In this week's Six Things, Paul Carroll looks at a behavioral science scandal. Plus, tomorrow's insurance is connected; boosting cyber hygiene with insurtech; mental health in a post-COVID era; and more.
In this week's Six Things, Paul Carroll looks at a behavioral science scandal. Plus, tomorrow's insurance is connected; boosting cyber hygiene with insurtech; mental health in a post-COVID era; and more.
A much-cited claim about how behavioral science can guide insurance has been exposed as fraudulent. The claim was made most prominently by Dan Ariely, a best-selling author and pioneer in the field of behavioral economics, who was Lemonade’s chief behavioral officer from 2015 through 2020. But the claim turns out to be based on fabricated data.
Tune in to this month’s webinar as industry experts reveal insights to next-gen distribution management that will help insurers grow and retain their distribution channels.
Peter Drucker once famously said that “what gets measured gets managed,” and the Insurance Information Institute is unveiling measures for U.S. communities’ resilience against natural disasters. In this webinar, ITL Editor-in-Chief Paul Carroll and the Triple-I’s senior economist, Michel Leonard, discuss what the measures cover, how individuals and communities can use them and where the Triple-I will take them from here.
Cognitive computing is a funny beast. Every time you hit your target, you find that another pops up off in the distance.
When I first saw a demonstration of speech recognition, some 30 years ago, I was mightily impressed that the computer understood a few words. If I had seen what would be possible today, I’d have been stunned. But now? Oh, that’s just Siri or Alexa. And why didn’t auto-correct guess exactly what I wanted to say?
Streamlining operations, increasing efficiency, and driving customer loyalty are some of the benefits of predictive analytics in automated underwriting. Ohio’s talent pipeline has the wide range of skills industry leaders need to drive innovation in insurtech and fintech.
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A much-cited claim about how behavioral science can guide insurance has been exposed as fraudulent. The claim was made most prominently by Dan Ariely, a best-selling author and pioneer in the field of behavioral economics, who was Lemonade's chief behavioral officer from 2015 through 2020. But the claim turns out to be based on fabricated data.
The claim was based on a study that Ariely and four co-authors published in 2012 in the Proceedings of the National Academy of Sciences. Ariely then cited the study at length in his 2013 book, The Honest Truth About Dishonesty, continuing his string of best-sellers that began with Predictably Irrational in 2008.
The study reported that people would be more honest if you asked them to promise to be truthful before providing information rather than having them provide the information and then certify that what they reported was accurate. In other words, you disrupt the usual process, in which people supply information and then just have to rationalize a bit of cheating afterward.
The study said it drew on nearly 13,500 customers of an auto insurer, half of whom signed a claim of truthfulness at the top of an application and half of whom signed at the bottom. The study reported that those who signed at the bottom said they drove about 10% fewer miles than those who signed at the top -- and, of course, paid lower premiums as a result.
The conclusion was so appealing that the paper was cited more than 400 times in academic publications. Many organizations, including the IRS, began having at least some people attest to their honesty at the start of the process. I certainly fell for the idea. I couldn't even tell you how many times I've cited the study.
More importantly, from the standpoint of insurance, Lemonade incorporated behavioral economics ideas into its initial business model that at least rhymed with the study's conclusion, even if they didn't specifically build on it. Lemonade took a set share of premium, to demonstrate to customers that it had no incentive to deny claims. Lemonade also said it would donate to specified causes if claims were below a set level -- encouraging clients to minimize claims.
Other insurers surely built on the study, especially given Lemonade's success (even though its use of behavioral economics seems to have mattered far less than its sleek customer experience and slick marketing).
As part of the retractions, the authors published the original data -- which is how it became apparent that the study was based on more than an honest mistake; the data had been manufactured.
Sleuths at Data Colada spotted what, in retrospect, were obvious problems. The data didn't follow a Bell curve, as you'd expect. There weren't some people who drove a little, some who drove a lot and a whole bunch who fell in the middle. Every division based on mileage had almost exactly the same number of people in it, from low mileage through high mileage, and not a single person out of nearly 13,500 drove more than 50,000 miles in a year. In addition, the mileage that people supposedly reported was accurate down to the mile, even though actual people would round off the numbers. The precision was a clear indication that a random number generator was being used.
There was more, too. In any case, when confronted with the Data Colada analysis, all the authors quickly agreed that the data had to have been faked.
At the moment, the focus seems to be on figuring out who to blame for the fraud. I confess to some personal confusion. I spent time with Ariely at a small, three-day conference where we both spoke in 2008 and found him to be extremely smart and thoroughly engaging, so I'd like to think that he wasn't involved. (He has vigorously denied faking any data.) But he has said he was the only one of the five authors who dealt directly with the insurer that provided the data, and it's not at all clear to me what the insurer would gain by faking the results. (While the company wasn't initially named, it's since been identified as The Hartford.) I'm also confused because he cited the study to me, personally, at that gathering in 2008 but didn't publish the results for four years. Why wait so long with such an interesting result? (He's on the record as having cited the study in a talk at Google in 2008, so he wasn't just talking to me, either.)
But I'm more concerned with the broader point, which I think is this:
Behavioral economics is still a powerful tool for insurers despite this embarrassing fraud. We may like to think of customers as completely rational, but they aren't, and we need to understand them as they are, not as we'd like them to be. That doesn't mean accepting broad pronouncements about behavior, even from charismatic experts like Ariely. Understanding behavior means engaging with our own customers deeply, testing how they react to various actions on our part and then tailoring our interactions with them, foibles and all, to maximize benefits both for them and for us.
I realize that this is two weeks in a row where I've take a contrary view about technologies and techniques that are huge benefits to the insurance industry -- last week's was When AI Doesn't Work. I'm sure these two Six Things commentaries aren't the start of a trend. But I don't believe that trees grow to the sky, so I don't see the point in pretending they might. When there's a problem, I'll always try to point it out.
Cheers,
Paul
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Carroll spent 17 years at the Wall Street Journal as an editor and reporter; he was nominated twice for the Pulitzer Prize. He later was a finalist for a National Magazine Award.
This article was written by Chunka Mui for the International Insurance Society, a sister organization of Insurance Thought Leadership, under the umbrella of The Institutes. To see more IIS articles by Chunka and other IIS experts, visit www.internationalinsurance.org.
“There are decades where nothing happens, and there are weeks where decades happen,” Vladimir Lenin observed. The arduous weeks spent grappling with the COVID-19 pandemic certainly fall into the weeks-where-decades-happen category.
