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4 Reasons to Join Agency Networks

While it’s easy to get stuck in the routine of working IN the business, it’s critical for independent agents to also work ON the business.

Rick Fox

May 3, 2019

Agency associations have been around for years, providing advocacy and resources for independent agencies around the country. Also known as agency networks, clusters or aggregators, these organizations play an integral role in the insurance ecosystem, building connections between agencies, carriers and partners to help both grow business and better serve the needs of customers. While many independent agencies have opted not to join these networks, sometimes deterred by the cost of membership, these organizations can provide valuable return on investment. At a recent event, I spoke with a network executive who said his agencies are seeing a nine-to-one ROI for independent agents. This ROI is impressive and further evidence of why agents should consider participating in these groups. The resources and access to carrier and vendor relationships deliver measurable value for independent agencies of every size. At the same time, carriers and vendors are also investing in network relationships. Investment in new programs like Vertafore’s, specifically aimed at championing the independent agent by working with industry associations, clearly underscore the value of these networks as part of the insurance industry. This kind of purposeful investment, putting the right people and the full support of the company behind it, is a strong endorsement of the association model. See also: 3 Ways to Boost Agency Productivity Another hurdle for independent agents is that they’re simply too busy running the agency to investigate new opportunities. But as buyers’ expectations for price, convenience, service and product availability have grown, many independent agents have found themselves struggling to keep pace. They’re so busy scrambling with their heads down to keep up with their current business, they hardly have opportunities to look up and see what’s happening in the market around them. But as competition gets tougher and customers gain more flexibility of options, independent agents can’t afford to keep their heads down. Network membership can help here, too, introducing agents to resources, technology and services that can help them work more efficiently and identify new business opportunities to develop. If you’re on the fence about agency networks or skeptical of their value, here are four reasons you need to make joining one a priority this year:

Access to new carriers and products through aggregation. For small agencies, it can be tough to get appointments with carriers if you can’t support the volume of business they require. Trying to meet the quotas or milestones to keep multiple appointments can be difficult, and some carriers won’t work with agencies if they’re under a certain size. This can lock small agencies out of writing new business or securing new products their customers are demanding. Joining a network lets the independent agencies band together to hold those appointments and feed the appetite of the carrier at a much higher level.
Buying power with vendors. The industry is being driven by technology integration, not only as a means of serving customers’ expectations for a modern, tech-savvy experience, but also for efficiency and workflow productivity for the day-to-day operations at an agency. But those software and solutions can be expensive, especially for the small-volume licenses that small independent agencies would need. Vendors are eager to work with agency networks to offer more value and partnership. The vendors benefit from the access to new customers and agencies can take advantage of the latest solutions that may have been out of their reach if not for the collective power of the group.
Networking opportunities. Keeping yourself glued to the agency 365 days a year can be a mistake. Even when you’re busy serving clients, it’s also isolating you from market trends and developments that your counterparts are eyeing as opportunities. Agency networks offer networking opportunities to meet with and learn from your colleagues, to build relationships that can help solve mutual challenges or share creative solutions or strategies. Whether it’s an annual conference, a workshop group or even just a meet-and-greet, being involved in your industry community can open doors of opportunity through shared wisdom and resources.
Thought leadership and access to expertise. The network itself can be a source of knowledge, resources and expertise on relevant issues like how to run and grow your agency, how to make inroads into a new, niche market or how to manage mergers and acquisitions. Just like it aggregates carrier access and vendor relationships, the agency network can be a tremendous source for aggregated knowledge, providing thought leadership and counsel that can help member agencies grow business and access new markets and opportunities.

When looking for an agency network to join, choose one based on what it can offer to meet your needs. Don’t just consider what it will cost but, more importantly, what you will gain. Ask to talk to other members or vendors as a reference to get a broader perspective. The right network or association will be in a leadership position in the industry to provide information, resources and expertise to help you grow your business. It should work diligently on behalf of its members to build partnerships with carriers, vendors and tech services. See also: Expanding Into Small Commercial While it’s easy to get stuck in the day-to-day routine of working IN your business, it’s critical for independent agents to also make it a priority to work ON your business. The biggest risk to agency success is inertia—simply staying in the same spot. With the rapid pace of technology development, market evolution and shifting consumer expectations, you can’t afford to get left behind. Getting involved in agency associations and networks is a smart investment that can help your business stay ahead of the trends to grow and thriv

Rick Fox

Rick Fox is the vice president of agency associations and networks at Vertafore, where he serves as a liaison for agency associations, clusters and aggregators to ensure they and their members have the right technologies, systems and policies in place to drive success.

