As the world becomes more connected -- with billions of sensors, connected machines, totally digital processes, trillion terabyte of new data and strict regulations on data privacy -- cyber risk appears as a bigger threat on the digital transformation journey of insurance companies. Cyber risk was always there, and companies managed it without detailed policies or billion dollar covers. But, the situation is changing dramatically. In our century, managing cyber risk is a full-time job and requires big budgets. Gross written premium in 2017 for cyber risk policies was nearly $3.1 billion, and it is expected to reach $14 billion just in five years. Insurance professionals expect rapid growth because cyber risk is now threatening not just financial statements but also the existence of companies from every business. Managing cyber risk seems still like maiden soil. There are covers for business interruption, reputation loss and possible physical damages, but it is obvious that there is a lack of clear understanding about how much cyber risk policy owners have. Cyber risk management is still in the very early stage: I don’t know what I don’t know! See also: Urgent Need on ‘Silent’ Cyber Risks   As a result of new capital regimes and strict regulations, like GDPR, Solvency II and MiFID II, there is a remarkable increase in sales and acquisition activities among companies from every sector, and cyber risk appears as a new key indicator during M&A due diligence processes, as well. Four or five years ago, cybersecurity due diligence consisted of asking few questions in a short phone call. Now, cyber risk management can lead to the termination of an M&A deal in a few days or a sharp reduction in price. So, insurers appear as due diligence partners. As all we know, the acquisition of Yahoo was radically changed right after Verizon Communications learned about how 3 billion Yahoo accounts were stolen. When Home Depot was preparing an offer for the Company Store, Home Depot discovered that e-mail and payment card information for as many as 56 million customers was stolen. Cyber risk is climbing to the top of CEOs' nightmares, and insurtech is a trigger -- it is also the best tool for managing cyber risk.

Distracted driving is having a tremendous impact on insurance rates. Distracted driving is the leading cause of accidents Increasing technology has seen the development of user-friendly mobile devices that have been the leading agents of distractions when it comes to driving. Distracted drivers have always existed. However, their number drastically increased with the invention of new applications for smartphones. Distracted driving has been found to be an increasing problem especially among the youth. More accidents equate to higher policy premiums Studies show that a distracted driver is 23 times more likely to cause an accident while using a cell phone. The Boston Globe reports that policy providers in Massachusetts received approval to raise rates by as much as 5% in 2017. See also: Distracted Driving: a Job for Insurtech?   Insurance costs rise drastically Many campaigns have been launched countrywide in a bid to sensitize drivers on how to keep their mind on the road and hands on the wheel. However, overconfidence and lack of focus has seen more drivers lose their lives due to distracted driving -- 52% of road accidents had significant phone distraction before the accident, according to Cambridge Mobile Telematics. Everyone should take part in curbing distractions while driving to help moderate insurance rates. Strict actions should be taken on those violating traffic rules. It is also important to report any road or accident-related cases to a car accident attorney.

