It is a warm autumn morning, and I am walking through downtown Mountain View, Calif., when I see it. A small vehicle that looks like a cross between a golf cart and a Jetson-esque, bubble-topped spaceship glides to a stop at an intersection. Someone is sitting in the passenger seat, but no one seems to be sitting in the driver seat. How odd, I think. And then I realize I am looking at a Google car. The technology giant is headquartered in Mountain View, and the company is road-testing its diminutive autonomous cars there. This is my first encounter with a fully autonomous vehicle on a public road in an unstructured setting. The Google car waits patiently as a pedestrian passes in front of it.  Another car across the intersection signals a left-hand turn, but the Google car has the right of way. The automated vehicle takes the initiative and smoothly accelerates through the intersection. The passenger, I notice, appears preternaturally calm. I am both amazed and unsettled. I have heard from friends and colleagues that my reaction is not uncommon. A driverless car can challenge many assumptions about human superiority to machines. Though I live in Silicon Valley, the reality of a driverless car is one of the most startling manifestations of the future unknowns we all face in this age of rapid technology development. Learning to drive is a rite of passage for people in materially rich nations (and becoming so in the rest of the world): a symbol of freedom, of power, and of the agency of adulthood, a parable of how brains can overcome physical limitations to expand the boundaries of what is physically possible. The act of driving a car is one that, until very recently, seemed a problem only the human brain could solve. Driving is a combination of continuous mental risk assessment, sensory awareness, and judgment, all adapting to extremely variable surrounding conditions. Not long ago, the task seemed too complicated for robots to handle. Now, robots can drive with greater skill than humans — at least on the highways. Soon the public conversation will be about whether humans should be allowed to take control of the wheel at all. This paradigm shift will not be without costs or controversies. For sure, widespread adoption of autonomous vehicles will eliminate the jobs of the millions of Americans whose living comes of driving cars, trucks, and buses (and eventually all those who pilot planes and ships). We will begin sharing our cars, in a logical extension of Uber and Lyft. But how will we handle the inevitable software faults that result in human casualties? And how will we program the machines to make the right decisions when faced with impossible choices — such as whether an autonomous car should drive off a cliff to spare a busload of children at the cost of killing the car’s human passenger? See also: Of Robots, Self-Driving Cars and Insurance   I was surprised, upon my first sight of a Google car on the street, at how mixed my emotions were. I’ve come to realize that this emotional admixture reflects the countercurrents that the bow waves of these technologies are rocking all of us with: trends toward efficiency, instantaneity, networking, accessibility, and multiple simultaneous media streams, with consequences that include unemployment, cognitive and social inadequacy, isolation, distraction, and cognitive and emotional overload. Once, technology was a discrete business dominated by business systems and some cool gadgets. Slowly but surely, though, it crept into more corners of our lives. Today, that creep has become a headlong rush. Technology is taking over everything: every part of our lives, every part of society, every waking moment of every day. Increasingly pervasive data networks and connected devices are enabling rapid communication and processing of information, ushering in unprecedented shifts — in everything from biology, energy and media to politics, food and transportation — that are redefining our future. Naturally we’re uneasy; we should be. The majority of us, and our environment, may receive only the backlash of technologies chiefly designed to benefit a few. We need to feel a sense of control over our own lives; and that necessitates actually having some. The perfect metaphor for this uneasy feeling is the Google car. We welcome a better future, but we worry about the loss of control, of pieces of our identity, and most importantly of freedom. What are we yielding to technology? How can we decide whether technological innovation that alters our lives is worth the sacrifice? The noted science-fiction writer William Gibson, a favorite of hackers and techies, said in a 1999 radio interview (though apparently not for the first time): “The future is already here; it’s just not very evenly distributed.” Nearly two decades later — though the potential now exists for most of us, including the very poor, to participate in informed decision-making as to its distribution and even as to bans on use of certain technologies — Gibson’s observation remains valid. I make my living thinking about the future and discussing it with others, and am privileged to live in what to most is the future. I drive an amazing Tesla Model S electric vehicle. My house, in Menlo Park, close to Stanford University, is a “passive” home that extracts virtually no electricity from the grid and expends minimal energy on heating or cooling. My iPhone is cradled with electronic sensors that I can place against my chest to generate a detailed electrocardiogram to send to my doctors, from anywhere on Earth. Many of the entrepreneurs and researchers I talk with about breakthrough technologies such as artificial intelligence and synthetic biology are building a better future at a breakneck pace. One team built a fully functional surgical-glove prototype to deliver tactile guidance for doctors during examinations — in three weeks. Another team’s visualization software, which can tell farmers the health of their crops using images from off-the-shelf drone-flying video cameras, took four weeks to build. The distant future, then, is no longer distant. Rather, the institutions we expect to gauge and perhaps forestall new technologies’ hazards, to distribute their benefits, and to help us understand and incorporate them are drowning in a sea of change as the pace of technological change outstrips them. The shifts and the resulting massive ripple effects will, if we choose to let them, change the way in which we live, how long we live for, and the very nature of being human. Even if my futuristic life sounds unreal, its current state is something we may laugh at within a decade as a primitive existence — because our technologists now have the tools to enable the greatest alteration of our experience of life since the dawn of humankind. As in all other manifest shifts — from the use of fire to the rise of agriculture and the development of sailing vessels, internal-combustion engines, and computing — this one will arise from breathtaking advances in technology. It is far larger, though, is happening far faster, and may be far more stressful to those living through this new epoch. Inability to understand it will make our lives and the world seem even more out of control. A broad range of technologies are now advancing at an exponential pace, everything from artificial intelligence to genomics to robotics and synthetic biology. They are making amazing and scary things possible — at the same time. Broadly speaking, we will, jointly, choose one of two possible futures.  The first is a utopian “Star Trek” future in which our wants and needs are met, in which we focus our lives on the attainment of knowledge and betterment of mankind. The other is a “Mad Max” dystopia: a frightening and alienating future, in which civilization destroys itself. These are both worlds of science fiction created by Hollywood, but either could come true. We are already capable of creating a world of tricorders, replicators, remarkable transportation technologies, general wellness and an abundance of food, water and energy. On the other hand, we are capable too now ofushering in a jobless economy; the end of all privacy; invasive medical-record keeping; eugenics; and an ever worsening spiral of economic inequality: conditions that could create an unstable, Orwellian or violent future that might undermine the very technology-driven progress that we so eagerly anticipate. And we know that it is possible to inadvertently unwind civilization’s progress. It is precisely what Europe did when, after the Roman Empire, humanity slid into the Dark Ages, a period during which significant chunks of knowledge and technology that the Romans had hard won through trial and error disappeared from the face of the Earth. To unwind our own civilization’s amazing progress will require merely cataclysmic instability. See also: Lack of Enthusiasm for Driverless Cars? It is the choices we all make which will determine the outcome. Technology will surely create upheaval and destroy industries and jobs. It will change our lives for better and for worse simultaneously. But we can reach “Star Trek” if we can share the prosperity we are creating and soften its negative impacts; ensure that the benefits outweigh the risks; and gain greater autonomy rather than becoming dependent on technology. The oldest technology of all is probably fire, even older than the stone tools that our ancestors invented. It could cook meat and provide warmth; and it could burn down forests. Every technology since this has had the same bright and dark sides. Technology is a tool; it is how we use it that makes it good or bad. There is a continuum limited only by the choices we make jointly. And all of us have a role in deciding where the lines should be drawn. This is an excerpt from Vivek Wadhwa’s new book, “The Driver in the Driverless Car: How Our Technology Choices Will Create the Future.”

