Sometimes, finding the answer in confusing times is really a matter of knowing the right questions to ask. For example, the Novarica Nine Insurance and Technology Trends for 2018 and Beyond looks at three groups of three key issues:

• External trends, like disaggregation of value, the insurtech bubble and drive for innovation leveraging emerging technology.
• Technology capabilities in data and analytics, digital channels and core systems
• IT management issues like security, talent and alignment and governance

In each of these nine areas, planning a successful strategy starts with asking the right questions. Some questions I encourage our insurer clients to ask themselves are: What is our distinctive value to this stakeholder in transferring risk from individuals and businesses to the capital markets? (Disaggregation) We’ve long talked about disintermediation of distributors, but, in the current environment, any intermediary between those looking to buy coverage and those looking to take risk are intermediaries. Insurers and reinsurers, as well as distributors, need to make sure they they’re providing a unique, differentiated value to justify their position in the value chain. See also: Predictions From 6 Insurtech Leaders   What's different about our approach to the problem? (Insurtech) There are many different opportunities to engage with insurtechs, but the most interesting thing carriers can learn from new market entrants is, what’s different about their approach? As the Zen saying goes, in the beginner’s mind, there are many possibilities. In the expert’s mind, there are very few. New entrants into the market can help insurers avoid overlooking new ways to solve customer problems. What would this enable us to do? (Innovation and Emerging Tech) Emerging technology is full of possibilities, from AI to RPA to IoT to drones. The important question is, what could we do if we had access to this technology and its capability? Could we price better? Gather information faster? Create better customer experience? Framing the right question can drive better strategies for exploring innovation and emerging technology. If we knew, what would we do? (Data and Analytics) Everyone wants more data and insights, but few have a plan to act on those insights. Without an idea of what could be done better if more insights were available, and a plan for how to do that, insights are worthless. How could this be easier and faster? (Digital) Insurers have different definitions of digital strategy, but it really all boils down to this question – how could this be easier and faster? Better UX? More pre-fill? More predictive analytics? Simplified products? Simplified processes? Yes to all. And then do it again. How will this create a foundation for evolution? (Core) Core systems are still the ultimate foundation for speed to market and ease of doing business, and are critical in enabling analytics and insights. Insurers should consider whether their core systems are really up to the challenge of creating a foundation for evolution in product and process, or whether they will be an anchor to the past. What is our realistic goal? (Security) Perfect security is attainable – unplug the internet and all terminals and lock the server in a dark room. Becausse that’s not realistic, insurers should do a realistic assessment of risks, costs and impact on business effectiveness. Why should anyone work here? (Talent) This is a challenging question to face. Insurers talk a lot about talent availability, but they talk less about what’s compelling about the opportunity to work for their companies. Is the pay stellar? Is the environment stimulating? Does the role have an opportunity to create an impact? If not, your problem may not be the supply of talent. See also: Where Are All Our Thought Leaders?   How does this IT capability drive business results? (Alignment) IT leaders often have a hard time translating the capabilities they enable into business results. But how can anyone expect business executives to invest in something they don’t understand the value of? Not being able to draw a line between tech capabilities and business results is fatal. Communication and understanding are critical skills for IT leaders. Insurers really need to examine whether they are providing a distinctive value and a positive experience in every area both internal and external. Some of these questions are not comfortable to ask, or to answer. But having a realistic set of answers is the first step in developing an effective strategic plan.

Part 3 – Your claims process can become a revenue driver for your products! In our first two installments, which you can find here and here, we discussed that your claims process is a customer experience issue and that a company can reduce expenses within the claims process. This article is going to ask you to think outside the box and disrupt the way a life insurance claim is processed. First, let’s review a typical process for a life insurance claim:

1. Claim process is initiated by the beneficiary.
2. Claim packet is mailed to the beneficiary to complete.
3. Beneficiary completes claim packet, includes any necessary documents and mails it back to the company.
4. Insurance company receives the claim and initiates an internal claims process. More documents or verifications may be needed, and requests are sent to the beneficiary.
5. Beneficiary completes additional requirements.
6. Insurance company verifies and completes the claims process.
7. Check is mailed to the beneficiary.
8. Check is deposited into the bank of the beneficiary.

This is a very simplified version of a typical claims process. There may be some differences in this process from company to company. However, you get the basic idea of the process. My previous experience as a top financial adviser at a major company led me to believe that this process is stuck in the past, provides a poor customer experience and is in great need of an update. As part of my adviser role, I had the opportunity to speak at events and gain the perspectives of other advisers. I also spoke with my clients to really get a sense of their experiences with filing claims. Now, imagine with me that you are a financial adviser or agent for a life insurance company. You are the person who prospected the individual and identified a need for a life insurance policy. You built the relationship and gained the trust that allows you to sell a $1 million life insurance policy. GREAT! You just did them a great service. You offered someone peace of mind. Guess who gets to experience the forward thinking, care and love for the futures of spouses, kids, grandkids and legacy? The beneficiaries will be the only people who truly experience the amazing benefit their loved one left for them. Let me ask, would it be beneficial for you, the adviser, to provide an exceptional experience for the beneficiaries? Stay with me. See also: Finding Efficiencies in Claims Process   What if the new claims process was a technology solution that allowed your company to make this adjustment to the claims process? It could look like this:

1. Beneficiary initiates and completes the claims process on a digital platform that has all the documents pre-filled for convenience. The platform allows beneficiaries to use their mobile devices to scan and upload any additional documents that are needed by the company.
2. Insurance company receives all documents completed and signed. All documents and correspondence are associated with the correct claim in real time.
3. Insurance company verifies and completes the claims process - all on a digital platform provided by the life insurance provider.