Insurance companies, like many other businesses, are extremely concerned – and rightly so – about cyberattacks that could result in the theft of the personal information of customers and employees. To protect themselves against data breaches and other threats, they companies are implementing physical and network security controls that include both the latest technology-based solutions and security awareness training for employees, who are all too often the weak link. But while these security measures are certainly necessary, they are not enough, because insurance companies also face a second type of risk: the risk that criminals who have gained access to customer information from other sources will use it to hijack accounts. Most account takeovers occur via social engineering, where fraudsters use hacked customer data they have purchased on the dark web or information they have gleaned from social media to impersonate legitimate customers and trick call agents into making account changes. To prevent this type of fraud, insurers need more robust customer authentication processes. Many insurance companies continue to rely on so-called knowledge-based authentication (KBA) to grant access to accounts, meaning that customers verify their identity by demonstrating knowledge of personal information such as their account number, date of birth, mother’s maiden name and so on. But any business that protects financial assets by authenticating customers in this way is vulnerable to fraud because, thanks to data breaches, criminals have easy access to that information. And the rise of social media means that even the answers to common challenge questions (for example, “What was the name of your first pet?” or “Where did you attend elementary school?”), are often readily available to skilled and patient fraudsters. See also: Draining the Swamp of Insurance Fraud   The proliferation of customer information on the dark web and on social media means that insurance companies need to rethink how much, if at all, they will rely on customers’ knowledge of personal information to verify their identities. Because criminals have such easy access to customer data, insurers need to implement more reliable ways to identify their customers, whether the contact is via the web, a mobile app or phone. So how can insurance companies make sure that a person logging in to change account details or calling customer service to initiate a claim is a legitimate customer? Multifactor authentication is a best practice that adds an extra layer of security to the identity verification process. This approach requires that knowledge (something the user knows, such as a Social Security number or account number) be combined with inherence (something the user is, such as a voice print or retina scan) or ownership (something the user has, such as a trusted phone or a driver’s license). ATM access is a good example of a type of transaction requiring multifactor authentication: Bank customers must use both a physical debit card and a PIN. For increased security, insurers should apply this same principle to their customer authentication processes. Apps and websites, for instance, should not grant account access based simply on user IDs and passwords – both pieces of information that can be hacked. A wide variety of more secure authentication methods are available, and many of them, such as dynamic PIN code generators and one-time password lists, are not particularly costly or complicated to implement. Compared with online access, the phone channel continues to lag when it comes to security. Identity interrogation is still the dominant means of authentication used by customer call centers, and this obviously poses a significant risk in the age of increasingly sophisticated fraudsters who are adept at social engineering. Fortunately, new tools are emerging that make reliable multifactor authentication possible. One approach is to use the caller’s phone as a physical ownership-based authentication token. With this method, a network forensics system analyzes the phone call within the global telephone network and verifies that the customer is calling the call center from his or her personal phone. The process is virtually invisible to callers (it requires no action or enrollment) and allows callers to be automatically authenticated before their calls are even answered. With this technology, the only way a fraudster could spoof a call would be to physically steal and unlock the customer’s mobile phone or break into the home to use a landline. These are not easy tasks to accomplish. Multifactor authentication can also use biometrics – voice prints, specifically, in the case of phone calls. Voice-biometric systems compare a caller’s voice with a previously enrolled recording of the account holder’s to make an authentication decision. Biometric voice authentication will be one of the ways callers are authenticated in the future, but today there remain several sizable roadblocks to widespread adoption. Most notably, it is a lengthy task for contact centers to gain the permission and initial recording from their entire base of members. Remaining stagnant and continuing use of single-factor authentication based on KBA may seem simpler in the moment, but the risks – not only losses to fraud, but also potential penalties from regulators and lawsuits from affected customers – greatly outweigh the short-term discomforts associated with technology change, which will ultimately bring with it reduced costs and complexity. See also: Global Trend Map No. 11: Fraud   Consumers are living more and more of their lives online, and they clearly value the convenience and connectedness of the digital world. However, the steady stream of headlines about data breaches in every industry, as well as social media companies’ improper handling of personal information, is rapidly eroding trust. Many consumers have little confidence that their information will not be hacked and fall into the hands of criminals. If insurance companies wish to retain customer trust, they must take information security seriously and implement multifactor authentication. The good news is that many of the new authentication technologies are not only more accurate than identity interrogation but also result in a better immediate customer experience. Customers who call their insurance company are often already stressed, and they just want to resolve their problem without having to jump through hoops. Reducing reliance on identity interrogation also reduces operating costs as agents can spend more time helping customers instead of grilling them about their identity. Selecting the right authentication technology can thus be a win-win that results in more satisfied customers and decreased costs.

