01-Asia Pacific Insurance 2012 Top 10 Predictions

8/22/2019 01-Asia Pacific Insurance 2012 Top 10 Predictions

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| 22 J une 2012

Asia/Pacific Insurance 2012 Top 10 PrediStrategic Initiatives for Insurers to Carpe DStudy)

Primo B. Aguas (Dondi)

ASEAN Insurance Sales [email protected]


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Copyright IBM Corporation 201122 J une 20122

IDC Top 10 Insurance Predictions for 2012 in Asia Pacific

1. Data Integration and Analysis Will Continue to Shift to a Higher Gear asInsurers Place Concerted Focus on Raising Customer Experiences

2. The Customer of the Future Will Be Multimodal, and Insurers Will Needto Expand and Innovate on Their Indirect Distribution Network

3. Risk Management Will Remain Crucial, Despite or Perhaps Becauseof the Current Uncertain Economic Climate

4. Optimizing Business Performance Will Only Take on Greater Urgency asCompetitive Pressures Intensify

5. Insurers Will Focus on Raising Productivity and Retention of TheirAgency Force via Tools and Technologies


IDC Top 10 Insurance Predictions for 2012 for Asia Pacific

6. With Falsified Claims Raising Insurers' Operating Cost up to 5%+, FraudManagement Initiatives Will Continue with Rigor

7. More Carriers Will Develop Strategic Road Maps for Vendor

Replacements or Agility Enhancements to Their Core InsuranceApplications

8. Insurers Will Increasingly Diversify into Alternative Revenue Segmentssuch as Health, Pension, and Microinsurance Products

9. Technology Spend Will Rise an Average of 510% in 2012, with SomeBeing Channeled into New IT Delivery Paradigms

10.Insurance Regulations Are Increasingly Making Their Impact Felt, ButUnfortunately, So Will the Corresponding Regulatory Cost Burden


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Data Integrationand Analysis Will Continue to Shift to a Higher Gear asInsurers Place Concerted Focus on Raising Customer Experiences

Insurers are facing increasingly savvy, demanding, and capricious customers.

To better manage client relationships, they are thinking more strategically about

organizing, synchronizing, and consolidating disparate customer information tocreate a "single version of truth" on these customers.

They are also making investments in analytics to gain deeper insights into theirpolicyholders and to tailor-make more appropriate products and customerexperiences.


For 90% of insurance CEOs, the answer is to get closer to thecustomer

83%

Others

95%

Standouts

Getting closer to customer

14%more

Getting closer to customer

People skills

Insight and intelligence

Enterprise model changes

Risk management

Industry model changes

Revenue model changes

90%

86%

81%

70%

49%

49%

40%

Dimension to focus on over the next 5 years

Convenience for customers is new to theinsurance industry, we are behind otherindustries here.

CEO of P&C insurer, the Netherlands

Chinese consumers are very open tomodern channels.

CEO of Life Insurer, China

Source: Global CEO Study 2010. Left side Insurance n=78, right side global n=1523, n=303; (unpublished interview quotes)


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The Customer of the Future Will Be Multimodal, and InsurersWill Need to Expand and Innovate on Their IndirectDistribution Network

Consumers prefer to have a choice of interaction points and would not hesitate to

switch carriers if their preferred channels are not available or operating efficiently.

Insurers are therefore increasingly offering alternative distribution channels (thepredominant ones being bancassurance, Web portals, and mobile devices) to caterto divergent buying preferences of policyholders, but yet must be able to presentthem with a cohesive channel message and branding.


Risk Management Will Remain Crucial, Despite or PerhapsBecause of the Current Uncertain Economic Climate

Insurers are bolstering their investment in risk management to be able todetermine risk tolerance, align risk appetite and strategy, and thereby make moreintelligent risk decisions.

Focus is around instituting stronger internal controls and in selective spending inareas such as enterprise risk management (ERM) and Solvency II to alleviatecorporate risk.


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Optimizing Business Performance Will Only Take onGreater Urgency as Competitive Pressures Intensify

With IT portfolios becoming overly complex and cost ineffective over theyears,

insurers do realize the merits of investing in business process reengineeringprojects to automate and streamline processes to ensure efficiencies and fasterproduct speed to market (even as economic prospects weaken and budgetstighten).

Being able to handle changemanagement and engage employees in thetransformation process is crucial in ensuring effective business transformationresults.


Resultingintodayslegacyof:

Multiplelinesofbusinesssystemsprocessingcasesforthesamecustomer

Lackofstandards,inconsistentprocesses

Nosingleviewofa

customerscase

history

Effortstooptimizeinsuranceprocessesandautomation(casemanagement)haveevolvedintheindustryovertime

Theintroductionofsoftwareautomationtotheprincipalbusinessprocessesreplacingpartsoftheoldmanilafolder

Newlinesofbusiness

wereadded

Challengesandexperimentationindistribution

channels Acquisitions

Modernizationofoldertransactionbasedlegacy

systems


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What is a case?

