KEY TAKEAWAYS:

--A digital adoption platform (DAP) is a no-code software that integrates with applications to help users learn the application. A DAP provides just-in-time prompts, nudges and smart tips to users while they are in an app.

--Sentry offered guidance and support to internal associates for sales, underwriting, claims and operations, along with external agents and customer service reps, and more than 75,000 customers. As a result, user engagement on the Workday application reached 94%, with a 91% success rate for self-help searches.

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The insurance industry has long struggled with barriers to software application adoption by its internal agents and external policyholders. That is why leading firms are exploring a better approach, to enhance the quality of their software user experiences.

In a world relying on digitization, more organizations are finding digital adoption platforms to be crucial to their overall digital transformation journey. A digital adoption platform (DAP) is a no-code software that integrates with applications to help users learn the application. The goal is to help users take charge of their digital environments while working within their apps. Automated support can equip functional users such as underwriters, adjusters, agents and service representatives with in-the-moment resources to improve their software decisions and thus increase business profitability.

A DAP combines guided walkthroughs with task lists to assist users in the software training process. Property and casualty (P&C) and life insurance companies are able to deliver superior customer experiences to their policyholders by accelerating policy and claims processes using a DAP. Insurers can also improve the user onboarding experience by creating training content that supports the adoption of complex applications. 

A digital adoption platform minimizes human errors by posting just-in-time prompts, nudges and smart tips directly in the user’s app experience, serving as a kind of trusted adviser. This approach can help reduce claims leakage, improve processing time and boost customer satisfaction.

Efficiency for Insurance Employees and Benefits for Customers

For example, Sentry Insurance, one of the largest mutual insurance companies in the U.S., sought to provide on-demand learning and self-help options to train employees and customers to use its applications and portals more effectively. With more than 4,400 employees, Sentry believed self-service training options were essential to reduce the support team’s workload.

The internal-facing applications included core P&C apps such as a claims management system for claims associates, a policy administration system for underwriters and a portal for independent agents. A customer-facing application allowed for easy management of their personal accounts. The platform also provided digital guided learning for the Workday HR and payroll systems.   

Using Whatfix, Sentry created user-specific content with just-in-time support by using pop-ups, videos and other self-help materials specific to each person’s role and application. Those resources highlighted operating procedures on topics such as lienholders and vehicle payments, how to handle different types of claims or how to raise additional requests. Both customers and employees could immediately access the most relevant support and training materials in the flow of their work, without searching through a vast knowledge base or engaging with the support team for help.

This approach is known as "userization," which involves making technology more accessible through experience-first principles and empowering users to drive efficiency and productivity. Userization focuses on making technology user-centric, rather than making people technology proficient. With userization, organizations can tailor their technology ecosystems to suit individual users, show intelligent nudges and provide step-by-step guidance.

By implementing a digital adoption platform across multiple applications, Sentry created a real-time, in-app interactive guidance system for the full range of end users and reduced the average time needed for content creation by 40%. In the past, in-house content development could take Sentry up to 50 hours for a single project. With the new digital adoption platform, that timeline was reduced to 30 hours. Such time savings are significant because each application can involve 500 or more content resources.

See also: Digital Future of Insurance Emerges

Driving Agile Policy Administration, Claims and Sales Growth

Until recently, Sentry used simple tools to point sales, customer service and claims teams to their training resources. The organization recognized the need to provide a better experience that could improve the efficiency of all stakeholders. Sentry applied the DAP software to eight main applications, including employee and customer-facing platforms. The company offered guidance and support to internal associates for sales, underwriting, claims and operations, along with external agents and customer service reps, and more than 75,000 customers. As a result, user engagement on the Workday application reached 94%, with a 91% success rate for self-help searches. 

In addition, Sentry created automated walk-throughs to guide users through different parts of the platform. The company also used in-app surveys to collect feedback on the walk-throughs and other training content to improve future versions. In in-app surveys, Sentry saw an increase in user satisfaction – both from employees and customers.

Online resources were accessed through self-help menus more than 15,000 times during the platform’s first 12 months of operation, enabling contextual self-service and streamlining faster claims processing. Over that first year, time savings for Sentry content designers, developers, customers and support staff totaled $1 million in resources, salaries and increased productivity. Sentry reallocated those resources toward profit-generating activities rather than toward creating training content, which does not directly generate profits.

