Over a third of the U.S. workforce work on a self-employed or freelance basis; a stat that is forecast to continue rising. This is the gig economy and is here to stay. For a recent InsurTech Insights, I looked at the gig economy's impact on insurance with the rise of ride-sharer platforms like Uber. Only a decade old but already operating in over 700 cities, Uber is a global brand that has achieved the rare distinction of becoming a verb. "To uber" has replaced "to hail" when needing a ride home. To help me understand the impact of the gig economy on insurance cover, I called up David Daiches, the COO and co-founder of specialist insurtech platform Inshur. First up, I asked David how he got started at Inshur with co-founder Dan Bratshpis. “Dan and I came at this from different directions and met in the middle. Dan had been writing trading algorithms on Wall Street until the financial crash. From there, he found himself in a taxi brokerage serving the traditional yellow cabs. Then Uber came along, and Dan saw first-hand the difference between the (old) traditional cabbie and the (new) digital natives driving for Uber. Age, attitude, technology were all defining characteristics of the younger drivers who simply don’t want to come into the brokerage and sit around sorting out insurance. They wanted to do everything online and mobile and resist coming into the office. “Which is when Dan started to look for a technology solution and our paths crossed. I had been working on OpenUnderwriter and developing an open source policy admin solution to allow brokers to trade on the internet. When Dan saw what we had done with OpenUnderwriter, he got in touch straight away. We met in London within days and created Inshur; the rest, as they say, is history.” It’s a familiar story when I look across the insurtech landscape; one founder is a technologist, the other understands the market. Becoming more than just a broker in the gig economy In the beginning, Inshur operated as an aggregator in New York. They saw the opportunity of getting the driver up and running as fast as possible. In the old world, it could take weeks before a licensed driver was insured and ready to go. In the new world, that wasn’t going to be acceptable. See also: How to Insure the Gig Economy   So they did what insurtechs do and built a fast and convenient sign-up app using a chatbot called Ami. Providing a totally digital experience on a mobile app, Inshur could get the driver signed up, checked out and quoted in a matter of minutes.

“We asked carriers for more flexibility, but all they offered us was a dedicated fax machine!“

This gave them a digital face, but, behind the scenes, much of what they did looked like a traditional broker operation. They were restricted in their efforts to adapt the insurance experience to meet the digital profile of the ride-share drivers. David explained, “We asked carriers if they would give us some binding facility, but all they offered us was a dedicated fax machine! “Then we saw what Munich Re was doing with Digital Partners, and we reached out to Andy Rear. After an initial meeting with Andy in New York, we signed a partnership agreement with MRDP and launched as an MGA in New York last year. The next logical step for us was to launch in the U.K., and we strengthened the team by hiring a good taxi underwriter who understood the U.K. market. We then started working with Uber and collaborating on how we could use their driver data for underwriting purposes.” Inshur is a service-driven, engagement model It’s clear to me that Inshur wants to be more than just a distributor of insurance products for the gig economy. The service features they are building into the platform offer value over and above a cheap price and an easy-to-buy insurance product. It’s what I would call an engagement model. In New York, Inshur has a partnership with a dash-cam provider called Nexar. It’s a self-financing no-brainer for the driver who pays $49 for the camera and, in return, gets a 10% discount on the premium, typically worth about $450! The deal works for Inshur, too, which gets access to the footage of any incident/accident. The dash cam also collects telematics data that provides useful corroborating evidence in any claim. When it comes to claims, the Inshur approach is all about getting the driver back on the road as quickly as possible. Business interruption cover can be challenging when it comes to getting a plated replacement vehicle for the driver, in which case the solution is to pay the driver while he is off the road and get the car fixed as soon as possible. Managing different regulatory environments Launching in New York and London has created challenges managing very different regulatory environments. David explained: “In the U.K., it’s much harder to get an FCA license, but, once you have it, you can be very flexible on pricing compared with the U.S.  It’s the other way round In the U.S. In New York, you can get an insurance license quite easily by submitting a form, but you don’t have the same freedoms on pricing. In the U.S., all prices have to be agreed with the regulator and published in advance.” The logic to the U.S. approach is that the regulator is protecting the market against new players undercutting market rates and then failing, leaving an exposure. I know from talking to many founders that it can be difficult to get the regulator to agree with pricing no matter how compelling the proposition for digitally removing cost and inefficiency. The regulators are there to safeguard the customer, not give a free ride to the startup, after all. Putting the insurance customer first  When it comes to underwriting Uber drivers, Inshur uses around 50 different rating factors. These are a mix of proprietary data and publicly available data sources from simple processes, such as the scan of a driving license. This data gathering reduces the time on the application process and builds a much richer and more accurate driver risk profile. One of the significant factors in underwriting used by Inshur is the driver’s Uber rating. Any driver with an Uber rating of 4.99 is going to be rated a much better risk than one at, say 4.5. This rating is much easier to use in the U.K. than it is in New York, but, with their U.K. experience, Inshur will be able to show the New York regulators that the Uber rating is a reliable factor when pricing premiums. For the ride-share drivers, insurance is a high fixed cost, and Inshur has introduced flexible pricing models to fit the needs of the drivers. Currently, about 90% of their ride-share drivers buy the monthly policy. At each monthly renewal, a simple process involving one click in the app re-rates drivers based on any changes to their Uber rating. See also: Gig Economy: Newest Tool for Insurance   However, Inshur haven’t gone as far as moving to a pay-as-you-drive model like the one Metromile has in Los Angeles. I asked David about the need for flexibility and how he saw the market developing for ride-share insurance. “Simpler is better,” he told me. “We have found that the gig economy drivers want a simple annual/monthly policy that enables them to drive when they want, for whoever they want. We haven’t found much appetite for on-demand. When you think about it, it doesn’t make a lot of sense to keep turning the insurance on and off. It becomes too complicated when most drivers have multiple apps and are signed up to drive for everyone: Uber, Lyft, Juno, etc. They flip between the different platforms to the next ride; they don’t mind where it comes from. Any insurance product that was based on on-demand would need to be smart enough to flip seamlessly between the different ride-share platforms.” I tend to agree with David; simpler is always better than complicated, unless it can be completely hidden inside a black box, which isn’t practically possible just yet. This article for Linkedin is part of an op-ed first published on The Digital Insurer. The full original article can be found here.

