Demand for cryptocurrencies is booming, as more than 40 million people worldwide use some type of them, according to SaaS Scout Research Group. 

As with any financial asset with value, cryptocurrency owners need protection with their investments, and that’s where cryptocurrency insurance enters the picture – at least on a limited basis in early 2021.

“There’s only a handful of insurers either currently offering cryptocurrency coverage, with insurance broker Aon claiming to own 50% of the business-to-business market,” said Virginia Hamill, senior insurance analyst at FitSmallBusiness.com “Approximate estimates for cryptocurrency insurance capacity stands at between $1 billion and $6 billion, for a market that’s valued at around $1 billion.”

The complicated nature of a decentralized trading environment also gives insurers pause, especially in a global trading platform that operates in a wild west environment. 

“The cryptocurrency insurance sector is relatively small but complex,” said Savanna Bilbo, a consultant at Pelicoin, a Bitcoin ATM service. “Bitcoin and other cryptocurrencies are unregulated by the government, which means there are no rules for insuring. The price of cryptocurrency fluctuates day-to-day, which makes it difficult and expensive to insure.”

It’s tough to pinpoint exactly what to expect in a highly volatile cryptocurrency market, but industry experts seem to agree on a few key themes in early 2021.

Prices could rise, and demand, too.

By the end of 2021, Bilbo said Bitcoin, the largest cryptocurrency, could be priced as high as $100,000 (it traded today at about $49,000). 

“Large mainstream companies will likely start purchasing Bitcoin and other cryptocurrencies and accepting them as forms of payment,” Bilbo said. “When this happens, the world of crypto will see a significant change, with demand for financial protection rising.”

Crime and fraud are up-front insurance issues.

Currently, the cryptocurrency crime and fraud sector are seeing the highest insurance costs. 

“Millions of dollars of cryptocurrency have been lost every year due to corruption and fraud,” Bilbo said. “There are many ways to hack or defraud cryptocurrency owners, and many feel the need to insure their cryptocurrency any way they can. Thus, insurance interest is up in these sectors.”

Exchange insurance is gathering steam.

Currently, the largest insurance market in the crypto industry is with exchanges that insure against theft from cryptocurrency hackers. 

“In the past, there have been hacks which took down entire crypto exchanges, and stole every coin in their wallet. The customers had no recourse, and their funds were permanently lost,” said Rob Zel, founder of bitni.com, a crypto exchange focusing on user privacy. “To prevent this from happening again, exchanges have begun insuring their customer's assets, so, if there is a hack, the customers can at least recover their funds.”

See also: Where Blockchain Shines Right Now

Exchanges are creating their own insurance programs.

One trend in the cryptocurrency insurance sector is large exchanges creating their own insurance funds when such insurance is unavailable anywhere else. 

“A small percentage of each transaction is added to a collective fund, which covers losses by hackers,” Zel said. “We will see more self-insurance by exchanges, although as commercial insurance products are developed, some exchanges may prefer to outsource, instead of dealing with the overhead of managing their own self-insurance funds.”

Currently, the larger exchanges are offering the most insurance to crypto consumers.

For example, Gatehub offers wallets to investors, which they can use to purchase individual insurance for the entire value of their crypto wallets. Other crypto exchanges like Coinbase provide supplementary insurance (backed by Nexus) that covers exchange users who lose 10% or more of their cryptocurrency assets.

Cryptocurrency users are self-insuring.

Insurance providers still largely see cryptocurrency as a risky investment. That’s led to “sky high” premiums for Bitcoin, Ethereum and other crypto investors. 

In that scenario, industry investors are taking matters into their own hands.

“There are a few other ways to protect your crypto investments,” said Chris Abrams, founder of Abrams Insurance Solutions. “I recommend sharing private keys with trusted, independent custodians. This can safeguard your wallet against theft.”

Abrams also believes it’s a good idea for cryptocurrency investors to spread their investments into multiple wallets. “That way, you avoid keeping all your eggs in one basket,” he added. “This can minimize your risk in case one wallet goes belly up.

Cryptos will soon be regulated, which may attract insurers.

Cryptocurrency may soon be mainstream, and, with the stamp of normalcy on the industry, regulators would begin to police it.

“With companies like Tesla making large purchases of it, others are soon to follow,” Bilbo said. “This scenario attention will cause the government to step in and attempt to regulate it, which will make cryptocurrencies more compelling for insurers.”

See also: Breakthrough Technologies for 2021

What can the crypto industry expect from insurers?

