For years now, people in the insurance industry have worried about the impending retirement of so many Baby Boomers. Well, it's happening. They're retiring. A lot of other people are leaving the industry, too, or considering doing so as part of the general reevaluation of work that the pandemic has caused these past two years-plus.

What to do?

To figure how to tackle the problem, I talked with Hunter Fausnacht, vice president, agent & broker development, at The Institutes, who says the talent issue is the biggest challenge facing agents and brokers today. 

The short version of his solution is two-fold. First, agents and brokers need to get creative about where they look for talent and how they pitch to prospects. (Hint: The industry can do a much better job of communicating the excitement of working in insurance during this period of great change and of describing the potential financial rewards.) Second, agents and brokers need to have a plan in place to start extensive training on Day One. There just isn't time any more for the learning by osmosis that tended to occur at agencies in years past.

The longer form of his answer follows in the interview below. I hope you find it as illuminating as I did.

Cheers,

Paul

Editor-in-Chief, Insurance Thought Leadership

ITL:

To start us off: What are the biggest issues you see agents and brokers dealing with these days?

Hunter Fausnacht:

Attracting, training and retaining talent is the No. 1 challenge that everyone from a small agency all the way up to Willis and Aon and Marsh is facing. We knew the Baby Boomer generation was retiring, and there was going to be a shortfall of people to fill vacant jobs. That problem got accelerated significantly with the pandemic and “The Great Resignation,” as people are calling it. A lot of job postings aren't receiving nearly the applicants that they used to, and the pool of those responding isn’t as qualified. So, the challenge is: Where are we going to find people to fill these roles, and how are we going to get them the skills required to perform those roles?

ITL:

Are their solutions, or are we just stuck?

Fausnacht:

There are two things I see the best organizations doing. First, they are identifying new channels of recruitment. They're thinking creatively about where to source their talent, outside of traditional university pipelines and other brokers. They’re marketing a career pathway to people looking to switch industries. Maybe someone who was a carpenter is looking to start a career in insurance, a teacher, someone who has been a stay-at-home mother or father is looking to reenter the workforce. The key is showing them that there is a well-thought-out pathway for them to acquire the knowledge and skills to perform the job. You have to be able to show them the viability and the opportunity of having a career in risk and insurance. And the truth is this could be an extremely exciting and lucrative career pathway. There's lots of opportunity.

Second, the best organizations have an organized plan from day one for you to start learning about risk and insurance and about how to perform your job. Historically, development was more of a learn-on-the-job system. You’d learn informally from your colleagues or your manager. We don't have time to do that any longer. You need to have a training resources format and have already developed a plan.

ITL:

Those two approaches sound like things that a big broker can do fairly easily. What about the five-, 10- or 25-person brokerage?

Fausnacht:

That’s a great question. Large brokers do have the necessary overhead. It's still a challenge for them. The smaller agencies are looking for organizations like The Institutes to have an off-the-shelf learning pathway that is effective and relevant to the job, but also cost-effective. We’ve spent a lot of time with our advisory board and other organizations to tailor learning pathways that are ready to go for new hires.

ITL:

You mentioned a few possibilities of the kinds of people who could form a new talent pool. Are there others?

Fausnacht:

Several startup companies are sourcing international talent, particularly out of the Philippines and India, where they'll run job advertisements and receive thousands of applicants for a customer service role. They’ll have a training program in place and use offshore talent to service insurance clients here in the U.S.

The approach is innovative, and it does seem to be an efficient solution if you can't find talent in other ways. The troubling part is that customer service reps for agencies have always been the entry point for the industry. Unless there's a viable new entry point, we might just be making our talent problem worse down the road.

ITL:

How do you advertise to sell people on the possibilities of the insurance industry?

Fausnacht:

We as an industry have never done a good job with this. Insurance has a negative reputation, or certainly not a positive one, among the next generation of talent, right? They think of a door-to-door insurance salesman. In reality, risk and insurance is extremely exciting. There are a number of different opportunities, from working with Fortune 500 accounts to building your own book of business, which can be an extremely lucrative annuity that most folks just don't know about. You're not going to be able to fully communicate that through a digital ad.

The larger brokers are really investing in campus recruitment to do presentations. It's certainly an extremely competitive landscape. From a digital point of view – which is how you reach the next generation -- there's still a lot of experimentation. Many are communicating that there’s a planned pathway for people to come in and have a rotation program combined with formal training to get the knowledge that leads to additional job opportunities. Many are also tailoring to a changing demographic in the U.S. We've never done a good job at marketing to underrepresented communities, and I've seen a lot more through formal and informal channels to cater to those communities in that next generation. It’s absolutely vital that we have inner city and underrepresented young professionals pursuing careers in this field.

ITL:

Insurance is a massively important industry, and it’s on the move. Based on a long history of writing about innovation, I tell people that the industry is where all the cool kids are hanging out. But it seems that message still has a ways to go.

Fausnacht:

Right. Coming back from the RIMS conference, where I just was, it’s hard not to say, Wow, this is a cool field. But most people don't get to see RIMS, right? They just see an insurance commercial. They think of someone trying to sell them life insurance. That's all they know.

But there’s an awful lot more going on. We just have to get the word out.

Hunter P. Fausnacht

Vice President – Agent & Broker Group

The Institutes

As vice president of the Agent & Broker Group at The Institutes Fausnacht leads the client-relationship management efforts by serving as chief advocate for insurance brokers.

