You are more likely to be reading this on a mobile device than on a laptop or desktop, and almost certainly not on a printed page: and therein lies the source of the problem. A Pew survey from June 2017 revealed that 85% of U.S. adults now get their news on a mobile device at least some of the time, up from 72% last year and 54% in 2013. At the outset here let me be clear – I am not a Luddite, anything but! I am an eager and early adopter and user of gadgets and technology. I owned one of the very first mobile car phones long before cellphones existed. I am, however, concerned about our addiction to some newer technologies, particularly smartphones, and the dangerous and pervasive distractions they are creating. We are quickly becoming permanently distracted by technology, whether in motion or stationery – and what may be even more disconcerting is that we know it and most of us are doing nothing to stop it. Dr. Sally Andrews, a psychologist at Nottingham Trent University in the U.K., conducted research that shows that “a lot of smartphone use seems to be habitual, automatic behaviors that we have no awareness of.” Smartphones have come to occupy what is referred to as “privileged attentional space,” comparable with the sound of our own names. According to Pew Research Center, more than three-quarters of Americans own a smartphone. In 2016, American consumers spent an average of five hours a day on their smartphones, nearly double the amount of time from 2013 , research firm Flurry Analytics says. We habitually check our smartphones hundreds of times a day, from the moment we awake until bedtime. See also: How Technology Drives a ‘New Normal’   Of the many distractions that permeate our lives, distracted driving is especially dangerous. Distracted driving has become a national safety crisis because of the rise of smartphones. According to statistics from the U.S. Department of Transportation, 10% of fatal crashes, 15% of injury crashes and 14% of all police-reported motor vehicle traffic crashes were attributed to distracted driving. In 2015, 3,477 people were killed because of distracted driving, and 391,000 were injured. Total auto fatalities grew 5.6% to more than 37,000 in the U.S. last year. In spite of all the new driver assistance and accident avoidance technologies appearing in newer vehicles, auto accidents have increased 14% over the past two years — the biggest increase in more than 50 years, according to the National Safety Council. Distracted driving — and the ubiquitous use of smartphones behind the wheel — is one of the leading causes of this deadly trend. Too many drivers are texting, talking, surfing the web and using social media and apps on their smartphones while driving. New sources of distraction appear almost daily and are adopted without hesitation. Case in point: A new in-car app from General Motors called Marketplace lets drivers order coffee and browse deals while behind the wheel. It’s shocking that it even exists. A recent survey conducted by Harris Poll on behalf of the Property Casualty Insurers Association of America (PCI) reveals that 92% of respondents perceive that distracted driving, including the use of a cell phone, talking to passengers, eating and adjusting the radio is the No. 1 contributor (92%) to the increase in crashes across the country. As professionals, we struggle with our work/life balance, and we suffer from scattered demands on our attention. We all strive to be more productive, but mobile technology is not only failing to help us accomplish that, but it is actually making it worse. To be blunt, smartphones are making people stupid! More accurately, smartphones are addictive and distracting, and they make it harder for us to pay attention to what we are doing. Adding to all of this, 29 states and the District of Columbia currently have laws legalizing marijuana in some form (medical or recreational), and, according to the Highway Loss Data Institute, collision rates were about 3% higher in three states that have approved the sale of marijuana for recreational use – Colorado, Oregon and Washington. There is no reason to expect this new contributor to distracted driving to do anything but grow. Work-related pressures also play a part in distracted driving. A recent survey conducted by Harris Poll for Travelers Insurance found that 43% of respondents who drive were in touch with work either by talking on the telephone (38%); texting (17%) or emailing (10%). These drivers admit to using the phone while driving, often because they feel the need to be available at all hours or don’t want to upset the boss, a survey has found. And distracted driving is only the beginning; we are already seeing technology distractions creeping into other aspects of our daily lives; wearables and smart-home, voice-activated, internet-connected devices are proliferating – and interrupting to notify us of something we may or may not care about. In any event, they are distracting. There are solutions to distracted driving, and we should embrace, promote and adopt them. A new generation of telematics service providers are partnering with auto insurance companies to offer distracted driving prevention solutions on mobile apps. Mobile device manufacturers are beginning to build in safeguards. Apple’s new mobile operating system iOS 11 features a long overdue “Do Not Disturb While Driving” mode to combat the dangerous practice of texting from behind the wheel, while also switching off other alerts that entice people to look at their phones while driving. And the adoption of digital voice assistants is rising, although they do not completely eliminate distracted driving. Legislation against distracted driving, adherence and enforcement varies widely, and we should continue to support it and ensure that penalties are severe and enforcement efforts are strict. No states ban all cell phone use, but 47 states plus D.C. ban text messaging for all drivers. Thirty-eight states and D.C. ban all cell phone use by teen drivers, and 21 states and D.C. prohibit any cell phone use for school bus drivers. Fourteen states prohibit all drivers from using hand-held phones while driving. However, these regulations are not fully observed or enforced. See also: How Technology Amplifies Evil   Of course, there is our own self-control and just plain common sense. Why not just turn off our smartphones when we get into a vehicle we are about to drive? In Silicon Valley, some tech leaders are predicting a new trend will become widespread in response to the problem – “smartphone fasting” — going without a smartphone for varying lengths of time. But just think – technology also promises us self-driving cars at some nearby future point, at which point we can use our smartphones 100% of the time if we want while in transit. That resolves distracted driving, but the larger issue of technology distraction from family, friends and our daily lives remains to be addressed.

