For many years, I have advocated for the insurance industry to coalesce in pursuit of a perception change. The industry clearly gets a bad rap. ProfitableVenture notes seven reasons why people think insurance companies are bad. I think at least a few are missing from this list. 

You hear people say insurance companies are not trustworthy, are uncaring during times of need and only focus on profits. From college-students considering careers, we often hear that insurance is boring and bad.

The only child who ever said they want to go into insurance when they grow up was someone with a relative in the business. Someone who guided them into the industry by helping to debunk the stereotypes and myths about the space. To all my friends in the industry, tell me that isn’t true…

The industry has two major perception strikes against it: It’s bad, and it’s boring. People coming out of school today can’t handle boring, and they certainly don’t want to work for a company seen as doing bad in the world.

But, those who know a little something about insurance know that both of these perceptions are simply not true.

The fact is, the insurance industry is one of the most caring and philanthropic around. People working in insurance are there to protect you and the property you own. Helping others is part of the insurance DNA, and the vast majority of insurance brokers and underwriters are committed to serving their clients in their best interests. 

McKinsey and the Insurance Industry Charitable Foundation, a nonprofit that unites the collective strengths of the insurance industry to help communities and enrich lives through grants, volunteer service and leadership, reported in 2020 that industry-wide charitable giving was more than $560 million between 2015 and 2019. 

Using information collected by IICF, the Insurance Information Institute estimated U.S. insurers and their charitable foundations donated $280 million in response to the COVID-19 crisis alone. 

I couldn’t find much data on volunteerism, but all the insurance brokers and underwriters I know support their hundreds of thousands of employees to volunteer in communities across the nation and around the world. The IICF alone has tracked more than 110,000 industry volunteers giving more than 320,000 hours of service through IICF volunteer projects. Volunteerism is widespread and important in the insurance industry.

The industry is doing many good things in the world. It gives back – in a big way.

As for being boring, the insurance industry is far from it. I tell anyone who will listen, “Don’t knock it till you try it.” I’ve seen over the years how people reluctantly agree to take on insurance-related clients to lead communications, awards, executive positioning, brand activation efforts and more, only to fall in love with the complex topics, financial metrics and real implications of the work. Managing risk is the foundation of decision-making, and in today’s world of volatility – from climate change to political uncertainty – weighing the risks and mitigating them is more critical than ever. It’s an incredibly interesting space to be in, and I highly encourage young people to give it a shot.

See also: Key Insurance Exposures for 2023

But, back to the task at hand. How do we change the long-held negative perceptions about the insurance industry? I believe that the insurance industry should come together to undertake a wide-scale and fully integrated campaign to improve the industry’s reputation. That campaign should include such actions as:

1. Reaching out to high school and college students – particularly kids interested in math – to show them the kinds of solutions provided by insurance and the possibilities for building careers in insurance.
2. More effectively measuring the total philanthropic impact being made by the industry in terms of giving and volunteerism and reporting the result to consumers, businesses and government officials.
3. Being more visible among business leaders on issues of climate change, health and wellness and other topics. Taking a seat at the table among the thinkers and actors working to make the world a better place. Insurance executives should lead conversations at the local level and at national and international platforms like local chambers of commerce, TED, Business Roundtable, World Economic Forum, Cop and so many more.
4. Calling out the bad players for what they are. Let’s not gloss over the fact that there have been some shady businesses in the industry in the past. Likely, some still exist. Let’s step up and call out those players. Let’s get rid of the bad actors.

We didn’t get to this place of overarching negative perceptions about the insurance industry overnight, and those perceptions won’t be shifted overnight, either. But, if the industry were to come together to more vocally explain its good work and great impact and more forcefully educate young people about the incredibly fulfilling careers to be had in insurance, there is no doubt in my mind that the industry’s reputation would improve. You can bet I’ll be telling my kids to consider a career in insurance

The cyber market has been in flux for about as long as it’s been around. New hackers use new techniques to exploit new vulnerabilities and use new methods of collecting ransoms. Meanwhile, victims and their insurers scramble to try to stay one step ahead of the bad guys, as rates rise – then rise some more. To sort through the latest trends, we sat down this month with Emma Werth Fekkas, RVP of underwriting at Cowbell Cyber. She offers any number of insights, including that those constant rate rises are likely a thing of the past.

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ITL:

Let me start by asking you what you think the two or three biggest issues are that are facing cyber market at the moment.

Emma Werth Fekkas:

One of them is around clarity of coverage, what it does, where it applies and how it fits into other policies and overall risk management. Cyber is such a new product and new coverage that I think we're all still trying to find our bearings and find where this is really the best fit.

ITL:

Are there particular areas of confusion?

Werth Fekkas:

There are a couple of hot buttons. One is around war. There are a lot of cyber terrorism carvebacks and a lot of debate around what was the intention of a cyber policy. Does it apply to cyber terror terrorism—and how do you define cyber terrorism? Should government come in and define it? There's been a lot of movement to define kinetic war differently from cyber terrorism. There's a lot of debate, and currently, different insurers are handling that differently.

