Express Scripts v. Kaleo illustrates what we have long suspected, that PBMs are re-labeling rebate dollars with another name to retain the value. Only now, we have insight as to what that value might be. Thanks to Robert Ferraro R.Ph at Conduent and Barry Cross at Michelin for passing this along, from ProPublica. Express Scripts Lawsuit Should Raise Everyone’s Eyebrows  For years, every PBM has refused to disclose the “rebates” that it earns on a drug-by-drug basis. As a result, no one has been able to detect the “net cost” of any drug (factoring in rebates), which means no one can assess whether a PBM’s formularies and programs favor higher-cost or lower-cost drugs. Every PBM has also refused to disclose how much in “other monies” the PBM is secretly being paid by manufacturers to favor the manufacturers’ products. As a result, no one has been able to determine how much a PBM is earning from its secret “deals” with manufacturers, or the amount that the PBM’s clients lose in potential savings because a PBM re-labels “rebates” with another name to avoid sharing those monies with its clients. But a few days ago, Express Scripts filed a lawsuit against the drug manufacturer Kaleo, and, while Express Scripts’ lawyers heavily redacted the complaint, they did not redact certain information that Express Scripts has long maintained as closely guarded secrets. The information that’s revealed is shocking. According to Express Scripts’ complaint, Express Scripts entered into “rebate agreements” with Kaleo in 2014 concerning its opioid overdose treatment Evzio that required Kaleo to pay Express Scripts far more in secret “administrative fees” (that Express Scripts presumably retained for itself) than Kaleo paid in “formulary rebates” (that Express Scripts presumably passed through to its clients). The complaint reveals that in four of its monthly invoices to Kaleo, Express Scripts invoiced Kaleo $26,812 in total “formulary rebates” but $363,160 in total “administrative fees.” Thus, based on the structure of Express Scripts’ rebate contracts, Express Scripts would pass through in these four months about 6.9% of the total amount it collected. Stated otherwise, Express Scripts would retain about 13 times more in “administrative fees” than Express Scripts would pass through in “formulary rebates” to its clients. Here’s a summary of the information included in the complaint: What was Express Scripts doing – if anything – to earn so much in administrative fees? Obviously, no one knows. But every plan administrator and fiduciary should demand full disclosure of this information. After all, unless Express Scripts was engaged in actual work meriting these payments, Express Scripts should have used the label “rebates” for the “administrative fees” it collected and passed through all such monies to plans to reduce their costs. The federal government should also want to know what work Express Scripts actually performed to earn its “administrative fees” under the Medicare contracts. And the government should ensure that Express Scripts appropriately reported the amounts as Medicare obligates Express Scripts to do. Medicare rules require that Express Scripts only retain the “fair market value” of services that Express Scripts actually performed, and that Express Scripts report such money to the government as “bona fide service fees.” Therefore, assuming Express Scripts retained these monies, Express Scripts was obligated to perform services commensurate with the amounts it retained. See also: Is This the Largest Undisclosed Risk?   On the other hand, if Express Scripts did nothing – or little – to earn these fees, Medicare rules require that Express Scripts label whatever amounts did not represent the “fair market value” of its services as “direct and indirect remuneration”, and report and pass through those amounts to the government. Bottom line: The federal government should determine whether Express Scripts is accurately categorizing and reporting its “bona fide service fees” and “direct and indirect remuneration” or whether it is retaining and hiding monies that the government would otherwise benefit from. Also, we think the government should determine whether any activities that Express Scripts did perform under its Medicare contracts were actually in the interests of the government and Medicare beneficiaries, or contrary to those interests. As a taxpayer, wouldn’t you want the government to investigate and obtain answers on all these matters? Why Did Express Scripts’ Earnings Increase?  