View from the shop floor: there was a lot of energy found as vendors and insurers got together at the IASA conference this summer.
My overwhelming impression of the show was the energy, focus, and general hubbub that attended the event. Attendance was up from last year, more vendors populated the exhibition hall, and the education sessions were numerous, diverse, and well attended. Many of the carrier representatives I spoke with were there not only for ongoing education credits but also with serious technology shopping lists and in many instances short lists of specific vendors to talk with. From the vendors' side, the report was the same: carriers focused in search of information and solutions. Business transformation and growth seemed to be the dominant drivers for those in search of technology, and those drivers translated into interest in policy administration systems, portal and distribution solutions, and business intelligence products, in particular.
Another feature of this year's show was the reappearance of life insurance carriers--a group that, in recent years, has looked more like an endangered species than anything else. The life insurance community put in an appearance at this year's show whilst being conspicuous by their absence in recent years. Of course, the life vertical was hit far worse in 2008/09 than the P&C sector, causing major budget problems for IT shops along with every other operating unit. The discretionary nature of life insurance in conjunction with the less restrictive financial and investment oversight contributed to massive losses for the industry. Now, as has been reported by the analyst community, life companies, no longer faced with existential financial threats, are waking to the realization their technology position continues to deteriorate.
One major challenge for life technologists is the relatively restricted market and particularly the lack of new and modern third-party solutions to choose from, a fact echoed by some of the attendees. By way of comparison, industry analyst Novarica recently published updated Market Navigator reports for policy administration system solutions for both the property/ casualty and life/health verticals. The L&H report lists 27 different solutions (eight of which are sourced by four separate vendors), while the P&C report lists 50 different solutions (10 of which are sourced by five different vendors). Beyond this gross numerical distinction it is also noticeable that the L&H space is dominated by large multi-vertical players--Accenture, CSC, EXL, HP, IBM, Infosys, Oracle, and TCS--to a much greater degree than the P&C space. Only CSC and TCS show up in bothreports as having a policy administration solution. Further, these giant vendors generally entered the L&H space through acquisition rather than by developing new, innovative systems. So, the carriers that attended IASA did not have the breadth of choices their P&C counterparts enjoy, especially in the area of small, innovative vendors focused on excelling in a given vertical market.
Speaking of vendors, the vendor community put on a strong showing at IASA. The general sentiment among vendors was that the life market was showing signs of activity while the P&C market remains strong and is, if anything, increasing its activity level. As in prior years, I met new or recent market entrants that I did not know and was generally impressed by the levels of software maturity achieved by relatively small companies.
At the other end of the vendor life cycle it was notable that some vendors at the show in 2009 were now exhibiting under new names and signage, the result of merger and acquisition and rebranding activity during the past year.
In terms of what the vendors have been doing since last year, the theme touched on in prior Shop Talk articles continued to play out: the newer vendors continue to build out their functional base on top of configurable toolkits while function-rich legacy vendors strive to introduce more flexibility and configurability into their offerings. There is a race going on in the P&C vendor community that we might characterize as the "Race for the Magic Quadrant." The Magic Quadrant is consulting-speak for the top right-hand corner. The nearby diagram shows a chart with two axes and four quadrants. The top right quadrant, is the high flexibility/high functionality quadrant; the Magic Quadrant.
Legacy vendors that occupy the low flexibility/high functionality quadrant are working to introduce greater flexibility into their solutions, and in doing so, to move up into the Magic Quadrant. The "new kids on the block," the toolkit/configuration vendors, are building out base functionality in order that they can move laterally from the high flexibility/low functionality into the Magic Quadrant. This, of course, raises the question as to whether any vendor has established itself in the Magic Quadrant. There are several vendors approaching from both directions, but my personal take is that none of them has taken up residence yet. For any carrier that perceives its core-system vendor as occupying the bottom left quadrant ... you should be going to the trade shows. But in summary, as the saying goes, a rising tide lifts all boats. In general the level of carrier expectation and vendor delivery is trending strongly in a positive direction.
As part of IASA's CIO Roundtable, I chaired a panel of four senior vendor staff. The panelists' job was to comment on various trends in the vendor space including M&A activity, changing delivery models, changes in vendor R&D spend, and hot technologies. The last topic led to an interesting discussion about social networks, mobile and cloud computing, and self-service.
One of my favorite assumptions about the limitations of self-service was challenged in this session. I have always felt self service remains limited to "trivial" functions such as inquiring on a policy change or receipt of a payment, or possibly making an electronic payment, but the real "heavy lifting" associated with applying for insurance or reporting a claim would always be too data-intensive for self service to catch on.
Not according to my panelists, who wove a scenario in which there is enough information about me and my home and car(s) available "in the cloud" that I would be able to apply for insurance from my iPhone.
Upon entry of (or even just transmission of stored) personal identification, all my current risk exposure and coverage information would flow into a receiving system that would then underwrite, rate, and issue my policy with a new carrier. The wow factor here is that this futuristic scenario is not really futuristic anymore. At worst case this is only "fingertips away." For someone of my generation that can only invoke the image of Mick Jagger wailing: "Hey! You! Get off of my cloud." Wherever that is!
The Shopping "Public"
As mentioned before, carrier representatives were out in force on the exhibit floor talking with vendors, making a list, and checking it twice. Another trend that seems to be emerging and was in evidence at the show is carriers in general are getting more organized and businesslike about dealing with vendors. One of my hobby horses for years has been that carriers are too nice and too trusting when it comes to making strategic vendor decisions and this could be seen in the passive and polite interactions at trade shows. Now these exchanges seem to be more searching and demanding. More carrier representatives showed up this year with short lists of vendors they wanted to meet, with pre-arranged visits and demonstrations, and attendance on the IASA organized "vendor connect tours," which match interest groups with vendors, was high. These are all encouraging trends. The better prepared the carriers are, the better prepared the vendors will be.
The trade shows are a good way of checking the technology pulse of our industry. Any one attendee can only hope to take in a sliver of all that is going on, but based on what I saw and heard I think our marketplace is in better shape than it has been in recent memory. My own schedule reflected the general level of activity and left me both tired and fired up. It will be interesting to see how the remainder of the year plays out.
George Grieve is CEO of CastleBay Consulting. Previously a CIO and still an acting consultant, he has spent much of the past 25 years with property/casualty insurers, assisting them in the search, selection, negotiation, and implementation of mission-critical, core insurance processing systems. He can be reached at 512-329-2619.
The content of "Shop Talk" is the responsibility of the author. Views and opinions are those of the author and do not necessarily represent those of Tech Decisions.
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|Title Annotation:||Shop Talk|
|Article Type:||Conference news|
|Date:||Sep 1, 2010|
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