Happy New Year!

As an industry, we made huge progress in 2017 on our much-needed transformation, and 2018 is looking like it may be the tipping point. I think we will be in a very different place at the end of this calendar year. Even though we won't be able to act on all of the immense opportunities in front of us this year, we'll tackle a bunch, and the path to the future will be far clearer than it is now.

I can't wait.

To help set the stage, I've gone back through the nearly 1,000 articles we published from thought leaders in 2017 and have highlighted the six most-read articles below. Many are predictions about what would happen during the year. They hold up remarkably well and provide a start for a road map for 2018, because the opportunities that are identified take much more than a single calendar year to play out. 

My favorite is the final one, from our own Guy Fraker, on how to start on an innovation program. That first step is a doozy. Addressing a classic problem for incumbents, Guy provides a powerful framework for how to not only think outside the box but for how to drive that thinking into products and services that increase profits and generate growth in ways that can transform a business and, in time, the industry. Despite all our progress, we risk kidding ourselves about how far we still have to go—the spate of "innovation tourism" in Silicon Valley worries me—and Guy provides a no-nonsense approach that not only mattered in 2017 but that will hold up for years to come.

Top 10 Insurtech Trends for '17

Issues to Watch in Work Comp

Why AI Will Transform

The New Age of Aggregators

3 Areas of Opportunity

Innovation: Where Do We Start?

Stay tuned: Over the next couple of weeks, we'll be publishing a series of articles on our website that will set the agenda for 2018. 

Onward and upward!

Paul Carroll,
Editor in Chief

Why Lemonade is Going Global It’s a curious thing: Most insurance companies stop at the water’s edge. Europe’s largest insurance companies operate in dozens of countries, but most don’t offer insurance to consumers in the U.S. Same is true for those operating out of Asia Pacific and Africa. And it cuts both ways: American consumers buy insurance from American firms, most of which don't have any operations to speak of outside of the Land of the Free. It’s odd. The Atlantic and Pacific oceans are vast, but they can be crossed. And bits and bytes can cross them in milliseconds. As a tech company doing insurance, we see no reason that a body of water should be an obstacle to reaching new markets and expanding beyond the 50 states. In fact, within the U.S., we’re finding that being digital has allowed us to cross the country without enlarging our physical footprint. Consider this: California is our largest market at the moment, but our nearest employee to the Golden State is 3,000 miles away in the Empire State. Our announcement of a $120 million Series C funding round led by SoftBank sets the stage for our global expansion. See also: Lemonade’s Latest Chronicle   See, to bring AI-powered insurance to Mumbai, London, Rio de Janeiro or Sydney, there’s no need to invest in thousands of people in towering skyscrapers. Like Airbnb or Spotify, our services require little more than a mobile phone and a credit card. In our largest markets, we have zero employees. Sure, we’ll need to invest time with regulatory bodies and learn to adapt to local culture, customs and languages. But our mission is a global one, and our means to go global lie in our being a digital pure-play. When Tom Friedman wrote about the waves of globalization and the "flattening" benefits of it in the 21st century, he declared that the world went from being small to tiny. He dubbed the change Globalization 3.0, following the previous rounds of globalization, in the 15th century and later when multinational companies emerged. At the turn of this century, Globalization 3.0 moved the needle in such an enormous way that it’s not only a difference in size, it’s a difference in kind. Fast forward almost two decades, and insurance powered by bots and data-driven algorithms means we can reach endless people in all corners of the globe and provide them with a similar yet customized experience, without the heavy bureaucracy and costs that discourage the traditional insurance carriers of venturing across the ocean. Digitally enabled folks have a common denominator: They tap to get a ride, order a meal, get groceries delivered, find a soulmate… and they’d readily do the same to get insurance. We may be divided by international borders, but our connectivity is so intertwined that it has become the natural fabric that weaves us together. It’s not only the technology that makes international prospects so enticing. We believe our mission of trust and transparency is universal, too. Through his behavioral economics research, our Chief Behavioral Officer Dan Ariely reminds us that the way the insurance system is designed brings out the worst in us humans. Whether you’re in New York or Paris or Tokyo, that inherent conflict between insurance company and its customers brings out bad behavior from all sides. Bad behavior is rooted in the same human nature all over the world. See also: Lemonade Really Does Have a Big Heart   So we’re not stopping at the water’s edge. We believe that being built on AI and behavioral economics means that, at a profound level, we’re building something with universal appeal. The world is flat; it's time insurance was, too.

It’s time for the 2017 Deplorables Awards, lovingly bestowed on those vendors who do the best job making other vendors look good.  The good news is that you don’t have to actually win the Deplorables Award to sue me.  Runners-up are eligible, too. Here is my address for hand-service delivery most of the year: 890 Winter Street #208, Waltham MA 02451 In case you decide to sue me between June 22 and Aug. 8, use: 8 Paddock Circle, Chilmark, MA 02535 And don’t leave out my attorney: Josh Gardner, GARDNER & ROSENBERG P.C., 33 Mount Vernon St., Boston, MA 02108 I don’t know how much more I can do for you, other than lick the envelope. So go for it. Don’t make me beg. But, remember, unlike with your usual business model, in court you are required to actually tell the truth (I would be happy to explain to you how that works), meaning there is no chance of your winning — or likely even avoiding summary judgment, because none of the evidence is in dispute. It’s all your own writings. Oh, and I do my own cross, which means you won’t be able to find an expert witness. Anyone who knows enough about wellness to be an expert witness also knows enough about wellness to know that attempting to defend you would be a humiliating, on-the-record experience. And there is always the chance that some annoying jerk might blog about it… The 2017 Runners-Up Springbuk and Fitbit As many of you recall, earlier in the year we analyzed the study done by Springbuk that was secretly financed by Fitbit. Or maybe I need new glasses, because I just couldn’t find the disclosure in the Springbuk report that this paean to Fitbit was financed by Fitbit, much as Nero used to have the judges award him Olympic medals. Coincidentally, the study showed Fitbit saving gobs of money because employees taking more than 100 steps a day spend less money than those taking fewer. However, a simple tally of one’s own footsteps shows that it is impossible not to take 100 steps a day unless you are both:

1. in a hospital bed; and also
2. on dialysis.

