Even Popeye needs some help from spinach. In this post, I look at the importance of the insurance agent and some insurtech startups providing tech spinach to the Popeye agent. I started out my career in this industry as a financial adviser. Being a financial adviser was always my fallback plan if my entrepreneurial ventures did not work out (which, in my late teens/early twenties, they didn’t). My father has been a financial adviser since I was about two years old. I have always been around the business, from interning for him, meeting various clients of his and even getting to attend some top producer trips. So, maybe I am biased about how I see the future of the agent, which in my definition is an agent, financial adviser, broker or any other intermediary selling insurance face-to-face. But, as the headline indicates, I do feel that insurtech is going to make agents stronger, rather than displace them. Winnie the Pooh needs to weigh in I got some food for thought at a recent Plug and Play event focused on digital solutions that can help to strengthen the broker and agent proposition. The panel comprised Jason Storah, executive VP of Aviva Canada; Chip Bacciocco, CEO of TrustedChoice.com; Kim Opheim, president of Opheim Consulting; and Aaron Schiff, founder & CEO of Matic Insurance. The panel was moderated by Richard Cagney, managing director of KBW. It was a diverse panel with varying views, which led to a exuberant discussion. See also: Insurtech: An Adventure or a Quest?   In terms of the Winnie-the-Pooh analogy I've used, none of the panelists fully fit into the Tigger, Eeyore or Pooh buckets, as, at times, they each shared views that could be categorized into different ones. I label the three characters this way:

• Tigger is the excitable cat, full of enthusiasm for every new technology, which will surely change the world for the better and do it right now. Tigger could be a direct-to-consumer digital insurance carrier.
• Eeyore is the old grey donkey who thinks it is all rubbish, that all this change will only end badly or won’t happen at all. Eeyore could be an insurance carrier with an established agency force and no D2C capabilities.
• Winnie-the-Pooh is a humble “bear of little brain” who somehow gets to the right answer by asking good questions. We all want to be that insightful bear, but in the tech world the market is the only judge of what works or does not work. Winnie-the-Pooh is asking – what is the right thing for the industry and customer?

A quick personal story My first role overseas was working on a project team where we set up an insurance carrier in Poland. My role was to set up the target operating model of the agency force for our Polish business, which included everything from recruitment of agents to the sales process with customers. I was nervous because, up until that time, I had only been a financial adviser and wholesaler and was not sure if I could deliver. I had the following conversation with my former boss a few weeks after joining the project (he was running the project and is a qualified actuary by trade): Me: "I know nothing about back-office operations, actuarial/product pricing, how to set up a branch. How am I supposed to define the requirements of what the agents need when I have never actually worked in these areas?" Boss (with a smile): "You have quoted and sold policies to customers, right? You’ve spoken to them about how the underwriting works and then worked with operations people to make sure the policy issued correctly, correct? You’ve walked a customer through a policy document, helped with a claim, dealt with multiple servicing issues and back office people on their behalf, right?" Me: "Yes." Boss: "Then you know a lot more than most of the people you are going to be working with on this project…as a lot of them have only seen one area of the business, whereas sales people have to interact with all areas of the business. I will always say, the sales person is one of the smartest people in the whole company and typically will make more money than most of the CEOs, too!" In our next meeting, in which every workstream lead was present (product, operations, actuarial, etc), my boss stood up in front of everyone and said, "This business will only succeed if the agent is successful. The agent is the heart of this business and will drive our growth. As such, we need to put all of our efforts in place to support the agent in our business model, which also means giving Stephen the support he needs to be able to build the best operating model he can for our success in Poland." (Thanks, ML, for giving me the confidence in those days. FJ, you, too.) Some start-ups enabling rather than replacing the agent There were many startups that presented at the Plug and Play event, some of which focused on enabling the agent/broker, including: Wellthie – Wellthie is an insurance marketplace and sales optimization platform for brokers and carriers to help with the end-to-end sales process to small businesses. The platform offers live quoting from top medical and ancillary carriers nationwide, contribution modeling, customized proposals, an integrated CRM and more. Hello ZUM - Hello ZUM is a startup out of Latin America that aims to "organize the world’s insurance information in one click." The management team is made up of veteran insurance industry professionals. Their solution is a SaaS platform that was born out of looking at two areas: 1) the different roles in the insurance industry and how they will evolve in a new digital environment and 2) how they interact with each other and exchange information. Hello ZUM helps to provide all the different stakeholders within the insurance ecosystem with consistent information, which helps make operations and distributors more efficient and ultimately provide a better customer experience, while generating significant cost reduction. Client Desk – Client Desk is a Canada-based software startup focused on giving tools to brokers and carriers, focusing on engagement, self-servicing and claims management. They provide a white-labeled policyholder web portal and mobile app, as well as a management dashboard used internally by brokers and agents. HazardHub – HazardHub has two goals: (1) to create the best geographic hazard data available and (2) make it free for every person in the U.S. to see the risks around their property. This can help individuals and their brokers to identify the specific risks that may be around their property. You can try it for free here and sign up for the API here, which will give you as many as 10 inquiries a day for free! For carriers and brokers that want to incorporate HazardHub data into their quoting and rating routines, HazardHub offers a novel pay-on-the-bind approach to pricing. acuteIQ – acuteIQ is an AI platform that helps brokers and agents with customer acquisition and prospecting by searching a database of 21 million small/medium-sized businesses. Summary A few weeks ago, I wrote about my experience of buying health insurance this year. After doing all my research online, I also spent time talking to two different agents. I was amazed at the information that they shared with me that I couldn’t find online; which included information on the evolution of ACA and how it’s affected their business and their clients' experience with different carriers, as well as many other general tips on what I should be looking at for my own insurance needs as a repatriated entrepreneur. I was reminded about how the role of the agent is much more than only selling and servicing, but about knowing continuing trends, regulations and being able to ask the right questions to individuals to determine what the most appropriate route is to go with the advice they want to provide. Can AI and a chatbot provide for this? Possibly. But for people like me (and I know I’m not the only one), I prefer talking to a real, live person, who is paid for knowing all the complexities of the market and industry to guide me. As I used to say in my financial planning days to prospective clients, "Just because you can use WebMD to diagnose your problems doesn’t mean you will perform the surgery on yourself, right?" See also: How to Augment Agent Channels   That’s not to say that agents don’t face a risk. Some of the simpler personal and commercial lines may be able to be sold direct (though, in my opinion, there will almost always need to be a live person to be a backup to answer questions for a customer who purchases online). The more complex lines and individual circumstances, specifically when it comes to estate/legacy planning, tax sheltering and comprehensive solutions for businesses (both small and large), will need to be assisted by agents. Further, I can’t see super-high-net-worth customers using digital only as their means for buying insurance. Agents need to start eating their spinach. They need to invest in educating themselves as well as in digital tools that can enhance the customer experience. In the digital age, customer experience is going to the key differentiator. I personally use an agent because I want to have the expertise of a live person to bounce ideas off. But, if the agent I am working with as well as the carrier he is representing both have tools to make my experience with them more engaging (and back office systems that also run smoothly), then I will be a happy policyholder. In posts here and in conversations I have daily, I keep saying that insurtech startups need to have an insurance person on their team (either as an adviser or part of their management team). I’m going to take that a step further; they need someone who has done insurance sales. If they really want to learn the business, this is going to be the best way for them to do so. You can find the original article published here.

