The future of the insurance industry is the customer. More and more insurance companies are stepping up their games and moving to digital and customer-centric strategies. The push to position the customer at the forefront of the industry is driving the adoption of self-service technologies — digital offerings capable of delivering more user-friendly customer experiences. In turn, the industry is embracing another customer-centered technology: chatbots. But important questions remain:

• How will chatbots solve historic industry pain points around customer service?
• How can humans and chatbots work together to improve the customer experience?
• In what ways will chatbots change the insurance industry over the long term?

By answering these and other questions, the insurance industry can better leverage chatbots to improve the customer experience —and prepare for the changes ahead. Chatbots: Why now? Until recently, customer service has been frequently discussed but rarely prioritized in the insurance industry. Traditional customer-facing processes rely heavily on phone interactions and fall short of customers’ digital expectations. Although some insurers have reduced the tedium of traditional processes, customers frequently experience long wait times and multiple touchpoints for a single action or request. Taking a page from the e-commerce playbook, leading insurers are empowering customers with self-service capabilities, which augment the work of employees and agents, allowing them to focus on more meaningful customer interactions. See also: Will Chatbots Take Over Contact Centers?   Chatbots are a natural extension of the push for self-service capabilities. They improve the customer experience through a cooperative approach involving both humans and artificial intelligence (AI). The timing is right for the widespread adoption of chatbots. Just 34% of consumers report they have definitely not interacted with a chatbot in the past year. By making it easier for customers to answer common questions and perform routine activities like filing a claim, chatbots reposition customers at the center of insurance processes. How chatbots improve the customer experience Retail and other sectors have successfully used chatbot technology to significantly enhance the customer experience. However, the buying and claims processes in insurance present unique challenges. Insurance customers purchase policies because they are afraid of losing things they care about: cars, houses, even loved ones. As a result, customers are more emotionally invested when buying insurance than when they purchase consumer goods or even big-ticket items like vehicles. Chatbots help neutralize emotions during the transactional stages of the insurance lifecycle. In some ways, chatbots are an extension of a web search. The difference is that they go deeper and present customers with information that is otherwise difficult to access. Chatbots also streamline routine tasks, eliminating the frustration policyholders commonly experience when dealing with insurers. Consumer acceptance of chatbots is largely predicated on the availability of human interactions for certain tasks. Nearly half (49%) of consumers feel better about using chatbots if they know they can escalate the experience to a human interaction. The ability to defuse the emotional element of buying insurance accelerates the speed of doing business. In addition, agents and customer service representatives no longer have to perform transactional processes, which improves their quality of life in the workplace and leads to a faster pace of service and internal transformation. There are limits: At some point, humans must engage customers directly and assist them with the emotional aspects of the insurance process. Still, with today’s most advanced chatbots, there is the potential to capture new insights and further improve the policyholder experience through personalization. For example, when a customer prices flood insurance, chatbots with AI running in the background can quickly identify the best and most affordable coverage for her situation. Insurance customers have grown to expect this level of personalization from retailers and consumer-facing brands. As AI-powered chatbots gain traction, customers will expect the same from their insurers. A look ahead: What’s next in chatbots for insurance companies? Chatbots will have a transformative effect on the customer experience, but benefits may vary by insurance category. Chatbots provide an opportunity to reimagine the role of health insurance and position health insurance providers as true partners in the quest for better patient outcomes. For example, chatbot solutions can provide free/low-cost health coaching or other services. See also: Chatbots and the Future of Interaction   In life insurance, chatbots enable insurers to build on existing trust and serve as wellness partners to their customers. Leveraging AI, chatbots can deliver personalized recommendations that improve customers’ quality of life by promoting financial, physical and emotional wellness. Similarly, chatbots have the potential to generate added trust with property and casualty insurance customers. With advanced analytics, chatbots can improve how customers price insurance policies or streamline the claims process. When combined with IoT devices, chatbots may even be able to provide real-time analysis, enabling customers to prevent incidents like a leaking hot water heater or a pending part failure on a vehicle. By focusing on customer needs, chatbots not only strengthen policyholders’ relationships with their insurers but also drive sales through touchpoints that span a range of digital channels. Humans remain a vital part of customers’ experience with insurers, but, with chatbots on the team, human agents and customer service representatives have the freedom to focus on more meaningful aspects of customer relationships — a big win for customers, employees and insurance companies themselves.

