This white paper discusses how leading insurance companies are transforming their operations for the 21st century by leveraging new technologies. It explores how insurance executives are investing in enabling new systems to take advantage of opportunities in an increasingly global insurance industry and address impediments from legacy systems. The paper provides insights from interviews with technology executives on how insurers are aligning IT and business strategies, standardizing technologies, and focusing on customer management through analytics and improved channels to create platforms for success in the future.
We interview Charles Armstrong, CEO of social technology provider and consultancy Trampoline Systems on decentralisation and its impact on future organisational design.
This document discusses whether Europe can become a global leader in innovation. While Europe has pioneered many technologies, it has struggled to commercialize them, with companies in other regions dominating markets like consumer internet, mobile operating systems, and networking equipment. For Europe to succeed with new digital technologies like AI, it will need to keep talent from moving elsewhere, increase funding throughout the innovation process, overcome market fragmentation, and develop its own strengths in collaboration and industrial sectors rather than mimicking other models. Reasons for optimism include Europe's skilled workforce and potential to leverage data from public services.
The document discusses current trends in strategic management. It covers trends in the external business environment including the third industrial revolution driven by digital technologies, societal pressures on businesses to be more socially responsible, and the decline of public corporations as more go private. It also discusses new directions in strategic thinking beyond just cost cutting and shareholder value, including a return to fundamentals of profitability and accessing more complex sources of competitive advantage.
The Global ICT 50: The Supply Side of DigitizationFlorian Gröne
For the top 50 companies providing IT and telecom hardware, software, and services, the world is changing dramatically. How these suppliers respond will transform the world for the rest of us. Based on an analysis of the four factors determining success for digital providers, this article shows why the four different supplier categories—hardware and infrastructure companies, software and Internet companies, IT service providers, and telecom operators—have different growth trajectories and competitive prospects.
The document provides an overview of the European startup ecosystem and its progress in recent years. It notes that Europe has closed the gap with Silicon Valley in terms of startup formation and venture capital-backed exits. However, it will be critical to maintain this momentum to remain relevant globally. A new public data platform called EuropeanStartups.co will be launched in 2020 to provide data and intelligence to help stakeholders and inform policymaking. The initiative aims to showcase strengths and address weaknesses to help the ecosystem weather the current COVID-19 crisis and emerge stronger.
We interview Charles Armstrong, CEO of social technology provider and consultancy Trampoline Systems on decentralisation and its impact on future organisational design.
This document discusses whether Europe can become a global leader in innovation. While Europe has pioneered many technologies, it has struggled to commercialize them, with companies in other regions dominating markets like consumer internet, mobile operating systems, and networking equipment. For Europe to succeed with new digital technologies like AI, it will need to keep talent from moving elsewhere, increase funding throughout the innovation process, overcome market fragmentation, and develop its own strengths in collaboration and industrial sectors rather than mimicking other models. Reasons for optimism include Europe's skilled workforce and potential to leverage data from public services.
The document discusses current trends in strategic management. It covers trends in the external business environment including the third industrial revolution driven by digital technologies, societal pressures on businesses to be more socially responsible, and the decline of public corporations as more go private. It also discusses new directions in strategic thinking beyond just cost cutting and shareholder value, including a return to fundamentals of profitability and accessing more complex sources of competitive advantage.
The Global ICT 50: The Supply Side of DigitizationFlorian Gröne
For the top 50 companies providing IT and telecom hardware, software, and services, the world is changing dramatically. How these suppliers respond will transform the world for the rest of us. Based on an analysis of the four factors determining success for digital providers, this article shows why the four different supplier categories—hardware and infrastructure companies, software and Internet companies, IT service providers, and telecom operators—have different growth trajectories and competitive prospects.
The document provides an overview of the European startup ecosystem and its progress in recent years. It notes that Europe has closed the gap with Silicon Valley in terms of startup formation and venture capital-backed exits. However, it will be critical to maintain this momentum to remain relevant globally. A new public data platform called EuropeanStartups.co will be launched in 2020 to provide data and intelligence to help stakeholders and inform policymaking. The initiative aims to showcase strengths and address weaknesses to help the ecosystem weather the current COVID-19 crisis and emerge stronger.
This document discusses the history and use of the "no comment" response in crisis communication. It traces the origins of "no comment" back to the 17th century with the advent of print media. Over time, "no comment" evolved from a clear statement to a strategy of subterfuge or delay. While traditionally taught as something to avoid, the document argues that "no comment" may be a viable strategy in some contexts, such as other cultures where silence is more accepted, or when minor issues could blow over. It concludes that "no comment" should be considered as a possible crisis communication tool rather than an absolute to never use.
Thales of Miletus proved that any triangle inscribed in a semicircle will be a right triangle. The document then describes two triangles, ABC and DEC, inscribed in two concentric circles with radii in a 1:2 ratio. It provides formulas to calculate the altitudes of the triangles based on the radii, with both triangles having altitudes at 1/4 the length of their bases.
How to create a platform for the 21st century insurance firmMarcel Nickler
nsurance executives in many ways must feel like the proverbial kid in a candy shop. Aging populations in Western nations, deregulation of key markets, spectacular growth of the middle class in Asia and consumers embracing the use of new technologies are among the major trends creating huge growth opportunities for insurance companies—at least for those that can scale to take advantage.
I nostri intervistati si aspettano addirittura un nuovo tipo di
entità assicurativa emergerà entro il prossimo decennio,
come l'Internet delle cose, l'intelligenza artificiale
e blockchain convergono per creare smart, in tempo reale
soluzioni assicurative. Quasi sette su dieci
(69 per cento) ritiene che l'assicurazione verrà nuovamente intermediata
algoritmicamente a intervalli frequenti con un nuovo stile
di aggregatore assicurativo e il 91% si aspetta
questo avverrà entro un periodo di 15 anni.
Four technology super trends and their impact on banking: digital society, big data, everithing joins up, integrity and security.
Customer: convinience, safety, personalization
This document discusses the history and use of the "no comment" response in crisis communication. It traces the origins of "no comment" back to the 17th century with the advent of print media. Over time, "no comment" evolved from a clear statement to a strategy of subterfuge or delay. While traditionally taught as something to avoid, the document argues that "no comment" may be a viable strategy in some contexts, such as other cultures where silence is more accepted, or when minor issues could blow over. It concludes that "no comment" should be considered as a possible crisis communication tool rather than an absolute to never use.
