The disruption of the P&C insurance industry, touted by insurtechs and others, may not have hit full force, but outside forces will drive a tsunami of change. Technologies such as AI/machine learning and the Internet of Things are already prominent in insurer strategies and projects. The demographics of the insurance workforce are shifting and will drive many changes over the next decade. New technologies in the digital, connected world promise to change the risk landscape – in some cases dramatically reducing risk and in others introducing new ones. There is much experimentation with products today, addressing the sharing economy and on-demand, episodic and parametric types of coverages. The changes raise questions in many senior executives’ minds about the nature of the insurance business in the future. Will change really be dramatic, or is it overly hyped? How will it affect the lines and segments of an individual company? Lacking a crystal ball, it is very useful to employ a scenario planning approach, developing and evaluating several possible futures in the context of a specific insurer’s business. While some may view this as an academic, blue-sky exercise, it typically yields surprising insights that serve to inform short-term and mid-term strategies. See also: Insurance 2030: Utopia or Dystopia?   Naturally, initiatives should not occur in a vacuum. A realistic assessment of the current state of the company is a good starting point: the products, people, processes, technology and other dimensions of the existing model. The intent is not to scrap existing strategies and plans but to layer in new strategies over time that position for the future. Ultimately, every insurer needs to build and execute along its transformation journey or fine-tune and enhance journey plans based on new insights. What will insurance look like in 2030? We humans have proven to be bad at prediction. So, in an era of rapid change, successful companies will be those that create a culture and an infrastructure that is adaptable, enabling them to seize new opportunities as the world changes. See also: An AI Road Map to the Future of Insurance   For more information on scenario planning and the development of digital transformation plans for insurance, read the recent SMA research report, Insurance 2030: How Technology is Transforming the P&C Landscape.

The macroeconomic news has been largely positive for several years running, especially in the U.S. Record-low unemployment. Recent wage growth. Nearly a decade of steady — if slow — growth. So why do so many people feel uncertain about their financial lives? Why financial stress matters: the link to physical and mental health Financial stress may be the most damaging type of stress. According to the American Psychological Association, more than 60% of Americans suffer from financial stress, which has been linked to migraine headaches, cardiovascular disease, insomnia and other health problems. A National Institutes of Health study showed that people with more debt face greater risk of depression and high blood pressure. That’s a potential vicious circle; health events can cause financial problems that can further deteriorate our sense of financial well-being (through huge healthcare expenses, for example). The path forward to financial well-being It’s clear that the financial services industry — and insurers, in particular — have a role to play. It’s just as clear that previous efforts haven’t paid off fully, which means a new approach is necessary. Financial education has been around for years but hasn’t fundamentally changed behaviors. As important as financial literacy is, it’s not enough by itself to increase the general sense of financial well-being or move large numbers of consumers closer to their goals. Insurers — as well as retirement firms and wealth managers — should focus on a more integrated and holistic approach that addresses the components of financial well-being and that has a chance at changing behaviors. In this context, it is interesting to observe where fintechs and insurtechs are placing their bets. Many are focused on delivering digital tools that educate customers and help them take charge of particular challenges, such as asset allocation or saving for an emergency fund. See also: Why Financial Wellness Is Elusive   The question is, how do traditional players that are capable of providing solutions for many elements of financial well-being through their savings, investments and protection products develop an approach that takes a comprehensive view and actually helps change consumer behavior? Recommended actions: What insurers should do now With broad product offerings and large amounts of high-value data, insurance companies are well-positioned to help consumers achieve financial well-being. The question is, what strategic and tactical steps can they take today to begin engaging consumers more directly and broadly in terms of financial well-being?

• Develop a proprietary, multi-factor analytical model that determines financial well-being from the customer point of view, especially to the moments that matter in their lives. It’s not enough for insurers to understand what customers want — they must also know when and how they want it.
• Understand customers’ financial stressors and review existing portfolios and the new product pipeline for those that can specifically address these issues. Offerings that deliver “quick wins” (both for consumers and insurers) can advance the dialogue on financial well-being.
• Adopt “evolutionary” and “revolutionary” in designing new products and experiences — that is, evolve existing products through simplification and basic enhancements and innovate boldly with new product types (e.g., portable group policies) and embrace digital transformation to offer entirely new experiences.
• Develop digital tools based on artificial intelligence and other advanced technologies but surround them with a human element, such as real-time access to financial advisers or customer service agents via phone or live chat. This way, firms can have the right conversations with consumers in the right way at the right time.
• Develop a platform strategy, recognizing that platforms designed to promote financial well-being may need to incorporate multiple external parties, including other financial services providers. Scalable platforms should reduce the cost to serve, support evolving technology sophistication and enhance customer experiences.
• Develop an integrated brand and marketing strategy to effectively communicate and drive demand. Consumers must come to understand that insurers want to help them live richer, less stressful lives, rather than simply selling policies to protect against losses and other unfortunate events.
• Design and build the necessary technology architecture, which likely requires digitizing legacy systems so next-generation tools and apps can be deployed. Most insurers today face serious legacy system constraints in at least some channels or lines of business. These constraints must be removed if insurers are to meet customer expectations for seamless and personalized experiences across channels.
• Orient all touch points around trust and transparency. It’s not enough to simply secure channels, assets and data to be compliant. To build trust, insurers must also share information transparently (like digital leaders in other sectors) and deliver high-quality, personalized experiences.

