KEY TAKEAWAYS:

--While building codes have long been set by local authorities, national standards are emerging for resilience in buildings.

--The commercial insurance community -- insurers, brokers and property owners alike -- must begin to develop and implement an organizational mindset for property resilience.

----------

The history of the standards we use for how we build structures -- homes, apartments and commercial and manufacturing buildings -- has largely to do with regional authorities determining what criteria they need to meet to keep the occupants of the building safe. Building codes traditionally reside under the authority of local governments, which determine a bare minimum requirements for their jurisdiction. But the realities of a warmer climate are changing this framework.

The Biden-Harris administration recently launched an initiative to modernize building codes, improve resilience in buildings and reduce energy consumption and costs. The National Initiative to Advance Building Codes provides incentives and support for state, tribal and territorial governments to enact and enforce building codes. Adopting stronger building codes increases the resilience of structures and can help in meeting the U.S. decarbonization targets.

As the federal government provides guidance on the next era of building codes, the commercial insurance community -- insurers, brokers and property owners alike -- must also begin to develop and implement an organizational mindset for property resilience.

What Is Property Resilience, and How Do You Get There?

Property resilience is the ability to withstand shocks or stressors and, with relative speed, return to normal business operations. If a hotel in South Florida experiences flooding as a result of a Category 1 hurricane, how quickly can the facility welcome back its guests? If a distribution warehouse facility in Tornado Alley is built to withstand 100 mph winds, how quickly can it be expected for the warehouse to resume normal operations? Questions like these form the basis for an organization's approach to resilience, going beyond the simple framework of disaster, claim and recovery.

Resilience sits firmly inside the realm of things we think about when it comes to commercial insurance. But operationalizing resilience happens beyond securing revised terms of coverage when your policy is up for renewal.

Calculating Your Risk — What does it mean to calculate risk? An equation that helps us think about risk would be Hazard x Exposure x Vulnerability = Risk. The vulnerability of a particular building is the degree of loss of a specific type of element (building attributes) at risk given the intensity of the hazard.

See also: Business Resilience Will Be Tested

Resilience as an Investment Framework — We are already experiencing extreme weather events as a result of a warmer global climate. With that said, choosing to acquire or to build new assets from the ground up must also consider what it would take to make the most resilient edifice possible. Gone are the days of meeting local building codes exclusively for safety. Those with large commercial portfolios have a responsibility to consider potential impacts -- extreme weather, supply chain disruptions or pandemic -- and work back to mitigation efforts from there.

Planned or Existing Properties — Understanding your portfolio as it stands today, its collective resiliency measures and how to build or acquire to reduce risk in the future is also a necessary component in crafting a framework for resilience. If you have an office building in Northern California that is located in an area prone to wildfire, but was built in 1986, how do you retrofit that building to survive a fire? Is it sensible to invest in retrofitting with fire protection measures? Might the cost of covering the building point to retaining the risk yourself? Outlining a methodology for making decisions like these will increasingly lead, not only in pursuing insurance but in how portfolio level decisions are made.

Building for Resilience — Despite the challenges we face as a result of a warming climate, capital will always seek deployment. If capital is deployed (in the form of new property assets), it makes sense that those assets be built with the latest types of mitigation technologies. Even if doing so raises the price of the structure as a whole, it stands to reason that the extra cost will be covered both in terms of lower insurance premiums and the ability to withstand outside stressors. Though it may be tempting to avoid the additional costs, the future necessitates an aggressive approach that can save time, money and capital when disaster strikes.

The road to the next generation of building standards in the era of climate change will certainly be long. But starting the practice of asking how resilience can be a part of the entire property lifecycle -- from acquisition, to operations, to liquidation -- will take your organization a great distance in protecting and maximizing assets, even in the midst of a warmer climate.

KEY TAKEAWAY:

--The types of automations that result in the biggest return on time, and thus profit, range from notifications (license expiration, date reminders, continuing education data notifications, workflow event creation) to license renewal submissions, license updates, license copy retrieval, etc.

----------

The use of automation—especially for manual, time-consuming tasks—could very well mean the difference between viability and extinction for many insurance carriers and producers in years to come. 

Why? Agencies, brokers and carriers are spending an inordinate amount of time and money on back-end processes that are taking them away from their core objectives. 

At the same time, many forward-looking organizations are taking advantage of incorporating intelligent automation across their entire lifecycle, reaping a myriad of benefits, including less expenditure on mundane processes, while allowing for more time on those tasks that will indeed affect their bottom line. 