Fausnacht joined The Institutes in 2017 as director of Business Development where he led the growth initiative with the Agent & Broker community. He partnered with the top 100 insurance brokers to deliver knowledge development solutions and advised The Institutes on the learning needs of the modern insurance broker.

Fausnacht is the co-host of the Agent & Broker Group podcast, The Voices of Risk Management, a premier podcast giving followers a peek into the minds of risk and insurance leaders.

Before joining The Institutes, Fausnacht served as vice president of Business Development at the Willis Group where he discovered his passion for developing talent. Prior to that, Fausnacht worked in Business Development at Rolls-Royce covering Asia and the Middle East.

Fausnacht earned a bachelor’s degree in finance and marketing from the Kelley School of Business at Indiana University.

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Is the Email Era Ending? Paul Carroll, Editor-in-Chief of ITL Paradigms die hard, but they can eventually die. The idea of a carriage stuck around long after engines, rather than horses, began to power them, but the horseless carriage became the car over the course of a few decades. TV shows were initially just radio shows or Vaudeville acts done in front of a camera, but "I Love Lucy," "The Honeymooners" and others eventually pioneered a better way, just as cable-TV has morphed into its many, many current forms after initially being just broadcast TV carried on a wire.  Even though email has been around so long that many of us can't remember life without it, it's actually based on an antiquated physical model -- the inbox and outbox -- and the paradigm is showing signs of dying. While it's still not clear just what approaches will supplant email, they could make internal communication more efficient and, even more important, provide better ways of communicating -- even collaborating -- with customers.   continue reading > Webinar Alert How can you differentiate your products from competitors? Check our latest webinar to get expert insight on how Majesco is helping traditional insurers, greenfields, and startups establish a new foundation for growth, launch new lines of business, and enter growing markets. Watch Now SIX THINGS Revolution? Not Yet. Evolution? You Bet. by Bill Walrath In our fervor to embrace new insurtech companies, we may have missed the opportunity to learn from those incumbents that have seen the ups and downs. Read More How to Use Social Media Data in Underwriting by Michael de Waal Social media data provides insurers with an opportunity to gain insights into a customer's risk exposure in real time. But it comes with many challenges. Read More The New Competitive Landscape  Sponsored by PwC Insurers increasingly go to market not as individual companies but as part of ecosystems -- a radical change in thinking. In this high-octane webinar -- featuring Marie Carr, partner at PwC; Andrew Robinson, CEO at Skyward Specialty Insurance Group; and Andy Cohen, COO at Snapsheet; along with moderator Paul Carroll, editor-in-chief at Insurance Thought Leadership -- we discuss where ecosystems are making a difference now, where they will in the near future and where their impact is likely overstated.  Watch Now  It’s Time to Reimagine Digital Payments by Karen Furtado The acceptance and delivery of payments must be in real time, and capabilities must let customers create tailored digital payment experiences that fit their needs best. Read More How Automation Can Streamline Claims by Faheem Shakeel Insurance claims software lets agencies reduce fraud, shorten the claims lifecycle, optimize costs, improve efficiency and a lot more. Read More An Overlooked Target for Modernization by Kayvan Alikhani Maintaining compliance requires manual, repetitive and error-prone processes, handled by small armies of well-compensated experts -- but many can be automated.  Read More The Power of Ecosystem Transformation by Nag Vaidyanathan The ecosystem model empowers technology departments by getting them closer to the end customers, positioning them as supporters of business strategy. Read More InsurTech Ohio Spotlight with Ron Rock Sponsored by JobsOhio  Ron Rock discusses how the insurance industry is rapidly evolving, and the importance of recruiting and retaining top software and programming talent.  Read Now MORE FROM ITL April Focus: Automation and RPA Sometimes, innovation takes time.   Some 30 years ago, I wrote an article for the front page of the second section of the Wall Street Journal that declared a revolution in forms. We were far enough along in the personal computer revolution that software companies were coming out with products that would let users fill out forms on-screen, speeding the process and eliminating the errors that occurred as someone had to interpret people's handwriting. Even more magical, the spread of local area networks meant that information could flow straight from my screen into a corporate database, with no never to ever print the form and have someone re-enter the data. .  Everything I wrote was correct, and forms did take a major step forward, but, here we are three decades later, still drowning in forms. And the insurance industry is Exhibit A.  Read More The Impact of Rising Inflation and Interest Rates on Insurance Profitability  Sponsored by Insurance Information Institute  Paul Carroll, ITL's Editor-in-Chief, and Dr. Michel Leonard, vice president, senior economist and head of the Triple-I’s Economics and Analytics Department, continue their series of webinar discussions by looking at the Triple-I's latest projections for inflation and interest rates and talking about how the insurance industry can prepare. Read Now   Partner with ITL to create expert thought leadership content. Custom Content Promoted Content Display Advertising Custom Webinars Monthly Topic Sponsorships ITL Partner Packages and more Learn more and get the 2022 Media Kit

Many P&C carriers say they will become more data-driven, and many of them have tried -- with mixed results. Such efforts can only succeed through a constant effort to employ data to make better pricing, underwriting and claims decisions.  

A great data strategy transforms a company's data into valuable insights and top-line growth, but shouldn't be limited to internal data. Insurance carriers understand that external data is a must-have, and there are two compelling reasons. First, carriers think it will help their existing business processes and operations. Second, they see the value that leaders are realizing from external data. 

Although a must-have, external data requires considerable effort. Leading carriers consume volumes of third-party data from multitudes of channels, and this data is most often highly fragmented. The system architecture may also need to be changed to accommodate the data, which can be challenging. 

