The New Year Means New Challenges
Where is the insurance industry headed in 2015? Many of the trends of the past year have gained
momentum and are expected to affect more carriers in all three tiers next year. Technology being what
it is, the one thing we can be certain of is there also will be plenty of new ideas in the year ahead to get
insurance carriers looking at even newer issues. We asked three insurance technology analysts their views
on the challenges and opportunities of 2015. Providing their insight are: Frank Petersmark, CIO advocate
for X by 2; Karen Pauli, research director for CEB TowerGroup; and Rod Travers, executive vice president
of The Nolan Company.
This month’s question:
What major challenge must insurance carriers deal with in 2015?
X by 2
In 2015 insurance
carriers will contin-
ue to be bom-
barded with the
are reshaping the
erism, mobility, big
data, cloud com-
puting, and core systems modernization
all come to mind.
On top of that well-worn list of industry issues, we can add a couple of new
and future-focused entries, things like
usage-based insurance and driverless
technologies. These issues and more
are and will be a part of what insurance
carriers must deal with in 2015 to one
degree or another.
With all of the noise going on out
there, the biggest challenge insurers
will face in 2015 is not a technology, but
a behavior, and that behavior is their
ability to focus.
Execution and implementation are
what matters. That means focusing
on what is strategically important and
relevant for the company, and ignoring
the rest. Technological solutions are everywhere, and in some cases have been
The real challenge is focusing on the
right technologies—the ones that make
a competitive difference.
One of the biggest
challenges is “level
3 cloud”…..my own
Level 1 of cloud
was a rejection of
cloud due to secu-
rity concerns, fear,
and lack of clear
understanding and definitions. Level
2 was adoption by a few pioneers and
learning curves going up. Level 3 is a
convergence of business aggressively
advocating for cloud solutions, technology providers happily providing
cloud for most things, and IT asserting
that it isn’t as easy as it looks.
Given the challenges, it’s reasonable
that business leaders would want to
adopt cloud solutions that promise
short time-to-business value and defined cost structures. Because technology providers have rapidly gone to
market with cloud capabilities, IT has
to be an investigator, a teacher, and a
psychologist all at the same time. Determining what is executable in terms
of vendor capabilities is going to stress
many IT organizations, but avoidance
is not an option.
Insurers must re-do their IT road-maps to merge in cloud solutions that
make sense and align with what IT
must do to make it all workable.
The Nolan Company
deal with rapidly
tions and buying
behaviors of the
next generation of
many are falling
behind in adapting
to serve the next generation. I once
described an emerging phenomenon
wherein “kids don’t ring the doorbell
anymore.” If you have teenagers,
you know what I’m talking about. The
same thing is happening to mature
industries like insurance, financial ser-
vices, retail, music, and transportation.
Kids no longer buy products and services in traditional ways. Relationships
are secondary to price and simplicity.
Service interactions are asymmetrical
and often fragmented across channels
and sometimes for all to see.
I recommend asking those future
customers for their suggestions. Ask
them how they envision the future of
consumer commerce. Ask for their
ideas on how to reach them/serve
them on their terms. Find out what
is most frustrating about today’s processes. And hire some of them into
internships where they are empowered to ask questions and impart a bit
of disruptive observation.