The continued decline of standalone long-term care policies seems inevitable, and the life insurance gap among Americans continues to widen. Hybrid policies offer a joint solution that with the right approach can turn these two challenges into a new market. Recent months have seen a steady drip of bad news from life insurers, as firms have had to boost their reserves to the tune of billions in an expectation of soaring payouts for long-term care policies. October's update from Unum followed Prudential's in August, and by the time this is published more will likely have followed. While troubling, the news simply confirms something that has been fairly obvious for some time: The old long-term care market – once so popular as a means of funding assistied living, nursing home and home care services – is now more of a headache than an opportunity. Insurers are now having to significantly review assumptions made long ago when the first such policies were written, during a period when life expectancies were shorter and health expenses lower. To say the equation has shifted would be an understatement -- healthcare costs for assisted living have almost doubled over the last 15 years, while one in two Americans now suffers from chronic illness. The accompanying increased premiums have decimated the market. Many insurers have withdrawn from the line altogether, and those that remain are having to be increasingly restrictive with their policies. See also: Insurtech: Mo’ Premiums, Mo’ Losses   Axing an entire revenue stream, however -- especially one that was once so lucrative -- is risky in a situation where demand is clearly not the problem. The need for long-term care is going nowhere. And getting on the front foot with a new approach would be advantageous should a new solution cause an emptying marketplace to fill back up. Hybrid policies are designed to make long-term care insurance profitable again, and they do so by simultaneously offering a new solution to another difficult problem -- the decline in the life insurance market. The number of Americans holding life insurance has fallen steadily for years. The number of Americans holding life insurance has been falling steadily for decades and is now at a record low, with about half of U.S. households going without. Hybrid policies work by combining the two types of coverage – life insurance and long-term care – and allow for payouts based on accelerated or early payments of a death benefit. Importantly, the combination also allows insurers to stabilize the risk profile of the product and provide a sustainable means of growing both the top and bottom line. Despite some initial skepticism based on previous miscalculations that are now coming home to roost, insurers are starting to warm to the new approach, and upward of 260,000 hybrid policies were sold last year. As well as potentially re-opening the long-term care market, the policies could simultaneously help insurers reverse the downward trend in life insurance. Evidence suggests that one of the main barriers for uptake of life insurance among today’s customers is the lack of flexibility and control associated with traditional products. By addressing this, hybrid policies promise to turn two problems into a new and untapped market for insurers. See also: What’s Next for Life Insurance Industry?   However, the skepticism isn't without cause. As the headlines are reminding us, the consequences of incorrect assumptions and miscalculation can be drastic and long-lasting. If the long-term care market is to enjoy a hybrid revival and avoid the mistakes of history, carriers will need to ensure that the design is right. Given the nascent stage of the new product, this requires a specific set of underwriting skills, a granular understanding of the pricing and risk modeling involved, a deep expertise in mortality rates and new reinsurance structures to support risk transfer. For those that can get it right, though, the rewards will be significant.