Insurance carriers are making an unprecedented investment in transforming their policy, billing and claims systems and processes. We are in a unique period where the convergence of aging legacy platforms, complex market dynamics and a mature vendor landscape has made transformation a top priority for carriers of all sizes and profiles. We expect core system transformations will continue to be a top priority for insurers – regardless of size and product mix – in the coming year. Trends in the following three areas have been dominating our recent conversations with the industry:

1. Digital transformation and analytics: Carriers are looking to extend their core platforms to develop the foundation for digital transformation and analytics. They have more ambitious visions for how these programs should drive growth strategies and are no longer satisfied with simply implementing a new platform and then searching for ways to achieve benefits in the post- implementation environment. Looking forward, a successful transformation should include broader strategies for 1) data analytics, 2) a positive digital customer and agent experience, and 3) underwriting efficiency.
2. Greenfield and Cloud: Carriers are looking at alternate delivery approaches that align with their broader organizational visions. Some of them have recently started to explore the business and architectural simplicity of greenfield and cloud delivery scenarios.
3. Specialty and E&S: An increasing number of carriers’ core transformation focus is on modernizing platforms that process specialty and E&S products. We expect the next wave of transformation will affect specialty line carriers, which we categorize as non-admitted (E&S), Bermuda and London market carriers.

Insurers are looking for more than just up-to-date systems. They also want digital and analytics platforms that can help them realize the full benefits of a core transformation. See also: Data and Analytics in P&C Insurance   Digital and analytics platforms Several carriers have increased their investments in core transformation and recognize they need to add digital and analytic platforms to realize the following additional benefits and capabilities:

1. Better data and analytics – In recent years, carriers have recognized the value of building or improving an enterprise data warehouse (EDW) in parallel with traditional core transformation initiatives. This has enabled them to plan for strategic data analysis and build necessary components into core systems. Modernizing core systems often leads to more reliable data, and when this data is coupled with strategic data analytics initiatives it facilitates improved process metrics, work queue volumes and claims fraud detection.
2. Better customer and agent experience – Good customer and agent experiences most often occur with modern underlying core platforms, most of which now offer self-service capabilities and can even open new customer channels. Carriers are looking to advance core system capabilities by customizing an agent and policyholder portal layer that enables users to intuitively interact with the system; a claims transformation can improve the claims reporting, servicing and resolution process and fundamentally alter how a customer interacts with the carrier’s claims processing division. Billing transformation programs also typically include self-service capabilities that can improve the overall customer experience.
3. Improved underwriting efficiency – This can be a direct benefit of any core transformation simply because of the resulting modern screen flow. However, carriers can gain much more by coupling the screen flow with an operational redesign that integrates the underwriting department with the new system capabilities (although this may entail an assessment and reconfiguration of the underwriting organization.) This is of particular importance in commercial and specialty lines transformations that seek to automate repetitive manual tasks but still require experienced underwriters to fully evaluate risks.