This 100 steps-a-day threshold was repeated many times in the study, with no explanation of how that number came to be. However, it turns out we owe these two outfits an apology. Fitbit and Springbuk have told a number of people privately (not publicly, to avoid an embarrassing news cycle) that they didn’t really mean to say that 100 steps a day constituted activity. They meant to say that taking 100 steps a day implied you had your Fitbit on. My apologies for failing to read their minds that their conclusions were based on reading people’s minds to determine whether they wore the Fitbit deliberately, or simply forgot/remembered/cared to put their Fitbit on. Springbuk and Fitbit never did explain — privately or publicly or to anyone — how employees who took an average number of steps during the baseline year could show huge savings by taking an average number of steps in the study year, too. They also never explained how these two statements didn’t completely contradict each other, even though I specifically asked them to in a personal letter, excerpted here: Third, can you reconcile this statement…: “The materials in this document represent the opinion of the authors and not representative of the views of Springbuk, Inc. Springbuk does not certify the information, nor does it guarantee the accuracy and completeness of such information.” …with this statement: “This demonstration of impact achieved by integrating Fitbit technology into an employee wellness program reinforces our belief in the power of health data and measurement in demonstrating ROI,” said Rod Reasen, co-founder and CEO of Springbuk.  National Business Group on Health Next up is the National Business Group on Health. Last year, they made the list for criticizing the U.S. Preventive Services Task Force for not demanding enough screenings, in a country that is drowning in them. Not content to rest on those laurels, this year they earned an Honorable Mention for inviting Dr. Oz to keynote on the role of quackery in corporate wellness, and perhaps tell us about his latest lose-weight-by-eating-chocolate miracle diet. See also: How Advisers Can Save Healthcare   Health Enhancement Research Organization HERO, of course, also earns a runner-up award. 2017 will be remembered as the year they finally came to grips with the realization that a business model based on fabricating outcomes requires that perpetrators possess that critical third IQ digit. Without that extra “1”, an organization trafficking in math that can at best be considered fuzzy is going to be outed. This year’s set of lies?  By way of background, their 2016 poison-pen letter insisted they had fabricated that data set showing that wellness loses money without disclosing that it was fabricated — and also never reviewed their fabricated data before publication. Early in the year, I had the insight that, wow, this “fabricated” chapter in their guidebook is so much better than the other chapters that something is amiss. No one at HERO can analyze data competently…and yet, here it was, a competent data analysis. I did something I had never thought to do before, which was look up the actual author of that chapter. It was Iver Juster, MD. He was a great analyst even before he read all my books, took all my courses and achieved all my certifications in Critical Outcomes Report Analysis. So I called Iver. Here’s what I learned:

1. Whereas Paul Terry and Ron Goetzel had insisted that Iver fabricated the data, Iver said that, of course he didn’t — whatever made me think that?  (“If it wasn’t real, I would have disclosed that,” he observed. Of course, he would have. Iver has tremendous integrity.)
2. The board discussed and reviewed his chapter at length and made helpful suggestions, for which he was quite grateful. This review process required “countless hours,” just as the HERO document says:

The number of  transparent lies HERO tells could make a president blush. In the immortal words of the great philosopher LL Cool J, they lied about the lies they lied about. Even though 2017 was an off-year for them in terms of the number of lies, they still told enough to be named a runner-up. Wellness Corporate Solutions Next is Wellness Corporate Solutions, famous for its crash-dieting contests. WCS now offers a water-drinking contest. The idea is to set up a “challenge” for your team to drink more water than other teams. They call this a “healthy competition.” I guess they didn’t get the memo that forcing yourself to drink when you don’t want to drink, just to make more money, is anything but healthy. Here is a novel idea: Drink when you are thirsty.  Evolution 1, WCS 0. Perhaps as an encore, WCS, Dr. Oz and the National Business Group on Health could team up to offer a chocolate-eating contest. I looked into this outfit to see where they get their ideas. The CEO previously ran something called the Washington Document Service. That qualifies her to run a wellness company. As Star Wellness says, to run a wellness company successfully, your background needs to be in sales, or “municipality administration.” After all, what is more central to administering a municipality than documents? Wellsteps What fun would a list of runners-up be without Wellsteps, the  proud recipient of the 2016 Deplorables Award? While their streams of consciousness weren’t as memorable in 2017 as in 2016 (“It’s fun to get fat. It’s fun to be lazy“), they get credit for trying. Their 2017 weight-loss campaign was headlined: “This campaign is not really about weight loss, it is about helping you apply the behavioral secrets of those who have lost weight.” So if your kids ever want you to teach them how to ride a bike, say: “It’s not really about riding a bike. It’s about helping you apply the secrets of people who have ridden bikes.” And what secrets are we talking about? What person who has lost weight doesn’t brag to everyone or even write a book?  If there is a secret to weight loss, like eating chocolate, Wellsteps owes it to the country to tell them. Don’t make us beg. See also: Should Wellness Carry a Warning Label?   Odds and Ends No Koop Award winner this year, but an honorable mention to past winners and runners up for their commitment to wellness:

• McKesson, for flooding the country with opioids;
• Pepsi, for flooding the world with sugar.

