Digital, Core and Microservices: Conversations at IASA 2018, Part II

More of IIR’s discussions with leading vendors serving insurance companies seeking to adopt new digital capabilities and infrastructure.

(Interior Gaylor Opryland, Nashville, venue of IASA 2018. Photo by author.)

Microservices, UI and Future Vision: Charlie Hanna, Hyland Software

The topic of microservices was hot in customer communications management as elsewhere at IASA 2018. Charlie Hanna, director of Hyland’s insurance practice, spoke of the vendor’s emphasis on micro-applications and content services, as well as its work on its new interface, which facilitates a user’s access to what they need, how they need it rather than being boxed into a rigidly preconfigured solution. “For about 18 months we have been very heads-down in our future vision and in the first iteration of our new UI, Combined Viewer,” Hanna told Insurance Innovation Reporter.

Charlie Hanna, Director, Insurance Practice, Hyland Software.

The new capability will be available across industry verticals but was driven from Hyland’s insurance practice, according to Hanna. The UI takes the best-of-breed of the vendor’s user experience and is designed to work for a power user, with rich case management capabilities, he reports.

“It’s also the first iteration of content services, microservices technology, a standalone, ultimately cloud-based pieced of technology that you can integrate with whatever systems you have,” Hanna adds. “It checks a lot of boxes from the perspective of high-volume, performance and stability.”

Hyland has set an internal goal that within 18 months, Content Composer will be in the upper right-hand corner of analyst ratings, according to Hanna. “The goal is for the communication platform to be able deliver the customer experience that includes all the right touches from right points with the right data so that it feels special and significant, personalized to the end customer,” he says.

‘Blind Spots’ in Small Commercial Underwriting: Ernie Feirer, LexisNexis Risk Solutions

LexisNexis helping insurers navigate the challenges associated with a boom in small commercial business. Growth of small business has been skyrocketing and Boomers are being replaced by Millennials. “How do they want to transact business?—in the digital mode.” comments Ernie Feirer, VP and General Manager, Commercial Insurance, LexisNexis Risk Solutions.

Commercial carriers need help on the marketing continuum: marketing-contact-quote-underwriting-renewal-compliance-claim. Commercial carriers are taking advantage of predictive analytics to gauge small business owners’ proclivity to buy insurance, and also their renewal propensity and the likely severity of their claims. However, carriers struggle to get the data they need to perform an accurate and precise analysis. “There are often gaps in the information—it may be inaccurate or incomplete, and these deficiencies cause downstream issues,” Feirer says.

Ernie Feirer, VP, Commercial Insurance, LexisNexis Risk Solutions.

Among the ways LexisNexis Risk Solutions is helping carriers in small commercial is through its Commercial Data Prefill capabilities. With a small amount of information accurately identifying the applicant—including a few details about the business, such as number of employees, whether it uses vehicles and how many drivers—the vendor can prefill the application, boosting pricing accuracy and reducing work for agents on the front line.

LexisNexis Risk Solutions also provides Insurance Scores for small business risk—a challenging task since many small businesses don’t behave like larger concerns. For example, they may have been in business for a short time and are yet to establish a business credit footprint; or they may use personal credit cards that won’t show up on a Dun & Bradstreet audit. The vendor uses public records associated with the business owners, which work as well or better than traditional commercial data sources to predict loss propensity for small commercial, according to Feirer. “In small business, the personal loss history is very predictive of loss propensity,” he says. “I think that in assessing commercial risk, the personal lines claims history will be invaluable in assessing that emerging commercial risk in the small business context.”

Feirer shared a newly published report produced by LexisNexis Risk Solutions, which ran a survey of more than two hundred commercial lines insurance professionals to understand the factors that can impact a carrier’s ability to assess risk. The survey’s results overwhelmingly pointed to missing, incomplete or inaccurate information during the underwriting process as a critical factor.

To prove the benefit of automated loss runs in terms of eliminating blind spots that can mask risk and hinder business results, LexisNexis ran separate tests with seven carriers in which the company searched for prior losses on risks they had previously bound. Below are the common blind spots the vendor identified through the test results:

  1. Moving bad risks across the insurer’s own companies, where bad risks are passed between companies within the carriers own company group.
  2. Assuming “clean” risks, in which risks with no claims identified at point of underwriting had claims found later in the automated validation process.
  3. Missing risks with large loss history, where the risks with historic big-dollar claims were not reported.
  4. Searching only on business claims history, not driver claims history, thereby missing valuable risk-related insights.


