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.

For much of 2020, news media speculated about a potential epidemic of suicides as a result of the stressors and social strains related to the pandemic. For those of us in the work of suicide prevention, we urged for more conservative coverage. Why? Because we know that sensationalized media coverage around the topic of suicide runs the risk of developing what we call a cultural script.

Some journalists—unknowingly or intentionally—report in ways that, research has shown, increase suicide risk. Many elements of their reporting—romanticizing, glamorizing, gratuitously detailing the means of death or depicting the death scene—are considered unsafe reporting practices and have been shown to contribute to an uptick in suicide attempts and deaths in the days and weeks following a celebrity's suicide. Some media outlets do outstanding work reporting these newsworthy events with sensitivity. They follow practices that can help people find hope and link to life-saving resources like the National Suicide Prevention Lifeline.

Decades of research summarized in the Suicide Prevention Resource Center safe messaging reference guide encourage those giving public communications about suicide to follow these suggestions:

• Portray help-seeking as a reasonable action.
• Provide resources people can use for support.
• Give people who are willing to help others something to do.
• While you may want to communicate the importance of the issue, be careful not to normalize suicide.
• Emphasize that suicide can be prevented.
• Help distressed individuals to feel competent that they can do what needs to be done.
• Avoid giving very specific details of the tragedy.

The Power of Words

Language matters when discussing issues of suicide. Language reflects our attitudes and influences our attitudes and the attitudes of others. Words have power. Words matter. The language we choose is an indicator of social injustice and has the power to shape our ideas and feelings in insidious ways.

Phrases to Describe Suicide

For example, the phrase "committed suicide" is frowned on because it harks back to an era when suicide was considered a sin or a crime. Think about the times when we use the word "commit": "commit adultery" or "commit murder." Similarly, "successful suicide" or "unsuccessful attempt" are considered poor choices because they connote an achievement or something positive even though they result in tragic outcomes.

See also: What Is 988? Future of Crisis Services

Putting People First

Likewise, using "suicide" as a noun to describe a person ("the suicide was wheeled into the morgue") is considered dehumanizing and reductionist. When we identify a person solely by his or her mental illness ("They are bipolar"), we diminish that individual's wholeness. We wouldn't say, "They were a heart attack." Instead, we need to define a person by their life, not the manner of death, and say, "They were a person who died of suicide. They also loved to play golf, brew beer and climb mountains." Or: "They are a teacher, writer and animal lover who lives with a bipolar condition." Let's put people first and focus on their resilience. Instead of "suicide attempter," we can say "they are a person who has lived through a suicide attempt."

The litmus test for talking about suicide is to substitute the word "cancer" for the word "suicide" to see if the sentence still makes sense or if it has a negative connotation. We wouldn't say "committed cancer" or "successful cancer." We would simply say "cancer death" or "died of cancer." Thus, when it comes to suicide, we should say "suicide death" or "died of suicide."

We should also be wary of assuming intent when we use the phrases "cry for help" or "suicide gesture." This line of thinking can be a slippery slope. Instead of dismissing these suicidal behaviors as not serious, we should lean in and better understand what function they are serving in a person's life. Perhaps, we can get that need met in another way.

"Suicide Is Selfish"

In his book Myths about Suicide, Dr. Thomas Joiner goes to great lengths to dispute this common narrative of suicide as a selfish act. While it may appear that those who die of suicide are not taking into consideration the impact that their death will have on loved ones, there is much evidence to the contrary. The mind of a suicidal person is distorted and often holds the belief that he or she will be lessening their burden on loved ones by no longer being around. Avoid using this type of storyline.

"It Was Their Choice"

The idea of choice or free will is often discouraged when talking about suicide because thinking is often very impaired at the time of death. Sometimes, individuals in the throes of unimaginable emotional pain are not entirely capable of making a rational decision because their depression, addiction or other mental health condition often prevents them from generating alternative solutions to their problems. Many people I have interviewed who have survived an intense suicide crisis report that they experienced something akin to command hallucinations right before they attempted—voices inside their heads telling them to kill themselves.