Thales of Miletus proved that any triangle inscribed in a semicircle will be a right triangle. The document then describes two triangles, ABC and DEC, inscribed in two concentric circles with radii in a 1:2 ratio. It provides formulas to calculate the altitudes of the triangles based on the radii, with both triangles having altitudes at 1/4 the length of their bases.
How to create a platform for the 21st century insurance firmMarcel Nickler
nsurance executives in many ways must feel like the proverbial kid in a candy shop. Aging populations in Western nations, deregulation of key markets, spectacular growth of the middle class in Asia and consumers embracing the use of new technologies are among the major trends creating huge growth opportunities for insurance companies—at least for those that can scale to take advantage.
I nostri intervistati si aspettano addirittura un nuovo tipo di
entità assicurativa emergerà entro il prossimo decennio,
come l'Internet delle cose, l'intelligenza artificiale
e blockchain convergono per creare smart, in tempo reale
soluzioni assicurative. Quasi sette su dieci
(69 per cento) ritiene che l'assicurazione verrà nuovamente intermediata
algoritmicamente a intervalli frequenti con un nuovo stile
di aggregatore assicurativo e il 91% si aspetta
questo avverrà entro un periodo di 15 anni.
Four technology super trends and their impact on banking: digital society, big data, everithing joins up, integrity and security.
Customer: convinience, safety, personalization
The insurance industry has evolved over centuries from early forms of risk-sharing in ancient times to the modern insurance model that emerged in the late 19th century. The document outlines three eras of the insurance industry: Insurance 1.0 referred to analog insurance companies of the 20th century; Insurance 2.0 saw insurers adopt digital tools and the internet but still operate similar business models; Insurance 3.0 calls for insurers to fully embrace digital technologies and transform their business models to focus on customer needs in today's digital world. The industry now faces pressures to change as customer expectations have risen and new competitors have entered the market.
This document discusses the evolution of the insurance industry from Insurance 1.0 to Insurance 3.0. Insurance 1.0 referred to analog insurance companies. Insurance 2.0 saw the industry become IT-enhanced through computerization and the internet. Insurance 2.5 saw some forays into digital with predictive analytics and customized products/services. Insurance 3.0 requires the industry to fully embrace digital technologies and create primarily digital business models that are customer-centric and able to quickly adapt. The insurance industry has been slow to change due to its complex regulatory environment and business model, but digital disruption requires it to now transform into a digital business.
The Rise Of Insurtech: How young startups and a mature industry can bring out...Accenture Insurance
A wave of startup-driven innovation is putting insurers' approaches to innovation and technology under the spotlight. While some insurers have well-defined innovation programs, others have yet to take substantive action. InsurTech represents both an opportunity and challenge for insurers. Most InsurTech deals have focused on non-life personal insurance, but life insurance and commercial insurance could also benefit greatly from technological disruption. Collaboration between InsurTech startups and traditional insurers faces cultural challenges but will be important to drive innovation and better customer outcomes.
With support by the CII, Marketforce launched this special report providing a snapshot of the challenges and opportunities the industry is facing - and how to prepared it is to meet them.
Based on responses from over 1000 senior insurers, in this report you will find dedicated chapters on digital, analytics, operations, claims, fraud and more.
Would you like to meet like-minded insurers? On November 7th, 8th and 9th we're holding our 16th annual The Future of General Insurance conference.
Find out more about the event here: http://bit.ly/1TKDIgQ
Tech scouting in Banking & Insurance Project.pptxGiorgia Zunino
This is the final report for Mastre in Fintech and Digital Transformation at LUMSA about innovation team tech scouting for insurtech startups. The analysis process was set up in 5 different steps and worked as following:
Panoramic view of Insurance market and last years trends
Identification of needs and issue about Insurance market and what industry is working on
Selection of 4 startups which are working on technology related to insurance new waves
Description of the chosen startups and the tech features involved
Our consideration about different aspects improvements:
This document provides an overview of the future of risk and insurance. It highlights 10 key insights and trends, including the need to disrupt and innovate before others do, embrace technological change, get certified in risk management, leverage mobile technology, mentor the next generation, question traditional underwriting practices, and think globally about risk in our interconnected world. Emerging technologies like 3D printing, artificial intelligence, and messaging apps are disrupting traditional business models, and the insurance industry must adapt to better understand and manage emerging risks.
A Digital Way Forward for Australian SME InsurersCognizant
The ongoing digitisation of the small- and medium-sized enterprise (SME) market has only accelerated post COVID-19, opening new opportunities and challenges to established carriers. Winning insurers will need to hyper-personalise their offerings and experiences to attract and retain new and
modern SME businesses, as well as tap the billowing insurtech ecosystem – whilst leaning into extended capabilities of their modernised core systems – to remain relevant in this fast-growing and dynamic market segment.
Shared Service Captive Centers: Assets or Liabilities in the Post-COVID-19 Era?Cognizant
1) The COVID-19 pandemic has caused many organizations to rethink their global shared services strategies and question whether maintaining internal shared service captive centers (SSCCs) still makes strategic or financial sense.
2) SSCCs were originally established in the 1990s as an alternative to outsourcing business processes to external service providers, but provided many similar benefits while maintaining more control. However, external service providers have since demonstrated the ability to deliver high-quality services at lower costs.
3) The pandemic has exposed that many SSCCs are focused on cost reduction rather than digital transformation and are not well-positioned to adapt to the new remote working environment. This is leading many organizations to consider divesting
This document discusses innovation in the banking and insurance industries. It provides examples of both incremental and radical innovations that have occurred, ranging from automated teller machines to internet banking. The document notes that while stability is important for these industries, customers also reward adaptability and flexibility. It suggests that a framework is needed to help banks and insurers consistently and reliably innovate, both through incremental improvements and larger transformations, in order to better cope with increasing complexity and change.
The report analyzes the stock market performance of 126 technology, media, and telecommunications companies from 2005-2009. It finds:
1) The average 5-year annual returns for the sectors were 6.2% for technology, 5.3% for telecom, and 2.5% for media, below the overall market average of 6.6%.
2) Companies from emerging economies dominated the top performers, holding 7 of the top 10 spots in telecom, 5 in media, and 4 in technology.