Life & Health

Benefit Advisers Must Actually Advise

Benefit advisers need to dial down the reseller role in healthcare and concentrate on imparting guidance to tackle core issues.

Michael McKenna

May 2, 2019

Sales is the name of the game, no matter the industry, but some professions should focus more on providing sound advice and less on promoting new and trendy products. Many benefit brokers fall into that latter category, and I say this as someone who has been in the insurance industry for 25 years. It used to be that group insurance brokers were more transactional. Get a good product at a fair price, provide some service, and your client is generally happy. Today, that same broker must create compliance initiatives, administer COBRA, FMLA, enrollment services, ERISA advice and some human resource functions. This new responsibility requires expertise beyond what's needed to get an insurance brokers license, yet, like most entrepreneurs, we adapt. We must, however, get back to basics. As group benefits brokers, we must turn our attention to the core mission of our profession today. That mission is strategic consultation and education for our clients, addressing the cost of providing healthcare in this country. It is, by far, the biggest driver of the increase in the cost of, and inability to afford, group health insurance. Certainly, maintaining an awareness of professional trends has its benefits, and often a new offering can make a big difference for clients, but advisers need to dial down the reseller role and concentrate on imparting guidance to address core issues. Next to payroll, the largest expense for most businesses is the cost of group health insurance. Yet many benefits advisers continue to go down the same old path by providing information on the same, tired, cost-shifting plans – this despite the fact that these plans's premiums are rising faster than the cost of living. See also: Benefits Advisers: It’s About to Get Real Benefit brokers need to begin educating clients on what is really driving premiums. One significant lesson that should be learned upfront is that joining a large insurance purchasing group is rarely the solution for small to medium-sized businesses, because savings are short-term for most. The dominant problem facing health insurance prices is the cost of providing care. It won’t cost less for a small firm with a staff of 10 for an MRI or maternity stay simply because it is in a pool of 5,000 employees. Although these multi-employer plans may show short-term savings, unless there is a marked improvement in the risk pool, as with every other group collective purchasing arrangement for healthcare, it fails. And, oftentimes these plans are dangerous self-insured arrangements where the employer, and sometimes even the broker, has little knowledge of the potential risk. The need, from my standpoint, is for businesses to embrace measures that can result in less prohibitive healthcare costs, beginning with the use of telemedicine programs not owned by insurance companies. An eye-opening statistic from the American Medical Association indicates that over 70% of all emergency room, urgent care and primary care visits could be handled via telemedicine. This is a cost-effective alternative that will reduce the employers claims cost by a weighted average of $240 to $300 per visit. Offering telemedicine as a benefit not only decreases claims and keeps overall costs down, but the employees are less likely to miss work due to a medical appointment. An independent second opinion program is another avenue to trim costs, yet a mere 19% of health care consumers get second opinions. This is head-shaking as a study conducted in 2014 by the Houston Veteran Medical Center and the Baylor College of Medicine estimated that 12 million people in this country are misdiagnosed annually. The study went on to show a change in diagnosis by nearly 15%, as a result of a second opinion and as high as 26%. The course of treatment is changed an astonishing 70% of the time. An independent medical second opinion program can provide simplified access to high-profile medical centers/teaching hospitals, specialists, etc. in collaboration with a patient’s attending physician team, often for little to no cost. Result: Employees are less likely to miss work due to a misdiagnosis or follow-up appointments. Consider, also, that the third leading cause of death in the U.S. is medical errors. Offering employees a choice as to how they purchase prescription medications is another cost-efficient employer healthcare program. It fosters consumerism by deploying a comparative prescription drug environment and can lower cost for the consumer and the employer, sometimes substantially. Numerous online prescription drug programs can help members identify discounts, coupons and subsidies available for their high-tier prescriptions. Current and emerging technologies aggregate these programs so immediate access to potentially less expensive prescriptions drugs are identified and easily obtained by the patient. Also, some of these programs will have deductible and copayment assistance programs designed to keep people compliant with their medication regiments. Another easy way to reduce costs. Employers need to weigh the worth of group health insurance against self-funding; if choosing the latter, always offer a reference-based pricing option. This plan recognizes that insurance company payments to hospitals can be as much as 300% to 600% more than what Medicare would pay. Reference-based pricing plans might pay the hospital just 50% over Medicare. If an employer or local market isn’t ready for this aggressive approach, there is a solid opportunity to educate about reference-based pricing. See also: Reinventing Sales: Shifting Channels Those of us in the insurance and benefits industry have the responsibility to shed light on strategies that address the real drivers of cost rather than simply regurgitating what we are told are current industry trends.

