Becoming a Celent Model Insurer 2018

BECOMING A CELENT MODEL INSURER 2018

A GUIDE TO CELENT'S ANNUAL AWARD PROGRAM

Luis Chipana and Nicolas Michellod 08 September 2017

CONTENTS

Executive Summary ...... 1 Introduction ...... 2 Key Questions ...... 2 What Is Model Insurer, and How Will It Benefit an Insurer? ...... 3 Introduction to Celent Model Insurer ...... 3 How Will It Benefit An Insurer? ...... 3 Model Insurer 2018: Approach and Key Dates ...... 7 Nominations ...... 7 Judging ...... 10 Results ...... 10 Case Studies and Award Presentation ...... 11 What Are Best Practices for Submitting a Winning Nomination? ...... 12 Analysis of Winners to Date ...... 12 Winning Tips: Key Success Factors ...... 13 Celent Values ...... 17 Appendix 1 ...... 18 CSE Insurance Group ...... 18 Opportunity ...... 19 Solution ...... 20 Project Planning ...... 21 Delivery ...... 24 Results ...... 25 Leveraging Celent’s Expertise ...... 28 Support for Insurance Companies ...... 28 Support for Vendors ...... 28

EXECUTIVE SUMMARY

Beginning in 2007, Celent sought to identify and promote effective use of technology in insurance as a means to foster investment in innovation. Model Insurer is awarded for best practices of technology usage in different areas critical to success in insurance, and is the main award an insurer can win from Celent.

Insurers are encouraged to submit their initiatives, which we evaluate on three criteria:

 Demonstrable business benefits.  Degree of innovation.  Technology or implementation excellence as seen through the use of best practices.

This year we are accepting nominations in five categories:

 Data mastery, analytics and AI.  Digital and omnichannel technology.  Innovation and emerging technologies.  Legacy transformation.  Operational excellence.

Being recognized as a Model Insurer has a number of benefits for the insurance company and its executives:

 Prestige of the award.  PR opportunities to promote the award.  Further exposure via a Celent case study.  Complimentary invitation to attend Innovation and Insight Day, Celent’s flagship annual event.  Personal benefits, such as recognition internally and externally.  Strengthened relationship with the technology vendor.

To optimize your chances of winning the award, select your best initiative(s) that would score highly on all three criteria above and clearly explain to us what you did, why, and how. Get help from your technology vendor to submit the nomination form if you like, but make sure to own the entire process and stay on top of it.

Most importantly, remember: you can only win the competition if you enter it! Please visit https://www.celent.com/awards/model_insurer and submit your initiatives by completing the nomination form by December 15, 2017. We look forward to hearing from you. Good luck! 2018 nominationform. this which The repor    number of reasons: published a guide to the award program since 2016. The guideis beingpublished for a At Celent, we have beenrunning the Model Insurer program since 2007, but have only INTRODUCTION K 1 EY We also look back and consider lessons from the past. provide transparency into what Celent is looking for when judging the nominations. We want to offer tips on how to submit a quality Model Insurer nomination. We As the number of submissions grows, the quality inevitably becomes more variable. present a guide that explains the changes and their rationale. There have been changes to the Model Insurer program. Wefelt it wasimportant to this report will increase help awareness. of Model Insurer to insurance companies that may not be familiar withit andhope Model Insurer becomehas a truly global program. We want to introduce the concept report isfreely available for are only Q award? Model Insurer What is a UESTIONS t addresses available toinstitutionssubscribingCelent’sresearch

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Chapter: Introduction (see Figure1 Being recognized as aModel Insurer has a number of benefits foran insurance company H Insurer of the Year, the top honor. present 15 to number of them initiatives in one of five technology themes. We allnominationsreview and recognize a areas critical to success ininsurance. We invite toinsurers nominate their technology Celent’s approach isto seek examples of best practices in technology usage in different “Model Insurer” through real examples world of eff and others not wellwhenas it comes to technology While there is no suchthing asa“Model Insurer complexity of theiroperations and product sets,and technological their starting points. “right” will mean very different things to different Of course, the question is not asnearly as simple it appears. The terms “everything” and I INSURER? AN ITBENEFIT HOW WILL AND INSURER, MODEL WHAT IS try to answer an apparentlyquestion: simple program is now initstwelfth year. Celent started ModelInsurer research in has 2007and continued annually since. The insurers or vendors to participate in the Model Insurer process. whether it has any prior relationship with Celent. Celent not does charge any fees to insurers, and annuity/pension providers globally. Any insurer can apply, irrespective of available to property andcasualty/general insurers, specialty insurers, life insurers, health Model Insurer is the main award that an insurance company can win from Celent. It is NTRODUCTION TO OW W ILL I everything right with today “What would it look like for aninsurance company to d on page4 20 awards. We alsorecognize one initiative every year asthe overall Model T Research Question — B ENEFIT up to four per theme 1 Key Key C ). ELENT

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Chapter: What Is Model Insurer, and How Will It Benefit an Insurer? exposure for the winning insurers and their initiatives. consistently amongthe most popular reports with Celentgenerating clients, further These case studies are included in Furthermore, Celent analysts write detailed Celent Source: of ReceivingFigure Benefits 1: Award aModel Insurer why they were recognized Model Insureras winners. Most winners tend also to issue apress release announcing the winning insurers. We, at Celent, announce all the winners andissue a press release. As a result, a Model Insurer presentsaward anumber of Nationwide, John Hancock, Aegon, and XL Group, to name afew fromsizes all over the world including Zurich, Allstate, Marine Tokio & Nichido, MetLife, in greatcompany Competition isglobal andfierce, and the selection process is rigorous. Award winners are technology initiatives rather than narrowly being focused onone (e.g., mobile). prestigious award First of all, insurance companies tell us they view ModelInsurer as a distinctly Research Question and . The awards are focused oninsurance, yet span a full spectrum of 2 Key Key are proud of such association. Past winners include insurers of all

of hasanumberBeing ModelInsurer recognized asa release. announce opportunit A How does winning benefit an insurance company?