In an often-chaotic trading environment, insurance companies may be taking a “wait and see” stance on cryptocurrency coverage, but the financial payoff may be too lucrative to ignore.

“I can definitely see insurers’ appetites for cryptocurrency coverage increasing because the market is clearly there, but I think the growth is going to be slow,” Hamill said. “The possibility for extreme volatility is going to keep most insurers from jumping in too quickly.

“That said, they’re most likely going to be investigating the opportunity.”

Digital capabilities are more important than ever across all parts of the insurance ecosystem. That includes the world of principals and producers, who rely on agency management systems (AMS) to serve as a workbench for their main activities: selling insurance, managing clients and managing themselves. 

While some vendors have slowly expanded the capabilities of their core offering, others have integrated with larger, agency-focused suites of stand-alone software solutions that offer a broader range of capabilities to speed up transactions, automate processes and create a better overall experience for agents. Insurance carriers that consider agents’ ease of doing business one of their differentiators will likely have to integrate with these platforms at a minimum. 

Insurers may use AMS solutions for internal MGAs or agencies, but the primary overall users of these platforms are independent insurance agents. Modern AMS platforms are designed with these agencies in mind. Originally, these solutions began as enterprise resource planning platforms, but now they act as day-to-day workbenches. Carriers that want to improve overall agent relationships, which ultimately leads to better policyholder relationships and retention, need to consider how their products, processes and policy information will be part of these AMS ecosystems.

General Functionality of an AMS

While smaller agencies usually turn to an AMS that offers capabilities like advanced lead management and carrier connectivity, larger agencies are more likely to take a component-based approach and select a software suite with a broader range of solutions. These differences are not unlike the differences in core systems approaches taken by larger and smaller insurers. 

The difference in AMS purchasing approaches can cause some confusion about what functionality an AMS should offer, but there are three general categories of functionality that any solution, whether stand-alone or suite component, should cover: selling insurance, servicing customers and managing the agency itself.

AMS platforms help with selling insurance policies by tracking prospects, managing leads, understanding appetite, automating communications and generating quotes, among other capabilities. They can help service customers through capabilities like serving as a central record of customer activity (e.g., changes in policy, billing, claims, etc.). AMS solutions can also help improve operational efficiency by facilitating agent workflow, tracking calendars and deadlines, managing alerts or tracking individual and aggregate agent activity. 

Selling Insurance

Sales capabilities in an AMS include functions like managing leads, generating quotes, reporting underwriting appetite, automating emails, creating and storing templates for communications, managing the pipeline, marketing integration and integration capabilities (or APIs) with insurers’ portals. 

Quoting and underwriting appetite has become an area of focus for agents because omni-channel approaches are becoming the norm. Agents are also relying on AMS platforms to manage mobile messaging and social media posts, not just email and phone. In some cases, this might require insurers pre-approving templates or implementing software that can monitor compliance through a direct integration with the AMS or through workflow steps. AMS platforms are also commonly offering “next-best action” recommendations built on analysis of touchpoints and customer responses to marketing initiatives. 

Servicing Customers

When it comes to servicing insurance customers, AMS platforms typically offer download from/upload to insurers, execution and recording of endorsements, document management, ACORD forms, policy information updates, contact information maintenance, the storage of billing information, bill pay, monitoring of claims and record of payments. The platforms can also automatically alert agents when there are any service concerns that need their attention. 

Agents prefer platforms that make it easy to conduct all of their business through one interface, so allowing integration between agent portals and AMS platforms is a wise option for insurers. Agents and insurers alike are focused on the customer experience, meaning that AMS platforms should keep track of all policyholder interactions across the insurance life cycle. 

Ease of upload to insurance carrier systems can also be a differentiator; a recent Novarica study showed that 38% of young agents’ AMS platforms did not include upload ability, but they would like to have that capability. Consistent data across insurers and agents can improve customer service for inquiries as simple as updating contact information to more complex interactions like filing a claim.

See also: How Carrier Tech Drives Agency Change

Managing Agents

Agency management is a basic tenet of an AMS, and each platform should include some form of workflow management; monitoring of compliance, credentials and license; commissions tracking; general ledger and accounting; dashboards that show agent performance; data and analytics functionality; and sales and technology training. As AMS platforms have evolved to keep up with platform and industry trends, so have these capabilities. 

Regulation is top of mind for most insurers, and AMS solutions can help maintain compliance through monitoring and managing agent credentials and licensure. An AMS can produce reports and send alerts to ensure that agents are staying up to date with their licenses. AMS platforms can also help agents with their workflow management, including laying out process steps, milestones, dependencies and approvals. 

