The sharing economy is a system in which individuals may rent their possessions or time to other individuals, often through an app or website. Although the term first appeared in the mid-2000s, New Economy Advisor April Rinne says that it didn’t become a household word until recently. Still, the sharing economy has caused radical change in a very short time. While real-estate booking apps like Airbnb and ride-hailing apps like Uber dominate our current understanding of the sharing economy, the options for such sharing aren’t limited to houses and cars, Cointelegraph writer Connor Blenkinsop explains. “You can share someone’s garden if you live in a bustling city, strike up job shares, team up with other travelers to share a tour, swap books and even take someone’s dog out for the day.” Central to discussions of the sharing economy is a sense of disruption, research fellow Chris J. Martin says in a study published by Ecological Economics. This disruption may be framed in positive, negative or neutral terms, but the change itself and its challenges remain a constant topic. The explosion of the sharing economy has brought a new set of challenges for insurance companies as well. Here, we look at some of the biggest obstacles in the industry — and how property and casualty insurers can meet them. The Sharing Economy: Challenges for Coverage Traditional insurance models offer a poor fit for the sharing economy, Wells Media’s Andrew G. Simpson says. “Also new multi-party relationships among platforms, providers and consumers draw further questions around who is ultimately responsible for managing and mitigating risk.” For example, when an Uber or Lyft driver causes a car accident that injures a passenger, who covers the passenger’s medical costs? Who pays for the damage to the vehicle? What if the other car’s driver had insurance? What if the driver didn’t have insurance? See also: How Sharing Economy Is Reshaping Insurance While some sharing economy companies provide coverage for those renting out their homes, vehicles or possessions, such support is usually limited. So when the accident, damage or loss isn’t sufficiently covered by the company, Capgemini Financial Services' Ian Campos says that substantial risk may fall on the individual. For example, Airbnb offers coverage of up to $1 million to homeowners who share their properties, WeGoLook CEO Robin Smith points out. But this coverage applies only to the actual scheduled hours of the visitors’ stay — not to shoulder times in which visitors might arrive early or stay late. Also, $1 million may be insufficient coverage for certain homes or losses, such as total destruction by fire. Finally, the sharing economy is creating challenges to established P&C insurers themselves. Peer to peer (P2P) insurance is a sharing economy phenomenon that allows individuals to skip established P&C companies by pooling their own funds, finance expert at Money Under 30 Sarah Pritzker explains. This model excludes the value-added services an older, more established insurance company can provide — pushing new insurers to communicate that value more effectively to customers. Rising to the Occasion of a Sharing Economy It’s tempting to think of the sharing economy as simply a new model of ownership that requires only a slight change to existing insurance products. Some commentators, however, warn that this view misses the fundamental nature of the disruption the sharing economy represents. “Taken together, the growth of [sharing economy] services suggests that we are entering an era in which consumers will value access over ownership and experiences over assets,” Financial Times reporter Brooke Masters says. Many companies have already made the shift: A focus on intellectual property over tangible real estate or equipment has supported the growth of organizations like Apple and Amazon, for instance. This fundamental shift in ownership and access is problematic for current models of property and casualty insurance. Some types of insurance may not apply to businesses in the sharing economy, and others may be prohibited altogether. Jose Heftye and Robert Bauer, Marsh managing director and AIG managing director, respectively, explain this struggle in a 2018 report. “Where the distinction between personal and commercial use of assets in the sharing economy is blurred, regulators view personal lines of insurance very differently from commercial.” By mixing personal and commercial use, sharing economy companies can cause coverage gaps for participants. For instance, an Uber driver’s personal auto insurance may not cover times the driver uses a vehicle to make money through Uber, but the cost of a commercial policy may be out of reach for someone who just wants to make extra pocket money by driving for Uber on the weekends. Trust is also a significant issue in the sharing economy, both for customers who share their houses or cars and those who use them, Lyle Adriano writes in Insurance Business. For insurance companies, providing flexible products that explain the coverage gaps they address is a key factor in building trust among users. To foster that trust, participants in the sharing economy are putting pressure on insurance companies to provide adequate coverage or to explain why such coverage is unavailable. From adopting new brokers to creating more out-of-the-box services, researcher and writer Esther Val highlights that the sharing economy is prompting insurance providers to offer more flexible insurance solutions. They’re also being pushed to do so by insurtech startups, especially those that are already seeking to provide these services, reinsurance treaty analyst Alex La Palme explains. For instance, Slice Labs is a new insurance provider that provides on-demand policies specifically for home and ride sharing. This helps fill in the gaps for nuanced situations — like damaged furniture or utility issues — that aren’t usually covered, Slice Labs CEO Tim Attia suggests. To compete with these startups and meet customer demand, established insurance companies need to find new ways to cover risks they have not covered—or perhaps have not even seen in the past. One way is to partner with sharing economy platforms, Deloitte insurance consulting partner Nigel Walsh recommends. Another idea is to scrutinize the ways that the sharing economy has changed people’s behavior, understanding and approach to risk regarding insurance. Addressing Customer Needs in the Sharing Economy One of the biggest hurdles to participation in the sharing economy is risk. A study by Lloyd’s of London found that 58% of U.S. and U.K. consumers believe that the risks of sharing their possessions outweigh the benefits. Even for those who do participate, risk is a concern — particularly the risk of events and situations that can’t be anticipated. P&C insurers can help enable participation and growth by clarifying their role in coverage in the sharing economy, Lloyd’s Chief Commercial Officer Vincent Vandendael offers. “Based on our findings, instilling consumers with confidence by clearly defining and protecting against risk can help remove barriers to engagement in the sharing economy.” See also: How Sharing Economy Can Fuel Growth   Ryan Ward, an actuarial analyst at American Modern, agrees, noting that educating insureds about coverage gaps is an essential first step toward providing adequate coverage and mitigating risk. Risk is a concern for insurance companies, as well. Denny Jacob, staff reporter for PropertyCasualty360, writes that the sharing economy requires an entirely different approach to risk understanding and management. In particular, it necessitates that providers gain a deeper understanding of behavioral economics—especially how consumer preferences and attitudes change in the face of risk. Participation in the sharing economy can change a customer’s risk profile. For instance, a customer who drives for Uber is out on the road more often, attorney Jeremy Heinnickel says. Helso explains that some users may be less careful when interacting with shared vehicles, houses or personal property that isn’t their own, which in turn shifts the balance of risk. “It will never be possible to escape the fact that we just don’t treat other people’s belongings with the same care as our own,” Disruption Business writer Sarah Finch points out. “Sharing has therefore opened up the insurance business to a whole new kind of market.” One golden lining? In an era where fewer people are owning cars, houses or large quantities of consumer goods, the sharing economy creates an entire new class of people who need property and casualty coverage. “The gig economy has created the ability for more people to pick up ad hoc, part-time jobs,” Insurance Technologies Corp. CEO Laird Rixford says. “The amount of people that insurers, agents and brokers can now sell additional coverage to has exploded.”

