It’s an interesting time to be a business leader. Recent research shows that 25% of employees are considering a job change, while 60% of leaders are still feeling daily burnout. From hospitality to retail, many industries are facing record labor shortages. In the title industry, an unprecedented real estate market is creating hesitancy for homeowners and hardship for agents. After such massive uncertainty on a global scale, risk aversion feels almost instinctual – and, as leaders, the easiest route may feel like the one that leads back to the status quo. 

It can be downright frightening to disrupt the norm when it comes to your company – and disruption is not always positive. Like anything else in business, disruption has to be approached strategically. Unique challenges, however, often demand unique solutions, and being willing to go against the grain can uncover new opportunities and help your company stand out to both employees and customers. Organizations that are more innovative generate 11% more revenue and 22% more growth than those that tend to stick with tradition. Below are four ways leaders can buck the status quo and create positive change for your customers, company and community:

1. Listen to your gut – and your consultants.

It’s just a fact: you’re going to have to take risks in business. At some point, you will need to make a new hire, launch a product, make changes to a long-time service or make another decision that brings risk. You can make decisions that will set you apart by trusting your gut about the things you’re the expert in and reaching out for guidance on the things you’re not. Don’t be afraid to stand up for the vision you have for your company, but also be open to admitting what you don’t know — and accepting that you can’t know everything. There’s a reason that 60% of CEOs at growing companies work with coaches and consultants. When you have trusted advisers to collaborate with, you can approach every decision with the benefit of a wealth of perspectives and expertise.

2. Focus on the humanity.

Regardless of what your industry is, people ultimately make your business run. The people who work in it, the people you partner with and the communities that comprise your customers – all are integral to your success. Always look for opportunities to build and facilitate relationships well beyond the moment of transaction. Eighty-two percent of consumers want more human interaction, and nearly half say they pay close attention to how a company supports its community when making purchase decisions, so being a visibly positive force in yours should be viewed as both an ingrained responsibility and good business sense. A culture of giving back has also been shown to increase employee productivity by as much as 13% while simultaneously improving collaboration. Consider creating a role at your company for a designated community ambassador who is always looking for new sponsorship and volunteer opportunities for your team. When you take the time to build connections with the people who interact with your business, you also build customer loyalty, a positive reputation and high employee retention and morale. 

See also: 7 ‘Laws of Zero’ Will Shape Future

3. Leverage your differences to build a balanced team.

It takes a lot more to run a business than just knowing your industry; you have to be willing to seek out other perspectives, detailed about hiring the right people and dedicated to building a great culture. Instead of thinking about the ways you don’t fit “the mold” of leadership, focus on how you can build a balanced team where one individual’s weaknesses are balanced by another’s strengths – including your own. Having a background that doesn’t fit neatly within your niche isn’t necessarily a bad thing; it means you bring an outside perspective to the table along with a layer of expertise that your competitors likely don’t have. Combine that with the right hires, and you end up with a team that is well-rounded and brings a deeper level of value to your customers.

4. Reconsider traditional hierarchy. 

A traditional hierarchy has been the norm in most businesses for so long that it’s rarely questioned, but, if you want to build innovation in your company, you have to apply it at every level. Hiring self-starters, trusting their expertise and giving them space to thrive fosters an entrepreneurial spirit that is key for inspiring ideas and higher collaboration. Hiring motivated people – and trusting their expertise -- allows both your team and your company to prosper: Employees who feel trusted by their leadership have 74% less stress, 50% higher productivity, 76% more engagement and 40% less burnout. For leaders, giving employees more ownership and less day-to-day oversight results in more time spent on strategic business planning and development. 

The road less traveled

There are a million different paths to leadership, along with an intimidating number of pitfalls to avoid. It’s the ones less-traveled, though, that can lead to the greatest journey and the best reward. From startups to small businesses to large corporations, the companies (and leaders) that veer away from the norm end up making the most impact – not just on their bottom lines but on their employees, industries and communities.

Subrogation is a relatively manual, time-consuming process often requiring physical checks to be mailed on a claim-by-claim basis between insurers. Sounds laborious, doesn’t it? That’s because it is.

In 2018 alone, the total amount of dollars demanded and issued through the subrogation process was over $9.6 billion for all insurance carriers, and multiple sources of data increase the potential for fraudulent claims. According to Claims Journal, up to 10% of claims costs for U.S. and Canadian insurers are attributed to fraudulent claims.

With so many disparate parties, including claimants, carriers, third-party adjusters (TPAs), law firms, recovery companies and regulatory entities, involved in the process, subrogation is in desperate need of innovation. Fortunately, emerging technologies are providing solutions.

In this post-COVID world, with reduced dependency on physical location, the digitization of insurance has caused a significant ripple effect for businesses in subrogation, including those involved in risk management and data protection.

The Proverbial Silver Bullet?

Blockchain, or distributed ledger technology (DLT), can help insurers drive more efficient processes, including use of new “smart” contract models. 

