Insurance Technology

Why IT Projects Fail…and How to Prevent Yours From Collapse

by Rob Berg

Authors: Rob Berg SCPM, CSSBB and Mark Nawrath, PMP, MBA
As expert insurance technology consultants with many years of experience under our belts, it feels like we keep seeing the same story over and over. It goes like this: Company has a need for an IT project, Company hires vendor to develop software or processes, project seems to start off strong, but ultimately gets further and further off track until the timeline is blown, the budget has skyrocketed, and Company has invested major time and money—with no useable solution yet in sight.
Though each company has its own unique circumstance and different players involved, we’ve seen the same types of issues derail project after project. Here are some of the most common reasons IT projects fail and how to keep yours going strong.

Reason 1: Lack of involvement from leadership

As the initial (and often final) decision makers, the executive team holds a significant amount of power regarding a project’s success. As we’ve all heard before, “With great power comes great responsibility.” It’s up to the executive team to not only carefully consider their choices and motivations when committing to a project, but to remain actively involved during every phase. The company’s leadership must thoroughly understand the project needs and goals and actively work to support that vision. New IT project implementation brings significant change throughout an organization. If leadership is not onboard at the outset and throughout development, those who are in charge of managing the project will struggle and the initiative may ultimately fail.

Reason 2: Change is challenging

New ways of doing business are often met with some level of resistance. The insurance industry is notoriously slow-moving and many of the people who work in this business have occupied their position for decades. Their experience brings value to an organization, but often those who have been accustomed to doing things the same way for the majority of their careers don’t realize the benefit of change. They may consciously—or unwittingly— undermine efforts to implement new systems.

Reason 3: Poor project requirements

As mentioned in a previous blog, ambiguous requirements are often both a cause and a symptom of a project that is destined to struggle. When project requirements are handled haphazardly, individuals involved in bringing the project to completion spend too much time trying to decipher what is being asked of them, they head down paths that seem right but don’t fit into the greater scope of the project, and they waste time trying to sort out the results of initial poor planning. By clearly and correctly articulating project requirements from the outset, projects stand a much greater chance of successful completion.
Read more: How the Right Requirements Can Make or Break Your Next IT Project.
We were brought into one such stressful situation. One of our clients was struggling with a failing implementation project, and about to head into an expensive arbitration. To assess the situation, we conducted a thorough review of contracts, requirements, and project management artifacts which revealed that their problem originated with the contract itself: it was far too ambiguous. One of the deliverables stated in the vendor contract was to “implement an underwriting module.” But what exactly did that include? The answer was up in the air, and neither our client nor the vendor could agree on what was to be delivered. Furthermore, requirements were scattered within emails, there was no evidence of a project plan or charter, and no regular status updates other than the ad hoc discussions that took place periodically.
Based on our written report, the client invited us to testify at the arbitration as an expert witness. After being certified by opposing counsel and the arbitrators, defending the findings in our report under cross-examination and delivering testimony that stood up under rigorous scrutiny, our client prevailed. However, their victory was a double-edged sword. They were able to recover their funds from the contract but had to pay the arbitrators, experts, and a stenographer – in addition to their own time lost in travel and testimony. They were also back to square one when it came to the project itself.

Reason 4: Sloppy project management practices

In insurance project management, keeping an eye on details is crucial. Projects should be overseen by experienced project managers or insurance technology consultants, not well-meaning junior staffers with an Excel spreadsheet and an Outlook calendar. During the course of development, many high-stakes pieces of information must be juggled, including status reports, baseline tracking, dependencies, and change requests. We’ve seen companies dive head first into costly IT projects with zero analysis of how long it’s going to take, what the final cost of implementation will be, or how it will affect other activities that occur downstream. All of these crucial pieces of information must be identified at the outset, tracked throughout development, and evaluated at project completion to gain a true understanding of whether or not the project is a success.
Read more: Common Mistakes Carriers Make When Implementing New Systems. 
We were called in to rescue a project for a medium-sized regional carrier who had sunk millions into a policy administration system that was months over deadline, with no end in sight. We discovered that not only was there no onsite project manager, there were no formal documented requirements (just raw materials like rating worksheets and product filings). Organized status reporting was also nearly non-existent: the Vice President of IT would hand-draw a set of pie charts on a piece of paper each week, roughly approximating the level of project completion—with no verifiable data to back it up.
We recommended that they put substance behind their completion tracking, so we created a formal project schedule for each component. We installed an onsite project manager who took documentation seriously. What had previously been a project that was almost at the point of litigation turned around quickly as all parties were able to assess and achieve their distinct requirements. This intervention ultimately led to a successful implementation.

Reason 5: Ignoring key stakeholders

Leaving out the people who will be using these systems every day is a grave error that will almost always cause problems down the line. If the ultimate end users are not invited to participate in system selection and configuration, not only is the project likely to face resistance, it could lack certain key features that might help these individuals perform better. Involving all levels of stakeholder during all phases of project development gives each a sense of ownership over how the project proceeds. It also provides stronger justification for each person or department to support its eventual success.