Cybersecurity attacks are inevitable. That’s the unfortunate reality. In fact, in a special report, Cybersecurity Ventures projects cybercrime’s global cost will exceed $1 trillion between 2017 and 2021. Safeguarding clients’ nonpublic information from cyber-criminals is a top priority for CPA firms. The latest data breach statistics from the 2017 Identity Theft Resource Center Data Breach Report show an alarming number of exposed consumer records in the U.S.

• 1,579 reported breaches, exposing 179 million records
• 55% of all breaches involved businesses
• 59% of all breaches resulted from hacking by outside sources
• 53% of all breaches exposed Social Security numbers

Now more than ever, organizations and accounting firms of all sizes need to be vigilant about protecting data and responding to threats. What’s my liability? “That’s a big question we hear from firms regardless of whether they’ve been attacked,” said Stan Sterna, vice president and risk control specialist for Aon. “There are actually no uniform federal laws on business cybersecurity. But there is a patchwork of state and federal rules.” Under certain state laws, CPAs can face liability for cybersecurity breaches that expose personal information. Most states have rules for handling breach notifications and for what remediation measures need to be taken. Breach requirements depend on where the client resides – not where your firm is located. We encourage you to learn the dynamic requirements of states that apply to you. The Texas data breach notification law has been amended several times since its passage in 2009. It requires notification of affected individuals in the event a data breach results in the disclosure of unencrypted personal information consisting of an individual’s first name or first initial, last name and certain personal information such as Social Security and driver’s license numbers. Federal rules and law The Safeguards Rule is enforced by the Federal Trade Commission and applies to all companies defined as financial institutions under the Gramm-Leach-Billey (GLB) Act. Businesses that prepare tax returns fall within this definition. Under the rule, businesses are required to develop a written information security plan that describes their program to protect customer information. There are five additional requirements. Learn about the rule and implement applicable compliance protocols. Do clients have standing to sue a CPA firm if they did not suffer damages as a result of a data breach? At the federal level, the circuit courts are split as to what constitutes sufficient standing to sue in cyber breach cases. Some courts hold that companies may be liable for damages if client or employee data is stolen, even if the theft causes no harm; instead, it’s sufficient to merely allege that the information was compromised. This broad interpretation will only further increase the risk of cyber liability claims. Two recent decisions illustrate these differences:

• The Sixth Circuit court, citing the defendant’s offer for free credit monitoring as evidence, joined the Seventh and Ninth circuits in holding that a cyber victim's fear of future harm is real and provides sufficient standing to sue. This particular ruling specifically undermines the defense that if no actual cyber fraud or identity theft occurred, the victim has not been damaged and has no standing to sue.
• However, in another case, the Fourth Circuit held that a plaintiff must allege and show that their personal information was intentionally targeted for theft in a data breach and that there is evidence of the misuse or accessing of that information by data thieves. The division among the circuit courts as to standing is not likely to be resolved unless the U.S. Supreme Court decides a case on the issue.

New cybersecurity regulation sets the stage for other states to follow In response to several highly publicized consumer data breaches, in 2017 the New York State Department of Financial Services enacted 23 NYCRR 500, “Cyber Requirements for Financial Services Companies,” with which all affected firms must now comply. These “first-in the-nation” data security regulations establish the steps that covered entities must take to secure customer data. The regulations are designed to combat potential cyber events that have a reasonable likelihood of causing material harm to a covered entity’s normal business operations. See also: 4 Ways to Boost Cybersecurity   Specifically, insurers, banks, money services businesses and regulated vital currency operators doing business in New York with 10 or more employees and $5 million or more in revenues must comply with the new rules. Under the provisions, companies must:

• Conduct a cybersecurity risk assessment, prepare a cybersecurity program subject to annual audit and establish a written policy tailored to the company's individualized risks that are approved by senior management;
• Appoint a chief information security officer (CISO) responsible for the cybersecurity program who regularly reports on the integrity, security, policies, procedures, risks and effectiveness of the program and on cybersecurity events;
• Establish multi-factor authentication for remote access of internal servers;
• Encrypt nonpublic information (PII) and regularly dispose of any nonpublic information that is no longer necessary for conducting business (unless required to be retained by law).
• Prepare a written incident response plan that effectively responds to events and immediately provides notice to the superintendent of the New York Department of Financial Services of any breaches where notice is required to be provided to any government body, self-regulatory agency or any other supervisory body or where there is a “reasonable likelihood” of material harm to the normal operations of the business;
• Implement a written policy addressing security concerns associated with third parties who provide services to the covered entity that contain guidelines for due diligence or contractual protections relating to the provider’s policies for access, encryption, notification of cybersecurity events affecting the covered entity’s nonpublic information and representations addressing the provider’s cybersecurity policies relating to the security of the covered entity’s information systems or nonpublic information;
• Annually file a statement with the New York Department of Financial Services certifying compliance with the regulations.

Meanwhile, the California Consumer Privacy Act of 2018 (CCPA) goes into effect on Jan. 1, 2020. The CCPA represents a significant expansion of consumer privacy regulation. Its GDPR-like statutory framework gives California consumers the:

• Right to know what categories of their personal information have been collected
• Right to know whether their personal information has been sold or disclosed, and to whom
• Right to require a business to stop selling their personal information upon request
• Right to access their personal information
• Right to prevent a business from denying equal service and price if a consumer exercises rights per the statute
• Right to a private cause of action under the statute

What is the impact of these new regulations on CPA firms? Whether or not a CPA provides professional services for an entity covered by the New York Department of Financial Services or the CCPA, these new rules are important:

• Regulation in one state frequently results in regulation in other states; both the New York and California cybersecurity regulations may serve as a template for other states contemplating cyber security legislation.
• The regulations create a framework for plaintiffs' attorneys to follow when alleging that a company (regardless of whether it is a New York or California covered entity) should have done more to protect private information, keep consumers informed or prevent a data breach or that a CPA firm should have detected data security issues while providing professional services.

