Conference 35.181::insurance

                 ORGANIZATIONAL MEETING OF THE INSIGHT GROUP



Digital has been working closely with Dr. Michael Hammer in the creation and 
support of a new service for the insurance industry known as the Insight 
Group. The Insight Group is designed to provide a cooperative study service 
which examines business issues and evaluates the way that technology will 
impact on that issue.

On June 29, the initial organizational meeting for the Insight Group, chaired 
by DR. Hammer, was held in the Mariott Hotel in Cambridge (a list of 
participants is attached). The purpose of the meeting was to shape the 
Insight Service to meet the needs of potential participants and to gain a 
sense of the interest in the service. During the course of the meeting the 
nature of the proposed service changed somewhat, broadening and deepening the 
implications of the study work.

It was agreed that a framework for a study report on a subject of interest 
would be:

        I.      Business Context

        II.     Technical capabilities, directions and architectures

        III.    Assessments\ possible scenarios\ strategies

        IV.     Business and organizational implications

At the conclusion of the meeting, the participants voted on the business 
issues that they would most like to have studied, with the following 
"straw vote" result (each company had 3 votes, and some companies did not use 
all three):

        RANK        #VOTES                      TOPIC

        1           14  Customer Service
        2.          9   Data Capture (including image, OCR, EDI etc.)
        3.          6   Systems information as a product
        4.          5   Point of Sale issues
        5.          5.  Relationship Management (Customer orientation)
        6.          1   Field management and organization
        7.          1   Changes in products and services
        8.          0   Risk Management
        9.          0   Product Life Cycle Changes


Discussion with a number of the participants after the meeting closed 
reflected a high degree of enthusiasm. My assessment is that within a month 
the group will have reached its initial subscription limit (25 company 
members).

The effect of this successful meeting, and the expectation that the Insight 
Group will provide a useful, and unique, service to the insurance industry 
can be expected to enhance Digital's image as a company committed to helping 
the insurance industry solve its problems.



                 INSIGHT ORGANIZATIONAL MEETING PARTICIPANTS



                                 JUNE 29, 1988


A.A.L. Insurance Company                John Hancock Financial Services
Mr. Steve Weber                         Ms. Diane Smigel
Second Vice President                   Second Vice President

Alexander & Alexander                   Lincoln National Corporation
Mr. Jerry Bland                         Mr. Michael Edington
Director of Automation                  Vice President

Alexander & Alexander                   Metropolitian Life Insurance Co. 
Mr. Anthony Russo                       Mr. James Bremer
Vice President of Information Services  Vice President

Chubb and Son, Inc.                     Metropolitian Life Insurance Company
Mr. John Roblin Ms.                     Fran Smyth
Managing Director                       Assistant Vice President

CIGNA Corporation                       Mutual Benefit Life
Ms. Pat Olechna Mr.                     Thomas Garrihy
Manager of User Support                 Vice President

CIGNA Corporation                       Mutual of Omaha
Mr. Rich Rosania                        Mr. Vern Langel
Vice President of P/C Strategy          Vice President

General American Life Insurance Co.     The Principal Financial Group
Mr. Chris Simonds                       Mr. Robert Meisenheimer
Second Vice President                   Vice President

Hartford Insurance Group                Prudential Life Insurance Company
Mr. Willaim Cooke                       Mr. John Schieman
Senior Business Architect               Vice President

Hartford Insurance Group                The St. Paul Companies
Mr. William Cutler                      Mr. Denny Dolan
Assistant Secretary     

Hartford Insurance Group                UNUM Life Insurance Company
Mr. Ray Howell                          Mr. George Thomas
Assistant Vice President                Vice President

Johnson & Higgins
Mr. Richard J. Swanson
Vice President

                       OTHER INTERESTED COMPANIES



        Aetna Life and Casualty
        AIG
        Allstate Insurance
        Connecticut Mutual Life Insurance Company
        Crum and Forster
        Equitable Life Assurance Society
        Guy Carpenter (Marsh McLennan)
        Kemper Insurance
        Massachusetts Mutual Life Insurance
        MONY Financial Services
        Travelers Insurnace Company
        Wausau Insurance Companies
        Willis Faber






    
    
    

The following document (which has been distributed to interested 
companies) is the latest statement of plans for the Insight group. 
Note the topics that are to be addressed during the first year of 
operation - they tie in well with our messages and plans.


