While data analytics has become increasingly important in the insurance industry in recent years, misclassification and missed opportunities continue to be major issues for many MGAs, brokers, carriers and vendors. Limited information is one of the most important factors, and more comprehensive access to better third-party data can improve decisions at all stages of an insurance policy lifecycle, from point of sale to policy maintenance and renewal.

It is important to identify some of the major roadblocks to securing valuable, accurate data. Antiquated data collection systems (with many systems built 30 years ago and not pertinent in today’s market) can have a significant negative impact. Other identified limitations of existing data analytics products include that “non-claims” are not differentiated from “not founds,” that policy and claims data are not linked, that carrier contributions are not vetted for accuracy (with up to 30% material errors or omissions) and that, perhaps most significantly, carriers and their agents often know little about the consumer at the initial point of contact.  

In addition, insurance professionals had to access multiple applications and field separate calls for each of the data sources and types of information, a time-consuming and cumbersome process.

See also: Achieving a ‘Logical Data Fabric’

But innovative technology can provide instantaneous access to better, more comprehensive data. It is now possible -- as we are showing -- to use application programming interfaces (APIs) to integrate data on a single platform and provide carriers, MGAs and brokers with immediate access to the prescriptive scores and comprehensive data they need, at the time needed, to allow for better decisions surrounding the sale, and growth, of policies. What we call a “single source” point of entry for all information, regardless of the source or type, provides a high-confidence hit rate to the prescriptive analytics and the pre-arranged knockout logic that facilitates rapid decisions based on extensive data into consumer behavior and insight.  

In addition, by harnessing the power of more accurate and complete information through prescriptive analytics earlier in the customer acquisition process and providing more opportunity for expansion and customer retention, today’s technology can help insurance industry professionals avoid the missed opportunities throughout the insurance lifecycle that have limited their potential.

The summer is shaping up to be one of the most uncertain hiring seasons in years. Many companies are hedging their bets, waiting for consumer confidence to recover more fully before adding employees.

One industry, however, is not only intensely interested in Gen Z talent but also relatively immune to the ravages of economic downturns and even pandemics: the insurance field.

Many young people might opt for occupations considered more high-profile. Yet, perhaps surprisingly, insurance offers many of the things most Gen Z candidates seek most: work flexibility, good pay, rewarding work and job security. Insurance is embracing the kinds of technologies that Gen Z “digital natives” are comfortable with.

Insurance is known for its ability to support work/life balance and diverse lifestyle needs. For young people, the ability to work from home, either by preference or for present/future family reasons, is a major plus. As a result, insurance agencies are increasingly adopting a variety of remote and onsite alternatives that allow employees to design a work environment to fit their situations and wishes.

Few fields offer newcomers the kind of job satisfaction and stability that insurance does. Compared with many sectors that had to lay off employees during the pandemic, insurance job losses were small over the past year. The industry also matches many of the values Gen Z workers embrace. In a recent Vertafore survey of over 1,000 insurance professionals, respondents said their favorite part of working in the field is “the ability to work directly with my community.” Informal one-on-one chats, catching up on events in a client’s life and helping customers tailor plans to reduce risk are some of the ways that insurance work provides authentic personal benefits.

Increasingly Digital

As an occupation, insurance is ideal for Gen Z candidates who grew up with technology. The old pen-and-paper methods were on their way out even before COVID-19 hit; since then, the process has only accelerated and the industry is modernizing like never before.

Most Gen Zers would be surprised to see the extent to which technology has overtaken the insurance field. Digital tools are eliminating repetitive tasks and enabling employees to use their higher skills to analyze and interpret client needs. Technology has reached nearly every corner of agency operations. Cloud-enabled agency management systems, digital communications tools, e-signatures and digital payments have accelerated workflows and automated routine tasks. Data analytics, marketing platforms and other cutting-edge technologies are used every day, particularly at carriers and larger agencies. Mobile apps and mobile-responsive websites are also being used to improve customer experience through convenient self-service offerings.

The latest technology to enter the insurance field is artificial intelligence. AI-driven predictive tools are able to accurately determine coverage recommendations, automate personalized client communications and even flag which policies or clients are at risk for cancellation. Candidates with data analytics backgrounds will be increasingly valuable to manage such systems and will acquire marketable skills in the process.

See also: How Well Did Agents Cope With COVID?

