The enthusiasm for insurtech seems to have hit a bit of a lull. Now that some have fallen by the wayside, while others are taking longer than hoped to deliver on their promise, there seems to be less buzz in the air.

But the failures and sometimes longer time horizons shouldn't be a surprise. Not all seedlings take root, and trees don't grow overnight. We know from history that some 90% of startups fail, and insurance will be no different.

Maybe the thinking is just maturing as we all see that, as an old boss of mine liked to say, "We're in a marathon, not a sprint." In any case, I can assure you that our monitoring of  thousands of insurtechs as part of our Innovator's Edge platform shows that innovation continues apace. 

As just a bit of evidence, here are our six Innovators to Watch for November. (Honorees from prior months can be found here.) Onward!

AOC Insurance Broker

Paris-based AOC Insurance Broker helps individuals and companies to evaluate and find international private medical insurance plans for expats, meeting their coverage needs while on international work assignments. In addition to comparison tools to find the best coverage options from 30 multinational insurers, AOC also offers an mHealth solution to provide medical advice, guide preventive care and healthy behavior and provide rewards for user engagement that can result in a premium discount. Leveraging such technologies as machine learning, chatbots and wearables, AOC delivers a robust solution for a growing niche market. The company also recently launched its solution via a mobile app. Learn more about AOC Insurance Broker.

Gain Compliance

Gain Compliance, based in Des Moines, Iowa, is a cloud software company focused on making it easier for the insurance industry to gather and organize information for compliance. The company’s solution aims to help insurers that struggle with outdated processes and technologies to gather and report the massive amount of information required for statutory reporting. The result is a dramatically more efficient process and higher-quality data. The initial focus of Gain Compliance is helping carriers comply with the notes section of a company’s annual statutory financial report, which entails following a package of instructions, data requirements and formatting guides that typically runs to more than 100 pages for companies. Learn more about Gain Compliance.

Hello Zum

Hello Zum aims to make insurance more efficient by digitally restructuring how information is collected, shared and analyzed by brokers, carriers and policyholders, with the needs of the customer as the focus. In the process, the Lima, Peru-based insurtech sees significant savings for the insurance market over existing workflows, which today can involve managing multiple carrier requirements as well as a wide variety of information and document formats.  Hello Zum is a Saas platform that sits in the middle of all stakeholders, organizing the information digitally. Its solution currently is live in Peru, and it is working with local and international insurance distributors—not only brokers, but also banks and department stores that sell insurance—carriers and regulators. Learn more about Hello Zum.

Insurance Agent App

Helping customers stay connected to their independent agents and helping agents get  connected to the digital channel is the focus of Insurance Agent App. The Charlotte, N.C.-based company aims to put the insurance agent at the center of communication between policyholders and their insurers and, in the process, make independent agents more competitive with direct writers and captive agents. Insurance Agent App recently was named  winner of the 2017 ACORD Insurance Innovation Challenge for Startups/Disruptors. Judges recognized the company for a pilot program with Selective Insurance that allows a policyholder to transmit to its insurer directly via the app a first notice of loss that automatically keeps the independent agent in the loop on the claim, using ACORD data and real-time messaging standards. Providing claims notification will join a suite of services that policyholders can access with the app. Agents using the app also gain software tools to better communicate and manage customer relationships and integrate with agency management systems. Learn more about Insurance Agent App.

Neosurance

Neosurance hopes to make insurance more relevant to the lives of consumers by presenting coverage offers at the right time and right place using push notifications in a mobile app. The initial focus of Milan, Italy-based Neosurance is on-demand protection for travel-related risks, including lost baggage protection and medical coverage while traveling abroad. The company applies behavioral science and machine learning technology, along with smartphone sensors and contextual data, to identify when to present an offer, such as when a user is at an airport, not when a ticket is purchased months earlier. Neosurance uses a B2B2C model, aiming to serve digital communities of users, such as associations, rather than directly sign up individuals. Additional use cases for its solution beyond travel are in development. Learn more about Neosurance.

Pindrop

Pindrop provides anti-fraud and authentication solutions that help insurance call centers reduce the risk of false claims and fraud attacks originating in the call center. Atlanta-based Pindrop technology goes beyond caller ID and knowledge-based answers that call centers typically use to authenticate customers. Pindrop multi-factor technology can pinpoint where callers are coming from and what device they are using and generate risk scores to authenticate callers and reduce potential fraud. For insurers, the solution minimizes the risk of someone using a phone to, for example, make fraudulent claims, cancel policies or take over accounts. It also improves efficiency and satisfaction by reducing the time it takes to authenticate and serve customers. Learn more about Pindrop.

The Innovators to Watch honorees are drawn from among the thousands of insurtech companies that are featured in Innovator’s Edge, a technology platform created by ITL to drive strategic connections between insurance providers and insurtech innovators. From this growing pool, only those companies that have completed their Market Maturity Review—a series of modules designed to help insurers conduct baseline due diligence on the innovator and make a more informed connection—are eligible to be considered for Innovators to Watch, helping them to stand out in this crowded diverse field.

If you are insurtech innovator that has not yet taken advantage of Innovator’s Edge to boost your company’s visibility to the insurance market, we encourage you to get started today. Contact us at info@insurancethoughtleadership.com if you have any questions.

Commercial insurers have every reason to be optimistic. Thanks to the gig economy and the sharing economy, business launches are on the rise. And even though not every business launch is the next Fortune 500 company, insurers that are poised to take advantage of volume may find themselves with impressive market share. Here are five quick reasons that commercial insurers in every line of insurance can be excited.

1. Demographics are pointing to short-term and long-term growth because growth fuel will be coming from two separate sets of entrepreneurs with separate timelines for business maturity.
2. Technology is supporting new channels for acquiring business that were not feasible before. Commercial insurers, in many cases, can look at current direct-to-consumer trends for real insights. Improved data use will provide better custom-fit insurance solutions for small and medium-sized businesses (SMBs).
3. Product development opportunities for commercial insurers are growing out of gig-related business trends and lifestyle and purchase trends.
4. Modern affinity groups will become more prevalent and important the more that people pursue gig-type employment. Insurers that traditionally offer voluntary benefits through employers will find that thousands of new types of business groups will become interested in both traditional and non-traditional products.
5. More sharing, less disruption. As the sharing economy grows (and with it, a new type of commercial product need) commercial insurers will also be the beneficiaries of fewer negative disruptive trends, such as vehicle autonomy.