Greenfield implementation Over the past two years, carriers have become increasingly interested in greenfield transformations. Such a transformation provides simplicity and gives carriers a unique opportunity to reinvent their business, IT and organizational culture. This is in contrast to traditional transformation programs that unfortunately  can “recreate the sins of the past” and implement relatively obscure business scenarios for the purpose of transferring the existing book of business. A greenfield implementation approach tends to be straightforward. It eliminates the need to integrate with antiquated legacy platforms and thus can lead to speedier delivery time. It also tends to require fairly simple product design, which makes it well-suited for mid-tier carriers that are looking to leverage off- the-shelf vendor products. Some key advantages of a greenfield approach are its product and solution simplicity, increased speed to delivery and the opportunity it provides the organization to break with the past. However, there are disadvantages if  a carrier doesn’t go into this kind of implementation with eyes wide open. For instance, it will limit book-of-business conversion capabilities in the near term and can create some intermediate operational challenges by adding to the overall portfolio of applications in the near term. Greenfield offers design simplicity that can enable carriers to break from the architectural complexity of the past. Cloud technologies Though cloud deployments are not new for insurance carriers, their scope has primarily been limited to productivity applications with minimal connectivity to the broader enterprise ecosystem. However, there are different expectations of the cloud today. The five key factors behind them are:

1. Aging infrastructure – Many carriers looking to modernize their core systems are discovering that their on-premise hosting environment is insufficient to support new core system technology, as well as customers’ and agents’ real-time “always on” expectations. Cloud solutions can meet many business and IT needs, and carriers now have a viable option to deploy new core systems in the cloud instead of investing in upgrading and maintaining new IT infrastructure.
2. Expanding technology ecosystem – Many small to mid-sized carriers do not have the capital or resources to support the complexity of a large transformation, but without transformations are constrained in their ability to respond to the market. Technology companies are beginning to offer complete, integrated ecosystems that include all the technology that runs core operations. This includes standard integrations of key ancillary systems (e.g. document generation, document management) and digital front-end portals and mobile, data analytics, underwriting desktops and predictive modeling. Better yet, automated refresh capabilities keep product versions up-to-date.
3. Need for new products and markets – Insurers need to quickly respond to changing market conditions to compete in a very competitive landscape. Cloud core systems provide carriers the opportunity to quickly test and learn new business ideas – such as new products or expansion into a new market – with minimal investment.
4. Need to facilitate product development and innovation – IT is beginning to shift from being a provider of all technology services to a broker or orchestrator of business services and technology innovation. Creativity requires experimentation, and, by nature, many experiments fail. Core systems in the cloud can help carriers reduce the cost of the experimentation and failure cycle, enabling them to greatly increase the potential for innovative ideas and solutions.
5. Talent shortages – It is difficult for many carriers to attract enough skilled employees, not least in infrastructure hosting and core development and testing. Cloud core systems alleviate the need for a full complement of IT staff because cloud solution providers already feature many of these resources.

There now are complete, integrated ecosystems that include all the technology that runs core operations, and automated refresh capabilities keep product versions up-to-date. Specialty and E&S Over the past decade, standard lines carriers have been challenged to improve profitability through reduced IT expenditures and policy acquisition costs. In response, these carriers have made significant investments in modernizing their aging policy administration platforms to improve automation and speed to market. We believe a significant share of the standard lines market now operates on a modern policy administration platform, with a final group of very large carriers starting to migrate to commercially off-the-shelf platforms over the next three to five years. See also: Demographics and P&C Insurance   We believe the next wave of transformation will affect specialty line carriers, which we categorize as non-admitted (E&S), Bermuda and London market carriers. Although they historically have been insulated from the deflationary pressures of technological automation, we believe three factors have aligned that will accelerate their transformations over the next five years.

1. Organic growth – Over the past decade, the specialty market has outpaced industry growth averages, and, thanks to a variety of market dynamics, we believe that this will continue. However, maintaining these increased growth patterns while managing their historically low policy-acquisition costs will be a challenge for many specialty and E&S companies. They are likely to respond by increasing and improving internal underwriting staff, as well as through increased use of technology to automate lower value aspects of the policy placement process. For example, specialty carriers will automate back-office and clerical work through new policy administration systems, while empowering their specialist underwriters to continue risk selection and pricing.
2. Technological maturity – Commercially available policy administration systems have traditionally focused on standard market products, thus requiring extensive customization to meet specialty carriers’ unique needs. For E&S and Bermuda carriers, we have seen products that now support multi-segment program policies, feature robust manuscript forms functionality and can set IRPM factors at exposure and policy levels. For London market carriers, vendors are now supporting accelerators that enable core systems to interact with the Lloyd’s and companies markets using ACORD XML standards and integrate their back office systems with the relevant Xchanging market systems.
3. Organizational reporting/controls – Many specialty carriers have difficulty providing sufficient data to their internal auditors and enterprise risk managers for the purposes of regulatory and group reporting. Modern policy administration systems enable underwriters, actuaries and internal controllers to more effectively track and analyze the carrier’s book of business. These systems support granular exposure, risk concentration and premium reporting, thereby easing the reporting burden. Moreover, powerful predictive analytics platforms enable underwriters to marry internal and external risk models to their expert judgment, resulting in clearer decision-making and more effective management across the enterprise.