In this day and age, everyone knows that most manufacturers of brand drugs are continually increasing their prices. And some manufacturers are raising their prices exponentially. But no one knows what PBMs are doing to prevent such price increases. Nor does anyone know the extent that PBMs are profiting from manufacturers’ price increases. The complaint discloses that Express Scripts “administrative fees” in January 2016 were $24,963, but in April 2016 they had soared to $129,517 – an increase of more than 400%. In a separate paragraph, the complaint states that Evzio’s price dramatically increased in February 2016 from $937.50 to $4,687.50. Our investigation into other data reflects that, nationally, the number of Evzio scripts that were dispensed spiked during this period, too. Unfortunately, we can’t tell from the heavily redacted complaint why Express Scripts earned far more in “administrative fees” in April. Was it because the structure of Express Scripts’ contract enabled it to earn more when the drug’s price increased – or more when the number of dispensed scripts increased – or both? Does Express Scripts earn “administrative fees” based on a percentage of the “total dollar volume of drugs sold”? Regardless, obvious questions arise: Did Express Scripts actually perform more work in April 2016 than it did in January 2016? Did its work load increase by more than 400%, meriting increased payments of more than 400%? Or does Express Scripts simply structure its rebate contracts to get paid more and more secret money, as drug prices increase or more scripts are dispensed, regardless of the activities that Express Scripts actually performs? The Plot Thickens: “Price Protection Rebates” Based on the complaint, Express Scripts included an additional provision in its contracts if Kaleo increased the price of Evzio, namely “price protection rebates.” From conversations with other industry experts, we’ve long known that some PBMs sometimes include price protection provisions in their manufacturer contracts. These provisions typically state something like the following: "If the manufacturer increases the drug’s list price by more than _%, the manufacturer must provide a price protection rebate reimbursing the PBM for all price increases above the stated amount." Express Scripts’ complaint reveals it entered into two rebate contracts with Kaleo – for its commercial business and for Medicare. Assuming Express Scripts’ “price protection rebates” created the above-described types of “caps” on acceptable price increases, how much were those “caps”? Unfortunately, the redacted complaint does not provide us with an answer. But note the following: Even if Express Scripts named relatively low “caps”- say, 2% – plans and Medicare would be totally exposed to 2% of Evzio’s price increase. If Express Scripts named a higher “cap” – say, 10% – plans’ and Medicare’s costs would inevitably soar. What conclusion can we reach about Express Scripts’ “price protection rebates”? While Express Scripts may have positioned itself in its “rebate” agreements to experience an “upside” if Kaleo increased its price, its “price protection rebates” left plans and Medicare exposed to higher costs from price increases. Note that Express Scripts – and all other PBMs – could theoretically write “price protection rebate” provisions that entirely offset the full amount of any price increase. But according to everything we’ve learned, they don’t. It’s reasonable to ask “why not?”Is it because PBMs are profiting from manufacturers’ price increases? Another bottom line: Every plan administrator and fiduciary – and the federal government and taxpayers – should want to find out the amount of Express Scripts’ price protection “caps” – for Kaleo’s Evzio and for other manufacturers’ drugs as well. Shouldn’t everyone want to know the extent that Express Scripts (and other PBMs) are leaving their clients and the government exposed to price increases? And how that exposure compares with the additional profits that Express Scripts (and other PBMs) may be realizing from the very same price increases? In fact, there’s a host of basic questions that every entity should ask of its PBM: What percentage of the PBM’s manufacturer contracts include “price protection rebate” provisions? How many manufacturer contracts don’t include any “price protection rebates” at all? For those contracts with these “protections,” what’s the range of the “caps” below which plans are entirely exposed to the manufacturers’ price increases? How many manufacturer contracts have “caps” above 5% (or any other number you want to select)? How many manufacturer contracts ensure that the PBM will earn increased revenues if prices increase? How much additional revenues has the PBM earned in the past year (or two or three) as a result of manufacturers’ price increases? Do Express Scripts – and Other PBMS – Actually Pass Through “Price Protection Rebates”?  