With more business being conducted online than ever, carriers, brokers and agents are discovering new strategies and tactics to better reach their customers. Traditional distribution methods are becoming less viable as insurance buyers have greater visibility into alternatives, expect personalized digital experiences, and can compare policies online with a few clicks. 

It’s an opportunity for insurers to connect with their audiences and produce positive digital experiences in uncertain times. 

Segment Audiences with Big Data

It is estimated that people worldwide generate 1.7 MB of data every second. This provides near-infinite ways for sales and marketing teams to segment audiences based on online behavior, demographic traits, shared interests, and purchasing habits. 

Companies often struggle with interpreting this data. One survey shows 95% of organizations say managing unstructured data is a problem for their business. Our brains were never meant to process this amount of detail! Fortunately, there are online tools that can support you:

• APIs and web services: Big data is useless if it can’t be leveraged across systems, fully synchronized. When your sales and marketing systems fail to talk to each other, the results can appear cumbersome, or downright embarrassing. If your CRM has a contact listed as a client but your email system thinks they’re new business, their experience will be anything but personalized. Look for solutions that offer a robust API with a strong library of native integrations.
• Artificial intelligence: When segmenting audiences and personalizing messaging at scale, there is a level of granularity that can only be reached via artificial intelligence. Many solutions providers are launching AI layers to their tech stacks to enhance personalization for email outreach, email list segmentation, personalized digital advertising, and more. 
• Your CRM: A flexible customer relationship management tool with configurable fields is essential to your segmentation strategy. Automate as much as possible, pulling all key information from your marketing stack into a single source of truth--your CRM--via APIs. One word of caution: over-engineering your CRM with custom fields can produce confusion and a poor user experience for your insurance sales team, leading to misuse and neglect. Keep it as simple as possible and make sure every member of your team understands what they are responsible for. Once established, APIs can be configured to push customer data into your quoting engine, eliminating redundant data entry and reducing quote turnaround time. 

Personalization can pay off big: according to Netflix, 75% of their users’ viewing activity comes from recommended content. Insurance providers should take inspiration.

See also: Designing a Digital Insurance Ecosystem

Deploy Chatbots and Conversational AI

With customer-experience-focused insurtechs gaining market share, insureds now demand friendlier, more personalized, and simplified digital experiences.

The traditional role of a broker or an adviser is to educate clients and prospects on their coverage options. However, accomplishing this at scale while delivering an excellent customer experience in a digital-first landscape is a challenge. Moreover, insurance is already tough to grasp for insureds who don’t live in our world. A recent survey revealed that more than half of Americans are confused by their health insurance coverage. This is a serious problem.

Chatbots provide an opportunity for brokers and carriers to transform the digital insurance experience.  Savvy insurers can use chatbots to save brokers an enormous amount of routine work.   Chatbots can

• Provide quick answers to common questions, such as “What’s the difference between an HSA and an FSA?”
• Provide “how-to” advice:  “How do I submit a claim online?”
• Outline coverage options and provide quick quotes 

Chatbot scripts can be designed based on most-visited web pages, common search engine queries (Google Search Console can be helpful here), or notes from real-life conversations your salespeople are already having with customers. 

You can even layer artificial intelligence on chatbots, which uses natural language processing to better guess what a user is requesting and automatically return the most useful information. 

Deploy Predictive Analytics in Quoting

Customers expect to buy insurance to be fast. To remain competitive, brokers and agents must be able to rapidly generate quotes, amendments and renewals that continuously meet a prospect’s needs. Seamless integrations with various data sources are essential for feeding up-to-date claims experience, demographic information, and wearables/telematics data into a powerful quoting and rating engine.

Predictive analytics can take quoting and rating capabilities even further by identifying the most successful plan designs for a customer based on historical success data for a particular carrier. Furthermore, predictive analytics can be deployed to help brokers and carriers upsell and cross-sell additional coverage based on the data collected during initial quoting. Artificial intelligence is crucial here because it can calculate these recommendations based on disparate connections that would be impossible for our brains to process.

Don’t miss opportunities to maximize profitability during quoting with AI! 

Get Social

One approach that is differentiating emerging insurtechs from large incumbents is a modern, friendly, and sometimes humorous presence on social media. These new entrants are answering one of the world’s most difficult questions: How can we get people excited about buying insurance?

While it can be fun and set your brand apart, it isn’t necessary to produce viral, humorous content to be successful on social media. Smaller brokerages and insurance companies targeted to younger generations may want to experiment with humor or even memes, while larger, more established brokerages might want to consider the kind of thought leadership their audience will find authoritative and engaging.

Whatever brand direction you choose, your sales team must be completely aligned on the brand “voice” and visual identity to ensure consistency across channels and online interactions. Social selling is about engagement.