“Fast and now” is what best describes the current insurance market. The internet has single-handedly changed how customers, distributors and even home office employees expect instant gratification in day-to-day insurance transactions. Couple that with increasing market pressures to maximize profit and lower cost, commoditization of products and the ever-increasing speed of business, it is only natural that distribution has emerged as a leading topic among executives at all carriers. Now is the time to modernize distribution. First, let us begin with understanding the structural drivers that have disrupted or can very quickly disrupt current distribution models: Customer Needs Changing customer demographics, expectations and needs have left insurers in a discombobulated state, with unclear strategies to optimize distribution channels, product mix and areas of investments. On one hand, customers today seek holistic financial and health wellbeing advice through a multitude of channels based on demographic and affluence levels. On the other, insurers are constraining distributors with standardized product offerings that make it hard for them to appease customer needs for flexibility and personalization. Customer journeys now start online for almost every purchase--including financial products--and, unlike in other industries, most end with an in-person interaction based on product complexity. This presents an opportunity to improve customer experience, intimacy, and fulfill the customer need using the distribution channel. However, slower product release cycles compound this problem and often leave distributors in a jarred state between cross-selling, up-selling or unfavorably switching carriers. Key events in a customer’s lifecycle--while slower in the P&C space--are much more frequent in the Life and Investments space, and customers are asking for short-term rewards against long term benefits. Carriers betting on closing technology gaps to increase customer intimacy are not moving fast enough, leaving the distributor with an “after-the-fact” and reactive (versus proactive and predictive) interaction. All these drivers continue to impact customer satisfaction and perceived experience, and widen the gap between the customers and distributors, overall slowing industry growth and profit realization. Distributor Dilemma A shrinking agent force is perhaps one of the biggest causes of concern for carriers who are heavily intermediated. Lack of succession planning, an older generation of producers coming close to retirement, reduced interest from newer generations to work as distributors, and changing customer behaviors have led to the consolidation of smaller distributors by bigger brokers and wholesalers. This has inadvertently reduced shelf space for carriers and increased pressure on competitive differentiation for product and price. The once-preferred captive channel is becoming cost-prohibitive to maintain as there is a stronger pull to invest in cross-distribution capabilities such as digital and direct. Technology constraints prevent carriers from expediting underwriting or even offering flexibility in product mix or incentive plan design: all necessary drivers to close the sale. See also: How to Use AI, Starting With Distribution On top of these impediments, the regulatory landscape is changing. While the recent fiduciary ruling from the DoL benefits customers with increased transparency, it increases pressure on fees, which impacts compensation plans and the need to introduce “advisement fees”. This also impacts the traditional advisory model and distributors must quickly adapt sales processes and carrier relationships to increase or maintain customer engagement as distribution moves from “best-suited” to “best-interest”. To combat these drivers, carriers have invested in shared service models and centers to allow producers to focus on tasks of higher value, implemented wrappers on legacy systems to provide agility in commissions processing and invested in process automation to increase operational efficiency. However, these disparate efforts do little, even as a whole, to increase the overall value for distributors or help solve for the holy grail of differentiated experience. Despite these factors, there is immense opportunity to improve distribution capabilities and, with the implementation of a new distribution management system, streamlining downstream systems and processes is not as daunting a task as it may otherwise seem. The Transformation Journey The pace of change in distribution prompts carriers to look at solving for issues and opportunities with technology, tooling, and platforms. However, it goes beyond just finding the right distribution platform that solves the table stakes business need of managing distributors effectively, processing compensation accurately, and providing a digital portal to improve the producer experience. There are four phases to this transformative journey, and it begins with defining the distribution and compensation management strategy to discover and understand the biggest roadblocks across people, process and technology. With the vision defined, it is time for a (b) mobilization or inception phase where business leads select a vendor platform, define the product features for their future state, all of which is supported by (c) the design of an operating model that can scale and flex to meet growing needs of the business with services and processes to deliver that elusive differentiated producer experience. Finally, the vision and future state is realized by (d) implementing the platform and the supporting operating model. While each carrier’s current and future state needs are unique, there are common opportunities (that often turn into roadblocks if not adequately planned for prior to implementation) to truly think outside of the box and deliver a transformed--not merely updated--distribution experience: Recruitment, Contracting and Onboarding: The producer’s first touchpoint with a carrier provides an opportunity to make a great first impression. The onboarding process itself must be streamlined and shortened with the highest degree of automation and self-service that lets producers drive the process on their own. There are also opportunities for carriers to provide “white-glove” services to larger distributors for mass-onboarding, or assisted onboarding for new first-time producers. Modern distribution platforms provide a digital, automated experience that can be configured to meet the carrier’s needs for a great first impression and, with a clear channel strategy, can greatly contribute to positive and sticky producer experiences. Producer Management: This area tests a carrier’s operational efficiency in managing high frequency events--ongoing hierarchy management, broker of record changes, licensing and appointment requests, to name a few--where any delay prevents producers from placing business or worse, increases a carrier’s risk of non-compliance. A clear definition of services associated with licensing and appointments as part of the operating model strategy, combined with the flexibility of modern rules-based appointment processing, alleviates significant bottlenecks and always keeps producers compliant and ready to sell with just-in-time appointing, automated backdating of appointments based on policy effectivity, or even self-delegated hierarchy management for larger distributors. Compensation Management: Perhaps the biggest area driving producer experience, trust, and satisfaction is compensation management. Producers work hard to earn the business and expect flexibility in plan design, accurate and timely commissions payouts, and incentives. Unfortunately, this area also drives the greatest amount of operational inefficiencies and producer requests or complaints due to legacy systems and processes. Modern platforms provide business-user friendly rules engines that allow for easy design of compensation plans on-the-fly, incentive options such as event or role-based advancing, bonuses, variable-interest loans, campaign management, vesting rules management, retroactive adjustments, splits between producers and producer debt management across channels, companies or even hierarchies. As part the transformation journey, compensation is where carriers must carefully assess, design, and deliver features to ensure minimal disruption to producers for business-as-usual activities while extracting the maximum business value from the transformation. See also: The Future of P&C Distribution   As insurance carriers migrate from legacy platforms to flexible, modern distribution management and compensation solutions, the art of the possible becomes infinite. No longer will rigid, crippling legacy systems and manual workarounds hinder a carrier’s ability to flexibly design new compensation plans, roll out new products, perform advanced analytical exercises on consolidated data, or digitize the field’s experience. What previously required heroic IT efforts will become business-as-usual, thus upping the ante for carriers who are beginning to consider implementing a modern distribution management and compensation solution. In sum, distribution and compensation have quickly moved from traditional back-office functions to prioritized elements of the value chain, primarily due to the impact producer experience can have on a carrier’s production. Such organic conditions provide the perfect ecosystem to undertake the distribution and compensation transformation journey with the aim of increasing distributor production, capturing savings from operational efficiency gains, and establishing an operating model that scales with business growth. Changing the perception that distribution and compensation functions are no longer menial back office functions, but instead, the carrier’s greatest opportunity to attract and retain distributors--and thus, customers--will help business leaders prioritize this initiative at an enterprise level. After all, it starts with carriers empowering their producers so customers can get products or services “Fast and Now.”