This is the fourth part of a five-part series. The first three are: here, here and here.   It’s time to take a long, hard look at the insurance industry. Customers see insurance as a grudge purchase, not as something they buy eagerly to gain peace of mind so they can live boldly. Customers don’t think about insurance in between transactions and have no qualms about switching providers. But there is the flip side. Insurers haven’t done a good job at communicating insurance’s true value proposition, nor have they cultivated effective customer relationships that reward loyalty. By and large, the insurance customer experience is lacking, particularly given that customer expectations aren’t informed by their interactions with insurers—they’re comparing insurers against Amazon, Apple, Netflix and other customer-centric organizations. See also: Digital Insurance 2.0: Benefits  Here are some of the basic capabilities that customers expect from their insurers—and where insurers generally fall flat.

• Answer the phone. Insurance is generally ranked as one of the worst industries for its customer experience. Just 20% respond to questions via Twitter and email, and only 30% answer questions satisfactorily.
• One-size-fits-none. In designing and selling products, insurers focus on risk, rating and products rather than customers. Customers expect tailored service—and most are not getting it.
• Multichannel is hardly a reality. Customers expect to be able to have a seamless experience across all channels. Having to repeat information with a representative who has no record of previous interactions is frustrating, to say the least.
• Get a single customer view. Customers have a single view of their providers, but few providers have a single view of their customers. It’s difficult for customers to understand why they have both auto and home insurance with the same provider, but that information isn’t shared between them.
• Online self-service is limited service. In principle, online self-service can be a way to empower customers and reduce loads on call centers. In practice, a customer may have to log in through multiple portals. Or, insurers may have limited capabilities through online self-service, requiring customers to contact the call center anyway (and, even more galling, incur administration fees).
• The claims process is flawed. Claims payments are often drawn out and require multiple follow-ups. Though insurers regard this as the “moment of truth,” many do not provide satisfactory or transparent service at this crucial point in the customer relationship.
• Customized policies are difficult to obtain. Many customers cobble together multiple policies to amass the coverage that they need. A better option would be for a single provider to tailor one insurance policy—and that provider would also obtain better insights into that customer’s needs, and be able to offer living services to strengthen the customer relationship beyond the transaction. 

The list above isn’t exhaustive, but it’s a good place to start. Yes, it’s long. Yes, it shines a light on some of the flaws that insurers have ignored for decades. Yes, fixing them will take work. But, rather than view it as a list of challenges, you should see it as a to-do list of digital opportunities—it’s a way to begin your core transformation efforts to deliver more value to your customers. It’s easy to get distracted by shiny innovations when we talk about digital transformation. But as I’ve been emphasizing throughout this blog series, it’s irresponsible to look at how artificial intelligence (AI) or blockchain fits into the enterprise if your customers can’t easily see the status of their claims. What’s more, successful core transformation supports a strong foundation and releases investment capital—which, in turn, funds innovation and fosters the agility needed to effectively pilot and scale new projects. See also: Global Trend Map No. 6: Digital Innovation   

Loyal customers are becoming harder to find for auto insurers. As many drivers compare policies based on price, insurers have a difficult time differentiating themselves in an increasingly commoditized marketplace. And, once they buy, customers aren’t afraid to churn based on a single subpar experience or a lower price elsewhere. At the same time, heavy losses and tepid new customer acquisition growth are putting financial pressure on insurers. Combined ratios for private auto insurance spiked to 105.9 in 2017, according to S&P Global, driven in part by a string of claims from recent natural disasters. New driver behaviors and the use of mobile technology (both ride-sharing and distracted driving) are also causing uncertainty for auto insurers. In the face of this uncertainty, maintaining customer satisfaction and increasing customer lifetime value are key factors for strong long-term financial performance. Satisfied policyholders stay with their insurers longer, reducing churn and the costs associated with finding new customers. In addition, happy customers tend to buy more products and spread the word to their own network, building brand equity and referral traffic. See also: The Evolution in Self-Driving Vehicles To drive this level of loyalty, insurers first need to determine how to be more relevant to their customers throughout the auto-ownership lifecycle. Just half of customers have been in touch with their P&C insurer in the last year, according to a Bain survey of 172,000 policyholders worldwide. The same survey found that policyholders who had spoken with their insurer in the last year reported a Net Promoter Score (NPS) 15 points higher than those who hadn’t. Enter the ‘Ecosystem’ To forge closer customer relationships, insurers are beginning to look beyond their underwritten suite of products. By creating an “ecosystem” of related services that meet customer wants and needs, carriers can become more relevant to their customers and tap into new ways to boost satisfaction and loyalty. When customers receive these types of ecosystem services, Bain found, their satisfaction levels spike. Auto insurers that offered three or more so-called ecosystem services received an average NPS a full 40 points higher than those with no ancillary offerings. These services can include everything from vehicle sensors that provide maintenance alerts to financing advice. For auto policyholders, breakdown services top the wish list. While the market is still nascent, interest in the ecosystem model is growing. Fewer than 10% of insurers currently offer three or more ecosystem services, but more than 80% of insurers in major markets say they’re interested in adding these services. To differentiate themselves and their offerings, forward-thinking carriers need to move quickly. Driving loyalty with breakdown services As the top pick for policyholders when it comes to ecosystem services, vehicle repair plans help drivers manage the hassles of breakdowns. Drivers typically pay a monthly cost for the plan, which pays for covered repairs and simplifies the entire repair experience – finding a trustworthy mechanic, arranging a tow truck, providing a loaner of your choice and sending periodic notifications of the status of the repair. For auto insurers looking to expand their ecosystems, the benefits are clear. Vehicle repair plans meet a stated customer demand for breakdown services, helping to boost loyalty and differentiate from the competitive peer group. Choosing a vehicle service plan partner As auto insurers consider bringing vehicle repair plans into their product ecosystem, many are facing the “build-or-buy” question. For insurers eager to gain first-mover advantage under this model, partnering with a solution provider can help them get to market quickly without investing significant time or resources. To ensure a flawless customer experience, however, insurers must choose wisely. Delivering on the promise of the ecosystem means making sure that each component added will delight customers. Here are four key considerations for insurers as they review potential partners: A digital experience. More than half of insurance customers now research pricing or connect with providers online, reflecting a growing desire to interact through these channels. A digital vehicle repair plan solution can help insurers meet customer expectations for a convenient, personalized shopping experience. Online shopping allows policyholders to browse for coverage anytime, while emerging features like real-time pricing based on individual vehicle data connect customers with the best coverage and value instantly. See also: 8 Things to Know About Insurance   Transparent, high-quality coverage. Insurers should consider the types of plans available through providers, from bumper-to-bumper to basic powertrain, and if they can customize coverage levels and pricing based on customer driving habits and budget. In addition, partners should make it simple for buyers to understand exactly what’s covered and how much it will cost. A detailed, part-by-part overview helps drivers shop with confidence, enhancing customer satisfaction and avoiding any surprises when claims happen. All-in-one solutions. As insurers juggle countless tech priorities, many don’t have the time to pull all the components together for a vehicle service plan product offering. A partner that offers the full stack, from plan options and financing to a shopping portal and customer service agents, can help speed time to market and reduce disruptions along the way. Robust reporting. The more insurers learn about their policyholders, the better they can serve them, supporting continuing relationships and retention. By offering features like a customer portal that shows buyer activity and purchase trends, insurers can make data-driven decisions about pricing, product offerings and marketing activities. In a time of industry transition, insurers that prioritize customer experience will lead the way into the future. By expanding their reach to include new services that matter most to their customers, insurers can protect policyholders in more aspects of their lives while strengthening their customer economics.

