Maturity in innovation means the innovative approaches taken by companies throughout the ecosystem are becoming more comprehensive and systematic. SMA has acquired a unique historical view of innovation in insurance through our annual SMA Innovation in Action Awards – and we have seen how it has changed over the six years of the program. Small-scale experimentation with a single emerging technology like drones has been replaced by building an entire product or division around advanced technologies like machine learning. Insurers are also taking concrete and proactive steps to establish an innovative culture within their organizations. This year’s award winners provide great examples of these shifts and show how innovation is becoming firmly established in insurance. An excellent example is Liberty Mutual Insurance, the winner of a SMA Innovation in Action Award for company-wide innovation. They created a sustainable innovation model across the enterprise to successfully deliver transformational value to their operations and customers. Their innovative initiatives include developing a digital, direct-to-consumer insurance product aimed at skiers and snowboarders, multiple skills for Amazon Alexa that break new ground in how consumers interact with their insurance company, and a number of next-generation telematics programs. See also: Innovation: ‘Where Do We Start?’   Liberty also implemented cutting-edge analytics and emerging technologies in support of their Liberty Mutual Benefits carrier, winning an award for innovation in a single initiative. Building the data structure from the ground up gave Liberty Mutual Benefits the opportunity to create a data-driven organization with a focus on speed to market and innovative thinking – in effect, an InsurTech within the larger Liberty Mutual structure. Liberty Mutual Benefits leverages the open-source analytics platform Hadoop, artificial intelligence, visual analytics, and machine learning to extract the greatest value from big data and store it in a data lake rather than a traditional data warehouse. Innovation at Liberty is not only happening within their innovation division, Solaria Labs, but throughout their business, with various external partnerships as well as investments through their strategic venture arm (Liberty Mutual Strategic Investments). Liberty Mutual is demonstrating how innovation as an organizational value can both drive competitive advantage and create new solutions for customers in the digital age. TAL, Australia’s largest life insurer, took their own approach with an innovation initiative. The first achievement of that program is a new breed of customizable life insurance, CoverBuilder, which won one of this year’s awards. TAL CoverBuilder allows consumers to build their own personalized life insurance policy by adding or removing blocks of coverage. Designed by consumers through interactive online processing and education, new policies can be written without the help of a financial advisor. They can see how each choice they make affects their premium and benefits, and educate themselves about their life insurance options at the same time. As a result, they both understand and value the coverage that they put in place. TAL’s new product approach is tailored to the self-directed digital consumer. They found that these new customers valued customization rather than simplicity and were willing to learn about many coverage options in order to personalize their coverage. TAL’s nimble pivot allowed them to better serve these customers. They furthered their offering by partnering with Qantas for early rollout, marrying their life insurance expertise to next-generation business models such as wellness programs. Grange Insurance created an internal practice to institutionalize innovation through cultural change, regular events, and multiple channels. Their formal innovation practice elicits active participation across the enterprise, using an ideation platform for crowdsourcing innovative ideas, regularly scheduled hackathons, gamification, and communal discussion boards. All business and IT associates are incented to participate, backed by strong support from the senior leadership team. Some of the new ideas, like their skill for Amazon Alexa and an associate mobile app, are already in production. Many others are in the development pipeline following hackathons focused on increasing customer retention and potential uses for chatbots. Grange has also benefited from adapting their cultural mindset to structured, scientific experimentation and accepting failure as a key learning step toward successful innovation and creativity. Grange’s direct, inclusive approach to innovation complemented their established business practices. The first hackathon dealt with policyholder retention, taking a new look at an old problem. Together with advanced technologies like natural language processing and chatbots is simple, low-tech collaboration: communal whiteboards for brainstorming and communication across siloes, with enthusiastic participation by top executives. See also: Insurance Coverage Porn   This year’s insurer award winners are well-established companies with long histories, not greenfield insurers. Together, they have been writing insurance for 335 years. As exciting as the InsurTech world is, it is not the only home of innovation. In fact, the shifts that the winners have taken show how they can take advantage of the best of the new world without giving up their existing expertise. The convergence of these two ways of thinking positions them as Next-Gen Insurers. What is clear from these examples is that these shifts are possible, valuable, and indeed central to the future success of these organizations. So, we urge insurers of all sizes and lines of business to look closely at these examples of convergence, where innovation complements an insurer’s established strengths. The opportunities are out there in every aspect of your business – and are paying dividends to the business of insurance.