ITL:

Quick aside. I think the term “kinetic war” is just a crazy euphemism. I mean, people are firing guns, artillery and missiles at each other, and we use a cute little word, “kinetic,” to describe that.

Werth Fekkas:

Right?

ITL:

I didn’t mean to sidetrack you.

Werth Fekkas:

The other piece is what we call infrastructure exclusions, or named perils, things like that. Prior to COVID, cyber started covering things like business interruption, and the wording kind of broadened to make coverage more appealing and meet the needs of our policyholders. But the wording sometimes can take on something it wasn't intended to and start to look more like a property or GL [general liability] coverage. So there is some pullback, defining when business interruption for a cyber policy would fit in and when it goes under more of your standard property and casualty coverage.

ITL:

Is there a big issue related to rates? Insurers have typically really wanted to push rates up because this is potentially really expensive stuff, but clients have often balked.

Werth Fekkas:

I think you're going to see rates coming down. It depends a bit on where you are in revenue. Rate declines will be slower for larger companies, I think, than for smaller companies. But I do think we're coming into a softer market now. And so we are going to see more competition and more price adjustments.

ITL:

That’s interesting. How quickly do you think that can happen? This year? Next year?

Werth Fekkas:

I would say throughout this year. You're probably going to see a significant difference between January and December, for sure, moving faster in the smaller and middle market space than in the larger space.

ITL:

A thesis I’ve had for a while is that insurance needs to move to what people are calling a “predict and prevent” model, away from “repair replace,” and cyber seems like a perfect spot for the transition. The more secure you are, the less you need to worry about insurance and the less the insurers need to worry about the risks. Are you seeing a shift?

Werth Fekkas:

I am. At Cowbell, we're able to continuously scan our policyholders and notify them of any vulnerabilities that are coming up. A little while ago, Log4J was a big one. We were able to get an idea of how many clients were potentially affected and notify our insureds and their brokers of how to mitigate the problem. We're going to have more and more of that.

There's going to be more and more partnership between cyber insurers and technology vendors to help companies see what they can do up-front to mitigate certain exposures.

ITL:

Is it a big deal, medium deal or small deal that law enforcement has managed to recover ransom payments made in cryptocurrencies, which were long thought to be untraceable?

Werth Fekkas:

It's a fairly big deal. It's certainly helpful for us to have some protection, to be able to mitigate what we're paying and to know we're getting to the root cause of some of these attacks. On the other hand, there have been frustrations among clients about having assets frozen and other measures taken, even though they know those measures protect them, in the end. To clients, it can look like investigators aren’t helping, that they’re part of the problem.

ITL:

How about trends in attacks?

Werth Fekkas:

Business email compromise is still the main way in. If it ends up in ransomware, of course, it's higher-severity. Overall, the main issue is higher frequency.

ITL:

What about countermeasures companies are taking?

Werth Fekkas:

We always stress training, but, of course, not all training is created equal. MFA [multi-factor authentication] is a big one. But if you just have MFA for email, it’s not as effective as if you have MFA across your entire system. Another one is EDR and MDR. EDR is endpoint detection and response. It checks each computer as an endpoint and notifies you when there's a threat there. MDR is more toward monitoring. We’ve learned in the past couple of years that a lot of threat actors are kind of dormant in your system. They’re monitoring your activity so they can make it look a lot more natural when they send you a phishing email. So, MDR seems very helpful, as well.

ITL:

You can monitor what might be monitoring you.

That really covers it from my end. Any thoughts you want to leave us with?

Werth Fekkas:

There’s definitely lively conversation in cyber right now, coming out of the hard market. Now is the time to do a post mortem, of what was working and what wasn’t? What can we now do as the market softens?

ITL:

Thanks, Emma.

 

Across the insurance landscape, commercial P&C firms are facing a host of challenges when it comes to underwriting talent. Rapid shifts in the makeup of the workforce, combined with technological innovation, global trends and industry-specific realities, have added considerable complexity to the process of attracting and retaining high-impact employees.

These difficulties manifest across the talent lifecycle, from recruiting and onboarding to advancement and retention – and the industry is feeling the pressure. According to a white paper from training firm Attensi, 55% of insurance executives surveyed said that talent acquisition and retention difficulties could prevent growth in the year ahead. And with a report from PwC finding that 71% of P&C insurers expect to increase staff in the next 12 months, the problem will only intensify.

One way to overcome the talent crisis is by leveraging technology to support talent. Technology provides a real opportunity for employers to differentiate themselves in the market and foster a happy, engaged and productive workforce. While many view it as having disrupted the status quo, when pointed in the right direction it can serve as a unifying force, enabling diverse underwriting teams to achieve transformative results while collaborating more closely than ever. Let’s explore how.

The Challenge: Demographic and Professional Evolution

Perhaps the biggest driver of the talent crisis in underwriting is that the hiring pool is changing rapidly. PwC found that the average age in the U.S. workforce is now 43 to 45, down from 55 just a few years ago – and that’s created pressure at both ends of the spectrum.

