What is it with insurtech brand names? Among the insurtechs that SMA is tracking (well over 1,000) are a wide range of names ranging from the clever to the practical to the bizarre. Having personal experience with naming, I can understand the challenges of finding something memorable, not already used, and lacking any negative connotations. There is always the option of functional naming; for example, Insuresoft clearly creates software solutions for the insurance industry. When I was recently in a whimsical mood, I decided to do an exercise to categorize insurtech brand names by a number of topics or areas, including food, animals and human names. This is a sampling of what I found: Food One could make a whole meal out of insurtech names. The main course could be Oyster, focused on workers’ comp. Fruit sides might be Pear Insurance or Pineapple. There are plenty of drink options with H2O, Lemonade and Soda Insurance. And dessert – everyone’s favorite – is not lacking in options, with Cake or Pie, or maybe even Marshmallow. See also: 3 Insurtech Firms Take a Star Turn   Animals Comic George Carlin used to wonder who took all the blue food. (Blueberries are not blue; they are purple!) But there are plenty of blue animals in insurtech, including Blue Owl, Blue Leopard and Blue Zebra. Then we have animals with descriptors like Bold Penguin, Pandadoc and PrecisionHawk. The insurtech menagerie also includes Hippo, Dolphin, Canary, Rhino and even a hybrid in CatDogFish. There is even a regular Zebra to go along with Blue Zebra. Human Names Why not anthropomorphize insurtechs? We do it with everything else. There is Bob – and if he gets lost there is FindBob. Abe, Albert, Frankie, Gabi and many others are named after people. Then there is Hi Marley, which does a nice job of creating something unique that also relates to the company's solution – leveraging texting and messaging platforms to communicate with policyholders and claimants. There is no question that many of these names are becoming known in the insurance industry, but there are pros and cons for using these types of names. One caution for those selecting names – think about search engine optimization (SEO) and how individuals will discover your site. With enough money, brand visibility can be built for any name. But in many cases funding is limited in the beginning stages, and the focus is more on building the solution and getting successful partnerships and projects underway. I have personally had great difficulty finding any information on some of these insurtechs – even just navigating to their websites – due to names that are so common that SEO is difficult. See also: Insurtech’s Act 2: About to Start   Another piece of advice (although I don’t claim to be a branding expert): Two-word names (separate or conjoined) offer more options for uniqueness than one-word names – Cake Insure, Young Alfred and TechCanary would be examples. Of course, brands are built, and companies succeed, based on the strength or their offerings, their innovation, their customer relationships/experience and many other factors. But I, for one, am glad that insurtechs are choosing names that are fun and interesting. So, what’s in a name? I guess it’s what you make of it.

Throughout a number of the recent conferences I have attended and conversations I have had with my clients, colleagues and incumbents in the space, the question of "what makes an insurtech/innovation initiative a success?" keeps coming up. This week, I explore the critical success factor. If you haven’t figured out by now through my writing, I like the softer side of our business. A lot. Perhaps it is the salesman in me and the fact that I have always been more relationship-focused than details-focused. In my most recent management roles, I always tried to delegate the detail-oriented tasks to the people on my team who were good at it, and have them provide me a summary of their findings so I could go manage the relationship/conversation with our various stakeholders. When looking at insurtech solutions, I tend to focus on customer outcomes more than the actual tech behind it. Yes, the tech is cool and interesting for me. The application of it is even more impressive. I’ve explored this concept a few times – here, here and here. This week, I’m going to take a slightly different look. That’s because there is one answer that keeps coming up to the question of "What makes an insurtech initiative a success?’, regardless of if I speak to incumbents, investors, startups/technology providers or consultants. That answer – the team. The team is what is ultimately going to make an insurtech initiative a success. There are some key factors that should be common, regardless of where you sit. In addition, there may be specific nuances to take a look at depending on what role you play in the initiative being undertaken. This week, I take a look at the common factors that should be in place, the different perspectives one may look at, as well as a revised formula for my "insurtech formula for success." See also: An Insurtech Reality Check   What are the common factors one should look at when partnering? To set the stage for what’s to follow, I would like you all to imagine the different types of partnering that can be out there for any insurtech initiative (for initiative, I mean an implementation, investment or building of a company). I will name a few (though this is not an exhaustive list):

• Incumbents (reinsurers, carriers, brokers, agencies, etc) partnering with startups/technology providers
• Startups/technology providers getting funding from investors (on the flip side, investors investing in a startup)
• Technology providers partnering with each other to offer a more robust solution to incumbents
• Consultants being used by incumbents, investors and technology providers to help implement, assess or "strategize"

Regardless of the type of partnership, there are a few key factors that should exist if you are going to partner with another party for an insurtech initiative.

1. Knowledge – Does this person/company have the knowledge to understand what pain point they are trying to tackle? Do they have knowledge of the industry? Etc.
2. Trust – Do I actually trust this person/company? I recently read this article from Inc., which outlined Google’s study on trust and how to demonstrate it. It’s quite fascinating, and I encourage you to have a read.
3. Likeability – Do I like this person/company? Even if I don’t necessarily like them, am I going to be able to tolerate them for the years to come? Many partnerships are long(ish)-term. If you don’t like someone that you are going to have to work with for a while, that could pose a big problem down the road.