For insurance workers, perhaps the greatest benefit from the introduction of technology is the personal and career flexibility it can provide. In the same Vertafore study, 70% of agency respondents agreed that their workplaces already have tools in place to allow employees to work effectively from home. The extent to which the industry will adopt flexible working conditions post-COVID is yet to be determined and will not be a one-size-fits-all solution. Each company will have to achieve a balance between business needs and the needs of the employees, and each company’s balance will look a little different. But, overall, the industry has seen a significant shift in what is possible for employees in terms of flexibility, and the potential for a new way of doing business will attract a younger employee demographic.

The industry is also embracing diversity and inclusion practices. Insurance is a field that recognizes the need to not only reflect the changing composition of its customer base but also to broaden its hiring practices. As a result, the field is creating more options to accommodate more people, more lifestyles and more life stages in more ways than ever before.

Demand Is Strong

According to the Bureau of Labor Statistics, demand for insurance agents will grow through 2029 at a faster rate than the occupational average. As agency principals retire, the need for skilled candidates is rapidly increasing.

Insurance also offers career-long opportunities for personal and professional development. New lines of business, new forms of analytics and risk assessment and continual upgrades in systems and technologies will be part of the business for years to come. Many insurance professionals expand their skills by branching out into financial planning and advisory services. 

For entrepreneurs, starting an agency or growing an established one can be lucrative. In an alternate career path, insurance brokers specialize in risk management and represent the customer in obtaining the best insurance coverage. 

See also: Intersection of AI and Cyber Insurance

High Satisfaction

Tallo, a firm focused on the Gen Z talent field, reports in its April 2021 industry rankings that the insurance business is securely in the middle for favorability among Gen Z candidates—above more seemingly progressive industries like renewable energy, real estate and consulting services. U.S. News & World Report puts insurance agents at #2 in its list of Best Sales and Marketing Jobs. 

Vertafore found that 90% of insurance professionals over the age of 40 would recommend a career in insurance. There aren’t many industries that can boast such a vote of confidence from longtime employees. It may be an uncertain time for employment, but the insurance field may be that sure thing Gen Z job seekers are hoping for.

The modern insurance industry isn’t just about processing damage claims—it’s about helping clients avoid them altogether. The Internet of Things (IoT) is reshaping the way insurance companies operate, with huge possibilities for the future, arming insurers with a smarter set of tools to better serve their customers.

In this article, I’ll diving into a few cutting-edge examples of IoT in action within an insurance organization and where I see the industry going.

Usage-based and parametric insurance

Usage-based insurance is already benefiting from the IoT by helping insurtechs offer more accurate and individualized policies based on customers' behavior and use of the insured object. In the motor industry, Discovery Insure’s innovative Vitality Drive sensor is an example of such use-based insurance. With an integrated, low-power, non-intrusive wireless device attached to the windscreen, connected to a mobile phone app and able to transmit core driving metrics, Vitality Drive tracks driving behavior and allows Discovery Insure to offer incentives and rewards for better driving.

Unsurprisingly, the system has detected a strong correlation between better driving habits and fewer accidents and less severe insurance claims. By encouraging better driving by aligning insurance premiums with the lower probability of accident claims, this type of use-based insurance helps both insurer and customer and improves road safety in general.

Parametric insurance is described by the Center for Insurance Policy and Research as “a type of insurance contract that insures a policyholder against the occurrence of a specific event by paying a set amount based on the magnitude of the event, as opposed to the magnitude of losses in a traditional indemnity policy.” In other words, a parametric insurance policy insures against an event, rather than against loss or damage of assets. This helps to bypass – or at least greatly simplify – the process of calculating potential losses and making policy adjustments after a claim; meaning that parametric insurance claims are processed and compensated much faster than indemnity claims.

The advent and growth of parametric insurance has close links to the IoT, with more sophisticated devices and better connectivity allowing providers to both calculate and compensate more effectively. This is especially true in the case of natural disasters, which have long been notoriously tricky for insurers.

Wakam (former La Parisienne Assurances), another insurtech, makes full use of the IoT to improve customization and automation. Both tailoring parametric policies to their customers’ needs and automating the claims process benefit from the capabilities of these smart devices. Wakam has gone further and has introduced a private blockchain platform to process and manage parametric claims. The combination of IoT and blockchain technology allows parametric policies to be generated and managed intelligently, based on global, connected event data, rather than isolated public or private events.

