Customer service is undoubtedly important to the modern, connected consumer. The chief differentiator between legacy carriers and the new breed of agile, digital-native insurtechs lies in the superior, efficient and omnichannel customer experience the latter are able to provide. The rapid rise of companies like Lemonade has shown the benefits that personalized offerings can produce. While 2018 saw many legacy carriers conduct a host of pilot initiatives aimed at improving the customer experience, there is an imperative on the rest to act now in delivering interactive and personalized products, communications and experiences. Based on a 2019 Insurance Nexus survey, insurance executives firmly believe that customer experience will see the biggest impact from the implementation of AI. While there are many barriers for carriers to effectively leverage AI (data organization, lack of technical expertise and ever-increasing regulation, to name but a few), its potential for winning and retaining customers in the future is now beyond doubt. The survey found, among other things, that: --85% of the executives expect to increase their investment in artificial intelligence this year. --30% see the biggest impact on customer service, while 26% expect the biggest changes in claims. --76% expect their personal roles to be transformed by AI. --52% see AI as integral to one of their company's top three strategies. Three carriers who are making great strides in the successful deployment of AI-driven personalized services will join Insurance Nexus for a webinar, “Create Customer Value with AI + Innovation: Personalize Insurance to Win Customers Hearts,” on Jan. 30. You can register here to attend live or to have the recording sent to you afterward. Moderator Stephen Applebaum, managing partner, Insurance Solutions Group, will be joined by: Thomas Sheffield, QBE senior vice president and head of specialty claims; Nicolette de Guia, Allstate head of consumer innovation and design, Allstate Digital Ventures; and Bilal Parviz, Arch Mortgage Insurance vice president of product development. They will explore the approaches carriers are successfully deploying to create valuable customer experiences driven by AI, including: how to move from low-touch to automated underwriting; how to let customers own their claims journey; and how to completely understand your customer.

Over the past couple of weeks, we have used this commentary to shine a light on and begin a discourse regarding what we believe are the avoidable consequences of certain catastrophic events. As our takeoff point, we've focused on PG&E's announcement that it plans to file for bankruptcy protection following massive liabilities from California's wildfires over the past couple of years. Some have shrugged and said there really isn't much we can do because the changing climate creates such vulnerabilities. Others have suggested that we can stop, even reverse, climate change. We think we have to deal with the world as it is, while waiting (without great hope) to see whether mankind has the political will and the technological skill to remove climate-related vulnerabilities, at what would likely be great cost. 

And we think we can deal with the world as it is, at least a lot better than we have been, mostly because of sensors that are becoming available. The California Public Utilities Commission has just 19 inspectors for the state's 250,000 miles of power lines and 4.2 million utility poles, but new types of sensors in the grid, augmented by a new generation of satellites and drones and managed aggressively through big data and AI, can at least help spot many potential problems and can let the state respond much faster to those that occur. 

The benefits of technology are even more apparent and immediate in preventing other sorts of disasters. What about the folks in Mexico who blew themselves and a bunch of other folks up trying to tap a gas pipeline? Is technology available that can detect an attempt to compromise the pipeline? There absolutely is. Is there technology that can assess the integrity of a bridge before it collapses? Yes, there is, and the technology is getting better.

Until now, we didn’t really have any choice but to wait for catastrophic events to occur, then respond as best we could. But technology exists or is being rapidly developed to enable a complete shift in our approach from response to prediction and prevention, and, at least with respect to infrastructure, we are not moving nearly fast as we should.

We refer to the current situation as a "Pinto moment." Our bet is that the costs to lean into technology that captures the data, analyzes it and creates alerts that can head off catastrophes pale compared with the cost of recovering from an event like California's Camp Fire (as if there is any recovery for the 89 people who lost their lives and for their families). 

We don’t know exactly who or what caused the Camp Fire, and we don't know just how it could have been prevented or what the cost would have been. We do know the wait-and-see cost of not doing anything.

One person responded to an earlier commentary by writing: "So I suppose you think the insurance industry is responsible" for these types of catastrophes. Well, depending on how you define "responsible," then, yes, we are saying that. Not from a legal liability perspective, but based on the notion that the insurance industry is uniquely qualified to take on the world's grand challenges. The industry should lead, and, in our view, has the responsibility to do so.