3) While the sectors as a whole lagged, the top 10 companies in each achieved much higher average annual returns of 23.3% in technology, 26.2% in media
Accenture From Global Connection To Global OrchestrationInnovation Tank
This document discusses two defining trends for the next economic era: the acceleration of multi-polar globalization and the transformative potential of newly mature information technologies. It summarizes that economic power is increasingly diffused across more countries and regions, with emerging markets accounting for over half of global output. It also discusses how information technologies like cloud computing are enabling new forms of business models and market-making forces. The document advocates that companies must move beyond global connectedness to proactively orchestrate opportunities from these new trends through strategies like gaining deeper customer insights and developing wide networks.
Global natural disasters have increased insured losses and highlighted gaps in risk coverage. Insurers are updating risk assessment models using AI and improved data to better understand emerging risks, price policies accurately, and help close coverage gaps. They are also leveraging AI to strengthen risk management through continuous risk assessment, real-time monitoring, and risk prevention initiatives to improve underwriting profitability and reduce losses. These strategies aim to make insurers more prepared for evolving risks and help create more awareness and optimal protection for policyholders.
McKinsey Global Institute Connected World-discussion-paper_february-2020DESMOND YUEN
The promise of 5G has captured the attention of business leaders, policy makers, and the media. But how much of that promise is likely to be realized anytime soon?
With the first true high-band 5G networks already live, we set out to take a realistic view of how and where connectivity could be deployed and what it can enable over the next 10 years. But 5G is not appearing in isolation. This research takes a more expansive view of connectivity to include other technologies, ranging from fiber and satellites to Wi-Fi and short-range technologies.
Despite the hype about remote surgery and Star Trek–style holodecks in everyone’s living rooms, the future is not solely happening on the frontier. Existing connectivity technologies are expanding and evolving, with new standards that boost network performance—and they are much less capital-intensive. We have identified an enormous array of use cases that can run on this type of upgraded backbone. Companies do not have to wait for high-band 5G to implement new systems and go after the resulting productivity gains.
To illustrate what is possible, this research looks at how connectivity could be deployed in mobility, healthcare, manufacturing, and retail. The use cases we identified in these four commercial domains alone could boost global GDP by $1.2 trillion to $2 trillion by 2030. This implies that the value at stake will ultimately run trillions of dollars higher across the entire global economy.
The document discusses how insurance is facing significant disruption from social, technological, economic, environmental, and political changes between now and 2020. These changes include a more fragmented customer base, rising digital connectivity and data availability, slowing economic growth in developed markets coupled with faster growth in emerging markets, increasing catastrophe risks, and greater political instability. Insurers will need to reinvent their business models to adapt to these trends and changing customer expectations in order to remain competitive. The document examines the implications of these changes and how insurers can design business strategies to succeed in this disrupted future.
Next Wave of Fintech: Redefining Financial Services through TechnologyRobin Teigland
The Stockholm School of Economics and PA Consulting present The Next wave of Fintech, a sequel to the 2015 Stockholm Fintech Report, focusing on the new InsurTech and RegTech segments. The report, which describes and quantifies the Swedish market for these segments, contains valuable insights and recommendations for decision makers at banks, incubators, startup companies, public authorities and investors.
A very interesting report explaining how a collaborative model is taking place between traditional banks and FinTechs, whose strengths and weaknesses are very much complementary to each other.
Is the next Uber coming your way?
CxOs are on high alert for competitors coming out of nowhere. Prepare for disruption – read the Global C-suite study.
Similar to 21 st century insurance firm bearing point (20)
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Presentation by Herman Kienhuis (Curiosity VC) on Investing in AI for ABS Alu...Herman Kienhuis
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A select set of project management best practices to keep your project on-track, on-cost and aligned to scope. Many firms have don't have the necessary skills, diligence, methods and oversight of their projects; this leads to slippage, higher costs and longer timeframes. Often firms have a history of projects that simply failed to move the needle. These best practices will help your firm avoid these pitfalls but they require fortitude to apply.
Starting a business is like embarking on an unpredictable adventure. It’s a journey filled with highs and lows, victories and defeats. But what if I told you that those setbacks and failures could be the very stepping stones that lead you to fortune? Let’s explore how resilience, adaptability, and strategic thinking can transform adversity into opportunity.
[To download this presentation, visit:
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This presentation is a curated compilation of PowerPoint diagrams and templates designed to illustrate 20 different digital transformation frameworks and models. These frameworks are based on recent industry trends and best practices, ensuring that the content remains relevant and up-to-date.
Key highlights include Microsoft's Digital Transformation Framework, which focuses on driving innovation and efficiency, and McKinsey's Ten Guiding Principles, which provide strategic insights for successful digital transformation. Additionally, Forrester's framework emphasizes enhancing customer experiences and modernizing IT infrastructure, while IDC's MaturityScape helps assess and develop organizational digital maturity. MIT's framework explores cutting-edge strategies for achieving digital success.
These materials are perfect for enhancing your business or classroom presentations, offering visual aids to supplement your insights. Please note that while comprehensive, these slides are intended as supplementary resources and may not be complete for standalone instructional purposes.
Frameworks/Models included:
Microsoft’s Digital Transformation Framework
McKinsey’s Ten Guiding Principles of Digital Transformation
Forrester’s Digital Transformation Framework
IDC’s Digital Transformation MaturityScape
MIT’s Digital Transformation Framework
Gartner’s Digital Transformation Framework
Accenture’s Digital Strategy & Enterprise Frameworks
Deloitte’s Digital Industrial Transformation Framework
Capgemini’s Digital Transformation Framework
PwC’s Digital Transformation Framework
Cisco’s Digital Transformation Framework
Cognizant’s Digital Transformation Framework
DXC Technology’s Digital Transformation Framework
The BCG Strategy Palette
McKinsey’s Digital Transformation Framework
Digital Transformation Compass
Four Levels of Digital Maturity
Design Thinking Framework
Business Model Canvas
Customer Journey Map
Digital Transformation Frameworks: Driving Digital Excellence
21 st century insurance firm bearing point
1. White Paper:
FINANCIAL SERVICES
HOW TO CREATE A PLATFORM FOR
THE 21ST CENTURY INSURANCE FIRM
2. HOW TO CREATE A PLATFORM FOR
THE 21ST CENTURY INSURANCE FIRM
IN THIS WHITE PAPER: INTRODUCTION
INTRODUCTION 1 Insurance executives in many ways must feel like the
A NEW ERA FOR INSURANCE 2 proverbial kid in a candy shop. Aging populations
in Western nations, deregulation of key markets,
THE EVOLUTION OF IT:
FROM 20TH TO 21ST CENTURIES 3 spectacular growth of the middle class in Asia and
consumers embracing the use of new technologies
IT/BUSINESS ALIGNMENT 4 are among the major trends creating huge growth
STANDARDIZATION, WORKFLOW AND opportunities for insurance companies—at least for
NETWORKING TECHNOLOGIES 5 those that can scale to take advantage.
