Gregory Maciag

Digital Insurance

Richard Williams, CIO at Mitsui Sumitomo, gave an inspiring keynote at ITC 2014, looking ahead to a future that's not so very far away. One of the striking points he made is that the digital revolution is more about the customer facing side of the business than the backend. Most players in the industry are focused on improving their processes, which is an efficiency play. At some point, the returns on this kind of investment will start to diminish. Richard said that by the end of 2016, everyone will have got nearly all the benefits they can from BPM and analytics – partly because the regulator is pushing this way.

By 2017, we'll be seeing digital partnerships becoming routine, with new value propositions driven by data about customer location, activity and preferences. This will be radical enough, but Richard predicts that 2020 will see the first “no-touch” insurance processes across the sector. He imagines a storm approaching an office building. The building automatically closes its shutters and arms itself against the coming storm. However, the roof suffers slight damage and water gets in; the building reports the damage and perhaps a drone gives independent visual confirmation. The building may even be able to heal itself by booking the appropriate repair crew.

This is a wonderful vision of great service, with insurance at the heart of an end-to-end process. Richard's conclusions about IT flow naturally from the vision. He says it's time to stop talking about “IT” as something separate from the business. All staff have to be digitally aware.

This is a summary of only part of Richard's message. Like all the keynotes at ITC, this was powerful stuff from someone at the heart of our industry. The timelines Richard gives are compelling. He's showing the way ahead.

Get Involved: US Treasury & Data Standards

Thanks to Roger Wood for spreading the word on this:   The Treasury Department is looking for input “on several data standards topics and questions, specifically on data exchange, to better ensure the data standards to be established by Treasury and OMB are informed and useful, and to ensure compliance with DATA Act consultation requirements.”  

These standards will enable real analysis of all federal spending, so they are a major step forward. Have  your say at regulations.gov before November 25th.   US Treasury

Getting to be Data Oriented

Jos Voskuil is a self-proclaimed Product Lifecycle Management guy. He has started a new blog series explaining what a data-oriented organization is. This will be useful for anyone who needs a little help seeing why data is central to business – and how being data-oriented is different than having lots of files.  Voskuil

Too Important to Isolate

Futurologist David Smith stimulated and provoked with his presentation at ITC 2014. David sees the future with clarity and he's adept at finding the cases and quotes which crystallize his message.

I particularly liked his reference to the CEO of Metro Bank. Metro Bank is the UK's newest retail bank. They've set up stores across the country – airy, glassy spaces that are open long hours and have no scary counters. For a nation that's seen so many of its old bank branches turned into bars and restaurants, launching a new bank on the High Street is a big statement.

And what does the CEO say about the CIO role? He won't have one. IT is too important, he says.

This is the logical endpoint of the idea that IT is the business, or that information is the lifeblood of the business, or that data is everyone's responsibility. I hope it means everyone at Metro Bank is tech savvy. I'm sure it means IT will never be compartmentalized, and never need to be “aligned with the business”.

Data for UBI

The first of Susan Kuchinskas's two-part article on telematics and insurance is crucial reading. She's talked to many insurers and gives a real sense of where the industry is, and where it's headed.

The key point for me is the threshold for data credibility. You need a lot of data before you can do good analyses. If you're going to modify your products and services in line with an analysis, you want to be as certain as possible. Progressive, a pioneer in telematics, has the certainty it needs: “Its massive amount of driving data – 110 terabytes covering some two million vehicles, 1.5 billion separate trips and more than 10 billion miles driven – allows it to quickly test new rating factors, and to do so with a great degree of accuracy.”

Others are less fortunate. ACORD data standards for telematics will enable them to assemble and process reliable data in greater quantities. Standards are central to the development of this important market.   Telematics

Insurance Wants to Change

Mary Trussell of KPMG says: “The insurance industry is at an inflection point. To date, insurers have largely embraced digital capability as a supplement to existing customer service channels. Our survey shows a massive 108 percent increase in the number of respondents who want to use digital technology to enter new markets in the next three years as compared with the previous three years.

That reflects growing digital ambition but significantly raises the stakes. Yet around the world we still see many insurers and intermediaries focused on product and channel silos, facing significant challenges from legacy systems rather than unlocking value for customers and investors. This suggests the need for more than digital transformation. Such a transformation represents a massive cultural change.”   KPMG

I think the cultural change will come – as the result of a jolting realization of the profound nature of this inflection point. “The computer” has disappeared. “Automation” is done. Technology is now the air we breathe. If you don't take a technology-based viewpoint, you won't be able to compete. And if you're not focusing on your customers' understanding of value, they'll leave you in the dust.

