Future-Proofing Insurance with Deep Customer Insights

Future-Proofing Insurance:
Deepening Insights, Reinventing
Processes and Reshaping Services
Insurance carriers face an imminent sea change in how their
mission-critical processes remain efficient, agile and innovative.
Ensuring relevance in the future requires redefined business
models fueled by heightened productivity across “business as
usual” activities.

Differentiation will be tied to knowing
— really knowing — customers. Yet many
insurers must balance today’s operational
costs with the investments they need to
innovate differently in the future.

Executive Summary
Insurance as we know it is about to change — and fast. Imagine a not-
too-distant day when your favorite social media company builds, buys or
partners in order to enter the insurance market: Your son’s Little League
team decides to have an impromptu party and 15 eight-year-olds want to
jump on the trampoline in your yard. Immediately, an ad appears on your
social media app — suggesting that “For only $2.50, you can buy a micro-
insurable policy on your trampoline between 3:30 and 6:30 today.” At
what price, real-time peace-of-mind? And all at the touch of a button?
Competitively disruptive scenarios like this will become game-changers
for the insurance industry. Insurers that are stable and mature will
either lead or brace reactively to accommodate extensive and ongoing
disruptions in business models, markets and the ways customers
engage with their carriers. Yet what will constitute success? Will social
media drive disruption? Will the ubiquitous use of drones increase the
competitiveness of property insurers? Will Code Halos enable companies
to totally reimagine the customer experience? There is no substitute for
preparation. Leaders need to lay the groundwork today for the coming
changes.
To begin with, carriers need to become more agile and efficient than
ever. This means being equipped to face anticipated (and unanticipated)
competitive moves pushed by innovative technologies that will demand a
total re-evaluation of existing business models. Differentiation will be tied
to a deeper understanding of customers, which is paramount. But many
insurers are balancing today’s operational costs with the resources they
need to innovate differently moving forward.
In this paper, we will present our view on how insurers can apply Code
HaloTM
thinking and solutions to reinvent and revamp their enterprise
processes… reshape their customers’ experiences… and better anticipate
business needs in order to survive, if not outperform, in the years ahead.1

4 KEEP CHALLENGING December 2014
Unlocking, Accelerating and Deriving Meaning
from Information
At its core, insurance is a business fueled by information. The winners of tomorrow
will unlock it, accelerate it and derive meaning from it. Advanced analytics and other
foundationaltechnologiessuchassocial,mobileandcloudcomputingwillbecomethe
catalystsforchangeandinnovation.Theywillbeviewedasaforce-multiplierofmiddle-
office insurance processes — an absolute “must” for everything from claims
management to risk management, to interactions among underwriters, actuaries
and adjusters. Not to be overlooked are engagement models and ubiquitous
technology platforms for customer management. All interfacing with today’s
insured, tomorrow’s prospects, third parties and claims.
To better understand these dynamics, we recently surveyed 100 senior-level North
American insurance executives to understand their businesses’ current and future
strategies. Conducted by phone in Q2 of 2014, the survey targeted decision makers
across life, P&C, retirement and wealth management lines of business — covering
processes related to claims, new business and underwriting, agency and distribu-
tion management, policy administration and shared services.
The results of these discussions present a compelling picture of change. Four critical
themes for the future of the insurance industry emerged:
• The need to make customer interactions smarter through process changes.
• The need to manage shifting market trends and demographics by embracing new
digital business models and services.
• The need for accurate, real-time “meaning making” through analytics.
• The perennial drive for efficiency and reduced operational costs.
We believe that applying data and insights from customers and partners is becoming
a foundation for incredible competitive advantage. Forward-thinking companies
are already winning decisively in their markets due to their refined ability to mine
insight from the digital information surrounding people, organizations and devices.
When properly harnessed, this data — which we call Code Halo — contains a treasure
trove of business value.