Automation offers insurers a number of advantages, including:

• Centralizing the tracking of all insurance carrier/producer information
• Liberating compliance teams from tedious administrative work 
• Streamlining producer compliance by aggregating data from different sources 
• Driving a more unified regulatory workflow
• Leveraging compliance data to empower strategic decision making 

See also: A Low-Tech Approach to Work Automation

The types of automations that result in the biggest return on time, and thus profit, range from notifications (license expiration, date reminders, continuing education data notifications, workflow event creation) to license renewal submissions, license updates, license copy retrieval, etc.

For instance, the license renewal process includes the following manual and labor-intensive tasks for compliance teams:

1. Determining if there are any background check issues with the licensee
2. Submitting the renewal
3. Waiting for approval
4. Updating the new license data
5. Retrieving a license copy from the state website

It's a big advantage to automate this entire process. At Rhoads, for instance, our AI knows when expiration dates are coming up, and we automatically message the individual to update their background answers. We also store these answers and automatically submit the renewal. And, upon approval (by the state), we update the new license expiration date and retrieve a license copy for storage. 

Insurers are now able to do more with less. Automation and technology can address the routine tasks that compliance teams need to perform, freeing them to apply their expertise to exception management. 

Experts no longer need to spend their time on routine tasks and can use their acumen to focus on what drives the company forward. Automating compliance saves on operational as well as back-end costs, allowing organizations to do more with their current workforce.  

Make automation more than a buzzword for your organization and discover the value in terms of time and workforce savings and, of course, profits.

KEY TAKEAWAYS:

--Cyber insurance carriers should stop relying on security questionnaires and should perform active scans to determine the digital assets and overall security posture of each applicant.

--Insurers must then monitor the risk continuously. Cyber-attack trends and techniques evolve rapidly, meaning the risk and performance of a policy can differ drastically not only from year to year but also within a 12-month policy period.

----------

Cybersecurity risks continue to pose a significant threat to businesses, and the insurance industry is feeling the impact of these attacks. The percentage of insurance clients opting for cyber coverage has risen 47% over the last several years – while the costs associated with cyber events have steadily increased. 

The increasing frequency of large-scale cyber-attacks — WannaCry, NotPetya, Log4j, ProxyNotShell, to name a few — has highlighted the potential for catastrophic events and the resulting financial losses. This has put pressure on insurance companies to find new ways to mitigate risk and protect their policyholders.

Too often, insurers have reacted through traditional methods, such as enforcing limits on coverage and capacity, raising premiums and seeking coverage from reinsurers. But these approaches may not be sufficient in the long run.

Insurers must take a more comprehensive approach, including (1) practicing risk selection informed by the latest cyber security threat landscape, (2) maintaining constant awareness of the digital assets they insure, (3) scanning continuously for emerging risks, (4) identifying vulnerable companies quickly and accurately and (5) helping their insureds implement security patches as quickly as possible.

Issuing a cyber insurance policy without promptly assessing an organization's security stance is comparable to providing property insurance without comprehending the building materials used in its construction.

Unfortunately, many traditional cyber insurance policy processes and applications do not gather essential security details, such as the software and tools employed by the insured. This often leads to over-reliance on security questionnaires, whose answers are inherently biased and may not be completed by the correct technical staff.

Active scanning can offer a solution to this problem. Cyber insurance carriers can perform active scans to determine the digital assets and overall security posture of each applicant at the time of underwriting. This gives insurers real-time views of a company's digital assets and vulnerabilities – and enables much better risk selection and pricing decisions.

Such active scanning should be complemented with continuous risk monitoring. Cyber-attack trends and techniques evolve rapidly, meaning the risk and performance of a given cyber policy can differ drastically not only from year to year – but also within a 12-month policy period. Continuous cyber risk monitoring of an organization's digital infrastructure over the course of the policy periods allows insurers to keep pace with the changing threat landscape and the technological evolution of companies.

Amid an age of rapidly advancing cyber threats, insurance companies should start a program of active scanning and continuous cyber risk monitoring of insureds and their digital assets. By adopting such measures, insurers can improve their loss ratio and better protect their policyholders against cyber risks.

You can find a whitepaper on the topic here.

Sometimes, you get so caught up in what you’re doing that you miss the significance of what you’ve done. 

Recently, we were working with a client, driving efficiency in their claims operation, sweating over a lost and unaccounted-for minute, when Marcin, our customer success leader, said, “Do you remember when we got here and (the client) was trying to manage to the month?” We all laughed and got back to work. 

Only later did the significance of Marcin’s observation dawn on me. The first, fairly obvious reason is that we had helped our client actually manage to the minute. The second, less obvious reason is that the desire to find that lost minute came as much from workers as from management. The front-line people wanted to know where it went. 