Take telehealth; its adoption has seemingly been on the horizon for decades and suddenly, within weeks after COVID-19 became a pandemic, telehealth achieved near universal embrace. McKinsey estimated that healthcare providers saw 50 to 175 times more patients via telehealth in the months after the pandemic than ever before. Additionally, 57% of providers viewed telehealth more favorably than before the pandemic, and 64% of providers reported that they felt more comfortable using telehealth. Now, even as the pandemic recedes, another McKinsey survey found that 40% of consumers believe they will continue to use telehealth at similar or greater levels even after the pandemic ends. These punctuated changes in preference, perception and practice will force the rewiring of the entire healthcare delivery system.
Similarly, insurance has steadily, but unevenly, digitized for decades. Suddenly (and admirably), within weeks after COVID-19, the digital nature of most insurers’ work, collaboration, transactions and customer service greatly accelerated. A recent PwC survey found that customers are not suffering laggards lightly. Of customers who expressed difficulties in dealing with their carriers, 41% said they are likely to switch providers due to inadequate digital capabilities.
A key aspect of successful innovation in the context of such rapid change is to first deeply understand the technological drivers behind that change. I briefly introduced these drivers as the Laws of Zero in my first article of this series, titled "How Insurers Can Change the World." In this article, I explore these laws to highlight the changing future context in which insurers must operate. (I go into even more detail in a book I've written with ITL Editor-in-Chief Paul Carroll and a longtime colleague of ours, Tim Andrews, a vice president at Booz Allen Hamilton, that will be released Sept. 21.)
The basic ideas behind the Laws of Zero are that seven key drivers of change—computing, communications, information, genomics, energy, water and transportation—are improving exponentially in capability while headed toward a nearly zero relative cost. This yields two critical implications. First, as shown in the figure below, there exists a rapidly expanding gap between state-of-the-art technology potential and incremental change. Secondly, the rapidly decreasing costs of those state-of-the-art capabilities will drive marketplace adoption; the notion of zero(ish) cost grabs the attention of loads of people and means we use as much of these capabilities as we need to address any problem.
Figure 1: The Rapidly Expanding Technology Gap
Successful innovation requires anticipating future scenarios, both upside and downside, enabled by the Laws of Zero, and then smartly pulling backwards to the present to chart possible paths for working toward the opportunities while managing downside risks. The best way to predict the future is to invent it, as personal computer pioneer Alan Kay says.
Now, let’s explore the drivers and lay the foundation for understanding the upside and downside scenarios that should drive your innovation agenda.
1.Computing
The smartphone in your pocket has over 120 million times more processing power than the computer systems that guided Apollo 11 to the moon and back—at a percentage of their cost that effectively rounds to zero. While computing power obviously isn’t free (as anyone buying a smartphone knows), that power looks almost free from any historical distance.
Now, consider how computing capabilities will change over the next several decades. If Moore’s Law remains an accurate guide, computing power will double 20 times in the next 30 years while cost would be cut in half 20 times. In other words, we can look forward to analytical power more than one million times faster than the present with a per-unit cost of today’s divided by one million. What’s more, trillions of devices will be connected in a network, making the so-called Internet of Things millions of times more important than it already is.
Building on ever-smaller connected devices, over the next several years AI-driven voice input assistants such as Alexa, Google Home and Siri will not only take commands but will act as sensors that can detect illness, provide home security, etc. Robots will extend our presence: Just slap on some virtual reality goggles and (with permission) “inhabit” a robot in your kid’s, parent’s or friend’s room. Computing could be implanted in our bodies. A chip right below the jaw and near the ear could capture our voices while vibrating in ways that our ears would easily pick up as sound. There is even talk of chip implants that would plug directly into our brains and give us instant access to essentially all the world’s information. People may turn into a form of centaur, except that, instead of being half-human and half-horse, we would be part people, part electronics.
People, homes, cars and all other things being insured and served will never be the same, and the insurers that serve these assets must adapt.
2. Communications
Communications will reach into every corner of the globe, as tens-of-billions of devices and trillions of sensors are incorporated into a tapestry of communication. In other words, we aren’t just talking about humans connecting with each other. We’re also talking about humans talking to devices as well as devices talking to each other. This communication could happen anywhere because, with a little solar power and a tiny antenna, every device could be connected.
Communication will become richer too, as having bandwidth to burn means that video can be part of every connection. Think of how easily the world moved from voice calls to Zoom calls during the pandemic. Now imagine having thousands of times as much bandwidth available. If you draw the graph of cost vs. performance from today’s perspective, that cost will be so low that universal-ultra-high bandwidth connectivity will be the normal expectation rather than an exception.
Imagine what that will mean for every aspect of the insurance value chain, including underwriting, distribution, claims and service.
3. Information
The ability to embed computing and communications into every aspect of life will exponentially expand the amount of information available. Paired with rapidly improving data analytics, machine learning and other artificial intelligence capabilities, information will enable more powerful knowledge-driven enterprises.
Think about a situation we’re all familiar with, the daily commute. Every car and street will soon be so thoroughly wired that traffic will be managed in ways that aren’t conceivable today. For example, just because you can’t see what might be coming at you from the sides at an intersection, doesn’t mean another car can’t see for you and relay that information to your car; a camera mounted on a car, for instance, could spot a vehicle zooming through a red light and automatically alert all cars in the vicinity to halt and wait for the danger to clear the intersection. The presence of ice or any other danger will be immediately communicated to all cars in the area. Traffic will be managed as a single, highly efficient digital system, rather than through a few rules that require hundreds of millions of drivers to sort things out on their own.
Ubiquitous sensors will supply information from everywhere else, too - - including our bodies. Already, sensors built into contact lenses can measure blood sugar levels. A cuff about the size of a smartwatch can report on blood pressure in real time. Tiny cameras can now be sealed into a capsule the size of a cod liver oil tablet that someone can swallow; these cameras screen for cancer as they pass through the person’s bowel, meaning the person can avoid the dreaded colonoscopy. In addition, chips the size of a grain of salt are being developed that could be swallowed and provide real-time data on our vital signs from inside our bloodstreams - - sort of an Internet of Me to go along with the Internet of Things.
Yes, this sort of transparency could be a scary prospect, and the concept of Big Brother is a real possibility. Breaches in cyber security will be an ever-present threat. How do insurers shape their futures in a world where every bit of information is available? How do these insurers offer trustworthy products and service while navigating potential problems?
4.Genomics
If DNA is “the language in which God created life,” as President Bill Clinton once put it, then genomics’ acceleration has brought us to the point where we can read and write in the language of life. It cost billions of research dollars to sequence the first human genome in 2003. Today, sequencing a genome costs roughly $600. That’s a cost improvement of more than one million times. That’s almost seven orders of magnitude in just 18 years, and the gains are hardly finished. There are already attachments that let you sequence a genome from an app on your own smartphone. Likewise, rapid improvements are being made in the field of gene editing, building on revolutionary techniques such as CRISPR/Cas9 (called CRISPR for short) and mRNA.