FUTURE-PROOFING INSURANCE: DEEPENING INSIGHTS, REINVENTING PROCESSES AND RESHAPING SERVICES 5
Creating Smarter Customer Interactions
It’s no secret that dealing with insurance companies today is something many
consumers dread. The fault usually rests with bad processes that challenge, confuse
and frustrate people and organizations in the value chain. Where can executives
prioritize lasting improvements that will fuel positive change and lead to enhanced
revenue-generation?
Process Modernization: Driving Agile, Intelligent Operations
and Better Customer Interactions
Most of the insurance executives we surveyed believe their processes need
improvement in order to sustain desired performance levels. The infusion of
digital technology, the use of analytics to drive insurance meaning-making, and
preparing for new sets of millennial customers (as well as coming “Gen Z”
customers2
) will require more innovative operating models that simultaneously
pivot around better cost management and an enhanced customer experience. Our
research showed that one-third of respondents worry that their processes will not
support growth in the next two years (see Figure 1). However, it also shows that
insurers that have modernized their processes through IT system upgrades and
analytics are confident that they are better prepared for the future than those in
the initial stages of doing so.
Applying Customer Data and Insights
Individual agents and insurance company call centers are the greatest source of
business renewal and new policy binding. But change is on the way — largely driven
by customers’ demands for more personalized experiences and services. In fact,
insurance leaders anticipate significant investments in digital self-service portals
over the next couple of years. Our study shows that by 2017,
self-serve portals are expected to be the lead touch point for
customer interactions (see Figure 2, next page). While these
changes may not be transformational in and of themselves,
when coupled with the ability to capture, understand and
analyze a customer’s likes and dislikes in more detail, they can
yield smarter, more intuitive channels for interfacing with and
serving customers.
Understanding and applying customer data and insights can, in
our view, help carriers create customized products and services
that drive competitive differentiation. Leading companies like
Google, Pandora, Netflix and Amazon, along with many others,
are winning decisively in their markets because of their refined
ability to mine insight from the digital information surrounding
people, organizations and devices. Code Halos can strengthen
customer engagement, deepen insight and refine processes.
The customer interface is an especially rich arena for applying
Code Halos to mission-critical processes and distilling the fields
of information they provide.
As the digital economy evolves, new opportunities beckon.
Particularly in the shared economy, fresh players and newer
models are emerging — an area that insurers need to exploit. For
instance, on-demand peer-to-peer ride-sharing startups such
as Lyft, Uber and Airbnb are said to be considering offering
liability protection to drivers and passengers.3
Insurers should
25%
30%
26%
29%
35%
ClaimsManagement
NewBusiness&Underwriting
SharedServicesFunctions
PolicyAdministration
Agency&DistributionManagement
Expect Process Degradation over
the Next Two to Three Years
Response base: 100 senior executives
Source: Cognizant
Figure 1

do more than just “take note” of these industry-
level disruptions: they need to consider how “born
digital,” Code Halo-driven disruptors offer amazing
opportunities to re-think how they analyze risk-
related data, and develop hyper-customized policies
for the new “sharing” economy.
While many insurers have considered — if not fully
implemented — components of Code Halo thinking to
make meaning from their B2C processes, untapped
efficiencies also lie in B2B interactions among
agents and companies in the insurance process
value chain. For instance, insurers are finding that
to stay competitive, they need innovative process
models in order to engage with their intermedi-
aries. At the same time, they should be aware of
the potential conflicts that can arise when agents
and brokers adopt newer sales and distribution
models, some of which might be perceived as
threats to their jobs.
As one life insurance industry respondent told us:
“Customers appreciate companies that make their
lives easier, so make it easy. Researching and
purchasing insurance policies and other products
should be a straightforward process. It is no longer
enough for a customer to have an agent who can
provide guidance and service. Leveraging informa-
tion and analytics, insurance companies that can
move beyond conventional alternatives to instead
introduce fundamental changes in their organiza-
tions have the opportunity to distance themselves
from the competition.”
Accommodating New Expectations
There is a new and dominant foundational architecture to help insurers sustain
customer loyalty and deliver a great service experience at a reasonable price. It’s
called the SMAC Stack.TM
Consumers are increasingly comfortable using SMAC (social, mobile, analytics and
cloud) channels to learn about and purchase insurance products. They are also
accustomed to the convenience of customized products and services based on
their personal data. This is a major catalyst for business process innovation, and
especially important when top business priorities include new products, enhanced
customer experiences and aggressive cost management (see Figure 3, next page).
Consider the surging wave of millennial customers. Their expectations for
SMAC-based services from insurers will only grow, especially as they transition from
being students, to single adults and DINKs (dual income, no kids), to new parents
and beyond.4
They will be among the fiercest critics of those companies that do not
swiftly adopt new models incorporating social and mobile access to their insurance
information — allowing them to connect, interact, buy and switch where and when
they want.
Customer
Self-Service Portals Insurance Co.
Call Center
Traditional
Broker Channels
Individual
Agents
Through
Branches
Through
Financer
52%
51%
46%
45% 38%
36%
Source: Cognizant
Figure 2
Changing Customer-Contact Channels
Fresh players and newer models
are emerging — an area
that insurers need to exploit.