See also: Despite COVID, Tech Investment Continues

Avoid damage claims with IoT

Today’s insurance industry isn’t just about processing damage claims. It’s about helping clients avoid them altogether. Insurers can use the power of data to create a more secure, connected world. The next generation of IoT-based smart security solutions overcomes the shortfalls of earlier technology to provide connectivity at a cost-efficient price.

The potential of modern IoT is almost limitless: protect homes and businesses with security alarms that aren’t susceptible to jamming; recover stolen vehicles with powerful, reliable tracking systems; and react quickly to emergencies in the home or business with connected smoke detectors and real-time water leak detection. The overlap with insurance is obvious – IoT data provides a smarter set of tools for the modern insurance landscape.

Discovery Insure, for example, uses IoT to tackle a major problem in South Africa, where 48,306 vehicles were stolen in 2019. Only one in five stolen vehicles were recovered. The process was usually slow enough that thieves had time to dismantle stolen cars or ship them to the other side of the world. Even if the car was found, insurers might refuse to compensate the victim if there was no physical evidence of a break-in. But IoT sensors allow cars to be found even when they are hidden in enclosed or underground locations.

The future of IoT in insurance

From 2019 to 2024, the IoT insurance market is expected to grow 60%. The number of use cases for IoT devices within insurance will grow along with it, with more electronic devices entering the consumer and business marketplaces year on year. Traditional insurers are looking to the future and working on digitizing their offerings to move forward faster and with greater agility. According to the Global Insurtech Market report published in 2020, the pandemic has accelerated the digital transformation of industry, a driving force in the commercial introduction of IoT. Thanks to this IoT, insurance companies are being given more opportunities to revolutionize and grow than ever – but taking advantage of them will require forward thinking and adaptability.

The global life insurance and retirement industry is facing an inflection point due to the convergence of challenging economic, technological, competitive and societal headwinds. Product-driven business models of the past will not be sustainable because insurers cannot adapt quickly enough to changing customer needs. This problem is on top of mature markets, strict regulatory requirements, low interest rates and tight margins. The COVID-19 pandemic has made it even more urgent for life insurers to redefine their role, take bold measures and address these changes.

The good news is that many global insurance leaders are already making large investments in digitization, innovation and cultural change. Going digital has been a top priority, as it helps reduce cost and enhances customer experiences, leading to the increasing adoption of predictive analytics, artificial intelligence (AI) and automation in various business functions in the industry. According to McKinsey estimates, the potential total value of AI and analytics across the insurance vertical is approximately $1.1 trillion.

Soon, AI will be deeply embedded into the insurance value chain, providing unmatched power to insurers: automating manual processes in underwriting, eliminating errors and inefficiencies in claims processing and enabling predictive insights to deliver superior outcomes. Below are the top challenges that AI and machine learning (ML) will help solve in the insurance industry. 

1. Underwriting and Pricing — While pricing personal auto policies is mostly automated today, the underwriting process is still manual for commercial property. For commercial property insurance, the underwriter needs a lot of information, such as occupancy, data on adjacent buildings, loss estimates and typical hazards. Some of the data may be available online but may be outdated and might require onsite verification. This is why human judgment is critical. A PwC report on top insurance issues noted that carriers are devoting considerable attention to helping underwriters use models and AI-driven tools to supplement their knowledge. Underwriters are becoming increasingly comfortable marrying what they’ve learned from personal experience with insight from models to make the most informed decisions possible. Soon, underwriting will be fully automated, supported by machine learning models that ingest vast amounts of data through an ecosystem of vendors. 

2. Claims Processing — In the future, machine learning algorithms will manage claims routing, increasing efficiency and accuracy dramatically. According to a McKinsey report, claims for personal lines and small-business insurance will be fully automated, enabling carriers to achieve straight-through-processing rates of more than 90% and dramatically reducing processing times from days to hours or minutes. Unlike with the traditional practice, involving manual methods of first notice of loss, the burden will no longer be on the customer to inform the insurance carrier about an event. The process will now be automated, relying on  IoT sensors and real-time monitoring to prevent incidents from happening and sending notifications for critical events requiring immediate attention. An app on a smartphone will handle all interactions, with the capability to trigger claims automatically upon loss. Other technologies will support claims processing, such as natural language processing, deep learning and text analytics. 

