COVID-19 is, in many ways, still a disease of uncertainty, both in the severity of its symptoms and the scale of financial hardship it could ultimately cause. And no business is better equipped to confront uncertainty than insurers.

So it is perhaps unsurprising that life and health carriers are responding to the pandemic with a variety of consumer offerings, from complimentary, compassionate benefits to new protection products and services.

After performing a global review of responses to COVID-19, RGA identified six primary trends:

Compassionate and Complimentary Benefits

Insurers have sought to build trust and goodwill by offering complimentary COVID-19 coverage as a compassionate benefit or marketing expense, with an emphasis on policies with lower face value to manage overall exposure. A multinational insurer in Hong Kong, for example, has begun offering an additional hospital cash benefit of HK$600 (equivalent to US$77) per day for covered clients who may be required to undergo a mandatory quarantine in a hospital or isolation center. Similarly, the local branch of another major insurer in Thailand partnered with a leading telecom operator to offer a market-first, free-of-charge COVID-19 coverage benefit to customers. If a customer requires treatment in a hospital, he or she will receive a hospital indemnity benefit of up to THB1,000 (equivalent to US$31) per day. Still another multinational partnered with a Singapore-based insurer serving private hire drivers to offer a complimentary benefit for all of these essential workers as part of the company’s Group Prolonged Medical Leave insurance policy.

Other forms of consumer relief have proved popular, including premium holidays, grace periods and reductions to policy/premium amounts. Many insurers globally have offered grace periods for premium payments either voluntarily or at the request of local governments and regulators. On the health insurance side, some insurers have waived cost-sharing, co-pay and other deductibles for inpatient hospital admissions due to COVID-19. Some have also sought to support healthcare first responders and other frontline workers through donations of personal protective equipment (PPE) and other charitable efforts.

COVID-Specific Protection

COVID-19 emerged in Asia, so it stands to reason that regional insurers have been first to develop hospital cash and comprehensive care products offering standalone protection in case of diagnosis. For example, one Bangkok-based broker and insurer teamed up to offer Thailand's first policy that provides cash upon diagnosis with the coronavirus. Similarly, a major Indian insurer offers a COVID-19 support plan, providing end-to-end treatment services, including consultations with qualified doctors, to policyholders who become infected. In Malaysia, a major multinational has introduced a COVID-19 hospital assistance program with an upfront one-time cash payment upon hospitalization with the disease. The program includes a one-time cash payout for family assistance should dependents also be diagnosed. It also includes other assistance for consultation and treatment costs while in isolation or intensive care. Similar products are now emerging across Europe and North America.

See also: Reigniting Growth in U.S. Life Insurance

Segment-Specific Offerings 

The word pandemic derives from the combination of two Greek words: pan ("all") and dēmos ("people"). But, while all are at risk of contracting the coronavirus, a few face far greater danger due to the essential public services they must perform. Insurers are customizing certain offerings to serve these frontline workers. In China, a first-in-market COVID-19 medical worker insurance program pays cash compensation upon diagnosis. Similarly, healthcare personnel at specified primary and secondary public hospitals, treatment centers, and pharmacies are eligible to sign up for another Chinese insurer’s COVID-19 coverage for free. Another insurer launched COVID-19 coverage targeting shopkeepers in India, with the product paying 100% of the sum insured, irrespective of hospitalization expense, upon diagnosis.

Health and Wellbeing

The coronavirus not only co-opts our cells, it exploits our fears. A lack of clear information and shortages of available testing have compounded the problem in some locations. U.S. insurers responded with new consumer plans that seek to bundle mental wellness services with physician care to address public anxiety with clear and actionable medical guidance. One U.S.-based healthcare carrier repurposed its existing telehealth application for mobile devices. The app now provides a coronavirus assessment based on guidelines from the U.S. Centers for Disease Control and Prevention and the U.S. National Institutes of Health. Customers can connect directly to a board-certified doctor via text or secure two-way video call and use the app to discuss the assessment results. Another U.S-based provider of healthcare IT solutions and services launched a new telehealth product to help physicians and patients stay connected during COVID-19 through real-time video technology. A number of mental health schemes have also emerged around the world with an emphasis on technology to address social isolation.

COVID Diagnostics

Artificial Intelligence (AI) has been coming to medicine, and insurance, for some time. Now the spread of COVID-19 may present a new opportunity to increase use of smart apps and chatbots. A number of insurers are relaunching and rebranding existing AI applications to meet surging diagnosis and informational needs in an era of social distancing and staffing shortages. In China, one major insurer launched a smart, AI-based audio screening system for COVID-19 to strengthen epidemic control and prevention through automated interviewing and risk assessment. Another U.S.-based case manager launched a coronavirus chatbot to answer questions related to COVID-19 and assist in diagnosis, and a multinational in Hong Kong retooled its mobile application to assist in coronavirus contact tracing. Much remains unknown about the overall effectiveness of these emerging technologies, but the increasing use of AI is a trend that merits monitoring.

New Approaches to Sales Operations

COVID-19 has been dubbed an “invisible enemy,” but its effect on the insurance industry has been very apparent. As traditional evidence and sales channels have been disrupted by lockdowns, carriers have moved to accelerate a transition to alternative evidence, simplified and accelerated underwriting and digital distribution.

