Personalization has taken a variety of industries by storm. Retailers base marketing campaigns on individual customer preferences; financial institutions are revamping their user experiences to cater to specific demographics; and healthcare organizations are offering services based on patient needs and family history. Without the ever-helpful “you may also like” features and individually customized dashboards, companies like Amazon and Netflix would be nearly unrecognizable, and certainly less appealing. There’s one critical aspect of business -- something that affects every industry -- that’s woefully behind on personalization, however: cyber protection. With media outlets constantly reporting on the latest large-scale data breach like this summer’s Quest Diagnostic attack or the First American Financial leak, it’s easy to get swept up in all the fear-mongering and reactively incorporate as many cybersecurity tools and services as possible, no matter their relevance. For small and medium-sized businesses (SMBs), in particular, it’s especially tempting to blindly emulate larger organizations’ defense strategies, as most SMBs are understandably short on knowledge and resources when it comes to cybersecurity and cyber insurance. Devising Cyber Protection Strategies Isn’t One-Size-Fits-All One could argue that any efforts toward cyber protection should be applauded. Data breaches have become an inevitable part of doing business today, so wouldn’t even a misguided attempt at making an organization more secure be beneficial? Unfortunately, no. Devising cyber protection strategies isn’t a generic, one-size-fits-all process. Rather, it’s akin to prescribing medicine. Just as physicians base their treatment plan on an individual’s specific symptoms, companies need to institute an approach to cybersecurity that incorporates their organization’s unique characteristics and needs. See also: Where to Turn for Cyber Assistance?   Consider the cyber protection needs of, say, a bakery. While a bakery may need to consider implementing defense mechanisms for its business email account(s), CRM solution and digital document storage, its cybersecurity requirements are fairly straightforward. A basic cyber insurance policy could prepare a bakery for any worst-case scenarios in which customer payment records are exposed, for instance, or sales temporarily dip due to a damaged brand reputation post-breach. Now look at an urgent care clinic, for which cyber protection can literally be a matter of life and death. Any internet-connected healthcare device, such as a heart monitor or IV, needs to be thoroughly secured to prevent patients from undergoing serious harm. Email, phone and text communications between physicians, nurses, specialists and patients should be encrypted. With healthcare organizations required to retain patients’ medical records for anywhere between two and 30 years (depending on the state), secure digital storage and back-up services must also be considered. In addition to all the tactical cybersecurity considerations that an urgent care clinic needs to take into account, it also has various regulations and audits it must comply with, such as HIPAA and HITECH. Steep fines and severe reputational damage await any healthcare organization that fails to comply. Evolving and Future Business Needs Must Also be Considered Not only do organizations need to personalize their cyber protection strategies by prioritizing their businesses' unique needs, they also need to consider how those needs may change. A new law office may not have much client data to secure in its first six months of business, for example, but, once it’s amassed a few years of cases, the firm’s data security and storage requirements will drastically change. The type of data that a growing law office collects could change, as well. After a decade in business, if the firm decides to branch out to handle personal injury cases, for instance, it will have to adjust its data security strategy to accommodate patient health information. See also: Cyber: No Protection Against Complacency   Prioritize Personalization to Secure Critical Assets Rather than getting distracted by what Target or Facebook is doing to protect their digital assets, take the time to assess your business. Conduct a comprehensive evaluation of your current cyber protection efforts to determine what’s working and what’s not. Look for any major vulnerabilities such as insecure websites or lax Bring Your Own Device or Shadow IT practices, and map out how your cybersecurity requirements stand to change over the next one to five years. Any organization -- no matter its size, industry or available resources -- can establish a custom cybersecurity and cyber insurance plan and leverage it to more effectively plan for and prevent devastating cyber attacks.

Why do people buy insurance, when they could spend their money on dozens of other excellent products and services? A classical answer would be, "to be safe against risks." Then, why do some people spend thousands of dollars on insurance products while others don’t spend a penny? Doesn’t everyone want to be safe against risks?

To find real answers, it is necessary to take a closer look at the motivations of people. Deciding whether to purchase insurance is not easy. Consumers usually don't get any financial benefit in return for the premium they pay. However, in addition to financial benefits, insurance products offer moral benefits such as peace of mind and a feeling of safety.

So the benefit of insurance from the customer’s view can be formulated as (risk expectation x coverage) + (moral benefit). Thus, the motivation of customers to buy insurance depends on two main indicators: risk expectation and risk sensitivity. Risk expectation determines the expected financial value of insurance. Risk sensitivity shows the concerns of customers, so it directly affects moral benefit.

Who Wants Pizza?

Being cautious is the main instinct behind insurance purchases. Of two consumers who face the same risks, the more cautious one is more likely to buy insurance. Exercising regularly to be safe against chronic illness resembles buying home insurance to be safe against fire, theft and earthquake. Preferring fast food instead of healthy food is like buying a great TV instead of auto insurance. Purchasing an insurance product is like dieting; costs arise immediately, but benefits are achieved later.