WHO IS LEADING THE WAY?
A VIEW ON THE GROUND 5 Therein lies the problem, however. For some insurers,
CUSTOMER MANAGEMENT 5 these opportunities—these shelves of sweet good-
PROCESS 6
ies—may be just beyond reach. Many insurance
executives feel that technology infrastructure—espe-
ENTERPRISE ARCHITECTURE 7
cially legacy systems—is a significant impediment
INFORMATION 8
to progress as they attempt to take advantage of an
CHANNELS 9 increasingly global insurance industry. It is for this
COMMUNICATIONS 9 reason that insurance companies, especially many in
SOURCING 10 Europe and North America, are investing in enabling
CONCLUSION 11 new systems.
GLOBAL MANAGEMENT AND
TECHNOLOGY CONSULTING FOR Which types of systems are leading insurers invest-
TODAY’S BUSINESS ENVIRONMENT 12 ing in and for what purpose? What is their vision for
leveraging technology in the first decades of the 21st
ABOUT THE AUTHORS 12
century as the industry landscape rapidly changes? Is
too much emphasis being placed on problems asso-
ciated with legacy systems? To find out, BearingPoint
contracted with Datamonitor to interview technol-
ogy executives at leading global insurance companies.
The goals of this qualitative research were to find out
how these insurers are transforming their operations
for the new century and articulate a vision of how
they can succeed in the new century’s challenging
environment.
1 BEARINGPOINT
3. HOW TO CREATE A PLATFORM FOR THE 21ST CENTURY INSURANCE FIRM
This global survey report explores the direction of the are increasingly entering into novel strategic alli-
global insurance industry over the next five to 10 ances that position them in new markets according
years. The observations of industry leaders presented to the strengths of both or all parties.
here provide a vision of what the 21st century insur-
ance company may look like and how IT is being Technological evolution. The innovation spurred
used to achieve that vision. by the creation and expansion of the Internet has
changed the business landscape in profound ways.
It has enabled an entirely new business operating
A NEW ERA FOR INSURANCE model and fundamentally altered consumer behav-
ior. The most important advance for IT may be the
The evolution of the global insurance industry is a development of networking technology that is poised
reaction to the forces reshaping everything from global to deliver greater economies of scale and efficiency
supply and demand to market competition to technol- and reduce some operating costs to the vanishing
ogy. The most progressive insurers are taking steps point. Meanwhile, wireline and wireless communi-
to capitalize on unprecedented growth opportunities cations based on Internet Protocol will enable much
while avoiding the risks. The major trends affecting greater flexibility in connecting the insurers with
insurance in the 21st century are: clients, sellers and each other.
Socioeconomic change. The aging of populations
To capitalize on the opportunities in this market-
in Western nations, combined with the reduction or
place, the best insurers are lining up to realize all the
elimination of state and corporate pension plans, will
advantages—new markets, scale economies, open
create vast new opportunities for life insurance in the
computing, automation and multisource opera-
United States and Europe. Meanwhile, the moderni-
tions—while avoiding the downside—increased risk,
zation of the large Asian economies will create a
commoditization, and more demanding and disloyal
new, multibillion-member middle class. China may
customers. Figure 1 highlights the changing charac-
offer the most dramatic example of the growth of
teristics of the global technology industry.
wealth because the inclusion of China in the World
Trade Organization (WTO) has sped its transition to
free-market capitalism. According to China Pacific Although regional and niche insurers will remain viable
Insurance Company Group CIO Richard Cheng, the in the 21st century, economies of scale will concen-
“Chinese government benefit program will not be trate premiums, assets and global market share among
sufficient to this middle class,” leaving the door open a smaller group of very large insurers. Technology will
for domestic and foreign insurers. ensure that they are able to develop and distribute
products on a mass scale. Partnerships and strategic
agreements, rather than mergers and acquisitions, will
(De)regulation. The convergence of financial services
enable the “one-stop shop” model.
set in motion by industry deregulation, such as the
Gramm-Leach-Bliley Act and the deregulation of
the Chinese market, has resulted in consolidation, Independent channels will increasingly be the source
new markets, new competitors and the creation of for life products. In the next 10 years, captive agents
interrelated, cross-industry value chains. To estab- will have largely disappeared in the West, while, in
lish operations in high-growth geographies, insurers developing economies, they will gradually be over-
taken by banks, in alliance with both domestic and
2 BEARINGPOINT
4. HOW TO CREATE A PLATFORM FOR THE 21ST CENTURY INSURANCE FIRM
foreign carriers. Novel partnerships between insurers Furthermore, the notion of “distribution” itself will
may also emerge, particularly in a rapidly denation- change, as it becomes less about transferring and sell-
alizing China. ing products and more about sharing information,
whether in a B2B or B2B2C context.
The Internet and wireless communications will likely
emerge as serious sales channels; they are beginning to
make inroads in non-life sales today and, in 10 years, THE EVOLUTION OF IT:
will begin to take market share from independent FROM 20TH TO 21ST CENTURIES
channels. Insurers in Japan and China, where the use
of wireless transactions is ahead of that in the West, The insurance industry is poised to benefit from a
have begun to offer travel insurance via wireless number of new technologies, as well as the novel
accounts, allowing for “impulse” purchases on the fly. application of existing techniques, to realize greater
FIGURE 1. THE INDUSTRY VISION
20TH CENTURY 21ST CENTURY
MARKETS • National concentration • Global concentration
• Growth in developed markets • Growth in developing markets
• Insurance/some FS integration • Cross FS global alliances
COMPETITION • Polarized: life and non-life • Dynamic: life vs. non-life
• Insurer vs. insurer • Insurer vs. ???
