We are living in a hyperconnected world, and the presence of IoT devices has already been more pervasive than many of us have realized. Mobile phones in our pockets are full of sensors. Their software is updated over the air. And, when we lose them, we can remotely track their position. Meanwhile, restaurants are using simple QR-codes to comply with COVID safety measures, warehouses are employing robots to automate certain manual activities, etc. The spread of the IOT continues.

Although IoT has not yet been systematically addressed by the large majority of insurers, several early adopters have already concretely demonstrated the potential of using this technology. I have had the privilege to directly support many of these players through the activity of the IoT Insurance Observatory, an insurance think tank that has aggregated almost 60 insurers, reinsurers and tech players between North America and Europe.

Today, there are international insurance companies with millions of policies priced with telematics in their auto portfolios, millions of customers using an IoT-enabled wellbeing reward systems in their life insurance portfolios and thousands of workers protected with real-time risk mitigation solutions in their workers’ compensation portfolios. The level of maturity is higher on insurance personal lines; however, a new wave of IoT-based initiatives is occurring in commercial lines.   

These successful player journeys show IoT’s extraordinary potential to generate value for insurers, policyholders and even the entire society. Indeed, IoT allows an insurer to connect with its clients and their risks, providing benefits on four axes:

1. Improving customer experience by enhancing proximity and frequency of interaction with them, therefore moving beyond the traditional risk transfer. Many players are selling additional services for a monthly fee; others have found new ways to sell insurance coverages thanks to IoT; 
2. Enhancing core insurance activities (assessing, managing and transferring risks) by using IoT solutions for continuous underwriting, claims management and risk reduction. Using the insight generated by the analysis of the flow of IoT data has promoted less risky behaviors in real time; 
3. Generating knowledge about policyholders and their risks, to insure them in a different way, to enable up- and cross-selling and to insure new risks;
4. Providing positive externalities to society.

Unfortunately, many players in different markets have not understood the strategic nature of this innovation. They have considered IoT adoption as an IT project or the creation of a product. Instead, best practices show that IoT adoption is a strategic choice that requires a multi-year commitment to develop needed, specialized IoT competencies and leadership competencies. 

Each of the successful pioneers has designed its vision and strategy for IoT usage within its business processes.

A common mistake is to focus on the “thing,” such as a smart device. However, IoT is about data, not things. Even a focus on data is a mistake. What really matters is the usage of the data. The transformation of the business processes – through data usage – has been the secret sauce of any successful IoT insurance program. 

Some international success stories – from auto telematics to property insurance for smart commercial buildings – have already shown robust ROI. However, there is not much low-hanging fruit where a single use case generates enough value to cover all the emerging IoT costs. Typically, IoT insurance programs need deep functional competencies and a multi-functional approach to have multiple use cases that contribute to the return on the technology investment.

The opportunities for using IoT data in the insurance sector are summarized by the following framework, which has been developed within the IoT Insurance Observatory over the last five years.  

See also: 4 Connectivity Trends to Watch in 2021

Each of these use cases has been successfully implemented by tens of pioneers in different international markets and in different insurance business lines. 

These use cases don’t change the nature of the insurance business, but they allow insurers to do their job better. However, this paradigm requires moving beyond the traditional insurance economics (premiums, claim costs, administrative costs) integrating service fees, partners contributions, benefits generated by the usage of IoT data, IoT costs and value-sharing with policyholders (cashback, discounts, etc.). 

Insurance IoT is a new way of thinking about the activity of assessing, managing and transferring risks that fits with a world that is going to be more and more hyperconnected, a trend that insurers can neither stop or ignore.  

This article was originally published by Technology Magazine - IoT Edition

When the coronavirus really started to bite at the start of 2020 and businesses and individuals were forced into lockdown, there was a collective holding of breath in the U.K. as we waited to see if the insurance industry could respond effectively.

On the whole, the industry did a superb job of shifting its call center operations from centralized offices to thousands of homes up and down the U.K. A few early hiccups aside, the industry's tech stood up to the test and proved that we can work differently.

But what we have been doing for a year now is a temporary patch. The systems and business structures weren’t designed to operate like this on a permanent basis.

Negotiating the turn to digitization

Our current reliance on individual internet connections, the ambiance of various home environments and unreliable access to the policy, billing and claims systems mean that consistency and efficiency are a hope rather than a guaranteed deliverable for interactions with customers.

While remote working should result in vastly reduced real estate costs for most businesses, that shift has to be done in a way that doesn’t compromise on the customer experience or quality of conversation.

There is really only one way to provide a personal experience, delivered at scale but in a decentralized way: through the use of conversation process automation or, as it is commonly known, employing expert chatbots.

By using intelligent, effective and responsive chatbots, insurers can deliver the necessary consistency of service to an increasingly digital-first customer base while easing the pressure on remote (or office-based) call handlers. That will allow them to focus on the more complex or higher-value customer interactions that require less immediacy and less efficiency but a high-value human touch.     

Customer-facing process digitization requires automation

Of course, digitally triaging incoming customers is nothing new. It’s why webforms exist. They were designed to capture basic information, which is then fed automatically into the insurance system, creating an event for the call handler to progress.

But webforms lack one key element necessary to support call handlers in recreating the call center experience in a remote working world. They lack the ability to converse in real time with the user, to exchange valuable pieces of information.

Customers still want to have productive conversations, even in a digital-first world, and that is a want insurers will have to provide remotely. They could simply hire more call handlers, but it is logistically complicated while not being viable for the business -- with every addition of a remote call handler, the insurer moves further and further away from the guarantee of a consistent customer experience. And more call handlers, of course, mean more cost.

See also: Lessons on Reaching Customers Remotely

With expert chatbots, the consistency of experience can be delivered on a consistent basis without necessarily recruiting more call handlers.

And rather than replace the human call handler, expert chatbots assist in a way that webforms can’t by creating a natural, unseen bridge between the digital and the human touch. Anything that frees call handlers for productive conversations has to be embraced. Using their time to gather basic, repetitive data is a waste of their expertise and a waste of the customer’s time. Call handlers will always be required to solve complex problems and queries that automation can’t solve.