Every Express Scripts client – and every other PBM client, as well – should also demand that its PBM state in writing whether the PBM is passing through all “price protection rebates” that the PBM collects from manufacturers. And every plan that is trying to put in place a new PBM contract – including by conducting a PBM RFP – should explicitly demand that its new PBM pass through 100% of its earned price protection revenue. That’s especially true, given the immense sums these rebates represent. The  Express Scripts’ complaint makes that patently clear. According to the complaint, in just the four months of invoices that are identified in the Express Scripts complaint, Express Scripts expected to collect more than $8.4 million in total “price protection rebates.” Express Scripts filed its lawsuit against Kaleo because Express Scripts claims that Kaleo failed to pay Express Scripts most of the money (and some of the “formulary rebates” and “administrative fees” that Kaleo also purportedly owed). But assuming Express Scripts collects the $8.4 million in “price protection rebates,” who will actually benefit? Will Express Scripts pass through all the money to its clients? Some? Or none? Are other PBMs passing through all – or some – or none – of the “price protection” revenues that they collect to all their clients? Or do some PBMs only pass through some “price protection” revenues to some clients? In recent PBM RFPs that our firm has conducted, we’ve observed that the rebates that many PBMs are now promising are far higher than the rebates that PBMs have promised in the past, or that PBMs are passing through to their existing clients. Are PBMs trying to win new clients by sharing some or all “price protection” revenues with new clients, even though PBMs are retaining “price protection” revenues that manufacturers pay PBMs in connection with PBMs’ existing clients? Are plans that are relying on PBM contracts that are a few years old losing out on large sums of potential rebates? Every plan administrator – and plan fiduciary – should want to know whether its existing contract is obsolete, and if there are ways to dramatically reduce costs by ensuring that all “price protection” revenues are passed through. Winners and Losers The revelations in Express Scripts’ complaint reflect that Express Scripts likely positioned itself to be a big winner regardless of Kaleo’s actions. If Kaleo kept its price “flat,” Express Scripts likely would collect far more in “administrative fees” than it would pass through to its clients in “formulary rebates.” If Kaleo raised its prices (which it did) – or dispensed more scripts (which it also did) – Express Scripts’ “administrative fees” would likely increase. And there’s an open question whether Express Scripts would also benefit from retaining some or all of the “price protection rebates” that it included in its rebate agreements. But Express Scripts placed plans in a far different position. If Kaleo kept its price “flat,” the only “rebates” that plans would likely collect on Kaleo’s high-price drug were the paltry “formulary rebates” revealed in the complaint. If Kaleo raised its prices – and Express Scripts structured its “price protection rebates” as they are typically written – plans were likely left completely exposed to price increases up to a stated amount. And to the extent that Express Scripts doesn’t pass through its “price protection rebates” to some or all plans, those plans were likely left exposed to price increases above any “cap” that Express Scripts imposed. Note that when Express Scripts penned its “rebate agreements” with Kaleo in 2014 – before Kaleo raised Evzio’s price dramatically – Express Scripts made the decision to include Evzio on its standard formulary, exposing all plans to Evzio’s far higher costs even though lower-cost alternative drugs were available. Evzio is an auto-injector that delivers a single dose of naloxone, a drug that can reverse the effects of an opioid overdose. In 2014, Evzio cost approximately $690 for a two-pack of single-use auto-injectors. Depending on dosage strength, generics made by Hospira and Mylan ranged from about $23 to about $63 for a single injectable vial. And there’s a third product that the FDA approved in 2015 – a nasal spray containing naloxone called Narcan – which cost approximately $150 for a two-pack. Evzio is an innovative product that talks to those using it and explains how to use the auto-injector, as reflected in this Kaleo video. But the generic injectors work just as well, as does the nasal spray Narcan (as long as a person is breathing). Based on the Express Scripts complaint, in late 