Smart contracts allow insurers to enforce agreements by storing business rules in programing code and have them execute automatically once the required terms are met. Smart contracts can significantly reduce the cost of "netting." Netting is a process when two insurance companies give visibility into corresponding liability and recovery efforts. Today, this process can take days or weeks or months. With transparency provided by blockchain, the netting process can occur in real time. And, this is a huge cost and compliance savings for carriers, as well as for the entire ecosystem.  

Blockchain employs consensus management to manage risk pools, underwriting and claims payments. The contract is digitally signed on the blockchain, providing all parties a single version of the contract, eliminating the possibility for version mismatch or misinterpretation.

Security 

Due to the nature of DLT, blockchain can automate transactions and allow multiple organizations to share data securely. Data is stored on multiple machines, making it essentially “public.” In this scenario, it becomes incredibly difficult for a hacker to alter the content of the data because it would have to be done on every node simultaneously. 

Data is more secure because blockchain networks store data in a format that cannot be replicated or tampered with. Each block of information is also stamped with a unique alphanumeric hash key, which contains information about that block and all the ones that proceeded it. If one block is altered in any way, it will be immediately apparent by comparing it with others in the chain.

See also: Breakthrough for Blockchain?

Transparency 

Blockchain technology is providing new ways of carrying out data exchanges that are more secure and transparent than ever before. The ability to make these transactions without a central authority enables better serving customers by removing the bottlenecks and inefficiencies that come with outdated manual processes.

Having stakeholders house their data on a blockchain creates a shared source of truth, which would facilitate data-sharing, reduce costs and decrease the likelihood of errors. By creating a single source of truth, a blockchain solution would eliminate data redundancy, reduce the potential for errors and speed the process by eliminating the need for continual information requests. An automated blockchain payment solution would eliminate the need for reconciliations, improve audit quality and reduce the potential for payment fraud. 

In addition to claims processing, a blockchain payment solution can streamline operations, improve accuracy and reduce costs across the value chain in such areas as agent/broker commissions and incentives, premium receivables, premium refunds at cancellation and service provider/vendor payments.

Blockchain employs smart contracts and consensus management to manage risk pools, underwriting and claims payments. The contract would be digitally signed on the blockchain, thus providing all parties a single version of the contract, eliminating the possibility for version mismatch or misinterpretation. Blockchain provides immutability by design. And, each party owns their ledger and a record of unconsumed evidence. Decentralized transactions (with common access to a ledger that has a secure audit trail) provides an improved basis for non-repudiation, governance, fraud prevention, financial data and reporting.

The Future of Subrogation – Sponsored by Blockchain

Blockchain is poised to rewrite the rules of competition in the subrogation industry by streamlining operations, enabling data to be shared seamlessly with external stakeholders and disrupting traditional business models and intermediaries.

After a long stretch of global and local crises recorded under a relentless social media spotlight, the world is focused on risk in a different way now than it was even a few years ago. Businesses are building their risk management capability by investing in cyber security, flexible working capabilities and risk data and analytics. More firms are hiring risk managers and exploring insurance options that include risk and crisis management. And as our new Risk & Resilience study reveals, they are thinking about insurance differently, too.

The pandemic and ensuing lockdowns appear not only to have shifted business structures and operating models but also to have transformed business leaders’ views and expectations of insurance.

Insurance has always been considered a necessity, but our Risk & Resilience data, which is based on interviews with more than 1,000 C-suite executives in the U.S. and U.K. across 10 different industries, reveals that businesses are now expecting more from their brokers and partners. 

Let’s take a look at some of the biggest frustrations around buying insurance for businesses as revealed in this report, and how the insurance industry can use these findings to reshape our approach to risk.

A question of trust: Almost half (48%) of those surveyed said their trust in insurance has increased since the start of the pandemic, but only 54% believe that insurance is meeting their businesses' challenges very well.

Trust in insurance appears to have increased since the start of the pandemic, but what business leaders want from it has extended beyond pure financial protection. Balance sheet strength, a solid reputation and a swift and smooth claims handling process seem to now be expected as a baseline. Today, business leaders are demanding more. They want insurers and brokers to demonstrate better understanding of their operations and the risks they face.

Insurance buyers are looking to us to add genuine value to their business through the provision of regular risk insights, risk management tools, services and flexible coverage tailored to their sector and business size.

Delivering on these expectations in today’s complex, connected global risk environment means the insurance industry needs to take stock. A challenge for the industry is how we better apply data and claims insights to help clients future-proof their businesses against emerging known and unknown risks such as cyber, supply chain and environmental, social and governance (ESG) concerns.

See also: Pressure to Innovate Shifts Priorities

Closing the knowledge gap: A quarter of business leaders struggle to understand what cover they need, and 19% find it hard to get insurance tailored for their sector or specialist business.

Our findings also show there are elements of researching and obtaining commercial insurance that are perceived as difficult and where there is a need for better clarity and customer education. These include knowing the premium limits a business needs insurance for, comparing quotes and understanding how a policy would respond to real-life scenarios, as the controversy around interpretation of some business interruption coverage in the face of a pandemic has shown. 