Sounds like in 2018 the logical winners would be Philip Morris, or maybe the Asbestos Corporation of America. Veering briefly into the public sector, kudos to Rep. Virginia Foxx, (R-NC5) for introducing the Required Employee DNA Disclosure Act. Even HERO thought it was a dumb idea…and their threshold for thinking something that increases wellness industry revenue is a dumb idea is quite high, having all rallied behind the Johnson & Johnson fat tax, in which companies would be required to disclose the weight of their employees. Next up…the winner of the 2017 Deplorables Award

The emergence of insurtech has reshaped the strategic insurance agenda. Here are the top 10 insurtech trends as we enter 2018. Insurtech Trend #1 – Automation will replace human effort across the entire insurance value chain This is a trend that is not unique to insurance. But it is a trend that will significantly affect the insurance sector. This is because much of the insurance industry still operates in pre-internet ways. It is also because many personal lines are being atomized. Small parcels of insurance protection cannot be packaged and sold with human input and remain cost-effective. It is also because customers demand it. They want a purely digital experience that does not require human contact when a machine will do nicely, thank you. One to watch: ZhongAn Insurtech trends article: Is the Rise of the Digital Advisor the new InsurTech Game Changer? Insurtech Trend #2 – Insurance premiums will become highly personalized based on greater tech-enabled insight on customers and their individual risk When you add together the massive growth in new sources of data together with tech-enabled data science, it is inevitable that premiums will become highly personalized. This will be enabled by tech such as wearables, telematics, IoT and smartphone apps. Not to mention the ability to build insights through relationships that exists across data sets. Gone will be the days when people of the same age and gender, with identical cars or homes living on the same street, will pay the same premium. In the future, other factors will apply to reflect greater granularity in their individual risk profiles. Data science will become a key set for underwriters and actuaries. One to watch: Sherpa Insurtech trends article: Insurance distribution is about to get personal Insurtech Trend #3 – The blockchain era has begun, and there will be a rapid shift from pilot to production of distributed ledger technology It is hard to find a major insurer that is not involved one way or another with a blockchain initiative. This will only continue as this disruptive tech continues to prove its ability to provide a viable solution. Of course, there are still some big questions to answer in terms of scale, performance and security, but those answers will come. The big breakthrough in insurance for blockchain will be in the back office for the complex and global world of wholesale, commercial and reinsurance (which is desperately in need of moving into the internet age). One to watch: ChainThat Insurtech trends article: R3’s partnership with ChainThat is one giant leap for insurance See also: Insurtech: The Year in Review   Insurtech Trend #4 – The lines between the old and new will blur as insurtech becomes mainstream by 2020 The defining characteristic of the Fourth Industrial Revolution is speed of change. This certainly applies to insurtech and its impact on the world of insurance. The rate at which insurtech startups are popping up all over the world is not surprising. Everyone wants a piece of this $7 trillion cake. The incumbents have responded, too. By investing in, partnering with and acquiring insurtechs, the incumbent insurers have wholly embraced the movement. This will lead to the creation of whole new digital brands, designed to cannibalize traditional business. And because it is simply too expensive and takes too long to transform legacy operations, the incumbents will ring fence and run them down. One to watch: Munich Re Insurtech trends article: Digital transformation is the strategic imperative no insurer can ignore Insurtech Trend #5 – Digital engagement through lifestyle apps will change the relationship dynamic between insurer and insured Lifestyle apps are the norm. It is hard to find anywhere in the world where this is not the case, so lifestyle apps are the perfect vehicle to provide the peace of mind that customers want when they buy insurance. Instead of the annual chore of hunting for the lowest-priced insurance then having nothing more to do with it unless you suffer a loss, lifestyle apps offer value on a daily basis. This makes them sticky, which, for insurers, means less churn. They also give insurers greater insight into their customers’ behavior, which means better-informed risk assessments and personalized premiums. And they build brand loyalty, which, if you believe in behavioral economics, will result in lower levels of claim embellishment and fraud. One to watch: Metromile Insurtech trends article: Metromile, the pioneers of digital engagement Insurtech Trend #6 – The all-in-one insurance