“Selling at a distance” is a hot industry topic, and those insurers with relatively strong digital capabilities may be best-positioned, while others are playing catch-up. A major multinational recently launched a digital enrollment system, while another unveiled “simple life insurance” to be sold online. Another insurer is now using WhatsApp to deliver policy and renewal documents. One carrier has simplified the claims process for its critical illness policyholders. Upon diagnosis of COVID-19, the policyholder needs to only submit a certificate from a government medical officer to receive a lump sum payout rather than the more copious paperwork typically required.

See also: 4 Post-COVID-19 Trends for Insurers

As the pandemic unfolds, we expect more offerings to emerge. In the medium term, it may not just be health and safety concerns that drive offering design, but the state of the overall economy. Interest rates and slowing economies are placing renewed pressure on insurers to reassess less profitable offerings, such as those with generous guarantees, and to emphasize capital efficiency in the overall product portfolio. Against this challenging backdrop, it is unclear how many product innovations of all kinds are languishing in the exploratory phase versus being introduced to consumers at this time.

The novel coronavirus (COVID-19) and the resultant move to widespread homeworking has created vulnerabilities for criminals to exploit. Homeworking has exposed new access points for cyber criminals to gain entry to corporate systems, including domestic PCs, laptops and Wi-Fi routers. Homeworking has also led to a diminution in employees’ distinction between work and personal emails, to increasing usage of devices with insecure passwords and to use of online applications that would be prohibited in the corporate environment due to security concerns.

Criminals have also exploited the public’s need for information on COVID-19 to create a range of social media and text message attacks, particularly in those countries worst affected by the virus. In addition, the rapid rise of online shopping due to lockdown has exposed the public to a higher level of well-established cyber scams such as form-jacking and spoofing.

Any organization that rapidly deployed new technology, applications, services or systems at the onset of the pandemic should now be focused on taking a look back and ensuring that the organization has implemented best practices in security configuration and architecture. Many organizations are discovering that their rapid deployments, while necessary, may have introduced undesirable security vulnerabilities.

In a new report, Darren Thomson, Head of Cyber Security Strategy at CyberCube; Jon Laux, Head of Cyber Analytics, Reinsurance Solutions, at Aon; and Rebecca Bole, Head of Industry Engagement at CyberCube; explore the changes to our digital landscape and lay out ways to head off problems.

A video featuring Jon and Darren discussing some of the report’s key findings can be found on CyberCube’s YouTube channel. Here is a press release.

Six months ago, Visa acquired Plaid for a cool $5.5 billion, instantly making the fintech company a legend among technology startups – and its founders, investors and early employees very rich.

While the money is fun to consider, it’s not my key takeaway about Plaid, whose software provides the plumbing that lets startups connect to users' bank accounts and has been employed by peer-to-peer payment app Venmo, mobile investing app Robinhood and many others.

As the CTO of a startup – one developing a technology platform for insurance carriers – I’m finding the real topic of conversation among my peers, as well as among my company’s investors, partners and prospects, is Plaid’s technology approach and its ramifications.

Plaid’s decision to focus on application programming interface (API) development vs. application development is a natural starting point for such a discussion. (The main point being that Plaid didn't set out to build all the financial apps itself; instead, it provided a key interface that others, like Venmo and Robinhood, could exploit.) But there’s more to the story. And while it has already become fashionable to describe certain companies as “the Plaid of (fill in the industry),” I don’t think Plaid will be remembered as the face that launched a thousand API ships.

Not to say that the “API-ification” of the enterprise isn’t upon us. We’re seeing it in insurance and more broadly across financial services, as more processes within and across companies plug into each other via these software interfaces. But that trend started before, and is bigger than, Plaid. Conversely, Plaid’s significance extends beyond its APIs.

So what then can Plaid teach us? What can startups, and the technologists helping build them, learn from this early 2020 success story and carry forward into the young decade?

Here are four key takeaways:

1. Empower Builders

Any time a company develops a technology that makes it possible for others to do something they couldn’t do before, that company has the makings of a hit. Many companies succumb to the temptation of trying to own too much of that innovation’s value rather than putting some of that value creation into the hands of others.

Consider Google Maps. Prior to Google Maps, it wasn’t easy for a company to build a dynamic map into its customer experiences. Yet with the Google release, retailers could put all their locations into their web experience so consumers could find them without having to go to a specialized third party service. Now dynamic maps are an integral part of an array of experiences from retail and restaurants to real estate and travel.

If Google Maps had insisted on being the destination of all things maps, i.e., “Find My Retailer,” “Find My ATM,” “Find My Restaurant,” etc., and owning the entire value proposition, the proliferation of map-enhanced experiences across the internet would not have been as quick or as pervasive.

Even a company of Google’s size recognized that that approach would have put the burden of application-layer innovation on one company, one set of developers and one team of product managers. Instead, Google famously developed dynamic maps to be an embeddable component that can fit into any other application, enabling a variety of developers to innovate for their particular markets and end-users.