In our last two blogs, we discussed why consumer playbooks and SMB playbooks have such an effective application for business. Insurers, especially, can use the idea of a playbook to put together a package of viable “plays” that will help them on their shift from Insurance 1.0 into Digital Insurance 2.0 — the second wave of technological and business model advancement within insurance. In our pregame analysis, we looked at Majesco’s research into consumer and SMB behaviors and expectations. In this blog, we’re going to look specifically at the kinds of offerings that may be ideal for consumers. Of course, we won’t be developing low-level product detail, like an insurer would. Instead, we’ll connect high-level consumer indicators to the types of product and service attributes that could yield insurer differentiation and advantage. New Consumer Behaviors and Expectations Across all businesses, including insurance, disruption and change is driven by people. At its simplest, an offering can be created in two ways. First, we might observe changing behaviors and unserved or underserved needs that people have in today’s digital world to come up with an innovative idea that improves outcomes. Second, we might develop a new idea through some other inspiration or observation that meets a need or expectation — one that people didn’t even realize they had until the new idea came along — like Steve Jobs famously did at Apple. With either of these, we can create a value proposition that supports a new Ideal Offering. See also: Digital Insurance 2.0: Benefits   In 2017, Majesco set out to confirm consumer trends, across generational segments, looking at the attributes of new products and new business models in the marketplace. Using data from our 2016 research, we gauged increased use of new, digital activities that are influencing expectations and behaviors, highlighting year-over-year growth in today’s consumer practices. The results can be found in our thought-leadership report, The New Insurance Customer — Digging Deeper: New Expectations, Innovations and Competition; a synopsis of areas of digital impact would include: Sharing Economy: Ride-sharing, home-sharing and room-sharing are on the rise. Connected Devices: Fitness trackers are gaining incredible traction across all generations. Telematics, though maturing, are still increasing in growth, especially among Boomers. Payment Methods: Both use of company app payments (Amazon, Starbucks, etc.) and ApplePay and SamsungPay saw strong year-on-year growth among Gen Z and millennials. Channels: Across all generations, 22% to 38% of individuals purchased insurance from a website. Products: Between 25% and 30% of individuals had purchased on-demand insurance in 2017. Other Emerging Technologies: Items such as drones and 3D printers are growing in use. If we were in front of a whiteboard, we might use a word cloud to place some of these capabilities side by side and in groupings. For the purposes of the blog, we’ve created a list with many of the relevant concepts an organization will find, that will touch or likely touch Digital Insurance 2.0 offerings. This is the type of exercise that insurers may want to use during product brainstorming sessions. Included in the list are both the technologies themselves and the contexts that will drive the use of these technologies. In creating an Ideal Offering, insurers will want to take many of these capabilities and context drivers into account.

• On-demand
• Sharing
• Telematics
• Fitness tracking
• Property monitoring
• Pay-as-you-go
• Mobile account management
• Digital security
• Digital assistant
• Bundled insurance
• Data-driven pricing
• Gig employment
• Peer-to-peer insurance
• Artificial intelligence
• Preventive services
• Mobile messenger app-based communications and transactions