How to tell where your project is struggling

We have been called in countless times to help companies who have succumbed to the traps listed above. To prevent such catastrophes, we conduct an in-depth readiness assessment – preferably in advance of the implementation effort – to determine weak areas of the project, then develop a plan to reinforce those issues. For starters, here’s what we look for:

  • Personnel: Is the project adequately staffed? Are those staff members adequately trained with appropriate competencies?
  • Internal processes: How does work flow through the project? What is the process for approvals? What is the process for procurements that take place outside the scope of the project’s main deliverable?
  • Supporting technology: How are status reports obtained and delivered? How are people logging their time against the project? How does this compare against the baseline? Are the appropriate environments (e.g., development, staging, testing, production) set up?
  • Metrics: What metrics are being monitored? How is project success being defined?
  • Overall governance: What project management methods are being utilized? Are they appropriate for the project scale and scope and composition and distribution of the team?
  • Physical environment: Is the project effort being performed with the right facilities? Do people have enough space, equipment, and easy access to the resources they need?

Though every project has its own unique quirks and challenges, most implementation problems stem from one or more of the above factors. Only after a thorough discovery can you develop an appropriate plan to shore up the project. The truth is that there is no stock answer. This is why there’s a high failure rate. However, thinking ahead and crafting a laser-focused plan while maintaining flexibility to combat the inevitable changes and challenges you’re sure to confront gives each project the best shot at success.

If your project is running over time or over budget, Perr&Knight can help. Contact us for a no-obligation readiness assessment to determine where your project might need further support.

How the Right Requirements Can Make or Break Your Next IT Project

by Rob Berg

Authors: Rob Berg SCPM, CSSBB and Mark Nawrath, PMP, MBA
According to the Standish Group’s Chaos Report, an alarming 19% of all IT projects fail. Meanwhile, a full 60% fail to meet expectations. Stats like this show that tech projects run the risk of failing more often than they succeed. For insurance companies, these numbers should be alarming. The amount of capital—both human and financial—invested in IT projects for insurance companies mean that missteps in implementation planning and execution translate directly into significant waste, both of time and money.
We have found that one of the most impactful ways to shield tech projects from serious setbacks is to invest in establishing a clear set of requirements well before system configuration begins. If you’re not paying attention to the fact-finding and requirement-defining phases of your project, you may be unwittingly setting yourself up for failure.

How do you define “good” requirements?

In a single word: unambiguous. This means painstakingly translating information from subject matter experts into a language that can be easily consumed by developers or those configuring IT systems. Too often, subject matter experts get mired in their own vernacular. They forget that terms and definitions that seem obvious due to daily use and a shared language among colleagues are not likely to be fully understood by the developers—who also communicate through their own shorthand. Insurance technology consulting partners must not only record requirements, but they must also take the time to outline specifically what each requirement means and communicate how it fits into the greater context of the project.
Read more: The Importance of Unambiguous Product Requirements.
From there, consistency is key. By taking ad hoc approaches to write their own requirements from scratch at the outset of each project, we’ve seen insurance companies fail to capture and organize important information along the way. The formatting of the project outline plays an important role, even down to details like consistent sentence structure and naming conventions. When each project looks like an entirely new animal, developers and project managers are forced to spend more time taking in the basics, instead of capitalizing on their expertise to document an exhaustive set of requirements and spot areas of ambiguity that require more clarification.

The cost of hazy requirements

We’ve all heard horror stories about IT projects at insurance firms that have been drastically delayed or simply abandoned because the train got so far off-track that it couldn’t be redirected. For example, we saw a company spend millions buying a new policy admin system, trusting the assurances of their software development vendor that the project would take six months to implement. After six months passed and the project was still around halfway from completion, Perr&Knight was called in to try to salvage the struggling project and stave off a lawsuit.
We discovered that the project was doomed from the start because even basic requirements weren’t clear. Obvious problems included project requirements outlined in disparate emails, multiple stakeholders weighing in at different stages and actuaries who simply passed along a rating algorithm, assuming that programmers could just use it to program for a different state or new line of business. Lack of context was stifling each party’s ability to deliver their full level of expertise. 

Far-reaching consequences

Poor product definition – the core requirements that document the use of insurance product rates, rules and forms – has the potential to become a quadruple whammy that can hurt the company on multiple fronts, not just the IT or actuarial department. Here are some of the ways badly defined insurance product requirements leak out across departments and damage the company as a whole.

  • Lost time – When product parameters require constant clarification from underwriting and regulatory staff, project phases extend to weeks or months instead of days, and the delay drains time that could be better spent elsewhere. This lack of efficiency leads to…
  • Frustration – Projects that proceed at a snail’s pace drain morale and lead to increasing personal frustration as teams struggle to deliver.
  • Skyrocketing budgets – Resuscitating shaky IT projects that are midway through development often requires throwing good money after bad. It’s the only way to justify the expenditure up until his point and salvage the project.
  • Regulatory implications – For projects that do reach completion, those with poorly written product requirements often fail to address the true standards required by state departments of insurance. Configuring incomplete or incorrect forms or rates leads to a significant regulatory risk that can take a toll on the company’s reputation and seriously impede their speed-to-market objectives.