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all winners andissue the benefits for an insurancebenefits company. for PR opportunities of each winning initiative ir award and highlighting .

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Chapter: What Is Model Insurer, and How Will It Benefit an Insurer? 1 their clients. In response, vendors often issue their own PR statements celebrating achievements of While not explicitly awarding vendors, Celent recognizes their contribution to initiative.the often leads to an even stronger relationship between the winning insurer and its vendors. Finally, for initiatives that rely ontechnologyvendor them, such as recognition internally and externally and enhanced career prospects. winning initiatives often speakabout Model Insurer awardhaving However, the award has more than institutional benefits. Executives associated with the Celent Source: HaveInnovation andDay Traditionally at Presented Insight Insurer Figure Been Awards Model 2: event. All Model Insurer Award winners receive upto five complimentary tickets to attend the an excitingevent with over 280 attendees, presenting excellent networking opportunities. analysts. In 2017, I&I Day was heldat the State Room Boston, in Massachusetts. It was features exciting keynote presentations fromindustry leaders, academics, andCelent them an opportunity to discuss theirinitiatives on stage at the I&I day Day.The also celebrate the achievements of Model Insurer and Model Bank Celent’s flagship annual event, typically held onthe East Coast in the United States. We The actual awardshave been presented at Model Bank is Celent’s program recognizing outstanding use of technology in thebanking in of technology use outstanding programrecognizing Celent’s is Bank Model Innovation and Insight solutions and expertise, the award 1 award winners by giving personal benefits for

Day (I&I Day), industry. 5

Chapter: What Is Model Insurer, and How Will It Benefit an Insurer?

Figure 3: Technology Vendors Celebrate Their Clients Winning Model Insurer Awards

Source: Press searches

urer?

What Is Model Insurer, and How Will It Benefit an Ins an Benefit It Will How and Insurer, Model Is What Chapter: Chapter:

change or creative waysto foster innovation arealso welcome. not all do; examples of organizational or culturaltransformation to accompany technology no means exhaustive. Also, mostwhile nominations involve technology-related initiatives, offered as a way to broadly describe what we expect in a particular category; they byare The 2018 categories and example initiatives arelisted1 inTable    Key datesand changes include: N Celent Source: Figure andKey 2018 Overall Process DatesModel 4: for Insurer (see Figure4 While theoverall approach to the Model Insurer process in2018 issimilar to most years DATES APPROACH ANDKEY 2018: INSURER MODEL OMINATIONS Deadline Nomination Form: categories. Award Categories: ), this section highlights key dates. 15 December for Submissions:15

slightly revisedfrom previous years in 2017, Celent is accepting nominations infive different theme 2017. . Example initiatives are 7

Chapter: Model Insurer 2018: Approach and Key Dates slightly revised nomination form for 2018. information to augmentor substantiate the information provided make reasonable judgments. In cases,some Celent will check publicly available knowledge of the nominated initiative andwilllean heavily on the information provided to that in most cases those involved inthe selection process will have nopersonal that the true meritsof the initiative beconveyed through this information. Keep in mind nomination should be as specific, accurate, andcomplete aspossible. It is imperative nomination itself, andof the supporting information, cannot be overemphasized. The analysts to be effective when judging the initiative. importance The of the quality of the The nomination form is designed to capture the key data pointsneeded for Celent to categorize an initiative differently from what was submitted. may decide not to anyaward initiatives in a particular category. We alsoreserve the right Celent reserves the right to revisit the categories after all nominations are submitted and Celent Source: Model1:TableInsurer AwardCategories2017 for Operational excellence excellence Operational t Legacy technologies emerging and Innovation technologies omnichannel and Digital analytics and mastery Data CATEGORY ransformation

Risk management and security policies and security management Risk overhauls system Financial management and content Document DevOps technologies of cloud Deployment replatforming/transformation system Core insurance etc.) self, quantified drones, (e.g., use technology Breakthrough programs Innovation design/development New product Insurtech initiatives eLearning Telematics Straight insurance andonline Mobile Gamification analytics Predictive Data INITIATIVES EXAMPLE analytics -

through processing processing through

/ big dataapplications / big

(NOT EXHAUSTIVE)

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. Table 2

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Chapter: Model Insurer 2018: Approach and Key Dates the insurer. applicable, the vendorpartner. Subsequently, Celent will communicate directly Celent received, will acknowledgethereceipt The deadline is Friday, for nominations Celent Source: Nomination2:Table 2017 Formfor ModelInsurerAwards VENDORDETAILS CRITERIA TOSELECTION EVIDENCE DESCRIPTION INITIATIVE CATEGORY NOMINATION CONTACTDETAILS INFORMATION OFTYPE

APPLIED

QuantitativeSuccess Metrics Timelines DeliveryTeam Description TechnologyUsed and Rationale Project Backgroundand ElevatorPitch (Why X?) BriefDescription of I Business Involved InsuranceProducts ThemeofTechnology Initiative Position,Email and Phone Vendor ContactName, Vendor Name and Phone ContactName, Position, Email FinancialInstitution DATA FIELD Vendor Details, ApplicableIf Excellence Technologyor QualitativeBusiness Benefits

