The following is an excerpt from a white paper, available in full here.  I’m a huge fan of Dan Sullivan’s strategic coach program. Many years ago, he said something that, initially, I didn’t fully appreciate or understand:

“What you currently get paid for, you may do for free, or be totally taken out of. What you currently do for free may be the only way you get paid!”

Although he was referring to the advent of the microchip, his message is just as applicable to the digital disruption occurring today. Primarily, agencies get paid for the risk-transfer mechanism they provide (e.g., insurance). They transfer the risk from the individual or business to the insurance carrier. Once the insurance is purchased and placed, the service they provide is reactive. In essence, most agencies are pass-through middlemen that respond to the needs of the insured but that otherwise add no real value. These days, digital technology is rapidly assuming many of the functions and responsibilities for which agents used to be compensated, namely the purchase and placement of coverages, along with reactive service. This makes it easier than ever for customers, especially personal lines and small commercial lines, to buy and service most of their needs via their desktop, laptop or other digital device, with little or no human contact. This trend continues to accelerate at lightning speed. So what are agencies doing now “for free” that may be their primary source of compensation in the future? I believe the answer lies in so-called value-added services and tools. These mainly involve providing risk advice that outlines ways to control the client’s true cost of risk, improves the client's risk profile with the marketplace and protects their assets. The insurance carriers are spending hundreds of millions of dollars on digital platforms. Why? For one thing, today’s consumers are demanding it. Furthermore, it costs the carriers less to do business digitally than personally. There is a staggering cost difference between transactions handled on the phone vs. online. The use of insurance carrier service centers is also altering the way agencies operate. Originally, I wasn’t a fan. However, the carriers have invested significantly in technology and training, and I now urge agencies to put 25% to 50% of their personal lines and small commercial lines into a service center. See also: How Technology Drives a ‘New Normal’   By the way, the bottom 50% of your customers probably generate less than 10% of your commission income. This frees up resources so that you can provide a great customer experience to your best customers. I’m referring to your A and B accounts, the top 20% that generate 80% of your revenue — not the bottom 50%. I realize this isn’t for everybody, but if you don’t know your 80/20 numbers (discussed in depth in Chapter 4), you can’t even begin to make a valid decision about which accounts to place with a service center. It’s also crucial to remember that once the account moves to the service center, it’s moved! It’s gone. It’s no longer in your agency. One of my research contacts said that if he were an agency owner he’d transfer as many transactions and expenses as possible to the carriers. And I agree with him. This frees the resources, agents and agencies needed to focus exclusively on risk assessment and transfers, asset protection and risk management planning. In my discussions with insurance carriers over the years, I’ve found that 54% of incoming phone calls to the service centers are agency personnel calling on behalf of the client. Keep in mind, the client either has been given the service center’s toll-free number to call directly for assistance or the client's call is automatically routed to the center. And yet many agencies continue to service the accounts they’ve moved to a service center. This makes no sense! Once the account is moved, it’s moved. You need to be focused on the clients you’ve kept in-house. See also: Secret to Finding Top Technology Talent   Embracing technology also means getting serious about using all of the capabilities of your agency’s automation system. My content partner in the Better Way Agency program is Angela Adams, CEO of Angela Adams Consulting. She’s unequivocally the best in the industry when it comes to the internal operations of agencies and maximizing their automation systems. I’m constantly questioning her about the use of technology and automation within agencies. Recently, she shared with me that the average agency uses only about 20% of the capabilities of its internal and carrier-provided technology. That’s about the same percentage of agencies that are active in an automation vendors user’s group. I find that incredible! Learning from others is one of the best and easiest ways to maximize your system. How else — and when — are you going to do it? If you’re behind the technological curve, your time to catch up is rapidly running out. With the proliferation of ever-evolving technology, more and more of the routine service items and transactions that keep everyone “so busy” are being handled digitally, outside of the agency. Therefore, to stay relevant and not become obsolete, agencies and their teams will need to pivot from handling transactions to providing risk advice and insurance solutions.