policy is here to stay It has taken longer than I predicted back in 2015, but the all-in-one insurance policy is here. From a customer’s perspective, the all-in-one policy makes perfect sense. Especially for the millennials and Gen Y's. Why can’t they simply have one relationship with one insurer and have everything covered in one go? And it’s not just for younger generations. Imagine giving the insurer the details about your car, home, health, travel, pets and possessions. The insurer gives you one overarching policy, a fair price and the ability to flexibly adjust the cover as needed. Operating on a membership model, the platform can provide safeguards and advise the customer on good and bad decisions. This is AI territory and relatively straightforward to automate. IMHO, this is a winner; watch this space! One to watch: Getsafe Insurtech trends article: Getsafe take the Lemonade model one step further Insurtech Trend #7 - New models will challenge the traditional insurance value chain  In the digital economy, where insurance is embedded into lifestyle products or distributed through ecosystems, the traditional insurance model doesn’t work. The inherent inefficiency in a highly intermediated value chain, too dependent on human effort, makes insurance products expensive. When as much as 80% of premium is lost on distribution, leaving barely a fifth for the risk pool, you know something has to change. In the words of Jeff Bezos, “your fat margin is my opportunity.” These new models will see the carriers squeezed as the reinsurers provide risk capital directly to digital brands. Regulatory frameworks will be reworked to reflect these shorter value chains that don’t require the many layers they have today. One to watch: Amazon Insurtech trends article: Redefining the insurance value chain Insurtech Trend #8 – Lemonade has set the pace in Insurtech 2.0; copycats will follow The first phase of insurtech was all about distribution and data. Then came Lemonade. In September 2016, they launched in New York, and a year later they cover around 50% of the U.S. population with their renters and home insurance products. For me, Lemonade have defined Insurtech 2.0. Many insurtech startups claim to redefine or reinvent insurance, but they simply don’t, whereas Lemonade has. It is inevitable that the copycats will appear. Some will be insurtech startups, although they will need to be as well-marshaled, experienced and funded as the Lemonade team to have any chance of success. And some will be the incumbents, which will have a go at creating a Lemonade model from within. These will almost certainly fail! One to watch: Lemonade Insurtech trends article: Lemonade really do have a big heart, killer prices and instant everything See also: Top 10 Insurtech Trends for 2018   Insurtech Trend #9 – Claims settlement will become an automated, self-service and quick-to-pay experience for customers Insurers spend too much of a customer’s premium on handling the claims process. This is because the process is manual. And because the carrier wants to double-check the claim. And because customers don’t always tell the truth. And because there is too much time in the whole process. And and and and and. The insurtech solution is to put the claims process in the hands of the customer. This sounds counter-intuitive, but it isn’t. Taking a self-service approach, the customer provides video and images at FNOL and is in control of the claims process. Automated reviews of claims handle the vast majority of cases and award instant payouts. The money can be with the customer in a matter of hours. No long processing cycles, no time to embellish the claim and high levels of customer satisfaction. Those that fail the automated review are the exceptions handled by the carrier, which is what they’re looking for anyway! This will become the norm for claims management, once the fears and resistance of the lifelong claims directors can be overcome. One to watch: Rightindem Insurtech trends article: Democratizing insurance claims restores trust for customers Insurtech Trend #10 – Tech-enabled loss prevention will become a key feature in the insurance product Advances in everyday technology are increasing the ability to predict the likelihood of an event or outcome occurring. In home and motor, tech is being used to model behavior and identify exceptions. Sensors and phones and devices are all collecting data that define our individual norm (as opposed to a collective norm). As a result, any deviation can be instantly assessed, and action can be taken. To handle scale, this is 100%-automated, driven by AI and machine learning. Which means the opportunity for insurance is immense, because, instead of being a passive risk taker (which carriers are today), insurers will become active risk managers. One to watch: Surely Insurtech trends article: Digital implementation is the strategy insurers have been looking for Insurtech prediction lists from previous years  Looking forward with insurtech Insights – 10 predictions for 2017 Daily Fintech’s 2016 predictions for InsurTech Sign up for more insurtech Insights here

