Accenture Technology Vision 2013Every Insurer is a Digital Insurer

Insurance Report

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Insurance Report

How digital technology is changing the game for insurers

This year’s Accenture Technology Vision lays out the major technology trends affecting insurers in a world where every insurer is a digital insurer. While simple, this proposition signals a significant shift not just in the role of technology but also in the very business models that underpin success.

These technology trends will be at the heart of the transformation of today’s leading insurers into efficient and customer-focused businesses that use digital technologies to enhance the customer experience, manage risk optimally and improve profitability, even against the backdrop of tight regulation and tighter market conditions.

Digital is more than a new distribution channel – it is a transformation of every process in the insurer’s business. Although distribution and sales were formerly the primary focus of digital strategies, the move to digital is also building pressure to upgrade service and claims. Soon, no part of the value chain will be left untouched.

In this digital world, insurance companies that exploit emerging technology enablers to expand and personalize relationships with business partners, customers and agents on a massive scale can reinvent old businesses and create business models that were unimaginable just a decade ago.

Consider the many ways that new technologies and sources of data are enabling insurers to transform the customer experience and introduce innovative products, even as they optimize claims, underwriting and policy management. Combined, these powerful new technologies are redefining the way that insurers create and manage relationships with their customers and business partners.

Thanks to powerful analytical engines, digital customer touchpoints and Internet-connected sensors, insurers now have access to usage and contextual data they can use to redefine products and customer relationships. Pay-per-use insurance offerings that use contextual and behavioral data, combined with telecommunications, to scale coverage to customers’ needs in real-time are becoming increasingly popular – and more common.

Elsewhere, we see a wealth of opportunities and threats on the rise for insurers as technology opens up new markets for them – yet also opens up their traditional markets to non-traditional competitors. If they make the right moves, insurers could tap new revenue sources, extend their business models, and offer customers more personalized and relevant services in partnership with other companies.

Taking a central role in the customer’s life

In addition to offering better pricing and managing risk more tightly, insurers would be able to take a more central role in their customers’ lives and improve customer satisfaction. We are already seeing insurance companies team with local security companies to cover properties, with electronics firms to provide home automation, and with mortgage firms to handle the financing of real estate.

In the auto industry, there is potential for P&C insurers to work with car manufacturers to bundle insurance with vehicles and service plans for fleets and individuals. Those that don’t move quickly to exploit emerging technologies could lose ownership of their customers or even be squeezed out.

For example, there is little to stop car manufacturers or sellers from leveraging data collected by telematics systems to create insurance products of their own, or to outsource the manufacture of an insurance product to an anonymous carrier while retaining ownership of the customer relationship. This would certainly be in line with the trend to convergence as disparate partners collaborate. Other organizations that harvest

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Accenture Technology Vision 2013

Figure 1: Digital transformation spans the insurance value chain

MarketingDistribution & Channel Management

1. Cross-channelExcellence

2. Customer - Centricity & Personalization

3. Operational Simplicity

4. Superior Execution Agility

Integrated cross-channel campaignmanagement

Multi-channel marketing ROI management

Automated workflow & decision support

One-stop paperlessunderwriting

Optimized service level agreements

Maximized digitally enabled contract management

Continuous channel- mix optimization

Rule-based channel orientation

Marketing pressurecustomization

Full e-commerceadvice & quote,selling & payment

Generalized self-care & STP offering

Continually assisted care

Pro-active support in life insurance

Flawless cross-channel processing

One-time customer data request & automated update

Enriched risk analysis of customer

Customer-value-led promotions & discounts

Full 360° customer view(scoring & social)

Real-time segmentation/scoring

Value monitoring

Customer-sensitive multi-channel service offering

Digitally enabled claim submission &status monitoring

Personalized multi-channel customer experience

AI-enabled salesapproach

Next-best action

Optimized time to market

Digital capabilitymonitoring

Advanced customerdiagnosis tools

Cross-channel advice, quote & selling

Channel-sensitivepricing & productdifferentiation

Extended multi-device & mobility offering

Cross-channel service continuity & consistency

Cross-channel service continuity & consistency

Tailor-made products & services

Customer-event-triggered campaignmanagement

Product Manufacturing

Underwriting/New Business

Policy & ContractManagement

ClaimsManagement

Analytics

data and provide data-enabled services could also pose a threat in the future—for example, Google, Facebook or telecom operators.

These trends are not only enabling insurers to change their operating models. For forward-looking carriers they are also at the heart of product innovation. Marsh in the US has launched Cloud Protect, the first insurance product in the world to cover organizations against the risks associated with outages or disruptions at a cloud service provider. And multinational insurer AXA is now offering a product that protects customers against online and social risks such as identity theft, fraudulent payments, and damage to their e-reputations.

Customer experiences around the clock

Recognizing that now is the time to act, many insurers are beginning to reevaluate their entire business models. One large P&C client of Accenture’s is completely reinventing its distribution model to keep pace with a changing customer base. This insurer is building a seamless platform, across the enterprise, to deliver an industry leading customer experience around the clock, throughout the insurance cycle, and through all channels.

United Services Automobile Association (USAA) is also transforming its business model to put itself at the heart of a new ecosystem with its mobile end-to-end content approach. Its new ecosystem provides applications that encompass

a wide range of consumer needs. An Auto Circle app helps potential car buyers find a suitable vehicle, obtain a loan with a personalized deal and renew their car insurance policy. And the Home Circle app allows users to search for properties, arrange insurance protection, find home financing and receive notifications when payments are received.

The disruption that digital technologies will bring to the insurance market has just begun. Imagine the impact on the industry in the years ahead of, for example, safe driverless cars of the sort Google is testing on California’s highways. Liability losses will drop, followed by a fall in liability premiums. Insurers that fail to plan for the ways disruptive technologies such as this may turn their business models upside down face a bleak future.

