In the midst of a profound transformation in the workforce landscape, characterized by a major shift toward decentralization, incentives have never been more pivotal in engaging and motivating employees. Four key incentive trends emerge as focal points, each contributing to the overarching goal of driving performance and cultivating a positive work environment as organizational structures shift to a more distributed and autonomous model.

Let's unravel these trends to better understand how they are influencing the dynamics of modern workplaces.

Emphasis on Personalization

The new wave of decentralized workforces has emphasized the need for personalization in incentive strategies. With the traditional confines of office spaces fading away in favor of more remote and flexible work setups, human resources professionals are establishing incentive programs that extend beyond conventional rewards, Based on the diverse and individual preferences of employees, programs embrace tailored learning and development initiatives crafted to align seamlessly with specific career goals.

The inclusion of curated experiences, ranging from virtual workshops to wellness activities, demonstrates a commitment to addressing personal interests. As this trend gains momentum, its significance lies not only in boosting engagement levels but also in cultivating a work culture that champions inclusivity. By acknowledging and catering to the unique motivations of each employee, organizations are fostering a more holistic and adaptive approach to workforce management, leading to increased job satisfaction and a sense of belonging within the decentralized work landscape.

See also: Why to Customize Employee Healthcare Plans

Wellness-Centric Incentives

The decentralization of work has not only transformed where and how work is conducted but has also propelled employee well-being to the forefront of organizational priorities. As traditional office structures evolve into flexible and remote work arrangements, the harmonious relationship between a healthy, motivated workforce and overall productivity becomes increasingly evident.

This shift has prompted an emphasis on wellness-centric initiatives. Beyond the realm of traditional cash incentives, companies are integrating non-cash perks such as wellness subscriptions, mental health resources and contributions to home office designs. This multifaceted approach goes beyond the conventional focus on financial rewards, acknowledging the connection of physical and mental well-being with professional performance. Organizations improve job satisfaction and increase long-term employee retention.

Strategic investment in employee welfare reflects an organizational commitment to creating a supportive and nurturing work environment, which, in turn, establishes a solid foundation for sustained success and growth.

Recognition in a Virtual World

The digital era demands a reinvention of employee recognition strategies. Organizations are strategically adapting by harnessing the power of digital platforms to design and implement peer-to-peer recognition programs, virtual celebrations of milestones and interactive platforms for acknowledging achievements.

Such components not only address the inherent challenges posed by remote work scenarios but also foster a positive and engaging work culture. By ensuring that the remote workforce feels consistently appreciated, companies not only enhance morale and motivation but also fortify the sense of belonging and connection among team members.

See also: Opportunities in Group and Voluntary Benefits

Flexible and Inclusive Reward Structures

Organizations are embracing the implementation of flexible reward structures that can skillfully accommodate the diverse needs and preferences of their employees, whether in the form of personalized gift cards, curated experiences or the valuable currency of additional paid time off.

By providing a menu of options, organizations can ensure that their incentive programs are not only relevant but also deeply meaningful to individuals. 

As organizations navigate the challenges and opportunities presented by decentralized workforces, staying attuned to trends in incentive strategies is crucial. Embracing personalization, prioritizing wellness, reinventing recognition in the virtual realm and adopting flexible and inclusive reward structures are key elements in creating effective incentive programs that resonate with the modern workforce.

By aligning incentive strategies with the evolving nature of work, organizations can foster employee engagement, boost morale and position themselves for success in the decentralized future of work.

There’s plenty of evidence that insurance transformation has failed across the board.

Despite £100s of millions invested in IT, insurers have been unable to shrug off the baggage of their legacy systems. Instead of greater freedom, digitization has led to the shackles of modern legacy. This makes rapid adaptation at scale impossible, as complexity and a reliance on suppliers plague insurance infrastructure, making every change long-winded and costly.  

The results are plain to see. Insurer profits have been hit by myriad headwinds, leaving them little room to maneuver, save for slapping consumers with extreme price increases. That might be forgivable if the consumer experience had improved, but tech-savvy consumers who expect the control and transparency of fintech-like experiences have been left severely wanting. 

It isn’t hard to see why "transformation" has become a bit of a dirty word. Why would you want to commit more budget and resources when the promised land of your last heavy tech investments has yet to be reached?

Insurance, however, doesn’t have a choice. It must transform or fade away. The good news is the sector is only one transformation away from never having to worry about technology again.

Why Has Transformation Failed

Let’s first look at what’s led us here. Transformation and technology are often treated as synonymous, but technology isn’t where transformation begins, nor should it be.

Transformation starts with a vision for where the business wants to go. Typically, that vision is driven by a desire to leverage the latest tech to achieve greater scale, while reducing effort and costs. 

While there’s nothing fundamentally wrong with this approach, it becomes problematic when the technology and the operational model you're building on no longer serve the business. This is the predicament insurers find themselves in. 

Certainly, short-term efficiencies through digitization, automation and cloud adoption are there for the taking. But the drive for efficiencies hasn't alleviated the pressure to change. To truly transform, and position itself for the future, the industry must first transform its operational mindset. 

This can only be done by looking outside the industry, where today’s transformations are predicated on achieving the continuous change needed to adapt quickly to the whims of the market, the economy and the consumer. 

See also: Tech Secret to a Combined Ratio Below 100%

The 2030 Insurer

When considering the insurance companies of the future, our CEO, CTO and I produced a list of characteristics that are present in industries such as ecommerce where transformations are mature. The characteristics are:

• Multiple products sold, priced and serviced together
• Access to services at every consumer touchpoint, e.g. web, mobile, car and point-of-sale 
• A unified experience for sales, service, payments, etc.
• Operating at the center of a broader supply chain, e.g. hospitals, repair shops and pharmacies
• Unrestrained, unique and compelling customer experiences driving differentiation
• Absolute ownership of customer relationships
• Endless product offerings, personalized, partnered or adjacent
• Instantaneous changes without downtime
• Real-time analytics and data science

All of these characteristics come from being built around a customer core that employs sophisticated data models to make every customer moment a data-driven and intelligent outcome. The core provides the ability to change in multiple places, while the value of that change appears everywhere it needs to.

In these transformed businesses, valuable data is constantly mined, structured and treated as a perishable asset that’s used when and where it's most valuable. Critically, adaptability allows new value to be identified and monetized via an ecosystem where IT is an enabler, not an inhibitor. Partnering is straight-forward, allowing insurers to act as a modular producer. 