These components are becoming increasingly sophisticated; insurers looking to simplify agents’ day-to-day work should be clear about which steps require touchpoints with the carrier so the AMS can be configured properly. Some AMS platforms offer analytics capabilities to help improve sales and retention for agents and their overall agencies, routing particular opportunities to the agent who is best equipped for that specific lead. 

The marketplace for AMS platforms is broad, and agencies have plenty of options to choose from. Insurers therefore cannot routinely predict which AMS platforms the majority of their independent agents are using. Instead, insurers have to stand ready to be flexible — with data APIs, integration with connectivity platforms, easy download capabilities, readily available digital assets and, above all, a willingness to listen to their agents and understand what kinds of integrations would be most valuable and helpful to them.

Breakthrough Technologies for 2021 Paul Carroll, Editor-in-Chief of ITL The MIT Technology Review’s list of technologies to watch is always intriguing, and this year it’s even more portentous than normal. The list begins with developments in messenger RNA, which has not only delivered vaccines against COVID-19 but which may allow for other breakthrough vaccines, including against malaria and HIV, and may even create novel treatments for such killers as heart attacks and cancer. The Review also describes two developments in AI that will greatly broaden its capabilities, plus a potentially much more precise version of GPS, among several other things. Many, if they pan out, would ripple through society and, thus, through the world of insurance. Let’s have a look... continue reading > Strategic Priorities 2021   Majesco research highlights that despite impacts of pandemic, leaders widen lead over followers and laggards. Read More SIX THINGS Pressure to Innovate Shifts Priorities by Denise Garth Strategic planning needs to be bold enough to match the velocity and magnitude of the changes the industry faces. Read More How AI Will Define Insurance Workforce by Dustin Oxborrow If data analytics and AI become staples in modern business, how do they solve the human resource problem? The answer is threefold. Read More Claims Development for COVID (Part 1) by Mark Walls and Kimberly George This first article will cover COVID-19 claims data. Part 2 will provide more details on long-term medical effects. Read More The Insurer’s Customer Acquisition Playbook sponsored by Data Axle The right approach to data analytics can cut wasteful spending in customer-acquisition programs while attracting high-value clients. Read More 7 Ways to Innovate With Purpose by Amy Radin Now is the time to ask the basic question — "what is our purpose?" The answer will align strategy, people, capital and other resources. Read More 5 Things to Know When Integrating AI by Jimmy Spears It can be challenging to see which provider actually has a functioning solution, versus one that aspires to do the work in time. Read More Insurance Outlook for 2021 by Michael Giusti It may feel like the end of the pandemic is in sight, but the shock waves created by 2020 will reverberate for years. Read More MORE FROM ITL How AI Can Transform Insurance Correspondence Sponsored by Messagepoint Join Kaspar Roos, CEO and founder of Aspire, and Patrick Kehoe, EVP Product Management at Messagepoint, to learn how organizations can overcome the challenge of transforming communications by combining best practices and AI-powered approaches. 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

The latest Out Front Ideas with Kimberly and Mark webinar brought together a panel of industry experts to explore trends being seen in COVID-19 claims, as well as long-term medical complications and what risk managers should monitor in the future.

Our guests were:

• Teresa Bartlett, MD – senior medical officer, Sedgwick
• Max Koonce – chief claims officer, Sedgwick
• Tim Stanger – vice president, partner relations, Safety National
• Alex Swedlow – president, California Workers’ Compensation Institute

Long-Term Effects of COVID-19

There may not be a crystal ball to determine the impact COVID-19 has on a patient years from now, but current trends in symptoms can provide a better picture. These trends in long-term side effects range from fatigue and brain fog to more severe symptoms like blood clots and pneumonia. 

One study performed by the National Institutes of Health (NIH) followed over 4,000 people who tested positive for COVID-19 in the U.S. 50% of those people were unable to work full-time six months after recovering. With only 8% hospitalized, most cases were mild but resulted in long-term side effects, regardless. In another study, over 80% of the COVID-19 patients developed at least one long-term side effect. 

COVID-19 Variants

There have been over seven unique variants of COVID-19 found in the U.S. alone in recent days. While variants are common in viruses, much like with the flu, there is a difference in these mutations. However, understanding the difference between shift and drift is important. 

The U.K., South Africa and Brazil variants are drifts, meaning that the virus’s protein structure has warped, but that testing still recognizes this variant, and that the vaccine works against these strains. However, these variants are still more contagious, and there is uncertainty regarding how long the vaccine will work on these.