Take preventative action now “If someone sues your firm because of a data breach, you may have a stronger case if you can show that you’ve taken reasonable measures to help prevent an attack or theft,” Sterna advised. “Setting up systems to assist in prevention is an important aspect of managing cybersecurity risk.” Here are three tips to get you started: Start with an assessment. What are your cybercrime defenses? Do you have gaps in your data security procedures? Do you have controls in place? How do you document incidents when they happen? What is your response plan when incidents occur? “Mapping where you stand today and your vulnerabilities is the best way to understand your next steps,” Sterna said. The AICPA’s cybersecurity risk management reporting framework helps you assess existing risk management programs. The Private Companies Practice Section cybersecurity toolkit can also help you understand the most common cybersecurity threats. Implement best practices. At a minimum:

• Use encryption wherever appropriate to protect sensitive data. This includes laptops, desktops and mobile devices. Failing to do so threatens your data and your reputation.
• Train employees to recognize threats and safeguard equipment and data.
• Develop and practice your response plan for various situations such as a ransomware attack, hack or ID theft.
• Back up your data so you’ll still have access to it if it’s lost or stolen.
• Keep your equipment physically secure in your office and on the road.

Get an outsider’s perspective. What better way to learn your firm’s vulnerabilities than to hire an expert for penetration testing? Through a penetration test, a third-party consultant will perform a test tailored to your firm’s needs and budget. They’ll provide insights on your firm’s vulnerabilities and educate you about solutions for protecting your practice. A consultant can also help you implement regular drills that test your firm’s response in the case of various attack scenarios. See also: Cybersecurity for the Insurance Industry   Legal and insurance considerations CPA firms should consult with their legal counsel to assess the firm's risk of first/third party data security claims and assess vendor data security coverage. The existence and adequacy of data security used by third-party vendors (including contract tax return preparers) is often overlooked. CPA firms also should consult with their insurance agent or broker to review their current cyber policy to ascertain the adequacy of coverage. This article is provided for general informational purposes only and is not intended to provide individualized business, insurance or legal advice.  You should discuss your individual circumstances thoroughly with your legal and other advisers before taking any action with regard to the subject matter of this article. Only the relevant insurance policy provides actual terms, coverages, amounts, conditions and exclusions for an insured.

In my previous article, I addressed some of the apprehension associated with artificial intelligence (AI). Now that AI is real and being put to work outside of research labs, some are afraid of losing their jobs to machines. Others worry that the technology could be misused, reinforce biases or perhaps get co-opted for more nefarious means. I would argue that AI naysayers are thinking about the situation the wrong way. Although comments, criticism and questions are understandable, they are based on how the world functions right now. But innovation is not static. The world around us will change and mature, too. This, in turn, will require the commercial insurance industry to take a good hard look at what it is versus what it can be. There Is No Crystal Ball A couple of years ago, one of my customers owned a beautiful, traditional building in Seattle. Think offices and cubicles. They decided to sell the building and opt for a 30-year lease on a state-of-the-art space designed around how people work — open floor plan, lovely couches, lots of windows, every comfort you could think of. What’s headquarters like today? Empty. Most employees don’t come to the office any more because they work remotely — and now the company is saddled with a building far bigger and more expensive than it needs for the next 20-something years. That is not to say tides won’t turn again, but the point is that people are afraid of what AI will be tomorrow according to present-day terms. Fearing AI is akin to being scared by electricity when Ben Franklin lit up the kite. There was reason to be nervous. I’m sure electricity seemed quite unnatural and terrifying at the time, but think about how vastly different life would be if fear won and electricity was never used. By planning for tomorrow based on a limited view or context as it exists right now, we will miss the opportunities ahead. Don’t Confuse Focus With Narrowness Companies are built to drill into one (or at least relatively few) specific problem(s). In insurance, in particular, domain knowledge is essential, and organizations provide much-needed solutions. But companies also must see the forest for the trees and not define themselves in such a narrow way that they are closed off from how they are positioned in the larger scheme. See also: Strategist’s Guide to Artificial Intelligence   Consider the dawn of air travel. The people most capable of taking advantage of the market were the railroad barons. They were the ones with land, money and a choke hold on the transportation business. But, these men saw themselves solely as rulers of the railroad, a realm unto itself. If they had thought of themselves as leaders in transportation instead, they could have owned all of the airlines, planes, airports, etc. The same is true today. The companies that dig in their heels and have a fixed notion of what they are and how they should operate will eventually cease to exist. Instead, they could leverage AI to help them become more and appeal to customers in previously unimaginable ways. There Is No “Now” Moment There is rarely a clear signal that flashes “jump” when it’s time for an organization to make changes necessary to remain competitive over the long term. If you look at the evolution of business in the world, innovation in the marketplace rarely comes from existing companies. Kodak, for example, controlled the film market, but it wasn't in the photo business. Kodak hung onto film long after pixels arrived, until the company was so far behind the rest of the world in pictures that it could never recover. And Kodak is far from alone. Blockbuster, Blackberry, Atari, Hostess, TiVo — the list of once-beloved-then-abandoned companies is extensive. All of these businesses refused to move into a new mode because of too much fear, pain or expense; it was not who they were or saw a need to be, and the insurance industry is notoriously averse to change. Traditionally, it only happens when leadership believes in taking a risk or as a last resort, not because of some seminal moment. The question is how long do you have to adapt before falling too far behind to be successful. AI could expedite that timeline given the impact it’s already having on other industries. Clearing the Way No one knows what the future will bring — and how big or how small a role AI will play — but we are far enough along to know that AI is on the upswing, and its uses will continue to broaden as systems get smarter. So how do you take advantage? Leave legacy systems behind. This is a scarier proposition than AI to many companies. Yet, with the proliferation of cloud-based applications and services, there is an opportunity for organizations to no longer feel locked into a singular way of doing business, which is a game-changer. The cloud provides an unprecedented level of freedom to innovate in ways that are far less permanent and expensive. With more flexibility, companies can adapt at the speed of technology, learn from AI and evolve as it does (as well as the world at large). Organizations can plan and adjust to what’s happening around them in ways that make sense for the larger industry. See also: And the Winner Is…Artificial Intelligence!   The bottom line is that AI is here — whether we are ready or not. Will you embrace its potential like Ben Franklin, or will you be a railroad baron and stay where it’s comfortable? The choice is yours. Are you ready to leave legacy systems behind? Are you ready to have your business systems change at the speed of technology? Are you ready to have your business grow at the speed of light? As first published in Dataversity.

