The insurance industry has a last-mile issue. Insurers have known it for quite some time, and policyholders are quickly catching on. For consumers, the claims process is a critical moment – the one that often matters the most. Faced with the prospect of loss, they demand an experience that is speedy, familiar and customized to their needs. They want to feel confident that their insurer is acting swiftly to make them whole again. Forward-thinking insurers have invested in new processes to submit claims, including easier-to-use online and mobile platforms. The result - most can now offer claims filing and approval in just minutes. Yet, the way in which insurers pay people has been overlooked and remains slow, inconvenient and - well - frustrating. Nearly all insurers still pay people the old-fashioned way using paper checks or ACH. This experience falls far short of modern customer expectations. Waiting for a paper check to be printed, mailed and then deposited is unacceptable when a customer must repair a car needed for daily commutes or rebuild a home damaged by a natural disaster. Even an ACH deposit requires the customer to submit bank routing and account information – which no one has on hand, much less if they’ve lost their home to a flood – and can only be issued on a business day. Furthermore, managing checks that have been lost or issued but not cashed is an expensive process for insurers. Today, customers conditioned by online, on-demand and smartphone experiences are accustomed to instant everything, and the insurance industry’s outdated paper check payment model is a gut-punch in a time of a need. They are demanding more from their insurance partners. See also: The ‘Moment of Truth’ for Claims   The rise of instant payouts is helping to fill this void. Already in use across other consumer-facing industries like lending, banking and travel, real-time disbursements have become familiar to policyholders, and pioneering insurers are beginning to take notice. By putting funds in the hands of policyholders immediately upon approval – 24/7– and in a financial account of their choosing, insurers can gain a competitive advantage through increased customer loyalty, customer acquisition and operational cost savings. Those insurers exploring instant payout technologies or service providers should consider the policyholder experience as the beginning, middle and end of any successful digital payment transformation. The three key elements of that experience are convenience, choice and confidence. Convenience Policyholders submitting a claim are often inconvenienced - or worse - by unforeseen circumstances. Your goal is make them whole and do it in the easiest way possible. A push payment delivers the speed and simplicity that fulfills the promise of insurance. Unlike batch ACH payments or even slower instruments like paper checks, push payments are real-time delivery of funds 24/7 - even on weekends and holidays. Even better, the process of setting up a push payment is incredibly fast for the consumer. In contrast to ACH or a check, push has no process because it uses the same instruments and accounts that policyholders already know and trust. These are the cards they carry in their wallet or the accounts stored on their smartphones today. No need to look up a routing number, activate a new card or open an account. The way in which insurers communicate with policyholders about claims fulfillment should also make it as easy as possible to choose and manage a push payment. That means immediate electronic notifications that a payment is available and the ability to accept and select account destinations with the press of a button. Choice Historically, claims payments have been issued using a paper check or ACH deposit, constraining customers to the use of a traditional bank account. This limited the policyholder’s options and led to delays in them moving money to needed accounts to pay for auto repairs or begin work with a contractor. But policyholders pay for purchases in their daily lives using a wide range of accounts: debit or credit cards, online wallets and more. A successful claims payment should mirror this choice in accounts. Push payments allow insurers to send funds to a specific account designated by the policyholder (a familiar card or existing online wallet) for instant funding of ready-to-spend proceeds. To fully take advantage of this capability, insurers should find a push payment provider that reaches a comprehensive network of consumer accounts. As a benchmark, Ingo Money has built a network of networks that can fund more than 4.5 billion consumer accounts. Confidence By definition, push payments arrive in an account as fully guaranteed and ready-to-spend funds. In and of itself, this fulfills on the promise of insurance and inherently delivers the confidence that policyholders crave. The process of orchestrating a push payment can also instill confidence in your customers and lead to more loyal policyholder relationships. Insurers should support this with clear and transparent communications, helping policyholders understand when a payment is available, which accounts are supported and when funds have arrived. See also: How Robotics Will Transform Claims To deliver this confidence, be sure to tap a reliable push payments provider. Premier technology partners should provide reliable funding 99%-plus of the time. This is attainable by the reach of their network and ability to support millions of consumer accounts. In this way, it ensures redundancy to route transactions through multiple paths to the customer. The policyholder and business advantages of a modern, real-time last-mile payment process can no longer be ignored. Insurers that are not delivering on the promises of convenience, choice and confidence in payments risk being left behind by customers. With instant payouts, insurers can dramatically improve customer acquisition and retention, lower claims costs and claims leakage, reduce payments fraud and shorten claims cycles. Insurers that act now to embrace this shift will gain a competitive advantage in the marketplace and create distance from laggards that will increasingly be perceived as out of touch with the instant money economy.

