Gartner Top 10 Technology Trends Impacting Life and PC Insurance CIOs in 2014

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    Top 10 Technology Trends Impacting Life andP&C Insurance CIOs in 2014Published: 14 April 2014

    Analyst(s): Juergen Weiss, Kimberly Harris-Ferrante, Steven Leigh, Jeff Haner

    Gartner has identified the 10 technology trends that will be most relevant tolife and P&C insurance IT leaders this year. Insurance CIOs should use thisresearch to assess the maturity and business value of technologies andbetter advise their business users.

    Key Findings Insurance CIOs need to advise their business peers on the business value and use of new

    technologies to support critical business priorities such as customer experience, operationalefficiency and improved profitability.

    Expanding their technology competencies will be mandatory for insurance IT leadersdeveloping long-term IT strategies that contribute to their companies' value propositions andgenerate additional business.

    Legacy IT systems and business processes, inadequate IT budgets and lack of critical IT skillswill be among the inhibitors for insurance IT leaders evaluating and selecting disruptivetechnology trends.

    RecommendationsInsurance CIOs:

    Map your 2014 IT portfolio against the technology trends outlined in this research, and analyzehow well your current IT investments can support running, growing and transforming thebusiness.

    Assess the impacts of these trends on your company-specific internal productivity andcustomer experience. Evaluate how difficult it would be for your company or your ITorganization to generate real-world return on investment (ROI) from the adoption of thesetechnologies.

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    Identify the potential business and technology risks these technology trends present for yourcompany. Develop measures to mitigate these risks that are aligned with the company's riskappetite and risk threshold.

    Table of Contents


    Overview.......................................................................................................................................... 2

    Top 10 Technology Trends Impacting Life and P&C Insurance in 2014.............................................3

    Legacy Modernization.................................................................................................................3

    Cloud Computing....................................................................................................................... 5

    Risk Management and Compliance Solutions............................................................................. 7

    User Experience Technologies....................................................................................................9

    Event-Driven Architectures and Real-Time Operational Intelligence........................................... 10

    Mobile Applications and Technologies...................................................................................... 12

    Social and Collaboration Technologies..................................................................................... 14

    Sales Force Automation and CRM Tools.................................................................................. 16

    Internet of Things......................................................................................................................18

    Advanced Analytics and Business Intelligence.......................................................................... 20



    Gartner has identified the 10 most important technology trends for the life and property andcasualty (P&C) insurance industry for this year to help insurers' IT leaders assess and prioritizecritical technology options (for a related business-oriented discussion, see "Top 10 Business TrendsImpacting Life and P&C Insurers in 2014"). The technology trends described in this document arepresented in no particular order, and the sequence is not intended to imply any prioritization.Insurance CIOs will find this list useful as they reposition themselves and their IT organizations toprovide more technology guidance to their companies' business leaders. Articulating the businessopportunities of these technology trends will enable insurance CIOs to move beyond purely tacticaland operational IT roles.

    We first published this document type in 2013, and we have made changes to the technologiesincluded in this list since that time:

    We excluded metadata architectures and frameworks from this year's top 10 trends, becausethis is already a fundamental aspect of many of the other trends discussed here.

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    We added sales force and customer relationship management (CRM) tools, in a decision thatreflects life and P&C insurers' increasing focus on customer centricity and agent productivity.

    Next-generation portals have been redefined as user experience technologies to better expressthe strategic direction of many IT projects in the insurance industry, as well as to show the valueof improved usability across all channels, not just portals.

    Social media has been replaced by social and collaboration technologies, because we havenoted a stronger focus on facilitating internal and external collaboration.

    Telematics and sensor-based technology have been replaced by the Internet of Things,reflecting the expanding connections of physical objects, as well as emerging use cases in theinsurance industry (for example, "wearables" and smart home technology).

    Big data has been replaced by advanced analytics and business intelligence (BI), given that thecurrent adoption of true big data systems by life and P&C insurers remains somewhatimmature. More real business value is generated by advanced analytics and BI.

    Mobile technology has been redefined as mobile applications and technology, taking intoconsideration the widely varied technologies from apps to different mobile platforms, such asmedia tablets that are being adopted.

    Event-driven architectures and real-time operational intelligence, legacy modernization, cloudcomputing, and risk management and compliance technologies remained unchanged on our top 10list, because we continue to see significant client interest in these technology trends.

    Top 10 Technology Trends Impacting Life and P&C Insurance in 2014

    Legacy Modernization

    Analysis by Juergen Weiss and Jeff Haner

    Trend Description

    Legacy modernization is a broad term used to describe the continuous evolution of IT applicationsas part of the software life cycle, including system modernization and replacement. Gartner's IT KeyMetrics Data for 2014 shows that insurance CIOs spend an average of 61% of their annual ITbudgets on running the business (see "IT Key Metrics Data 2014: Key Industry Measures: InsuranceAnalysis: Current Year"). In this highly resource-constrained environment, legacy modernization isnecessarily a mission-critical concern. Legacy modernization frees up resources for other high-priority investments that have the potential to grow and transform the business. Insurers worldwideclearly understand the importance of modernization. The Gartner 2014 CIO Survey showed thatinsurance CIOs considered legacy modernization one of their most important technology priorities

    for the coming three years.1 And a 2013 survey of U.S. life and P&C insurers found that the

    respondents considered legacy modernization "very critical."2

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    The 2013 U.S. survey showed that the three primary drivers for legacy modernization are the needto improve:

    Services for customers or business partners

    The level of operational efficiency

    The time to market of new products and services

    Gartner research and client interactions indicate that these drivers are universal, and can beidentified as reasons for legacy modernization in other geographies as well. There is also a widerange of other company-specific drivers for legacy modernization in the insurance industry,including the need to mitigate system or vendor risks; the desire to reduce costs particularlymaintenance costs; the shrinking pool of workers with the skills to maintain legacy systems; andpressure to meet regulatory compliance requirements.