Insurance carriers and third -party administrators (TPAs) are well aware that emerging technologies are poised to change the industry. But, to many, it feels like the rhetoric has gone off the rails. You can hardly greet a consultant or surf the business pages without being told that digital reinvention is a do-or-die imperative. More insurers are adopting and contending with a world influenced by machine learning, artificial intelligence or the Internet of Things. More are deploying robotics or blockchain. A multitude of obstacles stand in the way of those left behind. Their organizations are often long on enthusiasm but short on vision. Senior executives, mindful of quarterly results, are excessively cautious about the near-term expense of IT innovation. Employees are prone to resist disruption that challenges skillsets or threatens jobs. And resource-stretched IT departments are hard-pressed to reinvent anything while struggling to keep existing systems running. The good news is that these obstacles can be overcome -- assuming tech leaders know where to start and adopt an effective approach. Below is advice on how to proceed, garnered from top performers in the industry. Start simply — Find a vendor with a proven insurance-industry track record who can help conquer discrete challenges, such as automating adjustments or on-boarding new customers. Some consultants, hungry for seven-figure contracts, may advocate radical and immediate change across the organization that is over their head. Smart, targeted change tends to be the better approach. Forget about the big bang overhaul all at once, particularly if the company lacks vision or commitment. Instead, start small to build evidence and snowball your effort. Target minimally viable projects and iterate to get bigger. See also: Culture Side of Digital Transformation   Empower bridge builders — Partners can be the best source for finding talent fast, rather than stumbling through the difficult process of attracting and building it in-house. Outsourced teams of specialists driving cloud native solutions can move quickly and transfer expertise. The coders these vendors can attract are valuable. Competent coders who can collaborate well with your whole company are priceless. They’ll help you get your ideas out of the IT trenches and into strategic meetings, where they belong. And they’ll bring forward the company’s best ideas and biggest challenges. Find these people and partners, and cultivate them. Be strategic — Fomenting a digital revolution requires forethought, planning, networking and disciplined execution. Just as a general doesn’t go to war by pointing his troops toward the enemy and shouting “charge,” a digital leader needs to understand what they are up against, where the pitfalls lie and how to best achieve her organization’s objectives with the people and assets at her disposal. The leader needs to be able to present convincing use cases up the chain of command. Target early, conspicuous wins — Projects that streamline operations, achieve cost savings or provide visible improvements to the customer experience can help demonstrate the tangible benefits of digital transformation. An experienced insurance-industry tech partner may be able to quickly alleviate operational challenges, such as capacity spikes and customer-experience deficiencies in claims intake. Such quick wins can build momentum; they should be pursued even if it means delaying initiatives seen as urgent to IT, such as legacy-system modernization. Be mindful of budget — In today’s environment, where all CEOs say they are running a technology business, the IT department needs the best talent available. Obviously, talent doesn’t come cheap, particularly with the current supply-demand imbalance. Given that nearly every industry from mining to warehouses, finance and retail is undergoing a shift to digital, there aren’t enough engineers and data scientists available or coming through the education system to meet the demand. Initiatives that help the CIO make a case for additional funding can mean the difference between an IT team that can barely keep up with the trouble-shooting backlog and one that propels the company into the future. Cultivate allies — A battle is best fought by a coalition of the willing who can provide resources, ancillary support and political backing. Likewise, a CIO or director of technology needs to find executives within the organization who are enthusiastic and knowledgeable supporters of digital change. When IT departments choose to forge ahead without obtaining adequate buy-in from the business side, they can fail. Similarly, when seeking help from outside vendors, strong working relationships are critical. Think broadly — Once you have achieved the critical mass of credible success stories, a viable budget and executive support, you can tackle the “transformational” aspect of digital transformation. That is, you can begin to revamp the organization’s culture to operate more like a nimble tech company than one weighed down by bureaucracy and legacy systems. See also: 5 Digital Predictions for Agents in 2019   Digital transformation is meant to pave the way toward a more efficient and profitable future. For the moment, however, many insurance executives are concerned by the scope of what lies ahead. Some worry whether they have enough of a grasp on what is hype and what is real in the digital space to lead their companies through the initial steps of the journey. Others are daunted by accounts of digital initiatives gone awry and, conversely, by the winner-takes-all competitive dynamics inherent in tech-driven industries. Yet there is no doubt that change is coming. By following the advice summarized in this article, carriers and TPAs can start on the path of digital transformation and take control of their digital destiny.

When IBM was struggling in the late 1980s and early 1990s, analysts often said the company was so big that it was going to take a while to turn around. A common image for the company was an oil tanker: You don't just lean on the rudder and go hard left in that baby. 

A similar analogy is used today at some insurance companies as they try to become more innovative. While surveys show that the industry hopes to improve customer experience, accelerate product development, etc., there is less confidence that companies will succeed. Many seem to feel like that oil tanker, and expect it will take years to get a new heading and gain momentum.

The innovation approach that most embodies the oil tanker is what ITL's Guy Fraker calls the "change management model." The mandate for innovation comes from the top, and everybody is expected to support it. The company may try a venture arm, an innovation lab and maybe even an internal incubator. But not all the efforts are connected, and there is no communication plan or change in incentives and rewards to get organizational alignment and buy-in. The focus is on creating an innovation culture, and, after a few years, you may even have built a new ship—but it’s still an oil tanker. 

What if, instead of an oil tanker, your approach was more like a speedboat? This common approach also is driven from the top, but, instead of a companywide effort, it relies on rotating, virtual teams. The small teams may be more agile but are isolated from the rest of the organization and, over time, can feel exposed and vulnerable. Their efforts to hand off innovation ideas to business units typically meets resistance. The teams may report to the C-suite, but there’s no organizational incentive for existing business units to follow their lead and adopt their recommendations. Like a speedboat, the small team is fun and exciting at first, but it tends to be short-lived and can’t take the larger organization very far. 

If the oil tanker is too cumbersome, and the speedboat is too small, where does that leave us?

Why not convert the oil tanker into something that resembles the strength and adaptability of an aircraft carrier? It can’t turn much faster than an oil tanker, but a carrier can extend its reach by launching multiple assets—and bringing them back to report and refuel—and is constantly scanning the horizon for intelligence. 

The aircraft carrier analogy fits the "innovate to grow model" of innovation. This approach is driven from the top and leverages clearly defined constraints and focus points. It rewards employees for participation, its goals are transparent to the entire organization and the workforce is encouraged to participate. The approach starts small but can scale, so the small team grows over time. It can employ change management tactics, such as a VC arm or an idea development programs. The key difference is that these efforts report up to a person or team in the organization who advises and engages corporate leadership. 

