Group insurance is an approximately $65 billion market. While growth has been consistent but moderate at 3.5% to 4% per year over the last six years, changes in the employee-employer dynamic are reshaping group benefit needs and making investments and growth prospects in the sector more attractive. Carriers’ initial response has been to drive profitable growth by streamlining their operating models and making incremental investments in technology to upgrade their capabilities. However, employer and employee needs and expectations continue to rise. Employers are using innovative benefit solutions to differentiate themselves when recruiting and retaining top talent. Employers recognize that employees no longer have the patience or time for benefit plans that are cumbersome to enroll in and manage. They’re looking for holistic solutions that employees themselves can direct. In addition, employees have different needs based on income diversity and – more so than in recent memory – generational circumstances. Consequently, they’re looking to employers to offer customizable solutions that help them meet their unique needs in a user-friendly fashion, 24/7. Moving forward, five trends will continue to shape the group insurance market and influence carriers to move beyond incremental investment to fundamentally reposition their business and operating models. These trends will motivate group insurers to provide more measurable value for employers, employees and intermediaries by delivering more integrated products and services and better customer experiences. We also expect to see a) More and more players in adjacent markets such as health, workforce management and wealth to expand into market niches that overlap with group insurance; and b) More venture capital to flow to insurtech solutions that meet the group space’s evolving needs. Group insurer solutions will take advantage of the convergence of health-wealth-career management Consumers are increasingly managing their health, wealth and career decisions in a coordinated way because they all affect the same wallet. Decisions about health range from ways to maintain fitness to ensure their quality of life (and thus ability earn an income) to selecting the right combination of benefit products to reduce the key risks that could knock them and their families off track for an extended period of time. As people at the higher end of the socioeconomic scale live longer and healthier lives, they’re looking to manage their personal wealth to support their and their families’ financial positions for longer periods of time. Moreover, as employers compete for top talent, they are increasingly providing benefits and programs that address the concerns their employees have about their and their families’ physical, mental and financial health. Employers are focusing on a) health and return to work programs that contribute to worker productivity and performance, and b) employee development programs. See also: How to Unlock Group Insurance Market   The confluence of these factors is creating opportunities for group insurers to provide employers with solutions that help them improve their employees’ health, wealth and professional satisfaction. Some carriers are responding by offering more holistic solutions, either by expanding their own product offerings or through partnerships with others in which they can white label products. Other carriers have decided not to expand their own product offerings, but instead focus more on the wealth/ retirement or health. In either case, they’re trying to make their products and services fit with the other benefits employers’ chosen platforms offer. Group insurers will look to serve more market segments Many group insurers have long focused on certain market segments. For example, some have been dominant in the national account or large case segments and others in the small or mid-case account segments. Each market segment requires different operating model strengths. But, as employer and employee needs increasingly change, the traditional lines between small, mid, and large account segments are starting to blur. Group carriers are now rebuilding core capabilities and introducing new ones in order to more profitably serve a broader range of employer segments. Recent M&A activity has resulted in significant new capabilities. For example, the Hartford, which acquired Aetna’s group life and disability business, and Lincoln Financial Group, which acquired Liberty Life, are examples of the priority group players are placing on adding or enhancing capabilities (such as integrated absence management) to serve broader segments of the market. These moves indicate that the carriers which traditionally have been stronger in the small and mid-markets are building new capabilities and transforming their target operating models in order to serve the unique needs of larger account segments. Moreover, large account carriers are building new capabilities and changing their target operating models in order to standardize and automate their solutions to more profitably serve smaller market segments. Group insurers will increasingly respond to increased absence management needs, even for down market clients Absence and leave management services are a core service in the disability market and demand is growing. There has been a spike in requests by employers for absence and leave services as a result of: a. The January 1, 2018 New York Paid Family Leave Law, which is the most significant paid leave program in the US; b. Recent localized laws, such as the Paid Sick Leave Ordinance (PSLO) and Paid Parental Leave Ordinance, have increased the local complexity of employer leave and absence tracking; and c. Increased cross-selling of disability, FMLA, and voluntary products makes the need for claims/absence integrated services more relevant. In response to these changes, carriers are increasingly adding absence services and platforms to their repertoire. For those familiar with disability, FMLA, and other products, absence is not new. For those who aren’t, tracking the high number of federal, state, and local laws is a tremendous value-add to their client base. In order to improve customer service, carriers are integrating claims and absence into an “event” experience to radically reduce the burden of correspondence that explains payments and absence rights. M&A activity and insurtech investment will continue to shape in the group market Moving upstream and downstream among employer segments requires new capabilities. The traditional way of doing business will not meet changing employer and employee expectations. As a result, M&A, insurtech investment, and maturing group technology solutions will continue to influence the group market in three ways: a. In addition to the M&A activity we previously noted, there have been other transactions in the group space, including Meiji’s acquisition of Stancorp and Sumitomo Life’s acquisition of Symetra. Acquisitions like these potentially provide much needed capital investment for group players looking to take advantage of the convergence in the space and the opportunity to profitably expand across traditional market segments. This in turn could raise the bar for existing players, especially in areas where they need i) broker or consultant customers to recommend their products, and ii) to address employer needs to respond the changing employer- employee dynamic. b. There also have been deals adjacent to group benefits, such as CVS’s acquisition of Aetna and the Amazon, Berkshire and JP Morgan joint venture. These developments may impact more than product solutions, pricing and omni-channel distribution and service; they also could significantly reshape the employer and employee customer experience. c. Group carriers traditionally have often been reluctant to make significant investments in technology and when they have, they’ve attempted to build new technology solutions in-house. However, with the exponential growth of insurtech and the maturation of group-focused core technology, some carriers are finding it both necessary and easier to acquire new solutions rather than build them. Consequently, group insurers are accelerating their investment in core areas, including enrollment, policy administration, and claims, thereby allowing them to improve in a number of areas from quote to close ratios, and from employee program participation to claims management. Group insurers will continue to build digital & data architecture and expand analytic capabilities Artificial intelligence, predictive analytics, behavioral economics, machine learning, robotic process automation, among other technological developments, represent opportunities for group insurers to better understand, acquire, serve and retain customers in new and more cost effective ways. Carriers are choosing to invest in new digital capabilities to improve customer and channel segmentation and experience, as well as enhance their ability to acquire and retain the right customers. This helps carriers anticipate employer needs and enables solutions to change as employers do. It also promotes better carrier understand of employees’ broader needs beyond the employer relationship. Also of note, group insurers have long had a significant amount of data and in recent years have taken advantage of advances in big data, reduced cost of computing power, and commoditized analytic techniques to increase their use of data for decision-making and insight generation. However, many of the advances in data have still not translated to improvements in employee level data across the value chain. See also: Group Insurance: On the Path to Maturity   New investments in data will help group carriers 1) Improve the data architecture that is critical to improving workflow and customer experiences, 2) Focus on employee level data to better meet the needs of employees – especially in the areas of portability, and 3) Incorporate third-party and unstructured data with employee level data, which will help them be more consultative with employers about the design of responses to employee needs. Implications

• Group insurance will be increasingly important as a business platform for addressing employee health, wealth and career needs, as well as employer needs to offer their employees differentiated solutions.
• Existing players cannot stand still because they face converging forces that are fundamentally transforming group business and operating models. Carriers that are business units of larger insurers which have underinvested in group capabilities (even if the group business unit has been consistently profitable) need to be particularly attuned to these developments.
• New group players, including those resulting from M&A, should do more than just make the mergers “look good on paper” but sincerely focus on designing new customer-centric operating models that leverage new business and technology architectures to create excellent B2B2C experiences.