The U.K. spends £97 billion treating diseases but just £8 billion preventing them. This imbalance is set to change according to government proposals. Under a social prevention model, health advice would be tailored to an individual based on several criteria, including personal data, lifestyle and demographics. There are parallels to insurance. The Association of British Insurers has reported that U.K. life insurers paid out £5 billion in income protection, critical illness and life assurance claims in 2017. These claims payments represent amounts paid when people's health has failed. While not every diagnosis or early death can be avoided, providers could offer more to help customers mitigate risk and stay healthy. This predicament is fueling interest in matching insurance programs to fitness data. There are multiple digital-based solutions available to help with engagement post-underwriting -- a white space for insurers to move into. Gen Re is active in researching technology of this type, which has led us to collaborations with a network of established companies and startups in an effort to create a prevention model. One such company is PAI Health. It offers a proprietary, science-based algorithm that uses cardiorespiratory fitness (CRF) to provide personalized guidance on how much exercise is needed for optimal health. See also: New Health Metrics in Life Insurance   In a 2018 article, Mandsager et al. confirmed CRF is a modifiable risk indicator of long-term mortality that is quite independent of age, sex and comorbidities. CRF is also associated with cardiovascular and other health benefits, including reductions in coronary artery disease, hypertension, diabetes, stroke and even cancer. CRF is inversely associated with long-term mortality with no observed upper limit of benefit. Extremely high aerobic fitness was associated with the greatest survival. That said, taking the right dose of physical exercise is very important. Too much exercise means a risk of adverse outcomes leading to the idea of a U-shaped dose-response association between exercise and cardiovascular events. PAI Health works by linking the individual to the dose. This personalized approach is critically important to ensure an insurance program is built around physical activity that appeals to the broadest range of people, and not just those who live in Lycra. In other words, an insurance program that provides benefit to everyman based on achievable yet therapeutic levels of everyday physical activity. It can be challenging to untangle large amounts of data and turn it into meaningful health insights. It’s important that there is evidence to validate the algorithms and "health scores" promoted in apps. All exercise is beneficial to health, but it's well-known that steps lack scientific reasoning. A daily target of 10,000 steps is daunting, even unrealistic, and lacks any calibration to the individual and to physical capability. PAI Health avoids these problems. The Physical Activity Intelligence (PAI) algorithm was invented by Ulrik Wisløff, head of the Cardiac Exercise Research Group and professor at the Norwegian University of Science and Technology. External evidence supports the conclusion that meeting a personal PAI target cuts cardiovascular risk, significantly reduces other lifestyle-related diseases in men and women of all ages and increases life expectancy. This has been shown to also be true in patients with established cardiovascular disease. Preventative medicine is about ensuring people take greater responsibility for their health and well-being. Most insurers could do more to engage policyholders in this way. Research suggests consumers increasingly value experiences above physical things. Can a new breed of protection products offer people more of an experience? A policy that actively involves them in protecting their own health could offer that. See also: More Opportunities for Reinsurers in Health   For any national health service to link care to personal data requires the highest standards of data privacy, and insurance is no different. While a prevention approach to healthcare is unlikely to be without controversy, the major barrier to a social prevention model is diverting funds away from treatment. For insurers, the problems may be less knotty. Elegant solutions like PAI Health are ready to be utilized.

This is the third part of a three-part series. You can finds part 1 here and part 2 here.

Successful industrialization of driverless cars will depend on getting over many significant hurdles. Failure only requires getting tripped up by a few of them. In part two of this series, I outlined seven key hurdles to industrial-size scaling of driverless cars. Overcoming hurdles to scaling is not enough, however.