See also: Wake-Up Call on Ransomware

3. Fraud Detection — Insurance fraud can cost companies millions to billions of dollars, as there are thousands of claims filed every day. Assigning insurance agents to investigate each case will be time-consuming and expensive. Using AI, insurers can evaluate millions of documents and data points in record time. They can cross-reference several databases and incorporate multiple external data sources, which would be impossible without automation. Anomaly detection models can identify deviations and flag cases for review. Leveraging learnings from previous fraud cases and using real-time data, AI and ML models can identify threat signals before they might become a more substantial problem. 

4. Other Use Cases — A common use case is using predictive analytics for estimating policy cancellations. Customer churn is one of the most problematic aspects of customer management for insurance companies. When high-value customers churn, insurance companies often replace existing businesses with new, more costly customers that lower profitability. Creating AI and ML models that can accurately forecast churn behavior can boost profitability and revenues. 

As insurance carriers get better at leveraging data and implementing predictive analytics, the focus will shift from product-led to customer-centric models. The insurance industry’s adoption and investment in digital capabilities to unify data, advanced analytics and people will ultimately make the industry more agile, efficient and transparent. The winners that go above and beyond will start to offer personalized products based on individual customers’ unique needs and enhanced customer experience.

Most public entities and many private companies have switched to a procurement model for all contracts and purchasing. This model means a centralized department is responsible for all these decisions, ranging from office furniture and supplies to purchasing insurance and risk management services. Risk managers and service providers are often challenged to demonstrate the value of such services beyond simply price, and pricing alone is not the best comparative measure of such services.

The latest Out Front Ideas with Kimberly and Mark webinar brought together two risk management and procurement teams to discuss how they work together to achieve the overall goals of their entities and how vendors seeking contracts can best differentiate themselves from their competition. Our guests were:

• Amber Feldman – purchasing agent and contracts administrator, state of Colorado
• Chelsea Gilbertson – contracts and procurement director, state of Colorado
• Rick Graham – chief risk officer, Southeastern Pennsylvania Transportation Authority
• Julie Mileham – director, State Office of Risk Management, state of Colorado
• Cristal Swift – risk management administrator, Southeastern Pennsylvania Transportation Authority

Framing the Issues

Public entities are often scrutinized over vendor choices because of procurement guidelines they need to adhere to and federal and state oversight. If government partners believe funds are being used inappropriately, consequences can result in reduced funding. Additional funding sources, like pass-throughs and grants, can be added to one project, making adherence to statutory requirements even more complicated, with multiple sources to track. These inherent challenges are precisely why the vendor selection process is extensive and thorough. 

Transparency throughout the process is also vital to maintaining public trust, especially when taxpayer dollars are involved. When the solicitation process begins, the process must remain competitive and fair, as to even the playing field for all vendors, including those currently contracted with the entity. 

Evaluating Third-Party Vendors

From the beginning, program needs should be extremely comprehensible to vendors, making the language in the request for proposal (RFP) critical. Transparent language also clarifies what is being asked of vendors and will ultimately help develop the final contract. RFPs should also include all mandatory minimum requirements and the scope of work, so expectations are unambiguous. Including the evaluation criteria and the entire selection process in the RFPs will further clarify the entity’s needs and allow vendors to know what they’re getting into. Additionally, consider a debriefing process after contracts are awarded so that vendors are aware of what they can improve on the next time, regardless of whether they were chosen or not. 

See also: State of Mental Health in the Workplace

Risk Management Purchasing

When seeking risk contracts, procurement teams should consult with their risk managers to appropriately develop the RFP. This allows risk managers to manage vendor risks and identify what can be transferred appropriately between parties within a project. Risk managers should also independently evaluate all bids, which is critical to identifying exposures and understanding coverage. One project may require pollution liability coverage while others may not, so it’s essential not to use a one-size-fits-all approach. With projects differing in size and scope, using scalable solutions can help ease the process.

Communicating early and often with the procurement team will also ensure that they consult with their risk management team for all future projects. Inviting all parties to a roundtable discussion can assist in keeping the lines of communication open and concrete relationships while verbalizing any concerns. Timeliness is critical in contract decisions to properly coordinate with vendors and keep the project goals on track. Remember that, throughout the vendor selection process, it is crucial to choose what’s best for the entity and not just easiest for the transition.

Advancing Your Purchasing Processes

Many entities expect vendors to be intuitive about their needs, but expectations should be made clear to make program goals a reality. And while there are a multitude of ways to make the procurement and purchasing process less painful, our guests offered a few critical elements to pay attention to. 

