Ralph Tiede is married with four children and hails from Boston. Prior to retiring in October 2019, he spent 40 years in risk engineering within commercial property insurance. We asked him to describe his career and the industry changes he has experienced, first-hand. Here is what he had to say:

Tell me about your family and your career trajectory. 

I attended State University of New York, and my first job out of school was working for the State Health Department in NYC. I was an environmental engineer inspecting medical facilities and performed field surveys on hospitals and long-term care homes.

A company back then called Improved Risk Mutual (IRM), had a fire protection training program. I didn’t know anything about insurance at the time. The starting salary was $10,500, but I had a company car, which was pretty great. I went to train there and did three weeks of intensive training lab in White Plains, NY. I shadowed experienced engineers and then went back and did three more weeks of intensive training before getting my first assignments. From then on, we were on our own. IRM had approximately 100 field engineers and a total of about 200 employees. All the field engineers worked from home before virtual or remote work was a thing. There were no computers back then or cell phones -- only “snail” mail. They gave me a manual typewriter and a package of carbon paper, and I moved to Buffalo to begin work. 

Can you describe for me, some of the technological and industry changes that took place?

Yes. From there, I went to work for Wausau Insurance. At this point, we were still using typewriters. I made a smart choice because I invested in a $100 Smith Corona electric typewriter to gain a competitive edge. It had an automatic erase feature that worked much faster than whiteout. It was probably one of the reasons I got promoted!

Around this time, electronic mail had begun making its way into the insurance industry. Sysm was the monitor we used, but I wouldn’t call it a computer. It had a screen and a keyboard to send emails, which was groundbreaking! I could get assignments sent to me from Philadelphia and other places in real time rather than in the mail, which saved days! Still, I couldn’t type up reports on it. The other drawback was that, from then on, we needed to track our time electronically vs. manually, which no one liked. 

Eventually, I became the manager for the Northeast territory from Maine down to Florida. I was managing seven or eight engineers. We were still writing reports ourselves or dictating them to one of the 20 young ladies who worked in the steno pool and typed the reports for us. In the late '80s, the computer was introduced. That’s when corporate began expecting us to begin typing reports on the computer. The older engineers fought back because they weren’t used to the technology or typing up their own reports. Many engineers retired at that time because they didn’t want to learn how to type. 

Corporate explained its rationale for using the computers to the engineers. “Now you only have to type up a report once,” they said, “so when you return to your client’s plant in a year’s time, you still have the report you saved on your computer from a year ago. That means you only need to update the document rather than re-type it during an account review.”

So, would you describe the introduction of computers as the first digital transformation you witnessed in your field?

Yes. After 50 years of insurance being stagnant as an industry, the guidelines for underwriting began to change almost annually. New hazards and concerns would come into play, new types of plastics had been developed and new buildings requiring more storage required us to rewrite the reports every year. The result was that the introduction of computers didn’t really save us time! 

As you know with Orbiseed’s customer discovery research, risk engineers are still trying to reduce the time spent reading and writing reports. We’ve had this problem since the '70s. The industry has moved ahead so fast, and our clients’ companies have changed so drastically that we’re required to gather more data than ever before. Fire hazards have changed, and so have the nationally recognized standards. The industry has new models to predict earthquakes, hail and floods. The majority of the modelers’ data is delivered by the engineers. The modeling people, the underwriters and the actuaries all want data from the engineers.

So, the job is basically the same, but the types of data we collect have exploded. We need new ways to aggregate and synthesize it faster to remain competitive.

When computers were introduced at Wausau, they caused an uproar. The transformation was introduced to over 6,000 employees in a short time. HR explained to the risk engineers that this was the way of the future. “We’ve been stagnant for 50 years in the industry,” they said. “But from now on nothing will ever be constant but change. If you can’t get used to constant change, you'd better leave.”

Through a series of events, Wausau was acquired by Liberty Mutual. It was while I was at Liberty that I was asked to interview for the role of VP, risk engineering. I didn’t really want the job because I didn’t want to uproot my family and relocate at this stage in my career. I reluctantly went through the interview process without ever thinking they would offer me the position, but they made me an offer. I remember my wife saying, “You’ve complained so much about the way this company is run. If you think you can make changes, then you should take the job. If you don’t go for it, I never want to hear you complain again!”

I spent the next 15 years trying to bring harmony during a massive company merge. My greatest success was helping to rewrite the standards and guidelines for engineering and underwriting to meet the new and emerging hazards we were faced with at that time. 

What were the major key performance indicators (KPIs) when you started vs. now for risk engineers in insurance? 

Since the '70s and my time at IRM, we would evaluate success based on how long it would take a field engineer or an account engineer to complete a task. But here was one of the problems: When I was a junior engineer, I would cover people’s vacations. The resident engineer would report taking six hours to complete a reinspection when I would complete it in two. Management picked up on this. The resident engineers gave me a hard time. They called me to say, “We don’t how care how long it takes you, you need to account for a minimum of six hours on a reinspection if that’s what was previously recorded.” The account engineers needed to account for 40 hours of account or project work per week, so they were always trying to find creative ways to meet their numbers. 

Management told me I needed to work on our report writing and analysis times to help reflect more accurate hours. However, the field engineers ended up moving their hours over from the report writing bucket to other areas such as the travel time bucket! That’s when we changed from tracking hours to measuring productivity. For example, we would look at how many inspections were made and, based on the scale of the building size and the complexity of the facility being surveyed, we would assess how many field visits they could complete per week.

