A partner of mine at a management consulting firm introduced me to the idea of "break points" in customer expectations some 25 years ago, and they struck me as a revelation.

I had just thought of, say, faster response to customer calls as a good thing, and assumed that the faster the better. In fact, there were break points. Customers would get royally hacked off if kept on hold for a certain number of minutes -- let's say 10 -- so it was worth the effort to keep response times below that threshold. But -- and this was the revelation -- you didn't get additional credit from customers if you cut response time to nine minutes or eight or seven or.... You didn't get credit until you reached the next break point, perhaps at less than a minute, a response time that would delight customers.

But that didn't necessarily mean you should try to delight customers. The expense might be prohibitive. You might make an economic calculation to merely satisfy them. 

That idea got refined for me a few years later in a conversation with Mike Hammer, the pioneer of business process reengineering and all-around famous professor at MIT. He told me of a large utility that found that the key metric for customer satisfaction when it started service for a customer wasn't what I would have expected: the number of days between the request for service and its initiation. In fact, the key metric was whether the utility lived up to its promise about when service would start. In other words, whether it took one week or two to start service mattered less than whether the technician really showed up between, say, 2 and 4pm on the appointed day.

That's a bit of a long windup, but I wanted to make clear why I was so intrigued by a Hi Marley survey about what really matters to customers in the claims process. While two of the main concerns that surfaced strike me as hard and expensive to resolve, one seems to be really low-hanging fruit ("process explanation and expectation setting"), and another seems within reach ("responsiveness and availability").  

The Hi Marley survey looked at thousands of four-star ratings in their database and identified 1,300 claims in which policyholders relayed issues that, had they been handled differently, would’ve resulted in a five-star rating. Of those, 95% fell into four categories: process explanation and expectation setting (34%), unresolved claim issues (28%), responsiveness and availability (18%) and adjuster attitude, approach and level of knowledge (15%).

You will decide for yourself how hard each of the four issues would be to attack, but it strikes me that process explanation and expectation setting should be relatively easy to improve, especially because of new technology tools.

Think of how package deliveries used to work, vs. how they work now. A decade ago, deliveries were a black box. You placed an order, and it eventually showed up at your doorstep, but you had no visibility about what happened during the days in between. You could call and ask for an update, but the customer service rep often had no more information than you did -- something you'd find out only after working your way through a phone tree and spending time on hold listening to bad music or ads. Now, you can simply check an app and know that the item has shipped, see where it is in the USPS, FedEx or UPS delivery network and get a precise idea of when the item will arrive. More advanced companies, such as Amazon, automatically text you or email you alerts about where your item is in the process, when it will arrive and when it has, in fact, landed on your doormat.

Why couldn't that sort of system work for claims? Yes, it would take work on the back end to automate updates, but then the marginal cost would be almost zero -- and customers would be a lot happier if they knew where their claim stood in the process. Even if they just got a notification every few days letting them know that you were still working on resolving a particular issue, they'd know you hadn't forgotten about them. That sort of notification would be especially valuable these days, given that supply chain issues can mean long waits for parts for a repair. 

Some training and continual communication would also, in my experience, be needed to improve process explanation and expectation setting. An awful lot of experts I've dealt with over the years, whether a plumber or a lawyer, have forgotten that they're experts. They assume I know things that I have never remotely experienced. Those working on claims would likely benefit from training and then frequent communication reminding them that they need to start from zero as they're explaining the process to someone filing a claim, that they should avoid all jargon at all costs and that they need to set realistic expectations (or under-promise and overdeliver). 

Technology can help here, too. The ease of electronic communication can let companies develop standardized materials that can be shared with claimants and explain the process in a thorough but friendly way. (Lemonade makes for a good model.) Electronic communication can also serve as a backstop -- if a claimant says you didn't warn them about something, you'll have a record showing that you did. 

The other point where I think real progress can be made -- responsiveness and availability -- is rather trickier, because that may require additional resources, but technology can take at least some of the load off agents. The sort of digitization of the claims process that would allow for automated updates would also provide for self-service and remove the need for any kind of response from an agent. A claimant doesn't have to place a call and wait for a response from an available agent if the person can just go to a website and look something up or interact with a chatbot and get a question answered at 2am or on a weekend. The responsiveness and availability are instantaneous.

The other two issues identified by Hi Marley -- unresolved claim issues and adjuster attitude, approach and level of knowledge -- are surely worth addressing but seem to require more systemic change. Claim issues involve the whole process, from beginning to end, and attitude, approach and knowledge depend not only on training but on finding the right talent. 

