7 Technology Trends

Transforming the
Insurance Industry
HOW INSURERS CAN ACHIEVE GROWTH
TABLE OF CONTENTS

Introduction 3

1. Mobility 4

2. Big Data and Analytics 6

3. Telematics 8

4. Automating Regulatory Compliance 10

5. Improving the Agency Experience 11

6. Social Media and Collaboration 12

7. Distribution Channel Management 14

Conclusion 15

About Vertafore 16
Introduction

The number-one priority for insurance carriers today is profitable growth

and one of the most effective ways to enable this growth is through the use
of innovative technologies. Yet, while they are critical, implementing new
technologies can drain budgets and resources. Carriers must judiciously Top 7 Trends
determine which technologies are worth the investment today and which
ones deserve a strategic “wait and watch” approach.
Transforming Insurance
This E-book will describe seven technology trends that will make a
1. Mobility
significant impact on carrier growth in a variety of areas:
2. Big Data and Analytics
• How carriers approach their internal processes
3. Telematics
• How they collaborate with both external partners and internal staff
• How they develop and distribute products and services 4. Automating Regulatory Compliance
• How they meet regulatory and compliance challenges
5. Improving the Agency Experience
In addition to providing an overview of each trend, this E-book includes 6. Social Media and Collaboration
recommendations for how carriers can apply these trends to both gain a
competitive advantage and support growth initiatives. 7. Distribution Channel Management

7 TECHNOLOGY TRENDS TRANSFORMING THE INSURANCE INDUSTRY 3

1. Mobility
Trend Overview
Mobile devices are here to stay—largely driven by a
rapid proliferation of consumer mobile apps—and are
affecting how carriers conduct business and interact
with stakeholders.
In fact, more than 30% of carriers provide agent or
customer capabilities via mobile, and more than 60% will
add mobile capabilities for policyholders and agents in
2013, according to Novarica’s report, Mobile in Insurance
Beyond Personal Lines: Current Trends and Expectations.
Karlyn Carnahan, Novarica principal, adds that 70% of
property casualty insurers predict that they will offer mobile
capabilities by 2014.
There are a few high-profile, mobile-enabled applications,
such as Progressive’s For Agents Only website available on
mobile devices and Western World Insurance’s mobile app
that supports rating, quoting and binding.
4 7 TECHNOLOGY TRENDS TRANSFORMING THE INSURANCE INDUSTRY
Carrier Recommendations
While mobile is quickly becoming table stakes for insurance
carriers, implementing mobile successfully requires more
than simply providing downloadable apps to employees,
agencies and customers. Insurance carriers must take a
strategic approach to their mobile offerings, ensuring that
these offerings truly enhance the user experience, provide
the functionality that users want and leverage the form
factor of the device.
For example, rather than provide online forms, which
can be cumbersome to complete without a keyboard,
leverage inherent mobile capabilities such as geo-location
and portability.
Carriers can provide field marketers and agents with
information they need to perform “what-if” analysis and sell
to and service customers on an easy-to-carry tablet rather
than a more bulky laptop when making client and prospect
visits. Carrier employees can use tablets to write interactive
performance reports during a site visit and improve agency
performance.
Other capabilities that insurers should consider deploying
“ Mobile is about
positioning

”
include mobile apps that support collaboration with
underwriters. Today, about 20% of carriers offer these for the future.
capabilities, and an additional 20% plan to deploy them in
–Chad Hersh, Novarica
2013, says Carnahan.

Notes Novarica partner Chad Hersh, “Mobile is about

positioning for the future, and significant measurable short-
term ROI is in short supply. But given the rate of change in
tablet adoptions, insurers cannot afford to be left behind.
Avoiding mobile today is like avoiding web browsers in the
late 1990s.”

Report Cited
Mobile in Insurance Beyond Personal Lines: Current Trends and Expectations
7 TECHNOLOGY TRENDS TRANSFORMING THE INSURANCE INDUSTRY 5
2. Big Data and Analytics