I love to celebrate the New Year. I’m energized by the opportunity to pause at the end of the year, reflect on my accomplishments over the past 365 days and think about what I hope to accomplish in the year ahead. My annual rumination centers on two questions: What have I done that is working for my clients and me? And what can I do differently to achieve better results personally and professionally? Turns out I’m not alone. I have found myself in many conversations with early-career insurance professionals who are pondering the same questions. I also have found that, for those new to our industry, coming up with useful answers to these questions is difficult. So, in keeping with the hopeful spirit of a new year, here are four tips for new insurance professionals (and even seasoned ones) to improve their client relations in 2019: 1. Understand your strengths and set goals for the skills you wish to improve. When I started out in my career, I was intimidated often by what the people across the table knew. Could I answer their questions? Did I understand their questions? Could I make a meaningful contribution? What helped me advance was to understand that, while I might not have the technical knowledge of more senior colleagues, I could still offer a number of strengths that could differentiate me from others. I was good at asking the right questions, at reading people’s body language and the overall tone of the room and at capturing meeting takeaways and following up on them quickly. See also: Restoring the Agent-Client Relationship   I soon realized that we all come to the table with strengths and with areas to improve. Even the most seasoned professionals can identify skills of theirs that they need to sharpen. For those new to the industry, begin building your professional brand based on the transferrable skills that set you apart. Set measurable goals for the personal and technical skills that you would like to enhance in 2019. 2. Evaluate current relationships. Over the past several weeks, my team and I spent many hours evaluating the client relationships that we have built, maintained and grown throughout 2018. Who are our closest clients? Who should we spend more time with this year? Who should I help my colleagues build better relationships with? Now that I understand the landscape of our current client relationships more clearly, I can reflect upon how purposeful the relationships are to me and if the clients will be long-term partners. If I believe a relationship has the potential to grow, the real challenge is dedicating the time and attention to carry the relationship to the next step, while identifying the relationships that may be stagnant or not worth pursuing. 3. Be mindful and deliberate with your time. Time is a limited commodity, and every client does not deserve an equal share of it. If you are spending a lot of time fostering a relationship with a person or organization that is not reciprocating the effort or that has not turned into an actionable business partnership, it may be worth re-evaluating whether you could use this time better elsewhere. See also: 5 Ways to Enhance Client Engagement   4. Repeat, repeat, repeat. Even if you have mastered the art of client relations and all your relationships are in good standing, your work is not necessarily finished. If anything, this success is an opportune moment to reflect – again – and evaluate the approach you used to build these strong relationships, and potentially apply it to other relationships that may need more work.