Blockchain technology is being hyped as ‘internet's superlative’. Some even think that blockchain promises to be a new infrastructure for financial services by 2020. The essence is that it facilitates peer-to-peer exchange of value, that is without the intervention of a third party, and that indeed renders the possibilities endless. Applications include identity validation, risk reduction, dramatic process improvement (on speed, accuracy, transparency and cost efficiency), fraud prevention, effective and efficient compliance and a lot more we can't possibly know about at this point. In this blogpost we listed our favorite blockchain showcases. All five have been selected for DIA editions in Barcelona or Amsterdam. All five match our key criteria; they significantly contribute to operational excellence and customer engagement innovation.
1. Tradle: KYC on blockchain New York-based Tradle is using the blockchain to build a 'know your customer' (KYC) requirements network to secure both intrabank and external transfers. Current technology has moved little beyond pen and paper but the blockchain provides a secure digital infrastructure. Tradle's system, ensures the transfer of data is verifiable. It's about transferring trust, not assets. With KYC on blockchain, Tradle is building a global trust provisioning network to give retail, wealth, SME and institutional customers of financial institutions faster access to capital and risk allocation. Tradle helps financial institutions to turn the pain of compliance into commercial opportunity. Read more … Check demo … See also: Blockchain: Basis for Tomorrow   2. Everledger: blockchain-based diamond fraud detection Everledger is a digital, permanent, global ledger that tracks and protects items of value by using the Bitcoin blockchain as a platform for provenance and combating insurance fraud. The London start-up is starting with diamonds, with a view to expanding into other luxury goods - high value items - whose provenance relies on paper certificates and receipts that can easily be lost or tampered with. With Everledger, the record is tamper-free; it’s immutable and can therefore be trusted. It also provides a Smart Contracts platform to facilitate the transfer of ownership of diamonds to assist insurers in the recovery of items reported as lost and/or stolen. Smart Contracts will also enable a fundamental change in the diamond marketplace and the way they’re financed. Diamonds are a global problem in terms of document tampering and fraud. In London it’s a 2 billion USD problem, meaning it is realistic to generate revenue with a blockchain-based diamond fraud detection system. Read more … Check the keynote of Everledger CEO Leanne Kemp … 3. Eris Industries: The smart contract application platform to solve big problems The London start-up Eris Industries has built a universal platform for smart contracts and legal applications of blockchain technology. This platform is the first that allows the full potential of blockchain-based technologies to be realized in business. By combining blockchains and systems of smart contracts, businesses can take any data-driven human relationship and reduce it to code – guaranteeing accurate and consistent execution of functions that hitherto required human discretion to manage. The free software allows anyone to build secure, low-cost data infrastructure with run-anywhere applications. By using permissionable, smart contracts’ capable blockchains developers can easily solve commercial data driven problems. Read more … Check demo … 4. Guardtime: the world's largest blockchain company Guardtime is a cyber-security provider that uses blockchain systems to ensure the integrity of data. The company has its roots in US defense systems and expertise in state-level digital security (Estonia). Guardtime uses Keyless Signature Infrastructure (KSI), a blockchain technology that provides massive-scale data authentication without reliance on centralized trust authorities. Unlike traditional approaches that depend on asymmetric key cryptography, KSI uses only hash-function cryptography, allowing verification to rely only on the security of hash functions and the availability of a public ledger. In this way, Guardtime guarantees data integrity without the need to keep secrets. In short, instead of putting all of the data up in the blockchain, they only take fingerprints of the data. Read more … Check demo … See also: 5 Main Areas for Blockchain Impact   5. Kevinsured: blockchain powered chatbot insurance for sharing economy Kevin, Traity’s new chatbot, provides micro-insurance for online P2P transactions. Created in collaboration with Australia’s financial services conglomerate, Suncorp, Kevin protects buyers on online marketplaces such as Gumtree, Facebook and Craigslist. From buying football tickets to renting a bicycle, Kevin insures any P2P transactions against theft, fraud, scams, etc. Anything. Millions of transactions happen between strangers every day. Most of them work out really well, but the small percentage of scams make people fear strangers. Kevin brings trust to people buying, selling and renting from one another, Kevin ‘insures the use of internet’. To help stop scammers, startup chatbot Kevinsured is here to support online buyers. For any transaction under $100, Kevin validates the integrity of parties to insure the transaction between the buyer and seller. Once a purchase is made and Kevinsured is notified of it, the chatbot reaches out to both the buyer and seller to verify everything is legitimate. $100 may not sound like much, but it covers most of the transactions online. Furthermore, at Kevinsured they think that this is not just about insurance but about prevention. Users who buy and sell through Kevin will be subject to a reputation check, and scammers will simply try to avoid it, so they are likely to see a low level of scams, because scammers prefer to be anonymous.

