Archive for March, 2011

The Seven Deadly Sins of Insurance Project Management – Part 2

Saturday, March 26th, 2011

Last week in our blog post on insurance project management we discussed the background to why insurance projects fail and listed out the “seven deadly sins” to be avoided. Insurance projects are not fundamentally different from projects in other industries. Here we look at the first three of these points in more detail:

Mistaking “half-baked” ideas for insurance projects

In insurance companies, it is senior management who are charged with formulating business strategies that will lead to profitability and industry leadership. Hence there is an immense pressure on senior management in insurance companies to identify those opportunities that are aligned with these strategies and turn these opportunities into products or services that deliver profit and competitive advantage. It is very common for these business strategies and business objectives not to be properly communicated to the project management team. Many of these ” half-baked” ideas slip through and mutate into projects. Most of these projects do not have any clear business objectives and eventually fail.

Insurance companies need to filter out ” half-baked” ideas from viable insurance projects. As a minimum, the project management team should check if the opportunity is aligned with the business strategy, if it is economically/technically feasible, if it is compelling and viable, the consequences of not doing the project, and if the organisation has enough resources to pursue it.

Dictated deadlines for insurance projects

Missed deadlines for insurance projects are fairly endemic and most IT/business projects suffer from schedule delays. A root cause of this problem is management’s practice of specifying unrealistic and over-stretched targets including artificially tight deadlines. Some of the reasons for these deadlines are:

strategic pressures override risks to sanction projects
there is lack of confidence that the teams are able to develop realistic estimates
management has a desire to challenge the team to work harder
in order to get projects approved, project teams are set over-stretched targets that are unrealistic
targets are set with no real benchmarks for comparison
trade-offs between cost, quality, and schedule are neither in balance nor clear

Insurance projects are no different from projects in other industries and the project sponsor(s) is key to a successful insurance project. They must create an environment in which project managers/teams are open and transparent with estimates and not estimate to please. Otherwise, there will be constant disappointments as projects come in late, over budget, lack functionality, are of poor quality or indeed complete failures.

In addition, they need to put in place projects assurance activities that will increase their confidence in project targets. Examples of project assurance activities are:

estimates are checked against external/internal benchmarks.
estimates are reviewed by external entities such as peer reviews or external benchmarking organisations

Ineffective sponsorship and leadership

The project sponsor role is essential for insurance project success. Without a competent sponsor, insurance projects will suffer severely leading in most cases to failure. Some of the symptoms of ineffective sponsorship or leadership are:

project team roles and responsibilities are not clearly defined
the project management team is not aware of the business objectives of the project or the link between business strategy and the project
the project is not getting the right people at the right time
access to the sponsor by the project manager/team is very difficult
boundaries for decision-making or zone of empowerment of the project management team are not defined
project sponsor changes during the life of the project

Examples of the sponsor roles and responsibilities:

communicating the business objectives and the business strategy to the project management team
establishing the boundaries for decision-making or zone of empowerment of the project management team
ensuring the timely availability of the right resources

A review of the above list demonstrates that effective sponsorship requires specific skills and commitment. Being a project sponsor is not a spectator sport. It involves time, effort, and commitment.

Watch out for the concluding blog post in this three part series next week where we will complete the “seven deadly sins” which contribute to insurance project failure.

We have worked very successfully with some of our major clients to
deliver fairly complex business projects. Here at JMR Consulting UK Ltd we promote the use of PRINCE 2 best practices on all our projects. If you want advice or help with your projects please contact us.

To find out more about how we can help you with project management, please get in touch by using the contact form, sending an email to info@jmruk.com or calling us on 0845 052 0900.

Tags: insurance projects
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The Seven Deadly Sins of Insurance Project Management – Part 1

Sunday, March 20th, 2011

Project Management for Insurance – The Seven Deadly Sins

Aside from underwriting performance, claims management, quality of BI etc, an insurance company’s performance is dependent on the quality of the projects it undertakes and how well they are managed. However, the frequency of project failure is high in the insurance industry. In a recent post we blogged about the “Five Tips for General Insurance Projects Success” with five practical steps you can take to enhance your chances of project success. Here we continue along the theme of project management for insurance projects with a three part blog post which discusses insurance project failure and success.

What is project failure?

In asking what is insurance project failure, what causes it and how can it be prevented, we discuss seven key areas that are critical to managing insurance projects successfully.

Projects are used to implement organisational strategies and the future of an insurance company is greatly affected by the quality of the insurance projects it delivers. A top performing insurance company is a company that creates distinctive projects and delivers them with efficiency and effectiveness. However, what is happening in the real world of general insurance is different. The level of insurance project failure is quite high with some spectacular insurance project failures very close to home here in the UK. Some argue that the situation is getting worse.

There is generally a mix of short-term insurance project problems caused by missed deadlines and high costs but also much bigger long-term losses such as:

missed opportunities
failure to implement organisational strategies
loss of credibility
damages to staff morale and effectiveness

In this post we try to answer the following questions:

What are the top seven root causes of insurance project failures?
What can we do to prevent or minimise insurance project failures?

Project failure

Generally, insurance project failures are preventable and insurance project failures can be attributed to some basic root causes. We have identified seven key issue areas that drive towards project wrecks and these are listed below:

mistaking half-baked ideas for projects
dictated deadlines
ineffective sponsorship and leadership
under skilled project managers
not monitoring project vital signs
failure to deploy a sound project management methodology
not formulating a comprehensive project portfolio

Next week we will take each one of these root causes and discuss them in detail and offer some advice on what you can do to minimise the risk to your insurance projects.

To find out more about how we can help you with project management, please get in touch by using the contact form, sending an email to info@jmruk.com or calling us on 0845 052 0900.