Given the pronounced generational patterns identified in Majesco’s research, it becomes clear that Ideal Offerings must take into account that different market and product strategies are necessary for each generation. To facilitate this thinking, we developed generational playbooks that summarize the attributes (the “ingredients”) that constitute the ideal insurance offerings (“the innovations”) for each segment (the “recipe model”). We also identified behavioral targeting opportunities for specific product, service and process offerings for sub-segments within the generations, based on experiences with certain technologies and trends. Here are just a few of our findings: Gen Z Offerings Gen Z tops the list for groups that are ready to purchase Digital Insurance 2.0 offerings. These offerings would use highly ranked attributes such as preventive services, rewards-based products, messenger apps, mobile quoting, charitable sharing, on-demand products, bundled products and usage-based products. They are also a prime market for targeting products based on usage of new technologies. For example, those Gen Z members who use fitness trackers (41%), are more interested in having health and life insurance premiums that are partially based on their tracking data. They are also willing to join an affinity group that shares their interests, especially if it helps them reduce the cost of insurance. So, an insurer trying to identify an Ideal Offering for Gen Z should consider that real-time, personal data tracking tied to fluctuating usage and variable-premium products (premiums based on behavior/activity levels) may be highly attractive to this group. And on-demand products fit their lifestyle needs. They are the industry’s newest buyer that aligns with the new products and models, reflecting the opportunity to capture and engage them today as they emerge as a dominant buyer. Millennial Offerings Millennials are likewise open to having personal data drive usage-based insurance. They are mobile users who will be happy transacting via messenger apps. They like the idea of telematics-based auto insurance. They like on-demand offerings and any service that can prevent or minimize accidents and claims. They are willing to share their data if it improves pricing and service. If they have ever used a device that monitors driving, they are highly likely to consider on-demand, device-tracked insurance for other areas of insurance. Because millennials are also experience-seeking consumers, an insurer looking to capture millennials may want to create products that match up with experiences and trackability. Marine insurance, motorcycle and ATV insurance and any products that can employ both telematics and a mobile-based on/off switch will be highly valued. Because personal watercraft and ATVs are often rented and borrowed instead of owned, on-demand personal liability insurance could be an excellent product, sold both D2C and through rental companies. In general, all generations, including pre-retirement Boomers, are showing signs that using insurance to cover an event with a specific duration will be a desired capability. See also: Global Trend Map No. 6: Digital Innovation  Gen X Offerings There is really very little difference between Gen X consumer desires and those of millennials, reflecting the rapid adaptation to digital by this generation. However, there is greater growth in the Gen X segment regarding mobile payments. Year over year, more of the Gen X cohort paid for transportation through a ride-sharing service like Uber or Lyft, and more of them began using ApplePay and SamsungPay. Though some of this is driven by work/life maturity and lifestyle, it shows a general acceptance regarding mobile transactions and a desire to make transactions as simple as possible. Ideal Offerings for Gen X will concentrate highly on ease of use and seamless functionality between quotes, admin, payments and claims. Much of this, clearly, is less product-based and more service-based, but when it comes to Digital Insurance 2.0, the two should never be separate considerations, rather should be an integrated offering. Back-end capabilities, front-end digital capabilities and lifestyle-relevant products are all part of the same agile environment. Pre-Retirement Boomers It was once thought that pre-retirement Boomers would simply be happy with traditional insurance products serviced in traditional ways. Once again, active lifestyles and our research are proving this to be false. The greatest jump in online insurance purchases falls within the pre-retirement Boomer segment. Because they tend to drive fewer miles, they have also latched onto the idea of usage-based auto insurance, leading the wave of growth in this area as well. Year over year, they are using substantially more fitness trackers, 3D printers and drones — and they are much more likely to have worked as an independent contractor or freelancer. This is not your previous generation of retirees! Because they tend to travel more, they are excellent candidates for property-monitoring devices as well as on-demand insurance. They want to protect their earnings, so they are price-conscious. When we tested business models against generational segments, pre-retirement Boomers were highly receptive to online life insurance products that included quick quoting and simplified issue. “DIY” Ideal Offerings for Insurers Ideas are business tools. They are just as important as systems and processes. Ideas, however, rely on capabilities. Insurance offerings are obviously constrained or enabled by the digital readiness of an insurance company. In other words, to make the playbook work, there must be a foundation in place. For insurers, that foundation is Digital Insurance 2.0. Digital readiness opens insurer doors to rapid testing of ideas and rollout. It allows a greater amount of freedom in product development, easier business configurability and exponentially better data gathering and digital service. Digital efforts provide speed to value, converting ideas to offerings while opportunities are fresh. In our next blog in this series, we’ll look at Ideal Offerings within the SMB market.

It's official! The ability to innovate will play a key role in determining the future success, even viability, of insurers. 

Why is it official? Because A.M. Best, the rating agency that is the industry's gold standard, says that "companies need to innovate to protect their ability to generate profitable business, and improve operational efficiencies and customer service" and that it "will be reviewing its Best’s Credit Rating Methodology to consider the inclusion of innovation in the assessment of a company’s business profile."

We know it's official because we have entered into an exclusive, multi-year arrangement with A.M. Best so it can draw on our Innovator's Edge platform to track the tens of thousands of insurtechs and other companies that will drive innovation in our industry. The need to innovate isn't exactly a surprise to anyone who has followed the insurtech explosion of the past two-plus years, but it's exciting that we're going to get to work with A.M. Best to help identify and measure the best of insurance-specific innovation practices for the benefit of established insurers, and to help A.M. Best to refine its projections.

Even though we live in turbulent times, we think that the insurance industry has unprecedented resources to draw on as it transforms. At ITL, we already have, in the aggregate, decades of experience setting up innovation programs, and that's just the start. The Innovator's Edge platform delivers the world of innovations and innovators relevant to the insurance industry in an online virtual community. The result is we all make each other smarter and can draw on the collective wisdom that the tens of thousands of innovators generate. 

To codify that knowledge and to make it as widely available as possible, we've been working with our friends at The Institutes to develop curricula that will help insurers leverage approaches and programs that will deliver measurable growth through innovation. More on those as they become available. Stay tuned.

Have a great week.

Paul Carroll
Editor in Chief

Personal observations have demonstrated that some insurance companies have some very serious misunderstandings about the attorneys they hire. I. The company's defense attorney is not its adjuster. Let's say the first notice of a claim was via a lawsuit against an insurance company and that the insurance company immediately hires a defense attorney to respond to the suit — but the insurance company does nothing thereafter to investigate the claim because it thinks that, somehow, its attorney will investigate the claim and then tell it what to do. This type of thinking may ultimately provide a great reason for the lawsuit to be amended to include the company’s bad faith.

1. Hiring an attorney to handle the claim does not shield the claim file (based on attorney-client privilege) from discovery.
2. The insurance company is, in this case, the attorney’s client, and the attorney does not owe the insurance company’s policyholder the duty of good faith and fair dealing in handling the claim.
3. The insurance company owes its policyholder the duty of good faith and fair dealing, and the duty can't be delegated.
4. Every state has rules set up regarding who can be licensed as an adjuster, and, invariably, attorneys are exempt for limited purposes — it is not a blanket exemption for attorneys. For example, in Oklahoma, persons not deemed adjusters or required to obtain license include: “a licensed attorney in Oklahoma who adjusts insurance losses from time to time, incidental to the practice of law, and who does not advertise or represent that he or she is an adjuster" and "a person employed solely for the purpose of furnishing technical assistance to a licensed adjuster, including but not limited to photographers, appraisers, estimators, private detectives, engineers, handwriting experts, and attorneys-at-law.”