At an American Association of Suicidology conference, Donna Schuurman challenged the audience to look up definitions of suicide. So, I did. Merriam-Webster defines it as "the act or an instance of taking one's own life voluntarily and intentionally."

The concept of choice is confusing because, while we never have direct access to the inner workings of a mind of someone who has died by suicide, there is much evidence that the thought processes are often gravely disordered by the effects of trauma, mental health conditions and substance abuse. If a person can't choose rationally due to impairment of the mind, the decision is not a choice.

The concept of choice is especially confusing to those bereaved by suicide. On the one hand, survivors of suicide loss who tried to keep their loved ones alive over time find the notion comforting. Even though they did all they could to prolong life, the final "decision" ultimately rested with the suicidal individual. On the other hand, survivors of suicide loss sometimes cannot fathom why their loved ones would choose death over love or the possibility of a better life.

Getting Positive Messages Out There: Hope, Strength and Healing

A few passionate resilience advocates can only go so far in changing the culture of mental health promotion and suicide prevention. We need workplaces, schools, faith communities and healthcare systems to model safe and compassionate language to help challenge existing misinformation and myths. We must learn to disseminate our messages to large numbers of people effectively. To do this, we need to craft safe and powerful messages, work collaboratively with traditional media outlets and use social media strategically.

Crafting Effective Messages about Suicide: Hope Is the Antidote

Suicide prevention is a hard sell. As a result, well-meaning health professionals often make serious errors when crafting messages for suicide prevention. We have a tendency to think that we need to grab the public's attention through graphic and scary messages when that just tends to turn people off. Instead, we need to think about aligning with our audience's beliefs, values, priorities and needs. We must craft messages that are engaging, provide people with the information we want them to remember and give them action steps.

Instead of just raising awareness by sharing statistics of suicide death, we can inspire hope by sharing stories of recovery and letting people know that help is available. Kevin Hines's story is one that spreads a ripple of hope around the world. He survived a jump off the Golden Gate Bridge, and his BuzzFeed video now has over 8 million views on YouTube. His main message: You are not alone, and brain health is possible. He is a fierce advocate for mental wellness and lives his message of fighting for a passion for life every day.

See also: Workplaces Coping With Suicide Trauma

Another positive media campaign, developed by the National Suicide Prevention Lifeline encourages everyone to #BeThe1To to take action to prevent suicide. The campaign is designed to be adapted to many different communities to help them move from awareness to prevention—because no one should die in isolation and despair.

We must talk about suicide if we are going to get in front of it. But HOW we talk about suicide matters. Unsafe messages and data that leaves us feeling that "suicide is an epidemic" can create harm. Instead, let's focus on messages and stories that inspire hope and healing and share resources that help people through their despair.

Opinions expressed in Expert Commentary articles are those of the author and are not necessarily held by the author's employer or IRMI. Expert Commentary articles and other IRMI Online content do not purport to provide legal, accounting or other professional advice or opinion. If such advice is needed, consult with your attorney, accountant or other qualified adviser.

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 importantly, provide better ways of communicating -- even collaborating -- with customers.  

The limitations of the inbox/outbox model have been apparent almost since email became widespread. I remember once having breakfast with Steve Ballmer, then the No. 2 executive at Microsoft, and asking him what the next killer app would be for personal computers. Email, he said. Well, that breakfast was in maybe 1991, and, by 1993 or so, email's limitations were so apparent that Lotus Notes had become popular as an alternative that allowed for better group collaboration.

Email: from killer app to serious pain in two years.

Companies have been wrestling with email ever since, if only by encouraging a code of etiquette that limits the number of people copied. (Email has been described as a way for others to add items to your to-do list.) Relatively recent tools, such as Slack and Microsoft's Teams, have facilitated collaboration, and those sorts of apps will become more prevalent as we older types age out of the work force and as more digital natives age in. (If I forward something to my daughters via email... crickets. But if I DM or text them... whammo! They may respond immediately. And just imagine the interactions if I ever start to use Instagram.)

As a New York Times columnist wrote recently in a piece titled, "The Kids Are Right About Email, Too": "For them, email isn’t annoying. It simply doesn’t exist."