That’s something Plaid got right. In developing its APIs, Plaid unlocked banking data that had never been available and usable before, but the company was smart enough to keep the focus there and let others – Venmo, for instance – innovate at the application layer. Plaid's approach brings so many more companies into the innovation mix, which in turn spurs more A/B testing, ultimately yielding more robust and varied applications – the true benefit of best of breed.

2. Love Your Hacks

Plaid did a lot of things that business school won't teach you. One of them was embracing the hack. Experience has shown that many of the most successful tech companies have used hacks to get their businesses off the ground and deliver their first positive results. Airbnb and Uber come immediately to mind, and so does Plaid.

This is important, because banks were never in the business of exposing their data in a clean way – they didn’t have nice open APIs with clean documentation. That meant that Plaid had to crack the code on its own, figuring it out for itself every step of the way. How do we get access to Bank of America data? to Chase? to the next big bank?....

The moral of the story is they did it. Sure, initially they did it with workarounds and solutions that were laughed at on forums and dismissed as insecure. But they stuck with it and built big enough engineering and data teams to make the company, its approach and its solutions sustainable over time.

But first came the hack. Before becoming sustainable, before scalability even enters the equation, Plaid was getting its hands dirty showing the value of its work, no matter how unsustainable the approach. In this regard, I see Plaid as embodying Paul Graham’s famous admonition to startups: “Do things that don’t scale.” I would just add: “until they do.”

3. Trust the Size of Your Market (and the Defensibility of Your Solution)

Technologists and entrepreneurs have to develop thick skins. We hear “no” more than “yes,” and often find ourselves answering the same questions: What is the size of your market? How are you going to monetize your innovation? How defensible is your solution?

Here, I have to tip my hat to Plaid. As a trailblazer, the company had to argue for a big market that didn’t exist yet, because no one else was monetizing access to financial data – and the generation of apps that would use that data so successfully had yet to be created.

Of course, Plaid was right. Other companies would use its APIs and multiply their value many times over. But before Plaid was right, it believed. The size of its conviction ultimately enabled it to create and fuel a multibillion-dollar market. And while it believed, it minded its knitting, focusing intently on innovating and letting great software speak for itself.

Did that answer investors’ initial questions about defensibility? At first, probably not, but as the number of successful hacks mounted, and as it became clear that the problem it was trying to solve was sufficiently complex and the competitive landscape it inhabited sparsely populated,  the company earned enough breathing room to deliver each successive, successful result. By 2018, Visa and Mastercard were in on the company’s $250 million raise, and the rest is history.

See also: Insurance Innovation — Alive and Kicking

Getting there took some swagger, perhaps even a little arrogance, that Plaid could solve something no one else had dared attempt. That attitude may have been its best line of defense.

4. Guillotine Your Platform!

As I mentioned, the temptation to try to do too much, to own all the value and innovation at every layer of a solution, can be fatal, and is something Plaid brilliantly avoided. Plaid will be remembered for focusing on APIs and powerful administrative functionality, leaving the user interface (UI) and user experience (UX) layers for others to perfect and deploy.

In this case, Plaid serves as a powerful example for the many “platform” developers across the startup landscape, mine included. Platform developers want to solve it all, but Plaid is helping us not to. They deliberately chose not to provide the full vertical experience of their service, leaving it up to developers outside their company to figure things out for themselves and provide their customers their own distinct experiences.

This “headless” platform model is quickly gaining traction among startups and other solution providers, as well as among big companies hoping to accelerate or complete their digital transformations. These companies don’t want their tech providers to own any portion of the customer’s journey and experience; they just want the value, and they want it expressed natively within their own digital footprint.

That shift, and tech startups’ ability to deliver on it, may be Plaid’s most lasting legacy.

The chairman of Reliance Industries, Mukesh Ambani, recently announced a video-conferencing tool, JioMeet, that looks just like Zoom. On social media, Indian entrepreneurs are panning him for copying; one person tweeted that he should have called it "Jhoom" because that is how it would be pronounced locally. But it isn't Ambani who is out of touch with the way the tech industry works, it is Ambani's critics. They don't understand how tech innovation works.

Although this may sound strange, copying is good for innovation. This is how Chinese technology companies got started - by adapting Silicon Valley's technologies for Chinese use and improving on them. The Chinese routinely monitor what app is achieving success elsewhere and duplicate it before they start adding features and innovating; they learn from the best and improve.

It's how Silicon Valley works, too. Even Zoom is a knock-off of the technologies it is competing with: WebEx, Skype and BlueJeans.

Steve Jobs built the Macintosh by copying the windowing interface from the Palo Alto Research Center. As he admitted in 1994, "Picasso had a saying, 'Good artists copy, great artists steal'; and we have always been shameless about stealing great ideas." Almost every Apple product has features that were first developed by others; rarely do its technologies wholly originate within the company.

The iPod, for example, was created by British inventor Kane Kramer; iTunes was built on a technology purchased from Soundjam; and the iPhone frequently copies Samsung's mobile technologies -- while Samsung copies Apple's.

Mark Zuckerberg built Facebook by copying from MySpace and Friendster, and he continues to copy products. Facebook Places is a replica of Foursquare; Messenger video imitates Skype; Facebook Stories is a clone of Snapchat; and Facebook Live combines the best features of Meerkat and Periscope.