Today, Sentry’s internal-facing claims system application receives over 100 queries a day in its self-help portal. With the new digital adoption platform, Sentry’s support team has reported a significant decrease in simple support requests, such as which browser to use, freeing the team to focus on higher-priority issues. By adopting a modern digital adoption platform, Sentry has created more efficient training content that provides users with immediate access to the most relevant guidance and self-help materials for every application.

Auto insurers are raising rates as fast as they can to stem mounting losses. For instance, Allstate just announced 12% increases in auto insurance rates in 12 markets, on top of a general 7.5% rise earlier this year.

But it's not clear that insurers can move fast enough — or that regulators and consumers will accept the rate increases.

Allstate had an unprofitable 110.1 combined ratio in auto last year, and the American Property Casualty Insurance Association said the direct loss ratio for the whole industry soared. It was 80.2 in 2022, up a whopping 24.1 points from 2020. So there's a lot of catching up to do. 

But consumers are rebelling. J.D. Power reported that shopping for auto policies in the second quarter in the U.S. was the highest they've seen in the three years they've been tracking the behavior on a daily basis. Not only that, but J.D. Power said a TransUnion survey of insurance customers in the first quarter found that "nearly 15% of respondents said they owned or used a car without valid insurance or allowed their coverage to lapse at some point in the previous six months, with nearly 30% having cited inability to pay as the primary reason." 

What happens now?

Well, as it turns out, our friends Stephen Applebaum and Alan Demers sent me an article yesterday afternoon with almost the exact headline I had on my draft of Six Things — "Auto Insurance in an Existential Crisis," in their case — and they go into "What next?" in considerable detail. So, I'll summarize their thoughts here, add a couple of my own and then, as always, encourage you to read their full piece.

The short answer is that what comes next won't be pretty. The longer answer follows. 

Their article summarizes the forces we've all been reading about. Supply chains have been disrupted by the pandemic, sending prices for parts through the roof and inflating costs for cars, in general. Delays in getting parts have also raised costs by extending the length of time for which drivers need rentals. The war for talent has pushed labor costs higher. The transition to electric vehicles and the growing use of safety devices have made many repairs far more expensive or even led to vehicles' being declared a total loss. Meanwhile, the pressures from inflation and general uncertainty about the economy have weighed on consumers.

But Stephen and Alan also get into subtleties that seem to be getting overlooked. In particular, they talk about the reshaping of the collision repair industry and about how it may sustain pricing pressures for auto insurers. They note that private equity has been buying up small operations and linking them into what are known as multi-shop operators (MSOs). Insurers have, in some ways, even been driving the trend because they want collision repair shops to adopt more efficient technologies and link more tightly into insurers' claims operations. But a result has been that the MSOs now have more pricing leverage and will continue using it.

The article describes how the many attempts to reduce the frequency and severity of accidents seem to have run their course, at least for now. For instance, they say, "Telematics-supported, usage-based insurance programs enabled a large group of safer drivers to take advantage of insurance discounts, but adoption has leveled out at under 20% of policies... and distracted driving is on the rise."

Stephen and Alan predict what they call a Great Rebalancing that will likely lead to consolidation among auto insurers, as the collision repair industry flexes its muscles, as EVs and other technologies continue to drive up costs and as regulators and consumers resist increases in rates. 

I'm sure they're right. The sorts of pressures facing auto insurers would, in other industries, force many to go out of business, but auto insurance isn't just something consumers want; it's required by law. So the industry will at least muddle through the current crisis.

The question is whether one or more companies will be able to innovate a way out of the crisis, keeping price increases to a minimum for good drivers while returning the industry to financial health. Supply chains have mostly healed, and inflation is declining, so some macroeconomic factors should help. 

But the field for innovation is still wide open. And consumers will surely find whatever auto insurer produces the best solution.

Cheers,

Paul

Insurance brokers remain an attractive category for private equity investment and changing market conditions have necessitated a refresh in the playbooks for success. As we navigate a period of high inflation and rising interest rates, how can brokers thrive during the potential ‘hard landing’ in coming months? Getting the basics right has never been more important. Here, we share an exclusive look of our Oliver Wyman report, The Next Phase of Growth for Insurance Brokers. We dive into the macroeconomic environment and the impacts to the brokerage ecosystem. We share perspectives on how to win in the long-term — through integrated business models, greater standardization, and by driving cross-organizational effectiveness

Read More

Sponsored by ITL Partner: Oliver Wyman

In Northern California, where I live, we had a mild start to the summer. I rarely even had my air conditioning on until this weekend. Following a winter with unrelenting rain and snow, the low temperatures seemed to augur a summer with few wildfires. 