The key to establishing clear requirements

In an industry that depends so heavily on specialized expertise, one of the smartest ways to ensure that your product definitions are clear is to approach the requirement through the eyes of a layperson. It sounds counter-intuitive but boiling down needs and specifications to their most basic, plain-English functions enables project managers to deliver the vital translation between insurance company and vendor described above. Additionally, it helps insurance companies gain a deep understanding of what amount of “out of the box” functionality will truly apply to software products they purchase, versus the amount of customization that will be required to achieve the final end-product.
Though it seems like a safe bet to hire the big guys, we find that when insurance companies go directly to big technology consulting firms for development, they often end up with well-meaning tech developers who may lack adequate insurance domain knowledge. This specificity plays an important role in translating the needs of insurance companies into software that not only improves productivity and speed-to-market objectives, but supports compliance in an increasingly burdensome regulatory environment.
Hiring an insurance technology consulting company to painstakingly outline and define your entire project scope may require a slightly higher initial outlay but think of it this way: you’re in the insurance business. Taking the time to do it right the first time is your own insurance policy against expensive delays and demoralizing headaches.

If you have questions about the adequacy of your stated IT project requirements, our expert insurance software consultants can help.

The Sharing Economy: What You Should Know Before Jumping In

by Courtney Burke

Authors: Courtney Burke, JD, CPCU, Michael Goldman, FCAS, MAAA, Les Vernon, FCAS, MAAA
The proliferation of the sharing economy impacts both commercial and personal property casualty insurance by creating new insurance needs. This new landscape brings many opportunities to better serve your customers – but also plenty of pitfalls. If your company is considering undertaking a new insurance product development project to address the needs of this fast-growing and quickly evolving marketplace, here are some key factors to keep in mind.

Mind the gap

Networking companies like UBER, Lyft and Airbnb have specific insurance needs that require customized commercial insurance. If not modified, traditional personal auto and homeowners policies may have gaps in insurance coverage for transportation network drivers and home sharing network hosts due to standard exclusions. For example, although UBER provides liability insurance for its drivers while they are working and Airbnb provides host protection insurance covering third-party liability claims related to a stay, the driver or host may not be protected for damage to their personal property.
The sharing economy also impacts the accident and health insurance industry. The majority of gig workers, i.e. service providers in the sharing economy like UBER drivers or Taskers on TaskRabbit, do not receive employee benefits through their networking companies. This creates a market for individual supplemental health products customized for gig workers.
These gaps create opportunities for insurance companies to develop bespoke products that address highly specific coverage needs.

Insurance + technology = opportunity

Much of the sharing economy is technology-based – services are engaged online or via a mobile phone application. If you’re considering targeting the sharing economy, you may need to mirror this online delivery model for your insurance products. This modernized distribution of insurance provides an opportunity for insurtech companies who can help deliver insurance products that feel native to this tech-centric landscape.

Finding the right insurance product development partner

As the sharing economy becomes more prevalent, you’ll likely begin to explore different methods to provide coverage. If you’re new to the sharing economy insurance market, you may wish to develop products with features specifically designed for this arena, including episodic or short-term insurance, or industry-specific coverage.
To design a solution that keeps pace with the market, you should partner with an insurance consultant who has extensive experience in developing new products. Experienced insurance product development consultants can draft coverage enhancements to incorporate specific coverages that may not be currently offered in your product. A product design consultant will also work with you to understand where coverage gaps or limitations exist in your current product and then make recommendations to address each.

Right pricing requires close actuarial attention

One of the sharing economy’s unique features is shortened exposure periods for coverage. Sharing economy insurance products typically offer coverage just during heightened time periods of exposure to risk, aka “insurance on-demand.” For example, home sharing insurance coverage, such as that offered by Airbnb, would depend on the frequency and length of stays, the number of guests, accessible areas of property, etc.
Understanding and correctly pricing for risks during unique exposure periods requires actuarial experience to correctly handle expense loads, increased risk of adverse selection, potential fraud and risk of litigation. If you’re thinking of entering the sharing economy, work with consulting actuaries and data scientists who have the expertise and experience to utilize predictive analytics and advanced pricing techniques in the development of rates.

Regulation varies by state

Sharing economy insurance products must comply with each state’s insurance regulations – those that apply to all insurance products as well as those specific to sharing economy insurance. For example, several states have passed specific legislation regarding transportation network companies. By working with an experienced regulatory compliance consultant in the markets and jurisdictions you wish to enter, you can ensure that your products comply with applicable regulations and that your products are filed with the states as required.
Strict governmental and industry oversight make insurance one of the most demanding industries for regular and accurate data reporting. Property and casualty insurance policies designed for the sharing economy present unique challenges. For example, for a ride-sharing driver, when is s/he covered by personal auto versus commercial auto? To which special statistical code does the vehicle get assigned? Your regulatory compliance consultants will make sure all these details are covered before you file.
To best capitalize on this exciting time, work with an experienced insurance consulting services team who can help you develop a proactive strategy to release products the correct way. In addition to actuarial expertise, make sure your partners possess years of statistical reporting experience, technical expertise, and data management best practices to help you navigate your unique reporting requirements. With a clear objective and the right team, you can develop a comprehensive solution that puts you ahead of the market in this new economy.

For more information about how to best develop insurance products specifically for the sharing economy, contact Perr&Knight today.