In the digital era of innovative products and services, insurtech technologies are bringing great opportunities to the insurance sector and accelerating the industry’s transformation. Advances in AI and data science are leading insurers toward the effective use of machine learning, data modeling and predictive analytics to improve back-end processes and streamlining and automation of the front-end experience for both consumers and insurance companies. Here are five ways that insurance companies are applying AI and data to the industry: 1. Front-end sales, underwriting and policy service Customers are acquiring insurance policies much faster and easier with the help of automated processes. These technologies differ depending on the systems that employ them and the people they serve. Integration gateways relying on data and AI are creating new customer experiences. See also: Seriously? Artificial Intelligence?   2. Back-end claim services AI, IoT, predictive analytics and data modeling let insurers refocus claims so that it is easier to file, submit, adjust and reimburse claims. This means customers have their claims settled in an expedited manner. Patterns of fraud are detected, learned from and shared via modeling and the AI that combs them for key information. 3. Business intelligence and big data Smartphones, telematics and sensors from wearables and connected homes provide a wealth of new data. In a connected world, insurers can generate insights from both external and sensor-based data sources. How this data is collected, stored and used will determine whether insurers will build or lose trust with customers. Take necessary measures to harden networks so that the threat of cybercrime is reduced. 4. Customer experience Insurance companies need to offer their services in a way that encourages loyalty, customer retention and loss mitigation. This can be made possible by making policy acquisition easier and keeping policyholders engaged. It’s now common for insurers to monitor driving, health and home behavior through mobile apps and wearables. In exchange for the data, carriers offer lower or customized premiums to customers whose score reflects reduced risk. 5. Customized insurance Carriers offer insurance packages and plans based on a matrix of factors. This requires their agents to possess extensive knowledge about products as well as their new and prospective clients. Through machine learning, millions of data patterns can be analyzed to identify the most appropriate customized plan or product for a particular customer. It can even be offered to them via AI. Data modeling and artificial intelligence are advancing rapidly. They are laying the foundation of an industry equipped to quickly take clients from prospect to policyholder with minimal touch points and reduced risk. See also: Motto for Success: ‘Me, Free, Easy’   Where exactly these technologies will lead us next is anyone’s guess, but carriers have begun to realize the benefits. A historically slow-to-move, conservative industry is now more nimble, innovative and tech-savvy than ever before. Transformation is here!

Workers’ compensation was designed to reduce litigation by trading out the employee’s right to sue his or her employer for negligence in exchange for limited guarantee of care and compensation. This exclusive remedy “bargain” was the justification for why the system was created a little more than 100 years ago. If we look at intent and where we are today, it’s a failure (albeit a fixable one).

Currently, the workers’ comp system is thought of as one of the more litigious marketplaces for insurance and healthcare. It doesn’t reduce litigation; it simply changes (and in some cases streamlines) the fight. We need to wake up and say ENOUGH! It’s time to dedicate resources on several fronts to get back to the original intent of this system.

Impact Analysis

In 2014, California Workers’ Compensation Institute released a study that provided a strong scientific approach to quantifying impact. The study showed that, if an injured party hired a lawyer, the associated costs went up on average by $40,000 for permanent disability payments and $25,000 in terms of temporary total disability benefits — even if the case never went to court. That is staggering!

Prior to this study, there was a general understanding that the system was not functioning as intended, but, when the hard numbers were presented in a very defensible analysis, it was truly shocking. More importantly, the study demonstrated that the injured worker doesn’t benefit from a litigious fight, either. It isn’t good for anyone (except maybe the lawyers) when things devolve to the point where attorneys become involved with a claim.

See also: 2018 Workers’ Comp Issues to Watch  

To determine whether things have improved since the release of the CWCI study, and if so by how much, I am involved with a new study. If the initial findings hold up, I can assure you that the situation has not gotten better. It’s far more likely that it’s only gotten worse. Doing a bit more digging on the impact of litigation on claims costs, we examined data culled from multiple claims companies. Several points stood out from the early informal analysis, most notably that, across all claims, on average:

• The overall time to resolve claims increased by nearly 10x when an attorney was involved.
• The amount spent in temporary disability payments was approximately 4.5x greater when an injured worker was represented by an attorney.
• The number of workdays employees missed more than doubled when lawyers were engaged.