No longer.

Soaring temperatures -- they hit 128 degrees Fahrenheit in Death Valley on Sunday -- are drying out the West. And there's even more feedstock than usual for fires because of the wet winter and spring. So Canada likely will soon not be alone in facing massive damage and smoke from wildfires.

Through mid-July, the U.S. is only at 26% of the historical average of acreage burned (while Canada is at 1,200% of its historical average) 

But AccuWeather says a heat dome forming across the Southwest and Southern California will cause wildfires that will likely peak in August or September but that could burn into the fall. In Southern California, the Rabbit Fire already exploded to more than 7,000 acres over the weekend. 

I'm actually on the Jersey shore this week, for a vacation with my many siblings and our families, so I'm still not using my air conditioning in California :), but I'll be back next week and experience the heat and, likely, fires first-hand. 

In the meantime, if you want to read more, here is a report from a sister organization, the Insurance Information Institute, and Capgemini on how to deal with wildfire threats, along with a raft of statistics on the threats they pose.

Stay safe.

Paul

KEY TAKEAWAY:

--None of the models singly can offer a solution, but, used together, they offer a compelling structure to power the pursuit of business value from data, analytics and artificial intelligence.

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Data, analytics and artificial intelligence (DAAI) agendas are now a part of boardroom discussions at all insurance companies, and what's the next big shiny thing is hotly debated at coffee tables at most insurance companies.

However, determining how much business value comes from DAAI efforts remains difficult. So does deciding who is responsible for ensuring that business value is measurable and sustainable.

We will delve into few value realization models that insurance firms can follow to deal with this conundrum and ensure that data, analytics and AI (DAAI) initiatives remain at the top of business agendas effortlessly.

1. Strategic Alignment Model

Insurance companies using this model have execution of DAAI across the company as an organizational strategy itself. DAAI capabilities are so pervasive that they influence strategic priorities or metrics in the first place.

With this model, questions around the value of DAAI do not have a direct, measurable answer. The strategic agenda alignment model requires a high level of organizational maturity. It is sustainable in the long run.

2. Pain-Point Model

This model uses DAAI to address opportunities and risks that keep the C-suite awake but primarily looks at addressing the pain points. This method follows an iterative process of identifying pain points, collecting data to validate each pain point, establishing DAAI initiatives to address prioritized pain points, implementing solutions and measuring benefits.

This is an effective tactical approach. It also helps build a data-driven culture. Typically, the value creation responsibility is a joint ownership between the respective C-suite executive and DAAl leaders.

3. Customer-at-Center Model

Insurance company operations are inherently complex, with most of the activities geared toward smoothing customer journeys across buy, service, claim and attrition points. Therefore, measuring value created by DAAI initiatives at customer touch points is a reasonable metric, although it does not account for the value created by operational efficiency enhancements.

Assessing, measuring and attributing value created by DAAI in the customer-centric model is a fairly straightforward task and ensures that capital is deployed to enhance the experience of the most important stakeholder of the insurance company, its customers. Value creation in this model is measured at customer touch points so it comes under the remit of teams and tools enabling such journeys.

4. KPI Model

Key performance indicators (KPIs), along with their owners and drivers, are essential for an effective and efficient insurance operation. Any initiative that improves KPIs creates business value, and DAAI initiatives can do so. 

Because organization KPIs and monetary gains are intertwined, however, value may be created but not be adequately showcased.

An organizational KPI model is a logical one to adopt. The individual KPI owners have responsibility for improvement, with a linkage to the DAAI team.

See also: Life Is a Bowl of... Customer Analytics

5. Technology Showcase Model

Adoption and proof-of-value are good surrogates for value creation here. Extrapolation and scenario analysis of future value using present outcomes, albeit limited, also provides good visibility into value.

DAAI teams are responsible for sustainability, measurability and visibility into value.

Conclusion

Ensuring business value from DAAI initiatives does not have a one-size-fits-all solution. There needs to be a single-minded focus on creating measurable and sustainable business value.

None of the models singly can offer a solution, but, used together, they offer a compelling structure to power the pursuit of DAAI business value.

KEY TAKEAWAYS:

--Begin by understanding your data relationship with your partner, then segment your customer base.

--Be sure to set an ambitious enough goal, then test and test -- and never stop.

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While data has long been the lifeblood of the insurance industry, embedded insurance is the latest hot ticket to growth — and for good reason! Executives are practically salivating when considering their share of the $70 billion U.S. embedded insurance opportunity.