Most carriers don’t have a plan for using and valuing the external data. Procurement is usually driven by senior leadership, without a complete handle on the gaps in internal data that it can fill. They begin acquiring external data without even knowing the landscape and having a definite plan for what to do with the data. Insurance leaders must start with questions such as:

• Can external data assist you in getting a better understanding of your customers and prospects? Can it help in answering questions that were not answered before? Do we, for example, have the potential to better evaluate and comprehend property risk by using features generated from external data? 
• Can external data also aid in discovering new operating models? For instance, can we use fitness tracker data to offer rewards and lower premiums on a health/life insurance plan, resulting in better underwriting and risk management? Similarly, can imagery data be used in property insurance to improve underwriting and cut down on the number of manual inspections?
• Can external data help in demystifying biases and provide granular details? Does adding external data into the training pool reduce the bias? For example, a data provider may provide access to crime data at the location level, allowing for a more accurate picture of risk at the local level rather than the ZIP code level.
• Can external data help provide directional insights in the decision-making process for an insurance carrier? While data precision is vital, it should not be the primary goal; however, the total data quality should not suffer significantly as a result of adding more data elements. What matters most are the directional insights that external data can bring when paired with internal data.
• Is the external data really providing value and worth the investment? A significant portion of the book of business should benefit from the usage of external data. For example, if a carrier is spread out across the Midwest and the external data is biased to, say, only Minnesota and Iowa, it is of minimal value to the carrier.

In this arms race to leverage external data to gain a competitive edge, carriers have made numerous attempts. However, these attempts need to either be successful in the first instance or fail fast. Failing fast is crucial, as it enables carriers to reflect back on what went wrong and can lead to experimentation that creates successful products. 

Numerous things can go wrong, from data need assessment to data collection to data management and everything in between. Successful companies look at the process holistically and have a team that looks for data sources outside the company for a specific use case, as well as an integration team that helps with data acquisition, cleaning and integration within the company. Instead of viewing external data as a one-time purchase, successful carriers retain and maintain the data, as well as find and compare insights based on marrying external data to internal data.

We recommend that insurance carriers follow a three-pronged approach to undertake a more systematic adoption of external data in their offerings:

Look across lines of business

Starting with the end in mind will make it easier to ingest and integrate external data, as well as enable the necessary data architecture modernization. We've seen carriers use third-party data vendors to automate the underwriting pipeline, improving customer experience by providing initial quotes and reducing the standard time for issuance and binding. In another instance, we have seen property insurers leveraging vendors providing property attributes extracted from AI and computer vision and doing digital inspections for underwriting, reserving manual inspections for highly complex instances only.  

See also: A Blueprint for Casualty 2.0

Analyze the impact of external data on the value chain

Not all functional areas of the value chain need to use external data. Upfront planning starts with an assessment of the existing data environment to determine how it can support ingestion, storage, integration and governance and ultimately the use of the external data.

This analysis will help in determining answers to the following questions:

• How many external data application programming interface (API) calls are being made across the different value chain functions?
• What kind of data parameters are expected to be passed via API calls across the different value chain functions? What is the expected format of the return objects and attributes?
• What is the utilization level of the external data attributes being pulled in across different value chain functions? (Complete/significant/partial)
• What is the underlying pricing structure of the external data vendor API? How does it affect costs across different value chain functions?

Once this impact analysis is complete, the data engineers can begin the needed data plumbing for different micro-services (i.e. data integration, feature engineering, AI/machine learning, business intelligence) to be developed for the respective value chain functions. 

Set up efficient model deployment, data governance and monitoring

Insurers should develop sophisticated tech stacks for efficient model deployment and monitoring, which employ the latest analytics workbenches. Carriers should also ensure the data quality by constantly monitoring the incoming data, checking whether the source data have changed and understanding the drivers of any changes.

Strong governance standards should be in place to address data security and usage aspects of external data. A successful strategy is to constantly analyze the value of various external data sources in terms of predictability and accuracy, and to dismiss vendors that generate poor ROIs. 

Conclusion

More data is better data if it aids in connecting the dots and expanding marketing opportunities and future growth. Minimizing risk and generating value with external data, on the other hand, necessitates a combination of creative problem solving, infrastructure and sound execution strategy.

Realizing the value of external data through data orchestration is a big responsibility and can overwhelm carriers. An effective approach is to begin by solving a well-defined problem and then use that success to generate momentum for expanding external-data efforts across the organization.

Emerging threats and risks are precursors to business crises, so all organizations should have an updated risk management plan to implement when these risks become a reality. Business leaders should be aware of the following operational risks:

1. Cybersecurity Risks

Cyberattacks are becoming a real threat in the digital world. A report from SonicWall, an internet cybersecurity firm, shows a 105% surge in ransomware attacks. Significant payouts to hackers and cybercriminals include the $5 million paid by Colonial Pipeline and the $11 million ransom paid by JBS Foods, which encourage continued cyberattacks.

The supply chain is the No. 1 target for cybercriminals. This results in a significant loss of revenue for businesses during downtime and recovery. According to the U.S. Chamber of Commerce, the average downtime after a ransomware attack is 21 days. Some businesses take up to 287 days to clear the ransomware, conduct forensic analysis, back up data and get back online.

2. New Energy With New Hazards

The cost of oil and gas was already on the rise, even before the invasion of Ukraine by Russia. Driven by the climate crisis, as well, governments will continue investing in alternative energy options, including liquefied natural gas, hydrogen and hydroelectricity.