While social media may have spurred these expectations, this isn’t just a “Facebook
thing” or an “iPhone” thing. By using SMAC and Code Halos, insurers can better
automate systems and digital processes to sense, predict and make sense of the
data they collect and produce — for all types of insurance lines. For example, a
wearable sensor for tracking the movement of a worker in a hazardous occupation
can alert him to approaching misadventure (using Code Halos driven by attitudinal
sensors applied to vital health parameters — drastically speeding up response times
should an accident occur). This capability can improve workplace safety and, as a
result, reduce the costs of workers’ compensation.
Applying Code Halo thinking can also help significantly in making sense of the
unstructured data captured in processes such as underwriting submissions, claims
adjustment, claims survey images and videos, third-party witness notes and
social media interactions. All of this data — when integrated with geospatial infor-
mation, aerial and satellite imagery, weather events, traffic patterns, medical
research artifacts, and historical data and trends — creates a digital map, timeline
and narrative story. This includes all “characters” or participants, protagonists
and antagonists alike. For example, smart underwriting processes using Code Halo
thinking can predict why one neighborhood is prone to soil liquefaction in an earth-
quake in California, or why a 200-meter long line of windbreak trees is the reason
one side of a street in Oklahoma would be spared the devastation of an EF-3 tornado.5
While technology-driven innovation sounds great, insurers must first focus on
keeping — and then continually cultivating — the clients they have. Today’s customers
are less loyal, and subject to a barrage of promotions and marketing efforts that are
Areas Where Insurers See Mobile Customer Interaction
Service Requests
for Policy Changes
Information Requests
Policy Purchases
Payment Reminders
49%
55%
53%
49%
Source: Cognizant
Figure 3

having an effect on the stability of relationships. Eighty percent of the insurance
company executives we talked to believe that customers are churning faster than
they did in the past — influenced by better prices, promotions and promises of
enhanced customer service (see Figure 4).
From Information Dissemination to Dialogue
What is encouraging are the innovative measures insurance companies are taking
to inch closer to their customers through process innovation. For example, research
shows that insurers are enriching customer touch points through mobile devices,
which to some consumers are critical components of their daily interactions with
all service providers, not just their insurance company. Innovative companies
know these interactions are moving from primarily one-way communications (i.e.,
sending policy updates and payment notices) to two-way interactions (i.e., buying
and servicing new policies).
Forward-thinking companies are examining models that allow them to better
manage risks. Two key areas under evaluation include pay as you drive (PAYD),
which typically charges a customer based on actual, documented miles driven, and
pay how you drive (PHYD), which is based on behavioral
and usage patterns related to peak vs. non-peak hours,
rapid accelerations and decelerations, time of day, routes
driven and the territories driven through. In the new
world, insurance companies can either collect this data
themselves, or work with aggregators to obtain driver
scores (similar to the FICO score for mortgage risks).
Process-level innovation can also be applied to drive
behavioral change on the part of customers — initiatives
that can lead to lower payouts and loss ratios. For instance,
“Pay How You Drive,” a usage-based business model
employed in the auto insurance industry, aligns driving
behaviors with premium discounts. By deploying in-vehicle
telematics devices or smartphone apps, insurance carriers
are able to directly monitor driving performance (by
capturing speeding, acceleration, hard-braking, cornering
or “prone to distractions” data); confirm driving conditions
(location, time driven, distance driven, weather, traffic,
pathway hazards) and set price policies (i.e., risk) accord-
ingly. Carriers are also able to deliver real-time feedback
to promote safe driving practices and prevent losses.
Technology innovators are moving at a faster pace than
the industry at large — providing an important glimpse into
future trends. For insurance companies, it’s time to “youth
up.” As digitalization and customer centricity take center
stage across life and property and casualty (P&C), many
companies will look to standardize omni-channel touch points and ensure a consis-
tently satisfying customer experience (see Figure 5, next page). From call centers
to self-service portals, the experience needs to be seamless and intuitive. Informa-
tion submitted through one channel must flow to and through multiple channels —
available and consistent across all touch points. This is where technology platforms
(integrated customer experience management systems) and analytics (member
profile and behavior) will play a much bigger role in creating unified customer
encounters. Most companies are already investing in upgrading or improving
their sites for customers, agents or policy holders. (See Figure 5, next page).
Integrating analytics to create a customized experience will go a long way in
enhancing this capability.
25%
19%
12%14%
11%12%
4%
3%
ActivelyPricingCompetitors
InfluencedbyPromotion
CustomerServices
InfluencedbyAdvertising
SeekingBetterCoverage
BadClaimsExperience
Peers
Other
Dear John,
Primary Reasons Consumers
Change Carriers
Source: Cognizant
Figure 4