Often, the leap of faith is a small step in the right direction

What we are talking about here is taking another leap of faith, the same leap of faith that insurers were forced to take in response to the coronavirus. But the opportunity facing insurers now is to take that leap before they are compelled to by market forces or consumer demand.

The industry has taken the first, bold step toward an entirely new way of working and servicing customers, and it deserves a huge amount of credit for that. But we are entering another breath-holding moment as we wait to see if insurance has learned the lessons of lockdown and is willing to take the next, natural step in this digital and automation revolution to secure the productivity that has escaped them for so long.

The past six to 12 months in insurance have seen a historic level of activity for mergers and acquisitions, new investments and public offerings. It seems like every type of entity in the insurance world has been swept up.

The M&A trend in the distribution space accelerates. Insurtech investments were at highs in 2020 and picked up steam throughout the year; that trend continues into 1Q21. Initial public offerings (IPOs) and SPACs (special purpose acquisition companies) are being used as vehicles for investment by incumbents and startups alike.

A few prominent examples:

• Hippo is merging with Reinvent Technology Partners Z via an SPAC that values the company at $5 billion.
• Bold Penguin was acquired by American Family Insurance in a deal with important implications for the small commercial lines space.
• Incumbent tech company CCC Information Services is going public via an SPAC that values the company at nearly $7 billion.
• Chubb offered to buy the Hartford for $23 billion.

And these are just some of the deals in the first quarter of 2021! IPOs of Root Insurance and Lemonade and multiple $100 million-plus investment rounds in tech companies have occurred during the pandemic, not to mention a huge M&A wave in the agency marketplace.

It is easy to document the “what” (i.e., the list of transactions in various categories). However, it may be more useful to explore why this flurry of activity is underway… and why more is likely to come.

Naturally, primary reasons are the ready availability of large capital and the eagerness of investors to deploy their funds to capture growth. The rebound of the markets after the initial pandemic drop has resulted in huge amounts of cash sloshing around the system looking for a home. During these periods, some entities always see an opportunity to cash out, while others see possibilities to pick up strategic assets and, in some cases, immediate revenue streams accretive to earnings.

But there is more going on here than just the financial transaction and ROI parts of the equation. There are two other factors at work that, when combined with the financial climate, create a perfect storm for investment: insurtech maturity and the pandemic.

Insurtech Maturity

In the first days of the insurtech movement (early 2010s), there was much talk of disruption and revolutionizing the industry. Many in the industry dismissed this talk as hyperbole, and the early entrants often had little impact on the industry. But as the movement matured, leading companies gained momentum via partnering and a deep industry experience to address critical industry pain points. Moving into 2020, the insurtech movement had become a real catalyst for industry transformation, and scores of companies were demonstrating their potential, not only to affect the industry but to continue on a fast growth path.

See also: Insurance Outlook for 2021

Pandemic Implications

The second factor was the pandemic. The insurance industry was collectively on the path to digital transformation. Even before the pandemic, many industry veterans thought that insurers were moving faster than ever to inject innovation into their organizations and spread digital activity across the enterprise. Enter the pandemic and the resulting lockdowns, work-from-home mandates and dramatic shifts in everyday life and work patterns. Insurers quickly discovered the digital gaps that needed to be addressed to enable remote digital interactions with policyholders, agents, employees and claimants. In addition, the need to accelerate the digitization of operations, increase the levels of straight-through processing in underwriting and claims and hasten the automation of tasks was underscored.

To address these requirements and compress digital roadmaps into shorter timeframes, insurers and distributors alike took three actions:

• They reprioritized internal projects and refocused resources.
• They sought insurtech solution partners to help them deploy solutions and fill the digital gaps faster.
• They looked for acquisitions that would help them scale faster and bring new capabilities to the enterprise.

All these factors and the actions being taken by insurers are likely to continue through 2021 and beyond. To those who think the investments and M&A activity will slow now that the prospect of getting past the pandemic is pending – think again. If anything, digital transformation and the uber-competitive environment will continue to result in blockbuster headlines as the industry is reshaped.  

Ecosystems have been growing in scale and importance in recent years, but the pandemic has greatly accelerated their evolution. Customers rapidly turned to remote engagement, bolstering their expectations of 24/7 service and easy interactions. Insurers’ legacy limitations now look increasingly out of step with contemporary buying behavior and distribution.

Rather than taking several years to fulfill digitization road maps, insurers will find that participating in a connected supply and demand service model offers something better, faster and cheaper.

Enabling technology is affordable and effective. Cloud-based technology and machine learning have helped insurtech firms grow quickly without the burden of legacy systems and are now helping carriers fill gaps, particularly as many insurers modernize their core systems to make external integration more practical. The same technologies support innovation from competitive sources that offer services or components that are “good enough” at relatively low cost.

Strategic considerations

Now that the building blocks are in place, industry leaders are increasingly engaging in ecosystems that serve broad consumer needs, often where insurance is only one offering among many. Strategic options are multiplying.

Similar organizations might make very different choices on roles, investments and partnerships, depending on their risk appetite, organizational culture, technical capabilities and ability to invest.

Here are four things to consider as you determine how to compete in insurance ecosystems:

1. Choose your ecosystem role(s) strategically

You can become involved in an ecosystem in many ways, with different levels of commitment and investment. Your role(s) reflect how you’ll relate to other participants and the degree of your commitment. This may be complicated.

• As an owner, you’ll build and control the ecosystem, but at significant cost and the risk that nimbler players could overtake you.
• An orchestrator creates a foundation, including technical platforms, and captures customer data but may not be able to curate the entire customer experience.
• Adaptive participants plug into one or several ecosystems. This is a lower-risk strategy, but it’s more behind-the-scenes and could cause you to lose contact with end customers.
• Abstainers are entirely responsible for their own offering. This could put them at a significant disadvantage if buyers find an ecosystem’s holistic approach more appealing. Abstainers also may miss the opportunity to provide their capabilities as inputs into other participants’ offerings.