Regards


John Baker


          THE FOLLOWING DOCUMENT WAS PREPARED BY MIKE HAMMER

                   AS A RESULT OF DISCUSSIONS HELD

            DURING THE FIRST MEETING OF THE INSIGHT GROUP.


                            INSIGHT UPDATE


INTRODUCTION

This note is an update on the Insight research service, and is being 
sent to Insight member companies and to others interested in the 
service.  It serves as a supplement to the preliminary Insight 
prospectus, dated April 1988.

Over the last six weeks, we have discussed the design of and plans for 
the Insight service with numerous firms, seeking their inputs 
regarding the structure of the service and the selection of research 
topics for the first year.  These discussions have been extremely 
fruitful and have reflected a strong consensus among the companies 
planning to participate in Insight.  Below, we summarize this 
consensus, first with regard to the orientation and structure of 
Insight research as a whole, then concerning the specific research 
topics for the upcoming year, and finally with respect to the 
structure and organization of the service as a whole.


RESEARCH STYLE AND APPROACH

Insight members have expressed a strong preference that Insight 
research be business-driven.  That is, Insight research will not take 
a technology as the jumping-off point and focus the research on the 
potential and future of the technology.  Rather, each research study 
will focus on a particular business issue that is already confronting 
the insurance industry and that looms even larger on the horizon.  The 
emphasis of the study will then be on how a variety of emerging 
information technologies may impact this business issue, and how the 
individual company and the industry as a whole will have to adapt to 
the changes resulting from application of these technologies to the 
business issue in question.  To be sure, a consideration of 
technologies will be central to the Insight enterprise, but they will 
be considered in the context of business changes and imperatives.  
Indeed, the initial component of each study will consist of an 
examination of the issues surrounding the fundamental business 
question.  In many cases, there may not be unanimity in the industry 
regarding the nature of the business problem and the nature of 
solutions to it; it would be premature to examine technological 
solutions without a thorough appreciation for the dimensions of the 
problem.  Moreover, as we have repeatedly seen in many environments, 
the availability of new technological capabilities often redefines the 
nature of the problem.  For example, the contemporary debate regarding 
distribution channels is often conducted in terms of obtaining 
leverage over brokers and independent agents; however, in the context 
of an emerging network marketplace, a more appropriate emphasis might 
be on opportunities for compressing the channel and increasing direct 
interactions with prospects and insureds.

As a strawman, then, we see each Insight study having a canonical 
structure, with four major constituent phases:

I. The business context. An examination of the underlying business 
issue that is the focus of the research, and of the driving forces 
affecting it.  This part of the research will be heavily based on 
inputs from senior managers and planners at the member companies.  The 
information sought here will not be about confidential business plans, 
but about members' perspectives on the underlying issue and the 
alternative strategies currently available for addressing it.  We will 
rely heavily on inputs from sponsor companies in conducting this 
analysis; time and resources will not permit us to conduct firsthand 
field research on the underlying business issues.  It will be far more 
efficient for us to build on the collective work already done by 
member companies.  The results of this phase will consist of an 
analysis of the issue and the driving forces; it is not our intention 
to take sides in major debates raging in the industry, but to lay out 
the alternatives and the assumptions on which they are based.

II. Technology capabilities and directions. We will then conduct a 
review of a range of emerging technologies that hold promise for 
having a major impact on the business issue under examination.  Our 
goal here is to provide a value-added analysis and evaluation that 
goes beyond the kinds of product/vendor surveys that are readily 
available from many sources.  To that end, and in the interests of 
efficiency, we will use such published studies and members' own 
researches as initial data.  We will then add our own assessments to 
this information, based on our additional researches as well as on 
discussions with other knowledgeable parties.  The output of this 
phase of the research will be a projected trajectory for the 
capabilities and characteristics of the relevant technologies.