Insurance companies that use these technologies and/or digital processes are
better able to “predict” and “prevent” an event, which has huge implications
when it comes to cost management and innovation — more so than being efficient
“processors.” We see this across progressive carriers — insurers that are early
adopters of breakthrough technology platforms and analytics.
Insurance Meaning-Making: More than
Just Analytics
Fundamentally, insurance is about foreseeing the future and understanding the
probabilities. The same value proposition applies to analytics, which enables
companies to convert insights into credible foresights.
How can leaders innovate to drive better customer interactions while also ensuring
more agility, less risk and enhanced loss ratios?
“Smart” analytics make processes smart — either through predicting or preventing
problems, or reacting fast to changes in the market. Given its absolutely central
importance to insurance, leaders need to prioritize budgets — putting customer-
facing processes first, followed by internal process efficiencies.
Half of our survey respondents said that analytics is a critical part of their organi-
zation’s strategies, and is applied across all processes. Yet many see a lag in using
analytics to create actionable insights or optimize risk models in actuarial pursuits
over the coming two to three years. As a result, an obvious competitive advantage
Investments in Various Types of Sites Among North
American Insurers, 2013
0
Life
P&C
10 20 30 40
86
85
80
75 25
50 29 21
20
14
43 43 14
10 5
50
Percentage of Respondents
Currently Investing
60 70 80 90 100
Life
P&C
Life
P&C
ImprovingService
SitesforPolicyholders
ImprovingCustomer-
FacingPortals
ImprovingAgent
Portals
Planning to Invest by 2015 Not Investing and Not Planning to Invest by Year-End 2015
Source: Gartner Inc., Kimberly Harris-Ferrante and Gene Phifer, “Building the
Next-Generation Web User Experience in Insurance,” February 2014.
Figure 5

will quickly emerge for
companies that get analytics
“right,” right now, while the
majority of insurers remain
on the fence.
Insurers can look forward
to substantial benefits from
getting ahead of the curve
by injecting Code Halo
thinking into their process
decisions, specifically those
related to analytics that are
tied to meaning-making — an
epiphany that will help them
accelerate from recogniz-
ing that something “needs
to happen” to “making
something happen.” All the
insurable assets that are subject to risk in the context of insurance products — auto,
home (building and contents), watercraft and the environment — have the potential
to generate rich Code Halos that must be seamlessly integrated with the insurer’s
core business processes to inform more timely and meaningful decisions. As such,
they help insurers create value from the increasingly smart and connected world.
In some cases, these assets could comprise a customer and his financial circum-
stances, such as life, annuities, retirement and health insurance
We looked at where companies that describe themselves as early adopters
of technology and analytics innovators focus their efforts (see Figure 6).
Astute businesses leverage analytics and versatility to fine-tune their message to
the market.
Getting Analytics “Right” —
A Near-Term but Challenging Mandate
The top three stumbling blocks cited by insurers include needing better technology
to extract meaning from data, having too much data and no tools to manage it,
and not having a consolidated data source (see Figure 7). While these challenges
are daunting, failure to address them is not an option. Data growth is not only
inevitable, but also essential for creating, personalizing and continually improving
the customer experience.
In the Code Halo economy, insurers can leverage analytics to consistently offer spe-
cialized services across all customer-engagement touch points, in areas ranging
from marketing to claims settlement servicing. Code Halos can act as a process-
level platform for building relationships based on trust — enabling the insurer to
continually engage with its customers and better manage potential risks. The
sales force gains insight into customers’ worlds, and thus can offer the appropri-
ate and adequate level of protection by suggesting the most suitable coverage. For
example, telecom companies are already giving their customers options to create
and manage their own plans.
60%
71%
72%
Better Operations
Management
Understanding Customer
Requirements
Marketing
Manage Governance,
Risk and Compliance
(GRC)
Creating Newer Products
and Opportunities
50%
57%
56%
60%
71%
74%
66%
81%
72%
57%
60%
68%
Predicting Key Events
Around Claims
Total
KEY
52%
62%
60%
Better Fraud
Management
53%
60%
62%
We are an early adapter
of technology.
Analytics is a critical
part of our organization
strategy – we use it
across all processes.
How Organizations
Use Analytics
Source: Cognizant
Figure 6
Code Halos can act
as a process-level
platform for building
relationships based on
trust — enabling the
insurer to continually
engage with customers
and better manage
potential risks.