2016 when Kaleo refused to pay Express Scripts all invoiced amounts, Express Scripts decided to exclude Kaleo’s Evzio from its standard formulary and solely provide coverage for the lower-cost alternatives. Because Express Scripts blocked Evzio in 2016 based on Express Scripts’ own financial interests, Express Scripts obviously could have made that decision far earlier based on plans’ financial interests and saved plans a lot of money. Turning to the federal government and Medicare Plan Beneficiaries, how did they fare as a result of Express Scripts conduct? Assuming Express Scripts passed through all “formulary rebates” but retained all “administrative fees,” the government lost out on a disproportionate amount of potential savings. Depending on Express Scripts’ price protection “cap,” the federal government was also exposed to some unknown amount of Kaleo price increases. If Express Scripts reported on and passed through all “price protection revenues” as “direct and indirect remuneration,” the government benefited from that money. But if Express Scripts didn’t do so, or only passed through some of those revenues, the government did not, and it was exposed to even more of Evzio’s exponential price increases. As for Medicare beneficiaries, because Express Scripts doesn’t negotiate to reduce the drug’s actual cost for beneficiaries – and the government retains all rebates it is paid – Medicare beneficiaries without “gap coverage” were exposed to Kaleo’s price increases. Each user’s exposure differed, depending on the phase of coverage the individual was in (deductible, initial phase, donut hole phase, etc.). But Express Scripts’ conduct did nothing to protect Medicare beneficiaries. See also: What Should Prescriptions Cost? The complaint also raises questions for the federal government in connection with its Medicaid program. The government requires all manufacturers – including Kaleo – to report the maximum amount of price reductions they provide in the commercial marketplace – known as their “best prices” – and to match those price reductions for the government when invoicing for Medicaid beneficiaries. Is Kaleo doing so? Are other manufacturers that are secretly entering into contracts with PBMs and agreeing to pay large “price protection rebates” doing so? The federal government should want to know. As a taxpayer, you should want the federal government to know. What about plan beneficiaries? How did they fare? Unfortunately, there’s no simple answer, other than “it depends.” Some beneficiaries weren’t hurt at all. While Kaleo inked its secret “deal” with Express Scripts (and perhaps other PBMs) – and raised its prices exponentially – Kaleo also did all it could to prevent consumers from screaming in outrage about its price increases. Kaleo made a savings card available to all who want to use it. As a result, the drug is free to all users who obtain the downloadable savings card. And everyone with insurance coverage who learns about the “Evzio Direct” program can obtain the drug directly from Evzio, while Evzio balance bills PBMs (meaning ultimately PBMs’ clients) for the the drug’s inflated price. Note that Evzio may be deducting out each user’s copay or coinsurance and deductible – or it may be balance billing for the entire cost of the drug – meaning your plan will be forced to absorb the cost of your beneficiaries’ cost share. Check your claims data to find out, because your PBM may not be bothering to do so. Plans should also want to know whether Express Scripts (and other PBMS) are indirectly assisting Kaleo in running its savings card program by giving Kaleo information about beneficiaries who are using Evzio or doctors who are prescribing it. Or Express Scripts (and other PBMs) may even be directly informing users or doctors about Kaleo’s savings card program. If any PBMs are doing so, they would obviously be secretly acting against plans’ financial interests, because PBMs would be end-running plans’ deductible and copay and coinsurance designs. For plan beneficiaries who don’t obtain access to Evzio’s savings card, those with  deductibles or coinsurance that need to be satisfied are hurt by Evzio’s inflated price and aren’t helped by any of Express Scripts’ secret rebate deals. As a result, from 2014 to 2016, they may not have been able to afford Evzio’s clever “talking treatment” to reverse opioid overdoses. And now that Express Scripts has blocked coverage of the drug for all plans relying on Express Scripts’ standard formulary, all affected plan beneficiaries will have to buy an alternative drug – or pay for Evzio entirely on their own – unless they can get Kaleo to cover the drug’s costs through a patient assistance program.