See also: Benefits of Deploying a Hybrid Cloud

Let’s Get Personal

Customers today expect providers to reach them at the right time, on the right device, with the right solution. While it is important to remain cautious of over-personalization and perceived creepiness (or regulatory trouble, if you’re using data improperly), under-personalization is vastly more common. 

Insurance customers who are shopping online to purchase coverage just want to get it over with. As great as a cordial onsite visit from an agent or broker is, the model is not quick, nor is it scalable. In a world where customers are shopping around for options and prices all the time, retention itself becomes a valuable commodity. To differentiate themselves, brokers, agents, and carrier sales teams must be willing to adapt their tech stack to offer digital experiences focused on the individual - not just the price tag.

Big data, AI, CRM, chatbots, predictive analytics, social-media messaging, and personalization can combine to produce the customized experience today’s insurance customers expect.

In the popular Terminator movies, a relentless super-robot played by Arnold Schwarzenegger tracks and attempts to kill human targets. It was pure science fiction in the 1980s. Today, killer robots hunting down targets have not only become reality, but are sold and deployed on the field of battle. These robots aren’t cyborgs, like in the movies, but autonomously operating killer drones. The new Turkish-made Kargu-2 quadcopter drone can allegedly autonomously track and kill human targets on the basis of facial recognition and artificial intelligence—a big technological leap from the drone fleets requiring remote control by human operators. A United Nations Security Council report claims the Kargu-2 was used in Libya to mount autonomous attacks on human targets. According to the report, the Kargu-2 hunted down retreating logistics and military convoys, “attack[ing] targets without requiring data connectivity between the operator and the munition.”

The burgeoning availability and rapidly expanding capabilities of drones pose urgent challenges to all of humanity. First, unless we agree to halt their development and distribution, autonomous killer drones like the Kargu-2 will soon be affordable and operable by anyone—from rogue states all the way down to minor criminal gangs and individual psychopaths. Second, swarms of killer drones may, through sheer numbers, render irrelevant the defenses against terrorist threats deployed by technologically advanced nations. Third, in creating a challenging new asymmetry in warfare, autonomous killer drones threaten to upset the balance of power that otherwise keeps the peace in various regions. The increasing ubiquity of affordable drones is an open invitation to one power and another to turn stable regions into battle zones.

The arrival and rapid proliferation of robot-like killer drones comes as no surprise. For decades, consumer technology has been outpacing military adoption of advanced technologies. Because a drone is essentially a smartphone with rotors, today’s affordable consumer drones are largely a byproduct of the rapid development of smartphone technology. They are making access to the third dimension essentially free and creating new commercial opportunities: Drones can already deliver groceries and medical supplies directly to your doorstep. But in endowing drones with human-like cognitive abilities—for instance, by combining rapidly improving facial recognition with artificial intelligence—will make powerful targeted weapons available to tin-pot despots, terrorists, and rampaging teenagers at a fraction of the cost of the fancy drones flown by the U.S. military. And unless we take concrete steps now to oppose such developments, instructions to turn cheap off-the-shelf drones into automated killers will be posted on the Internet in the very near future.

To date, artificial intelligence has struggled to provide accurate identification of objects and faces in the field. Its algorithms are easily confused when an image is slightly modified by adding text. An image-recognition system trained to identify an apple as a fruit was tricked into identifying an apple as an iPod, simply by taping to the apple a little strip of paper with the word “iPod” printed on it. Protesters in Hong Kong have used sparkly paint on their faces to confound government facial-recognition efforts.

See also: Wake-Up Call on Ransomware

Environmental factors, such as fog, rain, snow, and bright light, can dramatically reduce the accuracy of recognition systems employing artificial intelligence. This may allow a defense against drones using relatively simple countermeasures to confound recognition systems at their present level of development. But to actors who already place a low value on collateral damage and innocent victims, accuracy is not much of a concern. Their drones might be programmed to kill anyway.

What’s more, any defense against the drones zeroing in on individual targets does not prevent their deployment as new weapons of mass destruction. A swarm of drones bearing explosives and dive-bombing a sports event or populated urban area could kill numerous people and would be hard to stop. Various companies are now selling drone countermeasure systems with different strategies to stop rogue flying objects, and advanced militaries have already deployed electronic countermeasures to interrupt the drones’ control systems. But so far, shooting down even one drone remains a challenge. Although Israel recently demonstrated an impressive flying laser that can vaporize drones, shooting down an entire swarm of them is still well beyond our capabilities. And with the new generation of autonomous drones, simply blocking communication to the drones is not enough. It may be critical to develop ways to safely bring them back to Earth in order to avert random chaos and harm.

To a group intent on causing significant damage, autonomous drones open an entire new field of possibilities. Imagine attacks on 100 different locations in a single day—the effects of the 9-11 terrorist attacks on the United States could pale in comparison.