At the younger end, millennial and Gen Z prospective employees are digital natives – they have used modern technology throughout their lives, including in their educational and internship experiences, and expect their companies to arm them with the right tools and support. But many insurers have taken the opposite approach, making limited to no investment in modern digital workflow tools and cutting valuable training programs. To would-be underwriters, this lack of support is often striking, leading them to seek employment in other industries and further shrinking the pool of candidates.

At the other end, baby boomers and Gen X underwriters are finding that their roles are changing rapidly, with more quantitative workflows and fewer manual tasks that were once core to the profession. The risks they must account for are more numerous and ambiguous than ever before, such as climate and cyber. This has led to some senior underwriters feeling pushed out of their roles at the precise moment they are most needed.

Amid these rapid shifts in the workforce, it is imperative that different generations are brought together, not driven apart. Through close collaboration, senior underwriters can pass on a wealth of industry knowledge to those just starting out, while new hires can help their mentors learn the latest technologies. Together, they can combine their varied perspectives to shape and interpret quantitative findings far more effectively than any one person.

The pandemic has exacerbated the disconnect between employees and the breakdown in communication. Remote and hybrid work has made it even harder to onboard underwriters and give them the support they need, so they often feel a lack of engagement and empowerment. The pandemic has also led to a decrease in communication and organic training opportunities that happen when underwriting management and the underwriters collaborate in person and discuss risks. All of this can have an isolating effect, making employees less likely to feel a sense of meaning and community in their jobs – and less likely to stick around.

See also: Why the Decline in Underwriting Quality?

The Solution: Technology That Unites and Empowers People

While there are many elements that go into talent acquisition and retention, we believe that the right technology can facilitate real-time sharing of information, bringing together employees of all stripes and driving greater collaboration in the workplace. This kind of teamwork is something that many people are missing in the modern workplace, especially as we emerge from the pandemic. By driving greater collaboration, firms have an opportunity to differentiate themselves and more effectively fill underwriting roles – and keep them filled – even as the talent crisis ramps up.

Let’s examine some of the potential impacts across the talent lifecycle:

• Recruiting – Insurance firms should view modern technology as a recruiting tool, just as they do benefits and culture. The most talented candidates tend to gravitate toward roles that give them a chance to work with the latest systems – they make the role more engaging while providing an opportunity to practice related skills that could apply far into the future.
• Onboarding – Technology that drives communication and teamwork makes for a better employee onboarding process, especially in a post-pandemic world. When new and more junior employees can more easily navigate platforms, view how others interact with them, ask questions and get answers from veteran underwriters, they are more prepared to make an immediate impact, boosting their confidence. These cross-generation interactions can also help more senior employees learn the latest technologies, driving impact across the business.
• Development – Underwriting is a dynamic business function, with new risks and better processes always coming to the fore. With the right technology, underwriters can seamlessly adapt to these shifts and ensure they remain high performers even with this inherent uncertainty. It also enables them to maintain their edge over underwriters who do not have access to these capabilities, setting them up for career-long success.
• Retention – The right technology can drive retention at all levels. Junior underwriters feel more engaged and empowered, while veteran underwriters can evolve their workflows, remain in the industry for longer and apply their expertise to solving new challenges and training future generations.

There isn’t a single ideal approach to this evolution of underwriting technology – the right approach can vary widely based on the nature of your employees, clients, region, target audience and more – but the bottom line is that what you do can have a major impact on your talent pipeline. Stay tuned for specific examples of how the concepts outlined above can and have been applied to advance insurance businesses in ways never thought possible.

You can find this article originally published here on twosigmaiq.com.

There seems to be a common misconception that all workers’ compensation losses are flat to slightly improving. While that might be true for the frequency of smaller claims, it definitely is not the trend in the frequency and costs of large death and permanent total disability claims.

“Over the last three years, Safety National has seen frequency of severity like we have never seen before. This includes a 30% increase in claims with incurred over $10 million, along with a rise in claims with incurred of $5 million to $10 million,” said John Csik, president of Safety National. “Although these large claims are infrequent, when they do occur, the costs are high and continue to escalate. This is definitely a trend that should be on the radar of every broker and risk manager because, eventually, these costs impact premiums.”

Why Many Have Not Heard of This Trend

Bureaus such as NCCI and WCIRB focus their research on the first-dollar market, which is composed of a high percentage of small employers. These bureaus cap loss severity in their analysis and exclude claims that are open past 10 years. This approach does not accurately account for the long tail development and payout associated with catastrophic claims, which continue well past 10 years. In addition, self-insured employers that represent a significant percentage of the U.S. workforce, especially in segments such as public entities, hospitals, educational institutions and large employers, generally do not report loss information to the NCCI or state rate-making bureaus.

Cost Drivers Influencing This Trend

Significant advances and use of medical care and technology are increasing accident survivability and prolonging life expectancies for severely injured workers. These advances also considerably increase the quality of life and independence for injured workers.

Accident survivability for severely injured individuals has increased significantly due to better triage care on the scene, the use of air ambulances for rapid transportation to a hospital and the high-level care provided by level one trauma centers. People are surviving what used to be fatal injuries, but there are significant costs associated with this initial treatment.