About the Technology Vision 2013 study

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Insurance Report

Every year, the Technology Vision team at Accenture Technology Labs looks over the horizon at the emerging IT developments that will have the greatest impact on enterprises, government agencies, and other organizations in the next few years. This vision is distilled from Accenture’s extensive research over the course of the previous year, along with input from our industry experts and clients.

The Technology Vision is an exploration and analysis of key technology megatrends that are impacting technologies and businesses today and are likely to continue doing so in the next few years. These are:

• Relationships at Scale: Moving beyond transactions to interactions.

• Design for Analytics: A blueprint for the answers.

• Data Velocity: Minimizing the gap between insight and action.

• Seamless Collaboration: Embedding collaboration into business processes.

• Software-Defined Networking: The last mile of virtualization.

• Active Defense: Adapting defenses to threats.

• Beyond the Cloud: Weaving the cloud into the enterprise to create business value.

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Accenture Technology Vision 2013

Seven Technology Trends

Relationships at scale: moving beyond transactions to interactionsAmong the seven trends highlighted by Technology Vision 2013, the imperative to better manage relationships at scale is the megatrend that will most profoundly transform the insurance industry over the next five years and dictate which carriers will be winners and losers in a fiercely competitive market. Underpinned by the other six trends we discuss in this document, “relationships at scale” presents insurers with the opportunity to take customer relationships beyond transactions to personalized interactions.

Insurers must seize this opportunity in a world where insurance customers are truly connected consumers rather than mere buyers. Not only are they connected to services and information

through communications and devices, but they are also digitally connected with each other through interests, opinions, experiences and purchases.

Digital relationships and personalization at scale are opportunities to establish deeper consumer insights, offer more compelling user experiences and deliver customized interactions. Digital insurers are leveraging sophisticated analytics and optimization engines to increase the level of personalization and relevance through their digital channels, boosting click-through and conversion rates.

Thanks to richer digital interactions by way of email, social media, the Web, location-based services and mobile devices, insurers have the ability to build relationships with consumers wherever they are and whenever they need it. Insurers can also use digital channels to reach under-penetrated consumers -especially in emerging markets where there is high mobile penetration, for example China, India, and Indonesia.

By seamlessly integrating digital with agent/broker and contact center channels, insurers can provide even greater degrees of personalization and advice at the point of customer need. Cloud-based customer relationship management solutions can help insurers develop

a single view of the customer across channels and lines of business. This single view of the customer enables better orchestration of marketing, sales, and service activities, insight-driven customer interactions and increased collaboration.

While e-commerce has provided big opportunities for market and customer growth, mastering digital relationships will be the real key to growing customer engagement and loyalty. With the evolution of digital channels, insurance companies have new opportunities to develop deeper relationships with customers (B2C) as well as with brokers and partners (B2B) which will change the insurance business.

An effective commercial approach might start by identifying target customer segments, analyzing customers’ needs and presenting tailored offers and services in response. This approach can educate and engage customers, leading to better outcomes for insurers and consumers alike.

Using analytics and cloud solutions, insurers can now take advantage of real-time data to accurately gauge and refine risk as they create direct and multichannel relationships with consumers and with partners such as brokers.

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Customers may be rewarded with lower rates for sharing their data. Consumers are increasingly willing to disclose private data to insurers if premium discounts are offered in return. According to a Tower Watson survey, 66 percent of US drivers will change their driving behavior if a 10 percent discount is granted, and of those, 76 percent would allow a device in their vehicle that monitors their driving.

Similar benefits may be found in the commercial world, where fleet owners might share telematics data with their insurers, or factories could share real-time data from industrial equipment sensors to improve risk management and loss prevention. A number of health insurers have diversified into the life business, offering preferential premiums to customers who allow access to their medical and lifestyle data.

Social media is another source of data that can be used to get insights about the individual, helping to personalize the user experience with tailored recommendations, special offers, and so on. A simple example: if a customer announces travel plans on Facebook or Twitter, an insurer can immediately offer him or her appropriate travel-insurance products.

Social media might even provide a new source of underwriting data in the future. The wisdom of the crowd could be tapped, for example, in determining the risks attached to covering a contractor, restaurant or home. Or insurers could reap data about how employees perceive their employers, to understand how this affects the claims experience in worker’s compensation.

Leading insurers are already reaping the benefits of relationships at scale. USAA, in 2008, was one of the first in North America to embrace a formal social media strategy, and has since turned it into a competitive advantage.

The carrier has embedded social listening into operational execution, turning social data into a key element of the customer experience and organizational culture. It has kept innovating to stay ahead of changing consumer expectations.

Now, the insurer has made it possible for Facebook users to create “My USAA” tabs or application bookmarks on their Facebook pages that link back to usaa.com and make it possible to complete basic tasks—transfer funds, pay bills or obtain proof of insurance—quickly, easily and securely on the go.

In future, social platforms will enable a community-based approach that will create new types of relationships between insurance companies, their third-party partners and consumers. Social platforms and communities could serve as vehicles for creating value, segmenting consumers, and gathering innovative ideas from consumers and partners – such as rewarding safe drivers with points that could be redeemed for products from the insurer’s affinity partner.

For instance, health insurers are turning to mobile apps, social games, and Twitter feeds to communicate health tips, help children learn good eating habits, encourage exercise, and support other aspects of preventative care.

The Click for Kids campaign from Northwestern Mutual Life Insurance and Financial Services allowed customers to view videos about children’s health on YouTube. The result? Closer intimacy with and enhanced trust from consumers, paired with encouragement of healthier behavior that could reduce claims into the future.

There is also the example of Allianz and Waze, which have developed a social platform that allows customers to share information on

traffic, navigation and gas to make their daily commutes easier. This platform also includes insurance agency locations, and discounts and special offers for commuters.

Leading the shift from product-centricity to customer-centricity

Most customers still see insurance as an essential purchase, reluctantly bought from organizations that offer them a narrow set of impersonal services. Emerging technologies that enable insurers to transform the way they manage relationships at scale are the key to changing this perception.

