Flood is a complex natural catastrophe, with great variations across small spatial areas, producing extremely localized effects. Sometimes, one property may be badly flooded while its neighbor two doors down is spared. As a result, managing flood risk is often seen as a challenge by U.S. insurers. In fact, although 90% of all natural disasters in the U.S. involve flooding, according to the Insurance Information Institute, it could still be regarded as the least understood natural peril. Until recently, the complexities of flood behavior have been too intricate to fully represent using broad-scale modeling techniques. Likewise, flood data in the U.S. was not detailed enough to enable insurers to see the full picture of the hazard. Flood data has many other pitfalls, from being badly out of date to not providing full details on the different types and severities of flooding. However, through continued advances in technology and data availability, we’re now able to achieve a more detailed analysis. Technology is rapidly progressing, and it’s incredible to think how much more we can achieve now than we could just a couple of decades ago. Lessons from Donkey Kong: Using technology from the computer gaming industry A key part of the flood mapping process is hydraulic modeling, and at JBA we run our hydraulic models using technology that was primarily developed for the computer gaming industry. You only have to consider how far the video game industry has come, from Donkey Kong to Fortnite, to understand advances that hydraulic models have experienced. See also: It’s Time to Rethink Flood Coverage   Donkey Kong was released as an arcade game in the early 1980s and was a breakthrough. However, the difference in resolution between the 1980s Donkey Kong and today’s version is striking. ©Copyright Nintendo Our hydraulic models, which run on very similar technology, are now also much more sophisticated, and the resulting flood maps are more detailed and informative than ever. Artificial intelligence (AI) and satellite data We have also seen advances in artificial intelligence (AI) and machine learning, which fill knowledge gaps in our input data, as well as satellite technology, enabling us to access better data on elevation, land use and rivers. For example, we’ve trained machines to analyze elevation data to locate all the levees in the U.S. We are using similar algorithms to check the hydraulic model outputs for unusual patterns, which might indicate quality issues that we can then address much more quickly and effectively than before. See also: Here Is How to Make Flood Insurance Work   Over recent years, satellite technology and other techniques have improved, which means the quantity and quality of data on land use, rivers and rainfall, as well as on elevation, have increased significantly. We’ve progressed from using contour lines on maps to having light detection and ranging (LIDAR) data to sub-centimeter accuracy to describe the topography of an area. As a result, we can achieve a lot more detail in flood mapping. This can help insurers to better understand flood risk in the U.S. and allow them to capitalize on latent opportunities in the private flood insurance market.

The FBI reports that the total cost of insurance fraud is estimated to be more than $40 billion per year, costing the average U.S. family – in the form of increased premiums – between $400 and $700. A long-established and growing problem, insurance fraud has its many guises – ranging from tiny, one-off opportunistic cases to multimillion-dollar syndicates of customers and suppliers working together to routinely defraud insurers. Luckily, digital enhancements within the insurance industry have been able to help companies lessen certain fraud risks – particularly when data analytics is brought into the mix. To remedy insurance fraud using data analytics, individuals and businesses must be analyzed as they exist in the real world – as holistic, connected entities. To make these kinds of connections accurately, detection strategies must process high volumes of data in real time, be able to generate and constantly update a view of entities and apply a scoring model to the full picture. This allows companies to track and catch fraud, even across insurance lines and when multiple people are involved. Fortunately, there are now technologies that are able to do just that – detect fraud and understand risk throughout a customer’s lifecycle. This will, in the long run, provide better claims processing and a healthier insurance system. See also: Leveraging Data Science for Impact   Quantexa, a data analytics firm that uses AI technology to piece together suspicious customer behavior, enables companies to make better decisions with their data. Their technology allows users to knit together vast and disparate data sets and derive actionable intelligence, a task that would normally take a human many months to complete. This technology can be focused on a single person and the many data points that are correlated to him or her, or larger entities such as corporations. Technology like that of Quantexa’s can gather both claims and policies and build a network that provides three levels to which one can apply analysis: The claim: This analyzes claim behavior over a long period. For instance, has a person filed for soft tissue damage multiple times? If so, how often and at what rate? This frequency could be a marker for fraud. There is also the ability to review if claims are filed close to when policies are taken out – another marker for fraud. The entity: The entity can be either a claimant or, say, a medical provider; the analysis lies within the relationship between the two entities. Believe it or not, there are instances where medical providers have intentionally and habitually provided the wrong injury code; for example, if a claimant is in the hospital for an injured leg, the medical provider bills the insurance company for a more expensive procedure, such as a hysterectomy. Technology can detect and assess injury code discrepancies. The network: This is based on the density of relationships and connections between claimants, witnesses, medical providers and beyond, and can stem from both claim information and transactional data. For instance, are multiple claims from “different” claimants all going to the same bank account? Factors can be pieced together to paint a larger picture on where fraud is originating. See also: How Connected Data Can Help Stop Fraud   Technology allows fraud to be detected much earlier on and across much larger schemes than humans ever could – a fact that should give thieves something to be concerned about, and all honest insurance policyholders something to rejoice about.