    Insurance CIOs have different options for modernizing legacy applications, including systemmaintenance and replacement. More than 80% of the respondents to Gartner's 2013 U.S. survey,for example, preferred to mitigate the risks of legacy modernization by gradually replacing individualapplication components, or running old and new systems in parallel for a certain period of time. Weare also seeing several code conversion and platform migration scenarios, especially in caseswhere legacy applications still meet certain business requirements or the costs of new packagedimplementations are too high. Technologies such as enterprise service buses and business processmanagement (BPM) solutions are commonly used during such modernization projects. Thesesolutions can improve connectivity to other enterprise systems and also improve the userexperience by implementing more modern presentation layer functionality.

    Gradual replacement requires a significant amount of time. Many insurers, under intense pressure tomeet customer expectations and improve operations, are looking for alternatives that will allowthem to introduce new capabilities more rapidly. A growing number of insurers are focusing on rapiddeployment of full core solution suites with preintegrated modules for policy, billing and claims.Staged deployments are most common; but smaller insurers, and those that have a narrow range oflines of business, are likely to deploy a full suite of modules in a single implementation.


    Legacy modernization initiatives are generally complex, multiyear undertakings that presentsignificant risks of project delays, budget overruns or failure to achieve the desired scope. Forthis reason, an insurer's identified risk threshold and project management experience willdetermine its most suitable legacy modernization approach.

    Insurance CIOs who fail to conduct realistic project planning or sufficient risk analysis will tendto underestimate the complexity of legacy modernization projects.

    The high level of investment by insurers in packaged core solutions (especially among P&Cinsurers) during the past seven to eight years has resulted in the development of an activepackaged core solution market. Several vendors in different geographies now offer maturesolutions that have established successful track records in both life and P&C insurance.

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    The ability to achieve a timely ROI from legacy modernization will depend not only on solutionor vendor maturity, but also on internal factors, such as cultural inertia and stakeholdercommitment.

    Legacy modernization is often a technical prerequisite for the success of other strategicinitiatives, such as digitalization. Without a service-oriented-architecture (SOA)-enabledarchitecture, for example, it will be very difficult to expose application logic to mobileapplications.

    Recommendations for Insurance CIOs

    Create an inventory of your current application portfolio to assess the business value andtechnical quality of specific applications and prioritize legacy modernization projects.

    Develop an annual application portfolio review and assessment program to actively manage thebusiness and technology risks of your existing IT environment.

    Use risk maps to compare the different legacy modernization options, map the risk impacts ofthese options against your enterprise's risk threshold, and communicate the results to seniormanagement.

    Assess the IT organization's current degree of professional project management skills, anddevelop plans to improve your employees' capabilities to monitor ongoing and future legacymodernization projects.

    Related Reading

    (Some documents may not be available as part of your current Gartner subscription.)

    "10 Most Common Mistakes in Insurance Legacy Modernization"

    "Beyond Rip and Replace: Mainframe Migration in Insurance"

    "High Failure Rates in Insurance Legacy Modernization Challenge CIOs"

    "IT Key Metrics Data 2014: Key Industry Measures: Insurance Analysis: Current Year"

    "Use Risk Maps to Assess Insurance Legacy Modernization Options"

    Cloud Computing

    Analysis by Juergen Weiss and Jeff Haner

    Trend Description

    Life and P&C insurance CIOs are showing increasing interest in cloud computing, which we defineas a style of computing in which scalable and elastic IT-enabled capabilities are delivered as aservice to customers using Internet technologies. According to the Gartner 2014 CIO Survey, cloud

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    computing ranks among the top 10 priorities for insurance CIOs.1 And 35% of the participants in a

    2013 Gartner insurance webinar stated that they expected better IT scalability from the use of cloud

    computing; 24% hoped to see lower IT costs.3 The third most common expectation was

    standardization, with 19% of the participants assuming that wider adoption of cloud computingwould eventually lead to more standardized IT assets and processes.

    Despite CIOs' widely held expectations, the hidden costs of cloud computing, such as thoseassociated with integration with on-premises systems, will limit real-world cost savings (see "Don'tBelieve the Hype: SaaS Only Reduces Part of the Effort Needed to Implement and OperateBusiness Applications"). Gartner believes the primary benefit insurers will realize from cloudcomputing is actually flexibility. The different subcategories of cloud computing, such as softwareas a service (SaaS) and its different deployment options (such as private clouds), will significantlyenhance insurance CIOs' sourcing and IT architecture options. Multinational insurers are, forexample, using SaaS to rapidly enter new geographies and to establish "greenfield" operations inemerging markets. Another use case we have seen is the deconstruction of insurance value chains,with insurance IT organizations moving certain noncore business processes such ascommissions management, CRM, billing and regulatory compliance reporting to the cloud.Adoption of cloud computing in the insurance industry is not limited to SaaS, however. According tothe 2014 CIO Survey, 53% of insurance CIOs have also invested in infrastructure as a service (IaaS)and 40% have invested in platform as a service (PaaS) for better cost variability or to be better ableto quickly test new IT capabilities.