Account engineers work in a grey world. They need to be comfortable with ambiguity and great in front of the clients. It’s a challenging role. We would measure the account engineer’s performance based on the number of account reviews with the clients they did and how many broker visits they made. We would also look at the number of risk recommendations they sold to clients. Eventually, we took away the account reviews as a KPI, because those will always be there. That’s where AI comes in; we can do account reviews a lot quicker now. We can be measured on the metrics that really count. That’s where I see the big interest is going to be with AI. Every company has the same problem. The engineers are inundated with paperwork and data.

Despite the challenges, I always highly encourage young professionals to pursue the role of field engineer and account engineer. It’s like waking up every day and going on a field trip that 99% of the world will never get to see. You’re like a kid in school exploring aircraft manufacturers, mining facilities, paper manufacturers, even prisons. You have the freedom to go in and explore every inch of the place and see how people get their job done. If you’ve ever seen the TV show, “How Things are Made” -- it’s like that. You get to see how things are made, first-hand. You also realize how tough some people have it. For example, with some manufacturing plants people might get paid by the article they sew. That’s when you realize you have a pretty great life. I’ve seen people working long hours in five-story buildings at 95-degree heat. 

How do you think the future of technology is going to change the way risk engineering is done? 

The world is changing so fast. Insurance companies are trying to build the technologies internally, but they’re so slow at doing it. By the time the carrier has finished creating a product, it’s already obsolete. There’s a lot of resources being put toward improving underwriting efficiencies, but risk engineering is usually last on the priority list. We can perform virtual surveys and aerial mapping, but that still doesn’t solve the problem of analyzing the data. Now we can speed up the process of creating risk surveys and the time it takes to verify them, which is a landmark innovation.

Why do you think risk engineering is last on the list for change?

The way senior managers look at it, underwriting holds the key to success. Most senior managers come from the underwriting or the financial world. Risk engineering is thought of as a data source rather than a profit center or helping to minimize losses and reduce costs. Managers think it’s difficult to track the efforts of evaluating and analyzing risk, which is true. And claims are costly, so insurance companies focus a lot of their IT efforts and resources on claims.

That being said, clients are becoming a lot savvier and more intelligent about managing their own risk. Years ago, you’d have a financial person handling the insurance of a multinational corporation. Now you have an internal risk manager (yes, it’s an actual career path!), where they manage the corporation’s risk internally. They’re more involved in the terms and conditions, ensuring that the multinational gets the best insurance coverage. These internal risk managers understand they need to build loyalty with insurance companies, and, in turn, they’re looking for a long-term relationship – a strategic partner, if you will - and cost savings in return for good compliance. It takes corporations a lot of money, time and resources to change insurance companies. People are looking for more cost saving recommendations and relationships with their carrier to help minimize losses and reduce costs. Brokers are encouraging clients to convince carriers of their business continuity plans and show compliance, as well as a commitment to loss prevention and safety. They need to prove to insurance companies they have a stake in the game, because it's a lot harder to get coverage today than ever before.

See also: 3-Step Framework to Manage COVID Risk

What are your concerns for the future of risk engineering?

My biggest concern is the lack of knowledge transfer with the younger generations of risk engineers coming in. IRM had a great training program and Industrial Risk Insurers (IRI) – one of the biggest carriers  – used to trained hundreds of engineers per year. They were the reinsurance pool for the stock companies. They had an extensive training program and did all the underwriting and engineering for their member companies. Sadly, the company experienced a series of unpredicted large and costly losses and was eventually dissolved. Kemper HPR went out of business also. AIG started building and training their own engineers a few years back, but now they've pretty much reduced their efforts in this area. It’s well known in the industry that 25% or more of risk engineers are retiring within the next five years. All of these companies used to have their own fire protection training labs. Now there are hardly any labs left. 

Chubb has a good training program, but not a lot of companies are providing solid training for up-and-coming engineers. I think it’s really a shame because it’s not the kind of course you can go find in a college. You can get a certificate or degree in fire protection but not in property insurance. You have to learn that side of the business and shadow the experts who have come before you. 

A lot of engineers used to move into underwriting, and that’s really how it should be. But now you have people coming into underwriting from finance and business schools. They don’t understand the risk engineering side and rely 100% on an account engineer’s assessment. That’s a real risk. 

If you had 10 more years of runway as a VP of risk engineering, what changes would you try to implement?

Well, first of all, I think I’d become an account engineer again. That was the most enjoyable time of my career! While it was exciting as a VP to build the risk engineering department, I was responsible for a lot of administration, too, like staffing and budgeting. I used to love when the account engineers or underwriters would come to me with an engineering problem. If I were to be VP of risk engineering again, it would have to be focusing on improving technology to speed up the reporting processes for risk engineers so they can focus on high-knowledge work and being client-facing. That and creating a robust training program for new people.

Ralph is a senior adviser on the board at Orbiseed. Views are his own.

"In our world, parallel lines do not meet, and you can't turn an orange wrong side out." --Joseph Krutch

Yet, I see carrier management and agency owners regularly default to wishful thinking in their decision making. In other words, while parallel lines do not meet, these specific people believe the lines should meet. They make decisions on that assumption. Reality, though, does not change. Parallel lines can never meet no matter how much a person wishes the lines did meet. To pretend otherwise and make decisions in this alternative reality can only lead to problems if not disaster. And just because disaster does not happen immediately should not be taken as a sign that it won't.

A famous company once had an executive promoting how he had made parallel lines meet. Because most people did not look too closely and the accounting was opaque, what people did not notice was that a shell con game was being played (not literally a con game). While the line-bending benchmarks were being touted, the results being reported were mostly due to an entirely new part of the business that did not have a true financial reckoning until the credit crisis. Even after that, it took about 10 more years for people to admit they'd been seeing a mirage -- when financial promises were finally and completely broken.