This article is adapted from a report that can be downloaded here.

I just read this article, which includes this: “According to an Accenture study, only 27% of consumers consider insurers to be trustworthy. And Deloitte found that only 11% of people have strong trust in insurance agents and brokers.” I’ve seen studies like this over the years. What is usually missing from these statistics is the Q&A related to the insurer or agent OF the consumer. If you ask consumers if THEIR insurance agent is trustworthy, the numbers are almost always WAY higher than those above. The same is often true of politicians…when the question just refers to “politicians,” polls imply that they are universally despised, But ask people what they think of a politician they voted for and the statistics are completely different. As has been said, “Torture numbers, and they’ll confess to anything.” The driving force behind insurance policy evolution is litigation and regulation where the difference in coverage, according to the courts, can be the tense of a verb or a punctuation mark. See also: Insurtech and the Law of Large Numbers   Berkshire just came out with a policy called “THREE” that combines property, business income, general liability, auto, professional liability, workers' compensation and cyber liability (I’m probably forgetting something) insurance…IN THREE PAGES. And it’s going to be clear to business owners what is or isn’t covered? Inarguably, the most important “customer experience” is the one that takes place at claim time. Insurance policies are complex, legal contracts whose terms and conditions have often been interpreted over decades. And the reality is that virtually no consumers read them…. Far too many insurance practitioners don’t even read them. I doubt that reducing dozens of pages to two to three pages will change that metric. When it comes to making contracts understandable, less is not necessarily more. By the way, there is no such thing as “fine print” in regulated insurance policies.

As the insurance industry has grappled with creating meaningful touch points with our customers, a few interesting  models have emerged, such as Amica Life with Cardiogram or John Hancock with Vitality. A few insurtechs, such as Life.io, have emerged as leaders focused on customer engagement. Life.io has reduced lapse rates as much as 35% through carriers deploying its engagement platform and using wearables to encourage healthy living through gamification and rewards. These examples show that, as much as the focus has been on an engaging experience for the customer, work has to be done on the back end, too, to address some age-old problems. The customer engagement in life insurance was long limited to paper and the call center. We printed policies. We printed statements. We printed bills. There was little to no engagement with customers after a policy was sold except for an occasional phone call if they had service issues or needs. The industry has been constricted by its adage that no one buys life insurance; it is sold, not bought. The life insurance industry has even been conflicted about who its real customer is. The carriers considered distributors to be their customers, and the distributor has usually owned the end customer relationship. See also: Self-Service Portals Improve CX   Shifting customer demands usher in an era of change Today, all those old truisms have to go away. Customers want self-service capabilities. They want to begin their research online, seek views through their social networks and get feedback from their peers. There's a shift happening from, "I spoke to my Dad, and he introduced me to his financial adviser," to, "I'm talking to my social network, and I intend to buy online.” So, people do buy term life products without a financial adviser. While current distribution channels won't go away soon, direct-to-consumer is an emerging channel, especially for products that are simpler and have modest face amount and that cater to the millennials and to mid-market consumers. Meanwhile, carriers seek to own the relationship with the end customer. Digital takes hold And insurance companies or even financial services companies are no longer viewed in isolation; the industry is benchmarked against other enterprises by the digital age consumer. Social media companies, the Googles and the Amazons of the world, or the latest app used by consumer have the opportunity to become the benchmark. Consumers are comparing insurance carriers against the best of breed out there and demanding, "Why are you not as good?” See also: A Game Changer for Digital Innovation   Ultimately, much of the struggle comes back to the antiquated back-end architectures. Customer experience is not just about the front-end presentation – we as an industry need to solve the problem of the back-end enabling architecture, as that becomes critical in enabling this digital experience. By having a modernized back-end that can plug in APIs and expose those capabilities into the presentation and experience layer, you can create an engagement model that makes consumers want to work with you and be loyal to your brand. Through breaking down the customer journey, prioritizing pain points and redesigning those journeys to focus on what matters most for the policyholders, carriers can differentiate themselves as a customer-centric business.