Think Before You Act: Why Expert Solution Architecture Should Always Precede Critical Data Initiatives

by Joseph Allen

Deploying a data solution that addresses a real-world business problem is not just about drafting a quick set of specs and coding to meet those requirements. Instead, it’s about architecting a solution that will satisfy your true business need.
As experts in insurance data services, we have seen many companies dive headfirst into development without taking the time to outline a process that delivers not only their desired data set, but a viable strategy to keep moving forward.
Companies can sink deeper and deeper into development quicksand, increasing budgetary spend and extending the project timeline by piling more features onto both legacy and modern systems that don’t fully address the problem. To achieve lasting solutions that deliver maximum value, slow down and think before you act.

Focus on the problem, not the tools

Before you undertake any data initiative, it’s vital that you dedicate sufficient time and attention to define the full scope of your problem. We have seen companies get distracted by the latest, greatest software tools and fail to determine whether or not these tools will deliver the information they need.
Focusing primarily on tools is like shopping for ingredients without an idea of the meal you will be preparing. Instead, clearly articulate the problem first, then determine how you will utilize the tools at your disposal to solve this problem as efficiently as possible.
At Perr&Knight, most of our engagements are preceded by an in-depth workshop, during which we aim to identify the true need. Many companies think they need help with one aspect, but it turns out that addressing a different issue will solve their challenge. We apply our insurance data services expertise to determine short-term success as well as define a long-term solution that will help our clients avoid this situation in the future.

Outline specific future actions and activities

After assessing your problem, articulate the specific activities that you will take as a result of obtaining your data set. Knowing these actions informs the scope of what should be contained in your reports. Focus on obtaining useful information that will equip your teams to perform their jobs more efficiently and effectively.

Teams must understand how their roles support your business

IT teams might be deeply focused on technical aspects of the initiative but lack sufficient context for the project as a whole. As such, their expertise is stifled. Don’t limit your IT teams to only the execution of the plan – loop them in early to make sure that the ultimate solution takes into consideration your actual business needs. Spend time bringing your IT team up to speed on how their input fits into the bigger picture of your data initiative and what your overall goals and outcomes are. Equipped with this knowledge, your technical teams become more valuable project assets.

How to avoid “analysis paralysis”

Successful deployment efforts start with the known and build incrementally from there. Look for what you can define that will provide an immediate benefit. In the effort to plan for every possible event, software developers can end up overdesigning their solution architecture. Companies that want to create a massive system to address every possible future need often get stuck developing bloated, unwieldy software that takes forever to deploy.
Perr&Knight’s process is to plant a firm stake in the ground by targeting a specific data consumer with a specific need, then focus on building out just those portions. From there, we expand incrementally, generating deliverables that are definable, measurable, and achievable.

More expert tips to keep your data initiatives on track

  • DON’T cast too wide a net. Keep your eye on the specific problem you’re trying to solve.
  • DON’T chase trends. Make sure your solution delivers the information that addresses your core
  • DO make sure that you are being specific. There’s no point in coding to vague specs.
  • DO define what constitutes success before you undertake the project, including how you will measure progress along the way and metrics that ensure you accomplish various scope items throughout development.

The fact is, data reporting is not a sexy profit center – but it is a critical part of doing business. Everyone wants a quick plug-and-play fix, but solution architecture is more about business modeling than a strictly technical solution. There is no such thing as a silver bullet. Quality solution architecture starts at the business level, i.e. understanding your business problem and applying that knowledge as your guide to implement the best solution. Data initiatives are a marathon, not a sprint. Keep this in mind and you’re sure to go far.

For more information about Perr&Knight’s expert insurance data services, contact us today.

The Importance of Unambiguous Product Requirements: Why a Good Business Analyst is Worth their Weight in Gold

by Ken Ekers

Launching or updating a new insurance system seems like a straightforward process. But it’s common knowledge in the industry that a large percentage of projects hit roadblocks due to unclear requirements. This lack of clarity might initially seem like a small issue. But reverberations further down the line can have massive negative consequences to your timeline, budget, and ability to deliver the defined scope.
In this article, we’ll outline some of the problems that can arise due to ambiguous product requirements and discuss how working with an expert business analyst from a qualified insurance support services partner can start your project off on the right foot and keep it on track.

Evaluate where you are–and where you want to end up.

Charting a course for implementing a new process is not just limited to outlining a list of your project’s final requirements. It begins with taking an honest stock of your “as-is” process and determining clearly how you want it “to be”. This gap analysis enables you to look realistically at the strengths and weaknesses of your current system and the associated processes, and determine the amount of change that will apply to these processes.  It is important to include input and gain acceptance from your assigned subject matter experts (SMEs) and the project stakeholders affected by these changes.

What can go wrong?