Value is achieved by maximizing the knowledge of your customer, by your ability to act on it and by partnering effortlessly in an ever-evolving ecosystem. Happily, the dynamics at play have flipped. The technology is there, waiting for industrial mindsets to catch up. 

Every modern ecosystem driver architecture operates in a similar way, whether that’s Amazon or Tesla. Yes, microservices,  API-first, cloud-native SaaS and headless (MACH), but built in common ways within this. You'll often see reliable systems of record and “data stores” proliferate underpinning modern technologies, but at the core you'll need a customer and product engine capable of interacting with and creating intelligent customer and employee outcomes. 

In insurance, this is complex. If we want embedded, risk-mitigating and highly human-centric insurance outcomes, this complexity has to be dealt with. Working around it, by cobbling together point solutions through APIs onto policy-centric systems, frankly hasn’t worked.

When a system is built on a modern, digital-first architecture that puts the customer at its core, it reduces IT's reliance on suppliers by removing the complexity of change. It also creates extensibility, allowing the platform to connect and interoperate with a wide ecosystem of partners. Powered by customer data fluidity, this delivers ROI fast. An API’d new partner can typically apply all of their value back to an insurer in days or weeks, not months. 

Ultimately, the transformation goal is an ever-evolving ecosystem, the benefit being that there’s no need for a big-bang transformation project, constantly reliant on high-cost IT capability, bought or applied. 

Instead, the minimum viable organizational change is understood and worked toward, with the outcome being ever-increasing self-sufficiency and reducing core costs. 

We see ‌cost-per-policy plummet when servicing becomes digital, and the right fix or service is applied at the right time and in the right channel. Overlay this with reduced cost in IT change and new value generation massively increases, allowing for all sorts of cross- and upselling. 

See also: Why Are We Still Talking About Digital Transformation?

Taking Back Control

Control is vital in insurance. There is a balancing act between pooled books of insurance customers, their risks and the investment made with the capital earned. Maintaining this balance while driving toward adaptability requires a fundamental shift away from policy-centrism to customer-centrism.

Controlling and valuing a policy, then structuring an entire business around this idea has created unnecessary complexity. I'm not saying the concept of a policy isn’t useful. I am saying that ‌policy as a product should be constantly evolving and that an insurer's relationship with a customer supersedes the policy. To get there, technologies mustn't be built in silos. This is what avoiding modern legacy means.

Breaking free allows more control, not less. It leads to the development of propositions that help people build back better after a catastrophe. It offers connected and intelligent products built around usage and risk mitigation, or simply embedding insurance further into people’s lives. 

These new value paradigms are essential to the future of dynamic and highly adaptive insurance futures. However, to be workable, they must be built on modern technology foundations that serve these business outcomes rather than prohibit them. I believe this puts the insurer in a continuously evolving ecosystem model, and that is why Insurance is one transformation away from never worrying about tech again.

All of this may seem hard. Efficiency-driving agendas that do little to disrupt the cultural and operational status quo are easy to get behind. Fundamentally changing a core component of the business’s foundations is much harder.

However, the hardest aspect is ‌mindset change. When that happens, the technology is ready to facilitate it.

The (re)insurance industry has a long history of working on society’s hardest problems. Early involvement allows (re)insurers to go beyond simply diversifying risk – they can lead the way to new solutions and innovations by providing incentives to businesses and entire industries to do the right thing for everyone. 

The recent trend of increasing frequency and intensity of cat events is a top-of-mind issue, and true to form it is the international risk diversification community at the forefront of addressing it. However, there is one aspect of this phenomenon that is not yet widely addressed by (re)insurance: greenhouse gas (GHG) emissions, especially methane.

Solutions exist today that can deliver site-specific GHG information and data to the oil and gas, financial and insurance industries alike. Basin-level GHG monitoring, wellsite certifications, continuous emissions monitoring and more are available now across many of North America’s 20,000-plus wells. But (re)insurers are largely missing out. 

See also: Glimmers of Good News on Climate (Finally)

(Re)insurers need to understand that this is not just an opportunity to demonstrate environmental stewardship and leadership on a societal imperative, but it is also a way to offer more comprehensive coverage to oil and gas operators with more comprehensive risk assessments and loss control. These GHG strategies align with industry best practices for risk mitigation, everything a (re)insurer would want from their insureds.

Chubb is mandating that methane emissions and environmental responsibility become core aspects of their energy insurance. Others are wading into the issue, including Zurich and its exploration of methane emitted by cows. But the industry can do much more.

The forward-looking oil and gas operators implementing GHG reduction strategies are intrinsically the operators (re)insurers should cover with the most favorable terms for two reasons. First, an operator measuring GHG emissions carefully is a better risk. Then, after the policy is in place, emissions monitoring and measuring improves risk management and reduces claims. Within a few years, these types of operators might be the only operators that can get coverage at all because they will be the only ones with dependable data and information for underwriters, and they will be able to demonstrate adequate stewardship to satisfy ESG requirements.

If (re)insurers begin demanding well-specific GHG information and data, not only will they be improving their portfolios, but they will be taking their familiar position at the vanguard of helping solve another of today’s biggest issues.

Tech is revolutionizing the insurance industry by automating and enhancing efficiency, from customer onboarding to policy placement to claims handling. In fact, the global insurtech market was valued at $5.45 billion in 2022 and is poised for remarkable growth, as it's expected to expand at a CAGR of more than 50% from 2023 to 2030. 

But what are the forces driving this? 

There’s a vanguard of technological advancements, aka insurtech, driving unprecedented change in how insurance is conceived, developed and experienced: embedded insurance, customer-facing digital tools, telematics and the Internet of Things (IoT), reliance on rich data sets and AI and machine learning (ML). 

With these five insurtech trends in mind, let's discover what they are and how they'll redefine the insurance landscape in 2024. 

See also: Biggest Business Trends for 2024

Continued Emphasis on Rich Data Sets 

As more of the insurance industry relies on technology for greater efficiency and lower costs, there's a greater need for cleanly structured data for analytics and insights. 