Chatbots as Digital Experience: Anil Annandata, CodeObjects

Insurers are heavily focused on digital experience, and one of the best ways to enhance it is through use of chatbots enriched with AI and natural language processing, according to Anil Annandata, CEO of cloud-based insurance platform vendor CodeObjects. Since chatbot is a generic technology, how should insurers enable their customers to use it? The answer is to adopt an omnichannel strategy that lets customers interact through preferred platforms, including Siri, Alexa and Facebook Messenger, according to Annandata.

Anil Annandata, CEO of cloud-based insurance platform vendor CodeObjects at IASA 2018. (Click to enlarge.)

Chatbots can answer many questions either an internal professional or a policyholder might have, Annandata explains. “You could use text/SMS and say, ‘How much premium did I write this month?’ and you get a response. Or you could speak at home into Alexa and ask, ‘When is my next premium payment and how much is it?’”

While a powerful technology with tremendous near-term potential, chatbots are not perfect, Annandata cautions. “If the person can’t be understood, the chatbot must be able to transfer to a live agent. Furthermore, in engineering that transfer, you have to think about presenting the context to the live agent—where the call ended, what was the topic of the inquiry—and it’s a good idea to have a screen pop with the name of the policyholder and other relevant data,” he says.

Bots also have tremendous potential for customer communications beyond voice, according to Annandata. People still write about about 2.5 billion emails globally—when they have questions they tend to resort email: ‘I have a policy and I’d like to place a claim,’ or “What is the status of my claim?’ For efficiency reasons, you don’t want humans to have to read those emails—a bot can do it,” Annandata advises. “During the hurricane season people ask, ‘Hey what am I covered for.’ It’s one of the most common questions, and it should be automatically e-mailed back.”


The New Insurance Architecture: Donald Light, Celent

Earlier this year Celent released “The New Architecture for Core Systems: What it is and how quickly vendors are adopting it,” and at IASA 2018, we had a chance to talk to co-author Donald Light, Director, North America Property Casualty Practice at Celent. The report focuses on three elements that make up the new architecture: microservices, application interfaces (APIs) and the cloud. It further specifies their value, which is that they enable solutions that are faster to build, easier to maintain, quickly scalable, and able to leverage advanced analytic and security services offered by cloud providers.

Donald Light, Director, North America Property/Casualty Practice, Celent.

“I think everybody shares that vision of the need to do that rearchitecting or move to new architecture,” says Light. “Many of the vendors are saying ‘We’re there!’ or ‘We’re very close to being there,’ but as usual the devil is in the details.”

Some vendors are taking more of a discerning view, saying that they’ll transition much of what they have, but at the same time acknowledging limits to how fine-grained microservices can be. “A microservice that does ten different functions—is it really a microservice? Is there a good system performance reason for not making it one microseverice, one bit of functionality rather than ten?,” Light asks. “That gets into issues of orchestration, latency—that is, user experience from view point of speed. If I were an insurance company I’d want to do that kind of probe those issues one or two levels down. The world has shifted rhetorically, and in actual coding, but how fast and what’s the end point? There are a lot of differences among the vendors.”

Ilya Bodner, Bold Penguin

Bold Penguin, the Columbus, Ohio-based provider of the Emperor carrier recommendation engine for commercial agents, has found that its offering—which can be thought of as a triage tool for small business quoting—is used more heavily by big brokers. While small retail agents only use it occasionally, the big brokers have a greater need, using it tens if not hundreds of times a day, according to Bold Penguin CEO Ilya Bodner.

Ilya Bodner, CEO, Bold Penguin.

Bold Penguin succeeded in demonstrating to brokers that Emperor could be used either as-is or integrated with their systems, and has won some important contracts. Its first full implementation for a large broker was conclude by the end of Q4 2017, and since it has another up and running and a third in the implementation process.

“We also found that big carriers have same problem as big brokers,” Bodner comments. “Typically today carriers only write a certain percentage of the business that comes to them—their ‘hit ratio’ tends to be that three out of ten quoted get written.”

Usually, the other seven end up getting insurance somewhere else, Bodner explains. “But by matching manufacturer and the distributor to a risk, Emperor lets them close that delta,” he says. “They can quote and bind that other seven within Bold Penguin.”

Bold Penguin’s marketplace or clearinghouse approach has enjoyed 10x growth during the last 12 months, according to Bodner. “We went from processing thousands of applications a month to tens of thousands,” he says.