New policy administration systems can help specialty carriers automate back office and clerical work, ease their reporting burden and improve their risk-based decision making. Implications

• Carriers have increased their expectations of core transformations and increasingly look to transformation to include robust digital and analytics capabilities.
• They also will continue to look at alternative delivery options in an effort to simplify their technology environment and their implementation road maps.

Many transformation programs are starting to include portal and data warehousing components, and off-the-shelf package solutions are well-equipped to integrate those components with the core back-office systems.

Sleep allows the body and the brain vital repair and recovery time, giving hormones the opportunity to replenish. Both inadequate and excessive sleep have been associated with early death. We are getting a better understanding of the health consequences of low levels of physical activity combined with inadequate or excessive sleep. Having at least seven hours of sleep each night has been described as a “health necessity” for adults. Less leads to reduced cardiovascular fitness and metabolic disruption as a result of altered hormone levels, which can cause weight gain. Excessive sleep is probably evidence of an underlying chronic illness that will itself shorten life. Wearables and accompanying apps help monitor phases of shallow and deep sleep at night. The amount of time spent in and out of each phase can be influenced by underlying health. Sensors in the devices can detect when a person is lying in bed and moving, generating data that could be valuable to life and health insurers because the amount and quality of sleep provide important insights into our long-term health. Sleep is influenced by genetic, medical, behavioral and environmental factors, and problems often increase with age. How well we sleep is governed by melatonin (released from the pineal gland), matched by a fall in levels of the activity-related hormone serotonin. These changes align our body clocks with the circadian rhythms of day and night. See also: Confessions of Sleep Apnea Man   Regular bedtime in an environment with suitable levels of light, sound and temperature is important for “sleep hygiene.” Smoking, alcohol, caffeine or food before bed and exposure to “blue” light from tablets or screens can all disrupt sleep. Poor sleep may result from chronic health problems, anxiety or depression but causes psychological distress in its own right. Work performance, judgment and social relations are harmed. Excessive daytime tiredness increases the chance of accidents. Disorders of sleep include nightmares and sleepwalking. Sleep apnea is most associated with excess mortality. Often obese, those suffering from sleep apnea are at particularly high risk of cardiovascular problems. The partners of these patients also often suffer from chronically disturbed sleep. While consumer-grade wearables and apps may lack the detailed analysis in sleep studies that includes core body temperature, hormone levels, circadian rhythm and brain activity, these devices offer an approximation of sleep architecture that could help individuals improve sleep hygiene. For insurers, self-reported sleep data could be incorporated within wellness and fitness product protocols in the future.

We can all use a chuckle from time to time, right? When it comes to innovation failures, the funniest I've seen in a long while popped up last week, and it provides a lesson while not having cost anyone in the insurance ecosystem a penny, so I think it's safe for all of us to laugh—and then think, "There but for the grace of God go we."

The innovation, called Juicero, was designed to be a Keurig for juice. It uses a ton of technology to give people a great glass of juice at home or in the office as conveniently as Keurig has given us coffee and tea. Juicero met all the traditional criteria for venture capitalists: 

Proprietary technology? Check. The device used some 400 custom parts.

Hot market? Check. The market for juice is very tempting.

A proven founder? Check. He had started a juice company called Organic Avenue.

High-minded purpose? Check. The founder, Doug Evans, compared himself to Steve Jobs, and Juicero talked about things like life force, while avoiding the term "juice" (generally in favor of "plant-based nutrition").

Great business model? Check. The company used the long-proven "razors and blades" model that had worked so well for Gillette—once you get the razor in someone's hands, you have a license to overcharge for blades forever. HP used the model with laser printers, Keurig with the pods for coffee and tea, etc.

With all the boxes checked, Juicero lined up $120 million in investment from smart guys at places like Google Ventures and Andreessen Horowitz.

The problem: The device is totally unnecessary. It's also expensive. While going through their checklists, Juicero and its investors never stopped to ask that most fundamental of questions: Does this solve a real problem for a real person? Instead, they talked themselves into the more common question: Would this make me a lot of money if people bought into the concept?

In these days of ubiquitous media, it didn't take long for someone to let the emperor know he was naked. Bloomberg did the honors in this article. A reporter took a Juicero bag of juice and squeezed it by hand faster than the super-high-tech, $400 Juicero machine did. (That's the discounted price, down from the initial price of $700.) The reporter, helpfully, provided video proof with the article. So what you're really buying with Juicero is bags of juice, which cost $5 to $8 for each eight-ounce glass—meaning there has to be an awful lot of life force in there. 

The company is now a dead man walking. It won't acknowledge that yet, but it is. This Atlantic article shows that the piling on has already begun.

We'll all make mistakes as we sort through the innovations being bruited about in insurtech, but we'll make a lot fewer if we start from the customer and work backward, if we ask that simplest of questions: Does this idea make someone's life demonstrably easier? 