Further, catastrophically injured individuals are living much longer. Medical science has advanced, preventing the complications that once led to reduced life expectancies in patients with severe burns or with quadriplegia. That means that a quadriplegic in their 20s could live 30 to 40 more years, requiring around-the-clock attendant care.

Another contributing factor is that the large cost drivers associated with catastrophic injury claims are often not covered by fee schedules. These drivers include extended ICU hospitalizations, extensive durable medical equipment, advanced state-of-the-art care and attendant care. The costs of these services are increasing at rates far greater than normal medical inflation. For example, attendant care rates have more than doubled over the past 10 years. How will these rates develop over the next 10 years?

Legislative expansion of benefits through various measures has also contributed to the increasing costs of severity on catastrophic claims, including cancer presumption laws in the public entity market. These laws establish a presumption that certain types of cancer contracted by first responders are the result of duty-related exposure. Varying by state, cancer benefits for first responders continue to expand, with changes ranging from the types of cancers that will be covered by workers’ compensation to the extension of filing periods. These claims often take time to develop and can have an extremely long tail. It is not uncommon to see a claim with an incurred well under the policy retention suddenly jump in value because of a recurrence of the cancer years after the original diagnosis. Because of the cancer presumptions, these losses are also showing up in workers’ compensation.

With all the advances in medical science in the last 10 years, it is very difficult to forecast what the standard of care will be for catastrophically injured workers in the future. However, it is likely that advances will continue and that costs associated with such claims will continue to rise.

See also: 20 Issues to Watch in 2023

Final Thoughts

The latest medical advances are improving the efficiency of claims management and the effectiveness of patient treatments in workers’ compensation. From enhanced neurological tests that assess brain trauma more rapidly to nanotechnology applications that target cancerous tumors more effectively, medical innovations are reshaping the future of claims management. Further, these incredible developments offer the ability to restore catastrophically injured workers in situations that would otherwise result in permanent disability or death, thus costing less in the long term.

As the industry faces rising costs, there are several measures that can contribute to cost reduction. Insurance carriers have incredible expertise and access to resources like predictive analytics and medical cost controls to assist with cost-cutting efforts. They can provide valuable insight into risk transfer, help improve safety practices and offer actionable reporting on claims trends. Excess carriers, in particular, routinely see the worst work injuries that result in larger and lengthier catastrophic claims and can serve as a considerable ally in the plan for the best claims outcomes.

With an abundance of options for insurance, consumers today demand – and expect – seamless experiences and personalization from every interaction with brands. To stay competitive in today's environment, carriers and insurtechs must revolutionize their customer experience to meet the wants and needs of the modern consumer.

But how?

In an industry that has historically relied on limited data points such as age, household income and driving history, the next generation of insurers must look beyond these attributes and embrace new forms of data and analytics, including contextual, behavioral and motivational data.

Thinking Outside the Box

By now, most innovative organizations and business leaders understand and are even leveraging the power of data to make decisions, drive targeted marketing campaigns and improve customer experience (CX). However, oftentimes the data being used is incomplete or off-base or does not provide insight into the modern consumer. Do we really need data points like "Yellow Pages Users" in 2023?

Data that goes beyond demographic information and other traditional attributes through advanced analytics and cutting-edge statistical techniques can provide robust information on the identity, behaviors, motivations and future actions of individuals and businesses. This type of data – often referred to as predictive data – enables insurers to make more informed decisions based on their customer preferences and needs, market trends and other key factors that affect their business outcomes.

For example, insight into shopper intent and likely future needs can drive your targeted offering strategy and even product development; insight into an individual’s professional life can uncover cross-sell opportunities; and more.

See also: Key Insurance Exposures for 2023

Customer Experience 2.0

Predictive data allows insurance companies to gain a valuable view into actionable, unique and often unknown factors outside of traditional insurance data points that can help improve the customer experience. Here are some powerful thought starters on how predictive data can help insurance companies enhance the CX:

1. Personalize your customer engagement by boosting what you know about prospects in real time.

It is obvious that the more you know about a person, the better you can anticipate and address their needs and even exceed their expectations when doing so. The same thing applies when it comes to the insurance customer experience. When dealing with a limited view of who people are – such as only their age, gender and marital status – you can only do so much.

When you are empowered to customize messaging based on characteristics like price sensitivity or quality concern, direct your targeting based on your prospect’s preferred marketing channel, provide digital experiences to those eager to adopt new technology and more, you are able to provide quality, personalized experiences for even more customers.

2. Identify cross-sell opportunities and grow customer value by examining all aspects of life – both personal and professional.

With many insurance carriers offering a variety of lines of protection, cross-sell opportunities are a no brainer. However, a data-driven approach should be taken for cross-sell efforts to be effective and actually helpful to your customers. Insight into all aspects of life – both personal and professional – gives insurance brands the ability to identify and prioritize their efforts toward customers most likely to need other products.

Perhaps there are a million current consumer auto customers who are also identified as independent business owners. These business owners may be ideal prospects for a specific business insurance product that independent agents are unable to sell but that corporate could cross-sell. Or let’s say another segment of 1 million auto customers are likely to be renters who may move in the next three months. These policy holders would be prime candidates for renters insurance offers or bundles.