Property and casualty insurers aren’t shying away from digital distribution. “[F]our out of five insurers either have, or are planning to set up, wholly digital sales processes in which humans are involved only when customers need advice,” Accenture global insurance industry Senior Managing Director John Cusano reports. But taking digital distribution from concept to reality still poses major challenges for many P&C insurers. Here, we look at some of the biggest challenges of implementing a digital distribution strategy and how to overcome them. Everyone’s Going Mobile In a 2013 article for Wired, Christina Bonnington predicted that the world would contain 24 billion connected devices by 2020 and that the Internet of Things would result in people doing ever more tasks from their smartphones. We got there early: Statista estimates that the world of 2018 already contains 23.14 billion connected devices and that the number will be more like 31 billion in 2020. And more of these devices than ever are mobile devices. It seems as if the insurance industry only just began to embrace the opportunities afforded by digital technology when customers’ attention switched to this highly connected, primarily mobile world. Today, customers “expect the same intuitive experience from their insurance carriers as they do from their favorite mobile app,” says Rahim Kaba at OneSpan. And they’re not the only ones. “Even insurance agents are demanding better digital capabilities from insurers to increase their ease of doing business,” Kaba says. See also: Is P&C Distribution Actually Digitizing?   Putting Numbers to the Scope of Mobile's Impact Mobile is an essential consideration for insurance companies, according to Andrew Sheridan at DialogTech, who cites several statistics that illuminate the opportunity available:

• 40% of customers’ time researching insurance was spent on mobile, and 51% of these customers purchased insurance as a result of their research.
• 25% of insurance shoppers do all their buying via their mobile devices.
• 66% use a specific insurance company’s app.

Yet going mobile poses some challenges for insurance companies. For one thing, customers expect to be able to do everything from pay premiums to file claims, get driving tips or find a repair shop via a mobile app. That’s a lot of work for an app to do — and the more an app does, the slower and thus less appealing it is likely to be Another challenge is the integration of older technologies with new ones. As Parmy Olson notes at Forbes, older telemetrics devices like Progressive’s Snapshot are starting to give way to smartphone apps that perform similar tasks, measuring speed, distance and other driving-related factors that can affect premium calculations. These apps can seem more convenient to customers, but they can also make certain measurements or calculations more difficult. For instance, telemetric devices installed in the vehicle itself can more easily detect a crash and call for help, says Jim Levandusky, vice president of telemetrics at Verisk Analytics. Embracing Industry Shifts One solution? “Collaboration with the disrupters,” says Trevor Lloyd-Jones at LexisNexis Risk Solutions. Embracing mobile tools like telematics can make mobile apps easier for customers and more effective for insurance companies, and when these tools are approached through software as a service (SaaS) or similar providers, concerns about security or analysis are often addressed as part of the platform. Companies that dismiss disruptors in the insurtech sphere do so at their peril, says Nikolaus Sühr, co-founder and CEO of KASKO. The era of relying solely on historical data may be coming to an end. “Disruption in other industries is actually changing user behavior and the nature of risk, so there is no relevant historical data anymore,” Sühr writes. When moving into mobile for customers, agents or both, don’t be afraid to A/B test mobile apps, try new things and to innovate, says Amir Rozenberg, director of product management at Perfecto. While experimentation must account for the tight regulatory world insurance companies inhabit, trying out options in the mobile sphere allows P&C insurers to better understand how their customers use mobile — and how the company can use what it learns to attract and keep better customers. Within this process, however, it’s important to keep mobile in perspective. “Even with this trend, companies need to ensure a mobile app supplements the overall experience and doesn’t dominate it,” says Rodney Johnson at Kony. One Size Doesn’t Fit All “With customers using more devices in more ways, there are new options for customer engagement,” stated a recent Incom Business Systems white paper. There are also plenty of challenges. Mobile devices feel personalized to customers, and with companies in other industries extending that personalization to their apps, insurance companies are feeling the pressure to personalize, as well. A hallmark of in-person or traditional channels has been their one-size-fits-all approach to customers, according to Shashank Singh in an article at Insurance Nexus. Many P&C insurers have attempted to transfer this approach to the digital world, only to discover it doesn’t work. Data and analytics offer insurers an unprecedented opportunity to understand and respond to each customer as an individual, from recommending products to calculating risk. Digital distribution can also make it easier to capture a growing segment of the P&C insurance market that has changed its behavior as it finds itself priced out of coverage. “Rethinking distribution is key to successful inclusive insurance,” says Peter Wrede of World Bank Group USA. “Low distribution costs make insurance affordable for low-income people.” A 2017 article by in The Street noted that 18 million adults in the U.S. currently cannot afford auto insurance, so they go without, often turning to public transportation or rides from friends instead. As a result, “personal automobile insurance is in a crisis,” said Dave Delaney of Owner Operator Direct. “Rates have been increasing steadily since 2011, and there is no end in sight.” By turning to a digital distribution system to reduce costs, however, insurance companies gain the opportunity to make coverage more affordable, recapturing some of the 18 million customers who currently believe auto insurance won’t fit into their household budget. See also: The Future of P&C Distribution  Lack of Support Systems Personalization of the digital customer experience, leveraging tools like mobile apps, presents a profound opportunity to understand and respond to customers’ needs better than ever before, said Ash Hassib, senior vice president of insurance solutions at LexisNexis. But “data availability isn’t the issue,” Hassib said. “It’s how you use it to underpin sustainable and profitable growth that’s the real challenge for insurers.” And for many insurers, this challenge arises the moment they try to use that customer data within their current organization. “Insurers have focused on digitalizing the front end, with insufficient focus on the systems that support distribution,” said a May 2017 report from the Insurance Governance Leadership Network. Additional challenges in retention have resulted, with insurance companies noting that customers leave because the system doesn’t provide adequate support for their experience. Customers who use multiple channels to communicate with insurance companies are more likely to face problems caused by insufficient systems inside the organization itself. Perhaps this is why, relative to other industries, insurance company employees rated their companies 9% lower on providing a high-quality customer experience, according to Tom Bobrowski at The Digital Insurer. P&C companies were also rated 8% lower than average at “good cooperation between functions,” allowing the company to meet the customer’s needs effectively. One option is to take a hybrid approach, says Sasi Koyalloth in a Wipro Ltd. white paper. A hybrid approach focuses on incorporating human agents into the digitization process, focusing on giving agents and employees the digital tools necessary for seamless communication throughout the organization. Regardless of approach, “a single view of the customer is crucial,” says Robert Paterson at Afinium, noting that software as a service (SaaS) providers already exist with the tools and support needed to help P&C insurers move to a single platform for managing information. And the systems’ cost needn’t be onerous. “Another key driver for adoption of SaaS solutions is its use in developing pricing models that can be directly related to system usage,” Paterson says. Final Thoughts The switch to digital is now or never for P&C insurers. Working with knowledgeable insurtech providers can help companies address concerns about data security, analysis and customer experience, allowing insurers to take full advantage of the digital world to build more personal and long-lasting customer relationships.