Property and casualty insurers understand that technology is continuously reshaping consumer expectations and exerting pressure to change the way they do business. In our research, 73% of insurers are seeing demand for digital distribution, but delivering online buying is only the tip of the iceberg when it comes to meeting consumer experience standards. The most complicated task for insurers comes in connecting the multitude of back-end systems required to run existing operations, into a connected web that facilitates the lightning fast exchange of information necessary for today’s digital age. Standardizing the Customer Experience When it comes to creating a consistent customer experience, insurers face new and evolving challenges. In the old world order, before consumers demanded digital engagement, customer relationship management was simpler. “The insurance industry was once dominated by policy-centric, inside-out thinking,” wrote Mark Breading, partner at Strategy Meets Action (SMA). “Relationships were simple – a policyholder was matched with a policy and perhaps an agent/producer. Much of the executive focus and corresponding technology investment was designed to improve operational efficiencies and manage the portfolio of risks.” To that end, insurers implemented complex technology solutions to manage customer relationships and insurance policies. CRM systems stored information related to the customer’s contact information, coverages, product information, recent transactions and account balances. With little visibility between CRM systems and policy administration systems, they did nothing to help agents when it came time to quote and issue policies. As agents spoke with consumers about coverage such as auto, information was entered into a policy administration system related to that product. A year later, when the customer phoned the agent to get a quote on coverage for a newly purchased property, the agent could view customer data from within the CRM system related to auto insurance, including the policies already in effect, but the information wasn’t visible through the policy admin system related to homeowners coverage. To make matters worse, data from the auto policy administration system was also inaccessible to the homeowners’ system, so agents had no way to use existing data to facilitate a faster response to the customer’s request. Instead, the agent had to gather and re-enter customer data into the policy silo to quote, bind and issue the homeowners coverage. The problem for many insurers is that these disparate and disconnected systems still exist today, with the addition of digital channels of engagement to further complicate the matter of meeting consumer experience standards. Digital Demands Require United Systems According to Breading, insurers are placing a high priority on gaining digital capabilities. “One of the key findings of our recent research on strategic initiatives for 2017 is that digital is gaining more momentum than any of the 16 initiatives we have been tracking,” Breading wrote in a recent blog. “Strategies to become a digital insurer have now reached a high penetration in the industry, with 72% of insurers now claiming that they have this initiative underway.” See also: 3 Ways AI Improves P&C Economics   Digital channels create another layer for insurers to address in the customer-centric movement. Lack of visibility between CRM, policy admin and agency management systems creates roadblocks and bottlenecks in the consumer experience. Insurers will have one record on a customer as a homeowners lead, and this will live in a separate silo than a lead on the same customer seeking auto coverage. To make matters worse, these databases often disagree. Currently, many insurers have no way of combining data across operational silos or of tying information from third-party vendors, such as credit agencies, into the real-time actionable insights necessary for digital engagement. Agency Management Suffers Too While 74% of consumers start an insurance buying transaction online, J.D. Power reports that 22% will move to a consumer-facing call center to finish the purchase. Consumer-facing call center agents are responsible for assisting consumers with questions generated during web-based engagements and for reaching out to consumers who start quotes online without completing the transaction, but agency management systems often provide little visibility into activity initiated through digital channels. Agents are required to re-enter information already provided by consumers online and to move from one policy admin system to another to quote, bind and issue multiple policies. The opportunities for error increases as information is re-entered, and customer dissatisfaction rises. Without clear insight into digital activity, agents lack information that could guide measurable follow-up, such as when a consumer abandons an application or leaves the online storefront after receiving a quote. Agent productivity suffers as well without tools to track web-based activity and prioritize leads and follow up. According to Breading, insurers are limited by a customer view that delivers only “an awareness of the current and former products owned by the customer, the performance of those products, information related to product needs of the customer and perhaps some relationship information like the agent involved.” To deliver streamlined interactions and facilitate engagement, as well as the instant insights required to meet consumer expectations for immediacy, insurers need a single view of the customer. Breading calls this the ultimate 360-degree view, where every employee and system has the information necessary to engage in informed interactions with the customer in real time. Gaining a Single View of the Customer To gain this 360-degree view of the customer, insurers need visibility across all back-end systems from a central vantage point. According to Novarica’s research, 70% of carriers are in the midst of implementing new core systems to unite these operational silos. Rick Huckstep, industry influencer and chairman of the Digital Insurer, sees a problem with this approach. Core systems are expensive, take years to implement and are difficult to adapt to a changing environment. “Often, by the time these large IT implementations are finished, they are already a legacy system,” Huckstep said. Instead of investing in core systems replacements, Huckstep recommends a two-speed approach. Employing insurtech platforms, insurers can capitalize on investments made in IT legacy systems by building the agility and responsiveness necessary for online distribution into the digital front end. “Insurtech’s core systems are like the latest generation of robotic armed patrol boats — they are agile, automated and cheaper, have a shorter cycle time to commission and are task-specific,” Huckstep said. By breaking insurer operations into simplified layers, we can gain a better understanding for the role of Insurtech digital distribution platforms. The top layer is customer-facing. This is where agents reside as well as the online storefront offering digital engagement. On the bottom layer are the core systems that make it possible for the insurer to buy and sell policies and manage customer or agent relationships. In between, we have the digital distribution platform. As customers enter the online storefront and provide personal information, it’s the platform capabilities that enable application prefill by pulling data from third-party resources, depositing it automatically into policy administration, agency management and CRM systems. Because the platform has a single, cross-system view, appetite is determined and quotes are provided in seconds. Platform analytics even use carrier data in conjunction with customer information to provide real-time product recommendations. It’s a similar situation when consumers phone the call center during an online transaction. Because the platform provides a single vantage point to all customer and system information, the agent can see not only the customer data that has been entered into the policy admin system, but where the consumer is in the application process. Agents are able to pick up exactly where the consumer left off and realize the same benefits of automation when determining policy eligibility, providing quotes and binding and issuing coverage. Transaction speed and efficiency are maximized, giving consumers a seamless cross-channel experience. Agency management takes a step forward in the platform economy as well, flagging consumers who fail to make it through the quote-to-issue lifecycle, prioritizing work flows and supporting more frequent customer communications by tracking activity across product and operational silos. Entering the Era of “Platformification” Accenture says that 76% of executives see partnerships as critical to their competitive advantage. Platform-based business models are the goal of 94%, creating ecosystems where insurers and outside digital resources join forces in synergistic relationships that promote asymmetric growth. “The ‘Platformification’ trend is about leveraging the power of platforms and APIs in open environments, to create new marketplaces and new ecosystems,” said Sebastien Meunier, insurance industry influencer. Platformification is a growing part of insurance. As insurers embrace relationships with insurtech providers on digital distribution platforms that unite back-end systems and provide a single vantage point to the information contained therein, a more customer-centric environment is rapidly created. A top 10 insurer that offers products direct-to-consumer through digital and agent channels recently partnered with an insurtech digital distribution platform provider. The platform united silos and allowed internal agents to quote, bind and issue home and auto products from a single application. See also: Possibilities for AI in P&C Insurance   Three years into the agreement, the platform was managing as many as 4,000 quotes a day, and the number of policies sold had more than tripled through agency channels. Considering the success, the insurer made the decision to start a pilot program, offering the same advantages of seamless product bundling directly to consumers in select states. Within the first three months, the insurer recognized 50% growth in bundled business over the same quarter the prior year. The insurer could have continued the trial, but given the benefits to consumers and the bottom-line, moved quickly to a full rollout, offering the advantages to customers nationwide. Uniting back-end systems to provide a single view of the customer is critical to revenue growth and customer retention in the digital age. How is your organization tackling the challenge of siloed operations?