3. Optimize your offering by understanding your best policy holders.

If you enrich your customer database with thousands of new personal and professional insights, you’re guaranteed to unlock insights into who your most profitable policy holders are. By analyzing many more data points beyond your first-party data, you can more easily understand which attributes are leading indicators of profitable customers. And when companies can better understand unique traits about their most profitable customers, they can improve their media, messaging and experience.

What if you found out that a certain product’s customers are heavy video gamers? Perhaps your brand would choose to run more mobile ads or even gamify the application process.

While the insurance space can enhance customer experiences with predictive data and analytics, incorporating such information into the insurance process is not a simple task. It's also important to note it's just one piece of the puzzle. Insurance brands must also invest in other areas, such as technology and customer support, to truly offer the best customer experience possible. As technology and data continue to transform the insurance industry, those that take advantage of predictive data to create exceptional customer experiences will be best positioned to thrive in the years to come.

Anger over growing social inequality and the cost of living, foundering faith in governments and institutions and increasingly polarized politics, together with a rise in activism and environmental concerns, are expected to fuel strikes, riots and civil commotion (SRCC) around the world, according to a new report from insurer Allianz Global Corporate & Specialty (AGCS). The heightened SRCC risk environment means businesses need to remain vigilant about the different threats. In addition to buildings or assets suffering costly material damage, operations can be severely disrupted, resulting in significant loss of income.

Strikes, riots and civil commotion have not only increased in recent years, they are also becoming more intense and catastrophic. These types of events are making our era one of uncertainty. We have seen multibillion-dollar loss events in the U.S., Chile and Colombia. The threat is changing, and although many of the reasons for it are universal – whether economic, political or environmental – it can play out differently in different regions, with various levels of violence and disruption. Operational and security management within organizations should view the current climate as a catalyst for evaluating best practices and policies around preparing locations and employees for potential civil unrest and building resilience.

Civil unrest risks rose in over 50% of countries between Q2 and Q3 2022 alone, according to the Verisk Maplecroft Civil Unrest Index -- out of 198 countries, 101 saw an increase in risk. Since 2017, more than 400 significant anti-government protests have erupted worldwide. It is unsurprising then that political risks and violence" ranks as a top 10 peril in the Allianz Risk Barometer in 2023. While the Ukraine war is a major factor, the results also show that the impact of SRCC activity ranks as a political violence risk of top concern with a combined score of almost 70%. 

Unrest is now spreading more quickly and widely, thanks in part to the galvanizing effect of social media. This means multiple locations can be affected, potentially resulting in multiple losses for companies. Such events are also lasting longer -- almost a quarter of the 400 significant anti-government protests since 2017 exceeded three months – helping to ensure financial costs are mounting. Reported damages from just six civil unrest events around the world between 2018 and 2023 resulted in at least $12 billion in economic/insured losses.

See also: The Cost of Uncivil Discourse

Five risk drivers of civil unrest

In the report, AGCS’ political violence team highlights the five main factors they expect to power further SRCC activity in 2023 and beyond:

The cost-of-living crisis: Although inflation is now thought to have peaked in many countries, the effects continue to take their toll. Just over half of protests globally in 2022 were triggered by economic issues, and public confidence in the financial future is shaky. Half the countries surveyed in the 2023 Edelman Trust Barometer showed a year-over-year, double-digit decline in the belief that their families will be better off in five years. Further protests are likely, and although mostly peaceful, they can turn violent.

Distrust of governments and institutions: Governments thought to be corrupt or perceived to have been in power for too long can bring people out onto the streets. Economic grievances about food, fuel, pay or pensions can expand from issues-led demonstrations to wider anti-government movements. In 2022 and early 2023, protests ignited over the rights of women and minorities in Iran, fuel prices in Kazakhstan, economic failures in Sri Lanka, abortion rights in the U.S. and COVID restrictions in China. Europe continues to be hit by multiple strikes over pay and working conditions. Political instability in Peru, Brazil and Argentina has also resulted in widespread and violent protest.

Increasing polarization: Political divisions are stoking tensions around the world, undermining social cohesion and escalating conflict. Polarized opinions can become particularly entrenched on social media, and in some countries such polarization is turning violent. Recent years have seen a big shift to the left and the right in many countries, with few liberal democracies maintaining a sense of balance where political parties compete for the center ground.

A rise in activism: In recent years, movements that have been significantly galvanized by social media include the global Occupy movement against economic inequality, the Black Lives Matter protests highlighting racial inequality, the #MeToo movement against sexual abuse and harassment and the Stop the Steal campaign, which falsely claimed electoral fraud in the election of U.S. President Joe Biden. 

Where politics are polarized, people can feel a greater sense that their personal values are under attack and will take to the streets to defend them. Riots can erupt as a result around a single flashpoint, such as a heavy-handed response by authorities that is deemed unjust. These can then escalate across a wider area, with larger numbers of people involved, to become civil commotion. If this spills over into violence and opportunism, businesses can be vulnerable to property damage and looting.

