2016年後半のカンファレンスを振り返る

カンファレンスは、いつも刺激に溢れています。2016年もアジアの各地で、パネルディスカッションやプレゼンテーションの機会に恵まれました。自らのプレゼンテーションを通じて、過去のリサーチ成果を発信するだけでなく、カンファレンス・チェアやパネル・モデレータの役割は、業界ソートリーダーとのインプロビゼーションであり、将来のリサーチトピックスやインサイトテーマを仕込む、貴重な瞬間です。人が出会い、意見を交換し、議論を深める。そのための準備と当日の緊張感は、アナリストの責務であり、醍醐味でもあります。 本稿では、2016年後半の5つのカンファレンスを振り返ります。銀行、保険、証券、ウェルスマネージメントの各業界の議論に共通したキーワードは、引き続き、フィンテック、デジタル、そしてモダナイゼーションでした。
***

Insurance, Digitization and Bubbles(7月1日:東京)

保険業界は変革を迫られています。超低金利、新規事業参入者の増加、激化する価格競争、顧客との関り方の急激な変化が、保険会社の商品/ビジネスモデルを揺さぶっています。モノのインターネットやスマートロボットだけではなく、いまやブロックチェーンも保険業界に大きく影響しつつあります。 こうした新しいテクノロジーは、本当に業界を根底から変えてしまうのでしょうか? 仮に変化があるとするならば、いつ、どんな出来事が、どのような順序で起こるのでしょうか? セレント主催の本イベントでは、世界の保険業界におけるデジタル改革の最新トレンドを紹介し、お招きした日本の保険業界を代表するソートリーダーの皆様と、中長期的な視点での将来像を模索しました。
  • 世界の保険業界におけるデジタルトランスフォーメーションの最新トレンド
  • InsurTechが保険業界の未来、ビジネスモデル、事業運営に与える影響
  • 短期、中長期的な視点での展望、業界の未来図
  • 日本におけるInsurTechの現状と展望
Insurance, Digitization and Bubbles
***

Asia Anti-Money Laundering Summit713-14日:シンガポール)

アジアにおいても欧米同様に、規制の継続的な改正、最大手の金融機関における規制違反事例など、AMLの運営管理全般を改善する必要性が高まっています。電子取引の爆発的な普及は新たな課題をもたらしており、金融機関が様々な事象をチェックする際に、もはや規制当局や政府公認のブラックリストだけでは不十分な状況にあります。 AMLはまた、海外業務を展開する大手銀行だけのテーマではなく、全金融機関において同様な備えとその効率化が問われる時代となっています。本イベントは、アジアの保険業界を中心としたコミュニティにおいて、AMLとKYCを真正面から討議する場となりました。 セレントからは当日、以下の既刊レポートを中心に、「ユーティリティモデルの隆盛とAI適用」に関する報告を行いました。 Asia Anti-Money Laundering Summit
***

Asia Insurance Technology Awards95-6日:シンガポール)

2016年も引き続き、セレントは、AIR の主催する Asia Insurance Technology Awards (AITAs) の審査員を務めました。アジア各地の保険業界における、イノベーションと現代化に関する先進的な取り組みを表彰するこのイベントは、セレントの主催するアワード:セレントモデルインシュアラー と併せ、当社アジア保険部門の2大イベントとなります。 新たなテクノロジー、ビジネスモデルそして業界構造や組織変革への取り組みが、6つアワードカテゴリーにおいて表彰されました。中でも、Best Newcomerに輝いた Everledger(英国)、Digital Transformationを獲得した PetSure(オーストラリア)の両社は、InsureTech時代を象徴する取り組みと賞賛されました。
  • IT Leadership: Liberty Videocon General Insurance
  • Best Insurer, Technology: New China Life Insurance, Max Life Insurance
  • Digital Transformation: AXA Asia, PetSure (Australia)
  • Big Data and Analytics: AXA Hong Kong
  • Best Newcomer: Everledger
  • Innovation: IDBI Federal Life Insurance, Ping An Property & Casualty Insurance Company of China
Asia Insurance Technology Awards
***

5th Asia Insurance CIO Technology Summit95-6日:シンガポール)