You may think you now need to stop and design and build an aircraft carrier, which would take even longer than turning that oil tanker, but most big companies already are aircraft carriers or can be with a little adaptation.

I just finished the wonderful new biography "Churchill: Walking With Destiny" and learned that England launched a plane from an adapted cruiser in 1924, way before aircraft carriers existed in anything close to today's form and when flying was still in its infancy. Now, Churchill was positively protean. He was at least the godfather of the tank, if not the father, and he became so convinced of the power of planes so early that he asked that the Wright brothers be consulted as England built the Royal Air Force. (He became a pilot himself in the 1910s, only giving up his training when so many trainers and friends died in crashes that colleagues managed to convince Churchill that a senior member of the British government shouldn't take such risks.) 

While I'm not expecting anyone in insurance to be the next Churchill—what a disruption that would be!—we have plenty of resources in front of us to innovate quickly if we just stop thinking in terms of oil tankers or speed boats and start launching planes off whatever aircraft carrier we have or can improvise. 

Cheers,

Paul Carroll
Editor-in-Chief

As technology causes premium to contract, the most visionary insurers will change their focus from insuring risks and processing claims to obviating risk and instantly mitigating losses. Reflecting on my experience working with insurers and the IT and service providers who support them, I recall that about 15 years ago insurance business leaders suddenly needed to understand a number of new technologies to be able compete. Before that moment, the words “innovation” and “insurance” had rarely been used in the same sentence. The insurance industry was thought of as ultra-conservative and risk-averse—it seemed to move in slow motion while other industries were accelerating. ROI was a far more important metric than CSI or retention rates. Old habits die hard—but die they eventually will. The shift from an analog to a digital business world was challenging for all business sectors, but for the insurance industry it was particularly so, and likely the most disruptive change that the industry had encountered since the advent of the computer. The business of insurance is, at its core, about gathering, managing and storing a tremendous volume of information and using it to make calculations and predictions necessary for the creation of protection products. In an analog world, these functions were performed on paper—mountains of paper. Digital processes enabled these processes to be simplified and made faster and easier. However, the insurance industry, being conservative by nature—and subject to regulation—also kept the paper versions, creating even more complexity and making the management burden even greater. See also: Innovation Imperatives in the Digital Age   Transactional processing represented another challenging shift. In the analog era, people and labor were employed for every process from selling policies to developing rate quotes to managing claims to producing correspondence. With the onset of automation, the focus quickly shifted to eliminating human labor and reducing cost. For business leaders, their focus changed almost overnight from the management of large numbers of people and facilities to an understanding and effective deployment of new processing technologies. As if these shifts were not demanding enough, what followed was exponentially more challenging: Driven by the more technology-forward banking segment of the financial services sector, insurance experienced a seemingly never-ending stream of new technologies that disrupted every corner of the business. This next wave of technologies transforming the business of insurance appeared like a tsunami. The Transformation of Operational Process and Business Models Today, technology-driven disruption is accelerating, and the industry has entered a new phase: the transformation of underlying operational processes and business models. The initial impact was felt in distribution channels but more recently has begun to seep into the very infrastructure of the business—product development, pricing, rating, underwriting, loss reporting and claims management. The claim department consumes approximately 80 cents of every premium dollar earned, so it offers the greatest single departmental opportunity for earnings improvement. It is also customer-facing and represents the additional opportunity to improve overall customer satisfaction, retention and brand improvement. See also: How to Move to the Post-Digital Age?   Industry transformation still has a distance to go, and the next iteration of the business may cause even more fundamental upheaval in the C-suite. The explosion of “connected” things—cars, people, buildings, factories and the continuous streaming of data flowing from them—will drive two major shifts. First, traditional insurance product premiums will begin to contract in tandem with a reduction in the demand for insurance as the risk of losses is avoided. Second, the most visionary insurers will (and already have begun to) reinvent their basic business model from insuring risks and processing claims to obviating risk and instantly mitigating losses. The Darwinian dictum of “survival of the fittest” has never been more apt. This article was first published at Insurance Innovation Reporter.