A man in New Zealand, called into a meeting where he knew he would be getting fired, used an unusual tactic for the event. He hired a professional clown to sit in on the meeting with him. The clown's primary function during the termination meeting was to blow up balloon animals and mime crying while the man got fired. I bet HR never saw that one coming. To a fly on the wall, the scene had to be hysterical. The employee, who was a copywriter for an ad agency, received an email from his boss asking to meet to "discuss” his role. He was also advised to bring a “support person” to the meeting. He said he thought that “Joe the Clown” would be the best type of support he could have. They sure do things differently in New Zealand. Here in the U.S., we normally bring armed security to these types of meetings, and usually the clown is the one getting canned. It had to be an extraordinary sight. As the HR people droned on about policy and procedure, Joe the Clown was busy making balloon dogs and other animal creations. The mimed crying when the man was handed his termination paperwork was a nice touch, as well. According to the now-former employee, "It was rather noisy, him making balloon animals, so we had to tell him to be quiet from time to time." Imagine not even being able to hear the reasons you were being let go. This story further cements my basic impression of clowns making balloon animals. They are annoying, and the squeaking noise they make is like nails on a chalkboard. If this guy had really wanted to make an impactful story, he wouldn't have hired Joe the Clown. No, he would have brought in Pennywise the Dancing Clown, from Stephen King's story, “It.” Now THAT would have been the real headline. It is not often that HR gets terminated by a maniacal clown during the termination of a corporate fool. Or, for a slightly less intimidating effect, he could have brought this guy: via GIPHY In all seriousness, you have to wonder if the agency made a mistake. The now-former employee, who by the way is also a comedian, might not have been a good copywriter, but he clearly is a creative soul. This ad agency likely never produced any product that got the attention and coverage that the termination of one of their employees has received. The story has gone worldwide and made the agency famous, albeit not for reasons the agency would probably like. I seriously doubt there is an Addy Award for “Most Imaginative Termination Support Person.” The agency has to be thinking that maybe they took out the wrong clown. See also: 15 Keys to Mental Health Safety Net   Maybe there is a lesson for us here in the U.S. With the continual decline in socialization and increasing levels of workplace violence, conducting terminations that are safe today is a real concern. Just last week in Tallahassee, Fla., a man went on a rampage and stabbed five people at his workplace when he believed he was about to be fired. Perhaps employers could start hiring clowns to soften the message and help lighten the mood at these types of meetings. Of course, it might help if the clown is armed. It certainly could change the tone of the event. It would also completely change the meaning of the phrase, “It's time to fire John. Go ahead and send in the clown.”