Synthesizing Process Technology Automation +
Meaning Making = New Sourcing Strategies
The growing legions of sourcing strategies depend on analytics services provided
by global services partners to drive insight and bind prescriptive models into the
fabric of everyday operations. However, some leaders may question their sourcing-
management capabilities, and if they are prepared to handle the analytics options
available to them, especially if they require system changes or access to data.
Moreover, in our experience, failure to provide strong analytics support carries the
risk of serious process degradation and reduced efficiency. This was reinforced by
one of our industry respondents:
“I think most of us are using analytics to evaluate underlying factors that we didn’t
see before. These could be around underwriting, claims and managing losses. We
could do with more third party data, though.”
3%
Don’t Have the Skill Set In-house to Manage Data
18%
Need Better Technology to Take Meaning from Data
14%
No Consolidated Data Source Data Comes from Multiple Sources
8%
No Formal Data Analytics Function
26%
Analytics Are Not Integrated in the Process/Siloed
28%
Too Much Data and No Tools to Manage It
Key Challenges in Using Analytics
Source: Cognizant
Figure 7

Lowering Costs While Spurring Growth:
The Ongoing Challenge
Dual mandates are driving significant mindshare throughout
insurance companies as they continually struggle to better
manage costs while balancing investments in innovation.
The tough economy and the natural tendency of insurers
favor cost management and efficiency — ongoing business
objectives that are reflected in our survey results (see Figure
8). Initiatives related to customer experience, risk management
and advanced analytics, though on the horizon, are still overshad-
owed by market realities.
To a large extent, this may be due to challenges and concerns
around existing domestic market demands, compliance and
regulatory reporting, and a push to control costs to accelerate
profitable growth (see Figure 9, next page).
Outsourcing: Gaining Clarity
on Core vs. Context
Although most insurers take a mature approach to sourcing
IT or business services, many are still in the initial stages of
modernizing existing processes, redefining their operations
and evaluating their core capabilities. Most of the insurance
company executives we talked to were outsourcing some
part of their operational functions. High-cost processes
such as claims management and policy servicing, traditional
functions such as marketing, and high-skillset activities like
underwriting are sourced to manage costs (see Figure 10, next
page). We expect this trend to continue for the next two to three
years, but with significantly more agency management work
handled through partners or technology enablers (self-serve or
virtual agents).
In short, insurance executives have long leveraged outsourcing to gain efficien-
cies. But without deeper partnerships with innovative providers that can deliver
against future business outcomes, it becomes a story of “been there, done that.”
Insurers must sharpen their focus on improving SLAs, enabling better customer
management and increasing flexibility of delivery (see Figure 11, page 14).
Clearly, expectations for future-proofing insurance processes through outsourcing
have evolved (see Figure 12, page 14). Much of this has to do with the changes
that insurance companies are seeing in the market — from telematics to pay-as-
you-go insurance, and consumer demand for compressed turnarounds in claims
and responses to requests. Back-end support systems and operations need to be
updated to manage such changes in real time. These capabilities require a partner
Enhance Customer
Experience
27%
26%
16%
9%
9%
6%
3%
More Aggressive
Cost Management
Newer Geographies
and Products
Better Risk Models/Risk
Transfer in Insurance
Actuarial Analysis
Use of Analytics to Create
Actionable Insights
Compliance, Reporting
and Regulations
Use and Integration of
Newer Technologies Around
Social, Mobile and Cloud
Over the next two
to three years,
which business
goal will drive how
key processes are
performed?
Percent Who Ranked
It As No. 1 Goal:
Top Business Goals Driving
Process Performance
Source: Cognizant
Figure 8
Supporting processes need to be facilitators for growth,
rather than a barrier to seizing opportunities.