Like 2018, 2019 is shaping up to be a positive year for the insurance industry. The stronger economic outlook is driving up net investment income, consolidated capital and surplus and other factors -- see the table (from Deloitte) below: However, in the same report, Deloitte warns, “While 2018 and 2019 are shaping up to be banner years for insurers, some concerns are being raised about an economic slowdown, if not a full-fledged recession, as early as 2020.” In other words, insurance businesses must be mindful of expenses if they wish to navigate the rough waters of a less lucrative market. One of those cost areas is IT. No matter the size or specialty of the insurance agency, IT affects operational efficiency, customer experience and compliance, among other areas. Making the right decision in each is essential, but it cannot be done without a chief information officer (CIO), i.e., an experienced IT leader to identify bottlenecks, maintain compliance and ensure that your clients are satisfied with their digital experiences. Unfortunately, not every insurance business can necessarily afford or access a CIO. See also: How Virtual Reality Reimagines Data   However, these insurance businesses could leverage virtual CIOs (vCIO). The benefits of vCIO consulting cut across three major areas of relevance to your insurance business: 1. Complete IT Leadership Be it patchy WiFi, computers breaking down or client portals crashing, these and other such IT issues will impede staff productivity. This can hamper your ability to sign on new clients as well as put existing client relationships under pressure. A vCIO can bring a team of full-time IT experts to investigate your existing system to find the root causes that are derailing your operations and causing cybersecurity issues and compliance problems. A vCIO can provide clarity of how your IT options -- be it systems, processes or training -- will both maintain productivity and meet strategic business goals. 2. Lower Costs The average payroll cost of a CIO is $142,609 per year; salaries can range from $81,718 to $269,033 (Monster). For small and medium-sized insurance agencies, that salary alone would be a significant spike to overhead. Moreover, these smaller agencies may not require a CIO around the clock, as a large outfit would. This is where the cost advantage of a vCIO is key. Typically, vCIOs will charge a flat fee. A number of IT solutions for the insurance industry, such as managed services, actually include vCIO services as part of the agreement. So, many small or medium-sized agencies leveraging managed IT services may not need to pay extra to access vCIO services. 3. Objective, Outside Look at Information Systems Your IT manager may be a great asset, but IT has many different fields, with each field requiring dedicated experts. Be it cybersecurity, mobile, cloud management, web development or something else, it’s good to have an outside expert to take a look. See also: Insurance and Fourth Industrial Revolution   A vCIO can provide a neutral assessment. For example, a vCIO could come in and identify a gap in your compliance measures, thereby preventing you from getting hit by a fine. The vCIO could identify a glaring cybersecurity problem before it flares up into a costly technical (and legal) problem for your agency. A vCIO may not be ideal for larger entities, which have exponentially greater technology needs, potentially across dozens -- or hundreds -- of offices. Larger entitites may also have many more custom technology systems, such as an on-premises data center or custom-coded internal and client-facing applications. But every organization needs full-time access to a CIO to take ownership of your technology. Should something fail, you can’t afford to not have that leadership when you need it most.

Let’s slice pie from the sky and seriously consider AI’s role in workers’ compensation claims. First, admit that an end-to-end AI solution is impossible. WC does not provide a dispassionate linear process ripe for automation. Flow-charts or fishbone diagrams cannot codify WC claim contingencies. Rather, we must account for WC’s disparate interests and human unpredictability with a less analytical depiction… such as a pile of actual fish bones surrounded by alley cats fighting for scraps. Forcing a vision of full-auto AI blinds us to the real possibilities. AI should not seek to master our status quo claim system. Rather, our existing system should radically change to best apply AI. Forget usual vendor roles and re-draw the process. With conventional models gone comes freedom to revolutionize. I suggest we form logical “function modules” as powered by a sub-array of distinct AI tools, all recognizing boundaries for human connection and influence. Overseeing this flux of action is a super-adjuster in a role elevated from “data entry” to “data reaction.” New adjusters are extremely skilled and well-paid, acting as the human glue among a matrix of AI tools and able to react in real time to events and milestones in the interest of claim outcome all while managing the claimant experience. As just a partial illustration, some newly defined function modules might include:

• Employee sentiment
• Reporting
• Work continuum
• Care direction
• Finances
• Closure
• Filings and compliance

See also: Quest for the Holy Grail in Workers’ Comp   Function modules are in simultaneous action through the life of a claim, each contributing more or less depending on the situation and strategically sharing each other’s AI tools as appropriate. We can scratch the creative surface and imagine some aspects of function modules as follows:

• The “employee sentiment” module exemplifies just one new opportunity to support a known yet unmanaged challenge. In the current system, “employee advocacy” is a throw-away term with no defined responsibilities. “Employee sentiment” arises as a standard core concern with dedicated resources, focused purpose and ability to flag real-time urgencies. AI can support employee profiles before and during a claim. Continuous insight honed by machine learning ingests recorded statements, doctor findings, cooperative indicators, interim communications and non-claim-specific aspects. Human intervention is precisely triggered, gauged, placed where needed and not wasted. Nuanced automated messages can nudge desired reactions. More employees are better-cared-for while poorly motivated employees are dealt with from a smarter foundation. Less attorney representation is a critical result.
• The “reporting” module requires dedicated degrees of human interaction with nurses, investigators, employer contacts and intake staff. No “reporting” situation is fast-tracked because all information is valuable. This human investment returns value in securing fundamental data and spring-points for subsequent AI tools to act. As in old-school programs, good nurse triage can divert would-be claimants, yet we can add predictive analysis to round out a nurse’s conclusion.
• The “work continuum” module uses AI to evoke progressively updated, medically validated and predictively successful work opportunities with intensity far beyond common return to work (RTW) programs. Human interaction exists simply to coach a claimant among a wealth of opportunity. Beyond internal employer jobs are data-connected partnerships with out-placement temp agencies or non-profits, predictive validation for vocational rehab and labor market surveys. This module provides constant pressure and a holistic outlook. “Permanent restrictions” as a claimant legal tactic are conquered. A new employee culture is compelled to respect the ability to work.
• The “care direction” module replaces for-profit managed care with a dedication to predictively optimal care, with incentives provided by positive “employee sentiment.” AI validates treatment plans and choice of provider based on analytics matched to case-specific issues. Optimal healing is the paramount goal. Legislatures adjust laws concerning utilization review (UR) and customary care to allow weight for analytics as combined with traditional medical evidences, all with confidence in patient outcome over legal gamesmanship.
• The “finances” module might run mostly on AI, including basic management of employer funding schemes, premiums, claim payments and reserving. Medical bills are adjusted based on vast analytical data that supports any jurisdictional scheme. Percentage-of-savings fees no longer exist. Aggregate employer-population contribution from the “employee sentiment” module builds weighing factors to fortify premium calculations and actuarial outlooks.
• The “closure” module applies AI to provide a progressive outlook for method of resolution and closure date. Predictive likelihoods around dollar value and strategies to settle or litigate and even subrogation value are updated in real time. Data on judges, mediators, and lawyers feeds machine learning. The array of related AI tools herein includes analytically derived Medicare Set Asides (MSAs) and annuities.
• The “filings and compliance” module can be highly automated, fed first from the “reporting” module and updated from other modules in real time while running the gamut of statutory and OSHA requirements. Even this benign stockpile of data can be a reciprocal source of machine learning among other AI cells.

