With new OSHA electronic incident-reporting requirements ready to go into effect later this year, the time to focus on workplace safety data collection is now. Recently, I came across a video that went viral a couple of years ago of a worker climbing an enormous TV tower in South Dakota—to change a light bulb. Safely I might add. If you have a fear of heights, the video recorded by a drone might be uncomfortable to watch, but I can tell you that the man appears to follow best safety practices by continuing to hook the bars above him with his carabiners as he makes his ascent to the top of the structure, which stands the equivalent of five football fields—1,500 feet—above the ground. The video is a good reminder that there are scores of workers performing dangerous jobs every day—from miners to deep-sea fishermen and everything in between—who put their health and safety at risk at work. However, even in what normally would be considered a safer work environment, accidents and even deaths occur as well. In one recent example, a teenager from Streator, Illinois, died while collecting samples from a rail car after he accidentally came in contact with power lines near the train tracks, according to the local Pantagraph newspaper. Overall, there were 2.9 million nonfatal workplace injuries and illnesses reported in 2015 and 4,800 deaths, according to the U.S. Bureau of Labor Statistics, the most recent data available. Insurance companies in particular have a vested interest in ensuring their clients—the companies that offer their workers insurance for health, life, workers’ compensation, etc.—do everything in their power to ensure their workers stay safe at work. An injury or death can lead to five-, six- and even seven-figure insurance payouts and not to mention potential lawsuits that could hit insurers through liability insurance. See also: Setting the Record Straight on Big Data   To help keep workers safe on the job, the U.S. Occupational Safety and Health Administration recently released new rules for companies to track their workers’ incidents and illnesses electronically through an OSHA reporting portal. Initially, the reporting requirement for certain employers was scheduled to go into effect July 1, but a recent proposed rule in the Federal Register pushed that date back to Dec. 1. Even so, OSHA has already opened the Injury Tracking Application portal for companies with more than 250 employees or smaller firms working in industries with “historically high rates of occupational injuries and illnesses” to start tracking their work-related incidents. According to OSHA, it takes about 20 minutes to log each incident, which includes “the time for reviewing instructions, searching existing data sources, gathering and maintaining the data needed, and completing and reviewing the collection of information.” While the filing extension should give companies a chance to catch their breath, there’s really not much time to get a compliance process in place. A recent Sphera and EHS Daily Advisor survey of more than 400 Environmental Health & Safety executives found that about half (46 percent) of respondents have begun the process of addressing the e-reporting requirements. On the other hand, 44 percent said they have not. It’s important to note that OSHA has required safety-related recordkeeping for decades—even if OSHA recently changed course on the so-called Volks rule, which would have required companies to maintain safety records for five years rather than six months. The new part of the OSHA recordkeeping requirement is the electronic submission process, which, the agency says, will enable it to analyze safety-related data and “use its enforcement and compliance assistance resources more efficiently.” But whether it’s at the government or corporate level, being able to analyze and preferably benchmark workplace safety data puts companies at a distinct advantage not only for keeping workers safe—which is the top priority—but also improving the company’s bottom line. When aluminum-maker Alcoa’s former CEO challenged the company to a goal of zero work-related accidents a few years ago, for instance, the company’s earnings jumped 600 percent over a five-year period and sales grew 15 percent per year. And a large component of that safety initiative was data collection. With the amount of technology available today, especially mobile applications, companies have more tools than ever for data collection. That’s why it’s a bit surprising that only 1 out of 5 (21 percent) respondents to the Sphera-EHS survey said their workers use mobile apps to collect data on incidents. Compare that to the 46 percent who said that their employees manually type information into a web-based application, 56 percent who said their staff email or fax the information, and 74 percent who said their personnel orally report the information to an operator or supervisor. In other words, many companies are missing a huge opportunity to collect data quickly and more accurately with mobile software for safety-related purposes. Indeed, field workers who don’t have access to mobile technology to record events are at a disadvantage in documenting the details of an incident or near-miss. At best, they would likely have to write things down and then enter the details into a computer later or tell their supervisors when they see them in person or possibly over the phone, which could lead to a “telephone game”-like scenario where the details change as the information gets passed on. But any type of reporting delay or secondhand chronicling could compromise the usefulness and accuracy of the event data. Being able to take pictures and notes and enter them into a database gives companies a more accurate picture of the event or safety hazard. It should be noted that OSHA’s new e-reporting rules don’t address near-misses, but it is worth pointing out that 77 percent of the respondents to our survey said that their workers make those types of reports via verbal updates to their supervisors. Additionally, 57 percent of respondents said those near-miss records are maintained in paper form. (Note: respondents could choose more than one option here.) On the other hand, it is encouraging that about half of those surveyed (47 percent) said they plan to use collected data for benchmarking purposes to ensure they are keeping up with the Joneses of the corporate world if you will in terms of keeping workers safe. To do that properly, companies will need more inputted data, and oral and written records are much more difficult to manage in that regard. Timely and accurate data entered into a risk-management solution will give companies the data they need to ensure their safety processes are working and where the greater risks in the organization lie so they can be addressed. With proper solutions and systems in place, any fears of so-called “analysis paralysis” caused by managing too much data should not be a deterrent to collecting safety-related information. A true risk-reporting culture requires two things: empowering workers to be able to speak up without fear of retaliation, which is also addressed in the new e-reporting rule, and giving employees the tools necessary to report incidents quickly and accurately. If you’ve ever tried to tell a friend a story about something disappointing—or even exciting—that happened to you the other day, you know that some of the details get lost along the way, and it’s easy to embellish or confuse facts. And the longer you wait to tell the story, the less likely it is to be accurate. Recent research from Donna Bridge, a then-postdoctoral fellow at the Northwestern University Feinberg School of Medicine and currently an assistant professor at the school, found that human memories “aren’t static” and that “if you remember something in the context of a new environment and time, or if you are even in a different mood, your memories might integrate the new information.” See also: Sensors and the Next Wave of IoT   And that’s not a good thing for accuracy, especially when it comes to tracking incidents and even near-misses in the workplace. Using OSHA’s upcoming e-reporting rules as a talking point, insurers should help lead the push for more advanced safety analytics in the workplace. Not only will this mitigate insurance carriers’ exposures, but also it will keep people out of harm’s way and ensure that companies meet the new OSHA e-reporting requirements.

As Hurricane Harvey devastates Houston and other parts of Texas and Louisiana, while Typhoon Hato whales on Macau and Hong Kong, we don't have to even look past the banner headlines to see the crucial role that insurance plays in protecting society—and to see the huge opportunities in front of us if we can do even better. 

In that spirit, I offer this month's Six Innovators to Watch. Only one, HazardHub, directly addresses the sorts of catastrophes in the news this week, but all show great promise. I hope you find them intriguing. 