However, the most important part of buying insurance is knowing the types of risk their business needs to be covered for, which was cited by over a fifth (21%) of respondents. Buyers’ number one ask of their insurers is a deep, specialized understanding of the specific risks they face – and points to the existence of a knowledge gap that they are looking to specialist insurance partners to fill. 

Business leaders see the primary value of insurance in terms of financial support provided by a trusted partner. However, there is a tension between clients wanting and seeing the value of a long-term partnership with their insurance provider, but also thinking the insurance industry is too focused on the short term, with a tendency to dip in and out of certain classes of risk and change terms and conditions as market conditions dictate. 

While the relationship between insurer and insured has often been predominantly transactional, it needs to evolve more quickly into one that is more strategic, based on partnering to develop effective risk management solutions. For this to happen, the insurance industry needs to bridge the connectivity gap with clients by better demonstrating knowledge and insights around the risks they face. 

Creating a better connection: 44% don't think their insurers understand their business.

Building a better connection with clients and increasing the perceived value of insurance will require the insurance industry to improve its understanding of how buyers approach risk. Our findings indicate that buyers appear more inclined to insure when they think risk is real and present. 

As an industry, we need to consider how we connect better with clients around the risks that matter, not just today but in the medium to long term, to raise awareness and help them to prepare their business to be resilient against the changing risk landscape. This needs to be done through the lens of sector specialization, increasing understanding of the value of insurance overall as both a risk mitigation and a risk management tool. 

To build better connectivity, our research suggests that the insurance industry should reconsider the relationship among brokers, insurers and clients, as solving today’s complex, increasingly connected risks likely requires other skilled experts to be involved, too. As well as offering risk mitigation expertise, coverage and insight, insurers can be a conduit to those other expert partners and service providers with the depth of knowledge and experience required to manage the multifaceted issues created by many of today’s risks. 

To achieve a genuine partnership with clients, and to deliver the service that businesses indicate they want, will require regular, productive interaction. The challenge for insurers and brokers is to encourage busy clients to invest time – and determine what a more productive relationship will involve and deliver. As the insurance industry engages more with clients, effective communication and the ability to develop relationships and to share deep technical understanding and also to talk about broader business issues will be paramount. 

See also: Building Telematics Can Mitigate Risk

The results of our research show that the insurance industry is at a point of inflection, and that it is time for a service rethink. 

Our findings show that there is a big opportunity for the insurance industry to support businesses by harnessing data, tools and insights to provide more specialist, tailored and flexible coverage that meets sector needs and provides greater risk and crisis management support and insight. The industry is already making moves in this direction, for example looking at ways to deploy AI and use parametric triggers. Use of these types of innovation is likely to increase. 

Moving forward, we have a greater role to play, principally in designing and enforcing protocols and standards to help organizations improve their resilience against a broad range of risks and helping them to be more operationally resilient while operating in a high-risk and uncharted environment.

As coronavirus infection rates rise again, businesses around the world are asking themselves an uncomfortable question: Will consumers buy?

Since the outbreak of the pandemic, consumer behavior and business engagement with their customers has gone into uncharted territory. Consumers, influenced by COVID-related restrictions, experienced changes in needs for goods (increased consumption of food eaten at home), services (demand for high speed broadband bandwidth) and experiences ( an increase in outdoor leisure events). Businesses had to deal with volatility of their inventory, changing consumer demand patterns, the need for a complete move to online ordering and changes in their product mix (restaurants, for instance, have changed menus to accommodate a better pickup/delivery experience).

What we can now say for a fact after dealing with 1.5 years of COVID is this:

• All consumers, including previous nay-sayers, have become more comfortable shopping online.
• Using e-commerce platforms such as Shopify, every business can spin up a virtual store in no time.
• Consumers want relevant offers to be made where they shop. 
• There is consumer resistance to generic ad-tech offers. 
• Consumers expect higher levels of service. They look for higher certainty and flexibility from the businesses they buy from. 

Reality for every person is now changing much faster. One moment you may be planning to leave for Hawaii for a few weeks, and the next you are quarantined at home because your kid has a runny nose. 

There’s an old Yiddish saying, “Mann Tracht, Un Gott Lacht” -- Man makes plans, and God laughs. 

See also: Achieving Digital Balance in an Agency

Business in uncertain times

How can businesses succeed in an environment where everything is possible but nothing is certain? Many businesses have found the answer is to give consumers enough certainty that they reach a conviction that allows them to purchase -- create a sense of security around their ability to make changes, to cancel or to return the goods. 

Into this gap comes embedded insurance. When done right, it allows insurance products to meet consumers when and where it makes the most sense for them and to deliver highly sensible protections that they really want.

What makes embedded insurance so exciting is that it changes an insurance model that is centuries old.

If you are thinking to yourself, how does this all relate to changing consumer behavior and to the need to increase consumer conviction, consider this: A family is researching the option to go on a vacation via an online travel agent. They are interested in a beach resort in the Maldives. They will not book until they have strong conviction that there’s little or no risk to their travel plan or their experience. Risk means different things to different people at different times. In normal, non-pandemic times, a family like that might care mostly that the weather is nice, that the water is free of jellyfish or that there are no air quality issues. Nowadays, they may care more about having medical coverage, getting infection rates and screening procedure updates or simply having the flexibility to cancel if something goes wrong or doesn’t feel right.