Understanding the consumer purchasing the product or service unlocks opportunities for optimization. Consumers should not all be offered the same insurance solutions for all purchases. Such consistent delivery will quickly become white noise for consumers, something to skim past when checking out. The use of data, beyond underwriting, may be the difference that puts distance between winners and losers in the landscape.

Leaders should begin by crafting customer segmentation. The data to fuel this segmentation may include past buying behaviors, which will likely come from a retailer's customer relationship management (CRM) or loyalty program. Loyal buyers may react differently to coverage offers than first-time buyers will.  

See also: 9 Keys for Embedded Insurance

Third-party data can help fill the gaps. It may include standard attributes like age, gender, household income and presence of children. Some providers are even bringing in more advanced data, including a consumer's attitude toward uncertainty, price sensitivity, buying motivations and general interests.

Example: A consumer may be extremely price-sensitive, unwilling to insure any product or event costing less than $1,000. However, when it comes to children’s products, her appetite for uncertainty is reduced and she is more open to a policy on a $300 baby monitor.

Embedded insurance is a partnership

While insurance professionals understand the competitive capabilities of data, embedded insurance by its very nature includes other industries. As insurance products are distributed by non-insurance brands, there are many situations where partners may experience a "data skill imbalance." Said less kindly — the more sophisticated partner may need to drag the other forward if they are going to win as a team. Picture a three-legged race where Usain Bolt picks up his mother to get to the finish line faster. 

As you seek to apply data for marketing and product use cases, a winning partnership will function one of three ways. First, both sides of the partnership may be sophisticated about data. Second, the less sophisticated partner may want to increase their data sophistication. But that takes time and skill, so there is a third option. The less sophisticated partner may be self-aware enough to allow the more sophisticated one to take the lead in strategy and implementation. We are back to Usain Bolt picking up his mother to finish the race ahead of everyone else.

Unfortunately, many partnerships build their strategy based on the lowest common denominator in terms of data sophistication. Data-savvy providers don’t want to push too hard early in a new partnership.

Checking a box? Or competing to win?

Merely checking a box and saying, “Sure, we’re doing embedded insurance,” is going to net exactly the results you would expect.  

Many providers are early enough in their embedded insurance journeys that each incremental dollar is considered a win. With such a low revenue threshold, it’s easy to say “but we’re beating expectations! Don’t fix what isn’t broken.” 

With low revenue expectations for embedded insurance, product leaders can no doubt breathe easier. Unfortunately, low revenue expectations typically also mean the product isn’t provided enough resources or strategically supported internally. Essentially, low expectations hold brands back from greater gains in the future. 

How much embedded insurance revenue should you expect, given your customer base and product suite? By combining multiple datasets,and including a robust view of your typical customer base, you can generate much more accurate revenue forecasts.

While you are operating in a testing phase, or beta period, a pre-optimized solution is fine. The key is knowing when a product needs to graduate to the next level and truly enter the competitive arena.

See also: The Recipe for Embedded Insurance

Ready to win? 

First determine which type of partnership you have. Are you more sophisticated when it comes to applying consumer data, or is it your partner? If neither party is experienced, the first step may be securing a partner that can help bring your organization forward. 

Next, ensure that the data you bring into your analyses and processes is high-quality. The adage hasn’t lost power: It's still garbage in, garbage out. Use your data to establish meaningful goals for embedded insurance. If you take a full view of your product suite and customer base, you may discover that you should dream bigger.

Lastly, start testing and never stop. Consumer behavior is constantly shifting, and the providers that keep up are continually monitoring the performance of all strategies.

The rise of embedded insurance is the perfect example of how the world of commerce is continually changing. To win, providers must maximize all available resources to deliver a winning and simple customer experience.

KEY TAKEAWAY:

--In the wake of a death, beneficiaries have questions that carriers typically do not address, such as: “How do I close my loved one’s accounts?” and, “What am I supposed to write in the obituary?”

--Insurers have begun using an app that streamlines end-of-life bureaucracy and automates estate administration processes. It features to-do lists that suggest action items, such as contacting government agencies and filing claims for IRAs and pension plans. The app addresses self-care, too, with online resources and referrals to local counselors.

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The old saying goes, “When you file a claim, it’s not a good day.”

When you file a life insurance claim following the death of a loved one, it’s a wretched day.