This report was written by Jamie Yoder, Marie Carr, Jim Quick, Mike Mariani, and Josh Schwartz.

So, you’ve added the Net Promoter “likely to recommend” question to your customer surveys.  You’re tracking the results and reporting a Net Promoter Score (NPS) on your Executive Dashboard. Your company is “doing” Net Promoter – right? Not quite.  What your company is doing is what a lot of companies do when they jump on the Net Promoter bandwagon – they measure NPS.  But if all you’re doing is measuring NPS, then you’re not really “doing” Net Promoter. What many people don’t realize is that the actual measurement of NPS is arguably the least important component of a true Net Promoter program.  The hallmark of a robust Net Promoter implementation is what happens after the measurement is made. That’s when – in Net Promoter parlance – there’s a need to “close the loop” on the measurement. Closing the loop is about acting (not just reporting) on what you’ve learned from the Net Promoter survey. This needs to be done at an aggregate level — looking at the themes across all survey responses and translating those insights into operational improvements. But it also needs to be done on an individual level — initiating some type of follow-up contact with customers based on their survey response (for example, calling a customer who expressed dissatisfaction). See also: Where a Customer-Focused Culture Starts   Note that closing the loop isn’t just an academic exercise.  As I’ve written about in the past, your customer surveys are part of your customer experience.  The mere act of following up with survey respondents actually helps enhance their impression of your business (because it’s so rare that a company actually takes that step). As the popularity of Net Promoter has grown, the origin of the measure – and its foundational principles – often get overlooked. Fred Reichheld, the creator of NPS, drew his inspiration from Enterprise Rent-a-Car’s “Service Quality Index (ESQi).”  Interestingly, the ESQi survey questions and scale are completely different from NPS. For Reichheld, however, the real defining characteristic of ESQi was how individual Enterprise branches used the survey data to drive specific operational improvements.  There was (and remains) a strong cultural ethic at Enterprise around closing the loop following any survey exercise.  Reichheld made that discipline a cornerstone of his Net Promoter philosophy. Net Promoter is a great instrument for facilitating customer experience differentiation.  Just be sure to employ it properly – which means using NPS to manage your business, not just measure it. This article originally appeared on WatermarkRemarks.

Imagine the scene. A warm summer’s day. The tree-lined slopes of gentle hills stretch toward a darker valley below. There’s a river running through it, sparkling water, dappled light through the leaves. Now place a party of schoolboys there, shipped out from the nearby town – lucky kids from well-off families, enjoying the fun of summer camp. On the first day, they form into two teams. They’re given different huts to sleep in and different colored badges to wear. They’re encouraged to choose a name and an identity. During the coming days, they’ll compete in all sorts of games and projects. Sounds idyllic, yet, by the end of the week, there is almost open warfare between the two teams. What began with name calling and petty violence (each group burned the flag it had captured from the other team) moved on to raiding parties that attacked the opposition’s huts, overturned beds, ripped apart furnishing and stole key possessions. Before long, there was a real risk of violence. The teams armed themselves with baseball bats and socks filled with rocks and marched toward each other for a showdown when the camp counselors finally intervened! This was the famous “Robbers Cave” experiment devised by Muzafer and Carolyn Sherif to explore how inter-group conflicts occur when there are limited resources and a strong element of competition. Being in one group – in this case, you could be either in “The Rattlers” or “The Eagles” – meant that you had a great deal of loyalty toward your fellow teammates and an equal antagonism toward the others. In many ways, this mirrored work by Henri Tajfel and others around social identity theory – the idea that we define ourselves by the groups we identify with and which we try to belong to. Their famous studies gave us the idea of the “in group” (people like us) and the “out-group” (the others outside of our circle). Once again, research showed the propensity for conflict between the two groups and the lack of trust that could quickly build up – even if the basis of who’s in which group is as simple as being allocated a color or a group name. See also: Improving Your Potential for Innovation   Significantly, the same effect can be reproduced very easily with different groups and in different situations – essentially underlining an important aspect of the way we have evolved as social animals. We bond together tightly (which is good evolutionary practice when facing a common enemy). However, it has a downside, which is a tendency to distrust people belonging to groups outside our circle and the ease with which this can escalate into open hostility. What has all of this got to do with innovation? Quite a lot, actually. It helps us understand the famous “Not Invented Here” (NIH) effect. NIH is one of those surprising features of the innovation landscape – the situation where an organization rejects a new idea offered from outside. For example, the young inventor Alexander Graham Bell was looking for a partner to help him commercialize his idea for a telephone – a device which could revolutionize the communications industry. He started with the U.S. market leader, Western Union, the guys who’d spent so much time and effort stringing telegraph wires alongside railways tracks to link up the continent. It seems like a good fit from the outside. However, their reception was frosty. In a famous comment the President of Western Union, William Orton, who was known as one of the best-informed electrical experts in the country said: “There is nothing in this patent whatever, nor is there anything in the scheme itself, except as a toy. If the device has any value, the Western Union owns a prior patent … which makes the Bell device worthless.” NIH is a surprisingly common feature of the innovation landscape, and there are many other famous examples. Not least Kodak’s rejection of both Edwin Land’s idea for the Polaroid process and Chester Carlson’s xerography underline how easy it is to put up defenses against ideas originating from outside. NIH is a theme which my colleague Oana-Maria Pop has written a great blog post about, but its persistence makes it worthwhile to take another look. Elting E. Morison gives a wonderful example in his detailed study of “Gunfire at Sea,” which explores the tortuous journey the innovation of continuous-aim gunnery had in finding its way on to the decks of U.S. warships. Back in the late 19th century, naval gunnery was not very accurate. A U.S. Bureau of Ordnance study of one thousand shells fired during an exercise around the time of the Spanish-American war suggested that less than 3 percent were hitting the target. That’s a problem. A long way away in the South China Sea, Admiral Percy Scott of the British Navy was working on the solution. His squadron was doing gunnery practice with similarly poor results – except for the crews on one ship (rather inaptly named HMS Terrible) who were recording surprisingly accurate performance. Looking more closely revealed the use of a prototype gun-sight and a novel method of tracking the target called “continuous-aim gunfire.” Scott supported the development, trained all the crews on all his ships, and eventually changed practices across the British Navy. The fascinating part of the story concerns a young U.S. lieutenant, William Sims, on secondment with the squadron. He is aware of the Bureau of Ordnance study and the poor U.S. performance and sees in the new British system an opportunity to make his name and career by introducing this better system to his superiors in Washington. What follows is a classic case of NIH – all sorts of arguments assembled to prove that the new system was no better. For example, a side-by-side test was arranged on dry land where the advantages of the new system in dealing with moving targets at sea were neutralized! It took President Roosevelt intervening himself to get the U.S. Navy to take the idea seriously and eventually adopt the new system. It would be wrong to see this behavior as the result of blind stupidity or outdated attitudes. Significantly, in most NIH cases, there is a very plausible defense to be mounted – the lack of fit with the core business, the risk of having to cannibalize existing activities, the unproven nature of the new technology, etc. What’s really going on is subtler and owes a lot to the ideas introduced above around group identity and defenses. We sometimes talk about a corporate immune system, and this is a good metaphor because it accurately captures what an immune system does for our bodies: protect them against dangerous things from outside. The narratives around resistance to outside ideas – not invented here – are very much those of a well-meaning immune system. One way this hits our innovation world is when the new ideas emerge from across national borders. There is little doubt that “lean” thinking has changed the world – first through manufacturing and then across services both public and private. In its early days, lean was conflated with Japanese manufacturing techniques which had a frosty reception outside Japan – a common argument was that “it works over there, but it isn’t right for our kind of organization.” The same goes for many of the quality management principles which we now accept as second nature but once saw as something peculiar to Japanese corporate culture and not transferable. Studies in psychology have shown the close links between the ideas raised by social psychologists like Sherif and Tajfel. For example, Alex Haslam and colleagues looked at perceptions of creative ideas arising from groups. Their findings confirmed on many occasions that when those ideas came from within the group, they were highly rated and valued where those coming from another group were lacking in innovativeness or value. And a recent article by Frank Piller and David Antons distills a variety of other psychological studies, which give us a clear sense that this is not an occasional effect – it is deep-rooted. The big question for innovation management is, of course, what might we do about NIH? How can we reduce the risk that we miss out on something important from outside because the way our “immune system” operates? One useful place to start is with Sherif’s original experiments. In their later work on trying to understand inter-group conflict, they found that giving groups a superordinate goal made a difference. In other words, make the challenge big enough and everyone will co-operate, share, and work together towards the target. The “moon-shot” project is a powerful way of overcoming tribal rivalries, and it works just as well inside large organizations. See also: Linking Innovation With Strategy   Another approach is to mix people up. The more we can experience first-hand that people are like us, the harder it is to maintain inter-group boundaries and barriers. Cross-functional teams, secondment, and rotation are all helpful strategies, especially in innovation where ideas from across different functional or discipline boundaries are often powerful assets in solving the overall challenge. Interestingly, we’ve known this for a long time. Back in the 1960s, a pioneering set of experiments were carried out by Paul Lawrence and Jay Lorsch looking at innovation in textiles, plastics, and food. They found that the extent to which differences between functions was an important influence on how long it took to get new products to the marketplace. By extension, those groups with multiple integration mechanisms fared better, sharing ideas, defusing tensions, and working together towards the common goal.