See also: Behavioral Economics Show Details Matter  

Generally, competition among insurance companies is thought to depend on prices, brand awareness and customer service. In fact, competition is much broader. Purchasing decisions cross product categories; people buy home insurance or... shoes. Insurance companies should develop strategies to convince more people to buy insurance, not those shoes.

Fans of Insurance

The key point is: People make risk assessments based on their personal experiences, not actuarial tables. Therefore, insurance companies need to focus on the feelings and emotions of consumers and not just working on statistics. People exaggerate the likelihood of risk occurrence under certain circumstances, which increases their sensitivity of risk. People will be more likely to buy insurance even if all other factors are the same. Some opportunities:

• High Loss Frequency: Consumer tend to demand insurance where loss frequency is high even if severity is not so great. A house fire is a disaster, but a car accident is more likely. This explains why automobile insurance is one of the biggest lines.
• Customers With Claim: Risk sensitivity increases cumulatively. If you faced a negative situation recently, you look at the world more pessimistically. It would be a good strategy to offer home insurance to customers who made auto insurance claims the previous month.
• Highlighted Risks: If a risk is highlighted in public, people exaggerate the possibility even if risk occurrence is not high. Theft news broadcast on TV for a week would increase people’s tendency to buy home insurance policy for a time.
• After Tragic Events: Right after tragic events like earthquake, flood and terror attacks, people think they will happen again soon. It makes no sense to buy insurance after an earthquake because, statistically, a new earthquake is not to be expected soon, but sales rise.
• Uncertainty and Fear: Important experiences like having a baby or suffering a heart attack make an impact on people’s view of life. There will be a significant increase in risk sensitivity. Therefore, it would be a good strategy to offer life insurance bundled with family health insurance to a customer who had a baby recently.

Homework for Insurers On the behavioral approach side, there are some basic steps to follow to grow the whole insurance market;

• Being Micro: Insurance products are not only complex but also are too focused on macro risks. In fact, the daily risks of our lives are more micro and ordinary. Why are major risks like fire or flood pointed out in home insurance products rather than damage to electronic devices or accidental risks?
• Being Visible: Insurance companies have a natural advantage because they pay thousand of claims every single day to people and touch their lives. Creating positive stories from negative events can bring life to insurance products.
• Being Informative: Insurers should undertake the mission of "warning against risks," in addition to providing financial coverage. The insurance company that interacts with customers regularly and improves their risk awareness would build brand trust.
• Being Protective: Getting share from competitors is becoming tougher every day. Insurance companies are not only competing with new-generation insurtechs but also with technology, entertainment and consumer goods companies. The most rational and cost-effective strategy could be retaining the existing customer portfolio.

See also: Machine Learning – Art or Science?  

New-generation economic theories based on behavioral science provide important insights about customers’ decision mechanisms. Many organizations, from e-commerce companies to government institutions, are profiting from the insights. For insurance companies, a good place to state would be understanding that customers are not robots who just want the most coverage at the cheapest price.

Thanks to Daniel Kahneman and Richard Thaler for inspiring this article with their behavioral economic theories.

In the past decade, a number of organizations have adopted cloud technology. As reported by Forbes in 2018, 83% of enterprise workloads will be in the cloud by 2020. The benefits of the cloud become especially valuable for SMEs (small-to-medium enterprises) without the infrastructure to support their own systems, let alone the staff to dedicate 24/7 to uptimes. Cloud computing allows insurance SMEs, including brokers and smaller carriers, to offer enterprise services without the overhead. Cloud opens the door to digital systems without constraints. Cutting-edge tech used to be reserved for large organizations with the funds and capacity to deploy, manage and maintain their systems. It’s is now open to organizations of all sizes through the cloud. Here are five ways cloud-based systems allow insurance SMEs to become more competitive: 1. You avoid costly up-front investments One of the most limiting factors for the growth of a small business is the up-front capital to invest in competitive technology. Traditionally, engaging on the same level as enterprise competitors meant investing many thousands of dollars in infrastructure to support the technology of the day. Cloud computing companies generally bill month-to-month for the use of their infrastructure, which is more manageable for growing organizations. You rent rather than own. If you ever become dissatisfied with your cloud provider, you can switch. See also: Cloud Takes a Starring Role   2. You get the benefits of a built-in support team Once you’re working on a cloud system, you get the benefits of an extended team. Not only does this reduce strain on yours, but it will also reduce your long-term IT costs. Depending on your contract, you won't have to worry about the time, costs or staff required to make system upgrades or fix any hiccups in the system. Almost all cloud providers guarantee upward of 99.95% service level uptimes, which means their systems are always available and your clients will always get the services they expect. This will reduce strain, allowing you to better serve your clients and do what you do best. 3. You can lean on reliable security Those same teams taking care of your system updates also work around-the-clock to ensure their cloud platform is secure. In addition to resources, cloud solutions bring to the table operational best practices and security standards, along with regular monitoring, patches and system fixes to ensure robust security you can depend on without added investments. 4. The system can scale to your business needs As your organization grows and your software needs evolve, you’ll have an external partner whose system can grow with you. You won’t have to reinvest in new infrastructure to accommodate the needs for more storage or capacity. Cloud applications offer virtually infinite growth to meet the demands of your business and clients - at any size. 5. The cloud will drive innovation and offer better experience for your customers Many benefits save money and time: two of the most critical factors in business. . The cloud makes it easy to streamline processes and can replace common tasks through automation and workflows. This frees employee time, allowing a better focus on innovation and customer service while you grow your business. See also: Security for Core Systems in the Cloud   Adopting cloud computing is a key way for smaller businesses to level the playing field with large enterprises and remain competitive in the insurance industry. Cloud can provide access to cutting-edge technologies and innovation without the burden of traditional IT costs.