More than 10 million Americans died between 2020 and 2022, according to the Centers for Disease Control and Prevention and the U.S. Census. Assuming each person left behind the average number of three family members, at least 30 million Americans have experienced terrible grief in the past three years.

When carriers can verify the death, beneficiaries receive checks in a reasonable timeframe. In some cases, despite missing paperwork, many insurers issue emergency checks to handle funeral costs and other urgent fees and settle the rest of the policy later.

Even as exceptions are made, the industry is focused on process. Streamlining work methods and catching fraud are important. Becoming more efficient helps management focus on achieving business targets and saves everyone – carriers, clients, beneficiaries – money in the long run.

Process can frustrate policyholders

Yet, as companies experiment with digital engagement, they can inadvertently push their interaction with beneficiaries to the background. Carriers do not intend to upset beneficiaries, but the rigidity of the new processes has frustrated policyholders: Only 30% of Americans have high confidence in life insurance companies, according to a January 2023 LIMRA U.S. consumer sentiment study.

Let’s be honest: Policyholders don’t care about the process. They do care about being heard. And in the wake of a death, they have questions that carriers typically do not address, such as: “How do I close my loved one’s accounts?” and, “What am I supposed to write in the obituary?”

Younger generations might turn to Reddit or Discord for answers, but the information from an online community may not be accurate. Older generations who have gone through this life event before can rely on experience, although there might be new regulations that they are unaware of.

Adding more humanity to insurance

Life insurance is designed to help people in their darkest hour. Now, technology is putting people back into the center of insurance.

For example, FINEOS recently formed a partnership with Empathy, a platform that helps families navigate the emotional and logistical challenges of a loved one’s death. The team at Empathy has found that death in America is an expensive and complicated business for the survivors. Families are faced with an average of $17,000 in costs for funeral expenses and financial and legal matters. On top of that, it takes 13 to 20 months for families to settle their loved one’s affairs.

Most U.S. employees are managing these tasks at work. In its 2023 annual report, Empathy found that 76% of employed respondents said that dealing with loss harmed their performance or work status. Roughly 20% of the workforce at any given company will be grieving a recent loss.

See also: A New Boom for Life Insurance?

Providing practical support

Many of the issues Empathy deals with are beyond the scope of an insurance company’s claims process but critical to support the beneficiary experiencing a life event. So, the Empathy app streamlines end-of-life bureaucracy and automates estate administration processes. It features to-do lists that suggest action items, such as contacting government agencies (Social Security, Veterans Administration, etc.) and filing claims for IRAs and pension plans. The app addresses self-care, too, with online resources and referrals to local counselors.

On an individual level, providing comfort when people are grieving is a kind gesture. From an insurance perspective, it is both humane and makes good business sense. There is a business in ethically helping to build community, especially because traditional support networks are gone. Carriers that demonstrate concern when people are at their lowest point are not just ensuring favorable Yelp reviews. They are reinforcing brand loyalty in those families, quite possibly for generations.

Demonstrating compassion  

The benefits of demonstrating compassion outweigh its costs. Life insurance companies are in business to protect people. By extending themselves beyond putting a timely check in the mail, savvy life insurers are providing practical support to give their policyholders a soft place during an extremely hard time.

KEY TAKEAWAY:

--By embracing these advancements, insurers can enhance their competitiveness, improve operational efficiency and provide superior customer experiences in the ever-changing digital landscape.

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In the ever-evolving landscape of the property and casualty (P&C) insurance industry, technology continues to play a crucial role in shaping its future. With each passing year, new advancements emerge, revolutionizing the way insurance companies operate and serve their customers. Here are the top 10 P&C insurance technology trends that are expected to make a significant impact in the near term, paving the way for a more efficient and customer-centric insurance experience:

1. Artificial Intelligence (AI) and Machine Learning

Advancements in AI and machine learning have revolutionized the insurance industry by automating manual processes, enhancing underwriting accuracy and improving risk assessment. AI will continue to drive innovation in P&C insurance by enabling personalized customer experiences, optimizing claims handling and streamlining fraud detection.

2. Internet of Things (IoT)

The IoT has opened up possibilities in the insurance sector by connecting devices and gathering real-time data. Insurance companies will leverage IoT technology to offer usage-based insurance policies, monitor property conditions and mitigate risks.

3. Telematics and Usage-Based Insurance (UBI)

Telematics, combined with UBI, allows insurance providers to collect data on driving behavior and offer personalized premiums based on actual usage. This trend will gain traction as more insurers adopt telematics devices and develop innovative UBI programs to attract and retain customers.