With all four of the issues identified in the survey, Hi Marley suggests that there is a clear benefit just to getting customers to raise your rating. I'm not necessarily convinced. You still have to do the analysis to see if the expense of resolving the issues would matter enough to get past a break point and lead customers to change their behaviors.

But I also don't think that it would take that much effort to improve on process explanation and expectation setting and on responsiveness and availability. 

Cheers,

Paul

The Centers for Disease Control (CDC) director announced in mid-August that the public health agency required a shake-up or “reset” after its’ admitted failures during the COVID-19 pandemic. Who is to argue? The CDC was too bureaucratic and slow to allow it to collect data and respond quickly at the same time to the evolving health emergency and spread of variant strains. 

I, too, felt completely disillusioned during the peak time of the holiday season last year when, despite being fully vaccinated with the initial booster shot, I learned that the data showed I still could get the new Delta variant and spread it to others.

I had just visited my oldest brother in a rehab hospital, where he was recovering from a COVID outbreak in the facility. My niece in medical school was ill from long-term COVID symptoms, and there was no COVID-19 testing available anywhere. I had no choice but to spend the holidays away from my family because I could not get tested until after New Year’s.

This was 18 months after the start of the outbreak in March 2020, and zero tests were available. I mean zero. The national TV news showed lines of people and cars waiting for COVID tests across the country.

Guess what? The federal funding for three COVID tests just expired due to a funding short fall at the same time public health officials predict a surge in COVID cases this fall and winter.

Although Operation Warp Speed will go down in history as one of the great public health success stories, the federal governments’ role in providing widespread real-time COVID-19 testing and accurate, updated public health information... not so much.

What has made matters worse: The anti-vaccination critics have now seized the situation to continue to spread their political agenda to discredit the field of public health with threats of public hearings and conspiracy theories. 

Like I have said, “do the math.” (See ITL article: On COVID Vaccine: Do the Math 9/8/21) A recent study conducted by the Imperial College of London and published in the Lancet Journal of Infectious Diseases stated that the COVID-19 vaccines saved 20 million lives worldwide in the first year alone. The vaccines reduced deaths by 63%. If the vaccines developed through Operation Warp Speed were not made available, the death rate today would be three times higher in a much more severe catastrophic worldwide pandemic.

See also: Brace Yourself for More Waves of COVID

The anti-vaccination movement has resulted in 1 out of 10 American parents delaying or outright refusing necessary childhood vaccinations. What was just found recently in New York City sewage by public health researchers? Polio!

One of the most dreaded childhood diseases. officially eradicated decades ago. Public health officials announced that polio was also found in wastewater in Rockland County and has now been found in wastewater in neighboring Sullivan County. Nearby Orange County has a childhood vaccination rate of 59% for two-year-olds, who should have received the recommended three polio shots by 18 months. The state health commissioner recently stated, “The polio in New York today is an imminent threat to all adults and children who are not vaccinated.” A documented case now exists in Rockland County for an unvaccinated person -- the first documented case in America in a decade.

In incredibly bad timing in the decades-long world-wide effort to eradicate polio, in rare circumstances the oral vaccine containing a weakened form of the virus, which is cheap and easy to administer and widely used in poor isolated countries, has been found to cause polio in two to four children per two million doses. (The oral vaccine has not been used in the U.S. since 2000; only the inactive polio virus vaccine.) Worldwide health officials are now warned they must use the most recent vaccines in the effort to eradicate polio in poor isolated pockets in the world -- and now apparently in New York.

Although COVID-19 today has moved from a pandemic with over one million deaths in the U.S. to an endemic phase. it still accounts for 400 deaths, 500 hospitalizations and 80,000 new cases a day. The FDA has now cleared through an emergency use authorization (EUA) a brand-new bivalent vaccine booster from both Pfizer and Moderna that targets both the original virus and the now dominant BA.4 and BA.5 omicron variants. 

Again, the new Omicron booster will not provide full immunity to the virus but can reduce serious illness, hospitalizations and deaths. A major concern, due to what I believe is COVID fatigue, mixed messaging and pure hypocrisy, is that there is no current federal funding to provide the new booster shots to Americans who want the booster. In terms of people who refuse to get vaccinated, the FDA commissioner just stated; “It’s painful to see people dying when we have free treatment available to save lives.”