Here is where the revenue can be generated if your company is forward-thinking and truly wanting to be innovative. Remember when I asked you to imagine that you were a financial adviser? Now step back into that thought process. What if your company electronically notified and looped you into the claims process? Would that be valuable to you as the adviser?

• Would this allow the adviser/company to create a new relationship that is built, and continues, on an existing relationship?
• What if your company electronically sent you pre-filled account opening forms and asked you, the adviser, to reach out to the beneficiaries and help them through this process? Would that be valuable to the adviser?
  • Would the adviser have an opportunity to build a relationship with the beneficiary?
  • Would the adviser have chance to retain the $1 million instead of those assets getting deposited at a bank or competitor?
  • Would the adviser have an opportunity to present products or services that could benefit the beneficiary?
  • Do you think the beneficiary would find value in this?

Now imagine that you are the beneficiary. Would it be helpful to complete the claims process quickly, efficiently and on your time frame?

• Would it be helpful to have a professional help you with the process and $1 million benefit you are about to receive from your loved one’s good planning?
• Would you want to leave the same legacy for your heirs?
• If the company provided you with a great user experience, a professional to help you through the process and genuinely wanted to create a lasting relationship with you, would you consider doing business with this company yourself?

See also: Global Trend Map No. 10: Claims   Based on my experience as a trusted adviser, I would find extreme value in a company that engaged and embedded me into the claims process. In addition, advisers have been through this process many, many times and can add true value to those who have not been through the process. When I was involved with the claims process, a few things happened:

1. We were able to start a new relationship that is built on a common previous relationship. Most beneficiaries would think, “If dad trusted this adviser and company, I can too.”
2. We were able to continue to provide service to a family who had already experienced the value of what our company offers.
3. We were able to offer a true benefit and meaningful solutions to the beneficiary.

Stay tuned for the final issue – Part 3.5: Your company can be innovative and generate revenue with the help of insurtech startups.

Most learning and development pros are familiar with learning styles—the idea that people respond to various teaching methods differently. Visual learners need pictures and diagrams, social learners prefer group training, solitary learners just want to be left alone with a textbook. The concept is based on the belief that different parts of our brains handle different functions. If one area of a person’s brain functions more strongly, that person will prefer learning in a way that uses that portion of the brain. Well, I’ve got some bad news: the idea of different learning styles is something of a myth. Study after study has found that everyone’s brain learns in pretty much the same way. Research conducted by Paul Howard-Jones, professor of neuroscience and education at Bristol University, found that the human brain is extremely connected—we don’t use just one part of the brain when we learn. People may have learning preferences, but there’s no scientific basis for different learning styles. Howard-Jones calls it a “neuromyth,” similar to the misconception that we only use 10% of our brains. See also: Beat Brain Drain: Boost Your Talent Pool Now the good news: Just because learning styles don’t have a strong scientific basis doesn’t mean that efforts to tailor training to how people learn best are for naught. Daniel Willingham, professor of psychology at the University of Virginia, has done research in the area of elementary and high school education and says that many teachers he talks to share this view. Learning styles may not explain everything about how students learn, but they’re a useful way to “prime the creativity pump” when coming up with lesson plans. Ideally, lesson plans should blend a variety of learning styles to make training more effective. 4 Learning Styles You Should Take Advantage of Neurology aside, here are four learning styles outlined by Neil Fleming’s VARK model along with some training exercises associated with them that could benefit all learners by making sessions more engaging and memorable. 1. Visual learning. This doesn’t refer to YouTube videos or PowerPoint presentations. Instead, visual learning focuses on charts, graphs, maps and other diagrams that convey information—think infographics. If you want to increase visual learning models in your training, look for ways to explain complicated ideas or the flow of a specific process with a graphic. 2. Aural/auditory learning. This style isn’t about just hearing the material; it’s really about using language to communicate ideas. Lectures and group discussions are effective examples of aural/auditory learning, but so are conversational emails. To boost your aural/auditory quotient, ask trainees to repeat concepts in their own words and have them work in small groups focused on brainstorming and talking through training material. 3. Read/write learning. This is where the infamous PowerPoint presentation fits into the training equation. Read/write learning is all about the written word, with a heavy focus on manuals, procedures and other comprehensive texts. This style works as a great baseline for many training sessions—give trainees the textbook or the full PowerPoint presentation, then use other learning styles to mix up the delivery and keep things interesting. 4. Kinesthetic learning. This learning style is focused on creating real-life examples. Case studies and other real-world scenarios are a great way to give your training some immediacy and consequences; trainees will see that they’ll actually have to use this stuff on the job. Simulations and mock exercises are a great way to get people engaged and thinking about the material in a more real way. See also: How to Outfox Our Brains About Risk   Regardless of which camp trainees fall into, the key is to mix up the styles so that trainees engage in the material in different ways. For example, start with a PowerPoint presentation or assign a chapter from a textbook as homework, then discuss the content by encouraging employees to summarize it in their own words. Finally, break trainees into groups to come up with real-world examples or create a chart summarizing the material.