The further we dig into the gig economy, the more we find that small efforts by commercial and specialty insurers could yield big results. If an insurer is looking to build a case for preparation, some of the following points may be excellent support. Gig workers, millennial entrepreneurs and senior entrepreneurs Demographics are painting a clear picture of the new economy from the ground level. As we pointed out in our report, Future Trends 2017: The Shift Gains Momentum, project-based work and new businesses are on the rise. The emergence of the “gig” or “on demand” economy is made up of individuals who work as freelancers, independent contractors for themselves or independent contractors for on-demand service providers. The gig economy has increased the number of small businesses. The 2016 version of Upwork and the Freelancers Union’s annual survey, Freelancing in America, estimated that 55 million people, or 35% of the U.S. workforce, have chosen freelancing as their means of work. See also: Commercial Insurers Face Tough Times   While freelancer and independent contractor work arrangements are not new, the relatively recent trend of on-demand workers, where workers and clients are typically connected through a digital platform, have caused state regulators and insurance companies to wrestle with questions of worker safety, liability and employee benefits. A growing list of insurers are providing products for the fluid dual coverage needs of people working through ride-hailing services like Uber and Lyft and home-sharing services like Airbnb. Insurers are also providing for the unique coverage needs of workers and companies engaging in contract-driven work. Many of these independent jobs turn into larger businesses, and insurers can find relevant business launch trends among two separate groups — aging millennials and retiring boomers. The Kauffmann Foundation’s statistics on entrepreneurship indicate that the “peak age” for starting a business in the U.S. is around 40. Millennials are on the cusp of mass entry into the “peak age” bracket for entrepreneurship. They show a strong desire to start businesses. By 2020, more than 60% of small businesses in the U.S. will be owned by millennials and Gen-Xers. Baby Boomers are reaching retirement age in ever greater numbers. As they move to retirement, some will seek “gig economy” businesses and jobs to supplement their income. Many will start their own businesses. For those who already own their businesses, they will potentially pass them to the next generation. For those starting a business, this represents a growing segment. In either case, the trends will cause growth in the need for commercial insurance. For more information on how demographics is shedding light on growth opportunities, read A New Age of Insurance: Growth Opportunities for Commercial and Specialty Insurance in a Time of Market Disruption. Greater access to small businesses Traditionally, commercial insurance was sold and serviced by agents and brokers. Smaller businesses were often underserved because they were simply difficult or expensive to reach. For the underwriter, they were also a bit cumbersome. Was it worth the time spent in research to underwrite the business? With small businesses, cookie-cutter products were an effective solution. But today’s small businesses are too varied for effective low-volume underwriting. Digital sales and service will effectively fill a void for millennial and Gen X business owners, who prefer that kind of service for most every other transaction. Our research, The Rise of the New Insurance Customer, showed that all generations use multiple methods to research insurance prior to buying or renewal, but Gen X, Millennials and Gen Z use the widest variety of options, including digital channels like e-mail, texting/messaging/chatting and social media. Like personal lines, commercial lines have historically relied on macro segments for classification and pricing purposes. With the advent of more data sources and sophisticated analytics, commercial lines have developed new segments for insurance like professional liability for specific businesses, all-terrain vehicles, yachts and pleasure boats, wineries, country clubs and numerous others. In many cases, the business sales and service model for gig individuals and SMBs will be patterned off of modern direct-to-consumer models. Some insurers have already been capitalizing on the similarities. Berkshire Hathaway, Hiscox and Homesite are all examples of successful small business coverage direct writers that have found a formula that works. Group purchasing and commercial and specialty product development The gig economy is naturally isolating individuals who used to be covered under employers for standard health, life and other core employee benefits and voluntary benefits. Those who leave their jobs for gig-type employment will often take portable benefits with them, switched into individual coverage. They will be assuming a larger load of their core benefit costs or going uncovered. This will create a natural pooling. New potential “affinity” groups will arise with insurance opportunities for both group carriers and commercial insurers. New work habits and preferences will also create new needs. For example, there is growth in demand for temporary work spaces, temporary storage spaces and occasional use of vehicles and equipment. Commercial insurers will be filling the insurance gaps for these types of policies. In many cases, the lines between insurance types may begin to get fuzzy as commercial insurers create risk products that go beyond personal lines but that still contain some of their attributes. See also: Gig Economy: Newest Tool for Insurance   As some personal lines business is lost due to vehicle autonomy and manufacturer liability (such as at Volvo) or sharing liability (such as at ZipCar and Maven), commercial insurers will be on the flip side of receiving additional pooled business. Many commercial insurers, already adept at handling fleet dynamics and logistics liabilities, will be extremely comfortable shifting gears and accepting other types of pooled risk. If commercial insurers are truly interested in expanding into gig-created space, they should prepare their systems to handle not just large groupings of risk but individualized data contained within the risk pool. They should also keep tabs on mobile and insurTech developments, keeping their eyes on apps that cater to group sharing of any type of resources. Mobile apps may open commercial doors to unique product development. For example, an insurer may find that only one app is traditionally used by commuting cyclists or bike couriers. One unique product offering may help that insurer corner the market on a nationwide community.

Practical tips and thoughts on travel for the new insurance broker, underwriter, risk manager; or someone who is new to business travel. Pre-Trip -- Plan, Plan, Plan

• Understand that there are risks associated with travel. As an employee and representative of your firm, your responsibility is to take necessary steps to mitigate them.
• Read and understand your organization’s travel policies. Follow the policies on travel authorization, approved vendors and rates. The organization will only pay for the travel that it authorizes, and only at an approve rate. Check for spending guidelines or limits per diem on personal meals, etc. Do not expect to be reimbursed for failure to follow the written guidelines.
• Use the company travel agent and the company credit card if one exists. This is not just for financial information for your company, but often additional protections and insurances built into these resources should something go wrong.
• Get your travel documents in order. If your state-issued drivers license does not meet the ID requirements, you will need to have an alternative document such as your passport with you to travel beginning in 2018. For more information on compliant states, use the Homeland Security website: https://www.dhs.gov/real-id.
• If you are traveling alone, leave an itinerary with an immediate family member. Leave a copy with your manager if your company does not have a central travel agent. Ensure that your contact information is current at all times with your HR department and with your travel agent.
• If you are traveling with a group, put together an itinerary. The itinerary should include, who is traveling with you, their cell phone numbers; the flight information (airline and flight number); ground-transportation information (local phone contact); the hotel name, address, telephone number, and reservation number; meeting times and places — with telephone numbers, of host names, telephone and fax numbers, and e-mail addresses; meal arrangements; and scheduled entertainment.
• If traveling as a group, appoint a central coordinator to double check to make sure you are all on the same flights and staying at the same hotel.
• Travel costs escalate the closer to your date of travel. Wherever possible, make your travel and accommodation arrangements as soon as you know when you will be traveling. Follow your company travel policy on non-refundable tickets.
• As an employee traveling, you should always manage travel expenses as part of your overall budget.
• If an airline is checking your bag, always doublecheck the tag to ensure that it goes through to the right location. (There are a lot of San Juan and San Jose cities out there)
• Always have a spare set of underclothes and a toothbrush in your carry-on luggage.
• List what you want to take and practice packing it. Consider bringing your laptop, cell phone, reports, contracts, brochures, clothes and shaving kit toothbrush medication and your lens prescriptions if you wear glasses or contact lenses. If visiting foreign countries, make sure that you have the proper electronic conversion to keep your laptop and phones alive. 220 volts can wreak havoc with your stuff if you are not careful.
• Have a list of your medications and lens prescriptions where you can access them quickly in the event you need to replace while traveling.

See also: The Insurer of the Future – Part 6   Airline Rules

• Be a smart flyer. You will have missed connections and missed meetings. In most cases, things will all work out. Anger does not help the situation. Do not stand in lines -– use your phone and call your travel agent or airline directly.
• If you park at the airport, take a photo of your parking space. It will save you from wandering around a parking lot following a long trip late at night when you are the most tired (especially if you return on a different airline than the one on which you left).
• Take a photo of your luggage with your phone. It will help you recover it if it is lost.
• Dehydration is caused by flying, and studies show that deep vein thrombosis (DVT) can be a risk for frequent flyers; drinking water on all flights and getting up to stretch are simple preventative measures that can be taken.
• Once you arrive at the airport, secure your car keys (other than on your person). Once you lock your car, you won’t need them again until you return. There usually are special pockets in backpacks or suitcases to use. That way, you always will know where they’ll be when you need them.
• Global Entry and TSA Pre work well. In time saved and travel friction reduced, the status is worth every penny. If traveling international, get Global Entry. It can take as much as six months to get an appointment for Global Entry.
• Enroll in every frequent flyer program whether or not you routinely fly a particular airline. Make sure that you have a spreadsheet of the programs and the security code to access them online.
• Check in early and review your seat selection. With equipment changes, the airlines may move you around without your knowledge.
• Determine if you are an aisle or a window person.
• There is a reason exit rows are premium seats. If there are upgrades to be had, it is likely that an “exit row” person will be moved to business class. Ask at the gate to get the open seat if one opens up.
• When things are blowing up at the airport, use the latest technology to re-schedule your flight and get a place where you can sleep for the night. Waiting in lines during these events can be a colossal waste of time.