These three factors, knowledge, trust and likeability, form the foundation for the types of relationships that I will describe below and must be inherent if you are to partner with someone (regardless of where you sit). What the factors are to look for, depending on where you sit Now that we’ve established a foundation, let’s look at the different types of relationships from a startup/technology vendor, incumbent and investor perspective. Startup/technology providers The three relationships I will look at here are; their incumbent partners (primarily for B2B), their team and their investors. The types of questions they should be asking for each of these parties are:

• For their incumbent partners (some of this is covered in the insurtech startup guide):
  1. What is their approach to innovation?
  2. How much has management bought into it? Are there KPIs assigned to initiatives, and what are they?
  3. Do they have a dedicated budget, resource, need and timeline for the proposed initiative?
  4. What other initiatives have they done, and who have they partnered with?
  5. How do they treat the startup/technology provider (does it feel as if they are a partner or just another vendor)?

• For their team:
  1. Do they have the right mindset to work in a startup (in the case of an early-stage company)?
  2. How flexible are they in working style?
  3. How do they handle pressure?
  4. What are their expectations?
  5. Do they want to build/grow something, or are they OK with the status quo?

• For their investors:
  1. How much control (other than just % of equity) is the investor going to want after the investment is made?
  2. How much is the investor willing to mentor/coach them?
  3. What resources will they put in place to help grow their business, while still letting them (the founders) run it?

Incumbents Using the term "incumbents," I mean any reinsurer, carrier, MGA, broker, etc. that may be looking to partner with an insurtech startup/technology provider. The two relationships I will cover here are; their technology partners and their internal teams. The types of questions they should be asking for each of these parties are:

• For their insurtech startup/technology providers (some of this is covered in the carrier guide):
  1. How much do they understand the insurance industry/specific line of business(es) we operate in?
  2. How much do they understand our specific company and nuances? (Incumbents – while it is nice that they do their research beforehand about you, you also need to bring them on this journey of understanding if you really want them to help)
  3. What has been their current experience with other partners? Not just from an ROI perspective, but also an implementation perspective.
  4. How patient are they to work within the confines of corporate governance?
  5. What is their approach to security and handling data?

• For their internal teams running an innovation initiative:
  1. For the person/team that is leading an initiative, do they have the right balance of understanding of governance plus the agility/flexibility to push an agenda that starts with change?
  2. Is this person/team going to seek to overcome internal pushback or see it as a wall that cannot be scaled?
  3. Is this person/team going to have the leadership ability (and swagger) to be the voice of change for our organization?

Investors I haven’t worked for an investment firm yet, so, it would be difficult for me to assess what sort of internal requirements they should have in place for their teams. I will only take a look at the types of questions they should be asking for the companies they invest in. These are similar to the questions above that incumbents should be asking to their insurtech startup/technology partners.

1. How much do they understand the insurance industry/specific line of business(es) they operate in?
2. How open are they to ceding some ownership of their company?
3. How coachable are they? Are they willing to have changes made/suggested to their business model, or do they feel like they know it all and are not willing to change?
4. How diverse is their team (from a variety of perspectives)?
5. How have they come up with their solution?
6. What sort of drive to they have, and how have they handled adversity?

I’m sure for all three of these parties, there are more questions to ask. What questions do you think of (depending on where you sit)?  Please comment below, I’m interested to hear! See also: 10 Trends at Heart of Insurtech Revolution   With all this, the "insurtech formula for success" needs an update Back in early May, I posted the insurtech formula for success as: Insurtech Success = customer experience + dollars and cents + compliance + applicable technology Whereas:

• Customer experience = what part of the customer experience are you trying to make better? Is it quoting/purchasing? Is it claims? Is it servicing? ("Customer" may not always mean policyholder. "Customer" may also mean the employees or partners -- like auto body shops -- that are part of the value chain. Think about which customer you are trying to solve a pain point for.)
• Dollars and cents = Does the solution help to increase sales or reduce costs? Our industry is a business, and that means we get measured by dollars and cents. Ultimately, a solution that is being put in place should do one of these things – increase sales or reduce costs.
• Compliance = is the solution in line with regulation? Is it compliant with existing internal guidelines? Is it fair to customers? Is it secure?
• Applicable technology = what is the right technology that should be used to meet this need? This should be the easiest part of the equation once the other three are determined.

This week, I’m making a slight change to the formula, which has also been reflected in the original article. Insurtech Success = (customer experience + dollars and cents + compliance + applicable technology)^team I love the circumflex/hat symbol (^) so much in this formula. It fits so aptly here. For those not as familiar, it literally reads out as "to the power of." Customer experience, dollars and cents, compliance and applicable technology are extremely important. They will only succeed by the power of the team that is driving it. Because after all, it’s not "you" nor "I," it’s "we" and "us’". You can find the article originally published here.