AITAと同時開催のアジア保険CIOサミットにおいて、キーノートスピーチ「InsurTech & Digital: A Global Round-Up 」を提供しました。 さて、保険会社の存在価値とは何でしょうか?
  • 安心、安全、健康な人生を支援する
  • 企業活動の全てのリスクを担保する
  • 人生の、企業活動の不安とリスクを軽減する仕組みの提供
様々な表現で語られますが、全てに共通することは、「顧客中心」主義。一方で、これまでの金融機関におけるテクノロジー活用の中心命題が、長らく
  • システム化による、人手から機械への代替による合理化、コスト削減 であったことは事実です。
しかし、テクノロジーの進化とその爆発的な普及は、こうして古典的な命題を激変させました。本キーノートでは、情報とテクノロジーを手にしたデジタルな顧客に対峙する現代の金融機関は、
  • 「デジタルな顧客中心」主義であるべき と提唱しました。
また、デジタル世紀の金融機関が遭遇している、急激な業界構造の変化に対して、
  • 「戦略自由度の担保」とそれを実現する「アーキテクチャ」 も提案しました。
5th Asia Insurance CIO Technology Summit
***

TradeTech Asia 20161019-20日:シンガポール)

キャピタルマーケットとウェルスマネージメント業界の祭典 TradeTech Asiaは、今年もシンガポールで開催されました。セレントは長年、このイベントのカンファレンス・チェアやモデレータを務めてきました。ウェルスマネージメントにおけるロボアドバイザーの台頭、トレーディングデスクにおけるAlgoからAIへのシフトが鮮明だった2016年は、アジアの機関投資家の方々と、以下のパネルに参加しました。
All Star Panel: How can you use machine learning and artificial intelligence for predictive analysis and accurate analytics?
当日は、セレントのAIフレームワーク:人口知能モデルを披露し、資本市場、資産運用ビジネスにおける、AI活用の現状と展望に関して、以下の事柄に言及しました。
  • トレーディングライフサイクルの最適化におけるAIの役割
  • 投資分析の予測能力や正確性を向上させるAIの適用方法
  • リサーチ:投資分析やポートフォリオ分析におけるAI活用
  • AIとコンプライアンス:不正取引の監視におけるAIの活用
  • 購入か利用か、構築か?:AIにおけるフィンテック企業の可能性
TradeTech Asia 2016  

Core System Strategies for the Fintech Age: LEGACY MODERNIZATION IN INSURANCE INDUSTRY, Part 6

Finally, we will speak out the proposal from three perspectives…

  1. Automation to Complex Systems
  2. Core Standard and Local Variation
  3. Review Sourcing Models

Winding down this post series, Celent would like to put forth an approach specifically tailored to helping insurers formulate modernization plans.

This entails determining top-priority business strategy challenges, formulating a solid scope definition sufficiently reflecting a firm’s capabilities, strengths, and appetite for risk, architecture design, and assessing the feasibility of the project.

***

 

LANDSCAPE AND TARGETING

It is important to create a conceptual diagram that will function as a systems map, containing the peculiarities and implied information to give stakeholders a clear overview of the systems.

In addition, using a system landscape, which is an accepted industry approach to convey knowledge (including the constitutive elements of the core systems in the context of business goals and by involved stakeholder), companies can thrust the unique and peculiar elements into relief.

This task will probably be unfamiliar to Japanese insurers who have designed, developed, operated, and maintained their own core systems. In short, it will be difficult to determine

  • What is standardized?
  • What is peculiar?
  • What can be outsourced?
  • What should be internalized?

Identifying modernization targets, along with formulating the project scope definition, will facilitate setting business strategy priorities and will help lead to emphasizing core system priorities based on desired capabilities.

FIG6-1: Landscape and Targeting: Insurer System Landscape

FIG6-1

 

MODERNIZATION THAT AVOIDS RECREATING LEGACY ISSUES

The greatest risk of any legacy modernization project is recreating legacy issues.

Indeed, Celent regards this as more significant than both stable system operation and realizing a business case.

It is of paramount importance that modernization projects do not recreate legacy challenges but rather free firms from them. Celent puts forth the three proposals below to help ensure that insurer modernization initiatives are successful.

1. Automation and Its Application to Complex Systems

The key to attaining a high level of operational efficiency, not only among systems, but also with straight-through processing (STP) of insurance office tasks as well as office and communication processes, lies in applying automated business processes to complex systems tasks (this refers to processes that are excessively concentrated and frequently require exceptions processing).

When it comes to communication among insurer stakeholders (customers, intermediaries and agents, employees, management, and others involved in the market), it is important to look at several things including rethinking stakeholder interaction and communication (reports, contact, and consultation routes that occur in daily operations), making communication possible through a portal, and the possibility of consolidating existing applications such as workflow tools.