These numbers are considerable and don’t even focus on the out-of-pocket costs of the attorney’s fees, direct litigation costs or the impact the additional friction causes in claims overhead costs. One of the more provocative initial findings shows that, when carriers distinguish between claims that are litigated and claims that are just represented and haven’t escalated to litigation, there is little difference in outcomes. If anything, initial figures suggest the worst outcomes are more likely in the claims that are represented but not litigated (carriers have different criteria for these categories, so it’s not a conclusive finding).

It is clear that, once the injured worker decides he or she needs to get an attorney, the horse is already out of the barn. We have to get IN FRONT of this event — and not just react to it. The future health of the workers’ comp industry depends on this.

See also: States of Confusion: Workers Comp Extraterritorial Issues 

There are lots of opinions on where to go from here. But real solutions are on the table. Before we examine all of this, however, it’s important to understand why injured workers hire attorneys to begin with. (Hint: It’s rarely because they are looking to score a massive payout). In my next article, I will dive into these reasons and how to remedy them so that we can return the workers’ comp system to its original intent.

As first published in WorkCompWire.

When you combine the ability to collect workplace data with evolving data analytics and machine learning, you can improve productivity, worker safety and fraudulent and exaggerated claim rates. During a session at the RIMS 2018 annual conference, Eric Martinez, founder and CEO of Modjoul, and Lance Ewing, EVP of global risk management and client services at Cotton Holdings, led a dynamic discussion around wearables and how they can and will create change for your organization. Why should companies start using wearables? For an individual, it can point to issues for correction. Groups of employees can compare with known thresholds, or set thresholds for improvement in areas of concern. For an organization, wearables change the way an organization is managed. The benefits of wearables are working with individual outliers, validation of application and new data for further understanding. Working with individual outliers, for example, in automotive telematics, the worst 5% of drivers represent 15% to 20% of losses. Validation of application can verify applications and information provided with new data for further understanding activity (bends, steps, twists, driving), training (aggressive driving events, near misses, bad bends), fatigue (duration of physical activity), fitness (height-to-waist ratio) and even environment (temperature, heat index, humidity). See also: Where Are the New Wearables Heading?   Workplace wearables create data and insights for companies and employees to achieve their highest performance. The wearable device captures payloads, then sends payloads to the cloud for computing and finally displays data on a dashboard. The criteria for a wearable are sensors (detect location, motion, environment and biometric data), processor (determines how fast data is sent to the radio and runs firmware code), data storage (provides short-term firmware and allows for inconsistent radio signal), radio (three basic types of radio: WIFI, Bluetooth and GSM) and data storage (allows ease of use for charging). These wearables are for finding the locations of injuries or potential injuries. Why are wearables the new hot topic for workers’ compensation?

• Wearables can be put in place to improve productivity and safety.
• 70 million-plus blue collar/labor workers in America.
• Typically don’t have access to their cell phones while on the job, making it harder to inform supervisors in real time when injuries occur.
• Employee turnover is high, requiring a solution that can easily transfer between users.
• Hazardous environments, increasing the probability for injuries.
• Due to the spread-out nature of work, employee reporting is hard to track.
• Occupational injuries and illnesses cost $250 billion a year.
• Injured workers require an average of eight days away from work to recuperate.
• Lost productivity ($183 billion) far outweighs the cost of medical expense ($67 billion).
• Worker productivity has continued to be abysmal.
• Productivity growth is the weakest it has been since the early 1980s — only 0.8% a year over the last half a decade, compared with 2.3% on average from 1947 to 2007.

These wearables can keep workers safe and productive. Wearables modify work procedures and can improve work activities based on data conveying a certain activity is potentially hazardous or inefficient. Telematics can provide near-real-time feedback of employees' motion, location and environment, and real-time clock timestamps all activities, including start, break and end of day. Fraud detection can record employee incidents to verify when accidents occur, and the potential severity and time reporting verification ensures employees are working in reported time. Wearables can identify near-miss events and identify locations/processes/poor technique that result in near misses to implement solutions before an accident can occur. Wearables also track employee performance and drill into data to provide work insights that empower employees to achieve their highest performance. See also: Wearable Technology: Benefits for Insurers   Lastly, some privacy concerns to consider are that there no biometric screening data is captured. Only captured data has a business purpose. WiFi credentials are encrypted inside device and when transmitting to the cloud and device can be logically turned off based on shift times. The time of wearables is now!

