the Finys Suite to meet the needs of all the companies that have become our customers since our founding in 2001.
  6. As part of the natural course of our doing business, we resolve to make the Finys Suite the most functional, configurable, flexible, and intuitive processing system for property/casualty insurance for its price.

Are those tall orders? Maybe. It depends on the level of commitment with which we work to fulfill them. And since the level of our commitment is second to none, it’s quite likely we’ll achieve all these things and more in 2020. We’ll be sure to keep you apprised of everything.

In the meantime, we wish everyone who reads this post a bright, healthy and and very prosperous new decade — with or without resolutions.

Happy New Year.

’Tis the Season

It’s time to pump the brakes.

Yes. We know the year’s not quite over yet. But think about how much is behind us:

  • If any of the system changes you might have taken on this year aren’t finished, they’re likely well underway.
  • If your budgeting for next year isn’t finished, you only have two choices at this point anyway: (1) Panic. (2) Put a bow on it after the first of the year.
  • You either completed all the organizational transformations or reinventions your were going to take on this year — or you realized they were figments of some marketer’s imagination.
  • Your holiday shopping must definitely be done; otherwise, you wouldn’t have the time to be hanging around reading this post.

No matter what, the year’s winding down. If you don’t take time to wind down with it, you’ll be back in the race in the first week of January without having taken a deep breath, to say nothing of a rest or a celebratory drink.

Take Two and Call Us in the Morning*

We also know you didn’t ask. But here’s what we prescribe for the Holiday Season fast upon us:

  1. Since Christmas is on a Wednesday, try to take Monday and Tuesday off, too.
  2. If you can pull it off — or if your boss is going to be away — take Thursday and Friday off, too.
  3. Since New Year’s Day is on Wednesday of the following week, see if you can get away with 1 and 2 that week, as well.
  4. Since Hanukkah starts on Sunday, December 22, and ends the evening of Monday, December 30, just disappear until January 6 and tell your boss you thought Hanukkah was two weeks because 2019 wasn’t a leap year.
  5. If you don’t observe any religious holidays, do whatever you want. The only day you really have to worry about is Valentine’s Day because … well … you know.

If you get in trouble for any of that, to paraphrase Mission: Impossible, we’ll disavow any knowledge of your actions.

Just Joking

Kidding aside, we wish everyone who reads this post — along with our customers, our prospects, and all their loved ones — a joyous, restful Holiday Season and a bright, prosperous New Year.

Seasons greetings from all of us at Finys.

* We’re not doctors or HR consultants. We don’t even play ‘em on TV. In fact, we didn’t even audition. But we think we’re on to something anyway.

Don’t Pardon the Disruption

Given much of what we see and hear — much of what appears in but is not limited to the trade media in insurance or any other industry — we’re frequently reminded of the lyrics from the old Buffalo Springfield song, “For What It’s Worth”:

There’s something happening here.
What it is ain’t exactly clear.

The part that ain’t exactly clear has to do with disruption. According to Merriam-Webster, disruption is, “the act or process of disrupting something : a break or interruption in the normal course or continuation of some activity, process, etc.” That’s where things start to get muddy.

Homework Worth Doing

In much the same way that innovation is now interpreted to mean change, disruption is now interpreted, at least in many quarters, to mean improvement. Compounding the problem posed by the interpretation (and introducing irony into the equation) is the fact that many companies that promise disruption (meaning improvement), actually deliver disruption (meaning operational catastrophe). And every organization can tolerate (let alone afford) just so much disruption.

To minimize disruption (meaning organizational chaos), we employ what we call PREP (Project Risk-Elimination Planning). Here’s what we do:

  • We come to your location for a few days.
  • We get to know you, your organization, and the way it operates.
  • We review your systems and their functionality, as well as your LOBs and their state variations.
  • We show you our workflows for Policy, Billing, and Claims and review our Design Studio toolset.
  • We validate the necessary integrations and share our implementation methodology.
  • We discuss roles, responsibilities, and resources.
  • We give you a project-management overview and develop a data-migration strategy specific to your needs.