Now, Zuckerberg is trying to copy WeChat by integrating private messaging, groups and payments. This is why he is so focused on getting WhatsApp Payments approved by the Indian regulators. Before purchasing the company, he desperately tried to copy WhatsApp, but repeatedly failed. So he ended up purchasing the company, which had almost no revenue, for an astonishing $20 billion or so, which was about 10% of Facebook's market cap.

This is another one of Silicon Valley's secrets: If stealing doesn't work, then buy the company.

By the way, they don't call this copying or stealing; it is called "knowledge-sharing." Silicon Valley has very high rates of job-hopping, and top engineers rarely work at any one company for more than three years. They routinely join their competitors or start their own companies. As long as engineers don't steal computer code or designs, they can build on the work they did before. Silicon Valley firms understand that collaborating and competing at the same time leads to success. This is even reflected in California's unusual laws, which bar non-competition agreements.

In most places, entrepreneurs hesitate to tell others what they are doing. Yet, in Silicon Valley, entrepreneurs know that, when they share an idea, they get important feedback. Both sides learn by exchanging ideas and developing new ones. So when you walk into a coffee shop in Palo Alto, those you ask will not hesitate to tell you their product-development plans.

Neither companies nor countries can succeed, however, merely by copying. They must move very fast and keep improving themselves and adapting to changing markets and technologies.

See also: A Quarantine Dispatch on the Insurtech Trio

Apple became the most valuable company in the world because it didn't hesitate to cannibalize its own technologies. Jobs didn't worry that the iPad would hurt the sales of its laptops or that the music player in the iPhone would eliminate the need to buy an iPod. The company moved forward quickly as competitors copied its designs. I expect Jio will do this, as well: learn from what works best in the Indian market, and come out with better technologies.

There is a line here that should never be crossed, however, and that is intellectual property theft. China's Huawei was sued by Cisco for its "systematic and wholesale infringement of Cisco's intellectual property," for example. Huawei's 5G technologies were likely stolen from Nokia and others. The core of many of China's most advanced technologies is based on such theft. This is never good for innovation and leads to even more destructive habits and the types of blowback that Huawei is seeing all over the world as countries rightly ban its technologies.

My simple message to Indian entrepreneurs is to imitate before they innovate - but don't cross any ethical lines.

This article first ran in the Hindustan Times.

In the 1939 blockbuster film “The Wizard of Oz,” Dorothy, Toto and their three companions run toward the Emerald City across a field of poppies; an intoxicating scent puts her, Toto and the Cowardly Lion to sleep. Then, from the clear green-blue sky, snow starts to fall. Dorothy, Toto and the lion awake, and the lion says something like, “Unusual weather we’re having, isn’t it?”

Insurance companies across the U.S. might be saying something about unusual weather given the on-again, off-again occurrences of severe weather. In fact, with all the other issues the insurance industry has had to deal with from COVID-19 and the worldwide protests and riots, which will already account for higher than normal losses for some insurance companies, maybe the silver lining might be that the severe weather season has overall been a roller coaster and not just a straight plunge.

After an active April (second most active for tornadoes) of severe weather across the Southern states, which accumulated a total of about $6 billion in insurance loss, May and June have been much better. May was atypical, with just half the insured loss of April, which is truly welcome news for the insurance industry. This shows up in the severe weather reports as well, with May having well below normal severe weather reports, especially tornadoes.

In fact, May had the fewest severe weather reports since May 2014, led by what you might call a tornado drought that has resulted in the fewest recorded tornadoes since at least 1970. On top of that, May had the fewest number of EF2+ tornadoes in recorded history, according to preliminary data, and the insurance industry still has not experienced an EF5 tornado since May 20, 2013. Another way to gauge the lack of severe weather in May across the U.S. is by looking at the occurrences of moderate/high outlooks for severe weather. May 2020 was the first year without a moderate risk or higher for the day 1 outlook issued by NOAA Storm Prediction Center since 1995, and May had the fewest number of tornadoes watches in recorded history (1970 – present). May was truly unprecedented when compared with the active April that occurred across the U.S.

See also: Wildfire Season Off to Perilous Start

Sam Lillo, who is a postdoc at the Cooperative Institute for Research in Environmental Sciences at the University of Colorado Boulder, likely shows the situation best in the image he created below of tornado activity anomalies for the U.S. The map and graph show tornado activity is near record lows and for the last six weeks; none of the climatological favored areas for tornadoes have seen tornadoes. Negative anomalies are shown across Oklahoma, Texas, Colorado and Kansas. I guess Dorothy would truly say this is unusual weather for Kansas. And, if she were in Florida, it would be highly unusual to see above-normal tornado activity. In fact, for Florida, June has already matched their climatological average for the month, likely a result of Tropical Storm Cristobal, which produced 11 tornadoes across Florida. The average for June in Florida is 7.6 tornadoes.