Michael McKenna

Michael McKenna is founder and CEO of Comprehensive Benefit Administrators (CBA), recognized as one of the largest and most progressive organizations of its kind in the country.

Data Analytics

Product Managers Needed for Analysis?

Some data science teams have matured beyond offering advice and are making products. Do they need a data science product manager?

Paul Laughlin

May 2, 2019

I mentioned, in a debrief from the Data Leaders Summit, the rise of the product manager role within data science teams. This surprised me. I’ve become used to hearing about the need for more data engineers or analysts to complement data scientists. But the focus on product managers and product development life-cycles was a new one. This was not an isolated incident from only a speaker or two. Many leaders confirmed that they had product manager roles. What is going on? In this post, I will share a combination of my initial thoughts and resources I have discovered. I hope to help you decide whether product managers are needed in your team. What Is a Data Science Product Manager? Let’s define what is meant by this new job title. Some data science teams have matured beyond offering advice. Their output was no longer decision support analysis, providing models or insight to influence leaders. Increasingly, these teams were making products. These could be deployable models (for decisions, optimization, categorization) or even entire automated processes. Developing and deploying these into live business operation requires some additional skills. It is to meet that need that product manager roles have evolved. Taken from the historical role of product managers in operational or marketing teams, these roles own a life cycle, from initial innovation (e.g. insight generation sessions) through design and development into deployment. See also: 5 Key Effects From AI and Data Science This article, from the IoT for All blog, helps bring the role to life. It is not prescriptive (as frankly the role is still evolving) but highlights some of the key skills needed. The references to facilitation and communication skills reminded me of the need for softer skills. Those matter across so many data science or analytics roles. But the product manager skillset also reminded me of how I used to define analytics business partners. One key difference is the judgment and knowledge needed to manage a production line and pilots. How Do You Develop Data Science Products? How do product managers and others develop data science products? A number of skills are needed, and the most appropriate development methodology will vary by business. But product managers sound some common themes. I've heard speakers draw on influences from analytics, systems thinking, agile working and design thinking and stress the role of product development workflow. In this article from Harvard Business Review, Emily Glassberg Sands shares a high-level view of how to build great data products. Is This an Opportunity for Other Product Managers? Given the emphasis on product management skills, does this role represent an opportunity for product managers working outside any data or analytics field. My experience with crossovers is mixed, but the data science product manager may be a different case. The mastery of product development and management skills appears to be key. See also: The Entrepreneur as Leader and Manager This interesting blog post from Cohort Plus reads as if aimed at product managers in the technology space but is still a useful introduction for others in such a role. If you are a product manager and interested in making the move into a data science team, this introduction should help (apologies, but posts from Medium will not display snippets). Do You Need a Data Science Product Manager? It would be great to have comments or feedback from both those who see the value of a product manager in these teams and those who think it’s a fad. I’m sure more roles will evolve as these teams mature. Customer Insight Leader blog will keep a weather eye on ones that matter.

Paul Laughlin

Paul Laughlin is the founder of Laughlin Consultancy, which helps companies generate sustainable value from their customer insight. This includes growing their bottom line, improving customer retention and demonstrating to regulators that they treat customers fairly.

Leadership

How to 'Detangle' Your IT Issues

Trying to detangle the spider-web information systems that exist in organizations today is a lot like bargaining with a four-year-old.

Bobbie Shrivastav

May 1, 2019

If you have ever experienced detangling a four-year-old’s hair, you know it is a mess! The amount of fighting and screaming along with negotiations (I will give you ice cream), sometimes threats (no iPad for you) that go into that process can be unbelievable. The situation is not so different a scenario when we try to detangle the spider-web systems that exist in organizations today. Business folks fight with IT, have back-door negotiations with leadership about priorities and engage in countless back-and-forth exchanges of business requirements. Sound familiar? How can organizations cope in a “detangle” situation? Here are three recommendations:

1. Comb through your systems one small section at a time. If you have tried to comb through a large section of tangled hair, what happens? You get stuck, or your comb breaks. If you comb a small section at a time, you could effectively detangle. Take one part of your process, application, module, etc. and determine ways to streamline the operation. “Eat the elephant one bite at a time” to ensure you won’t get stuck in your innovation and transformation efforts or end up in a mental asylum.

2. Use a detangle spray. I love detangle spray! Taking a small section of the hair and applying the detangle spray makes the combing faster. Here is where I would recommend organizations look at outside help. Is there a service like virtual transformation office that can expedite your transformation or innovation efforts? Transformational consultants are of a different breed. They cut through the BS; if they don’t, you don’t have the right one working for your organization. These folks bring outside technology, industry-level perspectives and agile processes to act as a “detangler” in your initiatives. For most organizations, operational needs tend to outweigh innovation efforts. An external perspective can ensure organizations are looking beyond the operations and focusing on innovation.