AppBus

AppBus integrates all the enterprise applications an insurer might use in a single environment, making it easier for employees to securely access the information tools they need while avoiding duplicate data entry. AppBus can combine standard business applications like CRM software with tools being created by insurtech innovators. AppBus augments those services with a library of key content and information to make users more productive. Users can create role-based interfaces to provide the specific tools that individuals need, especially when in the field. Learn more about AppBus at: https://www.itlinnovatorsedge.com/companies/appbus

Aquaai

Aquaai has developed an autonomous marine robot that looks and swims like a fish and can be used to gather marine data in an eco-friendly and efficient manner. The drone is equipped with interchangeable sensors that can be used to gather an array of data, such as water health, temperature and oxygen levels. While the first market application is aquaculture industry, the platform is applicable to multiple uses, from pollution cleanup to disaster recovery, port security and marine monitoring. Learn more about Aquaai at: https://www.itlinnovatorsedge.com/companies/aquaai

Carpe Data

Carpe Data provides predictive scoring and data products to insurers, drawing on both traditional and alternative sources of data to give insurers new insights to customers and risk. Carpe Data serves both the property/casualty and life insurance market by leveraging the social web, online content, wearables, connected devices and other forms of next-generation data. The company places a particular emphasis on consumer privacy while serving the information needs of insurers. Learn more about Carpe Data at https://www.itlinnovatorsedge.com/companies/carpe-data

HazardHub

HazardHub offers a robust array of property-level hazard databases for both natural and man-made hazards, creating a powerful tool for both educating consumers about their own property exposures and delivering better data to underwriters. The company’s goal is to make it more cost-effective for insurers to use hazard data in their decision-making processes, from underwriting to claims analysis to predictive modeling. Learn more about HazardHub at https://www.itlinnovatorsedge.com/companies/hazardhub-inc

MyHealthConnection

MyHealthConnection.tv provides a white-labeled, fast, secure and affordable virtual healthcare platform for mobile or desktop computers. Users can quickly initiate live video consultations with physicians, specialists, healthcare experts and various resources from their homes or while on the go, enabling patient interactions beyond a clinic’s walls that can drive down costs and improve efficiency and patient satisfaction. The platform also can deliver medical training and education resources and enable peer-to-peer consultations and remote patient visits in a highly secure, HIPAA-compliant system. Learn more about MyHealthConnection.tv at https://www.itlinnovatorsedge.com/companies/my-health-connection

Rejjee

Rejjee is designed to serve customers who have product losses that fall at or below their insurance deductibles, while also capturing data on these “hidden” losses that are occurring but not resulting in claims—often due to a policyholder’s fear that a claim would drive up premiums, with little financial recovery. Rejjee provides users with discount replacement offers on their lost valuables, connecting them with a network of retailers that offer discounts on replacement, resulting in a faster recovery and helping users find a more affordable replacement when insurance isn’t tapped for a loss. Rejjee is working with several insurers that are testing its solution as a new way to serve and engage with their customers, win loyalty and avoid the potential churn that could accompany unmet financial needs. Learn more about Rejjee at: https://www.itlinnovatorsedge.com/companies/rejjee

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.

For information on previous honorees, click here: July, June, May, April and March. 

Cheers,

Paul Carroll,
Editor-in-Chief

Magazines and insurance seem to have three commonalities:

1. Each depends heavily on renewals for profit.
2. Each originally, in part, used the term "subscription," though only magazines commonly use this term today.
3. Each wants to charge more, often far more, at renewal.

This is where the commonalities end and the last commonality should not exist. Magazines are priced at a market rate. Insurance is supposed to be priced at actuarially supported rates with only so much consideration to the market and profit because insurance is considered a public good. Insurance is heavily regulated because of its importance to citizens and commerce. Magazines just don't have the same relevance. A real need exists to balance company/agency profitability and public affordability so that public policy is best served. In other words, insurance is supposed to be priced so that the most people possible can afford it because more people possessing insurance is the greatest spread of risk possible, resulting in the lowest overall cost and the best societal results. It works for everyone: society, consumers, agents and insurance carriers. This combination really goes to the heart of the insurance industry. It is somewhat egalitarian in nature, though almost no consumer will ever see it that way, and maybe that is because the industry is not working the way it should. See also: If Insurance Invaded Magazine Covers   Pricing has changed significantly and is set to change even more, and in ways completely novel to the industry. Magazine renewal pricing is an example. Insurance companies probably (actually they almost certainly) bought a study from one or more large consulting firms that concluded that companies could charge x% more on renewal without any actuarial justification. After all, why would an account become riskier at renewal, unless the company is constantly developing more information in the first year? Because increased renewal rates is widespread behavior, this suggests if data is developed the first year that indicates more rate, carriers are not asking the correct questions on the initial application and are not in a hurry to fix their applications. Otherwise, they know they can just charge more. While true that they will lose some accounts at renewal when they raise rates, the net gain on the accounts that stay will outweigh the loss, resulting in a net gain. Different economic terms exist for the different varieties of price sensitivity, but most fall under the term "price elasticity." Price elasticity has absolutely nothing to do with actuarially sound pricing. Moreover, companies have identified that they can keep more of these accounts if the agent gets out of the way. The agency variable is an important reason companies are pushing service centers. (A question: Why do companies need agents or, at least, pay agents renewal commissions if the company does all the work while achieving a higher retention rate? Just asking a question more agents need to ask themselves.) The net result is a magazine renewal pricing program. I completely understand and appreciate the opportunity that carriers have identified and partially realized. Any executive running a company would have to choose this strategy once the data was presented. This strategy is a contributing reason why insurance companies have been so profitable the last 12 years. From a public policy perspective, I am not confident that pricing insurance like magazines is in the public’s or even the industry's best interest. A newer pricing factor is the supposed ability to bypass the law of large numbers and price accounts with extreme individual precision (the statistical argument as to whether this strategy works must await another day, but it is not a foregone conclusion that such precision works). Assuming for now that this hypothesis is correct, insurance will be made available to more consumers and businesses, though maybe not at affordable rates, is a given. The reason is that, within the law of large numbers, a certain unpredictability exists as to which account will have material losses. Pricing therefore charges those who do not have claims a huge premium while greatly undercharging those who will have a claim. Actuarially, on average, the premiums and discounts will average out, i.e., the beauty of the law of large numbers. However, if pricing is precise, the best accounts' premiums will decrease significantly, maybe by 50% or more. The worst accounts' premiums will increase by thousands or tens of thousands of percent. If too many people are priced out of the market, the market likely will not work well, which is just one reason the theory of such precise pricing may not work. Additionally, I cannot imagine how it is in the public's best interest. Just consider this: Quite a few uninsured drivers are already uninsured because they are bad drivers. This is why UM insurance is so important. What happens if uninsured drivers increase by 20% or 30%? Another factor is how some insurance distribution disrupters have flouted insurance regulations, regulations designed to protect the public and pricing integrity. The press has widely reported the shenanigans of an online independent agency/broker funded by private equity. Besides the normal ethical mores a company should observe, for its own good and the public's, this one reportedly created a software program to hide from insurance commissioners its employees' lack of insurance licenses. Insurance pricing and regulation are co-dependent. Insurance costs more when employees need licenses, and licenses are another protection for the public because insurance is, again, considered a public good. Cheating by not purchasing licenses changes pricing. The same firm has been questioned by some relative to conforming to rebating laws. Rebating is prohibited because rate filings list x% for agent commissions. Rebating arguably demonstrates that x% commission should be x% minus y% commission. An actuarial factor is not applicable, and, therefore, all customers should really pay x% minus y%, not just some consumers. Anti-rebating rules are levelers. An agency can more easily afford rebates when one does not have to pay for licenses. Foregoing licenses, regardless of how easy they are to obtain, is not in the public's best interest. See also: Is Talent the Best Defense?   The insurance commissioners have heavy workloads and plenty on their plate of more immediacy. I know they are considering each of these factors, and I am not naïve enough to suggest the industry police itself on these matters. The distribution of education and knowledge helps. Keeping what is happening quiet does not benefit anyone except the most aggressive parties. My recommendation is for all associations and regulators to consider a loud public discussion and then make the rules enforcement consistent, extremely consistent, for all. I recommend agents keep their clients' best interests in mind by actually working the renewals. If you want a service center, build your own. Companies do not need to pay agents a renewal commission for doing nothing on a renewal. For now, they are just being benevolent. These scenarios remind me so much of the proverb involving the frog bathing in the warm water thinking it has a free warm bath until the water is boiling and it'sdead.