I have a complaint against insurance agents, not a claim for them to file. Rather, I do have a claim—and reason to complain—regarding their use of marketing copy. Too much of what these agents write says too little about who they are and what they do. Too much of what they say sounds too similar for there to be a major difference. It seems as if agents use the same words with slight variations in structure, to optimize their results with search engines. Search as I may, and I have searched far and wide, I cannot find what I want: originality. The lack of original copy—the general absence of creativity in business writing—is a symptom of personal laziness and professional indifference; as if it is acceptable to commit plagiarism, at home or abroad; as if standards of honesty do not matter; as if the theft of intellectual property is less a sin than a sign of flattery; as if numbers nullify the underlying wrongness of an act; as if the more common a problem is, the less problematic it becomes. Let me restate the problem: An insurance agent who does not care about the message he markets is not in the market to attract or retain clients. And yet, some marketers—including a contributor to Entrepreneur—all but admit that plagiarism is inevitable, because it is hard to come up with a unique idea. This excuse in the form of an explanation should not lessen the seriousness of this offense. Difficulty does not, after all, denote a license to steal. It does not condone—no one should misconstrue it to mean—that misappropriating content is fine, so long as one’s clients are content. See also: Underwriting, Marketing: Sync Up!   Insurance agents need to stop outsourcing their messaging to the unskilled and the unethical. It does not profit an agent to be at the top of Google search but at the bottom of what no search engine can retrieve: one’s soul. An agent who cannot ensure his own integrity should not attempt to insure anyone or anything. This rule applies to all businesses, but it matters most to how agents conduct themselves regarding the business of insurance; because each sale is an exchange of dollars and a transaction of trust; because you should not do business with someone you do no trust. If you do not trust the originality of what an agent says, why would you entrust this person with your money—or agree to buy life insurance from this man or woman? If insurance agents take the lead on this issue, it will benefit their industry and the business community as a whole. The biggest beneficiaries will be the people who have or want to purchase insurance. See also: Global Trend Map No. 8: Marketing   If they trust the originality of the message, they are more likely to listen to the messenger. They are more likely to insure themselves, without the urge to reassure themselves that a particular agent is reliable and trustworthy.

The following is an excerpt from a white paper, available in full here.  There have always been a lot of independent insurance agencies in the marketplace, just as there are today. But the competition seems to be increasing by the hour, thanks largely to the proliferation of digital technology and online marketing. Consequently, most agents hear the following comments quite frequently:

• “You insurance people are all the same.”
• “Sure, you can bid on my business insurance; we shop it every three years.”
• “Can you give me a quote on my business insurance? I’m just trying to keep my current agent honest.”
• “I’d like a quote on my automobile insurance.”
• “I noticed my homeowners insurance increased $25. Could you shop it around?”

And those are just a few examples. There are so many others because consumers have so many additional purchasing options that didn’t exist until recently. Whether it’s personal or commercial lines, consumers are constantly being educated that insurance is all about price. So if you sound like, look like and act like every other insurance agent or agency, people will assume that’s who you are — like everyone else. This leads to price-only selling, practice quoting and unpaid consulting. See also: A Contrarian Looks ‘Back to the Future’ One of the reasons the marketplace is so crowded is that most agencies have not differentiated. They simply do not have a compelling story of differentiation. When asked, “Why should I do business with you/your agency?” most will respond with the same standard, boring, "Generic Five" lines.

1. “We give great service.”
2. "We're local."
3. “We represent all of the major insurance companies.”
4. “We’ve been in business for 100 years.”
5. “We have the best people.”

That last one annoys me. Really? Is there a vortex in the universe that sucked all the best people in our industry into one agency?! Don’t get me wrong. I find that most agencies provide excellent reactive service, represent a slew of great companies, have been around a long time and have some great people. There’s no doubt about that. There’s just not a compelling reason why I should even consider you. You’re just not different. Furthermore, the vast majority of agencies simply have no formal, systematic selling and marketing process. For most, the “selling system” (or set offense, as I like to call it), is still focused on the old way of selling: Look, Copy, Quote and Pray. I’ll look at your policies, copy the information, give you a quote and then pray that the premium I present to you is less than what you’re paying today. I’ll continue praying that you don’t take my quote, give it to your current agent and tell the agent, “Match it, and you get to keep the business.” Do you have an “agency's way” of selling and marketing your products and services? As an agency owner or producer, how would you answer the following:

• What’s your 30-second commercial? What’s your two-minute infomercial?
• What’s your unique selling proposition (USP) — the unique and appealing ideas and things that separate you from all other “me too” competitors?
• What’s different in your process of risk assessment, risk transfer and risk prevention?
• Do you and all of your team members know your top five PODS, or points of differentiation, and do you actually deliver on them?

I realize that changing the consumer’s perception remains a challenge when TV’s Flo and the gecko saturate the marketplace. They, and others, spend billions on advertising. It's no wonder the consumer thinks it’s all about price! Plus, once you click through to a site, it has your data and tracks you indefinitely. This is not just in personal lines. Small to mid-sized commercial accounts are getting the exact same message. That’s because it’s irresistibly easy for the consumer or business owner to call a toll-free number or “click here for a free quote” on hundreds of different websites. Again, please don’t misunderstand my point. The reality is that when properly used, digital marketing can help aggressive independent agents fill their pipelines (although I fear that most are filled with suspects, not future ideal clients). But while digital marketing can provide you with opportunities, it’s up to you to seize them. Once you get an email, phone call or online alert, what do you do with it? See also: Future of Insurance Looks Very Different   When I talk to agency owners about the number of clients they’ve received from online contacts, I hear vastly different stories. What is one doing to get the prospect’s business that the other one isn’t? When an opportunity arrives, what are you/your producers doing and saying to connect with the prospect and close the deal? What’s your process, and how do you follow up on it?