See also: Strategist’s Guide to Artificial Intelligence   In conclusion, AI can be a powerful force in a renaissance for the WC world. We must first abandon the knee-jerk inclination for AI to make the existing end-to-end process more efficient while protecting current profit streams. Vendors need to redesign operations and service lanes with new pricing and new value propositions. The industry must adopt the spirit of open-source development by defining non-proprietary functional modules whose needs invite the tech world and spark creative innovation. We must clearly define sacrosanct human tasks and connections that are paramount to an employee’s WC experience. Legislatures must seriously adopt analytics as an arbiter to remove considerable human bias from critical decisions. Humble pie may be hard to swallow, but pie on the plate beats pie in the sky!

This one has been a long time coming. I have discussed the topic time and time again, both on the podcast and with many folks -- both in incumbent insurers and at startups breaking new ground. In fact, it's the countless conversations with startups that have led me to this conclusion. Quite simply, the more insurtech founders I meet across the globe, the more partnerships we create, the more convinced I am that the lowest common denominator for the insurtech (r)evolution is the core system itself, most notably the policy admin system and quote-and-buy process. Claims is present in some of the new platforms but seems to be a slower follower here for new/low code/business-focused platforms. The Holy Grail Having been involved in many large-scale core system transformations over the years, I feel the pain here. Ultimately, though, I believe they are the holy grail of holy grails. I have worked with many clients on "core system transformation" projects and thoroughly enjoyed the challenge. These systems typically replaced decades of legacy claims, policy and billing platforms. These old systems were not built for the current (or future) market environment with its very specific and demanding requirements around data and engagement, to support today's very different customer expectations. The multitude of platforms is a result of a whole host of factors, including increased M&A activity, out-of-support platforms, security issues and efforts to modernize or simplify. Those are all valid reasons to act, if the business case stacks up. Sadly, more often than not, it doesn't. What's the alternative? On fire but not hot enough Unless there is a burning platform, I am seeing more organizations lean toward leveraging an insurtech solution to address the key challenge of speed-to-market for products,. See also: Is Insurance Industry Too Complex?   Insurers are typically adopting a two-pronged approach, these being:

1. Left to Right —solving the core system challenge from the foundations upward, addressing the burning platform issues through slow-moving projects that take months to years. These are the more traditional transformation programs, bigger and using some of the industry's leading core systems technology, such as Guidewire or DuckCreek. I don't think these are going away anytime soon. In certain markets, these programs will have more success than others.
2. Right to left — starting with the customer and working backward into the organization, addressing the very specific "speed-to-market" challenge that almost every carrier I talk to is looking to solve. The internal change stack is either full or the existing platforms can't get there at the right speed or price point to test the market or to meet a specific demand that has been identified. These projects are typically fast-moving and short, lasting weeks to months.

These approaches are not mutually exclusive. Many of the folks I speak to are doing both and aiming to meet in the middle somewhere. I genuinely see the case for both in some of the insurers I work with. You simply can't run 30-year-old platforms and expect to meet modern-day agility requirements. The second approach above, of course, is where the insurtech (r)evolution is playing out right now in full force. Finding our feet I categorized these challengers into three broad categories:

• Category 1 — Modern-day equivalents of the traditional (large) core system providers, albeit cloud-native and built for speed to market. These are all-encompassing, with a huge amount of flexibility, either to operate standalone or integrate into carriers' existing standard tools for rating, documentation, etc.
• Category 2 — As above, but with the added benefit of being able to write business in specific states or geographies, authorized by local regulators.
• Category 3 — Players that have been built from the ground up to solve a single, specific problem -- but that could easily be repurposed to solve another challenge or address a new line of business.

I mapped some of the existing players into each of these groups below. This is not exhaustive; we know there are north of 2,000 insurtech startups and over 100 providers in the platform space. A little more detail Category 1 — Instanda, for example, has 45-plus clients, from MGAs to insurers, that it has helped launch propositions and products to market in 8 to 12 weeks each, often less. Like everyone in this space, Instanda is cloud-native, sitting on Microsoft Azure, with the ability to spin up and down in a heartbeat. The screenshot below shows the simple, logical flow a business user can follow to create full insurance products, from rating questions and calculations to documents and endorsements. Adding to this, Instanda will quite happily deal with the first notice of loss (FNOL) phase for claims, passing then on to the client's in-house claims or TPA platform. Category 2 — Slice not only has a cloud-based platform with ICS for policy and claims, it has the ability to write business in specific states. Built from the cloud down, Slice is outsourcing the speed-to-market challenge and has some great examples. Category 3 — Finally, these folks have been on their merry way solving very specific challenges, whether it's Laka reinventing the business model while solving cycle insurance, or Flock with its head in the clouds with drone insurance or Canopy for Renters or MyUrbanJungle or Buzz or so many others. They have built in most cases an end-to-end platform focused on one line of business or one specific product. There is nothing stopping them leveraging this technology for another line. For example, what else could Flock insure that needed: location, real-time pricing, third-party data and much more? You guessed it: anything in the mobility space. And I probably wouldn't limit it there, either. Have a look at the Flock full insurance stack: My view is that those in Category 3 are more likely to (will need to?) pivot into Category 1 or 2 in the search of scale, unless, of course, the business segment they have gone after is large enough. I would ask: How can I turn my platform and capability to broader and greater use? Solving business challenges I see insurers leveraging any number of these platforms depending on what their specific business challenge is to address new market pressures very quickly, whether they want:

• new capability, flexibility and speed (category 1)
• above, plus the ability to test easily in new states/markets (category 2)
• a new specific product/line of business (category 3)

Interestingly, many of these platforms are country-specific or country-focused (not to say they can't work across geographies), a lot of these operating in the individual countries where they started. They are not only cloud-native but are geared up for the API economy. A great example is CoverGenius, which integrates at the commerce layer, not as an additional task for the customer. (Here is an interview with Sarah and the team here.) There will not be one single platform here. It's great to see insurers leveraging the right one to address the business problem. New platforms, new challenges Jump forward five to 10 years, and we may well be back to insurers having more platforms to manage than they currently do, but being less reliant on any single slow old beast. I'd hate to share some of the numbers that I see when it comes to the numbers of PAS platforms in play at most insurers; needless to say, it's never one! Maybe we'll go full circle and head back to mainframes, but I very much doubt it. My hope and expectation are we get the data right and end up with a beautifully orchestrated ecosystem of capabilities with multiple platforms doing what they do best and meeting specific market demands. Growing up, what next for the startups As the startups in Category 3 mature and scale, I see this as a typical sequence of events:

1. The early years: As a new startup, most founders I know build their own tech stack, and do a bloody good job of it. They are unbound by legacy, free from data, customers, partners and all the other the things that often get in the way, and give you the benefit of a clean sheet of paper. This is enough to prove the concept, business idea, ability to acquire customers and get the seed/series A round under the belt.
2. The growth stage: Companies start to hit scale problems and spend energy on places they can truly differentiate in, not reinventing the wheel.
3. Serious player: The company has money, scale and lots of customers and wants to grow exponentially, going multi-country, multi-product and much more. Time to deploy the enterprise big guns and get ready for hyper growth or an exit.

They will likely engage the folks in Category 1 and 2 as they mature, creating a market and ecosystem. See also: So, You Want to Work With Insurtechs?   Is there space for everyone? Sadly, probably not. I think we will see a whole host of consolidation, with many of the smaller or local players getting together to build longer runways and greater customer bases and drive scale. They will then face their own challenges in combining platforms and technologies. We have already seen some of this in Germany with the likes of Knip and Komparu in 2017. A timeless debate If we were to start the industry today, of course we wouldn't design it the way we did 30 years ago. We didn't have the ability back then to adopt a capability-driven and services-enabled approach to plug the necessary components together easily or swap out capabilities quickly and easily. We simply have a better start point today, and this will no doubt continue to improve.

Insurers of the future will be assembled, not built. New platforms are an essential component in the rapid assembly process.

There are, of course, a whole host of other categories across the entire insurance value chain that insurtech has been addressing. Many of these are incremental and address a specific problem area, whether it's making an efficiency play, helping price better, understanding risk differently, leveraging processing power, aggregating new data sources, addressing fraud, etc. We are merely at the tip of the iceberg still. I would love your perspectives.

1. Are the two approaches correct, and do they make sense (left to right and right to left). Have you seen others?
2. Does the categorization of startups feel right in the platform space? Who would you add, and to which category?
3. Is my outlook for startups in this space correct?