Always remember: Parallel lines never meet. And you can work to see the lines as they are rather than as you wish them to be.

An example or two might help. Take two carriers of equal size. One has an issue causing expenses to be $200 million more than the competitor's. All else being equal, the first carrier's loss ratio needs to be the equivalent of $200 million better. Yet the management of that carrier has proclaimed that its loss ratio only needs to be the same because there is no way its expense ratio is higher than average. So, the carrier loses money the next year, and the next, and the next, and the next. Parallel lines are straight, not warped. The carrier's thinking is warped (true story).

Or, there are agency owners who think that unmotivated producers will become motivated on their own initiative. That is warped. If the producers had initiative, they would already be motivated (true story, multiplied by thousands).

Yet humans are pre-programmed to believe what they want to believe, reality be damned. St. Augustine wrote something to the effect of, "Do not plan long journeys [pilgrimages], (to help you believe more in something like an aspect of religion in this realm) because whatever you believe in you have already seen." I have read one theory that the strong desire of humans to believe in whatever they want to believe is for survival. If they did not believe in the unreal, they might give up hope. That makes some sense to me, so the challenge is to know when to believe in reality and to be disciplined enough to recognize the "when" to believe in reality regardless of how sour that reality may be.

See also: Another Reason for Insurers to Embrace AI

The solution, one of the few solutions actually, is to have someone close to you who will always be brutally straight with you.

Another solution is to be away from your kingdom, your organization, when you seek advice. A human's ability to accept reality often increases the farther one is from home.

Another solution for larger organizations is to always have outsiders on the board and give them extra influence or voice. An entity will begin believing in alternate realities even more rigidly than individuals. This is what happens with groupthink. An example of carrier groupthink is everyone at a carrier thinking it has great claims service even though the agents, based on their customers' experience, almost universally say differently (again, true story).

Reality really can suck. No bones about that. But reality usually wins, so if you want to be a winner, take steps to understand and accept reality on a vigorous basis.

Almost daily, news reports cover ransomware attacks involving Garmin; the world’s largest cruise line operator; the Las Vegas school district; Brown-Forman, the manufacturer of global distilled spirits brands like Jack Daniels and Finlandia; and the University of Utah, among other victims.

The attacks illustrate ransomware’s far-reaching and costly impact in terms of exposed data, disrupted operations and ransoms paid: Intruders claiming responsibility for the Brown-Forman attack, for example, said they had copied a terabyte of confidential internal network data and threatened to share it online, as part of the extortion. The cruise line operator, Carnival, experienced the compromise of guest and employee personal data. The Las Vegas school district notified employees that their Social Security numbers may have been stolen. The University of Utah reportedly arranged to pay more than $455,000 to satisfy a ransom demand, while Garmin reportedly paid $10 million after certain web sites, customer support and user application functions were blocked.

Clearly, companies are living in an age of high cyber risk. In addition to ransomware – which is targeting three of five organizations – wildly lucrative business e-mail compromises (BECs) are also behind mounting financial losses. Through BECs, adversaries create fake but authentic-looking e-mails (often disguised to look like they were sent by a high-level executive) to trick employees into wiring money into bank accounts controlled by the bad guys. Like ransomware, BECs are generating lucrative returns for fraudsters, costing U.S. businesses more than $300 million a month – up from $110 million a month in 2016, according to the U.S. Treasury Department’s Financial Crimes Enforcement Network (FinCEN).

To minimize the fallout from these and additional risks, organizations are increasingly investing in cyber insurance, a global market projected to reach $28.6 billion by 2026, up from an estimated $4.85 billion two years ago, according to a forecast from Allied Market Research. Cyber insurance often covers a company’s liability for data breaches leading to the compromise or loss of customers’ Social Security numbers, credit card accounts, health records and other personally identifiable information (PII). These insurance policies can also help a targeted organization cover the costs of customer breach notifications, fraud monitoring and the restoration of personal identities.

To be sure, cyber insurance is a significant investment. Acquired and managed correctly, this insurance coverage becomes part of an integrated cyber risk posture complementing security controls and policies. However, the insurance can bring a false sense of security and lead to coverage gaps and expensive disputes with carriers, if corporate IT, legal, risk and business leaders do not collaborate closely on the following essential action steps to take before updating or acquiring new coverage:

Inventory your assets – and understand their value

The IT ecosystem is much more dynamic today. The traditional perimeter no longer applies in the global, mobile age of digital transformation. There are more remote employees, third-party partners and non-traditional connected devices. Companies operate anywhere and everywhere, which leads to negotiating and purchasing coverage based on incomplete views of true assets and risks -- increasing the probability of costly disputes. A single shift like moving e-mail, storage and other applications to the cloud, for example, could get entirely overlooked – and uncovered. That’s why IT and a cross-functional team of leaders must develop a comprehensive, current view of these assets and their role in supporting business continuity, customer services and the accomplishment of strategic/bottom-line goals.

An objective, “data-first” approach proves critical in visualizing and managing coverage requirements. Cyber insurance evaluation team members need to pinpoint where the data resides, and where it travels to, i.e., which non-traditional networked devices, new partners or regional offices it touches. Even if entirely new parties are not handling the data, team members must determine if they’re storing information in new internal locations and form factors, which may make the data more susceptible to theft or exposure.

See also: The Missing Tool for Cyber Resilience

Understand what is covered, and what is not

The cybersecurity profession uses terminology like “compromise,” “intrusion” or “incident.” The insurance domain assigns very specific meaning to works like “theft,” versus “loss” and “damages.” These terms are not interchangeable, and the stakes for coverage disputes and litigation are high because so much turns on whether a cybercriminal “broke in” to steal or ransom something, for example -- versus tricking a victim to e-mail the attacker sensitive files figuring in a compromise.