The difference from one year to the next can be astounding. Just compare surveys of independent agents from the end of 2015, with the same survey taken a year later at the end of 2016. Industry outlook improved significantly as 49% felt positive about the year 2017, compared with only 33% for 2016. But…before we start doing the happy dance, let’s take a more in-depth look at the state of independent agents. Not as Good as It Seems Despite the hoorays and hoopla, we’re not uncorking the champagne just yet. There are still disconnects between independent agents and carriers over workforce efficiency. In a recent survey conducted by National Underwriters (NU) in conjunction with PIA, Flaspohler, 66% of independent agents rated ease of doing business as the number one consideration when selecting carriers. EY sheds more light on this. Over a quarter of independent agents find the effort spent on administrative tasks to be a serious threat to growth, while 35% of agents told EY that they would stop, drop and roll for improved customer online tools, and 45% would stand on their heads for fewer forms and less paperwork. Furthermore, 60% of agents select carriers based on the quality of the tools they offer and 35% have left one carrier for another offering better options. See also: P&C Insurers: Come Out of the Dark Ages   Another major storm cloud on the horizon is product choice. Product choice significantly impacts the ability of agents to generate new business. In the NU study previously referenced, independent agents rated access to superior products and coverages 8 points in importance on a nine-point scale. As proof of changing consumer preferences, agents already report that demand for usage-based insurance and policies tailored to meet the needs of the sharing economy are escalating. Putting the Numbers Together Now that we’ve showered you with the rapid-fire numbers, let’s take a second to recap and focus on what it all means. Agents are seeing demands for a wider selection of products, including new coverage types related to the sharing economy. As a result, nearly half see the ability to customize products to the needs of their customers as integral to their future success. Greater product choice is also a concern with 40% of agents saying they need products to fit a wider range of consumer needs. Distribution is also a challenge. Digitally-enabled insurers are growing at 2.5 times the rate of their less- advanced peers. The difference between agents with strong digital capabilities and those still wading through complex forms and processes to quote, bind and issue products, is efficiency. Enabled with automation, digitally-empowered agents rapidly quote and issue products, meeting the needs of consumers expecting lightning fast distribution. As a result, more than half of agents select carriers based on the tools and capabilities they offer. For instance, Progressive, an insurer recognized for embarking up the digital tree when it comes to empowering agents, was ranked number one on independent agents’ list of approved carriers. While carriers fight aging legacy technology and costly, long new product development cycles, the world continues to spin and agents continue to award their business and loyalty to insurers capable of delivering the products they need in a seamless simplified transaction. Or, they take matters into their own hands, and find it themselves. Doing it Their Way Leading agencies are adopting a top-tier digital distribution platform with a tightly integrated market network of products. In doing so, they gain access to efficiency-enhancing digital tools and expanded product selection without taking on new carrier appointments. Agents use the digital distribution solution to bundle their current carrier appointments with products from the market network. It happens seamlessly, in a single transaction and all that customers see is an agent who can offer robust product choice and then quickly and efficiently quote, bind and issue the coverage they need. Benefits include:

• Tightly integrated market network: Waiting for carriers to develop new products and provide appointments can leave agents holding the bag with customer satisfaction. A market network gives agents access to the products they need now, without obtaining additional carrier appointments.
• Straight-through processing: PwC, in their recent report on the state of the P&C insurance market, proposed an interesting scenario: “…imagine a small business owner being able to enter just four pieces of information (e.g., business name, business address, and owner’s name and DOB) on a policy application and receiving a real-time business insurance quote with the option to immediately purchase and electronically receive policy documents.” Surprise, surprise, no imagination required with the right digital distribution platform, as automation prefills the application, quotes multiple product options and then binds and issues the coverage when the agent clicks the mouse. And it’s available for both personal and commercial lines.
• Improved efficiency: Stop working on those speed typing records. With digital distribution, you won’t need them. Data entry is minimized, giving agents a shorter, more productive path to policy quoting and issuance.