We have written about the key challenges that insurance carriers are facing. Winning insurtechs are those that tap into these challenges to accelerate digital transformation. In this post, we'll focus on the first of seven different flavors of winners in fintech insurance: insurtechs that drive superb customer engagement. Customer engagement leaves much to be desired Most insurers still have low Net Promoter Scores. In spite of all the efforts and investments in the last years, customers continue to experience a lot of friction throughout the customer journey. And what is even more challenging, rising consumer expectations are more and more difficult to meet. The frame of reference is set, not by the service offered by other insurers, but by what customers experience when they reach out to other brands, for instance when using their smart phone. See also: Core Systems and Insurtech (Part 1)   There are a bunch of reasons why customer engagement is the first flavour we are exploring in this blog series. We believe customer engagement is the key to turning digital transformation efforts into a lasting competitive advantage:

1. Customer engagement is the key to build trust This is what research told us: Trust is built by excelling in the daily provision of services. Touch point performance, the perceived quality of customer-facing employees, the ease of doing day-to-day business are the most important elements in building or reinforcing trust.
2. Customer engagement offers new points of differentiation Because virtually every financial institution is simplifying its product range and individual products, it will become increasingly difficult to differentiate from competitors on a product level.  Consequently, the points of differentiation of financial services will shift to the way the company engages with customers, e.g. in service and customer experience.
3. Service is becoming a much more important purchase driver In the past, you shared your thoughts and experiences with your neighbors over your backyard fence. Nowadays, people exchange their thoughts and experiences also over a virtual fence powered by smart phones and social media. Peer-to-peer information sharing is almost always about the service quality. This has a huge impact on our decision-making. We are less and less choosing solely on price any more; more and more we are -- within a certain price bracket -- choosing on service. Service is becoming a much more important purchase driver.
4. Lack of customer engagement results in loss of value Every day, thousands of insurance and financial products are purchased that do not completely match the needs of the customer. The cancellation rate in life insurance is proof of this. Sunk costs include billions of euros in intermediation costs and, even more importantly, of course, huge loss of value for customers.
5. Customer engagement is a primary source of profit Ample research shows that customers who have had real positive experiences will drive revenues and profit in a variety of ways. They are more open to other products of that company. They will be less sensitive for offers from competitors. The costs to serve will decrease. And the customers are more likely to advocate your services to friends and family.
6. New entrants set new standards to engagement Not all new entrants will survive, but they will definitely set new standards. Despite the fact that they differ quite a lot in nature, they have one thing in common. Every new entrant is attacking the frictions and complex processes that customers have to deal with when working with financial institutions. Incumbents need to step up to the plate to keep up.
7. Regulators scrutinize how the industry engages with customers During the first couple of years "after Lehman," the various supervisory authorities have focused on the way money was made, and the quality of financial products. We now see that that focus has widened to just about every aspect of customer engagement: sales, advice, service, even advertising. Regulators are forcing insurers to have a 360-degree view of customer engagement to treat customers fairly.

Address the pain points The challenge is to close the gap between the insurer and the customer. Moving from transaction to interaction, from one-way communication to a dialogue and from interaction to intimacy, taking the dialogue from exchanging information to actions. Too often, customer engagement is mistaken for creating a Disney-like experience. We think the opportunities are much closer to home. In our work for insurers, we have learned that customers across the globe more or less experience the same pain points:

• "They do not really know me. They do not understand my situation."
• "I am not convinced they act in my best interest."
• "They do not treat me nicely. I don’t think they would walk the extra mile."
• "Their information confuses me."
• "They don’t make it easy for me."
• "I am not sure what I’m covered for and what the overlap with other policies is."
• "It is not clear what the status of my claim is."
• "I am not sure what I am exactly paying for; it seems very expensive."
• "It takes ages to get an answer. And too often I’m not getting any."
• "What the call agent says is different from what the broker told me."
• "They don’t treat me fairly."