Lately, I’ve been talking a lot about the impact technology has had on the travel insurance industry – from chatbots that answer customer questions to apps that guide them through the claim process – and it got me thinking about just how far our industry has come and just how much customer needs have changed in only a few decades. Consider this: In the 1990s, consumers could purchase travel insurance, but distribution was far more limited than it is today. Printed brochures – which customers completed by hand and returned via snail mail – ruled as our primary distribution method. Online travel agents (OTAs) were not much more than a concept. AOL was just beginning to gain momentum as a mainstream communication tool. We were conducting business as we had for years. By the middle of that decade, the industry began to change, setting the stage for the experience we know today. Recognizing the value travel protection could provide its passengers, Cunard became the first major cruise line to offer a plan designed specifically for their needs. Others began to follow suit, and today virtually every travel supplier offers some sort of travel protection customized for its customers. Then along came Cancel For Any Reason (CFAR) plans. See also: Has Digital Insurance Failed?   Much like the supplier plan, CFAR seized on the need for customization – then it layered in a degree of flexibility that consumers simply hadn’t seen before. A concept almost ahead of its time, CFAR has exploded in recent years as the desire for travel – particularly abroad – collides with a growing number of global uncertainties. Consumers want to see the world, and CFAR is helping them do just that. The industry continues to evolve with benefits such as parametric coverage and fully online/mobile pre-sale questions, purchase options, post-purchase support and claims platforms. Essentially, we’ve put the security of travel protection in consumers’ pockets, giving them instant access to coverage tailored for everything from their traditional Caribbean cruises to their bucket-list experiential journeys to Mongolia. The future is exciting. According to a recent survey by flight information specialist OAG, more than 75% of travelers would be willing to use fingerprint and facial recognition scanners at stop-points if they could simplify their journeys. And 73% of all travelers and 89% of millennials said they would like artificial intelligence to better predict flight pricing during the booking process. The survey also indicates growing comfort with the integration of technologies like virtual reality and robots into different phases of the travel experience. Just imagine blending some of these technologies into the travel insurance experience to further tailor and streamline it for consumers. See also: Practical Tips for the New Traveler   Consumer travel preferences may be changing rapidly, but the travel insurance industry is right there with them and will continue to be right there with them – enabling new adventures with a sense of security. I look forward to what the future holds for our industry.

Relationships are the key to success in the insurance industry. Trust and respect go a long way when it’s time to deliver challenging news. For example, the firming of the directors and officers (D&O) market has led to tough conversations about increasing rates. The best way to handle these conversations is to make sure your communication skills are in excellent shape – and that means both what you say and how well you listen. How to announce a price increase to clients: Plan ahead and be clear Preparation is key. Take the time to identify potential high-risk accounts early, with 90-day reviews. Our clients aren’t happy to hear their rates are going up, but it helps to have conversations early to explain the reasons for rate increases. With pricing down 50% over the last 10 years, a market adjustment has been due for some time. In fact, price increases in the current D&O market are a good sign for the industry’s long-term health. Be sure to take the time to explain the main drivers for rate increases, which are being experienced by public companies, private companies and financial institutions, including large private equity firms and large banks:

• The number of claims has risen.
• Capacity has decreased with the departure of carriers.
• Defense costs have risen, in part because of coverage expansions and increased loss costs.

Securities claims on a yearly basis are up, and, because there are fewer public companies now than there were 10 years ago, the chances of attracting securities litigation is even greater. We owe it to our clients to be open about the realities of the market and their impact on rates. Bear in mind: How we announce a price increase to clients and brokers will have a lasting impact on our relationships going forward. The markets that handle this communication effectively will be the ones that succeed in the long run. See also: How to Be Disruptive in Emerging Markets   Be transparent about how underwriters evaluate a risk Underwriters base their risk evaluations on data. Reminding clients of the factors that contribute to their increased rates can help alleviate some of their distress. These factors include:

• Financial strength
• The class of business
• Strength of the leadership
• Business track record
• M&A activity
• Organizational structure
• Claims history

While it’s important to be straightforward in explaining the facts underlying a risk evaluation, it’s just as important to demonstrate your understanding of your client’s position. We view our relationships with clients and brokers as partnerships, and we want to deal with people fairly and honestly and communicate our position. Be effectively empathetic – and actively listen It takes effort to be effectively empathetic. Saying, “I know this isn’t what you want to hear,” is not enough. Consider these steps to validate the reactions you will receive when it’s time to share not-so-good news:

• Put aside your viewpoint
• Validate the other person’s perspective
• Examine your attitude
• Ask what the other person would do
• Listen

Be prepared to respond to objections It’s only natural that bad news will meet resistance. Here’s how we suggest keeping the conversation on track.

• Objection: Why is my rate increasing in the absence of a claim? Response: Rate increases depend on risk and current pricing, which is affected by increases in regulatory costs for financial institutions, in defense costs and in claim frequency.
• Objection: I may have to go to RFP if rates increase. Response: We understand your position and wanted to give you an update early for our due diligence and your ability to market the risk with other carriers.
• Objection: This account was written new last year. Why the increase this year? Response: Accounts are evaluated annually, and defense and regulatory costs increased over the past year.
• Objection: Why are both the underlying and the excess rates increasing? Response: We know this news is hard to hear. The market is adjusting after a lengthy period of low rates. We’ve seen more price compressions for excess than for primary, which has created even more need for excess rate increases.

In our careers, we’ve come to anticipate that the marketplace will continue to change. It’s essential to keep your skills refined for when the time comes to have tough conversations.

Storms of unprecedented power have lashed the U.S. and the Caribbean in recent years, leaving a trail of devastation estimated in the tens of billions of dollars. The U.S. alone has experienced 212 natural disasters since 1980 with the overall costs totaling $1.2 trillion, according to the National Oceanic and Atmospheric Association (NOAA). As a venture investor interested in fintech, I get sight of quite a lot of innovative insurtech startups hoping to be the next big thing in insurance. Barely any of these businesses are focused on improving claims management. Why is that? Perhaps claims are considered the least sexy aspect of the insurance industry, a necessary evil if you like. Good insurers understand the claims experience is one of the most important parts of insurance. Insurance, after all, is a promise to make good your losses in case of an accident. Natural disasters are brutal. They leave people vulnerable and exposed, and a speedy resolution by the insurer is crucial to the customer experience, encourages customer retention and also saves the insurer time and money. That’s an easy thing to say, but dynamically responding to claims after events of the magnitude of Hurricanes Harvey and Irma is no mean feat. It’s often impossible for people to access the areas for quite some time, by which point storm surges have subsided, and claims can be harder to assess. One company addressing this challenge for insurers is Geospatial Insight. VenturesOne recently announced a growth equity investment in the company, and I was with their team in the U.K. They had just delivered incredibly detailed visual intelligence on Hurricane Harvey to enable insurers and their corporate clients to understand the situation at ground level and respond swiftly to claims. There are three main challenges that an insurer can address by adopting visual intelligence services after a natural disaster:

1. The approximate total claim size likely as a result of the event.
2. An accurate map of the area affected by the event, to prevent fraudulent claims.
3. That the proximate cause of the claim is directly related to the event.