Today’s technology news is dominated by articles about the promise of 5G—it was one of the top stories coming out of this year’s Consumer Electronics Show. 5G, so named because it’s the generation following today’s 4G, could bring mobile phones information 600 times faster than today’s speeds. Further, 5G will enable connections of up to 1 million devices per square kilometer. That is significantly more than the 2,000 to 10,000 devices per square kilometer that 4G allows. The capacity for a massive increase in connected devices that respond seemingly instantly will bring about important innovations in a range of sectors, including the property & casualty and collision repair industries. As Kent Finley wrote in Wired, “There's more to 5G than just speed; 5G technologies should also be able to serve a great many devices nearly in real time. That will be crucial as the number of internet-connected cars, environmental sensors, thermostats and other gadgets accelerates in coming years.” It’s these and other connected devices that have the greatest implications for these industries. 5G and Connected Cars 5G has the potential to be a game-changer in terms of how connected cars interact both with other vehicles and with the environment around them. In the future, 5G will enable faster, more reliable connections with cellular networks as well as “vehicle to anything (V2X)” communications—with the anything being “car-to-car and car-to-infrastructure” linkages, as Digital Trends’ Jeff Zurschmeide explains. As he put it, “Cellular and other V2X communications … (will be) critical for autonomous driving, but they can also improve your driving experience while you’re still behind the wheel. For example, systems have been tested in which vehicles are allowed access to traffic light signal information,” helping drivers, both humans soon and autonomous vehicles later, work in concert with signal timing, improving traffic flow. 5G connectivity will be essential for innovation in vehicles to make the next big leap forward, including managing the charging of electric vehicles and making autonomous ones acceptable and then routine. See also: Why 5G Will Rock the Insurance World   Impact on Insurers and Collision Repair Facilities 5G has significant implications for the entire auto physical damage ecosystem. As the number of sensors in vehicles increases, the data they produce may collect details of collision damage, which in aggregate can help manufacturers improve vehicle designs, carriers price coverage appropriately and collision repair facilities accomplish proper and safe repairs. Further, the ability for vehicles to communicate with each other and the environment via 5G may signal greater safety on the road. For instance, with embedded sensors, vehicles could crowd source information about weather, road conditions and hazards and share it with other vehicles in real time. But increased vehicle complexity may also signal increased repair complexity. As Mitchell’s Jack Rozint explains, as advanced driver assistance systems become more prevalent, repair facilities “must be prepared to fix, and heed the advice of, a computer network on wheels.” This is a pattern that is likely to escalate as 5G drives the adoption of increasingly sophisticated onboard computers. 5G in Healthcare: Reverberations Across P&C 5G is expected to bring significant changes to healthcare that will reverberate across the property & casualty industry. Among the most important opportunities will be Internet of Medical Things (IOMT) devices that allow for sophisticated remote monitoring of patients. Today’s consumer wearables and even IOMT devices like heart and diabetes monitors already provide medical care providers with information and insights that they previously would not have had access to. 5G networks will have greater stability and lower latency and be much less of a drain on battery life, so they will be able to support more critical healthcare monitoring and functions. And with the data these sensor-enabled devices produce, healthcare providers can deliver more personalized care. See also: Blockchain, Privacy and Regulation   In fact, 5G networks will be so fast and so stable that one company, Ericcson, believes they will be able to support functions that could mean the difference between life and death like remote robotic surgery performed by a physician working on a patient via a super-precise robot. In the not-too-distant future, the surgeon could be performing a remote surgery as close as in the same building as the patient or as far as in another continent due to the speed of 5G in IOMT. When Will 5G Get Here? While wireless carriers are rolling out early iterations of 5G networks worldwide, it may be several more years before the systems are in that will make V2X and remote robotic surgery a broadly shared reality. Based on the expected advances that 5G will foster and the current speed of innovation, I envision the way we live today will someday seem quaint, with today’s phones, cars and medical equipment appearing to our future selves as antiquated as a rotary phone. Maybe not tomorrow, but possibly faster than we might expect.

Newcomers to the insurance industry face no shortage of challenges. If you’re a broker embarking on a career in insurance, you need to learn a variety of skills and navigate an ever-changing landscape. Among the most critical skills you need to develop early on is the ability to forge relationships with underwriters and put forth robust insurance applications and supplementals. Knowing how to communicate effectively with underwriters and providing them with quality submissions will be pivotal to your career. On an average day, a typical excess & surplus lines (E&S) underwriter may review 16 to 20 submissions, so getting yours to the top of the pile is critical. Underwriters consider three important factors when prioritizing the submissions in their pile: (1) if the submission is complete and detailed, (2) if it fits their appetite and (3) if it's from a broker who is known and trusted. So, how do you get yours to the top of the pile? Here is my three-step guide: Step 1: Start with trust As with any other successful relationship, trust is essential. Underwriters will always prioritize a submission written by a broker they trust. The first steps in building these relationships are often awkward, but getting over that uneasiness is critical. Pick up the phone and get to know the underwriters you work with. Try to find common interests to bond over, such as sports, music or cars. You don’t need to be best friends with underwriters, but you do need to reveal your personality to them, rather than keep the relationship merely transactional. See also: Underwriters Need Some Power Tools   You also can build trust by showing an underwriter you understand his or her company and its appetite. Being prepared goes a long way for underwriters who work on tight timelines and have busy schedules. Learn what underwriters seek before submitting, patiently answer any questions they have and be respectful of their schedules. When you’re able to demonstrate that you understand their unique appetites, you’re making their lives easier and helping to build trust. Building trust is the most important step because everyone, unfortunately, carries some hidden bias, intentionally or not, that goes into the decision-making. If an underwriter receives two submissions of equal quality that both fall within his or her appetite, the one from a known and trusted broker will likely get preference. Even submissions on the fringe of an underwriter’s appetite are more likely to be considered when coming from a trustworthy source. The human factor will always play a role in the decision-making, so, if you establish trust, the hidden bias will favor you. Step 2: Write an effective submission While building trust is a critical first step, it won’t mean anything if you can’t craft submissions that grab underwriters’ attention and save them time. With so many submissions to handle each day, underwriters will always favor those that include as much information as possible, provide specifics, anticipate questions and include summaries. A good broker knows the specific information and answers that underwriters seek and provides those. It’s best to provide as much information as possible about operations, losses and exposures. It’s okay if you don’t have every specific detail, but make sure that what you provide is as accurate as possible. Be transparent, and let the underwriter know you’re working to obtain more information. Also, be prepared to take no for an answer. It’s okay to ask for a justification, but being agreeable and understanding will help you next time. At the end of the day, underwriters are looking for submissions that save them time. By putting forth a submission that includes summaries, provides specifics and anticipates questions, a broker significantly enhances his or her chances of getting the submission to the top of the pile. Step 3: Communicate effectively Knowing how to communicate properly after putting forth a submission is the third most important step you must learn. One easy way to differentiate yourself among other brokers is to include a cover letter. This is a great way to kick off your communication around a submission, because it provides underwriters with a concise summary of what to expect, thus helping them understand the information that follows and saving them time. (Notice a pattern here?) Your cover letter also gives you an opportunity to call out specific items you know the underwriter will be concerned about, immediately showcasing your value. Just a simple email up-front with a summary will do. It's also very helpful to promptly follow up by phone – not email – with underwriters to provide an overview of your submission after you’ve sent it. Of course, you don’t want to be annoying, but staying persistent is key. After all, it's the squeaky wheel that gets the grease. See also: 14 Keys for Broker-Underwriter Ties   Embrace the future Taking these three steps skillfully and consistently will set you up for success in your career as an insurance broker. Remember, however, that they are just the basics. As our industry changes at a rapid pace, the brokers who understand and embrace future trends are the brokers who will thrive. Underwriters want to work with brokers who keep pace with change. So my last bit of advice to brokers is to become an expert in one of these trends – whether it’s IoT, automation, hydroponics or clean energy. If you gain a reputation as a forward thinker, you will stand out now and in the future.