Artificial intelligence is the new electricity. We hear it will fundamentally shift the balance of power between labor and capital, mostly by rendering labor obsolete. It will enable and empower transformative technologies that will rearrange the sociopolitical landscape and may lead to humanity’s transcendence (or extinction) within our lifetimes. As it changes the world, it will necessarily rewrite the rules of insurance. That’s the myth, and the nature of the headlines. Interestingly, insurance is heavy on intellectual property (think of proprietary underwriting models), technology and data. And AI is hungry; hungry for data, of course, but also hungry for systems that can be automated and for proprietary classification problems that can be improved. That places insurance right in the appetite of artificial intelligence and its promise of transformation. If we want to act on artificial intelligence’s transformational potential,  we need to understand what it actually is, separate the technologies from the hype and develop a practical understanding of what is required to implement AI-powered solutions in the insurance sector. This article will highlight these three steps and offers a realistic approach for carriers to take advantage of the opportunities. Defining Artificial Intelligence Unfortunately, our first step is also our hardest, as a working definition of artificial intelligence is difficult. The scope of the term AI is broad, and it requires careful consideration to avoid becoming hopelessly confounded with its own hype. It is also challenging to come to a clear definition of natural intelligence, which leaves us struggling for a definition of artificial intelligence because the latter is so often compared to the former. AI tends to be discussed in two flavors. The first is general artificial intelligence (also, artificial general intelligence and strong AI). GAI is machinery capable of human-level cognition, including a general problem-solving capability that is potentially self-directed and broadly applicable to many kinds of problems. GAI references are accessible through fictional works, such as C-3PO in Star Wars or Disney’s eponymous WALL-E. The most important feature of GAI is that it does not currently exist, and there is deep debate about its potential to ever exist. The second is usually referred to as narrow AI. Narrow AI is task-specific and non-generalizable. Examples include facial recognition on Apple’s iPhone X and speech-to-text transliteration by Amazon’s Alexa. Narrow  AI looks and feels a lot like software or, perhaps, predictive models. Narrow AI can be described as a class of modeling techniques that fall under the category of machine learning. See also: Seriously? Artificial Intelligence?   What is machine learning? Imagine a set of input data; this data has one or more potential features of interest. Machine learning is a technique for mapping the features of input data to a useful output. It is characterized by statistical inference, as advanced techniques often underlie machine learning predictive models. Through statistical modeling, software can infer a likely output given a set of input features. The predictive accuracy of machine learning methods increase as their training data sets increase in size. As the machine ingests more data, it is said to learn from that data. Hence, machine learning. Perhaps most important of all, machine learning (as an implementation of narrow AI) is real and here today; for the remainder of our discussion when we say "AI," we mean narrow AI or machine learning. Beyond the Hype The hype around AI and its potential is extensive. Silicon Valley billionaires opine on the potential implications of the technology, including comparing its power to nuclear weapons. Articles endlessly debate if and how quickly AI will structurally unemploy vast swaths of white collar workers. MIT’s Technology Review provides a nice summary of the literature, stating that up to half of all jobs worldwide could be eliminated in the next few decades. AI may well have this kind of impact. And the social, political and economic implications of that impact, especially around questions of potential large-scale unemployment, deserve careful long-term consideration. However, executives and business owners need to evaluate technology investments today to improve their current competitive position. From that perspective, we find it more practical to focus on examining which existing tasks could be automated by AI today. Enter Pigeons In 2012, researchers trained pigeons to recognize people based only on their faces as part of a study on cognition. Suppose you had millions of face-recognizing pigeons; this force of labor could be deployed in a comprehensive facial recognition system -- a system remarkably similar in function to the facial recognition AI of devices like modern smart phones. It turns out pigeons have also been trained to recognize voices, spot cancers on X-rays and count, among a host of other tasks related to headline-grabbing AI achievements. The metaphor is admittedly silly. Instead of pigeons, imagine an army of virtual robots capable of classifying information from the real world to produce a machine-readable data set. In machine learning language, these robots take unstructured data and make it structured. Said robots resemble the automation machinery of a factory; like spot welders tirelessly joining steel members to form automobile frames, our virtual robots tirelessly recognize if a face is featured in a photograph. In contemplating the question, what could be automated with AI, a useful starting place is the army of robots (or pigeons!). For example:

• What existing analyses could be improved or optimized? Could pricing or underwriting be improved using better classifiers or non-linear modeling approaches?
• What data currently exist at the firm that could be made available for new types of analysis? Claims adjusters’ notes can be processed by natural language algorithms and cross-referenced with photos of physical damage or prior inspections.
• What data would you analyze if it could be made available? What if you could listen to all the policyholder calls received by your customer service department and annotate which questions stumped the customer service representatives? Or which responses lead to irritation in the policyholders’ voices?