2018 was a breakout year for insurtech companies, as the insurance industry has been long overdue for innovation and disruption. The year attracted both talent and funding to the industry. FT Partners Research announced insurtech’s quarterly financing volume for Q3 2018 totaled $1.2 billion, which is up from $749 Million in Q2 2018. The excitement increasingly surrounding insurtech indicates that 2019 promises to be an even more meaningful and game-changing time for the insurtech space. Here are three insurtech trends you should keep an eye out for in 2019 and beyond: Sophisticated Analytics Any successful insurtech startup is not only passionate about transforming the current insurance model to be more cost-effective and automated but is invested in exploring the role that data analytics plays at the core of this process. Intelligent and productive data aggregation, integration and analysis are crucial in achieving this. When it comes to data analytics, the insurance industry’s antiquated business model has much room for improvement. Insurtech is modernizing insurance as we know it by implementing advanced big data analytics to optimize insurance products and services. And investors are taking notice. Significant investments are being made in data analytics and modeling techniques to improve nearly every part of the business. By embracing data analytics, your business can gain a competitive advantage by finding “new revenue opportunities, enhancing customer service, delivering more effective marketing and improving operational efficiency.” Over time, this rise in digital innovation is sure to bring significant opportunities for a more efficient, competitive and sustainable progress for insurtech as a whole. See also: 10 Insurtech Trends at the Crossroads   Transparency The vast and complex insurance industry has long awaited simplification. Insurers’ underwriting models have historically been a black box for consumers. Easy comparisons of complex data have been reserved for the experts. Transparency is critical to earning the trust of customers, especially in this digital age. People are now accustomed to online shopping, and they want procuring insurance plans to be less complicated -- similar to shopping for and purchasing other high-ticket items such as homes and financial products. Consumers desire that their pricing and product information not only be transparent but comparable as “apples to apples” so they can make smarter choices. Users can access online marketplaces to compare prices and benefits of different plans side-by-side. Partnerships between carriers and innovators There is a deepening need for laser-focused investments and partnerships between carriers and innovators as insurtech has now matured into an everyday business. Insurance executive and insurtech dealmaker Stephen Goldstein argues that “the team is what is ultimately going to make an insurtech initiative a success,” meaning that incumbents and insurance leaders executing partnerships with insurtech companies are part of the recipe that is going to provide a positive ROI and make insurtech as an industry thrive. While 2018 was a year of exploring and experimentation for insurtech, 2019 will be the year of engaging and deepening those relationships. At the start of 2018, insurance professionals predicted that the number of partnerships and collaborations between carriers and innovators would only gather momentum over the next year. And in June 2018, the Digital Insurer reported that partnerships remained a priority where insurtech was concerned. Insurtech companies are actively enabling new technologies that are used to provide increased efficiency and the ability to execute new tasks and analyses. These technologies are changing the industry on a fundamental level, all the while causing more incumbents to adopt these capabilities through investments or partnerships to compete effectively. The possibilities alone suggest that there will be expected growth in partnerships throughout the end of 2018 and well into 2019. See also: Insurtech: Revolution, Evolution or Hype?   Conclusion 2018 proved to be a massive year for insurtech, with a dramatic increase in funding from Q2 2018 to Q3 2018. There has been demand for skillfully acquired and implemented analytics, transparent experiences for consumers and mutually beneficial partnerships. All three trends are being successfully observed in 2018 and are believed to gather more momentum to lead us into 2019 and later.

The government shutdown is a chance for insurers to inform the public without inciting the American people: to address people’s concerns about, say, their ability to buy health insurance from a site run by the government but governed by the market. This chance is temporary, which means now is not the time for insurers to be silent. Now is not the time to say or do nothing, while citizens worry about the state of their own unions, never mind the president’s State of the Union address, because of their fears about the quality of their health insurance or the stability of their retirement insurance. Now is the time for insurers to show they are people not by virtue of the legal definition of personhood but by the virtues that define a just and humane people. These virtues include helping the public by educating the people without selling them a thing, because people will buy insurance—if they need insurance—so long as they have reason to trust insurers. That trust is the realization of a message: a message that grows with repetition, based on marketing and branding for insurers. It is a message I will continue to repeat, until insurers get the point, until the point is as clear to them as it is to us; that insurers are like a public trust, in terms of how they look as well as the look and feel of the very papers they print for term (and all kinds of) insurance; that insurers have commercial longevity and contractual legitimacy; that insurers have assets beyond the physical, which they can deepen or deplete with a single action. These intangible assets are a matter of perception. If, for example, people perceive insurers to be too big to fail, and if that perception persists, insurers will still exist—they may very well thrive—but they will have failed to safeguard irreplaceable assets like support from the public and the respect of the people. See also: The Opportunity of a Lifetime   Now is the time, then, for insurers to fill the void caused by the government shutdown. Now is the time for insurers to establish goodwill and earn the trust of the American people. By speaking to the insured and the uninsured, by assuring the people of their desire to serve the public interest rather than the interests of private enterprise, insurers can deliver a message that we will long remember. Crafting that message starts now. Honoring that message must never stop, because honesty has no expiration date, integrity has no sell-by date and decency has no end date. The end that insurers should seek is the one they have an opportunity to achieve: popular acceptance. They have a role to play and a statement to articulate. Let us hope that they find their voice, that they give voice to what matters most. Let us hope that we listen to that voice. I wait for the sound of that voice.

