Health City Cayman Islands (HCCI) is a three-year-old, 104-bed Caribbean hospital outpost of the Bangalore, India-based Narayana Health System. Just an hour’s flight from Miami, its island location is comfortably familiar to Americans, is English-speaking and is modern. Specializing in complicated or severe conditions, HCCI has developed care and business models that are so focused on quality and efficiency that it could radically change the standards by which U.S. hospitals are judged. Most importantly for patients and employers, it provides very high quality care — it has been awarded the coveted Joint Commission International (JCI) quality credential at one-half to one-sixth of U.S. pricing. HCCI’s performance is the culmination of a deep commitment to access, efficiency and excellence. Narayana Health’s (NH) founder, Dr. Devi Shetty, who, earlier in his career was Mother Teresa’s personal physician, began with the mission-driven awareness that healthcare is an essential need that must be affordable to be accessible. He spearheaded an enterprise-wide focus on process optimization to deliver the best care possible at the lowest possible price. The results have been remarkable. Fifteen years ago, NH’s bundled costs for open heart surgery in India averaged about $2,000. Now, they are about $1,400, or about 1% of the average U.S. costs. The costs at the Caribbean hospital are higher, but they are still low compared with U.S. standards. A coronary artery bypass graft that typically costs about $151,000 in the U.S. is $32,000 at the Caribbean hospital. Heart valve replacements, about $174,000 here, are $31,000. Hepatitis C treatments, which run about $75,000 here, are $19,000. Knee replacements, which cost $60,000 here, are $16,000. See also: A Hospital That Leads World on Transparency   A relentless willingness to rethink HCCI’s capacity to consistently deliver low costs and high-quality outcomes is rooted in a relentless willingness to rethink and execute better, more pragmatic approaches. Hospital common spaces — atriums and open areas — are smaller than we’ve come to expect in U.S. hospitals, significantly reducing overhead. Each patient room has its own heating and air conditioning unit and ducting, isolating the room’s air flow, which dramatically reduces infection. Operating rooms are connected to the laboratory by pneumatic tubes, so surgeons can get immediate information about patient specimens. Equipment, supplies and drugs are purchased in Europe or India at a fraction of U.S. prices. Rather than receive a bewildering array of bills, HCCI uses bundled, all-inclusive pricing that is so simplified that its billing department needs only three people. Every aspect of hospital function and care process is open to re-examination, which facilitates lots of minor (and sometimes major) improvements. Just after HCCI’s gala opening in April 2014, Robert Pearl MD, the CEO of the 19,000 physician Permanente Medical Group, wrote in Forbes: “Based on everything I saw in the Cayman Islands, the operational approaches in Dr. Shetty’s hospital are about 10 years ahead of those used in the typical U.S. hospital.” HCCI’s health outcomes and pricing represent an opportunity for self-insured employers and unions — as well as for self-pay patients — to get genuinely superior care at far more affordable rates. While getting employers to consider sending patients outside U.S. borders for care has been a challenge, the trickle of those who have become convinced that the quality is strong enough to merit their consideration is growing rapidly. Imagine how local and state governments, financially strapped by excessive healthcare costs, could benefit from a higher value resource such as this. Florida’s Medicaid program, for example, has some 20,000 patients with Hepatitis C. Even with a discounted U.S. rate of, say, $54,000 each, HCCI’s bundled rate of $19,000 — a difference of $35,000 per patient — could save the state about $700 million, funds that surely could be used more productively. It is important to acknowledge that there are U.S. hospitals that have achieved superb quality or very notable cost streamlining. But rarely do we see a single-minded organizational emphasis on both affordable cost and quality excellence that is consistently delivered. That is HCCI’s innovation. See also: Survivor: Hospital Edition   The bottom line Against a backdrop of systemic healthcare excess, American employers will increasingly opt for equal or better care at lower cost from facilities such as HCCI. This could force domestic hospitals to follow suit and could help to bring American healthcare back into balance. This article originally appeared on Jacksonville.com.