Take Responsibility for Data Flow

The message that data standards are a business issue rather than a technology one is making great progress in industry and commerce. However, not everyone has heard it. In the UK, an IT industry group is calling for common data standards in the police and criminal justice system: “Industry body TechUK said important data exists within too many IT systems that are neither connected nor searchable. As a result, within same police force and between closely connected services, it is often difficult to link people, objects, locations and events data. At the regional and national level, the situation is even worse, it claimed.”

I'm struck that it's fallen to the technologists to air this issue and bring it to public attention. We all expect our law enforcement agencies to be focused on using data effectively. The need for data standards should not need to be pointed out. It's their business.

A few days after TechUK's intervention, we learned that Britain has lost track of a number of foreign criminals who were let out of jail but not deported. Why would that be? Well: “Teams set up to manage foreign offenders still use old technology, with referrals from the Prison Service being sent to the Home Office by fax and manually entered into the records system.”

Many people reading this blog might need to look up “fax” on Wikipedia.

On the positive side, pockets of poor practice like this one now look bizarre and isolated. It's not like the process owners can shrug and say everyone else is in the same position. There's no place to hide. If you own a process, you're responsible for data flow.

IT PRO

TheGuardian

 

Not Invented Here is Not an Option

Mueller's slogan is about open source development. She says: “No open source project is built without incorporating the work of others.”

I'd like to see this ethos applied to all software development and integration. Everything we build these days incorporates the work of people who have gone before us. And when we use industry standards, we're leveraging the insights and experiences of our peers across business and through time.

We are very rarely asked to invent. But we're constantly asked to innovate. Different things. One of the quickest routes to innovation is to reuse existing components and artefacts in ways that add new value. Industry standards are the paradigm case of the virtue of embracing the Not Invented Here.  Mueller

Spread of Open Data & Standards Among Cities

Governments want and need open data and data standards just like industries do. Nine of the ten largest cities in the US have adopted open data. Take-up in small and midsized cities is less. This is partly because of a lack of plug-and-play tools. Big city budgets can swallow tooling costs that others can't.   I wonder: Could the big cities donate their tools to the smaller cities?

There is also a need to develop useful new data standards that can easily be adopted by cities without the deep technology.  Research communities that can help drive open data adoption as data standards are a way to export civic technology needs to larger cities.  While cities such as New York and San Francisco have gained attention for their open data efforts, the roll out in smaller cities has been much slower.   StatesCoop

Standards Save Government Money

For a quick catch-up on examples of how data standards can produce immediate and repeated savings in government, take a look at Gene Dodaro, Comptroller General of GAO, testifying to the House in April 2014.

Dodaro gets straight into how the Department of Defense has a separate system for each of its satellites and could save a fortune by standardizing. He also notes how joining up data across the federal government can increase revenues. For example, passport applications could be withheld for people who are delinquent in their taxes.   Identifying overlap, fragmentation, and duplication is time-consuming but not too hard – an external perspective is usually enough. Quantifying the losses due to such inefficiencies can be harder. But pinpointing and applying the solution – standards – is relatively easy. With the scales of operation at play in government, the business case for standards is always going to be overwhelmingly positive.

I like Dodaro's rolling hit-list approach to fixing these deficiencies in government operations. He's like a project manager with an issues log and a very strong sense of purpose.   US Government

Collaborate to Win

One of the big themes to emerge loud and clear at ITC 2014 was the value of collaboration.

Our keynote speakers stressed that the London Market has to see itself as an organic entity competing with other venues. Competition is relevant at the whole-market level. And to be competitive at this level, London players need to collaborate.

London has a great tradition of coming together to standardize, simplify, and streamline on behalf of the whole community. It's taken longer in some areas than others. But I'm encouraged by both the realism being shown about past “big bang” solutions and the appreciation being given to Ruschlikon – which has turned out to be not just a great solution for its original sponsors, but a real beacon to the whole insurance sector.

Vision for London

Shirine Khoury-Haq, Director of Operations at Lloyd's, told ITC 2014 that previous plans for market modernisation had too often been “grandiose, ambitious, elephantine leaps.” She made it clear that modernisation has to be centrally located and broadly driven: “These are central projects because they have to be: they're programs where only collaboration can prevail.”

Her refreshing combination of vision and pragmatism made a big impact in the hall. I felt Shirine won a huge amount of enduring support with her address. She's keen to learn from what's worked in the past, rather than mulling over what has not. So, for example, she sees “a Ruschlikon-type exchange (Powered by ACORD) as our first deliverable” in the central services refresh.

