Core Systems: Impact of Collaboration,

and Business Intelligence/Analytics

A Novarica Research Partners Program™ Report

Underwritten by Zags

Executive Summary

Customer experience has become a priority for insurance carriers, with increased

expectations from agents and policyholders influenced by innovative approaches from

internet giants like Amazon and Apple, customer service-focused companies like

Starbucks and Southwest Airlines, as well as financial services companies like banks and

brokerages. Insurers are looking to modernize legacy systems to better enable

capabilities like collaboration and business intelligence (BI)/analytics. For example,

collaboration can better connect agents with underwriters for faster policy issuance.

BI/analytics can be used to identify profitable prospective customers as well as analyze

performance of the distribution network. These capabilities can enhance core system

replacements and other technology updates to improve sales/marketing, underwriting

and other operational functions.

This report presents research on use of collaboration and BI/analytics at 10 mid- to

large-size personal lines property and casualty (P&C) carriers, nearly all with recent

experience in evaluating a core system replacement. Insurer CIOs and IT leaders were

asked for their perspective on the importance and effectiveness of these tools as they

relate to core systems strategy.

Collaboration and BI/analytics capabilities are growing in importance to insurance

operations as innovative carriers seek to improve speed-to-market and increase

workflow efficiency. Insurance IT leaders are being called upon to provide tools that

will effectively meet these business user needs. However, implementing tools can be

difficult since legacy architectures and systems weren't designed for these capabilities

and integration with core systems often requires additional programming and

maintenance. This report provides valuable insights for CIOs facing these issues.

This report presents and discusses

the findings of a survey of 10 mid-

size P&C insurers (annual

premiums between $100M and

$1B).

This report is a product of the

Novarica Research Partners

Program, which enables industry

sponsors to underwrite surveys on

topics of interest. These surveys

are conducted using the same

methodologies and with the same

respect for participant privacy as

Novarica’s independent surveys

and reports.

Underwriting sponsors have input

on question design and general

characteristics of target

respondents only.

Novarica conducts the survey and

analyzes the results

independently. Underwriting

sponsors do not have draft

approval or other ability to

influence content of the final

report.

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Importance of Collaboration and BI/Analytics

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Collaboration and BI/Analytics tools have become more important to insurance carriers, mainly for sales, underwriting and claims. These areas require more information flow between carrier staff and agents or claims adjusters and have the most potential for use of data to improve operations.

Insurers consider collaboration more important than BI/analytics for sales and claims and as important for underwriting. While it is of lesser importance overall in other areas, collaboration can be used internally to improve communication during workflows for policy servicing as well as billing issue resolution.

CIO comment:

“With the latest round of core system modernization, there was a clear desire to build a system that is more collaborative… people expect to know what is going on through the course of a process –claimants, insureds, agents”

0% 20% 40% 60% 80% 100%

Claims

Billing

Policy Servicing

Underwriting

Sales

Importance of Collaboration and

BI/AnalyticsPercentage of CIOs rating each as “very important”

Collaboration BI/Analytics

Workflow components and email-based tools

are the most common collaboration tools

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Most of the surveyed insurers are using

workflow components of core systems

and/or email as their main collaboration

tool, while less than half are using an online

tool.

Workflow components are used most

frequently across all functional areas, while

email continues to be the most used tool

for sales, underwriting and claims, where

collaboration was rated as most important.

0% 20% 40% 60% 80% 100%

Claims

Billing

Policy Servicing

Underwriting

Sales

Types of Collaboration Tools in Place(n=10)

Email-Based Tools

Workflow Components of Core System

Traditional Workflow Tools

Modern Online Collaboration Tools

Insurers focus on reporting tools for BI/analytics

with few implementing integrated analytics

5

Most of the surveyed carriers are using

stand-alone reporting tools for all

functional areas, and about half are using

reporting tools in the core system, mostly

for billing and claims.

Some carriers are using stand-alone

analytics tools, mainly for the areas they

ranked high for importance of these tools,

underwriting and claims.

Few are using analytics tools integrated

into their core system.

0% 20% 40% 60% 80% 100%

Integrated

Analytics

Tools

Integrated

Reporting

Tools

Stand-Alone

Analytics

Tools

Stand-Alone

Reporting

Tools

Types of BI/Analytics Tools in Place(n=10)

Sales Underwriting Policy Servicing Billing Claims

Insurers see a wide gap between importance

and effectiveness of collaboration tools

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Insurers consider their current

collaboration tools most important and

effective for underwriting and policy

servicing.

However, there is a noticeable gap between

importance and effectiveness, where sales

and claims are farthest apart.

Carriers mentioned ease of use and

availability as the top attributes that make

these tools effective in their organizations.

Few carriers have deployed mobile

collaboration tools, but many have plans to

deploy a solution in the next 12 to 24

months.

Insurer quote:

“Modern GUI capabilities and aggregated

customer and process data are the essential

capabilities that make these tools effective.”0% 20% 40% 60% 80% 100%

Claims

Billing

Policy Servicing

Underwriting

Sales

Importance and Effectiveness of

Current Collaboration ToolsPercentage of CIOs rating tools as “very important” or

“very effective”

Importance Effectiveness

BI/analytics tools are considered effective most

for sales and least for billing

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Insurers consider their current BI/analytics

tools most important for sales,

underwriting and claims and least for

billing.

As with collaboration tools, there is a gap

between importance and effectiveness, and

billing is considered the least important

area of use.

Insurers mentioned that a key to

effectiveness was the ability of BI/analytics

users to frame the problems and issues,

along with ease of use of the tools.