Attracting young, talented workers seems to be one of the single greatest challenges facing the insurance industry. There are several reasons for this, chief among them the retirement of the career-oriented baby boomers, because they are taking their institutional knowledge of processes and systems with them. That institutional knowledge resident in each baby boomer is critical and has its roots in the days of apprenticeships, which is defined as “a system of training a new generation of practitioners of a trade or profession with on-the-job training and often some accompanying study.” Unlike an internship, in which the job candidate received work experience for a limited period, being an apprentice meant you committed your career to a particular industry. See also: ‘Jobsolescence’: How Big a Threat?  We know that young people don’t consider insurance a high-powered, exciting industry; rather, many see the industry as risk-averse, stuck in its stodgy ways and afraid to upgrade processes and technology. Perhaps the only exception to this is in the insurtech world, where startups are disrupting the status quo and larger insurers are starting to pay attention. When we look at internal responses (people/systems) to external changes (insurtech/other efficient technologies) among smaller insurers, however, the value of the retiring knowledge worker seems even more critical. This is especially true with insurers that have been clinging to their legacy core systems and are now in a scramble to put new business plans and processes together that will help support the technology required to remain competitive. So, why are smaller insurers more hesitant to embrace modern technologies? Think.Shift Chairman Balaji Krishnamurthy says smaller insurers, municipal risk pools, captives and self-insured groups are timid to adopt new technology because they fall prey to what he calls “the law of inertia,” which states that people tend to endure the pain of the present rather than risk enacting change. “Having lived with the pain of the present (spreadsheets, home-grown databases or software), they fear the certain pain of the change (moving to new technology with considerable unknown attached to it), even when they know that doing so might put them in a better position for the future,” he says. I can tell you first-hand that the future for young professionals does not include working on outdated systems. It does include working for a vibrant, forward-thinking industry that views enabling technologies as a priority. The industry at large is trying to do its part: February is now the official “Insurance Career Month”; the Insurance Risk Management Institute produced a YouTube video called "Why an Insurance Career"; and more than 850 organizations have joined forces to promote www.insurancecareerstrifecta.org, which is designed to inspire young people considering work in the industry. See also: Beat Brain Drain: Boost Your Talent Pool   So, my suggestion is that as your baby-boomer workers continue to plan for their own retirement, avoid the law of inertia and start making your own plans to upgrade your technologies to match the needs and skills of a new workforce. If you do, your new technology will foster superior opportunities for your company and workers; and you’ll enjoy the same sort of security of having institutional knowledge and the long-term loyalty inherent in apprenticeships.