See also: P&C Core Systems: Beyond the First Wave   By selecting a digital distribution platform with a tightly integrated market network, insurers have improved agent efficiency, doubling quote volumes, converting 35% of those to sales and booking over 55,000 policies in a single year. Others who have started seamlessly bundling products from their own lineup with those from other carriers are selling 1.6 more of their own offerings, ultimately generating $70 million in premiums in under 10 months. Maybe it is time to start doing the happy dance after all. To learn more about the power of product choice and digital prowess, download our infographic, A New Year, A New Insurance Industry.

Workers’ compensation is constantly evolving with new case law and legislation around the nation every year. Because of this, managing a workers’ compensation program is a huge challenge for risk managers. At the CWC and Risk conference Mark Walls lead a panel discussion around the state of workers’ compensation. The panel included:

• Janine Kral, Vice President of Risk Management, Nordstrom, Inc.
• Jennifer Saddy, Director of Workers’ Comp/Corporate Insurance & Risk Management, American Airlines, Inc.
• Miriam Levario, Director of Workers’ Compensation, Warner Bros. Entertainment Inc.
• Duane Hercules, President, Safety National
• Rick Taketa, President and Chief Executive Officer, York Risk Services Group, Inc.
• Tom Ryan, Managing Director, Workers’ Compensation Market Research Leader, Marsh LLC
• Mark Walls, Vice President Communications & Strategic Analysis, Safety National (Moderator)

Talent attraction and retention for the future: what can we do? Social mission is a key message to attracting new talent. Employees care about getting those workers back to work as soon as possible. Employees want to have meaning and value added to their job. We are here to help people, here to help, here to entertain. Bringing in employees that are like family. They are coming to work for the brand not necessarily the company. That is how to retain employees. Employees are looking for a mission or bigger picture to be part of a bigger and greater good. Continue to tell the greater good of how we help injured workers. Work with universities and internships to create and build those relationships. People want a job with a purpose. How important is total cost of risk? Total cost of risk includes all costs of an insurance program. Imagine a pie cut into slivers and each of those pieces are costs of variable and fixed costs involved in a workers’ compensation program. As small as 10% could be fixed and 90% could be variable including surveillance, lost wages, medical costs, etc. Look at benchmarking compared to peers to see where your company stands compared to others. Create specific goals to measure and chose key data elements and watch those costs. Do not want the claims of today to turn into the claims of tomorrow. Open communication between workers’ compensation and company. See also: 25 Axioms Of Medical Care In The Workers Compensation System   Thoughts around drug treatment guidelines and drug formularies? Should create similar procedures and protocols for similar injuries, positives far outway the negatives. Create better true treatments for injured workers now not using 17 year old data and treatments that are outdated. Create clinical treatments early on and create benchmarking to create results, be proactive and not reactive. Predictive analytics is an industry buzzword now. How are you using analytics? First thing to look at is prevention. Look at how we can use that data and create prevention in that area. Post loss – look at opportunities to mitigate those losses. Prevention. Once you have an open claim, you have an open claim. Meet with safety and other departments that are having multiple similar injures. The word predictive is important. This requires action after you receive that data. Look into those claims and see which one will benefit from this predictive analytics the most. Pattern recognition from huge groves of data. Its not just about identifying what has happened in the past but how can that be used for the future. Use that data and create a workflow path for similar injuries. Need to check and recheck data to make sure its accurate. Make sure the reports are credible. Machine learning and artificial intelligence. What are some other technology areas for potential impact of workers’ compensation? Assisting and changing the way we communicate with injured workers. Large area for improvement for communicating with injured workers. Claimants should be able to get any information regarding their claim whenever they would like such as a portal they could log in and see where their claim is standing. Understand and know your audience. Some technology will work for younger claimants but some older claimants appreciate the personal phone call and not the text message. Collision avoidance programs to decrease injuries. Wearable technology and wearable devices can provide real time data to proactive to reduce injuries. How does California compare with other states? Its a nation to itself. Just the size is huge. Geographic and demographic complexity. Over the past few years there has been a lot of positive change. The state is also highly regulatory complex. Clear litigation issue in California that needs to be addressed. Highly more expensive. Changes over the past years have been favorable but there are still issues with litigation. Issues around marijuana More research needs to be done, it is an evolving trend for sure. Safety is a big issue and some companies want to remain a drug free workplace. Minimal regulations on medicinal marijuana. Needs to be a more safe environment and regulated. Challenge for some companies is around drug testing and remaining a drug free environment but these injured workers are taking heavy doses of opioids. Dealing with issues in states where marijuana is legal but the company is a drug free workplace. This gets confusing for employees. See also: How Should Workers’ Compensation Evolve?   How do you think workers compensation needs to evolve? Crucial for claims examiner and their role with the claimants. They can make a huge impact with the way the claim plays out. Effective use data and technology to increase workplace safety. This leads to better outcomes. Evolve to meet on demands needs such as Uber, Lyft and even delivery services. Attract the best and brightest new talent. Nothing is better than getting injured workers back to health and back to work. Look at a more holistic approach to health management and better alignment with health and wellness.