In medicine, as genomics pioneer Craig Venter has observed, almost every new drug and vaccine is already based on genomics, and, even at our early stage of knowledge, genomics provides hope for addressing several diseases caused by variation in a single gene. These diseases, known as monogenic disorders, include sickle cell anemia, cystic fibrosis, Huntington’s disease and Duchenne muscular dystrophy – debilitating diseases that afflict some 400,000 people in the U.S. CRISPR is helping researchers better understand these diseases, and a number of therapies are in clinical trials for treating and even curing them.
The combination of massive power and plunging costs guarantees that we will soon be able to sequence any genome, anytime, anywhere, with profound implications not just for medicine but far beyond. Genomics is a foundational tool in almost every field of science related to biology, including agriculture, environmental studies, health and zoology. Genomics will exponentially amplify science and engineering’s impact over the next half century to a degree that will likely surpass the impact of the computing platform it is built upon.
We still have much to learn to become truly fluent in the language of life. But it is not hard to envision harnessing the power of genomics to create healthier foods; to eliminate microbes that cause disease; to eradicate the most dangerous pests; to identify and possibly correct the genetic markers that cause disease; and to do all of the former in an ethical and equitable manner with a deep understanding of the implications of our choices.
The opportunities and challenges for life and health insurance will be profound.
5. Energy
When Bell Labs developed the first solar photovoltaic panel in 1954, the cost was $1,000 per watt produced. That meant it cost $75,000 to power a single reading lamp, which is a little pricey. By 2017, solar was down to $0.25 a watt. A solar project that will supply 7% of the electricity to Los Angeles promises power at less than $0.02 per kilowatt hour (kwh), while the national average for electricity charges to consumers in the U.S. is nearly seven times that. The International Energy Agency’s annual report for 2020 says solar power is already “the cheapest electricity in history.” A drop in price by a factor of 3,000 over six decades isn’t Moore’s law, but it’s certainly headed toward that magic number: zero.
Wind power is also on an aggressive move toward zero as prices are down nearly 50% in the past year. Contracts were recently signed for wind power in Brazil at a cost of 1.75 cents per kilowatt hour, about one-fourth the average of 6.8 cents per kwh worldwide for coal, considered to be the cheapest of the conventional energy sources.
The key holdup for renewable energy has been batteries. There must be some way to store the solar and wind energy for when you need it, which means the need for lots of battery capacity. Fortunately, batteries are progressing on three key fronts: battery life, power and cost. CATL, the world’s top battery producer, recently announced a car battery that can operate for 1.2 million miles, eight times longer than most car batteries on the market today. Additionally, battery prices have plunged 87% in the past 10 years.
So, we have at least three cost curves that look like they’re headed toward zero: solar, wind, and batteries. That’s plenty, but others are worth mentioning as well, including nuclear fission, nuclear fusion, geothermal and radical energy efficiency. Together, these curves create a Law of Zero for clean energy that will create unfathomable benefits.
Energy drives every living thing, and unlimited clean energy will drive unlimited opportunities.
6. Water
A quarter of humanity faces looming water crises, and demand is growing along with population, urbanization and wealth and the taxing of traditional fresh water supplies while also polluting them. But there’s hope – limitless energy could allow for the almost magical availability of water.
By 2050, anyone near a body of saltwater could benefit from water technology breakthroughs. Desalination has always been possible, but prohibitively expensive because of energy costs, whether done by filtering out the salt through osmosis or by evaporating the water and leaving the salt behind. Cheap energy makes desalination more plausible, as many cities around the world are getting desperate for water.
Water won’t be pulled out of thin air in great quantities anytime soon, but that technology is also under development. One group won a $1.5 million X Prize by developing a generator that can be used in any climate to extract at least 2,000 liters of water a day from the air at a cost of less than $0.02 per liter, using entirely renewable energy. One can imagine a day when decentralized production of water will lead to benefits akin to those that come from having abundant electricity while off the grid.
Where there is abundant water, along with the energy that comes from the Law of Zero, there can be food. The basics of life will be available everywhere, even at the far corners of the Earth.
7. Transportation
Although the enthusiasm for autonomous vehicles (AVs) took a hit for a couple of years – they are a really hard problem – momentum is building again, and the multitude of startups and brilliant scientists tackling the issues portends a future that will include an unlimited number of AVs.
The implications are mind-boggling. AVs are aimed at dramatically improving two key drawbacks of human-driven cars. First, humans are bad drivers. More than 90% of vehicular accidents are due to human error, which result in tens of thousands of deaths, millions of injuries and hundreds of billions in cost each year—just in the U.S. Worldwide, the figures are even more staggering. Bad driving also leads to traffic congestion, costing hundreds of billions of dollars due to added hours in traffic, wasted gasoline and lost productivity. Secondly, human-driven cars are very underused. Most of these cars are personally owned and sit parked more than 95% of the time. Some estimate that AVs, once successfully deployed as fleets of shared Uber-like, on-demand vehicles, could reduce accidents, lower congestion and reduce the number of cars by 90%.
Now, a lot of metal will need to be shaped and maintained even in an autonomous future, so transportation won’t be free. But that transportation will be so much less expensive than it is today that we can be profligate in throwing transportation resources at anything we want to. Think in terms of a world where fuel is free and, thus, infinite, where many considerations of time and distance no longer matter. Think about how health, wealth, education, economic mobility and more could all improve because access to transportation currently constrains so many people.
Yes, lots of people and businesses will have to adapt. Among the notable are the 4.5 million professional drivers in the U.S. AVs will also change emergency rooms, which currently treat some 2.5 million people each year after auto accidents and, based on current estimates, might treat only 10% as many individuals once AVs become ubiquitous. Car dealers, gas stations, oil companies, auto repair shops and most others in the multitrillion-dollar transportation value chain might well be disrupted.
There’s also the existential question for auto insurers: Why do you need personal auto insurance when there are almost no accidents, and you aren’t driving anyway? Will personal car insurance essentially go away?
* * *
Not all the Laws of Zero will kick in right away. The ubiquity of water, in particular, will take time to play out, partly because getting to zero cost for energy will also take time. Other laws, such as for information and genomics, are driving disruption faster than most imagine.
Here’s the core question all insurers should explore: How will these Laws of Zero shape the future? As customers, supply chain partners, competitors and others in the world at large accelerate their own digitization, driven by the Laws of Zero, how will insurers innovatively adapt their own business and operating models to stay responsive and competitive? Insurers should assume that decades will continue to happen in the weeks and months ahead.
These are times that demand both giant leaps and baby steps. In coming articles and webinars, we will continue to explore how insurers can systematically do both. In the meantime, we welcome your comments and questions.Read more at internationalinsurance.org.