We know the agent channel isn’t disappearing from the insurance and financial services industry anytime soon. However, it’s not going to look the same way it did 10, five, even one year ago. That’s because consumer expectations are changing rapidly, due in large part to the multi-channel shopping experience made possible by mobile and social media and delivered by companies like Amazon. “All those expectations consumers have are coming to the insurance space,” said Chip Bacciocco, CEO of TrustedChoice.com, during Denim Summit 2017. “Insurance customers have an expectation of interacting with an expert to buy insurance any time of the day or night. They want to know where their friends buy insurance from. They want to know the ratings and reviews of different agents. They want transparency in value.” Here are three important things to keep in mind as you develop your multi-channel customer experience:

• Customer service. For most consumers, shopping for insurance doesn’t start on the phone any more. People want to have a conversation with a person after they’ve done their own research about the products and services offered. They want to feel informed and empowered — and many of them will be. Be sure your customer service representatives are well-trained and given the authority to perform higher-level service for those consumers who have already exhausted all self-service channels. After all, the last thing a consumer who is used to having requests completed quickly and seamlessly wants is to be transferred to another representative. Bacciocco recommends observing what you’re doing today in terms of customer interaction. “The number one way to do it: Listen to your phone calls,” he said. “Record every inbound call. We record 10,000 inbound phone calls every single month through TrustedChoice.com.”
• Consistency. It’s no surprise that in a digital, multi-channel world, your brand is being represented through multiple channels — agent, website, social media, call center and so on. It’s critical that consumers receive the same information and experience no matter what channel they’re engaging with. “What is the consistency of the products you’re offering? The price of those?” asked Denise Garth, senior vice president of strategic marketing for Majesco, during Denim Summit 2017. “If I go to different channels, and the price is different, you’ve lost credibility, you’ve lost trust and you’ve lost any aspect of having value.”
• Buying vs. renewing. Agents still dominate new insurance policy sales with both consumers and small- to medium-size businesses. However, renewals tend to be less of a face-to-face process. “That is really, really critical because that’s when you’re going to lose them,” Garth said. “If you don’t have a digital channel to engage with them really well to renew that policy and provide that service, you probably will lose them.”

See also: Global Trend Map No. 12: Cybersecurity With 224 million smartphone users in the U.S. spending an average of two hours every day consuming social media, you have too much to lose to put the mobile and social media channels on the back burner. As you develop your multi-channel strategy throughout 2018 and beyond, be sure you are keeping in mind the customer service experience you’re delivering, its consistency across channels and the process for renewing policies in a digital way.

April is one of the best months for learning about early-stage companies and technological platforms influencing insurance. Why April? Because this month the Global Insurance Symposium is held in Des Moines, Iowa. What we find makes GIS so special is that both attendees and speakers take off the gloves, show a willingness to look beyond the status quo and discuss the state of the future. 

Guy Fraker, our Chief Innovation Officer, will be speaking on a panel exploring "wearables technologies" at the GIS and we want to use that subject to highlight the importance of incumbent insurance organizations taking a broader view when selecting market intelligence platforms. Such platforms can help a company to assess the vast array of innovation opportunities that continue to emerge.

Insurers have a choice when it comes to innovation-related research and intelligence, which generally is:

1. 100 yards wide and ankle deep.
2. A mile wide and one inch deep.
3. A mile wide and a mile deep. 

Which of these options is most likely to yield insights that lead to the exponential break-through opportunity?

Let’s say for the sake of argument that the broadest actionable insights are going to come from Option C. A corresponding assumption, though, might be that this choice represents too much information and would require one or more analysts and months of work to manage the information and yield those insights.

Today, however, such an assumption would be inaccurate given that a qualified and tested A.I. platform can accelerate the analysis. Option C therefore does not require any more effort or resources to take advantage of its depth than Options A and B.

Another consideration is whether a user is served by a market intelligence platform that stays within the boundaries of conventional wisdom, restating the same information one can find through countless sources, or better served by one that pushes deeper. 

In the options listed above, the phrase “a mile wide” refers to the practice of taking a wider horizontal view of innovation. In contrast, Option A, "100 yards wide," reflects an analysis that is slightly more focused and makes some additional effort to discover insights.

Innovation does require questioning the status quo, including the very definitions of labels like "wearables technology." Now, let’s move beyond theory and conjecture, in favor of actual data points.

In July 2017, CB Insights, an often-cited source of innovation research, published an analysis of wearable technologies that listed 149 funding deals from 2016 totaling $1.8 billion. In its analysis, the article highlights how funding took a dramatic decline in 2017 to $628 million.

Another market information source, Coverager, includes 14 "enablers" in the category of wearables. The table of wearables tech lacks any explanation or context beyond early stage company identification.

What is missing from both platforms? Neither firm seems to challenge the most basic question: What is a wearable? Is a wearable device one that measures fitness activity and may even monitor vital signs? That would certainly fit a conventional definition. 

Insurance Thought Leadership’s Innovator’s Edge platform takes a broader view. According to Innovator’s Edge, the conventional definition of wearable technology includes 358 early-stage firms that received $2.7 billion in funding in 2017. However, these companies are just the tip of the iceberg.