    One of the major cloud computing challenges for insurance CIOs is separating the reality of variouscloud offerings from the considerable marketing hype. Vendors are labeling their offerings as"cloud-ready," because they know cloud readiness is attractive to prospective buyers. However,many of these offerings especially those from core solution vendors differ little from traditionalmanaged application hosting, and are not capable of providing all the benefits (such as scalabilityand metered pricing) that are suggested by the "cloud" label (see "Survey Finds Few Examples ofFully Cloud-Enabled P&C Insurance Core Solutions"). Moreover, many vendors have primarilysupported on-premises deployments and lack experience with cloud-based implementations.


    A wider adoption of cloud computing will force insurance CIOs to address securityconsiderations, review the maturity of their existing legacy applications, and reconcile complex,heterogeneous business processes and technology standards.

    Different styles of cloud computing ranging from cloud-native to cloud-hosted applications will vary in suitability for different application scenarios, such as greenfield and applicationmigration.

    IT and business complexity, along with the desire to customize cloud offerings and securityconcerns, are key barriers to the adoption of cloud computing. The greater the complexity of aninsurer's existing application portfolio, the less suitable it will be for cloud adoption.

    Insurance CIOs will have to combine different cloud deployment options (public, private orcommunity clouds) as part of their cloud computing strategy.

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    A growing number of both life and P&C insurance core software providers will invest in thecloud transformation of their solutions to address market demand, but their cloud experienceand their true architecture capabilities will vary considerably.

    Recommendations for Insurance CIOs

    Conduct a business and IT maturity analysis to determine when, where and why you shouldadopt cloud computing. Identify objectives and potential benefits that extend beyond pure costconsiderations.

    Carefully evaluate the cloud readiness of any insurance software providers under consideration,and request references from industry peers that can be compared with your own operations.

    Map cost, security and technology considerations against the risks and benefits of differentcloud computing deployment models to ensure that you select the most appropriate approachfor your architecture.

    Invest in a modular, service-oriented solution architecture, as well as in processstandardization, to reduce internal barriers to wider cloud adoption.

    Focus in the short term on leveraging true cloud-based solutions for more peripheral activitiesas a way to gain experience and comfort with this evolving solution space.

    Related Reading

    (Some documents may not be available as part of your current Gartner subscription.)

    "Don't Believe the Hype: SaaS Only Reduces Part of the Effort Needed to Implement and OperateBusiness Applications"

    "Forecast: Public Cloud Services, Worldwide, 2011-2017, 4Q13 Update"

    "Insurance CIOs Are Limiting Their Options by Insisting on Using Private Clouds"

    "Survey Finds Few Examples of Fully Cloud-Enabled P&C Insurance Core Solutions"

    Risk Management and Compliance Solutions

    Analysis by Juergen Weiss

    Trend Description

    Risk management and compliance solutions help life and P&C insurers assess, document, controland report on their various risk types. These solutions typically comprise multiple discretetechnology elements, such as data warehouses, reporting tools and enterprise risk managementapplications. Insurers in both developed and emerging markets are increasingly challenged byregulatory authorities to improve their risk management practices and to comply with a growingnumber of national and international regulator frameworks, such as Solvency II.

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    These increasing regulatory pressures have an immediate impact on IT organizations, but IT is notalways well-positioned to respond. Many insurance CIOs are not currently managing riskmanagement and compliance technologies, because those technologies are "owned" and operatedby business departments, such as actuarial and asset management. This increases the risk ofsuboptimal silo-based sourcing, data management and IT operations, leading ultimately to reducedeffectiveness of enterprisewide risk management efforts and higher IT costs.

    Based on conversations with clients, Gartner estimates that insurance CIOs already spend up toone-third of their annual IT budgets on applications for risk management, security or disasterrecovery. We have also noted growing interest in enterprisewide risk management and complianceplatforms that make departmental solutions obsolete and allow for better synergies across differentregulatory frameworks, such as Insurance Financial Reporting Standard 4 (IFRS4) and Solvency II.This market demand has led several software providers to enter this market, ranging from suitevendors (covering a wide set of regulatory requirements, such as control frameworks) to nichevendors (focused on specific aspects of regulations, such as data quality management).


    Risk management and compliance solutions implemented by insurers will typically comprisemultiple applications and require considerable integration efforts.

    Risk management and compliance solution deployments will likely involve software providersthat insurance CIOs have not been exposed to in the past. CIOs will need to align internally withtheir business peers to become acquainted with these providers and assess their deliverycapabilities against internal service-level agreements.

    Data quality issues, such as the lack of common metadata structures, data inconsistencies andpoor data governance processes, will present increasing challenges when enterprisewide riskmanagement platforms are implemented.

    Insurance CIOs will need to take ownership of technologies that have previously been managedoutside the IT organization (for example, by actuaries). This will, in turn, require the acquisitionof further integration technologies and new skill sets.

    Recommendations for Insurance CIOs

    Create an inventory of the risk management and compliance solutions currently deployedacross the enterprise. Identify all stakeholders who are managing these technologies today, andassess their willingness to hand responsibility for them over to the IT organization.

    Evaluate the IT organization's current project management skills, and begin developingcompetencies in agile methodologies that will make it possible to address the increasinglydynamic regulatory environment and the impact of new regulations on existing systems.

    Identify the business synergies between different regulations and their technology implications.Create a technology road map for addressing these regulations and review it with the businesson annual basis.

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    Related Reading

    (Some documents may not be available as part of your current Gartner subscription.)