As consumers, we know that digital has transformed the way we discover, engage and transact with businesses in every industry. From ordering coffee on our mobile devices to running our smart homes on voice-command, we expect all of our experiences to be fast and seamless. The insurance industry has gone through its own digital transformation over the past five years. With a general acceptance that digital is here to stay, most insurers have incorporated digital into their organizations, implementing ad hoc capabilities to make their business faster and cheaper, creating online tools to further engage their distribution channels, and implementing table stakes technology in areas such as marketing, digital portals, customer self-service capabilities, and automation of some back-end processes. As we move into 2018, digital is continuing to reshape the way insurers do business. The ecosystem of available capabilities has grown exponentially and industry leaders are starting to leave behind the “fast-follower” mentality, reallocating their investments into core capabilities that give them a more customer-centric view, as well as ways to differentiate themselves in the market. Industry leaders are starting to leave behind the “fast-follower” mentality, reallocating their investments into core capabilities that give them a more customer-centric view, as well as ways to differentiate themselves in the market. From our perspective, insurers will take one of two paths:

1. Continue as followers, investing in only select digital capabilities that support their existing business model. This is a bottom-up, project-driven approach that identifies select digital capabilities within different parts of the value chain.
2. Take a digital-first mindset by better understanding the end-to-end customer experience and how business models need to evolve in order to increase growth and reduce costs. This is a top-down organization transformation with the goal of becoming a digital and data-driven organization which can continuously reassess the business and operating model.

As the graphic opposite illustrates, taking a digital-first approach and synchronizing investments across functions and processes will promote success by enabling a digital strategy that is a “North Star” that guides continuously improvement rather than just a point in time assessment. See also: Digital Insurance 2.0: Benefits   The companies that develop a meaningful competitive advantage will design and implement digital platforms that can handle disruption and positively change cost structures. They will:

• Build scalable systems, even for niche offerings,
• Deliver an end-to-end customer experience, and
• Change their business models to foster a test and learn environment that helps them improve how they go to market. These leaders will be the most likely to quickly adjust and grow as the industry continues to become more digital.

Building a digital platform Although we tend to understand digital transformation and modernization of technology platforms as sequential, multi-year events with multi-million dollar price tags, finite delivery dates and fixed realization periods, true modernization requires a foundational shift in the organizational culture, operating model, and underlying architecture that enables business flexibility and agility. Building a digital platform that will take your company into the future — not just respond to current needs — is critical to prolonged success. Insurers are currently enabling access to data across various domains and dimensions, but the companies going the extra mile to design a futuristic platform architecture are the most likely to benefit in the long term. Future-oriented platform architectures should be able to:

• Enable more granular services,
• Provide flexibility when reacting to traditional demands and responsiveness to disruptive emerging products,
• Support business models and technology needs beyond now standard core platform capabilities (e.g., policy, billing and claims systems).
• Feature consumer-centric architecture built on the core guiding principles of atomic components and services vs. monolithic applications,
• Enable reusability across constituent groups and processes vs. process-centric solutions,
• Assemble best-of-breed technologies, capabilities, and/or service models vs. being just a broker of services.