Cheers,

Paul Carroll,
Editor-in-Chief 

Insurers are aware that technology will help to reduce claims drastically and therefore finally run premiums down to unsustainable levels. Time to move on “Insurance is a cornerstone of modern life. Without insurance, many aspects of today’s society and economy could not function. The insurance industry provides the cover for economic, climatic, technological, political and demographic risks that enables individuals to go about their daily life and companies to operate, innovate and develop.” Source: Insurance Europe I fully support this, but the way this cornerstone fits into modern life needs attention. It’s time to move on. See also: Insurance Coverage Porn   The Third Wave Twenty years ago, I set up the first digital insurance. Ten years ago, I set up (again the first) mobile insurance Now we’re heading for the third wave: connected insurance. Real connected insurance with the new opportunities that technology brings is what I (with a few former colleagues) believe in and have been working on for some time now. Of course: "IoT," "data science," "AI," "customer-centric" and "on-demand" are the buzzwords. But let me add two: "holistic" and "transversal." "Holistic" refers to the complete modern household with a connected lifestyle and "transversal" to the consumer who is completely not interested in our industry verticals. Insurance has to stay but with an overall and fresh approach. Hundreds of insurtech initiatives are currently taking pieces and add sometimes compelling features. See the Sherpa-Neos-Interpolis-Trov-CBien-Metromile-Vitality-Clark-Knip-PolicyGenius-Lemonade-Inshared-like initiatives. The real challenge is to bring it all together to a compelling, simple, transparent and engaging full service offer to the customer. Focus on prevention The new insurance is no insurance -- meaning the focus should not be on pushing insurance products but on offering prevention services. For this we developed an international concept for smart protection called InConnect, with the household as hub connecting all smart devices, vehicles and wearables and with technology and data used to improve prevention. Safety and Peace of Mind Unbiased personal risk management tools (Primes) help reduce insurance to what is really needed in one universal personalized policy without redundancies and gaps, dynamically adjusted to the actual situation and needs with:

• On-demand add-ons
• Built-in loyalty and reward system
• Ready connections for sharing cars, rides and homes
• Easy combining or splitting households
• Privacy and cyber risk recognized

and backed with a one of a kind insurance and claims IT platform. Startup The overall concept is quite ambitious. Although we’ve successfully done ambitious businesses before and have qualified people and technology on our side, we’ll start on a controllable scale. A startup will kick off in three European countries with home, motor and travel. As soon as we’ve completed our search for the right partners, we’ll start proving the concept, do the learning and keep you posted. Of course we’re always looking for enthusiastic and good individuals. Feel free to give me a buzz. See also: The Insurance Model in 2035?   Finally Insurers are experts in risk and capital management, and that is what they should keep doing, but in a different perspective. Deploy that expertise in the new environment of connected lifestyles.