Some insurers may take different roles in several systems at once, depending on resources and focus, but we expect ecosystems to evolve within a particular sector, with both industry and non-industry partners joining forces to develop markets that work for all.

2. Find the right match – and quickly

Companies comfortable with ecosystems have learned to make quick buy-build-borrow decisions. When you’re facing potential tie-ups, you’ll need to decide fast, because the most appealing opportunities won’t last.

Ecosystems benefit from having a variety of partners. Whether you’re the organizer or are providing products as an adaptive participant, look for tie-ups that add complementary and scalable products or services to drive more traffic into the ecosystem. Ideally, partners leverage each others’ capabilities and knowledge to help the ecosystem grow. Whether you’re considering a potential partner or an acquisition target, your due diligence process should include intangibles. Your stakeholders should know what your brand promises: value, service, innovation, trust, stability, etc. If a potential partner or acquisition doesn’t bolster that image or its culture doesn’t fit the ecosystem, then you probably should move on.

See also: The Intersection of IoT and Ecosystems

Complacency is a big risk; you likely can't wait indefinitely to determine the best corporate development strategy. When certain ecosystem positions are taken, or when the insuriech player that can fill a key need has been bought by a competitor, you’ll be out of luck.

3. Adjust your approach to match an ecosystem’s maturity

Ecosystems vary considerably by maturity and focus. You may see partners offering components but, for now, a fragmented user experience. That doesn’t mean you should wait for clarity; rather, you may have an opportunity to significantly shape the outcome. You’ll want to be patient, recognizing that whatever you build may be an interim solution. In other instances, some ecosystems will be further along, which means you’ll need to quickly decide how to integrate, and on what terms, as you catch up.

Ecosystems don’t necessarily come with clear labels or governance. Some may start with a bilateral partnership model, offering additional value for customers by bringing together two non-competitive providers. This may become more like a product marketplace, or vertically integrated, even if some capabilities are white-labeled. Regardless, relationships are developing faster than before, and today’s opportunities are unlikely to exist six months from now.

4. Make deliberate choices with your ecosystem investments

Ecosystems typically require fresh thinking about product design, data and technology. You’ll likely need to expand these capabilities to:

• Provide individualized recommendations that drive engagement and adoption. Few insurers have invested much effort in improving the (internal and external) user experience (UX). Like social media sites, ecosystems depend on keeping users “plugged in” with communication that’s relevant and personal.
• Open systems securely to your employees, employers and partners so you can be more flexible about the products, services and experiences you offer. This means building a well-functioning API framework and enablement process, as well as expanding integration capabilities to support secure connections to external parties. This may require changes to the back end to your data management programs, data storage and exchange platforms, as well as developing analytical capabilities that enable data-driven decision-making and discovery.
• Use data, analytics and business intelligence assets to “sense” market insights and package them to add value to ecosystem offerings.
• Design, develop, source and manage products and services to meet customer needs, while offering value to other ecosystem members and reducing the capital intensity of your own business. This requires prioritization. You can’t do it all, and ecosystems provide a way to meet those needs without “owning” a product. By involving ecosystem participants, you can quickly satisfy customer needs, widen your offerings and improve the customer experience. 

Conclusion: Don’t miss out on the best opportunities

Ecosystems’ appeal is undeniable. They offer carriers a chance to reach beyond conventional insurance products and strengthen their relationships with customers, and are a logical response to a changing, highly networked business environment. Although they require insurers to apply unfamiliar skills – flexibility, customer intelligence, speed and coordination – they can provide the benefits of scale without the asset intensity and command-and-control leadership that historically have characterized the industry.

Many prominent insurers have been watching developing networks with curiosity and interest but often without urgency. This approach typically worked in the past, when the industry changed slowly and competitors were known quantities. Carriers now need to understand where they fit before the appealing opportunities are taken. There is tremendous upside, but not for those who sit on the sidelines.

At least on the surface, benefits and insurance producers are supremely confident individuals. They believe they are just a bit smarter, a little more clever and particularly more likable than their boring, traditional and not-so-smart competitors. This is at least part of the reason they approach the building of their book of business as a popularity contest; it is why they believe this to be a "relationship business." 

Without realizing it, they are building a trap for themselves. Because producers are competing for the title of "most popular," they make relationship development their relentless focus. When they win the occasional deal, their belief is reinforced, and the cycle continues.

It's time to get real

I recognize the importance of a strong business relationship as much as anyone. But it’s essential to keep the relationship in perspective and realize business relationships and social/personal relationships are two different animals. It's not that they can't co-exist, but they have to stand on their own.

In the book "The Go-Giver," Bob Burg and John David Mann explain, “All things being equal, people will do business with, and refer business to, those people they know, like and trust.”

It would be easy to read that statement, focus on the part about people doing business with those they know, like and trust and feel validated. This seems to support the position producers hold on to, that this is a “relationship business.”

Change the rules, change the balance

Of course, you need people to know, like and trust you. However, the most important words in the statement are actually the first four, “all things being equal.” The relationship is nothing more than a tie-breaker.

Most everyone competes on a level playing field. Producers show up with the same spreadsheet and the same list of value-added services and parrot the same promises of excellent service. From the buyer’s perspective, “all things are equal” with every broker -- all brokers look the same to buyers.

The relationship trap leads directly to another fallacy believed by too many producers. Tell me how many times you have heard a producer say, “It takes two or three years to develop a new client.”

This is actually probably true. But it doesn’t have to be. It’s only true because it takes that long to get to the point that a prospect knows, likes and trusts you more than anyone else.

So, what should you do? 

Don't let things be equal.

In their book, Bob and John also advise readers how to tip the odds dramatically in their favor. Do the following, and you will find the advantage you have been looking for to grow in a healthier, more predictable and meaningful way.  

Deliver more value than anyone else — This doesn’t mean eroding your bottom line. The value doesn't have to, and usually doesn't, come at a financial cost to you. Share ideas and experiences and make introductions that will benefit others. This isn't to be done in some quid-pro-quo fashion; deliver value with no expectations. Also, don't confuse giving away value with working for free.