4. Data Analytics and Predictive Modeling

Data analytics and predictive modeling empower insurers to analyze vast amounts of data and gain valuable insights into customer behavior, claims patterns and risk assessment. By harnessing the power of big data, insurance companies can make data-driven decisions and offer more tailored products and services.

5. Blockchain Technology

Blockchain technology provides a secure and transparent platform for managing insurance transactions, policy verification and claims settlement. Insurers will increasingly adopt blockchain to enhance data integrity, streamline processes and reduce fraud.

6. Digital Claims Processing

Digital claims processing solutions expedite the claims settlement process by automating manual tasks, improving accuracy and enhancing customer experience. Insurers will invest in advanced digital platforms to streamline claims handling, reduce costs and provide faster payouts to policyholders.

See also: 4 Technology Trends for 2022-2023

7. Chatbots and Virtual Assistants

Chatbots and virtual assistants are revolutionizing customer service in the insurance industry. These AI-powered tools offer personalized assistance, answer policy-related queries and guide customers through the claims process. Insurers will integrate chatbot technologies to provide round-the-clock support and improve customer satisfaction.

8. Cybersecurity and Data Protection

With the increasing digitization of insurance processes, cybersecurity and data protection have become paramount. Insurance companies will invest heavily in robust cybersecurity measures to safeguard sensitive customer information, prevent data breaches and ensure regulatory compliance.

9. Robotic Process Automation (RPA)

RPA technology automates repetitive and rule-based tasks, enabling insurers to streamline operations, reduce errors and increase efficiency. RPA adoption will continue to grow as insurance companies leverage this technology to improve claims processing, policy administration and customer service.

10. Mobile Applications and Customer Engagement

Mobile applications have become an essential tool for insurers to engage with their customers. Insurance companies will develop user-friendly mobile apps that enable policyholders to manage their policies, file claims and access support services conveniently.

Conclusion

These technology trends will reshape the way insurance companies operate, interact with customers and mitigate risks. By embracing these advancements, insurers can enhance their competitiveness, improve operational efficiency and provide superior customer experiences in the ever-changing digital landscape.

KEY TAKEAWAYS:

--When it comes to forecasting the liability risk factors of the obesity epidemic, our radars may need to shift away from obesity drivers and toward obesity solutions such as Ozempic and Wegovy.

--It may behoove risk management professionals to think carefully about other emerging risks, as well. For example, numerous products (such as cannabis and, more recently, psilocybin products) are being marketed to help address mental health, sometimes without merit or without clear understanding of what side effects can ensue.

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There are countless factors that go into emerging liability risk assessment. But at a high level, a systemic event typically has followed this track:

1. Company (or Industry) X is alleged to transgress in its operations.
2. Injuries ensue, and a large cohort of individuals coalesce into a class action.
3. The risk “emerges” with a payout of hundreds of millions or sometimes even billions of dollars.

Risk managers and insurance carriers must monitor emerging risks that can pose a threat to the balance sheet of their companies as a result of this type of event. One of these areas of concern has been the obesity epidemic, in part due to a staggering 42% of Americans now being considered obese, a stark increase from 15% in the late 1970s. 

The prerequisites are in place for this to mushroom into a significant liability event, but it hasn’t yet. Causality has been tricky. Is the cause sugar? Saturated fats? Geography? Genetics? There is also a human element: Regardless of actual accountability, it is difficult to vilify the entities whose logos are globally recognized, whose advertisements adorn our televisions and whose products people enjoy.

This isn’t to say the tide won’t eventually turn – it was once thought to be unfathomable that cigarette manufacturers were guilty of anything. But when it comes to forecasting the liability risk factors of the obesity epidemic, our radars may need to shift away from obesity drivers and toward obesity solutions. 

The Obesity Economy Is Rife With Risk

Ever hear of the Emerging Risk Economy? I haven’t either. That’s because it’s not a thing. But should it be?

A massive payout to settle a lawsuit doesn’t necessarily mean a risk is completely emerged. A huge payout could simply be the first chapter of the story. Problems typically lead to solutions -- but they may pose risks, themselves.

The Master Settlement Agreement (MSA) in 1998 led to Big Tobacco companies paying over $200 billion across the country, but there were still millions of people hooked on their products. Fast forward to the advent of the e-cigarette industry, promoted as a less dangerous alternative for addicted users. But some companies ultimately fell into the same perverse incentive structures to lure teenagers to use their products as the original Big Tobacco companies did. As a result, the e-cigarette companies, too, have been sued for hundreds of millions of dollars, an example of "solutions" begetting more risks.