In this concluding article, I explore the challenges to broader market acceptance. I outline eight additional hurdles related to trust, market viability and managing secondary effects. All must be overcome for driverless cars to truly revolutionize transportation. Trust. It is not enough for developers and manufacturers to believe their AVs are good enough for widespread use, they must convince others, too. To do so, they must overcome three huge hurdles: 8. Independent verification and validation. To date, developers have kept their development processes rather opaque. They’ve shared little detail about their requirements, specifications, design or testing. An independent, systematic process is needed to verify and validate developers’ claims of their AVs' efficacy. Many are likely to demand this, including policy makers, regulators, insurers, investors, the public at large and, of course, customers. The best developers should embrace this—it would limit liability and distinguish them from laggards and lower-quality copycats. 9. Standardization and regulation. Industry standards and government regulation cover almost every aspect of cars today. Industrialization of driverless cars will require significant doses of both, too. Standards, especially those enforced by government regulation, ensure reliability, compatibility, interoperability and economies of scale. They also increase public safety and reduce provider liability. 10. Public acceptance. Most new products take hold by attracting early adopters. The lessons and resources from that initial success help developers “cross the chasm” to mainstream success. The industrialization of AVs will depend on much earlier and broader public acceptance. AVs affect not only the early-adopting customers inside them, but also every non-customer on and near the roads those AVs travel. Without widespread acceptance—including by those who would not choose to ride in the AVs—industrialization is not likely to be allowed. See also: Where Are Driverless Cars Taking Industry?   Market Viability. The next three hurdles deal with whether AV-enabled business models work in the short term and the long term, both in beating the competition and other opponents. 11. Business viability. Analyses of AV TaaS business models are generally optimistic about the possibility of providing service for much less than the cost of human-driven services or personal car ownership. Current cost-per-mile estimates are nowhere near long-term targets, however. Most players are also underestimating the cost to scale. It remains to be seen whether rosy market plans will survive contact with the marketplace. 12. Stakeholder resistance. As the old saying goes, one person’s savings is another’s lost revenue. The industrialization of driverless cars will require overcoming the resistance of a large host of potential losers, including regulators, car dealers, insurers, personal injury lawyers, oil companies, truck drivers and transit unions. This will not be easy, as the potential losers include some of the most influential policy shapers at federal, state and local levels. 13. Private ownership. AV TaaS services are only a waypoint on the path to transformation of the private ownership market. If AVs are to revolutionize transportation, they will have to appeal to consumers who have long preferred to own their own cars. Privately owned cars account for the vast majority of all cars and all miles driven. Secondary Effects. Technology always bites back. The industrialization of AVs could induce huge negative secondary effects. Most will unfold slowly, but two consequences are already concerning and must be addressed as part of the industrialization process. 14. Congestion. Faster, cheaper and better transportation will deliver greater economic opportunity and quality of life—especially for those who might otherwise not have access to it, like the poor, handicapped and elderly. But, it might also cause a surge in congestion by driving up the number of vehicles and vehicle miles traveled. This happened with ride-hail services, including Uber and Lyft. According to a recent study by the San Francisco County Transportation Authority, for example, congestion in the densest parts of San Francisco increased by as much as 73% between 2010 and 2016. The ride-hail services collectively accounted for more than half of the increase in daily vehicle hours of delay. 15. Job loss. Some argue that the history of technology, including transportation technology, shows that new services will create more jobs, not less. Few argue, however, that the new jobs go to those who lost the old ones. There’s no getting around the fact that every AV Uber means one less human Uber driver—even if other jobs are created for engineers, maintainers, dispatchers, customer service reps, etc. The same holds true for AV shuttles, buses, trucks and so on. Early AV TaaS providers will operate under an intense spotlight on this issue. Providers will have to anticipate and ameliorate potential public and regulator backlash on job loss. * * * There’s an old saying in Silicon Valley that one should never mistake a clear view for a short distance. The revolutionary potential of AVs is clear. Yet, we are still far from the widespread adoption needed to realize their benefits. Don’t mistake a long distance for an unattainable goal, though. As a close observer, I am enthusiastic (and pleasantly surprised) by the progress that has been made on AV technology. Leading developers like Waymo, GM Cruise, nuTonomy and their diaspora have raced to build AVs and progressed faster than many, just a few years ago, thought possible. See also: Driverless Cars and the ’90-90 Rule’   Industrialization is a marathon, not a sprint. It depends on overcoming many hurdles, including the 15 I’ve laid out. The challenges of doing so are great—likely greater than many current players (and their investors) perceive and are positioned to address. New strategies are needed. A shakeout is likely. That’s how innovation and market disruption work. That is why most contenders fail and why outsized rewards go to those who succeed. Whoever thought that a phone maker or a search engine company could be worth a trillion dollars? Is it outlandish to believe, as I still do, that driverless cars would be worth multiple trillions?

Property/casualty claims is destined to transform more than any other area of the insurance business over the next decade.

Many may see that as a provocative statement, especially with all the attention on distribution and underwriting. After all, there are so many new entrants, insurtech startups and new technology solutions aimed at disrupting or transforming distribution and underwriting that it may seem difficult to justify the statement that claims will transform even more.

To be sure, distribution, underwriting and other areas of insurance are undergoing transformation and may look quite different a decade from now, with significant variations by line, of course. But, keep in mind that claims is already a complex and sophisticated part of the business, with high levels of expertise, extensive partner networks and major usage of technology. In addition, claims touch points are even more critical in today’s environment of heightened customer expectations and insurer focus on improving the customer experience.