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term care, lifeor protection products, includepersonal auto, commercialproperty, annuities, long List the linesof businessaffected by thisinitiative. Examples, different category. intent. and selectthe one youthat feel best describes the project’s whichtheme to choose,please r initiative. oneSelect of five theme Sameas above. arethat nominating on behalfof FI clients O Self COMMENT/ information Vendor name,vendor representativenameand contact those? wereWhat the biggest chall Otherbusiness benefits that might be feedback, Revenueproductivity or enhancement, cost reduction, enduser Go Project duration firms, Externalresources: technology vendors, professional services Internal team: size of implement? youdid use? What processor organisational changes did you designedachieve to the desired outcomes? Whattechnology Detaileddescription of initiative. the wasWhat the solutionyou desiredoutcomes? Whowas theExecutive Sponsor? werebeing experienced? wereWhat the drivers and targetsor Describe thebusiness need forthe initiative. p What Insurer fewA bullet points whyyouthisthink 1 - ptional fieldfor of thesubmission with theinsurerand,if 2 sentence - livedate (only live initiativeswill be accepted) - explanatory

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Chapter: Model Insurer 2018: Approach and Key Dates notify all winners inlate January or early February. initiative asthe Model Insurer of the Year, the overallwinner. We expect to be able to categories, with the total of number winners reaching 15. Wewill also select one In 2018, expectwe to recognize up to three initiatives in each of the five theme R Celent’s intellectual above describes Celent’s process at a high level, the exact process remains within The majority of CelentInsurance analysts are involved in the judging process. Whilethe Celent Source: and review user ofend Solicitation ofmetrics Use management andproject testing, development, proper through management risk Project channels of use Improved compliance and transparency, data management, risk financial Improved integratio andsystem STP, Automation, forfuturereuse Positioning ofinfrastructure Optimization standards ofindustry Use IT Key3:Table BestPractices and IT MeasurableBusiness Results    on three criteria. constant through all While theModel Insurer process has evolved somewhat, one thing hasremained J UDGING BEST ESULTS initiative. initiatives that effectively demonstrate the useof best practices throughout the imp IT/business coordination, expansion and effective use of distribution channels, and important to successthe of a technology project. Initiatives areevaluated for their practice criteria to evaluate the nominations. Each best practice is considered Technologyimplementationor excellence. reducing risks or costs, or improving business processes. particularly innovative for their use of technology in improving sales or service results, Degree ofinnovation. success measures. heavily. Project size and scope matter, and wepay particular attention to quantitative insurance company’s business objectives. Therefore, this category is weighted most clear and sustainable impact onthe business Measurable business benefits.

PRACTICES lementation andintegration excellence, to name a few. Celent recognizes

capital capital and shall remain our “secret sauce.” 12

years: the selection criteria. Wecontinue to judgethe initiatives

This measure drawsThis attention to initiatives deemed feedback n

Celent to seeks recognize initiatives that have a

Improved customer/agent satisfaction. customer/agent Improved penalties. conduct market in andreduction compliance Improved organization. Green docum More efficient market. to time Decreased losses andreduced pricing, more accurate decisions, Better consistent andmore times Faster cycle share. ormarket revenue Increased expenses. staff lower productivity, Higher BUSINESS MEASURABLE Celent uses nine different key IT — .

those that most clearly advance your

ent and content management. ent andcontent

RESULTS

processes.

best

10 Chapter: Model Insurer 2018: Approach and Key Dates

Appendix 1. includes thecase studies of initiatives.winning A example case study isprovided in Concurrent with the I&I Day, Celentpublishes theannual ModelInsurer report, which [email protected] wishing to sponsor the event contactshould their Celent account manager or write to We willhave I&I Day sponsorship opportunities available again this year. Vendors in early 2018. expect to host the 2018I&I Day in the spring. The exact date and venue will beconfirmed during which publiclywe announce the winnerscelebrate and their achievements. We The Model Insurer process culminates with Celent’s Innovation and Insight Day (I&I Day), C similar award to ourprogram, it couldhappen in 2018. considerable toboon business outcomes. Although ModelInsurer has not introduced a Award, honoring projects that are comparatively easy andlow-cost yet offer a this?”doing their innovation but also for their simplicity. The banking team asked, partner program, Model Bank, found a small number of initiativesnoteworthy not only for alsowe reserve the right to introduce process and may decide not to anyaward initiatives in category.a particular However, As mentioned above, Celent reserves theright to revisit the categories during the judging ASE S TUDIES AND and decided and to introducea new award category that year . A WARD P RESENTATION additional awards

. For example, in 2013, our “ , Celent’s Impact W hy isn’t everyone 11 Chapter: Model Insurer 2018: Approach and Key Dates

the United Kingdom, Canada, Islands,Cayman Colombia, and France. 16 winners were initiatives from the US. The others were from other countries including the 39 winners, only 5 were not from the US Canada;or in last program,year’s 8 of the Over time the program has become more international. In the offirst year the program, of Celent Source: Figure 2017Celent 5: Insurer Nominations Model by Country world. In 2017, the nominations truly represented aglobal viewpoint. The winners alsoare not limited to any geography;single they fromcome all over the win. supported by statistics iseligible to win. As with all awards, you have to enter inorder to legacy transformation. Every thatinsurer demonstrates effective use of technology 2016, there were a number of tier 3andtier 4winners, and atier 5 insurer won for their insurers, not all Tier 1 insurersthat have submitted nominations have winners.been In award winners, such as Zurich, Allstate, Nationwide, and Tokio Marine very are large Insurer size and geography arenot the factors determining awinner. Whilemultiple have all won 5 awards. awards including onein 2016, Tokiowhile Marine and Nichido, Nationwide, MetLife, and once. Allstate haswon 11 awards across several business units, Chubb has won 6 companies received aModel Insurer award; of those, 34 managed to winit more than since the program’s inception in 2007. In the last ten years, 187 different insurance We havebeen recognizing on average 18 initiatives each year with Model Insurer awards A NOMINATION? WINNING A SUBMITTING FOR PRACTICES BEST WHAT ARE NALYSIS OF W INNERS TO D ATE