As the promise of insurance data lakes escalates, the sourcing and completeness of data to fill the lakes is paramount to getting real ROI from the investment. Common data challenges, like missing, outdated or incorrect information, can result in an incomplete picture of a risk and flawed underwriting and pricing decisions. The data must be complete, validated and sometimes cleaned to support accurate analysis. 

In the insurance industry, issues arise when agents lack complete client data, hindering their ability to advise clients on pricing and coverage. For instance, correctly determining the industry classification, such as distinguishing between a barber shop and a beauty salon, is crucial, as it significantly affects insurance policies and premiums. 

To effectively support decision-making for agents in underwriting and application processes, as well as to fuel AI models, rich data sets demand accurately sourced and structured information. 

There are several ways for insurance companies to ensure their data is clean. One way uses third-party data validation and verification tools supplied from businesses such as Verisk, Fenris and HazardHub. A more accurate option is getting customers to validate data themselves by presenting them with information you’ve already collected and giving them an intuitive interface to review it. 

Leveraging data cleaning tools offers many benefits, such as data validation, reduced manual effort, removal of duplicates, precise risk assessment and improved customer service. Simply put, clean data enables better decision-making and fosters customer trust by ensuring accuracy and reliability in information handling. 

AI and ML-Driven Insights 

Once insurance companies have their rich data lakes full of accurate information, they can let AI and ML do all the hard lifting. AI and ML can analyze vast amounts of data from multiple sources, including historical claims data, customer information and external data from IoT devices, to enhance the accuracy of risk assessment. 

For example, predictive modeling, which uses an ML algorithm to process historical data, can help insurers better understand and predict risks, resulting in more precise pricing of policies. 

Moreover, automation and AI-driven chatbots can streamline the claims process, reducing the time and cost of claims handling, while image and text analysis can expedite claims assessment by quickly identifying relevant information and fraud detection. 

Large language models (LLMs) can also be leveraged for data extraction. Eric Sibony, co-founder and chief scientific officer at Shift Technology, told the Insurance Times that a significant use case for LLMs is "data extraction from unstructured data, [such as] free text and documents." While LLMs can be leveraged as chatbots and can generate emails and other generic documents, their data extraction tools can also be used to detect fraud and make personalized customer recommendations. 

Analyzing a broad scope of customer data through AI programs and tools allows insurance companies to gain deeper insights into their clients' preferences and behaviors, enabling insurers to offer more personalized services and policies. Furthermore, this information can drive personalized marketing and communication to improve customer engagement and retention. 

See also: Investment Outlook for 2024

Embedded Insurance 

As people’s time is precious, customers want ease and speed when buying insurance. But the current process is complex and time-consuming. 

To solve this pain point, insurance companies can now embed their offerings at the point of sale (POS) through application programming interfaces (APIs), allowing them to market their products exactly when customers need them. As we head into 2024, embedded insurance is expanding beyond travel insurance that you can purchase while buying flights or an all-inclusive package deal. 

Tesla was the first company to offer POS car insurance—made possible with the help of telematics. GM Motors also now offers its customers something similar. With these embedded solutions, GM and Tesla can also monitor customer driving patterns and behaviors, allowing them to alter monthly premiums and rewards for better driving. 

This trend not only enhances the customer experience but broadens the reach of insurance to new consumer segments, widening the market. 

Customer-Facing Digital Tools 

The popularity of embedded insurance highlights that, in 2024, businesses need to focus on a customer-centric approach to sell a product or service. 

This means building products and services with customer wants and needs at the forefront and making the buying, renewal and management process as simple and personalized as possible. In addition, because of industry regulation, many insurance products have become commoditized, which means the best way for agencies to differentiate is through a placement process enabled by advanced technology. 

By investing in easy-to-use mobile apps and online portals, online claims submission tools, smart form documents with e-signatures and telematic apps, insurance brokers and carriers can differentiate themselves from their competition by providing an exceptional customer experience. 

In fact, McKinsey reported that companies that use technology to enhance the customer experience can increase customer satisfaction by 15% to 20%. 

See also: 2024 Outlook for AI in Insurance

Use of Telematics and IoT 

The insurance telematics market is expected to grow from nearly $5 billion in 2023 to $11 billion by 2028. And the increasing adoption of telematics has been particularly fueled by the growing popularity of electric vehicles. 

Telematic devices can be used to monitor driving and collect data for the vehicle owner, facilitating personalized safety tips and delivering driver habit information. These days, companies like Allstate, GM and Tesla are also using this data to dynamically adjust insurance premiums. Furthermore, advanced telematics can also be used for real-time accident data and fraud prevention by analyzing factors such as hard braking, cornering or speeding during a specific period.

The development of the IoT has advanced the use of telematics, particularly for fleet management. IoT sensors can seamlessly integrate within a fleet management platform to quickly and efficiently mine and sort relevant data. This provides near-real-time visibility into key metrics, including fuel usage, engine status, vehicle location, driver behaviors and vehicle maintenance history. 

With this new in-depth data collection, carriers can make advanced underwriting decisions and design insurance products that better align with their policyholders’ needs. 

Wrapping Up 

As the countdown to 2024 picks up pace, these five key trends are poised to shape the insurance industry's trajectory. They mark a paradigm shift in how insurance is conceptualized, developed and experienced. 

These trends collectively underscore the industry's commitment to meeting the evolving needs of a tech-savvy clientele.

Over the past few years, driver-facing cameras have become a burning issue in the transportation industry. Despite enormous safety benefits, the trucking companies are not putting them into practice. This raises a number of worrisome questions. 

• Why are companies not implementing them? 
• Are there any impacts of driver-facing cameras on truck drivers? 

With the aid of industry experts and insights from American Transportation Research Institute (ATRI), here is what we have discovered so far.

U.S. Truck Accident Key Statistics: Common Causes

The American trucking industry is solely responsible for hauling 73% of domestic freight, playing a huge role in the nation's economy. Unfortunately, it is also one of the biggest life-threatening industries for on-road passenger vehicles. 

According to a Forbes report, there were more than half a million accidents by large trucks in 2021, a 26% rise from the previous year. Following are the common causes that are found to have the greatest impact on truck crashes:

• In 6.7% of accidents, the driver was intoxicated.
• 7.3% of fatal accidents involved excessive speeding by the driver.
• 5.2% of collisions were caused by the driver’s inattention and impairment.