Examples:

Newpolicyapplication

Disputedfees

Lossprevention

report

Disputedclaim

Financialcondition

Fraudulentactivities

Customerrecords

disclosure

Servicecomplaint

AcustomerrelatedissuethatcannotberesolveddirectlybytheLOBbusinessorservicesapplications

Anissue

that

involves

significant

risk

or

loss

of

revenue

and

damage

to

thecustomerrelationship

Decisionmakingbasedonfactorsthatrequireknowledge,experience,investigationandanalysis

Themanifestationoflifecycleinformationabouttheinsuredbrokercarrierrelationships

Alsoknownas:

AgencyfileUnderwritingfileCustomer

complaintsClaimfile

PremiumauditfileMarketplaceconductreview

Litigation


What is case management?

Managingcustomerrelatedissuesthatrequireknowledgebased

decisionsorfalloutsidethescopeofnormalbusinessactivities

orin

todays

environment,

is

it

more?

Capturingrelevant

Information

Understanding

Evaluating

Analyzing

Allgrownincomplexity,urgencyandcustomerexpectation

Collaborating Internally Externally Communicating

Decisionmaking Takingaction Resolving Recordingand

reporting


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Copyright IBM Corporation 201122 J une 201212 12

Theveryexistenceofcasemanagementisproof

Tacitknowledgeworkerscannotbeeliminatedfromcoreinsuranceprocesses

Somethingupstreaminthebusinessprocesscannotresolvetheissueandneedsattention

Itsnot

possible

to

predict

all

outcomes

or

replace

experienceininsurance

Therewillalwaysbeexceptionstotherules


Policy

issuance

Customerreceivesdocuments

Policy

approval

Agentfinalizestermswithcarrieruntilpolicyissue

Underwritinga complex environmentExample: new business acquisition (front-office quote process)

Modify

quote

Agentreceivesquote,andcarriernegotiatescoverage

Underwriting

Agentaccessesmultiplesourcesovermultiplechannels

Policy

quote

requestConsumercontactsagentforaquote


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Simplifying the underwriting processchallenges to success

Newprocessisdesigned

forBlue

Sky

Processesareviewedaslinear,sequential

Commonexceptionsare

anticipatedas

tree

branchesnoadhoc

Manymanualstepsstillexist

Underwritershaveinconsistent

skill

and

experience

Policyadministrationsystemsonlyrecordtransactions


Advanced case management leverages active content, analytics,process and collaboration

Automaticallyfiled,analyzed TriggeredANDUWinitiatedprocessesContentdetected

Insurance application

Credit report

Loss historyApplicationsigned

Casemanagement

Transforms execution model to help

eliminate time waiting or checking fordocuments and information

Enables dynamic tacit knowledgeworker processes

Enables regulatory compliance

Losshistory

Credit,MVR,

MIBreports

Applicationinitiatesprocess Underwriter

evidenceordered

Riskaccepted,issuepolicy

Timeroverdueevidence

Negotiate,decline,additionalinforequired

Conference/referralwithexperts

Evidencereceivedinitiatesunderwriternotificationwhencomplete

Correspondenceand

formsautomated


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Processes and Business Services

WORK MANAGEMENT

1st levelService Representative

2nd level Specialist

AUTOMATION

MONITORING AND VISIBILITY SERVICES

DYNAMIC WORK FOLDER

INPUT

MANAGEMENT

OUTPUT

MANAGEMENT

Output Media ChannelsChannels Input Media

Process Choreography and Management

Business logi c, business specific funct ions, data, employees

IBM Insurance Process Acceleration Framework

Business Rules Content Management

Agents

Other SalesPartners

Customers

Employees

Agents

Other SalesPartners

Customers

Employees

@

@

IBM has worked with Clients globally implementing STP to improve service levels andincreased operational efficiency, reducing costs with up to 70% of processes automated

Straight Through Processing (STP)


Insurers Will Focus on Raising Productivity and Retentionof Their Agency Force via Tools and Technologies

Carriers are focusing on augmenting products and services offered to captive andtied agents and brokers to enhance their productivity and allegiance.

This includes equipping distributors with easy-to-use tools and technologies, self-service marketing applications, and wireless solutions such as mobile devices andiPads; providing access to product specialists and product information; andincentivizing with clear performance metrics.