Relationships at scale will drive the shift from product-centricity to customer-centricity, particularly in property and casualty. By harnessing tools such as data analytics, social media and collaboration, insurers will be able to build their products and services around the needs of their customers.

Self-service technologies, like those that have revolutionized the airline and banking industries, will become more commonplace. Insurers have the opportunity to use these technologies to integrate more tightly with their customers in return for new and enhanced services. By automating traditional back-office functions, insurers can fulfill customer needs in a “once and done” manner that enables more value-added customer interactions.

Over time, they can develop services that will give consumers the confidence to share their data, eventually providing customers with a range of aggregated services. As this transformation occurs, customers will adopt active roles that help insurers perform more effectively (and reduce the work involved in data collection).

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Accenture Technology Vision 2013

For example, homeowners could take photographs of their belongings and email them direct to their insurance carriers, which would store and process the unstructured data to enable faster assessment and payment in the event of a loss. And customers could even take on tasks and roles that were once owned by the carrier, for example becoming their own claims examiners and getting a faster settlement of their claims in return.

New social insurance models are coming to the fore. In the US, the universal healthcare law creates health insurance buying collectives for individuals and small businesses. It is not inconceivable that these collectives could branch out and buy other forms of insurance, too.

Germany’s Friendsurance has an online peer-to-peer insurance model which offers household, personal-liability and legal-expenses insurance. Large claims are covered by traditional insurers with which the company has partnered. Smaller claims are shared by a network of friends, who can either sign up as a group or hook up on the Friendsurance site. The model promises fewer small claims for insurers to process and a reduction of up to 50 percent on annual insurance premiums for consumers.

Your 100-day plan

In 100 days, refresh the mindset of your consumer channels to move beyond transactions to, in addition, drive consumer interactions and relationships.

• Catalog your consumer interactions, tools, and channels and identify changes needed to deliver more personalized, richer, higher quality interactions.

• Educate your internal teams on the tools and channels currently available.

• Determine current obstacles to enabling a holistic view of your customer, and identify strategies for overcoming them.

• Identify metrics for tracking the effectiveness of your organization in establishing, strengthening and deepening customer relationships.

• Research the voice of the customer to assess how well you are meeting customer needs.

• Augment traditional research with “social listening” and establish processes to rapidly respond to customer needs expressed through social channels.

• Propagate current tools and channels across business units where applicable.

This time next yearIn 365 days, reimagine your consumer strategy as a consumer-relationship strategy and create the cross-organizational ties to drive it.

• Look at your organization from your customer’s perspective to identify differentiated customer experiences that your target segments value.

• Develop a strategy and roadmap to dismantle any internal barriers that constrain agents, contact centers, the Internet, mobile, social media and other channels from working together to deliver those differentiated experiences.

• Create cross-channel and cross-functional teams, supported by strong governance and sponsorship, to close gaps in the processes, skills, technologies, and tools required to deliver more seamless experiences to customers and prospects.

• Strengthen your customer and channel analytics capabilities, and embed the associated insights into your business processes.

• Develop a “proof of value” capability to rapidly deploy new technologies and approaches and gather customer feedback.

• Develop a data-driven approach to assess progress towards delivering relevant and personalized experiences that are valued by the customer.

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Insurance Report

Design for analytics: a blueprint for the answersInsurers are trying to come to grips with a range of factors holding back the return on their investments in data analytics – a lack of enterprise-wide focus, a tendency to analysis-paralysis, and concerns about the quality and availability of data. But the reality is that data and the tools to leverage it are more accessible and affordable than ever before.

Insurers are no longer suffering from a lack of data; they’re suffering from a lack of the right data with the right quality to effectively define their strategic direction. They are flooded daily with information from every part of the business: operational data, business partner data, and data from processes and sensors, in addition to customer data from social media, email and call centers.

Repurposing all this data to make strategic decisions – like entering a new market or pricing a new service – involves a fundamental shift in how most insurers view information. It will demand that insurers treat data less as a warehouse and more as a data supply chain. This will enable insurers to manipulate data, add to it, update it, and analyze it in various ways, transforming it into new products and business insights.

The next generation of insurance applications is being designed for analytics and decision-making. These applications will equip companies to start with the outcome they desire, understand the data required, and then get the right data – from inside and outside the enterprise.

But to make the most of these applications, insurers must take an enterprise-wide view of collecting data rather than taking the costly and inefficient approach of harvesting and leveraging it in a functional, siloed manner.

Data analytics, powered by cloud computing, will enable insurance companies to handle big data from multiple structured and unstructured sources and process it in an efficient and flexible way. This will allow them to enhance their operations in three key areas of the business: distribution, claims management, and underwriting and policy administration.

In distribution, advanced analytics will give the carrier a 360 degree view of the customer, enabling it to provide a seamless multichannel experience that meets the demands for today’s customers for personalization and direct dialogue on every channel. Rule-based engines, combined with natural language technologies, will be key in automating dialogue with customers. Analytics will also be used to discover potential new insurance products and new market segments – products will be derived and designed from the data. Effective target marketing and campaign management, together with better agency management, will go a long way to improving customer acquisition and retention.

Claims analytics will help optimize claims processing, thereby reducing costs and enhancing customer service. It is also crucial to predictive fraud

detection models, which not only identify familiar and unknown fraud patterns. These models also predict fraud levels, create rules to detect fraudulent claims, and reduce the incidence of false positives. Analytics can be leveraged to make better decisions about medical management, litigation, subrogation, and more.

In underwriting and policy administration, analytics will be invaluable in more accurately refining and pricing the risk. In addition to serving the actuarial, risk evaluation and underwriting functions, it is transforming asset liability management, enterprise risk management and regulatory compliance.