McKinsey research has found that insurance companies with better customer experiences grow faster and more profitably. In 2016, 85% of insurers reported customer engagement and experience as a top strategic initiative for their companies. Yet the insurance industry continues to lag behind other industries when it comes to meeting customer expectations, inhibited by complicated regulatory requirements and deeply entrenched cultures of “business as usual.” Some companies–many of them startups–are setting the gold standard when it comes to customer experience in insurance, and are paving the way for the industry’s biggest insurers to either fall in line, or risk losing out to smaller competitors with better experiences. Through a combination of new business models, clever uses of emerging technology and deep understanding of customer journeys, these four companies are leading the pack when it comes to delivering on fantastic experiences: 1. Slice - Creating insurance products for new realities. Slice launched earlier this year and is currently operating in 13 states. The business model is based on the understanding that, in the new sharing economy, the needs of the insured have changed dramatically and that traditional homeowners' or renters' insurance policies don’t suffice for people using sites like AirBnB or HomeAway to rent out their homes. According to Emily Kosick, Slice’s managing director of marketing, many home-share hosts don’t realize that, when renting out their homes, traditional insurance policies don’t cover them. When something happens, they are frustrated, angry and despondent when they realize they are not covered. Slice’s MO is to create awareness around this issue, then offer a simple solution. In doing so, Slice can establish trust with consumers while giving them something they want and need. Slice provides home-share hosts the ability to easily purchase insurance for their property, as they need it. Policies run as little as $4 a night! The on-demand model allows hosts renting out their homes on AirBnB or elsewhere to automatically (or at the tap of a button) add an insurance policy to the rental that will cover the length of time–up to the minute–that their home is being rented. The policy is paid for once Slice receives payment from the renter, ensuring a frictionless transaction that requires very little effort on the part of the customer. See also: Who Controls Your Customer Experience?   Slice’s approach to insurance provides an excellent example of how insurers can strive to become more agile and develop capacities to launch unique products that rapidly respond to changes in the market and in customer behavior. Had large insurance companies that were already providing homeowners' and renters' insurance been more agile and customer-focused, paying attention to this need and responding rapidly with a new product, the need for companies like Slice to emerge would have never have arisen in the first place. 2. Lemonade - Practicing the golden rule. In a recent interview, Lemonade’s Chief Behavior Officer Dan Ariely remarked that, “If you tried to create a system to bring about the worst in humans, it would look a lot like the insurance of today.” Lemonade wants to fix the insurance industry, and in doing so has built a business model on a behavioral premise supported by scientific research: that if people feel as if they are trusted, they are more like to behave honestly. In an industry where 24% of people say it's okay to pad an insurance claim, this premise is revolutionary. So how does Lemonade get its customers to trust it? First, by offering low premiums–as little as $5 a month–and providing complete transparency around how those premiums are generated. Lemonade can also bind a policy for a customer in less than a minute. Furthermore, Lemonade has a policy of paying claims quickly–in as little as three seconds–a far cry from how most insurance companies operate today. When claims are not resolved immediately, they can typically be resolved easily via the company’s chatbot, Maya, or through a customer service representative. But perhaps the most significant way that Lemonade is generating trust with its customers is through its business model. Unlike other insurance companies, which keep the difference between premiums and claims for themselves, Lemonade takes any money that is not used for claims (after taking 20% of the premium for expenses and profit) is donated to a charity of the customer’s choosing. Lemonade just made its first donation of $53,174. Lemonade’s approach to insurance is, unlike so many insurers out there, fundamentally customer-centric. But CEO Daniel Schreiber is also quick to point out that, although Lemonade donates a portion of its revenues to charities, its giveback is not about generosity, it is about business. If Lemonade has anything to teach the industry, it is this: that the golden rule of treating others as you want to be treated, holds true, even in business. 3. State Farm - Anticipating trends and investing in cutting-edge technology. The auto insurance industry has been one of the fastest to adapt to the new customer experience landscape, being early adopters of IoT (internet of things), using telematics to pave the path toward usage-based insurance (UBI) models that we now see startups like Metromile taking advantage of. While Progressive was the first to launch a wireless telematics device, State Farm is now the leading auto insurer, its telematics device being tied to monetary rewards that give drivers financial incentives to drive more safely. The company also has a driver feedback app, which, as the name suggests, provides drivers feedback on their driving performance, with the intent of helping drivers become safer drivers, which for State  Farm, equals money. By anticipating a trend, and understanding the importance of the connected car and IoT early on, State Farm has been able to keep pace with startups and has reserved a seat at the top–above popular auto insurers like Progressive and Geico–at least for now. If nothing else, unlike most traditional insurers, auto insurance companies like State Farm and Progressive have been paving the way for the startups when it comes to innovation, rather than the other way around. For now, this investment in customer experience is paying off. J.D Powers 2017 U.S Auto Insurance Study shows that, even as premiums increased for customers in 2017, overall customer satisfaction has skyrocketed. 4. Next Insurance - Automating for people, and for profit. Next Insurance believes that a disconnect between the carrier and the customer is at the heart of the insurance industry’s digital transformation problem. In essence, it’s a communication problem, according to Sofya Pogreb, Next Insurance CEO. The people making decisions in insurance don’t have contact with the end customer. So while they are smart, experienced people, they are not necessarily making decisions based on the actual customer needs. Next Insurance sells insurance policies to small-business owners, and the goal is to do something that Next believes no other insurer is doing–using AI and machine learning to create “nuanced” and “targeted” policies to meet specific needs. An important aspect of what makes the approach unusual is that, instead of trying to replace agents altogether, Next is more interested in automating certain aspects of what agents do, to free their expertise to be put to better use: “I would love to see agents leveraged for their expertise rather than as manual workers,” Pogreb told Insurance Business Magazine. “Today, in many cases, the agent is passing paperwork around. There are other ways to do that – let’s do that online, let’s do that in an automated way. And then where expertise is truly wanted by the customer, let’s make an agent available.” See also: Smart Things and the Customer Experience   While innovative business models and cutting-edge technology will both be important to the insurance industry of the future, creating fantastic customer experiences ultimately requires one thing: the ability for insurance companies–executives, agents and everyone in between–to put themselves in their customers' shoes. It's is a simple solution, but accomplishing it is easier said than done. For larger companies, to do so requires both cultural and structural change that can be difficult to implement on a large scale, but will be absolutely necessary to their success in the future. Paying attention to how innovative companies are already doing so is a first step; finding ways to bring about this kind of change from within is an ambitious next step but should be the aim of every insurance company looking to advance into the industry of the future. This article first appeared on the Cake & Arrow website, here. To learn more about how you can bring about the kind of cultural and institutional change needed to deliver true value to your customers, download our recent white paper: A Step-by-Step Guide to Transforming Digital Culture and Making Your Organization Truly Customer Focused.