See also: A Key Point on Limiting Attorneys’ Fees II. The defense attorney the insurer hires for the liability lawsuit against its policyholder is not “your” (the company's) attorney, even though “you” (the company) pay his bill. The attorney the insurer hires generally has fiduciary duties to the policyholder, not the insurer, even though the insurer is footing the bill. I have heard managers say, “Well, why did our attorney not tell us that the policyholder was not really covered?” I'd say, “Because he or she is not our attorney. Telling you that his client, our policyholder, was not covered would violate attorney-client privilege.” While the insurer can get raw information from the attorney, do not expect him to point out coverage weaknesses that may allow the insurer to withdraw from paying for the policyholder’s defense costs. Even if the insurance manager would really like to know this information, don’t expect a competent attorney to set himself up for a legitimate complaint to the bar and to subject himself to sanctions for his ethical violations to his client, your policyholder. III. The coverage attorney should not be the insurance company's defense attorney. Perhaps the coverage opinion given by a defense firm may be based on developing its defense business. Lawyers are human, so, to avoid any appearance of conflict, use different sources for coverage opinions and defense. Getting a coverage opinion from the same group that will be defending the suit based on the denial (which was based on the coverage opinion) is not only a poor claim practice, it is a good way to increase the company’s defense costs. Lawyers who defend insurance lawsuits are no more experts in insurance than lawyers who defend doctors are medical experts. Hire your defense lawyer to perform in what should be his area of expertise: court. See also: Top Reasons Why Injured Workers Seek Attorneys   IV. Insurance company corporate counsel is not its defense. Corporate counsel is generally an employee of the insurance company, and he or she holds the law license; the insurance company does not.

1. Insurance companies are not authorized to practice law, not even pro se.
2. The corporate counsel is not very likely to be on the “panel counsel” list of the insurer’s E&O carrier.
3. The insurance company is not protected by any legal malpractice coverage under the insurance company’s E&O policy.
4. Such coverage is likely prohibited by the language in the insurance company’s E&O policy, and it is the E&O carrier that will choose the insurance company’s defense counsel.
5. Corporate counsel did not attend law school and obtain a law license so the insurance company may get a cut-rate deal on its legal defense fees.
6. Defense fees are a part of defense costs, while salaries are generally not. Corporate counsel is generally paid a salary as an exempt employee and not an hourly defense fee.
7. Corporate counsel may be called as a witness or representative for the insurance company.
8. Good defense attorneys (trial lawyers) are a specialty, different from corporate counsel. Treating them as the same would be like hiring an ENT physician for a kidney infection — yes,  he or she is licensed to practice medicine, but that is not his or her most competent area of practice.

Corporate counsel is not the proper attorney for an insurance company's proper attorney to respond to a suit against the insurance company.

As web-first rapidly becomes the norm for today’s businesses, a new bogeyman is lurking: cybersecurity. With IT systems no longer an adjunct but the central pillar of most organizations, cyberattacks have come to represent an existential threat. No less serious is the risk to the vast repositories of customer data that today’s businesses sit on top of, which have grown far faster than security architectures can keep pace with.

According to PwC’s 19th annual CEO survey, 61% of CEOs are concerned about cybersecurity, with everything from phishing to denial- of- service attacks on the rise.

For the insurance industry, cybersecurity represents both an opportunity and a threat: an opportunity in that enterprises are crying out for coverage against the cyber risks they face, a threat because carriers, of course, hold large amounts of customer data and are hence targets for cyber-attacks and hacks themselves. A theme across this content series, and one we explored specifically in our feature on marketing and customer-centricity, has been the imperative for insurers to better engage with customers’ needs – before customers start taking those needs elsewhere. On the commercial side, cyber risk is therefore an enticing opportunity for insurers, as their clients’ businesses are only going to get more online, not less, and security risks abound (especially with anything IoT-related). However, cyber events are particularly challenging to insure against due firstly to their manifold knock-on effects, which range from barely quantifiable reputational damage to share-price collapse, and secondly to the lack of historical data. Substantial focus will therefore be required for insurers to fully realize the cyber-coverage opportunity.

"Insurers just don’t have the capability or the skillset to produce things that customers want to buy, particularly with so-called cyber products that mostly don’t cover the specific risks that the clients are concerned about. There’s a total disconnect there between the reality of business for all the Fortune 500 companies in the world and what insurers think they’re going to provide them by way of services and products." — Steve Tunstall, CEO and co-founder at Inzsure.com

Cybersecurity is a sprawling area, so this part of our series is primarily aimed at cybersecurity as threat, as opposed to cybersecurity as opportunity: What are carriers doing to protect their customers’ data and to mitigate against the threat of data breaches? We start with a look at carriers' attitudes to cyber threats like data breach, followed by a look at how – and how confidently – they are addressing these. To finish off, we cast an eye over the longer-term evolution of cybersecurity as carriers pressing forward with digital transformation seek, at the same time, to future-proof their systems. The following stats and perspectives are drawn from our Global Trend Map; a breakdown of all respondents, and details of our methodology, are included in the full report, which you can download for free at any time. 1) Assessing the Scale of the Cyber Threat 69% of carriers are "very concerned" about information security breaches.

#databreach is the Achilles Heel of the #BigData economy, and insurance is no exception. More in the #InsuranceMap! https://t.co/QH8z3aYH7y pic.twitter.com/Ac9fbLOPaK

— Insurance Nexus (@InsuranceNexus) July 26, 2017

While (re)insurers are open to the same sorts of attack as other large enterprises, the event we choose to focus on here is data breach. There is nothing that strikes so much at the core of the insurance business, which has been a data business since the very beginning; at the same time, (re)insurers – as professional data stewards – ought to be relatively well-placed to defend themselves. The harm that could come from a cyber breach at a carrier is multifaceted: Stolen data could cause customers direct commercial damage, whereas tampered-with data could render carriers’ risk models worthless, affecting both them and their customers further down the line. It is no surprise then to see the overwhelming majority of (re)insurers registering concern with information security breaches (94%). Cyber-attacks affect other players in the insurance ecosystem, too, and there are plenty of weak points in the "water cycle" of customer and company data; so we also encounter a majority concern among the other ecosystem players that contributed to our survey. See also: 2018 Predictions on Cybersecurity   Our broader research suggests that data breaches are particularly high up the agenda in Asia-Pacific. We reached out to David Piesse, chairman of IIS Ambassadors and ambassador Asia Pacific at the International Insurance Society (IIS), based in Hong Kong, to understand more about what is happening in the region: "Digitization is leapfrogging in Asia, and so are industrial parks with smart devices and machine learning running the processing. Because of global supply-chain issues, this makes the need to mitigate and protect data integrity an urgency even without regulation where best-practice risk management must be implemented." Piesse continues: "Asia Pacific is only starting to look at regulations for data breach as opposed to data privacy laws, which have been around for some time. This leads us into the debate of the difference between privacy (encryption) and data integrity, which are two different arms of the cybersecurity triangle that must be embedded in all cyber risk management approaches. "The time from compromise to discovery in Asia is now on average 580 days, according to statistics. Therefore, we must assume compromise of data across time, as there have been no notification laws and hence no catalyst to mitigate. This is why there is concern in Asia Pacific. The take-up of cyber insurance in Asia is fairly low as compared with the U.S. and U.K. for this reason." 2) Filling the Breach