See also: New Power Shift in P&C Insurance  

But back to the initial provocative statement – let me provide some rationale for why I believe claims will be very, very different a decade down the road. No one can predict exactly what claims will look like in 10 years, but here is a view on what is likely to change significantly – in some cases radically:

• New Products: Insurers already have new on-demand, episodic, and parametric-type products in the market. The advance of technology continues to create new risks that insurers are covering (such as cyber risk). Managing claims for these products is often different. Many of the new small-premium, high-volume types of products will require fully automated claims processing, including those triggered by smart contracts.
• Liability: Manufacturers of autonomous vehicles, IoT devices for property and other connected-world devices may choose to take on the liability of their products. In this case, the claims that do occur may be handled by the manufacturer, TPA partners or insurers that may be underwriting the risk. In addition, there are many uncertainties about which parties will be liable in complex new connected-world ecosystems.
• Prevention and Mitigation: The real-time, connected world affords insurers the opportunity to assist customers with risk management. This means that there may be a fusion of loss control engineering and claims as the focus shifts from post-incident indemnity to prevention and mitigation.
• Repair/Replace Changes: The physical objects that insurers insure are becoming more automated, and many new types of devices are appearing in homes, farms, vehicles and factories. This will affect damage estimates and approaches to repairing and replacing lost, stolen or damaged items.
• Partnerships: Insurers are already quite experienced at partnering in the claims area. However, the supplier landscape is changing, and insurers must determine the best way to partner with new providers of connected devices, solutions and services.
• Technology: AI and machine learning for automated damage assessment and fraud detection; visualization and location intelligence for CAT planning and real-time deployment; mobile, self-service FNOL for more types of claims; and other technologies like these will make major inroads into the claims environment.

See also: Keys to Loyalty for P&C Customers  

These areas will all warrant attention by claims executives. The drums of change are now beating – and real change will start to be felt in the next 12 to 18 months. When all these things are considered, I believe that major transformation is in store for claims. And for many insurers, it is going to be earth-shattering.

Arkansas recently contracted with an out-of-state vendor called Catapult Health to come in to the state’s schools and “play doctor” with the teachers, asking them personal questions, taking their blood and then telling them everything that’s wrong with them. This is a classic example of a “pry, poke and prod” program. This is followed by admonishments to take more steps and eat more broccoli. The program then refers teachers into lifestyle and disease management programs “at record rates.” Sounds terrible, but the good news is that this program isn’t going to cost taxpayers anything because, as Catapult Health’s website says: Phew! At least it’s free to taxpayers because Catapult’s expenses and profits are “already in your budget” and “fees are processed through your health plan.” Except that the state of Arkansas is its own health plan. There is no “Don’t worry. Insurance will pay for it” here. The state is self-insured, meaning it picks up the tab, not some nameless insurance company. But, hey, at least this program will save money, right? The return-on-investment for the state is allegedly 3.27-to-1, as shown by the so-called “Harvard Study,” conducted by Katherine Baicker. Except that the Harvard study has been proven wrong, not just by the nonprofit, nonpartisan highly respected RAND Corporation (and I myself chimed in, as well), but by an ace researcher named Damon Jones, part of the prestigious National Bureau for Economic Research. His work showed that wellness accomplishes virtually nothing other than the expenditure of money. (Don’t worry—insurance will pay for it.) See also: Wellness Vendors Keep Dreaming   But, hey, maybe Professor Jones is wrong. After all, why should he care what Professor Baicker thinks, right? Um, because he reports to her? Yep, he’s an associate professor at the exact same school of public health where she is now dean. Just guessing here, but it would seem a subordinate would have to be pretty darn sure of his findings (and they are rock solid, and completely in agreement with all the other recent research, summarized here) to publicly humiliate his own dean. Even Baicker doesn’t defend her findings any more. She says: “It’s too early to tell.” That means she is running away from her very widely cited signature study, upon which essentially the entire wellness industry’s economic justification is based. This would be like Arthur Laffer, whose Laffer curve created supply-side economics, which has been used to justify two tax cuts, saying, “Well, maybe it’s not right. I dunno. Let’s wait and see.” But, hey, at least forced wellness improves employee health, right? Apparently not. Forcing people to get annual wellness checkups doesn’t benefit them, according to the New York Times, the New England Journal of Medicine, the Journal of the American Medical Association and Consumer Reports. (Before dismissing the credibility of those sources due to possible political bias, keep in mind that Newsmax, the Federalist and Laura Ingraham hate “pry, poke and prod” programs, too.) Forced wellness also takes teachers away from the classrooms to be pried, poked and prodded, stresses them out and hurts morale. Further, sending “record rates” of employees into lifestyle and disease management is classic hyperdiagnosis – braggadocio-fueled misunderstandings of the arithmetic of lab results, resulting in large numbers of people getting told they need coaching and care they don’t want or, in general, need. Nothing makes a wellness vendor happier than to hyperdiagnose as many employees as possible. But, hey, maybe teachers are a special case. Maybe the impact of “pry, poke and prod” programs is different for them? It sure is. The single school district for which the data has been compiled is Boise, Idaho. According to the wellness vendor’s own data, the health of the teachers got somewhat worse as a result of this pry, poke and prod program. (The vendor, an outfit called Wellsteps, also admitted that it flouted clinical guidelines and fabricated its only positive outcome. The company also previously admitted that costs went way up as a result of its program. The company later suppressed that admission. Wellness vendors are not known for their integrity.) So the health of teachers may deteriorate, creating more medical expense. but don’t worry. Insurance will pay for it. But, hey, at least the teachers like it, right? According to Catapult, employees love the program. Ask the employees, and you might get a different impression. Indeed, I was tipped off to this program by an Arkansas teacher who hates it, like most of her colleagues do — and that’s before they learn that they are actually paying for it…keep reading. Obviously, if teachers wanted to submit to a “pry, poke and prod” program, the state wouldn’t have to threaten them with massive fines – almost $1,000/year, which appears to be close to a record for any "pry, poke and prod" program anywhere — for refusing to let a private, out-of-state corporation play doctor on them at state expense. But, hey, at least the state taxpayers save money by fining the teachers who don’t want to play doctor, right? Actually, wellness makes claims costs go up, probably by more than the fines. There are lots of unneeded lab tests and other tests. For instance, the state of Connecticut admitted that, in addition to throwing away all its money on the actual wellness program, the state spent more on health care. The state comptroller who administered the program said the increased spending was “a good thing.” I guess he wasn’t worried because insurance was paying for it. See also: Ethics of Workplace Wellness Industry   But, hey, at least the teachers don’t pay for it. Actually, they do. The state’s human resources department brilliantly figured out that it could launder its wellness spending by hiring this outfit. By paying extra to Catapult (a multiple of what an effective wellness program would cost), the state is able to pick up the tab for wellness using the extra paperwork of a medical claim, as opposed to an outsized administrative expense in a separate line item. The latter would clearly need to be picked up by the taxpayers…and the state would have an incentive to control this highly visible figure. By contrast, paying for “pry, poke and prod” as a medical claim will never be noticed, like Steve McQueen and David McCallum sprinkling the dirt from the tunnel around the stalag. On the other hand, the program will increase overall medical spending by 2% to 3% (the cost of the screening plus the added hyperdiagnosis expenses). Here comes the evil genius part: At the next contract negotiation, the state can limit wage increases (or reduce benefits) by pointing out how high the health spending is. So the teachers get pried, poked and prodded, hyperdiagnosed with hidden illnesses most of them don’t have – all against their will…and then they have to pay for the privilege in reduced wages. Wow…the teachers are getting screwed. But, hey, at least they can’t sue the state, right, so taxpayers won’t have to pick up that bill, as well? Starting in January, this program will be in blatant violation of two laws, the Americans with Disabilities Act and the Genetic Information Non-Discrimination Act. Those laws disallow forced wellness checkups but allow so-called “voluntary” ones. Until recently, “voluntary” meant “do wellness or pay a big fine” like this one. But thanks to a lawsuit by AARP, the rules are changing in January so that “voluntary” must mean voluntary, like a dictionary would define the word.  (This summary has the links to all you need to know about the case.) To get these fines back, teachers will be able to sue the state, possibly even as a class action, and possibly being awarded punitive damages. Exposure to lawsuits could cost the state millions more in addition to its current expenditure on Catapult Health. And that doesn’t even cover the costs of a possible teacher walkout, like the one in West Virginia that was spurred in part by – you guessed it – the wellness program. But, don’t worry. Insurance will pay for it.