Spin the wheel to land on any insurance carrier’s website. Did you land on Allianz, USAA, MetLife, Radian, Traveler’s, State Farm, Protective Insurance or American Family? Do you notice anything familiar? Perhaps it’s images of smiling people, like you and me, living their lives, connecting with each other or being a family. In business today, leading organizations, from insurance, healthcare and finance to mobile and technology companies, find themselves centered on a common theme of enhancing customer experience (known as CX). It’s about relating to other people and finding commonalities in a world that is rapidly becoming disconnected. Human emotions and the desire to connect are driving business around the world to change their focus to consumers. According to Harvard Business Review, “On a lifetime value basis, emotionally connected customers are more than twice as valuable as highly satisfied customers.... Companies deploying emotional-connection-based strategies and metrics to design, prioritize and measure the customer experience find that increasing customers’ emotional connection drives significant improvements in financial outcomes.” People are attracted to other people – it’s human nature. Yet today, much of our connections and information are driven by technology, data, the internet and mobile phones. How do we bridge this dichotomy? We use technology to connect with other people. Insurance companies can serve as a prime example of an industry that’s being pushed to incorporate technology and data to make those human connections. Imagery can change people's perceptions of a service or product. Common sense? Definitely. But the next logical question is, how do companies deliver on these promises and demands of connecting. Consumers and businesses – and not just millennials – want products and services quickly, if not immediately. Behind the scenes, innovation departments, data scientists, IT departments and line of business leaders are exploring automation technology from robots (digital workers), business processes, workflow, customer support teams, engineering and other departments that can work smarter and faster. See also: 3 Ways to Optimize Customer Experience   Let’s look at some examples where insurance companies are improving and automating business processes. Claims processing is a department that deals with a high volume of documents, forms, packets and images. Leading insurance companies with fast response times are using intelligent technology that uses AI and machine learning. They have eradicated manual processes that slow them, namely a combination of physical paper and electronic documents, such as emails and PDFs that are not in a structured format. They use tools that automatically capture the data from claim files, can recognize different types of forms and files, categorize them and export that data into another intelligent system, such as an automated workflow or claims processing software. I work with insurance companies all over the world who are pressing forward with digital transformation projects and are incorporating these type of automation processes. The results that insurance customers report back to us demonstrate the ability to expedite millions of documents and claims per year, decrease document preparation efforts by 50% and indexing by 75%, reduce fraud and cut improper payments by about 2%, resulting in positive ROI within six months. The human touch is removed from these mundane, time-consuming processes, enabling insurance companies to respond to claimants or billing-related questions faster. This is improved CX, which customers don’t see, but where they reap the benefits and remain loyal. It’s the start of making the emotional connection that we all want. Now, insurance companies’ customers can relate to those happy, smiling faces they see on insurance websites. For insurance companies, the data around CX should be top of mind. Bain & Co. surveyed close to 30,000 P&C customers and found that highly loyal insurance clients: retain at 97%, buy 25% more insurance, consolidate almost 90% of their insurance with one provider and refer 250% more than neutral clients. Bain found that loyal clients deliver 300% more lifetime value than neutral clients and 700% more value than low-loyalty clients. See also: Bold Prediction on Customer Experience   These numbers alone should support the move to relate to your fellow humans. And, the funny thing is, it starts with uncovering and optimizing your data. Digital transformation and automation will lead you to CX and the first start of emotional intelligence.

Customer retention is a must for any successful business in our competitive, global economic climate. Estimations vary based on individual studies and industries, but, according to this article on the value of keeping the right costumers, it can cost from five to 25 times more to find a new customer than to retain an existing one. Wherever the true number sits, it stands to reason that it’s easier to build on existing relationships with people who already have brand loyalty than it is to recruit and retain new customers. Otherwise, you need to go through the marketing, reduced introductory rates and manpower to set up new accounts and forge new customer relationships. For businesses that are serious about their success, one way to boost customer retention is to invest in translation. The U.S. is a great example. Increasing numbers of people in the U.S. speak languages other than English, making it more important than ever that brands connect with them in the right way. Why Translation Matters: Languages Spoken in the U.S., by the Numbers The U.S. has become increasingly bilingual. Spanish had over 37 million speakers as of 2013 based on this census on Spanish speakers, ranking it as the most spoken non-English language, according to the Pew Research Center. That number is projected to go up to around 40 million Spanish speakers through 2020, up from 11 million in 1980. That’s 233% growth from 1980 to 2013. Clearly, the need for translation services won’t be fading anytime soon. The U.S. Census Bureau listed a breakdown of languages spoken in the U.S. between 2009 and 2013, with about 231 million people speaking English only at home, while about 60 million people over that period spoke a language other than English at home. Some of the top languages besides Spanish included Chinese, French, Vietnamese, Korean and Tagalog, all boasting over one million speakers in the U.S. This diversity of languages has major implications for business document translation and how that can affect customer retention. See also: The 3 Ways to Customer Retention   These numbers show that there are vast numbers of customers who would feel more comfortable if a business could speak to them in their language, rather than in English. In fact, having a business accommodate language translation needs can mean higher sales and greater customer retention. How Translation Can Help Keep Customers An international survey titled "Can’t Read, Won’t Buy: Why Language Matters on Global Websites," done by Donald A. DePalma, Benjamin B. Sargent and Renato S. Beninatto, shows the impact of language in a buyer’s decision: The more information is available in the buyer’s own language, the higher the probability that it would be a factor in their decision making. Although there is a percentage of consumers that will buy global brands without any information available in their language, smaller brands that are just making their name in the market are more affected by language. In the long run, localization and translation efforts go a long way to help your costumers understand the perks of your products and services. All of that makes sense. Why would you be willing to buy something if you can’t understand the product information very well? This is especially true in the insurance industry, where customers need to understand complex rate and coverage structures. Easy Ways to Implement Translation Translation need not be difficult. If you’d like to boost customer retention, you can start by simply translating a few forms and letters. For instance, you could have a professional translator convert background forms, health surveys, letters informing people that you are reviewing their information or outlines of benefits. A little investment like that could go a long way toward helping customers know that you are willing to meet them on their own terms. You might also consider having a website translation that offers information in multiple languages. Results from a 2011 Eurobarometer survey (conducted on behalf of the European Commission) show what you lose out on if you don't:

• 44% of European internet users feel they are missing interesting information because websites are not in a language they understand.
• Just 18% of people search for or buy products online in a foreign language frequently or all the time, with 38% reporting that they do so occasionally and 42% saying that they never do so.

It might be worth having a professional translation of your company’s website completed, so that the site can be read by the widest variety of customers possible. You might also consider having a translation done for marketing materials such as brochures and fliers and even social media messages. That way, you can market additional services to your existing customers who speak other languages in ways that they can easily understand and that will support their longer-term engagement with your brand. See also: ROI Study on Customer Experience   Whether you want to simply translate a few documents to show customers that you care or undergo a full informational product translation project, doing so can aid customer retention. The numbers show that people who feel that a company helps them understand a product or service in their own language are more likely to do business with that company.

Working on a book project, I’ve done some digging into the history of X Prizes and Grand Challenges and found raging successes. I think the world of insurance and risk management should consider offering some rewards to tackle seemingly intractable problems, and I have some thoughts on where to start.

Prizes for breakthroughs can be traced back at least to 1567, when King Philip II of Spain posted the first of many prizes that governments offered to anyone who could accurately determine longitude at sea. The prizes weren’t collected for some two centuries, and it wasn’t until the mid-1800s that the longitude problem was fully solved, but the prizes still focused the attention of many of the world’s leading scientists and drove steady progress for a long time.

Progress came much faster when a New York hotel owner offered $25,000 in 1919 to the first person who flew from New York to Paris or vice versa. One team alone committed $100,000 for a prize a quarter that size. Then Charles Lindbergh succeeded in May 1927 and helped usher in the era of long-distance flights.

The DARPA Grand Challenges for autonomous vehicles were even more successful; while the race among pilots was already on in the 1910s and ‘20s, the AV prizes came at a time when the prospects for driverless vehicles weren’t at all clear. The prizes not only led to technology breakthroughs but created a community that has fostered the work ever since.

The first competition, for a $1 million prize in March 2004, went almost literally nowhere. None of the 15 autonomous vehicles made it even eight miles into a 142-course. More than half the cars failed within sight of the starting line. A motorcycle (yes, someone entered a motorcycle) fell over after just a few feet. Many vehicles crashed or caught fire. But the seed had been planted.

DARPA (an arm of the Department of Defense known for driving innovation, including the founding of the internet) sponsored a second, $2 million Grand Challenge 18 months later. This time, a whopping 195 teams entered; five (including an updated version of the motorcycle) finished the 132-mile course. DARPA then posted a $2 million Urban Challenge in 2007, and six of 11 entrants completed the complicated course in a simulated city environment. AV technology was real, and it worked even in cities.

For a grand total of $4 million in prizes, DARPA unleashed a torrent of private investment and innovation. The Brookings Institution counted $80 billion—yes, “billion,” with a “b”—of investment in autonomous technology between 2014 and 2017. That’s just the investments announced publicly and of course doesn’t count the prior investments or the money that has flooded into the field since 2017. The private investment has us well down the road, if you will, to full autonomy and in the meantime has spun off all sorts of “driver assist” technologies that are making cars safer. (Now, if drivers would just get off their stinking phones.)

Many industries are sponsoring prizes that have led to breakthroughs related to health, more sustainable food supplies and access to fresh water. Last year, for example, the Skysource/Skywater Alliance won a $1.5 million prize for developing a generator that can pull more than 2,000 liters of water a day out of the air in any climate, using renewable energy and costing less than two cents per liter. How cool is that?