Introduction of Driver-Facing Cameras (DFCs) to the Trucking Industry

After a decade of research, the Automobile Association of America's (AAA) Foundation for Traffic Safety found that 87% to 92% of the country's road crashes are the result of the driver’s irresponsible behaviors or errors. The foundation further recognized the potential of advanced safety technologies (ASTs) in reducing large truck collisions because of the driver’s errors. This includes the incorporation of an array of ASTs, and video-based onboard safety monitoring (OSM) systems are one of them.

The 2017 AAA research states that 63,243 truck-related collisions, 2,753 physical injuries and 293 fatalities annually could be prevented if all trucks installed this advanced video-based safety monitoring system. Vendor-sponsored research by the Virginia Tech Transportation Institute indicated even bigger numbers. According to that study, amalgamating the in-cab video monitoring device and adequate driving training could lower truck-related crashes by 25,007 and casualties by 801. 

That is how the concept of driver-facing cameras was introduced to the trucking industry.

But how does it function? Let’s have a glimpse.

See also: Automakers Build New Insurance Future

Driving-Facing Cameras: An Overview

Driving-facing cameras are installed in a truck right in front of the trucker’s face. The driving OSM constantly monitors and records the driver’s activities. Following are its additional capabilities:

• Consistently record the driver’s behavior day in and out and flag a safety-related event if needed.
• Save safety-related event recordings for post-journey evaluation.
• Provide supervisor the real-time warning for safety-related events via email/ text.
• Provide truck drivers real-time assistance in cases where they are helpless and are not able to respond.

Benefits of Driver-Facing Cameras

The driving-facing camera system benefits the truck drivers in numerous ways:

• Safer driving: Because the onboard safety system constantly alerts the truck driver related to any safety concern, it promotes healthy driving practices.
• Defense against unreasonable claims: The recorded videos can be used to prove a driver’s innocence in case of any false accidental or traffic violations accusations.
• Lower insurance premiums: Incorporating the driver-facing cameras in trucks mitigates collision risks, reducing premium costs. 

Now the question arises: With these many significant benefits of driver-facing cameras, why is this technology not getting implemented on a large scale?

Let’s get to know what truckers have to say about it.

See also: Auto Claims and Collision Repair: The Great Reset

The Impact of Driver-Facing Cameras on Truck Drivers’ Perceptions: Key Findings

ATRI conducted a driving survey in which truckers were asked to rate DFCs on a scale of 0 to 10 based on four key criteria: safety, litigation, privacy and overall approval. Here are the results:

Safety Perceptions

The current truck drivers who are using DFCs have rated their ability to boost safety at 2.6/10, twice as much as the truckers who have never used them and 1.5 times as much as the ones who have used DFCs in the past.

Impact of Gender on DFC Safety Perspectives

Both female and male truckers shared the same perspectives on DFCs' potential for their safety, with females' ratings slightly lower than those of males.

Litigation Perceptions

Current truck drivers rated DFCs’ potential to positively influence litigation as approximately 4/10, again more than twice that of the truckers who have never used it.

The rest of the drivers shared a different perspective and stated that, with adequate footage, a plaintiff's attorney can locate the minute error and use it against the truckers if there is no other substantial evidence of the driver’s irresponsible behavior or error found in the case. This has been accepted as a fair concern by both parties: truck drivers and defense attorneys.

However, the motor carriers can mitigate this issue by backing the truckers by limiting the recording or retention of footage that is not related to a safety event.

Impact of Gender on DFC Litigation Perspectives

Both male and female drivers shared the same perspective on the positive impacts of DFC litigation.

Privacy Perceptions

Among all four key areas, drivers rated the DFCs' capabilities to protect their privacy the lowest. Drivers who have never used DFC technology had the most negative attitude toward it.

Upon being asked, the drivers shared their different privacy concerns. One of them was an intrusion into their privacy during off-duty hours in the sleeper cabs. They shared examples where DFCs turned on automatically or when their supervisors shared the recorded footage while they were off-duty.

An intermodal driver said it’s hard to focus when a camera is directly pointed at your face. The driver said the truck is a living space as well as a workspace, and the company does not own any rights to meddle in the driver's privacy.

Impact of Gender on DFC Privacy Perspectives

Female truck drivers rated DFCs' potential to protect their safety 34% lower than male truck drivers. Some of them complained about cases of voyeurism and sexual harassment by workers tasked with reviewing DFC footage. Clearly, irrespective of gender, the drivers’ safety perceptions of DFCs are cynical.

Overall Approval Perceptions

The current users gave an overall approval rating of 2.24 for the driver-facing camera technology, which is closer to lower privacy ratings.

Impact of Gender on DFCs' Overall Approval Perspectives

It is very evident that female truck drivers have major concerns regarding DFC privacy, so the overall approval rating would be lower from their side. As the sector places more emphasis on hiring female truckers, it’s high time that these issues be given primary attention.

See also: Using GPS and AI to Improve Asset Tracking

DFC Functionality Changes Truck Drivers’ Perceptions

According to a report by ATRI, the different video formats, functionalities and attributes also have a major impact on truckers’ perceptions. For instance, DFCs support two different formats: event-based recording triggered by sensors and continuous recording. Here is what truck drivers have to save about these two formats:

Safety Perceptions

On average, respondents preferred event-based DFCs 21% more than continuous recording for safety perceptions.

One of the LTL drivers even said, "The continuous DFCs actually jeopardize my safety and that of my co-passengers, as I feel stressed and anxious about being watched, even though I am making no mistakes.”

Litigation Perceptions

Again, the truckers rated event-based DFCs' litigation effectiveness a bit higher than the continuous format. 

Privacy Perceptions

Regardless of gender, truck drivers are also convinced that employing event-based DFCs has slightly better protected their privacy. However, the major privacy concerns remain the same.

Overall Approval Perceptions 

In light of respondents' preferences for event-based driving-facing cameras, it is crystal clear that the truck driver’s perceptions would improve over time when they could see and sense the trust in recording clips.

Driver Suggestions for Greater DFC Acceptance

When the ATRI asked the respondents to share their opinions on what can be done to improve DFC acceptance, here is what they suggested:

View footage only after the crash

19% of respondents suggested that the recorded footage is only meant to be used as evidence in the event of a crash or collision and not for any internal assessment.