Insurance is overweight and unhealthy. For too long, the insurance industry has accepted that it is OK for at least a third of customer’s money to be spent on admin, overheads, sales and marketing. Insurance CEOs have been announcing operational efficiency programs for years, yet the percentage of premium left for the risk pool hasn’t really changed. Thank goodness for the insurtech digital implementation strategy for insurers! Hampered by legacy technology, large workforces and cumbersome business processes, insurance is an inefficient business. But that’s changing! Insurtech is now on the corporate agenda for all insurers who wish to be around in the next five to 10 years — which means embracing digital ways of working in an age where speed of change is the defining characteristic. For this month’s “Insurtech Insights,” Rick Huckstep explores the subject of the insurtech digital implementation strategy and the impact of digital platforms as an alternative to core systems implementations. Why now for insurtech? The insurance industry has always been a technology user, so why is there now all this fuss over and attention about insurtech digital implementation? IMHO, insurance is going through a massive catch-up phase. I call this a rapid evolution, rather than use “disruption.” Nonetheless, this is about digital implementation for insurers, who have failed to keep pace with technology since the mid-'90s and the birth of the internet. You only have to consider the iPhone, already a decade old, and incumbent insurers still appear clumsy when going “mobile.” For decades, software vendors and systems integrators were the source of technology insight and innovation. Now they find themselves increasingly irrelevant in the digital age — even more so with the emergence of insurtech. That is why many are scrambling around looking for ways to engage with the insurtech ecosystem; if anyone is going to be disrupted by insurtech, it will be them! See also: Let’s Keep ‘Digital’ in Perspective   The problem is that software vendors have focused on providing all-encompassing core systems at massive expense and demand on company resources. Often, by the time these large IT implementations are finished, they are already a legacy system. It is no wonder that so much of the IT budget is spent on keeping the lights on, leaving little for internal innovation and value creation. These core insurance systems are like giant aircraft carriers. They’ve got massive capability and scale and are deep and rich functionally, are generalist and are built to last (well, at least 17 years, which is about the average for a policy admin system.) They are designed and built to do just about everything! They are also very expensive, take ages to commission and are difficult to adapt to external, unforeseen changes. Whereas insurtech's core systems are like the latest generation of robotic armed patrol boats — agile, automated, cheaper, have a shorter cycle times to commission and are task-specific. The demise of core systems In the traditional software licensing model (the way legacy systems are sold), the insurer buys a license to use the software. For this, the insurer typically pays a large one-off, upfront fee. Then, the insurer pays an annual maintenance charge that is based on a percentage of this fee (in the 15% to 25% range). Added to this is the cost of implementation. This is where the systems integrators come in, because not all software vendors provide the services needed to implement and configure the new system. These implementations become large IT-led projects that are measured in years and tens, if not hundreds, of millions of dollars. And they’re big decisions that the insurer is going to have to live with for several decades! That is why the average time to make a buying decision is also measured in years. Meanwhile, the product and sales teams are frustrated by the IT department because it sees customer opportunities and competitive threats in a constantly moving market and is powerless to respond. IT has become a constraint — not the enabler it was always meant to be. Speed-to-market has become an oxymoron! The rise of the platform By contrast, those involved with insurtech are digital natives, mobile in nature and cloud-savvy. The entrepreneurs and founders are born out of the post-iPhone world. For the insurtechs, it’s all about building a flexible and agile tech platform. There’s little need for an in-house IT department when the insurer can buy a service on a pay-as-you go basis. The insurtech digital implementation can be measured in months and thousands of dollars (instead of years and millions). Speed-to-market is the defining characteristic of these tech-enabled platforms. In the old-world model, if an insurer wanted to launch a new product or enter a new market, they’d have IT on the critical path, defining the timescale for the launch. Partnering is the new route to market In the insurtech world, it’s a different story. And the incumbent insurers have cottoned on to the new way of working: partnering. In this model, the insurer picks insurtech platforms — rather than deploying their own core systems — when launching new products. The insurer focuses on insurance. The insurtech focuses on tech. A leader in this model is Munich Re Digital Partners. Its approach is to provide its own underwriting platform as the back-end engine while the insurtech partner provides the product and customer engagement. Either way, this insurtech digital implementation strategy offers insurers speed, cost and customer advantages. The result is a significantly less expensive implementation approach with a quicker actual speed to market. Let me give you an example. Let’s say Insurer A wants to launch a health product in a new territory. Its insurtech digital implementation strategy is to partner with, for example, Sureify. If you don’t know Sureify, here’s what I wrote about them last year under the heading “Sureify, the Salesforce.com of insurance engagement.” In it, I described the company as follows: “Sureify is an insurance technology platform that allows insurers to digitally acquire, engage and up-sell with prospective and current policyholders. Part of the platform capabilities includes health, disability and life insurance products built around IoT devices to enable dynamic premium modeling. It is a platform that emphasizes web and mobile distribution channels with multiple engagement possibilities. And it is offered as a white-label platform for the carriers where they define the underwriting questions, policy terms, risk and pricing tables using a plug-and-play approach.”  Digitalization is the redirection of the company to the customer To get a industry perspective on the subject of digital implementation, who better to give me an opinion than the well-qualified Martin Pluschke, head of digitalization at NuernbergerVersicherung. We met up recently at a RiskMinds conference in Amsterdam, where we were both speaking. Martin and I first met during Startupbootcamp’s original insurtech cohort in 2015. I was mentoring, and he was the executive in residence as part of the Munich Re/Ergo support for the program. Martin has spent 25 years in the insurance industry, but he also has several years working with insurtech start-ups at SBC and Axel Springer Plug & Play Accelerator. I asked him for his POV on digital implementation. He said: “Digitalization is the redirection of the company to the customer. This means that we have to look at the whole value-chain — from product management, contract closing to claims processing. Everything we do has to be from the customer’s mindset. It’s a totally new way of thinking for the insurer. There is nothing else, it is all about the customer.” This is 21st century insurtech thinking inside one of Germany’s oldest life insurers. Formed in 1884, Nurnberger has plenty of experience adapting to challenges and changing customer behavior. The company is no stranger to technology, either. Any life insurer that has been around this long will have seen massive technology change — from tabulation to the introduction of programmable computing in the 1950s to the internet age and now to 21st century digitalization. Moving from passive risk taker to active risk manager Martin had something to say about this, as well: “The new model for insurance is tech with insurance. Insurers must change from being a passive risk taker, where they take a bet and wait for a claim. They win when no claim is made. “With the use of tech, insurers can have a new relationship with customers. They become an active risk manager. In this model, the insurer will add value through additional services to the customer, such as giving customers advice on ways to manage their risk or offering them specific support and solutions when they have a problem.” What Martin is describing is one of the key insurtech trends of engagement. This is where the relationship with the insurer is not a once a year occurrence. Instead, the insurer finds ways to continually engage with its customer through the use of tech, such as wearables, telematics and IoT. The result is enhanced customer loyalty where value replaces price as the key buying criteria. See also: Digital’ Needs a Personal Touch   Executive mindset is critical to insurtech digital implementation  I asked Martin how well prepared he thinks are insurers for digital implementation? He said: “It starts with the very top. The executive mindset is critical because they can not measure the outcome of their decisions based on a business case or ROI anymore. Never try, never learn! That is the way insurers have to think now. That is the way startups and entrepreneurs think and act. But that is very difficult for insurers who are risk-averse. Which is why the strategic commitment to digital implementation can only come from the top layer of management. In my view, this is no longer optional for insurers. The only way to stay in the market is to become totally digital. It is a matter of survival.” I totally agree with Martin on this point. When we look back at today, the winners and losers will be defined by those that did and did not embrace an insurtech digital implementation strategy. The likes of Munich Re, Swiss Re, Aviva and others are all showing a clear intent towards embracing insurtech digital implementation through partnerships and a customer centric digital strategy. They will be among the winners.  Ditching the legacy The only way insurers can fully embrace an insurtech digital implementation strategy is to take a clean-sheet approach. This means ditching the legacy! IMHO, we will start to see insurers separate out their current operations, books of business and all the legacy that goes with it. They will no longer try and re-platform, modernize, migrate their existing core systems or redirect precious resources at another operational efficiency program to take out huge swaths of costs. At the end of the day, all these programs do is shift cost from one place to another. They seldom drive truly permanent and radical change. The insurance digital implementation strategy will be to run down investments in legacy operations and start new business ventures based on insurtech partnerships. And companies will put the customer at the very heart of their thinking. That will be the insurtech legacy!