I'm sure companies will continue to find ways to use collaboration tools to work more effectively than they have been able to just through email. As I've written previously, especially here, I believe that a lot of the increase in effectiveness won't be through speeding communication but by slowing it down, or, more accurately, letting senders and receives sort communications better so the time-sensitive issues get addressed quickly while others are set aside so they don't upset the flow of the receiver.  

But what has really caught my attention is the potential for better communication with customers. They are moving faster than companies are to a post-email world and, as usual, will get impatient with companies that don't keep up. 

Connie Chan, a general partner at the Andreessen Horowitz venture capital firm, lays out some intriguing possibilities in this blog post. (She uses China as an example, and I realize China is a controversial topic these days, but I figure we have to find examples wherever we can.)

She describes a new form of communication called "private traffic," which she defines as "a customer relationship management (CRM) strategy that emphasizes direct communication between brands and customers" and is better than email marketing "because private traffic enables two-way conversations. Customers expect a real back and forth whenever they communicate with brands, and in some cases interact not only with other brands but also with other customers....

"Here's one example of how private traffic might work: Let’s say you go to a store to buy a barbecue set. The sales rep might make a recommendation for a specific grill and say, 'Hey, after you purchase this, why don’t you add me as a contact? You can message me if you have any questions about installation, or any aspect of using your grill. If I come across cool barbecue recipes, or accessories for your barbecue set, I’m going to send them your way.'

"You agree, allowing the store rep to start a one-on-one chat with you. What’s the impact? You’re more likely to buy the barbecue set because you have the store sales rep’s personal support, and you’re less likely to return it because you now have a direct connection with them. This kind of private, two-way conversation also helps brands understand their customer better, which in turn helps breed deeper customer loyalty."

Chan describes an approach that Ctrip, the biggest travel company in China, began offering a couple of years ago: "If you booked an international flight for a week-long vacation, you’d have the option of joining a group chat with other travelers who booked tickets to the same destination, around the same time. There would also be a customer sales rep in the chat to act as a travel concierge before and during the trip. They’d answer questions about anything from what to do about a lost passport to which type of outlet converter to bring. But the best part is, once your vacation starts, you’re not only asking the customer sales rep questions — often, you’re talking to other group-chat members too. You might ask how long the line at an amusement park is, or see who has sightseeing recommendations, or even invite people to meet up for dinner. Essentially, the group of strangers becomes a community."

It's easy to see how the private traffic idea could translate to at least some situations in the insurance world. After a flood or wildfire, an insurance agent could act as a sort of concierge for a community, not only helping with claims but answering other important questions about how families can get back on their feet and connecting families with each other for counsel and support. Insurers could also act as a sort of insurance-plus concierge for clients with similar businesses -- landscaping firms, pizza parlors, etc. -- advising them while they advise each other. In addition, insurers could plug themselves into private traffic arranged by others -- perhaps the auto dealer who is maintaining a relationship with customers would welcome an expert to answer tricky insurance questions as part of the dealer/customer private traffic. 

It's easy, too, to see how quickly private traffic could get messy. For one thing, it requires a significant time commitment. And what if someone in the community you organize says something bad about you? Or gives inaccurate advice? Who would be liable? What will regulators say?

But the customer is always right. Right? So, we need to find some way to stop just blasting those email surveys to customers or simply sending forms about policy renewals and to engage them in ways that they find meaningful and helpful. 

If we do, we can obtain what some marketers are calling "privileged insights." The idea is that you can get certain basic insights from market research or from customers when they buy the first product from you but can gain deeper insights -- privileged insights -- if you establish a relationship with them and build trust by offering good advice, providing prompt service, treating them and their data with respect, etc. You develop a virtuous cycle. Customers grant you insights that let you improve your product or service, which makes them trust you more and grant deeper access to their thinking, which lets you....

But part of building that trusting relationship with customers will require meeting them where they are, with text, chat, DMs, etc. and less and less with email.

Yes, I realize the incongruity of my sending you an email about the end of email and expecting you to read it. But I think email newsletters, which are currently so successful for so many, can change as your needs and habits do. I certainly hope this one will. 