Therefore, it’s critical to know coverage and limits before an incident, with the leadership team mapping out plausible attack scenarios and consequences, along with a range of possible outcomes in the form of stolen data, business disruptions, brand reputation damage and customer churn. Then, team members must ensure that these outcomes are covered in the scale and scope of coverage.

Enlist a digital forensics and incident response partner before you buy

Many organizations benefit from sharing their initial cyber insurance checklists and assessments with a trusted digital forensics and incident response (DFIR) partner experienced in cyber insurance investigations and related matters. A DFIR partner familiar with your business and industry sector brings invaluable “outside eyes” on potential coverage gaps and helps ensure your team will be able to preserve files and document how an incident occurred, maximizing the likelihood that accurate claims for covered incidents are processed as quickly as possible. 

Policyholders benefit from “writing-in” (specifying) the DFIR partner as the designated, go-to response firm for incidents. Otherwise, the carrier will designate a response firm from its list of default contractors – vendors that do not command the same level of knowledge about a firm’s IT ecosystem and operations. And default vendors work for the insurance provider to reduce its liability, instead of committing to the interests of the policyholder.

See also: How COVID Alters Claims Patterns

Cyber insurance is a booming part of the risk management world spurred on by current events. It can be a key part of your organization’s safety net. But, like any net, it can come with holes – holes that can amount to an unnecessarily expensive proposition for companies that fail to recognize and eliminate them. By combining complete IT asset awareness with granular attention to detail about coverage, an organization can move forward with its DFIR partner to ensure the continuous improvement of risk mitigation and containment efforts no matter how forbidding the circumstances – along with the right insurance plan for these uncertain times.

With social distancing measures allowing fewer and fewer in-person interactions, all types of businesses are evaluating which of their typical activities can be shifted to digital platforms effectively. The drive to get more customers on digital is so powerful that many insurers are left playing catch-up; the pandemic caught many out as they were still working on modernizing their IT systems, so they transferred some customer-facing activities to websites and apps and pushed the customer-expectation bar that little bit higher.

Even insurers that had been preparing for the digital shift and had invested in integration and modernization of their infrastructure are struggling to keep up with volumes and new demands. Although they were aware of the importance of digital transformation, the urgency of virtualizing meetings with advisers, of providing self-service client onboarding for a complete range of products or of virtualizing damage assessments, had not been top priority. 

In fact, scenarios that previously seemed like nice-to-haves have suddenly escalated to urgent, while more futuristic alternatives, such as screen-sharing and CRM-integrated video-conferencing, are now commonly seen as critical enhancements to enable competitive advantage. CIOs and their teams are urgently assessing which new business scenarios need to be enabled and how.

These scenarios include new features that respond to customer pressure for more self-service, improved user experience and 24/7 access to information. At the same time, however, the scenarios also enable greater security, antifraud measures and stronger compliance. Some key examples that insurers should be harnessing now are:

1. Self-service channels

As more and more users turn to digital to carry out self-service operations such as checking the status of their claim 24/7 over a wide range of devices, the need to develop engaging and intuitive front-ends becomes more pressing.

These need to be easily integrated with back-end systems without requiring complex and lengthy projects. They also need to provide 24-hour availability of information and peak volume handling without affecting back-end system performance.

2. Increased sales team efficiency 

It is not just customers that demand access to information wherever they are and at any time of the day; brokers and sales teams also now need to access customer information remotely using a range of different devices (smartphones, tablet computers, etc.). This information enables them to be more effective in promoting, up-selling and cross-selling as well as developing personalized insurance plans.

3. 360° picture of the client and profiled cockpits

A 360-degree view of the client’s situation requires access to a lot of information, often archived in various back-end systems in different formats. Profiled cockpits and dashboards can gather all this information in a single location as well as including deadlines, notifications and suggestions on actions.

See also: Digital Future of Insurance Emerges

4. Antifraud

The availability of integrated information deriving from all back-end systems that is updated 24/7 could be a game-changer in fighting fraud. Not only should the business be able to access and integrate all its own information on the customer in a single view (such as previous claims or credit score for example), but it should be possible to integrate information from satellites or third parties such as IoT, big data or open data sources, for example.

5. Simpler, faster onboarding 

Onboarding is often a source of irritation for customers who would like to be able to get it done as rapidly and smoothly as possible. Digitalizing this process is critical to ensure the longevity of insurance companies in this period of social distancing, and customers have long been demanding it. By carrying out the process from their own home, where they have access to any required documents, customers save time and are less inconvenienced, and advisers are able to focus on more complex and valuable tasks.

6. Virtual video collaboration 

This scenario enables a series of activities that are highly valuable to insurance businesses, starting from video recognition of the customer in the onboarding stage, right through to enabling insurers to carry out video appraisals of accident damage, for example.

Video damage appraisals can, in fact, be carried out over video by the client, without the insurance assessor visiting the customer home or the mechanic, but simply via a video call recording short video snippets and taking screenshots. It is crucial to be able to easily store these video-snippets and screenshots directly into the claims application on one side, and into the corporate client app, on the other.

Another typical use case is the capability to run video meetings with clients and other experts and then seamlessly integrate them into the CRM system. These meetings range from video support and desktop sharing while quoting a policy, to actual video consultancy sessions. Video that is shared between agents or advisers and the customer over a screen may be browsed and commented on together and forms a key part of the customer experience, so it needs to be part of the customer view. Integrating this video with digital channels such as apps as well as the CRM system helps provide a more complete customer view and better decision making, including by providing more tailored products.

