Apple's market value crested $1 trillion last week, and its big-tech brethren Google, Microsoft and Amazon aren't far behind; all are valued at north of $800 billion. But to justify their valuations the companies need to keep gobbling up other markets.

Might insurance be on the menu?

All have at least dabbled in insurance, and all will go wherever they see major potential -- in the words of omnivorous Amazon CEO Jeff Bezos, "Your margin is my opportunity." At a time when digitization is the key struggle for insurers, all have decades of experience with smooth, efficient, automated processes. All know how to produce a great customer experience. All have extensive data about customers. And all have the size to tackle the mind-bending problems that insurance faces -- by contrast, you'd have to combine AIG, Prudential and Allstate just to surpass $100 billion in market value, let alone $800 billion or $1 trillion. 

There are natural limits to big tech's interest in insurance. The companies -- let's call them AGMA so we don't have to get into a MAGA discussion -- are allergic to heavy regulation. "Move fast and break things" works in Silicon Valley, but no insurance regulator would allow that approach. AGMA also believe in asset-light businesses. None wants to put up the kind of capital that is required in insurance. 

But insurance generates trillions of dollars of business a year worldwide -- a big number even by AGMA standards -- and many incumbents look like easy targets. So, which AGMA company makes a big move first? When? And what will that first move look like?

I hope you'll join me in a discussion to try to answer those questions. Our mantra at ITL has long been, "No one is as smart as everybody," and I think we'll come to a better answer together than we will individually. I set up a discussion two weeks ago to focus on another issue related to innovation, the KPIs that can be used to measure progress for corporate programs, and found the interaction fascinating. I'm now posting for discussion this question about what big tech plans. I've tried to seed the discussion with a fair amount of background on what the companies have done and have said about their plans.  

If you aren't already a member of our Innovator's Edge platform, to join the group you can just click here. Registration is free and fast. Then click here to see the group discussion. The process is painless -- and could be enlightening.

Have a great week.

Paul Carroll
Editor-in-Chief 

For many, the concept of a “smart home” is a futuristic, and perhaps even frivolous, offering where lights shut off automatically once we fall asleep, thermostats are controlled from your phone and security cameras can show you what’s going on in your home from thousands of miles away. However, as I have written in many previous posts, we are only at the start of the Internet of Things (IoT). Significantly more sophisticated devices are already entering the market and soon consumers will see the benefits of both enhanced personal safety and home protection. Forward-thinking insurance companies are not only recognizing the potential for reduction in non-catastrophic loses, they are embracing the potential by filing smart home discounts to create incentives for consumers who use these technologies. Let’s look at a few of these enabling technologies and their potential for loss reduction/avoidance around the core perils of water, fire and theft: 1) Advanced home security products — The professionally monitored home security market has limited penetration in the U.S. — a significant number of home owners don’t feel the need to have their homes monitored for theft. However, many IoT devices enable basic self-monitoring features as a secondary benefit. From video cameras with 24x7 recording, to controllable door locks, to lights that are triggered on with motion, home owners are now getting home security features included with IoT products that might otherwise be purchased primarily for convenience. 2) Leak detection — Traditionally, these products focus on single points of failure, providing coverage in specific locations, such as below a dishwasher or a hot water tank. While providing a lot of utility relative to their cost, it’s been hard to programmatically prove loss reduction with these devices as the location of the sensor has so much to do with catching the leak. That said, more ambitious forms of leak detectors are entering the market, enabling whole-home monitoring, from flow sensors installed on mains, to lightweight stripping that can be installed in floor boards. Additionally, a series of whole-home shut-off valves are also being introduced into the market. Most of these valves require professional installation; however, they are capable of automatically closing the water main with the slightest detection of a leak or abnormal usage patterns. Water losses may be greatly reduced if a home could automatically respond to a burst pipe or an overflowed toilet. 3) Connected smoke alarms and “listeners” — Fire alarms have saved many lives, but the original design was intended to notify occupants of a fire so they could quickly exit. Unfortunately, if no one is home to hear a smoke alarm, there isn’t much that can be done by way of stopping a fire before a total loss. But the new generation of connected smoke alarms and “listeners” (an add-on that hears an alarm and sends a signal) can message not only the home owner but also a third party who can dispatch emergency crews on a homeowner’s behalf. It’s not hard to imagine how dramatic loss reductions will be when all homes have connected fire safety devices. An exciting aspect of all of these enhancements is that they are incremental improvements on already approved safety devices, enabling a fast track of the actuarial analysis/regulatory acceptance of additional discounts. But these improvements are just the start… See also: Global Trend Map No. 7: Internet of Things   Connected devices are particularly special because the “intelligence” doesn’t necessarily need to reside on the device itself, but could also live in the cloud, where processing is getting more powerful and less expensive by the day. As such, there is a tremendous amount of innovation in the data analytics space — and here are a few technologies that will almost certainly result in greater loss reduction: 1) Real-time analytics — the more information that can be analyzed in real time, be it from multiple sensors or devices or historical data, the higher the accuracy in early detection of a potential loss situation. For instance, a sharp rise on a temperature sensor might indicate a fire, but it also could be caused from sunlight striking the device. Long-term tracking of that temperature data might quickly indicate what is normal, what is not. Or perhaps a flow sensor might detect a flow of water similar to shower running, but when paired with alarm system that shows the home is unoccupied and the alarm has been in “away” mode for several days could be a clear indication of a burst pipe. 2) Automated response logic — connected devices lend themselves well for automated responses. Homeowners will be able to create steps that are enacted when emergencies are detected. For instance, when a fire alarm rings, the sequence might be something like: a) snap a picture from each camera and take a temperature read from each sensor in the house, b) email/text all of the family that lives there with the data to confirm or override an emergency call, c) if no response within 60 seconds, forward the notifications to a third party for emergency dispatch. Automation combined with human intervention allows for a more accurate and effective response. 3) Predictive analytics — ultimately the best way to lower losses is to prevent problems before they start. This is where heavy processing power is required — as well as buy-in from consumers on the use of their data. Connected homes provide streams of output data and, with it, anticipated performance. Variances in this data might indicate early stages of problems. For instance, a packaged HVAC system might be showing degradation of airflow in the summer, which could mean trouble for gas heating as temperatures drop. It might be in the best interest of the insurance company to ensure performance is restored as the winter comes, prior to the risk of freezing pipes. Additionally, as we are seeing in telematics and auto insurance, you can bet that consumer behaviors will also have the potential to be analyzed, no doubt showing correlation between “safe” homeowners and reduced loss. While more forward-facing than the device enhancements listed in the first section of this article, it’s these enhanced intelligence features that will truly revolutionize loss models. The more advanced the technology becomes, the less dependent the loss prevention becomes on human behaviors. See also: Insurance and the Internet of Things   Imagine a world where the main perils for homeowners insurance carriers such as water, fire and theft are dramatically reduced through the IoT and smart homes. Yes, consumer mistakes/negligence, even moral hazard, will always be an issue, but at some point it’s very possible the home will become smart enough to compensate even for these factors in a substantial way. We are already seeing rapid advancements in these areas in both telematics for auto insurance and wearables for life and health insurance. Similarly with smart homes, these IoT technologies have significant potential to lower losses from non-cat perils.