All of your business processes and systems are so deeply intertwined that small problems can quickly spiral into much larger issues. If product requirements aren’t clear, the first line of defense occurs early in the IT project itself. Vague or incorrect requirements can be uncovered by the developers or testers. These requirements will have to be re-drafted. If the vague requirements make it through development and testing, the SMEs could possibly uncover the issue. That means that the BA will need to refine the requirement(s), developers will have to re-develop and the QA testers will have to re-test, etc. This additional work will create both an immediate and long-term unfavorable impact on your budget and schedule.
Unclear or incomplete requirements will also result in a sub-standard suite of test cases, which will lead to incorrect or insufficient testing. As a result, the quality of your product will suffer.
Your new IT application or system will have to integrate with other systems–it will have to “play nicely.” If your requirements aren’t drafted correctly, not only do you run the risk of not delivering the right product, your new implementation could significantly disrupt other systems and cause those to exhibit problems that in turn require correction.  The fall-out period after an implementation could run longer and deeper than projected.
Poor product requirements can create scope creep as your requirements start to veer outside the defined boundaries of your project’s goals. These expanded requirements will go on to get developed and tested, and will more than likely be rejected by the SMEs who will expand the scope a little further (e.g. change control) because the deliverable doesn’t quite meet their expectation. Before you know it, your budget and schedule will balloon.
Finally, improper requirements will eventually create an adverse impact on your business team. Releasing a product that ultimately fails means higher expenses and loss of revenue, a double whammy. Or, the business sponsor might be forced to move forward with whatever portion of the project is complete and still lack certain critical functionality. You’ll end up throwing good money after bad as you divert resources that could be spent on new business or writing more policies toward fixing preventable problems. In short, poor articulation of product requirements can cause you to risk losing your competitive advantage.
Luckily, most of these problems can be avoided. This is where an experienced business analyst comes in.

How can an insurance support services business analyst help?

A business analyst is dedicated to establishing clear requirements and keeping a close eye on the project through every stage. Not only do they bring professional industry experience to the table, but they will take the time to elicit input from business SMEs. This can be done via a combination of various methods including brainstorming, interviews, requirements workshops, and several other techniques. Each of these approaches is designed to reveal the true needs of the project effectively giving your project a boost with a set of clearly defined requirements that are within the bounds of the project scope.

Aren’t business analysts basically all the same?

Business analysts are not all equal. Right now, there is a shortage of quality business analysts in the U.S. market. Of the available pool, some lack effective training or experience. Alternatively, individuals might have been in business analysis for many years but still have a limited perspective or do not use best practices. It’s worth it to take the time to evaluate an analyst’s capabilities and track record before contracting their services.

How you can get the most from your business analyst.

Your business analyst can be a major asset to your project, but your organization must do its part, too. Here are some ways you can support your business analyst as they steer your project toward success:

  • Use quality software to manage your requirements. There are several tools out there on the market, such as IBM Rational, Jira, or CaseComplete, that can document and log your requirements, so each step is traceable.
  • Invest in producing quality requirements. That means building time into the schedule to produce clear and accurate requirements and devoting funds to support that phase.
  • Avoid low-cost business analysts. This could be a sign that they lack experience or confidence, and insurance support services is not an area where you should skimp.
  • Be willing to accept input from strong business analysts. They can possess valuable subject matter expertise in the insurance industry. They want to deliver a successful project, so be willing to listen to and act on their advice.

At the end of the day, don’t reinvent the wheel. Partner with industry experienced business analysts who can elicit and evaluate your requirements from various angles. This comprehensive perspective creates a clear roadmap and alleviates the chance of misinterpretation, making their services well worth the investment.
At Perr&Knight, we know where to get answers, due to our decades of experience in the insurance industry. We also have a complete set of resources to establish quality requirements right at our fingertips, including experienced actuaries and experts in regulatory compliance, filing, and product design. For project support at any phase of development, contact our offices and we’ll be glad to help.

6 Essentials Every Insurtech Company Must Know

by Denise Farnan

The avalanche of data now available to insurance companies is rapidly changing the capabilities of an industry that has historically relied on manual processes. Insurtech entrepreneurs are discovering new advancements in data capture and analysis that allow insurance companies to do their jobs more efficiently and effectively.
However, it’s important not to leap before you look. It’s wise to prepare for the business realities and regulatory scrutiny that are inherent in the insurance industry. We at Perr&Knight have provided insurance technology consulting for many emerging tech companies to assist them in advancing their product in the complicated insurance industry.
Here are some essential guidelines to keep in mind as you proceed through development and rollout. Disregard these guidelines now–and you may end up paying dearly later.

Do your homework

In the heavily-regulated insurance marketplace, product rollout is not nearly as fast as in other industries. Constraints including privacy rules, compliance requirements and standards that vary by state can throw a wrench into the best-laid plans. We suggest partnering with insurance technology consulting experts who can help you navigate the tricky regulatory environment.

Think bigger

You might have developed a product to help claims but its functionality has the potential to improve accuracy in fraud detection or streamline marketing efforts. Qualified insurance consultants can evaluate your product and inform you if there are other uses for your technology beyond its original application.

Test your tech on real data

Feed real data into your technology to demonstrate specific outcomes that you can share with potential clients or investors. Measurable results can also support your case when submitting to regulatory bodies, especially if your product is entirely new to the industry.

Prepare for regulator review

Complicated regulations apply to the collection, evaluation, and sharing of data in the insurance industry. It’s smart to prepare for the range of questions you will be asked by regulators (keeping in mind that rules not only vary by state but also by line of business) BEFORE you are ready to submit your product for approval. Preparing ahead of time enables you to respond to regulator inquiries quickly and completely.