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Copyright IBM Corporation 2011

In the face of rapidly changing expectations from sellers, customers and staff, Insurers arebeginning to implement innovative capabilities across all channels

CustomerAgent

HeadquartersManagement

& StaffOtherInformation

Sources

eServiceSelf-service

Portal

IM IM

CustomerService

Underwriting Claims

Single Sign OnSecure role-based

access

Real-time

New Business& Underwriting

access

Secureclaims

updates

Expand Customer Collaborationsto Agents and Customer ServiceVideo, Phone, Voice Chat, IM,email

Other partners enabled toparticipate (Credit, payment,health providers, etc.)

Expand Agent Access toinformation and servicesfrom HQ, New Business &Underwriting, etc.

Collaborative Operations:

Real-time instant access to information, wiki, blogs, forums,reporting, unifi ed communications, expertise search, integration &automation with processes via business process management

The solution: Consolidated e-Services

Enable more self-service

Collaboration models for communications, co-working, e.g. click to chat, click to callthrough all types of devices (IOS, Android, etc.)

Integration between front-end and back-end people, processes, technology

Virtual Office Portal


The Virtual Office for Sales and Service

Virtual Office objectives:

- Support sellers in non-urban areas agents, bank staff, others

- Provide real-time sales information and support

- Allow Sellers to submit new business, using their most preferred and convenient method

Virtual Office can provide support across a full range of sales and service processes:

- New Applications &Policy Administration

Data Entry

Quality Check

Client Search & Validation

- Agent & Customer Service

Inbound & outbound

- Status tracking

- Payment processing

- Outbound Collections

- Renewals / Persistency

- Help Desk- others


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With Falsified Claims Raising Insurers' Operating Cost up to5%+, Fraud Management Initiatives Will Continue with Rigor

Reasons for a rising trend in fraud cases stem from difficult economic conditions to

the absence of effective fraud detection, control and prevention measures to anenvironment where fraudsters can easily avoid detection and arrest.

We see regulations and technology innovation elevating fraud prevention anddetection to a new level in 2012, with insurers engaging in remedies such rules-based analysis and predictive modeling and tackling agent fraud through perimeterdefense technology (e.g., firewalls, email scanning, and ID access).


Fraud

Prevention

Fraud

Alerts

Fraud

Identification

Fraud

Discovery

Fraud

Investigation

Fraud

Monitoring

How can we help ASEAN insurers find Claim Fraud?

Underwriting Intake / Triage Adjudication Optimization Monitor

Identity

Behavior

Exposures

Timing

Locations

Number ofClaims within 30days of Eff Datefrom this Agent

Agents AverageFraud Score

Proximity ofAgent to Risk

Identity

Anomalies

Patterns

Prediction

Party on knownfraud list

Match to knownfraud pattern

Anomaliesexceed normalboundaries

Previous history

Identity

Anomalies

Patterns

Text / Content

Social Data

Prediction

Facebook postinconsistent withloss

Photo / Docs,forged/edited

Handwritingmatch to knownfraudster

Relationships

Anomalies

Patterns/Clusters

Streams, Text,Social Data

Cash flow

Twitter snifferanomaly

Claim anomalyscore exceedsthreshold

Cash depositedto AML account

Discover newfraud pattern

Identity

CaseManagement

DocManagement

BPM

SIU buildingcase on potentialfraud ring

Fraudulentvendorblacklisted

Claim denied

Dashboard

StandardReports

Ad Hoc Reports

Trend Analysis

Prediction

Report fraudratio, value, andfrequency

Drill down byagent, etc.

Predict trends Reduce reserves

Fraud no longer has to be discovered when the fraudster makes a mistake; we can examinemassive amounts of data in real time to predict, prevent, and ultimately prove fraudulent claims


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CRM Policy Claims Commissions Billing &Payments

Products Underwriting &Reinsurance

Operational Data Sources

End-UserCollaboration Customer Service

Representative3rd Party Service

ProviderCustomerClaims

Specialist

Fraud Decisioning

RelationshipAwareness

Fraud Detection

Desk & FieldInvestigation

Triggers, Routing &Task Orchestration

Fraud Investigation

Reporting,Scorecards &Dashboards

Performance Insight

Business & RiskPerformance

Investigator

i2, Identity Insight

SPSS, ILOGACM, i2 Cognos BI, i2

Data Integration Delivery

Appl ication & Business Process Integrat ion

IBMs Fraud Analysis & Prevention Solution


More Carriers Will Develop Strategic Road Maps for VendorReplacements or Agility Enhancements to Their CoreInsurance Applications

The inability of legacy IT systems to keep pace and respond quickly to dynamicbusiness requirements has engendered greater interest in enhancing core systemsapplications.

We expect a slight increase in the number of core system deals for the new year and especially among the life insurers with investments around closing gapsand inefficiencies, or selective component replacements.