Embedding insurance to create trust

Undoubtedly, a merchant selling goods is the one who knows his or her consumers and their purchasing behavior the best in the world. This kind of business oversees the customer journey and can recognize demand, conversions and trending concerns. The challenge the business has in these uncertain times is that consumers hesitate due to perceived risks. Embedded Insurance can be inserted into the online buyer path to create reassurance around the associated risk. Using AI, embedded insurance can allow for additional value-added protections to be customized and tailored to the needs of each consumer. This is a seamless experience as the consumers have already supplied all of their relevant details to the supplier. To complete a positive online experience, bundling, pricing and drafting of the policy needs to be done in near real time. 

See also: 7 ‘Laws of Zero’ Will Shape Future

In a sea of protection and service providers, insurance companies, technology platform providers and more, how would a business go about selecting the best insurance solution for its customers? In my mind, a business selling embedded insurance needs an insurance partner that:

• Understands the complexities of how businesses sell to their customers, 
• Is up to date on what consumers expect, 
• Has a wide portfolio of protections and coverages either in-house or from third-party providers, 
• Bases decisions on data, 
• Can seamlessly integrate with the merchant
• Can offer insurance streamlined into the core product or service sale.

Including an embedded insurance or service offering in the product offering can boost customer engagement and overall customer lifetime value. These protection policies can be auto-renewed or set as a subscription service to ensure customers keep coming back. Embedded insurance is the way forward for many online businesses to offer confidence to consumers, so they buy products and services in what are undoubtedly uncertain times.

Search “climate change and insurance” on the internet, and there will be no lack of information on the intersection between global warming and property insurance. It is also not hard to learn about the impact climate change is having on the D&O line of business. However, one area that is overlooked, in relation to climate change, is the product liability insurance space. That is slowly changing, and interest will most likely accelerate in the coming years. 

Wrapped up in broader social policy conversations like environmental justice, social equity and social inflation, climate change risk is emerging within the product liability discipline in a pattern seen previously with mass tort litigation.

An emerging risk in the context of product liability insurance usually follows a course starting with the publication of scientific or academic reports indicating a causal link between a particular condition (i.e. climate change) and property damage or bodily injury to a third party. As these works attract attention, litigation begins to accelerate. There is a period of fits and starts, but, as more scholarly studies are conducted by reputable sources, the causation argument becomes stronger.

The history of mass torts in the U.S. demonstrates that increasing amounts of scientific evidence precede allegations of liability and an advance of litigation that can be materially damaging economically. And the industry is entering a period of affirming causal linkage between climate change and product liability.

Insurance companies’ underwriting and claims communities should be examining the trend.

Businesses and organizations have a duty of care. When they sell a product or provide a service, it is expected that it will perform as intended and not cause harm or damage. In the instances where there are aspects of the goods that could be harmful, there is a duty to warn -- hence the plethora of warning labels, disclaimers and safety pamphlets we see when we purchase a product. Climate change will enter through the doors of these corporate responsibilities affect the product liability insurance market.

In 2007, David Hunter and James Salzman, in their University of Pennsylvania Law Review article, “Negligence in the Air: The Duty of Care in Climate Change Litigation,” anticipated that more tort actions would be brought against companies for breach of their duty of care as more scientific evidence was produced demonstrating that these companies contributed to greenhouse gas emissions, which caused physical harm to others, either through the products they sold or the production methods used. The authors also predicted that other legal avenues could be pursued, such as design defect, failure to warn or public nuisance claims.

Considering “Negligence in the Air” was published in 2007, a review of more recent circumstances should elevate Hunter and Saltzman to oracle status. In 2019, Neil Beresford, an expert in complex product liability claims at Clyde & Co., wrote, “The past several years have seen a surge in climate change litigation, and these lawsuits are providing a wider body of case law and attribution science that will enable courts to draw on decisions from around the world to influence their thinking.” This author posits that a wide range of industries, such as energy, heavy manufacturing and financial institutions, will all be drawn into climate change litigation. 

One location where suits might occur is California. In August, Cal/OSHA released a circular reminding employers of their obligation to protect workers from the harmful effects of wildfire smoke. While Cal/OSHA regulates employee safety, the California Office of Environmental Health Hazard Assessment (OEHHA) focuses on citizens at large and oversees enforcement of the state’s Safe Drinking Water and Toxic Enforcement Act of 1986, well known as Proposition 65. The purpose of Prop 65 is to enforce a duty to warn by requiring labeling of consumer products sold within the state that may contain chemicals that cause cancer or birth defects. While Prop 65 itself is not directly related to climate change, the OEHHA has more recently participated in studies linking higher temperatures to an “increased occurrence of death and illness, including hospital visits, emergency room visits and birth defects.” With Cal/OSHA’s concern for wildfire health hazards and many carbon-based chemicals on the Prop 65 list, it is easy to envision future developments that could bring actions against manufacturers for the harmful health effects of global warming due to the carbon-based goods they produce. 