Tags: insurance projects
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Social Media in Insurance – Governance Models are needed

Sunday, March 13th, 2011

Social Media for Insurance

Social media networks, such as Facebook, Twitter and LinkedIn are now mainstream business channels and represent extremely important new ways for insurance organisations to develop engaging and profitable relationships with their customers and suppliers. However, it is not without its risks. For an insurance businesses to leverage social media legally and profitably, insurance companies must establish a comprehensive strategy to govern social media interaction on the web.

Social Media Regulatory Problems & Risks

For instance, a bank or an insurance company could face regulatory penalties if an employee marketed or misrepresented the value of a potential transaction or investment on social networks. Likewise, if an insurance organisation employee defamed another fellow employee or a client on a social networking site, this could raise legal issues for the company.

Insurance companies need a Social Media Governance solution to monitor and protect themselves in what is an increasingly online world. New regulatory requirements for employees engaging with social media sites are now being launched. For example, the US-based Financial Industry Regulatory Authority (FINRA) requires member firms to supervise and archive content posted to social media for business purposes. The National Futures Association (NFA) in America is also developing rules associated with the use of social media. New regulations and compliance requirements for the use of social media by insurance companies will be developed on this side of the Atlantic in the not too distant future.

What is to be done for Insurance Companies in the UK?

For insurance companies in the UK, new Social Media Governance models will need to be developed and will require a mix of people, process and software solutions to help manage any business risks coming from employee use of social media platforms. For example, software is needed that will interface to existing insurance company computing platforms to recognise concepts, patterns and relationships in unstructured information. This understanding, which is particularly important for the conversational form of communication on social networks, can be applied on an insurance firm’s archiving, policy management, supervision, and analytics technologies to highlight potential problems. Any software solution will need to be supported by the right people and adequate processes.

Impact on Compliance

Compliance officers or lawyers at insurers will need to be able to use the policy management and analytics software in a Social Media Governance application to gain a real-time understanding of an insurance company’s compliance status. Dashboards are now common to summarise and present business information so new dashboards will need to be developed to combine data from all customer-facing channels, including email, audio, video, IM, web content, as well as social media like Facebook. Insurance companies need a comprehensive overview of compliance risks across all their communication channels.

Social Media Governance for Insurance – what will it look like?

A Social Media Governance process for an insurance company will need the ability to aggregate thousands of relevant news feeds, blogs, and social media sites. The Social Media Governance process will need to monitor content from employees who have logged in via company networks, as well as identify discussions from users operating outside of internal company networks. It will need to be able to:

undertake a conceptual search of all aggregated content
complete pre-programmed policy-based monitoring
make sure there is compliant archiving of regulated content
run advanced analytics such as clustering and visualisation tools
do escalation alerts and workflow management
reporting and trend analysis
produce executive dashboard presentations.

As discussed in great detail at the recent Celent seminar in London on Social Media and Digital for Insurance, social media is now a vital way to communicate and engage with insurance customers in a positive manner to grow your business. However, like every other customer-facing communication channel, regulated insurance companies need to govern social media interactions concerning the company, its products, services and employee behaviour.

To find out more about how we can help you with business compliance challenges and social media governance, please get in touch by using the contact form, sending an email to info@jmruk.com or calling us on 0845 052 0900.

Tags: Social Media Governance
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Solvency II-What you need to do-Part 2

Monday, March 7th, 2011

The Solvency II challenge for IT departments

This post follows on from our Solvency II Part One blog post from last week. Solvency II compliance requires time, budgeting and planning and Solvency II compliance will have a big impact on IT systems and IT people. Most of the current risk management systems and processes have evolved over time, been added to, have been developed on different platforms and with different technology. Therefore, many are not properly integrated and are unable to provide the full “end to end” transparency and auditability required for Solvency II compliance.

Recognising the need for collaboration early on we founded the Gain-Line partnership to pool our expertise with other companies with SII experience and expertise.

Solvency II compliance has a big impact on IT

This means that compliance with Solvency II will require a significant investment of time, money and people – this is especially true for the IT department who will be required to develop new tools, processes and procedures. It is reported (2010 SunGard study) that some IT departments are behind schedule in their Solvency II plans. In some cases this is because business teams have underestimated the required IT input or in other cases it is because, with competing demands for their time, IT has been slow to respond.

Solvency II compliance needs IT to deliver:

A well controlled, auditable IT environment to support enterprise-wide decision-making
A fully documented set of IT processes and process flows
An integrated enterprise risk management system that supports risk modeling for capital, assets, liabilities, liquidity, credit, market and insurance risk
Robust data governance and control measures to better manage the flow of information and support risk reporting
An enterprise-wide data warehouse to provide a full view of risk
Standardised extract/transform/load (ETL) processes and systems to guarantee the accuracy and relevancy of data
Powerful analytics tools to empower better informed risk-based decisions
A high-capacity platform to shorten reporting cycle times and accelerate the risk management process

These are not insignificant requirements and will test the resolve and capability of most IT departments. Solvency II compliance presents an opportunity to design and implement an integrated risk management strategy that goes beyond regulatory compliance.

CIOs need a plan of action for Solvency II compliance

There is no single, comprehensive solution designed specifically to help insurers with the transition. Therefore, CIOs need to create a plan of action that assesses the state of current enterprise applications, identifies functionality gaps and creates an implementation plan for the needed systems and infrastructure upgrades.

To find out more about how JMR Consulting UK Ltd and Magellan Consultancy Services working together can provide a safe pair of hands for your Solvency II compliance programme, please get in touch by using the contact form, sending an email to info@jmruk.com or calling us on 0845 052 0900.

Tags: Solvency II
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