If running a business were just about management, then we wouldn't need leaders; we'd just need managers. But innovation doesn't happen without leadership. You can't manage your way to a new business model. We need leaders who will drive us from reaction to prevention.

If we don’t step up, who will? Government? Are insureds going take up the mantle? Prevention is in our wheelhouse. And the upside to taking the lead and shifting the whole approach from risk management to risk prevention, from turning the model on its side, is a lot of new revenue opportunities. 

Are we as an industry and a society willing to step up and be smart about getting out in front and using technology to revamp how we approach the risks we face everyday? 

Who will raise a hand?

Wayne Allen
Chief Executive Officer
Insurance Thought Leadership

Insurers have one asset that is first among equals, that is too rare to risk and too rich to easily replace, that is too abstract for actuaries to calculate and too valuable to actualize with numbers alone, as if an extra comma here and another zero there can create worth without effort—if insurers look beyond their respective balance sheets, they may see the result of centuries of history, laws and tradition. They should see that there is no substitute for integrity. Insurers should also know, and I am here to tell them for the first time or however many times it takes, that the wrong digital marketing campaign can ruin what they cannot recover: their livelihoods, their fortunes and their sacred honor. Dramatic words, but a truthful description just the same. Melodramatic words, too, but a nonetheless accurate account of the damage that the inexperienced can cause, that the incompetent can sow, that the inept can spread in seconds. That insurers can be so cavalier about digital marketing, when they are otherwise so conservative about how they do business, must no longer be standard operating procedure. See also: 5 Accelerating Trends in Digital Marketing   According to Erez Kanaan, founder and president of Kanaan & Co., digital marketing must never be the domain of the novice and a means to deter clients from asking questions. He says: “Digital marketing is a ‘science’ to the extent that we can measure the efficacy of keywords, ads and website traffic, among other things. Overall, however, digital marketing is more of an art than a science. It has the veneer of science, but it requires the soul of an artist to craft a message that resonates with a specific audience.” I agree with that comment, not because I think it is right, but because I know it is; because there is too much junk online; because there is too much noise in almost every medium; because there is a surplus of mediocrity and a scarcity of excellence, from the ads we see (and do not read) to the posts, tweets, texts and alerts we have to see before we can see what we want. Insurers need to accept these facts. More importantly, insurers have to act in accordance with these facts. They must not compromise what they can control, only to lose control over how they present themselves and how clients perceive them. Digital marketing, then, is a power that belongs to the few—that should be the property of the talented few whose work is as exceptional as the work ethic of each designer, writer, advertiser and SEO specialist, for whom it is a privilege to be a digital marketer. See also: 5 Digital Predictions for Agents in 2019   Call it a service by the few for the good of the many. Call it a service that exists, but one that must expand so we can render the unprofessional unacceptable and the unethical extinct. Call it a digital marketing policy for insurers and policyholders alike. Call it a new chapter in the union between insurers and digital marketers.

Blockchain has grown to be way more than just a tech underpinning cryptocurrencies. It is opening up transformative business opportunities, even in industries that are notorious for resisting change. And for good reason. Blockchain offers data security, reduced transaction costs, increased efficiency, trust, transparency, fraud prevention and data provenance. It’s no wonder that many businesses are already rising to the occasion with exciting use cases, even though full-scale adoption remains elusive. Here are some of the startups spearheading the adoption of blockchain in the insurance industry: Tradle Founded in 2015, Tradle leverages a blockchain-based framework to bridge the gap between consumers and companies. Its applications span multiple industries. In insurance, Tradle is focused on know-your-customer (KYC) procedures to build worldwide trust and enable faster allocation and access to customer data. After the KYC data is verified on the blockchain, it would be easily accessible by other authorized companies, eliminating cumbersome data entry and verification processes. See also: Blockchain’s Future in Insurance   RiskBazaar This is a platform that facilitates true peer-to-peer risk contracts to enable the affordable and efficient transfer of risks on a global scale. With the current insurance system, you have to purchase an insurance policy by sending your funds to the insurance company, which takes care of your money until you make a claim. With RiskBazaar, however, there is no single insurance policy or agency. You send your cryptocurrency to a digital lock-up box, whose key is then assigned to multiple (two or more) people. Upon agreement, the other parties can unlock the digital box with these keys, and, if you make a valid claim, you receive the compensation from the newly unlocked box. Essentially, anyone in the world can become an insurer, and the person can’t take off with the funds because no single person has full control over the box. Etherisk The German-based insurance company is applying the Ethereum blockchain to create insurance apps. In 2016, it demonstrated the concept with an experiment that allowed people to obtain flight delay insurance cover that pays out automatically. See also: The Problems With Blockchain, Big Data  SafeShare Global This is the first company in the world to launch a blockchain-based insurance solution that satisfies the needs of a shared economy. It allows private homeowners to rent out an extra room. Through blockchain technology, the system provides a time-stamped, immutable record of insurance in real time and at significantly reduced costs. The insurance industry is but one sector set to feel the effects of the rising blockchain technology. Take a look at the infographic below to learn about many other industries that are benefiting from its attributes. You can find the infographic here.

