It seems increasingly likely that the budget in April will be looking to introduce changes to pension taxation, with the smart money being on changes and maybe the abolition of tax relief on pension contributions. The financial press has been full of articles arguing whether this is a good or bad thing, and whether this is a necessary change or just more legislation.


It is undeniable that the cost of pension tax relief is one of the larger burdens assumed by the treasury. In 2014, the gross pension tax relief on contributions and investment growth for both personal and occupational pensions was £34.3 billion. This was offset by a £13.1 billion receipt of tax on pensions currently in payment. That is a lot of money tempting a chancellor in need of funds. It is certainly conceivable that the chancellor will simply reduce and abolish tax relief without looking to replace it.

Published on: 1/21/19, 6:34 PM

In November 1991, in the wake of the Maxwell scandal, whereby millions of pounds were effectively stolen from the Mirror Group pension fund, the Goode Committee introduced the most draconian pensions regulation yet seen in the UK. The fear of another Maxwell has been ever present in UK legislation since that incident, despite the fact that history is showing Maxwell to be an aberration.

The Consumer

The obvious impact on the consumer is that they are no longer buying a simple, easily understood product. Buying pension products in today’s legislative landscape is a complex and risky business. Understanding the impact of the decisions a consumer makes with regard to their retirement requires years of training and a deep knowledge of tens of thousands of pages of legislation.

It is logical to want to protect the consumer against making faulty decisions, and the government default is to do this with more legislation. It could be argued that a direct result of the complexity of the legislation around pensions is the need for detailed and well-trained advice, which itself has given rise to the MiFiD II and FAMR regulation (which will be just as complex).

Published on: 1/21/19, 6:32 PM

Ridesharing has exploded in popularity and seems to be the wave of the future, with San Francisco-based Uber having reportedly raised $2.8 billion. Property and casualty/general insurers are enthusiastic about the potential of new business, but some are wary about the complexities of creating a combined personal and commercial plan.

“There was so much uncertainty and risk surrounding rideshare at the start, it made sense that there weren’t a whole lot of insurance companies lining up to foot the bill.  In fact, as we saw, most insurance companies refused to cover drivers completely,” said Harry Campbell, rideshare driver and blogger, according to Mark Vallet of

That has changed, with many general insurers now deciding on the best way to underwrite the risks of personal policyholders using private vehicles on a for-hire basis. And some are working directly with the large ridesharing businesses (which are referred to as Transportation Network Companies, or TNCs).

Published on: 1/21/19, 6:30 PM

If industry sales projections come true, tens of thousands of amateurs will receive drones for Christmas. That may sound fun and exciting, but Justin Bachman in Bloomberg warns of the inevitable accidents:

All that amateurish swooping over houses and cars, spooking pets and dodging humans, will invariably lead to cracked windows and more than a few bloody injuries.

First come the toy drones; then the liability claims start flying.

It turns out that some insurers offer drone coverage. Allstate will cover drone damage to someone else’s property, while State Farm’s homeowner policies generally treat drone collisions like other accidents.

Published on: 1/21/19, 6:21 PM

McDonald’s became a fast food empire by embracing an innovative franchising model, successfully commoditizing tasty food and offering an efficient customer experience. But lately McDonald’s has been struggling, in part because the industry giant became complacent and didn’t stay ahead of consumer trends.

“Places like Chipotle, Panera, and Five Guys do what McDonald’s does not: They offer a simple menu, allow customization, ostensibly treat their employees better, and serve food that is (or is perceived as) healthier, fresher, or more ethically raised. Most importantly, this has allowed fast-casual to get its hooks into Millennials,” according to Adam Chandler, senior associate editor at The Atlantic.

Insurers instinctively understand this lesson. A survey by KPMG International confirmed what I have been hearing from customers and Sapiens management: insurers value innovation.

More than eight out of 10 respondents to the survey, which included 280 insurance industry executives across 20 countries, said they believe their organization’s future success will be closely related to their ability to innovate faster than competitors.

Published on: 1/21/19, 6:13 PM

The UK population is ageing. Data published by the ONS in 2015 show that the UK population of over 65s has grown by 47% in the last forty years to make up nearly 18% of the total. And the number of people aged 75 and over has increased by 89% in the same time period. The most common age at death was 86 for men and 89 for women in 2011–2013.