HiThere, the ambitious Dutch startup, wants to reinvent insurance. They strongly believe they can improve the quality of life by providing customers a safety net through insurance. This safety net should be affordable and available to everyone all over the world. So that is why they decided to build their own unique platform: HiThere. A fully automated, modular back-office insurance platform that integrates the back-office seamlessly with the front-end, operates securely in the cloud, is accessible for customers, intermediaries and the insurer and is able to deal in a fully automated way with all life insurance products - closed books and open books - in a fast and flexible way. It is possible to provide personalized premium quotes, based on AI and advanced analytics. HiThere started from scratch and did not have to keep existing, outdated systems in the air. By making progress in the six key dimensions discussed in the McKinsey report, the making of a Digital Insurer, they build a brand-new insurer based on the latest insights, new regulatory demands, greater administrative efficiency, growing cost pressure and digital transformation. The total amount invested in the current HiThere application is around € 4 mln. [caption id="attachment_28053" align="alignnone" width="570"] McKinsey (The Making of a Digital Insurer)[/caption] See also: Lemonade: Interview With CEO   Advantages of a fully automated back-office HiThere has full, digitized processes, the latest data analysis technology and is not bound to a physical location. It offers great cost reduction, pricing based on pay per policy, personalized premium quotes and the ability to provide all the required business information real time to all the stakeholders. Handling the whole life insurance back-office chain in a fully automated way. The startup concentrates on designing creative and new ways to involve their customers and thereby radically improve customer experience. This will ensure that it becomes part of a much larger service platform that consists of a community of companies around the customer with all the services that he needs. Digital platform for funeral insurance The HiThere team developed tailor-made software for the funeral and cremation association Bleijerheide (BCB) in Kerkrade. They automated all the processes and created a full digital platform. New members can sign up online and existing members can make changes online at any time and view their information. All automatically and fully automatically processed in the BCB administration. The HiThere team also manages the actuarial consulting, the auditing and asset management. The membership administration, sending invoices and making transactions are now completed a flip of a coin. The contributions are automatically generated via HiThere, which greatly accelerate and simplifies the collection process. Why we selected HiThere for DIA Munich HiThere is reinventing insurance. In the current environment of rapid change, core processing, data analytics and digital engagement hold the potential to optimize the insurance lifecycle. HiThere is built on these pillars whilst putting the customer at the center of the business. With their digital platform for BCB they showcased their abilities. We’re very pleased HiThere wants to showcase their game-changing approach at DIA Munich. See also: Innovation: ‘Where Do We Start?’   Who is HiThere? HiThere is founded in 2016 by Ruud Kleynen, owner of Kleynen Consultants and associate Member Maastricht Centre for Taxation, Maastricht University. The HiThere crew are actuaries and econometricians with a profound background in IT. They call themselves: the Game Changers.