Enabling your digital platform Gone are the days of a simple buy/build/rent conversation where companies could seek to house all capabilities within their own walls. Now, everything from insurtech incubators to white-labelled products are revolutionizing the way insurance is bought and sold. The rise of flexible, digital B2B2C platforms is giving rise to faster, better, and previously unconsidered partnerships across the insurance and retirement spectrum. Industry leaders are identifying how they can extract value from partnerships in all areas of their organization, whether by providing newer customer engagement models, adding revenue streams, or reducing cost structures, all while building digital ecosystems that can easily integrate with these strategic partners. These partnerships are enabling companies to respond more nimbly to changes in market trends, consumer expectations and nascent technology, creating frictionless capital flows across the value chain. Better know your customers by serving them better While many insurers have been actively investing in customer facing digital capabilities for the past several years, the industry as a whole is not yet fully realizing customer and economic value. As insurers continue to respond to constantly evolving customer expectations, a holistic, data-driven approach that drives a detailed understanding of the customer and the contribution of digital initiatives to actual business value will be critical to meaningful ROI. Developing a detailed understanding of customers and their end-to-end journeys is necessary to improve customer value. Knowing your customers – not just as segments but individuals – will help you pinpoint opportunities and effectively optimize their experience across all channels and throughout their lifetimes. Tying these digital initiatives to measurable business value from the beginning is critical to justifying the case for investment and creating a framework for measuring the effectiveness and impact of various initiatives. With a strong, flexible framework in place, companies will be able to re-focus time and money into revenue-driving capabilities like external partnerships, invest in data-driven digital capabilities to improve customer value, and build back-end processes to support platform scalability. Don’t forget about back-end processes All the recent hype about insurtech and customer interactions has shifted attention away from digital considerations beyond technology and customer experience. However, leading companies’ back-end processes will support a digital environment. In a rapidly advancing industry, the companies out in front are transforming their processes to automate repetitive, business rule-driven work; this is rapidly reducing costs, improving controls, enhancing quality, enabling scalability, and facilitating effective 24/7 service. Future profitability and ROI hinge on being extremely responsive to business and market conditions and making business processes digital. The market leaders of the future will have fully digitally enabled operating models that feature a low cost profile, increase automation and efficiencies, offer an easy end-user experience. All of this will help them accelerate innovation and invent the future of insurance instead of just reacting to it. See also: Digital Playbooks for Insurers (Part 1)   Where we’re headed The world of insurance has already become digital. Whether you are a personal lines insurer assessing digital sales and service platforms or a life insurer trying to understand interactions with your end consumers, most of the industry has adopted digital agendas and many companies are is seriously trying to become digital-first organizations. Current frontrunners are redirecting their roadmaps and investments to high-priority business areas differentiate them in the market. Over the next five to ten years, all insurers will be able to take advantage of a broader ecosystem of available tools, leveraging test and learn capabilities that promote innovate in an industry that has not been reinvented for quite some time. Anyone still waiting on the sidelines is in jeopardy of falling so far behind recovery will be extremely difficult. Don’t blink and miss your chance. Most of the insurance industry has adopted digital agendas and many companies are seriously trying to become digital-first organizations. If you aren’t doing the latter, you risk falling behind; if you haven’t done the former, you may never catch up. Implications

• Industry leaders are starting to leave behind the “follower” mentality, reallocating their investments into core capabilities that give them a more customer-centric view, as well as ways to differentiate themselves in the market. Whether you are a “fast- follower” (as opposed to just a follower) or a market innovator, you are likely to share essentially the same approach to establishing an agile organization.
• The companies that develop a meaningful competitive advantage will design and implement digital platforms that can handle disruption. They will build scalable systems, deliver an end-to-end customer experience, and change their business models to foster a test and learn environment that helps them improve how they go to market. These leaders will be the most likely to quickly adjust and grow as the industry continues to become more digital.
• With a strong, flexible framework in place, companies will be able to re-focus time and money into revenue-driving capabilities like external partnerships, invest in data-driven digital capabilities to improve customer value, and build back-end processes to support platform scalability.

This article was written by Jamie Yoder, Tom Kavanaugh, Juneen Belknap and Alex Jaeger.

Following on from our previous post on product development, which concluded the key themes section of our Global Trend Map, we now examine the insurance and insurtech trends in the world's major markets via our dedicated regional profiles. We focus on seven key regions. In our forthcoming posts, we will be referring back — on a regional and comparative basis — to the stats presented across our earlier installments on: Industry Challenges, Insurtech Perspectives, Insurer Priorities, Services, Investments & Job Roles, Analytics & AI, Digital Innovation, Internet of Things, Marketing & Customer-Centricity, Distribution, Claims, Fraud, Cybersecurity, Investment Management, Regulation and Product Development. Additionally, we supplement our statistics with perspectives and discussion from a range of local correspondents in each region. In this post, which introduces our regional profiles, we present a brief preview of each region including key external and internal challenges, as well as insurer priorities. Each preview kicks off with a Top-Trumps-style summary table of key stats (an exhaustive key explaining each measure is included in the full report). In our Profile on Europe, we draw on the expert opinions of Switzerland-based venture capitalist Spiros Margaris, VC (InsureScan.net, moneymeets & kapilendo), and Charlotte Halkett, former General Manager of Communications at UK-based telematics provider Insure The Box (now MD of Buzzvault at Buzzmove). For all their insights, simply download the full version of the report. Below is a sneak preview of the stats and themes we discuss in the full profile.

"Europe presents us with a potentially gloomy picture, with the on-going issues of low interest rates and weak growth prospects, to which we may add growing regulatory burdens and political uncertainty – especially in the wake of the UK’s Brexit vote. However, we have nonetheless gathered plenty of evidence that incumbents have the tools in place both to come through and to hold their own against new entrants." — Helen Raff, Head of Content at Insurance Nexus

i) The External Challenges: Europe In Europe, the top three external challenges facing the insurance industry as a whole follow the global trend we outlined in our earlier post on Industry Challenges: 'Technological advancement', 'Changing customer expectations' and 'Digital channel capabilities'. Looking further down the table, some points of note are the higher position attained by ‘Increased regulation’ and the lower positions of ‘New emerging risks’ and ‘Catastrophe risk’. Compared to some of the other regions we examine, like Africa and Asia-Pacific, Europe is relatively sheltered from natural catastrophes and the associated risks that they bring with them, which possibly explains the lower scores we find for ‘New emerging risks’ and ‘Catastrophe risk’. As for the prominence of the regulatory challenge, we need look no further than the EU’s Solvency II, which came into effect at the start of 2016 and represents the first major shakeup of the landscape since the 1970s. --- ii) The Internal Challenges: Europe Internally, the top challenges are close to the global trend we outlined in our earlier post on Industry Challenges: ‘Lack of innovation capabilities’ and ‘Legacy systems’ take first and second place respectively, with ‘Siloed operations’ edging out ‘Finding and hiring talent’in third place. --- iii) Insurer Priorities: Europe These are the priority areas on which European insurers lead our other regions, out of our shortlist of 15 priority areas presented in our earlier post on Insurer Priorities: "Customer-centricity is an important issue because insurance is a 'trusted good'. To address social values and preferences is important. Customer-centricity means building trust, branding and a business model based on relational values. Not for nothing: Empirical evidence shows that identity is the strongest customer KPI." — Andreas Staub, Manager Partner at FehrAdvice In our full profile for Europe, we dig deeper into these challenges and priority areas on a more qualitative note, with insights from our two regional contributors, Spiros Margarisand Charlotte Halkett. Key focal points of our discussion include:

1. Growth opportunities in a relatively saturated market
2. The European consumer and Europe’s ‘early adopter’ status
3. How European insurers are using new technologies to deliver on their customer promise
4. Dynamic, real-time insurance and IoT
5. Progress on developing connected insurance models across the continent as a whole

NORTH AMERICA PROFILE: Preview In our profile on North America, we corroborate, and expand on, our stats via the seasoned perspectives of Chicago-based Stephen Applebaum, Managing Partner at Insurance Solutions Group, and Boston-based Matthew Josefowicz, CEO at Novarica. Below is a sneak preview of the themes we tackle in the full profile.