ecosystem focused on delivering enhanced
customer experiences and supporting newer
products and services. Supporting processes
need to facilitate — not hinder — growth.
Also, providers must be plugged into insurance
companies’ technologies and business process
management (BPM) layers to ensure that
processes keep pace and remain aligned with any
back-end systems revisions or partner additions.
For example, as insurance companies expand
their online interactions and use capabilities
such as geo-location and portability, back-end
processes will need additional analytics, and the
ability to process information on the fly. Insurers
will provide their field marketers and agents with
the information they need to perform “what-if”
analyses and sell to the customer through a
tablet — without delay. The ability to approve
claims and/or identify fraud cannot be a drawn-out effort. Automation and analytics
can help streamline that process.
Newer
Products/
Markets
Bringing in
Technology
to Support
Process
Enhancement
Reducing
Costs of
Doing
Business
Improving
Risk Models/
Risk Transfer
in Actuarial
Pursuits
Investing
in Creating
Actionable
Insights from
Analytics
Focusing
on Creating
Better Customer
Engagement
Models
Creating
Business
Agility
38%
20%
9%
8%
8%
5%
12%
PERCENTAGEOFTHOSEWHORANKEDITNO.1
Top Actions Taken to Better Manage Amid
Changing Market Conditions
Source: Cognizant
Figure 9
Functional Sourcing Hotspots
Source: Cognizant
Figure 10
Claims
Product Development & Marketing
Policy Servicing
New Business/Underwriting
Agency Management
Shared Services, Billing, etc.
Specific
Operational Areas
That Are Sourced
NOW
PLANNED
48%
36%
40%
45%
32%
40%
44%
40%
62%
32%
27%
48%
Current Cost Structures
Availability of Skill Set & Resources
Risk Levels (including data confidentiality
& compliance/regulatory issues)
Strength of Internal Systems to Support
External Partner (teams, technology,
documents, resources, etc.)
Time to Market
Process Maturity
Location Preferences (offshore)
Criteria Used to
Determine Process
Outsourceability
69%
52%
42%
43%
37%
36%
14%
Claims
Policy Servicing
Agency Management
Specific
Operational Areas
That Are Sourced
NOW
PLANNED
48%
36%
40%
45%
32%
40%
44%
40%
62%
32%
27%
48%
Time to Market
Process Maturity
Criteria Used to
Determine Process
Outsourceability
69%
52%
42%
43%
37%
36%
14%

Noting the need for more pronounced use of
analytics, one life insurance industry executive
noted:
“Targeting newer markets has always been
important. Mapping our strategy to new markets,
better customer experiences and new products
requires a lot of investment. The idea is to turn
profits into long-term financial security.”
Moving Forward: Critical
Next Steps
Operational (re) alignment is essential — there is
a need to balance reductions in high operational costs with necessary investments
around better customer management and experience.
Among the urgent priorities:
• Go digital — your customers live there! Nearly every aspect of our daily lives
generates a digital footprint, or Code Halo. From mobile phones and social
media to policy look-ups and online interactions, we collect more data about
processes, people and things than ever before. Winning companies can create
business value by developing a richer understanding of customers — extracting
business meaning from data. By utilizing innovative interaction models (self-help
portals, app-based policy administration and claims management), insurers can
improve their bottom lines and derive additional value from core systems such as
policy administration, underwriting, distribution, billing and receipts, and claims
management.
Forward-looking insurance companies offer apps tethered to mobile camera tech-
nologies to allow consumers to file accident claims via their phones directly from
the scene of the accident, often eliminating the need for an appraiser. Taking
mobile one step further, insurers are piloting voice-activation software that could
turn customers’ phones into virtual clerks — dramatically cutting the cost of
serving customers. Insurance customers have little tolerance for poor customer
service, invasive underwriting, burdensome forms, and delays. Insurers have an
opportunity to better leverage social and mobile technologies and advanced
Opportunities for Vendor Improvement
21%
Better Cost Structure
20%
Better Relationship
Management
12%
Efficiency of Outsourced
Processes
10%
Flexibility of
Arrangement
Value-Add
Beyond Costs
9%
7%
Understanding of the
Insurance Industry & Trends
11%
Better Managing
Contractual SLAs
Source: Cognizant
Figure 12
Response base:
100 senior executives
Source: Cognizant
Figure 11
Criteria for Sourcing
Claims
Policy Servicing
Agency Management
Specific
Operational Areas
That Are Sourced
NOW
PLANNED
48%
36%
40%
45%
32%
40%
44%
40%
62%
32%
27%
48%
Time to Market
Process Maturity
Criteria Used to
Determine Process
Outsourceability
69%
52%
42%
43%
37%
36%
14%
Claims
Policy Servicing
Agency Management
Specific
Operational Areas
That Are Sourced
NOW
PLANNED
48%
36%
40%
45%
32%
40%
44%
40%
62%
32%
27%
48%
Time to Market
Process Maturity
Criteria Used to
Determine Process
Outsourceability
69%
52%
42%
43%
37%
36%
14%