One of my friends recently shared this article with me from Harvard Business Review, talking about how male and female entrepreneurs get asked different questions from venture capitalists, and the correlation of the questions and funding. I laughed as I recently had a similar experience. My company, Benekiva, consists of four founders: three men and me. We are diverse in our skillsets and perspectives, which makes our team very strong. We are also very experienced -- not saying we are old :) but we have been in corporations, run multiple startups, managed diverse teams and held mid- to senior-level positions. Being in the technology industry for nearly a decade and a half, as a woman, I've seen that getting "preventive" questions is such a norm, and the more you climb up the ladder the number you tend to become. I have encountered several times where I had to justify or prove my recommendations on a tech architecture or solution while my male counterparts could walk in and have a much shorter conversation. While pitching, I've seen folks look to my male co-founders for confirmation. I'm like: "Dude, do I smell or something? Do I need to throw out my credentials for you to believe me?" Recently, I pitched Benekiva to a couple of seasoned mentors. Benekiva is a software solution to bridge the gap between life insurance companies and their intended beneficiaries through claims automation, beneficiary and policyholder management and asset retention. As I was walking the mentors through the pitch deck, I kept getting interrupted and at one point was told, "I don't believe there is a problem." (Note: There is more than $14 billion of unclaimed property from life insurance policies, and that grows at an annual rate of $1 billion; the claims process is broken.) At the end of the meeting, I was told, "Great job, and they were tough for a reason." I left confused. What do you mean, for a reason? Was this a test? A co-founder, on the other hand, had a conversation with a similar audience and kept getting comments such as, "Wow" and "This is genius." See also: How Technology Breaks Down Silos   Earlier in my startup journey, I was nicely told that I was a pretty accessory, the female touch. The list of demeaning comments could keep going on, even though I've been a chief product officer, a CTO and a CEO. I'm not alone. Many women founders are facing similar problems, especially on the insurtech side. How might one survive? Here are some tips that have helped me not punch someone in the face:

• Come prepared — It is hard to hear statements from your male colleagues about how they can just wing a pitch. We women may, but chances are that we will hear about it. Prepare and practice answers to the questions. The HBR article provides a great point about how to turn a "preventive" question into a "promotion" one.
• Be confident — I don't care about hearing how I am intimidating. I have expertise and come across confident. I also don't have an ego about it -- I am very humble and helping. When facing investors, mentors, prospects, current clients, be confident. Answer with confidence because who knows better than you about your business, product, process, etc.?
• Avoid the impostor syndrome — Especially when getting drilled continuously, it is easy to start doubting your abilities. Don't! Think about your successes and stop the negativity and the voices of self-doubt.
• Find a peer group — Hang out with other entrepreneurs who are in your space. If there isn't a group, create a meet-up! I've started a meet-up in my region for Women in Tech and allies to share experiences and develop a network of tech women that can support and lift each other.
• Be positive — No excuses. Don't put too much energy into the negativity. See what has happened as a chapter in your book. I'm not saying not to address problems, but don't let them fester so much that you are spending time fighting something that is not worth the effort.

See also: Startups Take a Seat at the Table   Finally — Write about your experiences and share with colleagues. Knowledge is power, and perhaps your story can inspire others.