Money, Money, Money

• The company credit card should not to be used for non-business expenses.
• Have the right currency on a foreign business trip. Take enough cash to cover your needs or to get you to the next cash machine. Some countries or places do not have cash machines.
• Watch when you are using the credit card to make sure it is not being used inappropriately. Keep it in sight whenever possible.
• Keep all of your receipts. Take a picture of them with your cell phone when you pay the bill. Document who was at the dinner. Be aware of what the company does and does not pay for. Submit your documented expenses as quickly as possible.

During the Trip - While There, You Are Not Here

• If you travel enough; you will eventually get a bug. They are not fun. Cancel your appointments. If necessary, go to a doctor or hospital. Do not be a dead hero.
• Drink lots of water. However, do it strategically. In inclement weather or remote locations, access to bathrooms can be problematic.
• Exercise upon arrival is a great way to “reset” your internal time-clock. Sunshine works wonders. Take a walk outside (no matter the time of year).
• Use the gym at the hotel unless the concierge has recommended a jogging route; running around in some cities is both dangerous and often a sign that a crime has been committed.
• If you are visiting an exotic location (such as Cleveland, Ohio) for business, take advantage of the experience. Tourist destinations are just that because there is usually something worth seeing. Avoiding tourist destinations usually results in not seeing the good things.
• Don’t be obnoxious, rude or inconsiderate; America has enough problems with our reputation in the world; in fact, lean the other way. Go out of your way to be polite, friendly and considerate. Learn enough of the local language to say “hello, good morning, good day, good evening, yes please, thank you, no thank you and two cappuccinos take away.”
• The Google translation program is amazingly helpful in reading menus and other written documents.
• Use the opportunity for international travel to open your eyes to how the rest of the world thinks, acts, lives and believes; Americans often think that choosing a latte is the toughest decision they make in a day.
• Take pictures (cell phone or full camera.) Anyone can get a picture of the Eiffel Tower. Get a picture of you in front of it.
• Follow the local signs concerning when not to take a picture. Do not take pictures of any military person or institution without permission.
• Never give money to panhandlers, beggars or street people; you are likely to be swarmed and possibly attacked. If you want to help the local poor, donate money to a religious institution.
• Always leave an extra donation in a church or museum that you have visited.
• Local guides are usually worth every penny.
• Carry 3x5 cards to PRINT the name and address of hotels and restaurants to give to taxi drivers who may not speak English or even the local language. NEVER leave a hotel in a new city without a card with the hotel’s name and address
• Try not to schlep your bags to all of your business meetings. Most times, you can leave them at the hotel even if you are checked out. If you do, always count the bags every time you move (in and out of taxi, in and out of business offices, etc.)
• Read up on the country you are visiting, and ask for advice from others who have been there. A little cultural knowledge goes a long way and can make the difference between a successful trip and failure.
• Embrace the culture of places that are different from the one you call home.
• Know how to dress for the culture and business you will be doing; most countries outside the U.S. tend to be a little more formal.
• Little things count. For example: Wearing a green hat in China means your wife is having an affair.
• Drink local wines and beer. Ask for advice from dinner guests or restaurant help. This could help avoid some weird stuff (cherry beer late at night with a sandwich at the Holiday Inn by the Brussels airport).
• In business situations, do not overdrink. Always be sober enough to get safely back to your hotel if you are somehow left alone.
• If you are with a group and get lost from that group, plan to meet back at the last place where everyone was aware that the group was together.
• When visiting certain countries, realize the potential for your technology to be hacked and any information you had in that computer to be used against you.
• If an alarm goes off, do not ignore it. Take stock and determine where you should be.

See also: Risk Exposed to Your Art Business   Lodging

• Try to stay above the first floor of a hotel or motel. Also try to stay low enough for the fire ladder to get to your window (usually seventh floor).
• If you forgot a personal item, the front desk has it. Don’t pay for one in the little store.
• Pick hotels that have in-house gyms. Exercise, even 30 minutes on a hotel stationary bike, can help with digestion, sleep and staying awake in meetings in a warm room.
• Stay at places that include breakfast in the price of the stay.
• During a power outage, your phone and laptop can provide you with needed light.
• Tip the concierge if you get help from him or her.

Ground Transportation - Do Not Get Ground Down

• No matter where you go, take identification that allows you to drive. Consider getting an international driver’s license - https://www.consumer.ftc.gov/articles/0050-international-drivers-license-scams
• Uber and Lyft are a non-regulated means of travel available in most cities. There are increasing reports of violence from passengers using these forms of travel. Be cautious when using non-regulated transport.
• Purchasing auto insurance for rental cars is usually determined by company policy.

Traveling Internationally

• Read the State Department warning on travel. If traveling overseas, enroll in the State Department’s STEP program and list all locations.
• Get your international travel documents in order. Passport should be current and not expiring in the next six months, or some countries will not allow you to enter.
• Keep your passport safe at all times. Keep a notarized photo copy of your passport separate from your passport and keep it safe, as well. This will allow you to get a replacement while traveling much faster.
• Use chip-enabled cards only while traveling overseas to prevent theft.
• Most international car rental locations may only have manual transmissions. Know ahead of time if you can’t use a stick.
• When you’re planning the dates of an international business trip, review local bank holidays and religious holidays, which could affect your ability to schedule meetings or access services that may be closed.
• Bring a full set of electronics (chargers, adapters, etc.) for the phone, laptop and tablet in your briefcase.
• Before travel, identify any recommended or required vaccinations in the countries where you are traveling. Ensure that your flu, pertussis and pneumonia vaccinations are up to date. Finally, in many countries of the world, TB is a common illness. If you travel frequently internationally, speak to your physician on whether he or she recommends an annual TB test.

International Communication Most of us travel with a laptop and cell phone at all times. Using your cell phone and getting Wi-Fi access worldwide is possible but can be expensive if you don’t pre-plan.

• You should download all local Google maps for where you will be visiting onto your cellphone. This will save you data fees and allow you to get information even if you have no signal.
• Before an international trip, you will need to activate international service on your phone.
• Data is VERY expensive overseas. You should turn off your roaming on your phone prior to your trip. Use Wi-Fi dialing and Wi-Fi access to get emails, texts, etc.
• Be very aware of the Wi-Fi provider and only use trusted sources.
• Make sure you are aware of your company’s international data and phone policy – it will be different from the normal usage.

Travel Resources: https://travel.state.gov/content/passports/en/go/checklist.html

In our previous post on Insurance Nexus Global Trend Map #3: Insurer Priorities, we explored where carriers are focusing their money, time, staff and training resources in their bid to stay relevant and competitive in today's fast-moving insurance market. Today we are continuing that theme, examining some bellwethers for the general health and future direction of the traditional industry:

1. Service-Area Round-Up (in which areas are services are being consumed?)
2. Investment Prognosis (how is investment in these areas changing?)
3. Job-Role Creation (recent job appointments within carriers)

This selection of statistics is drawn from the extensive survey we conducted as part of our Trend Map. If you'd like to see a full breakdown of our survey respondents and details of our methodology, please download the full Trend Map here. 1. Service-Area Round-Up It’s one thing to talk about general industry challenges (post #1) and priorities (post #3), but people’s money is often not where their mouth is. To provide some clarity here, we asked insurers and reinsurers where they are planning to use third-party services, selecting from a shortlist of 15 priority areas. The three most sought-after services among insurers and reinsurers globally were digital innovation (cited by 59% of respondents),-analytics (47%) and Internet of Things (34%). The high percentage of respondents seeking digital and analytics services is hardly a surprise, given that these were two of the top three global priorities for our insurer and reinsurer respondents, as we saw in our previous post on Insurer Priorities. The presence of Internet of Things in the top three is more noteworthy. In our previous post, we found IoT ranked 11th out of 15 on our global priorities list, yet here it appears to be one of the most-sought-after areas for third-party services. Unsurprisingly, and consistent again with our previous post on priorities, investment management is the least in-demand area for services.