There is a lot of hype around the possibilities of advancing techs like machine learning, big data and drones, etc., but I see less in the way of tangible examples of how they can be combined to deliver benefits right now, so here is a real-life example. Hurricane Harvey Case Study On Aug. 25, 2017, category 4 Hurricane Harvey makes landfall near Rockport, Texas. Harvey causes catastrophic flooding, with 50-plus inches of rainfall in some areas (a record from a tropical cyclone in the U.S.). Harvey covers over 20,000 square miles in 72 hours, displacing 30,000 people. See also: Hurricane Harvey’s Lesson for Insurtechs Situational Analysis The first step was to make an initial assessment of the affected area and a rapid review of expected requirements by insurance clients. The densely populated residential and commercial area of greater Houston was set. Big Data Collection, Processing and Analytics Although Harvey made landfall on Friday, the weather event continued with torrential rainfall throughout the days that followed. By Wednesday, the 30th, it is estimated that a mind-boggling 24.5 trillion gallons of rainwater was dumped from the Gulf of Mexico across Houston and Southern Texas. To get the most comprehensive understanding possible, a diverse variety of data sets were collated, including terrain data, satellite imagery, drone footage from social media scrapes and independent commissioned light aircraft with specialist high-resolution camera imagery. The team used the data collected from aerial and social to calibrate the threshold used to generate the sentinel footprint. Geospatial Insight then use proprietary algorithms to cluster the areas detected as water into flooded areas. To understand the likely impact of Harvey on homes and commercial buildings, the multiple data sets were combined to gain insight into flood extents. The color-coded image below shows different data sources. The blue is derived from the National Oceanic and Atmosphere Association (NOAA) imagery and an aerial survey using a Midas oblique camera system. The red is Sentinel 1 radar satellite that can penetrate cloud cover to identify areas of standing water. The small pockets of yellow are derived from Geospatial Insight’s social media scraping tool to find photos and videos of the event, which can then be mapped to build the extents from video evidence. Typically, the team use their global network of licensed UAV operators that work to agreed SLA’s to map flood areas with drones, however, drones were banned over Houston during this time frame due to emergency services using the airspace for rescues, etc. Footage like the example below were identified, then the flight path and flood extents expertly mapped. Why was the flooding so severe? You can clearly see the two large blue reservoirs on the west side of Houston, Addicks to the north of Interstate 10 and Barker to the south. They are designed to protect Houston from flooding, and both dams feed into the Buffalo Bayou. The reservoirs are surrounded by parks and residential areas, and by Monday evening water levels had already reached record levels, measuring 105 feet at Addicks (north) and 99 feet at Barker (south). Local officials hoped to prevent a spill-over by slowly releasing water from both the Addicks and Barker dams on Tuesday and Wednesday. However, the storm surge was so great that the engineers had to release water through the dam gates much earlier than expected or risk it spilling over and causing further damage to homes. A warning was given to homes to evacuate in the early hours of Monday morning, but the decision was made to release the pressure late Sunday night, and many residents became stranded in the resulting swell. Accelerating Claims with Visual Intelligence To provide the intelligence required to rapidly address insurance claims, the Geospatial Insight team needed to first make sense of huge amounts of unstructured data. Not only the diverse image sources but also client information for insurance customers and corporate responsibility data like home addresses of employees to map the affected customers and staff. This data was quickly mapped and the multiple image sources applied as layers to allow corporate clients to access and make sense of the information via Geospatial Insights' dedicated customer portal. The image above shows the client portal with claim location points identified in yellow. High-resolution satellite images can be a good indicator, but they are a top-down view, so it is much harder to get an accurate perspective on the level of damage on a property. Images at an oblique angle were needed to help quantify this over a vast area, and thus Geospatial Insight commissioned a light aircraft equipped with a Midas 5 camera to map the most-affected region for high-resolution imagery. See also: Preparing for the 2019 Hurricane Season   The visualization below shows how this camera is able to capture oblique angles in four directions simultaneously (along with an overhead view). Using this technique, huge areas could be imaged in high resolution and then mapped to provide oblique angled images in North, South, East and West orientations for accurate analysis of identified claim locations. With this resolution and volume of data, the Geospatial Insight team could identify the evidence of flooding such as remaining water, sediment and waste outside houses even after the flooding drained away. Below is an example image showing home furnishings being disposed of. You can clearly see the raised swimming pools that remained clean and blue compared with those that were ruined by the storm surge. Rebuilding Lives After Disaster Sadly, it seems many residents of Houston were uninsured and face rebuilding their lives without any form of insurance payout. For those with cover, getting access to funds quickly will make all the difference. By embracing the kind of technology used in Hurricane Harvey, insurers can make a meaningful difference in helping residents, businesses and communities get back on their feet as quickly as possible.