The medical community is watching closely for a shift in the virus. When a shift occurs, testing will not recognize the virus, and the vaccine will likely not work. 

Vaccine Developments

The Moderna and Pfizer vaccines are both taken in two doses, with Pfizer’s doses administered 21 days apart and Moderna’s administered 28 days apart. Pfizer’s option allows for anyone age 16 and above to receive the vaccine, while Moderna’s is a higher dosage and allows for anyone age 18 and above to receive it. Only those with an allergy to polyethylene glycol or those who have experienced severe reaction to vaccines are advised against receiving either vaccine.

Johnson & Johnson’s viral vector vaccine, which was just approved for use, varies considerably from the mRNA vaccines currently being administered by Pfizer and Moderna. Like the flu vaccine, Johnson & Johnson’s vaccine uses the cells in a body to target the virus’s spike protein, triggering an immune response. The Johnson & Johnson option is only one dose but is currently only citing 66% efficacy. However, because Moderna and Pfizer’s trials ended before the variants were spreading, all three may have similar efficacy.

See also: Pressure to Innovate Shifts Priorities

Vaccine Myths

There are plenty of myths surrounding the COVID-19 vaccines. One of the common myths states that they could alter your DNA, but they cannot. The vaccine instead penetrates the virus’ genetic code and provides a map to break up the virus and kill it. 

Another common myth concerns sterility in those of child-bearing age. The vaccine contains syncytin-1, a spike protein that is also found in the body and that is used to grow and attach a placenta during pregnancy. However, these two spike proteins are completely different. The syncytin-1 used in the vaccine is only used to penetrate the virus and does not live on inside the body. Therefore, it cannot affect pregnancy. 

There is also a general fear surrounding the potential side effects of the vaccine. While side effects are possible, most are mild and short-lived, occurring for one to three days after the vaccine is administered. These side effects are inconsequential compared with the potential impacts of the virus itself.

To listen to the archive of our complete COVID Claims Development: Workers’ Compensation & Beyond webinar and view a full list of FAQs from this session, please visit https://www.outfrontideas.com/.Follow @outfrontideas on Twitter and Out Front Ideas with Kimberly and Mark on LinkedIn for more information about coming events and webinars.

With each new wave of technology over the past few decades, there have been many predictions that this is the end of agent distribution. You know the drill: “Technology can be so much more efficient and remove all that expense related to those human distributors.” I can remember back to the dawn of the internet, when there was all the discussion about disintermediation. I heard that term in all kinds of insurers’ strategy discussions. I never believed agents and brokers were going to be displaced then, and they certainly have not been displaced. In fact, as digital technologies have advanced in the intervening decades, agents and brokers are still dominant. 

Now, we are in a pandemic. It has been world-changing. And it has accelerated the digital transformation of businesses, society and our industry. The inability to meet in person and the rapid shift to everything online has put pressure on the agent distribution model. So: Has the pandemic finally put the nail in the coffin of agent distribution (for all those folks out there who don't like agents or don't think they add value)?

The answer is a resounding “no.” I think this idea is a myth. For complex lines of insurance, mid- to large commercial line specialty insurance, high-net-worth on the personal side and other segments, agents will be necessary. There will always be a need for expert advice on risk management. And there will always be a need for intermediaries who deeply understand customer needs and can create that right combination of coverages linked to the right underwriters. These areas will benefit more and more from technology over time. But the agents and brokers are likely to be around for a very, very long time. 

It could be a bit different for simpler lines like personal auto, homeowners, pet, travel, etc. and some of the new, on-demand or gig economy types of insurance. There are strong arguments that those lines will migrate more rapidly to direct digital distribution. But even then it's not going to happen overnight. There will be a slow evolution. My prediction is that there will still be agents selling all of those lines in 2030.  

See also: 4 Predictions for Independent Agents

Are there people out there who think you should be able to just press a button and get your insurance, so why have human intermediaries? Yes, but they are oversimplifying, and I believe it's a myth to assume that agents are superfluous. 

In that vein, this is your call to action: Strengthen the relationships you have with various distribution partners and with the technology companies that support you in the distribution space. Agent-carrier connectivity solutions, portals and self-service capabilities all enhance that connectivity. You must form strong bonds and leverage those technologies as much as possible to improve relationships and to provide more value. And, finally, we live in an omnichannel world with many different options. Customer journeys often involve the use of multiple channels, so agents need to be incorporated into the overall omni-channel strategy.  