"The importance carriers are attaching to analytics, digital and IoT is demonstrated by the numbers that are seeking third-party services in these areas." – Paolo Cuomo, principal at Boston Consulting Group (BCG) and co-founder at InsTech London

2. Investment Prognosis We asked our insurer and reinsurer respondents to indicate qualitatively, on a sliding scale, how much they expected investment to change in each of the priority/service areas we have been considering. Respondents saw investment increasing in almost all areas, which may indicate a bias toward bullishness. That said, the order of the different service areas should be a fair indication of which ones are most likely to attract whatever additional budget is available. In addition to being the key areas carriers are currently seeking services in, digital innovation and analytics are also due the largest increases in investment. Investment in IoT (3rd place among services sought) shows minimal increase. So, putting our two measures together, it would appear that digital innovation and analytics are attracting large and increasing investment from insurers and reinsurers, whereas Internet of Things is attracting large and steady investment. See also: Global Trend Map No. 2: Insurtech   As we saw in our first chart (under service-area round-up), product development was a relatively unimportant category when considering global demand for third-party services, with only 19% of carriers seeking services in this area – nonetheless, in the table above it displays one of the highest increases in investment (fourth place overall), suggesting that it may become a more significant category. The declining importance of investment management is most likely a reflection of globally low interest rates – this side of the insurance business, having become less lucrative, looks set to attract less spending on services.

"Insurers will invest in those areas that will support growth and differentiation or operational efficiency through innovation. These will range from delivering end-to-end innovative digital products to re-inventing the insurance value chain at the front end. A lot of these capabilities, though, rely on underwriting to achieve optimum results." – Sabine VanderLinden, managing director at Startupbootcamp

3. Job-Role Creation A key proxy for growth in any technology or business area is the creation of job roles relating to it. This is a useful measure for determining – beyond idle talk – which areas are genuine priorities or concerns for an industry. Based on our broader research, Insurance Nexus drew up a short list of emerging job roles within insurance companies, and asked insurer and reinsurer respondents to indicate whether these had recently been – or were soon due to be – created at their company. The results reflect the recent spike in importance of information security, which has doubtless been fueled by a series of high-profile cybersecurity incidents involving insurers, such as last summer’s data breach at U.S.-based Banner Health, in which as many as 3.7 million customers had personal data stolen. Thus, chief information security officer scores the highest out of the roles we considered in all the geographies we assessed (Europe, North America and Asia-Pacific). Comparing across regions, we see that chief customer officer assumes a higher relative importance in Asia-Pacific. As we noted in our earlier post Insurance Nexus Global Trend Map #2: Insurtech Perspectives, the real or perceived threat from new market entrants and disruptors was deemed highest in Asia-Pacific, and we speculated that this might be due to a larger proportion of the population being un- or underinsured, lacking ties to the traditional insurance model and thus representing an appetizing target for dynamic new players aiming to cut traditional carriers out. If this is true, it makes perfect sense for insurers in Asia-Pacific to place a special emphasis – including a whole new job role – on the customer. Sometimes, the relative prominence of different job roles may reflect variations in naming conventions rather than real differences on the ground. For example, we see that chief digital officer is relatively insignificant in North America compared with Europe and Asia-Pacific. On the other hand, these two regions both trail North America when it comes to the recent or forthcoming appointment of the chief analytics officer role. We know from the stats we have already presented in our previous posts, covering everything from challenges and priorities to investment and spending, that analytics and digital are both highly important in all three of these regions, so this disparity (with the job roles) is probably no more than apparent.

"Marketing/sales, human resources, underwriting, finance and claims are all being impacted by the growing focus on analytics. New roles are rapidly emerging — from a chief analytics officer to data scientists and engineers." – Margaret Milkint, manager partner at the Jacobson Group

We asked our carrier respondents to name any other significant roles of recent creation that we had missed. Our most significant omissions were, in no particular order:

• Chief risk officer
• Head of transformation
• Titles around "customer experience" and "customer engagement"
• Chief strategy officer
• Chief innovation officer
• Head of disruptive innovation
• Head of blockchain

Emerging job roles fall, it would appear, into one of two camps. We see that holistic strategy roles (also framed in terms of "transformation" and "customer-centricity") are becoming more and more important; indeed, one respondent lamented the lack of a "thought leadership officer" position. Then we have roles related to specific emerging technologies, such as blockchain – and we can expect the same with machine learning and AI. This spectrum reflects a major issue that insurers are likely to face from a staffing and organizational-structure perspective: Complex emerging technologies invite and often outright require specialization, yet the dependencies between divisions, technologies and initiatives within carriers become larger and larger every year. See also: Global Trend Map No. 3: Priorities   The ability to strike the right balance between these two camps – deep technical expertise on the one hand and a capacity to conceive and coordinate the big picture on the other – will be one of the key factors that separate the insurance wheat from the insurance chaff over the coming years. This concludes our exploration of the Global Trends. Tune in next time as we break into the Trend Map's 11 Key Themes, bringing you stats and perspectives on: We kick off with Insurance Nexus Global Trend Map #5: Analytics and AI. If you'd like to access all 11 Key Themes straightaway, though, simply download the full Trend Map whenever you like (it's free!). Download your complimentary copy of the full Trend Map here.

As I indicated in Part 10, I’m expecting the future role of the broker or agent to be severely curtailed. But that’s not to say there’s no role for intermediaries of a different type. In commercial lines, I expect to see an expansion of the push that some of the brokers have already made into broader risk management. The Risk Manager of the Future will provide a holistic risk management service to its biggest corporate clients – drawing heavily on IoT and big data analytics to predict risks real-time and prevent them from crystallizing. Only a small part of the risk manager’s service will involve insurance, but the risk placement process will be highly efficient. The risk manager will be seamlessly integrated with a wide network of insurers that, together, can meet all of the insurance needs of clients. See also: The Insurer of the Future – Part 10   The risk manager will place business in two ways: standard and bespoke. However, those terms describe the relationship not with clients, but with partner insurers. If a risk is standard, such as marine or aircraft cover, the Risk Manager of the Future will already have made arrangements to place pre-agreed percentages or exposure bands with a range of different insurers. And those business rules will be built into a “risk placement hub” linked directly into those insurers' core systems. This means that the risk can be underwritten in accordance with those pre-agreed arrangements, and policy documents generated, in a matter of seconds. If, on the other hand, the risk doesn't match previously agreed arrangements, the Risk Manager of the Future's “cognitive placement engine” will swing into action. This will pull together all the information it can on the risk, trawling multiple internal and external sources. It will then automatically pass that data to the underwriting systems of multiple different insurers, negotiating pricing with the AI engines of those individual Insurers and constructing the optimum cover for a client -- making trade-offs between the different insurers as appropriate. Again, once the cover package has been designed and placed, policy documents will be generated automatically and issued to the client. See also: Innovation: ‘Where Do We Start?’   Using the power of data analytics and AI, this entire process, end-to-end, will take no more than a couple of minutes.