3. Chop it off. Chopping off the hair was my final resort with my toddler’s hair. I went to the barber and had her hair cut. Why? It was just too painful to continue to maintain. With your spider-web systems, you will come at a point where you have to say good-bye--good-bye to your green screen friends, VB screens from the early 2000s and old funky .asp apps. Are there startups that you can bring to your organization to provide new tech that can eliminate multiple legacy applications? At Benekiva, we pride ourselves on eliminating four to nine systems leveraged by claims staff to process one claim. How many systems are your teams using to complete a task or work unit? You may not be ready to chop everything off, but you can do it gradually. Change takes time.

Disrupting is the name of the game for all organizations. Even if you are a giant company, you have to keep up or you risk going bald, at which point no amount of combing, spraying or chopping will help.

Bobbie Shrivastav

Bobbie Shrivastav is founder and managing principal of Solvrays.

Previously, she was co-founder and CEO of Docsmore, where she introduced an interactive, workflow-driven document management solution to optimize operations. She then co-founded Benekiva, where, as COO, she spearheaded initiatives to improve efficiency and customer engagement in life insurance.

She co-hosts the Insurance Sync podcast with Laurel Jordan, where they explore industry trends and innovations. She is co-author of the book series "Momentum: Makers and Builders" with Renu Ann Joseph.

Personal Lines

Drugged Driving Kills; Why Can't We Stop?

While Americans know that driving after smoking or ingesting marijuana is dangerous, one-fourth of them admit to doing so.

Andrea Leptinsky

May 1, 2019

DriversEd.com has released a new study on the awareness and prevalence of marijuana-impaired driving, finding that while an overwhelming number of Americans have an understanding that driving after smoking or ingesting marijuana is dangerous, one-fourth of them have admitted to doing so themselves. According to DriversEd.com’s 2019 Cannabis and Cars Report, 58% of Americans believe that legalized recreational marijuana use leads to increased danger on roads, and 91% of Americans believe marijuana can impair a driver’s ability. Even so, 20% of drivers admit to driving after smoking marijuana, and 6% admit to driving after ingesting it. This may come as no surprise, as 34 states, District of Columbia, Guam, Puerto Rico and the U.S. Virgin Islands have approved a comprehensive, publicly available medical marijuana/cannabis program as of March 2019. Marijuana is more out in the open than it ever has been before, but its accessibility is preceding development of proper oversight. Without correct traffic safety measures in place, the prevalence of drugged driving is growing, as drivers likely believe they won’t get caught, aren’t noticeably driving dangerously or don’t consider marijuana’s side effects to be risky enough to stay out of the driver’s seat. See also: Pledge to Put Your #phonedown According to the Brain Injury Society, significant cognitive impairment begins the moment marijuana is consumed. THC, or tetrahydrocannabinol, is the chemical responsible for most of marijuana's psychological effects. It interferes with the natural communication of cannabinoids between neurons in the brain, especially in the cerebral cortex—which plays a huge role in how memory, thinking and consciousness are affected.

A 2018 Governors Highway Safety Association study, Drug-Impaired Driving: Marijuana and Opioids Raise Critical Issues for States, found that, in 2016, 44% of fatally injured drivers with known results tested positive for drugs, up from 28% just 10 years prior. More than half of these drivers had marijuana, opioids or a combination of the two in their system. The best way to reduce drugged driving, according to Mothers Against Drunk Driving (MADD), is the use of standardized field sobriety testing (SFST), the foundation of impaired driving detection and enforcement for 800,000 law enforcement officials across the country. Some states, however, do not require SFST training for officers assigned to patrol functions. As MADD says: Myths and misinformation are part of the problem. Get the facts—and share them with your loved ones, especially young adults. Why? More than one-third of teens mistakenly believe they drive better under the influence of marijuana. The 2019 Cars and Cannabis survey was conducted online using Survey Monkey. One thousand and sixty-three participants were polled, spanning the U.S., with the U.S. driving population represented by the 997 respondents who, before completing the survey, answered that they have a driver’s license. The demographics of those polled represented a broad range of household income, geographic location, age and gender. This article was originally published on DriversEd.com.

Andrea Leptinsky

Andrea Leptinsky is a 15-year news veteran with experience in community journalism, automotive reporting and traffic safety marketing. She started as managing editor at DriversEd.com in 2017.