MARCH 2021 FOCUS OF THE MONTH
Strategic Innovation

 

FROM THE EDITOR

 

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. Some McKinsey partners told me a few years ago about working with a major U.S. insurer that saw itself as being paperless within a decade. When they looked at the budget for the coming year, though... spending on paper was projected to be up 6%. The last I checked, annual increases in a budget item won't get it to zero any time soon.

As you can see from the articles I've selected for this month and from my soon-to-be-shared conversation with Amy Radin, I believe strongly that insurers need to take out a clean sheet of paper and imagine an ideal form of the future five or 10 years out, then work backward to what they should be doing now to create that future. That approach to strategy will mean taking any number of actions -- and stopping many of today's practices, no matter how long they've been "business as usual."

My short form of Mel's line for the insurance industry is: Burn the fax machines.

 

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

 

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WHY STRATEGIC INNOVATION

2020 Global Concerns Survey

The International Insurance Society, in collaboration with the Pacific Insurance Conference and Insurance Thought Leadership, conducted its annual survey to understand the concerns of global executives in the insurance industry. This survey found that innovation was a very high priority in 2020, but less than half of respondents have a plan in place.

View the Results

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WHAT TO WATCH

A Conversation on Corporate Strategy, with Amy Radin 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

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WHAT TO READ

	2021: The Great Reset in Insurance A shift toward greater corporate and social responsibility and empathy in general is underway, and 2021 will bring a great global reset. Read More
	How to Think Better by Using 6 Hats Although Edward de Bono's Six Thinking Hats technique has fallen out of use, it's worth another look at what can be a powerful tool for creativity. Read More
	The Intersection of IoT and Ecosystems Insurers can build a sort of digital twin of the customer, then tailor their offerings and improve the customer experience. Read More
	Rise of ‘Product-ism,’ Fall of ‘Project-ism’ Firms struggle because they view AI initiatives as small projects rather than a product requiring continuing maintenance and investment. Read More
	The Next Wave of Insurtech With automated claims processing, the turnaround time for settlement will be measured in minutes rather than days or weeks. Read More
	How Low-Code Accelerates Change Here are three tangible ways that low-code programming lets carriers accelerate change and provide new benefits to customers. Read More

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WHO TO KNOW

Get to know this month's FOCUS article authors:

Stephen Applebaum	Richard Barbarino	Matteo Carbone
Marty Ellingsworth	Paul Laughlin	Colleen Wells

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Learn More about ITL Focus

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

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The MIT Technology Review's list of technologies to watch is always intriguing, and this year it's even more portentous than normal.

The list begins with developments in messenger RNA, which has not only delivered vaccines against COVID-19 but which may allow for other breakthrough vaccines and may even create novel treatments for cancer.

The Review also describes two developments in AI that will greatly broaden its capabilities, plus a potentially much more precise version of GPS, among several other things.

Many, if they pan out, would ripple through society and, thus, through the world of insurance. Let's have a look.

The MIT Technology Review article begins with the startling array of possible applications for the mRNA technology that allowed for the Pfizer-BioNTech, Moderna and other vaccines for COVID-19. While the technology had never been used in humans before, the success of the vaccines shows that it can be used in highly precise, targeted ways.

There is now hope for developing vaccines for HIV and malaria, each of which kills about a million people a year worldwide and which have resisted previous attempts at producing a vaccine. The fatty nanoparticles that protect the mRNA as the vaccine is injected into a person may also be able to deliver other microscopic "tools," such as those used for gene-editing, which might be able to cure genetic diseases such as sickle-cell anemia and remove conditions that can cause cancer and heart attacks.

The medical breakthroughs may not come for some time, so they may not be of urgent concern to health and life insurers, but it's hard to know. Moderna designed its mRNA-based vaccine within two days of getting the full genome of COVID-19 -- before the U.S. even had its first diagnosed case -- and had actual vaccines ready for testing in animals within six weeks.

(Amid today's discussions about what value will come from having people return to offices, I find it intriguing that Katalin Kariko and Drew Weissman, the two researchers who developed the basic technology for mRNA-based vaccines, began their collaboration after they met while standing in line to use a copy machine at a lab at the University of Pennsylvania in the late 1990s.)

The two developments that the Review singled out in AI likely won't find their way into the world of insurance quickly, but they're still fascinating.

First is OpenAI's GPT-3, which can mimic human writing. It has its issues but can also be scary good. For instance, a Review article says that a human provided this to the AI as a prompt:

"In a shocking finding, scientists discovered a herd of unicorns living in a remote, previously unexplored valley in the Andes Mountains. Even more surprising to the researchers was the fact that the unicorns spoke perfect English."

