In the going on 10 years that I've been editing ITL, there have been two truisms about claims.

First is that claims are "the moment of truth" for insurers. That's certainly true, and, taking that notion to heart, insurers have made real progress. They've made it easier for insureds to report claims -- via app, sending in their own pictures rather than waiting for an adjuster, and so on. They've used new technologies, such as drones to survey damage after a storm, and have become much better at triage so they respond faster to the situations that are the most important and most urgent. Many have institutionalized compassion, for instance by quickly providing money to people forced out of their homes in a major storm, rather than making them wait for a full inspection and settlement. I could go on.

The second truism, which has taken its full form more recently, is that the industry needs to get to straight-through processing. It's certainly worth heading in that direction. You can already see the benefits that have come from those apps for reporting claims, submitting photos of damage, etc. But it also seems to me that making straight-through processing has obscured some real opportunities for progress.

Read more about Claims >

The thought that keeps rattling around in my head as I think about underwriting these days is: How can you make accurate predictions about risk based on historical experience... when the world has decided to throw so much of that experience out the window?

COVID-19 changed all sorts of assumptions about life expectancy, at least in the short run and perhaps in the long run; we just don't know yet. The pandemic also reset our patterns of work, changing the risks associated with buildings and with those who work in offices and factories -- or maybe not, as more companies insist on a return to the office.  

Inflation came out of nowhere for the first time in decades and made just about every sort of claim more expensive, especially in auto, where supply chain issues sent car prices through the roof. Now, inflation is subsiding... we think... but how fast? 

And don't get me started on the Russian invasion of Ukraine, a stunner that not only created tons of business risks but that greatly stepped up the general geopolitical uncertainty, including on the possibility that China will invade Taiwan.

I wish I had an answer for underwriters. Instead, as usual, I have a story. It's one that was told to me in 2000 by Gary Loveman, a Harvard Business School professor who rather unexpectedly found himself being asked to be COO at Harrah's and who reinvented loyalty programs, initially for Harrah's and eventually for the whole gambling industry. 

The analogy is far from perfect. Regulations will prevent insurers from implementing many of the ideas. That's why I used the word "dream" in the headline, rather than offering a concrete proposal. But there may be aspects of his ideas that can help with underwriting -- and it's a good story....

Read more about Underwriting >

For me, the emergence of cyber insurance as a separate line dates back a decade, to when Target was hacked and had 40 million credit card numbers and personal information about 70 million customers stolen. Target was seemingly so well-protected, with its massive IT department and careful security procedures, and the vulnerability so seemingly trivial (in an HVAC system) that the news sent everyone scrambling. 
 
But what to do? 

Well, policyholders hoped their general liability policies covered cyber issues, or at least could be easily extended to cover those risks. Insurers, meanwhile, worked to make a clear division between GL and cyber and, in the face of such uncertainty and potentially enormous payouts, set rates as high as they could. Hackers, of course, plunged into what they saw as a huge payday. 
 
Ten years on, we seem to finally be approaching some stability. 

Read more about Cyber >

The ITL team will focus on DEI for the month of April 2023. Check back at the start of the month for six feature articles, exclusive commentary from Editor-In-Chief Paul Carroll and an expert interview. If you have interest in sponsoring this month's Focus, please reach out to lachowicz@theinstitutes.org

The ITL team will focus on Customer Experience for the month of May 2023. Check back at the start of the month for six feature articles, exclusive commentary from Editor-In-Chief Paul Carroll and an expert interview. If you have interest in sponsoring this month's Focus, please reach out to lachowicz@theinstitutes.org

The ITL team will focus on Internet of Things for the month of June 2023. Check back at the start of the month for six feature articles, exclusive commentary from Editor-In-Chief Paul Carroll and an expert interview. If you have interest in sponsoring this month's Focus, please reach out to lachowicz@theinstitutes.org

The ITL team will focus on Operational Efficiency for the month of July 2023. Check back at the start of the month for six feature articles, exclusive commentary from Editor-In-Chief Paul Carroll and an expert interview. If you have interest in sponsoring this month's Focus, please reach out to lachowicz@theinstitutes.org

