Lee Poskanzer, CEO and Founder of Directive Communication Systems, talks with ITL CEO Wayne Allen about the growth of digital assets and why access to these are at risk of being lost in estate planning without specific legally compliant steps to protect them for heirs. DCS, he says, aims to make this process easier for individuals to decide which assets—from social media, cloud storage, bank accounts and more—should be passed on and to whom..before it's too late.

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Steve Bernardez, Partner with Avanta Ventures, talks with ITL Chief Innovation Officer Guy Fraker, about how Avanta—a unit of CSAA Insurance Group—evaluates startups and opportunities through the lens of several key themes, including insurtech, mobility, and products that are ancillary to certain insurance products, such as cyber.

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Sanjiv Parikh, Managing Partner of Avanta Ventures, speaks with ITL Chief Innovation Officer Guy Fraker about the company’s mission, which includes not only investments, but also an accelerator/incubator to nurture early stage companies, and identifying and promoting the opportunities of innovation to drive growth for its parent, CSAA Insurance Group.

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More than 200 million people and two-thirds of the 48 contiguous states are at risk from flooding, according to Edward Clark, director of the U.S. National Water Center. This demonstrates the major threat that flooding poses to the reinsurance industry in the U.S. In light of this hazard, the U.S. private insurance market is growing, with 2017 reporting $600 million in premiums, an increase of $217 million over 2016. But why isn’t this figure higher? And, why do approximately 85% of U.S. homeowners lack flood insurance policies? One of the key reasons, among many, for low private insurance penetration stems from the inadequacy of current flood data, such as FEMA's, to fully assess this hazard. Changes in landscape Many parts of the U.S. have experienced extensive redevelopment since the creation of the industry-standard FEMA flood maps, and these redevelopment changes haven’t been adequately captured in flood maps—until now. To illustrate this, take Sherwood Park in Palm Shores, Florida, which has seen rapid and major development since the 1980s. Areas that were once rural wetlands have been re-landscaped and developed into desirable real estate. See also: How Non-Standard Became the Standard   Figure 1 shows a historical map of the Palm Shores development in 1981. Palm Shores as an urban area was then confined to the southern part of the area shown, with areas to the north and west entirely rural with several lakes and ponds. This is contrasted with Figure 2, which shows aerial imagery of the Palm Shores development in 2016—an entirely different, more urbanized, landscape today. Figure 1: Historical map of Palm Shores development in 1981.  Figure 2: Aerial imagery of Palm Shores development in 2016. This shows an entirely different, more urbanized, landscape today. Basemap: U.S Geological Survey Historical Topographic Map Collection, 1983 ed., accessed via topoView. Flood maps from the 1980s To fully and accurately represent today’s flood hazard in these changing areas, it’s vital for insurers to use the most recent flood maps available, which use contemporary, best-available elevation data. Figure 3 shows FEMA’s flood hazard zones for the Palm Shores area, showing some patches of Zone A flood zones in red, largely restricted to the west. The housing development in the bottom center is Sherwood Park, classified by FEMA as being in a Zone X area of minimal flood hazard. Figure 3: FEMA flood hazard zones for the Sherwood Park housing development, Palm Shores, FL.  Figure 4, on the other hand, shows JBA’s 1-in-100-year flood map, the equivalent of a FEMA Zone A map, which shows a very different picture. The areas of flood hazard are distributed across more of the overall area, with the Sherwood Park area now being represented as flood-prone. Figure 4: JBA’S 1-in-100-year flood map, showing areas of flood hazard in Sherwood Park (dark orange indicates more severe flooding). Contains Microsoft® Bing™ Maps, © 2010-2017 Pirmin Kalberer & Mathias Walker, Sourcepole AG. This disparity in flood hazard mapping can be better understood in the context of the altered landscape. It can be seen that FEMA’s mapping for this area largely corresponds to the landscape of the 1980s rather than the landscape of today. If insurers rely on mapping using this outdated data, they may easily over- or underestimate flood hazard in areas that have experienced redevelopment since the map’s creation. See also: Hurricane Harvey: An Insurtech Case Study   The need for high-resolution data This urbanization in areas across the U.S. also highlights the need for high-resolution data, especially when we consider that more than 20% of all NFIP flood claims relate to properties outside FEMA-designated high-risk flood hazard areas. Figure 5 shows downtown Miami when mapped at 30m resolution (left) and when mapped at 5m resolution (right). The 5m resolution illustrates the flow of water down narrow features such as walkways and roads much more effectively, whereas the 30m mapping can result in under- or overestimation of the hazard. Figure 5: 30m flood map (left) vs JBA 5m flood map (right). Basemap data ©Mapbox ©OpenStreetMap. In light of these changes in landscape, it’s vital that insurers use the right tools for today’s world. JBA's flood maps include the most up-to-date elevation data and can be used within SpatialKey to help insurers better understand risk in the context of their portfolios for more informed and confident underwriting.