In a videoconference hosted by Indian start-up website Inc42, I gave Indian entrepreneurs some advice that startled them. I said that instead of trying to invent things, they should copy and steal all the ideas they can from China, Silicon Valley and the rest of the world. A billion Indians coming online through inexpensive smartphones offer Indian entrepreneurs an opportunity to build a digital infrastructure that will transform the country. The best way of getting started on that is not to reinvent the wheel but to learn from the successes and failures of others. Before Japan, Korea and China began to innovate, they were called copycat nations; their electronics and consumer products were knockoffs from the West. Silicon Valley succeeds because it excels in sharing ideas and building on the work of others. As Steve Jobs said in 1994, “Picasso had a saying, ‘Good artists copy, great artists steal,’ and we have you know always been shameless about stealing great ideas.” Almost every Apple product has features that were first developed by others; rarely do its technologies wholly originate within the company. Mark Zuckerberg also built Facebook by taking pages from MySpace and Friendster, and he continues to copy products. Facebook Places is a replica of Foursquare; Messenger video imitates Skype; Facebook Stories is a clone of Snapchat; and Facebook Live combines the best features of Meerkat and Periscope. This is another one of Silicon Valley’s other secrets: If stealing doesn’t work, then buy the company. See also: Time to Rethink Silicon Valley? By the way, they don’t call this copying or stealing; it is “knowledge sharing.” Silicon Valley has very high rates of job-hopping, and top engineers rarely work at any one company for more than three years; they routinely join their competitors or start their own companies. As long as engineers don’t steal computer code or designs, they can build on the work they did before. Valley firms understand that collaborating and competing at the same time leads to success. This is even reflected in California’s unusual laws, which bar noncompetition agreements. In most places, entrepreneurs hesitate to tell others what they are doing. Yet in Silicon Valley, entrepreneurs know that when they share an idea, they get important feedback. Both sides learn by exchanging ideas and developing new ones. So when you walk into a coffee shop in Palo Alto, those you ask will not hesitate to tell you their product-development plans. Neither companies nor countries can succeed, however, merely by copying. They must move very fast and keep improving themselves and adapting to changing markets and technologies. See also: 3 Technology Trends Worth Watching   Apple became the most valuable company in the world because it didn’t hesitate to cannibalize its own technologies. Steve Jobs didn’t worry that the iPad would hurt the sales of its laptops or that the music player in the iPhone would eliminate the need to buy an iPod. The company moved forward quickly as competitors copied its designs. Technology is now moving faster than ever and becoming affordable to all. Advances in artificial intelligence, computing, networks and sensors are making it possible to build new trillion-dollar industries and destroy old ones. The new technologies that once only the West had access to are now available everywhere. As the world’s entrepreneurs learn from one another, they will find opportunities to solve the problems of not only their own countries but the world. And we will all benefit in a big way from this.

At the 2018 RIMS annual conference, Christopher Loebler from the firm McCarter & English discussed business interruption claims. Business interruption usually falls within your property policy. The coverage is triggered by a property loss from a covered peril under the policy that shuts down your business for a time. One in five U.S. companies sustain a loss in this area with an average claim of more than $2 million. Oftentimes, losses are less obvious, more complicated and larger than the property claim. Unfortunately, the focus on the front end tends to be on the property loss when any incident occurs. See also: How to Assess Costs of Business Interruption   Five Pitfalls on Business Interruption Claims:

1. Failure to include an insurance coverage lawyer on your crisis response claim. Policies tend to be long and complex, so you need someone who has read the policy in advance of the incident to now how to best respond.
2. Issuing a press release can directly undercut the insurance claim. After an incident, the typical reaction of a company is to issue a press release letting people know that the business can still operate. Later, when you try to file a business interruption claim, the carrier pulls out that press release and questions coverage.
3. Failure to understand what is privileged communication. Questions should be asked through your lawyer under privilege, not through you broker. Communication with your broker is not protected by privilege.
4. Failure to communicate. You have an obligation to communicate with the carrier, including putting iut on prompt notice. However, you need to make sure you are not giving it information that can be used against you without going through your attorney.
5. Failure to retain a forensic accountant. A forensic accountant is an expert in both the policy and making claims. The accountant knows exactly what information is needed to maximize recovery.