Amid the devastation from Hurricane Florence, one hopeful sign emerged: this video from the Weather Channel. The video is so striking that nearly 17 million people have watched it or a slightly longer version on YouTube, but my point isn't that graphics keep getting cooler. It's that the video suggests public authorities and insurers will soon be able to communicate with people in ways that could save many lives.

Think about the efforts to get everyone to evacuate endangered areas before Hurricane Florence and about all those who sloughed off concerns—leading to the need for thousands to be rescued from their homes and to at least 25 deaths thus far. Now imagine if those thinking about staying were confronted by a Weather Channel-like video simulation showing the possible danger to their specific home: how high the waters might rise in the street in front of their house, what trees might fall on it, how impassable the streets might be for the whole neighborhood and so on.

Psychology suggests it would be hard to ignore such a vivid personal threat, and the necessary technology isn't far off.

Google has already mapped and photographed essentially the entire United States, and it isn't that hard to do a mashup of its Street View with video showing the effects of floods. While the Weather Channel video is awfully realistic, as is, the street signs could be shown for your corner, and the generic house and yard in the background could be replaced by yours.

Getting specific data for the possible effects on your house is trickier, but not for long. Based on maps from Google and others, people have access to increasingly good information about elevations for properties. While FEMA has long provided maps showing whether a house was in a flood plain, the elevation in that plain matters a whole bunch—being 10 feet higher or 10 feet lower can make all the difference. Houses not officially in flood plains can also be affected because of low elevations. Some cutting-edge firms, including the folks at Coastal Risk Consulting (whose Albert Slap wrote the article highlighted below on the need for more sophisticated data than FEMA flood maps provide), are getting very specific about the threats to individual properties. They incorporate not just elevations but tides and other data.

Mash a Coastal Risk-like database together with information from the National Weather Service about possible storm paths and rainfall, and you can generate a real-time estimation of the maximum and minimum threats for every property, with probabilities included. Combine that analysis with Street View, and you can show me, very personally, what I might face in a hurricane.

Et voila! A lot of people who would otherwise hang tight will head inland or go to higher ground while there's still time—before they have to be evacuated by boat or helicopter, or perhaps even die.

Think about how grateful a family would be after the storm to the public authorities or insurer that convinced them to leave before their home was inundated.

This sort of simulation represents some of the incredible power that insurtech is unleashing, and, while it wouldn't come close to solving all the problems represented by natural disasters, would sure be a nice start.

Have a great week.

Paul Carroll
Editor-in-Chief

Claims is a people business – virtually every claims executive I have ever met believes this. If you have ever been in a vehicle accident, experienced damage to your home or business, or been injured in a work-related incident, one of the first things that comes to mind is: I need to talk to someone who can assure me that I have insurance coverage and that there will be resources, both financial and technical, to make me whole again. This reaction is a human one and is not likely to go away. Many claims organizations have tried to maintain staffing levels to ensure a human connection is available to all. However, this is expensive, and claims organizations are already experiencing a shortage of individuals to fill critical claims roles. Claims executives are at a crossroads, and many questions arise. How do we maintain 1:1 people interactions and simultaneously manage skills gaps and expenses? Then there are digital expectations from all parties to the claim – insureds, claimants, distributors, service providers – how are those expectations met? Given all these weighty challenges, many claims decision-makers relate to the phrase: “There’s a light at the end of the tunnel, and it’s a train coming the other way.” But, for many claims organizations, the reality is that the digital train that is coming can provide answers to the people challenges they face. See also: How Work Culture Affects Claims Process   SMA’s recent research report, Claims Transformation: New Paths Forward for Reporting,  Verification and Communications, explores emerging technologies and trends in claims operations. Relative to the people business theme, there are several areas of innovation where concerns, expectations and answers merge.

• Self-reporting via photo and video. Apps that facilitate the insured or claimant in providing visual representation of damage will speed the claim along versus waiting for an adjustor or inspector to do the same thing. Faster settlement clearly meets consumer expectations. Additionally, precious claims resources are preserved for more complex claims.
• Self-reported photos and videos along with AI analysis. The resulting outcomes from AI analysis can facilitate the next-generation of straight through processing (STP), ultimately going well past the current glass and towing claims STP, as things such as machine learning evolve over time. Again, shorter time to settlement with little or no claims adjustor involvement – a win-win.
• Telemedicine and digital health platforms blend consumer-accessed, personalized information with a collaborative environment for adjustors, service providers, medical professionals and other concerned parties. These technologies blend useful, self-service information with human access at the moment of need.