Virtually every company owns, licenses or maintains personal information and other sensitive data. Until recently, companies were not legally required to implement cybersecurity policies, procedures or controls specifically designed to protect personal and other sensitive information. Some companies might even have decided not to comply because of perceived high implementation costs and complex operational changes. However, recent expansions in a number of laws have changed this dynamic. Across the U.S., state regulations are being promulgated that require companies to implement and maintain a reasonable level of cybersecurity controls. Some of these laws provide for significant penalties in cases of non-compliance. As companies begin to take steps toward compliance with these regulations, one significant source of assistance is the cyber insurance market. New Privacy and Cybersecurity Regulations As of the writing of this article, at least 25 state laws impose obligations on their corporate citizens to have reasonable data and information security practices to protect sensitive data from unauthorized disclosure. Some laws go even further and prescribe specific standards that corporate citizens must follow to protect the privacy rights of those states’ residents. Two of the most stringent regulations currently in effect are in New York and Massachusetts, while a third, which may very well be the most stringent regulation, becomes effective in California on Jan. 1, 2020. New York state’s recently passed, “Stop Hacks and Improve Electronic Data Security Act,” or SHIELD Act, applies to businesses that maintain private information of New York residents, regardless of whether such entities actually conduct business within New York. SHIELD requires covered entities to implement “reasonable safeguards,” taking into account administrative, technical and physical safeguards such as training, risk assessments, regular testing of key controls and procedures and the disposal of private information within a reasonable time after it is no longer needed. Similar requirements exist in Massachusetts, Ohio, Oregon and Vermont. See also: Hidden Dangers for Cybersecurity   SHIELD also allows for possible fines for violations of the notification requirements up to $250,000. Notably, the imposition of the “reasonable safeguards” requirements brings the new law closer to New York’s 2017 Department of Financial Services’ Cybersecurity Regulation, which prescribes holistic security measures applicable to a broad swath of financial services companies operating under New York’s banking, insurance and financial services laws. In addition, many of New York’s small and medium-sized businesses in industries unaccustomed to the regulations applicable to the financial sector will now be required to address their security measures and implement controls, including risk assessments, to protect sensitive information and systems from unauthorized use or access. Massachusetts’ current regulation, 201 CMR 17.00, et seq., establishes minimum standards to be met in connection with the safeguarding of personal information contained in both paper and electronic records. The regulations apply to all persons who own or license personal information about a resident. 201 CMR 17.03 and 17.04 impose obligations on covered entities to implement prescribed safeguards, including (this is a small sample from the list set forth in the statute):

• A comprehensive, written information security program that contains administrative, technical and physical safeguards.
• Designation of one or more employees to maintain the information security program.
• Identification and assessment of reasonably foreseeable internal and external risks, and evaluation of the effectiveness of current safeguards for limiting such risks.
• Continuing employee education and training.
• Measures to oversee third-party service providers, including requiring such vendors by contract to implement and maintain appropriate security measures for personal information.
• Password management and controls.