Nobody can have too many BFFs (that’s best friends forever in today’s texting-driven vernacular).  That statement goes double for claims adjusters who are frequently seen as “bad guys” because of all the difficult-to-understand complexities of the adjusting process. The reality is that claims adjusters do not get enough recognition for the many times they go the far distant extra mile to help a customer after an auto accident. Claims adjusters need all the tools they can possibly get to deliver customer service at the high levels they want to deliver. And telematics is here to the rescue! Many insurers see telematics only as a new way to rate auto insurance coverages, perhaps even replacing traditional rating criteria as some InsurTech innovators are doing. Other insurers only see telematics as a new way to underwrite auto policies, replacing traditional and sometimes complicated criteria with usage-based facts. These are all real situations. But what most insurers do not yet see is that telematics can be a way to give claims adjusters a customer service tool that, incidentally, improves claims financial outcomes. And who doesn’t love a win-win! See also: Telematics: Moving Out of the Dark Ages?   A new claims adjuster, right after getting a company ID badge and signing up for company benefits with HR, learns that the sooner the company is advised of a claim, the better the odds are the company can assure a successful outcome and control costs. That’s Claims Adjusting 101. Many insurers have addressed this by directing the first notice of loss from the consumer through a company contact center or service provider. More recently, companies have developed FNOL apps for mobile devices so that claims reporting can kick off shortly after paperwork is exchanged at the site of the accident. But, what if the FNOL could be generated as the accident happens? As a matter of fact, state-of-the-art telematics can actually do this. Leading telematics technology can generate the FNOL from the actual impact dynamics. Appropriately implemented, this means that an emergency medical response could be automatically initiated if the impact details warrant it. In the event of a serious crash, this could make a critical difference in treatment outcomes. Towing services could also be initiated, getting the vehicle off the roadway sooner. Body shops and storage facilities could also be looped in as appropriate. Being the technology-enabled “first on the scene,” and providing much-needed assistance at a stressful time puts any claims adjuster on the fast track to BFF status. And, returning to Claims Adjusting 101, it helps with the positive management of claims costs. The benefits of telematics in auto claims adjusting don’t stop there. Telematics can provide factual details that sometimes elude those involved in the event. When asked what happened, those involved in the accident very frequently respond with “it all happened so fast.” Telematics facts can replace post-loss perceptions of the event, thus helping the adjuster move the claim along faster. The telematics-defined dynamics of an accident can also aid in injury assessment, again, moving the claim process along. There’s more. Vehicle repair can be an arduous process, particularly if the damage renders a vehicle unusable. Not having a car is clearly a source of frustration for most individuals. Simply getting all the assessment details can hinge on visual inspections, reports, and sending photos. Telematics can provide impact details and dynamics that can speed this process along, leap-frogging traditional claims processes to reunite vehicle and driver sooner. Another BFF moment! In my role, I have spoken to a great number of claims executives. I have yet to meet any who did not see themselves and their organization as a key driver, if not the number one driver, of customer satisfaction. There are a good number of tools that claims organizations possess to deliver excellent customer service. And you can never have too many customer service capabilities (just as you can never have too many BFFs). Insurers should assess their existing or newly planned telematics initiatives and expand the opportunities for value and customer service beyond rating and underwriting to claims operations. Many technologies benefit one product line, or one discipline, or one process. It is, indeed, a top priority technology initiative that can span the organization at many levels, improving customer service and bottom-line results simultaneously. Telematics should be on the short list. See also: Lessons From New Telematics Firm   For additional thoughts on how telematics can be a successful component of an anti-fraud strategy, please read our blog Fraud is Not a Cost of Doing Business – And Emerging Tech is Here to Prove It!

We've had so many insurtechs fill out Market Maturity Reviews, providing detailed insights about themselves at our Innovator's Edge site, that this month's Six Startups to Watch will highlight the most interesting newcomers among the more than 1,000 startups we track. Here they are:

—Understory. The company is setting up networks of inexpensive weather stations in cities to provide information to insurers about what is actually happening on the ground, rather than what satellite images suggest is happening. (I saw the value of this last October, when my wife had to pull off to the side of the road in an early winter storm in Truckee, CA. She called to ask about the progress of the storm, and I assured her that satellite images showed it was raining in Truckee and only snowing nearer to Lake Tahoe. She promptly sent me photos showing two feet of snow on the ground and a near whiteout in "rainy" Truckee. For once in our marriage, I learned I was wrong....) The company set up its first network in Kansas City and recently expanded to Dallas, Fort Worth, Houston, Denver and St. Louis. Each network consists of 50 to 150 sensor-filled stations spread around a metropolitan area at schools, churches and other sites where Understory rents space. Insurers get immediate information on, say, a hail storm and can contact customers immediately afterward if they are likely to have damage—pleasing customers, who are unaccustomed to having an insurer look out for them, while repairing damage before it can get worse.

—Wellthie. This insurtech began by sorting through the complexity that is Obamacare, making it easier for insurers to show how their offerings fit within the new structure and for brokers and their clients to find the best coverage. Wellthie now addresses health insurance more broadly, focusing on packages for small business.

—Edgepoint Digital. Based in Tanzania, this company provides health insurance for as little as $1 a month. That is not a typo—a dollar sign followed by a 1, followed by no zeroes. The coverage, aimed at families that earn some $70 a month, requires extraordinary efficiency in processing, based on the M-pesa mobile money transfer system that has taken hold in Africa. Edgepoint, whose offering is called Jamii, has received backing from the Gates Foundation, among many others. Edgepoint is worth a look both for the social good it could accomplish and for what it may show about a concept called "reverse innovation," or "trickle-up innovation." The idea is that not every idea has to begin in the developed world and migrate to the developing world. In fact, when it comes to cost-effective solutions, ideas can begin in the developing world—you may be more likely to find radical innovation if you start by thinking about families earning $70 a month than if you start with those earning the U.S. median of $52,000. Reverse innovation has already happened with refrigerators, medical equipment and other products. Maybe insurance is next.

—ElevateBenefits. It seems that comparison sites don't need to limit themselves to products and prices. This startup provides a way to compare brokers, too, for employee benefits, through its brokerSpotlight tool. Competition is everywhere these days. 

—Instanda. The product development cycle in insurance has historically been measured in months, not weeks, and certainly not days. But the pace of innovation in an industry depends on cycle time for product development—how quickly a product can be generated, tested and revised or tossed aside. Regulation will always limit speed in insurance, as it should, but product development can move far faster than it does now, and Instanda provides a tool that can greatly speed the process. 