When the mayor tells you, “if you're going to stay here, write your name and Social Security number on your arm with a sharpie pen," it's time to get out of there. But, whether residents stay or leave, physical structures don't have that luxury. So, we are about to see round one of an enormous claims process because of Hurricane Harvey. See also: 6 Reasons We Aren’t Prepared for Disasters Disaster mitigation and restoration services are critical after property damage, but how you manage these services may have an impact on the outcome of your claim. Though there are many capable firms that specialize in property damage clean-up and restoration, there are some that will make mistakes, and others may even take advantage of the situation. When it comes to recovering the cost of mitigation and restoration services for an insurance claim, any mishaps can create big problems that may leave you stuck with the bill. In the best of situations, you'd vet your emergency team before a loss. You cannot be too prepared. Recovery service providers should be identified and interviewed. Make sure the company you choose will be able to handle your potential issues. Involve your insurer during vetting. There are “approved” vendors that insurance companies recommend; however, just because they are “approved” does not mean there will not problems. Notify the insurance company of who you plan to use. With Harvey, the losses are already upon us, but here are some techniques you can still use to prevent problems:

• Clarify and document scope of work - Be clear on scope of work with the recovery firm, and make the adjuster part of that conversation. Often, emergency response does not follow the normal protocols of a typical project. There likely won’t be time for detailed estimates, so try to get the adjuster to approve work in real time to avoid second guessing.
• Take a hands-on approach - Your property may still be underwater, but, once access is granted, you must be hands-on. No one should have access to your facility without the presence of a company representative. Assign a property supervisor to the affected site to keep track of who is there and what they are doing. It’s your property and your responsibility. The bigger the loss, the more people coming in and going out, so it is vital to have a company representative onsite to observe and answer questions.
• Audit contractor charges before approving - The first weeks after a loss are chaotic. It’s important for policyholders to put controls in place to monitor activity and to verify that work has been completed to specifications and according to the terms of the agreement. Reimbursable insurance expenses should be separated and audited prior to payment for proper detail and accuracy. This needs to be done efficiently in real time. If you don’t have the resources, this step can be completed by your claim preparation accountants i.e. forensic accountants. Having forensic accountants on your team, along with your technical experts, can let you process this information in the context of insurance recovery. Don’t assume your forensic accountants will automatically audit invoices. Identifying errors or, worse, fraud is critical to avoid delays in payment or project completion.
• Address issues immediately - When the first invoice arrives, insurance companies may act surprised and even deny coverage, especially if the steps above have not been followed. Make sure to get the parties together to discuss the issues. Don’t procrastinate and don’t assume. It is important to be active with any potential discrepancies. The policyholder is responsible if there are unresolved differences. If the adjuster disagrees with the work performed and the invoices are paid, it may be difficult to recover all your expenses. The immediate aftermath of a disaster is stressful and hectic. Preparation and communication can help you weather the storm and minimize unwanted surprises when you’re looking for claim payment.

For many of us, it's very difficult to say no. We're asked to take on extra assignments at work and help colleagues and clients with projects that might be outside our official job description. We're asked favors by our friends, by our families and sometimes even by our LinkedIn connections. And though it's nice to help, we can end up overburdened with tasks and responsibilities we're not passionate about. See also: How Not to Make Decisions   Saying no is hard, but even harder is living the life you don't want to lead because you couldn't say no. So, a few years ago, I made it a New Year's resolution to learn to say no. And it's been an incredibly liberating experience. Here are the tips I've used. See how you can incorporate them into your life. 1. Recognize the legitimacy of saying no. It's OK to say no. I'll say that again: it's OK to say no! When we think about saying no, we're often focused on how our friend or colleague will react. How disappointed they will feel, and how bad that makes us feel. But how about you and your feelings... and your life? If you say yes to everything and everyone, you'll end up without the time or energy to do what you really love to do. And is that what you really want? So, instead of thinking about "no" as a bad thing, think about it as saying "yes" to you and your family and the other commitments you really care about. Frankly, if you say yes to the right things -- to the things that you really care about and that are important both personally and professionally -- it will feel much more legitimate and comfortable to say no when the time comes. Now doesn't that feel better already? 2: Find your voice. If you're not used to saying no to things, it's sometimes hard to actually find the words to say what you want to say. I personally like to make sure I thank the person making the request and offer what feels to me to be a legitimate excuse. For example: "I really appreciate you thinking of me, but I've just got too much on my plate right now," or "Thank you so much for the invitation. I would love to do it/serve/get involved, but I just can't right now. I hope you will think of me again" or, simply, "I'm just not able to do this right now, but thanks so much." In the end, the key is to find what works for you. 3: Press pause. In the heat of the moment, it's especially difficult to say no. This is especially true for people you like or for causes you care about, but where don't have the time or resources to commit. So instead of having timing work against you, make time your friend. Don't answer right away. Buy yourself time to think about the request by thanking the person for the opportunity, requesting some time to think about it, and even perhaps proposing a specific time to respond. Most people will understand, and you'll be able to buy time for yourself in the process. See also: Traditional Insurance Is Dying   Saying no is hard to do. But so, too, is burdening yourself with tasks and activities that you don't really have your heart in... and, as a result, constantly putting your true self on hold. So, use these tips to bring a little more "no" into your life. You'll be surprised how liberating it feels, and how much more productive you'll be.