No or slow growth in revenues. Intense profit pressures. Constant flux from technology advancements and rising customer expectations. That’s what insurers have experienced in the recent past. Without bold action now, they risk seeing more of the same in 2019 and beyond. Yet a lot is possible for insurance — better ways of working, a clearer sense of purpose, more effective use of emerging technologies and ecosystems as well as our industry’s unique ability to promote financial wellness, provide protection and enable insurance customers to better manage risks. Here’s where insurance leaders should focus to take advantage of opportunities in 2019: The Life Market The Americas life insurance market has remained weak for years, though recent developments look promising. Improved financial markets, an uptick in growth, rising interest rates and aging populations are expected to drive demand for life insurance products. See also: ‘Organic Insurance’: Back to Basics   Life insurers should not simply wait for these fundamentals to work in their favor as they have in the past. To make the most of the growth opportunities, they must drive the agenda, develop the long-term resilience and “futurize” the organization. The focus must be on:

1. Developing comprehensive new value propositions for holistic financial wellness that are aligned to evolving customer expectations and the needs of aging populations across the region
2. Improving distribution through direct channels and empowered agents
3. Collaborating with insurtechs, new entrants and other incumbents on ecosystems
4. Optimizing value chain “basics” to promote sustainability

To achieve these ambitious goals, successful insurers will need to undertake digital transformation. In these transformation journeys, life insurers should seek to optimize the policyholder life cycle by catering to specific needs for specific types of customers, such as overall wellness for aging populations and rewarding experiences for millennials. By meeting these customers’ needs, insurers will enhance their own bottom lines by reducing costs, improving conversion rates and retaining more customers. Property Casualty Low, single-digit growth has been the rule in the non-life sector, thanks to a mix of favorable and adverse trends. Improved pricing in motor and health in North America has been largely offset by weak economic growth in Latin America. Of greater concern is falling profitability for the region’s P&C insurers. The causes include higher underwriting losses and weak pricing environment in commercial lines. To manage through this low-growth, low-profitability conundrum, non-life insurers have focused on innovation and disruption, demonstrating a strong interest in new technological developments including telematics, the Internet of Things (IoT) and blockchain. To demonstrate the value of these investments, insurers must move the needle on business outcomes. The focus must be on:

1. Driving cost efficiencies to fund continuing investment in digital transformation
2. Strengthening direct channels to gradually reduce dependency on agents and brokers, particularly in personal and small commercial lines
3. Preparing for the market entry of tech giants
4. Exploring insurtech partnerships and acquisitions to leverage relevant capabilities
5. Accelerating time-to-market to take advantage of new opportunities

With improved economic conditions in the U.S. buoying their growth prospects, P&C carriers must launch multiple change initiatives so that they establish long-term sustainable operating models. See also: How AI Is Redefining Insurance Industry   What’s Next The world’s largest insurance market, like most developed markets, has seen tepid growth in recent years. Life insurance lost favor with U.S. consumers due to low interest rates and heightened competition. P&C insurance has grown at low single-digit rates, fueled largely by auto lines. Health has continued to grow. The commercial sector struggles with a weak pricing environment and persistently low margins. Despite these challenges, insurers can reignite and sustain growth by strengthening the core value propositions and embracing new technology. See the full report for more.