III. Strategies and scenarios. In the third phase of the research, we 
will consider the potential application of the technologies studied in 
phase II to the business concerns analyzed in phase I.  It is here, 
for example, that we would come to grips with how telecommunications 
standards are likely to affect insurance industry distribution 
channels.  We will project how the emerging technology capabilities 
can be used to address the basic business issues under consideration.  
We will describe how the technology could be applied in the area, what 
the evolution path is likely to be, and how successful implementation 
can be achieved.  This will lead to a series of action-oriented 
recommendations for member companies.

In most cases, we are likely to express the results of this phase of 
the research in terms of a series of alternative scenarios.  We do not 
expect to develop a monopoly on wisdom with regard to the complex 
issues we will investigate, and so do not want to put all our chips on 
a single alternative.  Reasonable people may disagree with some of our 
analyses and conclusions while agreeing with others, and we want to 
provide them with guidelines for action as well.  Moreover, Insight 
member companies represent a highly diverse set of organizations, in 
terms of their markets, products, and most importantly their business 
strategies and organizational cultures.  It is unlikely that the same 
course of action will be appropriate for every member company.  
Consequently, it is our intention to offer a series of scenarios and 
associated action programs, so that each member can select the one 
that most closely matches their own beliefs and strategy.

IV. Implications and consequences. In the final phase of each research 
project, we will examine how the developments that we foresee or 
recommend will affect how insurance companies are organized and 
managed.  In this phase, we will consider such issues as the likely 
effects on job and role definitions, human resource requirements, 
management responsibilities, organizational boundaries and structure, 
process designs and flows, technology architectures, roles and 
responsibilities of the I/S organization and its management team, and 
the like.  In short, we will provide our assessment of the question, 
"How will things be different, and how will we have to work 
differently, if these developments do in fact come about?" Our goal 
here is to sensitize member companies to the issues that they are 
likely to face as technology is employed to address the business 
problem under consideration, so that they may begin now to prepare for 
the future; we will also provide recommended guidelines for managing 
in this emerging environment, as a starting point for members to 
develop their own policies and plans.

Insight research projects will be conducted over a twelve-month 
period, with the emphasis in the first six months on phases I and II, 
and in the second half on III and IV.  At a conference halfway through 
the research, we will present our phase I and II analyses for member 
discussion and feedback, and outline preliminary views on the latter 
two phases.  At the end of the research cycle, we will present the 
conclusions of phases III and IV, with final reports and other 
deliverables to follow.


INITIAL RESEARCH TOPICS

In our discussions with participating companies, a wide range of 
potential research topics were raised, but two topics in particular 
emerged as of great interest to virtually all the companies; the 
impacts of information technology on customer service, and the 
potentials for using technology to improve information capture and  
movement.  Summaries of these topics follow.


IMPROVING CUSTOMER SERVICE THROUGH INFORMATION TECHNOLOGY

Major insurance firms today find themselves facing a Hobson's choice.  
In a market characterized by virtual commoditization of many products, 
service becomes the essential basis for differentiation and for 
building a long-term relationship with customers.  However, service is 
labor-intensive and very costly.  But aggressive price competition 
from new entrants and specialty providers has given cost control new 
urgency; moreover, with the emerging labor shortages afflicting many 
parts of the country (especially in the Northeast), competent service 
representatives are getting harder and harder to find at any 
affordable price.  Given this dilemma, many companies look to 
information technology to offer a way out.  The basic premise is that 
through advanced technology, some service providing can be automated, 
some can be delegated to less skilled (and less expensive) personnel, 
some can be offloaded onto the customer, and some can be enhanced to 
provide a basis for competitive advantage.  The technologies being 
considered to enable this are various, and range from interactive 
videodisk-based kiosk systems to voice response and expert systems.  
The scenarios envisioned for their use include allowing customers to 
access their own files and supporting software in order to resolve 
many questions themselves; enhancing the capabilities of service 
representatives with systems that augment their skills, making them 
both more efficient and more effective; and placing systems in 
customer premises to provide them with assistance in resolving their 
own problems.