Trend Overview Carriers are still grappling with ensuring that they are able
to collect the data they need and then transform that data
It’s all about the data—and carriers get it. When
into a format that is easily accessible, explains Carnahan
Novarica asked insurance CIOs how they would spend
of Novarica. Third-party data is being leveraged across
an “extra” $5 million in their IT budgets, almost one-
almost all business processes. Whether it is used to
third said they would spend that windfall on Big Data.
pre-fill a consumer online quote, verify claimant
information or assess fraud risk, third-party data
It’s not surprising that a large percentage of CIOs prioritized
provides significant benefits across the policy lifecycle.
Big Data over a wide variety of other IT possibilities since
insurance continues to be a data-driven industry that
U.S. insurers are increasingly leveraging external
creates huge volumes of structured and unstructured data
data sources in core business processes.
that carriers must manage.
Over the past 20 years, the amount of data
that is sourced from prospects, claimants
While insurers recognize that harnessing this
or agents has been decreasing while the
data can provide them with valuable and actionable
amount sourced from third-party data
insights, they struggle with making the technology
providers continues to increase. The
modernization needed to support Big Data and embed
business case is simple, yet powerful:
it into real-time applications.
External data sources provide immediate
access to quality, comprehensive data that
CIOs will need that extra $5 million because infrastructure
can improve underwriting outcomes and create
modernization can be costly: Gartner predicts that Big
efficiencies for the consumer, agent and insurer.
Data infrastructure changes will drive $232 billion in
Once they have aggregated the right data, carriers
IT spending through 2016 across industries.
can then take the next step and use that data to
perform predictive modeling and build analytics
Carrier Recommendations into their operating models. “Those carriers
Big Data presents several challenges to carriers: How to using analytical models are generating significant
aggregate huge volumes of data and how to analyze that benefits,” explains Carnahan.
data to make intelligent business decisions.

6 7 TECHNOLOGY TRENDS TRANSFORMING THE INSURANCE INDUSTRY

Carriers can use predictive modeling for a wide variety
of business activities, including underwriting, marketing
and claims. During the underwriting process, analytics
can provide guidance to underwriters to improve risk quality
assessment and optimize prices. Carriers can identify
customers most receptive to cross-sell offers or those
“Big Data has the potential to transform carriers,”
notes Carnahan. “Carriers need to consider the ROI
and technology implications of Big Data as well as
“ Those carriers using
analytical models are
the impact on their organizations and processes.” generating significant
benefits by identifying
Says colleague and Novarica managing director and partner
and acting on unique

”
most likely to defect. They can proactively reduce fraud Matthew Josefowicz: “Insurers can profit immensely from
by detecting potential fraud earlier in the process and by Big Data if they have created a culture where business insights.
detecting otherwise hidden patterns of fraud. leaders trust analytics and act on the insights provided. All
–Karlyn Carnahan, Novarica
insurers should take steps to create the culture today if it
Big Data also has a role in risk management, enabling doesn’t already exist in their companies.”
carriers to analyze risk characteristics and claims statistics
to decide which accounts would benefit from additional loss
control services. Predictive analytics also are being used
heavily in the claims space to detect fraud and to better
align resources with cases. One workers compensation
carrier was able to predict which claimants were likely to
have extended lost work days. By intervening early with
nurse case managers, the carrier was able to significantly
reduce their lost time days, relates Carnahan.

Another area in which Big Data can help carriers is

monitoring carrier reputation by analyzing comments about
the carrier throughout social media. In doing so, carriers
can addressany issues that may damage their reputation
or brand.

Report Cited
Top Five Disruptors in the Next Five Years for Insurers
7 TECHNOLOGY TRENDS TRANSFORMING THE INSURANCE INDUSTRY 7
3. Telematics

Trend Overview who don’t switch are likely to experience higher prices due to
the normal skewing of rate distributions. Carriers may need to
Telematics and usage based insurance (UBI) are among the
plan for a higher defection rate from those customers.
hottest topics in auto insurance. Rather than creating broad
rate tiers by looking backward at the performance of a book of
Carriers that are considering moving forward with telematics
business, it promises the ability to create more granular pricing
have different business models to evaluate. Two dominant
segmentation and improve the accuracy of pricing by using a
business models are being used in the industry today. Pay as
customer’s actual driving behavior as the basis for generating
You Drive (PAYD) typically charges a customer based on actual,
rates. The feedback provided to drivers also has potential for
documented miles driven. Pay How You Drive (PHYD) generally
actually changing driver behavior to safer levels.
bases pricing on a variety of dimensions related to
the driving behavior of the customer, such as rapid
Carrier Recommendations
accelerations and decelerations, the time of day,
For carriers considering entering the UBI market, there are a
the routes driven and the territories driven through.
number of important areas to assess. The technology is still
Carriers can either use installed devices and collect
evolving, and there are several business models to evaluate.
granular driving data themselves, or can work with
UBI comes with real costs, so carriers need to consider their
a provider that sends them aggregated data—think
options carefully.
of it as a driving score—that can be used as input to
rating models.
The first area to evaluate is whether UBI fits with a carrier’s
strategic market. Carriers looking for long-term “preferred”
The PAYD vs. PHYD decision has significant implications
customers will likely find this a good match with their strategy.
for carriers as it affects the technology requirements and
However, carriers that focus on the sub-standard market, or
influences how they can utilize telematics as a service offering
short-term policies, may not benefit from UBI because of the
for their customers. If a carrier is planning to utilize an
cost of the infrastructure needed to support it. Assess not only
installed device, additional considerations apply, such as how
which customers are likely to switch to a UBI-based program,
to distribute the device, install the device, provide customer
but also what the implications will be for those customers who
support for the device, collect data from the device and retrieve
don’t switch. Drivers that demonstrate superior driving skills
the device in the event of customer defection.
will certainly earn a lower premium. Those drivers, though,