December is the perfect month to predict the key insurtech trends for the year to come and to think of New Year’s resolutions: what specific trends to tap into to enhance the digital strategies. We believe these trends should relate to what an insurance carrier would like to accomplish, to what a winning insurance firm of the future would look like. We believe that that such winning insurance firms will have four essential elements. 1: They are always part of their customers’ lives Fast-changing customer behavior and new market dynamics make it essential for insurance carriers to increase the contact frequency and provide more value in these contacts. Fortunately, all sorts of connected devices offer an unprecedented entry into customers’ daily life. 2: They continuously build contextual ecosystems Adding value is about solving the real problem. People don’t want a mortgage; they want a nice house to live in. Insurance is usually just part of a solution, but rarely the entire solution to the real problem a customer is facing. To help solving the real problem insurers need to become more part of the context, and of the ecosystem of companies and organisations that play a part in that context. 3: They act ‘simply human’ With all sorts of new technologies being applied to digitise processes insurers run the risk of neglecting the feelings side of customer engagement. People crave for organisations that are human. The solution is to create ‘the best of both worlds’; to leverage technology to empower front liners. 4: They strive for operational excellence Digital transformation to improve operational excellence will continue to be top of the agenda in the years to come. And rightfully so. Yet, at the end of the day, digitalised processes and a lower cost base are table stakes. It is simply not enough to stay in sync with fast changing customer behaviour and new market dynamics. Operational excellence is essential, but it also a qualifier, not a winner. Engagement innovation needs to be built on top. This is where the previous three essential elements kick in. It is these four essential elements that drive our Top 10 Insurtech Trends for 2018; the key trends that set the Digital Insurance Agenda. We’ll illustrated each trend with insurtech solutions that featured at the 2017 DIA editions. Key words? Platforms and partnerships. Obviously, we’ll pay ample attention to this at DIA Amsterdam 2018 (May 16-17). Trend 1. Data-driven Services In order to really become part of customers’ daily lives new data streams from e.g. connected devices need to be turned into new insights and these new insights need to be turned into new propositions and services. This is where insurance carriers need to explore opportunities beyond their traditional primary process to really help solving the real problem that customers are facing. Many insurtechs are dedicated to supporting incumbents in these efforts. The Floow DIAmond Award winner The Floow (Sheffield, UK) designs telematics systems to make vehicles safer and cheaper for all. Their GoWithFloow (GWF) is a platform for car sharing. It is sort of the Airbnb in cars, including rating the owner or borrower of the car. But where the platform differs from other examples of car sharing and vehicle lending is the addition of The Floow telematics engine and scoring system which is integrated into the software. This means that when a driver borrows a car their behavior can be tracked using the smartphone-as-a-sensor capabilities. The Floow use this information to develop a score for the driver to help lenders decide who to lend their car to. The Floow is engaging with insurance companies to bring the proposition to market. This sort of capability will help meet changing mobility demands by creating a marketplace of vehicles. HeartShield HeartShield (Vienna, Austria) developed an artificial intelligence platform that uses patient data to recognize risk factors and determine whether someone is a potential candidate for a heart attack or heart failure in time. Instead of using 19th/20th century statistics, they allow computers to learn warnings signs autonomously using data from all sorts of devices that can measure heart rate; including smartphones, smart watches and clinical or portable ECGs. Peer-reviewed scientific papers show that the algorithms behind HeartShield outperform the best heart rate variability predictors in detecting heart disease, and is more reliable than blood test based risk scores in recognizing coronary artery disease. Trend 2. Invisible Insurance In banking we notice that more and more payments are becoming invisible. Think of machine to machine payments, of what Amazon is doing with Dash, and how you pay for a ride with Uber and for a song at iTunes. We see the same thing happening also in insurance. You purchase a product and there is already an insurance embedded in that. Customers purchasing the BMW i3 or the i8 are entitled to a seven-day free-of-charge, comprehensive car insurance from BMW Car Insurance. This is simply activated over the phone by the customer. Customers are then provided with an overview of insurance options available to them after their seven-day free policy has expired; all designed and backed by Allianz. Qover DIAmond Award winner Qover (Brussels, Belgium) have built an ‘Insurance as a Service’ platform to change the way insurance is designed, managed and distributed. Qover is a cover holder of Lloyd's of London and acts as a digital wholesaler of proprietary white label insurance. They target among others large non-insurance distributors; basically any business, from automotive brands and utility companies to ecommerce merchants and traditional retailers, to seamlessly integrate insurance into their products via open API's. See also: Insurtech: The Year in Review   Trend 3. Upstream Platforms Push strategies are becoming less and less effective. Pull is the name of the game. Pull is about understanding and solving the need behind the insurance solution and being present in that context. Insurers need to move upstream and be present in the context of specific life events and decisions, big and small. Pinganfang Ping An has adopted the strategy of the synergistic development of traditional and non-traditional businesses. Pinganfang.com for instance, is the largest real estate e-commerce platform in China and part of Ping An Group. Its business model integrates ‘real estate + internet + finance’ and seamlessly includes a wide range of financing services in the customer journey of buying a new home. Richard Sheng, director of branding & corporate communications Ping An Group in our book Reinventing Customer Engagement: “We are creating all sorts of portals in non-traditional domains such as home, health, car, but also food and entertainment. Each and every one of them are new business lines that create new value for themselves, as well as for Ping An. All these platforms have large numbers of users and interactions, and advanced data mining and precision marketing capabilities. When relevant, and at a logical moment, customers are brought into contact with Ping An's traditional banking and insurance activities. The new business lines are not only increasing their own value; by enlarging the total customer base and by allowing new synergies they also increase the value of the entire ecosystem of Ping An enterprises.” Abracar Abracar (Munich, Germany) was developed in 2016 as part of the Accelerator program of Allianz X and is the first spin-off of the incubator. The startup is Germany’s first professional car broker. They help car consumers to sell their car at the highest price without any effort. Abracar takes care of all steps of the selling process starting by creating a professional expert’s report, over 50 pictures, writing an attractive listing, filtering the potential buyers, negotiating the final price and preparing the contract. The car buyer benefits from the expert’s report, an Allianz warranty, financing solutions and competent consulting. Trend 4. Bancassurance Revival PSD2 is the new payment services directive by the EU. This directive makes it obligatory for banks to open up customer data to third parties. Originally, the intention was to increase the competition between banks to improve payment products, but it effectively creates opportunities to all sorts of third parties to provide new opt-in services to these customers. Although this is hardly on the radar screen of insurance carriers, we believe this will revamp the bancassurance model. Moving from bank partnerships for just distribution and using bank data in the marketing and underwriting processes to really being much closer to customers. When we interviewed Markus Pertlwieser, chief digital officer Deutsche Bank, at DIA Munich 2017 he agreed that the right PSD2 applications offer great opportunities to link insurance to a certain payment, making insurance much more individual and much more real time. Also at DIA Munich 2017, Vikas Chhariya, global head of digital partnerships AXA Group, mentioned Aadhaar, India’s national biometrics identity program, as an interesting platform. Banks need to comply, so that fingerprints will give hundreds of millions Indians access to financial services, including insurance. Strands Strands is a leading provider of Personal Financial Management solutions (PFM) for banks such as Barclays, BBVA and Deutsche Bank. PFM uses payments and other data to help bank customers understand their financial situation, give some tips how to better manage finances and prevent overdrafts, and improve wiser financial decision-making. PFM drives engagement between banks and their customers. Strands is actually a fintech rather than an insurtech. In the last few years