Today, the discussions around insurance distribution channels are in perpetual motion – everyone has an opinion as to where it’s going. But where is it today? What has changed? What hasn’t? And where are the investment dollars going? These are great questions, and most insurance professionals are interested in the answers. With that in mind, SMA conducted research about today’s distribution trends – and the findings are presented in P&C Insurance Distribution: Responding to a Rapidly Changing Ecosystem. Understanding where the current industry trends stand is important so that insurers can benchmark their organizations’ progress relative to competitors and the industry at large. The data is interesting, of course, but several important questions do arise that insurers need to consider and answer. In other words – get under the covers! When asked about digital strategies, 46% of responders indicate they are working on a digital strategy – but it isn’t in place yet. Given that rather significant percentage, one has to wonder if the spending around agent/broker portals (83% indicate it is #1) is for tactical reasons or strategic reasons. One could quickly conjecture that, either way, portals solve a business problem. So, there is value. That’s true … and it’s not. If the portal investment is not aligned with a corporate digital strategy, then the investment could be for naught because it does not support the overall corporate direction and might be throw-away dollars and effort. Perhaps the portal only holds value for a certain group – for example, agents and brokers – but misses the mark for customers. Does that mean that insurers should do nothing until a digital strategy is nailed down? That would not be practical either. The point is that when advancing digital capabilities in a tactical fashion, flexibility must be a core project goal. The technology choices for platform and installation (cloud vs. on-premises) must be capable of responding to strategic choices as they are made and not be unidirectional. A second critical question arising from the digital distribution spending research data relates to the amount of focus insurers are placing on internal processes. Survey results indicate that less than half (46%) are spending on internal operations to meet digital distribution goals. The question that arises is: Are insurers focusing on other technologies because their internal processes are already aligned to digital distribution transactions and outcomes? Or do insurers continue to believe that the corporate external-facing capabilities are most important – and internal processes can continue as they always have? Digital transactions expose internal processes that are holdovers from a manual, paper-based world. Billing is a perfect example of this. If a portal allows a customer to submit payment via a credit card but then advises the customer it will take three to five days to post (as the payment goes through standard internal, manual-posting processes) there is a serious disconnect from today’s digital world and what that customer expects to happen. As insurers assess and advance various digital distribution strategies, it is imperative that internal processes be re-engineered from the outside in so that interactions flow logically from the perspective of the agent/broker and consumer. This is not easy, but it is a critical element for success. See also: How Digital Platform Smooths Operations   In addition to technology spending trends, P&C Insurance Distribution: Responding to a Rapidly Changing Ecosystem explores the changing relationship between insurers and agents/brokers due to changing distribution demands. The report also provides insights into the role of startup insurtech distributors that are responding to changes in the marketplace and making inroads. There are many points that insurers must consider as they move forward with distribution channel decisions. Every insurer is going to be on a different discovery path. As that journey moves forward, it is critical to look under the covers of those decisions. Customers, agents/brokers and employees all have a stake in outcomes. The points of view and levels of involvement will be different – but they must all be considered.

If you’ve got your eyes set on technology that won’t move the needle this year, it’s time to reevaluate what can provide bottom-line results in the short term. AI and machine learning will have their day in commercial insurance. But what are you doing today to drive tangible business results? Insurtech does not have to be a “pie in the sky” endeavor. It can be deployed right now. Just a year ago, the insurtech conversation was all about innovation labs, blockchain, IOT, wearables and, of course, AI. Now, the dust has settled a bit, and the realization has set in that those bright, shiny objects may take years to make a real impact on re/insurers’ bottom lines. While they are still undoubtedly vital to innovation, long-term success and survival, it’s important to strike a balance between “pie in the sky” and practical. Last year’s devastating catastrophes served as a catalyst for more focus on short-term solutions that can improve bottom lines—now. Not years from now. This swing to here-and-now solutions was recently articulated in an article by Ilya Bodner, founder of insurtech startup Bold Penguin, where he notes: “Insurtech is moving rapidly now into commercial lines where the attention and intent is focused on solutions that will deliver a strategic and immediate return on investment (ROI)....Insurers are moving away from bright, shiny, insurtech objects and toward service partners, emerging technologies and solution providers with a return on investment more immediate than promised for five years down the road.” I second this sentiment. P&C risks are changing, as evidenced by 2017’s $144 billion in global insured losses and a commercial lines combined ratio of 104%. And, while a strong market made many insurers whole last year, that is not a guarantee going forward. The next hurricane, flood or wildfire won’t wait for you to innovate. Insurers must find ways to bring innovation to their bottom lines now. Don’t get me wrong, pie in the sky is good—and it is necessary. But insurers must strike a balance between their long games and short gains. You need both. Caution: The hard truth I don’t have to tell you that following last year’s back-to-back hurricanes there was an outcry about how the models got it wrong (of course, it didn’t help that some modelers put out early and grossly inaccurate estimates that incited market confusion and concern). Here’s the hard truth: Insurers also got it wrong. Got it wrong by using a single view of risk; by not taking advantage of innovations in data; by taking too long to operationalize data; by waiting for the perfect, utopian platform (in-house or commercial) to be built or delivered; by expecting legacy analytics software to deliver the scalability, reliability and insight required to act efficiently and effectively. No longer can insurers approach risk The. Same. Old. Way. Risk is changing. You must change with it. And the good news is, integrating insurtech in a way that helps you better assess and manage the evolving landscape of catastrophe risk doesn’t have to be time-consuming or costly, and it can produce immediate results. Here are a few of the challenges that insurers face that insurtech can help them address, in the here and now:

• Reality: Models provide a “framework for thinking; they don’t represent truth.” Evan Greenberg, chairman and CEO of Chubb, recently stated, “Given there have been three one-in-100-year floods in 18 months, how can Harvey represent a 1% chance of occurring, as the models suggested? Models provide an organized framework for thinking; they don’t represent truth.” Now, we all know models serve an important purpose, and our clients can derive insights from modeled data within our platform. But models must be taken with a dose of good old-fashioned human judgment. Models and the outputs are nuanced. It’s all about identifying the right models and model components that best represent your lines of business, geography and business practices. But it’s also about balancing resources and business value with this expensive exercise. You need to have an intelligent conversation about model nuances—and figure out the “so what” questions that models provoke but don’t answer.

See also: Can Insurtech Rescue Insurance?  