We need to both fund and restructure federal public health agencies like the CDC and FDA to help overcome public mistrust and outright lies and distortions by providing the best updated scientific information without outside political interference about the safety and effectiveness of vaccines.

See also: On COVID Vaccine: Do the Math

There is legitimate debate about the effectiveness of the mandated use of masks and school and business closings during the pandemic. However, a recent study of 33,000 students at Boston University found masked and vaccinated students had virtually no chance of catching COVID-19 in the classroom. The students who had COVID were infected in other places. That is why some universities such as Rutgers will still require masks in indoors classroom settings, libraries and clinical settings and testing for unvaccinated students this fall.

There will be an continuing need for research and studies about the source, treatment and testing of COVID-19 variants, along with studies on the effectiveness and timelines for new boosters similar to the annual flu shot. Right now, there are zero federal dollars until at least October, when the new federal budget comes before Congress. Talk about a reset!

Our public health agencies need to be way ahead of the learning curve on updated medical studies and be prepared for the next mutation or pandemic, which they have admitted they were not this time. 

However, there should be no such debate about the role of public health campaigns and the use of proven safe and effective vaccines that once were thought to have eradicated childhood diseases like polio and the measles, which have now reared their ugly heads again.

The answer to the question, can a person get the new booster and the flu shot at the same time, is yes. Once in each arm.

Around 80% of workers feel stress on the job, and in just about every type of job or position. Employees are reporting neck pain, eye pain and lower productivity due to stress. In fact, around one in five people has quit a job due to stress.

Making some simple changes around the office (including remote offices!) can have a large impact on workplace stress and, thus, productivity. Let’s review five simple but effective ways to promote a low-stress work environment.

What’s new in 2022?

A 2021 survey found that 76% of respondents with 500 or more employees said that improving employee mental and emotional health was a top priority. Employees are also beginning to view protection of their mental health as a non-negotiable aspect of their job, and, as a result of the pandemic, many employees found themselves with newfound power as people left their jobs in droves. This “power shift” has led to increased demands for conscientious and flexible management.

See also: Insurance Tips for the Remote Workforce

5 Tips to Create a Relaxed Work Environment

1. Use communication tools

We’ve all heard it before: Communication is one of the best tools to reduce stress. But with so many workers moving to remote work, communication has also become much more difficult. Gone are the days of popping into someone’s office to check in on a project’s status (or a coworker’s wellbeing!). Instead, leaders need to leverage communication technology. 

How, you may ask? Communication software not only helps people stay on track and avoid wasting time emailing back and forth but can help set clear expectations and deadlines and avoid misunderstandings that cause stress. Using communication software can also help build virtual communities that would not otherwise be possible. Finally, communication software can help your team respond faster to potential issues, helping disrupt problems before they become even more stressful.

2. Take time for team building

A strong team is generally a more relaxed team. While team building has garnered a rather unfortunate reputation in recent years (how many more rounds of Two Truths and a Lie can most people take…?), team building actually is a crucial tool for reducing stress. Not only can team building help managers understand employees’ strengths and weaknesses better, but it can provide employees with an opportunity to blow off a little steam – in a healthy way.

Team building doesn’t have to feel like forced fun. Today, there are plenty of options for team building activities that are engaging and fun for everyone. For example, this escape room in Los Angeles advertises the benefits of playing an escape room for corporate team building, such as improved collaboration and the ability to think outside the box. More unusual team building activities that are both fun and effective include scavenger hunts or office trivia. 

No matter your activity of choice, even five minutes of team building can reduce a little stress -- especially if the activity doesn’t feel like a waste of time. Consider incorporating real-world office training into your team building exercise. For example, if your team visits an escape room, consider incorporating the escape room into a larger training on time management.

See also: Bridging Health and Productivity at Work

3. Set boundaries

A healthy work-life balance is absolutely crucial to a stress-free work environment. If employees are overworked and using their downtime to think about work, stress is likely to build up quite quickly. Successful employers encourage employees to set healthy boundaries between life and work so that everyone can take a much-needed mental break every once in a while. Not only will a healthy work-life balance reduce stress, but it can also free up mental space for breakthroughs in the future; without breaks, it’s easy to get stuck in the same thought patterns. 

Employers can lead by example and implement boundaries between home life and work in their own life. This will likely encourage their employees to follow suit!

4. Create healthy variety

Studies have shown that boredom is highly linked to stress; monotony at work can actually, counterintuitively, lead to high levels of stress. It’s important to create variety in your work day to avoid this!