These are just a few examples of the technologies that claims organizations have at their disposal to transform processes and operations. The previously mentioned SMA research report covers many other areas. Make no mistake, balancing when to insert adjustors into processes and when technology can facilitate desired outcomes is not easy to accomplish. One of the key success factors is to look at claims processes from the outside in. This is not intuitive for claims organizations that have spent entire careers managing the challenges and intricacies of the adjustment process with an internal lens to meet corporate compliance goals and tangential department needs within a regulatory framework that can be daunting.  However, looking at claims processes from the consumer perspective – outside in – can suggest ways of execution that fulfill the need for the customer to be compensated for their loss in the fastest way possible or to find the clearest path to wellness. Happily, these outcomes also preserve human claims resources for when an individual really needs it. See also: The Best Workers’ Comp Claims Teams   The technology vs. human paradigm will continue to change, probably forever. However, claims is one of the areas within insurance where expert adjustor skills can truly make a meaningful difference for individual outcomes. But the definitions will continue to change, and the challenge for claims executives will be to continually assess processes through a different lens. Optimistically, the light in the tunnel will be a source of inspiration.

Picture a field army of insurance agents, whose mission is to help people live longer and no longer suffer from an addiction that benefits no one, not even the beneficiaries of a life insurance policy. Picture these agents not in fatigues but shirt sleeves, campaigning like citizen soldiers and delivering relief to their respective communities. Picture these agents neither in a battle of arms nor a contest of strength, but a war for the hearts and minds—and lungs—of smokers; of men and women who want to quit smoking; of individuals who want to end their cravings for tobacco and their consumption of nicotine. Picture a constituency equal to this army, whose lives would otherwise end in tragedy and whose deaths would have no meaning in a library of statistics. Picture more of the same in which, according to the Centers for Disease Control and Prevention (CDC), cigarette smoking is responsible for more than 480,000 deaths per year in the U.S., including more than 41,000 deaths resulting from secondhand smoke exposure. See also: Wellness Industry’s No-Good, Very Bad Year   Picture harmless ways to quit smoking. Picture seminars and workshops. Picture corporate partnerships and public meetings, where insurance agents are themselves agents of change rather than a series of changing faces; where the perception of agents changes to the reality of agents as leaders of every community they represent. We cannot afford to perpetuate the current image, which costs $170 billion per year in treatments for tobacco-related illnesses. We cannot afford to continue to ignore the obvious: that the economic cost of smoking a pack of cigarettes a day is $177 per week or more than $9,200 per year. We cannot afford to lose so many so often. We must not habituate ourselves to the emotional wreckage of a deadly habit; because the second we cease to absorb the enormity of this problem—the minute we distance ourselves from the size of this plague—is the moment we abandon our moral authority and the morale of Americans nationwide. Insurance agents have it within their power to do more than sell policies or find the best prices for smokers who want to buy insurance. They have the expertise to speak to smokers about the bottom line, that they can quit smoking without risking their already fragile physical or psychological health. They can help smokers convert the money they waste on cigarettes, as they lay waste to their bodies, into a commodity that protects their health and lines their pockets with cash: insurance. Coverage is what smokers need. An effective—and harmless—way to quit smoking is what these individuals must have. See also: 2018 Workers’ Comp Issues to Watch   Let us resolve to promote healthy living by saving the lives of those whose health is in danger. Let us eliminate the fog of uncertainty and the cloud of indecision, because we must not be enablers of cigarette smoking or passive smokers in our own right. Let us summon that field army into action. Let us earn this victory, so we may celebrate this achievement.

A few years ago, simply applying predictive analytics to insurers’ underwriting practice was enough to gain a competitive edge against the large portion of the market that was still operating with traditional methods. That ship has sailed with increased adoption of analytics, raising the stakes for companies that once enjoyed a first mover advantage. Currently, 60% of insurers have welcomed predictive analytics into decision-making and underwriting processes, and research continues to show correlation between predictive analytics integration in the property & casualty industry and improvement to top and bottom lines. Companies that view analytics as a necessary commodity for modern underwriting instead of the centerpiece to their decision making will find themselves falling short of their competition. The biggest differences between the winners and losers in analytics today is equal parts ideological and technical. In its recently published ROI study, Valen Analytics observed 20 insurance companies, representing $1.8 billion in premium, and compared their loss ratios and premium growth against the industry. The study showed that data-driven insurers consistently outperformed the market on both metrics.