You’re probably familiar with the name of the most recent Nobel laureate in economic sciences, Richard H. Thaler. A professor of behavioral science and economics at University of Chicago, Thaler's core work is "Nudge," a book he wrote with Cass R. Sunstein, in which the authors make the case for why to nudge people toward certain behaviors that are beneficial for the individuals and for society as a whole. Thaler's work has contributed to the creation of behavioral economics and could have major implications for economic research and policy, according to the Nobel committee. Settings of influence It’s common knowledge that the setting in which people make decisions very often influences the choices they make. What we buy at a supermarket is influenced by the position of products; what we choose from the menu often depends on what pictures of food are shown. These are simple examples, but implications extend to how a person or family relates to healthcare, insurance, savings strategy and so on. According to Thaler and Sunstein, even “small and apparently insignificant details can have major impacts on people’s behavior,” so whoever presents choices must frame them in some way, and the framing will affect the decision-making. The nudge approach has already been tested in different contexts, one of which is the U.K. government’s 2012 policy of auto-enrollment for private pensions. It is a great example of how a nudge policy can have benefits – it led to considerably higher private-sector, pension-saving participation, because individuals can opt out but are otherwise considered enrolled. See also: Major Opportunities in Microinsurance An example that is closer to the industry of our interest refers to a global insurer that has built on one of behavioral economics’ most powerful insights: “Losses loom larger than gains.” Starting from this premises, the insurer created more than 20 nudges and tested them on a large scale—in more than 7,500 cases of breakdown assistance. In one such case, the insurer’s service representatives described partner repair shops as “the natural, default choice, framing the benefits as something that would be lost if the customer went elsewhere—a subtle shift away from merely listing the advantages of choosing a partner repair shop.” The unexplored potential of microinsurance With particular focus on the smartphone — the main proxy of today’s customer — insurtech has introduced the concept of microinsurance: insurance policies of limited duration and contained costs available directly on the client’s smartphone with no paperwork. Currently, microinsurance covers around 135 million people, which represents about 5% of the entire market potential, with an average 10% annual growth rate. The risks covered by such solutions are the typical ones of the traditional insurance market: life, health, accidental death and disability and property insurance. Developing countries have economies that are generally based on farming and agriculture, and they cannot manage to cover all the needs of a growing population exclusively with the goods they produce. Approximately 70% of the world’s seven billion people live in poverty, which makes the case for insurance products like health and life, agricultural and property insurance, even catastrophe covers. An estimation of the potential market for insurance in developing countries is between 1.5 billion and three billion policies. Closing the protection gap Microfinance and microcredit, believed to have been originated at the Grameen Bank founded in Bangladesh in 1983, are commonly associated with poorer, developing countries and, by association, so is microinsurance. Nevertheless, the latter has a different kind of business potential. Microinsurance is not just a short-time insurance coverage at reduced cost for people in developing countries. It is an innovative way of selling insurance that is aligned with customer expectations while covering a specific need, at the right moment, at the right price, in a customer-centric approach – or so it should become. This type of insurance could help close the protection gap, both in developed countries and developing ones. The role of microfinance, in contrast, is to create “a world in which as many poor and near-poor households as possible have permanent access to an appropriate range of high-quality financial services, including not just credit but also savings, insurance and fund transfers.” Microcredit means providing credit services to those with low income. It is an extension of very small loans to impoverished borrowers who typically lack collateral, steady employment and a verifiable credit history. Provided that people who live on a low income are offered the right service, means and knowledge, they will become effective consumers of financial services. The MicroInsurance Centre estimates that in the next 10 years or so, the microinsurance market could grow to one billion policy-holders, representing a third of the potential projected 3 billion market. It is key not to take insurance demand for granted. Bringing the benefits of insurance Insurance often has a negative connotation in the developing world, which stops it from reaching more people. The market needs an innovative approach based on customer education and incentives. The advantages of having an insurance cover has to be clear in the minds of potential customers and, for that to be achieved, trust and information are very important. There are several mediums that can help in accomplishing this task: like agents on the field, TV and radio program plot lines, or even literacy campaigns. To create demand, other types of incentives can also be used, including tax exemptions, subsidies or compulsory cover. For microinsurance to function in a developing country, the products and the processes to be put in place must be simple, and the premiums need to be kept low. This can only be achieved if incumbents change their mindset and implement an efficient administrative strategy combined with the right distribution channels. Insurers will have to find the right business model and partners when approaching such markets and should consider less common mechanisms for controlling moral hazards, adverse selection and fraud. For example, proxy underwriting, group policies and waiting periods mitigate adverse selection. At first, investing in microinsurance might seem a bit reckless, but the returns are gradual over time: starting with reputational gains in the short term, knowledge in the medium term and growth in the long term. Moving toward smart lives Already more than half of the world’s population uses a mobile phone, and 34% of the total population are active mobile social users, with a 50% penetration for internet usage worldwide. Fewer and fewer people use fixed telephone lines, as mobile phones are the dominant means of communication, even in the developing world. According to a Pew Research Center survey, in the last two years there has been a significant increase in the number of people from developing nations who declare that they use the internet and own a smartphone. Moreover, in nearly every country, millennials (those aged between 18 and 34) are much more likely to be internet and smartphone users than those over 35 years of age. This phenomenon is characteristic of both advanced and emerging economies. Despite these trends, fewer than 5% of people with low income have access to insurance or to covers that they need. These qualities make underdeveloped countries an ideal market for the insurance industry to explore because they present some great opportunities. Relevance of Thaler’s nudge theory This takes us to microinsurance and what it has in common with the nudge theory. Insurance should adapt to the customers’ habits and their environment, so we believe the best way to do that is by selling microinsurance that has a short duration with a push approach. It’s called a push approach because the insurance seeks the client out and not vice-versa. This could be interpreted as a gentle nudge that arrives exactly when the client needs it, directly on his or her smartphone, offering protection against an immediate and perceivable potential risk. Machine learning and artificial intelligence (AI) have evolved to allow a detailed profiling of the potential customer and the context. See also: Big New Role for Microinsurance   As Thaler suggests in his book, the context makes everything and helps conclude the sale. By interpreting the variables that could influence the customer, a good AI-based solution should be able to capture the precise means and moments to deliver short-period insurance offers to truly interested users. The trick is to avoid annoying customers with offers that do not interest them directly, in the wrong moment. The answer is an AI-based solution that can correctly interpret different types of data coming from the customer (through use of apps, of the smartphone, of wearable devices connected to the smartphone and so on). Why nudge people toward microinsurance? Why is it so important to nudge potential clients into buying microinsurance coverage? Consider a common statement regarding the industry that has proven true over decades: “Insurance purchase is not exciting; insurance is sold, not bought!” That is precisely why need has to be stimulated, especially with the arrival of smartphone technology. The key to selling insurance to millennials and the whole “connected generation” is to reach them with the right message, at the right time, on a device where they swipe, tap and pinch 2,617 times a day: their smartphone. Companies should get customers’ attention by using the same channels that they use and talk to them in their “language.” Empowered by technology, members of this generation search out authentic services that they utilize across platforms and screens, whenever and wherever they can. This might just be the perfect moment to develop solutions that are able to nudge people into behaviors that can benefit them, offering short-term coverage for atypical situations that would otherwise remain uncovered. A good step toward closing the protection gap – if you look at it from an insurer’s perspective. Article originally published on Qrius. 

