(Image source: Guidewire.)
Speaking at Connections 2018, Guidewire Software’s annual user group meeting, CEO Marcus Ryu said that recent natural catastrophes have emphasized the critical role that the property/casualty insurance industry plays in society, leading to his conviction that society needs the largest and most efficient property/casualty insurance industry possible. The observation served as a prelude to Ryu’s discussion of technology’s influence on the industry’s transformation, and how that was exemplified by the vendor’s latest releases, customer success stories, InsurTech partners and new Analytics and Data Services division.
“The urgent work before us is to expand the reach of insurance: to render it easier to distribute and service, to close the underinsurance gap, to leverage the finite human talent we have to cover a larger scale, and to develop new products to address emerging risks such as cyber, supply chain disruption, terrorism, pandemic, and others of the 21st century,” Ryu commented.
Ryu briefly reviewed Guidewire’s progress from vendor of a single application for claims to its InsuranceSuite operational and transactional core today. “However, today, advancing the P&C industry’s destiny requires more than just core systems,” he added. “You’ve made that clear to us in describing your ambitions for the future.
Acknowledging that “platform” has become a technology buzzword, the term has value in signaling a division of labor. Guidewire’s place in that division was as an organization to build what he called a solid and standardized foundation that lets insurers focus on their competitive value proposition. “In our case, the scope of Guidewire InsurancePlatform is nothing less—or more—than the global P&C industry” he said. “As our mission reflects, delivering an industry platform in a time of rapid change commits Guidewire to a journey beyond our original ambitions.”
Delivering the Benefits of Cloud Architecture
Ryu identified three dimensions whereby the company executed its role:
First, delivering mission-critical software, meaning standardized applications serving every line of business and all sizes of insurers globally.
Second is to add to its historical mission of providing the services to implement software and now take on full post production responsibility for delivering the software in the cloud as a reliable business service, rather than just an IT asset.
Third, Guidewire must provide an ecosystem of technology providers and data streams that can readily integrate into the shared insurance platform, lowering cost, effort and complexity.
‘Almost boring in its reliability’
“If we get this right, [ software, services, and ecosystem should cohere to provide a springboard to the P&C industry, enabling you… to run your business on a foundation almost boring in its reliability, differentiate your businesses by disburdening you from keeping the lights on, and grow your businesses by accelerating entry into new markets, with new partners,” Ryu said. “Getting this right will likely take the rest of our careers, but we are not at the start of the journey.”
Ryu noted the 2018.2 release of InsuranceNow—the vendor’s end-to-end suite aimed at smaller carriers—and he reviewed major features of the InsuranceSuite 10 release announced at Connections. [See also our report on the release.] He stressed that the new release reflected that a modern insurance operation requires more than just flexible core systems, but also that those capabilities be unified with digital engagement and data and analytics.
Digital Engagement and Data/Analytics
He gave as an example “smart claims assignment,” whereby as first notice of loss is initiate in Guidewire Digital, it triggers the creation of a claim in the ClaimCenter component InsuranceSuite. Predictive analytics then predict a lifecycle trajectory based on a machine learning algorithm, driving assignment and workflow. The analytic module continuously adapts the workflow to new information, providing digital updates to the policyholder or agent.
“This unification of core, digital, and data is characteristic of the efficient frontier we are pushing against today, alongside you,” Ryu remarked. “This is how we can drive both greater underwriting profit and policyholder satisfaction.”
As an example of digital improvement, Ryu spoke of the often intimidating step of product selection for a potential policyholder. This is an issue not only for personal lines, but also for the underinsured segment of small business owners represented by the “consumerization” of small business. He spoke of Guidewire Digital Small Business DSB, Guidewire’s specialized solution for digital competition in the segment.
“It provides a completely mobile buying and service experience designed for the consumer sensibility of the small business owner, 90 percent of whom make the insurance buying decision for themselves,” Ryu said. “It also tailors this experience to market segments, reflecting different coverage needs and appetites.”