The company has grown its sales team, with a shift to enterprise solutions and sales. Bold Penguin’s greatest growth has been in its engineering team, and it has also grown its data science staff to enable the analysis of small commercial profitability and lifetime value of a customer. “We connect dots from the first collect to claim file—few companies can do that,” Bodner says. “We follow the customer through their journey and come back with a recommendation.”

The company has a healthy pipeline of prospects, including carriers, but with a focus on top-100 brokers. “We’re still committed to independent agents, but we’ll be spending much of next year balancing the participation of manufacturers and distributors,” Bodner relates. “That means more reports, predictive tools, self-services tools for them to make decisions. If you’re tech first, we supply an API.”

One of the firm’s biggest challenges is that it’s located in Columbus, Bodner confides. “It’s awesome because lots of insurers, but to be honest, it’s not sexy to attract talent. Especially for commercial insurance. We’re trying to pitch it as a fly-in state. That’s a big challenge. But at the same time, it’s a good problem to have,” he comments.

Of the company’s prospects, Bodner says, “I think we’ll go from tens to hundreds of thousands of applications getting to 100,000-plus per month—We’re on a path to do that. Small commercial is a really hot topic,” he adds. “Borrowing from Wayne Gretzky, we didn’t have to skate to the puck. It was headed our way.”

Dedicated Reinsurance Systems: Grégory Moliner, Effisoft USA

More insurance companies are adopting or planning to adopt dedicated reinsurance systems to manage their reinsurance program, according to Effisoft USA CEO Grégory Moliner, speaking at IASA 2018.

“Legacy systems and clunky spreadsheets don’t work anymore,” he says.

Moliner demonstrated Paris-based Effisoft’s latest offering, WebXL Version 4.1, which is designed to streamline management of ceded and assumed reinsurance. He also unveiled an optional cloud-based version.

Grégory Moliner, CEO, Effisoft USA.

Automating Schedule F, which discloses an insurer’s reinsurance transactions, was a top priority of carrier visitors to Effisoft’s booth, according to Moliner. “That complex form has been extensively revised for 2018,” he says. “Insurers will need to remap ceded reinsurance information from their systems to this new layout for 2018 year-end reporting. An automated solution is now even more essential.”

International Financial Reporting Standards (IFRS) reporting companies are also subject to additional reporting risk and are looking for information systems to facilitate and secure their reporting, according to Moliner.

“We are dedicated to help these companies stay on top of accounting standards and ensure compliance,” he says. “IFRS17 compliance is a substantial driver of demand for reinsurance software solutions, and Effisoft is in a great position to capture this demand and support our clients through this process.”

Insurers also need capable automation to track reinsurance claims, particularly to manage catastrophe claims, Moliner explains. Claims leakage can happen when an insurer fails to file a claim it missed. Because reinsurance is so complex, using spreadsheets to track claims means that legitimate claims can be overlooked.

Moliner also referred to the complex challenge of dealing with the “hours clause” in catastrophe claims. Under it, the duration of any one cat loss is usually limited to 72 hours. When a catastrophe’s duration exceeds the hours limit, the insurer divides the catastrophe into two or more loss occurrences and claims. Grouping individual claims is a complex exercise. “A reinsurance system with an algorithm designed to optimize CAT claims can remove the guesswork,” he asserts.

In reinsurance systems as with core system offerings, while most insurers still prefer an on-the-premises system, but there’s growing interest in cloud-based solutions, according to Moliner. “Insurers need a reinsurance system that will be able to respond to changing regulations and markets,” he sys. “WebXL has demonstrated its flexibility by serving American insurers that have widely varying needs and requirements.”

The vendor’s WebXL automates all ceded and assumed reinsurance operations from underwriting to financial accounting and reporting. Based on open technical architecture, the system can be accessed anywhere, anytime, and can communicate with all third-party systems, he said. It can be installed on the carrier’s own system or hosted in SaaS mode by Effisoft, according to Moliner.

Digital, Core and Microservices: Conversations at IASA 2018

Anthony R. O’Donnell // Anthony O'Donnell is Executive Editor of Insurance Innovation Reporter. For nearly two decades, he has been an observer and commentator on the use of information technology in the insurance industry, following industry trends and writing about the use of IT across all sectors of the insurance industry. He can be reached at or (503) 936-2803.

Leave a Comment