Off When Not Moving

Nearly 17% of respondents recommended that the DFCs be off when the driver is off-duty or on break or when a truck is in the parking area. As with the prior studies, it is evident that truckers have a low tolerance for any issues that raise major trust concerns. This is why a lot of drivers suggest a mechanical shutter that can be closed manually, ensuring no DFCs are on while they are off-duty.

Full Driver Control

Roughly 14% of truck drivers want to have full control over DFC use. This includes authority to decide when the camera will be on and whether to give access to the footage.

Less Fault-Seeking

What motor carriers or safety instructors see as fault-seeking, 12% of truck drivers consider nitpicking. There are numerous ways in which carriers can handle such sensitive issues. One, they should put more emphasis on results rather than pointing out minute errors. Second, they can develop coaching programs in which the instructors discussing clips share the same commercial driving background and guide the drivers. Third, they can implement driver-led coaching that boosts the driver’s self-confidence in handling safety-critical events.

Less Sensitive Triggers

More than 9% of truck drivers said event-based DFCs should only be turned on by crucial safety incidents. On this, ATRI recommended MC take the necessary steps to adjust camera sensitivity, including light and sound alerts.

Commensurate Pay Increase

7.3% of truck drivers shared that incorporating the DFCs into trucks makes them anxious and unsafe. This is why, as compensation, there should be a pay raise while all the camera policies would still remain the same.

Full Driver Access 

7% of truck drivers asked for full access to DFC footage and a formal assurance that no other unnoticed clip was collected.

No Punitive Use

Another category of truck drivers’ concerns is associated with punitive use of DFC footage. 6.7% of truckers fear that a clip can be used for punishment or to cut down on their bonuses.

Probation Drivers Only

5.8% of truck drivers suggested that DFCs should be employed for new drivers or drivers who have safety breach issues and not for drivers with a clean safety background check. However, the legal advisers suggested the other way and recommended keeping the camera on to stay away from litigation vulnerability.

Better Communication

Clear communication is the easiest way to improve drivers’ acceptance of DFC technology, according to 3.3% of truckers. Carriers should clearly convey the DFC's use, policies and how it will do no harm to drivers. They should give a reasonable explanation about the circumstances in which a recorded clip will be used and who would have access rights to it.

Final Words

With DFCs having an average overall approval rating of 2.24, it is obvious that truck drivers don’t have great regard for driver-facing cameras, largely due to privacy and litigation concerns. However, if we look at the brighter side, current users have shown a more positive interest in DFCs than truckers who have never used them.

Moreover, the ATRI research reports suggest that by implementing changes in DFC functionalities and adopting the drivers' suggestions, the perceptions of truck drivers toward DFCs could be improved.

Having spent years as a business strategist and supporting the technological advances across financial, legal and human capital management industries, I have been—and will remain—optimistic about adopting technology in the insurance sector. Technology tools have moved our industry forward when deployed correctly and have modernized customer and user experiences. Artificial intelligence (AI) and machine learning (ML) are the next technologies in line. 

For insurance carriers, the key to delivering the best protection to policyholders is creating empathy-driven, humanized insurance strategies. In other words, humanized insurance fosters trust, earns loyalty and creates lasting value between the customer and the insurer. In many ways, AI provides so much room for insurers to invest in humanized experiences. When done right, implementing AI and ML will spur the next evolution of our industry, enhancing speed, efficiency and accuracy and reimagining insurance for the better.

See also: 5 Ways Generative AI Will Transform Claims

A Faster, More Humanized Process

AI-driven underwriting and claims processing are already showing its potential. In its infancy, we have seen AI help insurers better assess and mitigate risk, scope more accurate premiums, speed settlements for policyholders and deliver better customer experiences. Insurance has forever been a data-driven industry. AI and ML tools will maximize data’s potential while giving organizations better insights and more bandwidth to focus on the customer experience and serving policyholders.

So, what does an AI-driven underwriting and claims process look like? AI powered by ML algorithms can cross-reference vast data sets at a completely different speed and capacity than humans. This capacity allows insurers to make connections and draw insights from data that otherwise may not have been available, at least not at speed or scale. For example, identifying fraudulent patterns, assessing risk profiles, identifying outliers on calculations of premiums and leveraging historical claims data to make informed decisions. 

The core of humanized insurance is protecting people. Responding to market changes quickly is critical in protecting people and businesses, and AI is already being used in this area. Insurers leverage AI-driven satellite imagery, for example, to assess environmental factors such as wildfire risk or even the extent of damage after a natural disaster. Having this real-time data means accurately pricing premiums based on geographic location. It also means verifying claims by cross-checking with real-time imagery or responding to crises before or quickly after they occur. 

We have also seen additional support from AI on the distribution and services front with chat robots or virtual assistants that offer 24/7 support and answer customer questions in real-time, enhancing customer engagement. Additionally, AI analytics help to inform insurers on tailoring to the proper customer segmentation and establishing customized marketing and distribution strategies. The generated data and the segmentation analyses allow insurers to determine whether a policyholder prefers to speak to an agent on the phone or to go directly to an app or website with accessible information.

A Win-Win for Customers and Insurers

Like any industry, customer experience in insurance is crucial, and while AI may not directly appeal to customers, better pricing and faster claims resolution do. Additionally, real-life customer service agents can exert their energy toward creating a better experience because many tedious or time-consuming tasks within the underwriting and claims process are in the “hands” of AI. 

Personalization takes on a completely different look when backed by the support of AI and ML tools. At a macro level, these tools' data aggregation and insight create more accurate personas and customer profiles that inform business decisions. At a micro level, using generated data on individual policyholders' unique characteristics, risks and preferences informs insurers on how to best meet an individual's needs. For example, electric vehicles track loads of AI-generated data that insurers can leverage, including driving behavior, which can allow for more personalized premium pricing, such as lower rates for safe drivers. EVs also track collision details, which insurers can use when processing claims.

With personalization comes trust. Each end-user will have different preferences and comfort levels when it comes to sharing anonymized data and personal information and to what extent they would like that data used to customize their experience. Insurers must have their finger on the pulse and put themselves in their customers' shoes to successfully deploy these tools. 

People value their time. Insurers are speeding up the time it takes to talk to an agent and providing customers with the feeling of being heard, creating a more empathy-driven insurance process. The more personalized the experience, the more worthwhile and valued the customer’s time on the phone, in the app, or on the website, the more likely customers are to return to that insurance provider. In fact, McKinsey found that the number one barrier to purchasing insurance is often poor customer experience. Embracing AI may just be the answer to improving the customer journey and increasing customer loyalty. 