12 Chapter: What Are Best Practices for Submitting a Winning Nomination?

project best practices were effectively used. the solution? If so, wantwe to about hear it. And wewant to understand how key IT insurtech player oranother thirdparty? Haveyou woven a complex to deliverecosystem out around the world? Did you find areally interesting way to collaborate with an just done a “heart transplant on aplane?” it Was an integration nightmare? Did you rollit finalOur assessment criterion is experience or to transform the ofways working. edge” technology; often it aboutis how you apply technology to enhanceyour customer technologies to drive your business. How although that obviously helps.Weare interested in how you experiment with emerging We are also looking for genuine increase or cost saving). us, feel free to talk about relative performance example,(for percentage revenue potentially sensitive information. If not you comfortable are sharing absolute figures with business case willnot be sufficient. We appreciatealso that you don’t want to divulge benefits are hard benefits, as we will devalue any initiatives without them. Weappreciate that some long as they have measurable results. Make sure to include quantifiable business already delivering initiativeown Naturally, the mainfactor determining a nomination’s success isthe https://www.celent.com/awards/model_insurer from the nomination page, you already know where it is. Otherwise, please visit: enter the competition by completing a nomination form. If you downloaded this report So, what does it take to win a Celent Model Insurer award? Well, a key prerequisite isto W 2011 in introduced Insurer Asia Model Celent; Source: InsurerFigureGlobal Has ProgramModel 6: aover Become Trulythe Years States, onefrom England, onefrom Ireland, and one from Switzerland. Of the eight Model Insurer of the Year winners far, so six have come from the United and winners in total. company winners inthe global program, but increased the number of Asian submissions The introduction of Model Insurer Asia in 2011reduced the number of Asian insurance 100% 20% 40% 60% 80% 0% INNING 2008 87% 5% 8%

T IPS (see Figure 7 2009 86% 14% : to

business benefits

K quantify, but vague statements about expected from benefits the EY S 2010 74% 15% 11%

UCCESS ). Remember, we will only award “live” initiatives which are 2011 77% 15% 8%

innovation

“ technology implementation or excellence , although wealso accept advanced stage pilots, as 2012 71% 21% F 8% ACTORS

ever, innovation doesn’t only mean “bleeding . It doesn’t have to bethe “world’s first,” 2013 55% 28% 11% 6% .

2014 69% 25% 6%

2015 53% 34% 13%

2016 73% 13% 7% 7%

strength ofyour 2017 52% 31% 10% 7% .”

Have you America North Middle East Europe& Asia Caribbean the America and Latin 13 Chapter: What Are Best Practices for Submitting a Winning Nomination?

Consider some examples in understand it, you won’t win. Clarity ofyour submission internal acronyms team or names. Your initiative might be brilliant manyhow entries suffer from lack of clarity. Please donot expect us to understand deserves recognition. Focus onessential points, but don’t skim on detail. It issurprising Clearly tell us what you did andwhy, and why you think what you uniquedid is and proud of what you achieved. prideThis should beevident in your submission form. If you considering are entering your initiative for a Model Insurer award, you must be Celent Source: Winning for FigureSuccessa Model Factors Key InsurerAward 7: Research Question 3 Key Key

C We What are best practices for submitting awinning nomination? larity of your submissionlarityof iscrucial! 3. 2. 1. judge the initiatives on three judge the onthree criteria. initiatives Technology or implementation excellenceTechnology or Degree businessbenefitsMeasurable

of innovationof is crucial! . Insurer Ownership Insurer , but if can’twe

14 Chapter: What Are Best Practices for Submitting a Winning Nomination?

are muchare clearer specific with datapoints. years. Submissions A and B barely tell anythingus about the initiatives, while C andD Table 4 , which realare (but sanitized) data fields from submissions we received over the 15 Chapter: What Are Best Practices for Submitting a Winning Nomination?

Source: Celent Celent Source: Comparing4:Table ClaritySubmissions of Submission D Submission C Submission B Submission A Submission