Collaboration is at the heart of successes over history — in Darwin’s words, “those who learn to collaborate and improvise most effectively have prevailed.” Yet the healthcare space has been slow to learn the lesson. Far from functioning as a team focused on a single goal, healthcare stakeholders operate on a fractured playing field, each one trying to get to the goal on their own. From that perspective, everyone becomes a competitor — and the ability to reach the goal line becomes nearly impossible. Nowhere is the tension more obvious than in the struggle to integrate technology and healthcare. On the surface, they are unlikely partners. Healthcare isn’t exactly a profession for risk-taking, and rightfully so — in every decision, the safety of a patient is at stake. A new drug or tool has to run the gamut of regulatory burdens and clinical validation before it gets anywhere close to adoption. Adoption and implementation is arguably even more challenging, including everything from integrating new solutions into legacy systems, convincing practices to abandon the sunk cost of preexisting solutions or overcoming the lack of financial incentives — without practice reimbursement, the challenge of adoption becomes that much more daunting. Technology, on the other hand, is a high-risk, high-reward market (there’s a reason that billion-dollar-valuation startups are called “unicorns”). Many tech startups succeed by delivering direct-to-consumer solutions, cutting out the middleman and individualizing experiences for the user. It’s a formula that doesn’t map well onto the healthcare field, where the success of patient care and outcomes relies on a web of relationships. And tech companies that have tried to take these formulas from Silicon Valley and apply them to healthcare learn that really quickly. The graveyard of digital health tools is littered with companies trying to sidestep the problems of the healthcare system by dealing with the patient directly, and removing the care provider from the equation. The crash-and-burn rate of tech entrepreneurs trying to break into healthcare is so notorious that GV, Google’s venture capital arm, set up a program to teach the ins and outs of the healthcare industry to aspiring crossovers from Silicon Valley. Despite this, the healthcare industry is overripe for disruption from the tech world, yet the process of working with healthcare providers is not easy, for all the reasons stated above. The rate of change is slower, the challenges to adoption more widespread. But the provider is an essential player in the provider/patient relationship that is at the heart of healthcare decisions, and that means that the needs of the provider as well as the patient have to be the guiding principle for change. See also: Putting Digital Health to Work   As the digital health market matures, it will be collaborative models that break down the barriers between stakeholders, and consequently will break down the traditional obstacles to tech integration in healthcare. Xhealth is one such example: A platform that connects innovators, healthcare teams and patients; it streamlines the integration of tech through an online marketplace that makes ordering and prescribing digital health tools as easy as traditional medications. Some of the most successful of these models are incubated by health systems themselves, like Mightier, a spinout of Boston Children’s Hospital (BCH). With an intimate understanding of their own workflows and the needs of their young patients, health providers at BCH created the app to help children with emotional and behavioral needs overcome daily challenges through bioresponsive games, and the Mightier system has since become available to children outside the BCH. At Babyscripts, we employ a collaborative model between clinician and innovator to develop and enhance our solution for pregnancy care. Our recent partnership with Penn Medicine focuses on taking the care protocols and results developed through Penn’s Heart Safe Motherhood program and automating and scaling those accomplishments into a technology solution for postpartum hypertension. Regardless of origin, a solution must have an awareness of different perspectives to build products that respond to diverse needs and configure to the right business model — and this awareness comes from a deep understanding of the needs of all the players on the field. See also: The Science That Is Reinventing Healthcare   Of course, providers and patients are not the sole stakeholders in the healthcare continuum, and, until we can get all of the stakeholders on board, then we’re still only responding to some of the needs. It’s necessary to expand the vision for collaboration beyond patients and providers: to nurses, payers, social workers, caregivers, community leaders, family members and others who play a role in patient health. Bringing these various stakeholders into dialogue, setting aside their competitive differences, is the path to better outcomes.

I'll be brief, because I'm running around at InsureTech Connect in Las Vegas (as are, I imagine, many of you. Come by and see us in Room 305 of the MGM Grand Conference Center, if you are.) But I do want to tee up an idea we've been discussing: What if we tried combining workers' comp with health insurance? 

Yes, they've historically been very different. Workers' comp sprang from the grand bargain of a century-plus ago, designed to free both workers and employers from potentially debilitating claims of negligence. Health insurance grew out of charity when care was limited and cheap—even when Blue Cross began selling insurance, in 1929, it cost just $6 a year—and took a left turn during World War II when a government tax break established employer-issued health insurance as the standard in the U.S.

But history isn't destiny. In fact, an idea like combining workers' comp and health insurance could allow for some creativity, in the midst of uncertainty, that isn't possible within today's silos. 

The combination would do away with a lot of today's inefficiencies. While workers' comp was set up to be no-fault, it's more like fault-fault-fault today. Everybody reviews everything. Lawyers often get involved early. So do doctors—and not just those treating the injured directly; you have doctors reviewing the doctors, and maybe doctors reviewing the doctors who review the doctors. What if the goal just became keeping the employee healthy, whether the problem was a workplace injury or strep throat? 

A lot of complexity would fall away. Perhaps even more than we know. The psychosocial approach to workers' comp finds that workers react well when they feel they're on the same side as the employer—trying to get healthy and back to productive work—and react poorly when they feel like the employer is being legalistic, uncaring, etc. If the whole goal was just a healthy employee, imagine what might happen. 

A fair amount of administrative effort and expense goes into deciding whether workers' comp or heath insurance covers a problem, but what if the two lines of coverages were combined...?

My innovation mantra has long been, Think Big, Start Small, Learn Fast, so how would we start small after having this big idea? I can imagine Texas and Oklahoma being hospitable, as long as they've been experimenting with ways to opt out of traditional workers' comp. Perhaps a small county in California would allow a melding of workers' comp and healthcare, so we could gather some data. In any case, let's find a way to try the idea.

I can already see a major issue: deductibles. Workers' comp doesn't have them, while health insurance may have massive ones. So, there has to be some way to cover workplace injuries immediately while not providing carte blanche for employees to have whatever healthcare treatment they want. 

But that issue feels like a detail, especially if we experiment before rolling out a new plan broadly. There has to be some way to assign responsibility for routine issues to individuals, while protecting injured workers. 