Think about that both operationally and culturally.

Then consider that it’s one short step from granular performance metrics to performance-based pay. Why pay anyone by the hour any more?  

I could go on, but in the interest of your minutes I’ll end there.

KEY TAKEAWAYS:

--Custom health plans allow employers to choose the vendors that build up their health plans, such as the administrator, claims manager, pharmacy benefit manager and reinsurer. By contrast, in the retail model, all of these vendors are prepackaged.

--When these components of a health plan are shopped competitively, premiums can be reduced substantially, and employees can share in these savings in the form of reduced deductibles, copays and out-of-pocket costs.

--With a custom plan, businesses only pay for the healthcare services that their employees actually use, meaning there is often money left at the end of the year that can be delegated to other business needs.

----------

The national uninsured rate for health in the U.S. reached an all-time low of 8% in 2022, according to the Congressional Research Service. People have put greater focus on their health since the COVID-19 pandemic, resulting in more employees participating in employer-sponsored health insurance plans.

Unfortunately, some employees who receive health insurance through an employer-sponsored plan may still be underinsured. A 2022 Commonwealth Fund Biennial Health Insurance Survey revealed that 23% of working-age adults were underinsured in 2022, meaning their coverage did not deliver affordable access to healthcare.

An economic downturn caused by the pandemic has restored attention to health insurance coverage as millions of people struggle to pay their bills. As a result of these economic stressors, more employers are shifting toward custom health plan solutions to reduce costs while improving benefits for employees.

Turbulent Times With Rising Premiums and Stagnant Wages

There are several reasons why so many working Americans remain underinsured, such as rising healthcare costs, public program cutbacks and erosion of employer-based insurance, as well as recessionary conditions.

Today, nearly half of all Americans receive their health coverage through employer-sponsored insurance. However, premiums for health insurance coverage are rising faster than many workers’ wages, causing employees concern about affordability.

A recent survey conducted by the Kaiser Family Foundation found that two in five adults who were enrolled in an employer-sponsored health insurance plan had difficulty affording healthcare or health insurance.

Rising healthcare costs are a primary driver in the increased cost of commercial health insurance. High-cost healthcare services, coupled with stagnant wages across many companies, have left many workers with concerning amounts of medical bills and debt.

Millions of Americans Struggle With Medical Bills or Debt

An estimated 41%, or around 100 million adults, currently have healthcare debt, ranging from $500 (16%) to $10,000 or more (12%), according to a Kaiser Family Foundation report.

Adults who are underinsured face some of the highest medical bill problems. A Commonwealth Fund survey found that 51% of underinsured adults have difficulty paying their medical bills or reported that they are currently paying off medical debt.

The survey also found that adults who were paying off their medical bills over time and had high deductibles or were underinsured had the largest debt loads.

See also: Employee Wellness Plans' Code of Conduct

Fearing Debt, More Americans Work Through Illness or Health Issues

Research has proven time and time again that there is a direct link between employee health and productivity. Employees who are mentally, physically, financially and socially healthy are more likely to do their best work compared with employees who are struggling in one or more of these areas.

According to the Centers for Disease Control and Prevention (CDC), the indirect costs of poor health, such as absenteeism, reduced work and disability, are often several times higher than direct medical costs. In addition, productivity losses due to family or personal health issues cost employers in the U.S. approximately $1,685 per employee each year, or about $225.8 billion annually.

Many employees are also concerned about accumulating more debt. To prevent more financial struggles, many Americans choose to continue working, even while experiencing illnesses or other health problems. In turn, employees feel unhappy, unmotivated and unable to perform at a satisfactory level in the workplace.

Design an Employee Benefits Package That Protects Your Employees

Designing a comprehensive and affordable benefits package can help employers meet the unique needs of their employees, while also using their budget effectively and creating a competitive offering that appeals to job candidates.

As costs on the retail health insurance market continue to rise, employers are looking for opportunities to lower their healthcare costs while making sure that no employees are underinsured. One alternative arrangement that is quickly gaining popularity across the nation is custom health plans.

Custom health plans allow employers to choose the vendors that build up their health plans, such as the administrator, claims manager, pharmacy benefit manager and reinsurer. By contrast, in the retail model, all of these vendors are prepackaged. When these components of a health plan are shopped competitively, premiums can be reduced substantially, and employees can share in these savings in the form of reduced deductibles, copays, and out-of-pocket costs.

How Custom Health Plans Make Coverage More Affordable

Businesses are always on the lookout for new ways to make healthcare coverage more affordable without hurting the health of their workforce. A custom health plan is one strategy that can save companies money without sacrificing employee health.