—Bold Penguin. The portal allows the insurance agent and carrier to streamline the quoting, binding and servicing elements of policies, an area of major friction for not only them but also for clients. The company—which teamed up in April with Ask Kodiak, which has a tool that matches clients with carriers interested in their sort of risk—aims to move placing commercial insurance to digital, paperless processes. 

Cheers,

Paul Carroll,
Editor-in-Chief 

A massive cyberattack involving a ransomware software program called Wanna Decryptor, also known as “WannaCry,” recently swept the globe, freezing computer systems and causing major disruptions. The attack — which is the largest ransomware infestation ever — affected tens of thousands of organizations across the globe and a wide range of industry sectors, including the U.K.'s National Health Service (NHS), Spanish telecom giant Telefonica, French car maker Renault, Portugal’s Telecom and U.S. delivery company FedEx, among many others. The attack reportedly affected nearly 150 countries. Ransomware (a combination of the terms "malware" and "ransom") has become an increasingly common form of cyber extortion. It often involves extortionists taking control of a computer system and locking files and data on the system by encryption, thereby rendering them inaccessible and useless, until a demand for payment, typically in Bitcoin, is satisfied. A typical form of ransomware, WannaCry does the following: 1) locks all data on the victims’ computer systems; 2) informs victims that their files have been encrypted; 3) warns that those files will be deleted unless payment in Bitcoin is received; and 4) provides instructions for executing and sending the payment. Ransomware has become frighteningly pervasive and increasingly serious and expensive. Ransomware attacks quadrupled from 2015 through 2016, to an estimated 4,000 per day according to the U.S. Department of Justice and, as punctuated by WannaCry, are projected to double yet again in 2017. These types of cyberattacks can, and do, cause significant operational disruption, often halting a business in its tracks, damage reputations and create other types of losses and exposures. Every industry sector is seeing an increasing threat, with the healthcare and education sectors particularly targeted. Other forms of cyberextortion -- including threats to obtain or release protected information, such as personally identifiable customer data, protected health information and confidential corporate information, or to discharge denial-of-service attacks that disrupt an organization’s networks, causing business interruption -- also entail significant potential exposure to organizations. See also: The Growing Problem of Ransomware Here we offer five insurance and other considerations for organizations to consider in the face of an enormous uptick in increasingly severe ransomware attacks and other forms of cyberextortion: 1. Consider purchasing “cyberextortion” insurance. No firewall is unbreachable, and no security system impenetrable. In the context of this reality, insurance can play a vital role in a company’s overall strategy to address, mitigate and maximize protection against the legal and other exposures flowing from serious cybersecurity, privacy and data protection-related incidents. Importantly, almost all stand-alone so-called “cyber” insurance policies offer coverage for ransomware and other forms of cyberextortion. This type of coverage is specifically designed to cover losses and expenses that an organization incurs in the wake of a cyberextortion incident like the WannaCry software virus, together with myriad other forms of first and third-party cybersecurity and data privacy-related exposures, including coverage for crisis management (such as notification to potentially affected individuals, credit monitoring and call center services), data breach and network security-related claims and liability, including regulatory liability, business income loss, and digital asset loss. Cyberextortion coverage can be extremely valuable as a way for organizations to address and mitigate losses arising from mounting extortion threats, and many organizations now purchase this coverage as part of their cyberinsurance programs. 2. Closely review cyberextortion insurance terms and conditions. It is clear that cyberinsurance can be extremely valuable, but obtaining the right insurance product presents significant challenges. There is a diverse and growing array of cyberinsurance products in the marketplace, each with its own insurer-drafted terms and conditions that vary dramatically from insurer to insurer — and even between cyberinsurance policies underwritten by the same insurer. In addition, the specific needs of different industry sectors, and different organizations within those sectors, are far-reaching and diverse. For these reasons, organizations purchasing cyberinsurance, and the cyberextortion components of that insurance, are well advised to closely review the terms and conditions of the coverage to ensure that the organization’s cyber extortion risk will be covered, without a protracted battle with the insurer, in the wake of an attack. Among other things, organizations are advised to consider the following:

• Scope of coverage. Cyberextortion coverage should be written to cover as broad a range of potential attacks, and potential exposure outcomes, as possible. The coverage should include any threat to harm, impair access to or engage in unauthorized access to, relevant computer systems and the applications, files and data residing on those systems, together with any threat to access or divulge any sensitive information in the organization’s possession or control.
• Key definitions. Key definitions must be sufficiently broad to match the reality of risk faced by the insured organization. By way of example, in addition to definitions that define the scope of coverage, definitions governing the types of losses and expenses that are covered should be carefully reviewed. The policy should cover reasonable and necessary expenses incurred by the insured organization resulting from a covered threat, including the costs of investigating and assessing a threat (even if no ransom is paid), should expressly cover payment of cryptocurrencies (including Bitcoin), as well as, preferably, any other consideration or action that may be demanded by the extortionists, and should cover reasonable and necessary expenses incurred to mitigate or reduce other covered expenses.
• Conditions. Organizations are advised to pay close attention to policy conditions, including notice and consent provisions, proof of loss provisions, allocation provisions, alternative dispute resolution provisions and any requirements that the organization notify law enforcement of the incident at issue. The importance of notice provisions is addressed in further detail below. Consent provisions may be favorably amended to state that an insurer’s consent to satisfying the extortion demand “shall not be unreasonably withheld.” Other provisions, such as the requirement of involving authorities, may be deleted. As discussed more below, cyberinsurance policies are highly negotiable, and very favorable amendments can often be made for no additional premium charge.
• Exclusions. It also is critical that organizations be aware of any insurance policy exclusions that may vitiate the coverage that the policy was intended to cover. By way of example, cyberinsurance policies typically contain a “bodily injury” exclusion. Such an exclusion may pose a particular problem for hospitals and other healthcare providers, which rely on access to patients’ medical records to provide appropriate care and treatment. As with other exclusions, it may be possible to significantly curtail or delete bodily injury exclusions. Many other types of exclusions can be curtailed or deleted — often for no additional policy premium.
• Sublimits and retentions. It is clearly important that a cyberinsurance sublimit of liability (a ceiling on the amount of coverage available to cover a specific type of loss at issue) be sufficient to cover the organization’s potential exposure. Like other facets of cyberinsurance coverage, including coverage for losses associated with regulatory action and PCI DSS-related liabilities, cyberextortion coverage may be written subject to a relatively low sublimit, such that, for example, a $10 million limit primary policy may provide only $250,000 or $500,000 for cyberextortion losses. In addition to policy limits, organizations are advised to pay attention to self-insurance features, such as policy retentions or deductibles, which typically range from $0 to in excess of $5 million. As with the case of other cyberinsurance terms and conditions, sublimits and retentions usually are negotiable. On a related point, as discussed further below, what starts with an extortion threat can end up triggering many different modular aspects of cyberinsurance coverage. It, therefore, is important that the policy contain a provision stating that an extortion threat, together with any other first- or third-party covered events that trigger different coverage sections of a policy, are subject only to a single retention, and that any lower retention amount applicable to a particular coverage section, such as a cyber extortion section, is met when that lower retention amount is satisfied by payment of loss under that coverage section.

Although placing coverage in this dynamic space presents a challenge, it also presents substantial opportunity. The cyberinsurance market is competitive, and cyberinsurance policies are highly negotiable. This means that the terms of the insurers’ off-the-shelf policy forms often can be significantly enhanced and customized to respond to the insured’s particular circumstances. Frequently, very significant enhancements can be achieved for no increase in premium. Before an attack occurs, organizations are encouraged to negotiate and place the best possible coverage to decrease the likelihood of a coverage denial and litigation. A well-drafted policy will reduce the likelihood that an insurer will be able to successfully avoid or limit insurance coverage in the event of a claim. 3. Provide notice and comply with other policy conditions. Insurance policies typically contain notification provisions stating that the insured organization must provide notice within a certain time frame, often “as soon as practicable,” even “immediately,” after the organization becomes aware of an incident. Although providing notice to an insurer may not be top of mind in a cyberattack, particularly where the demand is far below the policy retention or deductible, it is important for an organization to reasonably comply with notice provisions (and other policy conditions, including consent provisions) to not jeopardize, or delay, coverage. In the context of providing notice, moreover, it is important for organizations to recognize that what begins as a relatively low cyberextortion demand may quickly evolve into an incident or series of related events that triggers other first-party coverage sections of the insurance policy, such as the business income loss coverage (an extortion event may result in a significant loss of business income), extra expense coverage, digital asset loss recover/restoration coverage and crisis management coverage and, to the extent personally identifiable information or protected health information may have been compromised, for example, the third-party claim coverage sections of the policy, including coverage for data breach-related lawsuits and regulatory liability. Indeed, a ransom demand may be deployed as a purposeful diversion from a different, principal goal, such as stealing sensitive records. Recognizing this reality, it is important that the organization be aware of, and reasonably comply with, notice provisions to avoid a coverage defense based on purported late notice. In addition, providing notification can provide the insured organization with valuable coverage for costs related to the extortion threat, such as a forensics investigation, which may reveal other malware on the computer system, stop the intrusion and block future extortion attempts, a consultant to utilize decryption keys or to recreate the files and data at issue, and, where appropriate, legal counsel. The bottom line: In the event of a cyberextortion demand, organizations are advised to provide notice under all potentially implicated policies, excepting in particular circumstances that may justify refraining to do so, and to carefully evaluate all potentially applicable coverages. 4. Maximize coverage across the entire insurance program. Although cyberextortion coverage is an obvious place to look for coverage in the wake of a ransomware attack or other cyberextortion incident, organizations are advised to consider all potentially applicable insurance policies and coverages. As noted above, a cyberextortion incident may trigger various other coverages under the organization’s cyberinsurance program, and also may trigger other insurance policies and programs, such as computer crime policies and kidnap and ransom policies. The various types of insurance policies that may be triggered by a cyberattack likely carry different insurance limits, deductibles, retentions and other self- insurance features, together with various different and potentially conflicting provisions addressing, for example, other insurance, erosion of self-insurance and stacking of limits. For this reason, in addition to considering the scope of substantive coverage under an insured’s different policies, it is important to carefully consider the best strategy for pursuing coverage in a manner that will most effectively and efficiently maximize the potentially available coverage across the insured’s entire insurance portfolio. Absent a compelling reason, notice should be provided under all policies that potentially provide coverage. 5. Exercise business continuity and improve computer security. Insurance aside, the best protection against a ransomware attack is to have all files and data securely backed up, in a separate physical location, or at least on a separate system, so that no business-critical information that is not recoverable may be permanently deleted by extortionists. It also is important to reflect on how these types of attacks occur. Cyberextortionists must download malicious software onto a system, or a connected device, and this often is achieved through tricking employees to click on attachments or links in phishing emails, which increasingly look convincing. Therefore, improving computer security, including through antivirus programs, spam filters, firewalls, installation of software updates and security patches (early reports indicate that WannaCry appears to exploit a vulnerability in Windows that Microsoft patched on March 14, which would have automatically protected those computers with Windows Update enabled), disabling of macro scripts and using application whitelists, which only allow approved files to execute, is essential. Likewise, training employees about how to recognize and avoid social engineering exploits such as phishing emails, is key in negating or minimizing ransomware threats. Organizations also are advised to consider incorporating ransomware attack scenarios into their incident response planning. See also: Ransomware: Your Money or Your Data! A well-negotiated insurance program, together with solid business continuity planning and comprehensive, active cybersecurity policies and procedures, will position an organization to be resilient in the face of the serious and escalating threat posed by cyberextortion. This article originally appeared on Law 360.