So, what sort of challenges would merit a prize in insurance and risk management?

For my money (though, no, this won’t be my money), the goals have to be fundamental, so important and audacious that they will intrigue great minds. The challenges also should be issues that aren’t already being solved by market forces and that won’t be soon, unless attention is focused on the problems.

Perhaps we can start by thinking about hurricanes, as long as we’re in the season. While there isn’t a lot to be done to protect property from the devastating winds and from the sort of long-term flooding that sometimes occurs, an awful lot of damage is done by water, quite quickly, through wind-driven rain and wind-driven surge. What if there were some way to quickly seal a property off from that wind-driven water, so owners could take action in the day or two before the hurricane hit and could provide protection long enough for the storm to pass? I’m thinking of something equivalent to fire retardant that could be sprayed around or on a house as a wildfire approached, and a hurricane generally comes with more warning. The market for such a sealing product or service is diffuse enough that I’m not sure the market is headed there any time soon, but wouldn’t it be worth some sort of a prize by insurers, knowing how much damage they could prevent?

I’m sure there are much better ideas for Grand Challenges out there – so please share them. If some alliance competing for a $1.5 million prize can pull hundreds of gallons of water a day out of thin air, just think of what progress prizes could produce for insurers and for risk management.

Cheers,

Paul Carroll
Editor-in-Chief

June 28 was National Insurance Awareness Day in the U.S. While you didn’t see any greeting cards marking the occasion at the corner store — it’s not a Hallmark holiday — Insurance Awareness Day underscores the important role that insurance plays in our lives. The focus is typically on policyholders, and the day is a good time for those who are insured to consider all the ways coverage protects us from the unexpected. That said, Insurance Awareness Day is also an opportunity for people who work in the industry to reflect on the relationships we have with partners and colleagues. Collaboration across networks within the industry make the delivery of the coverage that protects policyholders possible. That’s what makes Insurance Awareness Day a great time for carriers to think about broker relationships. See also: What a Safer World Means for Brokers   Why does the carrier-broker relationship deserve special scrutiny? The main reason is that the two groups are incredibly dependent on each other for success, yet the relationship is often overlooked. In some cases, carrier and broker relationships border on acrimonious. Here are four ways carriers can improve this crucial working relationship: 1. Identify your top 10 brokers and explore more cross-sell opportunities. Because brokers serve as intermediaries with buyers, carriers typically work with a large number of brokers. That strategy is helpful for gaining market share, but the downside is that working with so many different brokers can make it more difficult to focus on the truly critical relationships. One measure you can take today to remedy that is to identify your top 10 most productive brokers and concentrate on that group, examining the type of business they bring in and identifying meaningful cross-selling opportunities. In this way, you can set your company and your top brokers up for win-win relationships, which will strengthen the bond. 2. Improve speed and efficiency in business processes that affect brokers. Brokers evaluate carrier relationships on a number of points, including how fast the carrier underwrites and binds policies. As a carrier, now is a good time for you to evaluate whether your core business processes cause bottlenecks for brokers. If you’re not sure your processes are meeting broker expectations, take a look at processes from quotes on the front end through reporting on the back end. Evaluate whether new technology can help you speed tasks. Carriers that are efficient and more responsive to brokers have a great opportunity to differentiate themselves in a crowded marketplace. 3. Understand the big picture from the broker’s perspective. If you want to be the carrier of choice, you’ll need to take steps to understand your relationship with brokers in its totality. Competitive rates are a key driver, of course, but it goes beyond that. It’s important to understand all the relevant benchmarks. With the right reporting tools, you’ll have an accurate view of how much business the broker has written. An accurate account of the meaningful business you and the broker generate is a powerful tool to have at your disposal during meetings. It provides both parties with crucial insight about the importance of the relationship. 4. Review your data access and quality. Information is the key to moving forward and remaining competitive in a changing marketplace. Carriers generate copious amounts of data during the course of operations and during interactions with brokers, but that doesn’t mean the data is accessible and of sufficient quality to be meaningful. With all the consolidation in the industry, data silos are a persistent problem. If data resides in several different repositories, it’s harder for the carrier to fully understand the market or accurately gauge the demand for products. Take a look at your data to make sure you have access to all relevant information — and that it is reliable and in a usable format. Many carriers express the goal of becoming the carrier of choice for brokers. They know price is a key issue, so they look at ways to reduce costs. Price is important, but it’s not the only attribute that determines broker preferences. Opportunity, speed, efficiency and effective partner relationships are also essential considerations for brokers. See also: The New Agent-Customer Relationship   So, if you want to be the carrier of choice for your brokers, take the opportunity on National Insurance Awareness Day to focus on broker relationships. Make sure you’re creating win-win opportunities for your most productive brokers, be responsive to their concerns about processes, understand their perceptions of your relationship and make sure you’re using accurate, complete data. By following these four tips, you can overcome the obstacles that keep many carriers and brokers from collaborating more effectively and find new paths to foster more cooperative relationships. In this way, you can set your organization apart in the insurance marketplace, not just on National Insurance Awareness Day, but all year long.