Custom health insurance plans tend to be more flexible than retail plans. They provide companies with the opportunity to more effectively tailor their healthcare plans to meet the unique needs of their employees and the business.

With a custom plan, businesses only pay for the healthcare services that their employees actually use, meaning there is often money left at the end of the year that can be delegated to other business needs.

Custom health insurance plans allow employees to still get the benefit of a wide network of healthcare providers, including hospitals, doctors and specialists. In fact, custom health plans are often built on the nation’s largest networks, like the Blues, United, Cigna, Aetna and Humana.

See also: Huge Opportunity in Disability Insurance

Make Sure Your Employees Are Covered With a Comprehensive Benefits Plan

Designing an employee benefits plan to retain employees and increase productivity can be complicated. However, creating a benefits plan that allows employees to gain access to affordable and comprehensive medical insurance is essential to stay competitive and give back to your hardworking workforce.

As the problem of underinsurance continues, it’s important for employers to develop plans that not only insure their employees but also sufficiently cover them in terms of out-of-pocket costs.

As insurers complain that younger people aren't buying enough insurance and wonder how to reach them, I observed an object lesson last week in what not to do. 

My daughter Shannon was offered a position that paid enough and was interesting enough that she was considering taking it even though it doesn't come with health benefits. As we discussed the pros and cons on the phone, she did a quick search to see what health insurance would cost her, and... look out below. 

The calls started pouring in — five, six seven, eight... even before we wound up our brief call. More than 150 calls hit her phone in the 24 hours after her tentative inquiry. 

When she answered a few calls, to see if she could politely tell companies to shove off, she mostly got a rude, hard sell. One rep told her he'd leave her alone as soon as she signed a contract. 

I'm sure there's plenty of data about how the first person to respond to an inquiry is the one mostly likely to make a sale, but I'm guessing that there has been less thinking about the effect on a millennial when scores of companies try so hard to be first that they shock a young prospect with an onslaught of calls. I'll bet there's data, too, on how well hard sells can work on people contacted by phone, but, again, there's a cumulative effect, especially on those experiencing insurance for the first time. 

Shannon isn't just ready to tell health insurers to shove off. She's ready to tell the whole industry to take a hike.

I'll let her explain. Here's Shannon:

I have a deep-seated fear of not answering my phone when it rings.  I get notified on my Apple Watch when a call comes in. I make sure I can hear my phone when I’m in another room. If — heaven forbid — I’m not going to be able to answer, I text the people most likely to call to give them a head’s up. I am Ms. Always Attached To Her Phone.

But last week, I did the almost unthinkable: I put my phone on "do not disturb" and refused to even look at it or answer it. 

Why?

Because I *tried* to get some basic information about health insurance. And instead, I got bombarded with calls. And then more calls. Then even more calls. I got calls while I was talking on the phone on the other line. I got calls while I was walking my dog and while I was running, which interrupted my music — a complete and total no no. I got calls while I was awaiting other important calls, which caused me to miss the calls I actually wanted to take. I got calls while I was working, while I was cooking, while I was binging TV, while I was sleeping. 

My phone would not shut up.

In all, I received more than 183 calls. I say "more than," because my call log won’t go back far enough for me to count all the calls. There would have been even more calls if I hadn’t realized I could just indiscriminately start to block numbers I didn’t have in my contacts. That may mean I blocked some friends — in which case, I am so, so sorry, but we’re never going to talk again.

Eventually, I started answering some of the calls, because I was so annoyed. I told some of the callers I was on the National Do Not Call registry — they hung up. I told others I wanted them to leave me alone, and they proceeded to try to sell me harder. "Oh, you’re not interested? What changed your mind?" "Ah, yes, I can make the calls stop… once you sign up for a plan with me." "Well, you were interested at one point, so let’s chat."

When I summarily told the insurance agents to stop calling me, the same numbers kept calling me! One called me back six times in a row. Some guy was trying to sell me life insurance (which I hadn’t even looked into).  

All I wanted was some simple info.  

Before I recently moved to the East Coast, I had a car. Which means I had car insurance. Want to know how purchasing that insurance went? I put my info into a couple of different sites, and they gave me competing quotes. I picked one, gave the company money and was sent insurance cards. The same kind of process happened when I was recently looking at renter’s insurance. I wasn’t called 900 times. I didn’t contemplate dropping my phone from the third-story balcony. The process was easy — and more importantly, it was online. 