Cyberattacks on brands and organizations have become an all-too-common occurrence in recent years—and 2019 will be no exception. Hardly any company is immune, regardless of the business sector, size of company or brand visibility. In fact, SMBs may be more vulnerable to computer attacks compared with their larger counterparts because smaller businesses tend not to invest in cybersecurity. Many SMBs also lull themselves into complacency when it comes to cybersecurity because they think their company couldn’t possibly possess enough online assets to attract malicious actors online. But hackers don’t discriminate. That was the major takeaway from a recent roundtable discussion focusing on how companies inoculate themselves against the growing threat of cyberattacks. The roundtable was hosted by Allianz Global Corporate & Specialty. I took part in the discussion, along with Steve Martino, Cisco senior VP and chief information security officer, and Gregory Falco, Stanford fellow, CISAC security researcher and MIT grad. The panelists agreed that computer hackers want to sow chaos just for the sake of doing so. What’s more, the problem is likely to get worse before it gets better. See also: Quest for Reliable Cyber Security   With that in mind, here are a few areas that companies need to think about this year (and beyond) to mitigate cyber threats. Brace yourselves. 1. Disruption from ex-employees rises. You know the drill. An employee is let go, and, before he can catch his breath, the head of HR tells him to turn in his ID badge, gather his belongings and vacate the building. However, does the employee have a duplicate ID badge at home? Did he download any corporate data to his smartphone? Ex-employees looking to wreak havoc on their former employer happens more often than you might think. Indeed, according to a recent poll of 472 cybersecurity professionals by CA Technologies, 90% of organizations feel vulnerable to insider attacks. The cyber threat posed by former employees is liable to get even more challenging in 2019, what with jobs created and old ones phased out due to the digital lurch. To bolster their company’s cybersecurity efforts, CIOs and IT departments must sharpen company protocols regarding how to make sure dismissed employees do not possess anything digitally that may cause the company harm. Another way to sharpen oversight is to clamp down on company intranets and reevaluate the kind of information or data that employees are able to access. 2. Ransomware threats grow more acute. Online crime travels fast, and hackers always seem to stay a step or two ahead of the efforts among companies and organizations to thwart them. But the ability to combat cyberattacks won’t get any easier in 2019, as ransomware becomes more difficult to contain. Ransomware is a type of malware that restricts access to the infected computer system in some way and demands that the user pay a ransom to malware operators to remove the restriction. Ransomware demands are typically made in Bitcoin, according to ZDNet, the cryptographic digital currency based on blockchain. As Bitcoin has spiked in recent years, so, too, has ransomware. A survey by Osterman Research found that ransomware attacks were the most common in 2017, leading to massive losses to businesses from the inflicted downtime, per Alverez Technology Group. Many businesses had to shut their systems for extended periods—up to 100 hours or longer, the survey said. To get their hands around the problem, companies should think about expanding their digital teams to include computer engineers who specialize in combating ransomware. 3. Digitization of manufacturing poses new problems. Large manufacturing plants that were formerly analog are fast being converted into digital systems—and posing new cybersecurity threats in the process. Many of these new systems are designed to assemble, vet and distribute products more efficiently, and not necessarily to detect cyber threats. A growing number of connected devices throughout manufacturing plants gives bad actors additional “pipes” to breach. For example, closed-circuit TVs and internal computer networks—both of which are fairly prevalent in manufacturing plants—are significant targets for hackers. As AI becomes a more integral aspect of manufacturing plants—with fewer and fewer people on-site—manufacturers will have to ramp up their cyber defenses even further. Is your company bringing any of the above cybersecurity strategies to bear? Is the board of directors tackling these questions head-on or sticking its collective head in the sand? Has the company sharpened both existing cyber defenses and training for rank-and-file employees on what to do if they spot something fishy in their email inbox? See also: Best Practices in Cyber Security   In 2019 (and beyond) these questions will be paramount for companies that want to protect their precious assets.