Assuming retirement is taken at 65, the average retiree has 18 to 20 years ahead of them. During this time they may go from good health to poor, or from complete independence to full time care. Exactly what will happen over the next two decades is uncertain. However, their retirement is unlikely to remain static and will be comprised of different phases, reflecting this time of great change in their life.

Published on: 1/21/19, 6:10 PM

With The Future of General Insurance event underway this is a good time to discuss self-driving cars, which will be a reality in no time. Google, Mercedes-Benz and Tesla have been testing autonomous cars globally, according to, with Volvo recently showcasing a Volvo XC70s travelling up to 70 kilometers per hour on an expressway in Australia. Apple also seems to be entering the autonomous arena.

Telsa CEO Elon Musk is quoted in the same article as saying he believes fully-autonomous cars are only a few years away. And Uber has announced its intention to build self-driving cars by partnering with Carnegie Mellon University at the new Uber Advanced Technologies Center in Pittsburgh.

And yet many property and casualty/general insurers aren’t preparing for this huge industry development, according to a survey by research firm KPMG. In “Automobile insurance in the era of autonomous vehicles,” a survey based on months of market research and analysis, only 29 percent of company leaders feel very knowledgeable about driverless vehicles.

Published on: 1/21/19, 6:06 PM

Data analytics has the potential to be the next big thing in reinsurance. The ability to consolidate reinsurance data into one centralized repository and perform business intelligence functions is already significantly improving carriers’ bottom lines.

While sophisticated data analytics tools are available, many insurance executives continue to wait on the sidelines when it comes to making the investment for analysis of their reinsurance data – even with the knowledge that reinsurance recoveries are one of the largest assets on their balance sheet.

Published on: 1/21/19, 6:03 PM

My previous blog post described how the leading C-level executives who attended Sapiens’ recent CxO Insurance Roundtable event, which I had the pleasure of hosting in Sydney, Australia, are saying “yes” to increased customer engagement and risk.

This follow-up blog post is focused on the new direction insurers are taking to capitalize on the opportunities presented by an Australian insurance market that is ripe for disruption. The 13 C-level participants – from business and IT, across both life and general insurance – enjoyed lunch, a lively discussion and some wine.

The roundtable discussion repeatedly returned to the difficulties between business and IT in many insurance organisations, as well as the struggles insurers are having in getting along with their antiquated legacy systems.

Published on: 1/21/19, 6:01 PM

“You don’t say ‘no,’” said one of Australia’s leading life insurer executives at Sapiens’ recent CxO Insurance Roundtable customer event, which I had the pleasure of hosting in Sydney, Australia.

She had been specifically asked how the IT department at her insurance company reacts when the business wants to push in a certain direction despite IT reservations, but her response seemed to represent the participants’ prevailing attitude on a number of important issues.

The 13 C-level executives (business and IT) from leaders in the life and general insurance markets across Australia and New Zealand – are saying “yes” to increased customer engagement, risk and organisational harmony, as well as new policy administration systems.

Published on: 1/21/19, 5:58 PM

Legacy IT systems are the largest cost that many organisations face today. This issue affects many markets – most obviously the banking and investment industries – with the insurance industry following suit.

The research firm Celent predicts that insurance IT spend is expected to be around $180 billion U.S. in 2016. They also predict that 60% of this number (or $108 billion) will be spent on legacy maintenance alone. To put that in perspective, the IT departments of the world’s insurers would rank as the 56th largest “nation” (GDP).

Published on: 1/21/19, 5:49 PM

There are two major reasons why it’s so difficult for the retirement services industry to modernize their technology: cost and risk.

The industry takes pride in its important work supporting generations as they move into retirement. And insiders are well aware that in order to continue to do so and remain competitive, they must maintain their status as both highly respected and financially sound institutions. I’ve found that providers are currently reassessing how to successfully balance these objectives as they look to drive positive outcomes to those they serve, as well as to the bottom line.

The infrastructure spend at most firms represents a significant corporate expense and in most cases is disproportionately applied to the modification or maintenance of legacy platforms in an effort to meet required compliance provisions. Capital investments are often prioritized to keep up with the competition over improvements related to efficiency, customer experience, or overall innovation.

Published on: 1/21/19, 5:46 PM

Wearables are prevalent in the insurance sphere, with 31 percent of insurance companies already using wearable technology for customer engagement. This has the potential to be wonderful for insurers. In addition to improving insurers’ decision-making and lowering their risk, wearables can be used to increase customer loyalty and strengthen insurers’ brands via popular apps, gamification and social media.