The capacity for insurance office activities to be automated (core processes, exceptions processing, eligibility criteria, business rule management, and business process management) is rooted in a common infrastructure and the monitoring tools of this infrastructure. The positions and opinions of many internal staff members, ranging from actuaries, underwriters, and marketing staff to name a few, must be considered when, for example, implementing a monitoring scheme, renewing automated rules and processes, and setting and modifying governance rules. In particular, for changes in rules or processes, the transition must be rapid and be able to respond to increased business volume. In addition, the objective of STP is to minimize exceptions processing. Eligibility criteria need to be used from the initial stages of the process even if conducting appropriate process routing.

FIG6-2: Automation to Complex Systems

FIG6-2

 

2. Establishment of Core Standard and Allowance for Local Variation

The key to realizing agile operations and reducing IT costs is determined by reusability and standardization in lower layers. Of the three layers of presentation, business logic, and data, the first two, must be shared to standardize and make the data layer reusable.

This is difficult as shown by the insurer responses indicating that "data model rigidity" is one of the largest IT challenges. While it may be difficult, if insurers do not address this matter, they are doomed to recreate their legacy issues.

FIG6-3: Core Standard and Local Variation

FIG6-3

 

To avoid being ensnared in this pitfall, Celent recommends referencing the below approach. These are universal issues that are applicable across industries, and Celent hopes to see vendors create tools and strategies that offer better solutions to this problem.

  • Presentation layer:
  • Configuration for unique user interface (even if fixed or common, configure using tool base).
  • Equip with framework for items such as shared user interface, reporting, and audit procedures, security (even if for unique user specifications, configure using tool base). 
  • Business logic layer:
  • Architecture allowing common office processes and unique variations to operate in tandem.
  • Equip with rule library to implement unique variations and common office processes (even if for unique user specifications, configure using tool base). 
  • Data layer:
  • Standard data model and field for adding unique items.
  • Mechanism to allow the use of non-structured data.

FIG6-4: Core Standard and Local Variation (cont.)

FIG6-4

 

3. Review Sourcing Models

Formulating a modernization plan should include a review of sourcing models. This should start with the design phase, involve assessment of the build phase, and sufficiently verify plan feasibility.

Global insurance IT firm offerings are many with options spanning core system build, operation, and maintenance. IT firms have expanded their scope of activities to include areas such as maintenance of existing applications, testing relating to the center of excellence (CoE), and data migration.

FIG6-5: Review Sourcing Models

FIG6-5

 

We should conclude this post series in this page.

KRQ #3: What does an insurer roadmap to modernization look like?

We’ve found the following:

  1. Legacy modernization framework.
  2. Understand your organization’s priority challenges and risk tolerance.
  3. Scope definition.
  4. Ensure that your modernization does not simply reproduce legacy issues.

 

Related releases:

Legacy Modernization in Japan’s Insurance Industry, Part 1: Survey Analysis and Status Update

Legacy Modernization in Japan’s Insurance Industry, Part 2: Prescriptions and Proposals

 

Back to the top of this topic – Click here

Core System Strategies for the Fintech Age: LEGACY MODERNIZATION IN INSURANCE INDUSTRY, Part 5

LEGACY MODERNIZATION FRAMEWORK

Since its inception, Celent has helped host countless events to facilitate financial institutions selecting the optimal next-generation core system.

Sometimes as a project management office (PMO), other times as a third party advisor, Celent has long been deeply involved in working with financial institutions on processes to optimize core systems.

Rooted in this wealth of advisory experience spanning countless projects, Celent has formulated and suggests using the theoretical yet practical framework in this table.

In the modernization project, three things you should know before starting a tender are:

1. VISION AND CONCEPT

  • Initial motivation and direction

2. CHALLENGE AWARENESS

  • Management, systems, products and services, business process and its priority

3. EXPECTED CAPABILITIES

  • Quantitatively, qualitatively, need to measure the ability of your organization

FIG5-1: Legacy Modernization Framework

FIG5-1

 

The next three things you should need are Methodology for the best project execution:

4. SELECTION PROCESS AND POLICY

  • Usually, it is the Constitution of the project, the project charter to be a live document, these seven items are described.

5. SCOPE DEFINITION

  • Not only the solution to be implemented (the new system and the new organizational structure), all of the things that the organization is involved up to its realization, without omission, rather than duplicate, each other without contradiction, MECE (Mutually Exclusive and Collectively Exhaustive) is essential.

6. REVIEW PROCESS

  • Especially in its project members, evaluation team, it is necessary to ensure the cross-organizational human resources:from both sides of the solution evaluation and commercial evaluation.