From mobile apps to machine learning, innovation in the insurance industry is moving faster than ever. Industry innovators are exploring the new frontier of insurance through smart investments, creative problem solving and new product and service development. To stay on top of the latest wisdom in the P&C insurance industry, put these 19 insurance innovators on your follow list in 2019. Marissa Buckley, Marketing and Brand Experience Vice President, Security First Featured on Digital Insurance’s 2018 Women in Insurance Leadership list, Marissa Buckley focuses on mobile innovation at Security First Insurance. One of her projects, a mobile app service that allowed customers to file notices of loss quickly, was used by 40% of Security First’s customers after Hurricane Irma. Buckley has also led the effort behind Security First’s JobSight network, which allows contractors to manage their work more efficiently. Buckley’s insight into digital and mobile technology as a tool to improve human lives, particularly in the face of oncoming catastrophe, makes her a must-follow insurance innovator in 2019. Chris Cheatham, CEO, RiskGenius As the CEO of RiskGenius, Chris Cheatham helps revolutionize risk management and underwriting. His company uses insurance algorithms that enhance the work P&C underwriters already do, making insurance work better for everyone involved. If you’re curious about how machine learning can be applied to insurance policies, Cheatham’s Twitter feed engages in many interesting conversations regarding this topic. Tom Elder, Senior Vice President, Breckenridge Insurance Services Though Tom Elder’s work focuses on risk management, he places a special emphasis on the rapid changes and future of P&C risk management. If you’re interested in understanding risk and innovation in commercial property and casualty insurance, real estate and flood insurance, following Elder in the coming year can offer an informed perspective on what’s coming next. Chris Gledhill, CEO and Co-Founder, Secco Aura If you need a fintech leader to follow in 2019, you can’t go wrong with Chris Gledhill, the CEO and co-founder of Secco Aura. Gledhill has given presentations on fintech, insurtech and business growth all over the world. If you can’t check out one of Gledhill’s presentations in person, his Medium account delves into many insights on fintech, banking and personal character. And, you can get a glimpse into what captures Gledhill’s attention by following his busy Twitter feed. You might also pick up one of his two books, titled “Consumerization: The Enterprise Guide to BYOD” and “The Fintech Group.” See also: Insurtech Innovator Videos 2018 Danielle Guzman, Social Media and Distributed Content Global Head, Mercer Danielle Guzman has served a number of professional marketing roles in the past, yet she credits her innovation not to these titles but to her personal qualities. “I’m a learner, a listener, a communicator, a social media enthusiast, and, above all, I am relentless,” she says. With a passion for innovation and success, combined with a focus on engaging people to build real value, Guzman earns her place on the list of insurance innovators to watch in 2019. Ryan Hanley, CMO, Bold Penguin Ryan Hanley is the chief marketing officer at Bold Penguin, a Columbus, Ohio-based insurtech company that focuses on applying technology to make the insurance buying process easier. Hanley helps P&C insurers put the human element back into insurance transactions, improving user experience for both customers and insurers. Hanley also travels the world as an international keynote speaker, providing insight on leadership and peak performance, customer experience, content strategy and marketing. Catch him at a conference or follow him on social media to share his insights. Seraina Macia, CEO, Blackboard Insurance Seraina Macia's professional experience reads like a who’s who of insurance companies, including XL Group, AIG and Hamilton Insurance Group. Since 2017, she’s been CEO of Blackboard Insurance, an AIG subsidiary that focuses on reimagining commercial insurance. For insurance companies interested in improving efficiency, reducing errors, breaking down silos and adopting new technologies, Macia’s insight will be essential in the coming year. Beth Maerz, Vice President of Customer Experience and Innovation, Travelers While many insurance companies are interested in using digital and mobile technologies to attract and retain customers, few have applied the technology practically like Beth Maerz. Maerz led the launch of Traverse, a renter’s insurance product that works entirely via mobile. Traverse seeks to meet today’s renters where they are and to make it easier for them to purchase coverage, prevent damage and file claims. The enormously popular app makes Maerz, the leader behind it, a top innovator to follow for anyone who wants to see technology applied to concrete, real-world improvements in insurance. Spiros Margaris, Margaris Ventures Spiros Margaris is one of the top minds considering innovations in fintech and insurtech today. In May 2018, Onalytica ranked Margaris in the top 10 fintech influencers within the insurtech community, along with naming him the No. 1 fintech, AI and blockchain global influencer. For insurers intrigued by artificial intelligence or blockchain and their ability to revolutionize the insurance industry, Margaris is a must-follow for 2019. In addition to maintaining an engaging Twitter feed, Margaris also gives talks around the world on fintech and insurtech topics. George Mathew, CEO and Chairman, Kespry Drones have become a big topic of conversation in P&C insurance due to their flexibility as a tool to improve claims adjustment and underwriting. Although Kespry has excelled in its approach to drones as a service, however, the company’s CEO George Mathew takes a view of innovation that encompasses the insurance industry as a whole. While promising big innovations from Kespry, Mathew also focuses on executive leadership, product