See also: A Price Tag on Climate Change

In fact, published just this year, the UN cited over 30 current cases in their “Insuring the Climate Transition” report that involve climate change litigation, falling into the following categories:

1. Fossil fuel production, emissions of greenhouse gases or misleading climate altruism known as greenwashing
2. Litigation related to physical harm due to climate change
3. Cases related to environmental regulatory breaches                       

The UN selected these examples because they involve novel theories of law, because they could have material financial impact should plaintiffs prevail or because the discussion of climate change overall has been aided by the decisions the particular judges have issued.

Another possible catalyst for future product liability litigation related to climate change is with the rise of litigation funding in the U.S. If there is an increase in the amount of scientific studies linking manufactured goods to the harmful effects of climate change, there will also most likely be an increased interest in the legal financing of suits brought on this basis. 

To date, the solution for the product liability underwriter has been to add exclusions to policies preventing them from responding to nascent climate- and carbon-related risks they cannot fully anticipate nor model such as MTBE, BPA or wildfire; or risks where there is a concern of dramatically, socially inflated jury verdicts. Even those insureds that purchase environmental liability policies should not assume a claim brought against a policyholder for the emission of CO2 would be covered under their policy. At present, it does not appear that there is contract-certain coverage for climate change risks in the casualty and liability arena. Existing policy forms either exclude the bodily injury or property damage risk through pollution exclusions. Even the failure-to-warn risk is usually uninsured due to limitations written within the advertising liability coverage part. On top of that, affirmative coverage has not been explicitly offered because there has not been a successful liability case based on a plaintiff’s contribution to global warming -- yet. 

The smart underwriters, however, will recognize the pace at which social policy is changing rapidly and should be bold in their deployment of capital as a means of supporting change. Some actions to consider:

1. Embrace the newer forms of third-party modeling platforms for emerging casualty risks that do not have historical loss patterns. Instead of avoidance of risk, underwriters can use these models to responsibly provide capacity.     
2. So as to offer a sustainable insurance program, upgrade the risk analysis process using insurtech tools to gather more data around insureds’ production methods and raw materials, as well as the biomedical science that may inform an underwriter about long-term risks related to those substances and their fabrication.  
3. Study policyholder ESG metrics and loss experience, and if correlations emerge incorporate those insights into the underwriting process as regulation allows.   
4. Develop coverage enhancements like reputation cover, legal expense annuities or regulatory enforcement coverage that could protect customers facing false claims of greenwashing or climate change legal liability suits.

See also: How Insurers Can Step Up on Climate Change

My favorite recommendation, however, is to be part of the climate solution by capitalizing on an underwriter’s innate inquisitiveness. Many new companies and organizations are forming to address the challenges of climate change, like developers of CO2 capture and sequestration facilities, designers of urban green roofs, inventors of sustainable water-management IoT devices and entrepreneurs offering services related to ESG scoring and reporting. With their launch, climate-related companies will need liability insurance, making them attractive new opportunities for an underwriter.

As these enterprises use untested technologies with no historical loss experience, the casualty underwriter’s enthusiasm may suffer. However, underwriters and sustainability-focused companies have a common characteristic: They similarly provide a social good through their products. Through collaboration and study, underwriters can understand the technologies these start-ups apply and provide access to the abundant risk mitigation resources insurance carriers can offer. With reasonably priced insurance coverage and capacity, businesses oriented toward solving the effects of climate change would have the protection needed to innovate and expand confidently. Insurance often looks to the past to predict the future, but it is also an industry that has the ability to facilitate a better world.

The full FDA approval of the Pfizer vaccine is an enormous development in the fight against the COVID-19 global pandemic. Already, there has been a steady increase in the rate of daily vaccinations, though still way below what is needed to stop the surge of the Delta variant. I have been trying my best to educate the public and state and federal officials for years now about the dangers of the anti-vaccination movement. Anti-vaxxers challenge the science they don’t understand or have been lied to about it. Let’s try the math.

Back in April, the incidence rate for the Delta variant was 0.1% among COVID cases. The little children in my math classes can tell you that means one tenth of one percent. Today, the Delta variant accounts for 86% of all cases and 95% of the hospitalizations and 99.5% of the deaths. Intensive care units in the Deep South are overwhelmed and turning away non-COVID patients, including cardiac arrests. Is it a coincidence that Alabama and Mississippi have the lowest vaccination rates in the country? Florida now has more COVID-19 cases than any state since the beginning of this pandemic. 

The FDA approval process was based on a 91% effectiveness rate in preventing the disease from spreading person to person. The Delta variant is spread like the common cold and is more contagious than smallpox. The Centers for Disease Control and Prevention (CDC) declared the Delta variant one of the most infectious respiratory viruses in history. The protection rate for non-vaccinated people is 0%. 