Cheers,

Paul 

With more pressure than ever to offer competitive pricing, insurers are seeking innovative ways to leverage additional data sources in underwriting. Today, there are over 4.62 billion social media users globally, leaving endless amounts of personal data across social media platforms like Facebook, Twitter, Instagram and LinkedIn. 

The need for more data sources to augment and support internal processes is growing, especially with the rise of predictive analytics, AI and new demands to improve the customer experience. 

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. It can be used—but take care!

Some insurers have already jumped on the bandwagon 

One auto insurer created a personality-type assessment based on certain choices and actions of potential clients. These included what athletes the client likes/follows, how concise their writing was and how often they used exclamation marks in social media interactions. The data enabled the insurer to determine if the client was overconfident or reckless, traits associated with many high-risk drivers. 

A life and health insurer in the U.S. tested behavioral data gathered from online retail sites and third-party databases as inputs for predictive modeling to determine the health risks of over 60,000 applicants. Examining user behavior helped the insurer get results similar to traditional medical examinations. Each application cost the insurer only $5, instead of $250 to $1,000 for conventional medical tests, according to a Deloitte report.

AI to the rescue

Scalability is a critical challenge with social media usage in underwriting. Manually collecting vast quantities of social media data is impossible. However, insurers can partner with third-party data vendors that use AI to scrape data from users' profiles. 

AI tools, equipped with machine-learning algorithms, can collect written and visual consumer data and build predictive models faster than human agents. Predictive models let underwriters gain a more detailed assessment of an insured’s level of risk.

Sentiment analysis, equipped with natural language processing (NLP), is a machine-learning technique that analyzes and interprets text. Sentiment analysis can take in written user information at scale and use it to assess a client's behavior. For example, sentiment analysis can read, analyze and collect information from a business's review section, flagging any potential risks that require further investigation.

Machine vision uses software algorithms to assess images based on existing data sets already evaluated by humans. Insurers can leverage machine-vision applications to investigate the photos and videos to discover more about a client's lifestyle, including eating, exercise and smoking habits.

Legal and regulatory pitfalls

Experts say insurers using social media data to fight fraud are on solid legal ground. But, what about underwriting? Regulation is evolving. Proceed with caution. 

Data mining through social media may violate privacy laws, such as the E.U.'s General Data Protection Regulation (GDPR). 

Closer to home, the New York State Department of Financial Services says they're concerned insurers could use their own algorithmic underwriting systems to discriminate against consumers illegally. 

New York’s insurance laws, and similar laws elsewhere, prohibit the use of race, national origin, lawful travel, mental or physical disabilities or traumatic experiences such as domestic abuse in any aspect of insurance underwriting.

Insurers must ensure that the external data sources they use meet their antidiscrimination requirements. Additionally, carriers must be transparent to customers about the content of the external data and its source when being used to increase premiums or deny a customer coverage.

One expert says insurers can test their algorithms for discrimination by examining the algorithm's results. For instance, insurers can test their algorithms by omitting standard customer data and only using information about the client's race. If the algorithm can predict the customer's premium by only using race, the model is too dependent on protected personal attributes. 

See also: Personal Connections Via Social Media

Does using social media data violate trust?

Collecting clients' social media information without consent or transparency can feel like a violation of trust. If not done sensitively, this can severely damage an insurance company's reputation, brand and relationships with policyholders. Always ask prospects and customers for permission to view their social media posts.

Lawyer Tyler Dillard compares the use of social media data to previous decisions arrived at on the issue of genetic testing for insurance. For example, while AI may suggest certain typing habits (e.g., excessive use of exclamation points) are correlated with bad driving, the causal link is dubious and supporting evidence is sketchy, unlike genetic testing. Insurers that use AI for big data analysis of social media should emphasize explainability above all else: Why did our program draw this connection?

From a proportionality perspective, analyzing social media data in such a granular way may only produce marginal benefits at the cost of severe regulatory consequences and offending customers. 