    "Magic Quadrant for Enterprise Governance, Risk and Compliance Platforms"

    "There's No Easy Way Through The Solvency II Software Maze"

    User Experience Technologies

    Analysis by Kimberly Harris-Ferrante and Steven Leigh

    Trend Description

    Insurers must be easy to do business with to remain competitive in today's customer-centricmarket. This means providing positive interactions with both customers and distribution partnersacross all touchpoints, especially electronic channels where self-directed interactions occur (forexample, customer or agent portals or mobile sites). As a result, and as part of larger customerexperience management initiatives, insurers are increasingly improving the user experience throughthe deployment of new technologies and processes that will provide a customized, tailored andcollaborative interaction. They are doing this in a phased process:

    First, the insurer must build a better understanding of the requirements of its users whetheragents, employees or consumers. Gathering data on channel, process and content preferencesis key to fulfilling this vision.

    Next, the presentation layer of the user interface should deliver the right content andexperience, based on the individual's or segment's preferences. This means moving from a"one size fits all" user interface to one that renders different experiences based upon role orsegment.

    The process for each transaction should follow the desired flow of that user group or segment.Mapping out user preferences will be the foundation for this step.

    Process analytics will need to be developed to assess process flows and bottlenecks.Assessing where users stop processes, slow down their filling out of online forms and othertransaction patterns will help insurance CIOs identify ongoing site enhancements that will beneeded to continue to improve the user experience.

    In the long term, as the portal becomes one of the most influential touchpoints for distributors andcustomers, it will need to be significantly enhanced with new functionality to support cross-channelinteractions and collaboration. Support for interactive capabilities and real-time content renderingwill be a critical success factor in driving user satisfaction. Investment in user experiencetechnologies, as well as new portals, mobile applications, electronic forms and e-signaturecapabilities, will be required to support these tasks. Insurers should also consider how they canimprove the user experience with the use of new data sources, user context, social media content,mobile device capabilities and improved integration.

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    The growing empowerment of the consumer is placing increasing pressure on insurance ITleaders to address behavioral preferences across all touchpoints.

    The portal is becoming a key touchpoint for insurers, enabling them to deliver intimate,personalized experiences both sales and e-service to their distributors and customers.

    New user experience technologies will allow insurance CIOs to deliver tailored interactions toindividuals or groups, replacing mass content delivery.

    Recommendations for Insurance CIOs

    Engage with marketing leaders to map new direct marketing needs and identify new userexperience management technologies that can support these requirements.

    Work with marketing and line-of-business leaders to review your available sources of customerintelligence. Determine whether you are capturing information on customer channel preferencesand how that information can be leveraged to support user experiences.

    Assess your installed portal technology to identify gaps, limitations and areas where userexperience technologies could help to improve user satisfaction.

    Coordinate with your marketing team to assess your customers' cross-channel traffic patternsand multichannel interaction needs.

    Collect and store interaction preferences, including channel and communications preferences,to deliver a technology experience that fits these patterns.

    Related Reading

    (Some documents may not be available as part of your current Gartner subscription.)

    "Building the Next-Generation Web User Experience in Insurance"

    "The Nexus of Forces Will Drive Insurers to Pursue E-Service Innovation"

    Event-Driven Architectures and Real-Time Operational Intelligence

    Analysis by Kimberly Harris-Ferrante

    Trend Description

    Business executives with P&C and life insurers increasingly recognize that they need to be bothmore agile in detecting changes in their business operations and quicker to respond to thosechanges to seize opportunities from slower competitors. For this reason, innovative insurance CIOsare developing event-driven architectures that leverage interactive digital channels (includingportals, mobile devices and telematics) with new data capabilities (including new data sources,such as social data, and new tools, including analytics and predictive modeling tools) to support

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    real-time intelligence and interaction with customers. These efforts can provide the foundation formultichannel platforms and deliver greater value from customer intelligence initiatives.

    This event-driven architectural approach represents an extension of an insurer's existing SOA, butwith an added focus on real-time operational intelligence especially ways of leveraginginformation for competitive advantage. This trend is reinforced in large part by the four convergingfactors that Gartner has identified as the Nexus of Forces social networking, mobilecommunications, cloud computing and information which are making real-time operationalintelligence and event-based operations more realistic than ever before.

    The potential uses of real-time operational intelligence include real-time event management basedon the instantaneous detection of events. These events could be data changes derived from anactivity (for example, a customer clicking on a website banner), from new data being collected (forexample, from an e-form or Web application or through a mobile device), or from predictivemodeling tools analyzing data the insurer already possesses. An event triggers an action, whether itis an automated decision or a message to an individual stating that he or she needs to make adecision.

    This architectural approach can deliver important business benefits by offering real-time insight intochanges in business performance, customer behaviors and business unit performance (includingunderwriting, claims, financial and distribution performance). This insight allows processes to bechanged early, before the bottom line is impacted significantly. Real-time operational intelligence isvaluable not only for corporate performance monitoring, but also for customer retention and cross-selling initiatives, such as the use of website analytics to drive marketing and sales campaigns andgamification results to feed new product offers.


    The use of event-driven architectures and applied customer intelligence will help to enhancecustomer intimacy; improve customer retention; and increase cross-selling, one-to-onemarketing and overall customer satisfaction.

    Real-time operational intelligence can help insurance IT leaders better support customerexperience management strategies by supplying the right information or product offer to theright customer or prospects, through the right channel, at the right time. This will drive upclosure rates and increase customer satisfaction.