• Reality: You can’t handle all the data. There’s a gap between the wealth of data now available and an insurer’s ability to quickly process, contextualize and derive insight from that data. Insurers are generally frustrated by a lack of process and an easy way to consume the frequent and sophisticated data that expert providers put out during events like Harvey, Irma, Maria, the Mexico City earthquake and the California wildfires. Beyond the sheer volume of data, insurance professionals are expected to make sense of it by using complex GIS tools. In reality, you have all this data but no actionable information because you can’t effectively make sense of it. Even insurers with dedicated data teams and in-house GIS specialists struggle to keep up. (SpatialKey tackles this problem by enabling expert data from disparate sources (e.g. NOAA, Impact Forecasting, JBA, KatRisk) and putting it into usable formats that insurers can instantly derive insight from and deploy throughout their organizations. We do the processing work, so our clients can focus on the analysis work.)
• Reality: Your best data is your own, but you’re not benefiting from it. It’s one thing to be in possession of data, and quite another to be able to realize its full value. Data alone has little value. One of our clients, for example, needed a way to re-deploy its own data to its underwriters, so we helped the company integrate an underwriting solution that would put its data, along with expert third-party data, in the hands of its underwriters—all from a single access point that would consolidate disparate sources and drive enterprise consistency.
• Reality: Your customers expect on-demand; you should, too. Your customers don’t want to wait for a quote or go through a lengthy process to submit a claim. Our society is instant everything, and while commercial insurance may not be held to the same real-time pressure as personal lines, it is moving in that direction. When you need the latest hurricane footprint, you need it now, not four hours from now. When an earthquake strikes Mexico City, you need to understand your potential business interruption costs today. When a volcano is erupting and no drones are allowed in the surrounding airspace, you need a geospatial analytics solution that can help you provide advanced outreach to insureds and do the financial calculations to understand actual exposure. Likewise, when your underwriters are trying to win business, you’d rather they spent their time evaluating the risk than searching for information.

Who knows what this hurricane or wildfire season will hold. The question is, are you prepared to handle it better than last year? What changes have you made to strengthen your resilience and that of your insureds? What has been learned and applied for meaningful results? It’s a misnomer that insurtech and disruption go hand in hand. Some insurtech solutions are built to complement—to drive efficiencies, cost savings and underwriting profitability—not necessarily replace existing processes or legacy systems. Data and analytics is an area where insurers, brokers and MGAs can still improve their bottom lines yet in 2018. See also: To Be or Not to Be Insurtech   Take down the pie and dig in My intention is not to dilute the importance of up-and-coming insurtech technologies, like AI and machine learning. They will undoubtedly help insurers compete as risks become more complex. My point is that those longer-term technological investments must be tempered with an understanding of what technologies will help move the needle in the present. You can strike a balance between pie-in-the-sky insurtech and insurtech that works for you now.

Do you think home and contents insurance is broken? Then join us for our Getting the House in Order series on what’s wrong and how to fix it. Part 1 takes stock of the U.K.’s protection gap and its effect on different demographics. I’m sure that at some point in life you’ve faced the too much stuff moment. For me, it was earlier in January, as I sought to escape the post-Christmas blues with a mini-break abroad. Except – the drawer that once contained my passport now appeared to be home to a multitude of still-wrapped DVDs, a large hardback book, some errant Christmas socks and a pack of comedy coasters. I located the passport in the end, several layers down. But I had to think: As a nation, we sure have a lot of household contents. I began trying to quantify the volume of stuff in people’s homes, starting with my own overloaded passport drawer. Then the drawers in the living room, drawers in the kitchen, drawers in my flatmates’ rooms (the mind boggles). Beyond that, the drawers in all the houses along my street. And that’s just drawers. What of the cupboards, floors and lofts? The garden sheds, shelves and trunks? In every city, town and village in the realm … To stave off insanity – at least temporarily – I decided to do a bit of research. It turns out there are 27.2 million households in the U.K., which means that, for starters, we’re looking at:

• at least 26,112,000 TVs
• 26,384,000 washing machines
• 12,512,000 dishwashers
• 4,297,600,000 books