Published on: 1/21/19, 5:44 PM

The essential functionality required by preneed insurers represents a significant departure from the mainstream insurance market. Each line of business has essential functionality critical to the success of the operation. In some cases, functionality in the preneed market constitutes table stakes, while other functionalities represent key differentiators offering the insurer a competitive advantage. The following is a list of must-have qualities in a solution that will help insurers solve the preneed puzzle...

Published on: 1/21/19, 5:42 PM

Today’s preneed insurers are being hampered by the limitations of older technology. They’re confronted with a “no-win” dilemma. They can either:

  1. Limp along with their heavily customized but antiquated policy administration system, adding modest, incremental improvements that won’t do much to move the needle; or…
  2. Move forward with a new policy administration system, knowing that the customizations that were made in the legacy platform will have to be added to the new system to avoid a giant step backwards in functional capabilities and customer service.

While preneed insurers must grow their top line and reduce operating costs to compete in a niche industry, the second option can seem too time-consuming and risky. The inability to solve the above dilemma often means the de facto selection of the first option, which keeps the lights on, but doesn’t truly transform the operation. The ability to partner with a technology provider offering both a modern, policy administration system optimized for the preneed market, as well as expertise in preneed and proven implementation skills, would go a long way to resolving this dilemma for preneed insurers.

Published on: 1/21/19, 5:39 PM

I bumped into an industry colleague on the tube tonight who works for a Big Five consultancy and had just been on an ‘away day’. He said that if technology was mentioned once, it was mentioned at least twenty times. This happened at a services company, where people will typically seek to downplay the significance of technology.

Remember people, process and technology in that order? Recently I sat in on a webinar by a consultancy that was exhorting application service providers to create IP and dedicate a significant percentage of revenue to product development. Earlier in the day, I was talking to a business executive from a loss adjusting firm who realised the organisation needs a more flexible, cost effective platform for their rapidly growing TPA business.

Published on: 1/21/19, 5:36 PM

The Old Model Is Broken

There is a disability income insurance gap of approximately 750 billion euros in 13 European and Middle Eastern countries, according to an eye-opening report by the Swiss Re Group, a leading wholesale provider of reinsurance, insurance and other insurance-based forms of risk transfer.

“A sudden critical illness or disability can have serious financial consequences for the individuals and families affected. However, most Europeans do not have the financial protection in place to deal with such a shock…people in the 13 countries surveyed for the report would currently struggle to secure 40% income replacement in case of disability. Together with the witnessed trend of the welfare state’s gradual withdrawal of benefits, this is set to drop further,” according to the report.

Published on: 1/21/19, 5:32 PM

Anthony O’Donnell, executive editor of Insurance Innovation Reporter, posted an interesting piecerelatively recently about Generation Y’s improved satisfaction with auto insurance. He interviewed Valerie Monet, director of the insurance practice at J.D. Power, about the firm’s latest “U.S. Auto Insurance study.”

Auto insurance customer satisfaction has reached an all-time high in the U.S., according to J.D. Power, with satisfaction among Generation Y customers increasing significantly more than the satisfaction of the other generations.

Rising satisfaction in the U.S.

Monet notes that although part of the Generation Y rise in satisfaction can be attributed to better online servicing, there is still room for improvement among insurers – and it’s important to note that the study looked solely at auto insurance.

Published on: 1/21/19, 5:23 PM

As a child, I always rooted against basketball legend Earvin “Magic” Johnson. His Los Angeles Lakers were arch-enemies of my hometown Boston Celtics. I love what he has achieved since retiring from basketball, though.

His Magic Johnson Enterprises company, which invests in and strengthens under-served urban communities, recently bought a controlling stake (60 percent) in EquiTrust Life Insurance Co., creating the largest black-owned insurance company in America, according to L.A. Biz.

Johnson’s tweet following the acquisition of the Chicago-based distributor of fixed-rate and indexed annuities and life insurance captures the importance of the transaction...

Published on: 1/21/19, 5:19 PM

The insurance industry has been talking about omni-channel, the Internet of Things (IoT) and the entrance of mega-companies for a long time, but the numbers and recent events show it’s all finally happening. Sapiens’ NEW infographic explores the three big trends that are dominating the market and pushing insurers to customer-centricity, and then recommends six steps that will help them capitalize on today’s big opportunities. To view the infographic, please click here.

Published on: 1/21/19, 5:16 PM

The insurance industry has been talking and speculating about the potential of the Internet of Things (IoT) for a long time, but finally this new era is beginning to seriously change the market.