Be ready to train

Even insurance companies that embrace new technologies will undergo a transition period where staff needs to become comfortable using your product. The most successful Insurtech companies put support staff in place to train users, answer questions and help companies through an integration of the new technology with their existing systems and processes.

Use expert evaluation to validate your product

Before investing in major upgrades, insurance executives want to be sure that new technologies will deliver results that justify time and expense. Insurance technology consulting partners help secure buy-in from execs with data analytics used to quantify and support your innovation.
Your product might be fantastic and your user interface might be seamless, but those are only a few pieces of the Insurtech puzzle. Experienced insurance consultants can complete the picture by providing you with insight and preparation for the complexities of the insurance market as it relates to your product or service, saving you from headaches, hassle, and wasted resources.

For more information about how Perr&Knight supports Insurtech entrepreneurs, contact us at (888)201-5123 ext. 3.

How to Use Predictive Modeling to Increase Profitability

by Denise Farnan

Predictive analytics is the practice of extracting information from existing data sets in order to determine patterns and predict future outcomes and trends. Insurance companies can use these sophisticated tools to increase accuracy in risk selection, pricing, and claims handling. With proven models and expert interpretation, carriers are more equipped than ever to make intelligent business strategy decisions that raise revenue and lower costs.
Here are some of the ways the use of predictive models has been proven to help insurance companies enhance their profitability.

To write or not to write

Deciding which risks to write and which to avoid was once an art. With predictive analytics, it’s now a science. The use of predictive models eliminates the guess-work that arises when a company must decide whether to write a particular demographic or whether it makes sense to try to offer a competitive product that is trending in the marketplace. Predictive models can compare data from various demographics, locations, weather, crime statistics, previous claims and other touch points that reveal an accurate picture as to whether each risk is worth writing. Understanding this before binding policies can generate significant savings by not heading down the path of unsuccessful products.

Provide the best match of dollars into risk

Pricing models help insurance providers segment the market on an astonishingly detailed level, accounting for hundreds of variables that were not able to be measured with such a high degree of accuracy in the past. Equipped with this information, insurance companies can develop pricing strategies for their products that reflect the true value of the risk they are covering.

Monitor dollars out

Insurance carriers can also enhance their profitability by improving the claims handling process. Predictive models help identify and reduce fraud and slow down claims leakage. By relying on predictive modeling, companies can be sure that they’re paying claims at the right cost. These tools provide additional accuracy that improves claim assignment to claims adjusters to get the right experience needed for the type of claim, thereby helping with the company’s bottom line.

Available to all

Many insurance companies lack the capital to support an entire predictive analytics department and therefore feel that this resource is beyond their reach. However, actuarial services companies like Perr&Knight understand the tremendous value offered by these models and provide these services for companies who want to increase profitability and compete on a scale with larger insurance providers.
For companies that have never undertaken any type of predictive analytics, we recommend reaching out to third-party support services to discover previously unseen opportunities available through the use of predictive modeling. Actuarial services companies with predictive analytics departments have extensive experience running insurance models on relevant data, integrating outside data and providing the results of the analytics in a usable format that clarifies decision making.

An ongoing strategy

For best results, it’s very important to note that predictive modeling should be applied on an ongoing basis. It’s not a “one-and-done” process. Companies should look for early indicators of marketplace change and be proactive about adjusting pricing and claims handling strategies. By staying on top of these fluctuations with regular monitoring, insurance companies can not only increase profitability but can maintain their edge over time.
Predictive analytics reduces the risk in the risky business of insurance. With the vast amount of data pouring in today, many companies realize the advantage of letting high-powered computers synthesize information with lightning speed. Once the computers have run their algorithms, actuarial services staff can apply their valuable expertise to interpreting the results. This is not only a more efficient use of manpower, but it frees up staff to focus decision making on additional profit-enhancing strategies.
If you would like to learn more about how predictive analytics can help your company, contact Perr&Knight at (888)201-5123 x3 and we’ll outline all the ways that predictive modeling can enhance your organizations’ profitability.

How to Avoid Common Mistakes Carriers Make When Implementing New Systems

by Rob Berg

Carriers who have not been through complete development and implementation of a new system tend to underestimate the time, attention, and project management expertise it takes to smoothly roll out a system that works seamlessly with the other systems already in place. During our decades of providing project management and insurance technology consulting, we find that there are no universal “best practices.” However, there are good practices that everyone should try to follow.
Here are some of the most common mistakes we see and our suggestions for better alternatives.

MISTAKE: Thinking that your in-house staff has the bandwidth to properly oversee your new system rollout.

WHY IT’S A PROBLEM: In-house teams already have full slates and might overlook crucial details that can compromise the project.
BETTER ALTERNATIVE: Partner with insurance experts who can bring a fresh perspective. They will evaluate the details of your system roll-out to spot hiccups before you begin. They can also create achievable timelines and budgets, helping all parties stay on track to meet these expectations.
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MISTAKE: Relying on an inexperienced project manager.