the company has been investing a lot in the development of smart recommendation engines (using AI and Machine Learning) that continuously learn about the user financial behaviour and then proactively make contextual recommendations of financial products, including insurance. Let’s say you are 40 years old and you have no pension plan in place. Through a Siri-like PFM medium, the Strands PFM will intuitively decide to offer you a pension solution. SaveUp Munich Re’s Life Financial Solutions Business has developed a new variable annuity product concept called SaveUp. It's the first attempt to revolutionize the savings life insurance space in Europe, through new product offerings and an entirely new distribution channel via a smartphone app but it also supports distribution via banks. SaveUp is a simplified savings product suitable for online self-service sales and management via web and smartphones. It is packaged for young consumers as a guaranteed savings and investment offering, allowing them to participate in investment markets while maintaining the security of their chosen guaranteed amount. Trend 5. Innovation Multiplied In a recent study DIA academic partners Alexander Braun and Florian Schreiber (University of St. Gallen) argue that real innovations require more than just new technological improvements to unlock new economic value. It is about combinations of innovative new models. Now think about insurtechs working closely together, combining their ideas to come up with something that is even more innovative. Innovation multiplied. And that’s exactly what we already see taking place in the DIA community. KASKO + Picsure KASKO (London, UK) supports insurance companies by offering an API-powered agile insurance product platform that sits in between digital customer touchpoints and your legacy IT, taking internal IT off the critical path to product launch. Picsure (Munich, Germany) creates smart AI solutions for the insurance industry, in particular for object recognition, fraud detection and identity checking. KASKO and Picsure teamed up to create an innovative watch insurance product for Swiss insurer Baloise. Sentiance + Sureify Sentiance (Antwerp, Belgium) is a data science company turning IOT sensor data into rich insights about people’s behavior and real-time context. These insights enable insurance companies to understand how customers go through their everyday lives, discover and anticipate the moments that matter most, and adapt their engagement to real-world behavior and real-time context. Sureify Labs (Silicon Valley, USA) created a platform that engages a customer over their lifetime. Their Lifetime Platform is a set of cloud-based software applications that allow insurers to digitally engage with their policyholders via web, mobile and various personal health and device data sources. The platform drives customer loyalty, brand recognition and better customer experience. After winning the DIAmond Award earlier this year Sentiance won again at DIA Munich through their collaboration with Sureify. They demonstrated the wizardry of the Sentiance technology that extrapolates behavior insights from a diversity of mobile-user data, and then showed the full circle that Sureify provides by turning these insights into buying signals and engagement opportunities. Trend 6. Competitors Cooperate Innovation beyond digitising the current processes and thoroughly exploring the opportunities that insurtechs around the world have to offer require a certain scale. Only the few carriers have sufficient size and presence to do this all by themselves. Teaming up with other insurers is the solution. The ultimate in cooperation can be found in Germany. Twelve insurers, ranging from multinationals such as Allianz, Generali and Munich Re, to domestic players like Versicherungskammer Bayern, LV1871 and Nürnberger Versicherung, have all put money into WERK1; an incubator that already supports ten insurtechs, located in an old cookie factory in Munich. And because these insurers are convinced that it is about continuously developing a stronger ecosystem, they have launched Insurtech Hub Munich in July 2017. The Insurtech Hub Munich initiative is unprecedented, in terms that twelve insurance carriers, big and small, are working closely together with leading universities and research institutions, with the State of Bavaria and the City of Munich as well as with blue chip corporates from adjacent industries such as automotive, health care and cybersecurity. Our DIA database shows that 180 insurtechs have ties with Munich. To put that into perspective: California, where Silicon Valley is situated, host 160, according to Braun and Schreiber’s survey. In our view, that makes Munich the de facto insurtech capital of the world. The activities of Insurtech Hub Munich will strengthen that position even further. Trend 7. Network Effects Scale economies get an extra meaning. Scale benefits are not just about ever-growing efficiency in processes within the business. It's also about ever-growing added value through network effects. Network effects can for instance be created by leveraging the growth and activity of estLibraryablished allied platforms. PayPal, for instance, grew on top of eBay. Zhong An teamed up with Alibaba’s online shop Tao-Bao to create a shipping return policy seamlessly integrated into every transaction. They’re selling hundreds of millions policies. AXA Group engaged in partnerships with companies such as Alibaba, Uber and car sharing platform BlaBlaCar. Clearly a clever choice to profit from network effects. They’re all fast growing digital players; so AXA’s business with them will almost automatically grow as well. We mentioned in trend 2 that Qover is targeting large non-insurance distributors to seamlessly integrate insurance into their products via open API's. Also a perfect example of ‘how to create scale through network effects’. With insurtech becoming mainstream, the challenge is adoption at scale. Leveraging network effects is a great way to achieve this. Trend 8. Empathy Empowered According to many headlines algorithms are displacing human advisers, saving costs. We believe there is ample opportunity to create the best of both worlds by combining new digital technologies with human skills. To relate to their customers, financial institutions need to secure the feelings side. Humans inject emotion, empathy, passion, creativity, and can deviate from the procedure if needed. Deploying technology to empower human front liners such as brokers and agents results in better conversations, higher conversion and finally, greater solutions for customers. SaleMove SaleMove (New York City, USA) provides solutions for delivering a high-touch, in-person customer experience online. SaleMove enables for instance life insurance brokers to interact with their online customers in real-time through voice, video and collaborative browsing - leading to better conversations, higher customer satisfaction and increased conversions. Wefox DIAmond Award winner Wefox (Berlin, Germany) combines the personal advice of a traditional insurance business with modern app technology, thereby bringing together the evolved needs and expectations of customers, insurance brokers and insurance companies. Wefox’s long term vision is to pull the entire insurance industry, in particular brokers, into the digital age, leveraging to the max what digital has to offer. They are very successful with already more than 150.000 end customers and over 600 brokers in 3 countries. See also: Global Trend Map No. 2: Insurtech   Trend 9. Behavioral Economics The ongoing success of South African health insurer Discovery’s Vitality program is creating more and more awareness for intelligent combinations of data and behavioural economics. Adrian Gore, founder and CEO of Discovery, in our book Reinventing Customer Engagement: “If you promote healthier behaviour, you can offer more sustainable insurance. Behavioural science says that people need incentives to change. The Vitality program is a complete wellness system that tracks everything from physical activity to nutrition over the course of a person’s life. It combines engaging policyholders through personalized and regular interaction, motivating and incentivizing them to manage their wellness, live better and to make healthier choices through tailored programs.” Lemonade Lemonade (New York City, USA) offers homeowners and renters insurance. We like Lemonade so much because it is fully powered by artificial intelligence and behavioral economics. By replacing brokers and bureaucracy with bots and machine learning, Lemonade promises zero paperwork, instant everything and killer prices. Lemonade’s chief behavioral officer Dan Ariely helped designing systems and processes that ensure that the interests of the insurer and the insured are aligned. But also how behavioural economics reflects in Lemonade's daily customer experience. When we interviewed CEO Daniel Schreiber on the occasion of Lemonade’s first anniversary he shared: "Not just our business model but also the whole product flow is informed by behavioural economics. For example, we ask people to sign on the top of the form, not at the bottom. Behavioural research shows that asking people to pledge honesty first, results in forms that are actually more accurate." Insurers could benefit much more from psychology and social sciences. Dacadoo Consumer engagement is becoming more and more important in the health insurance industry. Dacadoo (Zurich, Switzerland) has developed a mobile health engagement solution enabling individuals to track, manage and benchmark their health and well being in an easy and fun way on their smartphones. The Health Score indicator moves up or