FIG5-2: Legacy Modernization Framework (cont.)

FIG5-2

 

When selecting a next-generation core system, the important thing is not to depend on industry-specific differences or degrees of complexity, but to establish a methodology that is versatile.

In other words, the essence of legacy modernization is a comprehensive framework.

That should highlights top-priority business strategy challenges, includes architecture design, and fully reflects the scope definition in light of a firm’s capabilities and strengths to assess the feasibility of the project, all while making sure that it is a good fit.

The KFS are Scope Definition; Understanding Your Risk Tolerance and Organization’s Priority Challenges.

FIG5-3: Scope Definition

FIG5-3

 

Factors that will be crucial to determine the success of system modernization projects include firmly understanding your organization’s priority challenges and appetite for risk coupled with a good project scope definition.

This involves determining priority areas, what to procure and build, and what to cut — all within the scope of your risk tolerance.

Maximizing the use of limited business resources to respond to increasingly diverse and sophisticated digital users’ needs cannot be achieved by simply letting things take their natural course; rather, this requires intent and taking the initiative.

FIG5-4: Legacy modernization is a strategic move in digital innovation

FIG5-4

 

Related releases:

Legacy Modernization in Japan’s Insurance Industry, Part 1: Survey Analysis and Status Update

Legacy Modernization in Japan’s Insurance Industry, Part 2: Prescriptions and Proposals

To be continued – Click to read more

 

Core System Strategies for the Fintech Age: LEGACY MODERNIZATION IN INSURANCE INDUSTRY, Part 4

This post series examines the current status and future directions of legacy modernization in Japan’s insurance industry.

It is based on a legacy modernization survey Celent conducted in 2015. The survey targeted insurers, financial institutions, and brokers. It was supplemented with additional information gathered in follow-up interviews.

The new two-part report is an extension of this work that narrows the focus to the insurance sector.

The Report Part 1 offers an overview of the state of modernization in the industry.

The Report Part 2 builds on this to offer policy prescriptions and suggestions for industry players.

KRQs: Our Key Research Questions are…

  1. Where are Japan’s insurers in terms of legacy system modernization?
  2. What does legacy system modernization mean to insurers and why do they do it?
  3. What does an insurer roadmap to modernization look like?

In Part1 – 3 of this post series, we’ve discussed the KRQ1 – 2.

From Part 4 of this post series builds on this by seeking to answer questions three.

***

 

What about the DIGITAL FINANCIAL SERVICES?

First, we will address the relationship between digitization, innovation, and legacy modernization.

  • Celent advocates that companies revisit how they frame the legacy modernization challenge and stop thinking about it as a system unit or cost center issue.
  • Interviewees told us that it was not that core system business cases were not viable, but that business cases without ownership were not viable. Determining where costs should be allocated and breaking down the attendant benefits are important, but more important is reaffirming that today, success hinges on modernization of core systems and core system business processes for more than half of digital financial services.
  • Companies talk the talk and undertake digital projects, but these are often limited to the front office — that is to say, the contact point with the customer. At the same time, today’s digital consumer is increasingly comfortable with digital processes.

In Europe and the United States, digital native financial services have undertaken modernization of core business processes to such an extent that they will not consider adoption of a process that cannot be digitized. Here, we want to show a diagram that portrays the eight dimensions of digital financial services. Figure 6 draws attention to the importance of core systems of the middle and back office and operational processes, which collectively occupy more than half of the eight dimensions.

FIG4-1: Digital Financial Services

FIG4-1

 

The level of digitization reflects the modernization level of core systems.

In other words, the digitization of customer behavior spurs a shift in the digital processes of financial services (such as STP, automation, and self-service), which in turn drives the modernization of legacy systems — a difficult challenge that many people would rather ignore.

It shows us the stages of digital adoption. It is premised upon a modern core system in the middle and back offices that seamlessly combines with front-end digital channels.

FIG4-2: Digital Transformation

FIG4-2

 

DIGITAL NATIVE INITIATIVES

In the insurance industry, a novel business model is appearing. Still in its early stages, this approach fuses peer-to-peer (P2P) insurance with the traditional insurance model, creating insurance based on small circles or small communities.

This insurance is based on a small inner circle that is akin to a “circle of friends.” This approach has deftly used social networks to find a foothold and niche that meets the needs of digital natives.

It has undergone two or three iterations, is optimizing cost, and growing a new customer base at an extremely rapid clip.

Here also technology is the key to agility.