WHY IT’S A PROBLEM: Project management is about more than just watching the schedule and staying organized. Successful project management requires scope management, HR management, and experience in risk, quality and procurement management.
BETTER ALTERNATIVE: Since there are many moving pieces and many specialized disciplines to take into consideration, it’s wise to trust an experienced project manager who has the insurance technology consulting expertise required to successfully implement new systems specifically for insurance companies.
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MISTAKE: Drafting an ambiguous or incomplete scope of work before beginning the project.

WHY IT’S A PROBLEM: Poor planning reveals surprises that must ultimately be sorted out down the line. These can delay deployments and cause budgets to balloon.
BETTER ALTERNATIVE: Carefully define your scope of work before engaging vendors. Make sure that all stakeholders understand what’s in and what’s out of scope before awarding a contract, and encourage them to draw to your attention any gaps or points of confusion.
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MISTAKE: Adopting an ad hoc or informal approach to planning.

WHY IT’S A PROBLEM: Scattered planning results in reacting to problems as they arise, not charting a proactive course of action.
BETTER ALTERNATIVE: Ask your insurance technology consulting expert to give you a realistic picture of what to expect while you draft your scope of work. Make sure you account for all aspects of your current systems that need to be updated before integrating with your new systems.
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MISTAKE: Doing things the way they’ve always been done.

WHY IT’S A PROBLEM: A “business as usual” approach can cause you to overlook important details or blind you to new practices, which can result in the marketplace leaving you behind.
BETTER ALTERNATIVE: To remain both efficient and competitive, insurance companies must maintain the flexibility to adapt to new situations. Simply relying on project management practices that have worked in the past can cause you to miss out on opportunities for greater efficiency or profitability.
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MISTAKE: Jumping to a solution before properly assessing the issue.

WHY IT’S A PROBLEM: Rushed decision making leads to costly oversights that can stall a project or force a complete re-evaluation down the line.
BETTER ALTERNATIVE: Undertake a proper discovery period to correctly assess your project needs and evaluate the costs and benefits associated with project decisions.  Create a game plan that makes sense and make sure everyone is on the same page before you start the project.
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MISTAKE: Hastily selecting a vendor.

WHY IT’S A PROBLEM: Partnering with the wrong vendor can cost you time and money. You might end up deep in a project and be forced to throw good money after a bad vendor experience in an effort to get your project back on track.
BETTER ALTERNATIVE: Take the time to properly vet your vendors. Ask them specific questions about their experience in the particular lines of business you are planning to write. Look for areas where they push back. You don’t need a team of yes-men. You need experienced professionals who tell you the truth, no matter what.
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MISTAKE: Remaining with the same vendor.

WHY IT’S A PROBLEM: Legacy partners can also get mired in their own systems and might not stay current with technology changes or industry advancements, causing you to lose out on important opportunities.
BETTER ALTERNATIVE: Ask your current vendor to bid alongside new vendors. If you have a personal relationship with your current vendor, request an unbiased third party from your team to handle the interviews and compare proposals. Take their assessment into strong consideration when deciding if your current vendor measures up or if you should partner with someone new.
There are as many ways to implement a new system as there are individual insurance companies. Use these guiding principles to help you make more thoughtful decisions as you develop new ways of serving your clients.
Need more guidance? Call Perr&Knight at (888)201-5123 Ext. 3 to discuss how we can help your implementation proceed more smoothly.

Why Partner with an Insurance Product Design Specialist?

by Terri Hitchcock

In today’s insurance marketplace, coverage enhancements and creative new lines of insurance are essential to maintaining a competitive edge. When developing or updating insurance products, many carriers take action without considering important details. They do not develop their products with market evolution and regulatory hurdles specific to each state or line of insurance in mind.
Many insurance companies also try to go it alone, relying on their in-house departments to design insurance products that fit the bill. But this method is fraught with risk and can result in rejection by the State Departments of Insurance that require additional time and resources to correct.
As an insurance carrier, you understand what your clientele wants but are you prepared to design the most appropriate insurance product to achieve it? This is where insurance product design specialists come in.

Insurance product design specialists understand the nuances of specialized lines of business.

They have years of experience in unique lines such as gap products in the accident and health arena and uncommon coverages like emerging inland marine lines for technology products, insurance for pets, and animal mortality. Specialists can provide advice and guidance on any aspect required by a particular line. Most in-house teams are simply not set up to provide such extensive insight.

They bring a fresh perspective.

Insurance product consultants think outside the box and develop innovative solutions to get you from idea to an approved product that satisfies regulators in a timely period. Many product design consultants have decades of experience and can handle all aspects of your development, or fill in for a gap in your staff. You can utilize their services to whatever degree you are comfortable. They can handle your entire project or simply slot into your existing team and lend their expertise.

Product design specialists understand the market and work with you TO ensure that your product will match marketplace needs.

With today’s rapid technology advancements, what worked in the past might not be the best solution.  For example, millennials are buying insurance today in a completely different way than their parents or grandparents. They want instant quotes and payment submissions with a single touch on their smartphone. A specialist can help ensure that your product­–and how it is delivered–keeps pace with the times.

Insurance product design specialists understand how to approach regulators.