8 7 TECHNOLOGY TRENDS TRANSFORMING THE INSURANCE INDUSTRY

A major consideration in UBI rollout is the existence
of Progressive’s UBI patent, which has been a barrier
to entry for carriers. The Progressive patent is
fairly extensive, covering “a method and system of
determining a cost of automobile insurance based
upon monitoring, recording and communicating
data representative of operator and vehicle driving
characteristics … [including] an operating state of the
vehicle or an action of the operator.” In December 2012,
Progressive announced terms for licensing its UBI
program. Carriers interested in using the Progressive
patent must apply by the end of June 2013. If approved,
carriers will be permitted to rate customers under the
patent starting on or after April 2015.
What should a carrier do during those years of waiting
before they are permitted to use the data for rating
purposes? Some carriers are looking at providing
telematics capabilities as a customer service. They are
planning to use the time to evaluate the collected data,
but not use the data as an input for rating. Examples
of services considered by carriers include safe driver
coaching, automatic crash notification/emergency call,
crash data management, stolen vehicle tracking, geo-
fencing, remote access and vehicle diagnostics.
Once a carrier has completed its strategic assessment,
data management issues must be evaluated and
preparations made. A plethora of data about driver
behaviors may be available, and a carrier needs to
assess what should be collected, stored and used
for analysis. Carriers may need new technology
“ Although UBI is still
not widely available or
infrastructure to store, organize, cleanse and manage even widely understood
the data. Additional skill sets may be needed to take among consumers, the
full advantage of this new data through sophisticated
analytics, data mining and modeling.
adoption rate of the
technology is slowly
While it may be tempting to sit back and watch the picking up speed as
UBI market rather than leap in, opportunities across
the value chain exist for insurers that adopt the
more insurers develop
technology early, especially now as the main barriers UBI programs to add
to entry are falling. Insurers waiting too long potentially to their offerings for
face “adverse selection” and may be left mostly with
customers who don’t suit their pricing model.
both personal and
commercial lines of
business.
”
Although much has been written about the use of
telematics in the auto insurance industry, other types
of insurance can also benefit from behavior-based –Karlyn Carnahan, Novarica
products. Home monitoring devices can track whether
or not a homeowner locks external doors and drive
underwriting since a locked door reduces burglary risks.
In commercial insurance, devices can monitor bridges
or large buildings to identify potential structural issues.
In life insurance, carriers can offer discounts for
wellness programs based on the number of times a
customer visits a gym per week.
7 TECHNOLOGY TRENDS TRANSFORMING THE INSURANCE INDUSTRY 9
4. Automating Regulatory Compliance
Trend Overview
As a highly regulated industry, insurance carriers have
always built regulatory compliance into their business
processes and adjusted their processes to assure they
remain in compliance as new regulations are enacted.
Whether it is ensuring producers are properly licensed
and appointed, making sure pricing is generated in a fair
and consistent manner or confirming that claims are
handled fairly, compliance practices impact all aspects
of the insurance industry. Carriers that have not built
flexibility into their systems struggle with consistently
implementing regulatory requirements and responding
quickly to data calls.
“Carriers need to be able to rapidly add data elements,
modify documents and assure workflows are easily
modified to deliver consistent practices,” says
Carnahan.
The carriers best able to anticipate the future regulatory
landscape and implement technology to streamline
regulatory compliance will be in a much better position
than their competitors to address new and emerging
mandates, such as the Affordable Care Act, without
missing a beat or impacting agents or customers.
10 7 TECHNOLOGY TRENDS TRANSFORMING THE INSURANCE INDUSTRY
Carrier Recommendations
Automating regulatory compliance serves several
purposes. It provides carriers with almost instantaneous
“ While carriers are
highly motivated to drive
access to information and minimizes the risk of
growth today, every
non-compliance by ensuring processes are followed carrier wants to do so in
consistently. When regulators ask for information, a way that is compliant
carriers must supply it quickly, explains Carnahan.
with their regulatory
”
Regulators also look for consistent behavior. In other obligations.
words, is the carrier consistently following the law and
–Karlyn Carnahan, Novarica
operating in a way that is fair and non-discriminatory to
policyholders? Automation ensures that tasks are being
completed consistently by all staff—even novices—
because the business rules are incorporated into the
workflows. Automation also provides the underlying
data for reports and documentation about how a task
was performed and by whom.
Carriers with modern core systems have an advantage
in regulatory automation over their peers working within
the confines of a legacy environment. A modern system,
based on business rules or workflows rather than
hard-coded instructions, is much easier to change as
regulations morph.
5. Improving the Agency Experience