• Mutual model • Total demutualization
DISTRIBUTION • Channel segregation • Channel integration
• Direct/independent on unique platforms • Direct/independent on common platforms
• Distributing products • Distributing information
PRODUCTS • Internal strategic/internal development • Internal strategic/external development
• Complex • Simple/standardized
• Insurer-driven • Customer-driven
RISK MANAGEMENT/ • Affinity groups/some tiered underwriting • Fully tiered underwriting/automated
UNDERWRITING • Reactive modeling • Predictive modeling
• Actuarial risk focus • Operational risk focus
TECHNOLOGY • Group: decentralized • Group: centralized
STRATEGY • Business: isolated/some integration • Business line federation/mainly integrated
• Geography-defined • Geography-agnostic
• IT as “client” • IT as “partner”
Source: Datamonitor
WHITE PAPER 3
5. HOW TO CREATE A PLATFORM FOR THE 21ST CENTURY INSURANCE FIRM
customer-centricity, improve IT flexibility and remain would negotiate, or in some cases battle, over strategy
competitive in a rapidly changing industry. Figure 2 and budget dollars came to an end. Among the lead-
highlights how these key technologies can change in ing insurers today, IT is becoming so fully integrated
the next five to 10 years. into the business decision-making process as to appear
almost invisible.
IT/BUSINESS ALIGNMENT
Our conversations with insurers repeatedly illustrate
During the last 20 years or so, an understanding of the importance of IT and business alignment in
the importance of better integration of business and establishing effective long-term technology strategy.
IT strategies emerged. In some cases, it was the gal- General insurer ING Canada began the process of
vanizing onset of the year 2000; for others, it was implementing a central IT function in 1996 that
the buy-in of technological promise amid the dotcom paralleled its strategy of common platforms across
hype. Nevertheless, for many of the largest financial insurance lines. ING Canada currently sees itself as
services companies, the days when business and IT highly centralized in IT infrastructure, applications
FIGURE 2. THE STRATEGIC VISION
20TH CENTURY VISIONARIES 21ST CENTURY
CUSTOMER • Imperative: channel provision • Imperative: analytics
MANAGEMENT • Price-led • Price- and service-led
• Acquisition • Retention
PROCESS • Largely manual • Largely automated
• Workflow/digital documents • Business process management engines/straight-
through processing
ENTERPRISE • Point-to-point networking • Service-oriented architecture
ARCHITECTURE • Back-office functionality resides • Reference-/event-driven (portfolio management,
in legacy underwriting)
• Centralized computing • Distributed/grid computing
INFORMATION • Siloed • Integrated
• Product-defined • Customer-defined
• Structured vs. unstructured • Automated and dynamic taxonomy
• External fraud detection/claims • Internal/auto fraud/claims, identity theft
CHANNELS • Manual interaction • Portal front end (B2B2C)
• Disconnected operations • Shared back office
• Limited partner interaction • Partner network (claims, underwriting)
COMMUNICATIONS • PBX • Voice over Internet Protocol
• Phone/fax • Wireless LAN, field agents, claims settlement
• Manual transactions • Electronic transactions
SOURCING • Internal dominant — tactical • Best sourcing — strategic
• Long-term outsourcing contracts • Centralized procurement
• Standardized
Source: Datamonitor
4 BEARINGPOINT
6. HOW TO CREATE A PLATFORM FOR THE 21ST CENTURY INSURANCE FIRM
and strategy, despite leaving some decision-making from here? Or, as some in the industry might lament,
authority to regional offices. This centralization has can we get there from here? Many of the technologies
allowed it to consolidate legacy systems on a common cited by our respondents are not new. The concept
platform while driving long-term project develop- of service-oriented architecture (SOA), for example,
ment, including four- to six-year plans for enterprise has existed for years, but only with the recent devel-
data integration and electronic transactions. opment of Web services has it become a practical
proposition. Claim notification enabled by radio fre-
A large European life insurer indicated that its inte- quency identification (RFID) and real-time, driver-
gration efforts led to an enterprisewide, “two-track directed premium adjustments are tantalizing ideas
process”—continual evaluation of all infrastructure to technologists, but with the industry still address-
(to ensure lower costs) and processes (to ensure flex- ing core systems, it is unlikely these solutions will
ibility). The insurer believes that by establishing reach the mainstream for at least another decade.
ongoing enterprisewide IT evaluation, “we will be
able to build unique and new capabilities five, 10, Clearly, the insurance industry remains in a transition
15 years into the future.” period, with most major carriers taking the necessary
steps to prepare, perhaps, for the “science fiction”
STANDARDIZATION, WORKFLOW AND possibilities sometime in the future. By implement-
NETWORKING TECHNOLOGIES ing technology change in a steady and measurable
fashion, with business objectives driving strategy,
While the centralization of business and IT strategy insurers will be able to achieve the balance between
has fostered more effective strategic thinking, the maintaining profitability and solvency while estab-
development of the Internet, Web services and middle- lishing the flexibility necessary to keep pace with
ware are enabling the execution. Standards in IT industry change. The leaders in this area are making
infrastructure, networking, Web services, and, most progress toward the 21st century vision by estab-
important, the evolution of open and componen- lishing new techniques to address the most pressing
tized architectures are enabling the separation of business concerns.
IT management and IT strategy—a huge step in
the evolution of a 21st century vision. Business and CUSTOMER MANAGEMENT
IT executives can now realistically envision the day
when it will be possible to remove the management, The primacy of the customer has arrived in the
maintenance and even development of technol- insurance industry. In the next 10 years, insurers will
ogy applications from an organization, leaving the likely have established a uniform channel strategy in
insurer to concentrate on customer service, product which consumers can choose between an agent, bank,
innovation, sales and marketing, branding, and cor- Internet or wireless/PDA as their means of buying
porate strategy. insurance. The attention will begin to shift to more
advanced customer analytics that record, analyze and
manage all aspects of the customer/insurer relation-
WHO IS LEADING THE WAY? ship, thus improving cross-sell opportunities and
A VIEW ON THE GROUND fraud detection.