Speaking of Cristobal, its impacts will likely be felt by the insurance industry, but, as illustrated, the Florida tornadoes' impacts will be far away from the center of the storm. It might be possible that several states have a higher loss hundred of miles away from the landfall state of Louisiana with higher losses in the upper Ohio River Valley and Michigan. In total, Cristobal resulted in 497 wind reports for the area, which will likely lead to a loss level similar to a derecho wind event. In fact, with hail reports running below normal and the up and down of the tornado season, the wind reports are what could be driving the insurance industry losses this year, with several derecho wind events in atypical locations. On June 3, a derecho event went across central Pennsylvania; a few days later another derecho moved in northward from Colorado to South Dakota; and then the remnants of Cristobal merged with a mid-latitude cyclone that caused a lot of wind damage reports.

Rounding the corner

As the summertime heat starts to take over the overall U.S. weather pattern. the ingredients for severe weather outbreaks start to wane across the U.S. With the typical peak of the U.S. tornado season being the start of May, and the hail peak being the end of May, the overall focus will continue to be on wind-related events, which tend to peak in early July. Since tornado losses drive the overall large tail events for the insurance industry, and hail tends to drive the overall average annual loss overall. and with both of these perils now past their climatological peak, there are some positives for the insurance industry.

In terms of PCS severe weather insurance industry losses, typically 77% of the average U.S. severe thunderstorm loss and 64% of the total number of severe weather-related events have developed by July 1.

Of course, the forecast is for a busy 2020 Atlantic hurricane season....

Months into the global COVID-19 crisis, it is evident that the insurance industry failed to step up to the plate with actions that could have helped the community cope with the new situation. In a time where both individuals and businesses need support -- more than ever -- one would have hoped to see a more coordinated response or a strategic act from such a powerful industry. Instead, the pandemic and the response to it have highlighted significant gaps in industry offerings that are yet to be resolved. 

As soon as the pandemic started, a lot of the major legacy insurance companies simply stopped selling policies for certain kinds of coverage, and some of them still aren't selling them. In an attempt to manage the expectation of their customers, they put up disclaimers on their websites about not covering COVID-19-related losses. We have gotten used to seeing these disclaimers during natural catastrophes to deter fraud, but the outcome for consumers is still grim, at a time when they need protection and support. 

Even now, there is still a large amount of uncertainty and posturing between the insurance industry and regulators about who should have been covered by existing policies that may or may not have explicitly excluded pandemic-related losses. As a result, many customers who were affected by COVID-19 and already held insurance policies -- like travel insurance, which explicitly has blanket exclusions for pandemics -- remained unclear as to whether they will be paid. 

In the past decade, we have seen huge growth in the number of gig economy contract workers, but they generally aren’t treated as employees, meaning that they do not have sufficient benefits or insurance for loss of income. It has become evident in this period that almost 40% of the U.S. workforce don't have the support they need.

Herein lies a valuable opportunity: to adapt and provide better fundamental support to businesses and their workers, which in many cases have proved to be essential during these difficult times.

See also: Strategic Planning in the COVID-19 Era

The good news is that there is a huge opportunity for insurers to harness technology to create products and means of getting these products into the hands of people who need them, which will put insurers in a better position to support communities when the unexpected happens again. 

First and foremost, we need new products: customized, robust and agile solutions that provide actual protection during times of need. The cookie-cutter products that traditional insurers have been offering have not proved to be beneficial. Simply bundling-in pandemic coverage to every single insurance policy is not the answer, as it would raise policy prices for a lot of consumers. This is where product innovation can really make a difference. For example, general availability for "loss of income protection” for gig economy workers would have taken some of the burden off the government, while also helping the community stay resilient. Adaptable and responsive insurance coverage options for these people or the small business community could ensure they maintain the appropriate level of insurance as their income or businesses fluctuate. The exclusions for a pandemic in insurance policies are fairly broad, so there’s clearly a need for explicit pandemic coverages -- either as embedded coverages, or sold separately. And of course, parametric products of some type should be developed and made available to kick in when different types of events happen. 

As the economy starts to reopen, some businesses can only operate at a 30% capacity. Will they be able to claim for their losses under existing insurance policies? Will they have access to coverage for a liability resulting from an infection that happens inside a small business? For small and medium-sized businesses (SMBs), all of these situations could mean going bankrupt. Innovative products don't have to be all-encompassing as far as losses are concerned. Relatively affordable insurance products that provide a basic level of financial support to businesses to navigate difficulties -- even if it’s just to enable them to keep the lights on for a while -- have a demand in the market right now. 

Second, we need to change the way in which insurance products get distributed. As an industry, we need to help people get the right coverage when they need it. Generally speaking, one of the drivers of underinsurance in the community is the fact that insurance is complicated to understand and purchase. In most scenarios, people have to go out and search for protection, and most just opt out of that task. Others don't understand what they are buying, don't get the appropriate coverage or are simply underinsured. Giving consumers the opportunity to get covered, if they want to, is important. Making protection available and offering it in the right circumstances, as a product or add-on at the point of purchase, is a big opportunity for the industry.

The role of technology is to use data that exists from platforms like payrolls systems or e-commerce websites to better understand the level of risk and offer customers the right level of insurance at the right time. Reducing friction on the front end ensures that the level of insurance is adequate and will drive down the volume of underinsurance in communities, which provides a lot more resilience in the event that a pandemic happens again. 