Look, I’m 29 years old. And as much as I’m attached to my phone and as much as I never want to miss something important, I don’t actually like talking on the phone. And that’s not just a me thing! My generation would rather text or email than have to have a fully fledged phone call. We’d rather send 20-minute voice notes than actually be chatting on the phone for 20 minutes. I make all my important appointments from behind my computer screen. I only really like to talk to people in my (extensive) contacts list. Calling me, nay, BOMBARDING me isn’t the way to get me to sign up for your insurance plan. Instead, you’ve turned me off on your company completely. 

Here’s how I would have liked my health insurance search to happen: I’d have made myself a cup of green tea and sat down at my desk. I’d have poked around on the internet for a bit (where else would I connect with fellow fans of the K-pop group BTS?) before pulling up a few insurance-related websites. I’d have read about some different plans. I’d have put in my basic health details and would then have been directed to a site showing plan options. I’d have compared options and selected the one I liked the best. I would have given that company my money. And then I would have shut my computer and gone off to watch my English Premier League team, Arsenal, lose. 

It would have taken less than 20 minutes. And I wouldn’t have gotten one phone call, let alone 183-plus. 

This was such a negative experience that I’m dreading having to follow all the way through with this process. Do I actually want health insurance? Do I definitely need it? I’m aware the answer to both questions is "yes," but I don’t want it to be. I don’t want to have to hide from my phone. I don’t want to have to screen every call I get. I don’t want to have to block numbers just to get my phone to shut up for 0.2 second. I don’t want to be harassed. And I want to be able to make it up the hill at the end of my run without the song “Not Today” getting interrupted by insurance agents who feel entitled to harass and plague me.  

I guess it turns out that I'm Ms. Always Attached To Her Phone — Except When It Comes to Health Insurance.

----

You see why I try to stay on Shannon's good side.

I hope you do, too -- and not just with Shannon but with all the other millennials and Gen Z's coming along who are trying to figure out how to buy the insurance they need. 

Cheers,

Paul

The insurance industry has been slow to change. But going by the optimism and excitement at insurance conferences — among industry giants, insurtechs, thought-leaders, and decision-makers — over all the latest developments in the industry, we can safely say technology is driving change.

Across the industry, companies are trying to make up lost ground and accelerate digital transformation. They’re integrating emerging technologies into their operations while others are partnering with insurtechs to launch entirely new business models.

Carriers and insurers are asking: how can we harness innovation to meet business needs across the enterprise, including within customer experience?

Here are some insights into what industry leaders believe will shape the future of insurance.
 

AI Is the New Frontier for Insurance Innovation

AI is not coming for insurance — it is already here. Insurtechs, carriers (and brokers) are scaling their AI initiatives to solve business challenges — from unstructured data digitization and claims processing to fraud detection — and stay competitive.

The question on everyone’s mind is: how can we capitalize on AI and technology to reach the modern consumer?

Maximize all your data sources from agents to IoT to funnel into AI. Build volume and ensure quality that allows you to be predictive. Develop agile ecosystems through strategic adoption that support personalized, AI-powered customer experience from quote to claim. Balance artificial intelligence with human insight to seize opportunities from personalization to refined risk and streamlined claims. 

While AI is a game-changer for the insurance industry, we all agree it must be deployed responsibly.

The Age of Pilots and Trials Is Over

Companies — even those slow to implement digital technologies — are now implementing solutions at breakneck speed. They are embracing customer experience (CX) and employee experience and moving from experimenting with “newer” technologies to integrating them into their solutions. Digital transformation has become a burning priority — many organizations are fully down the path to successful (and long-term) transformation journeys — and the momentum will likely continue. However, getting back to basics around data, process, and customer experience is potentially where a large portion of the industry will still see a “big bang,” as those may be areas many companies may still have to focus on. 

Not All Automation Is Created Equal

Not every automation project succeeds: there are four common mistakes companies make.  

The first mistake is automating without completely understanding the process you're trying to automate. Making room for all variations in a process is critical. That’s why processes may need to be redesigned first before automating them. Because "Automating a poorly designed process just makes bad things happen faster." 

Secondly, only some have a quantifiable business case. Building an automation business case involves quantifying the impact automation will have on critical metrics than merely identifying areas for automation.

Instead of treating automation "as a hammer in search of a nail," where you go after as many automation opportunities as you can find, focus first on optimizing key processes as best as possible.

And finally, quantifying results and ROI is essential in the early days of implementation as this helps build a future business case for more resources.

While process metrics such as efficiency, throughput, and cost/effort are standard methods for measuring the impact of automation, business metrics such as customer satisfaction and revenue also need to be considered.