The best way to avoid the boredom trap is to perform a variety of tasks throughout the day. Consider splitting your day into “focus chunks,” in which you pick one task to work on for a specific period. If you’re motivated to finish it, great. If not, and you’re starting to feel boredom creeping in, move to another task if you can. Not only is variety proven to reduce stress, but it’s also shown to increase satisfaction.

5. Allow autonomy

Finally, feeling control over your environment or situation is proven to reduce stress. After all, stress often occurs when things feel out of our control. As an employer, it’s important to allow your employees control over their workflow when possible. For example, consider assigning a goal or outcome and allowing your employees to figure out how best to achieve it. Autonomy may also extend to allowing employees to choose their hours and daily schedule or, as we’ve seen with the pandemic, their workspace.

Conclusion: Where Are We Headed?

As remote and in-person workers alike begin to demand working environments that are healthy and supportive, employers simply cannot afford to ignore stress in the workplace. And an increased employee focus on their own mental health is here to stay, bringing with it increased happiness and productivity. The businesses that work hard to promote a stress-free workplace will likely be the ones to succeed in the long run; after all, much of a company’s success depends on the security of its employees.

Wait! You Forgot Your Thousand Bucks!

You just wrapped up this year's renewal  on your client's auto and homeowners coverage. You got the green light to place the umbrella coverage, too. And you got a nice referral to the brother-in-law. Nice work, right? Of course it is. But you probably left about $1,000 in commissions on the table if you didn't log in and hand them a "While-You-Wait" instant-issue term life insurance policy. What's that you say? Read on.... SO much has changed.

It's All About the "E"

Sixty seconds. That is how long it takes to have a term life policy electronically underwritten in real time, approved, issued and spouting forth from your (or your client's) printer. The client puts their E-signature on the online E-application, and the policy is immediately E-delivered via PDF for qualified applicants. Is that enough "Ease" for you (bad pun intended :) ?

What if there was a simple, online system that provided:

• A step-by-stop questionnaire to fill out your client's E-application in 10 minutes
• Built-in E-signature
• Automated underwriting based on "AI" (artificial intelligence)
• No need for a medical exam
• Immediate approval for qualified applicants
• E-policy delivery of the life insurance policy PDF in about 60 seconds?

Cross-Selling Is King

We all want to generate additional revenue for our businesses. Existing clients and policyholders are the best source of new business. The "bridge of trust "already exists with them.

But, in working with huge numbers of property & casualty as well as health insurance agencies and agents over the years, we have heard countless times how they are not asking the client about their life insurance needs. Giant numbers of consumers tell us the reason they don't have life insurance is because "no one has approached me about it."

What need is the most unaddressed financial risk for American consumers? Life insurance.

See also: Selling Where Life Happens

The Old Reasoning for Not Cross-Selling Does Not Fly Anymore

Before high-speed, real-time processing of life insurance sales, the reason for not embracing cross-selling life insurance held water. Clients hated the lengthy forms, the confusion, the waiting and the mysterious nature of getting life insurance coverage. One life insurance industry veteran who comes to mind used to say, "Life Insurance is the only industry where one could swear that we're trying to actually PREVENT the customer from buying our product." Back then, he got that right. But today, the right digital tools are here, are super easy to use and are the key to almost unlimited amounts of additional revenue and profits to your organization.

Recent Advances in Agent-Friendly Technology Create the Golden Opportunity

Non-medically underwritten term life is the key. It satisfies most consumers' needs. This is the basic family-needs market we're talking about. $50,000 to $500,000 of coverage.

Better than old, worn-out "simplified" programs that are too small, are too expensive and are perceived as "flimsy" by consumers, Non-medically underwritten term life uses a thorough but still compact application online. Underwriting decisions are made electronically and, therefore, instantly for the majority of applications. 

This new frontier described here is opening up right in front of us. Now is the time to embrace the new capabilities, which are making the great promise and potential of digital technology a reality for life insurance sales. 

Tom Warden, the chief insurance and science officer at CLARA Analytics, is a big fan of artificial intelligence. But....

Therein lies a tale.

As Tom explains in the interview I did with him for this month's ITL Focus, AI is only as good as the data it works on, and most of the data being used for AI in insurance just isn't very good. The data for underwriting and claims comes largely from adjusters, who are evaluated and compensated primarily based on how quickly they resolve cases and may have more than 150 of them open at a time—not an environment conducive to producing highly accurate data or to making sure all the data fields required by an AI are filled in. Besides, AI needs three or four or five years of data to train itself on, and few insurers were addressing the data problem that long ago.