“A thing of beauty is a joy forever.” This is the opening line of the very famous poem called Endymion by John Keats, published in the early 1800s. While this line is intended to set up a beautiful story about timeless romance, the line itself in popular culture has been used in literature, movies, ads and general conversation to describe everything from nature to art to science and more. Why? Because Keats did an awesome job of extracting the nuance of something that everyone can relate to — not just love, not just beauty, but timelessness. It’s human nature to want timelessness and sometimes even take it for granted. Good innovators know when something is going to fail the timelessness test. However, great innovators look at what’s failed or failing and, like a priceless painting unrecognizable from years of dust, extract what’s timeless and work hard to put it into a modern context. Let’s look at some of the most famous modern innovators and put a label on what timeless element they extracted and modernized.

• Steve Jobs (Apple): 24/7 connection to what’s important
• Mark Zuckerberg (Facebook): Social exchange and acceptance
• Jeff Bezos (Amazon): Convenience and time-saving
• Travis Kalanick (Uber): Anything on demand, including a job

Any company that is constantly looking at its products and their applicability to new consumers is practicing good innovation. However, those that can define the nugget of timelessness have a greater advantage. See also: Innovation Challenge for Commercial Lines   Recently, my colleagues and I have had the privilege of working with the American Fraternal Alliance, and we’re in the midst of an inspiring innovation initiative for what could be considered a dusty corner of the life insurance industry. 1. Why is it dusty? For background, fraternal benefit societies are organizations of people who usually share a common ethnic, religious or vocational affiliation and may provide insurance to members, primarily life insurance. While this model dates back hundreds of years, the dustiness doesn’t come just from age. For starters, the practices and language used by these societies can conjure up outdated or inaccurate images because connotations of words and phrases change over time. More important, for some, there is a decline or weakening of the common bond that drew the group together in the first place, requiring it to be updated. 2. Why is it inspiring? The insurance industry provides a valuable utility to the public, yet consumers today have a negative impression of the industry. Recent developments in healthcare don’t help that impression. Fraternals are a special kind of insurance organization that is required to give profits back to their communities; thereby, done right, they shift the focus naturally from what they offer to why they offer it. 3. What do they want to accomplish? The American Fraternal Alliance members want to reposition the fraternal model into the modern day and help more consumers understand it. However, it’s not an exercise of logos and fonts or sexy models selling something. It’s about finding and extracting what’s timeless and then communicating that in the right way. 4. How did they start? This group started with a small investment, to determine if there was an opportunity in the first place. What was found was very encouraging. While the awareness levels in the market were quite low as a starting point, when consumers intending to buy life insurance in the next two years were provided with a simple description of a fraternal, the overall impression was very positive. Then, when fraternals were described in a new way, overall positive impression went up by another 23 percentage points. Further, the interest level in buying from a fraternal was 70% when prospects were exposed to a new positioning message. This is further validated by signals in the market. We see younger consumers favoring brands that give back to communities all around the world. In addition, the disruptors in insurance are leveraging new definitions of community as a selling point for peer-to-peer models. See also: Examining Potential of Peer-to-Peer Insurers   That’s not to say there isn’t a lot of work still to be done. However, the innovation lesson here for the life insurance industry may be that community is timeless, and modernizing it may mean more to the future of insurance than modernizing insurance itself. Extracting what community really means and working hard to deliver on that value is what will ultimately move the needle in a meaningful way. Fraternals, dustiness aside, are in a great position to do that.

Every aspect of the way we interact with goods and service providers is becoming digitized, but it doesn't work to go partway. As insurers, we have to ask ourselves, “What does a complete digital experience for our customers and policyholders look like?”

In my travels over the last year, I have run into experiences with very large companies and enterprises that have excelled in customer service in the past, but today are falling short in the new digital experience realm. I’ll share some examples, and, insurers, lend an ear. There are valuable lessons to be learned here!

Earlier this year, I took my family to Disneyland. Disney, of course, is a leader in customer experience as well as digital transformation. Disney has gone out of its way to improve a customer’s access to park information. The company has digitized the ride process with fast pass and even offer a suite of apps to improve the customer experience. What I experienced though, in my view, was a fundamental failure to plan a digitally transformed end-to-end experience.

See also: Today’s Digital Customer: It’s Me  

Most people buy their Disney passes on-line. That’s great! That’s fast and easy. But the park entry process is still highly manual. Season pass holders are mixed in with day pass holders; check-in agents manually process the passes, check IDs and passports and take photos for multi-day pass holders. Meanwhile, day pass holders wait in a line of thousands of people all corralled into 20 lines, 100 people deep. This results in confusion, frustration and many children having meltdowns in the hot California sun. It took our family 45 minutes just to walk into the park.