3/4 of insurers are confident about customer #datasecurity & #privacy. More on #cybersecurity in the #InsuranceMap! https://t.co/QH8z3aYH7y pic.twitter.com/81JPs7Qch1

— Insurance Nexus (@InsuranceNexus) July 26, 2017

Our respondents’ data-breach concerns are matched by high confidence that data security is adequate, and this probably has a lot to do with mitigation planning across their organizations. As we see from our graphic, three-quarters of carriers are confident in their security, and we find a similar level of confidence among respondents from the broader ecosystem. While these figures are encouraging, a quarter of respondents lacking confidence on this important measure is still cause for concern when we consider the number of customers that any one company can have. Even just a few percentage points of the ecosystem still represents rich pickings for online criminals and massive disruption for thousands, and potentially millions, of customers.

"Insurers have been very early adapters of computer technology. Given this maturity, one might think they should be able to control technology security on all layers, but the opposite is usually the case." — Oliver Lauer, head of architecture/head of IT innovation at Zurich

When we turn to look at concrete mitigation plans, we observe that these are relatively commonplace.

According to the #InsuranceMap, 11% of carriers lack plans for #databreach. Get the latest on #cybersecurity here: https://t.co/QH8z3aYH7y pic.twitter.com/oHVspQ7rb6

— Insurance Nexus (@InsuranceNexus) July 26, 2017

However, 11% of carriers having no plan is concerning, given the absolute amount of business interruption this potentially represents (6% answered "don’t know"). Another factor to bear in mind is the potential fallibility of mitigation plans, so the proportion of carriers that are actually safe from security breaches will certainly be less than the 83% quoted above. We should also remember that data breach is just one type of cyber-attack and consequently just one aspect of (re)insurers’ overall cybersecurity strategy, which needs to be comprehensive.

"Insurers are very late in the game of opening their systems for the digital age, and most of their software systems are 25 years old and older, and are "secure by nature" due to their legacy walled garden architectures. And now they are modernizing their systems at the speed of light, and their security architectures and capabilities can hardly follow." — Oliver Lauer

We expect carriers – and all businesses for that matter – to continue ramping up their cyber defenses over the coming months and years, especially given recent high-profile incidents like the Wanna Decryptor attack in May 2017, which hit nearly 100 countries around the world. When assessing the full spectrum of cybersecurity risks, it can be difficult to know where to start and what to prioritize, so we asked financial services influencer Michael Quindazzi, business development leader and management consultant at PwC, for five key questions every insurer should be asking itself, from the board down:

— Who are our adversaries, what are their targets and what would be the impact of an attack? — What are the most important assets we need to protect? — How effective are our processes, assignment of responsibilities and systems safeguards? — Are we integrating threat intelligence and assessments into cyber-defense programs? — Are we assessing vulnerabilities against emerging threat vectors?

As with building on unstable foundations, the risks from getting one’s approach to security wrong at the outset only get bigger the further down the road you go. We spoke to Oliver Lauer, head of architecture/head of IT innovation at Zurich, who frames the security conundrum in the following terms: "Insurers are implementing digital cores with full connectivity to everything, omni- and multi-channel and open API architectures, and usually they have no real idea what these new implementations mean for their security systems – they are still handling security like they did in the past with their ‘closed shop’ approaches. "This will lead – in my eyes – to very dangerous threats in the future. And even if they have recognized these risks and have the money to invest, it’s very difficult to hire the necessary resources. Everybody is looking for security experts at the moment.…" What is clear is that today’s digital platforms introduce a fundamentally new security dynamic requiring a different way of thinking from security professionals at carriers. 3) Longer-Term Evolution 58% of carriers have updated their security strategies to reflect the rise of new digital platforms. As we can see from the chart below, the majority of insurers and reinsurers have made adjustments to their security strategy to reflect the rise of digital platforms, and we get a similar figure when we consider our other ecosystem players.

Most (re)insurers have updated their #cybersecurity strategies for new digital platforms! More in the #InsuranceMap: https://t.co/QH8z3aYH7y pic.twitter.com/b3ro6W1tV7

— Insurance Nexus (@InsuranceNexus) July 26, 2017

For now, though, this is a small majority (58%), less than the 83% who had mitigation plans for data breaches. As the industry gets savvier about cybersecurity as a whole, we expect this figure to rise sharply. "With customer data-protection and privacy rules becoming more scrutinized across Europe and the globe, it is not a surprise that the chief information security officer is taking such a prevalent position within enterprises. The role will need to ensure appropriate usage of customer data and overcome digital privacy and security issues." — Sabine VanderLinden, managing director at Startupbootcamp

This is the third in a four-part series. The two first parts can be found here and here.

It’s well established that insurers understand the need to innovate. Accenture’s Technology Vision for Insurance 2017 revealed that “86% believe they must innovate at an increasingly rapid pace simply to retain a competitive edge,” and a full “94% of insurance executives agree that adopting a platform-based business model and engaging in ecosystems with digital partners are critical to their business.”

See also: 10 Insurtech Trends at the Crossroads  

Increasingly, insurers are turning to insurtech, whose digital products and platforms can help them in their quest to innovate quickly and at scale. While the bulk of global investment in insurtech is still coming from outside the traditional insurance space, we do see a significant increase in investment from insurers over the past two years. Which technologies are attracting the biggest investments? Accenture’s report, The Rise of Insurtech found three key areas which accounted for more than half of the overall investment in 2016:

1. Analytics
2. Artificial intelligence (AI)
3. The Internet of Things (IoT)

Let’s look at a few interesting examples of how insurtechs are leveraging these digital technologies to help them connect with customers in new and innovative ways.

U.S. insurance startup Lemonade uses AI as an intermediary at multiple touch points throughout the customer journey. At the beginning of the client relationship, the homeowners and renters insurance company has an algorithm to assess a new customer’s risk level (by cross-referencing neighborhood data, past claims and other factors).

While most insurance claims still require some level of human interaction, the bots are improving. Lemonade’s “AI Jim” helped the insurer set the standard for the fastest processing time when the bot reviewed, ran multiple anti-fraud programs on, then settled a claim for a policyholder’s stolen winter coat in three seconds. It typically takes traditional insurers 30 to 45 days to close a similar claim.

Lemonade launched quickly and attracted $60 million in stable investment by the end of 2016; insurers and investors are watching the company closely.