"Rising claims costs – both attritional and catastrophic – against a backdrop of low interest rates calls for a new approach to insurance in North America. That the lion’s share of Insurtech deal money has been going to US companies suggests that this change of approach may not be long in coming." — Marsha Irving, Head of Innovation / Commercial Director at Insurance Nexus

--- i) The External Challenges: North America In North America, the top external challenges for the insurance sector as a whole follow the global trend from our earlier post on Industry Challenges, with ‘Technological advancement’ and ‘Changing customer expectations’ taking 1st and 2nd place respectively, except that in 3rd place we find ‘New emerging risks’. In comparison, this comes 4th globally and only makes 6th place in Europe – which, as we indicated in our Europe preview above, likely reflects some parts of the world being more exposed to disasters (and hence concomitant risks) than others. Further down the table, 'Increased competition' moves up a place, knocking 'Increased regulation' down one spot to 7th. See also: How Is Insurtech Different in Asia?   --- ii) The Internal Challenges: North America Looking internally, the top challenges reflect the global trend we outlined in our earlier post on Industry Challenges, except that ‘Legacy systems’ wrests the top slot from ‘Lack of innovation capabilities’ (which, by way of comparison, comes first in Europe and Asia-Pacific). Innovation is, at its heart, customer-driven, and, as part of our Regional Profiles, we compare the insurer-customer relationship in North America with what we find in our other key regions – and this may well explain the different positions ascribed to ‘Lack of innovation capabilities’ in their respective challenge tables. The parallel suggestion is that ‘Legacy systems’ play more of a role in North America, which is another theme our full profile investigates in more depth.

"Legacy systems has long been a core challenge for executives across functions within insurance carriers who are focused on innovation, customer experience and efficiency. Impacting product development, applying analytics, claims modernization, marketing optimization and more, it’s no surprise this is such a top priority for insurers. In the future, I think we’ll see more legacy system upgrades across insurers looking to digitize and streamline operations." —Emma Sheard, Head of Strategy at Insurance Nexus

--- iii) Insurer Priorities: North America These are the priority areas on which North American insurers lead our other regions, out of our shortlist of 15 priority areas as presented in our earlier post on Insurer Priorities: In our full profile for North America, we return to these challenges and priority areas, bouncing them off our two regional contributors, Stephen Applebaum and Matthew Josefowicz. Some of our key points of interest that emerge, and which we discuss in detail, are:

1. Insurers’ renewed focus on their primary underwriting business in the face of low interest rates and impending market disruption
2. The rise of the ‘new consumer’ and how this is changing the insurer-customer relationship
3. Customer-centricity as the prime mover of distribution and product
4. The impact of legacy systems and regulation on (re)insurers’ innovation and transformation efforts
5. How insurers are to unlock new sources of growth in a mature market

ASIA-PACIFIC PROFILE: Preview Our exploration of Asia-Pacific brings into play, alongside our statistics, the experience and perspectives of three in-region commentators: Steve Tunstall, CEO at Singapore-based Insurtech start-up Inzsure, João Neiva, Head of Innovation, IT and Business Change at Zurich Topas Life in Indonesia, and HK-based David Piesse, Chairman of IIS Ambassadors &Ambassador Asia Pacific at the International Insurance Society (IIS). What follows is a preview of our Asia-Pacific Profile (full thing here). --- i) The External Challenges: Asia-Pacific In Asia-Pacific, the top external challenges facing insurance as a whole follow the global trend familiar from our earlier post on Industry Challenges, with ‘Technological advancement’ and ‘Changing customer expectations’ taking first and second place respectively, except that, as in North America, in third place we find ‘New emerging risks’(by way of comparison, this challenge only makes 6th place in Europe). One possible explanation for the higher ranking of ‘New emerging risks’ is to be found in the related challenge of ‘Catastrophe risk’ – which also results one place higher in Asia-Pacific than was the global trend. While natural catastrophes are not emerging risks, in the sense that they have always occurred, their consequences are becoming more multifaceted as a result of the massive growth in urban areas and the rife interconnection of business in today’s globalised economy. This has introduced a new class of accumulation risk which could justifiably be called ‘emerging’. We know anecdotally that this phenomenon is particularly pronounced in the APAC region, which boasts some of the densest urban and business conglomerations in the world, in and among noted catastrophe zones, and the trend towards urbanisation and megacities is only set to continue. See also: Insurtech Ecosystem Emerging in Asia   Another detail we notice with the external challenges is the relatively high position attained by ‘Increased competition’ (two places up on the global trend), and we believe this is a natural consequence of the expansion opportunities on offer in the region. As we uncover in the course of our full Regional Profile for Asia-Pacific, this uneasy marriage of high growth and high competition is in many ways APAC’s defining market characteristic: to win is only ever to win big (get the full profile).

"The most significant challenges for insurers in Asia, from an IT perspective are: firstly, moving services to online sales – for agents, brokers, bancassurance and direct to customers; secondly, providing instant and ideally paperless servicing on claims management; and finally, the development of Chinese Insurtech players if they decide to compete outside of their local market." — Ash Shah, Regional CIO and Chief of Staff Property and Casualty at AXA Asia

--- ii) The Internal Challenges: Asia-Pacific The internal challenges highlighted by APAC respondents exactly replicate the global trend we staked out in earlier post on Industry Challenges, with a top three constituted by: ‘Lack of innovation capabilities’, ‘Legacy systems’ and ‘Finding and hiring talent’. --- iii) Insurer Priorities: Asia-Pacific The following 6 priority areas are those on which insurers in Asia-Pacific lead our other regions, out of our shortlist of 15 priority areas introduced in our earlier post on Insurer Priorities: "Doing nothing is not an option any longer. The top priority for many CEOs is to acquire the capabilities to deliver true digital innovation that achieves competitive advantage in a very short period of time. Understanding the agile and flexible lean techniques used within the start-up world can help. Analytics, the IoT or mobile are just enablers to ease such transformation." — Sabine VanderLinden, Managing Director at Startupbootcamp We return to these regional constellation of challenges and priority areas in our full Regional Profile for Asia-Pac, in which we present the direct market testimonies of Steve Tunstall, Joao Neiva and David Piesse. Key areas that we drill down into are:

• The high-growth, high-competition dynamic inherent in the Asia-Pacific insurance market
• The new calling for customer-centricity and the related question of disruption
• Using data and analytics to create more customer-centric products, such as personalised, on-demand insurance
• APAC distribution landscape and what insurers are doing to ensure scale for their products
• How to successfully manage back-office digital transformation