They understand the distinct operating nuances specific to state Departments of Insurance and the submission requirements for each department. Some have personal relationships with individuals at the departments and can obtain answers quickly. As independent contractors, insurance product specialists can also make anonymous inquiries about new products or product enhancements without spotlighting exactly who is asking. This can save a tremendous amount of time during filing, enabling you to meet all regulatory requirements ahead of time.

Some do’s and don’ts for working with an insurance product design specialist:

  • Do…take advantage of their expertise. Ask pointed questions. Consultants are there to help educate you.
  • Don’t…be afraid of confidentiality breaches. Non-disclosure agreements are standard and reputable product design specialists will have no problem signing.
  • Do…ask about marketplace trends. Insurance product design consultants watch the entire insurance marketplace and can offer insight into shifts in the industry that can impact your business. Many advise clients on worldwide issues, including European clients who want to do business in the United States and American businesses who want to expand their coverage overseas. This insight can be invaluable to your company.
  • Do…interview your prospective product design consultant thoughtfully. Time frame generalities and “Which states will be most difficult?” are softball questions. Ask specific questions about the challenges your product will face. Answering in-depth questions with detailed specifics is the sure sign of a true expert.
  • Do…hire a consultant to peer review your product proposal before you file. This is an excellent way to evaluate their quality of work and can save you a tremendous amount of resources by avoiding a rejection.
  • Don’t…be afraid to work with someone new. Insurance companies tend to get mired in “business as usual” thinking and can miss out on valuable opportunities in the meantime.

We always recommend that you bring your product design consultant onboard as close to your project’s inception as possible. While specialists can handle your project at any stage–before, during, or after filing–you get the true value of their expertise when you enable them to contribute to your product’s development early on.
If you would like to know more about how an insurance product design specialist can help your business, call us at (888)201-5123 Ext. 3 and we will gladly discuss your product needs.
 

5 Strategies to Improve Your State Filings Process

by Patrick Light

As every insurance professional knows, an inefficient state filings process can have a major negative impact on day-to-day operations and the timely filing of submissions. Problems related to organizing, sorting and tracking state filings consume time and resources and can create frustration and friction between departments. During our decades of providing insurance support services, we hear regular mentions of these challenges. As a result, we have identified five useful strategies to improve your company’s state filing process starting immediately.

Strategy 1: Stop relying on local storage and MS Excel.

Files stored on network drives, personal computers or on individual hard drives that are organized by MS Excel spreadsheets can lead to significant problems due to accidental erasure, data overwrites and inaccessibility by others. Local storage failures can stop your state filings in its tracks and render your team powerless to obtain vital information. Under audit, digging through old drives for information can waste days or weeks of manpower. Centralize your files in a cloud-based system and ensure your information is always safe and available.

Strategy 2: Say goodbye to your internally developed insurance software systems.

While it seemed like a good idea to develop an in-house state filings management system a decade ago, you might now realize that sustaining the software and hardware required for a secure and reliable system eats up more resources than your company can handle. These outdated systems can slow down the very processes they were developed to enhance. Maintenance and upgrades on legacy systems can get expensive and pose scalability challenges. Often only a few people on staff understand the system’s complexities and must personally resolve hiccups, thus stealing their attention from other duties. Switching to reliable hosted state filings software can ensure that your technology keeps pace with your business needs.

Strategy 3: Enable secure access by more individuals.

An insurance company’s state filings are often handled by a single department comprised of a few employees who manage all filings and issue all status reports. This employee involvement can slow the process down due to the time it takes to request information and generate reports. By storing your state filings in a web-based central location, you can issue log-in credentials to various stakeholders who have the ability check the status of filings at any time. Accessible and transparent data empowers users to get the information they need without running the risk of missed communications or slow-downs caused by human oversight.

Strategy 4: Maintain updated forms libraries and filing status information.

Old or outdated state filings status information can result in time-wasting confusion and policy issuance of incorrect forms. Rather than risk this unnecessary runaround, invest in insurance software that displays status and other forms data in real time and can be searched easily using relevant text. This enables all interested parties to monitor filing progress and obtain accurate, time-critical data at any time. 

Strategy 5: Take immediate action to enact change.

“Business as usual” operations avoid rocking the boat today at the expense of tomorrow. While it is easier to continue relying on a broken system and delay necessary improvements to your state filings protocol, you do so at your own risk. Chasing missing paperwork, sifting through email chains and calling emergency IT support to extract data after hardware failures takes time, attention and energy away from your staff–and only gets you as far as the next process failure. Generate a realistic timeline to improve your state filings process then stick to your benchmarks and watch your process improve.
Letting go of old systems and processes that no longer serve your business can be a daunting task. At Perr&Knight, we have seen these challenges affect scores of clients who watch their state filings systems become more and more fractured but lack a viable alternative. We enhanced our own state filings services by developing StateFilings.com, a cloud-based insurance software that streamlines filings process by directly addressing many of the pitfalls described above. In addition to using this software internally for our insurance support services, we offer StateFilings.com for license to insurance companies who seek a single, reliable solution to address their state filings challenges.
No matter which of the above strategies your company decides to employ, the first step to improvement is recognizing the limitations of your current processes and resolving to make a change. For questions about how to streamline your state filings process, call Perr&Knight at (310) 230-9339 or contact us today.