Though all countries are at risk of killer-drone attacks, the most likely victims of the first wave of these weapons are poorer countries with porous borders and weak law enforcement. The same gap between rich and poor states in the effects of COVID-19 is likely apply to the vulnerability to autonomous drones. The first such battles are more likely to play out in Africa rather than America—and with heavier tolls.

The companies producing the new wave of autonomous flying weapons are heavily marketing their wares. Meanwhile, the United States and China have thus far refused to back calls for a ban on the development and production of fully autonomous weapons. Washington and Beijing are thereby providing a cover of tacit legitimacy for weapons makers and governments deploying the new killer drones in the field.

Admittedly, the drone threat cuts both ways. Autonomous or semi-autonomous drones have been used to tip the battlefield balance against rogue states; in Syria, rebel groups have used drones as an asymmetrical weapon against Russian-made armor, destroying multimillion-dollar tanks with cheap drones.

But the risk of drones ending up in the hands of malevolent actors and being deployed as weapons of highly inaccurate mass destruction far outweighs their possible military benefits in guerilla warfare. Asymmetrical warfare disproportionately benefits forces of chaos rather than forces of liberty. It is not too late to place a global moratorium on killer robots of all kinds, including unmanned aerial vehicles. This would require a change of strategy on the part of the great powers. But any such moratorium should confine itself to offensive systems only, while all manner of anti-drone defense should be allowed. As part of a ban, the wealthy governments should consider subsidizing the purchase of drone-defense systems by poorer countries and teaching them how to defeat drone swarms. Drone technology is a global problem that humanity should address together.

See also: 6 Cybersecurity Threats for Insurers

In the Terminator series, the killer robot is eventually destroyed. In reality, the battle to confine artificial intelligence to constructive uses will be constant and never-ending. Its application to killer drones is merely the first, short chapter in a long book of artificial intelligence as an agent of chaos. Whether we choose to act to close that book will determine the type of future we want to hand to our children. It will be either a world of Terminator chaos with the specter of death in every corner—or a world like Star Trek, where humanity’s cohesive efforts channel technology to prioritize social good and prosperity over conflict and violence.

The 7 New Business Models Paul Carroll, Editor-in-Chief of ITL While those pressing for innovation often focus on the unbelievable speed of technology change, perhaps the more important issue is the pace at which business models can change. After all, increases in computing power have been running at the rate of Moore’s law since Intel co-founder Gordon Moore formulated it in the 1960s — processors have roughly doubled in power every 18 months at no increase in cost. But the pivotal moments came when that exponential improvement allowed for a new type of business model: e-commerce in the late 1990s; internet search and social media in the 2000s; data-heavy, asset-light platforms like Uber and Airbnb in the 2010s. Last week, futurist Peter Diamandis shared his list of the seven business models he believes will dominate the next decade, and they sound roughly right to me, so I’m passing his writeup on to you. continue reading > CAPGEMINI AND MAJESCO BLOG Inventive Insurers focus from the outside in on the customer - their needs, expectations, and experience. Read the latest blog to find out what is needed to be a truly customer-centric organization.  Read Now SIX THINGS Why Weak Signals of Disruption Are Key by Amy Radin You must commit to a process that more closely resembles an anthropological journey than a traditional strategic analysis. Here are four steps. Read More How Life Insurers Can Reach Millennials by Samantha Chow Millennials already understand the need for car and home insurance. The pandemic has given life insurers an opportunity. Read More Benefits of Deploying a Hybrid Cloud by Gary Kay Hybrid cloud models smooth digital transitions because they can easily operate their existing on-premise infrastructure during the shift. Read More How Digital Health, Insurtech Are Adapting by Alexander Kulitski Due to the spread of the COVID-19 pandemic, the digital health and insurtech sectors have developed rapidly in multiple directions. Read More The Importance of Captive Insurance by Jason Mandel Policies that insure a person in spite of the absence of bodily harm, that exist because of the threat of reputational harm—these policies are hard to find. Read More 2-Speed Strategy: Optimize and Innovate by Denise Garth Success in moving from the past to the future of insurance requires a two-speed strategy: Speed of Operations and Speed of Innovation. Read More How to Increase Profits With Connected CX sponsored by Statflo Fostering connected experiences is vital to meeting customer expectations and succeeding in a technology-centric world. Read More MORE FROM ITL JULY FOCUS: Customer Experience This month sponsored by Statflo Insurance companies are finding that they have to reinvent chunks of their businesses to really get the customer experience right. Yes, they have to focus on the ways that they touch customers, through agents and brokers, through call centers, through adjusters and through an increasingly broad array of electronic means. But a customer doesn’t just experience a company through a direct communication. Customers also experience, for instance, how long and painful an underwriting process or a claim is. And here’s the thing: This emphasis on customer experience requires a revolution for companies. Keep Reading A Conversation on Workers' Compensation, with Kimberly George and Mark Walls As the world starts to emerge from the pandemic, ITL Editor-in-Chief Paul Carroll sat down to discuss the new normal for workers’ comp with two of ITL’s most widely read contributors: Mark Walls, VP of communications and strategic analysis at Safety National, and Kimberly George, global head of innovation and product development at Sedgwick. Watch Now Partner with ITL to create expert thought leadership content. Custom Content Promoted Content Display Advertising Custom Webinars Monthly Topic Sponsorships ITL Partner Packages and more Learn more and get the 2021 Media Kit GET INVOLVED Write for Us Our authors are what set Insurance Thought Leadership apart. Get Started SPREAD THE WORD Share Share Tweet Forward SUBSCRIBE TO SIX THINGS