Always the same story: 11 months after a costly customer acquisition, crafty price comparison players and other intermediaries helpfully knock on the customer’s door, show a smorgasbord of supposedly better value options and outline how easy it is to switch. For example, 16% of Americans shop around for car insurance every year, saving up to 47% of the previous year’s insurance cost. This represents an impact of up to $40 billion on the $500 billion car insurance market. What’s great for the consumer is a major headache for the insurance provider, which often has to join in the dreaded price war to keep a customer. In many other industries, having a good brand is a bulwark against a price race to the bottom. But for immaterial and low-involvement products such as insurance, this is easier said than done. It’s hard to stand out in the customer’s mind and become a provider of choice. But there are a few things insurance providers can do to survive the first-year itch and give the customer an experience that will greatly increase the odds that they’ll stick around for another year. Before we get into the specifics, it’s important to understand one key principle of loyalty, which is best illustrated by Maya Angelou’s famous quote:

“People will forget what you said, people will forget what you did, but people will never forget how you made them feel.”

That’s why discounts don’t lead to loyalty. Sure, it’s sweet to get a $150 bonus for staying with your current life insurance provider, but once the money hits the bank account it just dissolves into the family budget, never to be seen again. It’s not memorable, and it sure as heck doesn’t make the recipient feel much of anything. Contrast that with what you could actually DO with $150: What if you gave your customers an experience such as a kayaking tour or a candle light dinner for two? The cost would still be some $150, which is close to what a bonus or discount would amount to — but the effect is far stronger. Why? Because the customer associates the experience with you. In the back of their minds, they know, as they’re tucking into their entree or dipping their oar into the turquoise waters, that this experience comes courtesy of Insurance Co. And that association works on a subconscious basis and lasts far longer than any discount could. You may argue: Why wouldn’t customers be able to do it themselves with the $150 check they received from you? After all, they just received a discount of $150, so you might as well encourage them to spend it on that kayak tour, right? All without going through the hassle of organizing it on your end. Not really. Most people don’t operate that rationally, and hardly anyone would take a windfall gain and spend it on something specific. It’s more restrictive to give them $150 in kayak or dinner vouchers, but that restriction means that they are far more likely to use it. And you WANT them to use it. See also: What Really Matters in Customer Experience The effect is obviously not limited to dinner experiences, although that one is quite the front runner when it comes to a memorable experience at an affordable price. Other perks that suit an insurance company’s first-year-itch-avoidance budget would be:

• A luxury case of wine
• Two tickets to a rock concert or musical of the customer’s choice
• An afternoon at the local spa
• A cooking class
• VIP cinema tickets for the entire family (customize it by asking them how many tickets they want and providing any number of them — within reason)

It’s important that the item or experience you provide be non-utilitarian. A new vacuum cleaner or blender won’t do the job as well as a cheese and wine tasting night out. To be a memorable experience, it needs to be non-quotidian and give a hint of luxury or, dare I say, décadence. Yes. French spelling. So how much can it cost? Well, that depends on how much you can afford. If you, with a heavy heart, normally provide a discount of $150 to keep a customer with itchy feet, providing an experience worth $150 is the starting point. More bang for your buck through breakage and volume discounts But that $150 can go a much longer way and you’ll be able to magically turn it into $200 or more in the following way: First of all, if you do this at scale, you’ll be able to secure discount rates from the vendors. A restaurant chain will gladly give you a discount if you buy 100 candlelight dinners from them. Second, there’s breakage. We’ve written extensively about the concept — in short, breakage is the rate of unredeemed dinner experiences (if we can stay with the dinner example). Some people will end up not redeeming their gifts. How should you deal with this, though? On the one hand, if you want to focus on short-term profit, this is good for you, because the user has accepted to stay with you for another year without creating any cost — because they haven’t redeemed, you can now use their voucher for someone else. On the other hand, if you are focusing on brand building and are willing to forgo the short-term profit for long-term customer loyalty, nudge customers toward redeeming, so that they can indeed build that positive association of their experience with you. Whichever route you choose to take, industrywide breakage rates are around 30% and, even if you nudge people toward redeeming, are unlikely to drop below 5%, so make sure you are including this in your calculations. See also: It’s All About the Customer Journey And the results? Our clients experience an average 15% reduction in customer churn by offering personalized gift cards to their customers. For more on how to boost loyalty and retention among subscription customers, read our brand-new ebook, “The Ultimate Guide to Loyalty and Retention.” The key message is: Stand out. Provide an experience. Do what others don’t. Give the customer a positive feeling for staying with you, even if you are not the cheapest option on the market. Here’s to the end of the first-year itch!