Data analytics will enable carriers to instantly adjust elements of the insurance offering such as pricing and bundling, offering more attractive plans that provide them with a competitive advantage. For instance, they could differentiate themselves by offering a driver-monitoring service as a supplement to insurance for corporate customers with vehicle fleets. Or they could partner with road tolling utilities to collect average-speed data, enabling them to reward customers who comply with the rules of the road. Analysis of social media data, meanwhile, will provide new geolocalized and contextual information that insurers can use to further tailor their offerings to customers.

Leading insurers are already tapping powerful analytics tools to change the way they operate. SeeChange Health mines data from personal health records, claims databases, laboratory feeds and pharmacies to identify patients with chronic illness who could benefit from customized compliance programs. The San Francisco–based health insurer offers cash rewards or lower out-of-pocket costs to patients who complete these action plans.

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Accenture Technology Vision 2013

Your 100-day plan

In 100 days, define the key strategic questions for the business and the data needed to answer them.

• Prioritize the existing questions your organization is working on and understand which of these data and analytics can be leveraged to answer in a way that yields significant benefit.

• Update or build your data catalog, identifying what data you have.

• Determine your in-flight analytics projects and what questions these projects are trying to answer.

• Begin to catalog new data sources (internal and external) needed to fill in critical missing data elements.

• Tap the new data sources where they fill identified data gaps.

• Define the required skills and experience needed to create data champions across the organization.

• Move from data to decisions by putting data in the hands of decision makers in areas such as underwriting, claims, sales and service.

This time next year

In 365 days, establish your data supply chain across the enterprise, quantifying the world around you to address strategic gaps.

• Create and energize data champions across the organization, for example, a chief data officer.

• Work across the organization to determine and prioritize your future strategic questions.

• Consider building a centralized analytics center of excellence as a cost-effective and coordinated means of deploying high-quality resources to address well-defined business problems that affect the organization across multiple verticals.

• Look at your data catalog and determine the long-term gaps.

• Fill these gaps in the data catalog – purchase data, develop new application programming interfaces (APIs), and ask your partners.

• Embed new data requirements into software road maps and procurement plans.

• Evaluate software product solutions for real-time data capture and data tagging—for example, clickstream web analytics and tag management software.

• Test new data sources for quality and predictive power.

• Begin designing software to capture new data within custom development and software update cycles.

• Develop a data creation strategy to attain data through the setup of new data sources: M2M, new software, and data creation from partners.

• Look for innovative ways to leverage data and talent—for example, universities, alliances, and partnerships.

• Put the data cycle in motion, revisiting data needs as new strategic questions arise.

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Mobility and the consumerization of IT are driving expectations of near-real-time access to data and insight. Meanwhile, technologies such as data appliances, no-SQL databases, and in-memory computing are accelerating the whole data lifecycle by providing, for instance, the ability to query extremely large quantities of data very rapidly (for example, gigabytes or even terabytes in seconds).

The combination of these technologies for data velocity with today’s powerful data analytics engines empowers insurers to make decisions about claims, risk, pricing, distribution and more that are effective and timely. Real-time data collection from multiple sources is becoming core to carriers’ business and a primary source of business innovation.

Insurance companies have long sought to leverage information in data warehouses to glean insights about customers and translate those insights into competitive advantage. In some cases, they have been unable to squeeze the true value from these investments.

Data velocity tools and technologies offer them a way to maximize older technologies in data warehouses. Now, with the ability to make rapid decisions based on high-velocity data, they can offer unprecedented customer experiences that foster loyalty.

For example, geofencing technology – which creates a virtual perimeter for a real-world geographic area - could be used to act faster and improve the chances of recovery when a vehicle is stolen. Right on the scene of an accident, with the help of telematics, an insurer could supply a customer with details of medical facilities, rental car options, and auto repair shops in the vicinity.

To expedite the claims process, an adjuster nearby could be immediately informed about the accident and telematics data used to make rapid decisions about the claim. P&C insurers will need to consider, however, how

smarter vehicles and reduced accident risk will impact on their business and pricing models, as well as those of other players in the value chain.

In a commercial insurance business, carriers could partner with equipment manufacturers and service providers to create innovative solutions that bundle plant or factory equipment maintenance and repair plans with risk cover. Temperature and humidity data from sensors in a plant or factory could alert the service provider to the risk of the imminent failure of an expensive piece of equipment covered by one of the insurer’s policies. The carrier could offer lower insurance premiums as an incentive for customers to adopt such services.

Personal lines insurers could use consumer data to tailor their marketing in real-time, offering consumers personalized web channel sites or customizing offers based on customer profile and interaction data.

And in Germany, healthcare insurer AOK is already using SAP’s HANA technology to conduct real-time analyses of mass medical data – more than six million hospital cases a year – to identify patterns of illness and offer individualized pre-emptive programs. This translates into better patient care and a competitive edge.

Such applications are just the beginning. Already, insurers are using real-time bidding (RTB) platforms to purchase online display advertising at the best possible rates; in the process they have helped raise the share of RTB as a proportion of Google’s Doubleclick Ad Exchange sales from 8 percent in January 2010 to 68 percent in May 2011. In future, expect to see insurers tap in-memory computing for advanced applications such as underwriting earlier in the insurance life cycle and assigning fraud scores to prospects during the quoting process. Real-time response to actionable insights gleaned from accurate data will be the one of the insurer’s most powerful competitive weapons.

Data velocity: minimizing the gap between insight and action Thanks to unstructured data from social media, mobile devices, sensors and applications, the volume and variety of data and data sources available to business leaders are greater than ever.

But until recently, insurers have struggled to rapidly create actionable insights from the data they collect. They have also battled to integrate the data and the insights that can be gleaned from it into their business processes.

Now, there is a surge in emerging technologies that deal with the third “V” – data velocity. These technologies are all about enhancing the way large quantities of data are rapidly managed and moved, and accelerating the data cycle from insight to action.

They enable insurers to make sense of huge amounts of data, access better quality data and more complete data sets. And by doing so quickly, they can match their speed of action to the speed of the opportunities. With better and more complete data, insurers can have more confidence in their predictive models. And with earlier access to this data, they can speed up the time to value by getting to the point of insight much sooner.