Just imagine what would be accomplished in terms of customer engagement if all these pain points were solved. Furthermore, insurance is still about averages, products, one-size-fits-all, paper, brokers and agents – which is not always in sync with changing customer preferences and what technology is able to. In fact, we notice that customer engagement technologies that are widely accepted in other industries are still hardly used in insurance. Take the use of video. Research shows that only 7% of a conversation is about words, 38% is about tone of voice and 55% is about body language. We have seen quite a few successful WebEx implementations; e.g. bank employees who assist customers in the complex process of purchasing a mortgage, with application-to-proposal conversion rates increasing from 10% to 35%, and proposal-to-signed contract from 50% to 75%. Another no-brainer is the use of YouTube channels to explain what customers should do when a particular event takes place. These channels are extremely effective to explain more complex consumer electronic products but are hardly used in insurance. Think of the application of social data to simplify the underwriting and onboarding process of new customers and consequently higher conversion rates, or to login to certain information to simplify the customer experience. Or take the poor state of FAQs at many insurers’ websites, while a company such as Zendesk is able to launch a tailored state-of-the-art solution in just a few weeks and at very low costs. The Tripolis communication platform allows companies to take personalization to a next level, deploying real-time relevant dynamic content in, for instance, email campaigns. Customers receive personalized real-time information and offerings that anticipate their context, the time of day, where they are – not when the email is sent, but at the moment the email is opened. Obviously, this improves the impression of a one-to-one intimate relationship with the brand. While the use of such solutions is increasing fast in other industries; this is hardly the case in insurance. Fortunately, more and more insurtechs are helping insurers to make a leap in customer engagement, to become much more effective in every step of the customer journey. And, of course, we also see new entrants that are attacking specific frictions, complex processes and product and pricing imperfections that customers have to deal with when working with insurance companies. Trendwatching.com coined the term Clean Slate Brands: a whole new breed of exceptional new brands living by the rules of business 3.0 -- newer, better, faster, cleaner, more open and responsive. Brands that consumers are therefore attracted to, also because they cannot have sinned yet. See also: Insurtech: Unstoppable Momentum   A line-up of 10 insurtechs that drive superb customer engagement in various stages of the customer journey: PolicyGenius addresses the uncertainty of consumers with regard to gaps and overlaps in the various policies they hava purchased over time. PolicyGenius offers a highly tailored insurance check-up platform, where consumers can discover their coverage gaps and review solutions for their exact needs. PolicyGenius’ online store includes solutions from life and long-term disability to pet insurance. Quoting engines offer side-by-side comparisons of tailored policies. Trov offers customized home insurance by allowing coverage of individual key items rather than a one-size-fits-all coverage set with average amounts. An app-based platform allows customers to discover and track the real-time value of their belonging. They simply upload the items they own to a digital locker, by scanning a product UPC code, entering an auto VIN number or a home address or looking up individual items in an in-app database. Trov (backed by leading fintech VC Anthemis) has partnered with a wide variety of proprietary data sources like Zillow (U.S. real estate), Blackbook (U.S. autos) and Symantics3 (global consumer products). Erste Digital taps into the fast-growing use of social media and mobile to purchase products and services – quite neglected by traditional insurance companies. Erste Digital is a B2B digital broker platform selling "add on" insurance. The Scan2Insure mobile app allows customers to scan a barcode to instantly get a quote to insure the product. To sell through social media channels, Erste Digital has integrated the platform into YouTube, Instagram, and Facebook. BIMA offers micro-insurance in 14 emerging markets in Africa, Latam and Asia, using a mobile-delivered model. Traditional insurance companies find it difficult to service those living on less than $10 per day. And that is a shame, because insurance is a powerful tool that can prevent families from falling back into poverty in case of illness and injury. BIMA gives customers access to micro-insurance that is paid for using prepaid mobile credit or postpaid billing. Policies start from $0.23 per month, and BIMA pays out within three days of receiving a claim. Today, BIMA serves more than 18 million customers. Recently, BIMA decided to enter the health sector. In emerging markets, people need to travel far and spend many hours in waiting rooms to see a physician. BIMA’s mobile health services make it easy, quick and affordable to access medical advice from a qualified doctor via a tele-doctor service. Memberships are available in three, six or 12 month pre-paid packages and include an unlimited number of phone consultations with a qualified doctor for the whole family. More about BIMA’s fascinating business model in one of our next posts. Cuvva introduced a mobile app that enables the user to sign up, get a quote and buy coverage in less than 10 minutes. Quite different than what customers have to experience when they apply at the average insurance firm. Basically, a completely digital experience run from a smartphone. What is also addressing a customer need is that Cuvva gets customers covered for only as long as they need it; from a single hour to a whole day – rather than the usual single option of a year. Another imperfection, at least in the eyes of customers, is the costs of deductibles. insPeer allows users to share insurance deductibles with their friends and family members. Collision damage waiver and loss damage waiver on rental vehicles are also always expensive. Insuremyrentalcar provides the solution with a package that starts from $5 a day to $93.99 a year. Embroker says it aims "to revolutionize the way businesses buy, manage and understand insurance." The company combines the service and expertise of the best-in-class brokers with an innovative technology platform. The 100% online solution allows customers to optimize insurance spending with policy benchmarking tools and provides a real-time interface to track and manage claims, apart from many other beneficial features. Claim Di and Snapsheet are both all about making the most important moment of truth of a car insurance, when an accident takes place and the claim process that follows, less of a hassle. The Claim Di mobile app "shake and go" feature facilitates communication and claims between parties in an auto accident and their insurance companies. The drivers can shake the phone near the phone of another party who also uses Claim Di, allowing for an insurance claim without waiting for a surveyor from their respective insurance companies to arrive at the scene (which is common practice in Thailand). Claim Di also includes roadside assistance, a call service for insurance companies and a module to facilitate payment to claimants. Snapsheet provides insurers the process and technology to optimize virtual claims operations. Claims adjusters get the tools they need to provide a seamless experience; a mobile solution enables customers of insurers to settle a claim completely virtually. The solution simplifies claims adjusting, reduces the cycle time and increases customer satisfaction. Consequently, Snapsheet’s solutions are transforming claims organizations into a customer-first experience and cost-efficient operation. Bauxy’s offerings takes away hassle and frustrations in a very different way. They enable consumers to file their claims just by taking a photo of the invoice. No more queuing on the phone to talk with insurance company call agents, asking when the money will be reimbursed and getting frustrated in the process. Bauxy submits the claim on the consumer’s behalf. What these insurtechs have in common is that they cut two ways. On the one hand they solve frictions and dramatically improve customer engagement. On the other hand, they simultaneously improve operational efficiency. In our view, this is what makes an insurtech a winner. In our next post we will focus on the second flavor of winners in fintech insurance; insurtech solutions for dramatic cost savings. So stay tuned!