In 1931, Ethel Merman sang a song titled “Life Is Just a Bowl of Cherries.” The phrase “life is a bowl of cherries” carried on – meaning that life is carefree. The life and annuity industry certainly can’t adopt this phrase because generating profit and growth has been significantly challenging since the 2007-2008 financial services crisis. Given that the low interest rate condition the economy currently lingers in isn’t going to dramatically change anytime soon, L&A insurers need to determine how to improve financial outcomes in other ways. According to LIMRA, there is a $16 trillion coverage gap in the U.S. In the language of the song title – that’s a lot of cherries! And an amazing opportunity for L&A insurers who are willing to change the way they approach the market. The recent SMA L&A data and analytics survey  revealed several important insights relative to this significant coverage gap. See also: 10 Trends on Big Data, Advanced Analytics   Financially protecting loved ones in the case of the death of a bread-winner isn’t a brand-new concept. In fact, it’s a fairly fundamental concept going back to original native tribes who had a structure for that. Yet, the identified coverage gap remains today. L&A insurers need to gain insight into those without life insurance coverage. What will trigger buying? What is important about products and services? How do they want to buy? The questions go on. However, only 38% L&A insurers indicate they are advanced users of dashboards and scorecards – which have been around a long time. Without modern dashboard technology that facilitates interaction with data, line of business experts cannot learn about the untapped and sometimes unknown opportunities. Closely aligned to the dashboard gap is the gap around predictive analytics. Only 19% of responders indicate they were advanced users of predictive analytics and models. These are critical areas for L&A insurers to dedicate time, skills, and financial resources to – if they want to convert a portion of the $16 trillion coverage gap. Overall, SMA research reveals that all insurers, both P&C and L&A, continue to invest in things they already do well. Investment in data and analytics for risk-based activities such as reserving, pricing, and product portfolio analysis has been high (between 70% and 76%) and are historically the top areas. Clearly, no one should stop investing in risk analysis as these activities are critical. However, customer-related data and analytics investment is very low. Customer segmentation and single view of the customer only garner 52% investing, and the investment percentages go as low as 29% for lifetime customer value. Even CRM only gets 48% investing. There is a clear imbalance. See also: Why to Refocus on Data and Analytics   While there are many other insights emanating from SMA’s L&A data and analytics research, the story around customer areas and the lack of proportional focus by life insurers is very important. Simply hoping that investments in advertising and websites will result in new customers from that previously uninsured $16 trillion is not a winning strategy. L&A insurers must know what is important to the uninsured population of the U.S. And there won’t be one right answer – there will be multiple right answers. Data and analytics investment for customer insights must increase. While there is a very low probability that a winning insurer in the L&A space is going to be playing Ethel Merman songs in their lobby, it won’t be an awful thing if insurers feel like there is a growing bowl of cherries in their corporate halls.

In the 1980s, when so many tech companies made so many empty promises that the term "vaporware" came into widespread use, cynical IBMers referred to their marketing department as "where the rubber meets the sky." Last week's InsureTech Connect gathering in Las Vegas suggests that, after some fits and starts for the insurtech movement over the past year and a half, we're about to see the rubber meet the road. 2018 should be an eventful year.

Any number of companies made compelling cases about how insurtech is cutting costs and setting companies up for much deeper reductions—so much so that, were I a carrier, I'd be looking over my shoulder. There's an argument to be made that brokers and agents, far from going away, will use technology to increase their access to knowledge and to deepen relationships with clients, then will feed business straight to reinsurers. And plenty of people in Las Vegas were happy to advance that argument. (Rick Huckstep explores the threat to traditional insurers in one of this week's Six Things articles: "Time to Get Personal.")

A senior executive at a big regional brokerage wouldn't go as far as Huckstep but did say the pressure on carriers is growing: "We tell clients that we swap out carriers at least as fast as general managers trade baseball players."

It seemed that everyone in Las Vegas had bought into the idea of innovation and was arranging for proofs of concept (POCs) with a number of startups, which is great—as far as it goes. But there are two issues to watch.

First, to continue the baseball analogy, you can't tell the players without a scorecard. In other words, the cast of characters is now changing rapidly. We tend to focus on the launch of interesting startups and on the rounds of funding they line up, but startups fail, too. We can all celebrate Guidewire's $275 million purchase of 3-year-old Cyence, but, historically, about 90% of startups fail, and there's no reason to think that insurtech will be immune. We track some 2,000 insurtechs on our Innovator's Edge platform (along with 70,000 other companies that are of interest to insurers looking to accelerate their innovation), and I'd bet that, a year from now, we'll still be tracking about 2,000 insurtechs—just not the same ones, in many cases. You have to stay on top of the new ideas and keep initiating POCs.