Of course, insurance advisers can’t save healthcare alone, but they will play a pivotal role. We must first recognize the key players:

• Employers (purchasers of healthcare via health insurance)
• Employees/dependents (consumers of healthcare)
• Physicians/hospitals/clinics (providers of healthcare)
• Insurance carriers (financiers of healthcare)
• Insurance brokers/advises (role varies dramatically)

To truly save healthcare will require collective change from at least four of these five groups. I’ll let you decide who may be the odd-player-out. By now, you are, or should be, aware of a new trend in the design of benefit programs: moving away from traditional carriers/networks and toward direct-pay programs where purchasers/consumers are contracting directly with the providers of care. While this approach has been producing real results for several years in isolated situations, the trend is still in its infancy. As you might expect, with some of the players' self-interests at play, its eventual maturity is anything but certain, and certainly not imminent. It is a path to maturity for which brokers/advisers need to be paving the way. In a comment he left on one of my LinkedIn updates, where I partially reflected on the emerging trend of these direct-pay programs, Robert Nelson, MD (spokesperson for the Georgia chapter of the Free Market Medical Association) made the following request: “I would love to hear the perspective from the supply side that actually performs the care and interfaces with brokers & TPAs on price-transparent direct contracts, from a position of owner (provider of service).” In response to Dr. Nelson, Dr. Keith Smith (medical director at Surgery Center of Oklahoma) observed: “The rate at which a physician (or facility like mine) transitions to a 100%-pure, non-insurance model will, and should, vary depending on the degree to which the local practice environment functions like a cartel. In areas of the country where large hospital systems and abusive carriers exist predominantly and work together, the speed with which a disruptor can achieve independence will be slower than in areas that are not so cartelized. "I am aware, however, of DPC (direct primary care) practices that have successfully launched in highly cartelized environments with tremendous success, partly because the physician(s) had decided that if their venture was unsuccessful they were going to quit practicing anyway.  At the Surgery Center of Oklahoma, we worked with insurance for years but do not at this time.  "Once a mutually beneficial arrangement with a self-funded employer (or a cash-paying individual) makes its entrance in a practice or facility, the abuses and coercion of the carriers cannot as easily be ignored or tolerated. One ‘win-win’ arrangement creates a desire for nothing but ‘win-win’ arrangements, and the journey to a pure model has begun.” See also: High-Performance Healthcare Solutions   Sean Kelley (president at Texas Free Market Surgery & MedSimple) then added the following observation: “I agree with Dr. Smith about the impact of market conditions on adoption of new, non-insurance, direct pay models. The cartels have erected competitive barriers over time with just this type of disruption in mind; the opacity at every level and supported by the entire cast of characters in the healthcare value chain are testaments to this fact. "(1) Most doctors want to see a new model emerge and will support it, some more energetically than others who fear a backlash or are at the end of their careers. DPCs have the most risk while independent specialists are able to straddle in our model and Dr. Smith’s.  "(2) Many broker/consultants desire change, though only a select few are risking their existing accounts; they are more likely to use a new direct pay model as a wedge to gain an edge with new prospects. "(3) Purchasers are unprepared for this type of disruption; the health plan data they get is highly summarized, making it impossible to compare what they currently pay for services to direct pay providers like Texas Free Market Surgery or Surgery Center of Oklahoma. Additionally, health plan purchase decision processes are mostly ad hoc, with multiple leaders holding tacit vetoes over direct pay contracting. "(4) Given this landscape, it takes years to create a few 'win-win' arrangements with the true innovative purchasers before the rest of the market will even start to pay attention. Many of the status-quo incumbents believe that almost any new model will eventually asphyxiate and go away. I firmly believe adoption of the direct pay model is mostly constrained by the demand or purchasing side. Purchasers hold the key; if there are enough purchasers, open and willing to enter into direct pay contracts with transparent, high-quality healthcare providers, most will react to the change and flock to the new direct pay model." For me, this was an unbelievably insightful exchange. Some of my key takeaways From Dr. Smith: In many markets, the providers of care and the insurance carriers operate in a cartel-like fashion to protect their own interest and to slow, if not outright halt, disruptive (direct-pay) innovations. However, once a provider is able to break the stranglehold of the “cartel” and experience a win-win with the purchasers/consumers of healthcare, this new structure is addictive, and the traditional approach becomes unacceptable. From Sean Kelley: He agrees that this cartel-type behavior is real and all too common. Both providers of care and brokers/advisers desire to see change take place but are afraid of its consequences on their respective practices. Many providers may only become drivers of the change as they approach the end of their careers, while many advisers will only become drivers when pursuing new business; they are not so willing to put existing client relationships at risk. Purchasers need access to THEIR data, a key to becoming comfortable in changing the way they make their purchasing decisions. The rate at which the direct pay trend reaches maturity is largely dictated by demand from the purchasers. With increasing demand, and the subsequent success stories sure to follow, there will soon be a tipping point at which the rest of the market will follow suit. This is exciting stuff! We are on the cusp (okay, that may be overly optimistic, but we can kinda, sorta see the cusp) of fixing one of the most challenging issues facing our country and our economy. But the solution requires change, sharing and collaboration at a level that I’m not sure many industries have ever experienced. If Sean Kelley is correct, and I believe he is, the biggest key to driving this trend to maturity is demand from purchasers. And, the key to increasing that demand is education of those purchasers. This is where brokers/advisers become the linchpin Advisers, your job as educators for your clients about how to most effectively finance the purchase of healthcare has never been more critical. Of course, you can’t educate them until you have spent significant time studying the issues and solutions yourself. The curriculum for your education is already being built. But, just know, as with any emerging trend, the curriculum continues to evolve. There are conversations taking place every day on LinkedIn that should be required reading for you. There are many generously sharing their ideas and experiences online. In addition to the people already mentioned above, here are a few others to follow to help get you connected to the larger community working to drive these changes in the healthcare system:

• Dave Chase
• Jeff Bernhard
• Adam Russo
• Alex Lickerman
• Dutch Rojas
• Art Baldwin
• Nick (Joseph) Heinen M.D.
• Suzy Johnson
• Josh Butler
• Rachel Miner
• Adam Berkowitz
• Megan Cook
• John Sbrocco
• Andy Neary
• Rina Tikia
• Mick Rogers
• Karen Kirkpatrick

And members of our Q4iNetwork who are deeply involved:

• David Contorno
• Bret Brummitt
• Joe Cacciatore
• Tom DiLiegro
• Robson Baker
• Cary Goss
• Tim Doherty
• Taylor Lindsey

In addition to the daily, online conversations, you NEED to read Dave Chase’s book, “CEO’s Guide to Restoring the American Dream.” Before we are truly prepared to educate the purchasers, there is a lot of collaboration that needs to take place within and between the groups of interested parties. See also: Healthcare: Need for Transparency   Providers of care need to collaborate and communicate with one another to ensure the right access to care and infrastructure are in place. Benefit advisers need to collaborate and communicate with one another to ensure there is the necessary critical mass taking this approach to their respective clients. And, the providers and advisers must collaborate and communicate with one another to help make this transformation of healthcare as smooth as possible for the purchasers. Change is never easy, but this change comes with particularly complex challenges. Not the least of which is changing a purchasing pattern that drives one-sixth of our economy. This change can’t happen in a vacuum (one employer at a time) if it is to be sustainable and rapid. We have to ensure it scales, and scales quickly. As my friend Josh Butler recently observed, change is only scalable through collaboration. All interested parties must come together as part of the solution or find themselves on the outside, victims of the solution. This article originally appeared on Q4intel.com.