SPIXII is both the insurtech business and the name of its chatbot, a virtual blue parrot that “sits on the customer’s shoulder and talks to you.” It’s an automated digital agent that assists customers on their retail journey via a chat window on their smartphones. As with other AI tools we’ve seen, SPIXII learns from its customer interactions and can offer personalized insurance products in real time.

SPIXII’s interactions are friendly and conversational, making for a customer experience that is convenient and even pleasant.

Digital Fineprint uses analytics and social media data to provide insurers with insights into customer risk profiles and relationships. The startup uses digital technology to connect with customers where they are online, via social media, providing convenient and customized offerings and increasing sales by targeting a larger network. After receiving initial seed investment from venture capital, the insurtech is attracting attention from Allianz, which invited the company to its accelerator initiative.

What makes these startups such interesting entrants into the insurance space? They’re using digital technology to interact with and reach their customers where they are. They’re offering a customized, personal and interactive service, and investors and incumbents alike are paying attention.

See also: Top 10 Insurtech Trends for 2018  

If you’d like to read more about insurance innovations, I recommend this series on the 2017 Efma-Accenture Innovation in Insurance Awards winners. You can register to read Accenture’s report The Rise of InsurTech here.

Aside from the "not," wouldn’t that have been a nice headline to see when the U.S. tax reform bill was passed and signed in December? Unfortunately, it wasn’t. The days and weeks leading up to the eventual passage and signing of the tax reform bill were exhausting. I actually stopped following too closely because, as with the health discussions, there were too many iterations to keep track of. Once the tax bill was signed and put into law, though, many people, including me, were eager to find out what the eventual impact would be for our individual and company wallets. One of the biggest pieces of the tax reform bill was the change of corporate tax from 35% to 21%. This is a huge break for companies and will give them a lot of extra cash to use to better their businesses. This is for all industries, not just Insurance. A huge tax break should equal more spending by companies. This article takes a look at what announcements were made, how our industry is currently viewed and some tips for insurance carriers when they make their next statement linking back to the tax reform bill (or any statement for that matter). See also: Tax Reform: Effects on Insurance Industry?   What were the big announcements after the tax bill was signed? Here is a sample of some of the headlines I have seen: Companies are rushing to announce special bonuses and pay hikes after the GOP tax plan This is just the start of companies handing out bonuses, raising wages and increasing spending Whoa: Over 1 Million Workers Have Received a Bonus Since The Trump Tax Bill Became Law Visa and Aflac boost 401(k) match after tax overhaul About 29,000 Nationwide employees to get a $1,000 bonus How is the insurance industry viewed in the market? From a consumer standpoint, insurance is not the most-liked industry. Take a look at the chart below, showing average net promoter scores (NPS) within the U.S. insurance industry. This chart was taken from Bain’s Customer Behavior and Loyalty in Insurance: Global Edition 2017. There are also a number of other charts in the report, which are quite alarming. The chart above points out two things to me:

1. The average NPS for U.S. insurers is pretty dismal, far worse than I would have thought.
2. Ecosystems are extremely valuable in engaging customers. (I write about this in my 2018 predictions.)

Many insurtech startups are capitalizing on the unhappiness of customers with their current insurance, even going so far as to make statements that insurance companies are in conflict to even do what they are intended to do, which is pay out a claim when a customer needs it. The combination of these two facts builds on the negative perception of our industry, which means that insurance incumbents should tread a fine line in exactly what they advertise in the market. Case in point is AXA U.K.’s showcasing of how much in claims they actually pay (see image below). Perception can often become reality The perception of the insurance industry from a consumer standpoint can be summarized loosely with the information above. This perception ends up becoming reality for many consumers when they have more bad experiences with their insurance as well as when they see an insurance company spending money on things other than the actual consumer. See also: Why Fairness Matters in Federal Reforms   I was having an e-mail conversation with a friend the other day about investing in the stock market vs. cryptocurrency. While we weren't talking about the insurance industry specifically, I thought his reply related well to what we do and how customers view us. ‘Maybe it will be a good year for the market, but the real reason I’ve enjoyed cryptocurrency investing is that it’s not these old, rich, greedy, corrupt fat cats who control the market and know more than I do. And for the record, I know nothing about crypto. Even if it’s hackers that are scamming people, I’d rather play with money there than bet on companies. It’s this idea of the old guard that I was talking about, and anytime something new comes that threatens to disrupt and change the way something is done people will always say it’ll never work and try and discredit it.’ Read that again. Replace cryptocurrency/crypto with insurtech startup. Summary I am fully onboard with rewarding employees if a company has a windfall of cash. This is how you retain and make happier staff. The same should be done in respect to consumers. Though it is from the utility industry, look at the headline from Baltimore Gas & Co.: Baltimore Gas & Electric Co. wants to pass on $82M in tax savings to customers after federal tax reform. Can you imagine seeing an insurance carrier make an announcement like that? Being the risk-averse business that we are, perhaps not. However, for the one that is willing to make an announcement like that, I’d be interested to see the direct impact to their NPS. This article first appeared on Daily Fintech. 