analytics to provide customers with excellent service, more transparent products
and pricing, and an experience that builds trust. This is especially important at
crucial “moments of truth” when buying decisions are being made.
• Capitalize on customer expectations for new and customized insurance
products. New customer demographics and the inexorable progression of digi-
tal technology present a perfect opportunity to take more control of everything
from social media, to mobile technology, to gamification and telematics. Insur-
ance companies can employ these tools to better understand their customers
and offer services that are highly customized — not to a segment or even to a
household, but to an individual.
These capabilities also open doors for non-traditional insurance companies to
provide insurance, such as liability protection for drivers and passengers of
peer-to-peer ride-sharing services. Or consider a move being contemplated by
Swedish furniture giant IKEA Group. Insurers need to be on constant watch to
react and rapidly respond to imminent market developments like these.
• Don’t get lost in torrents of data — create meaning. Today, the amount of data
that is collected from internal sources — be it related to claims, sales and pros-
pects or agents — can be integrated with data gathered from third-party sources.
External data sources — whether a customer with kids on a
trampoline consulting social media for insurance coverage, an
agent garnering next-generation risk modeling from satellite
or drone imaging, or the “hard-brakes” data from a Code Halo
plug-in device — will help insurance companies enhance their
underwriting outcomes and create efficiencies for the consum-
er, agent and insurer.
Once the right data is identified, integrated and mined, carriers
can take the next big step and create predictive models.
Based on these models, consumers can underwrite a policy
themselves, or input information into a portal to see if their
claims will be approved, or determine a hierarchy of risks to
reduce their insurance premiums. This will allow them to take
hands-on control of their policies, claims and payments. The
real goal of predictive analytics and meaning-making for self-
insureds is to help guide and support risk managers’ decisions.
Predictive analytics can be applied to both “pre-claim” and “post-claim” loss-
prevention methods. Today’s insurers use a variety of predictive analytic tools to
hunt through gigabytes of data to find variables — sometimes non-intuitive ones
— that hold clues to a customer’s risk levels and purchasing behavior.
• Understand that carriers, agents and third-party administrators (TPAs)
face constant pressure to attract new customers while reducing churn and
increasing market share. But for this to happen, insurance companies need to
show a positive intent (i.e., maximum transparency at each stage of the process).
They also need to explain how their data can enable calculation and ensure a
more accurate premium and level of coverage. Lastly, they must make clear at
exactly what stage a claim is in and what is required next from the policyholder.
Transparent communication is vital, since millennials expect next-best actions
without having to proactively call their insurers to determine the status of a
claim or receive an explanation of the coverage. These customers are used to
automatic and real-time communications that leverage their mobile device.
Moreover, smart, integrated omni-channel approaches that take into account
customers’ life stages, circumstances and problem-solving skills can result in
unparalleled competitive growth.6
The real goal of
predictive analytics
and meaning-making
for self-insureds is
to help guide and
support risk managers’
decisions.

This finding led one insurance executive to remark:
“Transparently-priced packages designed for different types of customers, such as
those with a new baby, a new house, or planning for retirement. Less sophisticat-
ed consumers would be able to simply select a package designed to meet their
needs. Consumers would have the option to customize a package to their individual
situation by adding or removing individual components.”
Getting There from Here
Moving forward, insurance companies will need to realign their business models to
fit (and anticipate) ever-changing market realities. Agility and the ability to revamp
the foundational structure of operations hold the key to adapting core processes to
the challenge of successfully managing amid continuous change.
The era of innovation driven by the Smart Home, the Smart Car and the Smart
Workplace is here. Telematics, social media and analytics are remaking existing
operating models. Think about how automated cars and peer-to-peer auto-share
or user-based plans will significantly alter the insurance industry’s overall market
dynamics. By keeping an eagle eye on the future, insurers can improve their bottom
lines and transform the way their core systems (e.g., policy administration, under-
writing, distribution, billing and receipts, and claims) are managed and extended.
To remain relevant and avoid extinction events, insurance companies will need to
capitalize on customer expectations for new and customized insurance products.
Many have already done so. Has yours?
Footnotes
1
For more on Code Halos and innovation, read “Code Rules: A Playbook for Managing
at the Crossroads.” Cognizant Technology Solutions, June 2013. http://www.
cognizant.com/Futureofwork/Documents/code-rules.pdf, and the book, “Code Halos:
How the Digital Lives of People, Things, and Organizations are Changing the Rules of
Business,” by Malcolm Frank, Paul Roehrig and Ben Pring, published by John Wiley &
Sons. April 2014. http://www.wiley.com/WileyCDA/WileyTitle/productCd-1118862074.
html.
2
Generation Z is one name used for the cohort of people born after the Millennial
Generation http://en.wikipedia.org/wiki/Generation_Z.
3
http://www.forbes.com/sites/ellenhuet/2014/12/04/peers-home-liability-car-replace-
ment-insurance/.
4
http://www.comscore.com/Insights/Blog/Why-Are-Millennials-So-Mobile.
5
http://www.eagleview.com/Products/ImageSolutionsAnalytics/PictometryAnalytic-
sDeployment.aspx#MobileAssessment.
6
http://www.bain.com/publications/articles/for-insurance-companies-the-day-of-digi-
tal-reckoning.aspx.