management, development and market strategy experience across business intelligence, analytics and SaaS, according to his LinkedIn profile. He brings 20 years of experience to the table, making his insights key for insurers seeking to better understand innovation in 2019. Martha Notaras, Partner, XL Innovate Behind some of the biggest names in insurtech innovation today stand the venture capitalists who saw genius and supported it. Martha Notaras is one of those supporters. She focuses on investing in innovation within insurance, insurtech, data analytics and the Internet of Things, putting her work and insights at the heart of insurance innovation in 2019 and beyond. While not everyone recognizes Notaras’ name on sight, many in the insurance and insurtech world recognize projects Notaras has invested in and supported. Her list of successes includes Lemonade, Slice Labs, Notion and Cape Analytics. Her focus on opportunities in insurtech make her insights valuable for P&C insurers who wish to better understand disruption in the industry. Karl Ricanek, Co-Founder and Chief AI Scientist, Lapetus Solutions Karl Ricanek focuses on AI research and its application to a number of industries, including insurance. He also works as a computer science professor at the University of North Carolina at Wilmington, where he has served as the director of the I3S Institute and Face Aging Group since 2010. Ricanek’s work has helped to build the Chronos platform, which uses facial analytics to help life insurers determine BMI, gender and physiological age. With potential for use in the P&C industry, as well, tools like Chronos — and their creators — are worth following. Piyush Singh, CEO and Co-Founder, Terrene Labs Piyush Singh teamed up with three other insurance leaders to start Terrene Labs, which focuses on helping insurers underwrite policies by integrating with third-party data providers. What makes Terrene Labs different is its ability to facilitate underwriting with a very small number of data points, improving both underwriting efficiency and the overall customer experience. Singh also presents at conferences like Dig In, giving insurance professionals the opportunity to hear from him in person. You can also follow his Twitter feed or the Terrene Labs’ blog for insight throughout the year. Kate Stillwell, CEO and Founder, Jumpstart Insurance Kate Stillwell works to build human resilience to natural disasters. To do that, Stillwell applied her 20 years of experience as a structural engineer to P&C insurance, leveraging existing technologies to create an entirely new approach to insurance via Jumpstart. Jumpstart connects mobile devices, insurers and geologic data to automatically sense when a seismic event occurs and to trigger payments to customers immediately based on the severity of the event. Jumpstart began selling policies in 2018, making it one of the new kids on the block — and Stillwell a figure to watch in insurance innovation. Kathleen Tierney, President, Berkley One Kathleen Tierney earned a place on Digital Insurance’s Women in Insurance Leadership list in 2013, and she’s remained a notable innovator. Since March 2016, she’s served as the head of Berkley One, a new personal insurance provider within Berkley. Berkley One focuses on providing high-net-worth customers with insurance that combines the best digital tools with high-touch, agent-based services. This company aims to supply the insurance industry with the human connection that’s needed for good communication and a quality experience. This approach, which focuses on the role insurance plays in customers’ lives, put Tierney on the list of innovators worth following in 2019. See also: 10 Trends at Heart of Insurtech Revolution   Alex Timm, CEO and Founder, Root Insurance Alex Timm has been engaged in insurance since age 14, when he landed his first job assisting customers of his father’s insurance agency. A love of insurance and a passion for analytics led Timm to create Root, which seeks to change how auto insurance attracts and keeps customers by using customers’ actual driving habits to generate quotes. While Root looks simple, the concept behind it stands to change much about insurance in the future, making Timm a mind to watch in 2019. Abel Travis, Underwriting and Innovation Leader, AF Group Anyone whose official title is director of innovation could earn a place on a list of innovators to watch, but what makes Abel Travis a must-follow is his commitment to sharing what he learns in the insurance industry. His passion for learning and teaching landed him on a 40 Under 40 list of leaders to watch in Worcester, MA, home of Hanover. Catch Travis’s latest thoughts by tuning in to the “Insurance Innovators Unscripted” podcast, where Travis shares his own insights and talks to other leaders in the industry. Sabine VanderLinden, CEO, Startupbootcamp InsurTech Sabine VanderLinden heads Startupbootcamp InsurTech, which focuses on launching insurance-specific businesses and ideas. VanderLinden started the project in the U.K., and, when 80% of its participants received funding, she partnered with the Hartford to bring it to the U.S. In addition to helping insurtech innovators realize their dreams, VanderLinden has also co-edited the “InsurTECH Book,” released by Wiley in 2018. Insurers who want a connection to the newest ideas in insurance innovation can learn from following VanderLinden’s work in the coming year. Nigel Walsh, Partner, Deloitte How many insurance industry professionals put #Insurancefan in their Twitter bios? For Nigel Walsh, that label is placed proudly front and center, along with #InsurTech super fan. Walsh has easily earned both descriptors, spending significant time engaged in the insurtech conversation with a focus on digital and technological transformation. Walsh also co-hosts the “InsurTech Insider” podcast with David Brear of 11:FS. The podcast offers an easy-to-access source of insights while you’re commuting or unwinding after a day of hard work.