Climate and environmental concerns: Where governments are seen to row back on climate-change progress, such as fracking or reopening coalmines as a solution to reliance on Russian gas, there could be unrest. Businesses that are deemed to profit excessively from fossil fuels while many people struggle could also be targeted. 

See also: Cost-of-Living Crisis and Civil Unrest

Implement, test and update continuity plans

Civil unrest can be difficult to predict because it often starts with a specific trigger such as a change in government, a piece of new legislation or a sudden price rise. However, there are many things businesses can do to minimize disruption. Allianz Risk Consulting has developed a list of technical recommendations for companies, such as implementing, and then regularly testing and updating, a business continuity plan. Specialist insurance can help protect companies against damage resulting from political violence, as well as any interruption to the business. Policies can cover civil war, SRCC, terrorism and war.

To read the full report, please visit Outlook: Strikes, riots and civil commotion – a test of business resilience.

Technologists have the challenging job of providing their companies with holistic technology and data strategies that satisfy needs today while accounting for future growth. 

Within commercial P&C insurance, we see two common approaches. There’s the “essentials first” approach, where you seek out solutions to meet basic functional needs like policy or claims management before tackling the big-picture objectives such as increasing your ability to grow the business. More often than not, this approach leads to a lengthy quest for an elusive end-to-end solution that will support the flow of business from ingestion to claims before you settle on a policy administration system.

There’s also the “patchwork” approach, where you endeavor to discover best-in-class point solutions for each part of the policy lifecycle and bring them together in a grand strategic vision for a complete tech stack for your business partners. This approach requires a sizable budget and staff and can take a few years or more to deliver actual value to the business.

In both cases, the long time to value tends to result in losing valuable trust from business users. They continually hear about the promises of the technology, but the longer it takes to deliver, the greater their expectations, to the point that they become unmanageable.

To avoid these issues, we advocate for a third, “user-first” approach where you progress toward the strategic vision while delivering a steady stream of value for the business and the users. 

Step 1: Defining the Problem

Too many technologists can connect with this story: You deliver something that you feel is genius, only to have nobody use it.

As technologists, we often enter conversations with business partners assuming that we already have the answers to their problems and that we are there to sell our vision for how technology will save the day. While there are times when this may be true, this assumption is almost guaranteed to result in a project that undershoots expectations. 

One of the most overlooked and critical elements of delivering value to end users is empathy. Understanding the pain points that users experience in their daily tasks is non-negotiable and the first step in developing solutions to alleviate them.

The first thing I do when embarking on any new technology project or entering a new domain is to observe the users in their daily work. Experiencing firsthand what they do, why they do it and how they do it is an opportunity to truly understand the semi-unconscious aspects of their jobs – the ones they do without thinking. Couple that with user interviews to further uncover their motivations and you will have a solid foundation to start problem-solving. 

See also: Humanized Experiences Are the Key

Step 2: Increments, Please.

Once you’ve established an understanding of your users’ challenges, the next step is to deliver value on some incremental cadence. You don’t need to solve every problem in one fell swoop. In fact, solving a single problem or a small number of problems early will win you the trust and freedom to engage in longer implementations of additional solutions.

Identifying these early increments might be as easy as enabling a seemingly small capability that saves time or a new piece of data that makes a decision easier. For more complex companies with multiple business units, it could mean tackling a single unit as a pilot to validate the strategy and use that success to energize other stakeholders. In addition to generating quick wins, this tactic has the added benefit of avoiding situations where you pre-optimize or over-generalize to the point of providing low or no value to the business. 

Real talk from a vendor: All-or-nothing proposals from technology providers are a red flag. If the initial value takes more than a quarter (give or take) to deliver, then you need a different plan.  

Step 3: No Such Thing as Overcommunication

Perhaps the most important aspect of a successful technology project is communication with stakeholders. To ensure expectations are managed, I live by the following principles:

• Be Clear – Align on the value that you’re building toward and when it’s coming
• Be Realistic – Don’t sandbag or overpromise 
• Be Inclusive – Don’t just talk to the managers, talk to the users
• Be Honest – Obstacles are inevitable, so don’t try to cover them up

It’s almost impossible to produce a successful technology program without strong communication to the business and the users. The best technologists I’ve worked with excel at this and are always having conversations with the people intended to get value from their initiatives.  

See also: State of the Insurance Marketplace

There is no one right way to design an insurance technology initiative to deliver outsized value for your business. That said, the three steps outlined above are a winning combination to ensure you build trust and continually add value for your business partners. 

As a technologist, I see my primary responsibility as solving problems for real people, and these lessons are hard-won through making many mistakes over two decades developing software across the finance and insurance markets. Keep an eye out for more articles where I’ll dive deeper into these areas and give concrete examples for commercial P&C insurance that you can use as a blueprint for your own technology projects.

This article was originally published at Two Sigma Insurance Quantified. 