This full approval comes just days after the FDA approval for the third shot or booster shot. The reason for the booster shot after eight months is the math. The COVID vaccine was found to hold at 92% effective against serious illness and hospitalization from initial COVID-19 cases but only 64% effective against the Delta variant. I, too, was delighted when the COVID-19 restrictions were lifted after being in lockdown in New Jersey for over a year, an early epicenter with more deaths per capita than any other state. I have been going out to dinner virtually every day at a NJ diner. But the war turned out not to be over. What happened? The disease mutated right out of a horror movie. 

A recent Kaiser study found that two-thirds of the non-vaccinated people in the country believe in myths and hoaxes about the safety of vaccinations. (See my ITL articles on vaccinations.) The UN and the World Health Organization have called this problem an "infodemic." The U.S. Surgeon General has added that this health misinformation is now a serious public health threat. 

I am thrilled with the movement now by both public and private institutions, employers, hospitals, nursing homes, colleges, sports teams, restaurants, etc.  requiring proof of vaccinations or at minimum a recent negative COVID test. However, a negative test on Monday means nothing on Tuesday. 

See also: Long-Haul COVID-19 Claims and WC

What is needed is a huge public campaign to educate four core groups of unvaccinated people in this country. Black and Hispanic populations, young adults between 18 and 26 years of age and the Deep South. Where is the Concert for COVID Vaccines? Where are the sports stars whom people idolize coming out for vaccinations instead of trying to sell me stuff on TV?  Want to see Billy Joel at Madison Square Garden? Get vaccinated at the show! Where are the country music stars? Hispanic music stars? Black music stars? 

There are now 60,000 new cases a day reported of the Delta variant, up from 24,000 cases per day from a few weeks ago. Do the math: 24,000 cases a day is 1,000 new cases an hour. Now it is 2,500 new cases an hour and getting worse. We have already lost over 600,000 people to this horrible pandemic. We went to war when we lost 3,000 Americans at Pearl Harbor, and 60 years later we went to war when we lost another 3,000 on 9/11. 

I don’t want to hear another word about “freedom” from anti-vaccination folks. You are not free to spread a horrible disease to other Americans and their families any more than you are free to be drunk on our highways. Unfortunately, it has now also been reported that the rate of normally routine childhood vaccinations for polio, measles, whooping cough and tetanus is way behind schedule for the re-opening of schools and is now also a major concern. All the political rhetoric and misinformation on vaccines is having a terrible ripple effect.   

We can do this America. Do the math. How do you think polio, smallpox, malaria and childhood diseases like the measles were eliminated? By the scientific development and widespread use of vaccines. Why are these diseases making a comeback? The anti-vaccination movement.

I'll see you at the concert for COVID vaccinations. Can I get my booster shot there?

The digital disruption to the U.S. home insurance buying process has been on the horizon. However, the fallout from the pandemic has rapidly shifted the industry, as consumer expectations are evolving and carriers look for solutions to streamline customer interactions. Consumers continue to purchase more goods and services online and expect companies to provide them with seamless experiences. For home insurance carriers, that means digital engagement is no longer just a communication channel. It is now a way of doing business. Carriers using digital business models and leveraging the right data will be better-positioned to make informed decisions and deliver a superior customer experience. 

To better understand how home insurance carriers are transforming the customer experience and underwriting process to meet these expectations, LexisNexis Risk Solutions commissioned a third-party survey of the top 50 U.S. property insurance carriers in 2020. Findings from the study were compiled in the Innovations Transforming the Home Insurance Buying Process report and reveal how disruption, innovation and the pandemic are affecting the industry. To stay competitive, carriers may need to invest in automation to improve their buying processes. 

Results showed that carriers are prioritizing automation as the impact of COVID-19 continues on claims activities and other areas of the policy lifecycle. Carriers that have not invested in automation can act now to keep up with market leaders. Carriers have an opening to improve the customer experience at bind, renewal and claims by using the intelligence available at their fingertips to help reduce time and expenses, maximize efficiencies and better understand their customers’ risks and returns. 

Additionally, carriers see other challenges looming in the next three to five years. Survey respondents listed their major concerns as: losing customers with higher expectations; a growing use of comparative rates; targeting customers with competitive premiums; answering insurtech threats; and charging adequately for changing weather patterns. Carriers need to be ready to implement digital solutions and automation built on a wider dataset.

Enhancing the customer experience

To keep up with the increase in claims activity and consumer demand for a digital insurance experience, most U.S. home insurance carriers are relying more heavily on available data sources to reduce the questions asked during the policy purchasing process and decrease in-person inspections.

The study revealed 67% of carriers are in the process of making changes to their investments in the home insurance buying process, while 43% have already made significant adjustments within the past two years. Key goals of carriers’ home insurance investments include improving the customer experience (77%), improving profitability (60%) and reducing underwriting expenses (53%). 

All carriers surveyed placed the most importance on minimizing customer friction. Relying on consumers to supply information slows the process, increasing the opportunity for mistakes and customer frustration. For carriers, that means gaining access to other sources of data they can trust to be more accurate and up to date.

See also: How to Exceed Customer Expectations

Responding to digital and market disruptors

Digital technologies are having a large effect on the business. New disruptors to the home insurance industry include self-service apps for consumer-led inspections, third-party aerial imagery, digital-only carriers like insurtechs, Internet of Things (IoT) smart home appliances and the gig economy. 