It’s no secret that millennials don’t care much for insurance companies. In fact, recent Bain & Co. research found that 80% of millennials say they would move their insurance business to new entrants that are capable of creating and delivering more value than incumbent insurers, leaving incumbents especially vulnerable to insurtech startups. But when it comes to millennials, what exactly is value, and how do insurance companies make good on it? Over the last year, Cake & Arrow has been conducting research with millennials to help the industry better understand this elusive demographic, and in doing so to answer precisely this question. In our research, we found that when it comes to insurance, creating and delivering value for millennials goes far beyond price and convenience–the two areas where insurance companies have been especially focused as they invest in their digital transformation efforts. 2016 research (also by Bain & Co.) suggests that value exists in a hierarchy, and falls into four distinct categories: functional, emotional, life-changing and social impact. Price and convenience both fall into the functional category, the lowest level of the hierarchy, meaning that, while they are important (and, according to the hierarchy, prerequisite for delivering higher-level value), they fail to deliver the highest-impact value–emotional, life-changing and social impact. When we studied millennials, one of our research hypotheses was that to deliver value at the highest levels means resonating with millennial values, that is, the important and lasting beliefs that influence their behaviors, attitudes and priorities. Our research identified three key values driving millennials: Community & Authentic Connect, Interdependency & Social Good, Transparency & Autonomy. Through a sequence of ideation, design and user testing, we were able to validate that insurance products that resonate with these values ultimately deliver more value (and higher-level value) to millennials than traditional insurance products, fundamentally changing the way they think about insurance. See also: Overcoming Concerns by Millennials   Looking at the industry at large, we found that there are a handful of insurance companies, mostly startups, that are taking these values to heart and designing solutions that not only address millennial needs and concerns but also resonate with their values to deliver value at the highest levels. 1. Eusoh Eusoh actually isn’t insurance at all. It’s community-based cost sharing, offering an alternative to insurance. A small, little-known startup, Eusoh has built a cost-sharing platform for pet-related veterinary expenses. Unlike traditional insurance, Eusoh customers don’t pay monthly premiums. Instead, they pay a $10-a-month subscription fee to join a cost-sharing community group with like-minded pet owners (there are currently groups for Jewish Dog Lovers, Urban Dog Owners, Large Cats, LGBTQ+ Cat Lovers and more). Community members pay for their vet visits up front and submit veterinary expenses; these costs are then shared among the group, and members get reimbursed. Members are also able to see how their funds are being distributed among the group through a dashboard that displays all the different expenses submitted for different pets and how much money each member was reimbursed. Eusoh also promises significant savings to its members, with the average cost of traditional pet insurance being around $800 for 10 months and Eusoh averaging only $133. What we like about Eusoh: Traditional insurance isn’t all that different from Eusoh’s cost-sharing model. At the fundamental level, both are about distributing expenses and risks among a group of people to lower costs for everyone. The big difference is that, in traditional insurance, customers pay their monthly premiums, and, if they themselves don’t have a claim, they have no idea where their money goes. What we like about the Eusoh model is the way it surfaces the community aspect of insurance so that customers can see how their contributions are going to help others. In our research with millennials, we learned that being able to see and understand how the money they were paying to their insurance company was being used to help other members of their community made insurance feel more valuable to millennials, and more worth the money. By charging a subscription fee, and then only billing members for the actual costs incurred by the community, Eusoh is able to resist a problem that has long plagued the industry–customers feeling like their insurance companies are just trying to rip them off. 2. Life by Spot Life by Spot offers flexible, short-term life insurance with one- to 30-day policies starting at as low as $7 a day. The insurance is geared toward travelers, athletes and other risk-takers. Life By Spot applicants are instantly approved, and there are few exclusions (Spot is like your cool older brother who “approves of the activities your mom wouldn’t”). While short-term life insurance might seem gimmicky at first, the founders see orienting life insurance around experiences (like skydiving or a surf trip to Brazil) rather than more traditional major life events (i.e., marriage and children) as a means of introducing millennials (who are increasingly prone to delaying traditional life events) to life insurance earlier on in their journey, creating a funnel for bigger life insurance policies down the road. Life by Spot also has plans to deepen its ties to outdoor and athletic communities with a new injury protection policy starting at $5 a day that would cover policy holders with high-deductible insurance plans who are injured up to the amount when their health insurance kicks in. Set to officially launch later this summer, the new product has already proved promising. The company recently soft-launched the product with the Austin Marathon with impressive results, offering the policy as an add-on to runners when registering for the marathon. While supplemental coverage like this is nothing new, the distribution approach is fresh and highly relevant to its target consumer. What we like about Life by Spot: Our research showed that people are more open to sharing costs and risks (as well as data and other information) when it is with a community of people they identify with. While Spot may seem niche, this is precisely what we like about it. We like that Spot takes a traditional product and spins it for a specific community, one with unique values, risks and behaviors. The spin on life insurance is more than just a marketing message (millennials can see right through this, according to our research); there is a change at the product level that corresponds with the values, risks and behaviors of this particular community, creating a sense of authenticity and trust in an industry where these things are increasingly difficult to come by. By making policy holders feel like they are involved in protecting a like-minded community and the kind of lifestyle this community values, Spot is able to create more value for millennial consumers, beyond what traditional insurers currently offer. 