Bringing AI to Insurance What is an insurer to do? Start by not fretting. We propose two considerations to facilitate a sleep-at-night perspective. First, insurers are already good at AI or its precursor technologies. The applicability of AI in the present and near future is entirely based on narrow AI technologies. For example, natural language processing and image recognition are both machine learning implementations with working business applications right now. Both use predictive models to achieve results. The software may be artificial neural networks trained on vast data sets, but they are nonetheless conceptually compatible with things insurance carriers have used for years, like actuarial pricing models. The point is that the application of AI is an incremental step forward in the types of models and data already applied in the business. Second, sorting through the hype requires a staple of good business decision making: the risk-cost-benefit analysis. Determining which technologies are worth investment is within scope for decision makers that otherwise know how to make selective investments in growing the capabilities of their firm. The problems faced by a carrier are much bigger than sorting out AI if management lacks the basic skillset for making business investments. Providing an inventory of every application of AI is beyond the scope of this article. DeepIndex provides a list of 405 at deepindex.org, from playing the Atari 2600 to spotting forged artworks. Instead, suppose that AI, like electricity, will be broadly applicable across industries and functions, including the components of the insurance value chain from distribution to pricing and underwriting to claims. The goal is to identify and implement the AI-empowered solutions that will further a competitive advantage. Our view is that carriers’ success with AI requires three key ingredients: data, infrastructure and talent. Data: AI might be considered the key that unlocks the door of big data. Many of the modeling techniques that fall under the AI umbrella are classification algorithms that are data hungry. Unlocking the power of these methods requires sufficient volume of training data. Data takes several forms. First, there are third party data sources that are considered external to the insurance industry. Aerial imagery (and the processing thereof) to determine building characteristics or estimate post-catastrophe claims potential are easy examples. Same with the vast quantities of behavioral data built on the interactions of users with digital platforms like social media and web search. Closer to home, insurance has long been an industry of data, and carriers are presumed to have meaningful datasets in claims, applications and marketing, among others. Infrastructure: Accessing the data to feed the AI requires a working infrastructure. How successfully can you ingest external data sources? How disparate and unstructured can those sources be? Cloud computing is not necessarily a prerequisite to successful AI, but access to vast, scalable infrastructure is enabling. Are your information systems equipped, including security vetting, to do modeling in the cloud? Can you extract your internal data into forms that are ready to be processed using advanced modeling techniques? Or are you running siloed legacy systems that prevent using your proprietary data in novel ways? Talent: Add data science to the list of AI-related buzzwords. We claimed earlier that many of the advancements attributed to narrow AI are predictive models conceptually like modeling techniques already used in the insurance industry. However, the fact that your pricing actuary conceptually appreciates an artificial neural net built for fraud detection using behavioral data does not mean you have the in-house expertise to build such a model. Investments in recruiting, training and retaining the right talent will provide two clear benefits. The first benefit is being better equipped to do the risk-cost-benefit analysis of which data and methods to explore. The second is having the ability to test and, ultimately, implement. See also: 4 Ways Connectivity Is Revolutionary   In Aon’s 2017 Global Insurance Market Outlook we explored the idea of the third wave of innovation as propounded by Steve Case, founder of AOL, in his book, “The Third Wave: An Entrepreneur’s Vision of the Future.” The upshot of the third wave for insurers was that partnership with technology innovators, rather than disruption by them, would be the norm. This approach applies now more than ever as technological innovators continue to unlock the potential of AI. If you don’t have the data, or the infrastructure, or the talent to bring the newest technologies to bear, you can partner with someone that does. Artificial intelligence is real. While the definitions are somewhat vague - is it software, predictive models, neural nets or machine learning - and the hype can be difficult to look past, the impacts are already being felt in the form of chatbots, image processing and behavioral prediction algorithms, among many others. The carriers that can best take advantage of the opportunities will be those that have a pragmatic ability to evaluate tangible AI solutions that are incremental to existing parts of their value chain. “If you don’t have an AI strategy, you are going to die in the world that’s coming.” Devin Wenig CEO, eBay Maybe true, but that does not make it daunting. The core of insurance is this: Hire the right people, give them the infrastructure they need to evaluate risk better than the competition and curate the necessary data to feed the classification models they build. AI hasn’t, and won’t, change that.

How long did it take to sell 240,000 insurance policies online in 2017? Most insurance leaders across Asia guess “at least a few weeks.” The reality is that, in the age of digital, it only took one second. The record was set on Alibaba's Tmall.com website on Nov. 11, 2017, by Zhong An, Chinese digital-first insurer and the most successful global insurtech so far. The total for that day was a staggering 860 million insurance policies sold online. The pace of Zhong An's growth has given the much-needed wake-up call for the insurance industry. Opening Act of Insurtech Insurtech had emerged in 2012, and over the last six years the insurance industry has started to embrace it. While there’s been a lot of excitement about insurtech, most of the digital efforts so far have been largely incremental—insurance products are becoming slightly cheaper, their distribution becoming a little bit more digitally enabled and the back-office becoming marginally more efficient. The “opening act” focused on the low hanging opportunities that kickstarted the insurtech wave globally. Now as opportunities susceptible to incremental tech solutions quickly dry up, many insurance managers are concluding that insurtech might have run its course, and, going forward, it will be back to business as usual for insurance. They will be in for a surprise! The perfect analogy for the current stage of the insurance industry is a record label in the age before digital music. Record labels erroneously believed they were in the business of CDs, which drove them to focus on pushing pre-packaged products with a single feature that consumers wanted, delivered to customers via expensive and inefficient distribution music store networks. See also: Digital Insurance 2.0: Benefits   The valuable lesson being that the full force of disruption did not come when records started selling CDs online but when Napster hacked through the oligopoly of record labels and force-unbundled their products. While Napster ultimately didn’t survive, it disrupted the status quo by pushing record labels to finally unbundle their products and make them available to digital-music distribution platforms such as iTunes and Spotify. The latest trends coming out of China are pointing to an early shift in insurance fundamentals. So the current slowdown in insurtech is not an end, but the beginning of the ecosystem transition toward the "Spotify moment” for the insurance industry. Main Act of Insurtech The “Spotify moment” happens when a discretionary spending item, like music, gets transformed from an occasional luxury into a utility that millions of customers rely on as their trusted daily tool. The key trigger for a “Spotify moment” is a combination of frictionless customer experience, mass-customization that closely matches consumer’s needs, perceived value for money and access to wide variety of choices. The “Spotify moment” will see insurance products simplified down to their core coverages and then embedded frictionlessly into digital ecosystem. This moment is now fast approaching, and it will bring with it the “main act” of insurtech. In the main act, insurance will move closer to becoming a risk transfer utility and a seamless part of consumers’ day to day digital service consumption. Digital businesses will start to dynamically pick the coverages that are relevant to the specific “worry profile” of their users and allow users to add those alongside their core services. Insurers have a narrowing window of opportunity to prepare or risk being sidelined into niche segments. Key strategic activities should include the following: Product Sprints. Cross-functional teams will need to start executing rapid product unbundling and creation of digital-oriented stand-alone coverages. Currently, it takes insurers on average six to 12 months to launch a consumer insurance product. In the future, product design will need to happen in five-day sprints and become iterative, to identify best product-market fits within the digital ecosystem. See also: Stretching the Bounds of Digital Insurance   Opportunity Management. Evaluating digital opportunities by the same metrics as legacy business is a sure way to destroy any sign of innovation. Digital requires a strategic “VC” approach to opportunity selection and management. Placing many strategic bets will let organization learn and iterate quickly from both mistakes and successes. Dedicating investment pool and digital P&L will keep accountability and ownership clear. Lastly, providing the best support for digital opportunities will maximize the probability of success. After all, would you rather lose your best resources to your self-disrupting digital team or to Amazon? Startup Collaboration. Working with startups and approaching them as high-potential partners will give the organization the right cultural compass and position it well for the dynamic digital insurance ecosystem. The future of insurance is digital; resistance is futile!