The direct channel has a major impact on the distribution landscape, as customers become the focal point for every transaction and sale. More agents consider the market shift toward online or direct sales a major constraint in the growth of their business. EY recently surveyed 530 P&C and life insurance agents to better understand trends, growth strategies and ways in which engagement rules have changed. They were asked about carrier selection, support and perceived value, as well as future growth engines and how they see their role as agents evolving in three to five years.

Four key themes emerged from this survey.

1. The threat of direct-to-consumer and digital business models is driving insurance agents’ desire to use digital and social sales tools.

Agents are concerned with how they fit into the trend of more direct-to-consumer and online insurance models. Most view the market shift to direct-to-consumer and online channels as the major constraint in the growth of their business going forward. Inadequate products, investment in analytics, administration and automation, and speed and quality of access to customer or policy data also are constraining growth.

Agent perceptions of carriers

While carriers begin to explore alternative distribution platforms, agents still believe they add value and want to be actively engaged with the customer. Survey findings reveal that agents who sell commercial insurance understand the most about how they fit into their carrier’s strategy, while those who sell personal lines and life insurance understand the least.

Growth is a major concern

The landscape of consumers is rapidly evolving from “traditionalists” to “technologists.” Millennials are the largest customer group in history -- and a target growth area for most industries, including insurance. Agents indicated that they need different tools and products to meet their needs and to capture this growth. Agents currently value basic functionality (e.g., operations and sales); however, the agent of the future will be concerned more with digital capabilities and tools. Quality of tools plays a large factor in the decision-making process.

See also: How to Support the Agent of the Future  

2. Agents expect carriers to enable simple customer and agent experiences, which, in turn, will drive agent loyalty. 

Today, 90% of agents tap into multiple carriers, which is forcing insurance providers to rethink their value proposition and ability to differentiate. Personal P&C agents are more likely to have two to five most-favored carriers, while those in commercial lines tend to favor one or two carriers for each product. Only 12% have one primary alliance carrier.

Agents need support from carriers

When asked what carriers could do to ease the operational burden on an agency, respondents universally identified better communication, improved customer service and underwriting. Agents think simplicity is the key for carriers to improve the customer experience. Across product types, agents have different opinions of what carriers can do to improve their responsiveness to customer service or claims; 45% want fewer forms and less paperwork, while 35% propose simpler products and better customer online tools.

Better sales tools, technology and analytics

Life agents are more focused on systems that support new leads and better underwriting, representing an opportunity for improvement. While 65% of commercial and P&C agents rate current tools as very good or good, only 45% of life agents rank them as such. The larger the agency, the higher the quality rating.

3. The agent of the future is looking for innovative, customized products to meet changing market and customer demands.

Innovation will require product change

Product innovation will be a key driving factor behind the agent of the future’s expanded basket of products. All agents place significant value on innovation that facilitates new business. Nearly half of commercial agents perceive technology that automatically identifies potential opportunities within their existing book of business as highly important. The majority of agents believe that carriers could be more innovative by producing more simplified products that require less explanation and better address the needs of millennials. Only one third view the needs of Gen-X’ers and baby boomers as the type of product innovation that will help them grow their business.

Wearables and new technology present opportunities

Technology is viewed as an important factor in addressing the needs of a new generation of agents – and adding millennials to the salesforce will better cater to that market. As millennials continue to represent more market share, almost 40% of agents question their preparedness to meet the needs of the next generation.

4. Agents see close collaboration with carriers as driving growth.

Agents want to be more involved in the underwriting process. They agree that carriers could improve underwriting interaction by allowing more access to underwriters, enabling agents to work with the same underwriters and shifting underwriters’ transactional role to a relationship-focused engineer of customer solutions.

Agents seek closer working relationships with carriers

The majority of agents are open to the idea of reducing their role in servicing to focus on sales and growth. Across all product types, nearly half of agents view increased customization as one of the main product changes to address future needs. In line with customization, 40% of agents view the ability to provide many available features to address a wide set of needs as key to meeting evolving market demand.

Improving the agent experience

Strengthening current customer relationships and achieving customer-centricity in core operations have become strategic imperatives. As consumers embrace digital and other emerging technologies, insurers must rethink their distribution strategies, agency interactions and partner relationships.