The ITL team will focus on Embedded Insurance for the month of August 2023. Check back at the start of the month for six feature articles, exclusive commentary from Editor-In-Chief Paul Carroll and an expert interview. If you have interest in sponsoring this month's Focus, please reach out to lachowicz@theinstitutes.org

The ITL team will focus on Resilience and Sustainability for the month of September 2023. Check back at the start of the month for six feature articles, exclusive commentary from Editor-In-Chief Paul Carroll and an expert interview. If you have interest in sponsoring this month's Focus, please reach out to lachowicz@theinstitutes.org

The ITL team will focus on Blockchain for the month of October 2023. Check back at the start of the month for six feature articles, exclusive commentary from Editor-In-Chief Paul Carroll and an expert interview. If you have interest in sponsoring this month's Focus, please reach out to lachowicz@theinstitutes.org

The ITL team will focus on AI for the month of November 2023. Check back at the start of the month for six feature articles, exclusive commentary from Editor-In-Chief Paul Carroll and an expert interview. If you have interest in sponsoring this month's Focus, please reach out to lachowicz@theinstitutes.org

The ITL team will focus on Workers Compensation for the month of December 2023. Check back at the start of the month for six feature articles, exclusive commentary from Editor-In-Chief Paul Carroll and an expert interview. If you have interest in sponsoring this month's Focus, please reach out to lachowicz@theinstitutes.org

When you strip insurance down to its essence, there are just three components related to indemnification. There is a client/contract. There is a yes/no mechanism for determining whether a payment is triggered to that client under that contract, as well as the amount. And there is capital, whether from an insurer, a reinsurer or the capital markets. That’s it: a client, a judgment mechanism and money.

Read more about  Parametric Insurance >

While blockchain has been an intriguing topic for some time now, interest has skyrocketed in recent months. 

ITL Focus February 2022 Sponsored by Gigaforce 

Read more about Blockchain >

For an industry that has long been considered sleepy, life insurance has a lot going on. 

Read more about Life and Health >

Sometimes, innovation takes time. 

Some 30 years ago, I wrote an article for the front page of the second section of the Wall Street Journal that declared a revolution in forms. We were far enough along in the personal computer revolution that software companies were coming out with products that would let users fill out forms on-screen, speeding the process and eliminating the errors that occurred as someone had to interpret people's handwriting. Even more magical, the spread of local area networks meant that information could flow straight from my screen into a corporate database, with no never to ever print the form and have someone re-enter the data.  

Everything I wrote was correct, and forms did take a major step forward, but, here we are three decades later, still drowning in forms. And the insurance industry is Exhibit A.

Read more about Automation and RPA >

In this month's interview for ITL Focus, my longtime friend and colleague John Sviokla takes us through some of the unintended consequences that digitization could bring to insurance claims.

Read more about Claims >

Not quite a decade ago, a colleague and I did some consulting on innovation for the CEO of one of the biggest personal lines insurers, and he expressed great frustration with his agent force. "Every time I try something new, even when it's going to benefit the agent channel, they turn around and kick me in the [crotch]," he said.

In the years since, I've watched the power of agents and brokers only grow -- just look at how much valuations for agencies and brokerages have been climbing and at the much slower increases for carriers. And agents and brokers have mostly guarded the model that has let so many prosper for so long: They get paid commissions on product sales, rather than being paid for advice, and are rewarded for building and then maintaining a book of business rather than primarily for continually adding clients. 

Certainly, the industry's push for digital innovation has led to more cooperation. In particular, insurers are trying to make themselves easier to work with, if only to try to become the carrier of choice for independent agents. But is that really the best we can do? 

Bill Walrath thinks not.

Read more about Agent and Broker >

Sponsored by AgentSync

When my younger daughter was a freshman at Yale, I was encouraged that her intro to economics class included a fairly long section on the economics of insurance -- essentially, an exercise in determining how much people valued the peace of mind they get from having a policy in place. Insurance certainly never came up in any of the economics classes I took way back when, and I took the material as a good sign: A top-tier college was making insurance intriguing for smart, young students.

Alas, I couldn't interest my daughter in the insurance industry. And there seems to be a lot of that indifference going around, based on the persistent concerns in the industry about the talent gap. 