The point is, digitization is great, but you have to think of the holistic experience – everything from buying a pass to getting customers into the park with an easy check in to getting them out again, and everything in between. Disney is one of the best, but even Disney can fall short. The reason is because digitization changes not only the front-end buying experience but the back-end processes, as well. Disney has access to immense amounts of data, including online ticket sales, and has the power to predict wait times and improve service at check in. The lesson here? When creating a digital experience, use all the tools available to you and don’t forget about the nuances of the experience. #disneyland

Of course, I have had some great and pleasantly surprising digital experiences over the last year, too. I took a ski trip and got to experience the Vail Resorts Epic Day Pass. Ski lift tickets have been replaced with RFID-enabled cards that are read without having to wait in line to be scanned. These Epic Day passes also synch to the Epic Mix app, which tracks your runs and your day on the mountain from a number of scanners placed on the lifts and throughout the mountain. The Epic Day pass also can load your credit card for use all over the mountain, so no need to carry a wallet. This is a great example of innovation and digitization with pure customer experience in mind from start to finish.

Just as surprising is what my daughter recently told me about the new online application to sign up my grandkids for swim lessons in her tiny New Hampshire town. Gone are the days of phone calls and paper applications. She says that, because of the online application, registrations are the highest ever!

Now, back to insurance. Did I mention that we recently renewed our professional liability policy? Every year, we are required to make a formal submission. Our agent was on top of it this year, we renewed early, and we actually received our quote and policy – all electronically! And then this happened: I just received a paper letter informing me that the expiring policy is not being renewed! Old, irrelevant and confusing. This automated paper form letter is disconnected with the renewal process and status. Unfortunately, there are still many cases like this happening in insurance.

See also: Customers’ Digital Expectations

These are just some thoughts from my travels about getting digitization right or missing the mark when it comes to the end-to-end customer experience. But insurers, take note: It is important to look at what outside companies are doing to see how they are digitizing their customer experience. If a tiny New Hampshire town can do it for preschool swim lessons, there is no reason insurers can’t make some significant steps to go digital.

Recent headlines report an upward trend in “deaths of despair” among middle-aged, white (non-Hispanic) men, most with less than a college education. For the past 100 years, life expectancy has been increasing, but, among this group, that trend suddenly went into reverse. The explanation that Princeton University economists give includes an increase in suicide, overdoses (mostly from prescription drugs) and liver disease related to alcoholism. When they dug a bit deeper, they found these deaths of despair were related to a reduction of labor force participation, marriage rates and involvement in faith communities — a loss of status, purpose, community — a classic perfect storm of risk for suicide and addiction. National statistics tell us that men die by suicide at a much higher rate than women and that, unless we as a country make significant efforts to prevent suicide among this age group, suicide deaths among working-aged men will continue to increase and affect a significant portion of our population over the next 25 years. Public health and behavioral health leaders are calling for targeting services at males through innovative approaches, including community-based campaigns. Suicide prevention campaigns have been shown to be effective in helping adults in general, but few target working-aged men to promote identifying a need for help-seeking services and increasing knowledge about crisis and mental health counseling services. More research is necessary to identify the most effective mechanisms of public health campaigns and how to best target messages to at-risk populations such as working-aged men. One state is engaging in a statewide campaign to fight this trend. HealthyMenMichigan.org is a free resource designed to engage working-aged men living in Michigan, through online depression and suicide screening and through encouraging help-seeking to reduce suicidal thoughts and behaviors. Leaders are demonstrating a commitment to reduce the suicide rate among working-aged men in a state where suicide is a leading cause of injury death among men. Through this campaign, men are offered online mental health screening that can be done any time and from any location, in an effort to educate men about risk for depression and suicide and to encourage help-seeking behavior from community resources. Another men-specific resource called “Man Therapy” is also offered and is designed to provide even greater assessment and support for men on suicide risk and related issues — including stress, substance use and relationship issues. See also: Employers’ Role in Preventing Suicide The online depression screening asks men about depression and suicide using a standardized measure that taps into symptoms such as low energy and motivation; loss of appetite; interruption of sleep; difficulties concentrating and making decisions; and thoughts of and plans for suicide. Based on responses to the online surveys, men may then be invited to participate in the voluntary research study conducted by the University of Maryland. The research team expects to enroll as many as 300 men in the study by Aug. 31, 2018. Partners throughout Michigan include nearly 100 mental health and suicide prevention organizations as well as 50 health and non-health groups. “Non-health” partner organizations include employers in male-dominated workplaces such as first responder and construction workplaces, sports and recreational clubs, faith-based organizations, colleges/universities, fraternities, men’s clubs, barber shops, casinos and hunting and boating clubs. It is through these partnerships that the researchers promote HealthyMenMichigan.org and, subsequently, recruit men for the research study. HealthyMenMichigan.org can be a great free benefit to businesses, where the cost of providing health insurance and wellness benefits (particularly to small-business employees) can be expensive. By providing a free resource — such as HealthyMenMichigan.org, which can be used to check a person's mental health status and receive local resources and supports — employers can communicate care and concern to their employees while promoting good mental health practices and overall employee well-being. HealthyMenMichigan.org is working to meet men where they are at any time — at their home, workplace and in the online community. The campaign helps men learn that taking control of their mental health is a manly thing to do. See also: Blueprint for Suicide Prevention   Results from this important study will inform the field about effective ways in which to engage working-aged men in suicide help-seeking behavior — information that is sorely needed to save lives. Additionally, this study will provide evidence regarding best practices for online screening and referral to treatment that can be scaled and sustained throughout the country. For more information about becoming a partner to help promote Healthy Men Michigan or for questions about the research, contact Dr. Frey at: jfrey@ssw.umaryland.edu.