PROFILES FOR LATAM, MIDDLE EAST, AFRICA AND CENTRAL ASIA We are unable, given the constraints of this post, to provide full previews of our profiles for these regions. Suffice it to say, like the profiles that are presented here, they are fundamentally structured around discussion with in-region correspondents: --- LATAM Luiz Bruzadin, Founder at Brazil-based Insurtech Segure.me, and Hilario Itriago, CEO at VC fund Bullfrog Venture --- MIDDLE EAST Cherian John, 2017-18 Regional Chairman - Europe, Middle East & Africa at Million Dollar Round Table (MDRT), Ahmad Al-Qarishi, Chief Risk Officer and Chief Actuary at Saudi Re, and Israel-based Dani Cozer, Reinsurance Operations at I.D.I. Direct Insurance --- AFRICA George Otieno Ochieng, Claims Manager at Britam General Insurance Company, and Belhassen Tonat, Head of Non-Life at Munich Reinsurance Company of Africa Ltd --- CENTRAL ASIA Kevin Hartnett, Chief Operating Officer at The Insurance Corporation of Afghanistan (ICA)

Insurtech is a poorly defined term, and as a result is little understood across the industry. At one end of the spectrum it can refer to early stage startup spun out of the world of fintech to focus purely on insurance; at the other end of the spectrum, it can refer to anything remotely innovative around the application of technology within an insurance context. This ambiguity, coupled with a high degree of media attention, has led to confusion and inconsistencies in understanding future value. Typical accepted signs of success, such as a flurry of startup activity in a given sector, higher levels of hiring activity, new inward investment or exit values, are not always good indicators of future value — despite being useful pointers. Furthermore, focusing purely on market-visible startup activity omits equivalent innovation activity underway within insurers, either as part of incubation or greenfield ventures.

Increasingly, we are being asked to help identify the source for future value for a few select concepts being explored within insurtech, specifically around distribution, proposition design and business model formation. Although there is a significant amount of public information available across the market for startup activity, venture activity and exit values, there is a dearth of data available on market traction and customer value. Consequently, in this research, Celent chose to break down insurtech into a set of characteristics that describe a future vision of insurance, around which some predictions around time-to-value could be made. They include attributes like a heightened level of digital engagement, a switch in proposition from purely indemnity toward active loss prevention, a fundamentally different business model and a shift toward a more agile way of working. We refer to these as “insurtech concepts,” and they can be evidenced in both startup ventures and an insurer’s innovation activity, helping to make them universal in their applicability.

See also: How to Embrace Insurtech Culture  

Given this inherent market and data collection difficulty at this early stage, we gathered 72 expert predictions of time-to-value for some of these specific insurtech concepts and general preparedness from our innovation leaders panel. The findings from this research have been insightful.

When the insurtech concepts are viewed in their entirety across all lines of business, a number of patterns begin to emerge when evaluating expert predictions for time-to-value. Using these predictions, innovations and new partnerships in distribution are likely to remain the primary focus of insurers for generating value in both the near and medium term. Given the activity already underway around robo advice, aggregators and digital platform partnerships, this observation may come as no surprise. With respect to the proposition, the focus on patterns for continuous engagement also attract a degree of attention (with 92% expecting a significant shift within the next five years), albeit largely focused on existing propositions and models. Experimentation beyond this for the proposition will differ depending on the market segment and product line. It is likely that retail propositions will continue to become more sophisticated in pricing and the use of external data (from sensors or otherwise) for tailoring the price to the end customer, while commercial continues to develop around disaggregation and the formation of alternative distribution, and active loss avoidance. Although the switch to becoming a more virtual organization appears to attract less attention today, Celent believes that the fast pace of AI maturation will provide a more certain path to value in the near term. This sentiment is also being echoed in client conversations we have had as part of the 2018 planning process, as can be seen in Celent’s latest insurance innovation outlook report.

Other highlights include:

• When analyzing the expert predictions for a selection of insurtech concepts by line of business, the time-to-value expectations between retail personal lines and commercial lines, and among life, health and P&C, can vary by some degree.
• Based upon these findings, it is clear that greater levels of change are expected sooner in retail personal lines than, say, either life or commercial P&C.
• Regardless of line of business, there is an expectation that technology-led innovations focused on distribution will have a greater impact in the near term.
• An overall shift in proposition toward continuous engagement (92% over five years) and move toward product distribution via aggregators (86% over five years) also appear likely in the near term.
• Although still represented within an insurer’s innovation activity, the timeframe to achieve future value from new tech-enabled propositions and business models remains less certain; a longer time horizon is expected. Consequently, greater care needs to be taken when allocating resources.

Although still at a nascent stage, insurers should prepare to adapt innovation activities to recognize the different expectations for time-to-value between lines of business, while maintaining a strong focus on innovation in distribution regardless, because disruption in this part of the value chain is already clearly signposted.

See also: Key Insurtech Trends to Watch  

This report is the first of a two-report series. Part 1 focuses on time-to-value for given insurtech concepts. Part 2 explores how insurance company innovators are approaching insurtech in their ambitions to engage.

You can find the full report here.

While AI systems can now learn a game and beat champions within hours, they are hard to apply to business applications.

MIT Sloan Management Review and Boston Consulting Group surveyed 3,000 business executives and found that while 85% of them thought that AI would provide their companies with a competitive advantage, only 1 in 20 had “extensively” incorporated it into their offerings or processes. The challenge is that implementing AI isn’t as easy as installing software. It requires expertise, vision and information that isn’t easily accessible.

When you look at well-known applications of AI, such as Google’s AlphaGo Zero, you get the impression it is like magic: AI learned the world’s most difficult board game in just three days and beat champions; Nvidia’s AI can generate photorealistic images of people who look like celebrities just by looking at pictures of real ones.

But most business problems can’t be turned into a game; you have more than two players, and there aren’t clear rules. The outcomes of business decisions are rarely clear wins or losses, and there are far too many variables. It is a lot more difficult for businesses to implement AI than it seems.

Today’s AI systems do their best to emulate the functioning of the human brain’s neural networks but do this in a very limited way.  They use a technique called deep learning, which adjusts the relationships of computer instructions designed to behave like neurons. To put it simply, you tell an AI exactly what you want it to learn and provide it with clearly labeled examples, and it analyzes the patterns in that data and stores them for future application. The accuracy of its patterns depends on data, so the more examples you give it, the more useful it becomes.

Herein lies a problem. An AI is only as good as the data it receives and is able to interpret it only within the narrow confines of the supplied context. It doesn’t “understand” what it has analyzed, so it is unable to apply its analysis to scenarios in other contexts. And it can’t distinguish causation from correlation. AI is more like an Excel spreadsheet on steroids than like a thinker.

The bigger difficulty in working with this form of AI is that what it has learned remains a mystery: a set of indefinable responses to data. Once a neural network is trained, not even its designer knows exactly how it is doing what it does. As New York University Professor Gary Marcus explains, deep learning systems have millions or even billions of parameters, identifiable to their developers only in terms of their geography within a complex neural network. They are a “black box,” researchers say.

Speaking about the new developments in AlphaGo, Google/DeepMind Chief Executive Demis Hassabis reportedly said, “It doesn’t play like a human, and it doesn’t play like a program.  It plays in a third, almost alien, way.”

Businesses can’t afford to have their systems making alien decisions. They face regulatory requirements and reputational concerns and must be able to understand, explain and demonstrate the logic behind each decision they make.