FIG4-3: Digital Native Initiatives

FIG4-3

 

DIVERSIFICATION OF TECHNOLOGY SOURCING MODELS

In the insurance industry, IT needs have accelerated to an unprecedented pace in the third sector arena, which includes new service sectors such as medical and nursing care, involving the addition of new sales channels and novel underwriting assessment models using AI, the IoT, and robotics.

The securities industry is also experiencing change and heightened requirements in terms of variability and flexibility for core system and back office operations (such as securing availability, variability, and scalability related to processing, latency, and connectivity to accommodate varying transaction sizes).

SaaS and BPO are no longer the latest and greatest technologies. Instead they are only two of the available sourcing model choices to accommodate the level of involvement that financial institutions and their technology partners desire as well as their resource, cost, and risk parameters.

Like best execution and optimized trade market selection, these choices are subject to pressure from sponsors and shareholders. Selecting technology models that can accommodate varying transaction volume and frequency is becoming the norm, and relationships between financial institutions and technology vendors are changing from a more specialized model to a more utility-based model.

FIG4-4: Technology Sourcing Models

FIG4-4

 

Related releases:

Legacy Modernization in Japan’s Insurance Industry, Part 1: Survey Analysis and Status Update

Legacy Modernization in Japan’s Insurance Industry, Part 2: Prescriptions and Proposals

To be continued – Click to read more

 

The 2017 Model Insurer Asia Nominations Start Now!

Every year, Celent recognizes the effective use of technology through its Model Insurer Asia Awards program. We are pleased to announce that the nomination period for 2017 award is now open.

From September 15, we will be accepting Model Insurer Asia nominations. The window for new entries will close on November 30. We are looking forward to receiving your best IT initiatives. The Model Insurer Asia award program recognizes projects that essentially answer the question:

"What would it look like for an insurance company to do everything right with today’s technology?"

It awards insurance companies which have successfully implemented a technology project in five key categories:
•Data mastery and analytics.
•Digital and omnichannel technology.
•Innovation and emerging technologies.
•Legacy transformation.
•Operational excellence.

Past winners include Max Bupa Health Insurance, Ageas Insurance Company (Asia), AXA Asia, Birla Sun Life Insurance, Tokio Marine & Nichido Fire Insurance, Yingda Taihe Property Insurance, Cathay Century Insurance, and Ping An Direct to name a few.

Does your company have what it takes?

If you believe that your company exhibits best practices in the use of technology, please read the Model Insurer Asia Submission Guidelines, and complete the brief nomination form by November 30, 2016.

Asia Insurance CIO Technology Summit에 다녀와서…

2016년9월5-6일에 싱가포르에서 개최된 Asia Insurance CIO Summit를 다녀왔다. 100명 가까이 되는 참가자들이 모여 성황리에 끝났다. 보험사, IT업체 그리고 스타트업들이 모여 자리를 빛냈다.

이틀간에 걸쳐 열린 이 이벤트의 첫날째는 보험업계의 방향성을 논하는 발표들이 눈에 띄었다. 접근방식에 다소 차이는 있으나 고객중심적으로 발전해가야 한다는 이야기가 많았다. 또 첫날째에는 저희 Celent가 심사위원을 맡은 제6회 Asia Insurance Technology Awards 시상식도 있었다. 모든 사례를 보고 수상자 선정을 한 저이지만, 발표를 보고 다시금 놀라웠다. 특히 PetSure (Australia) Everledger와의 만남은 인상 깊이 남았다. 응모용지나 기사에서는 못 느낀 기세를 느끼며 압도 당했다. 앞으로의 계획도 이야기를 나누어 주셨다. 그 이야기를 들으니 더 흥미진진해졌다. Celent에서는 이러한 best practice들을 수집하고 추적 관찰을 하고 있고, 앞으로도 그럴 것이다.

이틀째는 스타트업을 중심으로 한 InsurTech 관련된 이야기가 이어졌다. AI를 활요한 보험업계의 접근 방법, P2P 보험의 진화에 관련된 발표들이 인상에 특히 남았다. 그 중 싱가포르에서 창업된 P2P보험사 Insubee의 동영상을 소개한다.

https://www.youtube.com/watch?v=G-lv_4VHCAk&feature=youtu.be

본격적인 서비스 개시는 내년 초를 게획하고 있다고 한다. 초기에 나왔던 P2P보험의 약점을 보완한 비즈니스모델이라는 평가다. 서비스가 개시된 뒤, 이 모델이 어느 정도 받아들여지는지 궁금하다.

