A Tale of Two Cities: Insurance Peer Networking Week @ Celent

The week of April 22^nd was something of a landmark in the Celent Peer Networking process. For the first time, we held two events in the same week; the first in Wellesely, Ma. focusing on Group and Voluntary Insurance, and the second in Columbus, Oh. with a focus on Innovation across business lines. I was fortunate to be able to participate in both events and will give you a summary of the events which really speak to the depth and breadth of the issues we are discussing with insurers today. Tuesday April 23^rd, Wellesley, Ma. – The Group Experience Sun Life Financial was kind enough to host this session in their offices and representatives of eight insurance companies focused on the Group and Voluntary Insurance markets joined Karen Monks and I to discuss the changing Employee Benefit space. We used some concepts from the recent Celent research note “US Group and Voluntary Employee Benefits: Changing Markets, Changing Technology” to kick off the discussion. Key points and questions from the discussion included:

• How the Patient Protection and Affordable Care Act (PPACA) disrupts the current distribution/carrier détente, making direct to consumer and alternative distribution a more attractive option
• IS PPACA creating an opportunity for cradle to grave products more strongly aligned to key lifecycle events that require less broker planning/intervention?
• Can exchanges really disrupt the Group/Voluntary market when PPACA is major medical and dental only? A discussion of state sponsored ancillary exchanges and private exchanges ensued.
• Enrollment was a key issue for all the carriers in the room and we discussed where enrollment fits in the sponsor/broker/carrier world, how carriers continue to promote brand through third party enrollment and service providers, and how carriers should architect for enrollment and self -service going forward.

• One of the carriers led a discussion around the specific challenges Group carriers have in handling billing. While there was an in depth discussion of specific billing issues for the Group market the big issues fell into three major categories:
  • Data Management
  • Lack of standards
  • Convergence of Group and Voluntary products

Karen Monks finished the day with some Celent data from two recent reports, “2013 North America Insurance CIO Survey: Pressures, Priorities—and Innovation and “IT Spending in Insurance: A Global Perspective” Karen highlighted the current state of the life insurance industry across segments and talked about the opportunity in the Group space to create a more interactive, four-season approach to Employee Benefits. Karen then spoke about IT spend in insurance and then dove into the issues CIO are thinking about today and in the future. As we wrapped the day, the insurers decided we will maintain the “Group of Group Insurers” as a focused segment within our PNE process and will meet again in the fall. For those insurance carriers that are interested in the Group space, I hope you will join us by reaching out to Chuck Smith csmith@celent.com. Thursday April 25^rd, Columbus, Oh. – The Innovation Agenda Nationwide Insurance graciously sponsored the 2^nd Peer Networking Event of the week. Mike Fitzgerald of Celent led the event, where we were joined by representatives of 7 carriers from both life and p&c lines of business. This session was again a little different from the typical Celent Peer Networking Event as we focused on Innovation as a topic and did an abbreviated, public version of Celents Innovation workshop. This workshop helps insurers understand how their current IT project portfolio aligns with their business goals and appetite for innovation, get a sense for the investments they are making by business driver sector and create a common language around innovation for the enterprise. The insurers took away some new ideas around innovation, a new model for discussing and categorizing initiatives and some new organizational ideas about managing the innovation process. This will be an evolutionary process for most insurers as fostering innovation within a corporation may be the hardest task an executive has before them. Key points covered were:

• The need to separate emerging technologies from business innovation: Emerging technologies can be great enablers of insurance business innovation but are not in themselves innovative from an insurance business perspective.
• For best results, differentiate between improvement, innovation and disruption: Most of the people in the session had little problem with differentiating insurance status quo (of which there is a lot) and disruption (of which there is very little). Finding the line between improvement and innovation was much more difficult. The difference is meaningful for insurers to make informed choices about the allocation of their scare resources.
• Using a portfolio discipline can be challenging: We broke into groups and gave the attendees the opportunity to get hands on experience with the Celent Innovation model. There were a variety of experiences. Some found it harder to break projects down by level of innovation; others struggled with categorizing by driver sector.
• An insurer presented their structured model for driving innovation using a centralized innovation-funding model. Their model is an outgrowth of their strategic planning process and is still evolving, with a current focus on ensuring the ideas are captured, managed and evaluated against current business need and opportunity. There was a lot of discussion of sources of potentially innovative ideas and how to ensure top down ‘great ideas for innovation’ from senior management don’t drown out other sources of ideas. There was also discussion about decision-ing lifecycles and the need to never discard an idea out of hand, both to ensure a positive environment for fostering new ideas and because some ideas need to wait for the right climate and business environment to be successful.

Overall the PNE attendees found the exercise useful in helping them find a common language to talk about innovation and avoid some of the common traps one falls into when trying to drive innovation. We hope you will join us for a PNE event. We are always looking for hosts and again if you would like to sponsor a Peer Networking event please reach out to Chuck Smith csmith@celent.com.