However, after decades of depending on hydrocarbon-based energy options, these changes are monumental and bring forth uncertainty about hazards. As businesses adopt new energy sources, they should be prepared to construct infrastructure, train employees to handle new substances and be ready to manage emerging hazards.

3. Climate Change

Even though extreme weather was thought to affect a few places, specifically areas vulnerable to natural disasters such as hurricanes, earthquakes and tornados, irreversible climate change is increasingly becoming a concern to businesses. According to AON insurance, more than $238 billion was spent on natural disasters in 2021, with insurance covering only $108 billion.

Most businesses are poised to face significant operational risks due to extreme weather and natural disasters caused by climate change. Unfortunately, all businesses are affected by tough weather conditions. For instance, flooding makes it impossible to access different locations. Floods also damage property, electricity and hinder business operations. Businesses can only resume once professionals repair water damage.

See also: How Insurtech Alters Operational Risk

4. Functional Safety

There has been increased focus and criticism on functional safety, specifically surrounding environmental health and safety design and management. Interestingly, this interest doesn’t stem from organic growth but instead pressure from insurance providers to have high-hazard businesses enforce functional safety measures.

Due to this, businesses new to the functional safety realm are wondering how to maneuver these compliance requirements. Fortunately, with the help of advancing technology, they can improve visibility, streamline governance and automate environmental, health and safety (EHS) management using EHS software.

5. Economic and Political Instability

Economic and political instability is another common operational risk businesses face in 2022. Economic volatility resulting from the pandemic and political activities can affect various business dynamics. Increased political polarization, the migrant crisis and more issues will likely lengthen the harsh business environment.

However, while these issues may seem out of control, businesses can do a lot to mitigate the risks of economic and political instability. For instance, developing risk profiles that evaluate risks for immediate responses and building a robust business that can withstand economic shocks can help businesses withstand unstable situations.

Conclusion

Supply chain risks, data privacy, the changing regulatory environment and compliance issues are other major operational risks that businesses should watch out for. However, businesses facing risks from all sides should maximize efficiency and create a focused approach to risk management.

Before the rise of digital marketing, insurance agents could only sell to the people in their town or a potential client they met with in person. Most agents have opted for being a generalist who provides the most commonly offered policies most individuals are seeking. But those who have operated or chosen to move toward specialization are no longer bound by geographical restrictions, making it easier to dominate a market -- which can be lucrative. 

Digital sales channels, search engine optimization (SEO) and social media allow agents to sell any type of insurance to anyone, anywhere. Many successful agents are finding a new opportunity by selling policies to clients in a niche industry across the country. The geographic limitations that once existed for specialty practices are removed in this digital era. Agents who build reputations as experts in underserved, overlooked markets with unique insurance needs are finding increased customer retention, a less competitive field with more policies sold per customer and stronger new-client acquisition rates. 

Specializing can be a more lucrative option 

According to a recent report, the global specialty insurance market is expected to grow rapidly over the next six years, with revenues reaching nearly $244 billion. Specifically, the non-life insurance sub-segment is expected to be the fastest-growing in the global market and register revenue of $43.49 billion. This shift to prioritizing specialty insurance showcases the importance that these underserved businesses put on protecting against unplanned loss. 

Take the pandemic. Some industries have experienced unforeseen financial, property and revenue loss that traditional plans may not have taken into account. By becoming engrossed in the ins and outs of a specific industry, an insurance agent is able to include, upsell or cross-sell policies that better protect clients. 

See also: Bright Prospects for 2022

Finding a niche builds expertise and reputation

There is a huge range of opportunities that are still untapped, just waiting for creative, research-driven, passionate agents to capitalize on. How do you determine what to specialize in? 

Agents should start by researching businesses typically overlooked in industries they find interesting – laundromats, trucking, scaffold companies and day cares are just a few that might not be top of mind but that have specific needs that require additional protection that generalists often do not provide. Additionally, by reviewing your current book of business, you might find that you already have a strong client base in one business category. If the book matches the areas in which you enjoy spending your time, it might be time to consider pivoting your entire book to focus on growing your niche client base. 

Clients looking for general policies have endless options when looking for an insurance agent. But, for those with specific risks affecting their operations, agents who have unique industry insights can guide and inform them of coverage options they hadn’t even thought of. This creates an advantage for agents looking to win new business. Because they are hyper-focused on niche policies, they build in-depth knowledge within an industry that informs expertise to clients. This is a winning combination that will grow your business through referrals and upselling. 

Using digital marketing tools to maximize your niche operation

Technology provides the means for niche agents to both identify clients who need specialty insurance, and build a strong digital brand to attract them. So how can insurance agents who are shifting their focus to create and foster expertise in a specific industry also leverage the growing need to embrace technology? 

Digital marketing tools take off some of the pressure from the high-touch-point communication clients need. Technology partners can provide SEO, social media, custom web pages and blog content that highlights your expertise. This kind of tailored marketing becomes more critical after you’ve established your clientele and are looking to continue to showcase your expertise. These tactics are the most effective way to create strong SEO that leads back to your company, strengthen your brand and build trust within your current client base and with potential clients. By offsetting these digital marketing tools, you can focus on critical tasks. 

Niche insurance offers important liability protection for companies in unusual industries, not often covered by ordinary insurance policies. Insurance agents who develop their own specialized approach will have massive growth opportunities and less competition.

If you restrict your view of your potential niche to the borders of your city or state, you limit your potential. There may only be a handful of any given specific businesses in your area, but, if you expand your search, you’ll find that a niche you didn’t think was big enough has an extreme opportunity for growth.