Innovator’s Edge also tracks 528 wearable medical device innovators from 62 countries that received $16.7 billion in funding last year. Consider, for example, Retina Implant out of Germany that has created an electronic retinal implant to gradually restore sight to specific cases of blindness. Is this not a wearable?

We can also look at nano-medicine companies such as Liquidia Technologies from North Carolina. Liquidia is developing particle based vaccines that can attack a variety of viruses residing in the body. Is this not a wearable?

More importantly, in terms of identifying early stage firms with the potential for driving down chronic health care claims, might this be a wearable firm worth knowing about? Possibly, but it would not likely be found in these other platforms.

Early-stage firms in the wearable market also come in the form of medical device startups—many of them targeting improved health care diagnostics and treatment protocols—which received $9.3 billion in funding by year end 2017. This category also includes firms such as BoneSupport, which has created an injectable material to help fractures heal faster, serve patients with chronic bone fragility, along with many other applications. Located in Switzerland, it is in the final stages of an IPO, having been backed by a total funding exceeding $100 million. 

The chart below is an example of Option C: A mile wide and a mile deep. By the way, just the 3 companies mentioned above received $220.3 million in funding last year.

In conclusion, the technological capabilities being brought forth by billions of dollars and many of the brightest minds don’t neatly fit as a square peg in a square hole categorization.

Relying on a superficial analysis of innovation—which intuitively sounds agreeable because the information is neither provocative, nor wakes one up in the middle of the night—is very tempting and easily digestible, but please don’t allow yourself to fall into that trap. Picking an intelligence source that doesn’t take a wider view limits your options without your permission.

Those insurance industry executives who understand innovation growth can be measured in multiples and not percentages also display a willingness to venture beyond their comfort zones to discover real innovation opportunity. This will be one of many topics discussed at the GIS conference on April 25-26, and we hope to see you there.

Guy Fraker
Chief Innovation Officer

Paul Winston
Chief Commercial Officer

P.S. In addition to in-person events, we are pleased to be participating in several upcoming webinars each of which is aimed at helping insurance organizations improve their understanding of the opportunities from innovation:

May 3: “Insurtech and Insurance in the Age of Innovation” Presented in partnership with Johnson Lambert, this webinar will focus on how and where to start an innovation program, defining what innovation means and who should be part of the team within an organization to have the best chance of success.

May 9: “A Systematic Approach to Successful Innovation” This webinar from the Insurance Information Institute and Innovator’s Edge will introduce attendees to a systematic process for insurance innovation that has been successful at driving meaningful ROI at some of the world’s largest insurers and reinsurers. This webinar is the first of a two-part program that will be followed by a live interactive workshop in Chicago to help attendees focus their efforts and identify key opportunities. Register to attend both.

May 16: “Insurance Innovation Mythbusting” This webinar, part of the National Association of Mutual Insurance Companies’ Insurtech and Innovation Webinar Series, will address the myths and realities of innovation, especially for insurance companies that question whether it is possible for a smaller organization to succeed at this and are uncertain how to begin. 

We encourage you to consider attending these events to further your understanding of what innovation means for insurance organizations and to more confidently drive innovation results. You can also track our upcoming webinars here: http://info.innovatorsedge.io/webinars

It used to be common to say that “technology is marching forward, improving business and society.” But today, it would be more accurate to say that technology is sprinting forward – with progress at breakneck speed and breakthroughs happening in multiple fields on a regular basis. There are so many technologies – some new, some just emerging – that is it virtually impossible to track the progress of all of them, let alone explore all their implications. This may put insurers in an uncomfortable position. Insurance is an industry based on historical data and long-term predictions. However, technologies are now inundating the world with real-time data and a change-pace so accelerated that it is difficult to make predictions. Fortunately, SMA’s new research report, The Emerging Tech Landscape: 10 Mega-Trends for 2018 and Beyond, assists by taking a big-picture view of the key developments in the tech world.

To paraphrase George Orwell’s quote from Animal Farm, “All technologies are equal, but some technologies are more equal than others.” Every technology has a role to play in the business and personal spheres. Mature technologies such as telephony and email still matter. More recent technologies like mobile and social media have become mandatory, foundational technologies and have been instrumental in transforming the world. Emerging technologies such as autonomous vehicles, the Internet of Things (IoT), wearables and many others are poised to anchor the next wave of global transformation – affecting the way we live, work and play. It is these emerging technologies that require the rapt attention from insurers now. The earlier technologies are still very important, but insurers have already built those into their business and have had lots of experience with them. But the emerging technologies now have more potential to fundamentally change the insurance industry than anything else at any other time in history. The risk landscape will change. Many new options are becoming available that will change internal operations. Customer expectations are changing, and new customer segments are coming into view.

See also: Key Insurtech Trends to Watch  

Some of the mega-trends that insurers should be monitoring and considering in terms of strategy implications are:

• 5G and AI Form the Foundation: 5G communications networks and artificial intelligence will form the key foundations for the digital connected world in the next decade. We will need to move lots of data very fast and automate the analysis and actions surrounding that data.
• User Interfaces Are Revolutionized: We are witnessing a dramatic expansion of how we interact with computers and the world around us in new and more natural ways. These new UI technologies affect both emerging technologies and incumbent technologies. The technologies are now rapidly maturing to mimic and capitalize on all of our senses as well as the movements of our bodies.
• Mobility is Hot: Autonomous vehicles are enjoying a great deal of press these days. But this is only one aspect of a complex picture of the evolution of mobility. The notion of mobility encompasses many innovative technologies and approaches to moving people and goods from place to place.