As indicated above, we intend to address this topic from a 
business-oriented perspective.  That is, we will begin with an 
examination of the contemporary forces shaping the "service problem".  
Is there indeed a need to increase and improve service, or will 
customers prefer a combination of lower cost and lower service no 
matter what?  Will changing demographics and customer characteristics 
impact the service requirement?  What kinds of service will it be 
important to provide, to what kinds of customers?  It is with an 
examination of such questions that we will begin.  This will be 
followed by a review of a selected set of relevant technologies, and 
the delineation of a series of alternative business/technology 
strategies in the service arena.  In the final phase, we will consider 
such issues as managing customer expectations, training and developing 
a new generation of service personnel, integrating the new 
technologies into existing frameworks, and the like.


INFORMATION FLOW, INFORMATION FLOAT, AND INFORMATION MANAGEMENT

It is scarcely a secret that insurance companies are awash in 
information.  This information takes many forms and originates from 
many sources.  However, most companies do not have effective control 
over this information, and they devote far too much energy and money 
to manipulating it.  The costs of recording, transmitting, storing, 
entering, re-entering, and retrieving all this information are 
astronomical and are growing at a frightening pace.  What is worse, 
even with all the costs, the end result is often unsatisfactory.  
Information is not up to date, it is not usable, it is not available 
to people who need it at the time that they do.  Information float 
(the delay from the time information is created from the time that it 
is available to those who need it) has become a key impediment to 
improved performance in many organizations.

Some important technologies, now becoming viable, hold out the promise 
of helping us do something about the information management problem.  
The most prominent of these are image technology (for example) simply 
as a displacement for file cabinet and microfiche.  Such a narrow 
perspective overlooks the transformational potential of these 
technologies, to change the ways in which business processes are 
structured and in which organizations communicate and interact.  Most 
of the information that insurance companies need to manage does not 
originate within the four walls of the home office.  It comes from 
customers, from the field, from third parties.  Our goal cannot be 
limited to finding more expeditious ways of coping with the 
information once we have received it, but must extend to the impacts 
of technology on the entire process of information acquisition, 
dissemination, and use.  That is the perspective we will employ in 
this project.

The initial step of this research will focus on dimensioning the 
nature of the information problem and its future.  How will changing 
governmental regulations and market requirements change the kinds of 
information we must manage and how we must use it?  How will the 
evolution of company structure and attendant centralization or 
decentralization affect the magnitude of the requirement?  Where will 
information originate, what characteristics will it have, where will 
it need to be available and for what purposes?  After a consideration 
of such issues and the underlying technologies, we will outline 
implementation scenarios under a variety of business /technology 
assumptions.  In this context, we plan to give special consideration 
to the questions of timing and inter-organizational relationships.  
For example, image technology has been on the verge of success for a 
good many years now, but has yet to live up to its expectations.  Why?  
When will this change?  And how will new methods of acquiring and 
distributing affect the ways in which the organizations acquiring and 
using it coordinate and interact?  Finally, we will conclude with a 
consideration of how jobs and processes will change if paper-based 
information indeed begins to fade from view.  For example, when 
process structure is no longer determined and limited by the necessity 
of transmitting and handling physical files, will it be possible to 
realize the kinds of compressed process designs that many have 
envisioned?  And if so, how will that change the roles and skill 
requirements of the people performing the processes?  For example, 
with immediate access to multiple information sources in electronic 
form, will the mechanical aspects of jobs be so reduced as to enable 
concentration on the substance of the work and thereby require more 
highly skilled individuals?  It is with an examination of questions 
such as these that we will conclude this study.


STRUCTURE AND SCHEDULE

As described above, each Insight research study will be conducted over 
a twelve month period, with interim results on phases I and II 
presented after six months.  A new project will begin every six 
months, so that at each semi-annual meeting there will be an interim 
report on one project and a final report on another.  These 
semi-annual meetings will each be two days in duration.  In addition 
to these sessions, there will be one day workshops held twice a year 
(between the major meetings), to proved members with the opportunity 
to exchange experiences and ideas on various topics of common 
interest.  Part of the semi-annual meetings will also be devoted to 
such open forum discussions.