See also: Do You Know What You Don’t Know?

Deliver value to more people — Delivering value shouldn’t be reserved for active prospects. It also shouldn't be reserved for decision-makers. Deliver value to anyone and everyone as a part of what you do every day. Whether it’s through your blog, social media or any other interaction, make delivering value your primary goal.

Keep others' interests as your primary focus — Stay focused on helping everyone around you be more successful at what they do, and your success is all but guaranteed. 

Be authentic at every step — The only way people will eventually come to know, like and trust you is if they are allowed to know the real you first. Sure, some may not like you. That’s life. But nobody will ever trust you if they sense you aren’t being genuine.

Follow the four principles above, and you take the "all things equal" out of the “doing business” decision. Now, when you add in the know-like-trust, magic happens. This potent combination will result in the most substantial business and personal relationships you can imagine.

Deliver value before you meet

You may wonder, “How can I deliver value to someone I don’t even know?” The answer lies in your marketing strategy. Take the time to understand your target audience's goals and needs and make that the focus of your educational content. Do this, and others will find immense value every time they interact with you, even if it's only consuming the ideas you share.

Stop thinking about marketing as a way for you to get more prospects. Instead, recognize that marketing is an opportunity for you to help educate and deliver value to others.

Build on the value when you meet

How does the value continue once you do meet? Build it into your sales process. Your sales process should deliver so much value that others would actually pay for the privilege of meeting with you.

I know this sounds Pollyannaish, but it's possible. Build your sales process on the following foundation, and you will experience it for yourself:

• Start the sales process by taking time to learn what a specific prospect values.
• Make the primary focus of your sales process about analyzing the prospect’s current situation and identifying what is keeping the prospect from having what they value.
• Demonstrate how you deliver similar value to others and explain how you could do it for them.

Stop thinking about your sales process as a way to get people to buy from you. Instead, start thinking of it as a process you offer to ensure others get the value they need. This becomes the key to slaying the “it takes two to three years to develop a new client” beast. Imagine how quickly you could move a motivated prospect to close if you delivered the following:

• When you help a prospect clearly see the potential of a better reality, how long do you think they want to wait to see if they can have it as their own?
• When you guide a prospect through self-discovery to better understand what is holding them back, how long do you think they want to wait to learn how to address those needs?
• Once a prospect is confident in your ability to deliver better results, how long do you think they want to wait to get started?

I can’t give you specific answers, but I can tell you the entire process will be measured in weeks, not years.

See also: Ecosystem-Based Business Models

It's not you; it's them

Stop teasing prospects with a promise of the value you’ll deliver once they become a client. Stop telling them, “You need to hire me to figure out how much value I can actually deliver.” This is effectively what your spreadsheet, capabilities presentation and promises of better services require. I don’t see you winning many popularity contests with that message.

Instead, deliver value at every step – before a prospect meets you, during the sales conversation and in the detailed plan you provide showing how the value will continue to flow.

The more value you give away, the more you will receive in return.

As the insurance industry begins to emerge from the shadow of COVID-19, International Women’s Day (IWD) is a good time to reflect on the state of gender equality in our leadership ranks and assess the outlook. While much progress has been made, there is still a great deal of work to do.

My experience with equality

Certainly, gender equality has been a big priority for me, personally. In fact, I make it a key pillar of my leadership and champion it directly and purposefully on the ground in the businesses I run, as I believe all leaders should. When I assumed the role of EY EMEIA Financial Services Assurance managing partner in 2013, only 12% of the partners were female. Six years later, when I began my current role as EY global insurance leader, that figure had nearly doubled to 22%.

I have been motivated to address gender equality not only out of a sense of fairness but also because I believe that diversity is directly tied to business performance. I have seen firsthand throughout my career what ample research has shown: Organizations with more diverse leadership teams outperform their peers. Many research studies have shown that diversity and inclusion yield a wider range of skills and perspectives, improve decision-making, boost productivity and foster empowerment. Diversity and inclusion also enhance corporate brands and reputations, especially among younger generations who want to do business with and work for companies that share their values.

Gender equality: easy to define, difficult to achieve

When talking about sensitive issues, it can be useful to define our terms clearly. To me, gender equality means that everyone, regardless of gender identity, has the same opportunities for professional success and the same compensation and rewards for their performance. It’s a simple and clear definition, but there are multiple reasons why true gender equality has yet to become the norm.

Cultural factors have certainly played a role, even at companies that make a formal commitment to equality. In some cases, perception biases can hold people back. Maybe the perception is that talented female executives don’t go “all in” on their roles. Maybe women are reluctant to assert themselves or put forth too many fresh ideas for fear of how they will be perceived. Maybe the emphasis on team building and collaboration prevents women leaders from receiving the credit they deserve for producing results. Perhaps women don’t complain when they feel mistreated or overlooked. In all of these cases, the result is that promotions go to those who make their feelings known and demand recognition.

For example, few female university students major in actuarial science, a discipline that historically produces many senior executives in insurance. The future pipeline of senior leaders is only as strong as the next generation of workers who are recruited into the field and into the right functions. 

See also: 3 Keys for Building Women Leaders

Let’s look more closely at the state of women in the insurance industry. According to research from ACORD, women drive the insurance industry, composing more than 60% of the workforce. Leadership is where we find inequality. Women hold only:

• 19% of board seats
• 11% of named officer positions
• 12% of C-level positions

These numbers reflect the reality that gender equality remains a distant goal. But there are reasons for optimism. Though women are still underrepresented at the level of the executive committee and board, the last decade has seen significant progress at the level just below. I see a strong generation of women leaders who are well-positioned to achieve great things at the top of the organization in the years to come, even if the numbers won’t be equalized any time soon. Internal mentoring programs, like EY teams, are also critical to balancing out boards and C-suites. Indeed, more companies – including EY – are elevating diversity and placing it at the core of their values and mission statements.