And what about that class of possession wherein modern man delights the most: consumer electronics? The U.K. is apparently home to 41,000,000 smartphones, 37,600,000 laptops and 32,800,000 tablet. Now that’s a lot of expensive silicon knocking about! Today’s contents explosion has not been fueled exclusively by our couch-potato tendencies, let me add. We are a nation of 25 million bike owners, 1.5 million golfers and 825,000 tennis players (weekly), so we’ve got a fair bit of sporting equipment, too. These two recent trends – gadgetry and fitness – have helped to make our “contents footprint” larger than any previous generation’s. In fact, the Association of British Insurers (ABI), in its recent Britain Uncovered study, put the value of contents stashed in U.K. homes at £950,000,000,000 (that’s almost £1 trillion!). That’s £35,000 per home, on average, comfortably outstripping the average U.K. salary of £27,000. So, we’ve established that our small island conceals a scarcely imaginable volume of household contents, which brings us to our principal concern in today’s post: Where on Earth is all the contents insurance? See also: Can Insurtech Rescue Insurance?   The same Britain Uncovered study found that 28% of U.K. households had no contents insurance whatsoever. That leaves 16 million people and £266 billion of household possessions unprotected. — £266 billion of household possessions are at risk in the U.K. — This figure could be higher still. The ABI estimate was based on the number of uninsured households only, excluding those that are merely under-insured. Indeed, the Telegraph reckons that 6.8 million homes (25% of total households) may be under-insured, meaning that only a minority of U.K. homes have appropriate levels of cover. This contents protection gap has different causes – and solutions – for different people. At buzzvault, we’re pioneering an approach that matches contents cover to customers’ individual needs, whatever they own (sign up for buzzvault beta here, we’d love to know what you think). However: tech wizardry on its own never solved anyone’s problems. So it’s more important than ever that insurers truly understand their customers. To help with this, we’ve provisionally identified three demographics whose varying needs aren’t met by today’s providers. Let’s take a look. Contents Insurance: Renters As if only getting one shelf in the fridge weren’t bad enough already, “generation rent” miss out in more ways still. You see, that elusive house purchase isn’t just significant as a first step on the property ladder. A purchase is a major trigger for purchasing insurance, as well. Most home contents insurance is currently sold as a bundle with buildings insurance, which is generally mandated by mortgage providers. So, while homeowners are practically forced to take out contents insurance, little impels renters to even think about it. 81% of “generation rent” lack contents insurance, at least according to the Improving Access to Household Insurance report by the Financial Inclusion Commission (FIC). That means we’re looking at a staggering 10.5 million uninsured renters. That’s more than the entire population of Sweden! No assessment of the travails of renterdom would be complete without a cursory look at our nation’s students. Negative attitudes toward insurance are rife among this demographic. This explains why, despite the average student lugging more than £2000 of possessions along with them to start their studies, nearly half of them aren’t covered. And this, even though students are possibly God’s gift to burglars. Many renters could afford contents insurance, and would buy it, if only the thought crossed their mind for more than a second. So there is less a product failing for insurers than a failure to package and market their product in a relevant, customer-friendly way. Indeed, it’s that adage again: Insurance is never bought, it’s always sold. The Financial Conduct Authority (FCA) classifies two-thirds of renters as potentially vulnerable to harm due to low levels of financial capability and resilience, health issues or risk of life events creating difficulties. Contents insurance could provide a significant umbrella. Status: At Risk Contents Insurance: Poorest Households Only 40% of those earning £15,000 or less each year have contents cover, compared with more than 75% for the highest incomes (according to the FIC’s Improving Access to Household Insurance). And, in an unfortunate co-occurrence, it is precisely these individuals who are most exposed to household risks — be that house fires, floods or burglaries. Lower-income households live with 30 times the risk of arson as more affluent households. They’re also eight times more likely to be on tidal floodplains. To cap it all, socially rented housing is twice as likely to be burgled as owner-occupied properties. These are damning stats. They tell the story of unacceptable numbers of at-risk households having to bear the cost of personal disaster on their own. Covering total loss from savings is bad enough – worse still is the fact that many poorer households aren’t even in a position to do this. More than 7 million UK adults have less than £1000 in savings. And less than a quarter of those in social housing could replace a washing machine from savings and income alone (Citizens Advice Quids in survey). The financial inclusion debate has so far centered on banking, payments services and affordable credit – but accessible insurance has a part to play here, too. Tackling the protection gap won’t eliminate the savings gap, but it will de-risk it. To do this, insurers need to find ways to make lower-premium products economically viable. This will almost certainly require new distribution mechanisms to achieve scale, reduce cost and reach people regardless of their level of financial education. Tenants insurance schemes (sometimes called “Insurance with Rent”) are welcome in this regard but have had limited adoption so far. Status: Highest Concern See also: Why 5G Will Rock the Insurance World   Contents Insurance: Average Homeowners Some better news: More than 80% of those owning their home outright or with a mortgage have some form of contents cover in place (FIC: Improving the Financial Health of the Nation). However, these customers aren’t home and dry. More often than not, they have inadequate cover for the value of their contents. What we have here is endemic under-insurance, where coverage isn’t absent but is still patchy – leaving few people with optimal protection. When taking out insurance, people typically underestimate the value of their belongings by 40%. In the event of a total loss, this means they can recover max 60% of the value of their stuff. And many insurers operate an averages clause, whereby this percentage (representing the degree of under-insurance) is applied to all claims. To give you a flavor: Over the past three years, 6% of people have missed a typical pay-out of £1000 from their home insurance providers because they haven’t bought the right level of cover, according to a poll of 2,000 Britons by insurance broker Swinton Group. The main reason for under-insurance is the steady creep in home contents value. This, we estimate, grows by an average of 24% over a three-year period. While the rhythm for updating insurance policies is generally annual, we update our possessions daily, weekly and monthly. A one-size-fits-all approach to contents insurance doesn’t just lead to poorer households tending to pay over the odds. It can also lead to wealthier households paying too little – and then being hit with the consequences, without warning, when it’s time to claim. Topping up homeowners insurance isn’t as great a social good as providing a financial umbrella for the nation’s neediest households. However, much work for the insurance industry remains to be done here that could justifiably be called low-hanging fruit. These households are, after all, already receptive to insurance and tend to own the most stuff. Status: Vulnerable We will revisit all these themes in greater depth as this series progresses. Next, we’re looking at what can be done about the low adoption and engagement that insurance products have traditionally faced. It’s a certainly a challenge to sell a product no one covets or, in the main, understands. But rather than waiting for the public to start caring, the industry should explore ways to take insurance out to its customers: one approach being to embed it into other services customers do care about.

Active shooter events in the U.S., unfortunately, are becoming more frequent -- so much so that the Wall Street Journal reported this week that school districts are stepping up purchases of insurance against such events. The incidents raise many questions, and a persistent one in a legal context is, “Should anyone besides the shooter be held liable?” According to the Federal Bureau of Investigation, between 2000 and 2017 there were 250 active shooter incidents. They resulted in 799 victim deaths and 1,418 wounded. Often, victims and their families understandably seek to hold someone other than the shooter accountable for failing to prevent these acts of criminality or terrorism. Although this type of litigation is always emotionally charged, the legal concepts of foreseeability, duty and reasonable care are the key factors used to determine liability. In litigation, the concepts generally mean that allegations of liability must be supported by "expert" testimony. Such opinions are formed by using post-event knowledge to reverse engineer some preventative measure that would have allegedly prevented a particular incident. Of course, the entity alleged to be liable is being judged for its pre-event actions and "failing to act reasonably" in the context of a threat environment that includes countless potential risks. Unlike a government, private entities must assess these risks without access to the intelligence that only governments possess and without a government's resources and legal authority to implement an unlimited number of countermeasures. Governments are frequently held to be immune from similar lawsuits, so one can reasonably ask whether it is fair and just for private entities to be subject to a disparate legal standard. See also: Active Shooter Scenarios While there may be some cases where liability may properly attach, perhaps it's time to consider whether concepts of crime victim compensation funds and victim compensation funds similar to that enacted after the 9/11 attacks should be used to provide compensation to victims of mass shootings. Creating a similar fund for individual victims of active shooting incidents could address multiple challenges. Victims could gain compensation quickly and without the financial and emotional expense of litigation. Defendants who had no involvement in the shooting could be spared the costs of defending lawsuits. By authorizing a fund to accept claims over several years, individuals with latent physical injuries or illnesses that take time to develop also could be compensated. Risk cannot be eliminated Thinking about long-term solutions to address the issue of compensation for persons injured or killed by acts of mass violence is important. The real world is not like a post-event lawsuit that focuses only on whether a particular location could have been made "safer." In the real world, the question is really whether the world itself can be made safer. FBI data shows that the vast majority of active shootings 2000-2017 happened in locations that are open to public access:

• Commerce (businesses, shopping malls), 42% of active shooting events
• Schools (pre-K to 12, institutions of higher education), 21%
• Open space, 14%
• Government, 10%
• Residences, 4.8%
• Houses of worship, 4%
• Healthcare facilities, 4%

If active shooter litigation continues to propagate, more and more security measures are bound to be imposed by either governmental or private entities. The risk will never be completely eliminated, but the way we live and interact with each other necessarily will. And the cost for doing so will have additional ripple effects that may have profound effects on all our daily and heretofore routine activities. See also: The New Face of Preparedness   There are no perfect solutions for the societal problem of shootings, but we ought to fix what we can. Sparing victims the burden of litigation and providing fund-based compensation seems to be a logical approach to consider.

Sales is changing. That's a fact.

If your agency is still picking up the phone and hoping for the best, things probably aren't going to turn out the way you imagined.

The real future of insurance lies in leveraging the power of smart technology to streamline the sales process, increase conversions and have more productive agents and brokers.

Sounds like a dream for your business, right?

Every agent and broker wants to be able to sell more efficiently, hitting the right customers with the best products for their needs, and not waste time. Operating this way lets sales professionals shine and provides excellent customer service — something consumers expect today.

So how do you get there?

One way is through the right CRM system. These systems work in three main areas, which we're going to cover in this post:

1. Offering sales insights
2. Boosting productivity
3. Providing flexibility during the sales processes

Smarter Sales Via AI-Powered Sales Insights

Consumers today expect a lot more from brokers and agents than ever before. It's not enough to provide some information and call it a day.

Nope, consumers can get that part done on their own. Thanks to the internet, most consumers have already spent some time researching online and finding the basics. Now, what they are interested in is getting deeper insight and information from sales professionals.

Consumers want to know how a particular product is going to affect their business, where they will be able to see value in their investment and if customer service will continue after purchase.

See also: Strategist’s Guide to Artificial Intelligence  

The salespeople who are getting the best results are those who have seen this shift and have adjusted their approach to leads with this in mind. In fact, after analyzing almost 1 million sales calls, Gong Labs found the best performing "superstar" sales representatives talk about business and value 52% more than their peers.

That focus from merely highlighting features to deeply providing value on how a product or service can help their business can make all the difference when it comes to closing deals.

One area that is helping to drive this shift toward discussing the business and value is through sales insights. Tools today can use AI, predictive analytics and automated insights to offer agents and brokers data from lead scoring to opportunities for cross-selling and upselling customers.

Plus, integrated platforms allow for workflows to be managed across one system, removing back office backlogs and data silos that can get in the way of closing deals. Now, an agent can look at leads and use a data-driven approach to determine which are most likely to close, maximizing their potential.

Faster Sales Via Productivity-Boosting Features

When it comes to sales, downtime is not a good thing. After all, being as productive as possible accelerates the process of closing deals.

And yet, a study by Salesforce found only 36% of the average salesperson's week is spent selling.

As you can see from the chart, the majority of the time gets dedicated to administrative tasks, service tasks, meetings and traveling.

This is not a sustainable formula for the future of insurance agents and brokers (or sales in general).

The best agents and brokers are also the most productive. They keep track of their leads and customers and are quick to spot any potential issues, such as deals that are slowing down. They also know when to suggest action.

No, this isn't a unique gift; instead, top brokers and agents know how to analyze the data by utilizing the right tools. Here's where actionable intelligence can help streamline processes and boost productivity, providing sales professionals with the information they need to prioritize the most promising opportunities.

CRMs that utilize actionable intelligence and workflow automation can update and append activity records and call notes, automatically update the sales pipeline and even configure real-time prices and quotes for customers.

Timeliness matters. After all, in a survey from Demand Gen, 72% of respondents said the timeliness of a vendor's response to a quote was very important. When brokers and agents can come back with accurate quotes generated with a few clicks within minutes, it makes a big impression on leads and a huge difference in close rates.

More Flexible Sales Processes

It's rare to find two different insurance businesses that sell in the same way. Companies have their own processes, methods and even brand culture that differentiates one from another, especially when it comes to sales.

With that being said, flexibility in the sales process is essential. A management system that is too rigid can hinder the opportunities for some brokers and agents while having zero focus on the workflow and see a dramatic increase in employee turnover. Both need to be avoided at all costs.

Here's where introducing a new management system that offers data-driven insights can help provide the flexibility needed without the potential for critical data to slip through the cracks. Automated systems pull data from every corner of the platform consistently and in real time, giving brokers and agents access to lead scores, upsell and cross-sell potential, red flag issues and retention rates.

All of this information can be used in many ways.

The data can be used to populate customizable forms and reports, which can provide leads with policy details, for example. Plus, information is accessible by agents and brokers as well as the back office and management, removing bottlenecks in the system and allowing the necessary parties to get involved at a moment's notice to move a lead through the pipeline or save a sale.

See also: The Most Important (and Overlooked) Tech  

Flexibility also matters when it comes to customer service. Here is where smart CRM systems can make a massive impact. Studies have shown that companies embracing technology such as predictive analytics see much better results on everything from customer lifetime value to average profit margin per customer.

Numbers like these are essential when you consider that customer retention and upselling to existing customers are some of the best ways to increase revenue.

Having flexibility in the sales process, thanks to better systems and data, can not only convert new customers but keep existing customers happy and coming back for more.

The Bottom Line

The future of insurance is here, and it rests with automation, predictive analytics and AI-powered tools.

The sales professionals who are ready to go all in on it are those who are poised to fully take advantage of the potential and benefits not only offered to them but to their customers, as well.