Even though senior leaders in many insurance organizations realize that innovation is an imperative in the current environment, there are many reasons that success is difficult. There are some legitimate roadblocks, but many of the reasons that innovation efforts are either never started or, more troubling, never successfully completed are falsehoods. In the first installment of this three-part series on Myths of Insurance Innovation, we covered strategic complacency: those myths that are a function of misreading the current environment and lead to a lack of urgency. As we saw in our last post , even though the importance of innovation efforts is high, the urgency is low, and other concerns take precedence. Financial Myths Here, we look at a problem closely related to the lack of urgency: the canard surrounding innovation and financial performance. One of the key ways that financial concerns inhibit innovation decisions is through a focus on quarter-to-quarter results. Innovation efforts are often seen as hurting financial performance. Many insurers have multiple development efforts in flight at any time competing for resources, and the list always grows. There are two ways to add an effort: either put it into the current work queue, adding the attendant costs, or shift resources by slowing or stopping work on an existing project. But adding expense reduces corporate financial performance, and diverting resources from needs such as critical infrastructure can be a poor choice. Because there is little urgency, the innovation project can be tabled. The rationale is that, once the workload has been reduced and critical infrastructure improvements have been made, then the work on innovation can be started. See also: Can Insurance Innovate?   Unfortunately, the day when urgent tasks have been completed and resources have been freed up for innovation often never arrives. Additionally, as financial performance is pressured by market cycles and underwriting performance, it is easy to postpone innovation to a time when underwriting results are sure to be better. But hard markets are further apart and of shorter duration because new pricing and underwriting tools and processes enable faster course correction. Concerns about cannibalizing revenue from profitable business units may manifest themselves in two primary ways. First, leaders of the organization may be concerned about the overall impact on corporate performance. Second, business unit managers will fight to protect their resources – they not only need to protect their people and initiatives, but the battle for resources also determines status and potential for career advancement. In fact, companies often aren’t playing a zero-sum game with resources. In many instances, net new revenue from additional products easily offsets the revenue loss in the existing product line. An even bigger financial myth is that innovation is only for the largest carriers. The assumption is that successful innovation requires dedicated labs, large staffs and huge budgets. This is understandable, given the nature of how our industry deals with change. The press is full of stories of how giant insurance brand Y built this amazing offsite lab with 30 full-time staff. The result of this multimillion-dollar investment? An amazing new product or process that is revolutionizing some aspect of the insurance ecosystem. It is easy to see why this myth has come to be: The successes are often well-funded efforts. But there are as many highly effective improvements being fielded that aren’t heralded. See also: InsurTech: Golden Opportunity to Innovate   The truth is that most successful innovation efforts are driven by small teams with limited resources. With the right tools and processes, two to five individuals working within the boundaries of well-chosen constraints are able to quickly formulate, develop and launch innovations that will scale and quickly return multiples of the original budget. Constraints on financial and time resources are actually very effective in focusing a team’s efforts because the limits encourage timely decisions and trade-offs.

Earlier this year, industry titans Amazon, Berkshire Hathaway and JP Morgan Chase (ABC) announced a partnership that would incubate a separate, non-profit entity aimed squarely at healthcare. Given the seed stage of the collaboration, the announcement was necessarily vague, but it did refer to an intent to address healthcare for their employees, improve employee satisfaction and reduce costs. The partnership has now announced the selection of noted surgeon, best-selling author and public health researcher Dr. Atul Gawande as the CEO of the unnamed entity. It’s a bold marketing step to be sure – and I have nothing but respect and admiration for Dr. Gawande – but neither employers nor new ventures will disrupt the fiscal burden of healthcare. The trajectory of the ABC entity is still unknown, of course, but, like other high-profile announcements before it, I think it’s really targeting a fairly traditional group purchasing business model. At least that was the implication that CEO James Dimon gave to nervous healthcare banking clients at JPMorgan shortly after the press release hit this last January. See also: Healthcare Disruptors Claim War Is Won   In fact, there are a number of these group purchasing entities already in existence – and some have been around for decades. With about 12 million members, Kaiser Permanente is arguably the largest. It operates as a non-profit because the fiscal benefits should logically accrue to member companies and not the entity itself. Group-focused healthcare initiatives suggest that there will likely be a positive effect on ABC’s 1 million plus employees, but it won’t make systemic changes to our tiered – and expensive – healthcare system as a whole. Here are the top 10 reasons why this latest venture – or really any group of employers – can’t fundamentally change U.S. healthcare.