With the vision of the next five to 10 years taking Before the analytics can be used effectively, however,
form, the question remains, how do we get there insurers must make sure channels are well estab-
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7. HOW TO CREATE A PLATFORM FOR THE 21ST CENTURY INSURANCE FIRM
lished. The industry’s experience with customer CIO Scott McKay, there is “an entirely new opera-
relationship management (CRM) several years ago ting environment being created for insurers, with
has left IT departments wary. In what has become a many not having the capabilities to service this new
lesson on the dangers of embracing technological landscape. The companies that do will be in an advan-
hype without an understanding of its real business tageous competitive position.”
implications, the failure of CRM projects to deliver
the expected return on investment has left some ING’s U.S. life insurance division is actively plan-
insurers dubious of expectations laid out by vendors. ning its Web strategy around the changing needs of
According to a leading Italian non-life insurer, the these customers—“certainly, servicing targets in the
failure was likely due in large part to confusion over upper-middle/upper class who are saving for retire-
what CRM could deliver. “I am afraid of speaking ment is a priority,” says Catherine Smith, COO. The
about CRM. We are assuming CRM tools cannot key for ING is to enable the direct channel not for
address all the points in a customer life cycle. You need sales, but for more streamlined access to account
to have a CRM architecture across different informa- information on an increasingly diverse and complex
tion systems, so it’s more than just tools. We have to product portfolio. Furthermore, ING Direct’s success
think about something that is more along the lines in online retail banking will be a model for greater
of business process automation.” customer “intimacy” in insurance, including initia-
tives like “click-to-call” contact centers.
The use of CRM does, in fact, hold significant prom-
ise for establishing a deeper customer relationship, McKay is also keen on these automation technologies,
but it is clear that insurers must establish the frame- citing voice recognition as one that is enabling sig-
work before they can use the tools. For the Italian nificant efficiency and security in Genworth’s long-
non-life insurer, establishing what they call a “par- term care applications. “This is an industry known
allel channel strategy” is the key to customer service for telling people, ‘Let me send you the form.’ With
in the industry over the next five years. The only voice recognition software, I record that voice on the
expectation insurers should have, says the insurer, “is phone and I attach it to the file, so that conversation
that the channel between the insurer and the client is an even better authentication than a signature. It
will not always be the same.” Therefore, enabling as proves who they are and that you are performing the
much interaction as possible between the various task they asked you to. I think this technology has
channels is of utmost importance. It is essentially been significantly underutilized in the industry.”
placing the customer, rather than the channel, at
the center of an insurer’s customer service strategy.
PROCESS
This will be achieved by establishing a number of
other priorities for technology initiatives, such as Currently, imaging and workflow technologies enable
architecture, automation and data integration, that the digitization of documents and, by extension, add
enable “a greater global view of the customer.” a degree of automation to business processes. Insurers
are introducing automation into routine tasks such
The need for a global view will be essential in the 21st as simple auto claims, insurance policy changes, or
century. Insurers will increasingly need to have a full ratings/pricing adjustments in underwriting. The next
understanding of their customers’ buying patterns phase of automation, however, will be to enable true
and evolving needs and provide more consultation on straight-through processing in most insurance proc-
a growing product portfolio. According to Genworth esses, at both the processing and analytical levels.
6 BEARINGPOINT
8. HOW TO CREATE A PLATFORM FOR THE 21ST CENTURY INSURANCE FIRM
The advent of business process management technol- environment. In the 21st century, legacy issues will
ogy is already having an impact on so many areas of not demand nearly the attention or budget from
both manual and electronic workflow. The multi- business managers that they do today.
contact-point and labor-intensive claims-processing
function is the primary target of automation in non- Most of the leading insurers are already well along in
life operations. The Italian non-life insurer is making rationalization of their legacy operations, with the
a commitment to automation in this area, and most popular approach being the migration of func-
believes that the healthcare claims process will be tionality to a middle tier. Aviva remains in an “attic
the next big opportunity for automation. cleaning phase,” reducing the duplication and cost of
legacy where systems cannot be replaced. ING USFS
Perhaps because of the intensive process focus in the and ING Canada have largely tackled systems ration-
insurance industry, automation was cited as a break- alization, the former dealing with the culmination of
through technology idea by several respondents. several years of mergers and acquisitions activity, and
According to several of our participants, the under- the latter doing so as part of the overall move to com-
writing process stands to reap early benefits from auto- mon platforms.
mation, given the reliance on actuarial models and
the classification of numerous types of data and the Although these efforts largely serve to reduce cost and
manual processes still necessary for generating pricing/ duplication from core systems operations, they stream-
rating tables. However, participants cautioned that line numerous processes and pave the way for much
process must not be confused with enablement. greater functionality between old systems and new
applications. The ability to increase functionality
In order for automation to finally replace manual proc- between disparate systems within a common platform
esses, the industry will have to move beyond simple is the essence of enterprise architecture and serves to
enabling technologies, such as imaging, that perform execute on the centralized decision-making process.
some necessary functions but are not true automation. Because the establishment of enterprise architecture
“When I use imaging,” says Genworth’s McKay, “I am supports the very notion of IT/business strategy
in essence locked in to using electronic paper, causing alignment, it may be the most important long-term
me to still have people sitting there analyzing every technology investment an organization can make.
piece of data coming in front of me. Contrast that
with getting 100 percent of my data into a system. Although there are a number of technologies cur-
Now I can turn loose and use all kinds of digital deci- rently supporting the application of enterprise archi-
sion engines, process simulation tools and unlock layer tecture, and several likely scenarios, executives see
upon layer of additional productivity and service lev- enterprise architecture as practically synonymous with
els by being able to automate things.” SOA. The way SOA is spoken of these days gives it
the allure of a technology holy grail. One of our
ENTERPRISE ARCHITECTURE respondents believes this will be the most signifi-
cant technology development in the next 10 years.
If the aim of the 21st century insurer is to be more Despite the seemingly sudden interest in the indus-
comprehensive in the collection of information, more try, the idea of SOA is not new, but the technologies
creative in its use and more nimble in its application, that enable it, such as Web services and open systems
it will need to establish a far more predictable IT development environments such as J2EE and .Net,
have recently made SOA a more realistic proposition.