benefits of electronic submission. ofelectronic benefits COMPANY’S INSURANCE submission COMPANY’S SYSTEM B of submission electronic seamless tosupport process acollaborative launched I STPinitiative. for this two key objectives were system underwriting their into information this andintegrating Applications Order Good 100%In Creating insurance. selli themarketing, streamline to (STP) solution COMPANY INSURANCE o breath extensive t tomatch backgrounds, ofinternational variety with a managers and adjusters claims twelve senior including members, project time $8M of budget amount with mo $78M Pr the like iPhone. andapplications devices mobile and through at website theCOMPANY via claims ontheir toinformation access Custome The SYSTEM data. claims to access ready with personnel management senior and engineering, risk actuarial, finance, underwriting, well as as operations, insurance COMPANY for handlers claim 400 theapproximately include bu reengineered on fundamentally needs. evolving customer address “multi is thesystem since technologies, >Bene groups. ofour27business all in 11LOBs all for advantage wide competitive allowing >A to: us thatenables platform andfle scalable highly onamodern, based systems, claims COMPANY INSURANCE who ittoourcustomers. sell paidtotheadvisers and thecommission in achange wedeliver that required also was it the product to improvements as well As development. product of toalack due beenseen thathas share market declining halt was to key driver Another promise. BRAND overall andthe definition ‘o with thebetter line in statistics paid the claims andimprove definition tasks’ ‘working criticized theheavily enhance was to initiative of this Thepurpose tasks'. or 'working occupation' their on dependent are offered, cover forPRODUCT applying Customers etc. price, policy &fund hierarchy, agency management, content includes portal customer and agency online, systems includes users operation internal and Brokers Advisors, Financial customers, registered user, by public accessed is The SYSTEM DESCRIPTI INITIATIVE n July 2011, n July based professionals claims by COMPANY designed was SYSTEM oject’s initial total budget was $86M, with a final landing point of point landing with afinal was total$86M, budget initial oject’s ddress the needs of local market requirements via a single system, asingle via requirements market oflocal theneeds ddress

occupation, one of two definitions of disability, either 'own 'own either ofdisability, two definitions oneof occupation, fit from emerging trends and opportunities, such as digital digital suchas opportunities, and trends fromemerging fit

us to produce operating efficiencies, local and enterprise andenterprise local efficiencies, operating toproduce us

process provides fully transparent status updates within updates status transparent fully provides process life insurance administration platform. platform. administration insurance life

B A,VENDOR VENDOR independent agent force are the key users, and the and users, key arethe force agent independent anunder in resulting scope, agreed theinitially than re SYSTEM A f our international operations. f ourinternational

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16 Chapter: What Are Best Practices for Submitting a Winning Nomination?

case study about it anyway. If itisa genuinely interesting initiative, mightwe approach you about a writing separate than in a particular category; we want to ensure that all winners truly deserve the award rather entries inothers. Incidentally, this iswhy reservewe the right not to award any initiatives case that we have many entries in one theme category and yet be starved of quality relative, and appreciatewe that it’s notsomething you do can much about. It bethecan The final success factor is the instances, and wehad to disqualify those initiatives. congratulating them on winning the award. Over the years onlywe hada couple of such does notengage when we tryingare to write a case study respondor to anemail happened), we select the initiative asawinner, but the insurer shows no interest in it of and committed to theprocess. overall In the extreme scenario (and this has OKare with this, longas as it is done with the insurer’s approval and the insurer isaware work they did with an insurer and submits thenomination form on insurer Insurer process however, make sure that you (theinsurer) are actively engaged inand If applicable, don’t hesitate to involve vendor the when submitting your nomination form; application. initiative internally. Celent welcomes additional materials to supplement a well-written Consider including internal documentation that you may have used to the socialize get it by default for lack of competition. Also, don’t despair if your entry does not win. . Occasionally, havewe a technology vendor that wants to share the strength of competition. As with all the awards, it’s all own the Model ’s behalf. We —

17 Chapter: What Are Best Practices for Submitting a Winning Nomination?

upcoming research topics to Was this report useful to you? Please send any comments, questions, or suggestions for you do by submitting your initiative(s) into the Model Insurer 2017 programs. Good luck! In other words, you be can assured that if you win theaward, you deserve it. We hope Celent Source: Figure Values Celent 8:   You expectcan usto apply the values same to the Model Insurer program. Whatever we do at Celent, are guided we by ourvalues described in C ELENT have taken such great care to build. otherwise would mean compromising our values and therisking reputation that we creation or deployment of any of the that initiatives have recognizbeen ed. selection process, and we always ensure th retained advisory clients.service However, neverwe give preference to clients in the vendors, and many of the eventual winners, are haveor been Celent research or Integrity and Independence. “good” when wesee it. impressive. And because of personalour andinstitutional experience, werecognise success infinancial services. Weget excited when we see something genuinely Insight and Passion: V ALUES

We passionateare about application of technology to drive [email protected] Some of the nominating insurance companies or . at Celent was not directly involved in the Figure 8 and below. To do 18 Chapter: What Are Best Practices for Submitting a Winning Nomination?

rebrand and undertaking a product rethink. opportunityFrom to results, this case study The company plotting began acourse towards realizing goalsthese United States. strategy is straightforward too: aim for a 1% market share onthe West Coast of the exceptional service, and create confidence in our customer’s mind everyday.” Their want to offer protection with well-made andinnovative insurance products, delight with The company’s new vision is simple: “We a are community of good in the civil sector. commercial markets, while paying homage to their roots withunique coverages for those a community-minded insurer providing products and services the to general public and property Founded by a postalworker in1949, CSE Insurance Groupinitially served only the Group Insurance CSE Source: CHANNELS DISTRIBUTION OWNERSHIP KEY METRICS BUSINESS LINE OF FOUNDED YEAR GEOGRAPHIES AND KEY HQ LOCATION 5 Table of the Year. it took to theproduce user-friendly, multi-line coverages that earned them Model Insurer formerly niche property & casualty provider has evolved to its current state andthe steps produced a new product line worthy of further study. Below isa breakdown of how this Harnessing the power of analytics, cloud technologies,rejuvenated anda staff, CSE has 1 APPENDIX : CSEInsurance Snapshot Group & casualty needs of employeespublic and their families. Today, the company is

CSE

I NSURANCE

G ROUP Aggregators (confirm) Aggregators channel Direct agents Independent and Washington Washington Utah,Virginia, Oregon, Nevada, Idaho, Colorado, Arizona, California, in todobusiness licensed Diversified CSE and Company Insurance Safeguard CSE Company, Companies: Group France Paris, in headquartered Covéa) Mutuelle d'Assurance deGroupe (Société Group Insurance Covéa of the asubsidiary is The company Assets: 135 Employees: DWP: casualty insurance A multi 1949 CA Creek, Walnut

$147 million -

line provider of personal, commercial property a commercial provider ofpersonal, line $298 million

D.C.