There are big changes Medicare has planned in 2018 that will help protect the identity of seniors and continue proper health benefits. The biggest and best change will be the new Medicare ID cards. When Medicare recipients receive their Medicare card, they are typically shocked to see that their Medicare Identification number is the same as their Social Security number. Medicare beneficiaries run the risk of identity theft when they have their Medicare card in their wallet or purse; it would be comparable to walking around with their Social Security card in their possession. Identity theft is a major issue; when someone has the Social Security number of another person the thief can apply for loans, open bank accounts and possibly gain employment. When someone has your Social Security number, the person has the key to your credit and identity. The Social Security administration and the Federal Trade Commission have been urging the Centers for Medicare and Medicaid Services to change the Medicare Identifier for years. Finally, after years of requesting that changes be made, CMS has made the decision to move to updated cards that do not have a Social Security number as the Medicare identifier. These updated cards were sent via mail in the beginning of April 2018. CMS anticipates all Medicare beneficiaries will have a new, updated card by April 2019. What to Expect from the New Medicare Cards The updated Medicare cards will feature a new Medicare Beneficiary Identifier (MBI) number. The card will display a randomly assigned number for all Medicare recipients. Healthcare providers and Medicare beneficiaries will be able to securely access tools that will allow them to look up MBIs as needed. During the 21-month transition period, it will be possible for providers to use a patient’s Social Security number or the new MBI number. The transition period was put in place to help things run smoothly for providers and patients across the nation. The issuance of a new card will not affect Medicare benefits. The new MBI number will have 11 characters, with a combination of numbers and uppercase letters. These new numbers will have no special meaning, making it safe to keep in your wallet or purse. The new cards will be mailed to you based on your geographical location; however, it is possible that you and your neighbor will get a new card at different times. See also: Identity Theft Can Be Double Whammy The Transition Period CMS is trying to make the transition smooth for caregivers, patients and others who need accurate Medicare information. The transition period will allow beneficiaries and providers to exchange Medicare information with CMS using MBI or a Health Insurance Claim Number; this period is scheduled from April 1, 2018, until Dec. 31, 2019. On Jan. 1, 2020, beneficiaries and caregivers will be required to use an MBI for most situations. It is suggested that beneficiaries keep an eye out for their updated Medicare card, and when it comes they should get into the habit of using their new MBI early. Obtaining an Updated Card Beneficiaries should destroy their old cards immediately after receiving their updated Medicare card. Once the new card is in possession, you can start using it at once. It is important that you keep your new MBI number confidential and watch the mail carefully so that you are aware when the new card is delivered. The new cards are going to be made of paper, making it easier for providers to use and copy. If you are enrolled in a Medicare Advantage Plan, the Plan ID card is the main card you show to your providers, although a healthcare provider may ask to see your MBI card, so keep it with you. How to Protect Your Identity Now Identity thieves have noticed seniors as ideal victims for identity fraud. Seniors typically have more money in their checking and savings accounts, and they have paid off their major financial obligations. Because seniors usually receive Medicare benefits, the door for identity theft in the medical industry is wide open. Because most seniors are not purchasing a new home or taking out a large loan, they have no reason to stay informed and therefore check their credit score less often. How to Keep Important Documents Safe:

• Make copies of your insurance cards
  • Make a copy of your insurance card and remove the last four digits of your Social Security number.
  • Leave the original at home.
  • If you do need to take an original, remove the card from your wallet after the appointment and store it in a safe place.

• Keep important documents safe:
  • A home safe can allow you to store important documents; if you have highly important documents, you might want to consider a bank safety deposit box for documents you do not need often.
  • Never carry around extra bank cards, credit cards you don’t frequently use, any health insurance card or your Social Security card.

• Protect computer and internet access:
  • Be sure you use anti-virus, anti-spyware and firewall software to combat hacking programs that are designed to steal personal information.
  • Be creative with passwords and never use the same passcode for multiple accounts. Changing passwords regularly can ensure privacy.
  • Never send personal or financial information through an email, no matter the situation or company.
  • Be sure to have your Wi-Fi network password protected and secure. Your internet installation service rep can help make sure your wireless network is protected.
• Check your credit frequently: Per the Fair Credit Reporting Act (FCRA), every 12 months a free credit report can be provided for you from each of the nationwide credit reporting agencies.