They aren't really addressing the problem now, either, because there are simply too many other pressing issues drawing the focus of adjusters and IT departments. So, while AI can be incredibly powerful, Tom says a lot of hard work has to be done before the industry sees the full benefits.

ITL:

A lot of talk about AI seems to treat it as fairy dust that you can sprinkle on things to get magic results, but you deal with this stuff day in and day out, so you see where the real benefits are—and where they aren't, at least just yet. What are the biggest benefits of AI thus far for insurance?

Tom Warden:

They’re still mostly in the underwriting space but claims is catching up fast. Companies are figuring out the fairy dust stuff isn't real, but they can make real progress if they carefully structure AI-based projects and implementations. They get the data right. They figure out the business problem that needs to be solved and make sure it's a real one, not some pie in the sky. They get all the necessary constituents in the room at the beginning—the data folks, the IT folks, obviously the data scientists, and people from the function that's going to be affected.

For the most part, you also need to keep the C-suite folks out of the room. You need their support, obviously, but don’t let them drive the train. They're the ones that are getting the most bombarded by the hype and all the marketing messages from vendors, so they can be unrealistic or impractical.

I mean, I once worked for a CEO who was very engaged and advocated for what I was doing, but his expectations about how fast we could go and how grand AI could be were inflated. He used to stop me and ask, "Tom, when are we going to be able to get rid of all the underwriters?" Or, "When can we get rid of all the adjusters?" He was partly kidding, but he really did talk a lot about increasing the productivity of adjusters and underwriters by factors of two or more. And that's just not feasible, at least in the near term. You can make great progress, but you must sort of nibble at it. I advocate for multiple problems being solved simultaneously, a portfolio approach, but each initiative needs its own resources.

His expectations were way out in front of what our capabilities were, especially because our database was a mess and our IT folks were having to do all sorts of other things—automate processes, build a new claims system, build a new underwriting system and so on.

You need to start, not by going top-down, but by going to the underwriters or the adjusters and asking how you can make their jobs easier and more productive. Thankfully, more and more companies are starting to figure that out.

ITL:

I want to follow up on your point about the messiness of data, because I think that's a key impediment to what AI can do. How do we solve that problem?

Warden:

I think it's the biggest issue, really.

Most of the claims data we ingest isn't from automated entry or from scanning documents. It's from adjusters. And these are people who all have 150 claims or more open at one time and who are pretty much compensated and evaluated based on how quickly they work. They're in a hurry. So, they don't always enter data accurately, or they don't fill in all the fields.

When you ask for three or four years of claims data so you can train the AI, you find you're dealing with all kinds of messy issues. Unfortunately, nobody with decision authority thought about the kind of data you’d need in the future for AI, or provided incentives to make sure that data was entered accurately. Cost minimization by IT departments is a big hindrance to collecting, cleaning and saving historic data.

ITL:

Are companies recognizing the problem and starting to make sure they produce the kind of clean data that AI needs?

Warden:

Not really, and it may be a while before they do. I had a fellow from a big insurer in the other day, and he just laughed when I asked if they were putting more rules in the claim system so adjusters couldn't skip over stuff or were forcing them to do data checks. He said that was a great idea, but it would take two years to update the legacy claim system, and there would be significant adjustments to workflows and incentives needed on top of that.

If a company is moving to a modern cloud system from Guidewire, Duck Creek or others, they have the opportunity to start fresh with new processes, and these systems can be changed more quickly. But even that is tricky. I know a chief claims officer who spent two and a half years implementing one of these systems, and he told me at the end, "Yeah, we had to leave a lot of stuff by the side of the road just to get it done." Some of that "stuff" was the checks on data accuracy and completeness.

I understand. You have to pay the claims and operate efficiently. But until people invest in data quality, they won't get the full value from the AI.

ITL:

Outside of what we've already discussed, where are you seeing real progress?

Warden:

The biggest improvements are probably on the customer service side, where you don't really need historical data to make the interaction with insurance companies easier. You can build chatbots or set up smarter paths through the call tree. Companies are also innovating in claims by having more and more decisions made automatically or by coaching adjusters without intervening.

ITL:

I was a big M*A*S*H fan growing up, which is probably where I learned the term "triage." I think of the term as relevant to AI in insurance. You divide problems into three sorts—ones that can be resolved immediately by AI, ones that should immediately be sent to a human expert and ones in the middle that can maybe involve some combination of people and AI. Initially, there may not be very many in the AI-only bucket, but you hope that, over time, you'll keep learning and keep moving more into that realm. Does that notion match what you're seeing?