According to Insurance Networking News, Novarica looked at the IoT initiatives of 20 insurers and found that IoT is already impacting the carriers’ data collection, the customer/agent experience and pricing.

“At some point in time the entire value chain including product, underwriting, pricing, risk assessment, service and claims handling will all be impacted by IoT,” said Mitch Wein, vice president of research and consulting at Novarica.

“As these technologies evolve, there will be a reduction in cost to policyholders and insurers. Insurers should be actively monitoring the potential of IoT and considering how their core systems and processes will handle this additional wealth of data.”

Published on: 1/21/19, 5:13 PM

According to a recent report by Accenture, 63 percent of surveyed insurance executives believe thatwearable technologies will be widely adopted by the insurance industry within two years, and 31 percent say they are already using wearables to engage customers.

I can’t say I’m surprised by these statistics from the “Accenture Technology Vision for Insurance 2015” report. Sapiens’ life and health customers and prospective customers are increasingly asking how to plan for and leverage wearables, which will be owned by 33 percent of U.S. consumers by the end of 2017, when investigating appropriate insurance software systems.

The insurance industry has already started to run with this opportunity. Cigna, a global health insurance service, teamed with Samsung to jointly develop health and wellness-related features on the company’s mobile devices. And John Hancock Financial recently became the first U.S. insurer to offer discounts to policyholderswho wear Internet-connected fitness trackers.

Published on: 1/21/19, 5:08 PM

Most insurers today offer their customers multiple channels: customers can communicate with insurers via the contact center, online, social media and maybe a mobile application. But insurers are increasingly moving from a multi-channel approach to an omni-channel approach.

What does that mean? Aren’t multi-channel and omni-channel basically the same? In a word, no. Mark Breading, a partner and chief researcher at Strategy Meets Action (SMA), did a good job of differentiating the two in an article in Insurance & Technology...

Published on: 1/21/19, 5:02 PM

My previous blog post highlighted the rapidly increasing value expectations of insurance consumers – many of whom feel that their business should be as valued as that of a high net worth individual (HNWI). This post will take a look at service expectation when “the rubber meets the road” and a claim is lodged.

Twenty years ago, a pioneer of the Direct Insurance revolution worked out that the cost of servicing an incoming call is five times more than an outgoing call. I have no doubt that the cost differential is even higher now – it is evident that having customers chase for an update on a claim is a negative for all involved parties! The remedy is obvious: control the conversation, manage the client and exceed expectation.

Published on: 1/21/19, 4:58 PM

The Freedom and Choice in Retirement legislation is generating a lot of discussion and headlines, along with numerous recommendations and predictions about how this change will impact the retirement industry. Despite all the talk, many people in the industry are missing an important factor that may actually help them.

Most people seem to be focusing on three aspects of the impending legislation:

  • What will retirement products look like in the new world after April 2015?
  •  Is this the death of the annuity?
  • And how will the financially uninformed be advised on the choices that now face them?

Much of the conversation has focused on what the new products will look like and who pays for advice to the individual regarding which product is right for them. Here’s what isn’t happening so far:  a comprehensive discussion about how existing pension products will benefit from the freedoms allowed by the new legislation.

Published on: 1/21/19, 4:47 PM

Google officially rolled out its auto insurance comparison site in the state of California last week. With Google Compare, customers can instantly compare auto insurance plans via Google’s search engines and then complete a purchase. “MetLife Auto & Home, Mercury Insurance, Kemper Specialty, and 21st Century are among the 14 carriers launching on the platform,” according to an article by Nathan Golia in Insurance Networking News.

Google is already licensed in 26 American states to sell auto insurance, according to Reuters. And Google Compare has been operating in Britain for two years. The 14 carriers have decided it is in their best interest to collaborate with Google, who for the moment is acting as an aggregator (Google has partnered with CoverHound, another aggregator). These insurers are hoping that a partnership with the king of search and user analysis will boost sales.

Published on: 1/21/19, 4:43 PM

We are living in a world where service and value expectations are quickly rising. When speaking with friends and colleagues, it is clear that most of us feel more empowered and entitled than ever before. We all want, and even expect, to be treated like millionaires. We can think about how insurers should deal with this trend by analyzing how they currently treat high net worth individuals (HNWIs).