3. Toggle Insurance Toggle is a new, millennial-focused insurance brand launched by Farmers Insurance late last year. Currently a renters insurance product, with adds-on like credit building and coverage for pets and side hustles, Toggle has plans to expand its insurance offering to create an entire ecosystem of modern insurance products geared toward millennials. The name Toggle refers to the customer’s ability to “toggle” different coverages on and off, and coverage levels up and down, to create completely customizable insurance that befits the individual customer’s budget, lifestyle and coverage needs. What we like about Toggle: One of the mistakes we see players in the insurance industry make is to assume that simply having a digital product is enough to capture millennial consumers. For these players, innovation often ends here - at direct-to-consumer digital products that, while making buying insurance simpler and easier, fail to deliver value at the highest levels. What we like about Toggle is that they understand that a digital product is simply a foundation. To deliver value to millennials requires going beyond digital. In fact, our research found that in the age of Facebook, data breaches and digital burnout, millennials are increasingly wary of new digital products, and autonomy and transparency are more important than ever to securing their loyalty and trust. Toggle takes both autonomy and transparency to the next level. Rather than simply packaging various coverages at different price points for customers to choose from, Toggle provides consumers with true autonomy, allowing them to select exactly which coverages they want to include (and those they don’t), and giving them control over precisely how much coverage they want. As far as transparency goes, the product goes above and beyond to ensure that customers are never caught off guard by any “gotcha moments.” Rather than burying limits and exclusions in the fine print, Toggle calls them out from the get-go and allows customers to “toggle” on more coverage where it might be needed. See also: The Great Millennial Shift   4. Jetty Jetty is just one of a handful of new renters insurance startups geared toward millennials. Founded in 2015, Jetty has set out to not only make renters insurance easier, faster and more affordable, but to make the overall experience of renting simpler, safer and more accessible for everyone. What makes Jetty unique from other startups in the renters space is the way the company is going beyond insurance to solve the most pressing problems for renters. In addition to a renters insurance product, the company also offers Jetty Deposit, a way for renters to bypass the financial burden of coming up with a security deposit by paying a one-time percentage fee of the would-be deposit amount, and Jetty Lease Guarantee, a service by which Jetty will act as a renter’s guarantor, for a small percentage of the yearly rent. In May, the company launched Student Housing Express, which enables student housing properties to “instantly approve qualifying students who aren't able to get a traditional guarantor.” While Jetty may not be the cheapest renters insurance on the market (most policies start around $9-10 a month compared with Lemonade’s $5), the company's service offerings beyond insurance demonstrate an understanding of the more holistic experience of being a renter, building loyalty with renters before they even start thinking about insurance. What we like about Jetty: Jetty first caught our attention a little over a year ago when we learned about Jetty Deposit and Jetty Lease Guarantee. To us, these products appeared to be novel solutions to the significant financial hurdles facing millennials (about 70% of whom are renters) and unlike anything other players in the industry were doing. At the time, a lot of the millennial-related insurance products we saw on the market seemed to ignore the financial realities of millennials, many of whom are burdened with student debt, have little money saved (millennials under 35 have a median savings of just $1,500 ) and haven’t had opportunities to build credit. While many of these insurance products were catering to elite millennials with disposable income, when we surveyed millennials last summer, we found that the two greatest challenges they face are financial security and stability and uncertainty in the future. While insurance products can certainly help create more certainty, Jetty’s supplementary products truly address the challenge of financial security and stability in a way that few other insurance products are able to do, freeing up capital that might otherwise be spent on a security deposit to help millennials do things like build up their savings, pay down debt or save for a major life purchase. __ While all of these products boast seamless digital experiences that make buying insurance faster, easier and more convenient, what makes these four companies special isn’t fancy technology, low prices or convenience, but the way they connect with higher-order millennial values to offer tangible solutions to real-life problems, ultimately cutting through the digital din to deliver more value to millennial consumers. To learn more about the insights from our millennial research, download our report, Millennials & Modern Insurance. The article was originally published here.