Warden:

Yes, and you don't always even need a true AI-based solution. You can build an expert system by just interviewing adjusters and figuring how what rules to apply in certain circumstances and get 80% of the lift that you'd get from a more elaborate, AI system. Then, with enough time, we can add the AI on top of it to find the subtle things that are predictive and useful that maybe no one's thought of.

But people have it backward. They think, oh, AI is the answer. No, if you just mechanize your decision rules and have everyone follow them, that's where most of the lift is. AI can take you to higher levels, but it needs a decision-focused base to build from.

ITL:

Thanks, Tom.

The quarterly financial results of the listed insurtech carriers were published in August's first days. Their depressed valuations (which I have commented on in the last newsletter edition, Will insurtechs ever walk the talk?) improved somewhat before the announcements based on expectations. I posted about Lemonade's financial results, but otherwise let the dust settle until now.

We are still waiting for a clear sign that one of them can survive in the middle term. We are still waiting for Godot.

Let's look at some of the trends shown by the trio of the survival island saga.

Top Line

We have a positive sign from Hippo, which has underwritten more business than in the previous quarters. Root is shrinking its portfolio. (The number of their auto policies had been reduced by more than one-fifth in the last three quarters)

See also: Will Insurtech Disrupt Homeowner Market?

Loss Ratio

Hippo again stood out: It has provided some good news to its investors, while there has been nothing significantly positive about Lemonade or Root. However, Hippo's good news is a new version of the "seasoned policies" narrative. And, unfortunately for them, we are talking about an insurance portfolio, not a bottle of champagne. You can read in the comments of this post a deep discussion around this concept.

Net Losses

Each of them is still losing tens of million each quarter. This is still the major problem, even if they still have a pile of cash to burn.

Overall, it seems that Root is the player characterized by the worst trends. I highlighted in one of the previous editions of this newsletter that "Root is not using telematics data well for pricing and risk selection. Moreover, they have even denied the usage of telematics data for claim management and for changing driver behaviors."

A player such as Root -- which has focused all its equity story on telematics -- cannot miss nowadays having continuous monitoring and using the telematics data to improve the driving behaviors of its policyholders. It is well demonstrated how:

1. insurers can modify driving behaviors.
2. a structured behavioral modification program (including rewards) is necessary to obtain concrete results.

Here you can see a study on the field from the FHWA that I have discussed with the members of my IoT Insurance Observatory in the past few months:

Average height, average weight, non-smoker, occasional cannabis smoker and the kicker… 23 years old. The modern life insurance underwriter’s dream. The application flies through underwriting and is competitively priced. The consumer has a policy in hand at a record’s pace. But we do not live in a world of only 23-year-olds, and they aren’t thinking about life insurance on a consistent basis – but that’s a topic for another day.

Those who are more active in their life insurance search do not typically fit into that underwriter’s strength. So, what does one do with the 55-year-old diabetic, heart attack survivor with a high body mass index (BMI) who loves to scuba dive? Should you even try writing it or auto-decline? The key to writing a policy like this is in the data. With more data, more policies that may be immediately declined on direct-to-consumer platforms can go through, protecting more families and providing more peace of mind. 

Caution: Risk Ahead

For centuries, the life insurance industry has been cautious by nature. With the help of data and technology, the analysis of risk is shifting, which will enable prudent underwriting without volatility.

By leaning on digital capabilities and years of structured statistics and insights, carriers are now able to effectively write impaired risks and minimize the number of lab requests and attending physician statements (APS). As many advisers know, labs and APS add weeks and sometimes months to the application process, prolonging the buyer journey and putting unnecessary friction in the process. 

Companies like Legal & General America (LGA) are investing heavily in data and analytics to predictively ingest only the minimal amount of underwriting requirements for each specific case. LGA’s Lab Lift is an example of a new data source that can eliminates a lot of the redundancy of sourcing evidence. 

See also: Breathing Life Into Life Insurance

Understanding Your Map’s Legend

By harnessing decades of data and listening to where other industry leaders are finding patterns, life insurers can minimize the amount of evidence for a given risk appetite. Automating straightforward applications with instant decisions and automated underwriting programs take the pressure off the underwriters to do what they do best on the more complicated applications, and impaired risks. The trend toward instant decision life insurance journeys will help get coverage to historically underserved markets. 