Ransomware is on the rise and posing significant challenges for the insurance industry. Ransomware attacks soared by 485% last year compared with 2019, according to Bitdefender. Cybercriminals and state-sponsored hackers alike are employing ransomware to line their pockets and cause mayhem. The Colonial Pipeline, the Harris Federation, CNA Financial and Acer are just a few of the high-profile victims so far this year. 

Without proper planning and protection, a ransomware attack can sink a company. The average ransom cost is now $154,108, according to Coveware, and the average downtime caused is 21 days. 

As more and more victims pay up, cybersecurity insurance carriers are changing their products, increasing premiums, and limiting coverage. 

Attackers Targeting Insurance Providers

While cybersecurity policies covering ransomware used to be relatively easy to find and offer generous potential payouts, that’s no longer the case. Ransomware gangs have been doing their homework. They gain access to insurance company client lists and hack into networks to study individual policies for the purpose of uncovering maximum policy limits of targeted companies.

An anonymous spokesperson for the REvil ransomware gang was recently asked about targeting insurers in an interview for The Record, and said, “Yes, this is one of the tastiest morsels. Especially to hack the insurers first—to get their customer base and work in a targeted way from there. And after you go through the list, then hit the insurer themselves.”

Any insurer that responds to this onslaught with a blanket policy of not paying ransoms is soon under siege. Cybercriminals unleash coordinated attacks designed to make examples of these carriers and warn off other insurers that may be considering a similar no-pay policy. Inevitably this has impacted the coverage carriers offer. 

Insurers Building Experience

The silver lining here is that the cyber insurance industry has a vested interest in keeping costs, risk and recovery time down. To that end, insurers engage the very best incident responders with a proven track record. For a victim seeking a ransomware recovery specialist, a cybersecurity carrier might be the fastest and easiest route to the top talent. 

As insurers build a knowledge base and deal with the aftermath of more and more ransomware incidents, they are also gaining a deeper understanding of how to guard against such attacks. 

Organizations seeking consultation on what they might do to prevent ransomware infiltrating their networks, how to cope during an attack, and the fastest path to recovery can get solid advice from carriers. But all this experience comes at a price.

See also: 6 Cybersecurity Threats for Insurers

More Stringent Requirements and Fewer Options 

Any organization shopping for cyber insurance will find the market very different than it was just a few years ago. Many carriers are now refusing to insure for ransomware and those that do require solid proof that strong security controls are in place before they will issue any policy. Coverage scope and optional add-ons have been drastically reduced across the board, but particularly in industries with high exposure and susceptibility.

Even with every box ticked, the amounts that insurers are offering now are relatively limited. Premiums in general are higher, but for organizations considered to be high-risk with large limit requirements, policies may be prohibitively expensive. It’s important to remember that even with the climbing costs, cybersecurity insurance will still be cheaper than a breach for most organizations. A third-party assessment and strict requirement for strong controls can also prove invaluable in strengthening your security posture.

No Substitute for Proper Cybersecurity Planning

Ultimately, cybersecurity insurance is a complementary product that can help reduce business risk. It’s crucial to take appropriate steps to guard against ransomware and to fully plan and practice how to deal with an incident. Consider that the most likely way for ransomware to break in is through social engineering. Train your staff to spot phishing attacks and build response plans to investigate and deal with them.

Other smart protective actions include a regular patching procedure to ensure software is kept up to date, a comprehensive asset list that gives you a complete picture of company hardware, and properly protected off-site backups from a variety of points in time. Craft incident response and recovery plans to clearly delineate correct procedures and responsibilities and then test them in a mock attack to ensure you’re ready for the real thing.

If you are operating without coverage or your policy is coming up for renewal soon, make sure you dig into the details and fully assess your options. You may find that the budget you have allocated based on previous policies is no longer suitable. Just remember, the stronger your defenses are, the easier and cheaper it will be to secure a cybersecurity insurance policy that gives you the cover you need.

The COVID-19 pandemic had a devastating impact on businesses and workers worldwide. Companies had to adopt online business models to survive, which forced an unprecedented workforce migration as employees left their offices to work from their homes.  As the world starts to emerge from the pandemic, we’re beginning to understand the many effects of this economic and social upheaval on workers. New research shows that gender inequality, long a problem in the American workplace, worsened during COVID-19, and the insurance industry is no exception.