Who will win: carriers or startups? It’s a question that has dominated conference panels, opinion pieces and many of the conversations I’ve had with insurance industry friends and colleagues throughout 2018. On the surface, this question feels appropriate. For many consumer-facing insurtech startups, their valuation is rooted in the promise of capturing market share from large carriers. While this has led to a major boom in the number of direct-to-consumer (DTC) insurtechs, in reality, 2018 hasn’t yielded any new startups that are able to make a significant dent in the collective portfolios of the large insurers (Lemonade aside). As many carriers are awaiting the fruits of their multiyear organizational transformation programs, the lack of inroads may prompt a sigh of relief. If the trends we have seen this year continue, perhaps there will be enough time for the product innovation to spring from within the old guard, keeping the industry pecking order intact. Not so fast. Reframing the Debate Before breathing their sigh of relief, carriers might start asking themselves another question: If not carriers, then whom? As far as innovation goes, we continue to see resistance across the large carriers to properly invest in a “test and learn” approach for their internal product development teams. At the end of the day, standing up a new product that would generate only $10 million in additional annual premiums just doesn’t get the runway it would for a startup. Instead, we’re seeing the rise of venture groups, innovation labs and incubators (Metlife Techstars, NYLV, SOMPO Digital Labs, etc.) that are to innovate, then potentially bringing the work in-house. Adrian Jones, who leads investment and reinsurance terms to insurtech startups for SCOR, recently wrote about changing market conditions for reinsurers and their increased exposure to getting “disrupted.” Jones outlines how simpler and leaner startups have eaten away at the markets with the highest profit margins for reinsurers. This has the potential to become one of the most significant factors affecting the consumer space in 2019. Given their new financial exposure, reinsurers will be highly motivated (in a way that carriers currently are not) to adapt and discover new ways to increase their returns. This very well could be the fuel needed to truly ignite the customer experience (CX) advancements the industry has been promising. For a reinsurer, $10 million in annual premium from a startup is not only $10 million. It’s a path to diversify their risk portfolio and, more importantly, to develop an acquisition channel that can yield much higher margins than the current carrier model. See also: Insurtech: Revolution, Evolution or Hype? In the larger conversation, reinsurers are generally seen as key observers in the carrier vs. insurtech showdown, not major players. But given their advanced underwriting capabilities, global footprints, lack of direct customer acquisition workforce and substantially less technical debt compared with their carrier siblings, with the right set of partners reinsurers can provide the scale and expertise the new players typically lack. This enables startups to focus on their differentiators: seamless customer experiences and innovative acquisition strategies. You may or may not be surprised to learn that this trend isn’t new. Many insurtech “darlings” are already taking advantage of this partnership model. Jetty is backed by Munich Re, Root Insurance by Odyssey Re and Ladder Life by Hannover Re. Noteworthy is what these startups can offer consumers outside of the coverage itself. Jetty offers financial resiliency for renters. Root has an IoT-powered auto insurance underwriting model based on mobile data. Ladder Life has significantly trimmed their underwriting questions for term life. Yes, there may be flaws in each value-add example, but that is beside the point. These startups are able to experiment with modified underwriting parameters, and, once they fine tune these products for the masses, the major carriers will pay heavily either by losing market share or by acquiring the startups. In a recent conversation with an executive from one of the largest P&C insurance companies, the executive told me that he sees reinsurers like Munich Re as very strategic partners, yet an ever-growing risk because, in his words, Munich Re could “start cutting us out.” The threat is real. What Should Carriers Do? For starters, carriers need to identify how to enable a top-notch customer experience (CX). In 2018, there has been plenty of talk about improving customer journeys, but few incumbents have released anything remarkable. The time is now for mid-sized insurers and MGAs. There is no reason not to take a cue from the reinsurer playbook. Whether it’s backing an insurtech, creating a direct-to-consumer channel (like our friends at ProSight) or forming platform integration partnerships (as AP Intego is doing), there are opportunities to jump into the fray because the space is perfectly fragmented. Identifying a similarly positioned insurtech is a promising strategy for carriers with a wealth of data in niche markets. But working with an insurtech or building a DTC offering requires underwriting customization and collaboration. If that’s not something a carrier excels at, determining how to leverage existing technology or marketing capabilities is critical. For those with a technology strength, parametric insurance, such as Jumpstart and Floodmapp, may be a better fit. It’s an emerging market I especially have an affinity for. See also: How to Partner With Insurtechs   Regardless, it’s important that carriers develop a set of hypotheses on what will make them successful in whatever their new venture may be. At Cake & Arrow, we heavily rely on design thinking and qualitative research as a low-cost approach to validate strategies. Overall, being nimble, cross-functional and exceptionally tactical will be critical to success, which is why I consider large-scale organizational transformations not applicable here. If all else fails, get the pocketbooks ready, because we will see no shortage of bidding wars in the coming year. This article originally ran at Cake & Arrow. 