Please let me know what you think. And, as I said, maybe we can even do this in person, if you're at ITC this week.

Cheers,

Paul Carroll
Editor-in-Chief

Why do I say business income is "the dreaded coverage?" Based on my years teaching and decades of E&O audits, business income is the commercial coverage I have most often seen producers shirk. Many do not even try to sell it, or at least they do not try beyond whatever the throw-in coverage is. Yet business income is one of the most important commercial coverages. This combination of importance and silence equals a wicked E&O exposure. Why do producers dread bringing business income to the attention of clients? In my experience, many producers do not know the coverage adequately. Others know it but dread the worksheet. Others know the coverage but are uncomfortable discussing it because they do not know how to discuss business income with clients. Business income is not an easy coverage. The fact it is not an easy coverage is not an excuse to not discuss business income, much less should it be an excuse for not emphasizing to clients the need to purchase the coverage and to customize it to fit each client's needs. And just because some companies have "Bopped" it does not mean a producer need not discuss the particulars. Avoiding the particulars is just being lazy or scared. See also: Digital Solution for Income Protection One of the main dreadful issues is the worksheet. A key practical reason no one likes dealing with business income is that worksheet. It seems almost everyone thinks the worksheet has to be addressed first. I've been told that many coverage instructors even state that. But focusing on the worksheet first is plainly bassackward. The coverage provisions need to be addressed first because, if a producer does not know an insured’s business income exposures, a producer cannot calculate the required limit. Knowing the client's exposures first also requires addressing the various time limits. The time limits are essential to addressing business income correctly. Another factor is the need, availability and possible gaps. For example, if the cause of loss is a flood, the insured still has a business income loss, but if the business did not suffer physical damage from the flood, it may not have any coverage if the producer did not identify this potential and associated gap. Gaps equal E&O exposures. An agent can advise that the gap exists or can find a coverage solution. Many specialty business income gap products exist through specialized providers and almost never on standard forms. I find few producers know these gap products exist, which may be because so few are standard forms and most CE instructors stick to standard forms. In particular, the civil authority gap is of special importance. The civil authority gap is further divided into specific types of civil authority actions, but a simple example will suffice here. An insured has a business income loss due to mandatory evacuation, but the business suffers no damage from any of the covered perils. From an insured's perspective, they have a loss, and they want it covered. Another cause of business income dread is not understanding how the limits versus claims settlement is made. Regardless of the worksheet, when a claim is submitted it has to be supported by the insured's documentation. A simple example is the contractor who has a liberal interpretation of the tax code. He pays little in taxes because his deductions are high or because maybe he does not see the need to report all his revenue. Then he files a business income claim for the legitimate amount, but his documentation does not support that amount. The documentation supports a much lower loss. This is indeed a dreadful situation. See also: The Case for a Hybrid Business Model   The goal or premise of P&C insurance is to return the insured to the same balance sheet financial position the business was in the moment prior to the loss. To meet this promise, agents must improve their knowledge of business income in general and the options available, and their ability to communicate the associated complexities effectively to insureds. To learn more, visit www.burandeducation.com/niche-program-business-income.

Fairly or not, many consumers regard insurance as a commodity, so, for insurance providers, a hefty investment in customer experience is imperative to customer retention. And the biggest driver of a positive experience? Quick, fair resolution of claims — shortening the time between claim and resolution. In urgent situations, there are a lot of moving parts, and, in 2017 and 2018, the U.S. experienced 30 natural disasters, each causing more than $1 billion in damage, according to the U.S. Household Disaster Giving in 2017 and 2018 report. Claims representatives, such as adjusters, inspectors and appraisers, may need to be relocated from other parts of the country. Existing work will likely need to be rescheduled and completed upon returning to normal conditions. Not to mention, insurance companies must coordinate their efforts with customers, independent adjusters and mutual aid responders. Catastrophes are largely unpredictable — but capacity planning solutions empower insurance providers to best respond to them by optimizing their extended teams to ensure the right resources are activated to handle additional claims. In its simplest form, capacity planning involves assessing available resources against the expected work, identifying any gaps and making decisions on how to best meet any anticipated or “unplanned” work, using historical data to guide predictions. Ultimately, capacity planning drives better customer service, even under the most trying conditions. Preparing for Disaster Every customer-centric business is ultimately measured by how it performs on the day of service — especially in the case of insurance providers, where that day of service could easily be the worst day of your customer’s life. With September as National Preparedness Month, it’s the perfect time for insurance companies to formulate a solid resource plan to better service their customers. To effectively address the influx of claims brought about by disasters, insurance companies need flexible systems and processes—to speed the claims process from first notice of loss to resolution. In times of instability, customers crave predictability — knowing when they are going to interact with your adjustors, assessors and inspectors, down to the minute. Whether capacity is measured in points, quotas, hours or number of jobs, the ultimate goal for insurers is to understand whether they have the bandwidth for the planned, forecast and unexpected work in the coming weeks — and make changes accordingly to ensure they do. See also: A Tough Lesson in Disaster Preparation It seems daunting considering that most insurance providers are managing resource plans and schedules in disparate spreadsheets and claims management systems. But there are alternatives that provide a single view of work and resources: field service management (FSM) software. Used primarily for scheduling and dispatch, leading-edge FSM solutions now include the ability to optimize resource planning. Filling the Capacity Gap When a severe storm is forecast, a planner can load the expected increase in demand into the resource planning solution. This is immediately reflected in the planning tool, as well as real-time changes in the existing schedule, location of resources and adjuster skills. Using artificial intelligence (AI) and machine learning, capacity planning solutions empower planners to identify areas at risk, and allocate resources to ensure all work gets completed. Insurance companies can use these solutions to anticipate gaps in capacity coverage and take corrective action, such as:

• Temporarily relocating field resources
• Allowing for additional overtime
• Relaxing travel rules
• Training additional employees to take on expanded roles
• Hiring independent adjusters from multiple sources

Unlike most service planning processes, which are highly manual and involve multiple spreadsheets and guesswork, AI-driven capacity planning seamlessly accounts for historical demand data, scheduled and unscheduled work and available resources to ensure business priorities are enforced across the service lifecycle. When there are schedule disruptions — say, for example, an adjuster calls in sick or can’t travel due to weather situations — the capacity planning solution alerts the service organization of the problem, and swift action can be taken to reshuffle low-priority work. See also: Untapped Potential of Artificial Intelligence   Capacity planning arms insurance providers with the visibility, control and agility required to handle catastrophic situations, ensuring the right resources are in place to meet customer needs at an incredibly critical time.

As vaping becomes increasingly popular across the U.S., more businesses are manufacturing, distributing and selling vaping products, including ones containing or intended for use with CBD or THC. The proliferation of vaping products is likely to lead, before long, to an increase in vaping-related litigation. As such, vaping-related businesses will want to make sure – before litigation ever occurs – that they have the right insurance in place to respond. Given the variety of terms, conditions and particularly exclusions in commercial general liability (CGL) and product liability insurance policies, businesses cannot simply assume that they have the necessary coverage. In determining whether it has the needed coverage, a vaping-related business will want to take into account a number of considerations, including:

• Does its CGL insurance cover product-related claims, or it is necessary to obtain and maintain separate product liability insurance? Some CGL policies may specifically exclude coverage for “Products-Completed Operations.” As a result, such policies may not provide coverage if a consumer is injured by, for example, an exploding vape pen.
• Is its CGL or product liability insurance written on a claims-made basis, or does it provide occurrence-based coverage? Basically, a claims-made insurance policy provides coverage for a claim made during the policy period, whereas an occurrence-based policy provides coverage for an accident that happens during the policy period (no matter when the claim is ultimately made). Therefore, occurrence-based coverage is generally more valuable to the policyholder, especially when facing risk of long-tail-exposure claims (such as many toxic-tort claims). However, at least for cannabis-related companies, it may be difficult, if not impossible, to purchase an insurance policy covering product claims that is written on an occurrence basis.
• Does its CGL policy or its product liability policy specifically exclude coverage for vaping-related products or vaping-related injuries? There are different formulations of such exclusions being used by insurers today. For example, at least one insurer includes a complete exclusion for vaping equipment and components, which precludes coverage for “any claim arising out of the use, handling or ownership of vaporizing equipment or any part of the accessories attached or used with the vaporizing equipment including pens, cartridges, mouth pieces, batteries, chargers, coils and any miscellaneous products used with, or attached to, vaporizing equipment.” Another insurer only excludes coverage for claims “resulting from the use, sale or distribution of batteries manufactured by, or which are represented, marketed and/or sold as having been manufactured by” certain specified companies.
• Do its CGL or product liability policies include other exclusions that may arguably defeat coverage for a vaping-related claim? Such exclusions may include, (i) a health hazard exclusion, (2) a marijuana/cannabis products exclusion and (iii) a carcinogen exclusion.