Jenn Knight, co-founder and chief technology officer at AgentSync, offers some intriguing thoughts on a way forward in this month's interview. 

Read More About Talent Gap >

Workers comp has things doubly bad -- it has to deal not only with its own staffing issues but those of its clients. 

As Mark Walls, vice president of client engagement at Safety National, explains in this month's interview, many companies are having to ask employees to do more to cover for gaps in staffing. Companies are also being less rigorous about pre-employment physicals and may rush people into action. The risk of injury is rising as a result.

At the same time, workers' comp carriers and third-party administrators are having to deal with their own shortages of adjusters, nurse care managers and so on, while dealing with caregivers that are struggling to line up enough doctors and nurses.

The result? Not pretty.

Read More About Workers Comp >

When I think of the potential for artificial intelligence, I hark back to my days at the Wall Street Journal, taking notes in my home-brewed shorthand in one of those long, skinny notebooks you may have seen reporters carrying around in their suitcoat pockets. I still break out in a sweat when I recall interviewing the president of Mexico in the mid-'90s, in Spanish. I only knew how to take notes in English, so I had to translate on the fly, while still thinking about my line of questioning—and concentrating furiously so I would quote him so accurately that I wouldn't cause an international incident. 

While AI would have been zero help back then, today it's remarkable. I just record an interview on my phone, and AI transcribes the conservation in real time with remarkable accuracy.

So, if you want to think about where AI can go from here, you can look back 25-plus years and see that the difference between then and now is, well, like magic, and then start to think about 10, 15 or 25 years from now.

Read more about AI and Machine Learning

Sponsored by IntellectAI

The cyber insurance market is full of good news and bad news, good news and bad news, good news and bad news.

Let's start with the good news.

Targets are getting smarter about how to defend themselves. That's by far the biggest bit of good news. The improved defense is partly because employees are being trained to avoid phishing and other types of attacks.

Read more about Cyber Threats

Sponsored by Oliver Wyman

As I talked with speakers following the recent Global Insurance Forum about resilience and sustainability, I got the sense that the industry is leaning into climate change much more than in the past.

That's partly because events such as Hurricane Ian dramatize the risks but also because insurers are seeing ways to help clients and, more broadly, society, while also seeing business opportunities.

We obviously have a long way to go on resilience and sustainability, and I don't think we're moving fast enough, but we do seem to be making some progress, both in helping society, writ large, and in finding new ways to serve customers.

Read more about Resilience and Sustainability

Sponsored by Chubb

I recently read a fascinating book, "The Dream Machine," about the intellectual history of the computer world through the early 2000s. 
 
As a geek of long-standing, I was amused to learn that a mythic figure from the early days would end animated conversations on the streets of Cambridge, Mass., by asking which way he'd been facing when the conversation began -- that way, he'd know whether he'd been leaving the Harvard faculty club and had thus eaten lunch or whether he was on the way there. 
 
The book also filled in details for me about how computers had passed through key stages: from glorified calculators in the 1940s, to mainframes for batch processing in the 1950s and 1960s, to minicomputers and time-sharing in the 1960s and 1970s, to personal computers in the 1980s and 1990s and to the internet in the 1990s and beyond. Progress has obviously continued since the book was published 20 years ago: with smartphones, in particular, and Wi-Fi changing the world in the 2000s and beyond, but also with search engines, social media and a host of other innovations.
 
Based on that history, I'm confident that one of the biggest drivers of innovation -- maybe THE biggest -- at the moment is the Internet of Things. 
 

Read more about IoT

Much of the focus on innovation has related to personal lines. That makes some sense: Policies tend to be more cookie-cutter than in commercial lines, and individuals, spoiled by Amazon and other online resources, have demanded a better experience from insurers. But don’t sleep on commercial lines. As businesses see what’s changing in personal lines, they aren’t going to be left behind.

Read More Commercial Insurance

Blockchain has held out promise for some time now and it may finally be coming into its own, with some uses starting to move into production. We’ve collected our thought leaders’ latest thinking on the topic in this month’s ITL FOCUS, as well as an interview with John Sviokla about the future impacts and strategic implications of blockchain, the ITL On Demand ‘Future of Blockchain’ webinar series, and more.