Red Sky at Night

Brokers and advisers have always been meeting customers where they are on their journey, it is how the great ones do it week after week, year after year. By taking a few pages from their book, carriers can ease the burden on the advisers as well, giving them clearer options for smooth sailing no matter their client. 

Insurtechs and eye-popping valuations have generated recent headlines. However, the core element of life insurance is a promise – between the carrier and the insured. Underwriting is a check and balance to make sure that both parties can honor that promise. Processes to enhance the efficiency serve not only the quick wins but finding the best solution for more complicated cases because every human is different. And we now have the technology, historical data and human brain power to make more promises to new segments of the population.

What word would you pick to describe the future of underwriting? If "adaptable" came to mind, you would be joining the majority of insurer executives in the mid/large commercial lines segment who thought the same in a recent SMA survey. 

The past two years are clear evidence of how commercial lines, especially underwriting, adapted to a rapidly changing world. However, another phenomenon was also occurring as insurers pushed their underwriting initiatives forward: Many also realized that their digital capabilities were not as far along as previously thought. Now, insurers are accelerating their plans to move their underwriting departments into the next era. 

According to SMA’s new eBook, “Middle-Market and Large Commercial Lines Underwriting Transformation: The Next Era,” 87% of insurers expect big changes to occur in underwriting within the next five years. In 2020, only 69% said the same. Moreover, change is expected to touch every aspect of underwriting, from underwriters’ roles and responsibilities to the processes and resources used. Consider that 90% of leaders think their underwriting departments will significantly differ in five years, with many believing the role will evolve to blend the human touch with AI. In contrast, one in 10 executives thinks technology advancements will eventually eliminate the underwriter role. 

See also: Dramatic Shift in Underwriting Ahead

How insurers leverage their underwriting staff to drive change internally may also affect the path forward of the underwriter career. The more than half of insurers currently tapping underwriters to contribute to innovation initiatives may see their needs for tech-savvy talent increase. At the same time, several insurers are missing opportunities to capitalize on the expertise of underwriting teams to push their organizations into a new digital era.  

Learn more about the current state of underwriting transformation and the path forward for the mid/large commercial lines segment by reading SMA’s new eBook, “Middle-Market and Large Commercial Lines Transformation: The Next Era.” 

The term “liquid biopsy” has come into common usage, and the concept is receiving significant attention in the diagnosis and treatment of cancer. Liquid biopsies have been evaluated in other clinical areas, including prenatal diagnostics, organ transplant, autoimmune disease, trauma, myocardial infarction and sepsis. Liquid biopsy has been defined as “the collection of samples of non-solid biological tissues – i.e., body fluids – to test and analyze for relevant markers in specific diseases.”

Invading microbes either die naturally or are killed by antibiotics and the body’s immune response. Upon death, microbial genetic material and nucleic acids are released into the bloodstream or other bodily fluids. Sequencing methods are then used to identify fragmented microbial cell-free DNA (mcfDNA), extracellular DNA that can come from any cell in the body.

As this field’s technology is advancing rapidly, close attention must be paid to ensure that any test results are accurate and reliable, for use in both clinical and insurance settings. Potential uses of liquid biopsy in non-cancer settings include screening, identification of diseases and treatment selection and prognosis. Using liquid biopsy as an initial screening tool could reduce exposing individuals to unnecessary further tests and possible higher morbidity risk.

Infectious diseases such as bloodstream infections, tuberculosis, fungal and parasitic infections, endocarditis, pneumonia, urinary tract infections and infections following organ transplants can potentially be identified using mcfDNA as a marker of infection. The ability to identify pathogens quickly using non-invasive screening methods may provide significant benefit to patient outcomes.

Researchers have developed several mcfDNA PCR-based tests that use blood and urine specimens to diagnose infections. The mcfDNA plasma test can detect more than 1,000 organisms in the bloodstream that are responsible for causing infection. It has shown sensitivity of 93% and specificity of 63%. The test is also able to detect probable cause of sepsis in nearly half of patients (49%), compared with 18% using blood culture and 38% using microbiology tests. It also provided better results in detecting pathogens from individuals who had received antimicrobial therapy within two weeks preceding presentation compared with blood culture (48% versus 20%).

There are, however, issues with using liquid biopsy for clinical diagnosis of infectious diseases. Concentrations of cfDNA vary considerably from person to person, and there can be a lack of quantitative results differentiating infection from potential contaminants. Differences between practice and protocols with liquid biopsy methodology, and cost of sequencing further complicate its implimentation.