Personal commitments are critical. I make it a point to engage other women at EY to talk about their career paths, the challenges they face and their ambitions for the future. I have often promoted women into leadership roles even when they were considered “not ready.” This is a common misconception. While females are regularly included in succession plans, they are often passed over because they are “not ready,” while male candidates are almost always perceived to be ready. Of all the supposedly “not ready” candidates I’ve promoted, not one has fallen short in her new role.

Networking groups are a useful resource for overcoming such subtle barriers. The Insurance Supper Club and the Association of Professional Insurance Women (APIW) are two support communities for women in the insurance industry I have engaged with. I support these groups because they promote strong networks among female leaders, a critical component for success at the highest levels. They also create opportunities to share experiences, to find role models and be inspired by other industry leaders and to seek help or different views on tackling specific business issues.

Moving forward with gender equality

My experience has taught me valuable lessons that I would recommend to other female leaders. To advance gender equality, successful female leaders should:

• Identify strong performers early in their careers. I always encourage high-potential candidates to think big and strategically about their careers and not be shy about their ambitions. We must look beyond self-doubt about our ability to lead, which is common in many women. The key is to project ourselves into the leadership roles we want and gain the courage to raise our hand and ask for them.
• Make themselves visible. This is a critical step because it strengthens networks, demonstrates what can be accomplished and helps boost confidence, which is often necessary for women to make the most of their leadership potential. Women must also overcome reluctance to assert themselves and find sponsors who can help them increase their visibility.
• Serve as champions of inclusiveness and diversity. We must engage our male colleagues to ensure they understand existing biases and how they can help eliminate them by advocating for gender equality. Male and female leaders alike must live that advocacy in the teams they build and the decisions they make. Women can’t do it alone.
• Encourage their daughters, nieces and other young women. We must teach the rising generations to be fearless in choosing their fields of study, including largely male domains such as math, science and engineering. If they want a career in financial services, we shouldn’t be shy in pointing them toward cybersecurity, artificial intelligence, analytics and data science, while also coaching them about what to expect in these traditionally male-dominated domains.

See also: Insurers Can Lead on Addressing Inequality

Ultimately, I see gender equality as a matter of performance and leadership. The insurance industry needs more than ever to attract and more than ever to retain the best talent, regardless of gender, ethnicity, race or sexual orientation. The success of our firms demands it. Thus, it’s a primary responsibility of all executives in financial services. It is both the right thing to do and an imperative for business.

As we celebrate IWD, I'm reminded of and grateful for all the female staff, leaders and partners I work with at EY. On the insurance team specifically, our strong performance would not be possible without them. I am particularly proud to mention the EY insurance female leadership team below.

• In the Americas: Tara M Alex; Brenda Betts; Nancy Conturso; Janice Deganis; Dorree Ebner; Laura Ford; Katy Gardiner; Christine Holmes; Nicole Michaels; Sophia Yen; Carly Warren
• In EMEIA: Sabine Betz; Jenny Coletta; Maribel de la Vega; Cornea De Villiers; Zeynep Deldag; Penney Frohling; Hedvall Sunel Jacobs; Vicky Lampitt; Lauren Mounier; Anne Nahkala; Martina Neary; Gabriella Selvander; Anastasia M Vinogradova
• In APAC: Sun Young (Anita) Bong; Janine Donnelly; Liza Drew; Hong Gu; Hiroko Kakiuchi; Vanessa Lou

When workers’ compensation was conceived over 100 years ago, it was designed to cover traumatic injuries in an industrial setting. As workers’ compensation evolved, that coverage expanded in many ways. It was recognized that there were certain diseases or conditions, like asbestosis and black lung disease, to which workers in certain occupations were exposed, and to which the general public was not similarly exposed. The cause of these occupational diseases was not a sudden traumatic exposure but instead resulted from exposure over time, and it often took several years before the disease manifested itself. The traditional workers’ compensation system was not set up for such conditions, so most states eventually passed occupational disease statutes as part of their workers’ compensation laws. 

Infectious diseases were never considered occupational diseases. Still, most states will cover infectious diseases under workers’ compensation if the worker can show all of the following:

• They contracted the disease.
• They were exposed to the disease in the workplace.
• Their risk of catching the disease at work is greater than the general public. 

All of this leads us to the events of the last year with the COVID-19 pandemic. Although thousands of workers’ compensation claims were paid under the existing standard, several states passed presumption laws, assuming that workers in certain occupations contracted COVID-19 in the workplace. These presumptions changed the burden of proof for covered employees so that workers no longer had to prove they had a greater risk of catching the disease than the general public.

A troubling legislative trend is emerging in 2021, which takes this one step further. Several states are considering legislation or regulatory action that will classify COVID-19 as an occupational disease under their statutes. This consideration is alarming for many reasons.

First and foremost, COVID-19 is NOT an occupational disease. Millions of people worldwide contracted the disease, most of whom did not catch it in the workplace. An occupational disease, by definition, is particular to the risks of the occupation. That is not the case with COVID-19. Will this open the door for future infectious diseases to be covered under workers’ compensation? The flu of 1918 never went away; it lives on in a mutated form, necessitating annual vaccinations. The COVID-19 virus will likely undergo similar mutations, which could also necessitate annual vaccinations. Will all respiratory viruses be considered an occupational disease in the future?

Additionally, by making COVID-19 a named occupational disease, are policymakers not creating a de facto presumption that all COVID-19 is work-related? Policymakers seem to be using workers’ compensation to cover some of the pandemic costs, but workers’ compensation is not health insurance. There is no way for employers to run loss control against a global pandemic. There is no way for underwriters to assess the risks of a worldwide pandemic accurately.

See also: 20 Issues to Watch in 2021

If we continue to blur the lines between workers’ compensation and group health, where does this lead? Cancer and heart disease are already considered occupational diseases for specific occupations in certain states, as are hernias and bloodborne diseases. If workers’ compensation becomes responsible for common conditions that affect millions of people every year, it is no longer meeting its designed purpose. It is no longer a grand bargain for employers when they are being forced to pay claims under workers’ compensation that should be the healthcare system’s responsibility.