How do you manage employees when they are all remote? I agree with an inspirational business leader, Marcus Lemonis. There are three things that make your company successful. They are:

1. People
2. Product
3. Processes

Let’s talk about people. I believe the most important of the three is people. Good people can fix processes. Good people can enhance products. Good people are what truly make your business successful.

• How many times have you worked at your home, a coffee shop or a co-working space and thought, “Wow, I got a ton of work done today”?
• How many times have you worked in your office and at the end of the day thought to yourself, “I didn’t get ANY work done”?

Let’s face it, if you are one of those organizations that feel that the employees (people) need to work in the office building from 8am until 5pm, you are going to have a very hard time finding true talent! Today’s employees can be highly productive anywhere. Sure, there might be a need to connect at the mothership once in a while for face-to-face meetings, client meetings, etc. But to think, “if they are not here, they are not working,” is absurd. Please refer back to the previous questions and think about it… See also: Engaging Employees: Key to Success   The organizations that believe that all people have to be in the office 100% of the time have a glaring issue that they need to address. The issue is TRUST. My thought is, if you don’t trust your people enough to give them the opportunity to test the remote model, then… 1. Why did you hire them in the first place? 2. Why would they want to perform above average for you or your company? Are there some individuals who need to be in the office? Sure. And I would argue that, if they are good people, they will be honest with themselves/your organization and tell you that! One person I spoke with said, “I think I need the structure of coming into the office at a certain time and leaving at a certain time.” GREAT! That is a person who is being honest with you and himself or herself. That is a good person! He/she is more than welcome to come in to the office at 8am and go home at the end of day. However, to have a policy or a culture that says all employees need to be in the office at all times is a disservice to the employee and the organization. At Benekiva, our entire executive team is remote. Sure, we have an office that we go to for certain functions. However, if you find good people who believe in the vision, mission and passion of the company and the problems you are solving, they are never “off work.” The issue you will have with these people is to make sure they manage the work/life balance. That’s for another discussion. Burnt-out employees are not a sustainable recipe for business success. See also: 4 Good Ways to Welcome Employees   Bottom line: Find and hire good people. Test and measure innovative methods. You might be amazed at how much work gets done even though the people are not at “work.”

