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

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

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

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

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

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

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

1. Greater stress on cybersecurity

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

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

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

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

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

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

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

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

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

Have a great week. 

Paul Carroll
Editor-in-Chief

Digitalization has become the new standard for business success and is fundamentally changing how insurers run their organizations. Just four years ago, less than 40% of insurers identified as a digital insurer; today, more than 90% see themselves as one, according to SMA research. While some are only in the nascent stages of digital transformation, others like Chubb are paving the way by functioning as a fully integrated digital enterprise. No line of business is exempt from digital transformation, but workers’ compensation has the largest initial impact, with concerted efforts from many carriers to improve their underwriting through predictive analytics and redefine the claims experiences for injured workers. Leading insurers are increasingly using digital tools, emerging technologies as well as external and internal data, to enhance sales and service experience for agencies and policyholders while minimizing losses and improving ease-of-use. Liberty Mutual, for example, has employed personalized, interactive videos to enhance communications and drive engagement with injured workers. Similarly, insurers such as QBE are leveraging AI and machine learning to improve patient care, reduce litigation potential and manage fraud. However, becoming truly digital is not just about overhauling agency portals or using technology to improve operations. It’s changing the entire mindset of an organization and can touch every aspect of the business including the people, processes and technology. Here are some of the guiding principles to establishing a successful digital mindset. A Comprehensive Digital Strategy An ideal digital strategy blends emerging and existing technologies to redefine a company’s value proposition to create and support all means of engagement and automation across the company. It’s about finding the right balance between effectiveness and efficiency. There are several stages of building a successful digital strategy. The first is a baseline capability of taking a paper asset and making it digitally available. The second is the ability to apply new methods to enhance digital experiences across the board, whether through automation of internal processes or through customer-facing portals. Finally, it involves smooth transition for handling fundamental changes in an insurers’ business model, which includes looping in all parties who will be affected by the change, deploying changes in phases and using the process of changes and upgrades as learning opportunities. See also: 5 Digital Predictions for Agents in 2019   Speed-to-Market Principles As insurers continue to integrate technology into their organizations, competition is escalating, and getting a product to market as quickly as possible is essential to the success or failure of a project. The value that digital tools and platforms provide to an insurers’ stakeholders is of prime importance, but it’s vital that these changes and updates are introduced in a timely manner. Given that, on an infrastructure level, most companies aren’t built to support digital businesses, the best approach is to integrate the new digital capabilities across the organization in increments. Insurers should begin by introducing a minimum viable product (MVP) to the marketplace and then adapt as needed. Using an iterative testing and learning approach will save time and help make the products better-suited to user needs. Simplified Customer Experience The way customers perceive their interactions with insurers defines the customer relationship. Today, people want insurance providers that offer simple, time-saving products and services and have many options beyond incumbent insurers, with new entrants vying for their business. Most insurers begin digital transformation by overhauling their internal processes to support automation, but true digital transformation should also extend to the customer touchpoint. Insurance buyers have a long list of “asks” in the modern economy. They expect broad coverage, state-of-the-art technology and apps to make the processes simpler. They also demand bespoke risk management solutions and faster claims management. What makes catering to this ever-growing demand a challenge is the number of players competing for the same piece of business. On one hand, we have insurtechs and traditional insurance companies looking to offer efficient digital platforms, and on the other, pay-as-you-go insurance models and producers looking to own buyer relationships with innovative customer solutions and product offerings. As a result, insurers should create ways for customers to reap significant rewards by improving time-to-quote, expedite policy binding and create more flexible billing options. An example of how to achieve these goals is to offer seamless customer services using application programming interfaces (APIs), email, telephone and customer portals. Currently, more than 40% of the applications are submitted via agent portals on average, which share policy documents and commission information. Insurers have a complex and deep sales funnel that can be streamlined if internal systems work together to reduce operational friction. Data and Customer Insights Drive Decision Making Insurance companies have access to a wealth of data, whether from customers or third-party data acquired from IoT, sensors and drones. Over the years, insurers have proven themselves adept at collecting data but struggle to analyze, process and organize the information in a way that helps with real-time decision making. The idea is to leverage data-driven insights to model products and solutions while making updates and enhancements to them. An example of a company successfully doing this is Pie Insurance, which uses predictive analytics to expedite and improve the direct-to-consumer quote experience. Routing data across an insurer’s systems is incredibly challenging, which is why more are moving away from disparate core systems and migrating to a unified platform that supports data flow across the entire organization. Evolve With the Market While Inspiring Change Adoption Across the Board Any cultural or organizational change requires educating the affected parties about the value that technology will bring to their day-to-day workflow. Employing new tools to better the business means nothing if it won’t be used appropriately by stakeholders that interact with the solution every day. This promotes actual mindset change and organizational alignment that prepares companies to continue to build on their digital foundation. For example, an insurer might have stringent underwriting guidelines for how a team should use a predictive model to make policy decisions, but, if the underwriters themselves do not understand the tool or how it benefits them, they risk breaking protocol or providing misguided feedback that makes the model less effective. See also: 3 Ways to an Easier Digital Transformation   True digital transformation not only requires an understanding of what’s needed to replace legacy systems, but also depends on a detailed strategy and plan to see the organization through transformation. Building on top of existing technology is just as important for the future and, without organizational alignment, insurers won’t receive critical feedback and suggestions that can help optimize the technology.