Resilience & Sustainability

Some Hope in the Face of the Wildfire Threat

There are lots of reasons why fires get out of control, and it turns out the biggest issue is a lack of real-time information.

Insurance Thought Leadership

April 30, 2019

In 2018, there were over 6,000 wildfires in California alone, destroying well over 10,000 structures, producing over $9 billion in property damage and claiming the lives of at least 88 people. Horrific. But there’s hope. More than 95% of the wildfires in California are controlled within the first 24 hours and are contained to 10 acres or less. In other words, fewer than 5% of wildfires grow out of control and move into day 2, producing most of the devastation. And improvements in technology can help us tackle that 5%.

I say that after having had the privilege of being invited to a workshop hosted by the Gordon and Betty Moore Foundation, in collaboration with the University of Maryland, last week. (Yes, that Gordon Moore, co-founder of Intel and author of what has come to be known as Moore’s law.) The workshop pulled together 28 of the smartest people I have ever met, all committed to curbing the impact of wildfire, not only in California, but also across the globe.

There are lots of reasons why fires get out of control, and it turns out the biggest issue is a lack of real-time information. The best technology available to the commanders making strategic decisions and firefighters in the field gives them information that is usually six to 12 hours old. Fire can do a lot in six to 12 hours.

The workshop identified a number of technologies that could greatly improve the information flow, three of which stood out to me: offerings from Planet Labs, Jupiter Intelligence and Descartes Labs.

Planet Labs has deployed a pearl-like string of shoe-box-sized satellites that provide an image of the entire globe every 24 hours. The image is accurate to about three meters—you won’t be able to pick out a person, but if you’re looking for anything as big as a pick-up truck or bigger, you’re good—and will let firefighters watch for danger.

Jupiter Intelligence provides a supercomputer platform that models potential dangers from one hour to 50 years out and could be used to monitor fires in near-real-time.

Descartes Labs combines data from lots of different sources, including sensors and imagery, and refines that data so it can be used for modeling that can spot and monitor potential problems as well as actual fires.

The folks at the workshop are committed to pulling together these and other technologies to better understand the traits (weather, terrain, vegetation, humidity, wind, etc.) that might signal the right conditions for an uncontrollable wildfire. The group will also integrate technologies and other capabilities to provide firefighters with real-time data about a fire and its movement.

We have written many times in this commentary about how technology is moving insurance and risk management into a predictive and (we hope) preventive role, rather than simply helping us get better at responding after losses occur, and that change will need to extend beyond technological improvements. I learned last week, for instance, that we are probably a decade behind in controlled burns. We should be control-burning about 2 million acres per year to limit wildfires, but we have been control-burning only approximately 100,000 acres a year for a long while. No wonder there is so much fuel to feed those wildfires. (Some environmentalists may push back on the need for controlled burning, but the wildfires seem to have created a new level of realism all around. Unless we’re going to unleash tens of thousands of goats on our forests, controlled burns are the only alternative.)

As always, we in the insurance industry can help. While the data we use for making decisions about risk and pricing may not be the same as what authorities need to prevent or fight fires, there is significant overlap, and we must all work together in this time of acute need.

I’d love to hear any thoughts about what the Moore/Maryland group or we as an industry should be doing in the face of the wildfire threat.

Wayne Allen
CEO

Insurance Thought Leadership

Insurance Thought Leadership (ITL) delivers engaging, informative articles from our global network of thought leaders and decision makers. Their insights are transforming the insurance and risk management marketplace through knowledge sharing, big ideas on a wide variety of topics, and lessons learned through real-life applications of innovative technology.

We also connect our network of authors and readers in ways that help them uncover opportunities and that lead to innovation and strategic advantage.

Customer Experience

Who Is Your Customer; How Is the Experience?

The amount of low-hanging fruit with few costs and high impact for both the customer experience and optimized operations is incredible.