    Real-time operational intelligence systems that are programmed to respond automatically toaddress predictable business outcomes are less expensive, faster and more consistent thanthose that require human intervention. These systems will give insurers a competitive edge.

    Recommendations for Insurance CIOs

    Develop real-time operational intelligence using a combination of technologies, includingbusiness activity monitoring (BAM) tools, BPM solutions (including rule engines), real-timedashboards, interactive portals and channels and enterprisewide real-time analytics.

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    Ensure that the necessary SOA-based architecture is in place, and build a multichannelarchitecture that enables channel integration and cross-channel interaction.

    Build real-time alert capabilities (using dashboards and other mechanisms, such as email andtext messaging) for key business leaders, including stakeholders in underwriting, productdevelopment, claims, risk and compliance.

    Build real-time interactive customer response systems based on needs identified by themarketing, claims and sales organizations. Create automated, immediate responses tocustomer events using event-based technology to provide personalized and real-timeinformation based on unique customer behavior in a specific channel.

    Review customer intelligence initiatives and determine how the application of event-driventechnology can help with channel notifications, event triggers and real-time content renderingbased on customer preferences.

    Related Reading

    (Some documents may not be available as part of your current Gartner subscription.)

    "Best Practices for Designing Event Models for Operational Intelligence"

    "How to Improve Your Company's Event Processing"

    "Information Innovation Is a Key Competitive Differentiator in Industries"

    "The Insurance Call Center: The Center for MCI and Customer Centricity"

    "Use Business Analytics on Older Data to Assist in Real-Time Operational Intelligence"

    Mobile Applications and Technologies

    Analysis by Steven Leigh

    Trend Description

    The pervasive use of mobile devices continues to transform how insurers interact with customersand agents. Life and P&C insurance CIOs alike are pursuing mobile strategies to enable sales andservice functions on mobile devices, with tablets increasingly preferred. Life insurers' primary focusis on optimizing their portals for mobile devices, while P&C insurers are taking greater initiative withnative apps for claims and other service functions.

    From a functional perspective, life insurers' primary mobile focus is on new business processes,sales tools, straight-through processing, and actively optimizing their sales and service portals fortheir agents on the mobile Web. This is due in large measure to life insurance agents' attraction tomobile devices for selling. Agents who are used to selling using pen and paper, rate cards ornotebook computers strongly prefer the tablet experience. Many life insurers resist creating nativeapps for both agents and consumers because they are reluctant to make the investment to supportthe plethora of devices and operating systems. They also remain unconvinced that consumers who

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    interact only infrequently with their life insurers will choose a native app experience. However,mobile websites do not provide agents with the same level of user experience as native apps, anddo not allow transactions to be completed offline.

    P&C insurers' first priority, by contrast, has been leveraging mobile devices for claims, but it isshifting to policy administration service access and pocket wallets for quoting and part of the salesprocess. Many P&C insurers have provided mobile apps to their consumers, agents and servicepartners, such as adjusters. However, most P&C insurers have not achieved the desired level ofconsumer adoption of their native apps, and this has caused many of them to rethink theirapproach. They are also looking to smartphones as a way to offer usage-based or pay-as-you-driveinsurance. Both life and P&C insurers will continue to invest in support for mobile devices becausethey see value in using a mobile platform for a range of other service events, including billpayments, policy changes and policy value lookup, and these additional transactions will gaingreater popularity on mobile devices over time.


    Mobile devices are rapidly becoming the sales and service platform of choice for consumersand agents. Smartphones are occasionally used for data lookup and simple transactions, butmedia tablets are agents' and consumers' preferred devices for product research and moreextensive transactions.

    Mobile devices whether using native apps or the mobile Web will increasingly change thesales process, providing agents with new graphics, touchscreen, recording and othercapabilities that will enable them to better communicate the value of insurance products.

    Mobile devices are essential to creating fully digitalized processes for consumers and agents,and are a prerequisite for the use of emerging technologies. The new data generated by thesedigitalized processes will be essential for the next wave of insurance innovation, which willinclude gamification and context-aware computing.

    Insurers will increasingly add device-specific capabilities, such as geolocation and still andvideo photography, to enhance the user experience.

    Recommendations for Insurance CIOs

    Ensure that your service and sales portals are optimized for the mobile Web by optimizing suchelements as look and feel, touchscreen experience and screen size.

    Evaluate usage scenarios, roles and interaction frequency to determine whether a mobile app ora mobile Web scenario is most appropriate for your company. Mobile apps are generally bestwhen users are performing process-intensive functions and when offline functions are required.The mobile Web is generally best for data lookup and simple or infrequent transactions.

    Deploy mobile apps for scenarios where users are performing process-intensive functions forexample, life insurance sales and P&C claims or require offline capabilities.

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    Use mobile devices as a way to deploy digitalization for agent and customer processes, pavingthe way for context-aware computing, improved data capture, gamification and social mediaintegration.

    Related Reading

    (Some documents may not be available as part of your current Gartner subscription.)