These are just a few of the mega-trends that are important for insurance. Expect these and others to be dominant themes over the next few years. Taken as a whole, the change wrought by emerging technologies is likely to rock the insurance industry for the next decade. That said, insurance is still insurance, and the industry has many strengths to build on. The great challenge (and opportunity) for senior management teams is to double down on traditional insurance strengths while building a highly adaptive organization to respond to changes and prosper in the new era.

See also: 5 Trends for Employers to Watch in 2018  

Click here for more information on SMA’s recent research report, The Emerging Tech Landscape: 10 Mega-Trends for 2018 and Beyond.

For decades, workplace safety has been about reactively auditing the work environment to pass a "tick box" exercise. This has not only led to high and sometimes fatal costs to businesses, but also higher expenses, more losses and a general inability to improve safety. But we are seeing changes – workplace safety puts loss prevention up front as a target, leading to lower loss ratios not just in regard to profits but more importantly for human life. First things first: Let's acknowledge that the auditor model does not work Time and time again, studies have shown that workplace safety improves when you let business owners manage their own safety. The more involved owners, managers and the workers themselves are in monitoring safety measures, the higher the chances of success. In fact, empirical evidence shows that safety incidents are one-seventh as likely to happen with engaged worker-centric approaches. Conversely when third party auditors are involved, more often than not companies just put up an appearance of compliance to get through the audit. The results are lose-lose, disengaged workers, expensive auditors and no inherent increase in safety. See also: Seriously? Artificial Intelligence?   The smarter the device or building, the safer the worker Today we have the tools to genuinely anticipate and prevent accidents, and one of the best tools is that thing everyone carries around these days, a mobile phone. The list of wearables that can bolster workplace safety is also growing longer every day as we progress toward an Internet of Things. With a smartphone, workers can take a picture of any hazard (for example, an electrical fault) with augmented reality, and the GPS on the phone turns the hazard into a dynamic alert as opposed to being some static and often hidden document. So, even if it is not removed immediately, as it is unlikely to be in most cases, workers can be alerted as they approach it. (Note: The experts seem to call this contextual awareness.) The smartphone is just the start; the building itself is now smarter, with sensors for temperature, smoke, moisture, electric current, humidity, noise, light measurements, etc. In the more industrial workplaces, helmets, wristbands and even gloves are being embedded with sensors, so they can send alerts to employees and their managers in real time, allowing them to take preventive measures if workers’ well-being is compromised or safety procedures are not being followed. As safety data pours in, machine learning steps in to make the most of it While augmented reality is great for short-term risk management, machine learning makes sense of all the safety data collected and helps in long-term risk management. Placing this data among financial, environmental, occupational and social data can result in a system that updates in real time and any time (and not just via third party audits) and gives users GPS coordinates, pictures and notes. For insurance companies, this combination of IoT data feeding into machine learning capability will help deliver more sophisticated risk prediction models and underwriting risk assessment tools than the industry has ever seen before. See also: Digital Playbooks for Insurers (Part 4)   There is no need to hide things from this auditor Because it is self-audit!! But what does this mean to an insurance company? First, it means the focus now moves to loss prevention and subsequently, and carriers will have to lower premiums for worker-centric safety management. The lowering in top line premium is offset by lower expenses in using safety auditors and lower claims, leading to a better underwriting profit. This is not far-fetched; we have already seen this on the personal side and on the auto side with telematics. The trick this time around is combining with other data sources and machine learning for insights, which most humans could not comprehend in a traditional underwriting scenario. I’ll leave you with a sobering fact – 4,836 fatal work injuries were recorded in the U.S. in 2015 itself. That’s 4,836 too many. It is time for insurers to lead the charge on eliminating (the right kind of eliminating) with worker-centric processes powered by augmented reality and machine learning.