Start the RFP Process Early. The earlier this process begins, the better. Applications should be submitted early, and the underwriting data should be flawless. Take the time to understand the process and ask concise questions when writing a submission. Establishing the program needs early will help vendors better understand the scope of work and requirements. 

Look Beyond Cost. Often the price is viewed as the most crucial factor when choosing a vendor, when the actual value can be found elsewhere. This methodology can also prevent growth within a program. Consider the other values that a vendor may bring to elevating a program, looking at cost last. Additionally, examine preemptive challenges, like if a vendor comes back with several changes to a contract, this could be an early indicator of how they’ll work within the project.

Avoid Silos. Collaboration and communication in the planning stages can be crucial to your program goals, and bringing in additional departments to review RFPs can bring a fresh perspective to your evaluation process. Considering department input, like budgeting and accounting, can clarify implications around the solicitation process. Also, speaking with risk managers early can help identify associated risks that can be communicated to vendors.

Know Your Risks. Risk implications are involved with everything regardless of if it’s directly related to risk management. Discuss your concerns regarding coverage with brokers and ensure that complex issues are addressed. Use them to review coverage language and ensure that coverage in contracts and bids is appropriate for the risks your organization is willing to accept. If you’re unsure of risks, ask yourself what taxpayers should really be liable for. 

See also: Why Open Insurance Is the Future

To listen to the archive of our complete Perils of Purchasing for Public & Private Entities webinar, please visit https://www.outfrontideas.com/. Follow @outfrontideas on Twitter and Out Front Ideas with Kimberly and Mark on LinkedIn for more information about upcoming events and webinars.

As the world starts to emerge from the pandemic, ITL Editor-in-Chief Paul Carroll sat down to discuss the new normal for workers' comp with two of ITL's most widely read contributors: Mark Walls, VP of communications and strategic analysis at Safety National, and Kimberly George, global head of innovation and product development at Sedgwick. Together, Kimberly and Mark co-host the "Out Front Ideas" educational series.

This webinar will discuss:

• How legal interpretations related to coverage for COVID cases may expand the scope of workers' comp, making carriers responsible for other infectious diseases, PTSD and more.


• How telemedicine took on a much broader role during the pandemic, and why its use will continue to grow.


• How carriers, accustomed to conducting rigorous analysis of massive amounts of historical data, are adapting to a world where so many issues don't have a history, because almost everything is new.

Speakers:

Kimberly George

Global Head of Product Development & Innovation
Sedgwick

George is currently a member of Sedgwick’s executive leadership team and leads their innovation lab and global product strategy. Kimberly is actively working with Sedgwick clients, partners, and operations to enter new market spaces, drive the digital strategy, and oversee growth projects from ideation to execution. Previously she was the senior vice president of Corporate Development, M&A and Healthcare. Over the course of her career, Kimberly has become a true thought leader on issues related to claims management, healthcare, benefits, and business strategy. She became a registered nurse more than 25 years ago and since then led two successful startups and served in a variety of leadership roles in claims management, absence management, managed care, and corporate strategy.

Mark Walls

VP Communications & Strategic Analysis
Safety National

Walls has over 30 years of industry experience, including over 20 years managing workers’ compensation claims in multiple states. He is the founder of the Work Comp Analysis Group on LinkedIn and, with over 30,000 members, it is the largest online discussion community dedicated exclusively to workers’ compensation issues. Walls is also involved in government affairs and monitoring insurance legislation and regulations nationwide.

Together, they co-host Out Front Ideas with Kimberly and Mark

Paul Carroll

Editor-in-Chief
Insurance Thought Leadership

Paul is the co-author of “The New Killer Apps: How Large Companies Can Out-Innovate Start-Ups” and “Billion Dollar Lessons: What You Can Learn From the Most Inexcusable Business Failures of the Last 25 Years” and the author of “Big Blues: The Unmaking of IBM”, a major best-seller published in 1993. Paul spent 17 years at the Wall Street Journal as an editor and reporter. The paper nominated him twice for Pulitzer Prizes. In 1996, he founded Context, a thought-leadership magazine on the strategic importance of information technology that was a finalist for the National Magazine Award for General Excellence. He is a co-founder of the Devil’s Advocate Group consulting firm.