In March, Accenture surveyed 176 U.S. women in insurance to understand how the pandemic and the sudden shift to remote work affected them. We looked at the professional and personal effects this had on work-life balance and caregiving roles. At the same time, we surveyed 134 C-level insurance executives in North America to discover what the future of work looks like for their organizations. The results were both surprising and concerning and confirmed that the pandemic has had a significant impact on the well-being and productivity of women.

Key observations

The survey reiterated the long-standing conflict between women as workers and women as caregivers, but the numbers were still striking. Most of our respondents are working mothers, with six in ten (59%) having school-aged children at home, and 68% saying they are the main caregiver for children or elders in their households. More than half (56%) say they face increased pressure as the primary caregiver as they juggle childcare responsibilities due to school closures, while working longer hours because of record business activities.

Our results revealed that almost one in three (32%) women working in insurance left their jobs temporarily or permanently during the pandemic – a sobering statistic. When asked why they left, 21% said childcare/eldercare priorities were the main reason. Meanwhile, 30% of women who remained at their jobs during the pandemic are considering leaving.

Additionally, 45% of women in insurance feel they have lost opportunities to grow their careers during the pandemic. Similarly, 44% say the pandemic has adversely affected their career progression while 39% feel disconnected from or forgotten by their companies.

Employees vs employers

We uncovered a stark disconnect between employer and employee attitudes on a number of issues. This includes the level of support women receive from their companies, the expectations for their return to the office, and the post-COVID changes they expect before returning to work. These disconnects must be addressed, because COVID added even more caretaking responsibilities to women, and they are not going away.

See also: State of Diversity, Inclusion in Insurance

Consider the disconnect between corporate leadership and female employees in the number of days they are expected to work from the office. Nearly half (47%) of women surveyed believe they would lose advancement opportunities if not present in the office five days a week post-COVID, but only a quarter (26%) want to work in the office that much. More than a third (34%) want to work remotely full time, with the rest preferring a hybrid approach. By contrast, almost all (91%) executives would prefer employees to spend four to five days in the office post-COVID, and more than half (54%) believe their employees share that desire.

When women were asked how their employers can help, more than a third (39%) cited flexible scheduling, followed by increased paid leave (24%). This appears to be an area of progress for insurance firms, with 43% of women surveyed saying their employer is trying to offer more flexible scheduling. 

A permanent culture shift

So, what does this information tell us, and what should insurers take note of, as many look to return their workforces to offices in the coming months?

First, remote working is here to stay, so companies must embrace this new model to support women and their needs, or risk losing them along with their years of experience, institutional knowledge, and dedication.

Next, in order to accommodate the remote or hybrid workforce of the future, companies will need to engage in a deliberate cultural change, one that ensures “remote” does not mean “less effective,” and that remote workers are not penalized for missing out on traditional in-person interactions, like the conversation over a cup of coffee or the face-to-face mentoring session. They will need to create return-to-office strategies that promote flexibility for women who need to juggle additional responsibilities outside of the workplace.

Finally, if firms incorporate flexibility in their return-to-office strategies, it may help prevent women from leaving the workforce in the future and persuade women who did leave to return.

What insurers and other financial institutions do next will have a major impact on the future of women in insurance, from entry-level workers all the way to the C-suite.

The FDA approved the first new drug to treat Alzheimer’s in nearly 20 years in recent weeks, and it is a prime example of why our spending on healthcare is so unnecessarily high and not slowing down anytime soon. The new drug is Aduhelm, an infusion therapy developed by Biogen.

A panel of 11 scientists reviewed the research and science for the FDA, and 10 voted against approval of the new treatment, while one was undecided. In fact, three of the scientists have resigned over the approval. The FDA moved to approve Aduhelm despite the lack of evidence that it either cures or slows the progression of the Alzheimer’s and has given the company nine years to conduct a confirmatory trial.

What is the actual cost of this treatment? The drug price is set at a whopping $56,000/year, and the overall costs will be much higher. According to the Kaiser Family Foundation, when related costs are included (the testing to monitor for brain bleeds and other possible side effects, outpatient facilities and staff, etc.) the real price tag will be more like $100,000/year. 

What is the cost to the individual? Copays will be as much as $11,500 – nearly 40% of the average income for a Medicare, enrollee according to the Kaiser Family Foundation.

How will this affect Medicare Part B premiums? As an infusion given in a provider’s office, administering Aduhelm will be covered by Medicare Part B. The current average premium for this coverage is just under $150/month. This will almost certainly have to be increased, so the impact will be widespread across Medicare enrollees.

See also: Are Your Healthcare Vendor’s Claims Valid?