NOTE: Claim preparation expenses are usually covered under the policy. This includes the forensic accountant but not attorneys. Also, you can add contingent business interruption coverage to your policy. This coverage would apply if one of your key suppliers suffered a loss that would be covered under the policy and that particular loss disrupted your business.

Blockchain is gaining popularity across industries. While the technology holds long-term promise of transformation and business model changes, there are few people in business and IT communities who understand it in detail, and there is little evidence on real adoption and successful  implementations of blockchain projects. While you may have come across numerous use cases of blockchain covering asset transfer, asset management, supply chain management, payments, reconciliation, digitization of information, digital identities and smart contracts, giving the illusion of automating and simplifying everything under the universe, the reality is that blockchain technology is still evolving, very complex, unproven and lacking in the basic enterprise technology adoption hygiene that is needed to build real use cases. Technology hype or a game-changer: Where do you stand in blockchain adoption? The unfortunate state of many industries is that someone doing something “cool” on any new technology is seen as an innovator. So, many CXOs believe that their company must do something innovative to stay on the radar and in the limelight to attract investors and analysts’ attention. Biased by media news and growing articles on blockchain, they don’t want to be left behind. Innovation often demands business values that are tangible, measurable and sustainable. The unfortunate state of blockchain is that it still lacks basic tenets of innovation, i.e. desirability, feasibility and viability. The “desirability” aspects of blockchain lack the “real problem” that companies are trying to solve for customers. The “feasibility” aspects confront the immaturity and still evolving nature of blockchain technology to make it business- or enterprise- ready. The “viability” aspects fail to relate to or justify returns on investment (ROI) leveraging blockchain technologies. In the current state, blockchain technology is not ready to deliver meaningful value to enterprises! Blockchain: What is there in it for insurance companies? Blockchain technology often relates to trust, transparency and security/immutability aspects in the mind of insurance stakeholders. These aspects are key for insurance CXOs! And that is the reason why insurers are keen to learn, adopt and explore blockchain. See also: Blockchain: the Next Big Wave?   Few insurers are reimagining insurance as an “intermediaries-free” ecosystem where blockchain would connect an insurer with customers and other ecosystem partners seamlessly in a trusted, decentralized manner, helping sell the right product to the right buyer with ease while improving compliance, minimizing operational cost and nullifying frauds. This is an ideal-world scenario that is perhaps decades away from reality. One may promise to automate the entire insurance value chain using any emerging technology, but the reality is that insurance is not that easy for a paradigm shift. Blockchain is still a new technology and is still a few years away from being accepted at enterprise levels. Opportunities, challenges and realities of blockchain: A pragmatic view While blockchain's potential cannot be underestimated, it is still in pilot and proof-of-concepts stages in many industries. The key enterprise technology vendors in this space (IBM, Microsoft, Oracle, Amazon, etc.) are just gearing up. The most popular platform players in this space are Ethereum, Hyperledger Fabric, R3 Corda and Ripple, offering permissioned and permission-less blockchain. The continuing changes in these core platforms are another reason that this technology is a bit unstable. But blockchain technology has received backing from top executives across industries and backing of more than $2 billion in the last two years. Where do you start with blockchain? Don’t expect miracles. Treat blockchain like any other emerging technology that is an enabler for your business and watch the market carefully until it takes off. Let me assure that you have not missed much if you did not start experimenting with blockchain in the last 18 months. You may start with proof of concepts (POC) in any area of your business (underwriting and claims are best suited to begin with). Think strategic, act tactical: It is not the use case but the ecosystem that matters Once the blockchain POCs can address a few business scenarios with transactional capabilities, try integrating blockchain with one or more of your core system or applications to prove the end-to-end capabilities. You may also explore the consortium model in case you want to experiment it with other re/insurance companies and partners with whom you collaborate regularly and pick adequate use cases accordingly. The other option is to ask your preferred technology vendor or a startup company to demonstrate use case scenarios that resonate with your business. The key challenge is not the use case(s) you pick for building a blockchain POC but more about the right platform and technology partner you select for your blockchain initiatives. The commitment of technology partners and technology platform is crucial. See also: How Insurance Can Exploit Blockchain   Conclusion Blockchain technology is still evolving but holds long-term promise to transform business across industries. The technology is not enterprise-ready at the moment, and there is little evidence of real adoption within the insurance industry. But insurers must watch for progress and start their homework in choosing the right platform, partner and blockchain initiatives.