Blockchain and smart contracts have enabled the development of new approaches in the insurance industry, as they begin to replace outdated business models (with excessive paperwork, communication problems, multiple data operating systems and duplication of processes and the inability of syndicates to mine their data). By digitizing payments and assets—thus eliminating tedious paperwork—and facilitating the management of contracts, blockchain and smart contracts can help cut operational costs and improve efficiency. Smart contracts also allow for automation of insurance claims and other processes as well as privacy, security and transparency. It is estimated that roughly one-third of blockchain use cases are in the insurance industry.

How Blockchain Is Used in Insurance

How will blockchain and smart contracts transform the insurance industry?

• Quick and efficient processing and verification of claims, automatic payments—all in a modular fashion, thus minimizing paperwork.
• Transparency, minimizing fraud, secure and decentralized transactions, reliable tracking of asset provenance and improving the quality of data used in underwriting. Besides improving efficiency, this also reduces counterparty risks, ensuring trust and safety both from the insurer's and customer’s perspective. By computing at a network, rather than individual, company level, the consumer is reassured that the process was completed appropriately and as agreed upon. From the perspective of the insurance company, this fosters trust, as well, and encourages consistency, as the blockchain provides transparent and permanent information about the transactions.

The insurance industry has traditionally been associated with tedious administration, paperwork and mistrust; the incorporation of blockchain, however, has the ability to transform this image by bringing operational efficiency, security, and transparency. The long-term strategic benefits of blockchain are thus clear.

Top insurance blockchain projects:

AIG (American International Group) – Smart contract insurance policies HQ: New York Description: AIG, in conjunction with IBM, has developed a “smart” insurance policy utilizing blockchain to manage complex international coverage. Blockchain network: Bitcoin Deployment: In June 2017, AIG and IBM announced the successful completion of their “smart contract” multinational policy pilot for Standard Chartered Bank. It is said to be the first such policy to employ the blockchain digital ledger technology.

Fidentiax - Marketplace for tradable insurance policies HQ: Singapore Description: As “the world’s first marketplace for tradable insurance policies,” Fidentiax hopes to establish a trading marketplace and repository of insurance policies for the masses through the use of blockchain technology. Blockchain network: Ethereum Deployment: Fidentiax succeeded in raising funds for the project through its Crowd Token Contribution (CTC, aka ICO) in December 2017.

See also: How Insurance and Blockchain Fit

Swiss Re – Smart contract management system HQ: Zurich, Switzerland Description: Swiss Re, a leading wholesale provider of reinsurance, insurance and other insurance-based forms of risk transfer, has partnered with 15 of Europe’s largest insurers and reinsurers (Achmea, Aegon, Ageas, Allianz, Generali, Hannover Re, Liberty Mutual, Munich Re, RGA, SCOR, Sompo Japan Nipponkoa Insurance, Tokio Marine Holdings, XL Catlin and the Zurich Insurance Group) to incorporate and evaluate the use of blockchain technology in the insurance industry. The Blockchain Insurance Industry Initiative (B3i) hopes to educate insurers and reinsurers on the employment of the blockchain technology in the insurance market. It serves as a platform for blockchain knowledge exchange and offers access to research and information on use case experiments.

As of yet, there have only been individual company use cases in the industry. B3i is working to facilitate the widespread adoption of blockchain across the entire insurance value chain by evaluating its implementation as a viable tool for the industry in general and customers in particular. The initiative envisions efficient and modern management of insurance transactions with common standards and practices. To this end, it has developed a smart contract management system to explore the potential of distributed ledger technologies as a way to improve services to clients by making them faster, more convenient and secure.

B3i was launched in in October 2016. On Sept. 7, 2017, B3i presented a fully functional beta version of its blockchain-run joint distributed ledger for reinsurance transactions. On March 23, 2018, the B3i Initiative incorporated B3i Services company to continue to promote the B3i Initiative’s goal of transforming the insurance industry through blockchain technology.

Sofocle – Automating claim settlement HQ: Northern Ireland, U.K. Description: Through smart contracts, AI and mobile apps, Sofocle employs blockchain technology to automate insurance processes. All relevant documents can be uploaded by customers via mobile app, thus minimizing paperwork. Use of smart contracts allows for a far more efficient and faster settlement process. Claims agents can verify insurance claims, which are recorded on the blockchain in real time. The smart contracts allow for verification of a predetermined condition by an external data source (trigger), following which the customer automatically receives the claims payment. Blockchain network: Bitcoin

Dynamis – P2P Insurance HQ: U.K. Description: Dynamis’ Ethereum-based platform provides peer-to-peer (P2P) supplementary unemployment insurance, using the LinkedIn social network as a reputation system. When applying for a policy, the applicant’s identity and employment status is verified through LinkedIn. Claimants are also able to validate that they are seeking employment through their LinkedIn connections. Participants can acquire new policies or open new claims by exercising their social capital within their social network. Blockchain Network: Ethereum and Bitcoin Deployment: The goal of Dynamis is the creation of a decentralized autonomous organization (DAO) to restore trust and transparency in the insurance industry. Its community-based unemployment insurance employs smart contracts and runs on the Ethereum blockchain platform. Using social networking data and validation points, Dynamis verifies a claimant’s employment status among peers and colleagues. It also depends on Bitcoin-powered smart contracts to automate claims.

Conclusion

Recognizing the benefits of blockchain and smart contracts, the insurance industry has begun to explore their potential. With the traditional insurance model, validating an insurer’s claim is a lengthy, complicated process. Blockchain has the ability to combine various resources into smart contract validation. It also offers transparency, allowing the customer to play an active role in the process and to see what is being validated. This fosters trust between the insurer and the customer.

Despite the obvious benefits of blockchain for insurers, reinsurers and customers, the industry has yet to adopt blockchain on a large scale. The primary reason for this is that blockchain adoption has until now required in-depth knowledge and skills in blockchain-specific programming languages. The limited number and high cost of hiring blockchain experts have rendered the technology out of reach for many businesses in the industry. Without access to the technology, exposure to blockchain and the ability to reap its benefits will remain limited for insurance companies.