Delivering exceptional customer experience requires near-real-time service when a customer has a new claim. In a market that has the highest customer acquisition costs, it’s paramount for property and casualty insurers to keep the customers they have by making their experience as positive as possible. One key is to reduce human error in claims handling, because a whopping 91% of dissatisfied customers decide to move on instead of making their complaints known. It is also important to remember that, while speed is great, the response has to be right for that type of claim. AI can reduce response times while increasing accuracy. Insurance companies must focus on reducing customer effort as a key performance indicator (KPI). Forrester reports that 71% of consumers say that good service hinges on a company’s aptness to value their time. The good news? Field service management solutions leveraging artificial intelligence (AI) help property and casualty insurers lay the foundation for a positive customer experience from the first interaction. Adjuster Self Optimization vs. AI-Driven Optimization Field claims adjusting is full of in-day surprises that reduce efficiency and lead to service-level agreement (SLA) violations and poor customer experiences. To minimize the number and impact of disruptions, it’s important to have an accurate schedule, with each claim assigned to the appropriate adjuster. Predictive field service, powered by machine learning and data science, is key in making this happen. See also: And the Winner Is…Artificial Intelligence!   Companies are increasingly using machine learning to expose how and where to improve operational efficiency. This automated insight, combined with the wealth of precise data captured throughout the life cycle of every claim, delivers the feedback needed to improve decisions. By leveraging these capabilities, organizations can break out of the limitations forced on them by static systems and institute a culture of continuous improvement. Static, legacy solutions and approaches limit a providers’ ability to reach this level of precision and customer service. Improve Customer Loyalty The personal lines market is becoming increasingly commoditized, and it’s common for customers to choose a provider solely on price. To differentiate from competitors, insurance companies can provide a superior customer experience, especially in the face of a crisis. It’s no surprise that 84% of customers become frustrated when their insurance provider does not have or provide information they deem essential. By using AI, companies can ensure the right field adjuster is at the right place at the right time with the relevant information to address the customer need efficiently. Seventy percent of consumers expect their provider to have a mobile option for providing alerts, status updates and scheduling changes as well as a feedback loop on the quality of service provided. As a result, leading insurers are offering policyholders real-time engagement with Uber-like ETA visibility that eliminates a large percentage of calls into claim centers inquiring when an adjuster will arrive. Adjusters can then be scheduled in the most optimal way, based on actual availability, predicted traffic and other critical factors. Handle Complexity in Job Times and Locations Predictive job duration estimates the time it will take to complete a job based on all relevant task and adjuster properties. It continuously learns and improves from historical data. This means, for example, that, as an adjuster gets more efficient adjusting a certain type of claim, the expected job duration decreases. Let’s consider auto claims. To succeed, insurers must interactively expose appointments for appropriate drive-in or direct repair program (DRP) locations. Full awareness of customer’s location, employee and third-party availability, capabilities, cost and travel times quickly presents precise and appropriate options for a customer to select from. Field service solutions collect reams of detailed data at every stage of engagement and crunch the data through machine learning algorithms to enable improved performance. This increased precision and speed increases operational awareness, while pointing to where better outcomes can be achieved. Effective Use of Resources It’s easy to focus on individual adjuster performance when measuring job duration—but it’s not the sole purpose. It’s also important to go beyond looking at job duration at an individual level and maintain a holistic view into operations. With full visibility into performance across regions, claim types, customers and field resources, you can uncover which areas are strong and which areas need improvement. The visibility allows you to set standards, define goals and objectives and work toward improvements to the claim organization as a whole. This is an irreplaceable benefit of incorporating AI and one of the best ways companies can use historical data, in combination with machine learning, to help optimize field resources for the benefit of your customer’s experience. See also: Strategist’s Guide to Artificial Intelligence Managing appraisals, inspections, claims and catastrophic events to the customer’s satisfaction is table stakes, and must occur while balancing business needs. The inherent complexities of addressing these planned and unplanned activities— whether at the asset location, in a field office or at the site of a claim or catastrophe—require a high level of precision to balance the opposing objectives of providing exceptional service and profitability. The key performance indicator (KPI) improvements are visible through an increase in number of claims handled per adjuster, reduction in travel expense, reduction in calls to the claims center and fewer re-dos and missed claim appointments. By taking advantage of the latest field service management solutions, your organization can satisfy expectations efficiently, increasing your competitive advantage -- and your profits. It’s time to consider making a change for your field claims professionals in an effort to enhance customer retention and increase profitability. For success, we will need to reduce human error by leveraging applications powered by AI that make smart recommendations for your customers and your business.