The insurance considerations only increase if the vaping products at issue include, or are intended for use with, THC (i.e., the chief psychoactive component in marijuana, which remains a Schedule I controlled substance in the U.S.) or even CBD. Because marijuana remains illegal in the U.S., there are still many insurance companies that will not write coverage for a cannabis-related business or agree to cover cannabis-related losses. There are also any number of insurance policy terms, conditions, or exclusions that arguably could defeat coverage for a THC/cannabis-vaping-related claim. As such, as companies that already have CGL or product liability insurance move into the THC vaping space, they should double-check with their insurer(s) and review their policy(ies) to make sure they still would have coverage for any claims arising out of THC vaping. They cannot just expect that the policies they historically have had will cover them in this new line of business. See also: Legal Marijuana: An Insurance Perspective   Finally, CBD-related vaping products may raise many of the same concerns. Although the 2018 federal farm bill opened the door for the legal production and sale of hemp and hemp-derived CBD in the U.S., it did not amend the federal Food, Drug, and Cosmetic Act or otherwise legalize the sale of CBD for oral consumption. Accordingly, insurance policy provisions that require compliance with all applicable laws or exclude coverage for illegal acts or substances may arguably still bar coverage for CBD-vaping-related claims. While many of these considerations will apply to many businesses in the vaping industry, each business is also likely to have its own unique insurance needs and issues, and each business should carefully review its specific coverages carefully.

We’re talking a lot these days about the future of work. We’re not talking enough about the future of health insurance. Most Americans have historically gotten health insurance through their employers. But the number of self-employed Americans including independent 1099 contractors, freelancers, gig workers and sole proprietors is skyrocketing. According to studies by the Freelancers Union, 57 million of us are fully or partially self-employed today, and more than 50% will be by 2027. What will be the #1 concern of self-employed Americans? Access to affordable healthcare. What’s driving this change in how we work? Some people are deciding to step away from traditional employment to pursue what they love. Others are being pushed out of traditional W-2 employee roles by automation, corporate downsizing and rising labor costs. As the U.S. workforce changes, its insurance needs are changing, too. How will self-employed people get comprehensive and affordable health insurance? How will healthcare plans evolve to better serve this growing population? And as a broker, how can you serve them? [caption id="attachment_36665" align="alignnone" width="550"] The future of work is coming. Where is the future of insurance? Source: Freelancers Union.[/caption] Why does health insurance for the self-employed matter? I am a licensed broker and a former freelancer, so this issue is personal for me. I spent most of 2018 working as a self-employed growth consultant. I did paid projects from a desk at a coworking space and got to know the other people there — gifted technical, creative and business professionals with the courage and skills to bet on themselves. And I learned what every self-employed person already knows: This work can be exhilarating, but it’s not easy, and the lack of affordable health insurance hurts not only individual workers but their families, and their long-term health. See also: Empathy Transforms Health Insurance   Self-employed people including 1099 contractors can’t get coverage in most group policies. They can buy comprehensive individual plans during open enrollment, but it gets more expensive every year, and those earning more than $50,000 per year don’t get subsidies to offset the price. Outside of open enrollment, there are no comprehensive healthcare options for the self-employed–which is a massive problem. How does this affect you? If you sell group plans to organizations with a large base of independent 1099 contractors, you already know the answer--you’ve got a large and growing population, and nothing great to sell them. The most innovative and successful brokers in the next 10 years will be those who can figure out how to serve this massive and growing population of self-employed workers. The future of work deserves the future of health insurance. How can healthcare plans evolve? Brokers and self-employed people both need better options. Luckily, we’re starting to see some new options come online that are getting traction. Self-employed people can buy short-term plans, but these plans typically cap payouts and don’t cover preexisting conditions or many essential health benefits. They can join health-sharing ministries, typically composed of religious people who aspire but do not commit to sharing in each other's healthcare costs, but their care may not get covered, and monthly payments are not tax-deductible. Decent, which I founded, recently launched in Austin, Texas, in partnership with the Texas Freelance Association, offering the most affordable comprehensive plans on the market for self-employed people and their families. All plans include unlimited free primary care with a personal doctor. Decent sells year 'round, including to people without a qualifying life event, and will be expanding throughout Texas and beyond soon. So what is the future of health insurance? Whatever products eventually win in the market, getting employers out of the health insurance equation will make the healthcare market work more like other markets, where suppliers compete to serve customers on quality, price, and convenience. See also: 5 Health Insurance Tips for Small Business   America’s self-employed workforce is relatively healthy, wealthy and politically active. A revitalized individual market will encourage regulators to make subsidies available for insurance purchased in the private market, not just on government exchanges. At the end of the day, capitalism is about choice. People want more and better options. As a growing number of Americans choose the insurance they want rather than taking the insurance their employer gives them, suppliers and brokers will provide what the market needs. At Decent, we anticipate that the future of health insurance is refreshingly similar to the future of other markets that have evolved to serve the consumer: more choices, more customization and better deals for the diverse population that makes up our country, including the rising tide of the American self-employed.