To accommodate member schedules, initial memberships in the Insight 
service will extend from October 1, 1988 to September 30, 1989.  The 
first workshop will be held in early 1989 and the first research 
conference in mid-year.  Member companies for this period will receive 
all materials associated with the two research projects described 
above.


    

The following eleven companies are now confirmed participants:

	1.  Mutual of Omaha
	2.  Prudential
	3.  Principal Financial
	4.  Mutual Benefit
	5.  John Hancock
	6.  Money
    	7.  WAUSAU
	8.  General American
	9.  Alexander & Alexander
	10. Cigna
	11. Lincoln National
	
We expect others to sign up in the near future.
    

The following eleven companies are now confirmed participants:

	1.  Mutual of Omaha
	2.  Prudential
	3.  Principal Financial
	4.  Mutual Benefit
	5.  John Hancock
	6.  Money
	7.  WAUSAU
	8.  General American
	9.  Alexander & Alexander
	10. Cigna
	11. Lincoln National
	
We expect others to sign up in the near future.
    

                          NOTES ON 11/23/88 MEETING

                           WITH DR. HAMMER ON THE

                               INSIGHT SERVICE


On November 23 1988, a meeting was held with with Dr. Mike Hammer to review 
the progress of the Insight service. 

The purpose of this note is to report on the highlights of that meeting.

1. Insight Membership

	The process of securing members for the Insight group has taken 
        longer than was originally anticipated, but is now approaching 
        completion. The following 14 companies have executed the formal 
        enrollment process for the Insight Service:

	
	.	Mutual of Omaha
	.	Mutual Benefit
	.	Principal Financial
	.	Mutual of New York
	.	Wausau
	.	General American
	.	Prudential
	.	Alexander & Alexander
	.	Lincoln Life
	.	John Hancock
	.	Hartford insurance group
	.	Cigna
	.	Metropolitan
	.	Johnson & Higgins


	A number of other companies have expressed strong interest, but have 
        not yet formalized the relationship.

2.      Next Meeting


	The next meeting of the Insight Group is tentatively scheduled for 
        February 1989. The precise date is uncertain.


3.      Study Topic

	During the first meeting of the Insight group, there was a clear 
        focus on "Customer Service" as a broad issue that warranted immediate 
        study. Based on recent events in the industry, a change in topic has 
        been recommended. The new topic for the first study is "Information 
        Management & Image Integration", which is expected to include 
        examination of work flow control, management systems and processes, 
        process redesign, and the ways that Image can effectively be 
        integrated into operations. 

	Dr. Hammer is currently developing plans and identifying personnel to 
        undertake this study, and anticipates that an initial report on the 
        study framework will be discussed in the February meeting.  Needless 
        to say, we are very pleased with this selection since it represents 
        an area of substantial Digital interest and strength.
    

 As you are aware, we have been working with Mike Hammer as a sponsor of the 
 Insight program that he was developing. Recently, Dr. Hammer concluded that, 
 for a number of reasons, he was unable to make the program work as had been 
 proposed, and sent the attached letter to the 15 companies that had made a 
 commitment to subscribe.
 
 As a supporter of the Insight concept and program we are naturally 
 disappointed. We are presently contacting some of the subscriber 
 organizations to identify the characteristics of the program that they found 
 attractive. If we find that there is strong industry interest in pursuing a 
 similar service with a different consulting company, work may be undertaken 
 to reposition and revive the effort.
 
 In the meantime, you should abstain from use of the program as an example of 
 our commitment to the insurance industry.
 
 Regards
 
 
 
 John Baker
 

         
                   LETTER FROM MIKE HAMMER TO COMPANIES WHO
         
                        ENROLLED IN THE INSIGHT PROGRAM
         
              						  May 30, 1989
         
         
         
         
         Name 
         Title
         Address
         City, State  Zip
         
         Dear . . . :
         
              I regret to inform you that we will not be able to offer 
         the Insight research service as we had previously hoped.  The 
         primary reason for this is that I have been unable to retain 
         the level of staff for the program that I believe it would 
         require.  I have interviewed numerous candidates over the 
         last several months, but without success.  The kind of 
         individual I have been looking for - sophisticated both in 
         the insurance industry and in information technology, and 
         possessed of maturity and judgment - has been extremely 
         difficult to identify; and when identified, was either 
         unavailable or unaffordable.  As you can imagine, this has 
         been a source of great frustration to me.  My vision for 
         Insight was that it would offer sponsors high value, a low 
         price, and a small group setting.  In retrospect, it may have 
         been unrealistic to try to meet all these objectives 
         simultaneously.
         