You know those "three biggest lie" jokes? The third biggest lie would be: "I'm from Interactive Health, and I'm here to help you." Hilarious... unless you are one of those unfortunate souls who are:

1. paying their bills;
2. believing their outcomes; or
3. taking their advice.

The first and third are closely related in the sense that one would think, with their fees – which rank among the wellness industry’s highest due to their industry-leading embrace of hyperdiagnosis — they could afford to train their employees in wellness. See also: Healthcare: Need for Transparency   However, because they apparently forgot to check that box, I’ll do it for them. I owe them this favor, having recently made unflattering observations regarding their botched cover-up of their invalid outcomes reporting. First the good news No one can accuse Interactive Health of wasting money on excessively silly, excessively gimmicky, excessively readable user interfaces. Here is the advice they give to employees, all 1,350 words of it, starting with Page 1: But wait…there’s more. Page 2: And for all those employees who simply have too much free time on their hands at work, Page 3: More good news. They do tell this employee, after informing her that she has metabolic syndrome, to “avoid sugar.” Credit the law of averages with that — if you write 1,350 words, it is likely that two of them —  0.14% — will be correct. These two words are in the middle of the second page, so I’m sure she saw them. Who wouldn’t? Next, the bad news To prevent that metabolic syndrome from progressing to diabetes, the letter also recommends “lowfat or nonfat dairy” in the diet. However, according to the the journal Circulation, people with the most dairy fat in their diets had a 50% lower risk of diabetes. Likewise, a study of 18,000 women showed lower obesity among those who consumed full-fat dairy. Journal articles are likely beyond Interactive Health’s grade level, so here are two lay summaries and two lay books:

1. The Skim Milk Scam: Words of Wisdom from a Doctor Dairy Farmer
2. Lowfat Dairy: Zombie Guidance
3. The Big Fat Surprise
4. The Bad Food Bible

It’s not just dairy fat, where the science, though perhaps not definitive, is settled enough that even the dumbest wellness vendor should know not to tell diabetics to switch to skim milk. It’s also saturated fat in general, where the change in scientific understanding over the last 10 years has caught many wellness vendors by surprise, and they haven’t had time to react. If consumed in large quantities, perhaps saturated fat may be a heart disease risk factor nonetheless.  Who are we to say? However, if it were a culprit of any significance — like trans fats or cigarettes or family history — that conclusion would be definitive by now, given the massive amount of research that’s been thrown at this question.  Even if saturated fat were a minor risk factor, there is still one overriding reason that Interactive Health shouldn’t be telling people with metabolic syndrome to eat less fat: What the he** do they think people will eat instead? There is a whole body of literature on how telling people to eat less fat helped create the obesity epidemic. In all fairness to Interactive Health, they recommend eating only less dairy and other saturated fat, not less total fat. However, that is a subtlety that can get lost in those 1,350 words brimming with all sorts of random advice. For instance, on the subject of abnormal thyroid function, the letter says: “Talk with your healthcare provider about possible treatment options for this condition.” Sound advice indeed — if in fact the person in question had abnormal thyroid function, but according to this report (bottom of Page 2), her “thyroid was normal.” More bad news Even though this person does not have high blood pressure, the letter also recommends eating less salt. For people without high blood pressure and especially people like her who have other diabetes and cardiac risk factors, avoiding salt is likely a bad idea. Other than the answer being different for different people and different ethnicities (subtleties overlooked by almost all wellness vendors, which prefer to give blanket advice), the science is unsettled. It does, however, increasingly point to the importance of salt — something humans have been consuming in large quantities ever since way before the Roman empire paid its soldiers in salt — in the diet. This is especially the case for people with, or at risk for, diabetes or heart disease (which this person is). In particular, for people without hypertension, reducing salt intake to a level much below the U.S. average:

• is associated with higher risk of death among diabetics
• may increase insulin resistance
• may increase risk of death from heart disease
• may increase total and “bad” cholesterol

Among other limitations,  most of these studies are correlative, not causative, and rely on self-reporting rather than controlled environments.  So we can’t conclude with certainty that avoiding salt is a bad idea. Nonetheless, my suspicion is that companies paying Interactive Health millions of dollars — and basically forcing their employees to choose between submitting to them or losing money — have assumed that the advice they are giving employees is settled and likely correct, rather than controversial and likely incorrect. Other studies, generally older ones, recommend low-salt diets to prevent high blood pressure, so it is still at least arguably fair to say salt science is conflicted. But the overriding reason for Interactive Health to stop telling employees at risk for diabetes to eat less salt and less saturated fat is, what the he** do you think they are going to eat instead? Because most proteins come with saturated fat (and salt), there is only one thing left to eat: carbohydrates. The bottom line is that anyone who actually takes Interactive Health’s advice on how to avoid diabetes is likely to increase their odds of getting diabetes. See also: Wellness Isn’t the Only Scam in Healthcare  Fortunately, most employees will have the good sense to ignore their advice, if for no other reason than it is quite a Herculean task to plow through it all. How do I know this? By definition, any employee reading this blog is more health-conscious than average. And yet the particular employee who, after reading my blog post on them, sent me this letter originally sent me only the first and third pages. She hadn’t even realized there was a second page, because Interactive Health printed it on the back of the first page. Ironically, that was the page where it said “avoid sugar.” The “coaching” call In addition to the letter, this employee did receive a coaching call, described as follows: When they called to offer me advice, they simply said, “ Do you know you have high cholesterol?” I said, “Yes.” Then she proceeded to ask me what I was going to do about it. I said: “I thought you would tell me what to do.” She had nothing to say. Then I received another call a few weeks later as a follow-up, and I wanted nothing to do with them as they had already discredited themselves with the first call.   In yet another installment (which will have to wait until 2018 because December is devoted to highlighting the best-in-shows of the wellness industry and, of course, the Deplorables Awards) we’ll explain how Interactive Health translates ignorance of clinical guidelines, bad dietary advice and massive hyperdiagnosis into quite literally the most inflated savings in the wellness industry this side of Wellsteps.

A few weeks ago, for my work outside of Daily Fintech, I attended the InsurTech Asia Association Roadshow in Japan and Singapore. During the roadshow, Pivot Ventures (the company I work with), together with the association, brought together 15 startups with 15 insurer/reinsurers. This was my first trip back to Asia since moving back to the U.S.  It got me thinking: What are some similarities and differences between Asia and the U.S. when it comes to insurtech? At a high level, I found two clear similarities between Asia and the U.S:

• Incumbents are trying to find the right balance between upgrading legacy systems/other operational efficiencies with innovative solutions (both in terms of identifying the right corporate strategy plus prioritization)
• They are also trying to identify how to do innovation when it comes to distribution (in Asia, many have issues expanding D2C because of large captive agency and exclusive bancassurance tie-ups)