See also: 4 Post-COVID-19 Trends for Insurers

It will be a long time before the insurance industry has a feel for the scope and the scale of the losses that have and will be incurred by businesses, individuals and insurers as a result of COVID-19. The pandemic will have a big impact on coverage and pricing, and it still remains to be seen if the industry will get together to support the community by making insurance available to those who are affected. 

We should all join hands and step up to ensure our communities are protected. We need to use the power of technology to really innovate with new insurance products and distribution methods that guarantee people are properly protected and safe when things go wrong.

Did you know that artificial intelligence (AI) technology first sounded the alarm on COVID-19?

An algorithm developed by BlueDot, a Canadian AI firm, scoured news reports and airline ticketing data to detect the outbreak on Dec. 31, 2019 in China. On the same day, HealthMap, a Boston Children’s Hospital website using AI, spotted a news report of a new type of pneumonia in Wuhan, China, and alerted global health officials. HealthMap was also the first to notify Chinese health officials that COVID-19 was expanding outside of China.

Over the past decade, U.S. tech firms have made significant advancements in AI, and smart robots are making it far easier to automate tasks and functions across industries. AI’s ability to efficiently analyze large, diverse and unstructured data sets is now proving beneficial in the fight against COVID-19.

We examined the myriad ways AI can benefit P&C insurers in a three-part blog series that ran through February. Now we’re picking up where we left off, but with a focus on a timely and important application for workers’ compensation carriers and other P&C carriers. (A more comprehensive article will be published later in the summer.)

AI in the Fight Against COVID-19

AI is improving the speed and manner in which the world identifies, contains and combats infectious disease outbreaks. Its unparalleled ability to rapidly analyze massive amounts of unstructured data has already proven to be an early detection and warning tool for seasonal influenza.

The CDC, recognizing the potential value of AI, holds an annual competition for AI firms and academic institutions. The participants develop AI algorithms to help identify and predict the severity of future influenza outbreaks. Many of these participants are now leveraging their technology and data sets to fight COVID-19.

See also: And the Winner Is…Artificial Intelligence!

AI alerts have played and continue to play a critical role in detecting and controlling future outbreaks.

In the wake of the global pandemic, AI technologies are offering hope and promise in the fight against COVID-19. MIT’s Watson AI Lab is funding a research project for early detection of sepsis, a deadly complication of COVID-19 affecting at least 10% of COVID-19 patients. The project aims to develop a machine learning system to analyze white blood cells for signs of an activated immune response against sepsis. MIT is also developing an AI tool to help doctors find optimum ventilator settings for COVID-19 patients. Shorter ventilator treatments will limit lung damage and free ventilators for other patients.

U.S. research hospitals are developing AI solutions to improve the speed and accuracy of their COVID-19 diagnoses. Mount Sinai, a leading New York research hospital, was the first in the U.S. to develop an AI solution that could quickly and accurately analyze chest scans of patients and detect early signs of COVID-19 on par with highly trained and experienced radiologists.

The world’s leading tech firms and academic institutions are partnering with governments and hospitals to limit the spread of COVID-19 and to protect healthcare workers. Boston Dynamics and MIT developed Spot, a smart robot, to deliver medicine and monitor vital signals of COVID-19 patients. With the help of its leading tech firms, China created a smart field hospital in Wuhan to relieve and protect overtaxed medical professionals.

AI technology is also accelerating vaccine development in such efforts as the collaborative work between Harvard and the Human Vaccines Project. Given the lengthy time to create, test and approve a COVID-19 vaccine, academic institutions and AI firms are working with scientists to identify FDA-approved drugs for repositioning to treat or contain COVID-19. BeneloventAI, a U.K. tech startup, has already applied its drug discovery platform for this purpose and identified a drug for a COVID-19 clinical trial.

Why It Matters to P/C Insurers

Many AI advances are aimed at protecting the health and safety of medical professionals – doctors, nurses, EMTs and all those employed in hospitals. That protection extends to patients and visitors who do not have COVID-19. As a result, hospitals and healthcare facilities that quickly embrace and implement these new AI technologies should prove to be more attractive risks for workers’ compensation and professional lines specialty carriers.

The adoption of AI and smart robots in healthcare is especially critical given the advent of workers’ compensation COVID-19 presumption statutes and executive orders designed to protect healthcare workers and others on the front lines of the COVID-19 pandemic. Specifically, those legal efforts shift the burden of proof from the employee to the employer and reduce or eliminate the evidentiary requirements to establish a claim. While these developments are well-intended, many workers’ compensation carriers expect to see a rise in claims in states taking this action. If AI can significantly improve the safety of medical professionals, we hope it can offset the rise in claims from the new COVID-19 presumption laws.

See also: 3 Steps to Demystify Artificial Intelligence

To the extent that AI can help reduce illness or its spread, the need for extensive quarantine measures will be reduced, and all sectors of the economy will benefit. Main Street businesses and manufacturing facilities will be able to operate more safely, and that can mean fewer business interruption and premises liability claims during future infectious disease outbreaks.

Insurers do not need a global pandemic to appreciate the economic and health value of AI. Smart robots, AI and automation will continue to significantly improve workplace safety and employee health for all types of businesses even after we have tackled COVID-19. Gen Re continues to monitor these trends and looks forward to helping you understand and navigate the AI landscape.

You can find this article originally published here.