Asia Insurance CIO Technology Summit에 참여해 여기에서는 못 쓰는 이야기들도 다양하게 보고 듣고 왔다. 더 자세한 디스커션을 원하시는 분은 아래 연락처로 연락을 주시기 바란다.

공경순 (Celent analyst) kkong@celent.com  
Mr. Yuya Fukumori (Celent account manager 한국시장 담당) yfukumori@celent.com

 

Announcing the winners of the 6th Asia Technology Insurance Awards

Celent and Asia Insurance Review hosted the 6th Asia Insurance Technology Awards (AITAs) at AIR’s CIO Technology Summit at Mandarin Orchard Singapore on September 5, 2016. The AITAs recognize excellence and innovation in the use of technology within the insurance industry. This year we’ve received over 40 nominations from Australia, Hong Kong, Taiwan, China, India, Sri Lanka, Malaysia, Japan, Singapore and the Asia Pacific Headquarters of global insurers. There were many impressive submissions, from which our international panel of Celent insurance analysts selected the very best to receive the six awards.

Digital Transformation Award
This award honours an insurer who has made the most progress in implementing digitization initiatives. The winner was AXA Asia and PetSure (Australia). AXA Asia implemented Health Claims Portal (HCP), includes a mobile app and a web portal. Portal is available to four key user roles: 1) Customer & group scheme members for digital/self-service, 2) intermediaries including brokers and agents, 3) corporate HRs for their managing their group health schemes, and 4) back-office support and administration. The tool would be available in 7 markets from 12 AXA Life and GI entities. PetSure (Australia) implemented Vet Hub: getting vets to directly submit the claim from within their own PMS system, and a new portal for customer to track progress has been developed.

IT Leadership Award
This award honors an individual who has displayed clear vision and leadership in the delivery of technology to the business. The recipient will have been responsible for deriving genuine value from technology and has demonstrated this trait with a specific project or through ongoing leadership. The winner was Sriram Naganathan – CIO, Liberty Videocon General Insurance. Liberty Videocon General Insurance implemented Digital Enterprise Program including Delivery Platform, Enabling Platform and Data Platform. The vision and leadership in the delivery of technology to business belonged to the company’s CIO, Mr. Sriram Naganathan.

Best Newcomer Award
This award recognizes the best new player in the insurance technology field. The winner was Everledger. Everledger Use blockchain technology, built a permanent, global, digital ledger that tracks and protects diamonds and other luxury goods on their lifetime journey by providing insurance companies, financiers, traders, consumers and law enforcers with an immutable history of an item’s authenticity, existence of ownership.

Best Insurer: Technology
This award honors the insurer who has made the most progress in embracing technology across the organization. The winner was New China Life Insurance and Max Life Insurance. New China Life Insurance implemented Magnum Mobile, the smart mobile underwriting system developed by Swiss Re, built into a point-of-sale tablet for agents. During the FY 15-16, Max Life IT team has executed over 50 significant projects for either improving user experience or productivity, meeting regulatory/statutory requirements or for internal usage, and has made big progress in embracing technology across the organisation.

Big Data and Analytics Award
This award honours insurer or broker who has made the most progress in utilizing data analytics technologies. AXA Hong Kong was the winner. AXA Hong Kong developed a customer retention model and designed retention effort to maximise the long-term customer value including Create Holistic Customer View, Identify High Value Customer, Predict Success Retention Probability and Prioritize Retention Effort.

Innovation Award
Finally, this award recognizes the innovation business model  applying of emerging technology, or the innovative usage of technology. IDBI Federal Life Insurance and Ping An Property & Casualty Insurance Company of China won the award. IDBI Federal Life Insurance creates a new distribution channel platform through which customers can directly purchase insurance products without any intermediary. They launched the e-channel with a different strategy – Think Different, Think Opposite. Ping An Property & Casualty Insurance Company of China implemented Smart Selfi: Mobile platform for vehicle insurance sales force , gave full play to the advantages of the mobile internet. Key Functions are underwriting, connecting the printer, commission discount, team maintenance.

We look forward to more submission in 2017!

 

LEGACY MODERNIZATION IN INSURANCE INDUSTRY, Part 3

WHAT DOES IT MEAN TO MODERNIZE A CORE SYSTEM?

There are Two Major Modernization Propositions for Insurers:

Let’s think about what modernization means to an insurer. Respondent answers to this Celent survey indicated that they expected modernization to yield more agile business operations and to reduce IT costs.