Of course, the accuracy of the source data on social media is suspect. The online personas users construct are not always accurate reflections of reality. Moreover, insureds can seriously undermine the underwriting process by learning what information carriers are looking for and publishing content they believe will help them get a lower premium.   

Personalized policies

Despite its challenges, social media remains a great tool for enhanced customer intelligence and developing more personalized policies.   

Although social media data offers a trove of growth opportunities for insurers, the legal challenges, brand-affinity risks and lack of data verification are causing many to steer clear of this underwriting method. In fact, out of 160 insurers investigated by New York state, only one used social media for underwriting. 

To mitigate risks, insurers should focus on rewarding “good” behavior on social media rather than punishing “bad” behavior. In other words, offer discounts to desirable risks. Many regulatory bodies are slow to respond with clear guidelines on big-data analysis of social media. Err on the side of caution. 

As social media data usage in underwriting is adopted, insurers must be transparent with customers about using and obtaining the data. This step is imperative, as undisclosed use of client social media data can infringe on privacy laws and antidiscrimination laws and leave customers feeling violated. 

Leveraging consumer external data remains critical for insurers today. Insurers that comply with regulatory requirements and emphasize explainability and proportionality can mine magnitudes of external customer data and turn it into actionable information. Of course, they’ll need modern rating and underwriting systems to leverage that information.

Physical assets that we can touch and see make sense to protect. Windows get broken by accident, thefts occur, pipes can burst and anything and everything can happen in between. But what about our assets that we can’t see? What about cybersecurity? The information that we store online can be extremely valuable to those looking to do harm. 

Roughly 2.5 quintillion bytes of data is created every single day, and phishing attacks, ransomware attacks and distributed denial of service attacks are so common that some 23% of small business owners have experienced an attack on their business in the last 12 months, according to a survey by Hiscox. 

Here are examples of how AI can be used to fight against specific types of cyber threats:

Privacy 

Whether it be federal government organizations, local law enforcement or even personal home networks that have unique features within their dataset that are used to train algorithms, the identities within these systems may be compromised. To avoid identities having their integrity compromised as part of the training data and adding risk to privacy, organizations/persons can use unique techniques such as federated learning. What it comes down to is training the separate models locally at the source and federating them on a more global scale, to keep the personal data secured at the site of origin. Finding specific samples of outliers and excluding them from the training is a good practice.

Bias Bounties

With older software, sharing the intricate details of an AI algorithm can become more and more of a liability, because it’s able to provide insights into the model structure and its operation. A good countermeasure, described by Forrester as a trend for 2022 (North American Predictions 2022 Guide), is bias bounties, which help support AI software companies to further improve their algorithm robustness and reliability.   

Bias bounties are becoming the go-to tool when it comes to the defense of having ethical and responsible AI because they can help ensure that the algorithm in place is as unbiased and as functional as possible. There are more sets of eyes and different thought processes involved to help review the data throughout the course of the campaign.  

See also: Quest for Reliable Cyber Security

Data Poisoning

Data poisoning is taking data and then using it for ill intent. Data used as samples in training algorithms are changed to have an output or prediction that is malicious when triggered by specific inputs. 

Data poisoning is done before the model training step occurs. Zelros has an ethical report standard, where they have been collecting a dataset signature on the successive steps of modeling to ensure that data has not been compromised.

Human Behavior

With data or AI manipulation, malicious activity is typically responsible, but personal data that we often willingly share can be used against us 

Cybersecurity's most prominent weakness is our ability to propagate knowledge of our identity and activities in seconds to millions of people across the globe. Artificial Intelligence or even basic tools that can collect data have exacerbated the problem. 

For instance, geolocalization data that is openly shared on social networks can be leveraged by AI systems to place into categories potential customer targets and provide specific outputs or recommendations. The "attention economy” has been built on the personal data that can be fairly easily accessed. Cultural and scientific awareness is going to be one of our best bets for countering the problem (as detailed in the first topic of this article).

A machine learning model may learn much more than what we could have anticipated. For example, when gender has not been identified in customer data, the algorithm can learn to infer about gender through proxy features, in a way that a human could not, at least with the same amount of data, and in such a limited time. For this reason, analyzing and monitoring the ML model is crucial. 