Every real estate closing is a beginning, an exchange of deeds and a chance to do good works — if real estate agents and insurers come together. If both groups unite on behalf of homeowners, offering life insurance with mortgage protection to homeowners, the result is a boon for all homeowners. 

The proof is not only on paper, in the papers that insurers issue, but in the peace of mind that homeowners enjoy: knowing that loss of property will not follow loss of life, that devastation among the living will not follow burial of the dead, that foreclosure will not follow a tragedy without closure. 

We can eliminate the fear of foreclosure by deputizing real estate agents, making them advocates of life insurance or insurance agents outright. Either way, everyone wins. Real estate agents earn additional income, insurers underwrite additional policies and homeowners receive additional protection. No one wins, however, when no one communicates. 

Failure to communicate is the cause of our problem. 

We have it in our power to fix this problem: to correct it by working with real estate agents. But before we can get real estate agents to talk to homeowners, we must set our own house in order. 

We must recognize that practice is a prerequisite to preaching, just as attentiveness — people’s willingness to listen to a speaker — is a perquisite of having a calling, of answering the call to spread the word. We must do as we say, and have something to say, replacing silence with words of soundness; converting a stutter of hesitancy into a score of certainty; turning applause into action. We must give real estate agents reason to believe.

Belief does not require faith, not when evidence will suffice. 

That insurers have a wealth of evidence, that the evidence is translatable, that insurers have a duty to translate the evidence into that which is intelligible to real estate agents and homeowners, that insurers know how to translate the evidence is reason to believe in what the evidence proves.

See also: Life Insurance With Mortgage Protection

The proof is in the value real estate agents can provide, in addition to the credibility they possess and the clients they advise. The proof is in the freedom — the freedoms — real estate agents and insurers can deliver. The proof is in freedom from fear of foreclosure. The proof is in freedom from want, allowing families to have the financial strength to live. The proof is in the freedom to recover, giving homeowners the added value of time. 

Time to grieve permits time to rest; time to heal contains time to learn; time to think begets time to do.

Preaching the value of time is a virtue. 

Adopting this value guarantees continuity; applying this guarantee secures the value of a family’s greatest asset; providing this security is a great and invaluable act of goodness.

Real estate agents and insurers share these values.

Homeowners deserve the protection these values afford, which is the protection they welcome; which is the protection they shall receive.

When the pandemic struck early last year, insurers had a wake-up call when it came to digital transformation. A report by Accenture revealed that the lack of digital, agile systems was evident in the industry’s response to COVID-19 when “insurers struggled to pivot to remote work and to continue meeting demands for sales and service.” However, things have changed for the better. A 2020 PwC report shows that core technology transformation (51%) and cloud technology (28%) are key priorities for insurers.

At the same time as these digital changes are happening, the industry is seeing more regulations pop up. Depending on their specialty, insurers already had to adhere to healthcare, financial and consumer privacy regulations. More recently, Maine and North Dakota adopted the National Association of Insurance Commissioners (NAIC) data security model law, which seeks to establish data security standards for regulators and insurers to mitigate the potential damage of a data breach. They join at least seven other states that have already adopted similar laws.

With the shift toward cloud infrastructure and applications well underway, minimizing risk and protecting data integrity and privacy become all the more important. Those in the insurance field need to balance new digital transformation efforts with increasing compliance requirements. Data ownership can help with both – here’s how.

Keep Compliance Top of Mind

When important data starts to move from legacy systems into mission-critical cloud or SaaS (software as a service) apps, like Salesforce, it can complicate regulatory compliance. While many insurers may believe they own the data within these apps, they don’t have the control over it that ownership would typically convey. And yet, they can still be held liable should something happen to a client’s data within the SaaS app.

Additionally, because insurers may also need to access SaaS data for analytic purposes, they’re likely to download, make their own copies and store it in their own folders and systems, creating data sprawl. Not only does this increase potential access points and vulnerabilities within an organization, but it can also cause other problems for insurers. From inaccuracies caused by data being changed in one version of copied data and not others, to the more straightforward issue of not knowing everywhere data is stored – and who is accessing it – data sprawl can be dangerous, especially where regulations are concerned.

See also: The Rules of Digital Transformation

To better ensure compliance and avoid these pitfalls, insurers should back up and own their data. Where data is stored is critical to how accessible, secure and auditable it is – which is why organizations should store data in the cloud infrastructure they’re already using, such as AWS or Azure, instead of keeping it in SaaS vendors’ — or backup vendors’ — environment.