In 2006, years before Lemonade started to disrupt the insurance industry and the terms "fintech" and "insurtech" became known at large, Daisuke Iwase co-founded the first digital life insurance company Lifenet in Japan. Lifenet has been disrupting the Japanese life insurance sector right from the start by providing direct distribution of life insurance products via the internet – something that many still say is impossible to do. We’re therefore excited that Daisuke Iwase, a real pioneer in digital innovation, sat down with us to share his secrets on how he uses his experience in his current role as group chief digital officer at AIA Group. AIA Group is 100% focused on the Asia-Pacific with a presence in 18 markets, and headquarters in Hong Kong. The portfolio includes over 33 million individual policies and over 16 million group scheme members. AIA has an outstanding track record of growth. It is the largest life insurer in the world in terms of market capitalization. There is a major commitment to digital innovation, especially in transformative business models. Summer 2006, many years before people even thought fintech and insurtech could disrupt the digital landscape and the overall industry, you decided to start a digital life insurance company. Can you share how this came about? Daisuke: “Let me start by describing the industry landscape at that point. Many complex products, lack of transparency, mistrust, distrust in life insurers, consumers looking for more simple, transparent and convenient solutions. At the time, we had most industry colleagues telling us it was impossible; no one would buy life insurance digitally. Regulators wouldn’t give a license to two random individuals. But then, May 2008, we launched Lifenet with a capital of more than $120 million and with a license awarded to a new independent company. This was the first license awarded since 1936!” Impressive! Basically, you were insurtech 1.0, operating in a time before unicorns or the rise of fintech and insurtech … Daisuke: “In hindsight, we were a little bit ahead of time, yes. Fast forward three, four years to March 2012, we were still small but growing rapidly. We basically tried to build something that made total sense, but faced many challenges. We went public on the Tokyo Stock Exchange, raising additional capital. We also persuaded Swiss Re to come on board to become our lead investor. And a little later, in 2015, KDDI, Japan's second largest telco, became the largest shareholder of Lifenet. So it has been a journey, but a very interesting journey.” See also: New Efficiencies in Life Insurance   Lifenet celebrated its 10^th anniversary summer of 2018. Many say the company not only stands out because of its business model, but also because of its corporate culture. About 65% of the staff comes from other industries. Can you share a bit about this exciting period at Lifenet and being the first challenger in a huge, matured market? Daisuke: “At that time, Japan was the second-largest life insurance market in the world with over $400 billion in premium written every year. We came with a very simple solution: term and supplemental health insurance that was sold online with transparency, empowering the consumers, saving cost and giving the cost back to the consumers. We had successes, challenges and setbacks. I must say I am really proud of what we have achieved at Lifenet. I think we inspired many other challengers that shared the belief that incumbents could change the way they engage with their customers, the way they design their products, the way they engage with the millennials. But we did not yet disrupt the market.” Nevertheless, you had a significant impact on the Japanese life insurance industry and probably also beyond Japan. What lessons did you learn? Daisuke: “Let me share three lessons. First, consumers do not necessarily behave in an economically rational manner. Makes sense if you think about it. When was the last time you made a purchase solely based on economics? So, there is a lot more than just delivering value to the customers. Second, having the best products does not necessarily make you the one with the largest market share. History has shown that many times the companies with the best products do not necessarily win, but companies with the strongest distribution do prevail. Third, my humble experience reminds me of a case I read during my time at business school. It was on channel distribution strategy in marketing, and it said, ‘You can eliminate the intermediaries, but you cannot totally eliminate the functions they are serving.’ So, while we believe that by going direct to customers we can create significant value, there are many reasons that insurance agents have existed for a long, long time in history, and there are multiple functions that they serve that cannot be totally eliminated; they have to be replicated in different forms. That’s why technology is a tool to either help you sell life insurance in a more productive manner or help consumers buy life insurance more efficiently. But, during this time, from 2008 to 2018, most consumers did not wake up in the morning yearning to buy life insurance more efficiently.” Technology, at the end of the day, is a means to an end. So, then in late 2017, Keng Hooi, CEO of AIA Group, approached you and offered you another challenge. Daisuke: “Yes, and I shared these views with my current CEO now at AIA. AIA, given its strong distribution presence, should focus on enabling and empowering the distribution force through the power of technology. Not much later, as Lifenet celebrated its 10th anniversary in the summer of 2018, I made my transition from an entrepreneur to lead the digital and innovation initiative for the largest Pan Asian life insurer.” In Europe, most people know AIA through the Tottenham Hotspur sponsorship. Can you tell a bit more about the company? Daisuke: “AIA is the largest independent publicly listed pan-Asian life insurance group – with a presence in 18 markets around the Asia-Pacific region. We were rooted in Shanghai a century ago in 1919.  