For AI to be more valuable, it needs to be able to look at the big picture and include many more sources of information than the computer systems it is replacing.

See also: Strategist’s Guide to Artificial Intelligence  

In inventory management, for example, purchasing decisions are usually made by experienced individuals called buyers, department by department. Their systems show them inventory levels by store, and they use their experience and instincts to place orders. An AI could consolidate data from all departments to see the larger trends — and relate them to socioeconomic data, customer-service inquiries, satellite images of competitors’ parking lots, predictions from the Weather Company and other factors. Many retailers, including Amazon.com, are doing some of these things.

AI is advancing rapidly and will surely make it easier to clean up and integrate data. But business leaders will still need to understand what it really does and create a vision for its use — that is when they will see the big benefits.

The 4th District of the Court of Appeals has reversed a puzzling W.C.A.B. decision that had awarded TTD benefits beyond five years from the date of injury, ignoring the plain language of Labor Code 4656(c)(2). In County of San Diego v W.C.A.B. (Pike),<http://www.courts.ca.gov/opinions/documents/D072648.DOCX> the appellate court had little difficulty in reading the rather straightforward statutory language to firmly reverse the WCJ and W.C.A.B. decisions awarding TTD beyond the five-year jurisdictional limit set by statute. The applicant, Kyle Pike, sustained injury to his right shoulder in July 2010 while employed as a deputy sheriff for the County of San Diego. He was awarded a 12% PD benefit in May 2011. On May 26, 2015, within the five-year jurisdictional time to reopen his case, he filed a Petition for New and Further Disability seeking TTD and Labor Code 4850 benefits. He received his 4850/TTD benefits through July 31, 2015, at which time benefits were terminated. At trial, the WCJ awarded benefits on a continuing basis, determining that while Labor Code 4656 was clear regarding benefits payable within the five-year jurisdictional time frame in the statute, it was silent as to what benefits could be provided after five years from the date of injury. On reconsideration, the W.C.A.B., in a split decision, affirmed the WCJ’s award. The Appellate Court had little difficulty in seeing through the WCJ’s and W.C.A.B.’s construct: “       This interpretation of section 4656, subdivision (c)(2) is not tenable.  As discussed above, section 4656, subdivision (c)(2) clearly and unambiguously provides that temporary disability benefits "shall not extend for more than 104 compensable weeks within a period of five years from the date of injury." (§ 4656, subd. (c)(2).) Thus, contrary to the board's decision, the relevant statutory language does provide that all periods of temporary disability for which payments are made must occur within five years of date of the injury.” The court also pointed out that if the WCJ/W.C.A.B. analysis was correct, even the 104-week limitation would not exist after the five-year limitation, in effect, eliminating any limitation on TTD beyond five years while providing limitations within five years, hardly a logical result. “…Such inconsistent reasoning further demonstrates the fallacy of the WCJ's interpretation.” See also: Why WC Needs an Outcomes Strategy   The appellate court also pointed out that all of the authorities cited by the applicant attorney, amicus for applicant and the W.C.A.B. were interpretations of Labor Code 4656 prior to the amendments limiting TTD to the period within five years from the date of injury.  The court further noted that in the one decision it found where similar language was included in the statute, the appellate court had limited the receipt of TTD to within the five-year statutory time frame. The court reversed the W.C.A.B. decision remanding the case back to the W.C.A.B. to grant the Petition for Reconsideration of the Petitioner, County of San Diego. Comments and Conclusions: The W.C.A.B.’s decision in this case is at best puzzling, at worst a flagrant attempt to avoid the legislature’s clear intent. It is difficult to conceive of how this statute could be tortured into an interpretation that allowed TTD to be paid beyond the statutory limitation. The analysis by the WCJ, adopted by the majority of the W.C.A.B., was patently inconsistent and required a tortured reading of the statute to reach the final result. If the WCJ/W.C.A.B. analysis had been upheld, all an injured worker would have to do to obtain additional TTD is file a petition within five years from the date of injury and then wait till after the five-year date to claim additional TTD. Hardly a result the legislature intended and one that even the W.C.A.B. would have a hard time justifying with a straight face. A copy of the decision can be found here.

For many people, their first thought about natural disasters is the devastating property damage that is extremely visible and highlighted by the media. However, the impact of natural disasters goes far beyond property damage and includes the impact to your workforce, your supply chain and the operations of your business. During a recent Out Front Ideas webinar, we were fortunate to get the perspectives of leaders from three different segments of our industry on the impact of natural disasters on risk management. Our guests included:

• Tom Best, deputy general counsel for Home Depot
• Ryan Brannan, commissioner of workers’ compensation for the Texas Department of Insurance
• John Hinz, vice president of Vericlaim

Types of Disasters There are two basic types of natural disasters – those with warning and those without. With hurricanes and flooding, you typically have some degree of warning that allows you to initiate disaster response protocols and to prepare for the disaster. However, with events such as tornados, earthquakes and other sudden events, there is no warning and no opportunity for advance preparation to minimize the impact and maximize the response. Both types of disasters benefit from developing a disaster response plan in advance. Workplace Injuries One of the first employer concerns has to be preventing and responding to employee injuries when a disaster occurs. At Home Depot, they work with vendors on a daily basis to identify any potential weather that could affect their stores. When there is a potential event, they pull together their response team, led by a disaster captain. Their response team has functional members of all their critical business areas, including human resources, legal, supply chain and business operations. These teams meet every year before the start of hurricane season to make sure everyone understands their role and the disaster response protocols. They also connect with state, local and federal authorities to coordinate response efforts. Because Home Depot has a very important community role in disaster preparedness and response, they keep stores open as long as possible and reopen them as soon as possible. From a workers’ compensation claim standpoint, there are many concerns. Employees can be injured during the disaster itself. There is also significant potential for injuries sustained by first responders and the National Guard during the response and recovery. Texas deployed 14,000 National Guard troops in response to Hurricane Harvey, and those troops are all considered employees of the state of Texas when deployed. Traumatic physical injuries are not the only concerns. There are also occupational disease concerns because of the toxic chemicals that were in the floodwaters of Houston. Furthermore, there are concerns about post-traumatic stress. Because of the occupational disease exposure, there could be a very long claims tail from this natural disaster. Workforce Disruption Home Depot is a major employer, but they are also an essential element in any disaster response because people depend on them for building materials and other supplies. Their command center is focused on taking care of both their employees and the community as a whole. The Texas Workers’ Compensation Commission closed five field offices at various times in response to Hurricane Harvey. Their primary focus was the safety of their staff, but they were also concerned about being able to conduct the business of the commission. See also: 6 Reasons We Aren’t Prepared for Disasters   It is important to give your employees time off during a natural disaster to take care of their families and personal needs. Employers often bring in workers from other locations to assist in the affected areas so that the employees living in the area can tend to their personal needs first, then come back to work when able to do so. This allows the business to continue serving the community while also making sure that employees are settled. Workers’ Compensation System Impact Keeping the workers’ compensation system running during a natural disaster is important and challenging. In Texas, the governor suspended certain regulations and extended or tolled deadlines in affected areas to ensure that workers were receiving timely care and benefits and that carriers were focused on benefit delivery instead of bureaucratic issues. Social media was very useful in keeping people updated on when field offices were open and providing other important information to all stakeholders. Healthcare Impact One thing people do not often think about in natural disasters is the impact on the healthcare delivery system. The healthcare delivery system is disrupted in many ways:

• Technology: With electronic medical records and a wide variety of equipment powered by electricity, a prolonged period without power can make delivery of care very challenging.
• Continuity of care: Patients are often forced to treat at facilities outside their areas during natural disasters. Facilities need to not only be able to handle the influx of patients, but to deal with the potential HIPAA considerations.
• Supply chain: One impact of the hurricane that hit Puerto Rico was a significant disruption to the pharmaceutical industry, which accounts for more than 70% of Puerto Rico’s exports. There was a nationwide shortage of saline IV bags after the hurricanes, for instance, because most of these were manufactured in Puerto Rico, and those factories were shut down for a time.
• Life and death issues for patients: During Hurricane Katrina, healthcare workers and patients in New Orleans were trapped for many days without power. Providers had to make decisions around which patients to evacuate first and which patients were in such bad shape that they could not be saved.
• Litigation costs: There is always a big spike in litigation against healthcare facilities following a natural disaster because of care disruption and other challenges.

Supply Chain Supply chain is important to most businesses, and a natural disaster can significantly disrupt the normal supply chains. This was especially challenging on an island like Puerto Rico. Getting the supplies to the island was only the first step. Supplies sat for days in the ports because there were no dock workers to unload them and no trucks to deliver them. There are many lessons to be learned about disaster responses to islands after the events of 2017. On the mainland, supplies can be staged out of harm’s way in advance of a hurricane so that the trucks can start rolling in once the area is safe. Additional products are purchased in advance so there are ample supplies available. Home Depot works with local, state and federal authorities to coordinate the distribution of disaster relief supplies. Disaster Preparation Mitigating the risks and challenges from disasters takes extensive planning and practice. Every location and each facility is different and has varying needs. But as John Hinz explained, planning for emergencies can be the difference between staying in business and losing everything. There are several essential elements that should be included in any emergency preparedness plan.

• Focus on prevention: If there is any way to prevent a disaster from happening, that is your best defense. The first step in the process is to assess your risk and the potential impact to see how you can be more effective in disaster planning. Once you know the type of disasters for which you are most at risk, take steps to minimize potential damage to your facility and harm to your employees. Think of the actions you might need to take and what you would need in the event of a fire, flood, severe storm or other disaster.
• Evacuation plan: Every facility should have primary and secondary routes and exits that are well-lit, marked and easily accessible. There should be an outside area designated as a meeting place for employees to gather once they are out of the building. Staff members that may require assistance during an evacuation due to physical limitations should be noted in the plan.
• Communication: In addition to emergency contact information for local police, fire and ambulance numbers, you should have a contact list that also includes information for your customers, suppliers and distributors. This list should be updated continually, and copies kept both in your files and in offsite locations so you will be able to access them regardless of the situation. You may want to preset conference call numbers in case that is needed. Be sure you have a way to contact key players in and outside the organization.
• Protect vital company information and critical data and programs that are imperative to keep your operation running. Make sure these things are backed up and that the backup is kept in a location separate from the primary facility.
• Understand your insurance coverage: Review your insurance policies with your agent or broker so you know your deductibles and how they are applied to your coverages. You should know the limits and nature of your insurance, including coverage specifics. You may want to make changes to some policies, as all coverages are subject to limits and exclusions.
• Keep insurance information handy: The names and numbers of your insurance representatives should be kept in a safe, accessible place, as this will expedite the claims process when the time comes.
• Plan for contingencies: Despite your best efforts, your preparation may not be enough. Have an offsite location or allow personnel to work from home, if necessary, to keep the business running.

See also: Cognitive Biases and Risk Management   Final Thoughts There is no foolproof plan that will protect your organization from every disastrous situation, but you can be well prepared for most emergencies. If your company does not yet have such a plan, you can work with carriers or agents and brokers to begin the process. There are also a number of consultants that specialize in this area. After developing a disaster preparedness plan, you need to continually review and update it to make sure that it is current and that everyone understands his or her role if there is a disaster. You can listen to the archived Out Front Ideas with Kimberly and Mark webinar on this topic here.

The accident in which an Uber driverless car hit and killed a pedestrian Sunday night in Tempe, AZ, got us talking about how innovation should progress in a risky world. We worry that Uber hasn’t always been as careful as, say, Google/Waymo and GM/Cruise in testing its autonomous technology. An investigation will tell the tale soon enough in this particular instance (one of the advantages of all those sensors on driverless cars), but we’ll still be left wrestling with a world in which innovating can place people at risk, but in which not innovating might even be more dangerous. We can’t just sit still in a world where 1.25 million people die in traffic fatalities each year.

Our CEO, Wayne Allen, took up the pen to address the role we intend to play on innovating amid risk:

"I want to be super clear. We at ITL and Innovator’s Edge are going to increasingly take positions about what 'should be.' The rate at which certain technologies are being introduced into the marketplace outpaces the ability of lawmakers and even regulators to keep up, including those in the insurance world. Governmental authorities have jurisdiction over bits and pieces of the technology ecosystem, but it is rare for a single body to have complete authority over all the concerns about privacy, discrimination, consumer safety, etc.

"It is, therefore, incumbent on our industry, the folks who are supposed to manage risks of all kinds, to step forward and lead. Let’s provide innovation at the speed of reason.

"We will never advocate for the tempering innovation for the sake of antiquated processes. No. But we advocate for everyone to cinch up their chin-strap and do what’s right. 

"Consider chatbots. If chatbots are as much a commodity as many tell me they are, then anybody could roll them out to a carrier, right? Well, what if it turns out that the data transmitted to a chatbot is personal financial information or personal information about a health condition or relates to an accident and includes health information? Shouldn’t we be asking questions about how secure these chatbots are? How safe is the data being transmitted? Shouldn’t any company integrating chatbot technology in its claims process—or any customer communication, for that matter—verify that the bot and the path through which the information passes meet a standard for privacy? 

"What about autonomous vehicles? Should we be surprised if not all autonomous technology is created equal? Could one company’s technology be more secure, more heavily tested, just plain better than another? Are there standards for testing and product rollout that should be implemented? Should we as an industry simply take the position that we will not insure any vehicle (irrespective of the creative ways insurance can and will be built into the experience) that does not meet certain standards? If we do not, I am certain some enterprising politician will roll out a solution that will be the worst possible result, will likely be in line with what some lobbyist representing some corner of some industry wants, will stymie innovation and will be nearly impossible to overturn. 

"If you agree with me and want to help provide innovation at the speed of reason, for the benefit of us all, please email me at wallen@innovatorsedge.io. The table stakes need to be known, and they need to be raised."

Have a great week.

Paul Carroll
Editor-in-Chief