The complexity of insurance policies and the often-deferred, if ever realized, benefit for the end user have traditionally meant that insurance is a product that is sold and not bought. But, as consumer preferences and buying behaviors change, insurance providers must be prepared to move toward a middle ground, aligning distribution strategies to meet the modern customer at the desired point of purchase. Insurers need to offer differentiated products and convenient ways to purchase insurance to capture the business and, perhaps more importantly, the loyalty of today’s consumers.

Right Product

Traditional insurance products are complex in terms of both actual product attributes and the accompanying policy language and therefore inherently prevent transparency. In fact, recent Bindable research showed that 86% of insurance customers wish there was greater transparency around policy pricing, and 82% would like greater insight into what exactly a policy covers.

Historically, insurance agents have acted as translators between the insurance company and the consumer. However, selling insurance products through non-traditional channels, such as via digital experiences or embedded offerings, often diminishes or modifies the role of the agent. As a result, insurers need to develop simplified products with more straightforward policy language to create seamless experiences, regardless of channel.

Creating more consumable insurance products begins with data. Beyond personally identifiable information (PII), which is most often submitted by policyholders, insurers today also have access to significant amounts of third-party data from varied sources, including social media, geolocation, telematics, wearables and smartphones. 

This quite naturally leads to the expectation that insurers will, and should, leverage that data to not only develop personalized insurance products but to also find other relevant products and discounts based on the “big picture” of the policyholder that the aggregated data presents. Keeping in mind that one product does not fit all risks, having a choice marketplace solution to ensure all potential insureds have an option for coverage is critical in “right sizing” the coverage for the customer.

Right Place

The rise of e-commerce in the early 2000s introduced direct-to-consumer (DTC) sales, and, suddenly, insurers had to change the way sales and service were handled via digital solutions. Over the years, additional channels have continued to emerge, leading to a distinct need for channel strategy. But, as often is the case, challenges lead to opportunities, and, as insurers’ channel strategies have required more sophistication, many providers today are leaning hard into the opportunity for embedded insurance. 

Putting the right product in the right place at the right time through embedded insurance has the potential to increase conversions and make insurance more streamlined than perhaps any other insurance innovation in recent memory. This is true, in part, because policyholders are open to it. According to Bindable’s research, 65% of consumers are willing to purchase insurance through a non-insurance brand, and, of those respondents, most would actually prefer to do business with a non-insurance brand over a traditional broker (72%) or an insurance company (64%). 

Let’s face it, convenience is king. With costs and inflation rising and consumers watching expenses, convenience may be the single biggest trigger for insurance purchases in the near future. When products and channels align, conversion rates increase and acquisition costs naturally drop. Considering how fierce the competition is among insurers for customer attention, (insurance keywords are among the most expensive in Google Ads and Bing Ads, some costing $50 or more per click), any chance one has for reducing the cost of acquiring a customer should not be ignored. Embedding an insurance proposition into an existing point-of-sale (PoS) has a significant impact on getting in front of the right customers.

See also: How to Experiment in Innovation Training

Right Customers

For insurers to achieve profitability, it is necessary to find a healthy mix of risk through customer acquisition and existing customer retention. But, in the midst of a hardening market, this is a tall task for most. To attract the right customers, providers must leverage the right tools, partnerships and processes to meet consumers at relevant engagement points throughout the customer journey. 

Through partnerships with trusted brands, insurers have the opportunity to co-opt a pre-existing relationship status with the most desirable customers. Starting from there, creating a premium customer experience inside a user-friendly digital environment can help, but leveraging the most advantageous channels through partnerships enables the mining of supplemental data that insurers might not otherwise get, improving customer acquisition in the process. Today, all this can be done in a white-labeled interface so the insurance proposition “lives” within a trusted source, ensuring a seamless experience for the consumer. 

The Future of Insurance Distribution

Emerging technologies enable insurers to use newfound treasure troves of data to streamline submissions, improve underwriting and reduce risk. Digitizing insurance processes from quote-to-bind; intelligently gathering, segmenting and using shared data; and embedding white-labeled insurance propositions into ecosystems of trusted brands are all key to easing the burden of acquiring customers and – even better – retaining them. 

With all this in mind, insurers must approach strategy and innovation more thoughtfully than in the past by considering not only what products are offered but also how the products are distributed to best reach the ever-elusive target customers.

The rapid growth of family assets and the drive to preserve wealth for future generations has led to a proliferation of family offices across the country. According to Ernst & Young, the number of family offices has more than doubled over the last 15 years. 

The risks these affluent families face are rapidly evolving, heightening the possibility of loss of financial assets and challenging their privacy and physical security. Aon Private Risk Management’s recently released a Family Office Benchmarking report analyzed insurance programs and losses from 130 family offices. The report uncovered several positive trends and some key challenges that family offices should address. 

Positive Trends 

The report revealed significant progress in three areas:

• Art & Collections

Eighty-one percent of all family members elect to carry a collections policy for art, jewelry and other types of collectibles. Protecting valuable items under a specialized policy offers benefits that are not afforded if insured as general contents under a homeowners policy. While each insurer’s terms may vary, most collections contracts offer enhanced coverage, such as breakage of fragile items, a broadened valuation settlement clause, extended coverage for newly acquired items and the elimination of deductibles.

• Wind

As hurricanes become more prevalent along the Gulf and Atlantic coasts, the households in this study are insuring their property against wind damage. Ninety-five percent of all properties located in hurricane-prone areas are insured against damaging hurricane winds. The percentage of properties insured in Florida, Hawaii, Massachusetts and New York are covered at 96%, 95%, 73% and 94%, respectively. Considering wind and hail represent the second-highest cause of property loss, windstorm coverage is a prudent investment.