7. Improved, modern UX

All these business scenarios simplify processes both for the customer and for internal teams, but they depend on having a modern, multichannel interactive user experience. New platforms for digital touchpoints must be designed to maximize ease of use and user experience quality, while integrating legacy back ends in real time.

See also: New Digital Communications

It’s clear that each business needs to evaluate where its processes are obsolete and inhibit achieving these new scenarios. There is some low-hanging fruit just waiting to be integrated with the support of industry specialist partners, and some more complex but incredibly rewarding processes that can also be embarked on. Whichever route insurers decide to take to reach digital transformation of business scenarios, it is clear that the global pandemic has accelerated the pace.

For insurance carriers, customer retention relies on trusted communication between the company and its customers—often by way of representatives like brokers and agents. Developing and maintaining that trust depends heavily on the quality of policyholder communications: knowing and understanding your customers and presenting your brand in such a way that customers feel they know and understand you. While this seems a simple concept, in this era of digital communications it requires—and customers expect—the intimacy of personal interaction distributed through sophisticated and varied media channels and devices. 

The customer communication management (CCM) systems that many insurers employ today are able to create communications to be delivered via the various channels that customers prefer. However, modern CCM systems are capable of even more personalized and relevant interactions. And there’s the problem: Many insurers have been in business long enough to experience evolving generations of communications systems. This has resulted in valuable content and customer communications being stored in various silos throughout the organization—one for marketing, another for billing, another for claims and so on—and often in near-obsolete formats or systems. 

For customer service representatives, claims adjusters, brokers or agents, finding the right template can be problematic and time-consuming. Then, creating an appropriate response with approved content is yet another hurdle. Ideally, every insurer today should have a CCM system that is able to draw on the accumulation of content from customer communications from all internal departments, then assist business users in using that information to create a fitting response. If that is not possible in your organization, a more robust CCM system needs to become a priority for the sake of your staff and to satisfy increasing customer expectations. 

Moving to a better system

If the necessary content and customer information required for a new CCM system are still housed in disparate silos and legacy systems, the question becomes, where do you begin? When considering migrating to a modern CCM system, we recommend starting with a communications assessment to get a realistic idea of the scope of the task you’re undertaking. Consider the volume of the materials you have, where they are located in your organization—again, they may be distributed among several departments and systems—and your priorities. What will your future omni-channel customer experience look like? This understanding will help determine what kind of CCM system best suits your requirements, the plan needed for migrating to a new system and the costs involved.

Traditionally, the only way to migrate legacy content was manually. That meant getting staff to look at the tens of thousands or hundreds of thousands of documents and content messages in your files, then sort them into various piles, labeled as "obsolete," say, or "excellent explanation," or "good introductory paragraph," or "Connecticut doesn't require this any more." Depending on the volume of communications and associated content objects in your archives, this process would likely mean a major investment that could include hiring and training many more people and allowing them months or even years to sift through everything. Add to that the potential for human error, and you can see what a painstaking, expensive and fraught task this is. One alternative is to "lift and shift" all content from your old systems into a new one. Unfortunately, this move won’t deliver the change you are looking for as it just recreates the chaos of your old systems in the new platform.

See also: AI Ends Guesswork in Uncertain World

One answer is to apply more advanced technology to review and sort out your existing customer communication files. Modern technologies, such as artificial intelligence (AI), machine learning (ML) and natural language processing (NLP) are increasingly being used to significantly accelerate content migration and optimization processes. To begin with, AI can be a powerful tool to automate the ingestion and metadata tagging of legacy content from various file formats and systems. In addition, AI,  ML and NLP can analyze content and communications to identify outdated, off-brand, duplicate or similar content, as well as inconsistencies or non-compliant branding, reading levels and sentiment. This content can then be optimized prior to importing it into a content hub for use in future communications. Applications with these kinds of built-in AI and ML functions have been known to reduce the time required to modernize and optimize your existing customer files by as much as 99%.

Putting it all together

The aim of this process is to then to house the content in a centralized content management system or “content hub.” This enables your content authors to centrally control content and provide customer-facing teams with access to approved communications regardless of the channel (print or digital). This content hub should include documents like disclosures, policy statements and explanations of benefits, standard customer correspondence templates for claims responses, account servicing and billing to enable servicing teams to build relevant and personalized correspondence. The right hub will also help to automate the application of the required regulatory and compliance language for different states and jurisdictions. The AI-powered content hub would offer nearly all the pieces needed to put together a customized and relevant reply to a customer query via the preferred channel of communication. 

These systems empower your customer-facing teams, ensuring they use the latest, approved content and enabling them to add relevant, personalized messaging based on real-time information. AI embedded within these systems can provide guardrails to ensure communications stay within brand, reading level and sentiment guidelines. This not only helps to protect brand equity, but it also assists the organization overall in driving toward a more consistent, cohesive customer experience across various touchpoints and channels. 

As insurers have expanded customer touchpoints across new digital channels, delivering consistent and relevant communications presents new challenges. Increasingly, both existing and prospective customers expect prompt and appropriate answers to their queries via the channel of their choice, or they may look to your competitors. With a solid communications strategy and a CCM system that supports it, you will find new ways to create, manage and deliver an array of complex insurance communications with consistency and efficiency, which can be a significant factor in winning — and keeping — your customers.