In today’s constantly changing environment, positive customer experience has become more important than ever. As insurance becomes more commoditized, providing excellent customer service has emerged as a key way to achieve competitive differentiation. The stakes are higher today than ever before. Consumers have more insurer choices than ever before. Right now, insurers are facing competition not only from insurance companies but also non-traditional players in the field like insurtechs and banks that now offer insurance coverage. At the same time, customers demand more from their vendors, and they expect the interactions they have with retailers, financial institutions, insurers, health practitioners and service providers – every organization with which they do business – to be easy, seamless, pleasant and fruitful. It is sobering that customers are likely to switch providers of all kinds due to poor customer service. As reported by Forbes, NewVoiceMedia’s 2018 “Serial Switchers” reports that U.S. companies are losing $75 billion in business due to poor service. According to the research, the main reasons customers stop doing business with a company are: They don’t feel appreciated, they can’t speak to a person who can answer their questions, employees are rude and unhelpful, they are left on hold for too long and they need to speak to multiple people to get the help they need. Make the most of make-or-break moments There are several decisive moments in the life insurance journey when insurers have prime opportunities to delight new and existing policyholders with excellent customer service from the initial coverage inquiry calls and online visits to an insurer’s website to a final claim. Customers expect their policy-buying experiences to be fast and friction-free. They want their claims experiences to be uncomplicated and transparent, and they want their customer service experiences to be pleasant, efficient and productive. And if their insurance providers disappoint or fail to deliver, potential and existing policyholders can certainly take their business to the competition. Even worse, poor service can damage the brand. If an insurer consistently provides sub-par service, policyholders can voice their displeasure on social media, and the company can develop a bad reputation. Insurers absolutely must focus on optimizing customer experience across all channels and touchpoints. By using customer-facing and back-end technologies, these three solutions help life insurers enhance their customers’ experience: See also: How Insurtech Helps Build Trust   Offer an easy, intuitive and fast application process. Today’s online retailers have set the bar high for every customer-facing business. Because shoppers can place an online order and receive an item from companies like Amazon within two days – or even hours, in some cases – they have come to expect a similarly fast experience when they apply for life insurance coverage. However, applying for life insurance is far more complicated than placing an online grocery order. Life insurance shoppers typically must go through a rigorous application process before they can even get a quote. Not only do carriers need detailed health information to underwrite and properly price a policy, they also must gather other personal information like Social Security numbers, credit reports and other data that can help assess a potential insured. It’s no wonder so many people abandon the application process and wind up uninsured. Life insurers have recognized that streamlining the application process can not only improve the customer's experience, but has the potential to substantially boost sales. Historically, this meant life insurers had to increase their exposure and risk to offer a less onerous onboarding experience. Today, however, technology enables life insurers to optimize the application process, not only facilitating application completion but also ensuring appropriate risk assignment. With SE2 Digital Direct Life, for instance, carriers have a way to offer suitable products with a no-touch online application process that lets consumers nearly effortlessly apply for life insurance while better assigning risk and more accurately pricing policies. Digital Direct Life automates policy application by gathering key identifiers and an eSignature to authorize the carrier to access the personal data, which includes the applicant’s medical and credit histories and driving record. The system then uses the information to perform an automated underwriting process to accurately assess and price risk, while offering the insured tailored coverage and a speedy quote. Transform and integrate. In today’s omni channel environment, the contact center is a still a critical touch point where a carrier has the opportunity to significantly improve the relationship with customers. Insurers must provide a pleasant, high-quality interaction, the account service representative (ASR) must be able to resolve issues quickly and effectively and reps must inspire policyholder trust and confidence that all advice and information is accurate. If carriers provide anything less than superior service with every contact center interaction, they risk disappointing – and potentially losing – their policyholders. A decade or more ago, insureds would contact their agent or call their insurance company with all kinds of requests, ranging from the most complicated queries to requests for help with simpler tasks like changing a beneficiary or for basic information on premium amounts. The simplest calls might take no more than a few minutes because reps could simply pull up a single screen to answer quick questions. Today, however, an increasing number of policyholders are using online or phone self-service options for simple, routine queries, and many are now only calling into the contact center with the most complicated issues that require live help. To solve complex issues, contact center reps might have to pull up information on their screen from multiple sources on a single call. This can take considerable time, potentially frustrating policyholders and creating a customer experience that’s anything but pleasant. A comprehensive digital contact center transformation is essential for life insurers that want to optimize the call center. Digital not only enables self-service capabilities but gives agents the tools to perform their jobs better and more easily deliver fast and effective service to policyholders. A digital contact center strategy includes integration with a rich set of capabilities from a partner ecosystem to enable a seamless and engaging experience for both agents and customers. See also: How to Use AI in Customer Service   Use analytics to optimize the contact center. Speech analytics solutions give carriers insight on customer behavior by capturing the content of customer-agent interactions. A speech analytics application can attach different metadata to tag the call, including the caller’s number, the number of the contract the customer is calling about and call duration. Conversations are recorded and stored in the speech analytics software and then are typically turned into transcripts that can be used in several ways.

• Boost ASR performance and customer service. First, the analytics can help carriers significantly improve customer service by providing reps with valuable feedback to increase competence, leading to increasingly satisfying and successful interactions with policyholders. Typically, organizations provide feedback to their agents by evaluating a small, random sample of recorded calls. With speech analytics, 100% of calls can be evaluated. Ultimately, better-monitored, -evaluated and -trained ASRs can boost an insurer’s bottom line because customers may be more receptive to cross-sell and up-sell offers from a rep they trust, and policyholders are more likely to keep their business with an insurer that gets customer service right.
• Inform self-service strategies. Insurers can also gain insights from the metadata, revealing the reasons for the policyholder call that can help improve self-service solutions and processes.
• Improve FCR. In addition, speech analytics can also improve the first-call resolution (FCR) rate by giving insurers the ability to detect whether policyholders are calling multiple times for the same issue. Not only can speech analytics provide ASRs with feedback about their call-handling performance and guidance on how to improve service and issue resolution; the technology also captures insights that can drive solutions to improve FCR.
• Ensure regulatory compliance. And finally, speech analytics can help carriers head off potential legal and regulatory issues by flagging potential problems and handling them appropriately. Insurers can set up a speech analytics engine to detect key words like “legal action,” “fraud” and “DOL”. Any conversations that contain the flagged words are pulled for review, and a supervisor can swiftly follow up with policyholders and ASRs to deescalate a situation.

Even in a heated marketplace, insurers that can provide consistently superior customer service in the contact center can grow faster and become more profitable. With so much at stake, life insurance organizations absolutely must investigate how currently available contact center technologies can help them improve ASR competencies, develop their self-service capabilities and ensure a great customer experience.

Many of you have seen the Gartner Hype Cycle curve. When a hot technology appears, it gets hyped and hyped until one day enough people become impatient, and sentiment turns against the technology. It then heads into what Gartner calls the Trough of Disillusionment. Eventually, the technology finds its role – often a major one – in the market.