I took away a lot from this session. One thing that struck me is that we talk as if “the vision thing” is difficult but execution is easy. In reality, it's the other way around. Anyone who has experienced a painful or dysfunctional business process will spontaneously have visions of the ideal replacement. Sure, it takes talent to articulate a vision. But when we articulate a vision, we're expressing in language what our audience members already see and feel in their minds. Realizing the vision – making it real – now that's the challenge. With leaders like Shirine in place, London has great prospects of building its common vision.

Identifier Benefits

I'm always interested to see real world business cases for data standards, wherever they appear. Every quantified triumph for standards adds another brick to the already solid case for standards, and reminds us there are many, many opportunities still to be grasped.

I particularly like stories about the adoption of unique identifiers for key entities. This one comes from the public sector in Wales. Some smart people there linked the Unique Property Reference Number (UPRN) data standard, which was already in use, to the systems for collecting taxes. The project cost 100,000 pounds. Revenue went up by one million pounds.

The team went on to apply the UPRN to the emergency services, where they figure they can improve addressing accuracy by 20%. Amazingly, the various services still communicate address details to each other over the phone. Replacing this with electronic exchange of data may actually save lives through greater speed and accuracy.

Standard identifiers are so easy to get hold of and apply. And they generate immediate, high-profile, and lasting benefits.  Vision Becoming Reality

3D Printing and Standards

A repeating pattern with new technologies is a revolutionary vision, where the world is completely changed, followed by crushing disappointment when the technology turns out to be patchy or limited. But a relatively new theme in the reporting of this pattern is the issue of data standards. Today's hyped technologies often come with this warning: Sort out the data standards issues first, or this technology will fail to meet expectations.

We're seeing this with the Internet of Things. It's also apparent with 3D printing, as highlighted recently in Healthcare Purchasing News. The author of this article says 3D printing could be a real boon to surgeons, for example – and have major disruptive impact on traditional supply chain players. But he or she also says that, to be effective, any 3D printing solution in a healthcare setting would have to be “tethered to your enterprise resource planning or materials management information system, as well as your electronic health/ medical record system and billing system”. The reasons are clinical, financial, and legal. As we know by now, the only way to make these linkages economically viable is to apply industry data standards.

IoT and 3D printing interest me because they're cool in themselves, and because they extend the responsibilities of insurance systems in really massive ways. Think about the issues around insuring a 3D-printed part for a car. Who is at fault if the part fails? We could soon find ourselves in a situation where, in order to insure a vehicle, the carrier needs to know its entire maintenance history, maybe even in real time. There may need to be an insurance decision before a mechanic can print and fit a part to the engine.

Folks are grappling with the intellectual property issues around 3D printing. We need to move ahead on standards as well.   ASQ

Common Good

It's generally true that people have more in common than they have differences. The differences make us unique and interesting – and interested in each other. The commonalities are what enable us to understand each other, cooperate, and put ourselves in the other person's shoes.

When it comes to business, all this is true in spades, although we often forget it. As customers, providers, partners, and regulators, we have plenty in common. We're all engaged in the same field, working with the same concepts, applying the same measures, even though we have different ends.

Among competitors, there's commonality too. Companies succeed by recognizing and investing in their material differentiators. They don't waste time and money reinventing the wheel or gold plating their basic systems. Instead, they contribute to common efforts aimed at solving common problems. That way, everyone benefits while everyone is also free to be the best they can be.

The Speed of the Willing

A panel at ITC 2014 offered this principle of change: You've got to move at the speed of the willing, not the slowest. I heard this repeated with approval over the two days of our great London event.

Leading and managing collaborative change across a diverse group of organizations and people isn't easy. If it was easy, we wouldn't be talking about it. But the default management approach is often to avoid conflict by taking a “weakest link” approach. With this approach, those who are reluctant to change are given special treatment: They get to slow everybody else up.

Shifting the emphasis from behavior to intent is a powerful way of breaking this dysfunctional pattern. The speed at which an organization acts is an index of its commitment – its will to change. The majority who understand the benefits of change must not be held back by those who don't get it. That doesn't mean we should abandon the faint-hearted. We need to work on their beliefs, not the way they are expressing those beliefs.

Millenials Judge Technology

Paolo Cuomo of Charles Taylor mentioned this stat at ITC 2014. I remembered I'd heard it before – and it's worth repeating. Researchers found that 67% of millennials judge their employers by their technology. Having systems and devices that are regarded as out-dated, slow, or not intuitive, can prompt a prospective employee to bypass your company. Low quality IT, or the knowledge or perception that other companies are ahead in IT, can contribute to low retention.