Almost all (93%) carriers reported that self-service apps do not eliminate manual claims processes completely, but do help to reduce costs. The evolving gig economy also offers new opportunities, and many (75%) carriers have responded by offering specialized coverage products.

As the use of data prefill capabilities, advanced analytics and aerial imagery are increasing, carriers are mindful that these new market entrants are filling current gaps in the home insurance product set. As a result, 93% of carriers surveyed are investing in digital and mobile capabilities, product innovations that settle claims faster and ways to enhance the customer experience. 

Data is a key enabler for carriers wanting to remain competitive with changes throughout the customer lifecycle. It can assist agents to identify and recommend the best products and services to customers. This is an important path to improve the customer experience and potentially boost carrier profitability.

See also: Pressure to Innovate Shifts Priorities

Looking ahead for growth 

As home insurance automation continues to evolve, the carriers that use quality data to optimize their customer experience will likely be able to offer a more consultative and trusted customer experience, while positioning themselves for better segmentation and helping them make decisions faster. They will do this by both confirming data versus collecting it from the consumer, and by leveraging prior policy information to guide them to the right coverages for that consumer. 

Now more than ever, home insurance carriers need to evaluate their processes to see where enhancements are needed. Those that have a future-ready, digital business model will be in a better position to answer consumer needs and anticipate buying trends. Carriers having access to the right data at the right time will reduce customer friction throughout the policy lifecycle and address pain points, helping position them for rapid, competitive growth.

Wealth is the product—the work product—of work itself. Whether the product is a wealth of money, especially if wealth refers to a specific amount of money, or a wealth of deeds for which money advances good deeds, protecting wealth from excess taxation is essential. 

Private placement life insurance (PPLI) is the protection accredited investors with a minimum net worth of $1 million (excluding their primary residence), or income of at least $200,000 in each of the preceding two years, should have; that accredited investors, including married couples with income of $300,000 in each of the preceding two years, must have. 

Requirements differ among foreign-based PPLI carriers, while modified endowment contract (MEC) regulations ensure that policies have the same tax advantages as U.S.-based life insurance contracts.

Without the protection PPLI offers, and based on the Biden administration’s plan to raise the estate tax, the wealth of generations—born of one and borne by many over the course of decades or centuries—will go to the government. With the protection PPLI offers, an accredited investor can buy a variable universal life insurance policy to safeguard or increase his wealth. 

So long as the domestic investor can pay at least $1 million in annual premiums for four years, in addition to maintaining enough cash value to cover the cost of insurance, PPLI offers an investor a wealth of options, such as: tax-free death benefits to an heir(s), tax-deferred growth of cash value, and the possibility of tax-free growth of dividends. 

Also, the insured often has the ability to remove funds, tax-free, through policy loans and withdrawals.

Because the insured assigns the ownership to another individual or to an individual life insurance trust (ILIT), the policy is not part of the taxable estate."

Provided the cash value is not zero, thus causing the policy to lapse, PPLI is a convenient and customizable source of protection for an accredited investor.

These advantages more than offset any administrative costs, because the insured can create a diversified portfolio of insurance dedicated funds (IDFs) charged with managing the assets of the policy. 

For example, the cash value in a contract may be invested in an IDF that only manages money for life insurance policy cash accounts; while other IDFs offer private equity funds, commodity funds, funds of hedge funds, real estate investment trusts (REITs), and venture capital investments. The PPLI must, however, meet IRS rules pertaining to investor control, insurance, and diversification.

Working with an insurance adviser, the insured can have select money managers oversee individual investments within a portfolio. Choosing multiple managers can mitigate risk, just as having a diversified portfolio can reduce volatility.

See also: Innovation in Fraud-Detection Systems

Choice is the foundation of PPLI investing, because accredited investors want to maintain their financial freedom: giving them the means to perpetuate a legacy, promote a cause or preserve a lifetime of service; to do as they please, in accord with their ideals, on behalf of a universal ideal—that freedom is true and righteous altogether.

Protecting wealth protects the freedom of one to help many. 

Protecting the few who are wealthy increases opportunities for the many to build wealth.

Protecting what wealth makes possible protects what the wealthy can make probable: charity for those who need it, education for those who crave it, culture for those who cherish it.

PPLI is the protection the wealthy deserve, so they can strengthen what they can give.

When notorious criminal John Dillinger was asked during the Depression why he robbed banks, he famously replied: "Because that's where the money is." That simple observation may offer an answer to the surge of ransomware.

Even as companies struggle to strengthen their protections against hackers, we can target ransomware payments in some quite straightforward ways -- and, if the criminals can't get their money, what's the point in hacking?

As this essay in the New York Times argues, "The United States does not have a ransomware problem so much as it has an anonymous ransom problem. If we can change the payment system to make the kidnapping [of businesses] less profitable, we will go a long way toward a solution."

The author, Paul Rosenzweig, a former senior official in the Department of Homeland Security, says 95% to 98% of criminals involved in kidnaping people for ransom are caught and convicted, partly because they can be identified when the transfer of money occurs. By contrast, hackers demand ransomware in cryptocurrency, which, as of now, is extremely hard to trace.