See also: The Rise of AI: a Double-Edged Sword

A New Generation of AI-Informed Talent

To prepare for this technology’s impact, insurers should prioritize investing in talent and business workflows to build a solid foundation for AI integration. AI will generate more actionable data for insurers to make better decisions. Thus, new skills are required, including determining what data can be brought in and how we audit it. This new data can lead to new products that customers ask for and will create a whole new generation of jobs. 

Consider an executive who is responsible for understanding and managing the AI-generated data. According to a Gartner study, 35% of large organizations will have a chief AI officer who reports to the CEO or COO by 2025. And, in just 10 years, AI solutions will result in more than half a billion net new jobs. Other examples of roles could include chief ethics officers dedicated to ensuring all generated data is ethically used or chief training officers responsible for developing a process for the new jobs. A McKinsey study reinforces that AI enhances how STEM, creative and business and legal professionals work instead of displacing or eliminating jobs outright.

Furthermore, insurers will need to work hard to monitor and adapt to evolving regulations and compliance requirements related to AI usage. This means ensuring your “house” is in order and working with the right vendors and ecosystem partners with the same governance standards and ethics representing your business. 

Evolution for the Better

By embracing AI, the insurance sector has the potential to leverage emerging technology for operational efficiency, enhancing customer experiences and reimagining personalization. 

I remain optimistic that if insurers invest in preparing for this transformative technology, it will enhance operations and provide a more accessible, efficient and accurate future for the industry and its stakeholders.

Paul Carroll 

Bryan, you’ve been sounding the omnichannel theme, and, as we look forward to 2024, I’m hoping you can start us off by describing what you think the opportunities are and explaining why they’re becoming available now.

Bryan Davis 

When we talk about omnichannel, we mean having digital capabilities, our call center operations and our field operations all working harmoniously -- humans and digital working together.

The customer needs exit ramps at certain points. Sometimes, they just want a quote and not to be bothered. Other times, they just want to get advice and not to be bothered. Sometimes, they want to transact completely digitally without being bothered.

That's not as many as you may think. Most folks are somewhere in the middle. They might say, "I want a quote, I want to learn and be left alone. But I do want to check in with someone to make sure that I'm buying the right thing," Insurance is complicated. You may have some folks who say, "Hey, I value human touch. I might want to go into the office and talk to a person."

So our thinking is, you give customers choice. The vision of VIU by Hub is to enable acquisition and service however the customer prefers.

And what has accelerated this capability is COVID. I mean, the world literally went digital overnight. Commerce had to keep going. That led to an advancement in cloud computing, so data prefill is no longer a hindrance. I can store your roof type and how many people are in your house. I don't need you to answer 20 questions any more to get you a quote. And the development effort for the connectivity for all those exit ramps that I talked about is getting easier. With low-code and no-code platforms, my 13-year-old daughter can program a quote experience now.

Advancements in technology have enabled capabilities that even three to five years ago would not have been possible. 

Paul Carroll 

You've also talked in the past about market conditions and customer behavior as drivers.

Bryan Davis 

I grew up on the carrier side. I have been in this industry 24 years now. And for most of that time, we’ve had a soft market, partly because of macroeconomic policies such as quantitative easing. But interest rates are up dramatically. There have also been disruptions to the supply chain and other effects from COVID, and whether you talk about climate change or use another term, weather damage is happening in places where it didn’t use to happen. I mean, it's icing in San Antonio. It's hailing in Arizona.

When you couple that with inflation, we wind up with a hard market and shrinking supply.

When the market was soft, customers could easily go online and get a quote from many different aggregator functions, many different carriers. Well, not anymore.

Carriers put a lot of friction in the system, often pushing customers to go talk to somebody even though they never had to talk to anybody in the past. Non-renewal notices are now par for the course. Or you get a renewal that says you no longer have coverage for replacement costs. You have coverage for actual cash value. Imagine a customer who got homeowners coverage directly, with no agent: “What’s actual cash value? How do I understand this?" Who do they talk to?

That need for advice is pushing customer sentiment for omnichannel.

We’re also seeing a lot of non-rate initiatives in the industry, maybe a new payment plan or new underwriting terms. But customers may not have time to schedule an appointment and go visit an agent between the hours of 3pm and 5pm. You need to be able to offer that advice digitally.

Our thesis is that there is value in bringing choice and advice in omnichannel but delivering it in a more modern way to remove customers’ pain points.

And COVID changed a lot of thinking. A customer maybe said they would never interact with their agent on Zoom or Teams. Well, that's the only way you could have interacted with your agent during COVID. Once customers got a taste of the technology, many realized they no longer must go into a brick-and-mortar office.

Paul Carroll 

People have been talking for a good 25 years now about the “Amazon effect.” Amazon lets me hit one button and buy something, and customers hold other companies in other industries to that sort of standard of simplicity. Just about every company suffers by comparison. Insurers certainly do. Could you walk us through where the fracture points are in the insurance buying process?

Bryan Davis 

If you think about a typical value chain from insurance, there's what we like to call discover-to-quote. Let's say somebody is moving and needs to figure out what insurance they need for a house closing or new auto insurance if they move from, for example, New Jersey to Florida. We call that the discovery phase. New Jersey and Florida are different, and we need to get advice and counsel about what we should do. What should the experience be there?

The best experience for discovery, not only in the insurance industry but in any industry, looks like a Google, so you should incorporate those principles.

Then you go to the next phase, which is quoting.

You keep pulling that thread all the way through the value chain, to minimize the friction on the handoffs. And you can do that now through cloud computing APIs [application programming interfaces]. You can say, ”Give me the Google type of APIs for that experience” -- and a lot of these are being delivered just on the cloud hosting platform, so you eliminate the friction. Before, it was like you had discovery over here and then a whole other quoting site over here. The information didn’t even transfer from one place to the next.

And because of that, you might just have to start the whole process over. Think about that from a customer standpoint. Personally, that drives me crazy. I spent all that time and already provided my information, and then I finally get on the phone, and they say, “Can I have your name?” Didn't I just give you all that?