Storing historical data in this fashion can help insurance companies in several ways. First, it decreases the surface area of exposure. The more copies of data floating around an organization — whether the insurer’s or the backup vendor’s — the more potential touchpoints, meaning there’s greater opportunity for unauthorized access, and it becomes harder to trace any changes. These issues can put an organization at risk for breaches, intentional and inadvertent data corruption and penalties when auditors come knocking. However, when data is in your organization’s own cloud data lake and can be streamed into business intelligence or analytics tools from a single source of truth, it reduces the number of copies needed, helping to ensure data integrity and maintain compliance.

Likewise, storing data in an insurer’s own cloud means the organization can set controls over who touches it and where it goes in the organization. This makes it easier to maintain a digital chain of custody – and trace when, where and who made changes. Many new regulations require audit trails that capture this information, something that gets increasingly difficult when data is stored and retained over time in third-party applications.

Data ownership as a key to growth

Data ownership not only helps insurers decrease risk and liability, it can also propel organizational growth.

Many insurers have already been tapping into historical data for predictive analytics, when it comes to policy writing, for example. By incorporating this new pool of SaaS backup data – which captures every change made – those models can become more accurate. Insurers get access to even more information that can lead to better insights and be used to improve everything from underwriting, pricing and risk assessment to recommendations about insurance plans and strategic marketing decisions – all of which affect an insurer’s bottom line.

As insurers begin to cross the digital divide, they need to be aware of compliance necessities that accompany digital change. With a sound data strategy, insurers can reap the benefits of creating a digitally driven enterprise while adhering to regulations and setting themselves up for continued success.

Identity management has been an obstacle for commercial insurance companies for a very long time. Many thought that problems would dissipate or at least become easier to correct by moving to digital systems, but, in reality, identity management has only grown more complex. It is obvious that we need a better way.

Now, there is fresh hope that identity management will become much easier to wrangle. Artificial intelligence (AI) is progressing rapidly, to the point where it could become a tremendous tool in identifying and cleaning up inaccurate data as well as linking the right providers to the correct claims.

Let's take a step back and examine the key issues in identity management today to understand how AI could be used to shore up existing gaps and move the industry forward.

The Data Problem

First of all, by identity management, as it is applied to insurance, I am referring to a special case of entity resolution, i.e., the process of linking references to providers in claims, bills and other data to a single flesh-and-blood provider — the so called “single belly button.” This is facilitated by maintaining a dataset of the actual providers working all over the country, with their names, addresses, specialties and networks — essentially all the data associated with them for billing purposes. These “golden sets” also are available for attorneys in the claims space, functioning nearly the same way. Still, for the sake of clarity, I'll focus on medical providers in this article. These lists are available through a handful of third-party vendors (and certainly some organizations have developed their own), and they must be constantly updated as the ground truth evolves.

See also: Intersection of AI and Cyber Insurance

The Missing Link

Currently, numerous different golden sets have varying degrees of accuracy and cleanliness. While this is certainly problematic, the real challenge in identity management is the linkage process itself. This is because much of the provider references in the claims, bills and other data can be considered stale or dirty.

There are myriad reasons for stale and dirty data. Doctors change their name through marriage or for other reasons; they move to other cities; they might add a specialty or change focus, Joe Smith might become Josephine Smith. All of these things and more make the process of linking these references to the correct provider very difficult. In many cases, today’s systems lack the ability to link references in claims to golden sets; instead, linking falls to claims representatives. One of the biggest identity management tasks remaining today is the ability to uniquely and accurately link a claim to the right provider with the correct billing information.

Many companies try to build their own link, but it has not been smooth sailing. Developing such functionality is an expensive, time-consuming, complex endeavor. Without clean, accurate, linked datasets, claims can go wildly off track. But there is hope.

AI Will Fill the Gap

AI has shown its effectiveness in improving claims operations processes, pulling out key insights to resolve claims quickly without attorney involvement. Now AI could be applied to solve the linkage problem as well.

AI systems that aggregate data from actual anonymized claims, bills and other data throughout the industry could be used to read massive volumes of data, recognize pattern and find the links between specific providers and claims. Systems could be trained to identify and update records, managing identities persistently and in real time.