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Accenture Technology Vision 2013

Telematics: real-time data promises to transform insurance

Telematics has been around for more than a decade, but it is only now that the technologies needed to unleash its full potential have reached the point of inflection. Standardization and lower prices are making computer sensors and on-board computers ubiquitous, while cloud computing offers the cheap processing power needed to crunch through the data these telematics systems generate.

Meanwhile, high-velocity data management technologies provide the ability to query massive volumes of data in seconds, and analytics engines enable insurers to turn all of this big data into actionable business insight. The result is a radical shift for the insurance industry from making decisions based on historical events towards making them based on a constant flow of real-time data.

Telematics technologies allow carriers to collect data from a variety of sources and insurable assets including cars, plant and warehouse sensors for commercial lines P&C carriers, or home data sensors for home insurers. They can use this data to improve the accuracy of their risk assessments, to make better underwriting and customer segmentation decisions, and also to develop new services – on their own or within a collaborative ecosystem of non-competing partners.

The auto insurance industry is already experiencing the disruption of this technology, in areas of their business ranging from claims management to liability assessment and damage calculations. Nor is it just insurers who are affected; service partners such as auto repair shops are also feeling the impact.

More and more insurers are using telematics to attract safe drivers, adjusting their individual premiums based on their actual driving patterns. Some are offering pay-per-use products that can be bought whenever the customer plans to use the car, and that are priced according to where and when the trip will take place. They also reward careful drivers with insurance bonus-miles.

The IntelliDrive Fleet Safety Solutions program from Travelers Indemnity Company combines telematics with a software-as-a-service location-intelligence platform. This solution provides customers with feedback on everything from speeding and hard braking to the data needed to eliminate false or exaggerated third-party claims.

Telematics will have an impact that extends far beyond auto insurance. By gathering sensor data relating to warehouse or plant conditions, or data from monitors that keep a check on the blood pressure or blood-sugar levels of patients, insurers will be able to lower the premiums of customers that look after their assets or their health.

What is more, they will also be able to partner with firms that offer maintenance, protection or a wealth of other services, allowing them to market a bundle of offerings based on a deep, up-to-date understanding of their individual customers’ needs. It is not inconceivable that pricing by segment, group, or location will before long be consigned to the history books.

The most significant barrier to use of data in this manner is the regulatory and legal environment. Insurers will need to be mindful of consumer privacy concerns as well as data collection regulations as they roll out telematics-based solutions. They will need to put consumers in charge of their data and provide incentives to those willing to share their information.

Your 100-day plan

In 100 days, create a data velocity strategy to match the speed of your insights to the window of opportunity available to act on them.

• Survey business units to determine where they have critical decision-making bottlenecks.

• Determine which decisions are data-processing dependent.

• Prioritize opportunities based on the cost-benefit trade-offs for accelerating the decision. Speed costs money.

• Create tactical deployments based on the prioritized opportunities with current tools and methods.

• Data champions should update the data catalog to incorporate data-processing criteria.

This time next year

In 365 days, begin to transform key processes, accelerating the insights where the increased velocity leads to tangible business outcomes.

• Use your data catalog to create a strategic view of the data that creates bottlenecks.

• Determine if current infrastructure already supports a turnkey solution that alleviates these bottlenecks (e.g., use of SAP’s in-memory application HANA).

• Test and deploy required technologies and sources of data that improve your data-processing bottlenecks.

• Update the IT road map and architecture to reflect additional technologies and data sources.

• Deploy the next set of prioritized opportunities that will leverage the new architecture.

• Measure business outcomes and review the catalog for additional opportunities.

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using video conferencing and virtual white boarding to discuss customers’ unique insurance needs or exposures.

Your 100-day plan

In 100 days, redefine your collaboration strategy; prioritize based on business process enablement.

• Catalog the tools that are currently being used (supported and unsupported) to collaborate across the organization.

• Determine a set of quantifiable business metrics to measure the success of your collaboration services architecture.

• Identify and prioritize business processes where increased productivity through collaboration will drive the most value.

• Deploy collaboration to the highest-priority processes to create demand for additional deployments.

• Review and implement preliminary incentives for behaviors, evaluations, and personal metrics to encourage collaboration.

This time next year

In 365 days, implement your new strategy to weave the collaboration platform into the highest-priority business processes.

• Update your strategy with best practices established in “early adopter” industries.

• Use lessons learned from current implementations and industry best practices to build your collaboration services architecture.

• Establish a cross-functional team to design and evaluate user experiences of the collaboration services architecture.

• Leverage IT and the business to embed collaboration services into a prioritized list of business processes.

• Measure the business impact of your initial deployments to drive demand among other business units.

fragmentation and the lack of a systemic workflow. This picture results in inaccurate risk evaluation, mispricing and a slow response to customers.

But when social collaboration is plugged directly into the workflow, visibility between and within teams is enhanced and information bottlenecks can be broken. Granular data can be collected for analysis and shared to improve processes, while all the information exchanged informally in an application evaluation process can be captured and shared. As a result, more accurate quotes can be delivered quicker.

Blue Shield of California Foundation is one example of an insurer improving efficiency and effectiveness by integrating enterprise social tools into its workflow. The organization uses FinancialForce Accounting, integrated with Salesforce.com’s Chatter, to enable collaboration across the workforce.

Chatter is used by the health insurer to answer questions and easily search topics. Managers can use a simple Twitter-like interface to sign off transactions and manage queries, wherever they are. The system also ensures supporting documents such as email and paper are easily accessible when a worker needs the history behind a specific invoice or project.

Insurers are also using collaboration technologies to make expertise available at the point of need. There is tremendous opportunity to use collaboration tools to put customers in touch with experts who are best equipped to sell more complex products – an approach that will deepen customer penetration and improve customer lifetime value and retention.