As insurers undertake digital transformation programs, many rightly turn to the claims function. Claims is a very good candidate for such initiatives because of its importance to the relationship between customers and their insurers. Claimants and insurers both want speedy and fair resolution, based on clear lanes of direct and personalized service. A data-driven, analytics-enabled claims process can satisfy the objectives of all parties. Continuous improvement to customer experience in claims is critical to any strategy. After all, claims are a real “moment of truth” for insurers, with meaningful impacts on outcomes and customer loyalty. Insurers that craft the right strategies and deploy the right mix of digital technologies will be able to turn their claims operations into a source of competitive advantage, market differentiation and brand perception. While advanced technologies such as robotic process automation (RPA) and artificial intelligence (AI) are very much part of the long-term transformation story, there is much insurers can do that will generate immediate benefits. What matters to claimants — and how to deliver EY’s insurance consumer research confirms that speed, efficiency and transparency are among the most important characteristics of a quality claims experience. Better data and analysis can help streamline steps in the claims process, setting the foundation for an enhanced experience. Those analytics also set the foundation for the future where many claims will be resolved via “no-touch” processes. See also: 4 Ways That Digital Fuels Growth   Insurers seeking to automate their claims processes or to achieve straight-through processing for basic claims have multiple options, including:

• Advanced telematics data (including video imagery) can be instantaneously captured during an automobile accident and downloaded from the cloud to automatically trigger a first notification of loss (FNOL) entry. Underwriters can “score” the data to determine the extent of loss relative to the automobile’s current value.
• Drones and satellites can survey damage and collect information about property damage to initiate claims before a homeowner makes contact.
• Via intuitive apps or other interfaces, insureds can submit photos of damage to their homes or vehicles to initiate the claims process, provided there is no sign of fraudulent behavior (which analytics programs can evaluate).
• Property and casualty (P&C) insurers may use historical repair data to dramatically decrease estimating times for different types of vehicles and homes. They may also better manage repair costs and quality based on deeper analysis of these data sets.
• AI may be used in combination with social media and other data to scan claims for the likelihood of fraudulent behavior.

Insurers also have good options when it comes to personalizing service, which include:

• Voice analytics that can assess customer sentiment during phone calls, with appropriate classification and prioritization of resolution.
• Behavioral analytics that can be applied to model likely customer needs and identify high-value policyholders or those likely to dispute a claim.
• Analyses of customer records that can identify claimants facing renewal as well as good candidates for purchasing additional products.

A redesigned claims experience can pay immediate dividends (e.g., lower processing costs, improving claims resolutions or higher renewal rates). In all of them, insurers can engage at key points during the claims life cycle, with accurate and consistent information delivered on a timely and transparent basis. At the same time, claims teams can focus on high-value interactions, high-risk claims and other exceptions. The path toward a better claims experience No matter where insurers fall on the maturity curve today, there is much they can do to transform the claims process. The path to success begins with a series of well-thought-out steps designed to produce useful learning and incremental value. Huge investments in new technology or large teams of data scientists are not required for substantial improvements. Organizational and cultural factors are also part of the claims transformation equation. Insurers should endeavor to integrate third-party data (such as medical claims, consumer credit and weather data) with existing records. They also have the opportunity to pilot the use of automated notifications via chatbots and to encourage customers to submit photos of damage. While taking these initial tactical steps, they can begin building the business case for, and perhaps even pilot, more advanced capabilities, such as “no-touch” claims handling for specific products, regions, claims types or payments. Insurers in the intermediate phases of their digital transformation journey should consider expanding automated claims handling to more claims types and larger amounts, broaden their use of chatbots for communication and seek to integrate more external data sources. They can also deploy drones as “adjusters” and establish analytics Centers of Excellence in claims. More mature organizations will look to leverage new data storage and management technologies as the basis for advanced analytics and real-time visualization. They may also strengthen antifraud efforts by implementing machine learning. The most forward-looking insurers may build out data science teams to probe large and diverse data sets stored in analytics ecosystems. Similarly, they may expand claims volumes handled via RPA-enabled straight-through processing and evaluate medical treatments or repair effectiveness against leading practices. See also: Digital Transformation: How the CEO Thinks   As claims organizations become more digital, the benefits of additional data and more effective analytics should extend beyond the customer experience. Machine learning and visualization techniques can help assess and predict claims risk with greater accuracy and certainty. They also provide a consistent claims handling approach relative to unbiased reserving, litigation, subrogation and other claims processes. It is worth noting that technology enhancements alone will not produce a claims organization for the digital era. A cultural willingness to embrace change also matters. Many insurers must overcome risk-averse cultures to encourage experimentation and “fast failures” in the spirit of learning what works best for their culture and customers. How do they do that? Test-and-learn approaches are a good start for insurers with limited digital capabilities. Pilot programs for automated claims processing and bot-driven notification systems are an ideal place for many organizations to start. Customer experience is everywhere In the digital era, where customers have been trained to expect real-time access to data and personalized service, the stakes for the claimant customer experience have been raised. Insurers must learn to deliver what customers want and expect — and deliver it efficiently, accurately and quickly. Digital transformation makes it possible, while offering insurers significant upside in terms of lower costs, increased customer loyalty and reduced risk of fraud.