That enables all of us to become familiar with each other, our respective organizations, the way each organization does things, and why. And it shortens the work of work associated with contracting because we’re already … well … prepped.

No More Disruptions

The last thing we want to create — and the one thing our customers can least afford — is operational disruption. If we can’t keep you online, conducting day-to-day business without interruption, as we deliver our system to you (improvement), we’re doing it wrong, regardless of what it means.

We don’t mean to suggest that our way is the only way. But it’s the best way we know to minimize disruption (meaning business disaster).

Some disruptions just can’t be pardoned.

Think Big or Stay Home

One of our favorite slogans is one we saw on a t-shirt years ago. It was worn by a guy who must have been a bodybuilder — or else he was absurdly muscular for no good reason. The t-shirt read, “Get big or stay home.”

This is not a bodybuilding blog. It’s not even a single post about bodybuilding or weightlifting. And while we don’t think executives in smaller-tier insurance companies need to get bigger, they and their companies would benefit if they started thinking a little bigger.

Ante Up

When we were kids, our families had one car. We had one television set. It displayed in black and white. We had no cable service. We had no Internet. We had no cell phones. And we had land-line phone service with just one phone in the house.

Fast forward: Most families have a car for every driver in the house. They likely have smart TVs in every room, most if not all of which have LED LCD displays. Along with cable and Internet services, most homes have streaming devices like Chromecast, Raspberry Pi, Synology Diskstation, Google TV, Amazon Fire TV, Apple TV, Plex, and others. And everyone walks around with smartphones that, by the standards of even 10 years ago, are portable supercomputers.

Why is that relevant or important? It’s relevant and important because the rest of the world has moved on with technology and accepted the additional, initial costs associated with its increased capabilities. Those costs become entry cards, table stakes, and business investments in the adoption of contemporary living.

Has that happened in insurance? Not so much.

The Future is Here

Insurers are people, too. To stay relevant and competitive, they have to move forward. They have to adjust and adapt. That doesn’t mean they have to lead any technological charges. But they do have to adopt the technological capabilities and the processing functionality that will enable them to develop and introduce products more quickly, deliver service to policyholders more responsively, and react to market opportunities more nimbly.

Will there be incremental cost to adopting that technology? Yes. Just like there is with car payments, cable and Internet bills, streaming services, and data plans. But the more important question is this: What will it cost if you don’t adopt new technologies?

The new reality arrived with the future. Smaller-tier insurance-company executives and their boards have to accept this new reality or accept irrelevance.

They don’t have to get big or stay home. But if they don’t think bigger, they run the risk of getting smaller.

Feeling a Little Behind?

You need to replace your core administration system, but you think you need too much customization. You know you’ll fall behind competitively if you don’t replace your system, but you think the customizations you want will cost too much. Are you sure?

We’re not necessarily anti-customization. But we do think customizations — their perception of their benefits and advantages — may be matters of perspective. This may seem like an extreme example, but please consider the following exchange:

Ed: I’d like to put a manual transmission in my car.

Fred: But it has an automatic transmission.

Ed: Yeah. But I want it customized.

Fred: It’s going to cost a lot of money.

Ed: Never mind. I want to shift the way I want to shift. And your price is too high now anyway.

Speaking of Shifting …

What if Ed had taken a slightly more objective perspective? What if he’d been willing to take a look at the way he went about the business of driving? What if he’d realized he could decrease the cost of going about that business, get to his desired destination more efficiently, and save himself some time and effort if he’d been willing to drive the car the way it was intended to be driven? We may never know. Neither will Ed.

From his perspective, it was better to re-engineer the tool than to consider the reasons for which it was built the way it was and to use it the way it worked best. It was more important to Ed to turn his car into something it was never intended to be, rather than to accept it as it was, to understand its advantages, and to reap its benefits.

Another Interpretation

If you have the tendency to view software the way Ed viewed his car, we have a suggestion: As you head to NAMIC this year, try thinking about another interpretation of the acronym this way: Not All Methods Involve Customization.

If you do that, your experience at NAMIC might be more fruitful. You might find things you didn’t expect to find, including new perspectives. And you just might find yourself driving toward competitive success in a whole new vehicle.