Personal lines insurers are increasingly providing click-to-chat and click-to-call capabilities on their websites to improve conversion rates for personal lines products. Forward-thinking carriers are also developing capabilities to enable agents and brokers to connect with underwriters

Seamless collaboration: embedding collaboration into business processesAdvances in technology have made it easier than ever for people to work together, no matter where they are. But for most insurers, enterprise collaboration has not advanced beyond siloed communication channels, from email to video conferencing to social media. For the most part, people are left to their own devices to work out how to use each of these tools to do their jobs more productively.

Clearly, in an age where every worker is an information worker, that needs to change. The insurance workforce is expected to be thoroughly informed while simultaneously producing faster results and better decisions. To meet this expectation, insurers must move beyond stand-alone social and collaboration tools.

The new approach: build social, collaborative applications throughout the enterprise and embed them into core business processes. Insurers will be more productive, more efficient and more innovative as a result. The technology to integrate collaboration into insurance processes already exists in tools such as Yammer, Chatter, JAM and OpenSocial.

Consider the challenge of providing commercial insurance customers with accurate and timely quotes. This process is typically riddled with inefficiencies, bottlenecked by delays and lacking in transparency as a result of information

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Accenture Technology Vision 2013

Software-defined networking: the last mile of virtualizationVirtualization investments are already paying off in servers and beginning to pay off in storage, but the network has remained an untapped opportunity because there has been no easy way to make it dynamic. But software-defined networking – which IDC expects to grow from a $360 million market in 2013 to $3.7 billion by 2016 – completes the last mile of virtualization and enables insurers to finally realize the vision of a dynamic enterprise.

Software-defined networking, where the network is managed through software instead of through hardware, is a giant leap forward in enterprise flexibility. By virtualizing the network, insurers will be able to extend the life of their infrastructure and reap the full value of their virtualization investments.

Software-defined networking addresses the urgent need to make it easier for businesses to manage change, integrate cloud services and get better returns from their network investments. It enables insurers to remove the complexity and reduce the cost of network reconfiguration, and turn the network into a truly dynamic and flexible asset.

The value of software-defined networking for insurance lies specifically in its ability to provide automated configuration across the entire cloud network so new services can be deployed rapidly and operational cost can be significantly reduced.

The technology also allows for secure and automated network isolation. Software-defined networking applications can provide the ability to deploy, monitor and manage replication of network services for storage applications across separate storage facilities for disaster recovery and business continuity.

Software-defined networking offers the flexibility insurers need to improve bandwidth and latency while accommodating virtualized infrastructures for distributed applications such as underwriting and claims. It addresses the challenge that many decentralized insurers face in providing high-performing applications to offices and agents in remote areas.

For end-users—be they employees or agents—this translates into a seamless experience with consistent access to resources and tools in the context of distributed network resources, wherever these resources are accessed.

Combined with cloud computing and mature virtualization strategies, software-defined networking could also give insurers unprecedented agility as they seek to respond to changing marketing conditions and grow their businesses. They will be able to use these technologies to rapidly deploy core policy administration and claims systems as well as office productivity tools in new locations. This could help them improve the performance of their applications within their existing set-up of remote agency offices, as well as accelerate their move into emerging markets where such offices may not currently be in place.

Your 100-day plan

In 100 days, create a software-defined networking (SDN) mandate that frames value to the business and the impact on IT.

• Assign a champion responsible for SDN trends and technologies.

• Build an initial understanding of the state of SDN.

• Establish a “test kitchen” environment and begin to bring SDN technologies in-house for evaluation.

This time next year

In 365 days, create a SDN strategy defining the business case and the implementation approach.

• Prioritize the areas where SDN will have the largest business impact.

• Create a road map for the SDN deployment plan.

• Prepare the aggregate SDN business case that combines benefits from network agility and cost savings from network optimization.

• Assess IT organizational skill with respect to SDN and train or recruit to fill the gaps.

• Develop a network transformation plan to embed SDN into the corporate architecture.

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Insurance Report

IT’s core challenge is to change the way that security is viewed across the organization. Today, security is widely considered to be a hindrance to day-to-day business operations. At a foundational level, security must be socialized and be transparent to the various users (e.g., employees, agents and customers). Executive leadership must support and endorse security initiatives so that business units understand and assume responsibility and accountability. Getting to the point that security is viewed as an enabler is the panacea. While this is not a simple change, it is achievable through alignment with business objectives and true partnership with all of the functions within IT.

Your 100-day plan

In 100 days, solidify security on the C-level agenda and define the plan to close the gaps in your security strategy. Develop a holistic strategy across business units and their engagement models (agents, online etc.), business strategies and enterprise systems.

• Work with heads of business to fully understand the business strategy, inclusive of customer, agent and internal visions, and align the security strategy accordingly to each.

• Understand your regulatory requirements across each business area, geographical locations, and key customers.

• Reassess the organization’s reliability needs for critical business IT systems, processes and assets.

• Identify the skills needed to stay abreast of emerging security processes and technologies.

• Revise the security architecture roadmap to have multiple lines of defense (e.g., identity, infrastructure, data, application, etc.)

Because of all these points of entry, companies need to recognize that optimal IT security goes further than prevention – it is about knowing that attackers will get through, and staying one step ahead of them.

The important point is that there is no “silver bullet” that insurers should be waiting for, nor will there ever be. No single tool can handle the scope, scale and complexity of the security challenges of today and tomorrow. The real advantage lies in successfully integrating solutions and approaches – calling for holistic security architecture – and ensuring that the architecture remains flexible enough to deal with the continual flux in security requirements.

IT needs to align with current best practices in security while understanding the new active-defense possibilities and planning for the journey ahead. Fortunately, active defense technologies are emerging to help companies know their enemy, and prevent their enemies from knowing them. They aim to make it more difficult, more expensive and less profitable for attackers to do their work.