              Needless to say, I am most disappointed by this outcome, 
         and I apologize for any inconvenience that it has caused you.  
         However, I am extremely grateful to DEC for their support, 
         and to you for your encouragement and interest.  I do hope 
         that we will have the opportunity to work together in some 
         other context in the near future.  Please feel free to 
         contact me if you have any questions or if I can help you in 
         any way,
         
              Very truly yours,
         
         
         
         
              Michael Hammer
              MH/krm
         
         
         
         
         
    

    If the man is telling the truth and the only reason for discontinuing
    this programme is availability of quality staff, can we not consider
    taking over the programme and continue it as a Digital initiative??
    
    Surely the one thing we do have is the right calibre and level of
    insurance consultants in Digital.  What is needed is a commitment
    to the investment but if we are really serious about the insurance
    market place ...................... 
    
    M.
    

You have a point. However, one of the key requirements that potential 
participants set was that the service be independent. From their standpoint, 
a Digital sponsored, staffed, funded and driven consulting service is hardly 
likely to be seen as independent!

    

     
       >  However, one of the key requirements that potential
       >  participants set was that the service be independent.
       >  From their standpoint, a Digital sponsored, staffed, 
       >  funded and driven consulting service is hardly 
       >  likely to be seen as independent!
       
    Independent of what, John ?
    
    I don't want to labour this point as I think it's a bit acedemic
    anyway (because we're obviously not going to pick up the reins).
    
    It's just that I get a bit upset when we get so defensive over our
    ability to offer independent consultancy. Why cannot our advice
    be valid just because we sell computers ? Surely, that is a point
    in favour of our ability to understand the technology.
    
    As long as we are honest in where our interest lies (i.e R&D, future
    marketing direction, desire to serve the industry) I personally
    have no problem in offering sound technical and business consultancy
    to an industry on a generic basis. We're not selling them VAXes.
    We are exploring, jointly, technology trends and the associated
    impact on a particular industry.
    
    (FLAME OFF !), 
    
    Best regards. Keep the good work up.
    
    M.
    
    

    I know we're in danger of going off at a tangent, but I think the
    last two entries lead into a major issue for Digital. If we accept
    that we have the heavyweight consultants (how's the diet going,
    Mike?)- and that is a big if - we still have to achieve independent
    status in the eyes of the customer!
    
    OF COURSE we do a good, professional job, and just like the FSA
    tells us, we get to know our customers and give best advice &
    execution. BUT WE ARE TIED AGENTS! We are not here to recommend
    IBM.  And the customers know this, and often like to go to the
    "independent" adviser. 
    
    So, the obstacle we have to overcome is to get the consultancy service
    accepted, when the customer believes that it is an early commitment
    to choice of box supplier - before the requirements are defined,
    even. Its a long, slow business, building up credibility. Other
    thoughts, experiences?
     
    
    Gordon.
    

    There is a model which may be useful.  DECUS.  True, DECUS is a
    technology oriented organization; however, it is totally independent
    of Digital and has been for over 20 years.  We started it.  We love
    it.  We encourage it.  But we are not it.
    
    Another example is Digital Press.  Here we have even set up a totally
    independent editorial board of industry experts to review manuscripts
    prior to publication to ensure the validity of the material being
    offered.
    
    Point is, there are a number of examples where we, Digital, have
    successfully in our eyes and in the eyes of our audiences, put together
    efforts which could have been/viewed as self-serving which were
    neither and which, therefore, served the interests of our customers
    and ourselves to equal value levels.
    
    Go for it!
    
    Regards,
    
    Lee