Second, don't congratulate yourself too much for getting to the POC stage. We've seen this sort of thing happen in other industries: Someone will visit Silicon Valley, then go home, put a ping pong table in the office, start providing free food and declare victory. Surely, the reasoning goes, innovation will now follow. Now, POCs are much better than ping pong tables, but they can still create a false sense of assurance. They only matter if they get beyond any sort of innovation silo, get exposed to the core business and ultimately get pulled into areas where they can produce major gains. Identifying the right POCs to pursue is hard—but it's actually the easiest part of the innovation process. Driving a new technology or idea into the business is far harder. (Contact our Guy Fraker at guy@insurancethoughtleadership.com if you want some help or just want to hear some war stories. Guy has been running or consulting on innovation projects at insurers for decades—starting way back when he had hair.)

We'll certainly do our best to keep you up to date on the latest and best ideas at www.insurancethoughtleadership.com, beginning with the six articles below that are my favorites from the past week. Driving innovation in insurance and risk management is a worthy goal that we can all get behind. Please let me know if we can do anything else to help. 

READ FULL LIST AND COMMENTARY

Many insurance companies are not moving to cloud computing because they believe they can’t recover their sunk costs in IT infrastructure. This is not correct. Insurers can achieve big total cost of ownership (TCO) savings by migrating to the cloud.

Cloud computing offers insurers substantial benefits as they endeavor to adapt to changing market conditions and introduce new digital products and services. Many insurers, as I mentioned in my previous blog post, are not capitalizing on these benefits because of some serious misconceptions about the cloud. One of the most persistent and widespread of these fallacies is the belief that sunk costs are not recoverable. According to our research, 35% of insurers are holding back from embracing the cloud because they believe it offers unfavorable total cost of ownership (TCO). Such views are way off the mark. Take a look at Suncorp. This Australian banking and insurance group reduced its data center space by more than 75%, and also curbed its utility costs, by moving to the cloud. Several mergers and acquisitions had left Suncorp with a highly complex IT environment with considerable redundancy. It was operating more than 2,000 applications across many different technology silos. Furthermore, the company needed to support multiple major business brands. Instead of continuing to maintain and enhance its complicated and expensive IT infrastructure, Suncorp opted to move to the cloud. It first migrated its storage facilities and then transferred its other workloads and applications. The shift to the cloud has been a big success. See also: Lost In The Cloud: Five Strategies For Risk Managers Facing The Challenges Of Cloud Computing   Other insurers should take a fresh look at the substantial benefits that cloud computing offers. We’ve found that 60% of insurance companies replace their legacy infrastructure every three to six years. Most of these insurers, therefore, can optimize and align their IT replacement cycles with a migration to the cloud. This would allow them to avoid unnecessary capital expenditure, minimize write-offs and sunset their depreciation schedules. These benefits add up to considerable cost savings. What’s more, insurers can also capitalize on the data center space they’re no longer using by subletting to an IT services provider or cloud operator. This would generate additional revenue and improve their asset utilization and energy efficiency. In my next blog post, I’ll discuss why the cloud is essential for digital transformation in the insurance industry.  Until then, have a look at this link. I’m sure you’ll find it helpful. Eighty percent reduction in insurance carrier costs? Cloud as rainmaker.

Like a stool that is most stable when it’s on three legs, driving business results from digital customer experience stands on traffic, engagement, and conversion activities. When the three are done in conjunction with one another, you’ll see the strongest results. Traffic-driving activities through organic and paid efforts, and establishing content marketing strategies to ensure engagement take up a lot of investment and resources. The last thing you would want is for visitors to land on or engage in an experience that’s not fully optimized for them. That’s where conversion rate optimization (CRO) comes to the rescue. CRO is a data-driven, results-focused approach to taking the user experience to a higher level to transform more site visitors into paying customers. The insurance industry is perfect for taking advantage of CRO strategies, especially in driving quote submissions. Today, everything starts with a Google search. For shoppers who are in the market for new insurance, the journey usually starts from search with a goal in mind. Let’s say that is finding a new auto insurance. This search for auto insurance will expose available options to the shopper, after which he or she will decide which option looks the most fitting and then visit the insurance company web/mobile site. Once a potential customer lands on that insurance company’s website, it has very limited time to get the person's attention and funnel the person into the quote process. See also: Insurtechs: 10 Super Agents, Power Brokers   For insurance companies, web and mobile sites play an important role in driving quote generation. Optimizing these platforms to drive higher conversions is critical. Here are three ways to best use CRO tactics on insurance sites: 1. Connecting the right user to the right product: There are multiple tests we can conduct to figure out how much information about the site visitor we can capture in advance and make sure that the person sees the most relevant content up-front in a visit. For example, if everything we know about the visitor suggests that he may be interested in homeowners insurance, should you be showing him the other 20 product options? The conversion goal here would be to connect this prospect to a homeowners insurance company as quickly as possible and get him to engage in the quote process as fast as possible. 2. Highlight the main call-to-action (CTA): If the user is faced with multiple engagement points, different product options, or various next step alternatives, the result would be increased confusion, and the user potentially leaving the site. To get the insurance customers to the quote process more effectively you need to offer easy to follow designs, clear messaging, and clear call-to-action for the next step. Use CRO to determine how best to display your main key performance indicators from a visual design and placement standpoint. For example:

• Testing “sense of urgency” on the CTA language: “Get A Quote Today!”
• Testing visual treatments for quote start CTA: Usually darker, bolder colors that contrast well with the rest of the page design and content work the best.
• Testing placement: Place your quote start CTA always in the same section of the site to train users’ expectations. Test placing it as a part of the global navigation or as a part of the hero banner.

3. Optimize the quote process: One of the most important steps in the insurance customers’ journey is the quote submission process. Getting users to fill in the quote process is what seals the deal. You would think that anyone who came that far along would be likely to fill out the form, right? Why else have they been through that much work to get to this page? There is some truth in that but the fact that your site visitors made the journey all the way to the form doesn’t guarantee that they would not leave without completing it. See also: FinTech: Epicenter of Disruption (Part 2)   Luke Wroblewski, a product director at Google, wrote an amazing book titled, “Web Form Design,” which discusses ample approaches to testing forms, design, placement, labeling, orientation, single versus multiple steps, progress bars, etc. Do an analysis and understanding how users are going through your form pages first. From there, start a series of tests and play with various elements that can impact form submissions. Here are a few strong starters to prioritize:

• test number of form fields
• test single versus multiple (2-3) steps
• test CTA button on the form submission

These CRO tactics will help any insurance company get to a better conversion rate on their sites and start seeing immediate results. Happy testing!

Why do we base product KPI on data to begin with?  Product KPI (key performance indicator) is defined so we can measure how well the new feature works or resolve an A/B testing. That’s why it is only natural that when we come to set the KPI for a new product or feature, we start by looking at the data. This methodology fits nicely with the "scientific" and lean approach to product development: We base decisions on data and measurable KPIs rather than "soft," qualitative guess work. See also: 10 Trends on Big Data, Advanced Analytics   The limitations of working only with data But confining ourselves to data has its limitations. For starters, data is not immune to biases. We tend to interpret data to confirm our assumptions. But even if we reduce the bias risks, we can only look at the data we have. So if we already accumulated a lot of data, it still does not include behaviors and use cases that occur beyond our data, in the dark side of the data. Defining product KPI based on existing data is like looking for the solution under spotlight. That’s fine if the solution is there, but what if what we need to improve in our product market fit, or hack in our growth challenge, is hiding in the shadows? The importance of articulating a product strategy  Product life-cycle often starts with use cases. We ask ourselves what do our users do and how can we solve their problems or improve their experiences. That helps us to define the product KPI. But there is another important step in between. That is articulating product strategy. That is to say: given certain use cases, what do we want our product to achieve. Is it simply to help existing users do something faster? Or in a more sharing manner so we can hack viral growth? Or, are we looking for the product to serve a more business oriented goal of up-selling new features? Or, even help attract new types of users? While these questions may not change the basic use cases, nor our deep dive into product flow, these questions could be critical in defining the product KPI and eventually measuring product success and ROI. See also: Big Data? How About Quality Data?   Using product strategy to define product KPI A well-articulated product strategy can influence our prioritization along the product life-cycle and make MVP decisions easier. We still want to test our value and growth assumptions first, but without a well-articulated product strategy we can find ourselves arguing about the definition of value. There are many ways to generate value in a certain use cases. Setting the product KPI based on product strategy means we are prioritizing the value proposition according to our preferred target segment and our business goals. That’s why when we define product KPI it’s not enough to look at data and use cases. We must define product KPI in the context of our overall business strategy and its derivative product strategy.