The AI was asked to continue the story, and it added: 

"They also were found to have perfectly coiffed hair, and wore what appeared to be Dior makeup. 

"'We were shocked to discover the unicorns,' said anthropologist Daniel St. Maurice. 'They were like nothing we had ever seen before. We had heard legends of the unicorns, but never thought they actually existed.'

"When the scientists first arrived in the valley, the unicorns were surprised and startled by the presence of humans, but were also excited. The unicorns welcomed the researchers and explained that they had been waiting for them for a very long time."

Whoa, right?

The second AI development is progress in combining language capabilities, like those provided by GPT-3, with sensing capabilities like machine vision to give AI a more natural understanding of the world. A Review sidebar says a "multimodal" AI drew a picture based just on the words in a caption. In time, the new approach could lead to devices that would take a far wider variety of verbal directions than is possible now.

That would mean everything from nice-to-haves like new forms of Alexa in the home, to more sophisticated robots in factories and other workplaces that would reduce workers comp claims. A more aware form of AI would also help in areas where AI is currently being applied, including claims and underwriting.

As for the developments in GPS, a more precise version is already being deployed via new satellites and will take us from today's accuracy (generally within five to 10 yards) to accuracy of within one to three yards by 2023, but that's just the beginning. Already, a Chinese system based on satellites, ground stations and a network of sensors can detect movement of ground at the millimeter level -- roughly the size of the tip of a sharp pencil -- from 13,000 miles up in space.

I tend to think of better GPS as improving the directions I'm given or, in the intermediate term, allowing drones, robots or automated vehicles to deliver things to me more easily, but the new GPS systems will tackle far more important problems than whether a drone delivers my pizza while it's still hot. For instance, a Review sidebar described how the Chinese system spotted surface sliding following days of heavy rain last summer and evacuated 33 villagers days before a massive mud slide wiped out their homes. Such warning systems could greatly reduce the losses in many natural disasters.

The Review also describes a new type of battery that may accelerate the adoption of electric cars, plus a move toward "data trusts" that could blunt the control that Facebook and other social media platforms have over users.

If you're a tenth as interested in the future of technology as I am, the list of breakthroughs is worth a look. It'll broaden your horizons -- and maybe scare you a little.

Stay safe.

Paul

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

Pressure to Innovate Shifts Priorities

Strategic planning needs to be bold enough to match the velocity and magnitude of the changes the industry faces.

How AI Will Define Insurance Workforce

If data analytics and AI become staples in modern business, how do they solve the human resource problem? The answer is threefold.

Claims Development for COVID (Part 1)

This first article will cover COVID-19 claims data. Part 2 will provide more details on long-term medical effects.

7 Ways to Innovate With Purpose

Now is the time to ask the basic question — "what is our purpose?" The answer will align strategy, people, capital and other resources.

5 Things to Know When Integrating AI

It can be challenging to see which provider actu

Insurance Outlook for 2021

It may feel like the end of the pandemic is in sight, but the shock waves created by 2020 will reverberate for years.

According to a recent Aon Programs survey, insurance agents are betting on social media to give them the biggest marketing lift this year. Of the 33% of agents expecting a boost from social media, 41% expect Facebook and 33% expect LinkedIn to be their top-performing platforms.

As agents increase their reliance on social media to build their brands and connect with customers, there are four social strategies that they should tap to gain the best ROI. 

First, agents should take a less-is-more approach. While agents should be active on social media platforms, it is equally important to focus on quality content over quantity. No one likes an over-poster who is just cranking out content for the sake of it without a clear message. Agents should make sure that every post is relevant to their audience. Along the same lines, agents should concentrate posting on their top-performing platforms. You don’t want to bite off more than you can chew. And why would you need a YouTube channel if your clients and prospects aren’t on YouTube? Being targeted in your social strategy is the way to go to drive the best results. 

Second, agents ought to consider creating snackable content. Would you read a 10-sentence social media post? How about a five-sentence social media post? We are living in an era overloaded with digital media, and it can be overwhelming. How do agents combat digital fatigue on their business platforms? Keep posts snackable! Delivering a short but impactful message will up your chances of your post being read – and well-received. Remember, the bite-sized rule applies to all formats -- from visuals and motion graphics to text. If you want to give your followers the option to dig deeper on a topic, provide them with a link to a longer-form piece.