1. Employer-sponsored insurance (ESI) isn’t the product of intelligent system design. In fact, there’s no clinical, fiscal or moral argument to support this unique financing model at all. It’s quite literally an accident of WWII history, and America is the only industrialized country that uses employment as the governing entity for health benefits. We could have changed this accidental system design decades ago, but we never did.
2. Whatever the business of private industry (either privately held or publicly traded), unless  a company is literally in the business of healthcare, the vast majority have no specific healthcare domain expertise – nor should they seek to acquire it, because it will never be a true focus or core competency. ABC may purchase (or build) components of that domain expertise for their employees, but any of those fiscal benefits won’t auto-magically accrue to other companies – and, let’s not forget, at least some of those other companies are direct competitors to Amazon, Berkshire or Chase.
3. Unlike Medicare or Medicaid, ESI (and commercial insurance, more broadly) supports inelastic healthcare pricing because it is literally whatever the market will bear based on group purchasing dynamics. This is also why Obamacare health plans are entirely dependent on a laundry list of subsidies. As individuals, few Americans can afford unsubsidized Obamacare plans outright. This also makes it entirely pointless to go through a lengthy legislative repeal process, because it’s relatively easy to simply cripple Obamacare outright. Just remove the fiscal subsidies – which is exactly what’s happened (or planned).
4. The larger the employer (or group), the larger the fiscal benefit to the individual employer because of the group dynamic. That’s a compelling argument in favor of merger mania (leading to mega groups of millions of employees), but any of those effects don’t just trickle down to small employers. In fact, new business models (some with enviable unicorn status in the sharing economy) are designed to ignore health insurance or health benefits outright. They may funnel employees to group-purchasing options – but that’s a marketing sleight-of-hand to avoid the messy complexities and fiscal burden of managing ESI outright.
5. Like most other employment functions, ESI — and the employment process known as open-enrollment — is arbitrarily tied to our annual tax calendar, but that has no correlation or applicability to how healthcare actually works. We should all contribute (through taxation) to our healthcare system, of course, but a period of open enrollment (with a very specific number of days) serves no clinical or moral purpose (other than to continually monitor for pre-existing conditions and possible coverage denial).
6. While commercial titans capture all the headlines for many industry innovations (including high-profile healthcare initiatives like the ABC one), about 52% of private industry (either privately held or publicly traded) is made up of companies with fewer than 500 employees. Each of these employers is effectively its own tier of coverage and benefits. That works to support tiered (highly variable) pricing, but the only purpose of that is to maximize revenue and profits for participants in the healthcare industry.
7. Big employers are notorious for binge (and purge) cycles of headcount that results in a constant churning of employees. Today, the average employment tenure at any one company is just over four years. Among the top tech titans — companies like Google, Oracle, Apple, Microsoft and, yes, Amazon – average employment tenure is less than two years. This constant churning of benefit plans and provider networks is totally counter-productive because it supports fragmented, episodic healthcare – not coordinated, long-term or preventative healthcare. Insurance companies tried to tackle this – only to be penalized when those efforts (which led to healthier members) were delivered straight to their competitors at the next employer.
8. ESI represents a fourth party — the employer – in the management of a complex benefit over a long period. That function is administratively difficult for even three-party systems (payer, provider and patient) in other parts of the world. So why do we need a fourth party at all? We don’t.
9. ESI is heavily subsidized through local, state and federal tax exclusions. While this hasn’t been studied at great depth, it’s not a trivial amount. By some estimates, the local, state and federal tax exclusions combined amount to about $600 billion per year – which makes tax exclusions tied to ESI the second largest entitlement behind Medicare. It’s effectively corporate welfare specifically designed to support expensive healthcare pricing.
10. The employer contribution to ESI is significant – typically more than 55% of the cost for PPO coverage (family of four) – but this also helps employers keep wages artificially depressed. In fact, in recent years, the galloping cost of healthcare has tilted unequally to employees – and shifted away from employers. The days of sharing those annual cost increases equally are clearly over.

The combined effect of ESI – again, uniquely American – is the most expensive healthcare system on planet Earth and one of the biggest systemic flaws behind this ever-growing expense is ESI. As a distinctly separate flaw (I call it Healthcare's Pricing Cabal), actual pricing originates elsewhere, of course, but employers really have no ceiling on what they will pay – especially for smaller (fewer than 500) employer groups. This year, America will spend more than $11,000 per capita just on healthcare, and the average cost of PPO coverage through an employer for an American family of four is now over $28,000 – per year. [caption id="attachment_32169" align="alignnone" width="570"] Chart by Dan Munro; Milliman Medical Index 2018[/caption]