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IIS serves as the inclusive voice of the industry, providing a platform for both private and public stakeholders to promote resilience, drive innovation, and stimulate the development of markets. The IIS membership is diverse and inclusive, with members hailing from mature and emerging markets representing all sectors of the re/insurance industry, academics, regulators and policymakers. As a non-advocative organization, the IIS serves as a neutral platform for active collaboration and examination of issues that shape the future of the global insurance industry. Its signature annual event, the Global Insurance Forum, is considered the premier industry conference and is attended by 500+ insurance leaders from around the globe.
Finding peace of mind and mental clarity isn’t always easy, but it can often be the first step toward personal and professional success. On the flip side, when stress seems consuming, it can affect a person’s ability to focus, thereby taking a toll on workplace performance.
The American Heart Association CEO Roundtable Report surveyed thousands of employees (pre-COVID) and found 76% reported they struggled with at least one issue affecting their mental health.
The past year of COVID-related social distancing, isolation and worry have resulted in increased rates of stress, anxiety and depression. Even post-pandemic, addressing these challenges head-on and with a research-focused strategy is critical.
As companies across all sectors balance the return of their workforce in person or in a hybrid format and address the mental wellbeing of their employees, several critical trends emerge as necessary steps for employers to ensure the maximum wellbeing of their team. These include:
Understanding the connection between mental and physical health:
According to data from Springbuk Analytics, 69% of patients with a mental health condition also have a chronic condition.
When patients have a mental health condition and at least one chronic condition, insurance costs to employers rise by 126%.
Understanding how mental health affects workplace productivity:
The World Health Organization (WHO) indicates that, by 2030, depression will be the leading cause of lost productivity in all economically advanced countries.
Of course, with a diverse range of possible methods, solidifying best practices can seem overwhelming even for the most experienced management professionals. The “Building a Caring Culture: Addressing Mental Health in the Workplace” white paper, prepared in conjunction with CSDZ, Holmes Murphy and MindWise Innovations, provides key insights and best practices on addressing mental health in the workplace.
Building a workplace where mental health can easily be addressed is no small task. Mental health needs to be addressed across all sectors, such as health, wellness, safety and employee benefits.
Training leaders and supervisors to provide care and support to their employees, accepting employees for who they are, fostering a safe and empathetic workplace and understanding that each worker has other stresses, pressures and distractions from their personal lives all contribute to making mental health a priority in the workplace.
By talking about mental health and wellbeing in the workplace, we can work together to break down the stigma and help others with existing conditions.
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Cal Beyer is the vice president of Workforce Risk and Worker Wellbeing. He has over 30 years of safety, insurance and risk management experience, including 24 of those years serving the construction industry in various capacities.
Things as certain as death and taxes can be firmly believed. Believable, too, is that life is volatile and the cost of living highly variable. Because of these things, protecting your estate from taxation is one of several reasons why life insurance exists. How you structure this protection, transferring ownership of your policy and ensuring the payment of premiums while excluding this asset from your estate, is critical. That you act is critical, as the Biden administration wants to change major portions of the estate tax.
To start, the Tax Cuts and Jobs Act (TCJA) of 2017 exempts estates valued at up to $11.7 million. Whether life insurance proceeds are part of the taxable estate depends on who owns the policy at the time of the insured’s death. If you want to preserve your legacy, the owner and beneficiary of the proceeds from your life insurance policy must be another person or legal entity.
Choose wisely, because the owner of the policy is the person who is responsible for maintaining the policy. Because you do not want the policy to lapse due to failure on the owner’s part, or if the owner is a minor who is not able to pay the premiums without the approval of a legal guardian or trustee, make sure procedures are in place — perform the necessary due diligence — to make ownership convenient and secure.
An irrevocable life insurance trust (ILIT) is another means to a similar end, regarding estates and specific tax thresholds. In this case, the policy is owned by a trust. The proceeds are not part of your estate, nor are you a trustee in charge of the trust. You do not retain any rights to run or revoke the trust. The advantage here is the assurance that what must be done will be done, that premiums will be paid without delay, that the trust will honor its legal responsibilities.
An estate planning adviser can also determine if you can transfer money — funds relating to gifts — to the trust, thus reducing whatever taxes your estate may owe.
If the beneficiary is a child or an adult with special needs, an ILIT lets you name the trustee — a person you trust — to whom you entrust the handling of money on behalf of your child or children, according to the terms of the trust document.
In a word, documentation is key to any estate plan.
Documentation is verification of trust, affording you the peace of mind you deserve. Regardless of who owns the policy, whether the owner is an individual or an institution such as a legal trust, proof is in the paperwork; legal documentation is proof of ownership.
Do not tarry in attending to this work, lest the government be fastidious in its work of taxing the proceeds of your estate.
Trust, too, that the government will tax your estate unless you safeguard your estate.
For the good of your estate, with the opportunity for future generations to continue to do good, do what is right.
Exercise the rights life insurance provides.
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Jason G. Mandel has spent over 25 years at the intersection of Wall Street and the insurance industry. Mandel founded ESG Insurance Solutions (www.esginsurancesolutions.com) in 2020 to help better integrate these two, often conflicting worlds Having a strong belief in ESG concepts (Environmental, Social and Governance), Mandel found a way of incorporating his beliefs in his business.
Representing only insurance carriers and products that he believes offer compelling risk management solutions and maintaining business practices that he can support, Mandel has led the industry in this ESG initiative. ESG Insurance Solutions serves some of the wealthiest families internationally, and their business entities, by providing asset protection, advanced tax minimization vehicles, principal protected tax-free income structures, employee retention strategies, key person coverage and tax-free enhanced retirement plans for their essential employees.
This article was written by Ronnie Klein for the International Insurance Society, a sister organization of Insurance Thought Leadership, under the umbrella of The Institutes. To see more IIS articles by Ronnie and other IIS experts, visit internationalinsurance.org.
What is happening in the world of life insurance?
The Hartford discontinued sales of individual life insurance policies in 2012.* MetLife spun off its life insurance business into Brighthouse Financial in 2017. VOYA Financial exited the individual life insurance business in 2018. AXA sold its share in Equitable, its U.S.-based life insurance business, in 2019. AIG announced that it will split off its life and retirement business in 2020. Prudential plc, of the United Kingdom, announced the demerger of Jackson National Life, its U.S.-based life and retirement business. The American firm Prudential Financial announced that it will sell its retirement business and is considering further “de-risking” of its annuities and other products. And these are just a few of the announced divestitures from the life insurance business by major insurers.
Is the sale of individual life insurance coming to an end? Insurers are certainly still selling it, but in this lingering environment of ultra-low interest rates, pressure is mounting from shareholders to sell off all or certain blocks of life insurance. That is why one prominent insurer’s CEO said, “I think that life insurance is a mutual company product.”