Alice laughed: “There’s no use trying,” she said. “One can’t believe impossible things.” “I daresay you haven’t had much practice,” said the Queen. “When I was younger, I always did it for half an hour a day. Why, sometimes I’ve believed as many as six impossible things before breakfast.” Six impossible things before breakfast?  The wellness industry would just be getting warmed up by believing six impossible things before breakfast. Wellness vendors believe enough impossible things all day long to support an entire restaurant chain: Consider the article in the current issue of BenefitsPro — forwarded to me by many members of the Welligentsia — titled: “Can the Wellness Industry Live Up to Its Promises?”  BenefitsPro interviewed US Corporate Wellness, Fitbit, Staywell and HERO. Each is a perennial candidate for the Deplorables Awards — except US Corporate Wellness, which already secured its place in the Deplorables Hall of Fame (see, Why Nobody Believes the Numbers) several years ago with these three paeans to the gods of impossibility. In case you can’t read the key statistic — the first bullet point — it says: “Wellness program participants are 230% less likely to utilize EIB (extended illness benefit) than non-participants.” Here is some news for the Einsteins at US Corporate Wellness: You can’t be 230% less likely to do anything than anybody. For instance, even you, despite your best efforts in these three examples, can’t be 230% less likely to have a triple-digit IQ than the rest of us. Here’s a rule of math for you: a number can only be reduced by 100%. Rules of math tend to be strictly enforced, even in wellness. So the good news is, even in the worst-case scenario, you’re only 100% less likely to have a triple-digit IQ than the rest of us. See also: 6 Pitfalls to Avoid With Core Systems   And yet, if it were possible to be 230% dumber than the rest of us, you might be. For instance, US Corporate Wellness also brought us this estimate of the massive annual savings that can be obtained just by, Seinfeld-style, doing nothing: Assume I spent about $3,500/year in healthcare 12 years ago, which is probably accurate. My modifiable risk factors were zero then and are still zero — no increase. So my healthcare spending should have fallen by $350/year for 12 years, or $4,200 since then. But that would be impossible, because I could only reduce my spending by $3,500. Do you see how that works now? To his credit, US Corporate Wellness’s CEO, Brad Cooper, is quoted in this article as saying: “Unfortunately some in the industry have exaggerated the savings numbers.” You think? I’m pretty sure this next one is impossible, too. I say “pretty sure” because I’ve never been able to quite decipher it, English being right up there with math as two subjects that apparently frustrated many a wellness vendor’s fifth grade teacher: 400% of what? Is US Corporate Wellness saying that, as compared with employees with a chronic disease like hypertension, employees who take their blood pressure pills are 400% more productive? Meaning that, if they controlled their blood pressure, waiters could serve 400% more tables, doctors could see 400% more patients, pilots could fly planes 400% faster? Teachers could teach 400% more kids? Customer service recordings could tell us our calls are 400% more important to them? Or maybe wellness vendors could make 400% more impossible claims. That would explain this BenefitsPro article. Fitbit We have been completely unable to get Fitbit to speak, but BenefitsPro couldn’t get the company to shut up. Here is Fitbit’s Amy McDonough: “Measurement of a wellness program is an important part of the planning process.” Indeed it is! It’s vitally important to plan on how to fabricate impossible outcomes to measure, when in reality your product may even lead to weight gain. Here is one thing we know is impossible: You can’t achieve a 58% reduction in healthcare expenses through behavior change — especially if (as in the 133 patients the company tracked in one study) behavior didn’t actually change. You can read about that gem, and others, in our recent Fitbit series here:

• Springbuk wants employees to go to the bathroom
• Fitbit throws a bit of a fit, Part 1
• Fitbit throws a bit of a fit, Part 2

Health Enhancement Research Organization (HERO) and Staywell I’ll consider these two outfits together because people seem to bounce back and forth between them. Jessica Grossmeier is one such person. Jessica became the Neil Armstrong of impossible wellness outcomes way back in 2013. While at Staywell, she and her co-conspirators told British Petroleum they had saved about $17,000 per risk factor reduced. So, yes, according to Staywell, anyone who temporarily lost a little weight saved BP $17,000 — enough to clean up about 1,000 gallons of oil spilled from Deepwater Horizon. See British Petroleum’s Wellness Program Is Spewing Invalidity for the details. Leave aside both the obvious impossibility of this claim, and also the mathematical impossibility of this claim given that employers only actually spend about $6,000/person on healthcare. Jessica’s breakthrough was to also ignore the fact that this $17,000/risk factor savings figure exceeds by 100 times what her very own article claims in savings. Not by 100%. By 100 times. Fast-forward to her new role at HERO. In this article, she says: The conversation has thus shifted from a focus on ROI alone to a broader value proposition that includes both the tangible and intangible benefits of improved worker health and well-being. Her memory may have failed her here, too, because HERO — in addition to admitting that wellness loses money (which explains its “shift” from the “focus on ROI alone”) — also listed the “broader value proposition” elements of their pry-poke-and-prod wellness programs. The problem is the elements of the broader value proposition of screening the stuffing out of employees aren’t “benefits.” They’re costs, and lots of them: When she says: “The conversation has shifted from a focus on ROI alone,” she means: “We all got caught making up ROIs, so we need to make up a new metric.” RAND’s Soeren Mattke predicted this new spin three years ago, observing that every time the wellness industry makes claims and they get debunked, the industry simply makes a new set of claims, and then they get debunked, and then the whole process repeats with new claims, whack-a-mole fashion, ad infinitum. Here is his specific quote: “The industry went in with promises of 3 to 1 and 6 to 1 based on health care savings alone – then research came out that said that’s not true. Then they said: “OK, we are cost neutral.” Now, research says maybe not even cost neutral. So now they say: “But it's really about productivity, which we can’t really measure, but it’s an enormous return.” Interactive Health While other vendors, such as Wellsteps, harm plenty of employees, Interactive Health holds the distinction of being the only wellness vendor to actually harm me. I went to a screening of theirs. To increase my productivity, they stretched out my calves. Indeed, I could feel my productivity soaring — until one of them went into spasm. I doubt anyone has missed this story, but in case anyone has… Interactive Health also holds the distinction of being the first vendor (actually their consultant) to try to bribe me to stop pointing out how impossible their outcomes were. They were upset because I profiled them n the Wall Street Journal. The article is behind a paywall, so you probably can’t see it. Here’s the spoiler: The company allegedly saved a whopping $53,000 for every risk factor reduced. In your face, Staywell! See also: What Is the Major Barrier to Change?   Here is the BenefitsPro article’s quote from Interactive Health’s Jared Smith: “There are many wellness vendors out there that claim to show ROI,” he says. “However, many of their models and methodologies are complex, based upon assumptions that do not provide sufficient quantitative evidence to substantiate their claims.” You think? Finally, here is a news flash for Interactive Health: Sitting is not the new smoking.  If anything is the “new smoking,” it’s opioid addiction, which has reached epidemic proportions in the workforce while being totally, utterly, completely, negligently, mind-blowingly, Sergeant Shultz-ily ignored by Interactive Health and the rest of the wellness industry. There is nothing funny about opioid addiction and the wellness industry’s failure to address it, a topic for a future blog post. The only impossibility is that it is impossible to believe that an entire industry charged with what Jessica Grossmeier calls “worker health and well-being” could have allowed this to happen. Alas, happen it did. And, as I write this post, breakfast hasn’t even been served yet.