Organic products are quite popular in recent years. They are everywhere, in food, clothing, cosmetics and many other areas. It’s not hard to understand, because most inorganic things are harmful to human life. But what about organic insurance? The dictionary meaning of organic is “made in a natural way.” So, organic insurance can be defined as “insurance service that developed and is provided naturally.” Is today’s insurance service organic? Unfortunately, no. Basics of Insurance When we look back in the history of insurance, it becomes clearer.  Insurance was founded to guard against significant risks that affect society. Marine insurance was designed by sea traders. Fire insurance companies were founded by people who were exposed to the Great London Fire. The common point is the proximity of service and risk. And the service is offered by people who know the risk best, who can measure it in the most accurate way and take precaution when needed. Throughout history, insurance companies used to know the insured value from A to Z and managed the risk. For example, fire insurance companies had their own fire department and prepared detailed maps of the city where they operated. In this way, insurance companies made significant contributions to social development. Today, there is no organic connection between insurance companies and insured value. Insurance companies just have general statistics about the insured value. Statistics can be enough to manage the risk when the pool is large. But it doesn’t change the fact that insurance companies are far away from the society and the flow of life. Value of Insurance If you were living in Istanbul 150 years ago, the only way to protect your house from the fire was having a home insurance policy. Not for the compensation of your loss, because there was no central fire department; only insurance companies could protect your home from the fire (with their fire department). Today, home insurance policies don’t have such importance. In case of a fire, call the fire department; or home security companies meet your prevention needs. Insurance companies? They pay claims. Have you noticed how insurance service has become so uninspired over the years? It’s like hormone-growth tomato, bright red but tasteless. See also: Insurance and Fourth Industrial Revolution   Today’s insurance system is based on Henry Ford’s famous mass production system. The method we are familiar with, the factories, enables a product to be made in a short time and in large number. Workers do the same job continuously. They specialized in that line, but they have no ideas about the rest of the production. Similarly, insurance companies have kept a corner in the flow of life; they pay claims if bad things happen. It can be discussed how expert they actually are in this job, but It’s clear they have no idea about the other parts of the life. You can't provide insurance services like you produce cars. As a service provider you must be a part of people's lives. You must understand your customers and provide solutions to their various expectations. Henry Ford's famous quote summarizes the current situation of the insurance industry: “Any customer can have a car painted any color that he wants so long as it is black.” Development of Insurance Lots of things about family life have changed in the last 30 years, but home insurance coverages are almost the same. Cars are equipped with new driver assistance every year, but insurance companies still underwrite depending on car prices, license, driver’s age, etc. Brand new features of a car can be subjected to the insurance underwriting when they become an industry standard, but insurance companies follow all these developments a few steps behind. However, insurance companies had been pioneers of the social development throughout the history, such as fire departments, pension systems etc. The sales process of insurance is also inorganic. Most people buy extended warranty services with more peace of the mind when compared with car insurance. Why? Because people buy a warranty from car manufacturers, but they buy a policy from insurance companies. Paying hundreds of dollars to a third-party company can be annoying. Also, it raises lots of questions. Is insurance coverage enough? Is claim service high-quality? Whom to ask my question? You must trust a new brand for all these questions. But you buy extended warranty from the brand you already trust. Organic Insurance So, is organic insurance possible today? One way to make it possible could be to make insurance part of the insured product. Car insurance can be included in a car's safety package. Or home insurance may be a part of the home rental service. Although these kinds of partnerships are available, this business model promises much greater potential.