This prompts the question: How do they expect to make this happen? Celent advocates these two propositions.

  1. Straight-through processing (STP) for insurance office processes
  2. Realizing operational efficiency that extends beyond the system, including office and communication process operations

These propositions involve:

  • Communication between insurer stakeholders (customers, intermediaries and agents, employees and management, and other involved parties) and
  • Using common infrastructure and monitoring tools to control the capacity to automate insurance-related office processes (core processes, exceptions processing, suitability criteria, business rule management, and business process management).

FIG3-1: Two Major Modernization Propositions

FIG2-3

 

And we have already found out Five Approaches to Modernization:

Celent’s survey results clearly indicated Japan’s insurer system replacement strategies to be the following:

  • System replacement with a new system
  • Rewriting with new code
  • Replacement with a new platform.

For insurers undertaking modernization, Celent puts forth five approaches as examples.

Insurers can use these to gauge their risk tolerance and select an approach that best fits their needs.

FIG3-2: Five Approaches to Avoid ‘Bad Legacies’

FIG2-4

 

New Technology and the Need for an External Perspective

Core system modernization projects require a long-term perspective. This perspective must have one eye on the future, be driven by technology, and consider factors that will drive business model transformation.

  • An example of the successful transformation of a business model in progress is nonlife insurer use of telematics to calculate individualized rates for policyholders. Already, this technology is offering a glimpse of things to come and a disruptive business model that is emerging in auto insurance rate calculation and underwriting.
  • One example of this is post-underwriting assessments in life insurance that use the socalled “Internet of Things” (IoT). The IoT era is an era of sensors. External biomonitors, such as fitness bands and wearable computers, track everything from body temperature, pulse, and blood details to oxygen consumption and exercise volume to generate information about the user’s health level and risk for disease.

In other words, core system modernization extends beyond the replacement of internal IT assets.

  • An internal perspective that considers the future is of course important, but in addition to this, an external, more macro view of modernization is also indispensable.
  • The challenge that insurers face is to improve the caliber of their internal system while building a platform that will enable them to do more and do it better by adding competencies in the future. Ultimately, this entails preparing architecture that will enable them to take advantage of external opportunities.

FIG3-3: The importance of external perspective

FIG2-5

 

KRQ #2: What does legacy system modernization mean to insurers, and why do they do it?

We’ve found the following:

  1. Insurer legacy system modernization means migrating an insurer’s core system, including business operation functions, integration, support, new product development, scalability, and sourcing models, to a more modern configuration to streamline operations and create new business opportunities.
  2. Business drivers of system modernization are typically a desire to implement a growth strategy, restructure and rebuild business units, and realize new processes (high-efficiency STP) to respond to changes (more digitization) in demand.
  3. Modernization should be conducted carefully to avoid reproducing the legacy issues it is designed to eliminate. An external perspective is essential. This perspective should be focused on ensuring that the result is fueled by technology and can drive business model transformation.

 

Related releases:

Legacy Modernization in Japan’s Insurance Industry, Part 1: Survey Analysis and Status Update

Legacy Modernization in Japan’s Insurance Industry, Part 2: Prescriptions and Proposals

To be continued – Click to read more

 

LEGACY MODERNIZATION IN INSURANCE INDUSTRY, Part 2

Insurer core systems do not always evolve in the most planned, orderly way.

In a certain sense, their development can be quite random. But in terms of application area, they could have arrived in their current position by taking the path of least risk.

  • Through mergers and acquisitions, insurance companies have maintained multiple core systems seeking business merits other than IT.
  • When wading into a new business area, insurers have tended to use new or different core systems or systems infrastructures.
  • Repeated business integrations, forays into new markets, and waves of sales channel changes have taken a toll on the core systems of insurers.

Today, these superficial solutions are reaching their limit, and solutions that tackle root causes rather than symptoms are necessary.

It is clear that the heart of the cause is the contract management system, which includes the core processes and records of insurance contracts, and underpins all of the general insurance services provided to policyholders.

FIG2-1: Insurer Core Systems and Legacy Modernization

FIG2-1

 

Celent has consulted on many insurer legacy modernization projects.

At the outset of these projects, Celent asks the CEO and CIO a number of questions similar to those below.

CEO Questions:

  • How long does it take to get a new product to market?
  • What’s your average cost per policy?
  • How many systems does your call center staff have to access to answer a customer query?

CIO Questions:

  • Do product changes require customization of code?
  • How easy is it to integrate current apps into new ones?
  • Are you spending more on keeping the lights on versus new projects?