California’s much discussed California Consumer Privacy Act, see oag.ca.gov/privacy/ccpa, Assembly Bill 375 (CCPA) becomes effective on Jan. 1, 2020. The CCPA is a significant expansion of privacy rights granted to consumers and shifts the burden of compliance regarding consent and the collection, use, storage and destruction of personal data to businesses. The CCPA’s expansive requirements placed on businesses relative to the collection and use of personal data bring California much closer in line with the privacy culture of the European Union and its GDPR. While California, Massachusetts and New York have been at the forefront of imposing affirmative obligations on businesses requiring implementation of comprehensive cybersecurity policies and protocols, more than 25 states in total have laws that address data security practices of private-sector entities. Most of these data security laws require businesses that own, license or maintain personal information concerning a resident of that state (in several cases, including even entities who maintain such personal information but who are not doing business in the state) to implement and maintain “reasonable security procedures and practices,” taking into account the size and resources of the entity and the nature of the information it holds. Accordingly, businesses with personal information in their systems – for example, unencrypted combinations of names with Social Security numbers, driver’s license numbers, account numbers, PINs, biometrics, etc. – are required, by law, to adopt, implement, maintain and regularly update their information security programs. The conjunction of new obligations imposed by states like Massachusetts and New York, with the expansion in privacy rights granted to California residents in the CCPA, leaves companies with little choice but to take cyber security and corporate privacy with the utmost seriousness and spend time and resources in advance of any type of occurrence. The Role of Cyber Insurers It is clear now that instituting and managing cybersecurity protections are no longer merely options for companies in all industry sectors. One key resource for any business in developing and deploying a cybersecurity program is its cyber insurer. In today’s environment, businesses of all sizes should purchase cyber insurance. Cyber insurance is designed to cover numerous risks associated with both privacy and technology. Moreover, cyber insurance is there to respond after an incident occurs. See also: It’s Time for the Cyber 101 Discussion   Most traditional insurance policies do not cover measures like those contemplated by the various regulations. However, a few cyber insurers provide value-added risk control services along with free or reduced-cost access to cyber security vendors that can help an insured through this process. These services are available to the policyholder upon binding coverage with the insurer in advance of any actual cyber occurrence. CNA, for example, recently launched a suite of cyber security services. CNA CyberPrep is a program of cyber risk services designed to aid cyber policyholders in cyber threat identification, mitigation and response.

• Identifying cybersecurity posture is a critical beginning. Services include detailed analyses from a network of free or reduced-cost cybersecurity experts, reports that provide a snapshot of policyholder security posture and numerous recommendations for improvement.
• Working in collaboration with their broker, CNA Risk Control, and Cyber Underwriting, policyholders execute the cybersecurity experts’ recommendations to mitigate their cyber risks and improve their cybersecurity posture.
• CNA CyberPrep continues to benefit policyholders. In the event of a cyber breach, CNA’s panel of experienced incident response vendors provide guidance and strategies to help expedite recovery and minimize loss.

Offering these types of services is in the best interests of both insurers and policyholders, as an ounce of prevention is worth a pound of cure. Also, given the regulatory developments across the U.S., companies should, more than ever, take advantage of their cyber insurer’s ability to help facilitate this process. Simply put, companies can no longer fail to implement cybersecurity policies, procedures and controls. Failure to comply with the state and federal laws and regulations can easily result in substantial fines and mandated corrective action. Some states also permit individuals to sue when failures result in loss of their personal information, potentially resulting in treble damages under unfair competition laws. Given the staggering costs of non-compliance, businesses must implement appropriate cybersecurity policies and procedures, keep them current, train their employees and use the latest technical protections. When selecting your cyber insurer, look for one that can help supply the requisite resources for a comprehensive – and compliant – cybersecurity program.

When I wrote two weeks ago about the possibility of combining workers comp with health insurance to produce a sort of let's-just-keep-people-healthy approach, many of you wrote to tell me that I'm nuts. (You were as kind as possible; thanks for that.)