Amazon started life as an online bookseller, a fact that few people today remember, as the ecommerce giant has expanded into almost every vertical. The company now sells nearly every household item under the sun, and it appears that Amazon will enter the pharmacy market, as well, according to Tim Sandle at Digital Journal. Now, Amazon is setting its sights on yet another common household item: insurance. What does it mean for Amazon to enter the insurance industry? How will Amazon the Insurer change the ways that property and casualty insurance customers purchase coverage? And how can insurers respond to the change on the horizon? Here, we explore both what Amazon has in mind and how the company’s inauguration as an insurance company will affect the P&C ecosystem we know today. Amazon as Insurer: What We Know So Far Amazon made headlines in late 2017 when the company was spotted recruiting insurance professionals in London, according to Chris Seekings at the Actuary. GlobalData noted that Amazon was looking at insurance markets in the U.K., Germany, France, Italy and Spain. While Amazon did not announce any specific plans related to its conversations in London, speculation about whether the company would enter the insurance market, and what disruptions would result if it did, have circulated ever since. Amazon’s plans pique concern among P&C insurers in particular because digital transformation in the insurance industry has been slow, according to a Willis Towers Watson report. 53% of P&C executives who responded to the Willis Towers Watson survey said that the insurance sector was “significantly” or “moderately” behind other sectors when it came to digitization, and only 7% thought insurance was “significantly” or “moderately” ahead. As insurance becomes more digitized, it becomes more appealing to Amazon and its online-first approach. With P&C insurers like Liberty Mutual, Safeco, Farmers and Allstate already leveraging Amazon’s Alexa voice assistant to help users shop for coverage, Amazon’s own use of the tool to sell coverage seems only a step away, Pat Speer writes at Digital Insurance. As of early 2018, a search for “Amazon Insurance” brings up a page on the company’s website with divisions for health and auto insurance — but these sections offer no products yet. Currently, Amazon’s insurance offerings are limited to Amazon Protect, the company’s warranty service covering purchases against accidental damage, breakdown or theft, according to Paul Sawers at VentureBeat. But every sign indicates the company is exploring its options for expansion. See also: Can Amazon Dominate in Insurance, Too?   If Amazon does step into the insurance world, it won’t be the first global e-commerce site to do so. China’s Alibaba recently announced a joint venture with China Taiping Insurance Holdings and five other investors to bring Alibaba into the Chinese health insurance market, according to Steve Randall at Insurance Business. What Changes When Amazon Becomes an Insurance Competitor? “Given Amazon’s market presence and their capabilities in the digital arena, if they do get into insurance, it’s likely to be disruptive,” says Seth Rachlin, EVP and insurance lead at Capgemini. This is true even if, as Rachlin speculates, Amazon might begin its foray into insurance by offering add-on coverage related to the purchase of another product or offering, instead of offering coverage as a stand-alone product. The company is also rumored to be investing approximately $15 million in Acko, an Indian company that provides online-only insurance products, according to Business Insider’s Maria Terekhova. Amazon may even be looking at health insurance offerings, according to Stephen Goldstein at Daily Fintech. In late January 2018, Amazon, Berkshire Hathaway and JPMorgan Chase announced a plan to partner on ways to address their own employees’ healthcare, according to BusinessWire. Amazon as an Underwriter, Too? Another question is whether Amazon will compete as an insurer by actually covering risks, or if the company will perpetuate its current strategy. “Amazon does not create the products that it sells,” notes Daily Fintech contributor Bernard Lunn. “They own the ‘last click’ to the customer’s wallet and can partner to get any product they want.” Amazon Protect is just one example, according to Lunn: The actual coverage is underwritten by the Warranty Group, not by Amazon itself. Amazon’s partnership with several P&C insurers to share quotes via Alexa is another example: Amazon users can avail themselves of insurance — and Amazon can profit — without Amazon underwriting a single policy. In this world, cooperation may beat competition for legacy insurers. Amazon’s Sales and Marketing Channels What coverage Amazon decides to sell is one question. How they sell it is another. Alexa, plus Amazon’s seamless cross-platform digital marketplace, give the company a clear advantage when it comes to selling insurance in a digital world. Or do they? If Amazon plans to rely on its digital presence, it may be failing to contend with its biggest obstacle: customers. According to GlobalData analyst Patricia Davies, while Amazon is known for strong customer communication, this skill doesn’t translate to the kind of trust insurance purchasers want in a relationship. GlobalData’s 2017 General Insurance Survey found that only 18% of respondents trusted Amazon with their motor or home insurance. To overcome these obstacles, Amazon will need to improve its “face to face” approach to customers. Whether the company would do so through conventional agents or other means remains fertile ground for speculation, but Amazon may have one advantage: multiple contact points with customers. “Organizations such as banks have just had more contact with customers [than insurers], and that’s given them a head start” on digitization, Willis Towers Watson’s EMEA life insurance M&A leader Fergal O’Shea says. “The quality and frequency of the information exchange between insurers and customers, who may simply be renewing a policy once a year, just isn’t the same.” See also: Will Amazon Disrupt Insurance?   Amazon, by contrast, not only has significantly more contact with most of its customers, but the company also prioritizes data mining and optimization. One major concern the rumored Acko deal raises for legacy insurers, according to Terekhova, is the fact that Amazon can easily personalize its insurance offerings through the “troves of data” the company collects and maintains on its customers. And Amazon’s share of the Indian ecommerce market is growing, pulling even with Indian ecommerce site Flipkart in early 2017, Jonathan Camhi reports at Business Insider. In other words, Amazon has the information it needs to build customer trust — and shows it’s committed to learning how to use it. What’s the Next Step for Insurers? Whether Amazon decides to sell P&C insurance or simply aggregate other insurers’ offerings for easier customer perusal, insurance companies seeking to respond would do well to move to the forefront of customer-focused digitization. Doing so offers three major benefits:

• Better communication in a digital world. Customers don’t always buy insurance online, but they increasingly prefer it for comparing options and gathering information. A system that doesn’t make that easy pushes people to shop elsewhere.
• Better customers personalization through data. Amazon has long been the 500-pound gorilla in the room when it comes to collecting and using customer data. But legacy insurers have the benefit of existing customer relationships, which nuanced handling of data can make it easier to maintain — and to upsell.
• More nimble response to Amazon’s next move. A strong omni-channel platform improves an insurer’s competitiveness with other best-in-class omni-channel insurers. Whether Amazon decides to sell its own insurance or simply to aggregate data from participating insurers, an outstanding digital presence opens up options for the company that maintains it.

Fortunately, software as a service (SaaS) providers who specialize in working with P&C insurers have smoothed many of the major obstacles companies faced in the early days of digitization. Partnering with these providers can help a company move to a seamless omni-channel platform, improving customer relations and leveraging key data to boost sales.