Read More about Blockchain

Strategy is what you don’t do. That was the dictum of the late, great Mel Bergstein, who way back in 1994 founded the pioneering digital strategy firm Diamond Management & Technology Consultants. (It became part of PwC in 2010.) I heard Mel’s line a lot, as a partner with Diamond from 1996 through 2003, and I think his are words to live by in the insurance industry these days. Everyone seems to have gotten the memo about the need to digitize insurance and to explore innovative ideas, but the present typically creates a real drag that slows movement toward the future.

Read More about Strategic Innovation

Mark Twain reportedly once responded to a rumor of a serious illness by saying, “Rumors of my death have been greatly exaggerated.” Insurance agents and brokers could have said the same thing over the past decade and will likely be parrying those rumors for years to come. There’s no doubt that agents & brokers inhabit a world going digital and not every agent will migrate easily into the ever-more-digital world, but those who do will find the work more rewarding, both for themselves and for their ever-more-loyal clients.

Read More about Agent and Brokers

In high school, a friend of mine had a poster on his wall that read, “Just because you’re paranoid doesn’t mean they aren’t out to get you.”

That pretty well summarizes how the world of cybersecurity and insurance works. Companies may feel paranoid for looking over their shoulder all the time, expecting something back to happen, but we all know that there are plenty of bad guys out to find all the victims they can.

Read More about Cyber Risk

The world of work turned upside-down and inside-out beginning 15 months ago, as the pandemic shut down offices and forced so very many of us to work from home.

Now that we’re beginning to reverse this process, insurers will have to sort through all sorts of new issues. Here’s one: When is the place where a worker works a “workplace,” and when is it not? Welcome to the new world of workers’ compensation

Read More about Workers Comp

Insurance companies are finding that they have to reinvent chunks of their businesses to really get the customer experience right. Yes, they have to focus on the ways that they touch customers, through agents and brokers, through call centers, through adjusters and through an increasingly broad array of electronic means. But a customer doesn’t just experience a company through a direct communication. Customers also experience, for instance, how long and painful an underwriting process or a claim is.

And here’s the thing: This emphasis on customer experience requires a revolution for companies.

Read More about Customer Experience

Cognitive computing is a funny beast. Every time you hit your target, you find that another pops up off in the distance.

When I first saw a demonstration of speech recognition, some 30 years ago, I was mightily impressed that the computer understood a few words. If I had seen what would be possible today, I’d have been stunned. But now? Oh, that’s just Siri or Alexa. And why didn’t auto-correct guess exactly what I wanted to say?

Read More about Cognitive Technologies

“…It seems to me that the lines will increasingly blur between life insurance and financial management, given that life insurance is an important financial asset; people often think about their finances, and life insurance can become a natural part of that focus. I could also see the trend toward embedded insurance expanding the life insurance market — why couldn’t a term life policy be, for instance, embedded in a mortgage when someone buys a building, to make sure the purchase is secure even if something happens to the buyer?

Over the years, I’ve had people tell me life insurance is boring. I don’t see it that way at all.”

Read More about Life Insurance

In the face of catastrophic weather, insurers are doing what insurers do: helping identify, quantify and mitigate the risks, while making customers whole when disasters strike.

They are also increasingly digging further into the roots of the problem. As you’ll see in the articles we’ve highlighted for this month, insurers are focusing more on how to raise the alarm about climate change and on how to make the world more resilient in the face of the challenges that we face today and that are surely.

Read More about Catastrophic Weather

In all my years covering all manner of technology, telematics may have caught me off-guard the most. When I first wrote about Progressive’s auto telematics program, Snapshot, in 1998, it seemed like a slam dunk. Of course, it made sense to monitor how people drove and to price their insurance accordingly.

Or not.

Read More about Telematics

For nearly 30 years, I’ve been hearing about smart homes. Even before a commercial version of the internet browser was invented in the early 1990s, the rich, geeky types I dealt with in my travels at the Wall Street Journal were figuring out ways to wire their homes to ward off possible intruders. 

Read More about Smart Home