Those are some of the things that we're talking about on the drops and handoffs that lead to a less than optimal experience. On platforms like Amazon, from discovery all the way down to service, they know who I am, they know what I watched, they know what I like. In insurance, we need to close the gap. That’s what customers are expecting now. And that’s what insurance distributors should be thinking about delivering.

Paul Carroll 

As you continue to enhance the experience, what might it look like in a year or three?

Bryan Davis 

The ultimate experience would be to place insurance wherever a customer wants insurance to be placed. If you buy a house, how would you feel about having insurance just come with the mortgage? That’s possible now through technology that enables what’s called embedded insurance. But instead of just giving the customer one insurance carrier option, what about embedding a marketplace in that experience so they have choice?

Insurance can be embedded along with the things that matter most to customers. However, it's not like customers are waking up in bed, thinking, “The new vanishing deductible is coming out next week.” Customers are, however, waking up thinking about the new iPhone or the Air Jordan sneakers that are coming out. Customers have a ranking of what is more prioritized.

That's what our customers told us. They're busier with their heart, their family, their TV binging, and they want to be less busy with their head. So let's make insurance easy. Let's attach it to other purchases using the technologies available to do that.

You wind up with more of an ecosystem approach, where everyone needs to declare their place and where technology is the glue that brings everything together in a seamless manner for consumers.

Paul Carroll 

I certainly subscribe to the ecosystem trend. Any final words of wisdom related to omnichannel?

Bryan Davis 

If you believe there is merit to the ecosystem approach, then there's a strong case for brokers, and in particular digitally enabled brokers, to play a big role, because you're bringing neutrality to that ecosystem.

Paul Carroll 

This was great. Thanks so much, Bryan.

When Shohei Ohtani, the two-time American League most valuable player, signed his 10-year, $700 million contract with the Los Angeles Dodgers, my first thought was that the structure sounded rather like life insurance.

Okay, that was actually my second thought. My first thought was that my Pirates are dead meat forever and ever. While they delighted me in my youth with superstars Roberto Clemente and Willie Stargell and won World Series in 1971 and 1979, the Pirates' entire payroll is about 25% less than the Dodgers can afford to pay this one player. We're done.

Moving on....

The resemblance to life insurance occurred to me because Ohtani will collect only $2 million of his massive salary each year for the next decade. Then, from 2034 through 2043, he will collect $68 million a year. Ohtani will surely generate enormous revenue for the Dodgers in the coming years, which they can then use to make the real payments to him when they come due -- just as life insurers collect and invest premiums for years or even decades before paying a death benefit. 

But the Ohtani contract sparked some thoughts about other ways that insurers can be more creative about financing, and I suspect many of you will have much better ideas than I do. 

Let's first acknowledge the obvious: Insurance, as an industry, is extraordinarily sophisticated financially, ranging all the way from the work that actuaries and underwriters do in evaluating risk to the analysis that private-equity firms do to determine what buying a book of business from a life insurer will do to let them finance other ventures. 

But there still seem to be a lot of opportunities that are being missed. For instance, the whole world is moving toward subscriptions. I no longer buy my software from Microsoft; I subscribe to it. Car companies are selling subscriptions even to capabilities such as heated seats. So why is so much of insurance tied to annual contracts? Why not monthly subscriptions?

Even if an insurer wants the premium paid up-front, why not help line up financing for that small business that may not be able to comfortably pay for a full year of coverage in advance? Plaintiffs' attorneys are providing financing for a whole range of lawsuits against insurers. Why shouldn't insurers take advantage of financing in other ways?

Creative financing seems to be showing up in the natcat world, as some reinsurers are retreating and as enterprising folks are finding ways to issue catastrophe bonds that will cover at least slices of the exposure. I hope those efforts continue.

I also suspect that there are a great many more opportunities for captives for those willing to tackle the complexities. I'm thinking, in particular, of the opportunities for employers providing healthcare coverage. As health insurance premiums continue to soar, employers can do much better if they can take matters into their own hands. 

There are surely many other opportunities, too, if -- within the restraints of regulation -- we see our balance sheets and financial expertise as a competitive advantage and use it to its fullest.

I should caution that it's possible to get too cute with financial engineering. When Chunka Mui and I had 20 researchers spend two years looking into the reasons for major corporate failures for our book "Billion Dollar Lessons," we found that financial engineering was one of the seven strategies most often lined to catastrophe. 

I'm actually hoping the Ohtani contract turns out to be too cute by half. (Yes, I'm a Dodgers-hater of long standing.) He is deferring the vast majority of his salary so the Dodgers will still be able to hire talent around him, increasing the chances for titles. But you have to assume that a 29-year-old who's had some injury issues won't play for the full 10 years of his contract, at least not at full potential, and, in any case, you'll have a decade afterward in which the Dodgers will be paying $68 million a year to someone who's sitting at home with his feet up on an ottoman. So the Dodgers could be facing a wasteland of a decade or more.

No, my Pirates still won't have a chance. But maybe my daughters' Giants will.

Cheers,

Paul

When e-commerce began to develop in the mid-1990s, the digitization of the process created great efficiencies and opportunities but also produced a challenge: Companies not only had to prepare for a stream of digital interactions but had to manage the many possible handoffs to and from all the interactions that still occurred in the physical realm.

Lots of folks came up with clever notions. The CEO of Charles Schwab wrote a book called "Clicks and Mortar." Someone else came up with the term, "clicks and bricks." In some industries, including insurance, the term of choice is "omnichannel." 

But those coinages mostly just papered over the fundamental complexity involved in combining the physical and digital realms -- and the complexity is profound.

Frankly, most companies weren't any good even at dealing just with the physical interactions. How many times did we all call a company and spend 10 minutes with a representative, then get transferred to a specialist or a different department and find we had to start at the very beginning? What's your name? What's your address? What's your account number? 

As companies have gotten better at interacting with customers over the past 25 years -- and they have, though way too many still make me start over if I get transferred during a call -- they've generally focused on making sure the necessary data gets passed around. That mostly means my account information shows up on the new rep's screen if I get transferred. Often, notes from the initial rep and any prior calls are there, too. Handoffs from a chatbot to a human are pretty smooth if I'm querying a company online.

But I was struck during this month's interview, with Bryan Davis, an executive vice president at Hub International who is responsible for its VIU digital brokerage platform, that he's thinking less about the data and more about the humans. Rather than focus on resolving the data exchanges that happen between the computers, he talks about smoothing the handoffs that touch the customer.