• The affinity partnership model is advantageous in several ways;
• The partner company knows the features of the product much more than the insurer. Insurance coverage may be defined much more clearly and accurately.
• To bundle insurance with the main product is the easiest way to sell insurance.
• Customers feel much safer about the insurance product. As customers have trusted a business partner, there is no need to build trust for an insurance company.
• Insured risk can be underwritten much better with the data provided from business partner. Likewise, insurers may share data with the business partner to upgrade the product. For example, car manufacturers and insurers may work together to develop accident-prevention systems.
• As sales and after-sale services will be provided from one channel, customer experience and satisfaction will be better.
• Insurance companies may be transformed to real service providers. Insurance companies may offer smart home services with their policy, or health insurance companies may provide regular health check-up and monitoring service.

See also: Connected Insurance Comes of Age in 2019   In fact, all these titles are new play areas for the insurers. Maybe insurers can stop being boring types who live in skyscrapers and deal with numbers all day.

Has the insurtech wave hit a riptide? At Strategy Meets Action, we think it has.

The riptide analogy generates a powerful image of a turbulent sea, where the strong finally reach the shore, but the weak succumb to the powerful currents and are pulled back out to the sea. The insurtech world is experiencing a similar struggle. We are seeing distinct winners in the insurtech market who are reaching the shore, but the rest – the vast majority – are not making it. Those few who have landed with firm footing, the winners, have captured the attention, and the investment dollars are going to them.

Headlines show that the hype around insurtechs is settling down. We see fewer startups in the U.S., and it is not for the lack of a strong economy. In fact, Strategy Meets Action estimates investment in new technology to be at high levels. So, what’s happening? Investment spending has become more focused. The interest is there, but insurers have collectively started to sort through the flood of information for the best possibilities and select the most promising solutions. From the start of the insurtech phenomenon, we have predicted that many startups will fail, and the industry is now experiencing that.

See also: Insurtech: Revolution, Evolution or Hype?  

Despite the smaller numbers of startups, we expect to see continued progress on the insurtech front in 2019. Among the frontrunners, progress is accelerating and will continue to take place. Those businesses and solutions with some level of insurance expertise and capabilities are gaining recognition as they demonstrate the ability to advance their technologies and come to insurers with connections.

At InsureTech Connect, we saw many amazing ideas and solutions, but not all have insurance implications. In these cases, insurance may be the wrong industry to champion them. For many of the technology startups trying to break into insurance, it will be easier to fine-tune their applications and solutions for car manufacturers, utility companies, appliance manufacturers or companies that sell direct to consumers. And the sad fact is that some ideas will never fly because they just don’t solve the right problems or have the broad applicability to attract funding.

The other reality for insurtechs is that, as time has gone on, innovation has become more common. It literally is everywhere, and novelty is harder to achieve. The thought of becoming the next “Uber” or the “Netflix” of insurance seems less and less probable.

Last year, Strategy Meets Action said the insurtech wave would continue … and we still believe that. However, it is a smaller number that will come ashore. The barriers to entry are causing the insurtechs that reach insurance to be more focused and purposeful – and this is the reality of an innovative world. Many new startups are losing the “wow” factor before they ever have a chance to get off the ground.

See also: 8 Key Insurtech Trends for 2019  

The great thing about innovation, though, is that we will see another wave of a different size and color in the future. As new computing trends, 5G, AI (among others) and even quantum computing gain traction and become more feasible and pervasive, a new wave will pick up speed. The key will be to stay ahead of it through monitoring the progress of these technologies, studying these insurtechs and exploring the opportunities that they will provide.