It’s about 1:00 pm on a Friday as I step back into the office to the sound of foosball. Laughter is coming from the lunch room. Instructions to the latest board game are being explained, and friendly competitions are reignited. In the quest for success, as in life, it is important to stop and enjoy the moments along the way. We spend a lot of our lives at work. When we bring play into our day, it can energize us and encourage us to give more of ourselves to tasks. Having fun doesn’t just have to be designated for after hours; why not bring it into the workplace, too? A study by Bright Horizons revealed that 89% of employees with high levels of well-being reported high job satisfaction. Nearly two-thirds of those employees identified consistently putting in extra effort at work. This isn’t surprising. What is surprising is that more leadership is not capitalizing on the economic value of fun. Two years ago, we lost a key employee due to cancer. She was a wonderful person, who was not only good at her job but did much around the office for our staff, our culture and our morale. She grew vegetables for us, surprised us with catered lunches and took tea towels home to be washed. She was always there for us. Shortly after her passing, our corporate culture came off the tracks. It has taken a while to get our mojo back. Leadership listened to our staff for input and engagement. We have made some changes and adapted and tried to ensure that all employees are not only good at their job but are a good cultural fit for our team. We want collaborative and innovative colleagues that reflect our values, and we wanted to bring back the fun to increase productivity. See also: 3 Ways to Boost Agency Productivity   Here are a few ways you can bring more fun (and productivity) into the office: 1. Have lunch together Nothing bonds people like sharing a meal, no matter the circumstances. A 20-year-old design firm in Berlin called Studio 7.5 has a rule that all its employees must have a meal together every single work day. The meal is shared on a communal table. This is proven to bond even the greatest of strangers, who will always open up and relax over a meal or drink. If staff at my company aren’t playing a game, they’re often having lunch or stepping out for a walk. This goes a long way to balancing work and play as well as building relationships. 2. Decorate your office space Whether you are a startup entrepreneur or a big technology firm, find ways to decorate your office space to promote a positive, collaborative corporate culture. Use colors that represent your brand, and design meeting rooms that support creative ideas and brainstorming. Whiteboard walls, digital media and comfortable lounge chairs will facilitate coming together to share and create. If there is a holiday or event, get your team together and make decorating an activity. Take photos and share them on social media so that your team can celebrate the experiences they are making together outside of the daily grind. Baby and wedding showers, Christmas, Easter and even Valentine’s Day are opportunities to brighten up the office with decorations that everyone can enjoy. We have staff from all over the world and welcome celebrating their special holidays, too. 3. Hold staff events Having a unique culture that makes your office stand out will promote staff members feeling like they are part of something bigger than themselves. Plan team-building events such as escape room games, rock climbing or a cooking class where teams can rely on each other to reach success and have fun doing it – we do! Lunch-and-learns are another great way to have fun and advance knowledge of employees in areas they may not otherwise have access to. This shows employees you’re invested in their success, which can pay dividends in terms of employee loyalty. 4. Prioritize fun With tight deadlines and tasks competing for attention, it’s not always easy to prioritize fun. Get events on the schedule and build excitement with emails and at staff meetings. Have veteran staff speak up about how much fun everyone will have at office events. Invest in an air hockey table, lounge space or a weekly game lunch. Getting everyone to relax and enjoy a little downtime during the day will be team builders in themselves. See also: How to Make Insurance Fun So get out, have fun and make memories together. They will be the glue that bonds you together during challenging times and makes you more likely to become successful as a company and a team.

First, let me say that I don’t make a habit out of staying at Ritz-Carlton hotels. But I have had occasion perhaps a dozen or more times to stay at a Ritz while attending a conference. I’ll have to say that, not only did I never experience a problem, but, without exception, each stay was an exercise in indulgence. I’ve also experienced several outstanding displays of excellence in customer service. On one occasion, I was preparing for a workshop and realized that I had forgotten my overhead markers. Stepping into the hallway outside the meeting room, I asked a housekeeper who was dusting ashtrays (really) if she knew how I could get in touch with the A/V people. In many other hotels, I’ve been lucky to get a shrug or Freddie Prinze-ish, “That’s not my job, man.” Not at the Ritz. The lady insisted on tracking down the markers herself (my program was scheduled to begin in minutes) and, remarkably (no pun intended), she returned with a new, unopened pack of markers within five minutes. She had been taught that SHE “owns” any request by a hotel guest. On another occasion, I was convinced there was a shortcut to a meeting room on the second floor (where my sleeping room was located), so I wouldn't have to go down and through the lobby, then back up some stairs to the second floor again. I stopped and asked a guy who was painting some trimwork if he knew how to get to the room. It would have been easy for him to say he didn’t know, but this guy laid down his brushes and escorted me through a maze of corridors to the meeting room. What this gentleman did is the rule, not the exception, at a Ritz-Carlton hotel. If you’ve ever stayed at a Ritz-Carlton hotel, I’m betting that your experience was outstanding, too. (In an independent survey, 99% of Ritz-Carlton guests said they were satisfied with their experience, with more than 80% “extremely satisfied.”) How can they do it so much better than most hotel chains? Yes, you do pay a premium for their services, so we can attribute some of this to a larger budget. But, for the most part, the Ritz does it by creating a corporate culture almost solely devoted to serving the customer. If you spend the night at a Ritz, chances are the person making your bed received more training than you did getting licensed! EVERY Ritz-Carlton employee receives a minimum of 120 hours of customer service training. That’s THREE WEEKS or more of training devoted to one discipline. Most first-year employees receive 250-300 hours of total training. How many of your CSRs have received 120-300 hours of any kind of training? This type of commitment to service and training pays off by allowing the Ritz to charge significantly higher rates for rooms and facilities while developing a clientele that is fiercely loyal. Many people WILL pay more for greater quality and service…the kind of people most businesses would want as long-term customers. See also: How to Enhance Customer Service   The Ritz-Carlton, at the time this article was originally drafted, is the only hotel chain to receive the coveted Malcolm Baldrige National Quality Award and the only two-time winner (1992 and 1999) in the service category. In a study by Cornell and McGill universities, the Ritz was selected “Overall Best Practices Champion” from a field of 3,528 nominees. Let’s take a look at some of the foundational principles of the Ritz: The Ritz-Carlton Motto: “We Are Ladies and Gentlemen Serving Ladies and Gentlemen.” The Ritz-Carlton Three Steps of Service:

1. A warm and sincere greeting. Use the guest’s name, if and when possible.
2. Anticipation and compliance with guest needs.
3. Fond farewell. Give them a warm good-bye and use their names, if and when possible.