Not only are low interest rates making it difficult to earn a decent return on these products, but some insurers also have products on the books with minimum guarantees that they just cannot keep up with any longer. To add insult to injury, insurers must also hold regulatory capital against these policies and manage costly legacy administration systems. Announced changes to insurance regulations are tending toward increasing regulatory capital for long-dated guarantees, rather than decreasing it. Updating systems for old insurance policies does not seem like a good use of shareholder money.
Shareholders Demand Better Returns
Shareholders are becoming increasingly vocal about the returns on capital for life insurance. This is especially true for companies that must adhere to Solvency II regulations, which require insurers to hold excessive capital in support of long-term guarantees. A combination of low yields on assets and overbearing capital requirements makes life insurance increasingly difficult for stock insurers to maintain. One prominent board member of a life insurance company aggregator said the insurers that do not sell certain blocks of life insurance business “run the risk of activist investor action." While life insurance is generally thought of as a long-term business with many policies in force for decades, activist investors generally represent investors with much shorter time horizons. This mismatch of expectations can wreak havoc for life insurers and their policyholders.
The life insurance industry has focused on Baby Boomers for decades, and for good reason. Baby Boomers still hold over 50% of total household wealth (see Figure 1). This large group of people born between 1946 and 1964 purchased pure protection products to pay off mortgages and college costs for their children in case of premature death. Then they purchased life insurance savings products as they advanced in age and became more affluent. Then they purchased annuities to protect against outliving their retirement assets.
However, this era is coming to an end, as the youngest Baby Boomers are now in their late 50s and most are well into their 60s and 70s. Life insurers now realize that they have to invest in new technologies to attract other demographic groups, such as millennials. Freeing up large amounts of capital backing life insurance products to invest in technology seems like a better use of this money — and it is what shareholders are demanding.
The life insurance business is still extremely important and will continue to be so. It protects breadwinners from the financial consequences of premature death, disability or outliving their assets. According to the Financial Stability Board, insurer assets in 2019 amounted to $35.4 trillion. In 2016, the International Monetary Fund estimated that 85% of insurance assets can be attributed to life. That means that the life insurance industry is responsible for approximately 7.5% of the $404.1 trillion of financial assets worldwide. Not too bad for an industry that seems to be selling off its businesses.
Not only does the industry invest these assets into corporate bonds, infrastructure and government bonds, but benefit payments in the U.S. alone amounted to over $530 billion. The life insurance industry continues to be a noble undertaking.
Divestiture Strategies Vary
Insurers can use several different methods to offload blocks of life insurance business. They can stop writing new policies and manage the old policies as a run-off business. They can reinsure the old policies but continue to service and administer the policies. They can spin the business off into a separate company. They can reinsure the business and transfer the servicing and administration. Or they can sell the business to another organization, most likely to an aggregator. Each technique has its benefits and drawbacks, and hybrids may also be used. This paper will focus on the aggregation model, which has become more prominent during the past few years.
Through economies of scale, aggregators service and administer policies and may be able to invest a bit more efficiently than the seller was. Recently, the aggregator business has become quite competitive, with many new entrants, especially in the U.S. market. Aggregators can also domicile in jurisdictions with the most favorable capital requirements for their specific business models, thus reducing regulatory capital and increasing returns to shareholders.
The economics for this type of business seem to be working for both buyers and sellers, but what about the policyholder? This is exactly what insurance regulators around the world are exploring. With the increase in activity, regulators are “looking into the financial, operational and investment risks associated” with these transactions, according to recent conversations with four regulators. They are also concerned with policyholder protection. However, the chair of the board of a major aggregator recently said that regulation is “driving this business, not impeding it.” The president of another aggregator said that, as long as there is “sufficient capital to back the policies, regulators are happy.”
But there is more to in-force life insurance than simply paying benefits. Policies need to be updated as family circumstances change. If an aggregator is running off a block of business, the policyholders may not be receiving important services they need to keep their policies up to date. Aggregators will say that they actually do a better job servicing the policies because run-off is their core business. Their systems are newer and designed specifically for this business model, and the aggregators do not have new sales to offset lapses. Therefore, they need to maintain or improve persistency to meet shareholders’ expected returns.
Because most aggregators do not offer new policies, many policyholders may not be offered updates in coverage to meet changing needs in their lifecycles. The selling company will say that its agents and brokers will continue to treat these policyholders as customers, but regulators are becoming wary. One prominent European regulator said he would not approve the sale of a block of life insurance business when a third party services the policies. This regulator believes that the biometric and policyholder-behavior risks need to be with the same company as the administration. This, however, is not the norm in the U.S. or even other parts of Europe.
Another issue raised by regulators is the large — and growing — life insurance protection gap. Swiss Re estimates that the global mortality gap has reached $408 billion in 2020, a 6% increase from 2019. It seems unfathomable that the protection gap increased during a pandemic, when people were focused on their own mortality and that of family members. Others will argue that the pandemic impeded agents’ ability to sell policies by making it difficult to schedule paramedical exams and keeping people out of the office.
However, many insurers increased non-medical underwriting limits, making it easier to purchase life insurance without any additional exams. The Life Insurance Marketing and Research Association (LIMRA) announced that, while new life insurance policy sales in the U.S. increased 2% in 2020, annualized premiums dropped 3%. People were definitely considering purchasing life insurance during the pandemic, as the Medical Information Bureau (MIB) showed an increase in applications during 2020 (see Figure 2), but many did not complete the purchase. Some refer to this as the intention gap, another disturbing trend that needs to be addressed. Flat life insurance sales during the worst pandemic in 100 years is disappointing, nonetheless.
Source: Medical Information Bureau
Technology Can Help
There has been a lot of talk in the industry about technology. Life insurers are investing millions of dollars and dedicating much time to start-up companies that claim to issue policies in minutes and to have developed more efficient underwriting and better fraud management. Willis Towers Watson (WTW), in its “Quarterly InsurTech Briefing Q1 2021,” announced that investment in insurtech for Q1 2021 reached a record $2.55 billion, spread over 146 deals (see Figure 3). About 31% of this funding is associated with the life insurance industry. WTW says that it will soon have to drop the term “insurtech” as these new technologies are becoming the norm. Even with the multitude of start-ups and insurtech investments, worldwide life insurance sales have been flat at best. Will these new ideas eventually gain traction that turn into tangible insurance sales?
One area of increased interest is in the field of artificial intelligence (AI). However, this technology is not as advanced as people might believe. Try asking an automated assistant to dial the phone of a friend with a foreign name. Sometimes, no matter how many times you say the name, the assistant just cannot understand it — until you receive a response such as “Ordering pizza.” (Although nice, hot pizza may take your mind off of whomever you were trying to call.)