    "Best Practices for Global Life Insurers Developing BYOD Policies for Agents"

    "Media Tablets Force North American Life Insurers to Rethink Their Illustration Strategies"

    "Insurers Need a Framework to Successfully Deliver Mobile Capabilities"

    Social and Collaboration Technologies

    Analysis by Steven Leigh and Jeff Haner

    Trend Description

    Social and collaboration technologies enable insurance company employees, agents and customersto fluidly share information and interact with one another using a broad range of devices and onlinevenues. Specific technologies include social networks, blogs and microblogs, wikis, collaborativedocument creation tools, video and sharing tools, and other technologies that permit users tocontribute and consume content. Common uses for social and collaboration technologies include:

    Enabling agents and consumers to interact (using social networks)

    Informing employees of trends and decisions that affect them (using microblogs)

    Sharing information among employees (using blogs and wikis)

    Enabling agents and employees to collaborate online to create documents and otherdeliverables

    Storing and improving information for, and shared by, agents

    These technologies represent both a threat and an opportunity. The threat comes from the powerthey give individual consumers to rapidly share information for example, a report of a poorcustomer service experience that might negatively impact the insurer. The opportunity comesfrom the ability to quickly reach a large number of customers and prospects. These technologieshave the potential to transform the relationship between the policyholder and insurer by providingopportunities for much closer, more frequent interactions. Gartner research and client interactionsshow that insurers are using all of these technologies to increase user engagement. Social andcollaboration technologies are also helping life insurance agents make the transformation fromproduct salespeople to more holistic advisors by enabling them to provide consumers with valuablecontent related to risk reduction, investing and insurance needs.

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    Social media's dramatic increase in popularity with consumers makes it critical for all insurers notonly those actively promoting themselves through those spaces to listen to, learn from andrespond to their customers and prospects via social media. Insurance CIOs not only need to createsocial media policies, but also must deploy enterprise-class social media monitoring tools tomonitor and manage their agents' use of social media and ensure their compliance with companypractices and procedures. Insurers are also building private social networks to enable their agentsto share, collaborate and interact with one another and with home-office employees. In the longterm, insurers should be ready to respond to opportunities and threats related to new services andbusiness models, such as friend-to-friend insurance.


    Social media provides new ways for agents and customer service representatives to connectwith external customers and prospects, interacting with them in real time to support newbusiness, service and claims. Agents will increasingly establish communities on Facebook andother social networks to communicate insurance-specific and insurance-related content toincrease their value to consumers.

    Insurance CIOs and other executive leaders are leveraging social media to help improvecommunication and alignment within their organizations, connect employees, gather opinions,communicate more effectively and enable better project collaboration. Agents will increasinglyshare best practices, sales techniques and strategies with one another using social media toolssuch as blogs, microblogs and wikis.

    Social media monitoring tools help insurance IT leaders to improve problem identification sothat customer service representatives and agents can intervene before negative publicity isgenerated. These tools also provide business and IT leaders with new insights into whatconsumers value in insurance products, help them identity new sales opportunities, and enablethem to track buying behaviors that drive sales and service decisions.

    The increasing frequency and less formal nature of interactions between agents, employees andcustomers increase the risk that communications may not be compliant with insurancelegislation and insurance company rules.

    Recommendations for Insurance CIOs

    Develop social monitoring technologies that enable business leaders to create a governanceframework to ensure that agents' customer interactions are fully compliant with companypractices and applicable regulations.

    Catalog current human interactions to determine how social media technology can be deployedmost effectively. For example, managers who need to communicate time-sensitive informationto a broad audience might look to microblogging platforms such as Twitter. A wiki may bebetter-suited for service manuals and best practices, which contain more extensive informationthat evolves only gradually.

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    Deploy collaboration technologies to empower employees to create deliverables in collaborativeways.

    Establish social media sentiment analysis capabilities, through either a third-party serviceprovider or an enterprise-class social media monitoring system. This should be done even ifyour organization is not actively promoting itself through social media, because thesecapabilities will enable you and other stakeholders to be aware of key trends or urgentcustomer service problems that need attention.

    Related Reading

    (Some documents may not be available as part of your current Gartner subscription.)

    "Choosing the Right Social-Media-Monitoring Tool for Your Enterprise"

    "Life Insurers Can Increase Online Sales Using Emerging Technologies"

    "How North American Insurance CIOs Can Drive Social Media Adoption by Captive Agents"

    "Social Media Becomes a Critical Tool in Insurance Distribution Success"

    Sales Force Automation and CRM Tools

    Analysis by Steven Leigh and Kimberly Harris-Ferrante

    Trend Description

    Sales force automation and CRM solutions support marketing, sales, customer service andcustomer information management. These technologies are used by insurers' home offices, agentsand agencies to manage customer and distribution relationships, interactions, activity, sales goalsand relationship value. This family of technologies has been around for many years, but continues toevolve as new business cases emerge, and as insurers embrace new processes and channels, lookfor new revenue opportunities and strive to improve customer retention.

    Sales technologies are core to the insurance industry, and are a main focus of investment by bothlife and P&C insurers. These solutions referred to as sales force automation tools have beenan established and mature part of the insurance industry for many years. They allow companies tomanage the end-to-end sales cycles, from agency onboarding to lead management andcommissions payment to sales performance tracking.

    Customer service technologies mostly those targeted at supporting call center operations have also been important investment areas for insurers in the past. Focusing on functions such asinteractive voice response, unified desktop technologies and support for call center representativeshas helped insurers improve their service delivery.

    During the past three years, insurers have also significantly increased their focus on marketing,embracing direct models and seeking ways to interact with customers via Web channels. For this

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    reason, improved marketing capabilities, both online and offline, is increasingly important. Gartnerexpects this trend to continue with the move to digitalization.

    Customer information management, by contrast, has had a mixed reception across the industry.Many insurers still find it difficult to justify the investment needed to build a single view of thecustomer, while many others are stepping up their investments in 2014 as a means of supportinglarger customer experience management initiatives. Furthermore, interest in enhancing customerinformation is growing. Insurers are augmenting existing data with information about sentiment,attitude and behavior to provide a more expanded view of the customer. They are also building outmore complex customer analytics to better understand customer lifestyles and life events.