There’s a Hidden Opportunity in What You Already Know About Your Customers

On average, most insurance companies have few touchpoints with their customers. But through data and analytics, insurers can focus their efforts on driving growth through better customer experiences. With the right tools and data, they can improve this improved customer experience through analytics and make that experience stellar.  

Data can help you unlock the full customer story and offer coverage that adds the most value to your business. When you look closely at every stage of your customer acquisition process, you get a better understanding of why they convert — and why they don't. 
When you know why your prospects say "no," you can make improvements and convert them to "yes." 

It’s well known that insurance companies make minimal investments in customer experience after they've acquired the customer. But if you must grow, you must acquire and retain, and continue to ask – "what else can we do?" Here’s where you can lean on data to guide you.

Murray, I've included your additional point as another key takeaway. I just streamlined the thought a little. Please let me know if it works. Thank you. 

Author Bio

Murray Izenwasser, Senior Vice President, Digital Strategy At OZ, Murray plays a pivotal role in understanding our clients’ businesses and then determining the best strategies and customer experiences to drive their business forward using all of the real-world digital, marketing, and technology tools. Prior to OZ, Murray held senior positions at some of the world’s largest digital agencies, including Razorfish and Sapient, and co-founded a successful digital engagement and technology agency for 7 years.

Sponsored by ITL Partner: OZ Digital Consulting

ITL:

Let’s start off with your basic thesis on where insurance distribution is headed, then get into some of the details. Does that sound like a plan?

Adam Chadroff:

Sounds good.

There was a consensus view from, call it, 10 years ago until two years ago, at least among non-insurance folks, that technology was coming for agents. Digitization and digital leverage would make relationships meaningfully less important. The role of an agent would be superfluous over time.

That didn’t happen. People want agents when they shop for insurance. It’s not the same as shopping for other items on the internet. The stakes involved if you get insurance wrong are really high, and the complexity of the transaction is much higher, even for some personal lines products.

In fact, I saw a survey that said that many people don’t just want an agent; they want one who is co-located, so they might be able to meet at some point.

But I think there’s a second point: that digital leverage also matters. The fact that agents are enduring doesn't mean digital technology is a passing fad.

The way you interact with your agent will become tech-enabled, and the agents and agencies that succeed in the near and medium term will be the ones that really learn how to use that digital leverage effectively.

I was recently looking at some stats about how agencies and brokerages started leveraging technology more during COVID -- the virtualization of meetings, messaging capabilities, self-service portals and so on. But usage of some of these fairly basic tools is still quite low.

In my view, succeeding as a distributor will mean leveraging more technology to meet customer demand for a simpler process and to reduce your operating expenses because you’re more efficient. Another way I’ve seen that operating leverage framed is as a way to let agents focus on the things that matter, like actually selling insurance, taking more time to provide advice and perhaps expanding into products that haven’t been in your wheelhouse. That efficiency is also a retention tool.

ITL:

It sounds like a lot of progress can be made just by doing better with the technology that's available now. It's sort of, in the land of the blind, the one-eyed man is king.

Chadroff:

There’s a ton of different opportunities to embed technology to create a better customer experience, to sell more coverage, to sell coverage that better meets the needs of your customers and, thus, to retain your customer. I think all parts of that process can be digitally enabled.

That could look like better CRM [customer relationship management]. That could look like better analytics at the point of sale to recommend products. That could look like better integration between the different counterparties, such as brokers and agents and carriers, for providing coverage, for obtaining documentation, for making policy changes on demand. Those technologies can create a much better customer experience and can accelerate processes. There's innovation on licensing and training, on payments and so on across the value chain.

The challenge is getting the tools into the hands of agents, because the brokerage landscape is heavily fragmented and there’s not always openness to trying or paying for new software. Historically, there's just not been exceptional technology. And today, while there's a lot of emerging products, it's still largely point solutions, which often don’t fit well into your AMS [agency management system]. It’s challenging to find the right products and to integrate them in a way that is effective and doesn't seem complicated.

Agents are already grappling with a wide array of disjointed systems and workflows. So if a new product or technology is perceived as yet another complexity being added to the process, I think there can be less willingness to adopt it.

ITL:

I've seen people argue that the increasing reliance on technology suggests scale matters, because the bigger agencies are more likely to be able to adopt the technology than smaller agencies. Do you agree with that or not?

Chadroff:

To an extent, scale is important. You’ve certainly seen lots of acquisitions aimed at gaining scale. I do think, though, that there are ways for independents and smaller organizations to recreate some of the benefits of scale.

For example, if it's increasingly important for agents to be able to deliver advice that's not just monoline, but across a wide array of products and tailored to a customer's needs, then one solution is to have scale and be part of a larger organization. Another approach is to have the technology that makes it seamless to deliver recommendations and placement and products across a much wider array of product categories and lines of business.