If you Google the phrase “digital transformation,” you’d get more than 450 million search results, including educational pieces, research reports and information on technologies. Yet many organizations still face major challenges. Often, these obstacles aren’t even related to technology. According to a recent study from Novarica, the biggest challenges come from not knowing where to initiate a digital transformation journey, how to minimize disruption to business, how to accelerate time to value and how to ensure stability and agility throughout the process. We often discuss three paths, or phases, to digital transformation to clarify how insurers can achieve their goals. The paths also take some stress off organizations that see the goal but get lost in the haze of how to get there. The process starts with digital enablement. Digital enablement Prior to the digital enablement stage, many organizations feel like they are drowning and in need of change. Processes take too long and often rely on paper; customer experience is poor; and employees feel stuck. The problems push organizations to enter phase one of their digital transformation journey: preparing an outline of a digitization strategy with a clear mission and goal. In this phase, there may still be multiple digital "silos" where information is stored, often in legacy systems. Unconnected, insurers cannot get a complete view of business processes and customer information. To overcome this, IT departments should take time to understand and evaluate the organization’s full technology ecosystem and all the required systems that a new solution would either replace or integrate with. Once the ecosystem assessment is complete, the organization can evaluate the best solutions and partner with vendors and system integrators (SI) to help map out the scope of the project, keeping realistic expectations and goals in mind. One of the last steps within the digital enablement phase is putting the right team together to put the strategy in place. By starting with a critical department, like claims, insurers can gain quick momentum and showcase success before expanding the solution as needed. Digital Optimization Gartner defines digital optimization as "the process of using digital technology to improve existing operating processes or business models." In this phase, insurers are often enacting the same business processes – but using technology to optimize the procedures and experiences for end users and customers. For example, take the typical claims process. Once the claim is filed, an insurer receives, investigates and acts on the claim. Using the digital optimization model, the insurer would receive the claim in a digital format, and digital workflows would route the right information to the right adjuster at the right time, who could then review the claim and come to a resolution faster. By expediting the process, insurers decrease time to decision while increasing customer satisfaction. “A large incumbent could more than double profits over five years by digitizing existing business,” McKinsey reports in its Digital Disruption in Insurance report. Digital transformation Many insurers find that achieving digital transformation is much harder than they originally thought, not understanding that it is a continuing process and never really quite finalized. Insurers create revenue streams not possible in earlier stages of the transformation journey. The enterprise-wide, digital-first strategy ensures that digital information and data stays digital, available from anywhere at any time. Many insurers are still in the initial phases of digital transformation – sorting through goals and assessing needs within the digital enablement phase. The good news is that they are taking the time to evaluate needs and how they hope to achieve their goals. Some are even are starting technology evaluation processes, looking at content services platforms to help them modernize and digitize. By defining problems from both a business and technology viewpoint, insurers can gain approval from all stakeholders and buy-in from the beginning for a more successful transformation journey. It’s clear that insurers that embrace digitization will continue to thrive within the industry’s digital future. By selecting technology that will both uncover insight in data and provide the ability to quickly develop and support new products, insurers will attract new customers while continuing to provide exceptional service to current customers.

With headlines about catastrophic and historic storms driving increased interest in flood insurance, the emerging private flood insurance market – an alternative to coverage through the National Flood Insurance Program (NFIP) – is increasingly attractive to homeowners. As realtors guide their clients through the home buying process, here is some basic information that clients need to know about this new option: Q: What is private flood insurance, and what does it cover? A: Private flood insurance is a risk management tool backed by global capital markets that provides financial protection for buildings and personal property damaged by floods, helping families, communities and businesses to recover from these devastating events. Q: What are the differences between an NFIP and private policy? A: There are two primary differences between an NFIP and private policy: regulatory authority and source of capital. The biggest misconception with private flood insurance is that the NFIP is regulated and that private isn’t. Private flood insurance is heavily regulated and falls under the jurisdiction of state insurance regulators – just like homeowners, hurricane and auto insurance. While these state-based insurance regulations are separate from the federal regime that regulates the NFIP, the level of consumer protection and oversight is comparable. The second difference is who’s bearing the risk of loss. With an NFIP policy, FEMA holds all program risk, with U.S. taxpayers serving as the ultimate backstop. With private flood insurance, independent insurance companies bear the risk of loss. As a result, these companies cannot accept any risk in any location and must be more discerning with respect to underwriting, coverage and price. While private insurers cannot be all things to all people, this disciplined and thoughtful approach means these insurers can deliver a sustainable and valuable product to homeowners. See also: Here Is How to Make Flood Insurance Work   Q: How can a private policy work in tandem with an NFIP policy? A: A private policy can act as either an alternative or a complement to an NFIP policy. Private policies equip agents with customizable options that can cater to individual homeowners’ needs, allowing insurance agents to craft solutions that ultimately protect more people from floods. Private policies can also complement an NFIP policy. If you have a policy through the NFIP, you can purchase private insurance to increase the limits of your coverage. Private insurance is also available to expand coverage, such as adding protection for contents in a basement or the expense to clean out a swimming pool. Q: Who qualifies for private flood insurance, and how does it work? A: The NFIP is essentially a one-size-fits-all policy available to almost every person in all geographies. However, homeowners aren’t all the same. That’s the beauty of private insurance programs – they’re different programs offering different value propositions to different people, like high-net-worth homeowners or renters. Q: What is/isn’t covered by a homeowner’s policy when it comes to a flood? A: Generally speaking, most homeowners’ policies exclude flood losses completely. A homeowners’ policy may cover water damage from broken pipes or sump pumps, but most exclude loss from inundation, whether resulting from swollen rivers, storm surge or intense rainfall. The flood insurance industry is rapidly changing, and there are new opportunities coming online every day. Every realtor should take time to understand these new options. In most situations, the home is the family’s most valuable investment. Wherever it rains, it can flood, so take time to consider solutions that can protect these treasured investments from catastrophe. See also: Emerging Market for Flood Insurance   This article is provided for general informational purposes only and is not intended to provide individualized business, insurance or legal advice. You should discuss your individual circumstances thoroughly with your legal and other advisers before taking any action with regard to the subject matter of this article. Only the relevant insurance policy provides actual terms, coverages, amounts, conditions and exclusions for an insured.

You know what happens when you assume? That's right, you’ve heard the line before. But it's true. So, why do we continue to assume so many things that we just don’t know will hold up? 

People who study these things tell us that we all have to make assumptions to a certain point, or we'd spend all day fiddling with faucets and door handles to figure out how they function. But assumptions only work in situations where we have experience. Assumptions get us in trouble in new settings that don't operate like the ones we've seen before.

We often rely on the collected wisdom that has developed in an industry, but various studies have found that, in new settings, experts are no better at predictions than the rest of us. They're just more confident. Much more confident. Yet we fall for their "expertise," time and again.

A classic example: In 1980, McKinsey did a major study for AT&T that predicted there would be a total market for 900,000 cellphones globally by 20 years later. Expecting such slow growth, AT&T dropped plans to market a cellphone. Well, the McKinsey experts were off by 108 million phones as of 2000, and today there are billions in use around the world. AT&T had to buy its way later, at a hefty price, into a market it had invented. It turns out that decades of expertise in landline phones didn't help McKinsey or AT&T see how their assumptions about cellular were wrong.  