    Overall, new approaches to CRM will enable life and P&C insurers to improve campaign execution,customer segmentation, and direct and one-to-one marketing in both agent and direct-to-consumer distribution models. Insurance sales remain predominantly agent- and broker-based,although P&C insurers are rapidly deploying direct-to-consumer sales teams. Irrespective ofchannel, life and P&C insurers are increasingly focused on making their sales teams more efficientand more effective. The rise of mobile devices, social media, data access, gamification, context-aware computing, digitalization and cloud delivery are all contributing to increasing insurer interestin CRM solutions.


    Modern CRM solutions will support an augmented and expanded single view of the customer,which will include traditional transaction data combined with new attitudinal and behavioraldata, including social and sentiment information. This will provide greater insight into customerpreferences, requirements and needs, and provide improved ability to support customersegmentation based upon lifestyle or life events.

    Mobile communications, social media, cloud computing and data will become essentialcomponents of every business process.

    IT investment in agent and broker technologies will rise significantly during the next two yearsas insurers focus on strengthening their channel relationships. Gartner believes that investmentin a range of technologies and solutions including mobility, bridges, and exchanges foragent-carrier transactions, agent portals and lead management will grow during this period.

    Improved sales automation capabilities will help agents reposition their value from simply sellingto being more holistic advisors, providing their clients will relevant risk, financial health andsavings goals information, even when the agents are not actively selling.

    Many agencies will not have the IT skills to manage new technologies and will need supportservices from insurers' IT organizations. Innovative insurers will also offer value-added servicesto their distributors, such as analytical services and social media support, to increase loyalty.

    Some insurers may find that their old CRM system, already installed, cannot support newcustomer-centric initiatives such as direct marketing and Web sales. Replacement of old CRMsystems may be a likely outcome.

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    Recommendations for Insurance CIOs

    Deliver improved sales tools that will empower agents to build communities of customers andprospects. Those tools will transition agents from salespersons to advisors.

    Work with the heads of distribution to redesign and improve existing sales tools in light ofemerging trends, such as mobile, social, data cloud delivery, gamification, context-awarecomputing and digitalization.

    Build distribution analytics that leverage BI and analytics to assess channel, agency and agentperformance. Get usage data from CRM systems, core business systems (for example, policy,underwriting and claims) and other sales-oriented systems to holistically measure agents' andbrokers' performance and interaction to improve their effectiveness and efficiency.

    Assess shifts in consumer Internet behavior to identify trends impacting marketing, sales andcustomer service. Ensure that channels are integrated, online leads are routed to distributors,and the portal experience provides users with the same quality of interaction they would expectfrom an agent, broker or call center.

    Related Reading

    (Some documents may not be available as part of your current Gartner subscription.)

    "Life Insurance Sales Force Automation: Understanding Vendor Solutions"

    "Toolkit: CRM Industry Heat Map"

    "The Gartner CRM Vendor Guide, 2014"

    Internet of Things

    Analysis by Steven Leigh and Kimberly Harris-Ferrante

    Trend Description

    Gartner defines the Internet of Things as a network of physical items with sensors that connectautonomously to the Internet, to people and to one another. The use of these sensor-enabledconnections is growing rapidly in many industries, and these connections are increasingly beingused by mobile apps (see "Innovation Insight: The 'Internet of Everything' Innovation Will TransformBusiness"). The Internet of Things will have very different impacts on the life and P&C insuranceindustries during the next several years, because monitoring homes and other buildings, vehiclesand machinery is very different from monitoring humans.

    P&C insurers have already begun to leverage the benefits of the Internet of Things. For many years,fleet insurers have been leveraging telematics technology to manage vehicle risks, using driverfeedback, vehicle recovery and driving diagnostics data. During the past three to four years,personal lines auto insurers have also started to adopt telematics for usage-based insurance (oftenreferred to as "pay as you drive"). In both of these use cases, data is collected from the vehicle,

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    using a factory-installed device or aftermarket unit. The data, which ranges from distance driven toinformation on driving patterns (such as speed or acceleration), is then used by the insurer forpricing or for a range of customer services. A less-developed but emerging Internet of Things usecase is in property insurance, where smart home technology can be leveraged for managing homerisks.

    Life insurers can expect Internet of Things-based changes in several different areas, includingimprovements to traffic safety and health-monitoring technologies. Some countries (notablyGermany) are beginning to require improved sensing and Web-connected technologies that willreduce life insurance claims over time. Wearable devices and mobile health monitoring equipmentwill deliver lifestyle, behavioral and health data that will help life insurers assess current risks ofdeath for both group and individual life insurance products. It is not yet clear how this data willbecome available to insurers, and the real-world impact on the life insurance industry is still three tofive years in the future. Insurers are not yet even able to adequately evaluate Internet of Things datato appraise the potential value it can deliver. For example, it is unclear whether measuring fitnessperformance, driving Internet-connected cars or monitoring disease care will yield significantimprovements to mortality rates. Insurers will need to gain significant experience with this data todetermine what impacts it will have when assessing risk.


    Auto insurers will continue to adopt telematics technology that provides them with newproducts and new sources of information that IT will need to manage. New business models willemerge for example, pay-as-you-drive insurance that will incorporate data about a broadrange of driving behavior for use in pricing and underwriting. The data also can be used to drivemore interaction with customers (for example, insurers providing a risk dashboard to customerscan log in to get driving risk scores).