These are among the questions that executives need to ask themselves when they look to tackle IT challenges (e.g., data model rigidity, lack of application flexibility, IT duplication, and associated labor efforts).

If you already know the answers to these questions, then the typical challenges insurers face spelled out in this report likely do not exist for you.

The issues broached here are not the kind of challenges that can be resolved by improving peripheral systems or patchwork core systems solutions.

 

For financial institutions that have designed, developed, operated, and maintained core systems themselves, formulating a replacement strategy is akin to putting together a plan to travel to an unknown world.

  • Such a situation requires correct understanding, which mandates a bird’s-eye view or systems map of the entire firm (as-is state) coupled with recommendations for the system to be (to-be state).
  • Moreover, companies must select the solution that best matches their needs from existing solutions in the market. The key is the business requirements document (BRD).
  • This means defining the operational functions and system requirements that will satisfy the next system’s needs.
  • Often, understanding the current situation accurately is not easy, the ideal system goes unrealized, and companies end up with something approximating a reproduction of the legacy system.

Thus, it is crucial to distinguish between the legacy and modern systems.

FIG2-2: What is modernization and a modern system?

FIG2-2

 

Related releases:

Legacy Modernization in Japan’s Insurance Industry, Part 1: Survey Analysis and Status Update

Legacy Modernization in Japan’s Insurance Industry, Part 2: Prescriptions and Proposals

To be continued – Click to read more

 

LEGACY MODERNIZATION IN INSURANCE INDUSTRY, Part 1

This post series examines the current status and future directions of legacy modernization in Japan’s insurance industry.

It is based on a legacy modernization survey Celent conducted in 2015. The survey targeted insurers, financial institutions, and brokers. It was supplemented with additional information gathered in follow-up interviews.

The new two-part report is an extension of this work that narrows the focus to the insurance sector.

  • Part 1 offers an overview of the state of modernization in the industry.
  • Part 2 builds on this to offer policy prescriptions and suggestions for industry players. 

I hope that this post series will act as a catalyst for legacy modernization initiatives at financial institutions and aid in the pursuit of innovation.

DEFINITIONS :

  • Legacy modernization: Updating an existing system.
  • Legacy system: Systems that have been developed and in place for many years and possess many features but are difficult to upgrade. 
  • Modern system: A system built with high-performance, cutting-edge features that enable easy upgrades and are able to separate code and business rules.

Key Research Questions:

  • KRQ 1. Where are Japan’s insurers in terms of legacy system modernization?
  • KRQ 2. What does legacy system modernization mean to insurers and why do they do it?
  • KRQ 3. What does an insurer roadmap to modernization look like?

Part 1 of this post series answered the first key research question. From part 2, builds on this by seeking to answer questions two and three.

***

As the answers to the KRQ 1, we have been reviewing the following five things through the report Part 1.

  1. More insurers are seriously considering legacy modernization and moving to the implementation stage:  The norm for replacement strategies is increasingly the deployment of a new system rather than a version upgrade or wrapping, with the decision driven by cost, fit with existing IT skill and aptitude levels, and risk tolerance.
  2. As organizations progress to the implementation stage of replacement  projects: they do not always sufficiently consider potential new solutions such as software as a service (SaaS) or business process outsourcing (BPO).
  3. The greatest challenge for companies is selecting the optimal program.
  4. Business cases could be used better: They are generally only used as tools to monitor progress rather than functioning as live documents.
  5. Changes in the roles of business and IT units accompanying modernization: have yet to translate into changes in the responsibilities of these units.

My past report, Legacy Modernization in Japan’s Financial Industry, Part 2: argued that financial institutions looking to modernize should cease targeting a specific customer demographic and shift to a new strategy that incorporates the below points:

  • Create a community with customers using advanced digital technologies.
  • Build an ecosystem across the entire value chain.
  • Adopt technologies that can be reused and improved.
  • Transition to technology as a service, white-label products, and to revenue generating models.

In other words, Celent sees legacy modernization as nothing short of a wholesale upgrade of how companies do business and a strategic move in terms of both digitization and innovation.

Now we will focus on an in-depth look at legacy system modernization for the insurance industry and suggestions for insurers in Japan.

FIG1: Legacy modernization is at its heart the modernization of business

Part1

 

Related releases:

Legacy Modernization in Japan’s Insurance Industry, Part 1: Survey Analysis and Status Update

Legacy Modernization in Japan’s Insurance Industry, Part 2: Prescriptions and Proposals

To be continued – Click to read more