Collaboration has become one of the buzzwords at innovation conferences. Not quite as prevalent as blockchain or AI - but not far behind. Unlike some of the other buzzwords, the benefits of effective collaboration can be seen quickly -- as little as a month in some cases and no more than two quarters at most. Incumbent insurers have realized that collaborating with startups is one of the fastest ways in which to bring in unique capabilities, digital skills and mindsets into the broader organization. Effective collaboration, however, is difficult - especially from the insurer's point of view. At the start, the benefit of the collaboration is in the future – but the costs and effort are upfront (the startup gets an immediate benefit – validation of a large customer). Generating and maintaining organizational energy for collaborations is a key element of the innovation manager’s job. I have put together a 10-point checklist (from the perspective of the corporate innovation manager) to improve the chances of success: 1. Buy in: As the innovation manager, you have to ensure that you have the buy-in of the C-suite. Buy-in means paying more than lip service to the company's innovation agenda. It means a willingness to put your reputation on the line and personally promote startup partnerships. Lack of C-level buy-in is the quickest way to a doomed collaboration! Top Tip — Struggling to get buy-in? Remind your execs that 75% of the S&P 500 will turn over in the next 15 years. Do they want to innovate or die? 2. Money: Fight for a ring-fenced collaboration budget. Normally, the business unit will not be willing to pay for the pilot from its budget. It will always have a better use for its cash than paying for an unproven benefit. Thus, having a dedicated pilot fund significantly increases the chances of effective collaboration. Being the payer also allows you to demand (gently) effort and seriousness from the business unit implementing the pilot. Top Tip — Think through the handover of the pilot to the business. At what point will the business unit take complete ownership of the project? 3. Legal: Don't wait till after you have identified a startup partner to speak to your legal team. Involve them with the process from the start. Get them to draft a standard collaboration agreement. Allow them to be comfortable with terms relating to customer data, IP protection etc. The more lead time you can provide the better. Top Tip — Agree on the amount of liability insurance your legal team wants. Better yet, budget for it so that you can purchase it on behalf of your startup partners. See also: How to Assess Bootstrapped Startups 4. Compliance: Another team that should be involved from the start. At a minimum, get to know the documents your compliance team needs and get your startup partner to give those to you early on in the process. Waiting for compliance clearance is a real buzz and momentum killer. Ideally, work with your compliance team to create a sandbox (less demanding compliance) for your partnerships. Top Tip — Read your company's compliance manual. It helps to be an expert in your internal processes! Processes like internal risk clearance should be done well before the negotiations reach the contracting stage. 5. Procurement: Beware the Request for Proposal rules. These can serve as the ultimate roadblock if not managed ahead of time (you do not want your hand forced to request for minimum three quotes or ask for a three-year financial history for what should be an 'innovative' project). By design, procurement is a risk-mitigation strategy and is not meant to handle startups or innovation. Still, you have to work within the confines of the procurement process – it’s best to be on first-name terms with the head of procurement. Top Tip — Keep your pilot budget below the minimum that triggers a mandatory RFP. 6. Problem statements: As the cliché goes - fall in love with the problem, not the solution. Always start with the problem the business needs to solve and don't fall into the trap of chasing the latest shiny technology. Crafting good problem statements is at the heart of good collaboration. In contrast, technology-first partnerships will rarely capture mind share long enough to be successful. Make sure the problem statement has been approved by the business head; this includes agreeing on the outcomes you are looking to achieve and the metrics that your business sponsor can use to track the success of the project and to link them to her KPIs. Top Tip — Think through the following points to generate actionable problem statements: (a) One-line overview (b) How do things operate currently? Highlight the pain points. (c) How much pain does it cause (in $ value where possible)? (d) Who are the people/groups of people affected by the problem? (e) What are the barriers to improving the situation? (f) What are the outcomes you would like to see? – the best problem statements stay away from technological buzzwords​​​​​​​​​​​​​​. 7. Evangelists: Successful collaboration requires support from many individuals across all levels of the organization. Research has repeatedly shown that cultural and political reasons derail partnerships far more than product-related challenges. You need to make sure that your business colleagues are invested in making the collaboration work. They must have an upside – that is, the possibility of personal and financial growth. Financial growth is easy – include a bonus for successful collaboration. However, personal growth is the real catalyst and will pay dividends beyond the initial collaboration. Top Tip — Use the entire gamut of personal growth options — from profiling your evangelists in your company newsletter to giving them visibility to both your company and the startup’s executive teams. 8. Security and IT: You've done the hard work of securing a budget, agreeing on a problem statement and recruiting your evangelists and then you find that the APIs required for your project are not ready. You lose credibility internally and externally. You need to know what your IT org can and cannot do and the architectural requirements your organization mandates. Top Tip — Make sure you have reviewed documentation on all the APIs your organization provides. See also: Digital Playbooks for Insurers (Part 2)   9. Sourcing Networks: There are a host of open innovation platforms that you can use. Most come with thousands of startups registered on them (a classic vanity metric). You need quality over quantity and should focus on startups that have raised at least one round of institutional funding. Remember, you are not in the business of incubating startups - you need companies that are able to deliver a product-market fit on Day 1. Top Tip — Use tools like Crunchbase and Tracxn to vet startups. Look for verified funding and deployments. 10. Due diligence — DD in a collaboration context is a tricky subject. You are not an investor, yet you need to answer some basic questions. Ultimately, your reputation depends on the quality of the startup, so you need to complete a stripped-down DD that includes gathering information about recent sales, ensuring you receive customer feedback from the startup's customers and seeing an in-depth demonstration. Top Tip — Speak to at least one investor or customer as part of your DD Ultimately, successful collaboration is about survival – this is the age of the network, and success lies in building a committed and responsive ecosystem. Insurers quick to leverage the relevant startup services while defining a digital vision for themselves have a better chance of thriving for another century. Best of luck!