In the insurance industry, we find ourselves at a similar inflection point: facing a different landscape, unexpected events, a new set of circumstances, unfamiliar environments. So, we at ITL have been listening as we've spoken to industry insiders in recent weeks and months to try to pick out assumptions that are widely held but that may not hold up.

As that famed management strategist Mark Twain said, "What gets us into trouble is not what we don't know. It's what we know for sure that just ain't so."

Here are nine thoughts on what we all know for sure that just may not be so. (Please respond at the end of this commentary with your own thoughts on what may prove to be false assumptions. We plan a follow-up in two or three weeks.)

Consumers want a relationship with their insurance company. Sure, and I want a relationship with the guy who did my colonoscopy. If you can tell me something I actually want to know, then, sure let's hear from you from time to time; otherwise, leave me alone.

A digital strategy is key. Yes, it is, but only if you have the pieces to implement it. I can’t tell you how many companies we come across that are working on their digital strategy but don’t have any capability for digital distribution. That's like putting a bunch of ketchup on a plate but forgetting the French fries.

The consumer’s only choice when it comes to risk management is which insurance company to buy from. Look at all the ways clients are working to find alternatives to insurance and to reduce risk – e.g., the self-insurance trend among employers lining up healthcare and the efforts to reduce vulnerability to cyber attacks, rather than to just insure against them.

Life insurance is about what happens when you die unexpectedly. In fact, we suspect that life insurance will increasingly become part of how people manage their lives, especially their finances. Term insurance may even become an add-on to other products – take out a home mortgage and get some life insurance thrown in, for instance. Distribution costs would head toward zero, so, those commissions of more than 100% of the first year’s premium? Not for long.

We're collecting the right data, just like we always have. Or, maybe not. New risks come with new data and new underwriting concerns; old data need not apply, in many instances. New sources like the Internet of Things provide new data at astonishing speed; processing needs to move toward real time.

Brokers will always make their money selling insurance products. Nobody wants to buy insurance. Even those of us in the industry don’t want to buy insurance. But there are loads of services and products related to health and safety that lots of us would like to buy, from brokers smart enough and nimble enough to offer them.

Companies don't need to partner or buy their new technology; they can build it. Or maybe not. At least, you may not be able to move as fast on your own as if you found a partner or a supplier. Some of this is cutting-edge stuff, and the top developers tend to want to work for software companies, not insurers.

I have time. Maybe, maybe not. Here’s a test: Try to get on a decision maker's calendar for anything of any consequence – a partnership with an insurtech, an idea for an innovative product, whatever – and let me know if you can schedule that call before September. Then imagine what happens when someone figures out that customers demand quicker response in this digital age and greatly speeds up the clock cycle in insurance. What happens then?

IBM's development process worked for decades, until the personal computer came along in the 1980s and sped up the clock cycle of the industry. IBM consistently introduced PCs in the 1980s and 1990s six to nine months after competitors came out with machines based on the new Intel processor – and new models were only profitable for the first six to nine months of each cycle. IBM, once the most profitable company in the world, had to go through years of painful retrenchment to realign itself with the market. You're not immune.

Yeah, 20% to 30% of insurance companies won't exist in a decade, but mine certainly will. Really? Why? How do you know you’ll be one of the stand-alone survivors?

As I said, please use the comments tool below to let me know what we should add to our list. I won't, well, assume I got them all.

Wayne Allen
CEO

Getting the best outcomes for injured workers involves much more than just treating the actual injury. Their recoveries depend on a variety of additional factors; such as whether they have access to healthy food and clean water, their ability to travel to medical appointments and the extent of support they have. Increasingly, workers’ compensation payers are finding that these social determinants of health (SDoH) have a significant impact on the healing process and a worker’s ability to return to work. While these issues may not be a direct responsibility of stakeholders, addressing them to whatever extent possible can vastly improve and expedite the process. Many of us already do this when catastrophic injuries are involved. We believe SDoH could and should become a critical review of a workers’ compensation claim as a way to improve overall health and well-being among the workforce and create better medical outcomes. Two experts were on hand for our most recent Out Front Ideas webinar to provide their insight and outline strategies the industry can take to influence SDoH factors:

• Darin Hampton, regional recovery coordinator for International Paper
• Maggie Alvarez Miller, senior manager of client service management for Mitchell

Defining SDoH SDoH is not a new topic. Within the healthcare system, stakeholders began implementing programs 20 years ago to address the structural determinants and conditions in which people live, work and age. We included SDoH in this year’s Issues to Watch because we believe there is a significant opportunity in the workers’ compensation system to address these in the claims process. SDoH includes multiple categories, such as:

• Economics. Does the person have a stable income? Does he or she have enough money not only for his medical needs but to care for his or her family?
• Environment. What is his neighborhood like? Is it safe?
• Transportation. Can the worker get to and from work? What about travel to his medical appointments? Can he or she drive? If not, does he or she have other options, such as public transportation?
• Nutrition. Can the injured worker access quality food and clean water?
• Support. Does the worker have a network of family and friends who can help? Social isolation and community connections are imperative in a person’s ability to recover from an injury or illness. In fact, within Medicare and Medicaid there is a realization that a person who is not engaged in his or her community is more likely to have a readmission.
• Culture. Is there a discriminatory attitude toward the person in his or her living area or within the medical community?
• Understanding. An injured worker needs a basic understanding of what he or she needs to do to facilitate his recovery. Managing chronic conditions, for example, is crucial, along with taking medications as prescribed.