One wrote that the obstacles to a combination are "nearly insurmountable." She added:

"Workers comp is a legal system, whereas health insurance is a purchased benefit. Moreover, the legal system governing workers comp is federal law interpreted by each state, thereby making it 52 different legal systems counting Washington, D.C., and Puerto Rico. That’s the basis from which you need to start. Good luck!!"

I love the "Good luck!!" But I don't give up easily. I still believe in Stein's Law, which, paraphrased, says: "Trends that can't continue, won't."

The trends in our intertwined healthcare and insurance worlds simply can't continue. As a result, I think silos will break down, eliminating all sorts of traditional barriers, whether between workers comp and health insurance or between other parts of our healthcare system.

The urgent need for change was driven home by the recent report that the cost of family health coverage now tops $20,000 a year. That cost isn't sustainable. Indeed, many people are dropping coverage because they can't afford it.

The need also hit home in a more personal way. A woman I know, a CFO, reacted horribly to a cleaning solution used in her office and is largely incapacitated. She just wants to feel better and get back to work, but the lawyers have to sort this out first. Does she have a workers comp claim? A health claim? Is there a liability claim against the cleaning service? 

In all, the American healthcare system spends 8% of the total on administration, compared with 1% to 3% in other developed countries. 

But there are also signs of progress, of people trying to change the rules. In particular, businesses are starting to intervene to serve their employers better, beyond just paying for insurance. Amazon is following a move taken by many other large employers and setting up health clinics for employees, with an idea to rolling them out more broadly. Walmart is helping employees find doctors, schedule appointments and generally navigate the health system, also with the idea that the company might offer the service to others. Many companies are providing telemedicine services to help employees get faster, more effective treatment, supplementing the care provided through health insurance. 

Even health insurers, the bogeyman for many, are moving more directly into care. That may or may not turn out to be a good thing, but certainly represents a blurring of traditional lines.

One of my favorite dicta from my days in Silicon Valley is: "Never confuse a clear view with a short distance," so I realize that my (reasonably) clear view of healthcare won't necessarily happen soon. In fact, I'd say it's highly unlikely to happen soon. But it will happen, and we might as well get started, if not on workers comp and health insurance then on any number of the other possibilities.