down in real-time, depending on how body values, emotional wellbeing and activities change (exercise, nutrition, stress and sleep). To help individuals remain engaged, motivation techniques from behavioral science are used such as online gaming, social and collaborative features from social networks, and personalized feedback. Trend 10. Purpose Reboot New digital technologies are not only critical in repositioning the industry along customer-centric models but also offer insurance carriers the opportunity to reboot themselves as a force for good in the communities in which they operate. More and more insurers leverage insurtech to tackle important global challenges today and in the future. Connected devices and advanced algorithms are already improving patient care while simultaneously decreasing costs. Micro-insurance solutions are offering protection to low income populations that were previously considered uninsurable. Insurtechs strike the right chord among millennials that are dangerously under-insured. And insurtech innovation is helping to offset the damage caused by natural disasters such as hurricanes and floods. Allm Allm (Tokyo, Japan) is dedicated to reshaping healthcare by developing HealthTech medical communications platforms for healthcare professionals and the medical industry, using cloud technologies and smart devices. A more efficient communication and new innovative technologies help to improve decision making and can save more lives and reduce costs while improving customer experiences. Understory Understory (Minnesota, USA) is a smart weather hardware and analytics company that creates unprecedented details of how weather affects people and businesses. The data applications for Understory’s sensors are enormous, as US$ 485 billion of the US economy fluctuates with weather. With Understory’s white-labeled weather and home safety insurers can easily help their customers know what to do to prevent potential property damage. Neosurance Incumbents have difficulty connecting to millennials. As a result this segment of the future is hardly aware of the importance and necessity of insurance, with a high number of under-insured as a result. The average attention span of people is getting lower and lower and our daily lives seem to be made up of micro moments related to the use of smartphones. Neosurance (Milan, Italy) provides micro-insurance solutions for insurance carriers that want to address the ‘connected generation’. By gathering contextual data, the Neosurance is capable of identifying a potential specific insurance need for that customer and send a notification on the smartphone. The user can choose to activate the cover with 4 easy taps on the screen. A great way to get a whole new generation more familiar with the benefits of insurance. BIMA DIAmond Award winner BIMA (Stockholm, Sweden) provides insurance and underwriting to millions of low-income people via innovative partnerships with major mobile network operators and financial services businesses. They offer a range of affordable life, personal accident and health micro insurance products. BIMA partners with leading telecoms players such as Telefonica, Orange and Axiata Group. Consumers can pay for insurance via deduction of prepaid airtime credit. In just six years, the BIMA model has transformed the insurance landscape in the countries where they operate, proving that it is possible to reach consumers at the bottom of the pyramid at scale. BIMA has over 24 million registered customers in 14 countries across 3 continents, 93% living on less than $10 per day. Check out www.digitalinsuranceagenda.com for more info on DIA Amsterdam (16 and 17 May 2018).

I kicked off this series by detailing my argument for why physician quality is the single most important aspect of a claim — efficient and effective care is far more impactful than discounted care. Now, I want to expand on this idea by delving further into the relationship between the preferred provider network (PPO) and the exclusive provider network (EPO). First, let’s understand what is meant by EPO. The narrow definition of the term is a network that is the exclusive option for providers. In workers’ compensation, it most accurately describes programs like the MPN in California, the HCN in Texas or the PPP in Illinois. These are all examples of models where the insurer or employer can define an exclusive list of providers from which an injured worker must choose their doctors. In a broader sense, I think of the EPO as the listing of doctors and ancillary providers that are going to be included in elite programs. This includes the list of doctors you would want to use every time you create a workplace poster or the list of doctors used in any channeling program like initial triage. Think of it as the doctors you want to use any time you have the opportunity to either direct, contain or influence selection of a provider. Ideally, the goal of an EPO should be selecting the best available providers to drive improvements in outcomes. And improved outcomes should be at the heart of the relationship between PPO and EPO. Over the past decade, outcomes-based networks have become a well-adopted and proven model for dramatically improving a claim population’s overall costs, lost time and litigation, but many organizations struggle with the roll of PPOs in this model. They are also curious as to how to leverage the best of both worlds — PPO and EPO — to drive better outcomes and better pricing moving forward. Separating “Who” and “How” The idea of using both PPOs and EPOs to improve outcomes has been somewhat confounding to date. As discussed in Part One of this series, the primary goal of the PPO is to contract with as many providers as possible to drive the best purchase prices for medical and ancillary services. In the absence of any controls over care, the PPO serves its customers best by including poor-performing doctors, courtesy of more available discounts. With controls (and strategies to leverage those controls) for outcomes in place, however, the game changes, and the roll of the PPO needs to be reconsidered. See also: Why So Soft on Workers Comp Fraud?   In this environment, PPOs and EPOs coexist in an important balance. The EPO needs to determine “who” to work with, and the PPO provides the mechanism for “how” you work with them. Consider the following table: Hopefully, it quickly becomes clear that the “best of both worlds” model is not only achievable but also makes things like vendor selection and program management easier. Under this framework, the value proposition and role of the PPO is clarified: The PPO is the source of doctors who have been properly vetted through credentialing practices and contracted to provide care, typically at a favorable price. This function could be offloaded to your bill review vendor if it is positioned to resell networks, or you can take on the task of deciding which combination of PPOs gives you the best bench to select doctors from in each jurisdiction. On a case-by-case basis, you may find barriers with a certain jurisdiction or PPO vendor, so some research may be necessary to determine how to manage selecting a subset of providers from a list of preferred providers. Once you’ve built your bench of “available” doctors, the next step is to select the doctors that are going to be invited into the elite program, or EPO. The most effective method for selecting doctors for an EPO is outcomes-based. Depending on the program, it may be necessary to have processes and documentation for decisions related to the inclusion or removal of doctors from your elite programs. This is more important in situations where the decision to exclude a provider will prevent them from being able to treat your injured workers. Think MPN exclusion. It’s not really an issue when you are just selecting three doctors to be on a workplace poster. The core message is: Think differently about the purpose of your PPOs; they have a specific value proposition when you are working with an EPO strategy. Use the PPO to build your bench of available doctors, and use your EPO to decide which doctors are the ones you want your injured workers to use. See also: Healthcare’s Lessons for Workers’ Comp   The age of accountable care is upon us — in both comp and group health. Data science and access to big data has enabled a level of accountability that did not exist a decade ago. If you do not have a strategy for using quality as a primary factor in determining who should be seeing your injured workers, you are missing the boat. Having a framework for how to separate who you work with (EPO) from how you work with them (PPO) helps get you started on the path to an outcomes program or provides an easier perspective for how you manage and improve an existing program over time. Next Steps Once you have your framework in place, you need to determine the right balance of quality and quantity. To do this, quantify the difference between good and bad doctors. There are a lot of tools available to help you do this. Then, determine how many doctors you need of each type in a given geography to fully service workers. Next, eliminate those doctors whose outcomes don’t make the cut from your network. As long as you have enough good doctors available who can also provide a discount, there is zero benefit to having a deep bench. Once you make smart cuts, emphasizing quality over quantity, watch your savings and worker satisfaction with their care dramatically improve. Next up: outcomes strategies for each type of jurisdiction. In Part Three of this series, I will dive into three types of jurisdictional models and look at the differences between states. Stay tuned! This article was first published in Claims Journal.