    Insurers will look to leverage real-time data from new devices embedded in appliances,equipment, homes, offices, factories, vehicles and other locations. This data will help withmarketing, pricing, risk selection and claims. In some cases, they will leverage smartphones foruse as sensors.

    Life insurers will monitor the effects of the Internet of Things, and innovators will create ITinfrastructure to manage health-related data over time to assess underwriting value.

    Device data will provide companies with a wealth of knowledge that can be mined to helpimprove core business processes, such as actuarial and claims.

    Large data volumes generated from devices will create big data problems, which must beaddressed. Storage volumes will drastically increase, and new tools will be required to supportanalysis of these datasets.

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    Recommendations for Insurance CIOs

    Consider opportunities offered by new sources of data on factors such as lifestyle, drivingpatterns and building status that are relevant to insurance risk. Use this data to create a roadmap for delivering underwriting data to support innovative product offerings.

    Evaluate the marketplace for Internet of Things technologies particularly if your company is alate adopter of these technologies and their potential impact on your ongoingcompetitiveness.

    Identify partners that can help you with your Internet of Things strategy and with a review ofyour current-state infrastructure to support real-time, high-volume device offerings.

    Monitor adjacent industries to determine where device data opportunities exist and how yourcompany can pilot available technologies.

    Review data strategies to determine how big data will be supported including storage andanalysis.

    Related Reading

    (Some documents may not be available as part of your current Gartner subscription.)

    "Technology Overview for Personal P&C Auto Insurance Telematics"

    "Life Insurers Must Prepare Now for the Internet of Things"

    Advanced Analytics and Business Intelligence

    Analysis by Kimberly Harris-Ferrante

    Trend Description

    Insurers are increasingly aware that data is one of the most important assets they possess. Tosuccessfully compete in a rapidly changing and intensely competitive marketplace, they must havecontrol over, access to and improved insight into data. Data must be turned into information, andinformation must be delivered in a timely manner to the business so it can be used to make criticaldecisions. Insurers must make information easy to understand, using new visualization techniquesto enable interpretation and further analysis by individuals who do not necessarily havebackgrounds in statistics. Information may need to be delivered via a mobile device. And advancedanalytics models including those that use predictive and prescriptive techniques will helpbusiness leaders make forecasts, identify emerging data trends and determine the appropriateresponses. This must all be done with growing data volumes and an increasing use of unstructuredand external data (including social data).

    In this way, the use of business intelligence and advanced analytics will enable insurers to meetemerging business requirements. While business intelligence has been around for many years,analytics has taken center stage during the past 24 months. Gartner defines analytic applications aspackaged business BI capabilities for a particular domain or business problem. For insurance, this

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    includes analytics for underwriting, product performance, claims, fraud and distribution. Analyticalsolutions often come with prebuilt industry-specific models, a data model, reports and dashboardswhich contain the most relevant key performance indicators that the business user would want tosupport decisioning.


    Insurance CIOs who have successfully implemented BI and advanced analytics capabilities willsupport improved decision accuracy and insight into business performance, including actuarial,underwriting and claims efforts. This will give them a significant competitive advantage overinsurers that have not mastered centralized data or implemented analytics.

    Existing BI and analytics capabilities will increasingly need to incorporate social andunstructured data.

    Modelers' and data scientists' skills will be required to support emerging BI and analyticaldemands.

    Recommendations for Insurance CIOs

    Identify untapped areas where business users need information to support decisioning. Identifysources of information that can be used to augment existing data, and the requirements neededto integrate data into existing processes for analysis. Use new and unused data to optimizebusiness processes such as underwriting, fraud and product development, as well as toimprove customer intelligence.

    Assess your company's level of analytical readiness, and identify areas where additionalinvestments in hardware, software and staffing will be needed to support emerging datainitiatives.

    Ensure that your systems have adequate scalability for growing volumes and a variety of data(including unstructured data). Also ensure that enterprise data warehouses, analytical tools andcore systems can support the growing volumes of data and processing power required tosupport business requirements.

    Review the company's data governance guidelines, including those for the evaluation of datacleanliness and reporting, to identify limitations of the existing governance program.

    Related Reading

    (Some documents may not be available as part of your current Gartner subscription.)

    "A Framework for Evaluating Big Data Initiatives"

    "Insurers Must Fill Technology and Staffing Gaps to Support Intelligent Business Operations"

    "P&C and Life Insurers Not Ready for Big Data"

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    1The Gartner 2014 CIO Survey, conducted in 4Q13, included responses from 114 insurance CIOs,with 43% representing life insurers and 57% representing P&C insurers. Among the respondents,46% were based in the Europe, the Middle East and Africa (EMEA) region, 41% in North Americaand 11% in the Asia/Pacific (APAC) region.

    2Legacy Modernization Survey: Gartner interviewed IT leaders from 44 U.S. life and P&C insurers(13 life, 30 P&C and one company that offered both lines of business between July 2013 andSeptember 2013). The respondents assigned legacy modernization a mean value of 5.9 on a scalefrom 1 to 7, indicating that most considered it a "very critical" concern. Seventy-seven percent ofthe respondents were currently in the process of completing a legacy modernization project, and9% had already completed one. The remainder were planning to launch a legacy modernizationinitiative during the next 12 months to 24 months.

    3The Gartner Insurance webinar, conducted in January 2014, included 106 participants 70%from North America and 30% from Europe.

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    Gartner, Inc. | G00260600 Page 23 of 23

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