In the insurance industry, AI has mainly been used for non-life insurance — particularly in fraud detection. With vast amounts of data now available, machines can comb through seemingly endless numbers of claims to search for patterns in suspicious claims submissions. Machines can find certain repetitive behaviors not easily discovered by humans. Not only can claims managers use AI to assist in identifying potential fraud, AI can also help find ways to prevent fraud.
AI is also being used more and more in the field of auto insurance, especially with telematics and autonomous vehicles. A newer use of AI is to match up a caller with the correct servicer. Using data such as previous issues, age, location and policy type, machines can learn how to increase sales and decrease lapses. Call-center activity is vitally important to the success of auto insurers, yet this activity is typically delegated to operations or IT. Perhaps it is time to realize that call centers should be under the control of the sales team.
For life insurance, the only real use of AI has been in the field of medical underwriting. Risk assessment is probably the most important aspect of life insurance, and companies spend a lot of money choosing their risks carefully. This typically involves costly paramedical exams, blood tests, nonmedical questionnaires and perhaps stress tests. These tests are not only expensive, they are time-consuming and can severely delay the delivery of a policy. Agents complain that lengthy delays in policy issuance are a major cause of non-taken ratios — which could increase the intention gap. Using AI to select risks more quickly and without time-consuming and expensive exams could lower prices and speed delivery of policies. This can help close the intention gap and increase sales.
Another use of AI for life insurance could be for in-force management. Given the robust market for blocks of in-force life insurance business and the continuing need for protection, it may be time for a change to the current business model. Imagine using AI to examine in-force policyholders and determine which were in need of policy changes — increase in face amount, sale of new products (annuities, long-term care, disability, etc.), decrease in face amount (could prevent an imminent lapse and help build customer loyalty). Using AI as a tool to assist agents in identifying customer needs could be very powerful.
Aggregators could use AI to sift through in-force life insurance policies to determine which are best-suited for policy changes. If the aggregator does not issue new policies, it can contract with third-party insurers to write the new policies and receive a commission. This would be good for all parties. The aggregator makes extra returns for its shareholders by marketing a highly valuable asset — its policyholders. Insurers have a great source of new business — people who have already purchased life insurance and who have been identified by AI as likely to purchase additional insurance. AI companies can sell their software to aggregators and insurers. And, most importantly, policyholders are given the opportunity to purchase important products to help secure the financial well-being of their families.
Conclusion
Life insurance is a very involved business. Insurers must develop complex products that can last more than 50 years. Then they must market and sell these products using an array of channels. Applications must be underwritten carefully to mitigate the risk of anti-selection. Once a policy is sold, it must be administered, which includes allowing for a host of policy changes. Reserves and capital held against these policies must be invested prudently, according to strict regulatory guidelines. Claims and other benefits must be paid with a watchful eye for fraud.
Traditionally, these completely different competencies have typically fallen under one roof. But there seems to be change in the wind. With a combination of a low-interest-rate environment, the Great Recession, a once-in-100-years pandemic and stricter regulation, it is becoming more and more difficult to manage all aspects of life insurance while meeting shareholder expectations. The life insurance industry is decentralizing before our eyes. It is too early to say whether this new approach will succeed, but, if interest rates remain at record lows, the odds of this happening increase.
Regulators will continue to scrutinize this evolving business model with the goal of protecting policyholders. The worst thing for a policyholder, insurer and regulator is for a life insurer to be unable to make a claim payment, especially if the policyholder has been paying premiums for 30 or 40 years. One default could destroy the entire model.
The sale of individual life insurance may well be best-suited to mutual companies, but the new model that is emerging might be well-suited to insurers, aggregators, shareholders, regulators and, most importantly, policyholders. Bringing the many activities that life insurers currently perform under one roof to separate companies that excel in one or two of these competencies may be the wave of the future. New technologies such as AI can assist in meeting policyholder needs. Regulators will have to show some flexibility and patience. It will be very interesting to see how the life insurance industry evolves.
Who said the life insurance industry is dull?
*This article originally said the Hartford had discontinued sales of life insurance. In fact, while it no longer sells individual policies, it still provides group policies.
IIS serves as the inclusive voice of the industry, providing a platform for both private and public stakeholders to promote resilience, drive innovation, and stimulate the development of markets. The IIS membership is diverse and inclusive, with members hailing from mature and emerging markets representing all sectors of the re/insurance industry, academics, regulators and policymakers. As a non-advocative organization, the IIS serves as a neutral platform for active collaboration and examination of issues that shape the future of the global insurance industry. Its signature annual event, the Global Insurance Forum, is considered the premier industry conference and is attended by 500+ insurance leaders from around the globe.
Insurance is, at its core, five things: underwriting and pricing risk, selling and distribution, claims adjudication, servicing and, finally, investment management. Of course, there are hundreds of other skills and important areas, but these are the five central pillars of any insurance company.
Technologies are emerging that enable omnipresent, real-time connectivity between the people and businesses being insured and their insurers, and that is fundamentally changing the business of insurance. Here’s how.
Underwriting: Retrospective to Prospective
Underwriting and pricing is all about data and information at both the macro and micro level. Understanding socio-economic market trends, segmenting and accurately predicting how those may move and change is important. But the most critical data of all is at the individual customer level – the person or business you are about to insure. The more you know about their risk profile, the more accurately you can price their insurance and therefore the more competitive you can afford to be in selling and marketing.
Imagine if an insurer knew virtually everything about the behavior of the insured. Not only where they live but how they live, how they drive, their health and their daily habits. And imagine if the insurer had access to all the historic and predicted natural risk data about where the insured lived and worked and traveled. And imagine if there were computer programs powerful enough to gather, store and use this data to create an accurate and dynamic risk profile of the insured. No need to imagine – those capabilities already exist and are being refined and expanded. The debate over whether ZIP codes or credit scores are a fair and proper proxy for insurance risk will soon be moot, along with all the other retrospective information that has until now informed the underwriting process.
Usage-Based Insurance Evolves to Hyper-Personalized Insurance
A good example of this evolution in insurance is the well-publicized auto insurance product known as usage-based insurance (UBI), which is enabled by telematics – the joining of two sciences, telecommunications and informatics such as computer systems. In its infancy, UBI purported to offer auto insurance discounts based on driving behavior as reported by a device connected to the insured’s vehicle. In fact, these early programs were little more than clever marketing programs and were mostly counter-productive and unprofitable. Adoption rates grew slowly, initially attracting mostly better drivers willing to share their information. But, as smartphones proliferated and became more powerful and capable of reporting more critical driving metrics, these programs have evolved to become effective enablers of accurate risk quantification. In fact, some of today’s more sophisticated reward -based telematics programs are shown to significantly modify driving behavior and reduce risk.