At Bolt, we have been working with insurers since 2000, and I am often asked about the new startups entering the market and how traditional insurers can compete. The first thing I usually want people to understand is that not all insurtech is intent on disrupting the market. Bolt, for instance, is what we like to call an insurtech innovator. Our goal is to partner with existing insurers and help them find answers to the contemporary challenges they face. This explanation naturally leads to the next question I’m frequently asked: What should insurers look for when seeking an insurtech partner? Finding an Insurtech Partner That Brings Value The insurance industry is unique. Guarded by strong regulations and financial requirements, it has been relatively closed to new entrants, developing a culture and method of doing business that’s different from other industries. That makes finding a good partner from the growing list of insurtech innovators a challenge. See also: Insurance Coverage Porn   Below are the top five factors I think an insurer needs to consider when partnering with an insurtech innovator:

• Don’t fear change: While insurtech innovators need to understand the complex regulatory environment and the culture of the insurance industry, I also think that traditional insurers could learn a little from the newcomers. Silicon Valley startups, for instance, are at the forefront of cutting-edge technology. Consider the tremendous consumer backing that a company like Apple has, and you realize that these techy new entrants have tremendous insight into what makes the customer tick. Adopting a little of this can take insurers a long way in the customer-centric era, so don’t be afraid of a little give and take when it comes to merging your culture with an innovator’s.
• Have a plan: Some insurtech innovators are eager to enter the industry and will promise you the moon and stars, but do you really need the whole universe of what they are offering? For instance, most insurers have a strong agent channel, and their customers like working through agents. One insurtech may promise superior results by eliminating agents in favor of a straight D2C play. As we’re seeing with many new insurtech disruptors, consumers want to interact through a variety of channels, so you would be better served by digital capabilities that can support both D2C and agent channels.
• Avoid the culture clash: I’ve worked in both the technology industry and the insurance industry, so I understand the culture shock that can occur between the two types of organizations. Earlier this year, we attended the Auto Insurance Report National Conference (AIRNC) 2017, where Patrick Sullivan spoke about the wave of insurtech entrants. Based on his experience speaking with many of them, he concluded that the movement won’t change the world, but niches abound. What this means is that disruptors won’t be able to unseat existing insurers, but innovators with a strong insurance background can merge their technological skills with this knowledge to help insurers navigate the changing environment. The key is to find partners with strong industry experience.
• Support innovation: The insurance industry is well-known for being resistant to change, so it’s important that a spirit of innovation comes from the top down and that leaders support the progressive steps you’ll be taking with an innovator. For instance, at Bolt, we're always asked by companies that sell products on our platform why they should want to bundle in products from others in our network. We've seen companies greatly increase their results by doing so, because they show the customer they are committed to all of his or her needs. But making the commitment to bundle with competitors wouldn’t have been possible without an organization-wide commitment to change.
• Dedicated resources: Regardless of the change initiative underway, partners can only take you so far. Internal change management is the responsibility of the insurer, and you need to make certain you have a plan, and the dedicated resources, in place to support the new initiative. Over the last few years, we’ve worked with a major insurer on expanding product selection and giving agents access to top digital tools that streamlined the buying process. The company instituted internal ambassadors that led the change and supported agents throughout the transition, ensuring the success of the launch and beyond. The result was a $26 million increase in premiums over two years.