On March 12, 1928, William Mulholland, Harvey Van Norman and Tony Harnischfeger hiked down the dry side of the newly filled St. Francis Dam in California, inspecting worrisome leaks. Mullholland was the mastermind behind Los Angeles’ new aqueduct — a 233-mile series of man-made rivers and reservoirs that would eventually bring much-needed water to the San Fernando Valley. Before he left that day, Mulholland reassured Harnischfeger that, even though the leaks needed to be fixed, they didn’t represent a serious structural danger. That evening, the dam gave way, and 400 people living below the dam, including Tony Harnischfeger, were washed down the valley. It was a tragedy that could have been avoided.

We still have preventable tragedies, such as breadth of the pandemic and the Beirut explosion, but we also have advanced science that can give us quick vaccines, improvements in cyber security, fewer auto accidents through safer vehicles and greater access to relevant data from health and wellness to weather and water leaks.

Those of us in insurance technology know how knowledge can help us take advantage of opportunities and avoid risks. At Majesco, to help us look ahead, we gather insurer viewpoints and assess strategic priorities. This year’s survey report, Strategic Priories 2021: The Insurance Industry Shift Hits Hyper-Acceleration for Digital Business Models, the first of two reports, is especially crucial to an understanding of priority shifts: how COVID-19 affected insurer priorities and how those who are accelerating key strategies are leaping forward. 

In today’s blog, we’ll see that the COVID pandemic is not the only challenge insurers face. We’ll take a close look at what concerns insurers today.

Internal Challenges — Insurance Execs Share Their Views

Majesco surveyed insurance executives regarding these internal challenges:

• Digital capabilities
• Data security
• Innovation
• Legacy systems
• Budget
• Aligning IT and business strategies
• Data and analytics capabilities
• Talent (retention, availability)
• Change management
• Aging workforce/retirements
• Post-COVID work environment

Of the 11 internal challenges in the survey, five show indications of becoming more the “norm” of doing business (Figure 1): Digital capabilities, Aligning IT and business strategies, Data and analytics capabilities, Data security and Talent (availability, retention). These challenges showed steady increases in concern over time but peaked in 2018-19 and have trended lower over the past two years. This trend likely suggests that companies have adapted to these norms through improved capabilities, adjusting expectations or increased confidence via the benefit of experience gained. 

However, the question remains … Do these perceptions match reality? A few examples:

• Many insurers embraced portals, but most of these do not deliver a next-gen, holistic digital experience that customers, employees and distribution partners want and expect and that is part of a digital maturity that is needed.
• Insurers have made progress getting their internal data sources in order but still struggle to realize the benefits of a fully integrated data environment consisting of internal and new external structured and unstructured sources, with AI/ML-generated insights. 
• Given increasingly severe data breaches, data security may be more of an illusion than reality for many critical industries like insurance and why the need for cyber insurance is so critical.
• The reliance on an aging IT workforce to keep old legacy systems running should shift insurer priorities to rapid legacy transformation, including no code/low code capabilities.

Figure 1: Declining levels of concern about internal challenges

The challenges regarding Budget and Legacy systems remain steady, with above average concern in every survey. Budgets will likely always be a universal source of discomfort, but as companies begin to establish new operating models that have new cost structures and shift IT expenses from capital expenditures to operating expenditures, companies open up the opportunity to reallocate resources to new initiatives. 

While many insurers have completed or begun legacy transformation projects, many of these are non-platform modern, on-premise implementations that are the “new legacy” systems and are now being replaced by next-gen, cloud-based digital insurance platforms. This next-gen platform has superior capabilities that meet the needs of today’s and tomorrow's insurance customers, including no code/low code capabilities. 

See also: 5 Things to Know When Integrating AI

Interestingly, four new internal challenges in this year’s results all garnered lower levels of concern: Innovation and Change management, Digital and Data/Analytics capabilities and IT-Business alignment. Low levels of concern over Aging workforce/retirements and post-COVID work environment align with the downward trend in concern over Talent (availability, retention). These could be blind spots for many companies, which we’ll discuss in a moment.

Talent and Retention — IT Crisis or Minor Business Conundrum?

It is not surprising that IT executives are much more concerned about internal talent issues than their business counterparts, as seen in figure 2. Their 25% higher concern about the availability and retention of talent is driven by the fact that they face stiff competition with insurtech and Big Tech for employees with the skills needed to transform to digital-first insurers. Until they can achieve the transformation, however, IT needs to retain as much of its aging workforce as possible to maintain legacy systems and keep the current business running. This lack of alignment is problematic, meaning resources are allocated to business as usual rather than focused on creating the business needed for the future.

Figure 2: Levels of concern over talent issues, IT vs. Business

External Challenges — Insurance Execs Share Their Views

Majesco surveyed insurance executives regarding these external challenges:

• Changing customer expectations
• Emerging technologies
• Regulatory requirements
• COVID-19’s impact on target markets
• Pace of change
• Insurtech
• Growing market availability of new/innovative insurance products
• New competition from outside the insurance industry
• New competition from inside the insurance industry
• The rise of direct sales (B2C and B2B)
• The rising cost of the agent channel
• AM Best innovation score

This year, we see declining concern for several external challenges, including Changing customer expectations, Regulatory requirements, Pace of change and New competition from inside the insurance industry. It appears that insurers are feeling more confident in these areas, either through improved capabilities, adjusted expectations or experience (or a combination of these). 

However, as with the internal challenges, is there a risk of being too comfortable, confident and complacent, particularly coming out of COVID? Andreessen Horowitz says that e-commerce increased more in the last six months than in the entire decade beforehand! Add to this the emerging customer experiences from fintech and retailers such as Sofi and Amazon that are creating experiences, rather than transactions. Majesco research indicates that customers are willing to share their data if it leads to more personalized products and pricing that fit their changing lifestyles and risks, like on-demand and embedded insurance.