Deb Smallwood

April 30, 2019

In today’s digital world, companies have to focus on customers and their experience. No longer is it just about optimizing the business and processing the transaction; the overall experience matters for retention and renewal. It is essential to create a seamless digital experience that is tailored and personalized, based on understanding customers and their needs. The first thing an insurer must do is define who the customer is. Depending on a company’s channel – direct, captive or independent agents – the definition becomes not only complex but political and even cultural and structural. Historically, for many insurers whose channels have been independent agencies, the agent or broker has always been the customer. But more insurers have embraced the reality that the policyholder is also the customer. There is often a debate as to where the CX focus should be: on the policyholder or the agent? I believe insurers need to consider both as customers – different customers, but both customers. In most cases, agents own and manage the relationship with the policyholder, and the insurer provides services to the policyholder. Insurers need to embrace both agent and policyholder and the connectivity of the triad relationship, and how these relationships and connections fuel one another. See also: Bold Prediction on Customer Experience Ease of doing business is the requirement for any insurance customer in today’s digital, connected world. Agents choose where to place the business based on ease of doing business (along with the relationship, product coverages and pricing). There are a few key areas to focus on to improve the agent experience, like providing agents with the right technology solutions and tools to quickly and painlessly quote, bind, issue, endorse and renew. Agents expect it to be fast and easy to understand each insurer’s product and risk appetite and to have clear visibility into the status of all interactions between the agency and insurer – as well as the policyholder and insurer. While the agent may have a personal relationship with the insured, insurers do interact with policyholders: making payments, changing pay plans, asking questions around a final audit invoice, having loss control visits and, of course, experience the whole claims process. The key to providing a really great customer experience for the policyholder includes providing a personalized touchpoint in any channel – whether it is paper, digital or face-to-face – and ensuring communications are easy, accurate, consistent and straightforward. Last, but not least, minimizing or even eliminating the need to call, maximizing the experience when customers do need to call to a one-call-resolution and providing the option to go to the self-service portal are all goals of the transformed customer experience. As we look at the customer experience today, there is tremendous opportunity to transform not only the customer experience but your company, as well. As we work with insurers on their CX transformation journeys, the amount of low-hanging fruit with minimal costs and high impact for improvement to both the customer experience and the optimization of operations is incredible. But first, you must be clear as to who your customer is. Then, declare that your company is on a CX transformation journey. Now, you are ready to move forward.

Deb Smallwood

Deb Smallwood, the founder of Strategy Meets Action, is highly respected throughout the insurance industry for strategic thinking, thought-provoking research and advisory skills. Insurers and solution providers turn to Smallwood for insight and guidance on business and IT linkage, IT strategy, IT architecture and e-business.

Risk Management

Curve Ahead: Managing Autos

As a safety manager, what’s the best practice for managing the ever-decreasing road capacity along with the host of new exposures?

Tony Hughes

April 29, 2019

My first job out of college was very hands-on. I worked in a laboratory testing the bituminous materials used in road construction. Every month or so, I’d move to a different, temporary laboratory/trailer in a strange city near another highway being resurfaced, and I’d get to work ensuring the road materials were in compliance with the requisite specifications. I quit that job when I noticed that the chemical solution used to separate bitumen from rocks was dissolving my fingerprints. Hands on. Fingerprints off. Unless I wanted to be a burglar full-time, I needed to find a different occupation. I got a job designing traffic signals and road junctions. While there is a lot of math involved, there is also a lot of studying human behavior. The role was more of a black art than a science. Quite often, people – both pedestrians and drivers – do something other than what you expect them to do. Someone goes straight in a right-turn-only lane. It happens. Run a red light because the two cars in front of you did? That, too. My specialty was