See also: The New Agent-Customer Relationship  

Conclusion

Listening to the “voice of the agent” can help carriers provide a deeper, more robust experience and support them to rethink their commitment to the agency system. A collaborative process will allow carriers and agents to interact and strengthen their relationship. Our survey supports the concept that insurers and the agent of the future will be stronger by working together.

Technological innovation has the potential to change any industry for the better, and major technological developments in the last decade or so are creating exciting opportunities in insurance. Here are some of the top ways that insurance can leverage digital technological innovation. 1. Advanced Data Collection From wearable technology, to devices you can put in your car to monitor your driving habits, all of these innovations can provide insurance companies with highly useful data for their policyholders. Smartwatches alone can provide a large amount of beneficial data. For example, the Apple watch can track all of the following; heart rate, activity levels, steps taken, calories burned, movement, among others. Technological breakthroughs are making it easier for insurance companies to gather critical data. Being able to access large amounts of data can help insurers to create better policies, identify their lowest-risk policyholders and obtain alerts when policyholders are at risk for certain types of loss. See also: The Key to Digital Innovation Success   2. New Types of Insurance All of the advances in technology have led to many companies becoming increasingly reliant on their tech infrastructures. Also, increased dependence on technology has created a heightened need for data to be protected. Massive losses can be incurred by companies that have their sensitive data breached. The result is that “cyber insurance” is becoming increasingly popular. Almost 10% of companies now have cyber insurance. This number is likely to increase as more insurers begin to offer this type of coverage, and more companies realize that they need it. In fact, within a few years, cyber insurance could be as common as property insurance or liability insurance for businesses. 3. Increased Personalization Many insurtech companies are now making it possible for customers to engage with their insurance companies through various types of apps. These apps allow policyholders to set up profiles and indicate their preferences for service offerings. Customers can even choose to connect with their insurance companies on various social media outlets if they want to. And, because 47% of millennials report being influenced by social media when it comes to making purchases, this is a good thing. Personalization can be beneficial when it comes to improving customer experience, and helping customers to enjoy their interactions with their insurance company. In this sense, mobile innovations are making personalization easier by connecting policyholders with insurers directly on their smartphones. Final Thoughts Technological innovation in insurtech, wearable devices, data, apps, mobile devices, computers and many more areas all have a strong impact on the insurance industry. The time from the start of the new millennium until the present day has brought many of these new technological innovations. Some insurance companies may hesitate to take advantage of new technology because of a fear of change. However, there are incredible opportunities out there. Advanced data collection, new types of insurance and increased personalization are only a few of the ways that insurers can leverage digital technology innovation to become more profitable. See also: ‘Digital’ Needs a Personal Touch   As technology continues to advance, even more opportunities will become available.

Machine learning has been a staple of our consumer-driven economy for some time now. When you buy something on Amazon or watch something on Netflix or even pick up groceries at your local supermarket, the data generated by that transaction is invariably collected, stored, analyzed and acted upon. Machines, no surprise, are perfectly suited to digesting mountains of data, observing our patterns of consumption and creating profiles of our behaviors that help companies better market their goods and services to us. Yet it’s only been in the past few years that machine learning, a.k.a. data mining, a.k.a. artificial intelligence, has been brought to bear on helping companies defend their business networks. See also: Machine Learning: a New Force  

I spoke with Shehzad Merchant, chief technology officer at Gigamon, at the RSA 2017 cybersecurity conference. Gigamon is a Silicon Valley-based supplier of network visibility and traffic-monitoring technology. A few takeaways: Machines vs. humans. There is so much data flowing into business networks that figuring out what’s legit vs. malicious is a daunting task. This trend is unfolding even as the volume of breach attempts remains on a steadily rising curve. It turns out that cyber criminals, too, are using machine learning to boost their attacks. Think about everything arriving in the inboxes of an organization with 500 or 5,000 employees, add in all data depositories and all the business application depositories, plus all support services; that’s where attackers are probing and stealing. Understanding legitimate behaviors. To catch up on the defensive side, companies can turn to machine learning, as well. Machines are suited to assembling detailed profiles of how employees, partners and third-party vendors normally access and use data on a daily basis. It’s not much different than how Amazon, Google and Facebook profile consumers’ online behaviors for commercial purposes. “You have to apply machine learning technologies because there is so much data to assimilate,” Merchant says. Identifying suspicious behaviors. The flip side is that machines can be assigned to do the first-level triaging—seeking out abnormal behaviors. Given the volume of data handling that goes on in a normal workday, no team of humans, much less an individual security analyst, is physically capable of keeping pace. But machines can learn over time how to automatically flag events like a massive file transfer taking place at an unusual time of day and being executed by a party that normally has nothing to do with such transfers. The machine can raise a red flag—and the security analyst can be dispatched to follow up. “We’ve got to level the playing field … today, it’s machine versus humans,” Merchant says. “Organizations have to throw technologies, like machine learning into the mix, to be able to surface these threats and anomalies, so that we take out the bottlenecks.”