• Between 2012 and 2017, the industry saw its loss ratios improve by 18 points, whereas these 20 carriers averaged improvements that were nearly twice that (loss ratios improved by 35 points).
• Between 2012 and 2017, industry-wide premium grew 18% on average, while the carriers studied grew by 53%.

For the first time since its inception, the ROI study isolated the impact of applied analytics on insurers with concerning loss ratios: those whose loss ratio were greater than 60%. This group of insurers saw loss ratios improve to market average within 12 months, and then outperform the market with each subsequent year. These results underscore the value of predictive analytics in insurance. See also: 3-Step Approach to Big Data Analytics   Below are three best practices that the insurers studied have implemented to draw the most value from their predictive analytics programs: Empower underwriters The considerably positive findings of Valen’s study do not imply that predictive analytics should replace traditional underwriters. Instead, research suggests that predictive analytics tools should aid traditional insurance writers. This year’s study found that underwriter performance improves 3x when they combine predictive analytics with expertise. A well-implemented analytics solution helps underwriters leverage powerful data that they wouldn’t be able to otherwise, and underwriters provide the expertise to make the final decision. In other words, an insurance underwriter’s wealth of knowledge and contextual expertise is a largely irreplaceable asset. Underwriters know the critical variances between the price suggested by the analytics model and the historical habits of a policyholder and can incorporate this information into their decisions. Thus, predictive analytics usage augments an underwriter’s decision-making process rather than supplements it. Streamline the workflow Predictive analytics enable insurers to accurately align price to risk exposure, helping underwriters price policies within the context of an insurer’s risk appetite, and oftentimes allowing insurers to implement straight-through-processing (STP) for specific types of risk. In doing so, insurers can eliminate the need for underwriters to be heavily involved in certain decisions and allow them to focus on the decisions that will have the greatest impact to a book of business. This, again, leverages the expertise of an underwriter. Incorporate the right data Insurers that have incorporated a consortium of anonymized data into their model-building initiatives tend to be better-positioned for growth. This additional information can be crucial to initiatives like expansion across states or business classes, often by identifying risks that might fall in a blind spot of institutional knowledge. In other cases, the incorporation of consortium data will eliminate sample bias in an existing book of business. For instance, an insurer that’s relied heavily on its expertise in knowing how to underwrite low-risk construction accounts in one state to build a data set that determines good risks in a new state will risk overfitting the model, essentially giving it too high a standard. This will leave an insurer vulnerable to underpricing risky accounts without third party data to balance the scales. Consortium data increases the predictive power of models and helped the group in our ROI study of analytically inclined insurers grow premium last year, even as the market declined. See also: Global Trend Map No. 5: Analytics and AI   For the third consecutive year, Valen’s ROI study has identified just how much value applied analytics can add to insurers. The carriers that have leveraged analytics and consortium data and empowered their underwriters have realized significant advantages over competitors to improve both profitability and growth.

Apparently, the wellness industry does not have a monopoly on invalid research. A study came out in The Lancet–the British equivalent of the New England Journal of Medicine — finding that the only safe level of alcohol consumption was: none.  As the principal investigator said: “Alcohol poses dire ramifications for future population health in the absence of policy action today.” This finding generated myriad headlines like this one at CNBC: Or NPR: And how often do those two outlets agree with Fox News? One thing you learn if you hang around wellness promoters long enough is that oftentimes a close perusal of the study in question shows the opposite of what the authors intended. Or, as we often say: “In wellness, you don’t have to challenge the data to invalidate it. You merely have to read the data. It will invalidate itself.” And the same is true here. For example, Denmark leads the world in the number of drinkers — and has life expectancy higher than about 90% of the world’s countries. The lowest alcohol consumers? Pakistan — which ranks #130 in life expectancy. You might say: “Wait, aren’t there many other factors involved in life expectancy?” And the answer is, of course there are. None of those were controlled for in any way in this meta-analysis.  To begin with, the more people drink, the more other unhealthy habits they are likely to have. But that’s not the crux of what is wrong with this study. Two other things should lead wellness professionals to the opposite conclusion: that light drinking is perfectly OK. The remainder of this post addresses those. Absolute risk vs. relative risk Absolute vs. relative risk is one of our (many) pet peeves. Here are two other examples that we have had to smack down:

1. The American Cancer Society warns of a 22% increase in colon cancer among people under 50, but it turns out that absolute rate of colon cancer in younger people is so low that the chances of your life being saved by screening at age 45 are about the same as your chances of being struck by lightning.  The media had a field day with that one, too.
2. Before that, speaking of colons, a study came out showing that red meat increased risk of dying from colon cancer. Once again, it turned out — using the data right in the study — that more people are killed by lightning than by colon cancer due to eating more red meat than average.  Yet, once again, the media had a field day.