Cheers,

Paul Carroll
Editor-in-Chief 

The California Department of Finance recently wrote a Standardized Regulatory Impact Assessment (SRIA) of the California Consumer Privacy Act of 2018 (CCPA). The SRIA was prepared for the Department of Justice, the primary regulatory body, whose work is hoped to provide some clarity over what remains a confusing array of obligations for most California businesses. The Department of Finance is required by law to do these assessments when the proposed regulation has an economic impact of over $50 million. The Department of Finance went to great lengths to separate the cost of compliance with the CCPA as opposed to the costs generated by possible regulations from the Department of Justice. As to the former, per a letter dated Sept. 16 from the Department of Finance to the Department of Justice, “The SRIA estimates that the initial cost of compliance may be up to $55 billion.” As noted in the report, “Small firms are likely to face a disproportionately higher share of compliance costs relative to larger enterprises.” The definition of small business in the full report appears to be based on an estimate of how many employees would need to generate the revenue necessary to constitute a business as defined in the CCPA. As a result of this calculation, it is estimated that a “small” business would have at least 250 employees. This analysis, however, does not take into account the impact of the CCPA on a small business that acts as a service provider to a business but does not itself qualify as a business under the CCPA. Using the Finance methodology, this would mean any service provider with fewer than 250 employees that receives personal information from a business. These service providers will need to respond when their business customers start asking for revisions in contracts to meet CCPA obligations, and to show they are otherwise compliant with the obligations of service providers under the act. See also: Keys to California’s Consumer Privacy Act   The report also notes, looking to the experience of the European Union (EU) and the General Data Protection Regulation (GDPR): “Conventional wisdom may suggest that stronger privacy regulations will adversely impact large technology firms that derive the majority of their revenue from personal data, however evidence from the EU suggests the opposite may be true. Over a year after the introduction of the GDPR, concerns regarding its impact on larger firms appear to have been overstated, while many smaller firms have struggled to meet compliance costs.” The Department of Finance makes the assumption there will be a fairly static compliance environment after Jan. 1, 2020. That may not be a correct assumption. Alastair Mactaggart, the father of the California Consumer Privacy Act of 2018 (CCPA), announced recently he will be going back to the ballot in 2020 with the cleverly named California Consumer Privacy Act of 2020. At least part of the motivation behind this, according to Mactaggart, is to keep the legislature from weakening privacy protections – a much more difficult task when a law is enacted as an initiative measure. Following his initial filing with the attorney general on Sept. 25, Mactaggart filed a slightly edited version of the proposal – now titled the California Privacy Rights and Enforcement Act of 2020 (CPREA) – on Oct. 2. The new moniker for this may have something to do with messaging in anticipation of a campaign next fall. While the business community is attempting to negotiate with Mactaggart and his coalition in an effort to ameliorate the impact of this initiative, in the rapidly changing world of technological innovation nothing is static. The initiative process in California, however, is public process cast in quick-set concrete. Regardless of what is put into this ballot measure regarding future amendments in the legislature, the proponents of this law will invest in themselves the prerogative to decide what is “in furtherance of” their grand scheme. Their self-serving bureaucracy, the California Privacy Protection Agency (CPPA), is an effort to create a semi-autonomous state within but unaccountable to any of the apparatus of state government. While disdainful of the legislative process, this agency would be governed by a decidedly political five-member panel, two appointed by the governor, one by the president pro tem of the Senate, one by the assembly speaker and one by the attorney general. No mention of the insurance commissioner — just in case you missed that omission. See also: In Race to AI, Who Guards Our Privacy?   Regardless of the fate of a ballot measure on privacy, we are now in an environment where multibillion-dollar compliance costs are table stakes. For those who can afford it, it will be business as usual, even if slightly disrupted. For those who cannot, compliance is a death knell to innovation. Promising technologies that are dependent on personal information will be stifled unless Big Tech can grab it and afford the cost of putting such innovations to market. This affects all aspects of California’s economy. But when Big Government and Big Tech are the only easily identifiable winners in a public policy debate, can we expect anything more?