FROM THE EDITOR  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. Yes, criminals have gotten much more sophisticated, moving well beyond hacks of credit card numbers and personally identifiable information to ransomware and other attacks that can shut down an entire business. Some even offer hacking-as-a-service or at least pool their efforts with criminals with expertise in certain parts of the hacking process. But insurers and their clients haven't stood still, either. They, in particular, have become better about training employees to avoid hackers and have developed much more sophisticated tools for spotting and stopping attacks. Governments have helped, too, by going after hackers, including tracking and recovering ransom payments made to them in cryptocurrency.    No one is claiming victory. This is a Spy Vs. Spy scenario in which both sides will attack and counterattack as long as hackers see paydays to be had. But we do seem to have reached a much more mature understanding of the threat and of how to deal with it, both through better security and through insurance.   As you'll see in this month's interview, with Emma Worth Fekkas of Cowbell Cyber, the relentless increase in rates seems to have ended. In fact, she predicts rates will actually decline by the end of the year.    Now, that's a change.   Cheers,   Paul The cyber market has been in flux for about as long as it’s been around. New hackers use new techniques to exploit new vulnerabilities and use new methods of collecting ransoms. Meanwhile, victims and their insurers scramble to try to stay one step ahead of the bad guys, as rates rise – then rise some more. To sort through the latest trends, we sat down this month with Emma Werth Fekkas, RVP of underwriting at Cowbell Cyber. She offers any number of insights, including that those constant rate rises are likely a thing of the past.  Read the Full Interview "There’s definitely lively conversation in cyber right now, coming out of the hard market. Now is the time to do a post mortem, of what was working and what wasn’t? What can we now do as the market softens?"  —Emma Werth Fekkas Read the Full Interview READ MORE A New Era of Cyber Risk Geopolitical conditions, specifically those related to Ukraine, have increased risks as nation-states orchestrate prolific cyberattacks against other countries. Read More Who to Blame for a Cyber-Attack? Some 2,300 business interruption suits have been filed related to COVID-19, and a massive cyber-attack would surely produce even more--and more confusing--suits. Read More Compliance on Cyber Is No Longer Enough There are countless examples of high-impact breaches affecting companies that are entirely cyber-compliant. Read More Insurers Unprepared on Cyber Threats 65% of insurance technologists cited cyber-attacks/threats as even a greater concern than inflation (45%) and retaining and hiring talent (40%) Read More New Cyber Threats Are Emerging While ransomware still dominates among cyber threats, business email compromise incidents are on the rise, and geopolitical hostilities could spill over into cyberspace. Read More How to Fix Data Deficit on Cyber The imprecision on cyber vulnerabilities and how to price insurance are unnecessary. Data is readily available -- if you look in the right places. Read More FEATURED THOUGHT LEADERS Erin Whitmore Christopher Mee David Geller John Allen Gary Alterson Scott Sayce Christopher Strand

Family caregiving has always been an expensive, stressful endeavor but is becoming more so. For the more than 43 million unpaid caregivers in the US, rising healthcare costs, inflation and other key factors are turning up the pressure on families. Let's take a look at the macro trends that are expected to affect caregivers over the next few years.

Inflation’s impact

Every person feels the pinch of inflation, regardless of whether you’re a caregiver. It shows up at the gas pump, where prices have risen 50% since 2019, and at the grocery store, where the average food bill has increased almost 25% during the same period. According to Genworth, the average caregiver spent $10,000 a year on caregiving in 2018, and with inflation that number has likely grown to almost $14,000 today. The impact of this rising cost is increased stress and anxiety as many caregivers struggle to find extra dollars to spend. While inflation has come down since the high of 9% in June 2022, it’s likely to remain somewhat elevated over the next few years and continue to put pressure on caregivers and their families.

Part of the inflation driver is low unemployment and rising wages, which has a dramatic impact on paid caregiving. We often associate family caregiving with those who can’t afford paid caregivers, but that’s not entirely true. According to PHI, there are significantly fewer paid caregivers today than in 2019 due to COVID-19 and one million fewer paid caregivers than will be needed by 2030. There are several reasons for this, but a large driver is that many caregivers left for other industries where the wages were better and the workload much less demanding. 

Another driver is that 25% of paid caregivers are immigrants who left the U.S. in the beginning of the pandemic and haven’t returned, according to the Commonwealth Fund. The U.S. Census Bureau estimates there will be 80 million people over the age of 65 by 2030, and many of them will need caregiver assistance. Given the current worker shortage and the increasing number of adults who need care, it seems likely that family caregivers will continue to be the backstop for their loved ones until we significantly increase the number of paid caregivers.  

This caregiving trend will drive companies to make more permanent workplace changes, which is a benefit for family caregivers. According to Genworth, one out of every three Americans became instant caregivers at the start of COVID, when children and older loved ones moved into their family homes to stay safe. As the pandemic subsided, many have remained at home and created more permanent caregiving situations. For those balancing the responsibility of working and being a caregiver, working from home or hybrid work environments are required. Quiet quitting influenced many companies to reevaluate their workplace strategies and many are now allowing employee scheduling flexibility or job sharing to stave off turnover. In fact, several states, including Maryland, have bills in legislation currently to adopt four-day work weeks for all employees. This experiment may take hold elsewhere and at a minimum is highlighting a shift in how employers and their workers think about work/life balance. As low unemployment forces employers to acquiesce and even further enhance flexibility, this shift will likely continue. 