Rosenzweig argues that the U.S. government could simply "adopt and enforce regulations for the cryptocurrency industry that are equivalent to those that govern the traditional banking industry. Cryptocurrency exchanges, 'kiosks' and trading 'desks' are not complying with laws that target money laundering, financing of terrorism and suspicious-activity reporting....

"For example, some cryptocurrency services offer a 'tumbler' feature. Tumblers take cryptocurrencies from many sources, mix them up and then redistribute them, making financial transactions harder to trace. This practice looks like money laundering and would be illegal in the nonvirtual world."

Even though countries like Russia will probably continue to offer safe havens for ransomware thieves, the U.S. can take unilateral action and "refuse access to [the U.S. banking system] by cryptocurrency exchanges unless they demonstrate that they are equipped and prepared to prevent ransomware payoffs.... To be fully valuable, digital currency must also be convertible to cash, so the exchanges would have a strong incentive to comply."

The U.S. could also require foreign banks to "impose stricter regulations on cryptocurrency. Because access to the American financial market is vitally important to foreign banks, they, too, would have a strong incentive to comply."

There has been at least a bit of precedent for tracking and recovering the cryptocurrency used to pay corporate ransoms -- after hackers shut down Colonial Pipeline in early May and were paid a ransom in Bitcoin that was valued at $4.4 million at the time, authorities recovered 85% of the Bitcoins.

There is also precedent for blocking illegal activities by cutting off access to the banking system. I saw an instance up close and personal in the mid-2000s when I was working on a book project with one of the world's top poker players. He was involved in one of a series of high-profile efforts to take the popularity of poker on cable-TV and leverage it to build a massive online gambling site. While online gambling was illegal in the U.S., plenty of jurisdictions in the Caribbean were willing to host the site. Then the U.S. enacted a law that imposed major penalties on any U.S. bank that handled transactions for online gambling sites. And that was that. All the attempts at building national online poker sites shriveled up and died.

I suspect that companies and their insurers will still bear the brunt of ransomware for some time to come. Companies will need to shore up their defenses, with advice that insurers have developed by working with many clients across multiple industries and with technology companies that are working to stay one step ahead of the hackers. But aggressive action by the federal government could reduce ransomware significantly by going after the flows of money.

I look forward to the day when someone writes an article declaring the end of this scourge. I even have a headline in mind:

"Ransomware: Where the Money Isn't."

Cheers,

Paul

Traditionally, success in the middle-market and large commercial segments relied on deep expertise regarding customer risks and deep relationships with a network of distributors with access to those markets. Those capabilities are still fundamental to success, but lately the carriers’ digital capabilities have become increasingly essential in these markets.

Distribution partners – whether retail agencies, brokers, wholesalers or MGAs – want to do business with carriers that reduce the friction, shorten the quote-to-bind time and provide a good appetite match for the business they want to submit. Naturally, distributors are also interested in product fit and commission structure, but business tends to gravitate to carriers that feature ease of doing business. And all of these things are taken into account as carriers’ channel strategies evolve in the mid/large commercial segment.

See also: Tomorrow’s Insurance Is Connected

A recent SMA Research report, “Channel Strategies and Plans for P&C Commercial Lines: A View of Small and Mid/Large Commercial Segments,” highlights the aggressive stance that many carriers are taking in expanding their distribution networks over the next few years. To gain a deeper understanding of the digital technology capabilities that will support the existing and expanding channel strategies, SMA recently surveyed carriers focused on the mid/large commercial market. The research assessed the current state of digital capabilities offered to distribution partners, barriers to implementation and adoption and plans for enhancing or delivering new digital capabilities in the future.

SMA’s research tracked 14 digital sales-oriented capabilities and 17 servicing capabilities, starting with a carrier’s satisfaction with the state of their tech offerings to their distribution partners. In terms of digital sales capabilities, the overarching theme is that anything that improves the ease of doing business and provides more self-service capabilities is a focus. On the servicing side, both agent and policyholder self-service portals top the list of digital projects. New or enhanced capabilities related to policy, billing and claims are also in the mix.

It is important to note that there are both business and technology roadblocks to success with distribution technology. For example, few will be surprised to learn that limited IT resources are the #1 barrier on the technology side. However, from a business viewpoint, understanding customer needs and creating the right value propositions can prove to be a challenge.

All the new channel strategies and digital project activities reinforce the notion that there is a real revolution going on in the distribution space. For most insurers, standing still will not be an option. Winning strategies will include strengthening capabilities and relationships with current partners and extending distribution networks into new spaces.

For more information on commercial lines distribution expansion strategies, see our recent research report, “Distribution Technologies for Mid/Large Commercial: Carrier Progress and Plans.” SMA is also introducing a new research series with perspectives from the distributor’s point of view. A regular series of research reports will be published based on surveys and interviews withs agencies, brokers, MGAs and others in the distribution channel, including insights from ReSource Pro’s large footprint of distribution clients.