Sophisticated data and analytics-driven information security are shifting the security emphasis from monitoring, to understanding, to taking preemptive action. Solutions for web crawling and web analysis can detect potential threats and planned attacks before malware authors or hackers have had an opportunity to execute them. Meanwhile, moving-target defense systems turn computer systems into moving targets that are harder for attackers to pin down, to find and exploit vulnerabilities.

Active defense: adapting defenses to threatsWith insurance companies transforming into digital businesses, it is critical that measures are put in place to secure sensitive data, applications and systems. In a business as dependent on trust and reputation as insurance, no organization can afford the operational, financial, legal or reputational risks attached to a breach of its security.

As the digital transformation takes hold, insurance companies’ IT departments are struggling to keep pace with recent advances in security technology. They know that perimeter and even endpoint security is not enough. However, the realization or business justification to implement an active defense (i.e., risk-based approaches to security management, analytics-driven event detection, and reflex-like incident response) is still at an early stage.

Insurance companies and their agents, business partners and customers are sharing more information online than ever before. While this is enabling business growth, it increases the attack surface by engaging a greater number of devices, systems and people. It is also difficult to persuade business partners to protect data at the same level as they do.

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Accenture Technology Vision 2013

• Evaluate your threat scenarios to identify missing perspectives that would improve your security effectiveness and ability to act on each scenario.

• Identify the insurance sharing communities where you want to participate and generate and share valuable insights.

This time next year

In 365 days, start addressing the weakest security links.

• Focus on end users. While each type of user has a different relationship with the company and thus different needs, most threats can be minimized using pragmatic approaches.

• Accept that “bring your own device” will be part of the agent strategy and work to provide access to systems and data in a manner that supports this strategy while still maintaining a multiple layer of defense.

• Test and confirm responses to security breaches.

• Implement additional lines of defense called out in the strategy.

• Begin experimenting with technologies for security analytics.

• Acquire the skills necessary to stay abreast of emerging security processes and technologies.

• Engage with your chief counsel and chief risk officer on risk tolerances and the evolving threat landscape.

• Build security capabilities into core business platforms (e.g., claims systems).

• Develop a business partner assessment with defined security requirements and penalties. Based on the risk, this should be monitored continually.

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Insurance Report

Beyond the cloud: weaving it into the enterprise to create business valueThe benefits of cloud computing, in terms of cost reduction and enterprise agility, are already well-understood and leveraged in many industries. The crucial question for insurers, therefore, should not be why to use the cloud, but rather how to put it to work in a manner that creates business value.

Yet only a few insurers are really exploiting the infrastructural advantages of a true hybrid cloud environment that utilizes provision models such as infrastructure as a service (IaaS), platform as a service (PaaS) and software as a service (SaaS). They should accelerate deployment to seize the opportunities it offers. Leveraging cloud services for core transaction processing functions such as first notice of loss, an application can be brought to market in four months rather than two years, and in a manner that reduces costs and shifts the IT investment from capital to operational expenditure.

Foundational IaaS, blended with the cloud-enabled technologies of analytics and social media, promises to enable insurance companies to change their business models in even more profound ways. It can allow them to redefine their core competencies, offer new services and build networks of partners and customers they could not access in the past.

Accenture believes that the following trends will have a major influence on how insurance companies use the cloud in the future:

Real-time data collection

The cloud will enable real-time data collection from sources such as plant and warehouse sensors, recording temperature and humidity for commercial lines P&C carriers, home data sensors for house insurance, and health and lifestyle data for life insurance. This will provide a primary source of innovation and allow for more accurate risk estimation and better pricing. Rather than pricing by segment, group or location, insurers will use cloud’s computing power to offer personalized pricing.

Test-and-learn

Carriers will increasingly leverage the cloud stack to enable test-and-learn practices as well as to promote agility in their businesses. They will use the cloud to bring new services and products to market quickly by creating new partner networks with alliance partners and joint venture partners, such as location-based service providers, telematics data providers, security firms, home automation specialists, and so on. Or they will rapidly scale up back-end claims processing in the cloud to handle high demand, processing claims in the field via a mobile workforce when a natural disaster strikes.

Customer-centricity

The cloud will power the evolution of insurance from product-centricity to customer-centricity. Social platforms and the data they yield will foster intimacy and trust with consumers. To achieve this, carriers must shift their current approaches to applications and infrastructure with the as-a-service model at the forefront of their efforts.

Private software as a service

Larger carriers will begin moving their core application platforms to private software as a service (PSaaS) solutions. This will allow standardization in their application ecosystems, while providing business units with more transparency, tighter cost control and optimized business utilization.

Service integration

Challenged by the need to manage multiple cloud providers, contracts, service level agreements and helpdesks, insurers will embrace service integration. Since this is an evolving space, there are not yet many service integration offerings and providers to choose from. This will change in the next couple of years.

Mobile solutions

Mash-ups of cloud-enabled technologies will enable new mobile opportunities, such as the blending of insurers’ mobile applications with social-enabled mobile solutions.

The Internet of things

Before long, insurers will begin tapping into the Internet of things, where all devices will be connected and significant data will be continually sourced from these devices. Insurers need to prepare not only for this influx of data, but also how they will use it to reduce loss costs and adjust premium models.

The first step towards getting business benefit from the cloud lies in weaving cloud capabilities into the fabric of the enterprise. Whether the insurer adopts infrastructure, platforms, or applications in the cloud, the result is usually a mix of on-premises and off-premises technology, made up of legacy systems and traditional software as well as a mixture of public and private cloud.

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Accenture Technology Vision 2013

Yet, many organizations still consider cloud to be tomorrow’s technology, and have not prepared for the rapid growth of hybrid cloud in a proactive, structured way. The hybrid world of cloud and traditional IT will require a number of changes in the enterprise of today.

First are skills. A hybrid world demands hybrid skills and a technology architecture group that understands how different components can work seamlessly together.

Secondly, the IT organization needs the ability to govern an array of capabilities inside and outside the cloud, so that the business can turn them into new opportunities.