I recently had an opportunity to experience one of the benefits of pressing pause. While presenting to over 30 Chinese non-English-speaking executives, I learned when to pause for my translator. She was excellent and taught me how long to speak before pausing for her translation. (It’s longer than you might think, as she needed context to translate meaning not just words). The context of my talk was a visit by a leading Chinese insurer, to Cass Business School. To aid the executive education, that prestigious business school invited a number of leading thinkers (plus me) to present to them. Thanks to an invitation from our regular guest blogger, Tony Boobier, I was asked to educate the group on data science and customer insight. It was a good opportunity to build on the presentation that I recently gave to a non-technical audience at the University of South Wales. Anyway, the point of this blog is that I experienced a couple of benefits from needing to pause regularly. So much so that it got me thinking about the wider principle of pausing, prompting me to recall three aspects of leadership that can benefit from more intentional pauses. Benefit 1: Pause when speaking (for insight and hearing) The first benefit I want to highlight is the one I experienced when speaking to that audience. I mentioned when reviewing an excellent book for publc speakers that I spend part of my working life as a speaker. I could definitely improve, but attendees tell me they enjoy my talks and benefit from them. However, being forced to pause for my Chinese translator improved my effectiveness in a surprising way. First, I experienced so much more time to think. Not just remembering what I was planning to say next, but enabling me to reassess what was most important or relevant given context. Second, I spent more time observing the audience and having time to think up questions or tailor my content as a result. A couple of times, I even had new insights or ideas as a result from this greater reflection. See also: Key Difference in Leaders vs. Managers   At times, it was almost like the benefit of spending most of your time listening as a leadership coach. When you do speak, you are much more confident that what you will say is relevant for your audience. Without a translator, such long pauses would seem stilted in a conversation. However, I’d like to encourage us all (including me) to pause more in our conversations. Work at developing your ability to pause and just listen for understanding, rather than spending all the time you are not speaking just thinking about what you will say next. Benefit 2: Pause for self care (to have more energy for your work) Reflecting on my speaking experience, I ruminated on the other ways pausing can help my in my life. I recalled enjoying reading “In Praise of Slow,“ and although I think there are flaws in Carl’s argument, it’s a useful challenge to assuming fast is better. One aspect of this is the need to balance a modern obsession with “fail fast” with a valuing of taking time to think and hone your craft. As I shared when reviewing Cal Newport’s seminal book, it is well worth analysts protecting time for Deep Work. That includes pausing distractions. Another spin on this is the need for more focus on self-care. Too many leaders have bought into the Elon Musk myth of workaholic overwork being viable. In reality, we can neither cheat our need for sleep nor create more time. Most of us will be more productive by managing our energy, and part of that is taking more pauses. I’ve shared before on the importance of you taking a complete break from work when on holiday. A great build on that blog post is this podcast episode from Michael Hyatt. In this recorded live talk, to over 3,500 leaders, he explains the critical need for self-care and how busy leaders can pause. Benefit 3: Pausing from your current role (to prepare for your career) Reflecting further, I also remembered the importance of another type of career break. That is changing the work that you do. A number of times in my own career I have discovered it is powerful to pause one role, to try something else. Having spent the first decade of my working life doing almost every different IT role, I had the opportunity to pivot and try a role in underwriting. My line manager at the time, William Buist, encouraged me to see past traditional barriers and discover that I could master reinsurance recommendation. Since then, I’ve had opportunities to change career direction a couple more times. From underwriting to marketing, from data analysis to building a holistic customer insight team including data science skills. Then five years ago, taking the risk of leaving corporate life to set up my own business. Each change has been worthwhile and built on past different perspectives to improve my effectiveness in each new role. I’ve also seen the same effect in people who work for me. One man left my team to workforce a couple years within a marketing proposition development role. He later came back to a leadership role in our analytics team much more capable as a result. See also: Customer Experience Leaders Widen Edge   Could a change of tack for your career ship actually help you be stronger at your longer-term career goal? How could you pause? So, as always, my final thoughts turn to you, dear reader. If you buy my argument that pausing can bring you many benefits, how could you pause? In your leadership or working life, what are you doing on autopilot? What are you doing fast but mindlessly? Is that really efficient use of your skills and you as a human being? I encourage you to pause right now and take some time to think about your next pause. What will it be?

I have had the opportunity to ask many former Division I college athletes and a few professional athletes how much time they spent practicing. Plenty of articles exist that detail the many hours professional athletes endure practicing, studying film, lifting weights and doing stretches. Professional actors are similar in how they go through hours and hours of practice, readings, run throughs and vocal exercises. An interesting measure is how many hours of practice go into each hour of actual game time. Depending on the sport, the ratios I have calculated and seen range between five and 15 hours of practice and preparation for each hour of actual game time.

Professionals spend a tremendous amount of time practicing and preparing. When I ask producers how much time they spend practicing and preparing per hour of actual sales and client meetings, the answer is usually the opposite. They spend maybe one hour preparing and practicing for every 20 hours of sales and client meetings.

Some producers tell me they do not have time to practice, and, besides, professional athletes are paid much, much more, and the compensation delta is even higher between professional athletes and amateur athletes. Professionals make time to practice so they can earn more. I have found the same effect to be true with producers. True professional producers spend much more time practicing, even reading forms (preparing), than amateur producers.

See also: Do Consumers Trust Their Agents?  