Third, agents must let video take center stage. If you haven’t already jumped on the video bandwagon, start making your plans! Whether it be on Facebook, LinkedIn or Twitter, videos are the format of choice these days.  In fact, according to HubSpot, 72% of customers would rather learn about a product or service by way of video. Oftentimes, when we see a face and hear a voice delivering a message, it feels more personal and can be more appealing than one-dimensional visuals or text. The best part is that video is so easy to create today – put together a few talking points, find a professional backdrop and hit record on your smartphone or tablet. Just remember to keep it short. For the most part, social media videos should remain in the safe range of 30 to 90 seconds.

See also: Want to See Social Media Genius?

Finally, agents need to be authentic. If there has ever been a time for authenticity, it is now. Professionals need to be able to trust the brands they work with and even those they merely like and follow. If agents commit to transparency in their social media strategy, they’ll build deeper relationships with their network – and they’ll even build their business. According to Cohn & Wolfe’s most recent Authentic 100, “91% of consumers are willing to reward a brand for its authenticity with a purchase, investment, endorsement or something similar.”

How do you maintain an authentic voice on social media? Social media started out, well, social! Personalizing your content with showing your team’s personality helps to boost authenticity. One way you can do this is by using authentic photos with your posts. Another way is by pairing self-promotion with expressing gratitude to others. People want to know that there are real people behind the like button. On that note, it is sometimes better not to comment on a sensitive matter if you can’t confidently back yourself on the positive side of the issue.

Social media is ever-changing but these four tips for better ROI never go out of style. By merging these foundational basics with trending topics and tactics, you’ll be on the right path to building social relationships that garner real business results.

In my 30 years in the industry, I have seen several great advances in claims processing, but nothing as exciting as AI. 

The benefits of applying AI can be transformational, not only when it comes to cost control and claims acceleration, but also in providing an exceptional customer experience. 

Several players are promoting AI technologies now — whether it’s for auto or property, underwriting or claims – which means it’s important for claims professionals to be able to see past the AI buzzwords and evaluate solutions against solid criteria. 

According to MIT Technology Review, 40% of AI companies don’t actually have operational AI to apply. As a result, it can be challenging to see which provider actually has a functioning solution, versus one that aspires to do the work in time. 

Here’s my recommendations of what to look for when evaluating an AI platform for claims processing — is the AI making predictions that drive business value or are they just nice-to-haves?

1. When the AI processes photos it has never seen before, does it make accurate predictions? 

An effective AI system can provide a recommendation in real time on a photo it’s never seen before. A quick way to weed out potential providers is to ask for a live demo and submit your own pictures. Grab random pictures from Google or from your own historical claims to really test the waters. Did the AI accept the image? How long did it take to process? What was the confidence of the recommendation? Most importantly, is the vendor comfortable with the approach or coming up with an excuse to dodge this particular exercise? These results will separate a seasoned AI platform from ones that are closer to beta. 

2. How accurate are the results against my existing data? 

Now that you have seen if the AI works – you have to grade it against your historical figures. Ask for a calibration period where you send past photos from your own operations and ask for the AI’s recommendations. Use this as a “report card” to grade the accuracy of the technology. 

3. Do you have an open platform in which to deploy your AI? 

An open platform is more advantageous now and in the future. It allows for flexibility and will make scaling easy by adding, upgrading or swapping in the best vendors and their software for your organization. An open ecosystem also helps in reducing cost by avoiding vendor lock-in and increasing competition to get the best technology out there. The ability to integrate technology with your existing stack and processes will enable each system to “speak” to each other and give a greater picture of your claims operations. Examples of open claims platforms include Mitchell, Guidewire and Duck Creek. If your claims management system is home-grown, it is also an open platform. 

See also: How AI Can Tackle Claims Staffing Gap

4. Will the AI be adopted by the end-user? 

While the concept of AI can sound daunting to those on the ground, they should see the value that will enable them to focus on other duties and be much more efficient. A good AI provider should be easy to use, with a seamless implementation process across regions. 

5. How will my customers benefit? 

Submitting a claim is already stressful for your policyholders – not including the possibility of being without a car for weeks, or even months. A core key performance indicator (KPI) when evaluating an AI solution is, "How soon can my customer submit a claim?" Be sure to ask how an AI can benefit the customer experience. The concept of generating an instant claim shouldn’t be far-fetched – insurers are already doing it.

It may feel like the end of the pandemic is in sight, but for the insurance industry the shock waves created by 2020 will be reverberating for years. From premiums to policy language, and from underwriting to governmental action, changes are coming in 2021. 