Personalization is a significant opportunity for life insurance carriers looking to revolutionize their relationships with customers. In this article, Montoux takes a closer look at some key themes, with examples carriers can aspire to. Customer relationship Customers have long been thought to begrudgingly purchase life insurance protection, either as a rite of passage or something an agent or other perceived authority has advised them to do. The nurturing of a customer relationship is not something that has been required of the carrier, as it has traditionally sat with agents working to earn their commission. This lack of an engaged relationship has led to a culture of disconnect, distrust and even resentment toward the carrier companies, and without an agent’s care can lead to lapses in premium payments and ultimately lack of coverage. It is in customer relationship building that personalization is not merely an aspiration, but becoming a necessity. As younger generations are delaying or completely bypassing more traditional milestones of marriage, home ownership and starting families, the opportunities for agents’ messaging to resonate with them is lessening. The average age of a life insurance agent in the U.S. is 59 years old, and, as these aging agents focus their efforts on high-value policies among their peers, traditional carriers are at risk of losing touch with the new needs and perspectives of young generations if they don’t make significant changes now. Modern consumers -- and even more so, those of future generations -- are moving away from traditional sales models and purchasing behavior in every other industry, with insurance following in this inevitable shift. Consumers are going online to not only research and attempt to understand policies but complete applications and make payments. Even more significantly, the internet plays a key role in educating the modern consumer on the need for life insurance in the first place, as even the traditional triggers of life insurance purchase such as home ownership and financial advisers move to the digital space. It is essential to ensure younger generations realize the value of purchasing a life insurance policy in the first place, as Denise Garth outlines in this article. Consumers of today are bombarded with constant opportunities to part with their money, with a 2015 study estimating the average attention span has dropped from 12 to eight seconds since 2000, to less than that of a goldfish. Agents will continue to have a significant role to play for the foreseeable future as the Boomer generation enjoys long lifespans, and value the human connection. Tech-savvy agents will take advantage of digital distribution channels for acquiring new customers, and continue their roles indefinitely. But the ultimate transformation for life insurance could be turning it from a grudge purchase customers don’t perceive any immediate benefit from, to something that can improve their own lives and wellbeing in addition to ensuring their loved ones are financially secure in the event of their own death, or they receive a substantial payout from permanent policy in later life. And this potential shift lies in the carriers’ hands. See also: Thought Experiment on Life Insurance   Personalizing power An example of a grudge purchase becoming one of enjoyment in a different industry is shown by Flick Electric. Flick is an electricity company based in New Zealand that was established in 2014. It has built a steady following of loyal customers who are so enthusiastic about their relationship with the company that they often become ambassadors, referring friends and family to join. Flick has achieved this relationship by not only bringing a different payment model, which reflects the market rate of electricity and passes these ebbs and flows onto the end customer’s bill, but has also very tactically framed their marketing and social media presence to attract the key millennial and Gen-Z markets as they become new bill payers of households - and also well-prepared for Generation Alpha and beyond. While the purchase of electricity is obviously a more essential expense for people than life insurance, the customer relationship Flick has managed to build is a great example of what insurers can strive for in making customers perceive value in each and every premium payment they make. Life and death should feel personal Insurers can look to optimize their digital spending with highly targeted social media campaigns, as part of their wider marketing strategy. With social media now an integral part of 81% of U.S. Americans’ lives, insurers that work to very specifically target campaigns in response to personal milestones shared online could reap the rewards of more conversions by ensuring their marketing efforts are in exactly the right place, at the right time. Envisage the way in which a millennial couple sharing their excitement over their new firstborn child’s birth on Twitter could be automatically approached with a very specific offer of life insurance, which outlines the benefits of such a policy