Imagine just for a moment that you had a very high threshold of confidence in identifying the correct provider for a claim and that the provider automatically would be issued a unique ID (in the U.S., that of course is the National Provider Identifier, or NPI) that stays with him or her throughout the life of the claim so that every time a change is made — a note filed, a bill paid — the correct provider at the correct location automatically comes up. No detective work, no guesswork.

This is now possible from a technological standpoint, as we have seen in creating CLARA's solution. I can attest that it requires a significant investment of time, effort and intellectual property to build in-house. Given the rate of AI advancement, market adoption and pressing industry need, there is no doubt that it won't be long before nearly all identity management systems are powered by AI and machine learning technologies.

See also: Insurance Outlook for 2021

As I hope I have shown, the data available to the industry today is nowhere near sufficient. The bar for identity management — and therefore the level of investment, skill and innovation applied to this problem — will continue to increase. Those organizations that prepare to embrace new applications of AI for identity management will be the ones that thrive and modernize claims, driving down costs and increasing efficiency. The companies that resist this transformation will get left behind as they struggle to sift through their dirty, messy data.

As first published in Digital Insurance.

As the CEO of an identity security company, I share a perspective with many cyber insurers: Cybercrime is frequent and widespread and can happen to anyone. With cyber risk increasing with every data breach, phishing scam and identity threat, it’s time that digital health is taken as seriously as physical health. 

So, what does it mean to stay digitally healthy today? The world is just too complicated for a silver bullet strategy. Digital health is a set of offensive and defensive actions that, layered together, form a new picture of safety. 

Cyber insurance is a critical piece of the puzzle, and one we think is becoming increasingly important for both small businesses and individuals – often underserved markets. Complacency is no longer an option.

A Complex New Landscape 

In just a few short years, we went from using our smartphones to primarily stay caught up on email and social media to now managing almost every aspect of our increasingly digital personal and professional lives on our phones. As the technology landscape has evolved, so too has the threat landscape. At the same time, individuals and small business’ ability to manage all the risk hasn’t kept up.

A global pandemic has driven digital transactions even higher, and more organizations than ever are storing personal information and using technology providers to help manage and deliver the digital services people need and expect. Most people nowadays have no idea which, and how many, technology providers have their personal information. Even consumers with excellent digital literacy and hygiene simply don’t know what they don’t know when it comes to how their sensitive personal information is being exposed and potentially misused.

Cyber threats can come from anywhere and are fueled by forces that are difficult to control. Cyber attacks and the resulting data breaches happen with alarming regularity, but remaining vigilant and knowing what to do is an extremely difficult task when there are no universal best practices around data breach notifications.

Most people do not realize how vulnerable they are, and, despite the evidence to the contrary, think a cyber attack won’t happen to them. In today’s complex and rapidly evolving landscape, more insurers will need to act as educators and ensure that the cyber policies they are selling reflect the myriad of modern risks. In the interest of both the client and the insurer, cyber insurance should be combined with other solutions for a comprehensive approach.

See also: Does Cyber Insurance Add to Ransomware?

Personal and Organizational Security Risks Are Linked

The online risk that each person carries follows them through life. It doesn’t just threaten their personal financial accounts – which is bad enough – but the businesses and organizations they work for, too. More sophisticated cyber attacks now target individuals with convincing email and phishing scams that are used to gain access to enterprise systems, or to trick them into becoming unwilling accomplices in fraud. Cyber risks flow in all directions: from organization to individuals, who introduce it back into stakeholder organizations.

So even when a small business has robust cybersecurity defenses in place, each individual introduces their own set of vulnerabilities to the organization. And, for the complicated reasons mentioned above, these risks go largely unaddressed. 

It’s time to understand and accept that the problem of online security has grown too complex for most to manage alone. Individual security and organizational security are inextricably linked, so it’s in everyone’s interest to combat the modern challenges with robust protections.

Cyber insurers can help stem the tide of cybercrime – and protect their own interests in the process – by helping more organizations play a role keeping individuals protected. This involves looking at all audiences that could be affected by a cyber attack on the organization, from prospects to customers to employees and vendor partners. If insurers help educate organizational customers on the complex and related cyber risks, they can move the needle of protection forward meaningfully with appropriate cyber coverages

The question of total digital health is constantly evolving, and the solutions must be as dynamic as the problem. Cyber insurance has an important part to play in helping people manage – and master – the risks introduced daily by the technology that plays a starring role in life today.