Each year, California burns. With another record wildfire season come and gone, each new season seems worse than the last. While mitigation against firestorms is tricky, evolving technologies like fire-fighting foam—used for pretreatment and suppression sprayed around a property or on combustible building materials—can help businesses avoid peril and keep doors open as long as possible. In 2018, major fires stretched from the Oregon border in Northern California south to the Los Angeles suburbs – a distance of over 685 miles (1,100 km). The worst was the Camp Fire (so called because of its outbreak on Camp Creek Road in Butte County), which broke a 2017 record for the number of structures destroyed (15,573 – 472 of which were commercial) and killed over 80 people, according to CBS News. It became the deadliest wildfire in California’s history and the worst in a century in the U.S., according to the state of California. Three fires alone – the Camp, Woolsey and Hill fires – caused total insured losses of $9.05 billion, which could balloon to over $13 billion when final tallies are in. CoreLogic, a third-party loss estimator, places total California wildfire losses for 2018 at between $15 billion and $19 billion. Of the 20 largest wildfires in California history, 15 have occurred since 2000. While data shows the overall frequency of wildfires has remained relatively constant season-on-season, the size, volatility and impact of wildfire events has dramatically increased. Is this a new normal? Can improved risk mitigation techniques help extinguish wildfires once and for all? Reinsurance and risk modeling experts have begun using terms such as “mega-fires” and “the new abnormal” when mentioning recent wildfire trends and also identify several contributing trends to worsening conflagrations. See also: Spreading Damage From Wildfires   Some of these factor include an increase in property development in and adjacent to areas between unoccupied land and human development; an increase in fuel loads such as dead trees on the ground; an increase in weather volatility from year to year; longer dry seasons; intense seasonal winds that change fire behavior; and, multiple fires erupting at the same time and often in close proximity. Foam “coverage” for fire-protection Among fire mitigation solutions, one of the more novel has been the application of environmentally safe, biodegradable fire-fighting foam used for pretreatment and suppression around a property’s perimeter and buildings where the fire threat is imminent. One such solution, marketed by Consumer Fire Products, Inc. (CFPI), a professionally trained brigade of fire professionals dedicated to wildfire property protection, is applied manually from private fire trucks fashioned with state-of-the-art equipment. The brigades coordinate closely with local incident command centers and operate within active fire zones, at the behest of insurers and other interested parties. Major insurers often work with companies like CFPI to evaluate exposed locations, assess fire threats and prioritize deployment of resources. Customers with significant exposure and within close proximity to the forecast fire path could be identified, allowing CFPI to patrol these locations and take precautionary measures such as clearing brush, relocating flammable materials away from combustible construction and, as a last resort when under imminent threat, spraying buildings and foliage with biodegradable, fire-fighting foam. Although the ability to know exactly where to invest and deploy protective services real-time is challenging, the concerted monitoring of conditions with underwriters has enabled protection services, once deployed, to continue until conditions like wind speed, low humidity and underbrush dryness have diminished enough over a seven-day period to safely discontinue services. Insurance support Innovative approaches and services represent part of the new frontier in predictive and proactive mitigation responses. As such capabilities emerge, it is imperative that the insurance industry be at the center of any such dialogue. After an event, insurers should ramp up communication efforts with customers – making immediate contact and maintaining it until adjusters can access affected areas to assess damages, advance funds and analyze and facilitate customer needs (e.g. finding temporary storage locations or modifying existing undamaged structures). Besides property insurance, which covers existing structures, and time element coverages to protect against business interruption, some “inland marine” coverages can also help in the rebuilding phase (e.g. repairing a burned-out site that is damaged by ensuing mudslides), like builders’ risk, installation floaters, riggers liability and construction block. Mudslide Mitigation Heavy rains during the wet season in previously burned areas can often cause devastating mudslides, which can further exacerbate and even increase property loss. According to the State of California Department of Insurance, insured losses from the 2018 mudslides—which especially hit the Santa Barbara area hard—resulted in 358 commercial property claims, totaling $129.2 million. Taking all claims into account – commercial and personal property – the grand total was $589.5 million, according to CBS News. Damages from mudslides can be as costly as damages from fires. Some tips to mitigate mudslide dangers include monitoring local warnings to know if you are in a mudslide-prone area; being aware of your surroundings and the possibility of mudslides; and, being mindful of the potential for large pieces of landscape, including trees, logs, boulders and other debris fields, as well as “floating” destroyed houses, buildings, vehicles, etc. to fall or move in your vicinity. See also: How to Fight Growing Risk of Wildfire   Insurers can now strengthen their clients’ defense and better preserve their property partnership with policyholders. They are looking into how this in-event mitigation service on a large scale can be tailored to meet the customers exposed to various natural perils. By doing this, top insurers are taking risk prevention and mitigation to the next level.