• Excess Liability

One hundred percent of family members carry excess liability coverage, with 93% also electing excess uninsured and underinsured motorist coverage. On average, one in eight drivers on the road is uninsured. To reduce their costs, many drivers on the road elect to carry only the minimum limits required by their state. Excess uninsured and underinsured motorist coverage pays for bodily injury an insured and their passengers suffer in an automobile accident in the event the other driver does not have insurance or does not have enough insurance. This coverage is an important supplement as victims can suffer long-term injuries requiring lifetime care and will not be able to recover damages from an at-fault uninsured or underinsured driver. 

See also: Telecommuting: The Future Office or an Insurance Nightmare?

Persisting Challenges 

With the heightening risk of prominent families being targeted for liability lawsuits, the benchmarking report revealed that these coverage options continue to be overlooked by families: 

• Cyber

Family offices have a unique exposure, as the privacy and financial information of both the family office and family members are in jeopardy. Only 2% of family offices carry comprehensive cyber liability coverage, and very few individual households elect cyber coverage. UBS reported that approximately 22% of family offices in North America know they experienced a cyberattack in 2019. The most common forms of attack resulted from phishing, malware and social engineering. Protecting against cybercrime is a necessity for family offices, and the risks should not be underestimated. 

• Non-Profit Directors and Officers Liability

Serving on nonprofit boards is a frequent activity for family members, but only 15% of families carry directors & officers (D&O) coverage. Lack of coverage leaves family members solely dependent on a board’s policy for damages and defense, which may require them to pay expenses out of pocket if the coverage is insufficient. On average, 4% of nonprofits will have a D&O claim brought against them in any given year, according to the Nonprofits Insurance Alliance Group. Nonprofits are sued for a variety of reasons, including wrongful acts of board members and breach of fiduciary duties. It is important for family members serving on these boards to understand the risks involved and to be provided the opportunity to purchase their own coverage to help protect their personal assets.

• Employment Practices Liability

Only 48% of Aon’s family office households carrying workers compensation purchase employment practices liability coverage. Employment practice complaints stemming from accusations of wrongful termination, defamation, sexual harassment, and discrimination have been filed by domestic employees performing a variety of roles. Families need to take precautionary measures when both hiring employees and throughout the course of employment. Employment practices liability policies provide both defense costs and coverage for damages that arise out of these employee lawsuits. 

Family offices face increasing threats to their assets, reputation and physical security. These accomplished families need to consult experts that can identify and help them manage risks. The consequences can be severe if risk barriers are not built. Developing a strategy will help each family preserve and continue to grow their wealth.

There is a very popular movie genre we might call “the heist.” We’re all familiar with it from movies like "Ocean’s Eleven" or "The Italian Job." Pick any heist movie, and you will see one obligatory scene. There is a small dark room where a security guard is watching 50 surveillance screens, and the thieves either have to tap into the screens or they have to distract the guard. Somehow, they must not be seen on those screens. It seems like the number of screens would be helpful to the guard, but, in reality, the theft is probably made easier by the fact that there are too many screens to watch.

Imagine for a moment that you are a thoughtful system administrator, attempting to “know” your system’s ins and outs and connections. Daily, however, hourly perhaps, others are adding to the network of connections with their integration points and APIs, all seemingly harmless but incalculably numerous. You might feel like the unfortunate security guard. How can I keep my eyes on all of these screens at once when anyone can enter the building at any time and wreak havoc because they all have the keys? It isn’t just a security issue, it’s a system management issue. Who is keeping their eyes on the APIs? 

In our last cloud blog we discussed the rapid proliferation of APIs and their unwieldy nature. We talked about API traffic and how, as APIs grow in number, network flow and data traffic will be an issue without the right approach. A cloud API platform solves this approach, but it also solves two other key issues, one of which we’ll discuss today: API management.

API management includes dozens of tasks and roles, but today we’ll focus on documentation, administration and governance. Admittedly, most people don’t get excited about these things, but they should! They are key concepts that when used properly give us incredible results. A well-managed, cloud-based API platform approach will remove many time-wasting, head-scratching moments that we would have if we were still trying to watch 50 screens to keep an eye on the system.

Let’s look at these features in detail.

APIs in the cloud: A system that documents itself. 

Without an API platform-based approach, you run the risk of a network of connectivity where the systems and functions are too complex for you to understand the impact of changes. When you end up having to either upgrade a particular API or troubleshoot it, it becomes an exercise in network engineering. There is no schematic. It’s like hunting for the right wires in a circuit board. Simple APIs lose their simplicity as they multiply with no documentation or governance.

Modern API gateway and API management toolkits have acknowledged this issue and are built to assist the documentation step with some levels of automation. The API gateway “wants” to keep track of all that is happening. As APIs are introduced, the gateway captures the definition of the API in a machine-readable format that supports reference documentation. The gateway also enables the integration of definitions into the software development life cycle (SDLC) that will help to drive automation and configuration across the enterprise.

It’s as if the API gateway knows that the purpose of documentation is to save time, so it not only acts as an excellent reference tool but assists in deployment.

Let’s look at a simple example.

Let’s say that I am a consumer of an API. I need to use a particular API from a certain company. If a platform doesn’t exist, I am often forced to sift through an inventory of thousands of listings to figure out which one addresses my needs. This is like sifting through the Yellow Pages to find an Italian restaurant, only it's even slower than the Yellow Pages.