WHITE PAPER 7
9. HOW TO CREATE A PLATFORM FOR THE 21ST CENTURY INSURANCE FIRM
In the context of an SOA, these technologies enable an outsourced framework. Risk is integrated into the
unprecedented amount of flexibility within an organi- day-to-day operations and fed back into the system
zation’s operating environment, enabling heretofore to develop more accurate modeling and pricing strat-
unprecedented speed, flexibility and efficiency. egies. In fact, a combination of greater government
oversight and distributed/grid computing may yet
The largest insurers have already embraced the idea shift the risk burden from underwriting to opera-
of Web services. The Italian non-life insurer sees SOA tions, including network security and consumer/
as the true enabler of automation in processes and agent privacy.
data management because the entire enterprise will
be an open book. “Only with open architectures The establishment of enterprise architecture means
will the business be made flexible enough to enable that disparate business needs will be far easier to inte-
more automation.” Aviva is beginning to implement grate. However, the development of architecture is
SOA across individual business units where appli- but one piece of the technology puzzle for insurers.
cations, or services, are either available or easily Globalization of all economic activity will lead to a
developed. Currently, these organizations are focus- continued rise in the severity and volatility of high-
ing on transition, setting up common guidelines and impact risk exposures, while compliance requirements
integration with existing lines. At the same time, will require regular and reliable reporting capabilities.
they are eliminating point-to-point connections in Furthermore, the underwriting process will be increas-
favor of process management engines, considered an ingly fine-tuned to incorporate more precise risk factors
important—though more tactical—component of among insureds. All these pieces of data will need to
enterprise architecture. A large European non-life be stored, classified and callable for use in numerous
insurer believes “the step before full SOA is to use risk profiling operations.
the message broker and business integrator—a type
of technology that allows this type of applications Data management is essentially the collection and
communications.” proper use of knowledge. McKay believes that once
the governance and process focus are in place,
A U.S. life insurer said, “We think IT architecture knowledge is the most important overarching factor
must be based on SOA and Web services to make the in success. “You have the strategic discipline and
business more flexible and enable more automation.” incorporate a lot of knowledge of what you’re
doing, whether it’s technology knowledge or actu-
The insurer of the 21st century will almost certainly arial knowledge or risk management knowledge. All
employ some form of enterprise architecture, likely of those areas come together to make these things
with elements of reference architecture, that will allow successful.”
more-dynamic, even real-time, decision making that
will be driven by events, such as market fluctuations. The implementation and use of both structured
(defined and classified data, such as corporate policy
INFORMATION or financial results) and semistructured data (e-mails
and telephone conversations) will emerge as impera-
All tasks coming into the organization are directed, tive to realize the benefits of the feedback loop. The
monitored and managed in real time, and data is key at this stage is moving data to a warehouse,
stored and reused for underwriting, modeling and essentially a component, or service, within an archi-
compliance, either within the organization or in an tecture, from which it can be organized and extracted
8 BEARINGPOINT
10. HOW TO CREATE A PLATFORM FOR THE 21ST CENTURY INSURANCE FIRM
to meet business objectives, such as the pricing of a as the spokes, able to initiate or respond to requests
new policy or product according to a risk profile in independently. Third parties on both the sales (agents
a given growth demographic or the risk associated and financial advisers) and service (fulfillment and
with a certain asset class in a portfolio. These appli- settlement operations) sides will also have access, as
cations will be increasingly useful in the modeling claims increasingly become automated.
of catastrophe or terrorism risk. In this scenario, models
may be cross-referenced against corporate databases Many of the leading insurers we spoke with have had
to measure risk precisely across an entire group of agent portals up and running for several years as
policyholders. part of their acquisition integration or captive agent
replacement strategies. A large U.S. property and
The visionaries are implementing technologies that casualty company recently completed this project for
enable the processing of information. Distributed or its agents in all 50 states and is now addressing an
grid computing is already being used by a number updated Web access for customer information that
of large non-life insurers for risk modeling or catas- will allow them to obtain information on everything
trophe forecasting, allowing for much more precise from new products, to policy changes, to claims status.
risk calculations. McKay says that Genworth, using
grid computing for risk analytics in comparing liabil- The biggest challenge as we approach the end of the
ities in the asset portfolio, “has realized faster cycle decade, however, will be in China, where both life and
times and pricing runs, which has led to a measurable non-life insurance are still sold through company-
competitive advantage.” employed agents. Deregulation is providing an oppor-
tunity for Japanese, European and U.S. carriers to
CHANNELS enter the Chinese insurance market in novel ways. For
example, ING currently provides pension insurance
Captive agents in the West will begin to disappear via an agreement with China Steel, filling a void left
in developing markets in the next five to 10 years, while by denationalization of Chinese industry. However,
the growth of direct-to-customer sales via the Inter- the most popular method of entry into developing
net and wireless will continue to fragment insurance markets is via other financial services channels, such
distribution. Increasing attention to customer serv- as banks. China’s largest insurers will find it difficult
ice will also require significant investment in non- to compete with foreign insurers in an increasingly
acquisitional information, as policyholders become independent agent framework, according to China
more directly involved with account management Pacific Insurance Company’s Cheng. “Insurers will
and claims. have to improve their product design, internal con-
trol, and management and technology to compete
According to the survey respondents, the greatest dis- for, let alone maintain, market share.”
tribution challenge for insurers over the next five to
10 years will be to provide competitively differenti- COMMUNICATIONS
ated access to information. A large European insurer
believes that because of the B2B2C nature of insurance Insurers remain concerned mainly with investments in
sales, it will be imperative for insurers to open their transforming core systems to improve operational
back office to agents and policyholders alike. An insur- efficiency, considering the enthusiasm in the areas
ance company will essentially act as an information of architecture and process automation. However,
network hub, with agents, banks and policyholders advances in communications technology are giving
WHITE PAPER 9
11. HOW TO CREATE A PLATFORM FOR THE 21ST CENTURY INSURANCE FIRM
the insurers the ability to realize a host of new appli- In order to meet rapidly changing demand curves and
cations in everything from internal communications run a pan-European business more efficiently, Zurich
to Voice over Internet Protocol (VoIP) to wireless. decided to move the application development off-
According to a large European non-life carrier that has shore where it could more easily scale production to
implemented a VoIP initiative to strengthen the link meet demand, thus increasing staff productivity while
with its agents, “VoIP will happen. Having voice and realizing a significant cost savings. According to Chief
data on the same network enables more flexible com- Information Technology Officer Michael Paravicini,
munication between employees and cost reduction.” this agreement meant “getting access to the right
skills at the right price at the right time” in order to
The Asian market is at the forefront of wireless speed time-to-market.
business communications, both for information shar-
ing and for transactions. According to China Pacific This desire for efficiency over cost savings suggests
Insurance Company’s Cheng, only enterprise archi- a shift in thinking. Another large European insurer
tecture is a more important technology idea than is currently considering an application testing arrange-
mobile in the emerging Chinese insurance market. ment that will integrate the development function
“Mobile is part of the Chinese culture, plus the infra- across geographies. However, there remains some
structure is here. Everyone has cell phones and PDAs, reluctance to outsourcing due to the complexity in
which will be the key information contact points with sharing intellectual property and the difficulty in
the consumer. They can pay premiums or get policy measuring service levels. Furthermore, many insurers
information or click to a call center for more help.” feel that sending too many jobs offshore could be
The great advantage of mobile, according to Cheng, detrimental to customer relationships or organiza-
is that the technology can be used anywhere, where- tional morale. A large U.S. life insurer said that, for
as face-to-face contact and even computers cannot. this reason, it seeks to keep many jobs, such as produ-
cers and dedicated service representatives, onshore.