The initial resistance of consumers to share personal information eroded as they began to embrace other tech-enabled programs such as Google, Facebook, Amazon, Spotify and Uber, which require extensive sharing of personal information for users to participate.
We are already seeing the expansion of these connected platform ecosystems to include car makers, insurers and supply chain partners and transform the risk, accident and claims management process in terms of speed, cost and customer service. And, early-stage telematics programs have evolved and expanded to pay-per-mile, distracted driving avoidance and – while still early on – crash notification.
The future of connected auto insurance programs is promising as adoption rates increase and accident services enter the mainstream from various directions. One of the more important benefits will be the transformation of today’s reactive claim model into one that self-activates and makes the process easier and more efficient, from initiating a claim and every step through to reconstructing how the accident happened. This model will serve to make current breakthrough technology even more powerful and spontaneous -- for example, photo estimating. The possibilities to accelerate the claim life cycle and bolster service represent exciting new value propositions waiting to unfold.
Connected insurance is spreading beyond auto to include other personal lines of coverage such as homeowners, property, life, health, accident and travel and into commercial lines, including property, small business, fleet, ride-sharing, home-sharing and workers compensation.
Digital Ecosystems: Opportunities Through the Internet of Things
The Internet of Things (IoT) will transform the world in the near future, and networked devices and sensors will enable this change. According to McKinsey, in 2010 there were 12.5 billion networked devices, and it is estimated that by 2025 that number will exceed 50 billion.
The IoT is becoming a routine aspect of the everyday lives of consumers globally and is transforming business models across all industries. This new digital landscape presents opportunities for insurers: to develop new products (such as parametric insurance), open new distribution channels (such as embedded insurance) and fundamentally reinvent their business and products to include risk prediction and avoidance and real-time assistance and support on a hyper-personalized basis.
Even the investment management function of insurance is changing as carriers form corporate venture capital arms and invest in third-party vehicles that fund and leverage insurtechs and innovative technologies that are not only transforming insurance business operations but are earning outsized returns on investment capital as they exit into public markets.
A Connected Insurance Industry
The connected insurance industry of the future will still be supported by the same five core pillars, but underwriting and pricing risk, selling and distribution, claims adjudication and servicing and even investment management will look nothing like they did in the last millennium – to the benefit of all stakeholders, including the customer.
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Stephen Applebaum, managing partner, Insurance Solutions Group, is a subject matter expert and thought leader providing consulting, advisory, research and strategic M&A services to participants across the entire North American property/casualty insurance ecosystem.
Alan Demers is founder of InsurTech Consulting, with 30 years of P&C insurance claims experience, providing consultative services focused on innovating claims.
Sufferers of long COVID are often referred to as “long haulers” because symptoms can last for weeks or even months. And it is not just a person’s health that is affected for the long-term; there are many other knock-on impacts of extended symptoms, such as impact on life insurance, that industries will now have to consider and adapt to.
Much remains unknown, but the first step to navigating this new territory, for life insurance is to understand the data we do have so far.
Symptoms of long COVID
What do we know about long COVID?
We know that symptoms — shown in Table 1 below — may occur continuously or in a relapsing pattern. The symptoms may simply persist for a long time following the initial infection of COVID-19, or, over time people may experience new symptoms.
Interestingly, by far the majority of patients with long COVID test negative for the virus, indicating microbiological recovery. As such, the causes of long COVID remain uncertain. Possible explanations include organ damage from the virus, exaggerated immune or autoimmune responses and persistent but undetectable viral reservoir.
Classification of long COVID
Experts have also started to classify long COVID in two different stages. The first, referred to as post-acute COVID, applies to cases where symptoms persist for more than three but less than 12 weeks after the initial infection. The second, called chronic COVID, applies to instances where symptoms persist for more than 12 weeks following initial infection.
Experts also suggest that an alternative way of classifying long COVID is according to the predominant residual symptom experienced. Based on this approach, sufferers can be classified as having post-COVID cardiorespiratory syndrome, meaning likely to suffer with breathing problems; post-COVID fatigue syndrome, meaning likely to feel persistent low energy levels; or post-COVID neuro-psychiatric syndrome, meaning likely to experience cognitive dysfunction such as depression, anxiety or brain fog.
Data suggests that patients hospitalized during the initial COVID-19 infection have an increased risk of developing long COVID (87%) compared with those treated with outpatient COVID-19 (10% to 35%). Hospitalized patients are also more likely to sustain organ damage from their initial infection, leading to prolonged symptoms.
What’s more, the number of symptoms presented at the time of initial infection appears to predict the likelihood of a person developing long COVID. The more symptoms at initial infection, the higher the risk of developing a long COVID syndrome of some kind.
Long COVID is more commonly reported in adults aged 50-plus, although it can occur in any age group, including children.
Individuals with co-morbid disorders, and in particular co-morbid psychiatric disorders, such as depression or anxiety, have an increased risk of developing long COVID after infection. The more co-morbidities, it appears, the higher the risk.
The link between long COVID and morbidity must be continuously assessed. At this early stage, not enough data exists to provide a clear understanding.
That said, wide varieties of new-onset pulmonary and extra-pulmonary disorders, meaning conditions associated with the lungs, have been observed in long COVID patients, including interstitial lung disease and respiratory failure. Table 2 shows a list of the extra-pulmonary conditions associated with long COVID.
Additionally, according to a recent longitudinal study of more than 73,000 U.S. veterans with a history of outpatient COVID-19 infection, there was an increase in observed short-term mortality at six months, when compared with veterans with no history of COVID-19 infection. However, the picture is far from complete, and more research is required for an accurate understanding of the mortality associations of various long COVID syndromes.
Evaluation of long COVID for life insurance purposes
When it comes to evaluating the associated risks of a person experiencing long COVID, the predominant residual symptom profile should be used to guide the evaluation. For example, if the predominant symptoms presented are shortness of breath and chest pain, cardiorespiratory investigations such as lung function tests, EKG, echo or chest imaging should be conducted.
For more general symptom profiles, blood and imaging tests will need to be conducted, guided by clinical assessment, and may include tests such as complete blood count, liver and renal function analysis, urinalysis, D-dimer assay testing (which screens for clots or deep vein thrombosis), inflammatory marker testing (which evaluates the presence of inflammation) and NT proBNP testing (which detects signs of heart failure).
Underwriting considerations
When it comes to life insurance underwriting, there is some early-stage guidance to help navigate this new territory. One of the most important factors to consider is adjusting ratings in the case of any evidence of organ damage. To date, though, for sufferers of long COVID with no evidence of organ damage, there does not appear to be any significant excess mortality risk to take into account when underwriting.
As with any emerging condition, the picture we have today, and the industry’s understanding of risk, will become a lot clearer in time. What’s needed now is continued study and analysis of patterns so new underwriting rules can be developed. One thing is for sure, though: The COVID-19 virus is leaving a troubling legacy.