An all too common theme within a work environment is the mounds of work that people have on their plates at any given time. If this is something that you are experiencing, you’re not alone! This is a systemic issue that spans industries around the globe. In this article, I’ll break down:

1. The effects of an overflowing plate of work
2. The state that we should aspire toward
3. The formula that will help you right-size your workload and get closer to the desired state

The adverse effects of an overflowing plate

How did we even get to this point of overload? It usually starts when multiple deliverables are weighted the same in terms of value and urgency, which can lead to a sense of a lack of control over commitments.

Because it is impossible to complete everything with the same level of urgency, a general feeling of failure sets in; quality is compromised; and speed to completion is reduced.

What does the desired state look like?

What we all long for is a life where we feel in control, where we deliver high-quality work, where we are improving the world around us and feel fulfilled.

The question is: What can we do to lean more into this desired state and regain greater control? 

The three-step formula that will help you right-size your workload

Oftentimes, employees struggling with work overload also tend to work in environments that overuse meetings and place a high value on tasks.

Recognizing that part of the issue could be the environment itself, I’ll share a formula that will be able to stand on its own and one that may also help to improve the DNA of the organization.

Step 1: Prioritization

Ruthless prioritization is the first step toward regaining control. One technique that we use is a 3x3 matrix that compares High vs. Medium vs. Low Value against Urgency. Here are the steps to take to make this work:

1. Get clear on your definition of value. 
2. Discuss how you would define High vs Medium vs Low Value. 

Urgency means: the speed at which the value that you hope to gain will diminish if you do not work on an issue now. As you can see, the consideration of urgency controls bias and motivation.

1. Repeat steps 1 and 2 for Urgency.
2. Take inventory of the work on your plate.
3. Map each item on your list(s) to the various sections on the matrix. Scrutinize where you are ranking your work items. Whether you are creating a physical representation of this exercise in your office or using a collaboration tool, once you plot your work your matrix may look something like this: 

4. Take the necessary steps to eliminate the “low” and “very low” items from their plate. 

See also: How to Pursue Innovation in a Crisis

Step 2: Visualization

1. Start by creating a board with four columns and title each: Backlog, Next, To Do and Done. This exercise may be done physically or virtually.
2. In the Backlog column, add your Very High, High and Medium work items.
3. Once everything is in your backlog, move the highest-priority items into the “Next” column. (Remember how I color-coded the “very high” items differently from the others? This helps illustrate that these items will be prioritized and worked on first, before anything else.) 
4. Here is where the biggest mindset shift happens (and why we titled this article, “The Power of One”): Move only ONE of the items from your “Next” column, into your “To Do” column. This will be the item that you will focus on immediately.

Reducing your Work in Progress (or WIP) to one feels uncomfortable and counterintuitive, in part because further work decomposition may need to be done. Here’s the reality:

• Multitasking is not real. 
• Dividing your time and attention across multiple items results in lower throughput and a higher lead time to completion.
• The collateral damage to a higher WIP is always some combination of poor quality, longer lead times, stakeholder disappointments, etc. 
• Lowering your WIP wherever possible results in higher throughput, faster lead times, a huge shift in focus and a gratifying sense of completion.

Step 3: Conservation

To keep this system alive, establish policies and cadences for yourself. Are there any items that can supersede anything in your existing hierarchy? How often will you review and prioritize your work? How often will you replenish your backlog? Getting clear on questions like these will help keep you grounded, focused and in control and keep your system intact.

Bonus Step 4: Pause, Reflect and Celebrate!!

Breathe it in and celebrate all your hard work with your team.

Thirteen years after Progressive launched Snapshot, its usage-based insurance (UBI) rewards program, telematics-based policies represent a modest part of personal and commercial lines insurance. Bullish estimates of double-digit adoption by 2020 haven’t materialized, but it’s clear that telematics-based products appeal to a need within the market. Adoption will likely continue to grow. Insurers should consider telematics strategically, whether they expect to enter the space or not.

Adoption: Modest but Real

Insurer telematics activity in recent years has split into rough thirds: About a third of property/casualty insurers are actively engaged, a third are monitoring the space but not yet acting and a third feel telematics don’t apply to them.

Overall, Novarica estimates the penetration of telematics programs at around 6% to 8% of insurers’ overall books, based on industry research and conversations with insurers. These numbers vary substantially from carrier to carrier. At some, telematics-backed policies can be more than 30% of their books, while, at others, it can be as little as 1%. 

Applications: Increasing in Variety

Insurers predominantly use telematics for underwriting and actuarial or product design. This approach aligns with the stereotypical UBI offering, where insurers rate drivers based on telematics data and offer retention discounts to those who prove to be safe risks. More insurers are also providing pay-per-mile offerings (such as Liberty Mutual’s ByMile and Nationwide’s SmartMiles), which charge customers based on the actual amount they drive.

Applications in other insurance functions are less common, but this is changing as both insurers and vendors innovate to offer new types of coverages and programs, like rewards programs to generate regular customer engagement or teen driving programs that can leverage telematics to create speed alerts. These offerings align with broader industry trends toward creating richer digital experiences, particularly in personal lines.

Insurers should also understand that getting the most out of these advanced features requires technological and business support beyond the telematics offering itself. For example, to support a feature like automatic first notice of loss (FNOL), insurers will need quality data, and they’ll need to be able to move it between systems across the enterprise. A comprehensive rewards program may require focused effort from marketing and customer service to stay on-message and deliver a seamless experience.

See also: Driving Into the Future of Telematics

Program Design: Essential for Success

The variety of telematics capabilities and offerings in the market means that insurers should design or expand their telematics programs with care and forethought. As with any technology initiative, the point of telematics-based insurance offerings is to better manage risk, reduce costs or create a superior customer experience.