Logistics lies at the heart of the modern global economy, with figures from Transparency Market Research revealing expected growth from $8.1 trillion in 2015 to $15.5 trillion by 2023. Logistics are fundamental to the success of the complex network of supply chains that all 21st-century organizations rely on. Yet insurance has for too long been costly to administer for such firms and more of a hindrance than a help for the merchants it’s meant to protect. Fortunately, things are changing. A new breed of insurtechs are offering logistics firms the ability to provide standardized policy benefits and claims handling experiences to shippers of all sizes at the time of booking, along with instant claims and pay-outs – driving confidence and profits. End-to-end insurance platforms offered by insurtechs are helping logistics players turn insurance from something traditionally viewed as a cost center into a legitimate revenue stream and providing a customer experience for their merchants that increases loyalty. Out of the Dark Ages Insurance has existed as a critical service underpinning the logistics industry for hundreds of years, ever since the first policy was created in 1350. While much time has passed, and things have surely evolved, modern insurance solutions have become complex and derivative of something that is no longer fit for contemporary use, while the customer experience has proven to be a frustrating process that often leaves merchants at risk. Real-time software is now reshaping the entire matrix of insurance policies and distribution networks available to logistics companies and their merchants. The rise of insurtech companies and the API economy has meant that the logistics industry is finally able to dust off rigid insurance processes and deliver the sophisticated coverage that merchants have always needed. With the modern business demands on trade and logistics, this kind of customer-centric innovation is the only way logistics companies can be viable heading into the future. See also: Insurance 2025: Smart Contracts   The Customer Is King In all industries, the customer is becoming the focal point for product development, technology and the overall service offering. Businesses of all types are racing to catch up to the digital behemoths that have filled their coffers by prioritizing the customer experience and adding value at every touchpoint. With the global insurance market for logistics set to be worth over $61 billion by 2025, the scene is set for global logistics companies to drive additional revenue by solving common customer concerns and providing a little peace of mind. Offering standardized end-to-end insurance solutions not only protects merchants against the inherent risks of shipping goods but also helps their businesses thrive. It generates confidence and a level of customer satisfaction that keeps merchants loyal. Protecting shipments has benefits above and beyond just the shipment itself and creates a safety net for the merchant's overall profit margins and provides continuing cost savings. When the cost of failed deliveries has skyrocketed to $2 billion, the logistics firms that can offer customer-centric insurance solutions with real utility are best placed to significantly increase their ancillary revenue streams and customer loyalty. Standardizing Solutions Across the Board Insurance is a key prerequisite for anyone shipping goods globally. Goods may travel over hundreds or thousands of miles to reach their destination. Breakages, delays and other challenges are only natural. Companies need coverage to drive confidence and prosperity and to manage risk. However, existing solutions are riddled with challenges. Traditional insurance policy benefits and claims handling processes tend to differ greatly across different carriers, leaving the merchant at an increased risk of being under-protected. Add to that a 30-day delay before a claim can be initiated, and the merchant is now under-protected and out of pocket should anything happen to shipments. Situations like this are not only creating unnecessary friction for the merchant but also stunting growth and expansion opportunities for logistics companies. The good news is that insurance has changed. Thanks to technology, new end-to-end insurance solutions are now available and are providing a standardized approach to policy benefits and claims handling for any carrier globally. This means merchants can now get the appropriate level of coverage, regardless of the carrier, and have the ability to make claims and receive payments instantly via an automated process for loss notification and declaration of value. A standardized approach gives the merchant confidence and peace of mind while providing a service that adds value to the day-to-day business and reduces financial risk. While solutions like this put the customer at the center of the insurance experience all the way from booking to claims, they can also fast-track growth for logistics companies looking to expand. The Insurtech Solution Insurtech’s impact on the logistics industry is a rare example of modern technology bringing processes previously deemed unworkable back from extinction. Whereas before, insurance was an impractical distraction to the main business function, it’s now a legitimate ancillary revenue stream that's providing real value to merchants. The data and technology-led approach used by insurtechs has evolved insurance beyond rigid blanket policies to give businesses insurance products that are fit-for-purpose, at the right time and at the right cost. They have also put customer needs first, removing operational costs, accelerating processes and breaking the insurance broker stranglehold on the industry. Insurtech and tech companies have created customer-centric protection with real utility and kick-started the revival of insurance in the logistics industry, making it viable and valuable again. It’s also becoming easier for merchants to claim without incurring losses and lengthy delays. Furthermore, whereas 20 years ago the complexities of the insurance process became detrimental to the core business, insurtech has facilitated the opportunity for insurance offerings to fill the modern need for ancillary income.

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