The rubber meets the road when a claim is lodged. I was at a conference a year or two ago when one of the speakers gave a good summary of the skills required to meet the expectations of a HNWI when a household claim occurs. In addition to being an insurance wizard familiar with the law, our claims expert must be knowledgeable in the fields of real estate, architecture, the latest computers and technologies, vintage automobiles, fine art, fashion and rare jewels, to name just a few areas.

Published on: 1/21/19, 4:24 PM

You’ve probably wondered why it has been so difficult for your organization to succeed with Generation Y (also known as “millennials”). Generation Y is clearly an important segment for insurance carriers of all types, especially in terms of the future. This demographic will represent 75% of the global workforce by 2025 and has an expected inheritance of more than $17.8 trillion.

And yet far too many members of Generation Y are either uninsured or under-insured. Solving this problem will be more challenging than winning the Super Mario Bros. Nintendo game that some Generation Y kids grew up playing. Convincing debt-ridden young adults to purchase insurance is difficult enough, but it becomes nearly impossible if insurance providers don’t take four specific steps.

Published on: 1/21/19, 4:19 PM

Things used to be simpler. All insurance carriers had to do was keep moving along their well-worn paths, providing customers with the same old traditional products and services. But now customers and agents challenge you with constantly changing service demands. They expect access from their mobile phones, email, online chats and social networks.

Published on: 1/21/19, 4:16 PM

Our last blog post discussed how organizational strategies do not always align with the time spans of the products produced to support those strategies in the life and pension industry. The issue of how to manage Closed Books business without compromising New Business strategy has been around for a decade, and organizations are unlikely to stop accumulating Closed Books in the near future, unfortunately.

Technology is accelerating the speed at which new products and new approaches to selling those products are required – today’s digital world is fundamentally different from the world of yesterday. Economically, consumers are looking for opportunities to invest their money, many of which will be provided by new insurance/investment products.

Published on: 1/21/19, 4:01 PM

One of the realities of the life and pension industry is that the time spans of organizational strategies do not always align with the time spans of the products produced to support those strategies.

The average tenure of a FTSE 350 CEO is around six years, but many insurance products are designed to last 30+ years. The clear conclusion is that the key strategy drivers within an insurance organization often move on before the products designed to support those strategies fully mature.

Published on: 1/21/19, 3:41 PM

“When it comes to reinsurance, it’s been a buyers’ market,” wrote Karlyn Carnahan, director of Celent’s insurance practice, in an interesting blog post last summer. Because carriers are in the driver’s seat, suggests Karlyn, they’ve been able to tailor reinsurance programs, without specific exposures. There is an increase in the number of carriers structuring complex programs, but for most insurance carriers, reinsurance is still managed by a small group comprised of only a few experts.

Published on: 1/21/19, 3:36 PM

Pawel Stefanski, value creation executive with IBM Global Insurance Industry, said insurers can’t continue to lag behind other industries when it comes to their digital transformation at the recently concluded Sapiens ALIS Conference in Boston. I can relate…

Published on: 1/21/19, 3:26 PM

What should insurance carriers consider when thinking about replacing core systems? I’ve always thought that ensuring full cooperation between IT and the business is crucial – without that synergy, IT will likely push for cutting-edge technology, even if it comes at the expense of functionality, while the business might not fully understand how to best position IT for success. But that’s not the whole picture…

Published on: 1/21/19, 3:14 PM

Not everyone shares my passion for the outdoors. I enjoy pushing myself during outdoor excursions, but I know people who are put off by the cost and perceived risk.

My previous blog post described how the retirement services industry hasn’t advanced technologically as much as comparable industries, such as the insurance industry. Two major reasons that explain this phenomenon are the two that I gave above: cost and risk.

The industry takes pride in its important work supporting generations as they move into retirement. And insiders are well aware that in order to continue to do so and remain competitive, they must maintain their status as both highly respected and financially sound institutions. I’ve found that providers are currently reassessing how to successfully balance these objectives as they look to drive positive outcomes to those they serve, as well as to the bottom line.

Published on: 1/21/19, 2:59 PM

September is often a time when people, especially students, finish reflecting on the past year and begin planning how the coming year will be a better one. If this type of reflection is aimed at the retirement services industry, students like me can uncover some areas ripe for improvement.

As I wrote in my opinion piece, Observations of an Industry Newcomer, I’ve spent the majority of my career in the global insurance technology sector, but not too long ago my focus expanded to include the U.S. retirement services industry.

Published on: 1/21/19, 2:45 PM