The Ritz-Carlton Credo: The Ritz-Carlton Hotel is a place where the genuine care and comfort of our guests is our highest mission. We pledge to provide the finest personal service and facilities for our guests, who will always enjoy a warm, relaxed yet refined ambiance. The Ritz-Carlton experience enlivens the senses, instills well-being and fulfills even the unexpressed wishes and needs of our guests. The Ritz-Carlton Basics:

1. The Credo will be known, owned and energized by all employees.
2. Our motto is: “We are Ladies and Gentlemen serving Ladies and Gentlemen.” Practice teamwork and “lateral service” to create a positive work environment.
3. The three steps of service shall be practiced by all employees.
4. All employees will successfully complete Training Certification to ensure they understand how to perform to The Ritz-Carlton standards in their position.
5. Each employee will understand their work area and Hotel goals as established in each strategic plan.
6. All employees will know the needs of their internal and external customers (guests and employees) so that we may deliver the products and services they expect. Use guest preference pads to record specific needs.
7. Each employee will continuously identify defects throughout the Hotel.
8. Any employee who receives a customer complaint “owns” the complaint.
9. Instant guest pacification will be ensured by all. React quickly to correct the problem immediately. Follow up with a telephone call within 20 minutes to verify the problem has been resolved to the customer’s satisfaction. Do everything you possibly can to never lose a guest.
10. Guest incident action forms are used to record and communicate every incident of guest dissatisfaction. Every employee is empowered to resolve the problem and to prevent a repeat occurrence.
11. Uncompromising levels of cleanliness are the responsibility of every employee.
12. “Smile – We are on stage.” Always maintain positive eye contact. Use the proper vocabulary with our guests (Use words like – “Good morning,” “Certainly,” “I’ll be happy to” and “My pleasure”).
13. Be an ambassador of your Hotel in and outside of the work place. Always talk positively. No negative comments.
14. Escort guests rather than pointing out directions to another area of the Hotel.
15. Be knowledgeable of Hotel information (hours of operation, etc.) to answer guest inquiries. Always recommend the Hotel’s retail and food and beverage outlets prior to outside facilities.
16. Use proper telephone etiquette. Answer within three rings and with a “smile.” When necessary, ask the caller, “May I place you on hold?” Do not screen calls. Eliminate all transfers when possible.
17. Uniforms are to be immaculate. Wear proper and safe footwear (clean and polished) and your correct name tag. Take pride and care in your personal appearance (adhering to all grooming standards).
18. Ensure all employees know their roles during emergency situations and are aware of fire and life safety response processes.
19. Notify your supervisor immediately of hazards, injuries, equipment or assistance that you need. Practice energy conservation and proper maintenance and repair of Hotel property and equipment.
20. Protecting the assets of a Ritz-Carlton Hotel is the responsibility of every employee.

After the financial crisis in the European Economic Area (EEA), life insurance business was significantly influenced by volatile market conditions, low interest rates, pressures from regulatory bodies, changing customer demographics and investment patterns. These undesired economic conditions caused a dramatic increase in the protection gap. The insurance protection gap or underinsurance shows us the difference between the amount of actual need for insurance coverage and the amount that is purchased. This significant gap reached $21 trillion in the U.S. 58% of American families would not be able to cover their expenses just a few months after a loved one from their families passed away. European Union countries are in a similar situation. Sadly, the coverage gap reached $17 trillion in the EEA. Moreover, inequality is widening faster than ever. Current social security systems are strained because people live longer lives and job security is not a given anymore. When we look at other contributors to the protection gap, we see the negative perception about life insurance among customers. Life insurance is found to be very complicated and requires very bureaucratic processes to acquire, and policy premiums are not affordable. So, simplifying life insurance, especially for the new generation of insurance buyers, will be crucial for insurers’ future. The key of success is definitely insurtech! See also: Where Will Unicorn of Insurtech Appear?   When we examine the classic life cycle of a life insurance product, we see five main steps. These are:

• New business and underwriting support
• Agency and distribution management
• Policy admin support
• Claims management
• Shared services

With insurtech, these steps will be converted to standardized, efficient and optimized processes. The necessity for new product introduction will be performed while maintaining consistency and maximum quality in customer services. With insurtech, buying a life insurance policy will be converted to a digital customer experience, and this is a brand new business model. With insurtech, life insurers will:

• create easy-to-understand and non-advisory life products,
• have customer-centricity for creating life products,
• have automated UW (underwriting) decision processes that enable instant decision,
• reach target customers via different distribution channels,
• use predictive analytics to transform business with measurable variables easily and
• provide a high level end-customer satisfaction.

See also: Insurtech Can Help Fix Drop in Life Insurance  Creating a straightforward and informative online journey for life customers, via insurtech, will be the unique solution for the penetration problem that life insurers face.