If we are to anticipate algorithm and model behavior, and help prevent discrimination from occurring through proxies, a key element is diversity. Having multiple reviewers who can provide input based on their socioeconomic, ethical and individual backgrounds can lower the risks of biases being placed into AI programs in the first place. Organizations can also request algorithmic audits by third parties if the organizations lack the knowledge and diversity to complete the tasks themselves.

While watching an old movie, have you ever thought about the fact that there's no computer on the main character's desk? What was it like back then? I imagine sipping coffee, opening my mail, wondering if a check has arrived that I can deposit at my local bank later in the afternoon, hoping the phone will ring and then actually answering it when it does. I might also think about the meeting I'll have that afternoon, penciled into my day planner for 3, while thinking, "I bet Bob will be 10 minutes late. Bob's always late."

Today's world travels at a different speed. I'd say light speed, but I'll spare you the cliché. No one hangs out a shingle and then hopes for customers to notice as they drive by. Customers expect to be wooed, they expect to be wowed and they expect to be impressed by personalized experiences. Your benchmark is no longer your industry -- it's Uber. Customer expectations are no longer based on your competitors -- they're based on Amazon.

There is no single technology that makes this happen. Rather, technology is brought to bear on customer desires. When done correctly, technology is as transparent as it is critical. When implemented poorly, it's like begging your customers to look elsewhere for services.

Here are some lessons that travel insurance has learned that could apply to other parts of the insurance industry:

Mobility

As a travel insurance company, Seven Corners has spent a lot of time transforming the experience of our customers. For example, having an app for both Android and iPhone devices that allows the insured to "carry us with them" wherever they go provides peace of mind for the traveler. Knowing they can pull up their digital ID card or get turn-by-turn directions to a reputable medical facility is a big deal when you're traveling, especially internationally.

Could there be a better sell for getting people to leave location services enabled for your app than travel insurance? People say fear sells insurance, and travel insurance is no exception. Fear of getting sick right before a trip, fear of weather-related issues and now, of course, fear of pandemics has travelers at the height of concern. Why wouldn't they want you to know where they are throughout their trip? It helps provide peace of mind and provides you with an excellent opportunity.

Scalability

Putting data in the cloud has moved from being suspicious to expected over the last 10 years. Having the ability to scale systems to the farthest reaches of the globe with relative ease is critical to providing low-latency access to your products and services for anyone, anytime and anywhere. Imagine being able to set up infrastructure in a new region or country in a matter of days, instead of months or years. Being nimble is a requirement for companies that intend to compete.

Customer Choice

Customers of different backgrounds and generations have different ways they like to purchase and communicate. You can buy a travel insurance policy on our website, of course, but maybe you have questions. Travel insurance is something that most people buy only occasionally, so talking on the phone with someone about where you are going and what you need can be very comforting. After you purchase, you may have benefit questions or need to update information such as trip costs, travel dates or destination country. If you need to file a claim, you might have questions or need clarification on why your claim was paid or denied.

Technology plays a big role in making this easy for customers, meeting them on their terms. For example, allowing customers to interact via WhatsApp or text messaging can provide a real wow factor, letting them use tools they live in all the time to interact with your company. On the back end, the right technology allows customer service representatives to interact with the customer like any other chat. Once the conversation ends, it's stored with their customer record for future reference.

See also: Travel Insurance: An Exemplary Experience

Terminology

While this might not sound like a technology play, it is very common for technology to drive terminology, rather than terminology driving technology. What is a member, or an insured, or a customer? Are they all the same thing? Did you know that most of your customers don't know what a provider is? To them, they visited their doctor or the local urgent care, not a provider. Travel insurance companies are notorious for making their customers learn new terms, rather than engaging with them using the terms they expect.

One way to make sure that technology is driven by customer terminology, rather than the other way around, is to ensure your systems use the terms your customers use. Creating a data dictionary with a glossary of terms, and using this company-wide, will help guarantee that technobabble and industry-specific jargon does not make its way into use on your website, your app and in oral and text communication with customers. Mapping your customer journeys, surveying your customers and simply putting yourself in your customer's shoes will do wonders for making your company seem accessible and available to your target audience.