It can be more challenging for smaller agencies to adopt technology, but when deployed, that technology can also reduce the gap between scale and sub-scale.

ITL:

What about everybody’s favorite topic these days: ChatGPT?

Chadroff:

What I would be thinking about is, how could I leverage this sort of technology to be more efficient or to deliver better advice faster to my customers? That could mean the promptness with which I can answer their questions or how I can retrieve data from the multitude of different sources to recommend products or assess the gaps in their coverage.

ITL:

If I had to summarize, I'd say it sounds like, three or five years out, we're going to have pretty much the same model we have now, but more efficient and effective for both agents and customers. Does that sound right?

Chadroff:

I think that efficiency and effectiveness will just accelerate both because of the availability of the technology and because of increasing openness to it. I believe agents will increasingly recognize that technology is an enabler, and it’s their friend.

And that's why I'm very excited about platforms that help agents reduce friction in their workflows and deliver a better end-to-end experience for insurance shoppers and insureds.

As we’ve seen in other complex, fragmented industries, things move slowly until they move fast.

ITL:

Thanks, Adam.

About Adam Chadroff

Adam Chadroff is an investor at Equal Ventures, where he focuses primarily on insurance and benefits. Prior to Equal, Adam held roles at venture-backed fintech companies, most recently as head of operations at Counterpart, a commercial insurance startup, and previously as an early member of the product team at Policygenius. Previously, Adam worked in institutional equities and global capital markets at Morgan Stanley. Adam holds an MBA from the Wharton School, and a BA in international relations from Stanford University.

When you talk with a venture capitalist, you expect to hear about disruption and transformation, maybe about finding a "ten-bagger" (an investment that returns 10 times the original investment). But that wasn't the message from this month's interview with Adam Chadroff of Equal Ventures. I'd summarize his take on the future of agencies and brokerages as "the same, but different."

"The same," because all the talk of disintermediation is well and truly gone. Agents and brokers turned back all the insurtech challengers that tried to sell directly to consumers. The role of agents and brokers is now valued more than at any time in recent memory.

"But different" because technology keeps improving, so agents and brokers have to, as well. They need to keep making the buying and servicing process easier for customers and need to stay focused on operating more efficiently, to keep costs down. 

Some good news: In the same way that customers have learned they can be more demanding of their agents and brokers, agents and brokers can now be more demanding of their technology suppliers. What's good for the goose is good for the gander. 

Technology offerings thus far have been mostly point solutions -- digital payment software, a chatbot, and so on -- rather than a fully integrated, next-generation platform. But the trend in almost every industry these days is for impatient customers to insist that suppliers do the integration rather than providing piece parts and wishing customers good success. And the various offerings for agencies and brokerages have now matured enough that they can, and should, start demanding that suppliers do more of the integration for them.

I'll let Adam take it from here, in the interview.

P.S. Here are the six articles I'd like to highlight this month for agents and brokers:

STRATEGIES FOR INDEPENDENT AGENTS

Strategic targeting of commercial sectors with consistent hit ratios can lead to more efficient prospecting and, ultimately, higher conversion rates.

INSURANCE IS NOT A COMMODITY

But, with carriers running so many ads focused on price, agents need to work hard to get consumers to focus on the differences between policies.

THE NEXT GENERATION OF TALENT

With those born at the peak of the Baby Boom having reached 65 years old, here are five ways to attract the next generation of agents and brokers. 

APIS: THE KEY TO INSURANCE ECOSYSTEMS

Application programming interfaces offer health insurance brokers an efficient and modern way to manage data and processes.

SAY GOODBYE TO CYBER'S 'DATING PROFILE'

It's time to move past vague questions that try to determine companies' resilience to cyber attacks and move to precise, data-based ratings.

HOW MY VIEW OF CHATGPT CHANGED

The tone of articles about ChatGPT has rapidly shifted from "amazing but not always accurate or high-quality" to "this is significant progress."

KEY TAKEAWAYS:

--There are multiple considerations when choosing a fertility clinic, such as pricing, success rate and what the percentages are for singletons vs. multiple births.

--Another important consideration is whether a vendor’s performance claims have been vetted by an independent third party, like the Validation Institute. If not, why not?

----------

Does your company’s health plan offer fertility benefits? What’s the case for making these services available, and what issues should you consider in choosing a vendor?