Trend Overview
Since agents write more business with those carriers
easiest to do business with, carriers that work with
“ Look at your technology
offerings and compare
what you’re offering
independent agents cannot achieve their objective
of profitable growth without focusing on the agency to what the agents are
experience. Carriers are taking note, and up to 80% of looking for in their
carriers plan to enable agents to perform most information
top carriers—fast,

”
and transactional capabilities through easy-to-access agent
portals, according to the Novarica report, Paper, Phone, responsive, easy.
Email, Web, Mobile: Communication Channels in
–Karlyn Carnahan, Novarica
U.S. Insurance.

Carrier Recommendations
Real-time upload and download to agency management
Top carriers listen to what agents’ value and then leverage
systems is important particularly for those carriers working
technology to provide that type of experience. For example,
with large insurance agencies that represent multiple
the most important capability for agents is carrier response
carriers. However, improving the agent experience is more
to underwriting, followed by speed of underwriting decision,
than offering real-time connectivity; it requires holistic
according to Novarica. Carriers focused on improving those
approaches that ensure that every agent touch point is
capabilities with technology successfully drive increased
optimized.
revenues. Agents also value participation with comparative
raters, especially in personal auto.
Asserts Carnahan, “Carriers should be thinking, ‘How
can I enable agents to be more productive and write more
More carriers are providing a robust portal environment
business?’” The goal is to minimize the amount of time
that provides functionality to agents, including uploading
agents spend on non-revenue generating activities.
applications, quick quotes to bind and issue endorsements,
quick-and-easy access to appetite guides, and proprietary
rules and forms.

Report Cited
Paper, Phone, Email, Web, Mobile: Communication Channels in U.S. Insurance
7 TECHNOLOGY TRENDS TRANSFORMING THE INSURANCE INDUSTRY 11
6. Social Media and Collaboration

Trend Overview
Social media is about helping people connect. Consumer
and agent expectations for connection have been
established through social media tools that provide
an opportunity for people to collaborate and share
information. Social media tools—such as Facebook,
LinkedIn and Twitter—are frequently used in marketing
to drive brand awareness and connect with customers.
But other uses of social media tools improve collaboration
and improve decisions and processes both internally with
carriers and externally with the distribution channel.
Today, most collaboration in the insurance industry
takes place in the form of emails and face-to-face
meetings. While there will likely always be a need for
these types of collaborations, carriers can create
efficiencies by moving beyond these communication
avenues and providing a centralized collaboration
platform where people can share documents and
ideas and manage knowledge.
More than 70% of carriers that distribute through
independent agents use social media, says Novarica in
its report, Insurer Social Media Strategies for Independent
Agent Distribution, yet more than 40% have no social
media policy in place. Insurers need to institutionalize
their social media interactions with agents in such a way
that they can learn what’s important to agents and use
those insights to drive profitable growth.
Carrier Recommendations
Carriers can use collaborative technologies to improve
process time. During agent onboarding, agents could
access a variety of documents they need to get started
with a carrier, such as sales pipeline management and
training. They could also connect with other agents in
discussion forums designed to support knowledge sharing.
Agents could ask questions of their peers, discuss tactics
and generate new ideas. The collaboration platform would
also store agent action plans and reports.