Speed

In this modern era, new features, functionality, products and services need to be provided at record speeds. Whether you implement R&D, fail forward, set up hackathons or something else, you must have an agile mindset and make sure your technology allows you to deliver new things quickly. If you don't, your competitors will.

To stay competitive in today's fast-moving world and the growing industry of travel insurance, companies must adapt to customers' needs and wants and stay up to date with the latest trends in technology. Transforming the user experience to make things as simple as possible for travel insurance customers will not only make them feel comfortable when planning their trip but will also remain consistent with other technology-friendly user experiences they're already used to. This will only increase the chance that they'll choose to work with your company again in the future.

To be an incumbent means you have been around a while. That sounds old-fashioned, out of touch and full of "good old days" stories. As I have been told, “past performance is not an indicator of future performance.” However, this is shortsighted because this disclaimer is usually accompanied by a chart showing why I should invest today because the future is predictable to some degree. Right?

In our fervor to embrace new insurtech companies, we may have missed the opportunity to learn from those that have seen the ups and downs. Those underwriting cycles seem to persist no matter how much data and technology we have today vs. yesterday or how many new Instagram followers I got this week. 

Fundamentally, the challenges we face today: inflation, catastrophes, debt and destabilization, are not new to those incumbents. They are new to the insurtech community. The world is getting more complex by the day, and a solid foundation of the past certainly helps to pave the way through to the future. The trick is how to get rid of the “vs.” and replace it with “and.” 

The airline industry is a great example of the evolution not revolution that can happen. The technology revolution in this vertical enhanced our ability to access travel, not to replace it. Using technology, the industry suddenly brought to life the infinite possibilities of traveling the world. I could now see myself on a beach halfway across the world. That excited travelers around the world and grew the industry from $1.9 billion in 2000 to $4.7 billion in 2019 (pre-pandemic). A fourfold increase. This wasn’t because we reinvented the airplane. We used technology to make traveling on an airplane more accessible and interesting to all. That is powerful. 

The point is that we do not need to reinvent the insurance industry, we need to combine forces with the insurtech space and make it more accessible, understandable and interesting, to grow the market together. For the benefit of all. 

Agent vs. Digital 

So the next "vs." we are confronted with in the industry serves the same lesson. "The end of the agent is upon us" is as realistic as the end of brick and mortar. Oddly, these prognostications occurred about the same time. But within the last week I did business with both agents and brick and mortar, while also doing business digitally. I’m confused. This world is built on absolute statements because they are great headlines, but the truth is there are very few absolutes in this world except the ones your parents told you, death and taxes. Beyond that is pretty murky. 

While our industry toils in absolutes, the real winners and breakthrough companies will figure out how to meld together the agent and digital in a seamless experience. The first step in doing this is in a realization that the agent brings things to the table that digital cannot, and vice versa.

Whoever effectively figures this out will align digital and people assets to create a great customer experience. 

See also: Good, Bad and Ugly of Going Digital

The retail industry is one that we can learn from, as they are years ahead of the ballgame, and you can start to see winners emerge. If you were a company built on stores, you moved to create a seamless online and digital experience that may lead you to a store, but your order could get dropped off at your front door or shipped from a central warehouse. Two-day delivery was cool; how about 20-minute delivery? For the digital native players, they realized at some point they needed local stores to provide personal services, convenient options or perishable goods. All retailers are being rewarded as consumer spending has been on a tear even through the pandemic. The winners make it so easy to spend money and get stuff that the only loser here is my bank account. 

The point is, every time we get rid of the "vs." and insert "and," we grow the marketplace. The insurance industry could benefit greatly by partnering to build an agent and digital ecosystem. 

Wait, did anyone ever ask the customer? 

Funny how we can solve everything with solid academic theories and forget to ask the customer. This is exactly why this is my last section: to punctuate that our evolution as an industry needs to put aside our intellectual arguments and put the customer at the forefront of our decisions. 