• Destroy old documents:
  • Some documents need to be stored safely; others can be destroyed.
  • You should be destroying credit card statements, receipts, bank statements, tax documents, canceled checks and old driver’s licenses.

The Reason Behind a New Medicare Number The current Medicare number for many beneficiaries is their Social Security number. The U.S. Railroad Retirement Board, state Medicaid agencies, Social Security, healthcare providers and health plans all use this number. There are great dangers that can occur when a Social Security number is in the hands of a criminal. The Medicare Access and CHIP Reauthorizations ACT of 2015 is requiring CMS to replace the old numbers with a new updated Medicare Beneficiary Identifier. These cards are being released for one primary reason, to better prevent seniors from being the victim of identity theft. See also: 8 Questions on Medicare Set Aside Be Aware of Scams The reason for new Medicare ID cards was to prevent seniors from being the victims of identity fraud. Unfortunately, the change has inspired criminals to take a new approach. There have been attempts to mislead Medicare recipients, and more attempts are likely to be made through the transition. It is important that beneficiaries be aware of possible scams. The new Medicare ID does not cost beneficiaries money. The new card has the same benefits as the current card. Do not give the new card to anyone other than a healthcare provider. Many identity thefts are committed by friends and family. Medicare will not ask you to give personal information to obtain your new number and card. Nobody should contact you about the new Medicare card, your new number or any personal information. Medicare does not make uninvited calls to beneficiaries. If you think you are a victim of medical identity theft, contact the Federal Trade Commission about what to do next. Advantages of Change Because the new cards will not have a Social Security number, scammers will find it more difficult to commit fraud. Beneficiaries need to keep MBI numbers confidential and treat the numbers like personal identifiable information. If a beneficiary forgets the new card at home, healthcare staff can search the new Medicare ID number on a secure site. All existing Medicare information will continue to be available to your doctor. More than 57 million Americans will be provided with greater identity protection from the new Medicare ID cards. CMS intends a successful transition to the MBI for all people with Medicare and for their doctors.

After Solvency II, the European Union is ready for its next big and comprehensive regulation, called GDPR (General Data Protection Regulation). GDPR was approved by the EU Parliament in April 2016 and after a two-year grace period took effect in May 2018! The new regulation will replace the current Data Protection Directive 95/46/EC. Regulatory Landscape and Breaches The first key point of the new regulation is protecting all E.U. citizens’ data privacy with an extended regulatory landscape. New data privacy rules should be applied to all personal data of data subjects residing in the European Union, regardless of companies’ locations. With GPPR, fines for possible breaches were increased sharply, up to 4% of annual global revenue or 20 million euro (whichever is greater). Another radical change is that regulations apply to not just controllers, but also processors. So, cloud processors are also covered. Under GDPR, the data owner must give consent through a document that is understandable, simple and easily accessible. Withdrawal of consent for data usage must also be easy. With GDPR, breach notification will become mandatory and should be performed within 72 hours after the breach is spotted. Notifications must be to all affected data owners. The Key Point for Insurtech These changes are key for insurtech. Data security and privacy had seemed to be key concerns that would hold back insurtech, because of the dangers created by the increased use of connected IoT devices, real-time data collection and high profile cyberattacks. But customers will be much more comfortable with insurtech because GDPR will alleviate concerns about data privacy, without regard to a company’s scale. With GDPR, drivers of insurtech like IoT, machine learning and much more won’t be considered as possible tools for data breaches. GDPR will be a spontaneous trigger of insurtech!

While so many of us have focused on the transformative possibilities of driverless vehicles, a much simpler technology has popped up and begun to reshape transportation in cities, with lots of potential implications for insurance. The technology is what the experts are calling "micromobility" and what the rest of us know simply as scooters.

The technology isn't totally under the radar, of course. When a scooter-sharing startup like Bird raises capital at a valuation of $2 billion, people notice. But I'm not sure that the threats and opportunities of scooters are being understood just yet. There certainly seemed to be a lot of surprise when the Washington Post last week published   an article about the number of people who are ending up in the emergency room following scooter accidents.

They would seem to come with the territory. You have people buzzing down sidewalks at 15mph (and Bird is, unwisely, in my opinion, lobbying against laws that would require helmets) or venturing into streets, where they have to engage with vehicles with a lot more mass and steel protection than the scooters provide. But, so far, people seem to be focusing on the novelty, not the implications.

In the short term, we need to figure out what insurance, if any, covers those in these accidents and whether there are opportunities to sell new forms, as some are doing for Uber/Lyft/Didi drivers and Airbnb hosts. We also need to help find ways to reduce risk. (Hint to Bird: helmets.)

The longer term gets even more interesting if you believe, as I do, that transportation in cities can be rethought from the ground up over the next 10 to 15 years. We accept these days that cars rule the road, but that's only been true for about a century. Through the 1910s, at least, horses, people and carts all shared city streets and only gradually gave way to these loud, smelly, metal contraptions that carried people around. We could well return to a mixed-used environment, with an overlay of information technology that optimizes for speed, convenience, cost, energy use, pollution and many other factors. That environment would be so different that the risks would change considerably, and the insurance and risk management would need to, too.

My working hypothesis is that cities will become bigger and more vibrant, with many more people choosing to live in them. Space will be freed up because driverless cars will so greatly reduce the need for parking, including on streets, and cities can be thoughtful about how to redeploy public thoroughfares among driverless vehicles, mass transit, pedestrians, bikes and scooters, using all sorts of sensors and cameras to manage flow and safety digitally. Today, the first-mile problem (how to get people and goods to mass transit) and the last-mile problem (how to get them to their final destination) are complex, but the problems should yield to a bunch of smart thinking over time both for city dwellers and for those who choose to live in suburbs or even more remote areas.