Catastrophes can often be catalysts for how society manages risk. For instance, World War II transformed the U.S. into a highly industrialized economy and put us in a position of global economic leadership. As a result of the COVID-19 pandemic, the U.S. life & annuity insurance industry is at such an inflection point.

Life insurance has endured flat to declining sales for over a decade. Put simply, sales have by and large not kept up with the growth of the population, and younger generations are not seeing insurance as a product that belongs in their financial portfolio.

But as the world shut down seemingly overnight, interest in life insurance has come roaring back, and COVID-19 is now accelerating sector adaptation. Electronic application (eApp) submissions are up by 20% year over year, and e-policy deliveries by 52% YOY, according to recent insight from iPipeline. At Ensight, we have seen a dramatic shift toward the virtual sales experience, with growth of 155% in just the last three months. This agile sector response to COVID-19 bodes well for returning the sector to long-term growth and wider financial protection in society.

However, this resurgence will be short-lived if the life insurance industry doesn’t use this moment of opportunity. Younger generations will not tolerate antiquated illustrations or the absolute need for an in-person sale. When we take a step back, COVID-19 is very likely to drive the following three transformations within the life insurance sector: 

• Greater focus on the transformation of the sales experience
• A broader, accelerated shift to more holistic financial planning by advisers
• Increased consumer understanding of the importance of life insurance

These are potentially simultaneous tectonic shifts. And the potential long-term positive implications for life insurance sales are significant. 2020 may therefore represent the long-awaited inflection point for the U.S. life insurance industry.

So, what are insurance carriers doing well today? More importantly, what additional gaps must be closed to ensure long-term growth?

See also: Will COVID-19 Spur Life Insurance Sales?

The Current Frontier – Tackling the Application Pain Point

Over the past decade, the principal transformation agenda has been on addressing the pain point and cost inefficiency of the life insurance application process. Insurance carriers have largely focused on shifting to electronic applications (eApps), as well as implementing new accelerated/simplified underwriting programs.

This shift is critical. However, insurance carriers need to remember that eApps and accelerated underwriting programs will drive little long-term competitive advantage, because everyone will have them.

The next chasm to cross for the sector is product accessibility. Without it, we will not return to a vibrant life sector in the next decade.

Crossing the Chasm – Addressing Product Accessibility

In 1991, Geoffrey Moore wrote “Crossing the Chasm,” which quickly became the bible for entrepreneurial technology marketing. "Crossing the Chasm" focused on how to drive the introduction of innovative products from early adoption, to finding product market fit and ultimately to wider adoption.

To truly cross the chasm and reignite significant sector growth through broader understanding and belief in the value and application of insurance products, life and annuity carriers should prepare to address digitalization of sales and distribution.

Complete digitalization of the point of sale

Even with eApp growth, the permanent life insurance point of sale experience continues to be rooted in paper. Whether it is PDF brochures heavy on the compliance language or the 40-page illustration, the point of sale has simply not adapted to the 2020 expectation threshold. 

Consumers today - with the fintech movement transforming everything from banking and investing to mortgages - expect a digital, intuitively visual and easy-to-understand experience. These are the prerequisites for selling your products successfully – especially in the world of Amazon.

Life and annuity carriers need to transform the entire sales lifecycle – not just the application pain point. This means addressing everything from digital presentation of the product by financial professionals, to interactive training and to a consumer-oriented in-force web experience. Policy statements sent via snail mail are out of date. 

And financial professionals, for whom 50% of client engagements are now virtual, should be enabled with an interactive, digital experience to explain products to clients. Clients should be able to interactively play with products online to better understand how they might perform, for instance under different market scenarios. This is now par for the course.

Change distribution mindset and prioritize technology “platform plays”

Silicon Valley venture capitalist Marc Andreessen said, “Software is eating the world.” A corollary in financial product distribution could certainly be: “Technology platforms are eating distribution.”

Life and annuity distribution has traditionally been focused on relationships and traditional distribution partner platforms (i.e., people plus services). There is an unprecedented shift happening today – the introduction of distribution technology platforms and the elevated importance of the platform experience.

Insurance carriers will need to open their distribution mindset and strategy to prioritize “platform plays.” This means not only reevaluating whether they are delivering a modern, Intuit-like illustration experience for different types of personas, but also consider how they are enabling new technology platforms to drive premium growth.

See also: Fundamental Shift in Life Insurance?

Increasingly it will be the “platform plays” that will drive premium growth. And without addressing the challenge of “product accessibility,” the life and annuities market will never truly “cross the chasm” and return to long-term, sustainable growth.

Fintech is evolving our world and creating experiences that a growing portion of our potential client base have come to expect. While insurance has gained some renewed interest during the pandemic, we are now at the inflection point that will determine how well we can adapt and grow over the next decade.

It is only the beginning of the 2020 wildfire season, and already there have been 20,351 U.S. wildfires between Jan. 1 and June 12. Compare this with 16,630 fires during the same period in 2019, according to the National Interagency Fire Center (NIFC).

As many as 90% of wildfires in the U.S. are caused by people, according to the Department of the Interior. Some are caused by unattended campfires, burning of debris, downed power lines, negligent discarding of cigarettes and arson.