What are the potential impacts to our overall healthcare spending? Biogen estimates that 1 million to 2 million Alzheimer’s patients match the patients studied in the clinical trials. Overall, we have approximately 6 million people who have Alzheimer’s in the U.S., and most are enrolled in Medicare. Interestingly, the FDA has approved the medication widely not just for those who are in the early stages of the disease with mild symptoms like those in the trial. If 1 million people are given this treatment, it could cost Medicare $56 billion annually. Medicare Part B spent $37 billion in total on drugs in 2019. Total outpatient Medicare drug spending with pharmacy prescriptions was $136 billion for 2019.

Biogen’s estimates of future sales are seemingly conservative. The company and other analysts are expecting $103 million in sales this year, about $1 billion in 2022 and $5 billion-plus in 2023. 

When you factor in the incentives paid to prescribing physicians by Medicare ($3,360 for each prescription in this case), it seems we have a real problem on our hands.  

The Centers for Medicare and Medicaid Services could decide not to cover Aduhelm, but if the past is any indicator this is not likely. Private insurers that provide Part B benefits could also place some limitations on the drug’s use. But, all things considered, It is clearly time for us to take a serious look at how we have allowed a fifth of our economy to get to this point.

While those pressing for innovation often focus on the unbelievable speed of technology change, perhaps the more important issue is the pace at which business models can change.

After all, increases in computing power have been running at the rate of Moore's law since Intel co-founder Gordon Moore formulated it in the 1960s -- processors have roughly doubled in power every 18 months at no increase in cost. But the pivotal moments came when that exponential improvement allowed for a new type of business model: e-commerce in the late 1990s; internet search and social media in the 2000s; data-heavy, asset-light platforms like Uber and Airbnb in the 2010s.

Last week, futurist Peter Diamandis shared his list of the seven business models he believes will dominate the next decade, and they sound roughly right to me, so I'm passing his writeup on to you.

His post lists the seven as:

--The Crowd Economy, which he describes as "crowdsourcing, crowdfunding, leveraged assets and staff-on-demand," a la Uber and Airbnb or Amazon's Mechanical Turk.

--The Free/Data Economy, which he describes as "essentially baiting the customer with free access to a cool service and then making money off the data gathered about that customer," a la Facebook, Google and Twitter.

--The Smartness Economy, which he describes based on an analogy to the late 1800s. At that point, businesses could just "take an existing tool, say a drill or a washboard, and add electricity to it—thus creating a power drill or a washing machine. In the 2020s, AI will be the electricity." Basically, add artificial intelligence to anything, and you could have a new, smarter, more efficient way model for doing business.

--Closed-Loop Economies, which take an environmentally conscious approach to products, for instance allowing people to pick up waste plastic, turn it in and be paid.

--Decentralized Autonomous Organizations (DAOs), such as a fleet of autonomous taxis, "with no employees, no bosses and nonstop production," built on top of blockchain.

--Multiple World Models, businesses that reach beyond our real-world personae to online personae. Diamandis notes that people pay to design digital clothes and houses in Second Life and other virtual worlds. (I thought it was clever that the Biden campaign put up campaign signs in Animal Crossing and gave supporters QR codes that would let them put up signs on their Nintendo Switch.) Diamandis adds: "Every time we add a new layer to the digital strata, we’re also adding an entire economy built upon that layer."

--Transformation Economy, which go beyond what's known as the Experience Economy -- such as Starbucks' creation of a "third place" that was neither home nor work -- and involve paying for a something that transforms your life.

I'd encourage you to read the whole post and dig more deeply into the models, then perhaps sign up for his newsletter, which can sometimes be over-the-top but which is routinely intriguing and informative.

From my standpoint, the most intriguing models for insurers are the Smartness Economy and the Transformation Economy. AI can be added to just about any part of the insurance process and conceivably even allow for new business models -- for instance, embedding insurance offers into the process of selling cars, shipping grain in developing countries, etc., without the need for human involvement. And insurance can transform even more lives than it does now, if it shifts its emphasis toward preventing losses and goes beyond the already crucial work of providing peace of mind and making people whole following losses.

But I think it's worth taking a look at all the potential business models, because business only happens if it can be insured, and new types of business create opportunities for new types of insurance. Just think how interesting it will be to price the risk on a digital house in a virtual world.

Cheers,

Paul

P.S. Here are the six articles I'd like to highlight from the past week:

Why Weak Signals of Disruption Are Key

You must commit to a process that more closely resembles an anthropological journey than a traditional strategic analysis. Here are four steps.

How Life Insurers Can Reach Millennials

Millennials already understand the need for car and home insurance. The pandemic has given life insurers an opportunity.

Benefits of Deploying a Hybrid Cloud

Hybrid cloud models smooth digital transitions because they can easily operate their existing on-premise infrastructure during the shift.