In almost every industry in the U.S., consumers can easily access price information to shop. There is one glaring exception to this rule: goods and services in our nation’s healthcare system. Why do we accept the concept that it’s OK that we have no idea what the costs will be until after we have received the service? As a result, there is no price elasticity that would normally reward vendors who don’t overcharge and reward innovators that reduce costs while improving quality. Because the market for healthcare is broken, disparate prices bear no relationship to cost and quality. Table 1 shows very common examples of how the same medical procedure can have wild price variations within short distances. Many believe there’s no fix without healthcare price legislation, and recently we have seen some regulations passed and additional measures discussed by our political leaders. But Americans already get consumer-based pricing models in nearly every other industry, and shopping comes naturally to most of us. See also: Is Transparency the Answer in Healthcare?   So why would anyone wait for the passage of special price transparency regulations before requiring their medical suppliers to support a normal shopping experience? According to the Peterson Center on Healthcare, U.S. residents paid over $352 billion in out-of-pocket healthcare costs—along with another $3 trillion in healthcare premiums and taxes—to pay for commercial and government healthcare programs last year. This represents a staggering 10x, or 1,000% more than, what parents paid when baby boomers were teenagers. Unlike in the mid-‘70s, most medical tests and procedures vary in cost by 5–10x within a short distance of home, but very few of us recognize this. When we consider we’re just as likely to get the best care at the lowest-cost facility, you might think that we’d all take a personal interest in how we choose the providers and locations we use to receive “shoppable” medical tests and procedures. Yet most of us don’t. The reason is that the continuing rhetoric among suppliers, legislators and payers—created by the combination of the quasi-regulated environment of healthcare with a third-party, indirect, payer system—interferes with normal market dynamics. Most legislation aiming to mandate some sort of price transparency has simply provided plausible excuses for the industry to say “we use industry best practices” and “we complied.” This provides cover so the industry isn't subjected to the same consumer protection laws that affect goods and services in every other market. What’s actually needed is less regulatory meddling and more free market principles to reward innovations that lead to higher-quality care at lower costs. Rhetoric around “personal mandates,” “lifetime caps,” “pre-existing conditions,” “market stabilization,” “Cadillac tax” and other things that relate only to who will pay for healthcare coverage create a smokescreen that ensures that we never talk about the most basic issue in delivering services to this mass-market – price of medical procedures. Unfortunately, severe unintended consequences were created when many of our state legislators created a set of rules known as Medical Loss Ratio (MLR) rules, and, more recently, these rules have been codified in federal law known as the 80/20 rule. The intended effect was to limit the amount a healthcare carrier could charge a customer in insurance premiums to no more than the actual medical charges plus a fixed percentage to operate the business and provide a reasonable return to shareholders. This type of rule or contract is often referred to as “cost plus.” The unintended consequence is that carriers have no incentive to reduce medical claims, and therefore premiums and out-of-pocket expenses. Regardless of the carrier’s wish to help you, as long as there are MLR rules (a.k.a. 80/20, "cost plus"), carriers have a financial disincentive that makes them likely unable to survive if the amount of spending on medical procedures and drugs dropped substantially. Because research has shown that medical price transparency alone (shopping) could knock more than 50% out of healthcare expense, you can see why some might want to slow the movement to consumerism by continuing to maintain secrecy on procedure prices, while beating the drums of healthcare rhetoric. This approach will keep us ignorant of the root cause of the outrageous cost of care in the U.S. – overpaying for medical procedures. See also: The Search For True Healthcare Transparency   The good news is that more and more individuals have high-deductible health insurance plans, with roughly 36% of all people under the age of 65 currently enrolled in an HDHP. Now there’s a grassroots movement, debunking lies and empowering patients and employers—not lobbyists—to take action. Intuitive decision support tools continue to be adopted by those who want to be able to compare their options for healthcare based on price, in addition to quality and convenience. Eventually, as price-elasticity is restored to our broken healthcare market, we will see a full reversal of the unsustainable cost trends we’ve experienced over the last decade.

Peter Drucker famously said that we can't manage what we can't measure. Now that so many of us are trying to innovate in a predictable and sustainable (in other words, manageable) way, what should we measure? What metrics will let us know whether we're on the right path, while there's still time to pick a different one?

Some smart people weighed in on the topic recently, and I'll summarize them here.

Michael Schrage and David Kiron published a study in MIT's Sloan Management Review that found that only 27% of executives felt that their key performance indicators (KPIs) drove their businesses toward their strategic goals—leaving a lot of room for improvement. The two said many KPIs, having been used for decades, are out of date in today's environment. The authors also said too many are like profitability and market share, which tell you if you met targets in the past but don't help you understand the future.

They suggested a heavy dose of machine learning, sifting through big data, to identify new KPIs that will really move the needle for a business. They speculated that Netflix had no idea that binge watching would become such a phenomenon but quickly spotted the trend and came up with ways to measure bingeing, which led to KPIs that drove efforts to continually make Netflix more addictive.  

Here is an interview with my old friend Michael, with a link to the full report.

