Why did you form a consulting organization known as the Roswell Group?
My first job after graduating from college was with a life insurance company. I began my career in the actuarial division. Ever since, I have worked in this industry as an internal auditor, software engineer, software sales executive and now as a consultant. The insurance industry has afforded me a good living as it has for many Americans but it now is suddenly exposed. Managers need help to sort through the complex interaction of some key factors influencing their business, not to mention emerging competition.
The business model for insurance has changed from what I grew up with. Today industry survivors are faced with evolving needs and expectations of consumers. They are influenced by new technologies and their customer’s relationships to them. They are faced with making mission critical decisions involving software selection, implementation services, outsourcing, BPO solutions, off-shoring, etc. Early systems that served them well now constrain their ability to launch new products and services. Aggressive technology solution and service vendors claim to have the answer to every industry problem but often lack a detailed understanding of the underlying business problem.
Do you believe insurance companies need change?
All that we know of change, be it personal or organizational, tells us that the real energy for change comes only when you are looking disaster in the face. An old ancient Chinese proverb says “In crises lies opportunity”. The current global system meltdown finds a good number of companies in crisis mode and in need of help.
Let me give you an example where some changes may be in order. Insurance operations often grow in makeshift ways. Responses to crises tend to create new functions, layer after layer, stove pipe after stove pipe, resulting in an unfocused view of the customer. .. The result is often an inability to sustain value. This results in fragmented jobs that become departmental empires and any attempts to manage volume and complexity often result in fragmentation of work. Accountability and performance awareness is lost. Then organizations often build large departmental empires on those fragmented functions and the problems are magnified. It is often very difficult for companies to actually see and understand how their business model must change. This is particularly true in larger organizations where the focus on preserving existing business makes it very difficult to recognize when and where underlying processes maybe stagnating, or when new models may become possible.
Companies must create significant breakthroughs just to sustain their position in the market. During a recent interview with an actuarial consultant associate who is working with a major insurance carrier, I learned of the organizational challenges he faced when introducing a new product involving annuity administration and long term care. This innovative product which has considerable sales promise and market acceptance was meeting resistance from both the system and organizational turf executives.. But creating breakthroughs is difficult for most organizations to accomplish.
Many insurance executives realize the past might not be the best guide to their future.
The good news is that certain companies have discovered that to keep up with the rate of change in the marketplace the key performance factors for today are much different from the past. They need a new way of thinking about their problems and their futures.
How does your Roswell Group differentiate itself from other consulting companies?
Roswell Group differentiates itself along three lines.
Wisdom ……we provide wider and deeper domain expertise than other firms. Core offerings of general strategy firms tend to be very process-oriented, while we attempt to bring more content-oriented expertise. Our domain experts bring deep subject matter expertise about specific topics e.g., products / distribution / or governmental compliance to their clients. We find the demand for domain consulting continues to grow as insurance managers ask the question of “how do we better serve our customers?”. Consultants that are experienced in working in the verticals they serve typically have a much deeper appreciation for the detailed needs of their client and their client’s customers. Clients are looking to work with people that they don’t have to bring up to speed on their business. Increasingly clients are looking for firms that bring a depth and breadth of perspective, as well as a workable approach to the table.
Size……we are a boutique firm with a smaller base of professionals that enable us to easily mould our business model to remain in sync with market trends. We understand and study the industry details which enable us to offer our clients much more insight into reality which helps us avoid industry hype. With less office politics, low infrastructure costs and non-engagement responsibilities, we have a larger share of time available for deploying domain knowledge in client engagements offering better value at lower costs.
Approach ….our approach is that all our consultants are residents of their geography and markets. Some of our competitors predominantly staff off-shore and then have a small number of generalists onshore to support their clients. Once you start to add those hand-offs into the process you tend to lose quite a lot of information and hence market insight. In multi-national situations, we have global access to domain focused colleagues that understand local markets, culture and often speak the local language.
Where do you see emerging opportunities for solution vendors in the insurance industry?
Both the history and temperament of this industry constrain the realms of its potential for change. Insurance is a business steeped in the paramount nature of its guiding principles and is equally tied to the information provided by the record of its transactions. This is most evident with the extent of existing industry legacy systems. When considering the projected uses of technology, insurers tend to focus on point solutions or keeping up with market peers. Overall solutions tend to be short range, aimed at optimizing current operations and are linear projections for business outcomes. In tough times, as we are experiencing now, insurers turn their attention away from increasing returns, and towards decreasing costs. We believe successful suppliers should focus on solutions that offer sustainable competitive advantage to their customers not on costs alone but solutions that help industry players grow their business. There is a continued need to increase activity in the front office and the middle office space The reason for this is the increased demand for management to increase sales and take major costs out of their organization..
There are significant opportunities for suppliers who can help clients optimize their customer retention to achieve reduced overall customer care costs while at the same time increasing satisfaction and improving the top-line from these customers. This combination of benefits is a real challenge for insurance managers.
What about Business Process Outsourcing (BPO) for front and/or back office policy administration?
Frankly I am surprised this area has not grown significantly. We may see some interesting acquisitions in this space that have less to do with service quality and more to do with special financial arrangements. While there is quite a bit of industry hype for this, the buy-side perception has been that the supply-side delivery capability for policy administration is immature. The potential demand for BPO has been present for quite a while but a lot of bids and RFPs have never translated into contracts because organizations found it difficult to find suppliers who had appropriate capability. The BPO requires a distinctive business model and it is an unrealistic business notion to suggest that by expanding the scope of their activities to business processes, traditional IT services firms can effectively offer to take over the back office processes of all corporations. While offshore IT labor has dramatically altered the economics of outsourcing, the BPO business requires strong and deep domain expertise that is difficult to find, attract and retain, especially in emerging countries. .
Besides cutting costs, there are two things carrier organizations feel strongly about. One is to retain customers and get the maximum revenue out of their existing customer base. That’s somewhere a BPO can support you. The other requirement is support for entering growth markets. For example, a multi-national carrier might want to take advantage of the consumer market in
Steve Kendrick heads a boutique consulting firm known as Roswell Group. The group’s focus is working with both buyers and sellers of technology targeted to the insurance industry.
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