"The customer needs exit ramps at certain points," he says. "Sometimes, they just want a quote and not to be bothered. Other times, they just want to get advice and not to be bothered. Sometimes, they want to transact completely digitally without being bothered.  

"Most folks are somewhere in the middle. They might say, 'I want a quote, I want to learn and be left alone. But I do want to check in with someone to make sure that I'm buying the right thing,' Insurance is complicated. You may have some folks who say, 'Hey, I value human touch. I might want to go into the office and talk to a person.'"  

The human tendency, because of something known as "anchoring bias," is to start where we are and then work outward. We start with our existing processes and try to improve them. We start with our existing departments and data flows and try to make them work better. 

But we need to recognize our bias and then set it aside as best we can, so we free ourselves from the limitations that existing processes, departments and data flows impose on us. We need to be able to look from the outside in, to see ourselves and our processes as our customers do and then to try to become what they want us to be. 

Cheers,

Paul

---

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AI has swept the world by storm, and, as with any technological innovation, how it will evolve and be leveraged by businesses in not only the coming years, but the coming months, is unclear.

The technology is advancing rapidly, and the benefits for businesses are undeniable, from improved efficiency and automation, to better customer service, to increased productivity, to enhanced analytics... just to name a few.

But the benefits come at a price: AI is the Wild West, and, as such, it carries risks.

AI lacks regulations. There are only loose guidelines and ethics provided for industries that individual businesses can take…or leave…at their discretion. While it’s difficult to know where, exactly, AI is going, we do know that AI poses cybersecurity risk, regulatory and compliance risk, misuse and error risk, plagiarism and intellectual property risk and risks associated with transparency and bias. While strategies and tactics do exist to address each risk, the question remains: Are they enough?

Take Amazon. Its AI-based experimental recruiting tool was found to be biased against women when reviewing resumes. Because most resumes were submitted by men, the AI was “taught” to favor male candidates–even when specific women were far better qualified.

Amazon disbanded the program, but it highlights how AI lacks contextual understanding and leaves the door open to unintended discrimination. This leaves businesses vulnerable to not only legal consequences but reputation damage.

To avoid this risk, businesses could ensure they have employment practices liability insurance (EPLI). However, EPLI policies have limitations, and coverage specifics can vary among insurance providers. Certain exclusions and conditions may apply, too. 

See also: The Risks of AI and Machine Learning

The Challenge With Insuring Against AI Risk

Like EPLI, numerous insurance options exist within the traditional insurance market to address AI risk. For example, cyber liability insurance addresses losses associated with data breaches or cyber attacks, because AI systems often process large amounts of data. There’s also technology errors & omission (E&O insurance) for claims related to AI system failures or glitches, and directors and officers (D&O insurance) can protect company leadership from AI-related oversights. Intellectual property (IP insurance) provides protection from claims stemming from copyright or intellectual property infringement. Insurance to address AI risk is available, but with each of the policies mentioned, the following challenges exist:

• Complexity: AI poses complex risks. Technological innovation and advancements, like AI, are new risks that may be difficult to understand and predict. Rapid advancements make it challenging to anticipate the full extent and impact. Insurers may face uncertainty in defining policy terms, exclusions and coverage limits, leading to ambiguity in insurance contracts.
• Lack of historical data: Insurance is traditionally based on actuarial data and historical patterns of risk. However, emerging technologies and evolving risks often lack sufficient historical data, making it challenging for insurers to accurately assess and quantify these risks.
• Lack of standards: With evolving risks, there may be a lack of industry standards and best practices. This makes it difficult for insurers to establish consistent risk assessment methodologies and underwriting criteria. This can lead to inconsistencies in coverage offerings across different insurers. 
• Shifting legal and regulatory implications: Technological advancements often outpace the development of regulations. The absence of established guidelines can make it challenging to determine liability and coverage parameters for emerging risks.

In addition to the challenges above, if we go back to the EPLI example and the fact that limitations and exclusions create coverage gaps and vulnerabilities, any of the insurance options mentioned have the same downsides. You can secure cyber liability insurance to protect against AI risk, but if the claim is based on losses stemming from misuse tied to human error, the claim will likely be denied. 

Alternative Solutions to Insuring Against AI Risk

If so many problems exist with insuring against AI risk, does this mean insurance is useless? The answer is a clear “no.” Traditional insurance continues to be necessary, but it’s critical that businesses consider solutions to fill the gaps and limitations in these policies–or else be left to costly exposures. 

One solution that businesses are using is cyber insurance. When cybercrime or a cybersecurity issue causes business interruption or a breach, a cyber policy will likely cover it. However, AI is complicated. Harvard Business Review recently published an article, “The Case for AI Insurance,” that said businesses are “woefully unprepared” for AI risk because cyber policies often won’t cover AI failures resulting in brand damage, bodily harm and property damage. Also, AI-related risk continues to be an active and evolving area of research, according to the article.

In terms of an actual, AI-specific policy, that’s yet to be determined due to market variables as the technology is still the Wild West in terms of regulations, the legal landscape and actuarial data. However, a captive insurance company could write an AI policy that addresses everything AI-risk-related the business faces.

Captive insurance is a licensed insurance company owned by the business or business owner that provides insurance coverage exclusively for the parent company. It allows businesses to manage their risks directly and more cost-effectively. For AI risks, captive insurance is especially useful because businesses can customize their policies to align with their specific AI initiatives. It offers greater flexibility in terms of coverage, underwriting and claims handling, empowering businesses to address the unique and evolving AI risk landscape. A policy written by a captive insurance company can remove exclusions a traditional insurance policy might have. 

Also, captive insurance policies are particularly useful to address risks that are difficult to insure against because the premiums paid to the captive insurance company, minus claims, are retained as profit. This profit accumulates and can then be used to cover lost revenue or litigation fees tied to AI failures or issues.

See also: The Rise of AI: a Double-Edged Sword

In Conclusion

Traditional insurance, AI insurance and captive insurance can all play a role in effective and comprehensive AI-related coverage. Traditional insurance is ideal for covering broader risks, while AI coverage and captive insurance provide more specialized coverage. Beyond insurance, businesses should also stay informed regarding AI developments, best practices and emerging regulations–establishing a robust approach to risk management.