Civil Service Employees Insurance Employees Insurance Service Civil

policy policy people who by undergoing a nd ,

19 Chapter: Appendix 1

will show the changes that have resulted as well as some that may be in store for them along the way.

Figure 9: How CSE Presents Itself to Clients

Source: CSE’s Annual Report 2015

Figure 10: CSE’s New Brand and Tagline

Source: Celent

OPPORTUNITY In 2013, CSE Insurance Group commenced a massive transformation. Under the same management for 20 years, most of CSE’s senior leadership team was retiring. Led by its new CEO and new leadership team, the company launched a three-year strategic plan in 2014. The plan was based on three pillars: People, Process, and Products. A new

mentality that supported the willingness to take risks was born.

Appendix 1 Appendix Chapter: Chapter:

Figure 11: CSE Pillars of its Transformation Program

Source: Celent

For People, CSE changed who worked for the company. They hired 100 employees in a two-year period, seeking out those with technical skills and education, effectively changing a more clerical staff into a professional services staff. They also made organizational changes to their IT, actuarial, product management, and marketing teams. Governance was formalized to emphasize transparency and collaborative decision- making. And, by changing from a model that was resistant to change to one that looks for change daily, CSE made innovation part of the company’s culture.

CSE also chose the various applications and deployment methods that would support their transformation of process. They invested in new tools such as Emblem for predictive modeling. They moved technology to the Amazon cloud to allow for multiple, simultaneous development environments. With the right people and tools in place, they were ready to build new insurance products. They chose to revamp their legacy Dwelling Insurance product first.

CSE aspired to achieve “the best product in the industry.” This meant they had to overcome legacy thinking and practices to rethink all the features including coverage, pricing, rules, process, and communications. To do so, they sought inputs from customers and analyzed the market using two common analyses: 5 Cs (company, customers, competitors, collaborators, and climate) and SWOT (strengths, weaknesses, opportunities, and threats). Their analyses revealed opportunities to address concerns of users at every level: purchasers of the insurance, the agents who sell it, and the CSE staff who price, underwrite, and process claims for it.

SOLUTION The result was the company’s new flagship Landlord Insurance, which offers broader coverage, more discounts, and greater ease of doing business than any other landlord, dwelling fire, or rental insurance product in the US marketplace.

Landlord Insurance covers a property owner from financial losses connected with rental properties. The policy covers the building, any contents inside the building that belong to 1 Appendix the landlord, and liability of the landlord towards third parties. The industry offers generic

solutions. CSE worked to design a user-friendly product that offered more coverage. Chapter: Chapter:

PROJECT PLANNING

Product Research The project initiated with a written charter and stretch goals to develop the very best product in the industry across each dimension of rating, coverage, underwriting, ease of use, and marketing communication. The goals were communicated to the entire leadership and project team. The project was then prioritized, which cleared the way for the dedication of resources to be aligned across the entire organization.

CSE conducted primary and secondary research to learn about the needs of the customer and about the rental property market. They received advice from their agent advisory council. They analyzed landlord blogs, Google Analytics, Epsilon demographic and lifestyles market research, and Conning segment analysis. They joined the National Association of Residential Property Managers (NARPM) to learn about the industry from their perspective. They attended state and local chapter NARPM meetings and conducted a focus group with NARPM members at a local restaurant to learn about their insurance perceptions and needs as well as the needs of their clients.

Separately, they conducted a similar focus group of their independent agents and held 12 individual agency discussions dedicated to landlord insurance needs. They conducted internal focus groups with their claims and underwriting operations groups to understand and address their needs. They also analyzed their key competitors’ market positions and product offerings. All this informed their 5 Cs marketing and SWOT analyses, which in turn led to clear product requirements.

Their analysis showed that landlords are concerned about missing rent payments and eviction. CSE brought this knowledge into the focus groups, and there the concept of CSE’s Eviction Reimbursement coverage took hold. CSE developed a new cover and is now the only carrier to offer eviction expense reimbursement in the United States (copyright filed and pending).

Figure 12: Top Concerns from Landlords

Not being paid on time

Eviction Damages to property • Having to evict/costs • Tenant inflicted, other • Liability from wrongful eviction

Unforeseeable events causing liability or other unknown damage to the property • Lost rent due to inhabitability

Appendix 1 Appendix Source: CSE Insurance Group

They also considered coverages occasionally offered in other lines such as commercial