See also: Why AI Will Transform Insurance   Adapting to the industry evolution underway isn’t going to be easy, but insurers can pave the road to success by partnering with insurtech innovators that have solid insurance experience. By merging their native digital expertise with the ability to support and navigate the industry complexities, innovators can help traditional insurers become top-tier digital enterprises, capable of delivering the customer-centric environment consumers are demanding. To learn more about partnering with InsurTech Innovators, read our thought leadership piece, How InsurTech Will Revolutionize the PC Insurance Industry: Partnering Into the Future.

As an MGA, ensuring your commercial customers receive the quality service they deserve is a top priority—and premium financing options that help clients afford the best policies on the market are a great way to achieve that. The average premium finance loan can range from several thousand dollars to more than $25k—a welcome influx of cash that frees up customer capital to be applied toward more business-critical needs. Unfortunately, establishing a premium financing process is a multi-step affair that can often be drawn out for weeks or even months. But thankfully, there is a way to streamline the process: by partnering with a premium financing provider that supplies quality services on an accelerated timeline. How can a premium financing provider achieve this delicate balance? They do so by integrating automation into their processes, structuring certain aspects to address customer convenience and freeing up the crucial time you need to keep your company moving forward. See also: It’s All About the Customer Journey   Let’s take a look at some of the benefits of partnering with a premium financing provider that incorporates automated processes into their customer service delivery. 1. Automated quote integration Want to add value to your offerings and boost customer loyalty? Partner with a premium financing provider that automates the policy quoting process. Not only does this speed up a necessary step for everyone involved, it serves as a great starting point for a conversation around competitive policy rates available to your customers—so they can easily assess which rate and policy works best for them. 2. Online customer portal Another great way the right premium financing provider enhances the overall customer experience through automation is by granting customers access to an online portal. This allows your customers to follow along with every step of their premium financing journey, anytime they please, from start to finish. 3. Automated statements and reporting Keeping good records has always been important, but in the age of information it’s more crucial than ever. Putting policy statements and reporting easily within your customers’ reach is another benefit of premium financing automation, ensuring transparency and the accurate delivery of key data. Finally, even with all the benefits of automation, it’s worth noting that the right premium financing provider will also understand when to stick with more traditional methods. Key service offerings like live customer care—whether face-to-face or over the phone—are still critical to a successful premium financing partnership. See also: 3 Keys to Success for Automation   Automation can sometimes get a bad rap, but when applied to the right processes, it can be the perfect way to provide top-tier customer service to your commercial clients seeking premium financing services. Make sure to partner with a premium financing provider that shares these values and prioritizes you and your customers’ success.

Insurance buyers are changing. They are being conditioned by the internet to expect that they can interact with insurers in any manner they choose. They expect to be able to buy direct online, to call the insurer directly, to work with agents, and to access insurance at the same time that they purchase products. They have more insurance literacy than ever before, and they expect transparency and control over the buying process. These changing expectations mean that carriers are forced to assess and address new channels while finding ways of preserving their franchise value and existing channels. And so, distribution channels are exploding. Insurers are expanding channels, adding distributors, moving into new territories and growing their existing channel to improve customer acquisition and retention. See also: Taking the ‘I’ Out of Insurance Distribution   Distribution management is keenly important to insurers. For most insurers, this is a topic that reaches the level of a strategic corporate priority. According to our research, insurers today work with an average of three traditional channels. One way to grow a book of business is to move well beyond existing and traditional channels. Although most insurers do work with independent distributors, more and more are experimenting with other channels. Almost 15% say that one of their key strategies is expanding the types of channels they use. This is especially true for life insurers where 18% report expanding channels as a key priority. Despite these rapidly shifting distribution strategies, the reality is that the independent agent still accounts for the bulk of business written by most insurers today. Emerging Distribution Channels [caption id="attachment_27508" align="alignnone" width="471"] Source: Celent[/caption] The kinds of strategies carriers