See also: Wellness Vendors Keep Dreaming

While there has been no whiff of an MSA equivalent for any industries that could potentially be contributing to recent obesity trends, the wave of products (Ozempic, Wegovy, Rybelsus and Mounjaro, to name some) that have been developed to assist with weight loss could represent the pathway for the obesity epidemic to “emerge.”

Here are just a few areas of concern that could foster a pathway to litigation down the road:

• Widespread Use – In 2022 alone, 5 million prescriptions were written for the aforementioned weight loss products, up from 230,000 in 2019. This number may be poised to increase, with the successful marketing practices applied by targeted advertisements and social influencers, proliferation of telemedicine efforts by Congress to enable these drugs to be covered by Medicare and a recent recommendation from the American Pediatric Association that physicians should consider prescribing these drugs as part of a set of treatments for kids with obesity.
• Interplay of Competition and Incentives – The companies manufacturing these products represent some of the biggest pharmaceutical companies in the world and are likely keen on getting in on a market Barclays says could reach $200 billion in the next decade. As Charlie Munger once said, we should “never, ever, think about something else when [we] should be thinking about the power of incentives.” And the incentive to tap into this market quickly and beat out the competition for major global players with deep pockets is very strong.
• Serious Health Concerns – Alongside use of some of these products have come reports of renal failure, pancreatitis, intestinal obstruction, lessened bone density, decreased muscle mass, sarcopenia and “Ozempic Face.” The EU recently announced it will be investigating products in this class of drugs amid concern that use may contribute to suicidal thoughts. With use expected to pick up among children, there is scant information available on what long-term impacts can be. 

Keep an Eye on the Emerging Risk Economy

It may behoove risk management professionals to use this lens for other emerging risks, as well. For example, mental health, which has come under the microscope in recent years, has followed a similar arc as obesity. It has been difficult to pinpoint the key drivers to this issue, but numerous products (cannabis and, more recently, psilocybin products are just two examples) are being sold and marketed to help address mental health, sometimes without merit or without clear understanding of what side effects can ensue.

Sports have long captivated the human spirit, bringing people together in moments of exhilaration, triumph and heartbreak. Beyond the actual athletic competition, the world of sports holds valuable lessons for leadership.

By examining the dynamics of teamwork, strategy, perseverance and personal growth inherent in sports, we can unlock powerful metaphors that shed light on practical leadership principles.

Those who know me know I enjoy challenges. The outdoors and sports never fail to exhilarate and provide thrills. Whether it be a pond hockey game, skiing, summer sailing or hiking in the mountains (did I mention the five grizzly bears I ran into last week in the Kananaskis?) with my family and friends. I enjoy team sports and the camaraderie of competing and winning together.

In this article, we will explore leadership lessons from the world of sports, uncovering valuable insights that can be applied within various professional contexts.

Setting Goals and Creating a Vision

Just as sports teams set ambitious goals and work toward a shared vision, influential leaders must clearly articulate what their business is about: what it does, how it serves stakeholders and where it's headed and set challenging yet attainable goals for their teams. 

For instance, when sailing, the captain must know the final destination. Without a final landing spot and critical checkpoints along the way, the crew won't know where the ship is going, and you might get lost at sea.

By instilling a sense of purpose and direction, sports and business leaders can motivate their team members to strive for excellence, work toward a common goal and push beyond their limits.

A McKinsey study finds that 77% of employees who feel aligned with their company’s purpose or vision are engaged in their work, compared with only 20% of employees who are not aligned with the vision.

See also: Moving Forward

Building and Empowering Teams

In sports, successful teams are built on a foundation of trust, collaboration and complementary skills. It's up to leaders and coaches to foster an environment of trust and create opportunities for individuals to grow and contribute with their unique strengths.

Granting autonomy to employees and allowing them to think outside the box while not micromanaging is essential in creating such an environment. This might mean encouraging your soccer team to experiment with new plays or delegating your next marketing campaign to a young, ambitious associate. 

In the workplace, delegating tasks and trusting your team to deliver results are essential for building a dynamic team that can confidently work independently and solve problems without your direct input.

When employees and teammates feel valued and cherished for their skills, perspectives and personalities, they’re more likely to find fulfillment in their work and sport.