The first major hurricane to make landfall in the U.S. since hurricanes Dennis, Katrina, Rita and Wilma in 2005, Hurricane Harvey will cause billions of dollars in economic damage and disrupt countless lives. In the wake of massive economic losses and untold human suffering, including loss of life, millions of individuals and businesses will turn to their insurers for help. This will be a make-or-break experience, a real moment of truth. Insurers will be presented with a golden opportunity to justify the public’s trust and earn the respect of policyholders, regulators, legislators and others in government. But insurers also run the risk of failing to live up to expectations and incurring the wrath of voters and their elected representatives. See also: Flood Risk: Question Is Where, Not When   The first test may well be distinguishing damage caused by wind from damage caused by flooding, as virtually all insurance policies exclude losses due to flooding (the exception being those policies issued by the National Flood Insurance Program). Insurers will need to be careful, thorough and fair when settling claims. Equally important, insurers will need to be perceived as having been so, and communication will be key. Insurers would be well advised to do what they can to make policyholders feel they have been treated with respect, dignity and compassion even when their claims must be denied or settled for some amount less than the claimant sought. Moreover, insurers would be well advised to settle claims as quickly as possible without unduly sacrificing sound loss adjustment and efforts to weed out fraud and abuse. Finally, with the media sure to draw attention to heartbreaking stories about human tragedy in Harvey’s aftermath, insurers might benefit from doing what they can to shine a light on their efforts to help individuals and businesses recover. Surely it is worth noting that, as others evacuate, insurers gear up to send large numbers of claim adjusters to work in extremely difficult conditions in hard-hit areas. Hurricane Harvey will also lead to many other moments of truth. For example, the devastation caused by Harvey may well prove to be the first real test at extreme scale of new insurtech created to improve loss adjustment. Will use of drones, aerial imagery, artificial intelligence, digitalization, big data, predictive analytics and the like prove as beneficial as hoped? Will insurtech entrepreneurs and insurers who have invested in these technologies be vindicated? And, on a more positive note, will experience coping with Harvey reveal new opportunities to use emerging technologies to increase speed, efficiency and fairness? Insured losses from Hurricane Harvey may also test reinsurance mechanisms, including catastrophe bonds, other insurance-linked securities and sidecars. And what about so-called hedge fund reinsurers, which sought to profit by investing insurance float using strategies like those typically employed by hedge funds? Will they continue to participate as claims mount, or will they instead seek to exit the business? Some past catastrophes triggered significant inflows of fresh capital, as investors sensed opportunities to profit from a turn in reinsurance markets. Such was the case following Katrina, Rita and Wilma in 2005. Will the “fast money” come rushing in again, and, if it does, will it prove to also be “smart money”? All of the above raises the question, “Will Hurricane Harvey lead to a reset of catastrophe models, pricing for hurricane risk and underwriting?” Some past storms, such as Hurricane Andrew in 1992, convinced insurers that they had previously underestimated hurricane risk and thus led to dramatic resets in coastal property insurance markets, with attendant price increases and availability problems. Whether Harvey brings about such a reset seemingly depends on whether current catastrophe models did an adequate job alerting insurers to the risk of an event like Hurricane Harvey. If so, changes in coastal property insurance markets may be muted. If not, expect price increases and availability problems. See also: Is Flood Map Due for a Big Data Make-Over?   Last, and let's hope least, Hurricane Harvey may test insurers’ enterprise risk management. Prior to Harvey, the property/casualty industry had ample surplus, and most insurers were well capitalized. But surplus was not evenly distributed across insurers, and only the surplus of those insurers that wrote policies covering properties struck by Harvey is available to cover claims from Harvey. If an insurer only wrote risks in Oregon, its surplus won’t be called upon to cover claims from Harvey. Bottom line, insurers that covered properties affected by Harvey, that were aware of potential losses and that have ample financial resources to cover claims and continue operations can give themselves good grades for enterprise risk management. On the other hand, Insurers that covered properties affected by Harvey, that were surprised by their losses and that lack the resources to cover claims must give themselves failing grades for enterprise risk management. And then there is a gray area: insurers that intelligently judged the risk of insolvency to be acceptably small, took a calculated risk and then lost that bet. Though such insurers will fail, it cannot be said that their enterprise risk management failed. Eliminating even the most remote chance of insolvency is not practical. Neither is it economically viable. Sound enterprise risk management consists of: 1) understanding risks; 2) making conscious, intelligent decisions about which risks to take, which risks to avoid, which risks to mitigate and which risks to transfer; and, 3) enforcing controls that keep operations within the bounds established by an enterprise’s appetite for risk.

The definition of collaboration is the action of working with someone to produce or create something. That seems far too simplistic a way to describe the many types of collaboration already at work in the insurance industry and moreover does not begin to convey the looming and enormous demand for working together that will be required for success in implementing the Insurance Internet of Things (IoT). Historically, the insurance industry has had to use a wide variety of collaboration tools to succeed as data, information, consumer behavior, products and regulations changed with increasing velocity. These tools included e-mail, texting, instant messaging, content management systems, enterprise social platforms and formal enterprise collaboration software. Insurers have even begun to leverage the use of digital technology and web-based collaboration tools such as Slack to empower employees, enhance user experiences, improve internal communication and strengthen agent and broker relationships. See also: Insurance and the Internet of Things   Looking beyond insurance companies themselves, we note the emergence of insurtech accelerators and incubators, both independent and captive. What is becoming apparent is that there is a convergence taking place between these entrepreneurial startups and the traditional carriers, sparking collaboration between the new, small and fast market entrants with the old, big and slow incumbents. Much more of this kind of collaboration will be required for the insurance industry to survive and thrive in tomorrow’s world. New forms of collaboration are emerging in the insurance ecosystem, some more formal than others. Strategic alliances and partnerships are being announced daily, as are vendor-vendor and carrier-carrier arrangements. Recent examples are plentiful; CoreLogic joined the Guidewire PartnerConnect program to deliver more accurate property risk pricing and residential estimating more efficiently to Guidewire’s property insurance customer base, and Insurity collaborated with Allstate Business Insurance to quickly deliver a new self-service quoting app with convenient data pre-fill. Co-opetition is a more innovative form of collaboration that has been gaining traction. Former competitors work together to leverage a common, defined opportunity that yields better results for each company than either could have achieved on its own. In the world of insurance IoT, of which the connected car is a major subset, we increasingly see original equipment manufacturers (OEMs) participating in programs with auto insurers with telematics data exchanges and with each other in developing vehicle-to-vehicle (V2V) communication standards. In other areas of insurance IoT, we are seeing a rapidly increasing number of health and property insurtech partnership announcements with insurers delivering innovative new risk-management products and services to consumers (e.g. Vitality-John Hancock, Roost-Liberty Mutual, True Motion-Progressive, etc.). As the number of connected things expands exponentially, so, too, will the frequency and velocity of data generated by these sensors and devices. The ability to receive, normalize, manage and use all of this digital data will quickly exceed the capacity and expertise of even the largest insurers, so collaboration with a new generation of information management and data science providers will be mandatory. See also: 12 Issues Inhibiting the Internet of Things   For insurers and others to successfully navigate this burgeoning ecosystem, access to relevant knowledge and competitive information will also be mandatory, and one effective way to gain these insights is participation in subject-specific industry conferences where expert speakers and industry thought leaders share their experiences and insights. One such event is the Insurance IoT USA Summit taking place in Chicago on Nov. 30 and Dec. 1. So critical will be effective collaboration in the future that it is conceivable that formal courses, certifications and degrees in collaboration will be offered by business schools in response to the exploding demand for this set of business skills and expertise driven by IoT proliferation and adoption. In any event, participants in the insurance ecosystem that best master the art of collaboration are sure to be the market leaders of the IoT future.