Mergers and acquisitions (M&A) insurance solutions are effective tools to facilitate the closing of mergers and acquisitions and finance transactions when parties require additional comfort on a variety of issues. Proven strategies to achieve certainty of closing, these solutions are used by buyers and sellers to bolster both the decision-making process and approach to risk allocation at times when traditional legal opinions/expert advice, indemnity, escrow or sales price reductions do not provide adequate financial comfort or could impair the economics of the deal. Representations and warranties insurance, specifically, has emerged as a common tool in the current M&A market – serving as a means for sellers to effectuate a clean exit and for buyers to ensure they have a viable source of recovery if the business ultimately is not what it was represented to be. Typical R&W coverage generally extends to most, if not all, of the representations and warranties provided by the seller or target company in the purchase agreement, including fundamental representations such as title and authority as well as the full suite of business representations, including financial statements, tax, intellectual property and undisclosed liabilities. Of course, the scope of coverage varies deal to deal depending on the operations of the target company and industry risk profile, as well as the depth of the buyer’s due diligence process. Carve-outs to coverage are often limited and, when proposed by the insurer, are narrowly tailored to the specific known issue causing concern. One area that can be challenging to insure is environmental risk. Insurers’ ability to cover an environmental representation within the R&W policy is case-specific and depends on not only the environmental footprint of the target but also what issues are uncovered during diligence. Deals involving target companies with a relatively light environmental footprint or a positive claims history are often successful in achieving coverage of environmental representations – those that fall outside this category may confront exclusions for specific environmental conditions or, in the most severe case, an exclusion of the environmental matters representation itself. Subject to underwriting, coverage for “paper” environmental risk such as licenses and permits can often be preserved. In any circumstance, however, R&W policies are not designed to provide coverage for known contamination, active remediation or toxic tort allegations. For dealmakers grappling with limitations to coverage of environmental matters in the R&W policy, all is not lost -- acquisitions of target companies without a clean bill of environmental health or involved in a risky class of business are not left without options. Stand-alone environmental insurance can be an effective complement to an R&W policy to help plug the gap in coverage around the environmental representations. Depending on the nature of the transaction and the complexity of the target company’s site(s) and operations, a properly designed environmental site liability policy, which is also known as pollution legal liability, can complete the R&W placement. This can be accomplished by providing essential first- and third-party coverages including defense costs addressing known and unknown environmental conditions, with certain restrictions, with or without an environmental representation contained in the underlying purchase agreement. As a complement to the R&W policy, a customized environmental policy may also be able to replace or supplement an escrow or indemnity, becoming a value-accretive tool for future deals involving the insured site/operation by the careful addition of policy assignment provisions. R&W policies similarly afford assignment of rights to a future purchaser of the stock or substantially all of the assets of the target company, providing an attractive value-add for future divestment. See also: The Environment for M&A in Insurance Environmental site liability policies do not rely on establishing a breach of a representation and its subsequent damages. They are designed with a relatively low retention, as compared with an R&W policy, and are responsive to changing environmental regulations that can give rise to a loss. Written on a “claims made” basis for policy terms up to 10 years, environmental site liability policies can provide first-party clean-up and third-party protection for clean-up, bodily injury or property damage claims for known and unknown environmental conditions. This product has the broadest application of any single environmental product line due to its flexibility of wording and risk specific underwriting. From an operational standpoint, the environmental policy can be structured to either cover an entire corporation’s operations or a single site. Extensions of coverage for ancillary current or historic operations can also be covered including divested locations, waste disposal, transportation and business interruption. Coverage offered may be tailored to all historic operations pre-closing and extended to continuing operations for the target company post-closing. Additionally, the environmental site liability policy provisions are flexible enough to be used in lieu of an indemnity or to support indemnity requirements of a purchase and sale agreement by responding to an indemnified party for payment under the terms of the purchase and sale agreement if the indemnitor fails, or is unable, to honor its indemnity. This coverage extension is known as an “excess of indemnity” and is carefully underwritten with counsel and a comprehensive review of the purchase agreement. The placement of comprehensive environmental insurance may also help avoid carve-backs to coverage under the R&W policy by providing insurers comfort that the R&W policy is not the first line of recourse on environmental issues. In those instances, the R&W policy specifically sits excess of the underlying environmental policy, responding only after such policy limits are exhausted (or loss incurred equivalent to the underlying limits if the environmental insurer is unable to satisfy the claim). Careful drafting of the “Other Insurance” provision in the R&W policy is needed to ensure the smooth function of such a structure. Consider a buyer looking to acquire a nine-facility target engaged in wood treatment operations since the 1960s. Two facilities are currently the subject of an indemnity included in a 1980s purchase agreement with remediation continuing at those locations. The buyer has negotiated for the indemnity obligation to continue through the current transaction, but there are seven sites without any such indemnity. Although the R&W underwriter recognizes the environmental representation and associated indemnity with respect to two of the sites, the absence of protection on the remaining sites and long history of operations creates concern and thus the need for environmental issues to be insured separately. The environmental broker designs a tailored solution including two policies to provide a comprehensive risk management solution: Policy 1: Properties that are the subject of the indemnity receive a policy dedicated to the scope of coverage under the indemnity; the coverage matches the indemnity obligations and applies on an excess basis; the policy is triggered by failure of the indemnitor to perform on their obligation, in excess of the policy self-insured retention (SIR). Policy 2: Provides coverage for new conditions and unknown pre-existing pollution conditions at all nine locations; known conditions at sites without the indemnity are excluded for remediation costs Both policies carry a 10-year policy term, with exception of the new conditions coverage policy that is limited to three years. Policy 1 responds if the indemnifying party is unable to perform. The seller was able to limit the scope of the indemnity solely to known and quantified clean-up obligations. Any additional indemnity for unknown conditions or tort liability associated with known or unknown issues was not required because the insurance program provides that coverage. Both Policy 1 and 2 also contained assignment provisions that are beneficial in the event of a future sale. In another instance, a transaction stalls when the R&W underwriter declines to insure the environmental representations of a large global equipment manufacturer because due diligence demonstrates that the target locations likely have significant environmental impacts due to long-time solvent use. The environmental insurance broker is called in to design a solution: Policy 1: Provides coverage for all pre-existing conditions, known and unknown, where the most challenging locations assume a higher self- insured retention and the policy restricts coverage for remediation by applying a capital improvement and voluntary site investigation exclusion coupled with a third-party trigger for any remediation claims. A 10-year term applies, and the other insurance provisions are modified to primary coverage; most importantly, the policy does not specifically exclude any constituents. Policy 2: Is written on a three-year term and provides coverage for new conditions from date of sale forward for the continuing operations. Coverage is restricted in a similar matter to Policy 1. The environmental program structure described above was quite beneficial to the seller because it did not contain any constituent exclusion. This solution also allowed the R&W underwriter to provide coverage for the seller’s environmental representations on an excess basis. As these examples suggest, the current environmental marketplace is competitive, resulting in favorable coverage terms, conditions and premium for many transactional risks. Limits of up to $50 million are potentially available from a single carrier, and total limits of $500 million are potentially available for layered programs involving multiple carriers. Significant capacity is similarly potentially available for R&W insurance with limits available of up to $50 million-plus from any one carrier and close to $1 billion on an aggregate basis per deal. The significant increase in demand and use of R&W policies over the past few years has also translated into a very competitive marketplace, resulting in decreased pricing and broadening coverage and appetite for challenging deals. See also: Developing A Safe Work Environment Through Safety Committees   The strategic use of R&W insurance coupled with an environmental policy can be indispensable in helping buyers and sellers move a transaction forward to a smooth and successful close. Dealmakers and their advisers should carefully consider the environmental risks posed by the operations of the target company early in the deal to determine how such risks will be apportioned between the parties and if insurance, whether a R&W policy, environmental policy or both, provides an opportunity to secure protection against such risks while maximizing the economics of the transaction. All descriptions, summaries or highlights of coverage are for general informational purposes only and do not amend, alter or modify the actual terms or conditions of any insurance policy. Coverage is governed only by the terms and conditions of the relevant policy.