With the modern API management toolkit, there is a very robust system-driven documentation library, which can be searched with some dynamic search and discovery capabilities. It’s as easy as a Google search. Just as using a Yellow Pages is obsolete, not having a platform approach to API documentation is also obsolete.

The API platform-based approach brings order to the chaos because the system knows and understands the APIs and their relationships to one another. And, the platform is smart enough to be able to share its knowledge with us. It isn’t just that we can now find the information easily. The API gateway acts as a bridge from documentation into deployment and use within the SDLC.

See also: 2-Speed Strategy: Optimize and Innovate

API administration: An eye on understanding APIs with precision.

An API gateway in the cloud makes API management and administration possible. It also makes it understandable. Once you have a robust, searchable, dynamic library, you are suddenly open to seeing the API world through new eyes.

For example, dashboards improve. (Fewer screens with more concise information.) You can tailor views based on what you need to know. You focus on the right details. You can monitor how each of the APIs is performing. It’s almost like the API gateway begins to talk to you.

“Hey, listen. Across the board, for your thousand APIs, this is your composite, fine-grained data, measured by those 10 metrics that you feel are super important."

Within an API gateway, we receive a much cleaner, more precise and synthesized view of how the API system is doing. Once configured, it’s automated. It pulls in information. It displays the information. It can route the information. It can run deployment tests prior to release. It can truly manage many things without the administrator. Insurers won’t see this in a non-cloud, non-API gateway environment.

API guardrails: An eye on roles and responsibilities.

An API environment needs a division of responsibility. Let’s use an example outside of APIs.

Let’s say I decide to go shop for a car. There is one that I think I would like to buy. The salesperson and I are standing on the showroom floor, and I’m looking the car over. I want a deeper look at the car, so I open the hood and look at the engine. That’s okay, but let’s say I’ve brought my toolbox and begin to use my tools to remove major components and modify the mechanics of the car. I’ve stepped over a line, right? The salesperson protests, “Sir, please don’t take our car apart.”

Part of API system security involves maintaining a stable environment that might mean keeping my hands off the vital systems of the API management that should only be touched by a qualified developer or administrator. 

We see this all the time, and it is a real issue. Where an organization has a hodgepodge of a thousand APIs, and everyone feels they have free license to do whatever they want, the vital structure is in jeopardy. We need to keep our roles straight. It’s like our car. Who manufactured the car? Who is buying the car? Who should be allowed to work on it if we want to modify it? Some lines shouldn’t be crossed.

In our case, we have:

1. the person who is creating the APIs.
2. the people who need to configure an existing API to suit their specific needs, either for their customer or some other ecosystem partner.
3. the API consumers themselves, who say, “I need a particular functionality that does x.”

Those are, in essence, the three roles, and then you have someone who's administering horizontally across the board. An API gateway provides very defined access to each one of these personnel on what they can and cannot do. So, only the API creators can access what is called the API Developer Toolkit, which is where all the engineering things happen. It’s under the hood of the car. The gateway provides very delineated access and administration capabilities that are defined by your persona for what you want to do with the overall API ecosystem.

The alternative is problematic. You might have someone who's supposed to be a user, receiving access to tinker around with the code to the programmable elements of the API, and they make an unwarranted change. If this happens, version compatibility will somehow need to be banded back to the base function. It creates a complete mess, top to bottom. The issue is not just about easing the access for a role or a persona. It is also to ensure that their guardrails are so well-defined that a person cannot do something they should not be doing.

API governance: An eye on the importance of API standards.

Governance is simplification and security through consistency. It is tough for developers, users and administrators to stay on the same page. It can be more difficult when the environment continues to scale up rapidly. How can we determine the correct paths, methods and protocols that will help us to grow without losing efficiency? We define and implement standards. We ask the API gateway to assist us in our task by keeping us consistent and “on standard,” every step of the way. The API gateway is good at this. API Policy Enforcement uses many of the same protocols, definitions and methodologies that we have enabled during documentation to unify our teams in their approach. API Policy Enforcement keeps the environment clean so that everything else it does, including enterprise security, traffic control, workload optimization and monitoring, is much easier.

See also: 5 Ways Cloud Helps With SME Insurance

Customer impact: API governance brings agility to the business.

API governance is very much about placing people, technology and processes in a position to flow unimpeded. Efficient API flow, regardless of how many APIs are in use, enables digital insurance environments to do more than ever before. This is how APIs tie back to the business. With proper documentation, administration and governance, the insurance business user will hit fewer hurdles as they create the products and experiences customers want. The API gateway is the kind of cloud-platform technology that simplifies and improves the API experience as it facilitates every communication and transaction it touches.

"Canyon of Why"—an abyss that becomes impossible to climb out of because the loved one is never there to answer the question. Frank Campbell once said this canyon is what people who have lost a loved one to suicide often fall into. The question of "why" haunts the minds of many bereaved by suicide. While we can never really know all the reasons why people die of suicide, there are some explanations that can help us fathom how individuals might find themselves in such a state of despair.

Most people who kill themselves believe that suicide is the only solution to their unbearable situation. Sometimes the analogy of what happened in New York City on Sept. 11, 2001, gives people a framework for empathy. When one remembers Sept. 11, some traumatic images etched in memories are the pictures of people jumping out of the World Trade Center. These people did not want to die. They were leaping to get away from the flames at their back.

In a similar manner, people who contemplate suicide are trying to escape some type of peril in their own lives or unbelievable pain in their souls. Most of us find it difficult to truly appreciate the flames that consume the minds of people who contemplate suicide.