How Digital Health, Insurtech Are Adapting

Due to the spread of the COVID-19 pandemic, the digital health and insurtech sectors have developed rapidly in multiple directions.

The Importance of Captive Insurance

Policies that insure a person in spite of the absence of bodily harm, that exist because of the threat of reputational harm—these policies are hard to find.

2-Speed Strategy: Optimize and Innovate

Success in moving from the past to the future of insurance requires a two-speed strategy: Speed of Operations and Speed of Innovation.

Life insurance policies abound, but policies that insure a person in spite of the absence of bodily harm, that exist because of the threat of reputational harm, that ease the degree of harm—these policies are hard to find. These policies are also expensive, regardless of whether a person is rich and famous, or more famous than rich, or famous but not rich. These policies are a necessity for people at the commanding heights of society, because no one has total command of what anyone can do to a person’s reputation. Captives of chance, we have the chance to benefit from captive insurance; we have recourse from the infliction of harm.

As an alternative to traditional commercial insurance, captives participate in the alternative risk transfer (ART) market. Because of this alternative, captives risk their own capital; they accept the risks of forming their own insurance companies, of having parent groups create these companies for them, so they may avoid volatile pricing and difficulties in purchasing the policies they want.

By developing bespoke policies, captives can reduce costs, increase cash flow, write policies, set premiums and return or reinvest unused funds. As a specific type of insurance, representing the thoughts of people in positions of leadership, as an example of insurance thought leadership, captive insurance makes sense. (Please note: These policies are rare, which is not to say these policies do not exist. Insofar as these policies are available, they tend to originate from offshore insurers. More common are deductible reimbursement policies, where companies increase deductibles with their respective carriers. Captives assume the risk of paying deductibles when they file a claim with traditional carriers.)

As history proves and as a footnote to history confirms, vandals would replace a life of service with headlines from a person’s time as a public servant. The death of Raymond J. Donovan, labor secretary in the Reagan administration, underscores this point: that vindication in a court of law is no shield from vilification via the court of public opinion, that an acquittal is no guarantee of absolution from the influencers of public opinion, that these facts beg the question; that Donovan asked the question himself, “Which office do I go to to get my reputation back?”

Donovan’s question was rhetorical then, but it need not be—it should not be—now. Not when anonymous forces can harm a person’s reputation in seconds. Not when the slings and arrows of outrageous lies can exhaust a person’s fortune. Not when it can be a person’s misfortune to see his life’s work collapse in real time.

See also: How Life Insurers Can Reach Millennials

Insurance from reputational harm may be the only way to ensure loss of livelihood does not lead to loss of life, that character assassination does not lead to self-harm, that a leader does not commit suicide. Unless a public figure has this insurance, or knows that captive insurance is a means of buying this insurance, reputational harm can be hurtful indeed; so hurtful as to be harmful to the survival of the body politic and the success of the nation.

If first-rate leaders choose not to put their country first, if the choice is not theirs to make in the first place, if they are not free to choose because of what they may lose, because of what the enemies of freedom want them to lose, their sacred honor, then America loses.

We must not lose.

Do you have time to observe and process what's happening beyond your "must do" list? How often do you stop to look twice at details that just don't seem "normal" -- that may even seem outlandish or inappropriate? Do you dismiss these as trivial, or as mistakes, or do you ever consider whether they foreshadow something bigger?

Of the many truths reinforced by events of the past 18 months, one is certainly that evolutionary change can unexpectedly become revolutionary.

That's why improving the capacity to spot, assess and sort the weak signals -- the earliest leading indicators of disruptive change -- is an imperative.

Weak signals are easy to miss, for good reason

Weak signals are all around us, all the time. The challenge in recognizing them is precisely that they are weak.

Weak signals:

• Are out of place versus norms.
• Show up as crude, implausible renditions.
• Get blocked by groupthink.

An example of a discounted weak signal

In the early 2000s, Citi Cards' digital transformation team exposed cardholders to the idea of "tap and go" RFID technology as a means of payment with a small device attached to a keyring that would replace physical plastic credit cards. The first use case: paying fares in urban transit systems.

The weak signal that stimulated this experiment was emotional and qualitative: Users' intense, enthusiastic reaction to how they would feel commuting without having to pull out their wallet and fumble with malfunctioning "swipe" cards in crowded subway stations.

Banking traditionalists were quick to dismiss the possibilities. They were attached to the primacy of the card as the form factor, and retailers resisted funding nominal technology upgrades.

See also: The Real Disruption of Insurance

The prevailing attitude was, "if it's not broken, don't fix it." After all, why change, when magnetic stripe-based cards performed virtually 100% of the time?

The result? Within a decade, contactless payments became ubiquitous, with the pandemic acting as an accelerant.

How to read weak signals of change

You don't need a crystal ball to see weak signals. But you do need to value and reward curiosity and commit to a process that more closely resembles an anthropological journey than a traditional strategic analysis.