Intuitively, stents make sense. If you’ve got occasional chest pain due to reduced blood flow to your heart, having a stent—a thin mesh tube inserted into a coronary artery to hold it open—is a seemingly logical solution. Half a million of these procedures, called angioplasties, are performed every year, at a cost of roughly $20,000 apiece. Alas, sometimes hard data trumps intuition. Recently, a landmark “sham surgery” study showed these procedures don’t make a difference in people with stable angina and a single narrow coronary artery. Stents are inserted using a catheter. In this study, 200 people with chest pain who had single vessel disease had the catheter inserted. Half of them got a stent, and half did not (that’s the sham arm of the study). And the envelope please… Six weeks after the procedure, there was no real difference in the patients, either in chest pain or performance on treadmill tests. In other words, the placebo surgery did just as well as the real thing. While these results were described as “unbelievable” by some cardiologists, they are not much of a stretch from what we already knew about stenting. Even five years ago, the New York Times reported on research that found No Extra Benefits Are Seen in Stents for Coronary Artery Disease in patients with stable angina. That article also reported there was an “insignificant difference” between people who have had stents inserted and those who didn’t. A cardiologist and professor of medicine at Yale told the New York Times, “When people are making decisions, it’s important to disclose to them that this procedure [stenting]—outside of an emergency—is not known to be life-saving or to prevent heart attacks,” adding, “the vast majority of people who have this procedure have the expectation that it will help them live longer. That belief is out of alignment with the evidence.” See also: Global Trend Map No. 4: Industry Health   The good news is that we know that there are more conservative measures that can slow or reverse heart disease, include quitting smoking, exercising more, improving your diet and losing weight if possible. There are a range of safe and effective drugs that can help reduce chest pain as well as your risk of a heart attack. Although rare, there are some serious risks with angioplasty, such as bleeding from the site of the incision used to insert the catheter, damage to the blood vessel itself, irregular heartbeats and damage to the kidneys caused by the dye used. The risks of complications are low, but why would you take any risk, endure an uncomfortable recovery and pay a substantial co-pay or deductible, if there is no evidence of benefit? Like many medical procedures, the amount of unneeded and unnecessary stenting is a byproduct of the healthcare system’s financial structure that rewards doing more procedures, when doing less is often wiser and certainly cheaper. Sometimes the best procedure is none at all.

Parties sometimes want to put one number on the table without specifying how much of that number may represent permanent disability (PD), future medical care or any other issue in dispute. There are pluses and minuses to this approach. Benefits of Slicing A typical workers' compensation mediation requires resolution of multiple issues, each of which is subject to a separate evaluation calculation. Often there are sub-issues. For example, in calculating PD, not only is the disability percentage up for discussion, but perhaps also the average weekly wage or dates when compensation should or should not have been paid as temporary disability (TD). See also: Tips on Mediation in Workers’ Comp   Drilling down to the reason for disagreement on each issue can be enlightening. One side may have an “Aha!” moment when they finally catch on to why the parties have been at odds. Before mediation, they may have negotiated without understanding the other’s motivation. When negotiations are stalled, slicing can shift the parties’ focus. Slicing can produce forward movement when negotiations are stalled. Focusing on individual issues may resolve some issues while allowing parties to litigate only the remaining disputed issues. Sometimes resolution of a single issue, such as which medical treatment will be authorized, leads to parties adjourning the mediation to test the good faith of the adversary as well as the mediation process. After this initial hurdle, parties can return to mediation. The Benefit of the Single Number Offer/Demand Presenting a single number allows a negotiator to “log roll.” When evaluating for settlement, a negotiator can borrow from one column where the argument is strong to shore up the evaluation of another issue where success is not so certain. By presenting a single number, the negotiator minimizes argument about a single issue and leaves it up to the offer recipient to parse the figure among the issues. See also: How to Know When a Claim Should Settle  

I cringed took when I heard Richard Branson ask the film's media rep, "Is there any way we can combine these last two interviews?" I was waiting in the lobby of Virgin's New York offices to talk with Richard Branson about "Don't Look Down," the documentary about his record-breaking transatlantic and transpacific hot air balloon voyages. Already that morning he had appeared on "CBS This Morning," exercised with NYC school children, met with the Virgin team and conducted a series of other interviews. "We could," she said, "but Jeff Haden from Inc. magazine is next..." "Oh," he said. "I've been looking forward to speaking with Jeff. Let's not combine them after all." Do I believe Branson actually knew who I was? Heck no. But I do believe, out of the corner of his eye, he glimpsed me standing there, and chose courtesy over expediency. Classy move. A couple of minutes later I was ushered into a conference room. Branson stood to introduce himself and then sank heavily back into his chair. As I took my seat, a staffer placed a sandwich beside him. He smiled and looked apologetic. "It's been a long day, and I'm famished," he said. "Please, feel free," I said. "I totally understand. In fact, I once brought my lunch to a job interview." (I actually did.) He smiled. "Did you get the job?" he asked. "Oh, hell no," I said, and we both laughed. See also: The Unicorn Hiding in Plain Sight   "Well, I would like to eat, but I can't unless you join me," he said, offering me half of his sandwich. "No thanks," I said. "I'm fine. But I would love for you to go ahead, because I wanted our conversation to be casual and not feel like an interview." He paused. "I really must insist," he said. "I won't be able to eat unless you join me." Who says "no" twice to Sir Richard? Not me. So I took small bites of my half, while he dug in to his. For a moment, imagine you're Richard Branson. You run dozens of different companies. (Shoot, you're creating a commercial spaceline.) You correspond with world leaders. You're a philanthropist and humanitarian and adventurer. You're near the top of every business writer's interview wish list. Hundreds of people need, and thousands of people want, a moment of your time. Yet one day you notice a guy you don't know in your peripheral vision, and no matter how busy or tired you feel and no matter how pressing other matters may be, you decide to be gracious -- not because you have to, not because you're expected to, but simply because you want to. The next time a person asks for your help, offer to do a little more than requested. The next time you see a person who seems unsure, hesitant or feeling out of place, take the time to help the person feel more comfortable. As Maya Angelou says, "People will forget what you said. People will forget what you did. But people will never forget how you made them feel." I still remember what we talked about... but what I remember most about Sir Richard is how he made me feel. If you want to make a great impression on the people you meet, that's the perfect place to start. See also: What the 3 Little Pigs Teach Us   My new book, The Motivation Myth: How High Achievers Really Set Themselves Up To Win, will be published on Jan. 9 by Penguin Random House. It overturns the idea that motivation leads to success; instead, small successes lead to constant motivation and let you achieve your biggest goals -- while also having more fun. And it lays out strategies guaranteed to create those successes. Pre-order it now, and you'll be my new best friend.