The marriage of “insurance” and “technology” — “insurtech” — continues to attract investment among P&C insurers, and startups specializing in insurance technology products are popping up all over. In fact, investment in insurtech reached $853 million in the first quarter of 2017 — a 50% increase over the same period in 2016. While, to date, most insurtech products have focused on the distribution and sale of insurance, there is great opportunity for new insurtech innovations to offer superior customer service, which translates to loyal customers — the brass ring in a highly commoditized market. Insurtech enables fast and personalized experience, any time and anywhere Customers want to know that they will be looked after if any issues arise — even after a policy purchase. This means succeeding at a full range of customer interactions and touchpoints, from addressing customer questions about their bills, to working with a customer during the claims process. Customers expect these interactions to be personalized, fast, efficient and on their own terms. At the same time, insurers are looking to automate some processes, thereby increasing time savings and freeing employees to focus on more complex activities. Altogether, this is why technologies like artificial intelligence and chatbots have found a following in insurance. See also: Insurtech: An Adventure or a Quest?   Artificial intelligence, for example, enables personalized customer service from the initial interaction to processing a claim — often without any human interference at all. Artificial intelligence can analyze a customer’s profile and recommend insurance products best-suited for the customer. And, by removing human intervention, the potential for error decreases. Chatbots, too, are gaining favor for their ability to do things like schedule an appointment or process a payment, any time and anywhere. Whatever a chatbot can’t help with can be elevated to a human, but just eliminating these types of simple tasks from employees’ to-do lists can be a boon to their productivity. Industry is evolving To be sure, traditional insurers are embracing insurtech to augment and improve their customer service. Insurtech distributors, too, are realizing the need to evolve and offer more than just great purchase experiences. In personal lines insurance, for example, distributors understand they must provide more than a great buying experience, so they are becoming insurers as a way to better control the customer experience. Metromile, for example, which became an insurer in 2016, recently launched a new automated claims service, which enables a more seamless claims experience. Now, Metromile more easily assesses whether a claim can be quickly processed and paid. Improving customer service can be daunting, especially for traditional insurers that sell multiple products in various customer segments through a variety of channels. In a highly commoditized market, however, the customer experience is the all-important differentiator. By investing in insurtech innovations, insurers will find they have a leg up on the competition and will reap the rewards of satisfied, loyal customers.

So why don’t most Enterprise Risk Management system work?  Simply, they don’t “manage” risk, they just record it.  Manage is a verb not a noun. It is activity not an item.  Making a list might be adequate for those who want to check off regulatory compliance, but it’s does not produce a ROI. They don’t manage threats To manage threats you need to actively monitor risk drivers and influences thru lead and lag KRIs in real time.  Reporting systems aren’t much use if they’re telling you after the event. By the time it shows up on a heat map it’s not a risk, it’s an incident.  Simply moving your risk management from spreadsheets to a cloud risk register does nothing to pursue an active defence against threats. To create a workable system, you need to take your risk registers, work out what causes those risks to worsen (drivers and influences), and what lead/lag KRI to use to monitor the movement of those drivers and influences.  You then need to set up a real-time system for collecting those KRIs and alerting the appropriate people who can act on the threats immediately. They don’t tell you HOW it will affect Objectives The common practice of recording what objectives might be affected by a risk does nothing to assist in achieving or optimizing those objectives.  The real purpose of risk management is to navigate the myriad of influences on the objective’s outcome as they occur, i.e. it is an interactive real-time activity. Risk Management’s primary purpose in the strategic and tactical planning phase is to identify the best course to market and thereby optimize resources (time and capital).  This requires specifying HOW risks and actions interrelate and compound effect on one another.  This highlights two things.  For ERM to work it must integrate both risk and actions, and it must know HOW variations in either compound effect. Once these are in place they can easily be used to monitor progress in achieving objectives. Workflows and Issue reporting become inputs to risk drivers and influences which in turn automatically update risks. With a real-time aggregation of risks (roll-up), alerts can be sent to interested parties when the risk threshold of any objective is threatened. See also: The Current State of Risk Management   They don’t improve the quality of decision making By definition complex systems (the business world) are chaotic (see Chaos Theory), where small variations alter outcomes, like the weather and the winner of the Melbourne Cup.  But risk management was never about predicting the future. It’s about providing advice on the effects of possible decision outcomes and being prepare for any adverse effects. But here’s the real rub.  For ERM to be useful it has to employ Predictive Analytics and machine intelligence.  In my defence, Predictive Analytics doesn’t actually predict the future, it just highlights obscure facts. It provides true decision making collateral on possible opportunities and threats in any scenario, from which “informed decisions” can be made, instead of “gut feel” guesses.  It helps mitigate decision bias and raise ramifications sometimes overlooked in the heat of a problem. Obviously many ERM systems have numerous other failing, such as a single hierarchy for aggregating or “rolling-up” risks (wouldn’t it be nice if the world was that simple), and not including Incident Management in ERM to create a closed feedback loop, which drives evolution and effectiveness.  But the single most important thing is to use your risk collateral as part of the day-to-day operational decision making and not to just let it stagnate in risk registers being reviewed annually.

Q: Some American pharmaceutical companies are well-known for pricing drugs at whatever the market will bear. In oncology, some specialty drugs seem to have price tags completely unrelated to the proven effectiveness of the drug. Your company has been taking a lead in confronting this problem. What do you envision as possible solutions? A: New oncology therapies carry astronomical price tags—most people know this. Receiving far less attention is the question of actual therapeutic value. Drug manufacturers spend billions on advertisements and PR, but unfortunately, real-world patient results are frequently unimpressive. Two recent articles in BMJ make this point, 1) No evidence of benefits for popular oncology therapies and 2) Do cancer drugs improve survival or quality of life? Why do high-cost oncology therapies with questionable results continue to be prescribed? Let’s examine a situation my company is dealing with right now. VIVIO Health received a request for neratinib, an FDA-approved extended adjuvant therapy for early-stage HER2 positive breast cancer. Our system analyzed all available performance data from sources such as the FDA, ICER and NICE. The drug approval was based on a newly created surrogate endpoint called invasive Disease-Free Survival (iDFS), which only scored 94.2% vs. 91.9% in the placebo arm. Even worse, 29% of the patients dropped out of the trial due to adverse side effects, 16.8% for diarrhea alone. Not surprisingly, the FDA committee patient representatives voted against approval. See also: 'High-Performance’ Health Innovators   Neratinib’s manufacturer PUMA Biotechnologies provided data on the current standard of care, trastuzumab, showing a disease-free survival (DFS) rate of 89%. Interestingly, the use of iDFS as an endpoint led to an increase in the placebo arm of ~3%, which is larger than the neratinib-to-placebo arm difference of ~2%. Ultimately the creation of a new endpoint made a larger impact than the therapy itself. The trial design itself had been altered so many times; the FDA suspected the trial had been "unblinded" and attempted to determine statistically whether unblinding had occurred. Even with these highly questionable results, the FDA approved neratinib in July. After being shown the questionable data and asked, “Why neratinib?” the requesting oncologist explained that it’s an FDA-approved drug and that “MD Anderson is giving it to everyone.” Granted it’s hard, but physicians should have the courage to do the right thing. In the context of high-dollar, high-tech therapies and billion-dollar windfalls for pharma execs like Puma CEO Alan Auerbach, physicians must be America’s frontline ensuring that only the right therapies get to the right patients. Using neratinib as an example, here are seven steps every physician should consider before prescribing oncology therapies:

1. Police endpoint games. Don’t allow drug companies to define arbitrary and meaningless endpoints for your patients. Prescribe medications with objective data on meaningful endpoints such as life expectancy. Anything less should be considered experimental at best, and pharma should pay for that.