If we build our industry to create more value, be more interesting, be more accessible, then the overall spending for our products will increase. How many of us have used this statement, “for the cost of one Starbucks a month, you can cover your family,” and then nothing happens? This needs to change because that protection is more important than a cup of coffee, yet many people still remain without adequate insurance protection. 

We all have work to do. The start of this happens when we replace "vs." with "and." 

We can get back to our most important promise and be financially sound enough that no matter what happens we hold true to our promise to our customers.

My family recently purchased me a coffee cup with the slogan, “I’m not always sarcastic, sometimes I’m sleeping.” And I get really sarcastic about the notion that insurers put the customer first.

What do customers want from insurance? 

That is a pretty broad topic, so let’s explore. Each day, we interact with products that are customary, or quite simple. We are familiar with them and therefore can make decisions with the use of minimal information and help. On the other hand, there are products that are unfamiliar and complex and even if we work with them quite frequently are still confusing. Take the purchase of my internet service vs. doing my taxes. Although there are a number of different bundles and options for the internet, I will quickly settle in on the right service for me. When I do my taxes, even though this is an annual occurrence, I still seek the advice of a professional because my circumstances may change and the array of options is confusing. 

Now consider insurance. We have some products like auto insurance that act a bit more like the internet service provider. Once I am comfortable with my limits of coverage, I likely renew each year without fail unless the provider does something that I question, like increasing rates. On the other hand, if I were to purchase commercial insurance, there are more moving parts -- my business may expand, payroll may change, I may add vehicles or I ay enter into a new service or product line. Commercial insurance takes some advice and hand-holding to ensure the coverages are appropriate and aligned with my expectation. 

Customers want delivery that meets their needs. That delivery is what we call distribution. Whether through an agent, directly online or via a call center, distribution must bring order to chaos. 

If we are going to make a breakthrough, where do we start? 

First, we need to step back and evaluate the go-to-market strategy. If you do not have a GTM strategy or it is “do what we have always done,” then now is the best time to review. 

Each product in the insurance industry can be categorized based on two attributes that determine how you should take it to market: 

• Product complexity 
• Margin

A product that has high complexity and a high margin can and should be supported by an expert who can answer questions, customize coverages and explain the product choices. Contrast that with a product that has low complexity and low margin. This can and should be digitized. 

The chart below depicts a simple view of the marketplace in terms of complexity, margin and market size. You could analyze your own offerings based on a qualitative and quantitative approach considering your own portfolio or considering the future growth opportunities facing your organization. 

See also: How to Achieve Customer Ownership

Product Comparison of Margin v. Complexity by Line of Business 

There is a linear path that exists in charting these products, suggesting that all lines of business fundamentally are either low-complexity and low-margin or high-complexity and high-margin. On the lower-left portion of the chart, competition keeps margins low, which means keeping complexity low. On the top right, you see products where competition may be more fragmented and where pricing advantages are not the only determining factor in taking market share. 

How do you put this analysis into action? 

First, plotting your own performance is key. Second, understanding your starting point and determining the important priority for each product will help you invest in the right change for the future. For instance, for a low-margin, low-complexity product like auto insurance, you may want to use agents today, call centers in the intermediate term and digital channels in the future, while high-margin, high-complexity products like commercial insurance would be taken to market by agents, whether now, in the intermediate term or in the future. 

A few important points to consider: 

• Agents and companies that do not perfect digital selling for low-margin/low-complexity products will suffer in the future. 
• The idea that agents will disappear is false. 
• Incumbent companies should evolve their distribution to obtain customers digitally and seamlessly refer these customers to professional agents to upsell and cross-sell. Insurtech companies need to consider this, as well, and the potential to partner with agents in the future. 
• Companies that have agents need to support their agents in moving to more profitable products, opening new market opportunities and finding ways to compensate for the value they bring to the customer journey. 
• Finally, decisions about change are guided by alignment with customer expectations first and further supported by financial success. 

The road to the future will be paved by companies that understand that customers want a seamless purchasing experience for all their insurance products and are able to design a strategy that meets them where and how they expect to purchase important coverages.