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Nico van Zyl has been with Hannover Re Group since 2011. He joined Hannover Re US in 2017, moving across from his previous role as chief medical officer within Hannover Re's South African subsidiary.
You’ve probably seen it in your own life. A new gadget or software program promises to make life easier, but you can’t bring yourself to get started.
Maybe it’s too complicated to set up. Maybe you’re not sure if it really works. Maybe you’re just set in your ways. So, you keep trudging through the old way of doing things.
The same thing can happen at your insurance agency. Every month, you face decisions about what technology to use in your day-to-day operations, how to get the most value out of the services you already use and how to improve your customer experience.
As the head of a company that offers those kinds of services just for the insurance industry, I have some insight into how to make those decisions and achieve what I think of as “digital balance” — a task that has only become more urgent since the coronavirus pandemic began.
What Does it Mean to Have Digital Balance?
Digital balance is the Goldilocks spot. At one end of the spectrum, there is too much technology. We we spend loads of time trying to use everything offered in hopes of some productivity breakthrough. At the other end of the spectrum, we are really not taking advantage of technology because we are relying too much on the comfort of old processes we think work good enough. Digital balance lies in the middle of the spectrum.
With the myriad of applications and software thrown at us as a means to improve our lives and our workflows, finding digital balance is really about learning to evaluate the technologies we use on a daily basis, so we can embrace the ones that improve our efficiency and productivity and let go of those that no longer provide value.
The importance of this evaluation has become even more apparent within the past 18 months as we navigate through the ups and downs of the pandemic, striving to still provide our customers the best experience possible and give our employees the tools and support they need to succeed.
A simple way to evaluate your balance is by breaking your company down into categories depending on your specific makeup. I will just review a few examples, but there are obviously others like human resources or accounting that could be reviewed much the same way.
How to Review Your Digital Balance
Here are the five main categories I will review:
Internal Communications:How we communicate with our staff.
Workflow/Documentation:The processes by which everything gets accomplished and recorded as it moves through our system.
Marketing: How we tell our story, position our brand’s value and reach potential customers.
Sales and Customer Service: The way we deliver on the promise to provide the best customer experience possible.
Data and Metrics: Measuring the results of our efforts and accessing information to make improvements.
The way we evaluate our digital balance is by looking at each category across our company, creating an inventory of technology, evaluating each solution, identifying any pinch points, setting our priorities and making a plan to adjust our solutions to maximize efficiency and productivity.
Internal Communications
Given the new dynamic of having, in some cases, onsite and remote employees, internal communications are more important than ever. Your employees need to communicate quickly and effectively. Failure in communication can lead to declines in productivity as well as employees feeling isolated.
Some of the questions you might ask are:
What are the processes behind how we communicate currently?
What communicating technology are we currently using? Is it effective? Is it redundant?
What are we relying on the most: email, phone calls, voicemails, sticky notes, instant messaging, intranet?
How are we avoiding employees and departments from being/feeling siloed?
Are we using technology to streamline communications?
What hardware or software do we need to fulfil our communications needs?
Have we considered all the security risks for communications on personal hardware and remote access for employees working out of the office?
Workflow/Documentation
All projects live somewhere. They may be new, complete, in progress or maybe in need of changes. The point is, to get things done, there needs to be a process by which workflow happens. Technology can create an efficient solution to make this happen and track the results.
Do we have a work-flow process that could be improved by technology?
Are different departments using separate technologies to get the same result?
Has staff using the technology been trained so they can maximize the effectiveness?
Does remote staff have the same access?
Have we signed up for technology that we are not even using?
Marketing
Brand, perception, reach and awareness. So much technology has been developed to maximize the way we communicate our company’s value to the prospect. It is very easy to lose track of all the tools available. Often, many technologies overlap.
What is the inventory of each technology we are using, and how is it used to achieve the desired result?
Is there a way to combine any of our marketing needs into one solution? Will there be an advantage?
Do our marketing needs require specialized solutions outside of other solutions the company uses?
Will the costs of technology used to acquire new customers exceed the value?
Do we have the staff, and are they trained to maximize the effectiveness of the technology?
Sales and Customer Service
From your customer relationship management (CRM) to building relationships and solving customer issues, technology plays a big role in providing the best customer experience possible. Processes can be greatly improved with solutions that put customer information at your fingertips.
Do sales and customer service have access to the technology needed to provide the best experience?
What is our customer lifecycle, and what technologies can we put in place to understand and improve that experience?
Are we using technology to track how we are communicating with customers during and after onboarding? How do we know where we can make improvements?
Knowing where we have been certainly helps us improve where we can go. Using technology tools that provide access to data and metrics gives us valuable insights, allowing us to make better decisions and make improvements.
What key performance indicators (KPIs) do we need to measure to give us the information needed to make better decisions?
Will one technology meet the needs of all my data requests?
Are we collecting data from technology but not using it?
Do I have the staff to effectively use this technology?
Achieving Digital Balance
These are just general guidelines for you to evaluate your technology footprint. I hope you can use this information to maximize the technology you are currently using and possibly look to introduce new technology to build a more efficient and productive work environment.
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In this week's Six Things, Paul Carroll highlights what AI doesn't do. Plus, how to improve the customer experience; the evolution of frictionless payments; underwriting small business post-COVID; and more.
Although I’m a big believer in the prospects for artificial intelligence, and we’ve certainly published a lot to that effect here at Insurance Thought Leadership, AI has also carried a ton of hype since it emerged as a serious field of study in the mid-20th century. I mean, weren’t we supposed to be serving our robot overlords starting a decade or two ago?
To keep us from getting carried away, it’s good to look from time to time at the failures of AI to live up to the projections, to see what AI doesn’t do, at least not yet. And the attempts to apply AI to the diagnosis of COVID-19 provide a neatly defined study.
Join this webinar to learn how Group and Voluntary Benefits players have the opportunity to extend their reach through new, broader diversified plays that align to a new generation of employees and employers.
Peter Drucker once famously said that “what gets measured gets managed,” and the Insurance Information Institute is unveiling measures for U.S. communities’ resilience against natural disasters. In this webinar, ITL Editor-in-Chief Paul Carroll and the Triple-I’s senior economist, Michel Leonard, discuss what the measures cover, how individuals and communities can use them and where the Triple-I will take them from here.
Cognitive computing is a funny beast. Every time you hit your target, you find that another pops up off in the distance.
When I first saw a demonstration of speech recognition, some 30 years ago, I was mightily impressed that the computer understood a few words. If I had seen what would be possible today, I’d have been stunned. But now? Oh, that’s just Siri or Alexa. And why didn’t auto-correct guess exactly what I wanted to say?
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