In addition, concerns have been nearly flat or declined slightly in concern over Emerging technologies, New competition from insurtech, startups, MGAs and New competition from tech giants from outside the insurance industry. This last challenge issue is a concerning blind spot, as experimentation and market entries by players from outside the industry accelerates. Consider a few recent examples:

• Intuit launches QuickBooks insurance and 401K services — QuickBooks customers can now protect their businesses with comprehensive insurance coverage and offer their employees a 401(k) benefit, traditionally offered only by large companies. This integration will enable QuickBooks users to seamlessly obtain a customized quote and easily purchase general liability, professional liability and workers' compensation coverage from Next Insurance with a few clicks of a button, directly from their QuickBooks account.
• Petco launches insurance — In October, Petco announced the launch of Vital Care, a paid annual plan providing pet parents with a convenient, affordable way to meet their pets' routine wellness needs.
• Walmart offers pet insurance and health insurance — In November, Walmart announced it added pet insurance as animal adoptions soar during the pandemic. The company is offering insurance through Petplan and connecting people to pet sitters or dog walkers through Rover. In July 2020, it was announced that Walmart was launching a health insurance arm — dubbed Walmart Insurance Services — to sell plans to consumers. Walmart's low prices and wide footprint could pose a threat to insurance startups — especially those firms breaking into the Medicare Advantage market.
• Tesla insurance approved in Texas — In December 2020, the Texas Department of Insurance approved filings for insurance to be underwritten by a third-party Austin-based insurer and distributed by Tesla Insurance Services, which follows the company’s 2019 launch in California. Tesla’s Texas program uses driver behavior-based data collected by the vehicle as an input to determining at-fault collision rates. The program also covers cyber identity fraud expenses, electronic key replacement, loss or damage to the original wall charger and loss when the vehicle is being driven by autopilot.

As industry and market trends evolve, so do the topics covered by our annual survey. We added five new external challenges this year. Although these don’t have historical results for trending, COVID’s Impact on Your Target Markets had the fourth-highest overall ranking among all 14 external challenges, reflecting the real uncertainty on the pandemic’s effect on the economic health of consumers and businesses, and the impact for insurance. 

Growing market availability of new/innovative insurance products ranked sixth, tied with insurtech, ranking higher than the challenges from new competition from inside and outside the industry, suggesting that incumbent insurers more strongly associate insurtech with these new offerings – again, another potential blind spot on new competition.

The remaining three new issues, rise of direct sales, rising cost of the agent channel and AM Best innovation score, had considerably lower ratings than all other external challenges. (See Figure 3.) Again, are these blind spots, or do insurers have a good handle on these challenges? With e-commerce rising across all industries and demographic shifts in channel preference, we expected higher ratings on these two channel challenges. With the lackluster results of AM Best’s first Innovation Assessment mentioned earlier, it is somewhat surprising that this issue came in dead last.

Figure 3: New external challenges added to the survey

Key Differences Among Segments

Aggregating the ratings across all internal and external challenges highlights some key differences between direct written premium (DWP) tiers and line of business segments. The largest tier is much more concerned about internal challenges overall. This suggests that the complexity of the large organizations leads to a higher number of challenges that can be a hindrance to agility. Smaller companies should have an advantage here with less bureaucracy and complexity – but old systems could also be a hindrance negating this advantage. Replacing these systems with next-gen core platforms should now be of the utmost urgency.

See also: Claims Development for COVID (Part 1)

Companies with new products are much more concerned about the internal and external challenges, as highlighted by the aggregated rating comparisons. (See Figure 4.) The L&A/Group Only segment is a close second on five of these. This makes sense when you consider that these companies are challenging the status quo with non-traditional products and blazing trails, which can exacerbate existing challenges (e.g. IT, talent, etc.) as well as bringing up brand new challenges.

Figure 4: Differences in aggregate levels of concern over internal and external challenges by lines of business

How does your opinion rank within these challenges? Can knowledge open your organization up to the opportunities in our midst?

Do you know what you don’t know? 

 

Time for Optimism? Paul Carroll, Editor-in-Chief of ITL In the first full week of spring, green shoots are starting to poke through the metaphorical ground in the U.S. economy, as well. It may be time to start planning for a robust rebound late this summer or in the fall, both in terms of what needs to happen as insurance employees increasingly return to the office and in terms of what will happen for clients’ and prospective clients’ businesses... continue reading > MAJESCO WEBINAR Hear from industry experts as they discuss their approach to growing and expanding customer relationships with an integrated disability and absence management solution. Read More SIX THINGS Transforming Auto Claims Appraisals by Olivier Baudoux While the benefits of claims automation are indisputable, delivering a truly “touchless” experience will require a technological evolution. Read More Straight-Through Processing in 2021 by Harry Huberty Straight-through processing of claims is likely to become more common, especially in personal lines and individual life. Read More How to Combat the Surge in Ransomware sponsored by Tokio Marine HCC - Cyber & Professional Lines Group Insurers can help clients protect themselves -- but preventive approaches aren't yet widely implemented. Read More Analytics That Lower Spending on Claims by Aditya, Swarnava Ghosh and Mayank Mahawar The secret is to unlock the potential of the large quantities of unstructured data streaming through the claims function. Read More Premium Leakage Due to Legacy Systems by Dan Watt A recent study shows that 5% to 10% of insurance premiums vanish every year due to the inefficiencies caused by legacy systems. Read More Geomagnetic Storm for Insurance? by Andrew Siffert A geomagnetic solar storm could create havoc; the recent freeze in the Deep South showed how disruptive a failure of the electric grid can be. Read More Lessons on Reaching Customers Remotely by Gregory Bailey Tech companies have mastered digital communication because they have always sold products and services to customers remotely. Read More MORE FROM ITL A Conversation on Corporate Strategy with Amy Radin In-depth with ITL's Thought Leaders Join ITL's editor-in-chief Paul Carroll as he sits down to discuss corporate strategy with director, advisor, author and thought leader Amy Radin. Watch Now March's Topic: Strategic Innovation   Strategy is what you don’t do. That was the dictum of the late, great Mel Bergstein, who way back in 1994 founded the pioneering digital strategy firm Diamond Management & Technology Consultants. (It became part of PwC in 2010.) I heard Mel’s line a lot, as a partner with Diamond from 1996 through 2003, and I think his are words to live by in the insurance industry these days. Everyone seems to have gotten the memo about the need to digitize insurance and to explore innovative ideas, but the present typically creates a real drag that slows movement toward the future. Take Me There GET INVOLVED Write for Us Our authors are what set Insurance Thought Leadership apart. Get Started Partner with Us We’d love to talk to you about how we can improve your marketing ROI. Learn More SPREAD THE WORD Share Share Tweet SUBSCRIBE TO SIX THINGS

Airlines are rarely held up as models of customer experience (CX) excellence, but, in one important respect, the aviation industry actually deserves that recognition.