designing traffic light junctions. Humans are hugely inefficient at negotiating junctions, even those that have colored lights telling you what to do. Sit third or fourth in a line of cars at a set of traffic lights and see for yourself. It was a problem I worked on for years as a traffic engineer. It is worse now, of course, with many more distractions available via smartphone. Next time you’re in traffic, look at how many other people on your gridlocked commute are messing with something they shouldn’t be rather than paying attention. A conservative estimate would suggest that a third of drivers are distracted by their smartphone when they should be driving. That has to have an effect. To this day, I cannot help but critique road junctions and their layouts. I will be sitting in unnecessary traffic studying the layout of a junction, then perhaps remarking to my wife – or, worse, my kids – about some deficiency, then, of course, hate myself for doing so. I save the majority of my angst for new installations. I can’t criticize a traffic engineer from the 1960s who never envisioned a four-fold increase in vehicles passing through his carefully designed intersection. I am sure you have been driving somewhere on the highway when, for no apparent reason, you suddenly find yourself braking and eventually grind to a complete halt. You sit there for a while, pondering what choices led you to this point in your life (whipping out your smartphone to check the length of backed-up traffic), then, just like that, you and everyone else around you start to move and, within a relatively short time, you are back to your regular speed. The thing is, the wreck you assumed was holding you up is not there. It is gone by the time you get to it, or, more likely, it never existed. Instead, you got caught up on a section of highway that was over capacity. Oh, and congratulations, you just survived a shock wave. As a nascent traffic engineer back in the 1990s, I learned about road capacity. That is the measure of how many vehicles a certain stretch or road can handle before things become inefficient and congestion occurs. Say it is Friday circa 4 p.m. Cars in all lanes, in front and behind you. When someone enters from the on ramp, those in the far right lane have to start braking because there is too much traffic around them to allow them to change lanes. That braking makes its way down the line of traffic, growing as it moves backward. If the first guy has to tap his brakes to allow a car in his lane, the car 50 cars behind him is coming to a complete stop. Now imagine that at every on ramp or every time someone rashly changes lane without signaling. The more traffic you direct onto a road, the higher the frequency of traffic jams. Absent a few years directly after the 2008 financial crisis, the number of miles driven in the U.S. has increased year over year, with lower gas prices aiding this. In short: Our roads are filling up with cars faster than we can build new roads. At some point, things stop working. Gridlock ensues. So what, right? Nothing new here. There have always been traffic jams, and autonomous vehicles will solve all of our woes, after all. Move along, nothing to see here. Maybe AVs will make all the problems go away, but that claim has yet to be tested. It is a hypothesis, and we do not yet know whether cars that drive themselves will do anything to solve traffic issues. They will certainly help with traffic flows, particularly in congested cities, but, even then, the benefits will likely be temporary and finite. More vehicles should get through busy road junctions, but maybe we're just pushing the issue down the same road a little. If you free up space on the roads, what will happen? Absent another fuel crisis, the empty spaces on roads will be filled by more vehicles wishing to drive on them. Automated vehicles or not, once you reach capacity, passengers and drivers will suffer. Road capacity is finite. There are only so many vehicles and people you can get on them at any one time. Since the turn of the century, we have seen a huge reduction in accident frequency, but a lot of that is down to significant technological increases in vehicles braking, improved tire design and a plethora of safety features that no one had thought about in the 1990s. The increase in lift from each technological advance will tend to be smaller. You now have to share the road with many other commuters, big-box delivery trucks, last-mile Amazon deliveries, ridesharing independent contractors, utility service workers and the sidewalks with 20 mph scooters, pedestrians preoccupied with cell phones and, soon, robotic pizza delivery drones. Despite the technological advances in safety, it is becoming increasingly hard to prevent auto losses from occurring. How do you combat this? As a safety manager, what’s the best practice for managing the ever-decreasing road capacity along with these new exposures? I recommend the following:

Keep your vehicle use guidelines updated and communicate to your drivers as often as possible, at least every time there’s a modification to them.
Read. Every day a new challenge arrives and there is a new safety feature to deal with it. Perhaps in-cab cameras would benefit your fleet? Perhaps it is additional training for your drivers on the risks that scooters pose.
Understand the inherent exposures that your fleet possesses. Is there a vehicle in your fleet that can drive autonomously already? Do your large truck drivers have difficulty viewing vehicles approaching from adjacent lanes?
Minimize distractions in the vehicle. Address the use of cellphones when driving and limit consumption of food in the vehicle to when it is parked.
Factor in a likely increase in journey times for your drivers. There should be nothing gained by speeding.
Talk. Provide training to your drivers, particularly on the new hazards. Discuss techniques for handling these hazards as a group.

Tony Hughes

Tony Hughes is a commercial auto product manager at Safety National, with more than 15 years of experience in operations, claims, product management and underwriting. His comprehensive knowledge about the auto insurance industry results from having worked in related fields in the 1990s.

IOT

How Insurers Are Innovating Right Now

Connected insurance is the biggest potential for transformation that insurance has witnessed since the invention of the computer.

Graham Proud

April 29, 2019

From day-to-day operations, to the very relationship between insurers and policy-holders, it is no exaggeration to say that connected insurance represents the biggest potential for transformation that insurance has witnessed since the invention of the computer. See, for example, the ability of an insurance carrier to react to live data, in real time, and prevent a loss from occurring. From simply mitigating the effects of a loss, they become partners in risk-prevention. In an increasingly competitive, technology-driven market, insurance carriers must continually innovate to deliver connected products and services that resonate with customers and provide what they need, rather than what the insurer can offer. Likewise, as technology develops and the digital distribution of insurance products increases, product development itself must become similarly agile and responsive. Squeezed between decreasing profit margins, increasing customer expectations and greater competition, however, all insurance companies find themselves in a potentially make-or-break position; innovate or die. See also: Understanding New Generations of Data Yet while technology represents insurers’ best chance at outstripping competitors in terms of product development, efficiency and customer experience, with so many new technical possibilities available (many of which are relatively unexplored), there is also ample opportunity for them to overspend and underdeliver. To provide some clarity, Insurance Nexus recently interviewed over 300 executives to understand where insurance companies are concentrating their efforts to improve connected product and service innovation, who is responsible for these projects and how things are expected to progress in the future. In the course of our research, it was striking to note the degree of importance with which executives are now viewing connected insurance innovation. 50% of respondents believe that CEOs and heads of strategy must take the lead in connected product development--a clear indication that innovation is rightly regarded as an enterprise-wide undertaking. Our results also suggest that insurers recognize the scale of these projects and that, in many cases, they do not have the required competencies in house; 54% said that leveraging the expertise of external technology partners and insurtechs has been of greater value than relying solely on in-house talent. On the subject of departmental collaboration, the results show that data and analytics departments feature heavily in connected product innovation. This is significant principally because the success of the AI and machine learning systems that underpin so much of connected products is predicated first and foremost on data, both volume and quality. If insurers can maximize the potential of the data they already possess and then intelligently insert aspects of AI (as opposed to hastily implementing an AI system and feeding it on poor-quality, invalid or disparate data), they will see the greatest results. One particularly eye-catching statistic was that over half of respondents claim that their most successful channel for communicating product development and new services is by word of mouth. Although initially surprising to us in the digital age, this will be of great comfort to marketing teams everywhere because it tends to support the idea that product development should begin with the customer and their needs. If those needs are met, customers are showing themselves willing to become brand ambassadors themselves, a particular boon to insurers in such a saturated marketplace. Download the infographic for detailed statistics on:

Which technologies are insurers embracing and actually integrating into their everyday procedures and products, including AI, ML, data analytics, automation and IoT?
Where are insurers prioritizing investment: operational efficiencies and internal procedures or customer-facing UX technologies?
What are the proven internal blends of skill sets that drive transformation forward, including leadership buy-in and recruitment initiatives in IT and data analytics?
How to incorporate external technology experts and insurtech that supercharge what you can offer your customer.

This infographic was created in association with Insurance Nexus’ coming Connected Insurance Europe Summit, taking place May 15-16 at the Novotel Hotel in Amsterdam. Welcoming more than 350 senior executives from across departments, the event will provide organizations with the necessary strategies and insights to transform each core pillar of product development, strategy and innovation and communication of value to the customer. For more information about Connected Insurance Europe, please visit the website.

Graham Proud

Graham Proud works closely with insurer senior-management teams to identify the challenges and solutions in bringing about transformation. Proud produces a number of white papers, webinars and major industry events to reflect the industry's latest trends.

Regulation & Public Policy

Google and Applied Systems: 6 Months In

The big Google investment suggests it sees a great future for independent agents. So, what's the verdict after six months?

Mark Breading

April 26, 2019

The insurance world was caught by surprise last October when Google’s Capital G investment arm announced a substantial investment in Applied Systems (north of $100 million). It was seen by many as an endorsement of the independent agent (IA) channel. If Google believes it will make a nice return on investment in a company serving the IA channel, then it must believe the channel will survive and grow. From the Applied Systems viewpoint, in addition to the extra capital to invest in the platform, it was anticipating access to world-class technology and expertise from Google. So now that the investment/partnership is six months in, what can we say about the progress? Recently, I was fortunate to witness some of the activity first-hand, as Applied invited me to join them at the Google Cloud Next event in San Francisco. For me, it was a chance to “experience” Google and meet some of the players in the Applied/Google partnership. I’ve come away with several observations about Google and Applied Systems.

Deep partnership: As originally promised, the Google investment was more than money looking for a return. Applied and Google are collaborating at the development level, with dozens of Applied developers being trained and exposed to Google tech.
Future promise: It is still early in terms of how Google tech and expertise will influence Applied/IVANS systems, but there are indications that the first fruits will be visible this summer, and more enhancements and capabilities will be built into the product road map over the next several years.
New era of computing: The shift to a new era of computing is well underway. The event was focused on developers, and the entire event was filled with sessions and discussions about containers, connectors, Kubernetes, APIs, big data, cloud, edge computing security, AI/machine learning and other technologies and approaches that are transforming how computing systems are designed, built and managed.

See also: Whole New World for Customer Contact My one disappointment at the event was that insurance was not very visible. There were hundreds of speakers and dozens of use cases, but nothing for insurance. Banking, retail and healthcare use cases and solutions were prominent (as were those from many other industries), but insurance only received a passing mention. Let's hope the Applied/Google relationship will change that, and that more technology harnessed to address specific insurance use cases will be in evidence by next year’s event.

Mark Breading

Mark Breading is a partner at Strategy Meets Action, a Resource Pro company that helps insurers develop and validate their IT strategies and plans, better understand how their investments measure up in today's highly competitive environment and gain clarity on solution options and vendor selection.