A good example of this practice that is always amazing to me is how so many really good professional agents with big books find the time to use coverage checklists with their clients. Yet, in the same agency, other producers do not use checklists; their excuse is always, always the same: Their clients will not give them the time, or they do not have the time. How is it that a producer whose book is three times or even 10 times larger has the time and finds clients who give him or her the time to go through coverage checklists, while those producers with small books never have the time to act professionally? What a weird phenomenon!

Professionals in any occupation always find the time or make the time to practice and study and prepare. People who want to be seen as professionals, but are really just pretenders, never seem to find the time or make the full effort required to attain the skills necessary for success. These people want the recognition and the compensation, without the effort. Nice work if one can get it, and many insurance agents have succeeded doing just that for a long time because consumers do not know what they are buying until they incur an uncovered claim.

The industry is changing, though, and technology is going to reduce the compensation of amateur agents severely because, frankly, who needs an amateur insurance agent? Do companies need to pay full commission to amateurs when they can achieve the same transactional sales results at actual amateurs' wages? That math is pretty easy to figure.

Why should a consumer pay the same price for an amateur agent as they pay a professional agent? In fact, why should a consumer pay an amateur agent anything?

A professional agent, a truly professional agent, is someone who puts in the hours to learn and know the coverages in depth. A professional agent is someone who takes the time to work with clients to identify their needs, and actually does this every year for every renewal. At the very least, the agent makes a genuine effort to meet with clients at least annually to go over their needs, changes in coverages, changes in exposures and changes in their lives and businesses.

Professional agents do not just "BOP" every account. They actually understand what coverages in a BOP need enhancement to provide their clients with the coverages they truly need. An excellent example of an amateur agent is when a producer tells a client that he has automatic cyber coverage in the BOP. At best, such an agent might qualify for flag football.

See also: Changing Point of Sale for Insurance  

Is this a harsh statement? Not really, because it is reality, and that agent can change reality by actually practicing and preparing and learning the coverages. These situations are fantastic examples of people being in charge of their own destinies. They can be a pedantic peddler of insurance, be lazy really, or they can endeavor to practice, to study, to prepare and to become a true professional who serves a vital purpose and protects their clients' true well-being. The choice is completely yours, but the idea of actually being a professional while hardly ever practicing and preparing is dead. No more pretending.

Recently, I read this article from a venture capitalist: “Can Insurtech Reach Escape Velocity?“ The following passage caught my eye: “In a world where we can summon a car, or our favorite Mexican restaurant’s veggie burrito, at the touch of a button, shouldn’t we be able to get insurance cover for our homes by just providing our address?” This question was reminiscent of one I blogged about two years ago when a “top insurance executive” asked, “If people can buy paper towels on the internet, why not insurance?” The answer to the burrito question is: No. Entering into a complex legal contract where significant assets and income are at stake is not even remotely similar to getting a ride to the airport or ordering delivery of a burrito. I got a homeowners quote from one of these new startups that, according to this article, “gets it,” simply by providing my address. According to the “big data” source, the square footage of the home was 1,200 sq. ft. less than it actually was. Think that might throw off the dwelling coverage limit? Yes, by about $180,000 in this case. A year later, I got a quote from the same startup, and the living area was over 1,000 sq. ft. MORE than it actually was AND the coverage limit was STILL underinsured. I was told for “other structures” the insured had 10% of the dwelling policy limit. But apparently the startup was not aware that one of those structures, a $40,000 boat dock, was not actually on the “residence premises” (it was on Army Corps of Engineers property) and, therefore, according to the insurance contract was uninsured. See also: Is Insurance Like Buying Paper Towels?   The startup didn’t ask about any activities the residents were engaged in like serving on an HOA board and a child’s school athletic booster club, which presented exposures that can be covered by some insurers with a policy endorsement. No umbrella coverage was offered. And the list goes on. People who know NOTHING about insurance get all excited about the super cool technology, speed and convenience. That excitement lasts until there is a six-figure (or more) uninsured loss that could have been covered by engaging in proper exposure analysis beyond simply a street address. Big data is one thing; Big BAD Data is another.