At many airlines, the traveler experience leaves a lot to be desired. People are subjected to a host of annoyances and indignities, from baggage charges to ticket change fees, from cramped seating to overbooking.

But one aspect of the airline customer experience is remarkably good, and consistently getting even better: the industry’s discipline in identifying and addressing the causes of accidents.

Say what you want about the awfulness of air travel, but it does have one undeniably redeeming quality: It’s really safe. While commercial airline accidents obviously garner a lot of media attention, they are extremely rare. Accounting for just 0.006 deaths per billion miles of travel, flying is the safest form of transportation out there, far safer than driving.

We were recently reminded of this, when a United Airlines plane suffered an engine failure moments after departing Denver International Airport. Pieces of the engine rained down on a Denver suburb. Fortunately, no one was hurt on the ground, nor on the plane, which quickly returned to the airport and made an emergency landing.

Within hours of the incident, the National Transportation Safety Board’s (NTSB) “Go Team” was mobilized, and it’s from their tireless work that all businesses can learn a valuable lesson.

Established in 1967, the NTSB is an independent government agency that investigates all civil aviation accidents, as well as major incidents involving other forms of transportation (such as train derailments).

The Go Team is a cornerstone of the NTSB’s investigative process. Ready to travel anywhere in the world at a moment’s notice, the team includes a variety of specialists – in aircraft structure, engines, hydraulic systems, crew performance and even air traffic control. They all descend on the accident site to piece together what happened and to determine what went wrong.

Within a matter of days, the NTSB issues a preliminary report. (An official, final report can take months if not years to publish, depending on the complexity of the incident.)

See also: 9 Months on: COVID and Workers’ Comp

But here’s the most important part: Based on its investigation, the NTSB releases safety recommendations, which can then be turned into “airworthiness directives” by the Federal Aviation Administration (FAA). Those directives, which can be issued on an emergency basis if necessary, establish legally enforceable rules that can dictate anything from aircraft design changes (which would be handled by the manufacturer) to maintenance procedure enhancements (which would be handled by the airline).

What does that disciplined process of investigating aviation accidents and addressing their root causes yield? Decades of consistent improvement in the civil aviation fatality rate, with the five-year moving average hitting an all-time low in 2019 (despite a marked increase in the number of flights).

Now, imagine if the above graph were charting the failure rate for your company’s customer experience, perhaps measured through product defects, complaints or some other indication of an experience gone wrong.

Because that’s really what the NTSB Go Team (and other countries’ aviation safety agencies) do. They root out the underlying cause of a failure in the experience. Granted, in the case of the NTSB, they’re looking at failures that can be grave, resulting in harm to dozens if not hundreds of passengers. But the value of the NTSB’s approach is applicable to any business, regardless of product or service sold.

Think of it this way: There are a finite number of reasons why an aircraft will suffer an operational failure. By rigorously investigating every failure, and directing aviation partners to pursue remedial action, the NTSB and FAA have gradually narrowed the list of potential failure points. Hence the remarkable and steady long-term decline in accident rates.

The same logic applies to your business. There are a finite number of reasons why your customer experience may fail, from a product design flaw to an outdated website link to an inaccurate instruction sheet. There may be a long list, but it is a finite list.

You would be remiss then, if you didn’t take the opportunity to investigate failures when they occur, pinpoint the root cause and address the underlying issue. Only by doing so can you start to check items off of that finite list and begin removing potential sources of experience failure from your customers’ lives.

To bring the NTSB’s proven approach to your organization, keep three things in mind:

• Invest in investigation. When experience failures arise, people’s focus is (rightly) on solving the problem for the affected customer. Once that’s done, though, organizations just move on to the next task – answering the next call, resolving the next complaint, manufacturing the next widget. Resist that temptation. Culturally, people in your organization must understand that an essential part of experience recovery is asking yourself, “How did my customer even end up in this situation?”
• Turn insights into action. It doesn’t help anyone if a field sales rep or a call center agent figures out the root cause of a customer experience failure, but then doesn’t have an outlet to communicate that to people who can do something about it. After all, the NTSB’s investigations would be pointless without their safety recommendations and the FAA’s associated airworthiness directives. Make sure there is a clear avenue for your staff to share their findings with those who can drive change, such as a manager or an internal CX improvement team.
• Make it about progress, not punishment. Interestingly, conclusions from an NTSB investigation cannot be entered as evidence in a court of law. That is by design: The architects of the NTSB wanted the organization to be viewed as an independent party, focused on preventing future accidents, not facilitating litigation. In the business arena, staff need to be forthcoming to assist with root cause analysis. If they sense that the exercise is punitive, they’ll likely be reluctant to participate in a genuine way. Keep the exercise constructive, with an emphasis on continuous CX improvement.

Every company, even legendary ones, has to occasionally deal with customer experience failures. What separates the good from the great is how the organization approaches the resolution of those issues. Does it fix the problem for just one customer, or does it address the problem for all customers in the future. The NTSB has certainly demonstrated its proficiency in the latter approach, chipping away at root causes and turning air travel into the safest transportation experience on the planet.

See also: COVID, and How to Pivot to Innovation

So, the next time your organization encounters a customer experience failure, ask yourself, “Who’s on our Go Team?” Whether it’s a responsibility that lies with a dedicated unit, or an accountability that’s embedded in every staff member’s role – ensure this investigative work consistently gets done, because it’s that discipline that will keep your business flying higher.

A version of this article originally appeared on Forbes.com.