See also: Insurance's New Math

How can employers get involved?

Tied directly to this new work norm are enhanced employee caregiving benefits. These benefits include robust employee assistance programs (EAP), enhanced mental health benefits, caregiving and daycare assistance and other benefits meant to help ease the burden on caregivers. Employers are more aware than ever that employee caregivers represent a large portion of their workforce and require more assistance to stay on the job. According to the Family Caregiver Alliance, over 60% of these workers had some type of job change during their careers due to caregiving responsibilities, and employers are now paying attention. Evolving caregiving benefits are something we expect to see continue in the workplace and could even accelerate as more companies fight for quality employees and increased productivity.

Technology’s role

It would be impossible to talk about enhancements in caregiving without highlighting the role technology plays. Whether it comes in the shape of new smart home devices, which enable caregivers to virtually watch their loved ones while they’re at work, or new smartphone apps that let families share the caregiving responsibilities, there is more available today than ever before.

Most aging adults want to stay in their home as long as possible, and these advancements are helping them achieve this goal. Future enhancements can be expected in wearable technology, robotics and exoskeletons, which can help aging adults with mobility issues. Machine learning and artificial intelligence will also play a key role in decoding age-related decline and help change the aging trajectory. These are just some of the ways technology will continue to play a vital role in aging in place and caregiving.

The macro trends discussed in this article are just the tip of the iceberg of what’s in store for our aging population and the caregivers who assist them. We can expect new entrants into these categories to push incumbent companies harder and drive more innovation, all of which will benefit the family caregiver and their loved ones.

As insurance agencies increasingly rely on new technology for both back-office and consumer-facing operations, hiring a technology leader to coordinate digitization efforts and upgrades will help maximize the potential of those investments.

An agency technology leader is not another information technology professional. The two have different skillsets, and both are important to an agency’s success.

IT pros vs. technology leaders

IT professionals have no specific background in insurance, but that’s okay because their role is to keep systems up and running on the back side, which is crucial.

Technology leaders, in contrast, focus on the insurance operation first. Their tasks are:

• To analyze how to use the current technology stack to optimize insurance operations. 
• To lead efforts to spot where new technology might work best. The tech leader does the research and analysis, providing agency leadership with supported recommendations.
• To oversee data cleanup, rebuild workflows and identify and eliminate unnecessary technology.
• To help train employees to use new and existing technology.
• To foster future tech leaders within the insurance firm. 

An effective tech leader has experience in insurance systems and processes but also understands organizations and the need to focus on efficiencies. A tech leader intimately understands the agency’s workflow processes and the different end-user experiences of agency leaders, producers, CSRs, other support staff and customers. The leader operates as a high-level thinker, analyzing the agency as a global operation to determine how to integrate technology that benefits the whole, not just its disparate pieces.

Traits of successful tech leaders

The efficiency and profitability of the agency are the tangible benchmarks of their success.

A tech leader needs to be self-motivated, someone who can perform due diligence without handholding. A tech leader’s research is continuous — reviewing vendors and new technologies, monitoring system updates, assessing current operations, looking for new and better ways. 

A tech leader must be highly organized because there are myriad details to consider in insurance and many people whose workflows need to be as efficient as possible.

A tech leader needs to be an effective trainer, willing to sit down with every new employee to review every platform and sales tool, including its visuals, even if that employee won’t use a particular system in their current position. Team members benefit from knowing what is available because one day they might need to use some function of a different system.

Hiring from within

Agencies gain by hiring tech leaders from within their organizations, if possible. Internal candidates will not only understand insurance but also the agency’s unique operations. Internal employees may welcome the growth opportunities a new position with more responsibilities can bring.

Technology partnerships can also help an agency identify key talent. 

See also: 6 Burning Questions on Field Reorganization

My own experience

I was hired from within Deeley Insurance to lead technology after 12 years of insurance experience. I had worked through the different layers of an agency, including at the floor in a support role. My various experiences — including work as a processor, inputting insurance data — gave me a solid foundation for understanding how to improve operations.

Deeley had deployed a number of platforms and technology tools, but some weren’t being used properly or to their maximum potential. One of my early tasks was to lead a process to analyze what functions we actually needed, as well as the capabilities of each system. The process was a smart one, allowing us to knock out several unnecessary elements in our technology stack. Then we analyzed the technologies that we had decided to keep, determining how we could use them to their greatest capability.

This was a positive exercise from which all agencies can benefit. It boosted our efficiencies behind the scenes and streamlined processes for our users. It enabled our leaders, with a couple of clicks, to look into data based on our salespeople and our accounts to be able to sell more insurance. It helped keep our customers and employees happy.

As we continue to adjust to keep up with technology, I ask every day: Why are we using technology that way? How can we better use our data? Why do we need that piece of data?

Hiring a technology leader is a long-term investment. It has helped our leaders at Deeley make great strides, as it can for every agency.