13/16


Insurers Will Increasingly Diversify into Alternative RevenueSegments such as Health, Pension, and MicroinsuranceProducts

Spurred by governmental emphasis and stellar consumer demand, carriers are

expanding into ancillary lines of businesses such as health and medical, pension,and microinsurance in attempts to tap into alternative customer segments, diversifyrevenue streams, and build long-term strategic advantage.

To practically sustain some of these new offerings (like microinsurance forinstance), investment in technology and infrastructure would be crucial to cope withmassive volumes, manage fraud, and increase customer outreach.


Technology Spend Will Rise an Average of 510% in 2012,with Some Being Channeled into New IT DeliveryParadigms

We project that insurers' IT budgets would on average increase by 510% in 2012(versus 1020% in 2011), with investments centering around areas like networkservices, IT security, and for core applications development and management

pertaining to distribution channels.

In countries where regulations do not restrict their use, there would also be ademand for more flexible and cost-effective technology architectures such as cloudcomputing.


14/16


IT infrastructure is reaching a breaking point.

85% idleIn distributed computingenvironments, up to

85% of computing

capacity sits idle.

Consumer product and retail

industries lose about $40billion annually, or 3.5 percent

of their sales, due to supply

chain inefficiencies.

33% of consumers notified

of a security breach willterminate their relationship

with the company they

perceive as responsible.

33%$40 bill ion

Explosion of information

driving 54% growth in

storage shipments

every year.

1.5x 70 per $170% on average is spenton maintaining current IT

infrastructures versus

adding new capabilities.


Steady CAPEX spend

Global Annual Server Spending (IDC)

Uncontrolled management and energy costs

$0B

50

100

150

200

250

300

New systemspend

Managementand admincosts

Power andcoolingcosts

Organisationsurgently need

simpler, moreflexible IT

Source: IBM Corporate Strategy analysis of IDC data

CAPEX Savings are no longer enough. Operating costs need to beaddressed (server, storage and networks)

27

Escalating Admin and Power/Cooling costs


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Copyright IBM Corporation 2011

Singapore is expected to be the largest Cloud Services marketfrom 2010-2014 in ASEAN5.

8

11

16

25

7

1

2

3

5

1

4

4

7

12

3

0 10 20 30 40 50

Indonesia

Malaysia

Philippines

Singapore

Thailand

US$M

AaaS

PaaS

IaaS

ASEAN Cloud Services Market, 2010

By Country (US$M)

Source: IDC, APeJ Cloud Services 2010-2014 Forecast & Analysis, Apr 2010

36

39

74

88

23

12

13

24

34

8

25

22

53

66

17

0 50 100 150 200

Indonesia

Malaysia

Philippines

Singapore

Thailand

US$M

AaaS

PaaS

IaaS

ASEAN Cloud Services Market, 2014

By Country (US$M)

13

17

42

11

26

73

75

151

188

48

CAGR2010-2014

53.9%

44.9%

55.2%

45.5%

44.5%


Cloud is anew consumption and deliverymodel inspired by consumer Internet

services.

Enabled byVirtualization, (Service)

Automat ion, Standardizat ion

Cloud enables:

Self-service

Economies-of-scale

Flexible pricing models (eg. pay-per-use)

Workload based IT resource provisioning

Cloud is:

The Industrialization ofDeliveryfor IT

Services

Similar to banking ATMs and retail Point ofSale, cloud is dri ven by:

Economies of scale

Technology advancement

What is Cloud Computing ?

Banking

Retail

IT


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#1 reason to move to a public cloud is lowertotal cost of ownership

Top reasons for moving to a private cloud

include cost/resource efficiencies, as well asenhancing speed and flexibility

Security concerns are the top barrier toadoption of both public and private clouds

Experience managing large outsourcingengagements gives IBM the tools to managecustomers top cloud concerns

Three distinctive end-user cloud buyingpatterns are emerging: exploratory, solution-focused and transformational

There are reports that public clouds are

being adopted faster than originally forecast

In terms of market opportunity, FinancialServices, Manufacturing, High Tech,Government and Retail are the top fiveindustries for cloud

Cost Take-outisKey Driver

Security isTop Concern

Adoption Patterns areEmerging

Industries under theGreatest Pressure

Lead Interest in Cloud

Source: IBM Market Intelligence, WW Cloud Market Fact book

What the Market is Telling Us There is universal interest in cloud computing across all industries and geographies

Insurance Regulations Are Increasingly Making Their ImpactFelt, But Unfortunately, So Will the CorrespondingRegulatory Cost Burden

Regulatory and compliance requirement are escalating to correct existing structuralgaps in the industry. However, while well intended, these new mandates couldinadvertently raise insurers' operating costs and inevitably cause disruptions in the

regional insurance growth.

Documents

01-Asia Pacific Insurance 2012 Top 10 Predictions