We've just announced a first-of-its-kind insurance policy. One that puts the power formerly reserved to brokers and agents in the hands of all Lemonade customers!

When we entered the insurance industry, we knew one of the biggest problems with traditional insurers was the endless amounts of red tape and long wait times. That’s why we committed to "instant everything" since day one.

From the world’s first 90-second sign-up to our world-record-setting claims process, we’ve hit some pretty exciting milestones, but they were just a preview of what we’ve got cooking.

See also: A Risk-Free Life Insurance Policy? (No)  

The Old Paper Policy

Up until now, if a customer wanted to change the deductible or coverage amounts or add a valuable that was just bought, the customer had to contact the insurer’s customer support and explain the issue. Then, customers would need to pay for some changes, and probably get a new policy sent to them in the mail (snail mail, of course). That’s where the red tape and long wait times come in, and where the industry, new or old, startup or multibillion-dollar corporation, is right now. But our customers can now make those changes on their own.

As far as we know, no other insurance company allows its customers to modify their coverages or even cancel their policy on their own.

The new release is a great example of the reason behind our decision to take the longer, harder path in becoming a full stack insurance carrier, rather than a reseller. It also explains why we bet on building our own technology instead of taking the easy path of buying old-school IT systems (the ones that run most insurance companies in America today, and the startups that resell their insurance).

Introducing Lemonade’s Live Policy

Even if you buy renters insurance directly from the likes of GEICO or Progressive, the only part that’s direct is taking your money and sending you a policy. Everything else requires customers to contact customer service — which we all know can be… painful.

That sucks. So, in the last couple of months we’ve been working hard on the second phase of our policy, turning it into a "live" document that can easily be modified without involving an agent!

With Live Policy, Lemonade customers (existing and new) can make changes to their coverages and more, whenever and wherever they are! It’s actually easier to change your Lemonade coverages than it is to pay for your latte. Just open our app, go to your policy and start playing with stuff!

Here’s a list of things you can now do with your existing policy:

• Change deductible
• Change personal property limits
• Change liability limits
• Change loss-of-use limits
• Change limits for medical payments to others
• Add/remove your significant other
• Add/remove spouse
• Add/remove landlord
• Add/remove property manager

Why are we the only ones doing this?

Moments like these are the reason why we chose the hard way - becoming a real insurance company. It would have been a walk in the park to slap on some pretty UX over a centuries-old insurance carrier.

But we started from square one and built an insurance company from the ground up to address the very issues that turn people away from insurance. Doing so takes more than changing the way we market insurance, or even changing the very business model of insurance. It requires a dynamic focus on the issues our customers - and every insurance customer - face every day. It requires a commitment to tackling pain points, even (and especially) when it means questioning precedent.

See also: The Most Effective Insurance Policy  

This exciting new update is a part of a series of new features we’ll be releasing in coming months that will make insurance even more enjoyable, affordable and instant.

This post was originally posted on the Lemonade Blog

In spite of the fact that shiny insurtech objects have distracted some insurers from strategic core system (policy, billing, claims) replacement projects, many are moving forward with planned large-scale modernization initiatives. If the implementations were not complex enough already, the rip-and-replace of aging core systems must extend insurers’ capabilities toward full digital transformation and open the door to integrations with insurtech innovations, as well. Good executives and project managers minimize the risk of failure by going into implementations with eyes peeled for problems. These individuals plan for overcoming implementation pitfalls, because such risks can lengthen timeframes, create cost overruns or even derail the entire initiative. Here are six pitfalls to watch for: The Talent Crisis While insurance companies employ talented people who know the business and the company’s products intimately, many are not prepared for large projects, such as core system replacements, which typically occur only every 10 to 12 years depending on budget, company culture and the organization’s need for change. The significant time between such projects allows for turnover in key insurer team members and means that remaining, inexperienced insurer employees are often caught off guard by the project’s complexity. Clearly defining roles, responsibilities and time or additional resource requirements in the project planning process is critical for insurers’ success. See also: Change Accelerates in Core Systems   Documentation Deficiencies Documenting project requirements and specifications and gathering form examples can be very time-consuming, so, when it comes to documentation, shortcuts are often taken or the process is rushed. Even though most vendors have templates to aid in the process, insurers’ employees must aggregate all existing forms, notices, reports, rating algorithms, billing plans, dropdown boxes or picklist values, file formats for interfaces and a list of user permissions, as well. While the impulse to skimp on upfront documentation can be tempting (and understood), as the user acceptance testing process begins, the payback for a job done well here will become apparent. Extended Project Parameters Core system replacements are complex and touch virtually every area of insurers’ organizations, and, unfortunately, the duration of the project is typically long enough that business requirements can change during the implementation. An insurer’s necessary product refresh adds additional scope and risk to the replacement. Designing a new product, validating it, acquiring department of insurance approval and developing new integration points that may require additional contracts are some of the risks that can add cost and time to a core system replacement project. Resources may be required to manage these new, but needed, items, and new requirements may compete with other project priorities or strategic company objectives. It is hard to predict the domino effect caused when one change inevitably provokes another. That said, insurers may want to consider planning to undertake such changes to existing lines of business after the first line has been put in place and the new business processes have been vetted. This will help keep project momentum going and keep the timelines in check. Third-Party Integrations The ability of modern systems to seamlessly interact (interface or integrate) with third parties is a key business driver for updating core systems. Insurers often use implementation projects to introduce integration with new third-party solutions to improve operational efficiency and automation. The risk of doing this is when it takes longer than expected to finalize the relationships with the third parties. The delays hurt the project timeline and jeopardize related downstream project dependencies. Insurers can benefit by building extra time into the project plan for firming up any new third-party relationships. Data Conversion Conversion of historical policy data is an important aspect of core system replacement projects, which, in theory, seems simple. In practice, however, data conversion is a complex process that can be approached from innumerable directions and can cause as many problems as it solves if not done correctly. Many smaller companies opt to manually convert data, but larger insurers usually require an automated conversion as part of the project specifications. An insurer’s historical data requires verification and cleansing before it is usable for an accurate conversion, and the effort is successful based on the quality of the original data and the ability to make decisions about how to handle anomalies. Once the data is cleansed, it needs to be normalized or formatted to the new system specifications, and this usually involves some manipulation. At the end of the day, no insurer ever says data conversion was easier than originally thought. But this may be a result of vendors ensuring the data going into the replacement system is well validated and of high quality, which ultimately requires more effort on everyone’s part. The Customization Curse With data conversion running a close second, the biggest risk to a core system replacement project is extensive customization. All projects require some level of customization, but the impact of heavy customization can be catastrophic today, as well as down the road. Modern systems are developed to deliver preferred workflows and best practices. Customization inevitably leads to scope creep (for insurer and vendor alike), which hurts project timeframes and adds cost. Customization has another potentially negative side effect as deviations from standard configurations often make future upgrades more complex or impossible. Often, insurers find the cost and effort to upgrade highly customized systems unjustifiable. If an insurer requires extensive customization, it might be because business processes are out-of-date, or are in place due to legacy system limitations (paved cowpaths). So, actually accepting the ways the new system was designed to handle critical processes could save a lot of future pain if the insurer in question is willing to manage some level of process change. See also: Core Systems and Insurtech (Part 1)   It bears mentioning here that there are natural traps into which vendors or solution providers can fall, as well, and that will affect the potential of project success. However, if a vendor has performed multiple implementations successfully, there should be an efficiency inherent to that experience that will help avoid bad consequences. While it is not possible to foresee all of the challenges associated with a major IT initiative such as a core system replacement, it is worth understanding the basic tenets of the most common implementation pitfalls and taking measures to mitigate the associated risks. Taking precautions will go a long way in helping a core system implementation come in on-time and on-budget.