For telematics, that means that insurers need to consider a number of factors to guide the features of their offerings. These include the target market segment, the channel through which the offering will be distributed, the services offered and how all of these elements align with existing technological capabilities and processes. There’s no one answer, and anything from a basic UBI product to an engaging rewards program could be the right fit, depending on what an insurer wants to accomplish.

Fortunately for insurers that have taken a wait-and-see approach, there are a number of products available in the marketplace, from turnkey telematics solutions to book-of-business analysis from a variety of telematics service providers and data brokers. Although early adopters like Progressive procured and managed their own telematics devices, insurers don’t have to do this anymore. Carriers that are new to the space shouldn’t spend time replicating technology that already exists.

Telematics Beyond 2020

Telematics adoption will likely continue to increase slowly but steadily over the next several years. Depending on the rate of growth, telematics-based policies could make up between $22 billion and $32 billion of the personal lines auto market by 2025.

COVID-19 will be a major factor in that growth. Anecdotally, Novarica has heard from both insurers and vendors that interest in pay-as-you-drive or pay-per-mile policies has increased in 2020 as more Americans are working from home. How long the pandemic lasts and whether widespread remote work becomes normalized could speed adoption for both insurers and policyholders.

Auto manufacturers have also been active in the space, with a number of recently announced partnerships to share driving data from connected vehicles with insurance companies. This, too, could speed telematics expansion by lowering the initial barrier to entry. 

Telematics-based insurance offerings are a small but real portion of the personal and commercial auto markets that will continue to grow. Telematics isn’t going away, but it also won’t dominate the auto insurance industry in the next five to 10 years.

At the same time, telematics doesn’t have to become dominant to affect consumer expectations around price, convenience and service. Insurers should consider potential impact now so that no matter what decision they make, it’s a strategic one.

To learn more about how insurers are using telematics, read Novarica’s full report Telematics in Insurance: Overview and Key Issues.

Fundamentally, paying claims is what insurers do. For P&C insurers, for instance, claims typically amount to 60% 80% of costs.

The simplicity of this premise masks a great deal of complexity, of course, and insurers need to balance three desires that are often in opposition to each other:

• Contain payments losses – pay what’s appropriate, and only what’s appropriate
• Maintain customer satisfaction – customers generally don’t have much contact with their insurers except in a claims situation, which is the “moment of truth”
• Hold down the cost of claims administration

While it’s perhaps easy enough to balance two of these, any combination often comes at the expense of the third. You can keep customers happy and administrative costs near zero by paying every claim in full; however, your loss ratio, the key performance indicator (KPI), will go through the roof. Alternatively, you can manually process each claim, establishing with absolute certainty that you are paying only those you should: Your payment losses KPI will be superb, but you’ll have high costs and unhappy customers.

Getting the balance right has been the industry’s challenge since its inception, with two out of three the best it could do – until now. Technology is remaking the claims pay-out space.

First, pay up

At Accenture, we’ve long sought to help clients industrialize the claims management process, making it operate like a factory with only as much time spent on claims as is necessary to pay what’s right. That approach means automating the claims processes, then branching out only if needed. The constant goal is to optimize the balance between time spent and the impact on the pay-out outcome.

AI and analytics have revolutionized what’s possible. In China, for instance, the scale of the market means insurers were forced to pursue a digital route. As a result, they have become global leaders in the use of data, artificial intelligence (AI) and analytics – streamlining the full range of insurance processes, from underwriting to paying claims. Today, some Chinese insurers have inverted the claims process: Their default is to pay, allowing them to balance all three aspects. Here’s how they do it: 

The key is to build a straight-through-payment process as the default, for which technology has provided progressively better solutions. However, this requires a cultural shift, with insurers changing their mindset from finding any reason not to pay, and instead paying every claim quickly except for those where there is a sound reason to delay or stop payment.

Step one is to implement more sophisticated workflow solutions so that, instead of escalating all claims above, say, $10,000, to a supervisor, the approach is to check only those claims that deviate from a predefined approach, i.e. those that raise data-analytics flags. Indeed, our studies show that “leakage” (the costs incurred administering or paying out claims) is proportionally higher with small, high-volume claims that are “uninteresting” than it is with the large ones that typically are scrutinized.

The second step is to use analytics to compare each claim’s data against its peers, looking for outliers. Why does this windscreen replacement cost three times the average? Why is this insured person making a third claim between the same two people in a year? There might be good reasons, but there might not be. This use of analytics is better than fixed rules systems, as they are too generic. (One client, for example, saw 80% of claims red-flagged, with operators consequently clicking away every flag as they hadn’t time to see whether they were valid.)

The third step is to use AI at key decision points – as Ping An does with damage recognition, where the insured sends photographs of the car after an accident, and the system estimates the likely cost. This approach is also helpful for more complex areas like hospital claims. Critical illness insurer Xiang Hu Bao, for example, has fully automated its claims adjudication system, leveraging AI and blockchain to enable digital evidence submission. 

AI and predictive analytics can be used at other decision points to enable automated standard-path payment or to stop the process. These points include coverage match, liability assessment, fraud detection and final payment decision.

See also: Property Claims: It’s Time for Innovation

Lessons for all

Insurers elsewhere can learn from the approach pioneered by Chinese insurers to increase claims accuracy, reduce leakage and boost customer satisfaction.

Data is crucial. Many insurers try to integrate multiple systems, paper reports and information held on external databases. That’s close to impossible at scale without the technological tools that pull data from different sources and place it in structured databases – for example, using AI and optical character recognition (OCR) to extract data from written documents and feed it into structured databases, or to analyze legal documents or police reports of accidents.