From the media’s perspective, this makes sense. After all, who is going to click through on a headline that says: “Low-quality study finds trivial relationship between variables”? See also: 2 Studies of Why Wellness Fails   In the case of this alcohol study, looking behind the headlines proved equally insightful. (And thank you to Aaron Carroll of The New York Times‘ Upshot for suggesting it.) Here is the lead-in: Alcohol is a leading risk factor for death and disease worldwide, and is associated with nearly one in 10 deaths in people aged 15-49 years old, according to a Global Burden of Disease study published in The Lancet that estimates levels of alcohol use and health effects in 195 countries between 1990 and 2016. Based on their analysis, the authors suggest that there is no safe level of alcohol as any health benefits of alcohol are outweighed by its adverse effects on other aspects of health, particularly cancers. Read the first paragraph again. Two observations:

1. Almost no one dies between the ages of 15 and 49, so being responsible for “nearly” 10% of those deaths means that alcohol kills about 0.001% of people in that age bracket every year.
2. The authors have conflated two things: alcohol and excess alcohol. Virtually all of those deaths in that age bracket were due to the latter, a fact that the authors conveniently overlooked when demonizing any level. of consumption.

Reading a bit further in… They estimate that, for one year, in people aged 15-95 years, drinking one alcoholic drink a day [1] increases the risk of developing one of the 23 alcohol-related health problems [2] by 0.5%, compared with not drinking at all (from 914 people in 100,000 for one year for non-drinkers aged 15-95 years, to 918 in 100,000 people a year for 15-95 year olds who consume one alcoholic drink a day) Hello? A 0.5% increase in relative risk? And the increase in absolute risk (not calculated) is four per 100,000 people a year — or 0.004% a year.  Even two drinks a day increases absolute risk only by 0.06% a year. (Once you get beyond two drinks a day, the chance of harm accelerates exponentially…but that’s not news.) What the he** are employees going to consume instead? Our biggest beef with this study is the same as with just about every wellness program: Everything is off-limits. Even foods that are OK in moderation for most people — like full-fat dairy, salt, oils, cholesterol/eggs and red meat — are singled out for criticism by health risk assessments. And now alcohol. Unfortunately, the more foods you demonize, the less likely it is that any employee will pay any attention to any of your dietary pronouncements.  And to the extent they do. well, what are they going to eat instead? Here is Cerner telling people that non-fat yogurt is a “healthier choice.”  Trivia question: What added ingredient makes nonfat yogurt taste good? Here is Optum railing against oils: And Cerner, once again, this time incriminating dietary cholesterol, which of course has no impact on blood cholesterol for most people: Finally, here is Interactive Health hyperventilating about something-or-other in its HRA feedback to an employee. We don’t know what it is other than, given the provenance, it’s wrong. Fortunately, no employee is going to plow through this anyway. Conclusion Treat this alcohol finding the same way you would treat advice from most health risk assessments: ignore it.