CES, which once centered on consumers and electronics (per its name), now extends far beyond consumers and focuses much more on software and data than on the electronics and hardware. To be sure, it still all comes together in physical devices, and elements like engineering and design are vitally important. But more and more, everything comes back to the data. In fact, at the opening of CES2019, it was declared that we are in the Age of Data. It is no secret that we are amassing data at practically unbelievable rates from a rapidly expanding array of sources. But what is truly astonishing is what IBM CEO Ginni Rometty termed “deep data” in her keynote – the 99% of the data that the world emits that is not even collected or analyzed today. It is exceedingly important to explore all the issues and opportunities related to data. The top areas – all with big implications for insurance – are these six: Capture: Technologies to capture all types of data are advancing rapidly. This includes images, video, audio, text, 3D image capture and motion capture for virtual reality. Increasingly, real- time biometric data and environmental sensing data are being captured, as well. Transmission: 5G is even more prevalent at CES2019 than it was in 2018. As a so-called “ingredient” technology for the connected world, it will have a vital role due to the data transmission capacity needed, speed and ultra-low latency. Security: More digital data means more potential exposures. Some data will naturally be in the public domain. But other data will be owned by individuals, businesses or governments that will seek to protect that data from misuse. Privacy: The ownership of data has become a top-of-mind societal issue. As even more sensitive data gets collected through more devices, the question of data rights becomes complicated. Some companies at CES were promoting “privacy-centric” solutions, which may signal a positive trend. AI/analytics: “AI is Everywhere” was actually the title of one of the sessions at CES2019. And AI was everywhere on the show floors, as well. Granted, AI represents a large family of technologies ranging from relatively straightforward (robotic process automation) to very complex (machine learning/cognitive computing). Interaction: New types of interaction abound. Haptic controls continue to expand. Augmented reality in many forms is advancing. Foldable display screens offer new options. Above all, voice interaction is starting to be available all around us. Of course, what is most important are all the new products, services and insights that will be fueled by data. The vastness of CES2019, with 4,500 exhibitors and tens of thousands of products, is a testament to that. In addition, there are many initiatives in the works that will meet new customer needs and help to solve some of the world’s most important problems. What this means for insurance is that there will be many new data sources and analytics tools available for risk assessment and risk management, increasing exposure to cyber risk in the world, and new ways to communicate with customers and partners. Just as important will be the ways that data will fuel transformation in every customer segment covered by the insurance industry.

The industry used to be a tech laggard. No more. Though there’s still much work to be done, most insurers are now better-positioned to capitalize on their investment in technology. Here are eight key tech trends that continue to shape the industry:

1. Greater stress on cybersecurity

An Ernst & Young security survey revealed that 59% of respondents had encountered a significant cybersecurity incident in their organization. Because insurers store so much sensitive personal and business data, they’re a prime target. Cybersecurity strategy should be focused on proactive measures rather than reactive strategies. Cyber-crooks are relentless and inventive. Security has to be a top priority for insurers of all types and sizes. 2. Filling a gap in employee benefits automation While group proposals and policy administration are both well-automated, between the two comes group onboarding, which has not been automated. But solutions are being developed and implemented. Onboarding solutions will be built on automated data capture and importing. Data integrity is crucial. Employee information must be correct and complete when entered. The solution must also offer robust data security and comply with privacy regulations to securely gather and store employee information. Flexibility is also mandatory because integrating onboarding closely with both proposal and policy systems is essential to efficient workflow. See also: Connected Insurance Comes of Age in 2019   3. Cloud computing Cloud computing will continue to be adopted widely by insurers and insurtech providers as it is cost-effective, speedy and flexible. Cloud providers will continue to improve their technology to deliver sophisticated capabilities. The security risks associated with housing data off-site via a third-party, however, can present challenges. While cloud storage companies are expected to protect data, ultimately insurance IT departments are responsible for their cybersecurity. That requires constant vigilance, hiring skilled people and spending enough money. 4. Internet of things and big data IoT continues to become more useful. Insurers can use real-time data to meet and enhance business objectives. This can boost efficiency and revenue and promote better customer service. As the Big Data revolution continues to expand, IoT adoption in the insurance industry is expected to grow. It will enable collection of data in real time, resulting in lower premiums for insureds willing to participate. There will be continuing adoption of connected devices for loss prevention and pricing in property-casualty, life and health insurance. 5. Analytics Analytics can transform big data into actionable insights. As analytics and data science advance, insurers can better extract value from the huge amounts of data that now exist. Insurers can then leverage sophisticated information analytics to gain a competitive edge in the market. For insurtech providers, there is a huge opportunity in the coming years to develop advanced analytical technologies that can make sense of unstructured data such as real-time video, social posts and live blogging. 6. Artificial intelligence In 2018, more insurance and insurtech companies found effective ways to integrate AI. In 2019, companies will complement a significant part of their structured data decision-making with AI data analysis and decision-making. Robotic process automation will begin to gain a wider application facilitating automation of repetitive processes across the entire IT infrastructure. Robotics and AI can offer improved productivity, shortened cycle times and better compliance and accuracy. See also: How Insurtech Helps Build Trust   7. Augmented reality Augmented reality is starting to have a presence in insurance. An article by software development company Jasoren identifies several AR use cases, such as warning of risks, explaining insurance plans, estimating damages and increasing brand awareness. Alternate forms of AR such as virtual reality, mixed reality and extended reality are shaping how AR is being used. 8. Blockchain The technology behind cryptocurrencies will be adopted for more promising applications. They include “smart” contracts and secure, decentralized data collection, processing and dissemination. While I do not expect to see a full-scale implementation of blockchain technology any time soon, many insurers and insurtech companies are launching projects and initiatives to test its applicability and effectiveness for insurance.

For those of us who are long-suffering customers of  PG&E Corp., the giant northern California utility's announcement that it will file for bankruptcy protection could be seen as same old, same old. After all, this is PG&E's second trip to bankruptcy court just since the dawn of the new millennium—the first, in 2001, followed a botched attempt to deregulate the electricity market. In 2010, negligence by PG&E led to the explosion of a natural gas pipeline in a San Francisco suburb that killed eight people and cost the utility $2.5 billion in fines and legal settlements. Over the past two years, we all witnessed the record wildfires and read about PG&E's likely role, which the company says has led to about $30 billion in liabilities—that it will now try to duck in bankruptcy proceedings.

No one is going to be writing a business-school case study about good management at PG&E any time soon.

But there are two questions that transcend PG&E's managerial dysfunction and that I'd like to hit here, so we can avoid repeating the problems.

The first is: Why couldn't PG&E see the wildfires coming and spend more effort on prevention? The second is: Where were the insurers?

Climate change isn't exactly a secret. Nor is it hard to see the dangers of running high-voltage electric lines over increasingly dry forests and grasslands—with the exception of one very wet winter, California has suffered a dry spell/drought for more than a decade. So, PG&E should have been inspecting lines, clearing trees and brush away from danger areas, etc. The insurers should have been right there, too, insisting on seeing the results of inspections and looking for means of prevention, rather than just pricing the risk and then writing big checks.

Based on some exposure to how utilities operate from a project at the Department of Energy in 2010, I'm not overly surprised by the lack of thinking ahead on the part of PG&E. Do you know how utilities learn about power outages? Phone calls. If they get a bunch of complaints from the same area, they know a line is down and send a crew out to drive up and down streets to try to spot it. The joke at the DOE was that if Alexander Graham Bell came back to life and saw today's phones, he'd be amazed, but if Thomas Edison could see today's electric grid, he'd say, "Yeah, that's about how I left it." 

The lack of forward thinking by insurers disappoints me even more than risk management sloth on the part of PG&E, because we've all been talking for years now about how the industry can become more of an adviser and help clients prevent problems, rather than just price risk and indemnify clients afterward. 

I hope PG&E serves as a wake-up call, not just on its specific climate change and management issues, but on the broad need to face up to emerging risks and to do the hard work of prevention. One disaster like the fire that wiped out Paradise—killing at least 86, displacing tens of thousands and burning down tens of thousands of buildings—is one too many.

Have a great week. 

Paul Carroll
Editor-in-Chief