One insurer commented:

“More important than the tool is having

staff who can frame the right

issue/problem and then go about solving

it. ” 0% 20% 40% 60% 80% 100%

Claims

Billing

Policy Servicing

Underwriting

Sales

Importance and Effectiveness of

Current BI/Analytics ToolsPercentage of CIOs rating tools as “very important” or

“very effective”

Importance Effectiveness

Collaboration and BI/analytics are not priorities

for core systems, despite their importance

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Other

Improved collaboration

capabilities

Business intelligence

capabilities

Enhanced predictive

analytics capabilities

Improved quality of

customer information

Providing a better

customer experience

Improved speed

to market

0 10 20 30

Relative Importance of Business

Drivers for Core Systems

Replacement(out of 100 points total)

Insurers prioritized speed to market as the

top factor driving core system

replacement, followed by improving

customer experience and information.

While BI/Analytics is critical for insurers,

few today are incorporating it into their

core transformation business case.

One CIO noted:

“BI/analytics is certainly very

important…but the business case is

outside of core for us”

Similarly, while insurers consider

collaboration capabilities important, the

weighting given to it for core system

replacement is slightly less than given to

BI/analytics.

Inline collaboration could improve effectiveness

most for policy servicing and underwriting

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Insurers felt that including collaboration as

an inline capability would improve

effectiveness most for policy servicing and

underwriting and least for billing.

Those who indicated that inline

collaboration capabilities would be a major

improvement rated current capabilities low

in effectiveness.

A CIO commented:

“In the past, our collaboration capability

was not inline – it was via phone or email,

which involved delays, etc., and sales were

greatly affected”

Carriers considered the best use case for

inline collaboration capabilities as

agent/underwriter collaboration during the

sales and underwriting process.

0% 20% 40% 60% 80% 100%

Claims

Billing

Policy Servicing

Underwriting

Sales

CIOs Expecting “Major Improvement”

to Effectiveness if Collaboration is an

Inline Capability

Inline BI/Analytics could improve effectiveness

most for sales, underwriting and claims

10

For BI/analytics, insurers expected the

most improvement for claims, along with

sales and underwriting.

Carriers considered the best use case for

inline BI/analytics capabilities to be for

claims adjudication, and mentioned other

use cases such as fraud, lead generation

and large account sales and underwriting.

Insurer quote:

“I’ve seen examples where a manager is

viewing a report and they notice a spike,

leading them to discussions with others

who may have insight to understand an

issue or opportunity”

0% 20% 40% 60% 80% 100%

Claims

Billing

Policy Servicing

Underwriting

Sales

CIOs Expecting “Major Improvement”

to Effectiveness if BI/Analytics is an

Inline Capability

Insurers need to consider inline capabilities for

core system replacement

“It sets up a platform for having the conversation to understand an issue or

opportunity and make effective decisions”

– Insurer CIO on use of inline collaboration and BI/analytics capabilities

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All insurers generally felt that inline use of

tools in a core system would improve or

greatly improve collaboration and

BI/analytics capabilities.

Some are currently using inline tools and

note that business users often don’t see

the full value until the capabilities are in

place and they have learned more about

the system.

This learning curve effect could be

decreased if collaboration and BI/analytics

are implemented as inline capabilities, since

fewer issues with user interfaces and data

integration are expected.

CIO thoughts on use cases improved

through inline capabilities:

Agent / underwriter collaboration for

sales

Adjuster collaboration for claims

information

Lead generation and cross-sell

opportunities via data analytics

Fraud detection

Large account underwriting and sales

Concluding Thoughts

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Insurance IT leaders recognize the importance of collaboration and BI/analytics, but struggle with how to most effectively provide these key capabilities to business users.

The most commonly implemented collaboration tool is email, with few insurers using modern online collaboration tools. Also, while most carriers have reporting tools in use, fewer have implemented analytics tools. There is a clear need for improvement in these capabilities.

When considering core system replacement, customer experience issues are being given highest priority, with business intelligence and analytics and collaboration not as often incorporated into the business case, despite their importance.

Insurers felt that providing these tools as inline capabilities would be a major improvement to their effectiveness. Some reported that the value of inline collaboration and BI/analytics was not fully realized until business users were able to utilize the tools and better understand their full capabilities.

Since inline collaboration and BI/analytics tools are important and their effectiveness grows with increased use, insurers need to prioritize these capabilities when considering a core policy administration system replacement.

About Novarica and Zags

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Novarica provides technology strategy research,

advisory services, and consulting to more than 80

property/casualty and life/annuity insurers.

Novarica’s research covers trends, benchmarks, best

practices, case studies, and vendor solutions, drawing

on the expertise of its senior team and relationships

with nearly 400 insurer CIO members of the

Novarica Insurance Technology Research Council.

Through its advisory services, Novarica’s expert

team becomes an adjunct member of its clients’

strategy and planning functions, providing a force-

multiplier that facilitates faster, better, more informed

decisions.

Novarica’s consulting services focus on vendor

selection, custom benchmarking, project assurance,

and IT strategy, leveraging its proven methodologies,

extensive knowledgebase, and broad network to

rapidly deliver actionable insights and

recommendations.

www.novarica.com

Zags is a provider of core insurance software

committed to delivering on its vision to change the

status quo through the unique blend of technology

and user experience. Zags designs and develops its

insurance solutions with the goal of helping carriers

face the growing P&L pressures from increasing

regulations and little return on assets. Zags

understands that with these challenges comes the

need for P&C and Life carriers to find a new way of

processing that goes beyond claims, billing, and policy

administration.

www.zags.info