take are heavily influenced by their view of the agent. In no other industry that I know of do we have a disagreement about who the customer is. Yet in the insurance industry, this is a matter of religion for many people. Some insurers say that the policyholder is the customer. After all, they’re the ones who write the check and use the service. But others are adamant that the agent is the customer. They influence or make the placement decision — deciding which insurer will write the account. This question of who is the agent appears to have an impact on the investments insurers are making when it comes to managing the channels. Those who see the agent as their primary customer also are more likely to see distribution channel management as a top corporate priority. In addition to the traditional channels, a number of new channels are emerging. The biggest news here is the explosion of insurtech startups that have high hopes of disrupting the acquisition process. They provide a unique experience online and hope to garner a large portion of the online marketplace because of their ease of doing business. Some focus on unique slivers of the marketplace. We are aware of more than 145 startups in the US and over 300 worldwide. While a few insurers are very worried about the impact of InsureTech startups, most are watching closely and a little worried. This is more true for PC insurers where more than 40% say they’re a little worried – likely because of the greater activity in PC. Life insurers generally are watching, but not too worried, or see them as potential partners (31%). Direct-to-consumer isn’t limited to insurtech startups. There are also a large number of insurers that are actively engaged in building out direct-to-consumer capabilities. Many insurers offer some sort of direct sales capabilities for personal auto. Increasingly, they are extending to this direct sales capability to more complex lines including homeowners, workers compensation, and small business. To be successful here, an insurer has to have a streamlined process, a slick user interface, minimal data input, tailored advice, and real-time decisions. However, going direct to the consumer can create channel conflict. A variety of techniques are utilized to include and preserve the existing channel. Some will use a different brand such as biBerk, Say Insurance, TypTap, Haven Life, or eSurance. Some will assign an agent using algorithms that take into account location, status, or current production levels. Some will prompt the consumers to choose an agent. Going direct isn’t the only new distribution strategy carriers are experimenting with. Digital agents, aggregators, partnerships with other carriers and partnerships with non-traditional distributors are all gaining traction. As consumers increasingly expect instant action, insurers are looking for ways to be available at the point of need rather than after the need has been generated. Many insurers have defined themselves by their channel, saying “We’re a direct writer” or “We’re an independent agency company.” You don’t have to abandon those channels. But as a CEO of an insurtech startup said in a recent conversation, “Choosing your channel as the driving identity of your company is like me wearing a high school letterman jacket when I go out to dinner. It may be part of my identity, but I’m a 42 year old man. It doesn’t work anymore.” For most insurers, shedding the letterman jacket means integrating multiple distribution channels into whatever their historic context is. See also: How to Find Distribution Payday   This doesn’t come cheap. Expanding channels requires expanded technology capabilities. As consumers become more digital, the channel that is changing the most is the agent channel. Consumers are already voting with their wallet and moving online in droves, and insurtech firms are taking advantage of that. But it’s not easy for insurers to just go direct. Most insurers don’t have the skills necessary to sell a policy. They may have programs to help the agents, but don’t have their own capabilities. Decisions need to be made about how to proceed. Will they create an in-house call center? Will they commit marketing dollars to organically generate traffic to the website? As these operational decisions are being made, technology capabilities also must be expanded. Those who are going direct require a slick UI on the website as well as business rules, prefill, and workflow on the policy admin side to support straight-through processing. Ongoing servicing requires the ability to expose policies, bills, and claims functionality. Those who are partnering with aggregators or digital agencies need to build out connectivity solutions to pass data back and forth. Those who are partnering with other carriers may need an agency management system to track the leads and the commissions associated with them. And of course, the demand for data to manage these new channels is voracious. Distribution strategies are increasingly driving IT investments. While multiple channels are effective at targeting specific markets, the increasing complexity of managing these channels is placing pressure on IT organizations. Additionally, the explosion of insurtech startups carries with it the potential for channel disruption. Carriers can work with these startups, invest in the startups, or imitate the startups, but those who ignore them do so at their own peril.

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!