How can these obstacles be overcome? The key is accessibility to enable all parties within the insurance ecosystem to reap the benefits of blockchain and smart contracts. There is a dire need for a bridge between the blockchain technology and these industry players. This is the role that the iOlite platform fulfills. iOlite provides mainstream businesses with easy access to blockchain technology. iOlite is integrated via an IDE (integrated development environment) plugin, maintaining a familiar environment for programmers and providing untrained users simple tools to work with. The iOlite platform thus enables any business to integrate blockchain into its workflow to write smart contracts and design blockchain applications using natural language.

How it works? iOlite’s open-source platform translates any natural language into smart contract code available for execution on any blockchain. The solution uses CI (collective intelligence), in essence a crowdsourcing of coder expertise, which is aggregated into a knowledge database, i.e. iOlite Blockchain. This knowledge is then used by the iOlite NLP grammar engine (based on Stanford UC research), the Fast Adaptation Engine (FAE), to migrate input text into the target blockchain executable code.

See also: Blockchain – What Is It Good for? 

The future of blockchain in insurance With a clear direction of blockchain adoption for the future, insurance companies will be forced to adapt or be left behind. The adoption of blockchain by the insurance industry is no longer a question of if but how.

The General Data Protection Regulation (EU) 2016/679 (GDPR) revolutionizes the data protection regime and significantly affects how organizations worldwide collect, use, manage, protect and share personal data that comes into their possession. As personal data increasingly represents an important new class of economic asset for organizations, the regulatory environment across European member states is undoubtedly shifting, and regulators have greater powers of enforcement. Aon and DLA Piper’s guide "The price of data security," reviews the insurability of GDPR fines across Europe, which can reach up to €20 million or, if higher, up to 4% of a group's annual global revenue. The scale of these fines has understandably generated concern in boardrooms. GDPR replaces a regime under which fines for a data breach were limited and enforcement actions infrequent. Moreover, the consequences of GDPR noncompliance are not limited to monetary fines. There are also the costs associated with noncompliance. These costs, potentially resulting from a data breach, could include, legal fees and litigation, regulatory investigation, remediation, public relations and other costs associated with compensation and notification to affected data subjects. Furthermore, the potential damage to an organization’s reputation and market position can be significant. The guide also looks at insurability of costs associated with GDPR non-compliance, including litigation, investigation and compensation, as well as the insurability of non-GDPR regulatory fines. It highlights that there are currently only a few jurisdictions in Europe where civil fines can be covered by insurance, and, even then, there must be no deliberate wrongdoing or gross negligence on the part of the insured. Criminal penalties are almost never insurable. GDPR administrative fines are civil in nature, but the GDPR also allows European member states to impose their own penalties for personal data violations. See also: Data Security Critical as IoT Multiplies   Key findings include:

• GDPR fines were found to be insurable in only two of the countries reviewed – Finland and Norway;
• In 20 out of 30 reviewed jurisdictions, GDPR fines would generally not be regarded as insurable, including the U.K., France, Italy and Spain;
• In eight of the jurisdictions, it is unclear whether GDPR fines would be insurable. In these jurisdictions, specific details around individual cases, for example the conduct of the insured and whether the fine is classed as criminal, will need to be considered.

The role of insurance The magnitude of GDPR fines means organizations are keen to know whether these fines can be insured. Typical cyber insurance policies only insure fines when “insurable by law” and stipulate that the insurability of fines or penalties shall be determined by the “laws of any applicable jurisdiction that most favors coverage for such monetary fines or penalties.” Organizations also need to consider other costs and liabilities that could result from GDPR non-compliance. Given the size of the potential financial impact of GDPR non-compliance, it is important for organizations to understand how the insurability of fines, legal and other costs and liabilities following a data breach is approached in different jurisdictions. While the insurability of fines may be limited, insurance forms a key component of an organization’s GDPR risk management strategy to manage costs associated with GDPR noncompliance and resulting business disruption losses. In addition to insurance, there is significant business advantage to taking privacy and data protection seriously. Properly securing the data you hold is critical, but a robust data retention strategy is essential. The scope of GDPR is broader than most insurance policies, which are often triggered by privacy or security incidents, whereas GDPR violations can also be triggered by non-compliance separate from a privacy or security incident. To the degree an existing insurance policy is intended to cover wrongful collection or usage of private data and cyber-related regulatory fines, penalties and assessments, the same intent should apply with respect to GDPR. Similarly, to the extent an existing insurance policy excludes wrongful collection or use of private data and excludes cyber-related regulatory fines, penalties and assessments, the same should apply with respect to GDPR. Reviewing GDPR preparedness on an enterprise basis can increase an organization’s overall cyber resilience and help to reduce their total cost of risk – from insurance. See also: Global Trend Map No. 12: Cybersecurity Next steps There is no doubt that GDPR is a continuous challenge for organizations, but there are steps that you can take to help manage the potential impact through risk governance, insurance review and incident response. Risk governance

• Carry out a security audit to check personal data is secure against unauthorized access or processing
• Put in place a plan for ensuring continuous monitoring and follow up of data compliance efforts
• Ensure that contracts with all third-party processors contain at least the minimum terms stipulated by GDPR
• Adopt a privacy-by-design methodology when initiating projects or developing tools

Insurance review

• Ensure adequate cyber insurance coverage is in place
• Review your existing insurance coverage for GDPR noncompliance, especially fines, penalties and lawsuits, with assistance from qualified coverage counsel

Incident response

• Ensure you have an incident response plan in place, including data security breach notification procedures
• Review your existing enterprise-wide incident response plan to ensure that it incorporates escalation plans and nominated advisers covering all required stakeholders. This includes business operations, legal, PR and key third parties such as IT service providers.

Access the complete findings of the guide here.