FEMA flood maps are not particularly glamorous or technologically exciting. They have done their work for many years and, provided that they are up to date, are an effective way of communicating a generalized level of flood risk. FEMA flood maps have been the primary, flood insurance underwriting tool for the National Flood Insurance Program (NFIP). That program is currently billions of dollars in debt to the U.S. Treasury due to premium subsidization. Also, FEMA flood maps have been used extensively by local governments in their efforts to keep development out of the floodiest areas of the U.S. That has not worked out so well, either, as coastal and riverine developments in the most flood-prone areas have abounded over the past 30-years. As we saw with the Hurricane Harvey disaster in 2017, FEMA flood maps are far from perfect. Nearly a hundred thousand homeowners in the FEMA X Zone (500-year, or 0.2% annual risk) in Houston, who were told that they did not need or were not required to purchase flood insurance, had their homes severely damaged by Harvey’s heavy rainfall flooding. In 2016, we at Coastal Risk Consulting observed that FEMA flood maps did not provide comprehensive enough flood risk assessments to allow individuals and businesses to make accurate “buy, sell, protect and insure” decisions at the property level. So, Coastal Risk identified a number of improvements that could be made to the FEMA flood maps, including downscaling risk mapping to the individual property level, and made them publicly available for purchase at www.floodscores.com for any property in the U.S. FEMA flood maps don’t tell the whole story about your risk of flooding. First, as was seen with Hurricane Harvey flooding in Houston, FEMA flood maps don’t include heavy rainfall flooding risks to your home or business. Properties in FEMA X Zones, which don’t require flood insurance for federally insured mortgages, may definitely need to be insured to protect them from heavy rainfall flooding. Coastal Risk models heavy rainfall flood risk for every property in the U.S.; FEMA flood maps do not. See also: Emerging Market for Flood Insurance   FEMA flood maps also don’t include coastal tidal flooding risks to your home or business. Tidal flooding is a property damage “threat multiplier." When hurricanes come ashore at high tide or even a King Tide, which often occurs in the fall on the Atlantic Coast of the U.S., properties with existing tide flooding are at much greater risk of damage and loss than those that don’t experience tidal flooding. FEMA flood maps do not take this type of flooding into account, now and into the future as sea levels rise. King Tides occurs during the height of hurricane season. Because King Tides are due to astronomy and not weather, scientists know precisely when they will occur. FEMA flood maps also underestimate the height of hurricane storm surge, as compared with NOAA models. NOAA surge models typically show higher water heights than the FEMA Base Flood Elevations (BFEs), which are a key component of the FEMA flood maps. The higher the surge, the greater the economic damage and loss to properties, and the greater the risk of injury and death to those who don’t evacuate in advance of these storms.

In the not-so-distant past, before the insurance industry began to wake to the realities of the digital revolution, the decision-making process and implementation of new IT initiatives took years. In today’s insurance industry, with changes coming at rocket speed and business executives trying to stay in step (or even ahead) of the market, those years are being collapsed into months – or even weeks. Speed to market can make the difference between winning the race and being left at the starting gate. A new approach to IT implementation supports all facets of projects that have complex architectures and detailed documentation requirements. It helps deliver results fast, uncovering issues quickly and early in the process by organizing work into smaller functional segments. Cost savings and higher-quality results come from testing at intervals throughout the project – typical of an iterative approach – instead of at the end, as with a conventional waterfall structure. This is particularly important on the software side. According to an Accenture report on iterative approaches to software testing published earlier this year, “The insurance industry is undergoing rapid and disruptive change. By shifting to the left, insurers have an opportunity to accelerate projects that modernize, rationalize and consolidate their systems. Gone are the days of 24- to 36-month projects. Insurers need to act now and act fast to deliver new products across multiple distribution channels to mobile- and digital-savvy consumers.” See also: Insurtech’s Act 2: About to Start   As with the industry’s focus on customer-centric solutions, speed to market drives this shifting landscape. Insurance solutions today need to move as fast as the market moves, and that means implementations measured in weeks and months, not months and years. An Ernst & Young report, The Digital Opportunity in Insurance, puts this issue into focus: “Fueled by FinTech investments and InsurTech startups, insurance has become a hotbed of digital innovation. In response, insurers must embrace change and rethink business models to move toward a compliant, secure and digitally enabled operating model to enhance customer, employee, partner, and other stakeholder experiences.” The report goes on to show that those who fully embrace digital transformation will be the ones that can successfully meet tomorrow’s customer needs and respond to changing marketplace expectations. “To succeed, insurers must understand what’s possible and take decisive action to deliver value now and ignite long-term growth.” And the next wave of insurtech is already starting to take shape: a rapid migration toward solutions that are customer-centric, as opposed to the traditional carrier- and broker-centric models. At InsurIQ, we’re aiming to be at the vanguard of this movement with the development of solutions for the web-based purchase of insurance products in a shopping cart environment and end-to-end solutions from proposal generation through renewals, including underwriting workflows, policy administration, document fulfillment, premium accounting and producer management. Whatever new-generation approach an insurer decides to implement, a solid consultative relationship with a third-party solutions provider is key. See also: 3 Insurtech Firms Take a Star Turn   The pace of change in the insurance industry, and other businesses, as well, will keep accelerating in the short term and beyond. Carriers that do not emphasize speed to market as a primary objective of their IT initiatives will be left in the dust as other, forward-thinking companies sprint past them, picking up new clients as well as enhanced industry visibility.