We completed the reorganization driven by AIG’s liquidity crisis in 2008, leading to the positioning of the company for a public listing.  As of June 2019, AIA was valued at $120 billion, becoming the largest life insurer in terms of market capitalization.” So, here you are, making the transition from a start-up to this huge company. What drove you to make this transition? Daisuke: “The reason is exactly the size and the potential impact that I can have through the AIA platform. Through AIA, I can touch the lives of our 30 million customers across 18 markets. Needless to say, I am very excited about the opportunity. I truly believe that we are at a very interesting time, when the fundamental nature of a life insurer is significantly changing from a payer to a lifetime partner, supporting the health and the life of our policyholders. But I also believe that the life insurance industry will not be disrupted in the foreseeable future because of one reason; it is the low purchase frequency of the product. The power of digital is at its best when it involves something that is of very frequent purchase like an Amazon product or travel, etc. With the way life products are designed to date, this is not the case.” What should be the way forward then, in your view? Daisuke: “We can add much value by going digitally but with somehow limited impact. What we can do is change the nature of the engagement. The engagement takes place when we pay you when you're sick or you are diseased and thus becoming a more engaging partner of your healthy life. The opportunity for digital to have more impact will be larger. Just looking at the fundamentals, Asia's middle class will continue to grow. This middle class will make up the majority of the new rising middle class who, as they increase their fluency, would seek protection coverage for their loved ones. AIA’s competitive advantage lies in our extremely robust and competitive distribution force through highly disciplined management of agency and through the new partnerships that we are pursuing with our bank or telco partners and other non-traditional partners as well as our focus on health and wellness.” Can you share a bit about the strategy to make this happen?  Daisuke: We've identified four strategic areas that we would like to focus on as part of this innovation initiative. First is distribution digitalization. Second is customer engagement and ecosystem. Third is proposition enhancement, primarily around health tech. And fourth is artificial intelligence and data analytics. We're looking for companies that are willing to build a base in Asia to properly support us, offer robust technology and solutions and partner with other countries in our 18 markets to realize the vision that I've shared with you right now.” Scaling insurtech innovations with the incumbentsorganization seems difficult. Having been at the other side of the table, I'd say your experience as an entrepreneur means that you probably approach things differently compared with a traditional large insurance company … Daisuke: “I'm not interested in doing innovation for the sake of innovation. I only want to focus on things that have real impact, and by impact we mean something that moves the needle for our $120 billion market capitalization. I've noticed that innovation cannot happen in an isolated lab or isolated group office.  It has to be embedded into the strategic priorities, it has to be driven by the markets, the countries that are running their businesses day to day. We need to have a clear budget to support that. We need to have close alignment with our internal technology team to assess and build real businesses, and of course there needs to be a change in the culture and the mindset, which so often hinders innovation and challenging new initiatives.” See also: What Is Really Disrupting Insurance?   How do you tackle this from your current role as the executive who is responsible for digital, data and innovation? Daisuke: “As I mentioned earlier, I think there's a lot that we can do to make our distribution partners, our agents, our banks, our telco partners sell life insurance more productively to enrich our customer experience and to enable our employees, our colleagues to operate much more efficiently. Previous to my arrival, AIA had already embarked on many digital initiatives. For instance, last year we led a strategic investment of $500 million, as an investor group collectively, in WeDoctor, an online healthcare solutions platform, providing seamless online and offline healthcare services as well as integration of general practitioner and specialist doctors in China. WeDoctor has 27 million monthly active users on its platform, and through this strategic alliance we believe that we can deliver a new value proposition for our customers and access the broad customer base that WeDoctor has and many more digital initiatives we have pursued.” How do you think the future of life insurance will look? Daisuke: “I think of many things that may change in the future, but then my 10 of years experience running Lifenet made me humble about how slow or how little consumer behavior actually changes. What will not change is the fundamental nature of the life insurance product, a financial solution to offer protection for families in the future. But we are listening to many changes that are happening around us, that affect the way consumers behave, the expectations consumer have, and the role that life and non-life insurers may play. I hope that you can feel the energy from Asia. The opportunities ahead are serious commitments to driving our growth further through technology and innovation.”