It was also mentioned that people habituated to using social media are stunned when they're not allowed to use it at work. The reasons for this may be good. But they don't chime with organizations' rhetoric about embracing new communication channels and workstyles.  INC

Responsibility for Data Standards

A rallying cry from a conference platform, snapped by Audrey Bellis: “'We need static data standards- they need to ACTUALLY be run by somebody & be vendor neutral' @JamieXML #GOV20LA”

I second that. It's getting easier to call for data standards as more folks understand the pain of fragmentation, barriers to collaboration, and costs of non-standardized data. But somebody has to step up to the plate and manage the program.

A huge element in ACORD's success is its status as a trade organization. Created and funded by the industry it serves, ACORD is by nature vendor neutral and fully representative of the industry. People interested in government data need to look for the equivalent bodies in the public sector. These may be professional associations, for example. 

Strength Through Collaboration

“Strength through collaboration” is the tagline of CDISC, the information standards organization for medical research. It's a great phrase which encapsulates the core value of standards while reinforcing the collaborative nature of the research ethos.

Other industries don't necessarily recognize collaboration as a virtue they already practice. In commerce, we're more focused on competition. But, when you think about it, competition is only possible in a context of collaboration. Certain things have to be common if people are going to compete. That's why we have common languages, currencies, and laws.

Information standards enable collaboration. Ideally, they are created and maintained collaboratively as well. This way they are guaranteed to serve the needs of the sponsoring community.  CDISC

The New Vision Gap

In my keynote to ITC 2014, I talked about the vision gap that used to exist between business need and technology. This gap has closed. But a new type of vision gap has opened: The ability to change. We know change is a constant, so dealing successfully with change is a primary skill necessary to every organization.

A major theme of the event was collaboration. ACORD is a great example of collaboration – certainly the most successful and longest-lasting collaborative initiative in insurance technology.

Collaboration doesn't happen spontaneously. It requires leadership. We look to leaders to close the vision gap around change. We all make change happen – but someone needs to set direction, inspire the organization, and stand up for the better future we all want to make.

Life Insurance Evaluation and Purchase

There are many good points in Accenture's slide show on Life Insurance in 2020. One I want to underline is the shift from purchase to evaluation as the key point in the customer journey.

People used to worry about information overload – still do, I guess. But as the quantity of information available to us has increased, so have the quantity and quality of the tools for evaluating it. Today, if you know the exact physical product you want to buy, it's easy to shop for the best price. The prior step takes a little longer, but is getting easier thanks to online customer ratings and recommendations.

Insurers need to adjust to a commercial landscape where consumers potentially have not only multiple choices but information superiority. Knowing your competitors' positions, and their likely offers, will be critical to bringing customers through evaluation to purchase.   Accenture

Ecosystems

Sports is another area with proliferating data and great potential for exploitation of information. Nathan Kinch is calling for data standards so the sector can share data properly.

One CTO in the industry, Stuart Hudson says: “Remember that sport, by its very nature, always has been an ecosystem. Now, that ecosystem is growing to include technology, both specific to elite sports, and consumer technology. The data, the patterns within the data and how it flows provide insight at all levels of the ecosystem, and as such, the silos must be broken down.”

This is a crucial insight that I believe applies to all sectors. Whatever business you're in, it already is an ecosystem. It always has been. There's no competition without community.

Sports Business Insider

Insurance CEO's Prioritize Technology

The headlines from PwC's annual survey of Insurance CEOs make for interesting reading, as always. The key insight for me is that “86% of insurance CEOs believe technological advances will transform their businesses in the next 3 to 5 years – more than any other factor […] However, only 31% have completed or are executing change initiatives in the key area of data management and analytics.”

A positive interpretation of this finding would be that companies are already in great shape to take advantage of technological advances. Or that the technological advances CEOs envisage will have a  low impact on data management.

The first possibility is unlikely, since even the best prepared organization must constantly be reviewing its technology capabilities and adjusting to evolution. The second possibility only flies if every player in the game uses common data standards. And perhaps the strength of data standards in the insurance industry is a factor in the apparent low priority given to change in data management and analytics.

Maybe those change initiatives are really big and complex, and that's why many companies aren't through with them. We all know the most important element of change is people. My guess is most current change initiatives are around people and process. The stability of the industry's data standards is a sturdy platform on which to build new capabilities.