It sounds like a riddle, and in some ways it is. When it comes to insurance customers: If they don’t “get it,” they won’t get it. If they don’t see the need, they won’t need it. We can’t value our experience if they can’t experience our value. Let’s dig a little deeper. Much has been said recently about the customer experience. It’s a board-level topic. Everyone knows that it is important. We are busy transforming experiences, journey mapping and “digitizing” our organizations. Too much of what we are doing, however, is a frenzied reaction to a market scare instead of a thoughtful reaction to reality. We are afraid that new generations aren’t interested in insurance, and we are petrified that if they do see the need they won’t reach us through our pre-digital age channels. This is all true and valid. But if we operate solely upon these premises, we’re going to miss the meat of the issue. The customer experience is important, but it works hand in hand with a general understanding about the need for insurance and how insurance works. As attention spans narrow, demographics shift and insurance needs morph into new risk areas, the customer experience must include thoughtful ways of injecting insurance precepts into new methods for consumers to research and learn about what insurance does. If they “get it,” they’ll get it.  If they see the need, they’ll need it. And they will value our experience if we can help them experience the value. Because technology now plays a role in all facets of insurance experience and education, it may be helpful for insurers to have their own deeper understanding of the shifting nature of insurance researching, buying and servicing. For our lesson, we’re going to turn to the customer so that we can grasp the customer perspectives on purchasing insurance within the context of the full customer experience. As we step into the digital age, we want to be walking in their shoes. See also: Is Insurance Like Buying Paper Towels?   Perspectives Majesco conducted some primary research last year with consumers and small to medium-sized businesses, to find out where the insurance industry stands in their eyes. The goal was to document their perceptions so insurers could use the insights to craft new experiences that would meet and exceed expectations. One of our key findings was that insurance is perceived as too confusing. Did insurance just become confusing, or did we lose sight of the customer? Who moved? Insurers’ primary focus has been on the product.  Services were those things we did to support the product, such as underwriting, billing, and claims. A few services might be offered with the product, like roadside assistance, but for most products that has been rare.  As a result, insurance is an intangible, and, to the customer, intangible can be unintelligible. In insurance, customers pay for a protective concept, not a physical asset. Traditionally, the agent or broker’s job was to explain and reinforce the value of insurance to the insured, helping him to “get it.” Peace of mind was sold as an actual product. You could have peace of mind that insurers would make you “whole” if your home was damaged, you were in an accident or if a death occurred, to help cover the needs of the family. Majesco found in its survey that the greatest understanding in insurance was among those in the Silent Generation – many who bought into the traditional “peace of mind” product. But confusion rapidly grew in the younger generations. Many have predicted the demise of the agent and broker channel. Many other industries have eliminated that layer and are seeing success. Retail sales, for example, are shifting and thriving online. Banks are still relevant, driven by apps that keep customers in touch with their money. But insurance, the way it was designed, sold, serviced and understood by the Silent generation, doesn’t resonate with Millennial and Gen Z — generations that may value the concept of insurance protection but don’t understand how it works or why it is so difficult to research, buy and service. Businesses and insurance have their own corresponding issue. Small and medium-sized businesses (SMBs), increasingly led by Millennials and Gen X, don’t necessarily see or understand how insurance companies can best serve them. They also see the insurance process as confusing and lacking in value. For both individuals and businesses, there is a double-whammy — they are legally bound to carry home, auto and property insurance (and other lines in the case of SMBs). Right or wrong, they may resent being forced to pay for intangibles that provide little perceived value and have a not-so-great experience. A successful claims experience can change that perceived value, helping them grasp the benefits of adequate protective cover. But that may not happen for a long time … so the quest for value and relevance stays alive. Today’s customers are looking for organizations that give them a product that makes sense in light of the measures that they may take to protect themselves. In both cases, consumer and SMBs, business models, products, processes and systems were built for earlier times – for the Silent and Baby Boomer generations. But the generations coming up behind them need something that is relevant in the digital age, where there is a vast difference in needs, demographics and expectations. Improving the experience — What goes around, sometimes falls off The cycle of insurance, where we met each new generation with a simple variation on the products of the last generation isn’t going to work. Majesco found that none of the three categories (Researching, Buying & Renewing and Service) could claim to produce great insurance experiences across the industry. See also: Are You Buying the Wrong Leads?   The goal, then, is to build compelling customer experiences and to let some of the old fall off. There will be parts of the customer experience and process chain that will no longer be needed. There will be others that you cannot live without. In the coming weeks, we are going to have multiple blogs on customer journey improvement. You’ll want to listen in on these because they come from some of Majesco’s top experts on insurance experience. But for now, we’ll leave you with four overarching themes.

1. As you answer the technical questions of customer experience development and digital transformation, don’t forget to ask the basic questions, such as, “How can we illustrate and model insurance value to generations that may not grasp insurance?” Remember, when they “get it,” they’ll buy it.
2. Make sure all the different parts of your company that serve the same customer work together to create an experience that is easy, compelling, consistent and satisfying across all of the components. It requires a shift to journey thinking … not functional thinking and will require new teams and collaboration.
3. Younger generations may not understand insurance, but they definitely understand technology. Don’t just meet them where they are, but speak their language. They are living with a new set of experiences across an alternate universe of risks. Use the technology to instruct and protect, and you’ll be reinforcing the value of the relationship, not just the value of the product.

If you want to get a glimpse into the use of technology within age groups, see the generational chart below.

4. You can’t rebuild your customer experiences in a day. Review your customer satisfaction data to find the parts of your experience that are high in importance but lower in performance to help you prioritize where to begin. Then work on these areas, but make sure you have a plan for improving all of the other parts of the experience as well.

For a deeper look at consumer and SMB perceptions regarding insurance, download the Majesco’s research reports, The Rise of the New Insurance Customer: Changing Views and Expectations and The Rise of the Small-Medium Business Insurance Customer: Changing Views and Expectations.