Experts who study suicide coined the term "psychache" to describe the excruciating psychological pain that people coping with suicidal intensity experience, which often blocks the ability to see other potential solutions to problems. Psychache torments individuals who often do not want to die. They just cannot escape. Even though a pervasive sense of hopelessness stifles the ability for many to seek help, most struggling with suicidal intensity feel ambivalent about taking their lives. Another common metaphor people use to describe suicidal pain is feeling trapped in a completely darkened room with no way out.

See also: New Guidelines for Preventing Suicides

A Model of Suicide Risk

In his book Why People Die by Suicide, Dr. Thomas Joiner explains that those who kill themselves not only have a desire to die, they have also learned to overcome the instinct for self-preservation. This theory goes beyond previous theories of suicide that adequately described psychological risk factors but did little to explain why some people with those risk factors died by suicide and others did not. 

Desire to Escape Emotional Pain through Death (“I want to”)

The theory states that wanting death is composed of two psychological experiences.

"I am a burden”

The first is a perception of being a burden to others (perceived burdensomeness). According to Dr. Joiner, when people are in this state, they feel that their death is worth more to the people who love them than their life is. The word "perceived" is emphasized because frequently these thoughts are significantly distorted by depression or other mental health conditions. 

While conventional wisdom might suggest the person struggling with suicidal intensity is “selfish,” Dr. Joiner has found the opposite to be true.

Those who desire suicide often believe that they have become such a burden on others, everyone will be better off if they are not around. In other words, in the mind of the person coping with suicidal intensity, they are practicing ultimate selflessness. When we combine this emotionally painful experience of being a burden with isolation, suicidal despair often results.

“I am alone”

Thus, the second common factor in the desire to die is a social disconnection to something larger than oneself (thwarted belongingness). As humans, we are hardwired to be in a relationship with others. For some people, this means just a couple of very intense relationships. For others, it means vast social networks.

When people lose key relationships with partners, children, colleagues, and friends through death, divorce, separation, moves, layoffs or conflict, they can experience profound distress that can lead to a desire to die. Marked social withdrawal is not temperamental shyness. Rather, it's a marked change: The person used to be engaged with friends and family, and now they withdraw into a bedroom or into their own head, and what you see is what Dr. Joiner calls "an inward gaze of bemused resignation and resolution."

Capability for Suicide (“I can”)

Thoughts of suicide become more lethal, however, when people have what Dr. Joiner has called a "capability for suicide." If suicide desire is the "I want to" part of the equation, "capability" is the "I can" part.

Dr. Joiner turns conventional wisdom on its head once again by challenging the notion that people who die of suicide are not cowardly. They are among our most fearless. He argues—with a lot of research behind him—that those who are most likely to take lethal action on their suicidal thoughts are those who are able to stare death down. The following three main contributing factors for capability exist:

• You are born with it. Some people just come into the world with a temperament for risk-taking. They do not seem to be afraid of anything. Natural risk-takers in our society include law enforcement personnel and military, entrepreneurs, pilots, adventure explorers, construction workers, race car drivers and emergency room doctors. These folks are not at risk for suicide unless they have the first half of the diagram, "desire to escape pain through suicide." Should that desire ever develop, however, they have less distance to cross to fatal self-harm because their fear of death or pain is not as great as in other people.
• You learn it. Other people may not be born with this sense of courage, but they learn it over time by living through painful and provocative experiences. In other words, trauma is connected to suicide. By being exposed to violence and life-and-death situations, people become more accustomed and less afraid. They have walked the path of staring death down. Trauma comes in many forms – childhood trauma, sexual trauma, military trauma. For some people, this means a history of physical abuse. For others, it is chronic injuries or illnesses that require adapting to high levels of pain. For still others, it may be repeated suicidal thoughts or attempts.
• You have access to and familiarity with lethal means. In essence, you know what to do and have confidence to do it. For example, you might have at hand firearms, lethal medications or access to high places. The more comfortable a person is with the lethal means of suicide, the more likely they will choose that method should they find themselves wanting to die by suicide.

So, in Dr. Joiner's theory, we must have both conditions to have increased risk for suicide. A desire for suicide is necessary but not sufficient. As mentioned earlier, thoughts of suicide are relatively common, but suicide death is much less so. This is because most people who have suicidal thoughts, thankfully, do not have the capability for lethal self-harm.

See also: 10 Tips for Preventing Workplace Suicide

Suicide in Context

Understanding the suicidal person from a mental health perspective limits our understanding. Suicide needs to be seen in a larger context within the cultures people belong to – in other words, there are also social determinants to suicide. 

For instance:

• Discrimination/Prejudice/Exclusion
• Bullying/Harassment/Hazing/Toxic workplaces
• Exposure to trauma
• Family violence

Many now question the highly medicalized framework of understanding a suicidal person and see suicide in context by understanding how other frameworks — like social justice — expand our imagination on what is possible in prevention, intervention and "postvention."

Many traditional efforts in suicide prevention have failed us, including:

• Forced treatment
• Fear-based approaches of restraint and isolation
• Trying to predict suicide risk

Instead, explore alternative, environmental-based approaches. It’s not good enough to send “troubled” people to counseling; we must also look at fixing the toxicity in our environments that drive people to despair.

Conclusion

As researchers ask questions to those most directly affected by the crisis of suicide—both those struggling with suicidal intensity and those left behind—the mystery of suicide becomes less of an enigma and more of a significant preventable public health problem. That problem is one that we need to address at the individual level, at the organizational level and at the cultural level.