Ryu also alluded to Guidewire’s product-level integration with Salesforce, embarked upon last year, which addresses the imperatives of a customer-centric strategy. “adopting CRM principles, such as contact history, cross-sell, and life events, requires a deep integration between the front-office and the operational/transactional domain of core systems,” he said. “Over the last year, we have developed new Guidewire Engage products for Salesforce that unify full CRM functionality with a 360-degree customer view and enable agents and services reps to quote and bind policies for customers with multiple lines of business—even those outside of P&C. These are cloud-native products, running entirely on Salesforce, exemplifying how a modern core enables the digital front-office.”
Addressing the imperative that insurers use data to discover and apply new insights, Ryu discussed how Guidewire Live Analytics leverages the cloud to aggregate and visualize a much broader set data at large scale, including the unconformed and unstructured data captured in InsuranceSuite. “Now supporting both SQL Server and Oracle, Live Analytics streams data from Guidewire core systems near real-time into a cloud-based data lake,” he explained. “Once in the lake, the data are organized through a new Cataloging service, which readies it for visualization in what we call Explore applications, tailored to insurance roles.”
Ryu noted the creation of a new division within Guidewire called Analytics and Data Services (ADS) resulting from the 2017 acquisition of Cyence and building upon the 2016 acquisition of Eagle Eye Analytics. The new division enables the modeling of the contingencies of complex supply-chain or contingent risks. “This team has pioneered the technique of Internet-scale “data listening” [meaning] aggregating, cleansing, and updating petabytes of data to build cyber models—using public and proprietary data about network presence, connected devices and control systems, and semantic content such as job boards and news reports of ISP outages and data breaches,” Ryu explained. “This approach has already earned the trust of 40 insurers—including 5 of the top 10 cyber insurance writers—who use Cyence’s cloud-based tools to evaluate risk at the individual and industry level.”
Responding to insurers’ interest in InsurTech, Ryu contrasted two types of startups: “Digital Attackers, which focus on creating more liquid insurance marketplaces, and “Process Improvers,” who focus on specific challenges in the insurance lifecycle, often applying horizontal technologies. He cited four examples from among Guidewire’s partners:
Betterview—which analyzes satellite, aerial and drone imagery to create a more granular picture of building characteristics and hazards.
Hover—which lets homeowners turn pictures of their home into 3D models to speed the estimation process in the case of a claim.
FRISS—a solution used to flag potential fraud during underwriting and claims using machine learning and other techniques; and
Octo Telematics—a global telematics firm with data on over 200 billion miles driven which automates the first-notice-of-loss process for auto physical damage and claims and can digitally reconstruct the dynamics of an accident, providing a powerful forensic tool to claims adjusters.
On the topic of reducing IT complexity and delivering Guidewire’s software as a business service in the cloud, Ryu noted a “sea change” in insurers’ willingness to cede control of IT assets to their providers. “We are proposing a huge transfer of risk and complexity from your shoulders to ours,” he said of Guidewire’s role. “It’s not an overstatement to describe this as the most significant expansion of our mandate since the company was founded.”
Moving to the Cloud
Ryu reiterated that the transition to a cloud-based paradigm was in the early stages, but not at the very beginning. He noted that over 150 insurers have deployed at least one product in the Guidewire Cloud, and that Amazon Web Services had completed rigorous architecture reviews confirming both its core offerings to meet its design qualifications for Well Architected SaaS Solutions.
“We have invested in the new skills required of us, including a team of almost 200 data security and cloud operations professionals,” he added. “We have the experience of serving 44 InsuranceNow customers in the cloud, and 4 InsuranceSuite customers have already made the transition.”
Ryu said Guidewire intends and expects the majority of InsuranceSuite deployments to be on Guidewire Cloud within five years, though some will take longer to make the transition, and some will opt to remain on premise.
“Therefore, we must continue to reduce the total cost of ownership of InsuranceSuite for all customers,” Ryu said. “We developed InsuranceSuite 10 to that end, including greater content, connectivity to Marketplace, a RESTful API framework, and the decoupling of technical upgrades from business functionality. We are committed to providing full support and declining TCO for all InsuranceSuite customers, whether deployed on Guidewire Cloud or self-managed indefinitely.”