Business Owner Policy (BOP) and preferred Homeowners. Based on that perspective Chapter: 22

binding authority, and the maximum number of rented homesallowed. In the end, their they relaxed eligibility rules about legal forms of ownership, stand-alone policies, agent listening to agentsand property managers talk about their needs and assessing the risk, eliminated numerous underwriting rules that the ratenew modeling algorithm and the ultimate cause of loss analysis. They also claims anecdotal experience. CSE developedan ultimate causeof loss analysis based ondata and enhanced with practices and variable human judgment. Working with actuarial, claims, and product Another process change was in underwriting. CSE’s underwriting doesn’t the property manager a notice that they have “insured” status; address in the policy administration system. issueUpon the system automatically sends When the policy iswritten, include aprofessional licensed rental property manager “an as insured” on automated that four-step notification process by designing the base coverage contract to was The process of rentaladding property managersto a policy as anadditional insured party Process Improvements all the bundle packaged options withthe click of one button. tiers: Basic,Plus, and Premier. They designed the policy administration system to select To simplify coverage offerings fortheir policyholders CSE bundled coverages into three CSE to focus increasingon the accuracy of their remaining residual variables. using ISO Verisk Analyzer Risk territorial rating through exposure offsetting. This allowed was addedto expand the data set and add credibility internal policy andloss data for both dwelling fire and home insurance. Home insurance through Towers Watso science of Generalized Linear Models (GLM), built in SAS with visualization provided books with varied CSE modelershired with extensive experience building ratingplans onsimilarly sized Product Rating andModeling and after the project completed. information. They listened to their customer needs and validated solutions before, during, customers. They went back out to them to validate prototypes and get next-level Throughout the product development process, theystop never customers. They goodare policy people. commitment to providing fair andequitable coverage that does right by their insured 2% higher loss ratio per year. Although it will cost CSE theymore, standby their an honest policy. willingnessThis to take on the landlords exclusions in their policy. CSE decided clear communication of coverage was inherent to not in their back to their actions of the which landlord nohas knowledge. After internal debate, CSE anchored coverage from a loss of a whole home or arising from tenant-owned dogs. These exclusions can leave a landlord without needed carrier has ahidden exclusion for marijuana growand anotherthat excludes liability In up to the most preferred landlord segment. increased numerous limits andsublimits to theposition product to serve the mid-market not they decided to offer Service Line, internal discussions with their claims department, CSE discovered that offered in the Dwelling Fire Space. In addition, and in response to agent needs, they co mpleted peranunderwriting manual resulting in a high-touch process even have to request it. customer’s best interes brand value proposition, “ data sources. The company’s product n’s Emblem product. the agent enters the rental property manager’s name and The product’s underwriting rules wererewritten to include t to follow these competitors and hidesimilar and We areWe good policy people, Equipment Breakdown coverage a vicarious liabilitydue expense to tenant They created a model based on10 ofyears didn’t influence the . They strengthened the data by rating is founded upon the ’ risks will result in an estimated the property manager ped listening t result. For example, after was based on legacy ” anddeci — one coverages the policy. ded it was o . CSE national their , 23 Chapter: Appendix 1

underwriting manual was completely rewritten, and the rules in their policy administration system were cut from 30 questions to 14.

The Product

Table 6: CSE Landlord Product

BASE COVERAGE 175% dwelling extended replacement cost

$1,000,000 premises liability and personal injury

Bed bug or bed bug infestation remediation coverage

$1,000,000 premises liability and personal injury

Ordinance or Law – Increased Limits coverage

Highest deductible options in the industry

Earthquake coverage

NEW TO THE MARKET Eviction Expense Reimbursement coverage

EXCLUSIVE WITH CSE Equipment breakdown coverage

Service line coverage

Source: CSE Insurance Group

Product Marketing Formerly, CSE followed ISO and called their product Dwelling Fire, which was not descriptive of the product. They considered a variety of alternative names that would be more descriptive, including rental property insurance and investment property insurance among others. Agent and property manager focus groups and their agent advisory council feedback all pointed out that customers primarily refer to themselves as landlords. Google analytics of search terms indicated a much larger use of “Landlord Insurance” versus other search terms. Using these analyses, they renamed the product from CSE Dwelling Fire to CSE Landlord Insurance.

They communicated the new name and coverage changes to renewal customers with rich and informative collateral that resonated better with customers and agents alike. This was enabled by their newly outsourced print services, which provided better quality materials than CSE’s in-house capabilities. They also added a new business and renewal business letter from the CEO to align the product with the company brand and give it a personalized touch. They provided their agents with a table showing CSE’s coverage, discounts, and exclusions versus the competitors.

They kicked off the new product at their agent convention, where they went over the new product’s features and benefits to the customer. Following the product launch they presented the product at agent road show presentations across California. Daily agent training webinars were also held during the weeks following the launch.

With the launch of the new product, CSE’s public website was updated to give a product overview, features, and discounts for prospective customers to preview. They also provided new digital marketing material for all agents through the CSEAgents.com website.

After the product launch, they opened a contest to the agents: if any agent could simply 1 Appendix name another dwelling fire product in any state that has broader coverage, offered more discounts, or is easier to do business with, then CSE would give them $500. As

expected, there were no winners. This was to position CSE’s Landlord Insurance, in the Chapter: Chapter:

throughout the product development lifecycle. They used CA Technologies’ agile collaboration between IT and the business in response to changing requirements framework for managing software development projects,facilitate organizationalto code, test, andimplement. Thiswas overcome by using theirScrum process, an agile was the sheer volume of business requirements provided to the IT department to design, billing, third party interfaces, forms, and documents. major Thus,a challenge they faced product: rating, coverage, user interface, underwriting questions, rules, tasks, workflow, work without the help of their vendors. It was a complete makeover of their existing The scope of the project was so large it taxed CSE’s IT team, whota analyzer territory to factors support their rating. development testing; and Amazon for cloud services. licensedalso CSE Verisk ISO risk Technologies to support theagile development process; Selenium for automated surveys;SPInn Policy Administration system provided via ISCS; Emblem for predictive modeling; Numerous applications essential towere support the business including: Towers Watson CSE extensively technology used to develop the new product and then support it. Technology Enhancements 2015 2014 and for reports annual CSE’s Source: Figure 13 D highlighted its unique coverage features and enhancements. The total winners, and each month salessurpass gift cards to FitbitsKindle and Fires. The results exceeded expectations. hadThey 133 production. There were three oftiers with winners prizes ranging from and coffee mugs independent agents gave and monthly awards for three months based on their In the month following the product launch CSE introduced a sales for contest their product indeedwas leading in the industry. mind of the agents, as thebest. It offeredalso CSE objective external validation that the ELIVERY Insurance Journal : The The Making: ofthe CSELandlord Insurance

released anarticle outlining the product new California in and SAS for data analysis; forQualtrics customer and agent

the previous month’s production results. Ra lly Dev by CA ckled most of the -centric