As we all start working toward our goals and targets for the year, what defines a good KPI? Guest blogger Hanne Sorteberg returns to share her experience and advice on how to get these priority metrics right. She also helpfully shares nine pitfalls to avoid. Whether you are an analytics leader setting KPIs for your team, or influencing other teams, this is for you. Over to Hanne… A new business year often brings new strategies and plans. KPIs, key performance indicators, are metrics that provide information on how a business is performing. KPIs ensure that a strategy is achieved, by giving direction to the employees who can realize it. Best case, KPIs are the compass that makes sure we are headed in the right direction. Worst case, they may drive behavior we do not want. Best case, they motivate for increased and improved effort; worst case, they discourage and demotivate. Oftentimes, they are a theoretical exercise put in a drawer without value. Avoiding worst-case KPIs How can we build KPIs that contribute to the growth and development of our business? KPIs should follow the checklist for SMART goals:

• S = Specific, it is evident and clear what the goal is
• M = Measurable, it is possible to measure the goal unambiguously
• A = Ambitious, it’s a stretch to achieve, and at the same time realistic
• R = Relevant, it contributes to the business’ strategy
• T= Timed, the timeframe for when the goal is to be achieved is clearly defined

There are many pitfalls to avoid to succeed with KPIs and goal management. Here are nine to consider: Pitfall #1: Too many KPIs The most common mistake is to be too ambitious and clever, vigorously defining KPIs for the entire business with fancy graphs and Excel macros. The work requires a lot of time to set up, and even more to maintain. Important deviations drown in information overload. A hospital went from one report of over 150 measurements, that no one paid attention to, to a lamp on the manager's desk. It had a green, yellow or red light depending on the waiting time in the emergency room. The lamp caused a significant improvement. A few, important KPIs can be enough to model the most important business processes. First ensure these are established, communicated and anchored in the organization. Then you can consider adding or adjusting the KPI process. See also: Insurtech Starts With ‘I’ but Needs ‘We’   Pitfall #2: Overly fancy KPIs Some KPIs can measure performance well but still be a bad choice. It can be too difficult to obtain the data. It can be difficult to explain what the KPI is, or there may be disagreement on how the KPI should be defined or calculated. Pitfall #3: KPIs that are impossible to measure Some KPIs that are important can be difficult to measure. In such cases, you either have to drop them or find an alternative way to measure them. For instance, customer satisfaction can be measured by an index based on surveys. It is important that the KPI is a numerical value, so that you can define thresholds and measure historical development. Make sure the KPI has the same meaning over time. Pitfall #4: Vanity KPIs Eric Ries, author of “The Lean Startup,“ uses the term “vanity metrics“ for measures that are celebrated as achievements but don’t contribute to the growth and development of the business. The number of page views, clicks, downloads and the like are examples of metrics you can boast about, but they don’t necessarily contribute to increased sales, customers or loyalty. Vanity metrics can take your attention away from the important stuff to follow up on. Pitfall #5: Not defining “good” What are satisfactory results? KPIs should drive the right behavior. It is important to define the thresholds of what is a good result, or green, making clear when there is a deviation that requires actions, to improve a yellow or red/critical situation. Pitfall #6: Not following up on KPIs Many businesses define KPIs as a part of their yearly strategy planning. The KPIs should be followed up so frequently that you have a chance to adjust course in time. Some KPIs may be measured daily or weekly, others more seldom. If something is measured less frequently than quarterly, it is probably not a good KPI. Pitfall #7: Not distinguishing between result and effort KPIs Most KPIs show results a business has achieved. Sales, the number of customers and contracts, waiting time, etc. You cannot influence these metrics directly; they result from what you do. An effort KPI measures the activities you do to affect the results. The number of sales calls, marketing campaigns, number of service calls and hours used for improvements are examples of such KPIs. It is useful to link result and effort KPIs. When a measurement hits yellow or red – which actions are taken? And how much effort does it take to correct? See also: The Dark Side of Product KPI   Pitfall #8: KPIs that drive unwanted behavior Some KPIs can have consequences you did not foresee, or even lead to behavior that is unwanted. If you, as a software vendor, introduce a KPI on the number of bugs, the development time may increase significantly. Measurements comparing when features are delivered to an estimate may lead to estimates that are way too high. A KPI to shorten the length of a telephone call at a service desk to decrease waiting time may cause fewer issues to be handled at the first call. But it may also actually increase the total waiting time. Some of these KPIs may be kept if they are balanced by an additional KPI. The number of bugs measured at the same time as development effort. The length of service calls in addition to the number of issues solved at the first call, in addition to customer satisfaction. It is critical to reflect on whether the KPI will introduce negative and unexpected consequences. If you can imagine any, set up monitoring to evaluate how effective the KPI is over time. Pitfall #9: KPIs aren’t communicated and anchored in the organization KPIs are meant to change the way you act. To measure without doing something different based on the results is wasted time. If you are to introduce a system of goals and measurements, it is important that the KPIs are communicated. This needs to be done in a clear way, and the organization needs to agree to them. Stakeholders should perceive that their effort can affect the KPIs. They need to believe that the goals are realistically achievable. Something should happen when a KPI turns yellow or red, either corrective action or an adjustment of the KPI to make it reflect reality. How are your KPIs? Thanks to Hanne for that practical post, which I’m sure is relevant to many managers at this time of year. What are you going to do differently as a result? Are you confident that you have the right KPIs for 2019? If not, how could they be improved? If you do make changes that work, after reading Hanne’s advice, I’d love to hear your story.