When you get a bit deeper, though, there are some very clear differences between the two continents, which lead to differences in terms of pace of change/adoption of insurtech solutions as well as the actual solutions that are being put in place: 1.  Many times people talk about Asia as one place.  Yes it is one continent, but with many countries. I have grouped some of the countries below based on my experience in the region: a.  Northeast Asia – Korea, Japan and Taiwan b.  Emerging Southeast Asia (ASEAN less Singapore) – Malaysia, Indonesia, Cambodia,  Vietnam, Laos, Myanmar, Thailand, Philippines, Brunei c.  Mature Southeast Asia – Hong Kong, Singapore d.  India e.  China f.  Central Asia (Mongolia, Kazakhstan, etc.) I group these countries based on where I believe they are in terms of insurance/insurtech innovation as well as similarities in culture. India and China are kept on their own because they are so big and so different. "Others" would include Central Asia and some other parts of Asia not specified in a-e. 2.  Coupled with the differences in culture of the different countries above is that of the consumer. This can be two-fold – 1) in terms of their preferences/needs and 2) in terms of their disposable income.  In general, there are some similarities in terms of income/earning of consumers in the countries/groupings that I label above, but there will be some big differences in terms of what customers need/want when it comes to Insurance in each market. 3.  Regulation is different in each country. This means, for an insurtech startup wanting to expand to Asia, it will need to deal with multiple regulators (which could be entirely different regulations, language, cultural dynamics). U.S. startups have to deal with different state regulators, but, on the whole, it is the same language and overarching national guidelines (though the dynamics of each state could make it just as difficult as launching in multiple countries across Asia). See also: My 4 Ps for Investing in InsurTech   Also, on regulation, there seem to be more regulatory sandboxes in Asia (HK, Singapore and Malaysia all have one), which allow for startups to try their solution in a market without having to go through all approvals. I believe the U.S. could really value something like this. Any specific examples? A whole paper could be written on the differences between each country in Asia, especially as it relates to insurance and insurtech. So, I will include the top question/comment that I received/heard in each market, which may help to shed some light on some of the key differences (though I only attended Singapore and Japan, we had one colleague with us from China, and I have also included one from my experience in Malaysia):

• Singapore – "Who else is using this solution? We’d like to know that it works, but we want to adopt a solution that will be new and exciting to the market."
• Japan – "Who else is using this solution, in Japan? By the way, who is using you guys in Japan?"
• China – "Many times, the Chinese firms will have startups present to them just so they can learn the technology and then build it themselves."
• Malaysia – "What can we do to make our agents/banks happy while also doing something to expand our direct capabilities?"

Willis Towers Watson/CB Insights Quarterly Briefing Two weeks ago, Willis Towers Watson and CB Insights released their Quarterly Insurtech Briefing. This quarter’s focus was on Asia, primarily China, and the "shifting global balance of power" as it relates to insurtech. There are a lot of great things with the report and I encourage you to read the whole report when you have time. A few key themes/figures resonated with me from my recent trip to Asia and my experience working in Malaysia. All graphs/pictures below have been taken from the Quarterly Briefing. 1) Insurance penetration is low and populations are growing, meaning there are tons of opportunities in insurtech. Looking at the picture above highlights two interesting things:

• For countries like China and India, the two biggest countries in the world, the insurance penetration is one of the lowest, meaning there are hundreds of millions of people who need to be served/provided insurance
• In contrast, Japan and Korea are among the top countries in terms of insurance penetration. Hence, the needs for insurtech may be a bit more specialized, as the focus will not be as much on distribution/reach as it will be for China and India

2)  Products and distribution need an upgrade On the product front, just like everywhere in the world, there are opportunities for innovation. The products in each market in Asia will be primarily driven based on customer need and affordability. Hence, the offerings in each market will vary widely from country to country. Additionally, due to the massive amount of e-commerce in Asia, particularly in China, there are a lot of opportunities for new products in this space as well as insurance as a bolt-on (API) to web-purchased products. On the distribution front, things become a bit more interesting. I have mentioned this a few times above. In Asia, when it comes to agency distribution, in most countries, the incumbents operate on a captive agency model. Some of the agents/agencies will have been with the company for upward of 20/30 years, only representing that incumbent. On the partnership distribution side, many of the agreements with banks in Asia are exclusive agreements (particularly on the life side), whereby banks are the exclusive distributor of an insurer's products. What does this mean? The potential for channel conflict for incumbents, when it comes to new direct channel (i.e. online) sales, is very high. Both agents and banks will want the new digital tools/investment to be made in them, and will see any other distribution channel as a threat. Just look at the graph above. This is quite telling. This, however, means that there are lots of opportunity for new full-stack players that come into Asia (that doesn’t exist as much in the U.S. because the agents/financial advisers in the U.S. typically represent more than one carrier). Because of these captive agents/exclusive bancassurance deals, full-stack startups can offer a different proposition because they are not encumbered by legacy system or legacy distribution. 3)  Enter tech giants and APIs Leveraging partnership platforms is what has made Zhong An so successful. It has also opened the door for a lot of new types of products based on the needs and offerings from the e-commerce platforms that Zhong An partners with. This trend will not go away. Not in China, not anywhere else. There will be tons of opportunities for insurtechs to partner with insurers and non-insurers alike to find new ways to offer insurance directly to a consumer. I like the three points below that were in the briefing: There have been some write-ups recently about Apple and Amazon potentially entering the insurance space. How can you read Bullet B&C and not think of these two companies? Summary Asia is a fascinating place with different people, cultures and topographies. Aside from the similarities and differences outlined above, one thing for sure is that Asia is "always on." Every time I go there, I feel a certain buzz around me. It doesn’t matter what country I am in, I always feel that buzz, because almost everywhere in the continent is growing (albeit some places moreso than others). China is one market that is so intriguing. Geographically, it is so big. This means that each area is so diverse, as well. Things happen there at a pace much faster than anywhere else in the region. See also: Innovation: ‘Where Do We Start?’   As I’ve mentioned in a few articles before, cross-border collaboration and best-practice sharing is what is going to help make insurance and insurtech thrive. What is your experience of the difference between insurtech in Asia and the U.S.? Please share your knowledge in comments  or on the Fintech Genome. This article first appeared at Daily Fintech.

Disasters can happen in an instant, or they can come with some warning. There is usually some notice when there is an impending winter storm, but, all too often, people are still caught by surprise. When looking at the winters of 2015 and 2016, winter storms hit in some areas of the country that were not accustomed to such harsh conditions. This only proves winter storms can happen anywhere, no one is immune and, if you have a business, you need to be prepared. When people hear “winter storm,” they usually think about snow or blizzards — and that is certainly part of it. But winter storms can also bring high winds, ice and freezing rain. There could also be a combination of any of these conditions. This can result in power outages, downed trees, unsafe roads and other situations that make it dangerous to be outside. Statistics show nearly 25% of disaster-affected businesses never re-open. It doesn’t matter if that disaster is a winter storm, flood, hurricane or some other tragedy. Any business is vulnerable, but small businesses are especially at risk. They tend to have fewer employees who are able to get the business up and running again and assist in recovering losses. They also have less capital available to start over or even recoup losses. Creating a Business Emergency Plan A good business emergency plan could be the key to allowing your business to recover and resume operations after a disaster. This sample business emergency plan from Ready.gov is a good place to begin. First, identify the address where your business will operate, then identify a secondary location should the first become inaccessible. Next, appoint someone as the primary crisis manager for your business and designate a backup if that person is unavailable. Assemble a crisis management team and find other businesses that you can network or coordinate within a disaster. See also: Getting Beyond Risk in Insurance M&A After this, determine and prioritize your critical operations as well as who is in charge and what he/she needs to do when the emergency plan goes into effect. Also, list your suppliers, vendors and contractors — their contact information, what they supply and how to reach them. Then, identify an alternative for each, perhaps outside of the affected area or businesses that can get to you if the roads are closed. Include these elements in your emergency plan:

• Evacuation plan
• Shelter-in-place plan
• Crisis communications plan
• Cyber security plan
• Records backup
• Employee contact list

Your plan should be updated annually and after any emergency event. After a crisis, it is important to review your plan, assess its effectiveness and document any lessons learned — then make adjustments accordingly. Prepare Employees Most cities have text or SMS alerts for severe weather. Encourage your employees to sign up for alerts and download weather apps so they can keep an eye on the weather. Provide information on putting together an emergency supply kit, securing important documents in a safe place and creating a family communication plan so they can be prepared at home. Your employees are more than just workers in your business, and part of continuing operations means ensuring their personal safety. Make information about winter storms accessible to your employees, especially if you are in an area where winter storms are somewhat uncommon or if you have employees who are from such areas. Have a meeting to discuss these things with your employees and help them prepare. Review various scenarios, problems and potential resolutions for both work and home. Prepare your Business Use this 12-point checklist to get your business winter-ready:

1. Review your insurance policy and coverage. Some policies offer financial protection for business interruption because of severe weather. Also, make sure your policy adequately covers your business and the property it is on.
2. Replace old doors and windows, ensuring there are no gaps or cracks where cold air can seep in.
3. Clear your gutters of all debris.
4. Make sure your pipes are properly insulated, even if you live in an area that does not typically get severe winter weather.
5. Don’t leave any building unheated for any time, even if it is empty. The pipes can freeze, which has the potential to cause serious problems.
6. Check outside for dead trees or branches that are low-hanging or weak. Wind can cause a tree or branches to fall. Ice can accumulate on branches, creating what is called a “widow maker,” which is a deadly branch that can fall suddenly when it breaks under the burden of the ice.
7. Inspect your roof for any loose shingles for issues that could present problems during a storm.
8. Hire a pro to inspect your heating systems.
9. Invest in a good generator. Even if the power goes out, a generator can keep your business operational.
10. Create a plan for ice and snow removal. Ice and snow are significant liability risks as a safety hazard. They also have the potential to cause severe structural damage and can prevent your customers from being able to get to your business if you are able to remain open.
11. Teach your employees how to manually process credit cards and ring up customers. If you are a retail establishment, this is particularly crucial, but it can allow you to still make sales transactions even if you don’t have internet access. You will need to have a detailed inventory and make precise notes on what is sold so that the information can be entered once your business is back online.
12. Back up your data. Many businesses purchase cloud technology to back up their data, but if you have sensitive information you should get professional assistance. You can also back up offline as well using an external drive.

See also: Riding Out the Storm: the New Models Winter storms should be taken very seriously. Prepare your business and ensure continued operations or decrease your downtime. You don’t have to become a statistic. No business has to fail after a disaster if it is properly prepared.

In the opening segment of this series on complexity, I discussed the three network graphs that have emerged in the risk markets and which business models embody them. For quick reference: In the second segment, we discussed the emergence of P2P insurance, which will formalize the three core functions of the risk markets that currently exist in a “black market,” unformalized state. These functions are:

• Risk transfer;
• Escrow of funds for a defined purpose; and
• Management of reallocation of escrowed funds.

This formalization will occur via the emergence of a platform that enables all of these functions to be accomplished by the users of the platform, bringing the existing P2P economic activity out of its black market state and into the light of day. Risk is the killer app for distributed ledgers! The focus of the blockchain community on banking has been an interesting side effect of the timing of the Bitcoin innovation that coincided with the collapse of the U.S. banking industry. The blockchain technology software went open source in January 2009, while the markets (DJIA, S&P 500 and NASDAQ) bottomed out in March 2009. The term “distributed ledger” is synonymous with blockchain. Both refer to the technology of a shared digital ledger, upon which transactions are validated by a distributed set of servers using chronological, public and cryptographically secure methods. I prefer the term “distributed ledger” because, at its core, this technology is an accounting tool that enables a set of capabilities not previously attainable. In a distributed ledger:

• All transactions — or, in accounting vernacular, “ledger entries” — are validated using a distributed method, without requiring users to trust in a central authority who has control over all entries on the ledger.
• There will be lower transaction costs — both in terms of less time and lower labor costs — because there will no longer be a need to coordinate a multitude of private, centralized corporate ledgers.
• It will create an ability for end users to publicly escrow value on a platform that enables them to connect directly with each other, creating a P2P distributed graph and enabling both the trusted communication of and individualized control over the reallocation of their escrowed value.

I would like to introduce the idea of a “risk ledger,” which is any ledger where value is escrowed as a hedge against a risk so that the risk can be safely carried through time. Currently, insurance carriers operate risk ledgers as they escrow money against a risk over a segment of time. (I wonder if this is why insurance companies are called “carriers.”) The same goal can be easily accomplished using distributed ledger technology, albeit with some advantages over private, opaque, centrally controlled corporate ledgers. See also: 5 Steps to Profitable Risk Taking   Distributed ledgers enable individuals to escrow value in the light of day against a risk, carrying the risk safely through a segment of time until a loss event necessitates the reallocation to the user who experienced a loss event and the removal of that value from the distributed ledger. Risk is the killer app for distributed ledger technology; as such, I believe the timeline for adoption in the risk markets will be shorter than observed in the banking markets, where the technology itself needed time to mature. Trust is a fundamental ingredient in all financial services, and trust is something that distributed-ledger technology has a unique ability to enable. Because all money that is escrowed on a distributed ledger as well as the movement of that money is visible to all, users can trust in the system without needing to trust any single validator, company or peer participating in the network. It must be understood that all distributed ledgers are, inherently, a network. There are many distributed ledger networks out there, but I will use Ripple’s to exemplify how a P2P distributed risk ledger platform may look. Thankfully, Ripple spearheaded acceptance by international regulatory bodies on issues associated with distributed ledger technology. Another reason I choose to use Ripple is because of its two technical features: 1) It has built-in “trust lines,” which enable individuals to create an explicit network of other peers whom they trust, and 2) it has the built-in ability of order books, which can be used to make markets between different stores of value. There are other technical advantages of Ripple, but these two elements combine to make a powerful and open-source solution. Trust lines function as roads upon which value can move around the ledger. If I trust you, then you can send me value. If I do not trust you, then you cannot send me value because there is no path for the value to travel upon. This capacity for individuals to control who they are willing to trust enables individual peers to self-assemble a “trust graph” mirroring and to document the reality of who is trustworthy. Because all financial services are predicated on trust, this can be thought of as the finance industry’s equivalent to Google’s link graph, Facebook’s social graph and LinkedIn’s colleague graph, etc. Whoever ends up building this “trust graph” will likely be capable of creating much more value for society than those other graph types because of the significant role that finance plays in society. Peers can extend trust lines to other peers they personally know, trust and are willing to help. These trust line connections create a trust graph in the same way as friend connections on Facebook create the social graph. In this way, a P2P distributed trust graph can be self-assembled and emerge out of the actions of the individual peers. Building a distributed graph of roads and creating many paths upon which value can travel across the distributed risk ledger network is an example of a distributed managerial process. To give some example of how escrowed funds would flow through this distributed trust graph, let’s look at a hypothetical loss event. When a loss event occurs, a user documents the loss, and other peers who trust that user can choose to send a small amount their own escrowed funds to help their friend. (There is a formalized financial model  I will not detail.) However, I was surprised to discover, after working out the model’s details, that the model actually existed 1,000 years before modern insurance methods came about in the mid-1600s. Order books — and the ability to make markets — enable agents and insurance carriers to retain their relative roles as they exist in the industry today. The platform can be set up in a way that agents can capture a fixed fee as a spread or a percentage of the money that flows through the users that trust the agent by extending the agent a trust line. This is akin to commissions. The platform can be set up in a way that carriers can manage the funds, which users put on escrow, and can control which agents are allowed to access the carrier’s gateway. This enables carriers to essentially mirror the same function that the appointment process accomplishes today. Carriers can do this activity without invoking the regulatory burden of insurance laws; they only need to comply with MSB regulations. This would also enable carriers to earn float income on the newly escrowed balance. Phase change innovations typically emerge to address an order of magnitude more complex than what preexisting methods could in the prior industrial age paradigm. Consider how much economic activity and the number of actors Uber can organize on a global scale versus the top-down methods of an industrial-age taxi company. In the risk markets, coming out of the industrial age, we can see many companies operating independently in each of the three graphs (which are intentionally siloed). To achieve an order of magnitude improvement, we must encompass and coordinate all three graphs structures onto a single platform. See also: Are Portfolios Taking Too Much Risk?   Currently, agents function as a hub of client trust. Agents enable clients to navigate the complicated insurance product space and achieve the distribution of insurance products backed up by carriers. On a Ripple ledger, the agent would be a centralized hub of trust lines, and the graph would show that many users trust the agent node. Currently, carriers function as an access point and product provider, lifting the burden of regulatory compliance, administration and product creation from agents. Engaging with the platform, each carrier can independently escrow client money without hampering the client’s ability to connect with other peers who they trust but who may not be clients of the same insurance carrier. With order books, the carriers can trade escrowed funds to enable a user who has experienced a funded loss event to receive a single check from the carrier that that user does business with, even though many of the peers funding the coverage are not clients of that carrier and do not have funds escrowed with the carrier issuing the check. Via these order book connections, carriers' relationships will create a decentralized graph on the platform. Combining the peer-to-peer distributed trust line graph, the centralized graph that is the hub of trust connections surrounding the agent and the decentralized graph of carrier-to-carrier order book connections, the platform can facilitate the coordination of all three graphs within a single system — all while relinquishing ultimate control of the flow of funds to the individual peers of the platform. This achieves a distributed managerial method of the reallocation process applied to the escrowed funds. This also alleviates the cost of adjusting claims and the exposure to fraud from the participating carrier’s perspective, as well as the distribution of the costs associated with the adjusting process across the peers participating in the network. As is explained in his book “Why Information Grows: The Evolution of Order from Atoms to Economies,” MIT’s Cesar Hidalgo argues that we are at a point when firms need to network if they desire to continue to create value for society in excess of what any single firm can create alone. Via a distributed risk ledger network, many carrier firms can run the servers that maintain the whole ledger. This gives each carrier an equal vision into the ledger and removes the need for any carrier to submit control to another carrier that is tasked with running the entire system. Most importantly, these methods function as a shared back office so that no single firm bears the burden of the costs associated with managing all of the small loss events. Additionally, the cost of the system’s management does not need to be duplicated and absorbed by each participating firm. This is essentially how Ripple is being implemented in the banking industry to reduce the costs of international payments and increase the speed of international flow of funds. Some examples:

• Firms in the home and auto insurance business can network to facilitate a ledger with other home and auto insurance firms, helping homeowners who experience losses that are under the deductible or excluded from the policy form.
• Life insurance firms can facilitate their own ledger networking with other life insurance firms, enabling coverage for clients who do not meet underwriting requirements, such as those over the age of 75 or with a terminal disease.
• Firms in health insurance can network to facilitate a ledger with other health insurance firms to better enable users to cover high deductibles, only invoking their traditional insurance contracts for unexpected, large incidents.

By networking, firms can enable the existing P2P risk transfer behavior to occur with less friction and bring this important economic activity out of its black market state and into the light of day on a formalized platform. Once the economic activity is occurring on a formalized platform, one would expect to see, like was observed with Uber and AirBnB, a resulting boom in the aggregate amount of the economic activity, growing the entire risk market’s pie and improving the risk market’s value add to society. See also: 4 Steps to Integrate Risk Management In the next segment of this series, I will consider possible changes to the risk market’s current equilibrium state and what that equilibrium may look like after the phase change has occurred.

What is a digital insurer? In my previous two blog posts we dived into the digital deep end. In Part 1, we looked at what a digital insurer is and what it is not. We examined the link between customer-centricity and digital readiness, and we attempted to resolve the paradox of being an insurer that is running core systems yet wants to use agile emerging technologies and insurtech capabilities. In Part 2, we likened digital enterprise to a three-chambered fusion reactor that includes apps, content and journey. The reactor safely conducts the molecular fusion of core transactional capabilities and innovative emerging technologies and insurtech capabilities to provide exponential energy to the enterprise. We discussed apps and content, and now we are at the moment of truth — Chamber 3. We MUST design our fusion reactor to use the full power of the customer journey, creating compelling and relevant experiences. The experience is the most vital chamber of our fusion reactor for building our new digital framework. Experience and Experimentation Experience is how we build the FINAL customer journey and deliver it to our intended customers. To experiment with new business models, new pricing models and new customer interactions, we need to employ the full power of speed to value, improved total cost of ownership (TCO) and rich ecosystems. This is the era of digital, and speed is analogous to digital. Think about it. Instant gratification is becoming the norm in our society, and the speed of innovations is exponentially increasing. For insurers, this means we must ensure that our new digital platform can provide the speed, agility and cost-effective mediums that will yield speed in the customer journey and speed in the implementation of innovations.  What is not possible with entrenched systems is now possible with cloud deployment as long as the platform is designed for the cloud and not just retrofitted to run on external servers with architecture designed for on-premises expensive deployment and upgrades. See also: Core Systems and Insurtech (Part 1)   Find and Bind Find and bind will become a “most sought” requirement in the near future. Because long and expensive integrations cannot keep up with accelerating growth in innovations, a new methodology is needed to stay on top of innovation. A find-and-bind platform reimagines how new capabilities can be quickly bound to existing apps and content for designing overall functions and customer journeys. Find-and-bind architectures may appear to be “nice-to-have” now, but they are increasingly becoming important for leveraging new capabilities to continually innovate. Majesco is investing valuable R&D funds in this next-generation digital platform. Find-and-bind platforms will revolutionize how insurers think of themselves because they will open the doors to a thousand timely opportunities. Customer Journeys — The Real Deal An organization will know that it has arrived at digital fusion when it has fashioned and is using capabilities to design, implement, deploy, measure and tweak customer journeys for the insured and intermediaries. Many companies are using their customer satisfaction numbers as evidence that they are either “digital enough” or that they don’t need to move forward quickly. For example, a company-wide goal of customer satisfaction of 95% or above is often translated as 95% of customer satisfaction by each silo owner. This is not a bad goal – 19 out of 20 customers will be satisfied and a promoter of the company. But there is a problem, pointed out in a study by McKinsey. The study revealed that that a typical claims process goes through five to seven silos – underwriting, claims adjustment, payment, etc. If we assume that the journey runs through five silos and each achieve their goals of 95% customer satisfaction, there is a 5% dissatisfaction possibility at each stage. It isn’t the same 5% of people who are dissatisfied at every stage. The net overall customer satisfaction drops to only 75%, which is terrible. How is digital involved in customer satisfaction and in improving satisfaction across the journey? By recrafting the customer journey and its processes, we can cut through silos and unify the experience so that satisfaction is reached throughout. We use journey maps to establish a customer-centric brand by feeding customer experience back into the design. In other words, we use data and analytics from IoT, social and other non-conventional data to custom fit the experience to the user, regardless of whether the interaction is initiated by customers, intermediaries or insurers. Then, we monitor effectiveness and continually use our knowledge to raise the bar of customer experience. Is your organization an aspiring digital insurer? I’ve created a list of questions that may help you to consider the importance of change.  

• Can our digital strategy for delivery in differentiated customer experience really be supported with traditional platforms, attaching analytics and digital systems to silo-designed core systems?
• Are we able to test customer journey maps and learn, to continually innovate the customer experience?
• Are we able to focus on innovations and not be distracted by infrastructure and IT operations?
• Do we have “first-mover” advantages when we roll out new products, new services and new customer experiences, leveraging innovative data sources and technology?
• Can we achieve acceleration and scalability to launch our digital strategy by leveraging an industry platform that is designed outside-in and continually invested with expert innovations?

See also: Change Accelerates in Core Systems  You can start small or you can start big but staying still is not an option. This article was written by Manish Shah.