In addition to the obvious influence of the pandemic, 2020 was also a monumental year in terms of insurance losses. It is easy to forget the historic hurricane season with its 30 named storms, the hellscape of wildfires that ripped through much of the West, the tornados and derecho that ripped through the Midwest and the civil unrest that caused huge losses for businesses in city centers throughout the nation. 

All of that loss will likely add up to higher premiums. 

Even still, the elephant in the room was COVID-19. While much of the industry already had policy language excluding communicable diseases, pandemic exclusions are a certainty in nearly every new policy. And even without pandemics, underwriters will likely be taking closer looks at nearly every risk for a while. 

But, just as risk isn’t going away, neither is insurance. Here are a few specific ways the industry is likely to change in the next 12 months. 

Business

Perhaps the biggest disappointment for business owners during the pandemic was realizing that business interruption insurance policies excluded pandemics. But that didn’t stop them from suing.  

Barring legislative mandates or judicial intervention, pandemic exclusions won’t be changing any time soon. 

Instead, business owners are turning to practical ways to limit their liability while reopening as safely as possible. Still, liability is a concern. 

Some states have issued liability waivers for businesses that follow safety best practices, but no federal protections have yet come down. Absent that, businesses are going to have to rely on their business owners’ policies if an employee or a customer claims they caught the virus in their place of business. 

Liability may also bleed over into workers' compensation. 

One place the federal government has stepped in is unemployment insurance. While the federal supplement has softened the blow for employees, the open question that isn’t being widely discussed is the fate of state unemployment trust funds. 

State-based unemployment insurance was never designed for an event of this scale, and many state funds are nearly empty. It will be interesting to see if federal money will top off those funds or if state statutes will kick in, passing the responsibility on to employers in the form of higher taxes. 

Travel insurance 

The two traditional components of travel insurance were trip cancellation and supplementary health. 

The health component was essential in overseas trips where a U.S.-based policy may not carry over. But with overseas travel all but shut down, that element also largely fizzled. 

The cancellation portion is continuing for now, with a huge caveat. Pandemics in general, and COVID-19 in particular, will not be covered. 

As overseas travel begins to open up later in the year, the health portion may return, but, because COVID-19 is a known event, chances of finding a policy willing to cover its risk are slim to none.  

See also: 2020 Catastrophes; Preview for 2021

Event cancellation and contingency  

Like trip cancellation, event cancellation policies can also be found, but they, too, are all but certain to exclude COVID-19, much less any communicable disease. The policies that are available now tend to only cover small-scale events.  

Before any event will be covered, though, it has to be held in a locality where that event is allowed and legal. Presuming it is allowed, the next step is going to be increased scrutiny by underwriters, who most likely won’t sign off on any event unless it’s incredibly aboveboard. 

Underwriters will be looking at event size as well as logistics. An outdoor concert will be more likely to get a policy than an indoor electronic dance music show. 

Film/TV production 

Cameras are rolling again, and, in many cases, producers have secured insurance policies protecting their productions. That said, many of those policies are requiring massive self-insured components and monstrous deductibles. 

Even with the tighter pandemic protocols, some of those productions have still suffered COVID-19 outbreaks, in many cases causing the productions to shut back down. 

For the time being, the entertainment industry will likely continue that stuttered start-stop pattern, but the profit motive of new content will make that struggle worth it. 

Health/life

COVID-19 has thrown a wrench in the normal operations of health and life insurance policies. 

In terms of health insurance, paying for pandemic costs is the least of the worries. The bigger issue is that patients have foregone normal preventative care. That is reverberating in three major ways. 

First, because premiums are set according to prior-year payouts, setting rates for 2021 was challenging. Second, insurers are worried that the backlog of procedures will come flooding into the system in 2021, prompting corresponding payouts. Finally, with people not taking care of chronic conditions, industry watchers worry that health will worsen in the long run. 

In terms of life insurance, the biggest question is the paramedical exams. While many of the hard lockdowns have been lifted, people are still reluctant to invite nurses into their homes to get the data needed for proper underwriting. 

Some companies have responded by offering no-exam policies, but how that will play out is the biggest question mark. 

See also: 11 Keys to Predictive Analytics in 2021

Big picture

The biggest intermediate impact is going to be defined by Washington and the courts. 

The courts are going to have to weigh in on whether business interruption policies and event cancellation policies will be forced to pay out despite contractual pandemic exclusions. 

Lawmakers may also step in with a liability shield for businesses. 

But the biggest issue industry insiders are watching is a potential federally backed pooled risk system for pandemics similar to the Terrorism Risk Insurance Act. Without that kind of intervention, pandemics won’t likely ever be covered. There are a few pending bills that might do just that.