The race to put a self-driving car on city streets is starting to look like the space race of half a century ago -- everyone wants to get there first. Germany leads the race, with the U.S. running right on its heels. Japan, Sweden and France are making good strides, as well, while Italy, Korea, England and China run at the tail end of the pack, but, nevertheless, at a swift pace. Regardless of who first crosses the finish line, the very existence of a self-driving race proves that manufacturers and governments worldwide believe that these cars will spearhead some global changes. This is certainly true when it comes to safety. The numbers behind the trend all are truly impressive. Auto Loan Solutions, a car loan company based in Ontario, has created the infographic, “To Drive or Be Driven”, to show what these numbers are telling us about autonomous vehicles. See also: Of Robots, Self-Driving Cars and Insurance   Sure, self-driving alerts may flood your inbox, but the odds of your finding some new stat or insight in this piece is likely -- and, at the pace that the race is occurring, major developments will come in a few short years.

After decades of experience working with and getting to know thousands of people whose job it is to give advice around insurance, investments and real estate, I’ve observed a few traits that I personally believe are critical to long-term relevance. Frankly, I also believe they will make certain advisers immune to the threat of their job being eaten by technology.

There is quite a bit of concern over robo advice threatening these livelihoods. We must consider that the underlying reason is a trust problem with those who make their living giving advice while at the same time selling products for a commission. But the underlying cause of mistrust may actually be the absence of one or more of the following five characteristics of advisers that matter more in the trust equation: 1. They seek to help their community first, then benefit from it later. There’s a not-so-subtle distinction between people who join a community group because they want to network for business purposes and people who join because they are interested in helping advance the mission of that group. While oftentimes both motivations can exist at the same time, the real test would be to ask those people if they would have either joined or stayed with that group even if their prospecting need were not there. While those inside the business may not see the distinction, others can see it a mile away. Trust erodes when intentions are not clear. See also: 3 Major Areas of Opportunity   2. They see work and life as inextricably intertwined and are in love with both. Advisers who will stay relevant, who are "nondisruptable," are people who always seems to be there for what’s most important, whether the market is crashing, an individual lost his/her job or someone’s kid or grandkid is in a little league game. From the outside, it may look like those advisers are either always working or never working. And the answer would be: yes, they are. 3. They keep score based on outcome versus income. While earnings and sales numbers are important for a successful practice, putting numbers on the board is not what makes nondisruptable advisers sleep well at night. Rather, they create metrics of their own, consciously or unconsciously, counting things like how many people they have advised, how many thank you letters they receive, how many people they’ve helped employ or even how many hugs they have ever received from their clients. Counting these means they never need to count sheep. 4. They are described similarly by families, friends, clients and communities. Nondisruptable advisers show one face to everyone. While they may have many interests, they bring their best to every situation and see the role of adviser as a calling and not just a career. Anyone can give advice from his/her own point of view. However, it takes care, skill and emotional intelligence to deliver advice that’s in someone else’s best interests. The question remains as to whether these traits can be taught. Sure, someone could write a book or perhaps create a coaching program around them, but I’m not sure either would help. I suspect that people are either raised in such a way that these traits develop or they experience something dramatic that shifts their perspective quickly and forever changes their attitude. 5. They leave a mark that lives past them. While this trait certainly isn’t realized until the adviser passes away or can no longer do his/her job, that individual’s ability to make an impact is unmistakable and therefore nondisruptable. You just know it when you see it. See also: Insurance Coverage Porn   This article was inspired by and is dedicated to my long-time friend Jane Lopp from Kalispell, Montana. Jane and I met at Prudential, where she built an impressive practice with an outstanding team, a supportive family and a community that felt her presence in countless ways. Nothing stopped Jane, including being confined to a wheelchair due to a muscle disease. Jane’s life was taken after a car accident on April 21 of this year, and, as her husband, Bob, noted, she was full of life and at the peak of her career. If you know someone like Jane who embodies these five traits, please give them a hug. They deserve it.

The emergence of the Internet of Things (IoT), or perhaps more appropriately described, the “Integration of Things.” has created more visibility to the convergence model generally and cyber threats specifically. That said, I see a fundamental problem with sales organizations, outside of the cyber industry, with initiating a cyber discussion. This is the first step in aligning cyber threats in the context of overall business risk, and for providing the managed services, secure products, and insurance coverage that the industry increasingly requires. This Cyber 101 Discussion is more of an informal conversation than a deep technical discussion. Cybersecurity is a confusing topic to many people and is at times assumed to be overly complex. In reality, it is a crime and espionage discussion with a rich history and interesting as a business case study. Put into this context, it is actually a compelling narrative and promotes a lively conversation that inevitably turns to the topic of operational risk and specific business issues. See also: 3 Things on Cyber All Firms Must Know   The first step is to know your cyber history. This does not have to entail a debate as to when and how hacking evolved. I believe an appropriate starting point would be the first Gulf War. Perhaps the 1990s are ancient history for some, but most senior executives can identify. The important fact was the ease at which the U.S. military demonstrated technical dominance over the Iraqi army. Nightly newscasts of American generals proudly showing video clips of guided missiles accurately striking buildings and vehicles was enough to send chills down the spines of our nation state adversaries, and jump start their offensive cyber commands.