The idea has always struck me as rather obvious (I described the curve to reporter colleagues on the tech beat at the Wall Street Journal years before I ever saw the Gartner chart), but Gartner popularized the notion, which is why it’s known as the Gartner Hype Cycle rather than, say, the Carroll Hype Cycle. Gartner is to be commended, because technologies can be plotted on the curve, and, drawing on history, their futures can be predicted with some confidence.

On the Carroll…er, Gartner Hype Cycle, the idea of technology-driven innovation in insurance seems to be heading into the Trough of Disillusionment (great name) among incumbents. A Lemonade or Trov hasn’t taken over the world. Big Tech is coming to insurance but not really here yet for most insurers. Industry executives seem to have read everything they care to about AI, blockchain, etc., and are starting to describe plans for small-bore improvements rather than truly innovative ones. Not total disillusionment, but headed in that direction.

Which brings me to the warning signs for 2019. 

The slide into the Trough of Disillusionment creates real opportunities because prices of insurtechs will start to settle back toward reality. In any case, technologies keep maturing, no matter how we feel about them, so the day of reckoning in the market creeps closer all the time, and the slide toward disillusionment is the last opportunity for companies to position themselves before a host of technologies and startups will shake the insurance market.

If I’m right, 2019 may well be the last chance for insurance industry incumbents to start taking advantage of the opportunities presented by insurtech, or lose out to nimbler competitors. In that spirit, my colleagues and I at ITL pulled some thoughts together for incumbents on:

10 Signs You’re Headed for Trouble in 2019

• You set up an innovation fund and think that means you’re innovative.
• Your innovations focus on cutting expenses, to the exclusion of all else, and – worse – you reward executives based on those cuts.
• You say your legacy IT systems are what is preventing you from innovating.
• You say your defensive culture is preventing you from innovating.
• You practice “innovation tourism,” going to Silicon Valley and assuming magic dust will wear off on you. (Related warning sign: You have a ping pong table and coffee bar and think they signify creativity.)
• You have 6,000 ideas but can’t figure out how to turn one into a product.
• You can’t name 20 insurtechs that operate in your strategic domain or adjacent ones.
• You aren’t starting to move your operations into the cloud.
• You don’t have significant diversity in your management team and board, in terms of gender, race, age and nationality.
• You can’t quantify and measure how you’re doing on your innovation journey and hope you’re improving.

Bonus warning sign: You make television commercials criticizing innovative companies.

In "The Sun Also Rises," a character is asked how he went bankrupt. "Two ways," he says, "gradually, then suddenly." We’re still in the "gradually" part of innovation driven by insurtech, but "suddenly" is coming. I suggest insurance industry incumbents view 2019 and warning signs like these as a last warning to get moving and avoid innovation bankruptcy. 

Paul Carroll
Editor-in-Chief

The need for insurance agents will grow 10% faster than the overall job growth average between now and 2026, the U.S. Bureau of Labor Statistics  reports. Yet hiring in the insurance industry remains precarious, with only temporary periods of stabilization, The Jacobson Group  says. As digital natives form an ever-increasing percentage of the workforce, this tech-savvy demographic will become the backbone of our organizations. Ed Kooijman, head of operations at 12CU, adds that many traditional organizations will adopt digital natives as leaders as a key strategy for getting ahead. This gives rise to an important question: How are P&C insurance companies preparing to attract and retain a workforce consisting primarily of digital natives? The truth is that property and casualty insurers face multiple challenges when it comes to recruiting and retaining digital natives. To attract digital native workers and stay competitive, P&C insurers are changing their approach in several ways. Creating a Digital-Friendly Workspace The term digital native is used to describe workers who grew up in today’s high-speed, screen-focused digital environment. When used in a hiring context, this term helps explain what millennials and Gen Z expect from the workplace. As more digital natives occupy the workforce, adapting modern workspaces is a predictable response. In fact, workspaces have changed with every generation to leverage emerging technological assets and meet new demands, Nick Mason writes at OfficeSpace Software. Nevertheless, the changes occurring in modern workspaces differ from those experienced by previous generations. Today’s digital natives expect to be able to communicate and collaborate easily whether or not they occupy the same physical space, PwC technology leader Antonia Cusumano explains. They want to collaborate to produce results more than they want to clock a specific number of hours in the work day or week. Digital natives’ focus on collaboration and results has changed their view of the office. “The workplace is no longer a specific destination where employees gather,” CIO contributor Paul Chapman says. He explains that working is more about a mindset than a physical location. “83% of workers don’t think they need an office in order to be productive.” To this end, insurance companies seeking to enhance their internal culture with the digital native perspective need technologies that match or exceed the tools these workers already use daily. According to John Mancini at the Association for Intelligent Information (AIAA), organizations that fail to adopt new technologies will struggle to attract and retain the industry’s best digital native talent. See also: Winning With Digital Confidence   Using outdated, siloed systems is confusing and inefficient in the minds of digital natives, IO Integration contributor Mike Watson says. This is especially true because millennials are well-versed in technologies that empower smart, dynamic collaboration across remote and in-person teams. Making Information Easy to Access The internet provides the foundation of the digital native experience and helps define their approach to the world. Marie Puybaraud at Work Design Magazine explains that cloud-based data, along with multi-platform connections, provide digital native workers with instant, streamlined access to social and professional networks. This is why dark data, or siloed data that isn’t being used to make better decisions, can frustrate digital native workers. They’re accustomed to information being readily accessible, and they see this as a fundamental aspect of strong decision-making. Digital natives usually see technology as a tool rather than a solution, writer Jillian Richardson says. Consequently, insurance companies that invest in the latest technology simply to do so may be pushing these workers away, rather than attracting them. A clear goal for technological tools like software platforms, along with a careful consideration of how the new technology will be implemented, can help companies create a digital and physical environment optimized for these employees. It’s important to bear in mind, however, that while digital natives are comfortable with a wide range of technologies, they weren’t born with a complex understanding of cutting-edge tools like artificial intelligence or machine learning. Rather, digital natives have a lower learning curve for the technologies that are changing the insurance industry, says RapidValue marketing consultant Shuvro S. Sarkar. Similarly, multitasking isn’t a skill that digital natives have developed independently of previous generations. Although digital natives’ willingness to attempt multiple tasks at once is often higher than that of previous generations, their ability to succeed at those tasks is about the same, according to an October 2017 study published in Teaching and Teacher Education. Workspaces that allow digital natives some quiet time and space to focus on a single task remains essential. Speaking the Language of Digital Natives Insurance is also uniquely poised to speak the language of digital native generations. Digital natives may possess a confidence with technology that previous generations lacked, but they are keenly aware of the uncertainties in the broader world. Addressing this uncertainty within the context of insurance can make digital natives more interested in pursuing a career in the industry, says Michelle Tucker, global head of analyst training at AIG. “Insurance can provide some degree of certainty as a safety net supporting people’s lives and business pursuits,” Tucker says. “That idea really resonates with the individuals that we’re bringing into our organization.” The uncertainty that digital natives face in their overall lives is, in part, driven by the technology they are so comfortable using. Many are concerned, for instance, that the jobs they pursue at the start of their careers may be eliminated by technology, says Richard Partington, economics correspondent at the Guardian. This fear isn’t entirely unfounded in the insurance industry, says Peter Westerman, who works in product development at ALM. Highlighting the value of digital natives — and their ability to spot and implement insights that technology can’t replicate — is key to addressing these fears and hiring top-tier talent. See also: Workplace Wearables: New Use of Big Data In return, digital natives can help P&C insurers speak the language of their prospective and current client base. Younger generations are currently the most frequent users of new insurtech tools and systems, L’Atelier managing editor Sophia Qadiri says. Recruiting these natives can help established property and casualty insurers better adopt these customers’ viewpoints, making it easier to create the seamless digital experience this rising customer base demands. Like the rallying cry that early internet and software pioneers declared, the internet wants to be free. Today’s digital natives don’t always see information as free, but they do expect the information they need to be readily available when they’re pursuing a goal on the job. Attracting and retaining digital native staff can help property and casualty insurers better understand and address the changing world of insurance. To do so, these insurers will need to invest in technological tools that provide the information access and collaboration capabilities digital natives have come to expect from their technology.