My takeaway is to be wary of a too-simple connection between the “86% believe” and “only 31% act” messages. The reality on the ground is more complex. We ought to be celebrating the finding that CEOs have put technology at the top of their list of priorities. This is major. They think technological change will have a bigger impact on the business than changing demography or shifts in global economic power. That's big news.   PWC

Business Data Standards and Open Data

Computer Weekly has a long article about problems with opening up UK government data, the main point of which is Microsoft Excel doesn't handle comma separated files encoded in UTF-8 very well.   What's really alarming is the low level of this standards goof. I'd rather be hearing how the UK government is empowering citizens by standardizing business data – so people can challenge a budget, say, knowing its structure and relationships. The encoding issue is small potatoes.   Public Sector IT

London Gets It

Peter Mungeam, COO at AON Benfield Asia Pacific Client Services, told ITC 2014 that brokers prefer face-to-face business – and since mobile technology has been embraced enthusiastically by brokers, the future is in apps. Munge said: “ACORD messaging for me is the game changer – a global standard available today.” One of his top bullets was: “Any credible integrated system must be fully ACORD enabled.”

Messy Data

Jim Harris is an eloquent opponent of the idea that you need data standards to make sense of big data. One of the examples he cites to support his position is Google Translate, which does an excellent job on translating human languages, and, like many of Google's signature innovations, depends on statistical comparisons of very large quantities of messy data, rather than any overt theory of language.

It's certainly true that many tasks originally associated with Artificial Intelligence have turned out to yield much more quickly to statistical algorithms than more theoretically “intelligent” processes. At the same time, researchers are studying the statistical capabilities of the brain. As a quick and obvious example, your brain works out a three dimensional world from your two eyes without, um, thinking about it.

But. But. But. The world we humans live in generates messy data. And yet there's a world within that world where the data is not inherently messy. This is the business world. If you find messy data in your business, it means you haven't defined your purposes and processes well enough.

A business is a machine, not an organism. Yes, it is a machine built and enacted by human beings for human reasons. But it is still a consciously designed system. The world's inherently messy data is yielding to analytics. But organizations must not assume that analytic success with, say, human language is an argument for all data to be messy.

Look at it this way. You could get a million people to saw a piece of wood. You could then pick the one that's the right size for your project. On the other hand, you could figure out the size you need ahead of time, measure out the wood, and saw it. Once.

We see computer storage and processing as pretty much free resources, so it's tempting to go the “messy” route. But every time you opt to go this way, you entrench your dependence on systems. You add a little sliver to the server population and to energy requirements. Most importantly, your organization becomes a little less intelligent.    OCDQ

Work to be Proud Of

Our September event in London, ITC 2014, sparkled with insight and vision, giving the insurance community the opportunity to mark how far it has come with technology – and to affirm the way forward. The keynotes were energising and really captured the commitment of all of us. Panel sessions were incisive and relevant. I know there were some great conversations in the networking sessions too.

Thank you to everyone who participated. I'll be sprinkling this blog with nuggets and musings inspired by the event.

First off, I have a wry comment from Bent Isaachsen of Torus Insurance: “I'm all for keeping people employed; just not in this manner.” As an industry, we're still performing wasteful, manual actions which we know cause delay and cost too much. Automation has never been about getting rid of people. It's about freeing people to do the things people do best. If we can relieve them of the duty of printing out images, stamping them, and then scanning them, then people can move on to more valuable activities.

We owe it to ourselves and our fellow workers to reject unnecessary manual processes. It's not just about improving the bottom line. It's also about dignity.

Industrial Internet Consortium

I wrote about the II on Monday and thought that I would follow-up with a link to their website (IIC) to demonstrate how firms collaborate to influence and build a future.  I hope that some firms will take a lesson from these consortiums when they think about the insurance industry.  Of course, people in the technology business build their businesses on industry standards and have been doing so for a long time.  However, most businesses rely on a group of internal leaders and influencers to connect the dots.  And they don't always get it right.  ACORD was created to help and I would encourage any of you to call us with your questions.

Better yet, attend the ACORD Implementation Forum in Fort Lauderdale on October 26-29.

Here are the founders of the consortium.

 

Medical Records - Where's the Interoperability?

Regardless of who is at fault, doctors and hospital executives across the country say they are distressed that the expensive electronic health record systems they installed in the hopes of reducing costs and improving the coordination of patient care — a major goal of the Affordable Care Act — simply do not share information with competing systems.

The issue is especially critical now as many hospitals and doctors scramble to install the latest versions of their digital record systems to demonstrate to regulators starting Wednesday that they can share some patient data. Those who cannot will face reductions in Medicare reimbursements down the road.

The elephant in the living room... once again... STANDARDS.     Barriers