25 Chapter: Appendix 1

Renewal Policy Premium Dislocation: and others a decrease. “dislocation,” which means some renewal policies would experience a incpremium predictive model for rating, CSE saw a strong lift that improved segmentation results in results indislocation by better matching rateto highrisk and low riskpolicies. Byusing a muchhow better the rating new is relative to the oldrating formula. Better segmentation A key metric is thedislocation of premium on renewals. Dislocation isa visual measure of productionnew isup111% for premium, andthe policy count increased 143%. half to complete. The first policy effective date was 15 February 20 After many months of prework, the project began in June 2014. It over took ayear anda R underwriters, andclaims staff. managers. The post-implementation operations teams agency include territory managers, services for consultation, numerous independent agents, and numerous rental property externalTheir development team and resources included Perr and Knight actuarial developers; the IT director; 1 releaseengineer; and4 quality assurance testers. marketing representative; 1 business technical analyst; 2 business analysts; 5 modeling; 1 underwriter; 2 from legal / compliance; 1 for training development; 1 The core team included 24 staff: 2 from product management; 3 from actuarial and collaboration between the business and IT high. were through monthly cross-division steering committee meetings. Communication and The internal project team was enterprisewide. The project was governed and managed Project Team booknew of business. but their mitigation efforts paid off because they had minimal issues onday one with the The new product and supporting technology were pushed out in full. They took abig risk, include policy servicing for all products. agents, there was nodemand for a mobile sales app. CSE’s future digital strate for agents, which alleviates the need toa reference use guide. Based onfeedback from capture data and supported the ability to design it and streamline the process. The resulting web-based UI uses dropdowns to they reached out to agents via webinarsessions to receive iterative feedback on howto and was hosted by the vendor, but moving it to the allowed cloud CSE to develop, deploy, Fortunately, CSE’s core policy administration system pretty was modern. Previously it involved inday- Building the predictive model took almost 12 months, which meant IT team alsothe was and system redundancy. infrastructure on the public AWS cloud for persistent availability, of ease maintenance, automate a suite of regression tests. They thesehosted tools the and entireapplication an open source portable testing platform for webapplications, to author test scripts to and deployment workflow to environments for testing activities. They employed Selenium, minimizingwhile system operational cost. They used Jenkins to orchestrate code builds integration (CI) development practices involving code deployment and testing activities, CSE leveragedalso various open source automation tools to facilitate continuous vision- tool, RallyDev, to managetheirwork by identifying and managing ESULTS test changes quickly. When they developed agent-facing user prototypes,interface to -implementation of the product. to -day -day actuarial product development work. “hover” over afield to get definition information “feature stories,” from 16. Since that time, gy will rease 26 Chapter: Appendix 1

 46% of the book renewed within only $100 of expiring premium.  26% of the book dislocated more than $200.  16% decreased more than $200.  10% increased more than $200.

Figure 14: Renewal Policy Premium Dislocation

72% between +/- U$ 200

46% between +/- U$ 100

16% Less than U$ 200

10% above U$200

Less than 200 -200 -100 100 200 Above 200 Source: CSE

Due to the high dislocation, retention decreased by about 7 percentage points. It is more than made up for by higher quality and more new business. They are now writing more “preferred” segment policies with less insurance claim risk, including:

 Higher replacement cost valuations.  Newer building age.  Larger square footage properties.  Higher liability limits.  Higher deductibles.  More optional insurance coverages purchased.

The rating is supported with customer-friendly discounts. After evaluating candidate variables CSE promotes and displays over nine discounts, the most in the industry.

Other key metrics include:

 Through various technologies and the Scrum process, CSE delivered the full product to market and completed the project on time.

 CSE is growing into top 5 market share and ownership in this market.  Average quote time went from about 7 minutes to 2–3 minutes after the new product.  Time to complete an application went from 15 minutes to 10 minutes.

CSE made aggressive rate segmentation changes to drive favorable risk selection. Using 1 Appendix the predictive model in their rating gives them confidence that the rates are adequate and sustainable. CSE is one of three companies in California using predictive models based

on algorithms. They believe the rating algorithm provides effective risk segmentation and Chapter: 27

to compare their growth rate and lossratio to that of competitors. their enables pricing to match the riskefficiently. In theyears ahead they thesewill use metrics 28 Chapter: Appendix 1

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RELATED CELENT RESEARCH

2017 Celent Model Insurer of the Year: CSE Insurance Group's Transformation April 2017

Celent Model Insurer 2017: Case Studies in Digital and Omnichannel April 2017

Celent Model Insurer 2017: Case Studies in Innovation and Emerging Technologies April 2017

Celent Model Insurer 2017: Case Studies in Legacy and Ecosystem Transformation April 2017

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Celent Model Insurer 2017: Case Studies in Data Mastery and Analytics April 2017

Related Celent Research Celent Related Chapter: Chapter:

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