At the very least, maybe you’ll be able to see the possibilities once you’re able to see out from behind the eight ball.

A Word About Culture: Part Five

This is the fifth and final post in a series inspired by a Harvard Business Review (HBR) article, “The Hard Truth About Innovative Cultures”, that posited these five characteristics of effective corporate cultures:

  1. Tolerance for Failure but No Tolerance for Incompetence
  2. Willingness to Experiment but Highly Disciplined
  3. Psychologically Safe but Brutally Candid
  4. Collaboration but with Individual Accountability
  5. Flat but Strong Leadership.

In the prior post, which covered collaboration and accountability, we stressed the importance of giving people responsibility — plus authority — for their given tasks. As we wrap up this series, we address the subject of leadership and share our thoughts on the way our organization works best and why.

The Buck Stops Everywhere

To summarize the HBR article’s point #5, which is consistent with much of what we wrote in our last post:

In culturally flat organizations, people are given wide latitude to take actions, make decisions, and voice their opinions … [they] can typically respond more quickly to rapidly changing circumstances because decision making is decentralized and closer to the sources of relevant information … Lack of hierarchy, though, does not mean lack of leadership … For employees, flatness requires them to develop their own strong leadership capacities and be comfortable with taking action and being accountable for their decisions.

In all likelihood, there isn’t one person in our organization who’d say it lacks leadership. At the same time, most if not all of the people in the organization would say they’re comfortable with the extent to which they’re given rein to manage their responsibilities with authority, to call the appropriate shots, and to let their thoughts be known. While ownership is an overused term, all of our people are encouraged to own their jobs. And they’re recognized and rewarded for doing their jobs well.

Connecting the Dots

Logically, all five of the points in the HBR article are related. In this series of posts, we’ve suggested the ways in which those points are related sequentially (each point feeds off the previous point) and operationally (each point strengthens the functional interactions within the organization and of its people). Writing this series has given us the opportunity to grant ourselves some objective distance from the organization, to appreciate the things we’re doing well, and to connect the appropriate dots.

We hope you enjoyed reading this series as much as we enjoyed writing it.

A Word About Culture: Part Four

This is the fourth post in a series inspired by a Harvard Business Review article, “The Hard Truth About Innovative Cultures”, that posited these five characteristics of effective corporate cultures:

  1. Tolerance for Failure but No Tolerance for Incompetence
  2. Willingness to Experiment but Highly Disciplined
  3. Psychologically Safe but Brutally Candid
  4. Collaboration but with Individual Accountability
  5. Flat but Strong Leadership.

In our last episode, we pondered the role of respect in psychologically safe but brutally candid environments. In this episode, we contemplate the importance of coupling collaboration with accountability.

Free To Do It Well

The article from which this series derives has this to say, in part, about combining collaboration with individual accountability:

People who work in a collaborative culture … have a sense of collective responsibility. But too often, collaboration gets confused with consensus. And consensus is poison for rapid decision making and navigating the complex problems associated with transformational innovation. Ultimately, someone has to make a decision and be accountable for it.

While the people in our organization do, indeed, possess that collective sense of responsibility, we facilitate the success of their efforts — collaborative and individual — by ensuring our people are given responsibility and authority. Making people responsible for things — without giving them the authority to make appropriate decisions about them — sets those people up for failure.

Giving a competent person responsibility for achieving something — but giving decision-making authority to another person (who may be less competent, less responsive, less knowledgeable about the responsibility, or simply more detached from it), puts both of them in ineffective, inefficient positions. That’s why we make sure our people are free to do their jobs well.

If We Don’t Succeed, Our Customers Can’t Succeed

The other reason, of course, for assigning people authority for their responsibilities is that, as an organization, we want to be as responsive to our customers as possible. We do believe that two heads are better than one (collaboration). But we also believe good decisions made promptly are preferable to perfect decisions (which aren’t possible) made later. That’s why we strive to maintain an environment in which our customers succeed because we succeed.

Our customers and our employees seem to think that works pretty well.