for the future of that baby. Fabric demonstrates the kind of messaging that could resonate with this hypothetical pair of new parents. Fabric’s own social media content emphasizes "parenting made easy, starting with life insurance," conveying an easy, low-effort, high-reward investment, which appeals to new parents wanting to secure the financial future of their family. This kind of personal and emotional connection to a life insurance purchase is key for new generations of digital natives who are bombarded with constant offers online and limitless places to spend their money -- especially as, in this example, when starting a family. Breaking through the noise to demonstrate the immediate value of peace of mind is key for life insurers to earn that place in a young family’s budget. Products Life insurance products currently leave plenty of scope both for further personalization, and for wider improvements on messaging that will actually resonate with customers. Complex, wordy policies with grim mentions of “death benefits” that attempt to cover every eventuality can leave customers confused, frustrated and often either under- or over-insured. Sherpa is an example of using a different model to ensure the cover offered to customers is extremely personalized. While traditionally insurers create products, and brokers work to find the best customers to buy these products, Sherpa charges a value-based annual fee to customers, and in turn meets all their specific insurance needs. Distribution It’s important that insurers work to accommodate customers by allowing them to use the communication channel they are most comfortable with, rather than trying to funnel them into the carrier’s preference. A report published by McKinsey indicates that more than 80% of shoppers encounter a digital channel at least once during their purchasing journey. Especially on social media, replying to a customer’s inquiry through that channel with advice to call a phone number could lose an opportunity completely, whereas being able to answer questions directly and then move to another online channel such as the carrier’s website is more likely to retain interest. Behind the scenes, carriers need to ensure their staff are provided with the tools to communicate information and monitor customer engagement across channels to ensure every interaction a customer has with an insurance company as a whole is as seamless as possible, no matter which individual staff member at the insurance company might be behind the interaction. These digital communications with customers, along with the collection and analysis of data, allow insurers to build rich profiles of customer needs and preferences - and prevent the repeated ask for basic customer information, which should be acquired once only. Data and analytics Analyzing existing customer data is key to understanding patterns of premium lapses, and determining ways to help prevent them from happening with future customers. Using this data to ultimately identify the earliest signs and indicators of customer payment lapses means an insurer could preempt these, and ensure that reminders and offers of solutions keep the customer meeting premium payments, and are delivered effectively. Reminding a customer of the benefits and significance of the insurance policy at key points of doubt or uncertainty over the policies’ value relative to other payment requirements in their lives is a huge advantage for insurers. See also: This Is Not Your Father’s Life Insurance   Experience data and connected wellness Finding ways to gain access to and use customers’ experience data is key in achieving true personalization of life insurance, with IoT and device data greatly improving the company’s data set, and ultimately benefiting individual customers with personalized messaging and rewards. Improving the customer perception of carriers to build trust and good faith in insurance companies is crucial in obtaining this personal data, as customers will need to overcome fears of anti-selection in openly sharing, as well as their concerns around privacy. Being able to analyze this information provided by new customers can allow individual quotes to become even more accurate and eliminate the issues of non-disclosure or misinformation provided by customers -- which can ultimately lead to their policy not being paid out. This device data can also be used in a continuing basis to explore patterns of behavior, health and death to more accurately model risk. Insurers are already beginning to use data to help nudge customer behavior - the AIA Vitality app updates the insurer on activity levels by syncing from fitness wearables and rewards customers’ health improvements with lower premiums. According to Accenture, 77% of consumers would be willing to exchange behavior data for lower premiums, quicker claims settlements or coverage recommendations. Interestingly, this aspect of personalization may not be just for targeting the young, as Accenture also reports senior citizens are adopting wearable devices five times faster than the general population.