Amy Radin also weighed in, in this article at ITL, based on her long experience leading innovation efforts at major corporations and on the work she did for her book, "The Change Maker's Playbook," coming out in September. (I'm such a fan, I wrote the Foreword.)

She notes that traditional financial planning can smother innovation efforts. How can an innovator be expected to produce the precise forecasts that you can insist on from someone running an existing business in a well-understood market? Why would you even ask for such a forecast, given that it provides the corporate antibodies—those that like the world just the way it is—a chance to discredit an innovative effort?

Instead, Amy suggests five questions, including:

• How big is the addressable market? And does it pass the 1% test? In other words, would we be happy if we got 1% of that market? (In my experience, nobody thinks about just getting 1% of a market. 10%, 25%, sure. I've even seen 60%. But not 1%.)
• What would have to be true for this idea to pan out for us?
• What are the main drivers (conceptually) for revenue and expenses? 

In a cynical moment, my frequent co-author Chunka Mui and I once wrote in a book that "marketing is how you lie to your customers; market research is how you lie to yourself." Market research—whatever the reason for its failings—simply can't be as far off as it is now if our innovation efforts are to succeed. Spending a bit of time with Michael's and Amy's work will, I'm confident, help you zero in better on the right questions and the right indicators. You'll measure your innovation work better, and you'll manage it better.

Have a great week.

Paul Carroll
Editor-in-Chief

Across industries, digital transformation and cloud migration are forces to be reckoned with. Insurance is no exception. As an industry accustomed to operating on legacy technology, insurers should approach the cloud migration process judiciously. But they should also know that moving all workloads to the cloud – even if incrementally – is necessary to keep up with evolving customer expectations. The industry at large is receiving this message. Nearly 70% of insurers report they are somewhere along the journey to digitally transform their infrastructure, according to a report from Ensono and Forrester. But the jump from mainframe to cloud shouldn’t take place overnight. By taking a methodical approach and prioritizing the right workloads, insurance technology teams can achieve a hybrid IT infrastructure that allows for improved operations at manageable costs. Here are three guidelines to follow as your insurance organization adopts a hybrid cloud strategy: Prioritize which applications to move first 46% of insurers surveyed in the Ensono/Forrester study cited improving application performance as the most important IT change their company could make to augment customer engagement. But according to IBM, nine out of 10 of the world’s largest insurance companies still run on mainframes. Leaning on legacy technology alone makes it challenging to keep pace with application upgrades and customer expectations for speed and experience. Organizations that remain within a stand-alone legacy environment will have to rely on workarounds to keep upgrading their app performance, and these workarounds will only become more frequent and costly. See also: Digital Transformation: How the CEO Thinks However, moving all operations to the cloud and scaling up overnight isn’t a realistic ask of traditional insurers, either. The transition is expensive and takes months of planning and testing. Instead, insurance organizations should take things slower by prioritizing the applications that require the highest levels of performance as well as most external and third-party connectivity. The basic rule of thumb: Apps that are customer-facing should be at the top of your list. Set yourself up with premium analytics Quality data is central to understanding the needs of agents and customers, but legacy technology doesn’t allow for the best insights. Turning to a cloud or hybrid strategy increases an insurer’s ability to access top-notch, real-time data and analytics, as well as expand into emerging cloud offerings. According to Ensono and Forrester, almost half of insurance decision makers use cloud platforms for advanced data analytics, and about 40% believe it’s important to expand their use of emerging cloud technologies like mobile or internet of things (IoT) and increase reliance on public cloud platforms for systems of engagement. Those systems of engagement need to connect seamless to systems of record. Find the right partners Data analytics clearly play a huge role in the benefits insurers can reap from a hybrid cloud strategy. But a full 100% of insurers admitted to facing data-related security issues, according to Ensono’s study. Whether this is due to outdated IT infrastructure or a lack of expertise, it’s unacceptable to put any data at risk, especially customer data. The right partners can help keep your organization’s data secure while optimizing the right applications for cloud. Mainframes – a true foundation of the insurance business – aren't going away in this process, but they won’t bear the whole burden any more, either. Legacy systems do have their perks, such as security and expense, but ultimately insurers need to ensure they have access to the expertise needed to help their businesses thrive in the cloud. See also: 4 Rules for Digital Transformation The transition to a hybrid IT environment requires re-engineered IT infrastructure, the use of real-time data and insights and the right talent – the kind that can create a flexible and competent IT strategy with a custom balance of legacy platforms and cloud environment. Partners like managed service providers (MSPs), migration services and consultants can make the process much smoother. Accessing third-party support also allows your organization to skip the stressful experience of hiring for internal tech experts in a talent economy suffering from an IT skills gap. The push from customers for faster, better service in insurance continues. But dated infrastructure and an IT talent shortage is holding the insurance industry back. Digital transformation is the only way to achieve growing expectations, cloud migration being the core driver behind the progress. Insurers must thoughtfully design an infrastructure migration plan associated with their application strategy and seek the needed resources to help carry it out, thus ensuring a stabler as well as growing customer-backed future.