In many cases, wind causes fires to spread over greater distances, creating exponential expansion. Fire spreads from hillsides to various points in the valleys, creating spot fires with no relationship to the main wildfire body. Examples of late season fires being compounded by extreme winds include several Southern California fires in 2019.

When One Disaster Follows Another

Across the U.S. and Canada, the scale of forest fires has increased to the degree that the fires themselves are now contributing to the rise in greenhouse gas emissions. Some fires are even creating their own weather systems, making winds more erratic and conditions too dangerous for firefighters to protect people and properties. These fires are often called megafires, and they are becoming more common. Some bushfires in Australia created powerful pyrocumulus clouds that led to smoke-infused thunderstorms. The lightning from these storms threatened new fires, which sometimes developed into fire tornadoes.

Warmer temperatures do more than just dry out the land. They also heat up the atmosphere, where clouds hold on to more moisture for longer periods, causing severe drought and fire. This is often followed by crushing rains that can’t be absorbed by severely dry lands. When floods and mudslides destroy property where fires blazed nearby, a cycle of what scientists call “compound extremes” – one climate disaster intensifying the next – makes recovery more difficult.

See also: Wildfire Season: ‘The New Abnormal’?

Evacuations and Blackouts Made 2019 Unique

While 2019 was not as active as 2018 in the U.S., disruption was still significant, leading to the evacuation of over 200,000 people and the declaration of a state of emergency in California. 

One of the most notable aspects of the 2019 California wildfire season was the introduction of scheduled intentional power outages by utility companies when fire conditions were forecast. This was meant to minimize or eliminate ignition risk from downed powerlines. These preemptive power shutoffs occurred in approximately 30 counties in California for approximately 23 days total, by Pacific Gas & Electric, Southern California Edison and San Diego Gas & Electric. The shutoffs initially affected around 800,000 customers, or about 2 million people. Stanford University’s Michael Wara, an expert on electricity policy in California, estimated the total costs of the blackouts were somewhere between $1.8 billion and $2.6 billion.

The shutdowns drew widespread criticism from residents as well as government officials. Many businesses and residents complained of either being misinformed or not informed when shutdowns would occur. California developed programs to protect utility companies and consumers in the advent of future wildfire events. The state legislature passed a bill that created a $21 billion state-run insurance pool to act as a cushion for utility companies against future wildfire claims.

Wildfire Modeling 

Wildfires are a rapidly growing challenge – and businesses need better tools to manage this risk. Predicting wildfire-related risk requires understanding more than just fire history, frequency and severity. Using solutions that are scientifically supported and peer-reviewed can provide powerful insights into wildfire mitigation, monitoring, reporting and response.

At Allianz, wildfire modeling is approached from a loss- prevention perspective:

• Fire frequency, history and severity: Quantifies how often and how severe wildfires are expected to be, based on the history of a specific location
• Ember loss and smoke damage: Scores the risk of a fire breaking containment via drifting embers and the projected path of those embers
• Structure-to-structure ignition: Considers the proximity of houses and structures in each zone and the projected risk of fire jumping from structure to structure
• Urban conflagration: Uses fire shed analysis incorporating the risk of a wildfire’s transition into urban areas, including structure-to-structure loss, ember scoring and accumulated risk
• Correlated risk zones: Uses interactive maps to correlate and understand risk of single-fire events in specific areas

Reinsurance and risk modeling experts have begun using terms such as “megafires” and “the new abnormal” as they have identified several contributing trends of interest:

• Increase in property development in and adjacent to wildland urban interface (WUI) areas 
• Increase in fuel loads on the ground, including dead standing trees due to drought and insect infestation, along with a decrease in fuel moisture content as a result of prolonged arid conditions 
• Increase in weather volatility from year to year, including several years of drought interspersed with a few very wet winters, as well as longer dry seasons extending later in the year when intense seasonal wind patterns are most likely to spread fires 
• Changes in fire behavior, with rapid expansion becoming more explosive in terms of quickness and distance, due to a confluence of extreme conditions, including high temperatures, low humidity, strong winds, high fuel loads (vegetation and structures) and steep, hilly terrain; fires have consumed up to 70,000 acres a day and traveled over 15 miles in a few hours, with embers blown across multilane highways into developed areas within city limits  
• Multiple fires have erupted at the same time and often in close proximity, stretching the availability of fire-fighting resources and their capability for aerial drops of retardants due to massive smoke plumes that reduce visibility

See also: Some Hope in the Face of the Wildfire Threat

COVID-19 Challenges

The 2020 fire season presents new challenges related to COVID-19. The pandemic has raised the stakes at the worst possible time, forest managers say, and is forcing firefighters, officials and communities to rethink how they combat blazes. One such consideration is firefighters moving from blaze to blaze in camping groups while not on the front lines. This previous practice is now considered a dangerous incubator for COVID-19. Also, the combination of smoke inhalation and the novel coronavirus complications greatly expand respiratory risks for first responders.

The continued spread of the coronavirus, as well as the economic paralysis that has accompanied health restrictions, has affected every aspect of wildland firefighting. With fires beginning earlier in the spring and persisting later into the fall, communities may have to contend with the dual risk of COVID-19 and wildfire for several months.