2. Do the math. In the case of neratinib, a 2% probability of potential benefit means that for every two patients who might be helped, 98 are subjected to real side effects or other harm. In the neratinib trial, this equates to the "lucky" 33 out of 1,420 total patients, which is quite a needle in the haystack.
3. Consider the actual cost. Spending $5 million per patient "helped" with such uncertain outcomes makes no sense.
4. Consider societal opportunity cost. Spending money on therapies that don’t work diverts dollars away from developing therapies that do.
5. Stop listening to key opinion leaders (KOL). Dig deeper and make your own decision. A KOL’s opinion isn’t data and is too often wrought with conflict.
6. Require companion tests. Don’t prescribe low-probability therapies without some form of a companion diagnostic and insist that the drug company provide it for you.
7. Prescribe therapies as if you’re the patient and you’re spending your own money.

See also: U.S. Healthcare: No Simple Insurtech Fix   Physicians, you hold the key to changing the cost curve for ineffective therapies. Drug companies will get the message when you refuse to prescribe treatments that don’t work and cost too much.

Many insurers — especially regional players with deep ties to their local community — stress that customer service is a key differentiator for their business. Novarica’s position has always been that customer service and technology are not tangential, but rather they are one and the same: having quick access to agent and policyholder data, quoting and binding in real-time, and generating recommended contact opportunities are examples of the kinds of technology-enabled capabilities that take customer service to the next level. But key to providing great customer service is recognizing how customer expectations have changed in the last decade. Insurers must be ready to engage with consumers when and how they want across multiple channels for engagement. This has put considerable pressure on the insurance industry to figure out how to model themselves after other tech-driven industries in an affordable and scalable way. In the last year, chatbots have emerged as a viable option due to their ability to enable rapid customer service across a variety of low-touch applications 24/7. Moreover, chatbots are able to provide an added layer of support and consumer engagement without the need for additional staffing, freeing up human resources for higher-level tasks. See also: Chatbots and the Future of Interaction   Insurance use cases for chatbots include first notice of loss (FNOL), claims self-service, customer policy applications, policy endorsements and support, and agent interaction. These are great opportunities, not to replace other modes of interaction, but to supplement them for off-hours or for consumers who prefer a chat over a phone call. But chatbots are only as useful as the existing back-end functionality that supports them, and insurers can’t slap a chatbot interaction into their website or mobile app if they don’t also enable their core systems to provide real-time status updates or quotes via a web service. Just because a chatbot understands a user’s question doesn’t mean it can respond if the information isn’t available via machine, and an unsatisfying chatbot interaction is worse than none at all. The quick evolution of chatbot technology is a great option for a new channel, but it doesn’t let insurers off the hook to modernize and service-enable their entire infrastructure. Moreover, as discussed in a recent blog post on Progressive’s new chatbot, Flo, insurers need to understand appropriate use cases for chatbots: while some self-service functions are ripe for chatbot usage, others may require empathy that an algorithm can’t provide. The submission of a claim is often triggered by a traumatic life event for the consumer, such as a car crash or illness, instances calling for a human touch. For this reason, it is unlikely chatbots can completely replace human agents capable of offering empathy and reassurance to their customers during heightened emotional crises. As with any emerging technology, insurers should have specific, targeted use cases in mind for their initial implementations. Even if the end goal is to have chatbots available across all modes of support and service, such strategic projects start best with tactical investments. For more on this, see my recent brief, Chatbots in Insurance: Overview and Prominent Providers.

I'm going to borrow the approach taken by Chuck Schramm, a Chicago-area insurance agent with more than 50 years of industry experience and one of the premier insurance educators in the country. He has done a series of seminars that examine a single policy (commercial property, business auto, CGL, etc.) by providing several case study-based claim scenarios. Participants must determine for each claim whether the policy covers the damages and why or why not. It’s a wonderful way to learn HOW to read, understand and APPLY policy language to coverage and claim situations. Many insurtech startups and online comparative quoting systems take the position that auto insurance is little more than a commodity distinguished almost solely by price, that insurance buyers do not need professional representation by insurance agents nor advocacy at claim time because the product and process are so simple and there’s so much information available on the internet. Let’s dispel that ludicrous assertion with the following scenario…. Bubba owns a car insured in his name with the State Insurance Company. His wife, Bubbles, owns a car insured in her name with the National Insurance Company. Their adult daughter, Bubbette, and her six children live with Bubba and Bubbles, and Bubbette owns a car insured in her name with the ARP Insurance Company. All three insurers use the 2005 ISO PAP. See also: Geospatial Data: New Key on Auto   Using the ISO policy, determine who is covered for liability by what policy in the following claim scenarios AND why or why not are they covered. In other words, in each scenario, are the parties insureds under the policy, and, if so, does a liability exclusion apply? Claim #1:  One afternoon, Bubba drove Bubble’s car to the liquor store, ran a stop sign and had an at-fault accident. Bubble’s PAP   __ does   __ does not   cover Bubbles. Bubble’s PAP  __ does   __ does not   cover Bubba. Bubba’s PAP  __ does   __ does not   cover Bubba. Bubba’s PAP  __ does   __ does not   cover Bubbles. Claim #2:  That evening, Bubba drove Bubbette’s car to a local tavern and had another at-fault accident while returning home at dawn the next morning. Bubbette’s PAP  __ does   __ does not   cover Bubbette. Bubbettes’s PAP  __ does   __ does not   cover Bubba. Bubba’s PAP  __ does   __ does not   cover Bubba. Bubba’s PAP  __ does   __ does not   cover Bubbette. Claim #3:  Upon his arrival at home, Bubba and Bubbles separate, and Bubbles moves in with her mother that afternoon. That evening, Bubba asked Bubbles if he could borrow her now-repaired car again to take his new girlfriend to visit her mother and had yet another at-fault accident. Bubble’s PAP  __ does   __ does not   cover Bubbles. Bubble’s PAP  __ does   __ does not   cover Bubba. Bubba’s PAP  __ does   __ does not   cover Bubba. Bubba’s PAP  __ does   __ does not   cover Bubbles. I’ll post the answers within the next week, so make a note to check back later. If you simply can’t wait because you’re just too darned excited that you know the answers, feel free to email them to me, and I’ll respond. See also: Auto Claims: Future May Belong to Bots   If you find this kind of exercise valuable, let me know, and I’ll do others. Another one I have in mind for the PAP involves three people – Moe, Larry and Curly – two of them with PAPs and all involved in the rental of a car.