While our industry has made great strides in recent years, we still have a long road before balance is achieved at the leadership level. A recent study found that women represent more than half of the industry’s entry-level positions, yet hold only 18% of its C-level roles.

These numbers are not uncommon; among all industries, only 79 women are promoted into manager positions for every 100 men. The disconnect starts early, and, as a result, just 1% of insurance organizations have a female CEO at the helm. The imbalance is further fueled by the industry’s gender wage gap, with women making just 62 cents for every dollar earned by men.

As the #BalanceforBetter campaign advocates, “gender balance is not a women’s issue, it is a business issue.” A balanced workforce results in more than a level playing field. It yields tangible business advantages that are key to staying ahead in today’s competitive and complex market.

See also: Why Women Are Smarter Than Men  

Women remain underrepresented at the executive level across all industries, yet research consistently demonstrates their positive impact on business. A McKinsey study found that organizations in the top quartile of gender diversity at the executive level are 21% more likely to outperform their peers. Additionally, MSCI reports that, over a five-year period, U.S. companies on the MSCI World Index with at least three female directors achieved median gains of 37% on earnings per share.

For our industry to realize its full potential, insurers must develop diverse leadership teams that better mirror and relate to their customers and employees. With the insurance unemployment rate hovering between 1% and 2%, it is more important than ever for our industry to attract and retain top talent from all backgrounds.

Organizations that cultivate inclusion and intersectionality enterprise-wide are more likely to be seen as employers of choice in today’s candidate-driven market. In fact, on Fortune’s World’s Most Admired Companies list, the highest-ranked organizations had double the number of women in senior management than those that were ranked lowest.

There are several ways insurers can build trust while taking steps to realize a balanced workforce.

Embrace mentorship as a movement. Mentorship is a foundational element in helping break through the glass ceiling and building diverse and confident leaders. Through mentorships and sponsorships, women and members of other underrepresented groups gain access to senior leaders and role models that may not have otherwise been possible.

These can be internal programs or ones run through industry groups like Million Women Mentors, which aims to spark confidence in women and girls to succeed in STEM careers and leadership positions. Whether long-term or for a specific situation, these relationships can help propel women into manager roles and beyond, enabling them to move up the corporate ladder at a similar pace to men.

Create a culture of inclusion. Diversity of thought results in effective problem solving and more innovative ideas. Cultivate inclusivity through formal diversity and inclusion (D&I) programs and employee resource groups. By seeking out various points of view and effectively engaging and supporting employees of all backgrounds, teams benefit from unique viewpoints and healthy discourse. A greater sense of inclusion translates to an increase in decision-making quality, collaboration and perceived team performance.

Promote networking among women. Women helping and lifting up other women is vital to success. In fact, a commonality among most high-ranking women is a strong female-dominated inner circle, according to a recent study. Women whose networks are wide with strong female relationships at their core receive jobs at seniority levels that are 2.5 times higher than those who have smaller, male-centric networks. Female leaders are also more likely to surround themselves with other women. Credit Suisse found that female CEOs are 55% more likely to have women heading business units and are 50% more likely to have women as their CFOs.

Engage men as allies. A growing number of enlightened men are publicly advocating for women’s equity, standing as allies in identifying and breaking down barriers. In many organizations, male executives are spearheading employee resource groups and championing corporate D&I programs. By inviting men into the conversation and committing to open dialogue, organizations create shared ownership. A balanced insurance workforce will not be achieved through just one voice, but through a chorus of voices for change.

Hold leadership accountable. In an EY survey, only 39% of insurance leaders said their companies are formally measuring progress toward gender diversity, and just 8% shared that they have structured development programs in place for women. Additionally, Deloitte found that while 71% of organizations aspire to have an inclusive culture, their actual maturity levels are low. Implementing D&I programs is an important first step, yet true change will come as a result of organizations holding key decision makers accountable for setting and meeting goals.

See also: Survival Guide for Women in Insurtech  

International Women’s Day is March 8; however, its spirit and mission extend throughout the year. Through mutual trust and respect, along with actionable steps and accountability, our industry can work to create a culture of inclusion and achieve balance beyond gender.

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Looking to get involved? There are a number of insurance D&I organizations that join to support each other’s missions and events: STEMConnector’s Million Women Mentors Women in Insurance Initiative, Advancement of Professional Insurance Women (APIW), Business Insurance’s Diversity & Inclusion Institute, Dive In, Gamma Iota Sigma, Insurance Careers Movement, Insurance Industry Charitable Foundation (IICF) Global Women’s Conference, Insurance Supper Club (ISC) and Women’s Insurance Networking Group (WING).