A recent World Health Organization (WHO) report found that one in six people worldwide experiences infertility during their lifetimes and one in eight experiences it at any one time. Infertility is “a disease of the male or female reproductive system defined by the failure to achieve a pregnancy after 12 months or more of regular, unprotected sexual intercourse.” The report clarifies that infertility is a common condition worldwide. Any employees and their partners, both women and men, including singles and those in the LGBTQ+ communities, can need help in forming a family. For employers, workers with infertility issues are likely to have physical and emotional burdens -- e.g., anxiety, depression and financial stress -- that corrode employee engagement and productivity.

Infertility care can be expensive. A single in vitro fertilization (IVF) cycle -- ovarian stimulation, egg retrieval and embryo transfer -- can range from $15,000 to $30,000. Many patients require multiple IVF cycles before getting pregnant or taking a different path.

While 12 states have mandated coverage of fertility services, its cost has led many employer benefits managers and consultants to consider it a “premium” benefit, meaning that they’re most popular with employers in high-margin industries. The result has been limited coverage, with only one in four people getting the treatment they need. 

Even so, 97% of employers offering infertility coverage say that adding it did not significantly increase medical plan costs. They appreciate that these services are prized by many employees and can often be a deciding factor in the competition for top talent. 90% of employees with infertility concerns say they would change jobs for fertility benefits. 61% claim that receiving benefits increased their loyalty. 58% think it is discriminatory not to provide fertility benefits. 

A number of fertility companies have come into the market in recent years, and it can be difficult to compare them. Here are some key issues to consider:

• What are the recruitment criteria for the fertility companies’ physicians and clinics networks? Do they rely on objective data related to health outcomes and cost?
• What are their rates of singletons vs. multiple births? Singletons are likely to have a higher gestational age than multiple gestation births, so they typically have lower morbidity and mortality rates, as well, with better health outcomes and lower costs. It’s critical to know what each vendor’s numbers are and what they’ll guarantee.
• What is their pricing and what is it based on? 
• Is the employer-paid portion fixed or flexible/discretionary? Does the fertility vendor offer employers a range of subsidy options?
• Is the vendor backed by private equity or venture capital investments? If so, it’s almost certainly paying a 20% to 30% annual interest rate on those investments that must be built into the vendor’s pricing structure. Organizations that have bootstrapped their operations, with lower-cost capital typically have a competitive pricing advantage.

See also: 20 Issues to Watch in 2023

Another important consideration is whether a vendor’s performance claims -- fertility or other --  have been vetted by an independent third party, like the Validation Institute (VI), and if not, why not. (Disclosure: I serve unpaid on the VI’s Advisory Board.)

The VI stands behind its validation process, offering customers of validated solution providers up to a $25,000 guarantee for claims-based validations and up to $50,000 for program validations. They offer four validation levels, with 4 representing the highest. 

1. Contractual Integrity, meaning that a vendor “is willing to put part of their fees 'at risk,' as a performance guarantee.”
2. Metrics, meaning that “credible sources and valid assumptions create a reasonable estimate of the program’s impact.”
3. Outcomes, meaning that “the product/solution has measurably improved an outcome of importance.”
4. Savings, meaning that “the vendor can reduce healthcare spending per case/participant or for the plan/purchaser overall.”

As I wrote this article, I pulled up the VI home page, clicked on Validation Reports and searched using the keyword “fertility.” Up popped the names of 11 fertility companies, including Carrot Fertility and ARC Fertility, which had sought validation. Nine others were marked “Not Validated.” The VI’s listing does not include all U.S. fertility vendors.

Carrot achieved a Level 2 validation (Metrics) for their savings calculator. The report reads, “For each component in [Carrot’s] logic model, Validation Institute verified each assumption, data source and calculation. The model gives an evidence-based estimate of the program’s impact.”

ARC Fertility achieved Level 3 (Outcomes) and 4 (Savings) validations on two different performance claims. The Level 3 claim was “ARC Fertility clinics’ patients have a lower rate of multiple births (twins, triplets and higher) than all other U.S. clinics' average. Multiple births impact the health and the medical costs for mothers and babies.” The Level 4 claim was, ”By reducing the frequency of twins and higher multiple births, ARC Fertility reduces employers’ cost for offering fertility benefits.”

In ARC Fertility’s validation report, VI accessed a data repository maintained by The Society for Assisted Reproductive Technology (SART), which 86% of U.S. fertility clinics participate in. Members contribute specified data on each fertility patient's treatment and outcomes. VI used this resource to compare ARC’s health outcomes and savings with the average performance of other fertility firms. Other member firms can perform a similar analysis.

Which is to say that objective information is available to judge the relative performance of fertility services firms, making it straightforward to identify a vendor that is likely to deliver the highest value care.

(I have no financial relationship with any of the companies named in this article.)