In personal lines insurance, independent agents constantly face increased competition in an already congested market. Many of the competitors have the technology to provide the on-demand service that customers require. In addition to direct writers and others, massive companies like Google and Amazon continue to hint about re-entry into the insurance markets. The bottom line: For independent agents to remain competitive, they can no longer solely rely on selling personal lines. Commercial lines offer agents another avenue for revenue, and it is a segment in which they can still dominate. According to the IIABA’s 21st Market Share Report, while independent agents wrote just over a third of personal line premiums, they wrote 83% of commercial lines premiums. Most business owners need a trusted adviser. When searching for an insurance agent, they want a knowledgeable resource who can work with them on the different aspects of their personal and business portfolios. If their current agents can’t handle multiple line needs, many will turn to agencies that can handle both lines of insurance. But, for agencies looking to expand their book in commercial, the same techniques used to target personal lines clients will not work. Personal lines are fairly straightforward. If you build a good relationship with a prospect, have a reputable carrier to place him with and fall within a reasonable price, you have a good chance of winning him as a client–and having him refer you to family, friends and colleagues. For commercial, you have to know the product and the customer very well. You have to understand the specific business details and the risks it faces on a much deeper level. You also can’t rely on building referral to referral. Prospecting requires much more research and initial leg work before you can start cold calling and networking. See also: Top 5 Themes in Commercial Lines   For independent agents looking to expand from B2C to B2B, here are three best practices that will help you land commercial clients. Master some, but don’t dabble in all In commercial lines, each industry has its own specific risk categories, and the needs of different companies can vary greatly from each other. For example:

• How many employees does it have?
• Does it have business disruption issues such as supply chain or weather-related factors?
• What is the employees’ safety risk and how will this affect workers compensation?

For many agencies, especially those just entering the market, focusing on one or two industries and selling a specific type of product such as BOP or workers' compensation, can be an effective approach. This allows you to become an expert in that particular area and build the right set of carriers that specialize in that focus, a key draw for prospects. It also allows you to narrow your focus and get ingrained in that community. For example, if you wanted to specialize in restaurants, you could join the National Restaurant Association and subscribe to the top three restaurant trade publications. This would allow you to learn the pain points of restaurateurs on a macro and micro level. You could then create a compelling presentation for the prospect’s business owner or CFO on how your agency could benefit her in ways her current provider cannot. Closing that first lead will help you get referred to other restaurant owners, and soon you can build a client portfolio that will make you the go to restaurant insurance agent. Promote your credibility — with the right technology Technology is important in commercial lines – but since you’re dealing with clients one-on-one in a customized way, certain technologies are not as critical as they might be for selling personal lines. But that doesn't mean successful agents can rely on old-school tactics like pamphlets, mail and fax to attract clients. Companies are looking for agencies that exude expertise and credibility in their fields. Sending an email newsletter to commercial clients can keep them apprised of the latest developments and emerging risks in their industry as well as keep you top of mind. You should have an interactive, comprehensive website that is easy to navigate, details your expertise working in a specific industry and makes it easy for the commercial client to contact you. Other digital materials such as an agency blog and accounts on key social platforms like LinkedIn and Twitter dedicated to your business expertise will also demonstrate your knowledge in your focus area. The right digital capabilities can also aid you in prospecting. If your website illustrates your expertise in insuring a specific business rather than just commercial insurance, in general, it will attract prospects searching for insurance in their specific industry. For example, a restaurant owner will most likely search for insurance for restaurants, not business insurance. Email marketing newsletters and risk management webinars can also further demonstrate your expertise in working with businesses and provide an opportunity to build relationships with prospects by providing them with insightful information that go beyond sales materials. See also: Commercial Lines: Best Is Yet to Come   Let clients dictate the terms and method of communication All prospect relationships need to be nurtured to keep the lead engaged. You should be ready and able to communicate through whatever channels clients prefer. This may be traditional email or phone calls. But the prospect might need you to present your information to a group of leaders, and you have to be able and willing to travel to wherever that prospect may be. Or, the owner might want to quickly be able to text you a question, and you will have to have some plan in place for handling those requests. Companies might be using more modern video conferencing systems such as Skype or other video platforms. When pursuing a prospect, you should ensure you know the company’s preferred method of communication and make sure you have the capabilities to communicate with them on that platform. As the insurance market continues to evolve, insurance agents who focus on a single line of business will struggle to keep up with the competition. Independent agents still dominate the commercial lines market, and branching out can provide new sources of revenue. Targeting companies is not the same as individuals – and agents will have to thoroughly understand their focus industry and products. But if they can demonstrate their expertise in a particular field, independent agents can grow highly successful commercial lines books of business.