SOURCING However, it continues to look for opportunities to
send commoditized functions outside the organiza-
Insurers have long accepted outsourcing as a means tion. This reflects the mixed feelings on outsourcing
of leveraging economies of scale to lower costs. Claims and echoes the pros/cons argument surrounding out-
processing has been outsourced to third parties for sourcing in the media—what goes and what stays?
years, while the outsourcing of IT, including network
and call center management, is now commonplace Until recently, application development was consi-
in global insurance. Recently, however, insurers have dered a strategic insurance business function, whereas
begun to view outsourcing as more than a foundational call center outsourcing was a service-agnostic, labor-
cost-cutting measure. The separation of IT manage- arbitrage play. The contrary thinking among our
ment from IT strategy is allowing carriers much visionaries indicates that, while faith in outsourcing
greater flexibility in moving other operations and agreements will increase, outsourcing itself will remain
processing functions outside of the organization. an option, determined by strategic factors unique to
each organization.
Zurich Financial Services is among the pioneers in this
area, having entered into a unique agreement that
separates functions within application development.
10 BEARINGPOINT
12. HOW TO CREATE A PLATFORM FOR THE 21ST CENTURY INSURANCE FIRM
Be realistic about what capabilities and resources
CONCLUSION
need to be in place. Management needs to understand
what types of competencies, skills and resources are
With the global financial services industry at the necessary to execute toward the vision. A company’s
leading edge of a once-in-a-generation growth oppor- planning processes must encompass the IT initia-
tunity, leading insurers are showing how technology tives to make sure the organization is equipped to
may become a competitive sweet spot for true trans- carry them out.
formational change. Re-engineering of core systems
will gradually give way to new priorities and mark
Develop a culture of follow-through on a long-term
the end of a transitional period from the 20th to the
basis. How many times have companies launched
21st century.
ambitious IT initiatives, only to abandon them “when
the going gets rough” or when the next major reor-
The emergence of uniform IT/business strategy ganization weakens or eliminates executive support.
promises to pay dividends in long-term, enterprise- It is critical that senior management understands the
wide technology strategy—one that can address the full price of failing to see projects to their conclusion.
demands of agents and policyholders, more easily
adjust to risk and help firms adapt to and scale for
Overcome organizational inertia. In many com-
a rapidly changing global business environment.
panies, people act like antibodies when new and
However, to reap these rewards, insurance companies
unfamiliar technologies are introduced; they come
must address several key issues:
from all directions and try to eradicate it. If trans-
formational projects are to survive, senior executives
Establish a clear, achievable vision that includes must provide strong, unwavering support. Commu-
measurable steps. Increasingly, corporate boards nication must be clear and consistent from project
and senior executives are requiring detailed business inception to completion. Education and training must
cases for new IT initiatives, including the ability to be thorough.
show that projects will generate a healthy return on
investment within very tight time frames. The trans-
Learn to cut losses when necessary. Many insurers
formation plan cannot be a “big bang” approach.
have trouble shutting projects down midstream if they
CIOs must be able to articulate clearly—in tangi-
realize that the initiative is out of alignment with
ble business terms—the scope of their vision, the
the broader vision. CIOs and senior executives need
iterative steps that will be taken to get there and the
to reevaluate their portfolio of projects continually
value that will be created along the way. As Genworth’s
to make sure they are on track and that both near-
McKay says, “I think the industry whines way too
term and long-term objectives are being met.
much about legacy systems. The issue is not one of
legacy systems versus new technology. It’s about
IT organizations that strategically position their Long-term, comprehensive IT strategies that include
platforms to evolve forward in stage execution, not enterprise architecture, process automation and cus-
thinking somebody is going to suddenly bring you tomer analytics will be essential to insurance com-
a magic bullet and replace your legacy systems.” panies as they bridge the gap between the 20th and
21st centuries. Still, to realize the benefits of these
projects, industry leaders must first recognize their
limitations and properly understand their potential
impact on meeting business objectives.
WHITE PAPER 11
13. HOW TO CREATE A PLATFORM FOR THE 21ST CENTURY INSURANCE FIRM
Encouragingly, technologies such as open source com-
ABOUT THE AUTHORS
puting and SOA are reaching the stage of maturity
at which they can contribute to project success.
Leveraging these technologies and staying the course Marcel Nickler leads BearingPoint’s global insurance
once momentum is gained, leading insurance com- segment and is based in Zurich, Switzerland. He has
panies can, perhaps, be first in line to enjoy the sweet been with BearingPoint since 2000, and his insur-
taste of success as the new global opportunities unfold. ance industry track record includes more than 20
years of experience in corporate strategy, IT/business
alignment, process re-engineering and technology
GLOBAL MANAGEMENT AND management. Marcel earned a university degree in
TECHNOLOGY CONSULTING FOR actuarial mathematics. For more information, con-
TODAY’S BUSINESS ENVIRONMENT tact Marcel at +41 43 299 7310.
BearingPoint is a leading global management and Edward Blomquist is a senior analyst with Data-
technology consulting company that serves the monitor’s Technology practice, where he specializes
Global 2000 and many of the world’s largest public in financial services technology. His work has been
services organizations. Our experienced professionals cited in numerous industry and trade publications,
help organizations around the world set direction including A.M. Best; National Underwriters, Insurance
to reach their goals and create enterprise value. & Technology Magazine; and Banking Systems and
By aligning their business processes and informa- Technology Magazine.
tion systems, we help our clients gain competitive
leadership advantage — delivering results in an
accelerated time frame. To learn more, contact us at
1.866.BRNGPNT (+1.703.747.6748 from outside
the United States and Canada) or visit our Web site
at www.bearingpoint.com.
12 BEARINGPOINT