12 7 TECHNOLOGY TRENDS TRANSFORMING THE INSURANCE INDUSTRY

 11724 NE 195th Street 800.444.4813
Bothell, Washington 98011 vertafore.com

Vertafore delivers software and services that transform the business of insurance. Unique to the industry,
more than 20,000 customers rely on Vertafore to provide integrated technology that connects the entire
industry with the most complete source of solutions—agency management, rating and connectivity, content
management and workflow, research solutions and producer lifecycle management—so their businesses run
better and are more profitable. For more information about Vertafore, please visit vertafore.com.

© 2013 Vertafore, Inc. and its subsidiaries. All rights reserved. Trademarks contained herein are owned by Vertafore, Inc. The names of actual companies and
products mentioned herein may be the trademarks of their respective owners. VCM.EB.7TRE.0613
Many use cases exist in the insurance industry—
from creating training communities to large account
underwriting to product development. Carriers are
“ Any social media
tools must be
generating measurable improvements in both process intuitive, contain
time and the quality of decisions. content people care
“Collaboration portals should be designed to help people do
about, provide choice
their job,” says Carnahan. “Any social media tools must be over relationships
intuitive, contain content people care about, provide choice and give employees
over relationships and give employees something back that
something back that

”
they value.”
they value.
Carnahan recommends that carriers begin by determining –Karlyn Carnahan, Novarica
the role of collaboration within the context of the
carriers’ overall business strategy, including its impact
on governance and compliance, cultural implications and
ability to demonstrate measurable success. This includes
creating processes and policies and driving employee
adoption and participation.

Report Cited
Insurer Social Media Strategies for Independent Agent Distribution
7 TECHNOLOGY TRENDS TRANSFORMING THE INSURANCE INDUSTRY 13
7. Distribution Channel Management

Trend Overview
In a multi-channel world, existing distribution channels
remain as new channels emerge, complicating channel
Carriers are experimenting with a wide variety of
techniques to better manage their agents strategically,
not just on a transaction-by-transaction level. Mobile
“
Different elements
of insurers’
management. Today, they are managed as discrete
sales force applications, social media support tools communications
distribution channels unable to integrate for seamless
and straight through processing are all techniques are shifting at different
that deliver tangible benefits.
agent and carrier interactions. speeds, and older
channels are not

”
“Different elements of insurers’ communications are
shifting at different speeds, and older channels are not going away.
going away,” says Josefowicz of Novarica. “This creates
–Matthew Josefowicz, Novarica
additional burden on and confusion for insurer CIOs,
who are required to invest in supporting new channels
without being able to shutter older channels.”

Carrier Recommendations
Carriers need to consider how to strategically link
multiple distribution channels beyond the consistent
posting of transactions. They must also analyze how
channels relate to each other, especially for those
carriers selling direct to consumers and through
agents. Carriers must support both direct and agent
channels by motivating agents to generate business,
compensating them appropriately and providing a
suitable level of service to extract more revenue.

14 7 TECHNOLOGY TRENDS TRANSFORMING THE INSURANCE INDUSTRY

Conclusion

“The future ain’t what it used to be,” Yogi Berra once said, These seven technology
and for the insurance industry, it’s true that the future will
trends are deserving
likely look quite different from the present.
of carrier resources;
those carriers
For insurance carriers, technology trends such as mobility,
collaboration platforms, analysis of huge amounts of
that ignore them risk
structured and unstructured data, and new distribution being left behind in
channels can transform how they interact with their a rapidly changing
customers, their agents and others in the insurance value
industry.
chain. These seven technology trends are deserving of
carrier resources; those carriers that ignore them risk
being left behind in a rapidly changing industry.

For more information on how Vertafore helps carriers

transform their business and achieve their growth
objectives, visit vertafore.com.

7 TECHNOLOGY TRENDS TRANSFORMING THE INSURANCE INDUSTRY 15

 11724 NE 195th Street 800.444.4813
Bothell, Washington 98011 vertafore.com

Vertafore delivers software and services that transform the business of insurance. Unique to the industry,
more than 20,000 customers rely on Vertafore to provide integrated technology that connects the entire
industry with the most complete source of solutions—agency management, rating and connectivity, content
management and workflow, research solutions and producer lifecycle management—so their businesses run
better and are more profitable. For more information about Vertafore, please visit vertafore.com.

© 2013 Vertafore, Inc. and its subsidiaries. All rights reserved. Trademarks contained herein are owned by Vertafore, Inc. The names of actual companies and
products mentioned herein may be the trademarks of their respective owners. VCM.EB.7TRE.0613