See also: Genomics Revolution in Life Insurance

Elevated biomarker levels may be indicative of other pathological conditions, including infection, sepsis and autoimmune diseases. Sensitivity has been shown to be between 70% and 93% and specificity to be between 63% and 88% for mcfDNA liquid biopsy tests. cfDNA sequencing tests lack the ability to detect RNA virus pathogens such as human immunodeficiency virus (HIV), Zika, hepatitis C, respiratory syncytial virus (RSV), enteroviruses and norovirus.

Noninvasive prenatal testing (NIPT), which analyzes fetal cfDNA in the maternal bloodstream, is being more frequently used since 2011. It is used to screen for fetal chromosomal abnormalities and to detect other fetal and pregnancy-associated conditions such as preeclampsia, fetal growth restriction, congenital heart diseases and gestational diabetes. Fetal DNA shed into the mother’s bloodstream can also be sequenced to test for common chromosomal abnormalities such as trisomy 21 (Down syndrome), trisomy 18 (Edwards syndrome), trisomy 13 (Patau syndrome) and monosomy X (Turner syndrome). 

Extracellular Vesicles (EVs) are rudimentary cells, mostly isolated from blood plasma and serum. These are considered a promising liquid biopsy tool for noninvasive diagnosis of disease, as they contain microribonucleic acids (miRNAs), messenger RNAs (mRNAs), DNA, proteins and lipids. EVs derived from blood samples have shown the potential to diagnosis conditions such as Alzheimer’s disease, amyotrophic lateral sclerosis, Parkinson’s disease and Huntington’s disease. Saliva liquid biopsy testing may help diagnose conditions such as oral lichen planus, periodontitis and Sjogren’s syndrome, as elevated protein levels in saliva EV are involved in wound repair.

Summary 

The rapid development of liquid biopsy technology, along with its potential for multiple clinical applications, including new cancer screening tests, has garnered significant attention in both medical and insurance literature. mcfDNA technology is already providing valuable diagnostic information, but further work will be needed to establish quantitative reference parameters to provide a clearer interpretation of results. Given their multiple potential uses, they will surely affect many aspects of insurance medicine and products. Thus, while currently presenting some challenges to the insurance industry, liquid biopsy technology also represents great opportunity. Insurers should seek ways to embrace and find opportunity with these promising developments in the emerging field of liquid biopsies.

I am baking in Northern California, where the temperature is to hit 114 degrees today, as part of a four-day stretch with highs above 110 and a 10-day stretch with highs projected to be above 105. So, I have zero reason to doubt the effects of climate change. But a question has been slowly forming in my head: Where are all the hurricanes?

Almost all the predictions this spring were for another worse-than-normal season, following a stretch of six years that saw five of the 11 most destructive hurricane seasons on record in the U.S. Yet not a single named tropical storm formed in August, the first time that has happened since satellites started monitoring the Atlantic in 1967.

In fact, no named tropical storm had formed since July 3. Two have formed thus far in September, one that has become a hurricane (Danielle) and one that is expected to do so shortly (Earl), but both are expected to head north and dissipate without making landfall. So, we are now past what is expected to be the peak of the hurricane season, and it's looking wonderfully quiet.

What is going on?

A generally cited reason is "the strong subtropical-tropical sea surface temperature gradient. This strong gradient increases the temperature differential between the subtropics and tropics, which can help increase frontal activity into the tropics, increasing shear and bringing in dry air too," said Dr. Phil Klotzbach, lead forecaster at Colorado State University.

For us non-meteorologists, that translates as: Water in the North Atlantic is at record warm temperatures, but water in the central Atlantic is closer to average or even a bit below. The greater-than-usual difference in temperature seems to be creating high winds that are breaking up tropical storms before they can form.

In even simpler terms: We're getting lucky. 

Forecasters acknowledge that they don't truly understand what's happening -- some also cite unusually dry air over the Atlantic or sand blowing off the Sahara as reasons major storms may not be forming. They also note that there is still plenty of time for hurricane activity to catch up to earlier expectations: September is typically the worst month of the season. And, of course, it only takes one massive hurricane making landfall to cause tens of billions of dollars of property damage and threaten lives.

But, for now, we can hope for the best. Maybe often-battered communities can get a break, and insurers can build reserves for future hurricane seasons.

I'll be following the issue closely -- from inside, with the air-conditioning on.

Cheers,

Paul