However, once that data is in place, insurers can apply AI and analytics to drive automation, making pay-outs the default, and ensuring that claims adjusters spend their time more valuably and have more interesting work.

Insurers can also use technology to boost the second element – customer satisfaction.

As I got set to write this post on Sunday night, I saw a tweet recommending that I go to bed early and get plenty of rest so I can wake up early and do my part in what may be the least productive week at least in American history, if not the world's.

Maybe we'll get lucky, and the contours of the results from the U.S. presidential election on Tuesday will be clear enough, quickly enough, that we'll be able to focus on normal activities and not be distracted by legal fights and protests, but I'm not counting on it. My younger daughter, in her third year of law school in DC, got an email from the administration over the weekend recommending that she stock up on food, medicines and any other essential supplies as though she were going to be snowed in for a week. That feels about right.

With the world perhaps about to go on hold, I'll just lob in one, quick thought in this week's Six Things and hope I get to you before we all disappear into Twitter and cable news for however long it takes to sort out the results of the election. The thought is this: While autonomous vehicles have faded from the discussion since an Uber killed pedestrian Elaine Herzberg in March 2018, AVs are being positioned for a resurgence.

Some of the positioning is official and from the rock-solid actors in the autonomous space. Google's Waymo unit announced last month that it will begin offering fully driverless service (as in, with no safety driver behind the wheel) to customers of its ride-hailing operation in Phoenix. General Motors said that its Cruise unit will begin operating fully driverless vehicles in San Francisco by the end of the year.

Some of the positioning is more speculative. Tesla followed Google/Waymo and GM/Cruise by announcing that it has begun rolling out to customers what it calls Full Self-Driving as part of a beta test that will lead to a general rollout perhaps by year-end. This would be enormous news, if everything goes as advertised, but Elon Musk has long claimed self-driving capabilities that go beyond what his cars can actually do. With the latest announcement, Musk is claiming that his cars will be able to operate autonomously without access to the sort of carefully calibrated maps that Waymo, Cruise and others prepare before letting their vehicles operate in an area and believe are crucial. Musk is also planning to go live even though he doesn't seem to have done the kind of extensive on-road testing that Waymo and Cruise emphasize. Many in the industry still doubt that Tesla's basic technology is up to the task of providing full autonomy; conventional wisdom is that autonomous vehicles require lidar -- essentially, a laser-based form of radar -- while Musk uses cameras but no lidar.

Some of the positioning is subtle -- and this is the part that interests me the most, because I think it may have the biggest impact in the long term. In the wake of the accident that killed Herzberg 2 1/2 years ago, AV companies seemed to fall back and regroup. Now, having done far more rigorous testing, AV companies are starting to resurface with the sort of data that could sell the public on the safety of letting a car drive them around with no one sitting behind the wheel.

Waymo, as usual, led the way, with a report last week on the performance of its driverless cars from the beginning of 2019 through the third quarter of 2020 -- and the data is impressive. The vehicles were extremely safe, and -- importantly, for building long-term trust -- Waymo got specific about its record, using National Highway Traffic Safety Administration standards and going well beyond the press release treatment that usually obscures what actually happened.

Waymo reported 6.1 million miles of automated driving, including 65,000 with no safety driver, and 47 "contact events" -- consisting of 18 actual collisions and 29 incidents where a safety driver intervened to prevent a collision and where Waymo then simulated what would have happened without a safety driver. That's one contact every 130,000 miles, in case you're scoring at home and want to see how your experience compares with that of the Waymo cars.

Thirty of the 47 "events" resulted in no injuries (or were projected to produce none). None produced "severe" or "life-threatening" injuries (or were projected to in the simulations). While the report wasn't specific in assigning blame, it said that "virtually all" incidents resulted from an error by a human driver in the other car or by a pedestrian/cyclist. In the eight "most severe or potentially severe" incidents -- including a car running a red light at 36 mph and T-boning a Waymo vehicle -- Waymo said mildly that "road rule violations" by other drivers contributed.

In the one event where blame likely would have been assigned to Waymo, because it would have rear-ended the car in front of its vehicle, the report suggests that the human driver of the other car was instigating the collision -- its driver swerved in front of the Waymo car, then slammed on its brakes, the sort of behavior that is often reported about drivers showing resentment of AVs. In any case, the safety driver saw what was happening and prevented a collision, which simulation showed would have occurred at 1mph.

There's still a long way to go on AVs, but the announcements by Waymo, Cruise and Telsa show that companies are pressing ahead, and the report by Waymo starts to lay the intellectual groundwork for what I think will be a strong claim for public trust. In any case, after 2 1/2 years of lying low, the AV companies are back to making public arguments for themselves, and the insurance industry will have to react -- next week, or the week after, or the week after that, once the craziness from the election settles down.

Stay safe.

Paul

P.S. Speaking of public trust, if you haven't voted already, please do so. We're better as a people, as a nation, the closer we get to 100% participation by eligible voters.

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

Property Claims: It’s Time for Innovation

Those that solve for the dynamics of the many opportunities are likely to be the future industry leaders.

Driving Into the Future of Telematics

Connected vehicles, and their shared language of data delivered through an exchange, are the future of telematics.

The Future of Underwriting

A survey finds that nearly everyone expects big changes in underwriting. But what will different look and feel like? And how ready are we?

Asia: Latest Source of Opportunities

Think of giants like Ping An; innovations such as TenCent's Waterdrop; and ecosystem plays such as Rakuten.

State of Commercial Insurance Market

Every company today is different than it was six months ago. All risk profiles have likely changed.

Best AI Tech for P&C Personal Lines

The value rankings indicate that user interaction technologies fueled by AI are at the top of the list for personal lines insurers.