All these and other factors come into play in how well an injured worker recovers and returns to work. How an organization addresses SDoH depends on the company, the culture and the worker himself. See also: How to Embrace Workforce Flexibility   Employees of International Paper, for example, typically work in remote areas, where paper mills are likely to be. Also, many of its workers are older. That creates challenges in trying to ensure they have access to medical providers, quality food and water and a network of support. What’s Happening The workers’ compensation system could benefit from programs that some health plans and health systems have implemented to help connect patients to appropriate resources in the community. RWJ Barnabas, a New Jersey-based healthcare provider network, addressed the low levels of nutritional and health literacy in one area by creating a farmer’s market and community garden. In several major cities, health systems invest in apartments for patients whose current living environments may not be adequately equipped to fulfill their needs. They also augment the new housing with nutrition classes and provide caregivers to help improve overall health. Kaiser Permanente is developing a system that will allow patients and caregivers to "click" and get referrals to community providers of nutrition, transportation and other resources. The idea could translate to the workers’ compensation system by allowing claims team members and clinicians to identify services that could help an injured worker, for example, get healthy foods from a local deli. Literacy Understanding the healthcare system and, especially, the workers’ compensation process increases an injured worker’s engagement in his own recovery. Many employees have little or no idea how these function. Improved communication is a key to creating more understanding among injured workers. Companies that operate multiple facilities away from corporate headquarters can be challenged when a worker suffers an injury and has many questions. Training front-line supervisors on all aspects of workers’ compensation goes a long way to address the lack of understanding. When an employee gets injured on the job, a trained supervisor can direct him to appropriate treatment and address any concerns he has. Internal websites are another way companies help injured workers access information about their claims. Workers can see information such as when their next medical appointment is scheduled and when their next payments will be made. The knowledge — or lack thereof — among employees may be such that they are unaware of basic healthcare services. For instance, they may never have had an MRI and do not know what to expect. Case managers are in a position where they can work with the injured worker to help him or her make the best medical decisions. The managers can also prevent complications. A person who has comorbid conditions may not realize the impact those can have on recovery. Truly helping an injured worker increase his or her health literacy involves more than just informing; it requires gaining an understanding of what is and is not understood and explaining it in a way that makes sense. Culture According to panelists, cultural differences have a tremendous impact on a worker’s recovery. This involves much more than just language. The perception of authority in some cultures can also affect how a person deals with the injury and recovery. In Hispanic and Filipino cultures, the fear of losing one’s job can be such that the person does not report an injury. Cultural understanding among employers, payers and other stakeholders can help alleviate certain challenges that may arise and speed recovery. Having the injured worker partner with someone who is trained to understand cultural diversity can go a long way. Some companies have "employee advocates" assigned to work one-on-one with the injured worker. The advocate is the first point of contact and makes it clear that he or she is there to work for the injured worker’s benefit. Having that person available to respond to questions and concerns can also go a long way in preventing the injured worker from seeking an attorney. The advocate may steer the worker to outside resources that address health issues aside from the injury, such as smoking — directing him or her to a smoking cessation program — or obesity. The advocate may work with the employee on ways to get his or her children to school or how to handle a confused spouse. Whether it is an advocate from an external source or a trusted person within the injured worker’s own company, the idea is to address all the employee’s concerns in a holistic way. Tapping into appropriate community resources and ensuring the worker understands and uses all applicable benefits available can break down some of the cultural challenges and address literacy issues. Cultural competencies within the claims team is vitally important to align with the needs of the workforce. Whether it’s a matter of age, religion, geography or whatever differences workers have, those handling the claims should be trained on diversity and be adept at how cultures differ and ways they affect recovery. Applications for Workers’ Compensation An injured worker had a malfunctioning well, leaving him without an adequate supply of clean, accessible water. International Paper considered the problem and ended up paying $3,000 for a new well pump. While such a purchase would seem way outside the bounds of normal workers’ compensation expenditures, the company reasoned it would allow the worker to stay in his home and recover, rather than having to go to a rehabilitation facility at an estimated cost of $30,000. The employee healed and returned to work, which the company considered a win for everyone involved. That is just one example of how SDoH factors can affect a claim and how paying for something on the front end saves suffering, time and money for the worker and the employer. See also: Insurance 2030: Scenario Planning   Another example is a case in which the worker was rendered a paraplegic and unable to return to his double-wide trailer. By purchasing a new home, the worker was able to return to his community, where he was close to healthcare and a supportive community. Again, a better outcome and lower costs were achieved. It is not unheard of for employers/payers to purchase homes for injured workers. What may seem like an unreasonable expense ends up saving money and improving outcomes in the long run. But it’s not only catastrophic claims that have underlying SDoH that should be considered. Looking at an injured worker holistically and considering his or her overall situation can prevent "creeping catastrophic" claims. A claim that initially seems routine may become complex when SDoH factors are involved. As our speakers told us, it comes down to communicating with injured workers at the beginning of a claim and identifying those with circumstances that could affect recovery and drive costs, then figuring out how to tackle them. A good way to begin is to start small. Look at individual items on a claim, such as obesity and food, and find appropriate resources. Or, if an injured worker is socially isolated, provide a home-health caregiver to meet with the person. The injured worker who has transportation problems may need extra money for a bus pass to get him or her to medical appointments. These are small ways that payers can make a difference on these claims. Assessing claims early on to identify these and other issues is imperative. There are forms to help, such as those available on the American Academy of Family Physicians’ website. The organization has a variety of tools to help assess SDoH so stakeholders can mitigate them. While it is not possible to hire a perfect workforce, organizations are increasingly finding creative ways to maintain a healthy workforce and help those who become injured or ill. Some are finding apps that can address various SDoH; in others, HR departments are evolving their benefits because of the unique needs of their workers. One of the questions we were asked during the webinar is how to identify SDoH without violating a worker’s privacy. As Maggie Alvarez Miller explained, supervisors can ask open-ended questions. Let workers tell you what issues they are having and how the employer may be able to help. Also, nonverbal cues and body language might be a signal to try to engage the worker. At the very least, the HR person or supervisor can discuss her suspicions with a nurse case manager or other medical provider. Finally, having a dedicated employee advocate can be a way to let the worker feel comfortable and open up about issues that might impede recovery. The advocate may also pick up cues from the injured worker’s environment, such as expired food in the refrigerator. Some injured workers are concerned about their abilities to perform their normal home-life activities, especially if a spouse or others expect them to undertake tasks such as cooking and cleaning. The worker may fear his or her inability to do so will cause stress for other family members. An injured worker in such a situation could benefit from a discussion with an employee advocate, nurse case manager or other person about how to address the issues with the family and then bring family members into the conversation. Spouses or children may not be aware of how the worker is feeling and, on hearing, may be willing to help out. Additionally, there may be outside resources that can be brought in to assist for the short term. To listen to the full Out Front Ideas webinar on this topic, click here.