Follow these four steps to get started:

1. Embrace the mindset. Cultivate curiosity as a habit. A simple step? Start by recognizing and accepting that we filter what we see based on what we know. Have an open mind, challenge preconceptions and stop to explore for more when you come upon the unusual.
2. Cast a wide and decentralized net to gather signals. Go far to the edge of your networks for observations, paying special attention to things that stand out as strange or curious.
3. Create a mechanism to interpret and understand the signals. Keep a database or a journal -- narrative, images and other stimuli -- of signals, including what is interesting and what each suggests.
4. Channel the signals for monitoring and further action. Begin to organize the signals -- perhaps a few key trends are emerging that suggest logical groupings, e.g., which should be set aside, monitored more intensively or moved toward brainstorming?

For more tips...

Spotting the weak signals depends on active sensing of the environment. For more on listening, take a look at my Fast Company article.

JULY 2021 FOCUS OF THE MONTH
Customer Experience

FROM THE EDITOR

For maybe the first 15 years of the personal computer revolution, business and even government leaders talked a lot about the need for computer literacy. We were told that the very competitiveness of our nations depended on educating the populace to prepare for the digital age. Then Steve Jobs came along.

It turned out the problem wasn't our lack of education. The problem was that computers were just too hard to use. Once Jobs and Apple brought the graphical user interface to computers, and once processors became powerful enough to handle the demands of GUIs, the talk of computer literacy faded. Then came the iPad and iPhone, making an intuitive experience available on almost any device. If you asked a teenager to define "computer literacy" today, he or she would likely say, "Hey, Siri...."

The insurance industry is trying hard to move into a "Hey, Siri" phase, as companies focus on drastically improving the customer experience. Companies are finding that they have to reinvent chunks of their businesses to really get the experience right. Yes, they have to focus on the ways that they touch customers, through agents and brokers, through call centers, through adjusters and through an increasingly broad array of electronic means. But a customer doesn't just experience a company through a direct communication. Customers also experience, for instance, how long and painful an underwriting process or a claim is.

And here's the thing: This emphasis on customer experience requires a revolution for companies but merely an evolution for customers. Insurers have to move heaven and earth to add computing power, to deal with new kinds of data, to come up with new analytical models, to design new processes and so on. Consumers just have to add an app or a phone number so they can text a company, have to e-sign documents rather than printing and mailing them, etc. -- and consumers have already been doing these sorts of things with other companies in other industries.

So, customers may understand at some level all the effort that has to go into changing how they experience an insurance company -- but they don't really care.

As you'll see from this month's interview, from the appended articles and from a host of articles throughout the website, lots of noble efforts are underway, and companies are making progress, but improving customer experience is a marathon, not a sprint. Every January, I publish articles about how this is the year that the industry will figure out the customer experience. Then I publish more of those articles the following January... and the January after that. Despite the undeniable progress, I don't expect to stop publishing those pieces any time soon.

- Paul Carroll, ITL's Editor-in-Chief

---

ITL FOCUS INTERVIEW

An Interview with Scott McArthur, CRO, Statflo We spoke with Scott McArthur, chief revenue officer, Statflo, about the impact of digitization on customer interactions. Read More

---

WHAT TO WATCH

3 Tips for Increasing Customer Engagement Even before the pandemic, insurance customers were moving to digital channels and demanding the kind of smooth experience they get with Google and Amazon. With customers demanding new types of interactions and agencies and companies needing to increase leads in a world that’s gone from face-to-face to zoom, technology doesn’t have to be intimidating. Watch Now

---

---

WHAT TO READ

	Key to Better CX: Think Like NTSB Airlines are rarely held up as exemplars of customer experience, but in one important respect the industry deserves such recognition. Read More
	Why CX Must Trump Efficiency Companies talk about improving customer experience but focus too much on saving money. Customer process automation does both. Read More
	Providing a Better Claims Experience It’s important to consider the communication preferences of five different generations when building a better claims process. Read More
	Self-Service Portals Improve CX 81% of companies expect customer experience to be a key battleground. Self-service portals are a great place to start. Read More		3 Ways to Optimize Customer Experience Even in a heated marketplace, a superior customer contact center can let life insurers grow. Read More		Millennials Demand Modern Experience To address the life insurance gap among millennials and create more financial security, the industry needs to move quickly. Read More		How to Increase Profits With Connected CX Fostering connected experiences is vital to meeting customer expectations and succeeding in a technology-centric world. Read More

---

---

WHO TO KNOW

Get to know this month's FOCUS article authors:

Andi Dominguez	Tina Hammeke	Ian Jeffrey
Renaud Million	Jon Picoult	Thiru Sivasubramanian
Kseniya Yurevich

---

---

Learn More about ITL Focus

---

Interested in sponsoring ITL Focus or learning about other promotional opportunities? Contact us

---