About the Authors
Banwari Agarwal is Global Head, Cognizant Insurance Business Process Services
(BPS). He is responsible for go-to-market initiatives, including client engagement,
industry thought leadership, creating custom solutions, development and
strategic engagements. Banwari is a Cognizant veteran with more than 15 years of
experience in the industry. He has been involved in business transformation initia-
tives that include process consolidation, automation and analytics, and business
transformations through global, large scale IT/BPS programs. He has led a large
number of assignments — ranging from business strategies to complex delivery.
His expertise spans all operational and financial processes in Personal Lines P&C,
Life and Annuities and Commercial Insurance. Banwari is an Electrical Engineering
graduate and lives in Hartford, CT. Banwari can be reached at Banwari.Agarwal@
cognizant.com | LinkedIn: http://www.linkedin.com/pub/banwari-agarwal/11/131/7a4.
Robert Hoyle Brown is an Associate Vice President in Cognizant’s Center for the
Future of Work, and drives strategy and market outreach for the Business Process
Services Practice. He is also a regular contributor to futureofwork.com, “Signals
from the Future of Work.” Prior to joining Cognizant, he was Managing Vice
President of the Business and Applications Services team at Gartner, and as a
research analyst, he was a recognized subject-matter expert in BPO, cloud services/
BPaaS and HR services. He also held roles at Hewlett-Packard and G2 Research, a
boutique outsourcing research firm in Silicon Valley. He holds a Bachelor of Arts
degree from the University of California at Berkeley and, prior to his graduation,
attended the London School of Economics as a Hansard Scholar. He can be reached
at Robert.H.Brown@cognizant.com | LinkedIn: http://www.linkedin.com/pub/robert-
brown/1/855/a47.
Vineet Malhotra is the Senior Director of Marketing within Cognizant’s Business
Process Services Practice. In this role, he heads the global marketing function —
driving go-to-market strategy, market positioning and strategic solutions, and
addressing customer ecosystem challenges through thought leadership and
research. He has more than 20 year of experience across various industries and
geographies, while working with global telecom and technology companies. Vineet
can be reached at Vineet.Malhotra@cognizant.com | LinkedIn: http://www.linkedin.
com/pub/vineet-malhotra/0/a43/b19.

World Headquarters
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Phone: +1 201 801 0233
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© Copyright 2014, Cognizant. All rights reserved. No part of this document may be reproduced, stored in a retrieval system, transmitted in any form or by any means,
electronic, mechanical, photocopying, recording, or otherwise, without the express written permission from Cognizant. The information contained herein is subject to
change without notice. All other trademarks mentioned herein are the property of their respective owners.
About Cognizant
Cognizant (NASDAQ: CTSH) is a leading provider of information
technology, consulting, and business process outsourcing ser-
vices, dedicated to helping the world’s leading companies build
stronger businesses. Headquartered in Teaneck, New Jersey
(U.S.), Cognizant combines a passion for client satisfaction,
technology innovation, deep industry and business process
expertise, and a global, collaborative workforce that embod-
ies the future of work. With over 75 development and delivery
centers worldwide and approximately 199,700 employees as of
September 30, 2014, Cognizant is a member of the NASDAQ-100,
the S&P 500, the Forbes Global 2000, and the Fortune 500
and is ranked among the top performing and fastest growing
companies in the world. Visit us online at www.cognizant.com or
follow us on Twitter: Cognizant.

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