Resilience and Perseverance

Sports teach us the importance of resilience and perseverance in the face of adversity. Mark Stone, the captain of the Las Vegas Golden Knights, is a testament to perseverance and resilience. 

Stone underwent two major back surgeries in nine months, which put his participation in the NHL playoffs and even his career in doubt. However, despite playing with unimaginable back pain, Stone returned for the playoffs, and his resilience helped motivate his team to the first Stanley Cup in franchise history.

In business, we will inevitably have ups and downs. As leaders, we need to embrace and weather these setbacks and demonstrate strength in crises.

Most importantly, you must get your team on board by motivating and inspiring team members to bounce back from failures, learn from mistakes and keep pushing forward toward their goals -- no matter how much of an expert you are, nobody can do it alone.

Effective Communication

"You can have the greatest idea in the world, but if you can’t persuade anyone else to follow your vision, your influence, and impact will be greatly diminished." Carmine Gallo, Harvard Business Review. 

Communication is a vital aspect of both sports and leadership. Just as athletes need to communicate on the field to coordinate strategies and make split-second decisions, leaders must master the art of effective communication.

Transparent and open communication channels foster understanding, alignment and the ability to adapt to changing circumstances.

For example, in the sport of polo, each horse has a different personality and unique strengths and weaknesses. In business, no two people are the same and can't be led the same way. Some employees need encouragement and confidence to take risks and chances, while you might need to let others run free or rein them in. 

Paying close attention to your team, taking their concerns seriously and allowing them to voice their thoughts without judgment is critical to understanding who your people are and what motivates them.

This kind of acknowledgment and communication in the workplace can ensure everyone feels valued, understood and aligned.

Strategic Decision-Making

Sports coaches and team captains make strategic decisions that affect the outcome of a game. Whether deciding when to make a pass, take a shot or sub a player in or out, coaches and captains must analyze a situation and make informed decisions in sports as in business.

Inefficient decision-making costs a typical Fortune 500 company 530,000 days of managers’ time each year, equivalent to about $250 million in annual wages.

Influential leaders can overcome emotional impulses and take a step back, assess a situation and decide the course of action. Conversely, leaders who can’t control their emotions often make rash decisions that can lead to catastrophic consequences.

As a sports coach or team captain, this could mean staying level-headed and focused when a call doesn't go your way rather than complaining. The key is to trust yourself, take a step back, focus on how your decision affects your company or team's vision and be ready to adjust if things do not go as planned.

Inspiring and Motivating

Sports fans are drawn to charismatic athletes who inspire and motivate with their exceptional skills and determination. I was inspired by Wayne Gretzky and Michael Jordan's drive and commitment to be the best in the world at their sports.

Effective leaders inspire and motivate their teams by leading by example and creating a sense of enthusiasm and dedication in their work. This might mean getting up early to work on your wrist shot, supporting a teammate or colleague in a difficult time or staying late to help your team close a sale.

In addition, recognizing employees or teammates who lead by example can go a long way in creating a positive and inspiring environment. This can be as easy as saying, "Nice play!" to your teammate or acknowledging employees who deliver on core company values at your next monthly team meeting.

Not only is recognition a simple modality, but its rewards are significant; 40% of Americans would put more energy into their work if they were recognized more often.

See also: The Power of Lifecycle Marketing

Adaptability and Change Management

The most successful sports teams are adaptable and responsive to evolving game situations and opponents' strategies. Similarly, leaders must navigate uncertainties and lead their teams through periods of change. The ability to adapt, embrace innovation and guide teams through transitions is a hallmark of effective leadership.

For example, when sailing, the weather can change instantly. You need to know how to use the sails to compensate, navigate under harsh conditions and capitalize on whatever is thrown at you. It’s not much different when you’re a business leader.

Like the weather, business is constantly moving and changing. Whether you’re steering your ship at sea or driving your business on land, it takes experience and, at times, raw courage to weather the storm.

So, see each storm as a chance to gain experience for the next one and know that sometimes you simply need to batten down the hatches – and wait it out.

Winning on the Field and in Business

To foster an innovative and creative culture, we use and encourage all of these leadership skills as a team at Majesco Global IQX, whether from senior leadership, team leads or junior-level associates, as we help employee benefits insurance companies streamline processes.

Sports provide a rich metaphor for leadership, offering valuable insights into the qualities and behaviors that define exceptional leaders. By embracing the lessons from the world of sports, aspiring leaders can unleash their own inner champions, inspiring and guiding their teams toward success!