Will driverless cars (AVs, for autonomous vehicles) live up to the revolutionary potential imagined by many, including me? In part one of this series, I asked whether AVs might develop like the Segway personal transporter and be relegated to narrow niche applications. To avoid going the way of the Segway, AV developers must overcome significant hurdles to scaling, trust, market viability and managing secondary effects.

In this article, I outline the challenges to scaling. Building and proving an AV is a big first step. Scaling AVs into industrial size and strength business operations delivering transportation as a service (TaaS) is an even bigger step. Here are seven giant hurdles related to scaling: 1. Mass production. Hand crafting or retrofitting a few thousand cars with AV technology is good enough for development and testing. Industrialization will require producing hundreds of thousands of cars at scale. But, as Tesla learned the hard way, building cars at scale is more complicated than it looks. 2. Electric charging infrastructure. Almost all AV efforts are being developed on top of electric vehicle (EV) platforms. Before EV fleets can operate at scale in any market, a whole new electric charging infrastructure must be built. This will take time and lots of money. 3. Mapping. The industrialization of the detailed, high-definition (HD) maps on which AVs depend limits where AVs can operate. Even though the cars are loaded with sensors, cameras and software, they need up-to-date maps to figure out where they are and what to do. See also: Driverless Cars and the ’90-90 Rule’   4. Fleet management and operations. Industrialization will require flawless maintenance and efficient operation of tens of thousands of AVs widely distributed across large metropolitan service areas. Doing so will entail much more than cleaning windows and vacuuming carpets. It will entail maintaining complex computers on wheels. It will require complex predictive analytics to recharge, dispatch and load balance in response to spiky customer demand. Both public safety and business viability depend on this. 5. Customer service and experience. AV TaaS services are like a hospitality business built on a fleet of mobile hotel rooms with no on-property staff. Even the shortest trip can become arbitrarily messy and unruly—especially because there will be no human supervision in the car. Acceptable service and experience will have to extend to non-customers, as well, because AVs must interact with pedestrians, cyclists, other drivers, emergency personnel, other companies’ AVs and a host of other actors outside the car. 6. Security. Computer security is a challenging issue, in general, and networked armadas of computers on wheels will be attractive hacking targets. There are physical security issues, too. Physical security involving disgruntled drivers and bystanders, pranksters, thugs and others could also create security issues for both passengers and the public at large. 7. Rapid localization. How much of what Waymo and others are learning on the well-marked, well-lit, well-laid-out and relatively polite streets of Phoenix is transferable to the not-so-polite paved cow paths and roundabouts of Boston or the congested, pedestrian-filled city centers of New York, Paris and Beijing? Much—but not all. That is why every developer tests in multiple regions, to understand the peculiarities of local infrastructure, weather, cultural norms, etc. How fast and how well such localization can be done is another hurdle to scaling. See also: How to Adapt to Driverless Cars   In part three of this series, I’ll explore the challenges to market acceptance. I will discuss eight industrialization hurdles that deal with trust, market viability and secondary effects.