Thirdly, the legal department will need to be involved in managing multiple agreements with a wide range of new cloud service providers.

Finally, traditional approaches to enterprise architecture will need to change. As-a-service models for infrastructure, platform, software and business-process change the way technology is consumed, integrated, orchestrated and secured, and bring with them new ways technology can add value to the business.

Your 100-day plan

In 100 days, agree on a cloud strategy that emphasizes cloud as an enabler of business growth and the operating model needed to support the strategy, including people, processes, tools and governance among others.

• Create an inventory of current cloud deployments across the enterprise – public and private, IaaS, PaaS, SaaS, diversity of cloud vendors, and so on – in order to build awareness among leadership.

• Look at the external marketplace for representative / peer cloud success stories to broaden understanding of the art of the possible.

• Identify and prioritize opportunities to implement services in the cloud within your existing IT road map, particularly in near-term application modernization – challenge yourself to think “cloud first”.

• Evaluate the cloud knowledge and skills of your IT organization. Update training and recruitment plans as necessary to provide the capability to lead the rest of the organization forward.

This time next year

In 365 days, execute your cloud strategy; implement it piece by piece as your company buys, builds, and connects to its next generation of IT services.

• Create decision criteria for cloud selection and readiness evaluations.

• Consider implementing an interim (two- to three-year) cloud team that focuses on growing cloud technologies, services, and changes that should be adopted by your enterprise.

• Update your cloud strategy to create company standards for procuring and managing cloud services. Extend your operations architecture and services catalog to include private and public cloud services.

• Implement a service integration solution to manage and support your long term infrastructure and cloud ecosystem.

• Integrate cloud into your other technology road maps – use cloud to enable social, mobile, or analytics. All your approaches need to be cloud-ready.

• Update your enterprise architecture in preparation for partitioning of data and services across hybrid cloud deployments. Create an architectural review process to evaluate new IT projects for cloud usage.

• Acquire cloud skills aligned to your chosen platforms through recruiting or training and embed these skills in your project teams.

• Actively govern your use of cloud – continuously evaluate cloud usage and providers against your plan and standards.

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Insurance Report

Destination: Digital excellence

The technology trends outlined in this document can help insurers to successfully address their most pressing challenges and opportunities, creating a platform for digital excellence and measurably improving business performance in the process. Perhaps more importantly, they will enable insurers to survive and thrive in a world of changing business models and consumer expectations.

The most successful digital insurers of tomorrow will be those that look beyond merely enhancing their current operations, to evolving or even reinventing their business models. They will constantly anticipate, respond to, and even preempt technology-driven disruptions. These companies see digital as a strategic imperative – a tool for competitive differentiation.

They aren’t waiting for new technologies to be developed or to mature before they act. Such insurers understand that many of the items continuously listed as “hot trends” – mobile, cloud, social, virtualization, big data – are well past the point of exploration and experimentation. They are the practical tools with which companies can craft fast, cost-effective solutions to some of their toughest problems – and greatest opportunities.

The winners of the future will be those carriers that can put the customer at the center of their business. In many cases, this will entail the development of business ecosystems that pull together a number of related providers. Carriers must be nimble to build better alliances and joint ventures with partners from a range of industries so that they can create new value propositions for their customers.

The combined capabilities of this group of collaborators will result in innovative suites of products and services that are relevant and personalized, and make life and business better and easier for their customers. Within this ecosystem, the successful insurers will own the customer relationship, and will convince their customers that insurance is a source of genuine value rather than an essential purchase.

Farsighted insurers are recognizing IT as a strategic asset with which they can enable this shift. These visionaries understand that there is a single choice: harness emerging technology today to gain an advantage over slower-moving competitors or face a fight for relevance tomorrow after the leading insurers have reshaped the market.

These companies are grasping technology’s potential to renew vital aspects of their operations – optimizing at least and innovating at best. They are investing in the digital tools and capabilities to more easily identify useful data, evaluate it, analyze it, derive insights from it, share it, manage it, and most essentially, act on it for transformation of the customer experience.

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Accenture Technology Vision 2013

Figure 2: Aligning insurance drivers with recommended initiatives

Understand the customer and reach out to the right customer at the right time through the right channel with the right product

Integrate multiple channels to provide a consistent experience

Focus on improving customer service, while leveraging low cost channels

Create an M&A engine with the capability to obtain cost and revenue synergies in less than 12 months

Develop simple, innovative products targeted at customers in emerging markets

Explore cloud-based offerings

Enable mobile and social media as channels

Make digital marketing more relevant

Use cloud computing to save costs and improve agility

Increase revenue from current customers

Reduce IT running costs and ensure sustainable cost reductions come at speed

Improve cost-to-income ratio

Leverage low-cost channels

Changing consumer attitudes and behavior

Shift in growth

Financial crisis legacy

Consumerization of IT

Insurance Drivers Typical Initiatives Required

Focus on risk management

Data management, analytics and risk modeling, IT infrastructure, better integration of finance and risk processes

Offer location-based services with attractive pricing

Directly reach out to customers

Improve competitive intelligence

Redistribute costs from operations to transformation

Changing face of competition

Increased risk and regulatory pressures

For more information

www.accenture.com/insurance www.accenture.com/technologyvision

John Del Santo Senior Managing Director, Global Insurance john.l.delsanto@accenture.com

Andy Starrs Group Technology Officer, Financial Services andrew.starrs@accenture.com

Emmanuel Viale Managing Director, Accenture Technology Labs emmanuel.viale@accenture.com

About AccentureAccenture is a global management consulting, technology services and outsourcing company, with approximately 261,000 people serving clients in more than 120 countries. Combining unparalleled experience, comprehensive capabilities across all industries and business functions, and extensive research on the world’s most successful companies, Accenture collaborates with clients to help them become high-performance businesses and governments. The company generated net revenues of US$27.9 billion for the fiscal year ended Aug. 31, 2012. Its home page is www.accenture.com.

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