“I believe the Chinese concluded from the Desert Storm experience that their counter approach had to be to challenge America's control of the battle space by building capabilities to knock out our satellites and invading our cyber networks. In the name of the defense of China in this new world, the Chinese feel they have to remove that advantage of the U.S. in the event of a war”. – Admiral Mike McConnell (ret.), former Director NSA, and Director National Intelligence

Not to be left out, the Russian military also accelerated its cyber capabilities (post Gulf War I) as well. In fact, many “retired” military cyber warriors established the early Russian cyber criminal syndicates, and promoted global cyber crime as a business model. As a result cyber crime evolved, and Cyber Crime as a Service eventually exploded. It is a well-known operational fact that you only exist as a significant Russian cybercriminal if you abide by three hard and fast rules:

1. You are not allowed to hack anything within the country;
2. If you find anything of interest to the government you share it;
3. When called upon for ‘patriotic cyber activities,’ you serve.

In exchange you are “untouchable” and immune from prosecution. Tom Kellermann, CEO of Strategic Cyber Ventures, is a cyber intelligence expert, author, professor, and leader in the field of cybersecurity serving as a Global Fellow for the Wilson Center. He is the previous Chief Cybersecurity Officer for Trend Micro, and Vice President for Security at Core Security. Tom has mentioned to me that existence of approximately 200 “Cyber Ninja’s” globally; truly elite gifted hackers. This select group of black hat ninja’s realized they could produce “malware for dummies”, (or criminals with average skill sets), along with on- line “how to hack” support services, in return for a cut of the profits. This business model returned more personal revenues at scale, compared to individual hacking activities, with much less risk. These operations created the original “Malware as a Service” business models, and as a result cyber crime has since exploded. According to The Serious Organized Crime Agency (SOCA), global cybercrime has surpassed narcotics trafficking in illicit revenues, and In the United Kingdom, over 50% of all crime is now cyber related. As a final thought Tom added that cybercrime has transitioned from traditional burglary to digital home invasion.

“The economic security of the West is in jeopardy. Civilizing cyberspace must become a national priority.”

Research firm, Cyber Ventures (not to be confused with Strategic Cyber Ventures), produced a report that predicts that cyber crime worldwide will grow from $3 Trillion in 2016 to over $6 TRILLION dollars annually by 2021! As a comparison, the entire Gross Domestic Product (GDP) for the U.S.A. was $14 Trillion in 2016. Cyber crime today is professional, organized, sophisticated, and most importantly “relentless”. These are not personal attacks. If you have any digital footprint you are a target, period. The entire Internet can be scanned for open ports within a few days. When it comes to security, the old adage “Offense informs Defense” is appropriate when protecting your specific business operation. A former client of mine, John Watters, CEO of iSIGHT PARTNERS, (now FireEye), used an example: “A burglar and an assassin can use the same tools and tradecraft to gain entry to a location, but the intent, once inside, is very different. One wants your property, the other wants to kill your family. Prepare yourself accordingly”. Another business challenge moving forward is that the risk of cyber attack is growing. This is a dual-edged sword in many regards. The Internet of Things and the Industrial Internet of Things (IIoT) opens a much wider attack surface of many more devices. However, the operational efficiencies and human productivity advances cannot be denied and will move forward. This situation creates a new reality; essentially cyber threats are morphing from a virtual threat into a physical danger. Matt Rosenquist, Cyber Security Strategist, Intel Security Group, explained in his 2017 ISC WEST Keynote address that the same controls that provide auto assist to parallel park your vehicle can be hacked to force a car (or hundreds of cars) to accelerate to high speeds and turn abruptly, causing fatal accidents. Imagine for a moment what that hack does to that specific automobile manufacturers brand reputation? Would the corporation even hope to survive? Moving forward SECURITY, followed closely by privacy protections, will be at the top of all buying requirements to win business. The bottom line is that cybersecurity, like terrorism or tornados, is about risk management. This is a discussion that owners, management, and boards of directors know well. It is the responsibility of the sales professional to educate prospects to the sophisticated level of cyber risk that exists today and into the future. This is why understanding and explaining the evolving cyber crime business model is so important as an initial discussion. See also: Now Is the Time for Cyber to Take Off   In 2017 I have had the “Cyber 101 Discussion” with sales leadership and executives from many companies and industries:

1. The regional insurance firm in Texas (1,000 employees) that recognizes a huge and expanding cyber insurance market opportunity generating over $3.5 Billion dollars in 2016, and growing at 70% annually! Yet their sales organization does not know the first thing about starting the cyber dialogue with potential clients. ‘We know insurance, not cybersecurity”
2. The global video camera distributor that needs assistance in aligning marketing and sales messaging to answer customer concerns about cyber security. The industry needs a response to the Mirai botnet attacks that virtually guarantee that the Internet will be flooded by hacks of new botnets powered by insecure routers, IP Cameras, digital video recorders, and other easily hackable devices:
3. The physical security integrator that recognizes the need to provide secure solutions and endpoints for their enterprise customers, but needs to provide internal cyber education, while recruiting strategic partners offering cyber solutions and support resources.
4. The domestic security monitoring company that now offers cyber managed solutions to SMB market, but struggles with positioning a compelling R.O.I. (Return on Investment), and explains that customers cannot “quantify” the cyber risk to their business? (HINT: That’s the job of your sales organization, your customers need cyber education)

It begins with a cyber sales comfort level within your own organization. Cyber education allows you to pass knowledge on to others as a trusted adviser. Get the Cyber 101 Discussion started as a first step. Whether providing cyber insurance, hardening physical security equipment, or selling secure managed services, the cyber 101 discussion starts with understanding cyber history and the evolution of adversary intent. Today’s cyber threat is a component in the new definition of digital business risk. Position accordingly.