That's just a hypothesis, of course. As always, I recommend you Think Big, Start Small and Learn Fast so you can find out what the future will actually hold. The time to engage on the mobility transformation is now, but you can do so by testing big ideas in limited, inexpensive ways and only invest real money when an opportunity is clear.

Let us know if we can help with your innovation efforts. In the meantime, you might want to join our discussion in the group, "Inventing the Future of Risk Management and Insurance," on our Innovator's Edge platform. If you haven't already registered on the platform, just   click here. (Registering is free and quick.) Once you're registered,   click here  to join the robust discussion on mobility and a host of other topics.

Have a great week. 

Paul Carroll
Editor-in-Chief

Most owners of small businesses, many executives/owners of medium businesses and even quite a few executives/shareholders of large businesses think the most important aspect of a business appraisal is the final number. The business is worth X dollars. Obviously, the dollar amount is important. Getting the right dollar amount is even more important (I make this distinction because, in my experience, some business owners/executives and even quite a few bankers do not understand or sometimes even care about the difference between A Number and the Right Number). However, the number is arguably, especially if contested, only half of the requirement. Depending on the reason for the business being appraised, the actual valuation report MUST meet specific parameters. If the report does not meet these parameters, the value arrived upon by the appraiser may be found meaningless or an opportunity to litigate by tax authorities or plaintiff attorneys. Just arriving at a reasonable number is completely inadequate if the report parameters are missing. It is kind of like buying the wrong insurance policy. The coverage amount might be right, but coverage may not exist because the policy is wrong. Matching the correct report with the need is vital. Not knowing or understanding the difference makes business owners vulnerable to con jobs. And many business owners are conned each and every year. How to Avoid Being Conned First, I advise hiring an accredited business appraiser. All accredited business appraisers must sign a code of ethics, and most believe in their code. Some, though, do not quite believe in ethics as much as others. Some run the same con, but with accreditation. To be fair, I think some complete their reports mistakenly because they do not know any better. They are like insurance people with credentials who can barely spell insurance, much less business income coverage. The better path is to understand the three basic types of Fair Market Value reports and to also understand the huge difference between Fair Market Value (FMV) and Fair Value (FV). FMV and FV are not synonymous. I have seen agency owners, and even accountants and attorneys treat these critical terms as if their meaning was the same. However, many courts treat the values calculated using these two terms quite differently. See also: 3 Myths That Inhibit Innovation (Part 3)   Relative to the three types of valuation reports (there are other types that are generally less applicable to most agency owners that I won't address here), generally there is (exact terms vary depending on the professional association standards to which the appraiser is credentialed or belongs and sometimes depending upon the court, if being litigated):

1. Summary reports, which are often referred to as letter reports (the entire valuation is in the form of a letter) or short-form reports. These reports contain little detail.

2. Informal or Calculation Reports. The report writing standard, the analysis, the degree of confidence that applies to these reports are all relatively low. The margin of error is relatively high. The cost of these reports should therefore be relatively low. These reports rarely discuss the applicability of different valuation methods.

3. Detailed, Written Reports. As the name implies, these are highly detailed reports usually combined with considerable analysis and a thorough discussion of the applicable valuation standards. These should cost the most, all else being equal.

Do not confuse a low price with high quality. Some appraisers charge a stiff penny for lower-quality reports because the customer does not understand the relatively low quality. Customers tend to think the appraiser just charges less. They think they are getting a Cadillac for the price of a Chevy. They are really just getting a Chevy that might not even be new. The con occurs when appraisers fail to offer clients options, especially the most rigorous option, and clients do not know they are comparing apples with oranges when one proposal is for a lightweight appraisal and the other proposal is for a high-quality, heavy weight appraisal. One cannot always tell by the price, either, because the con is to charge as if the lightweight appraisal will be of high quality but just enough less money to get the job. Courts have recognized this problem to some extent. For specific purposes, especially estate taxes, the courts can actually penalize the appraiser. For most purposes, though, once the valuation contract is signed, the damages will fall on the client and not the appraiser. I am not suggesting all reports need to meet the highest standard, because they do not. When someone truly needs a decent, back-of-the-envelope valuation that has a large margin of error that is acceptable to all parties, a low-standard report should suffice. If litigation, a sale, taxes or compensation are directly tied to the value, then usually the best option is to spend the money and obtain a high-quality valuation right from the get go. Having a low-quality report in the hopes that everyone will agree can only complicate the situation if a high-quality report is eventually required. Then one may find it necessary to explain all the factors the low-quality appraisal inadequately addressed. My key point, though, is that it pays to understand some basic valuation differences. It pays to understand that a low-quality report has severely limited acceptable uses, including that one cannot easily dispute the resulting value because the margin of error is so acceptably high. If the calculated value is $1,000,000 plus or minus 50%, then any value between $500,000 and $1,500,000 is okay. See also: 5 Ways Data Allows for Value-Based Care   These are not easy differences for the uninitiated to understand, either. My short summary is a summary of thousands of pages of textbook differentiation. Sometimes, especially when the attorneys and accountants involved do not understand the differences, I think clients should consider hiring someone to just explain their valuation report options. The complexity goes far beyond getting a home appraised, and choosing the wrong standards rarely is beneficial to any party other than the attorneys involved. You can find the article originally published here.