According to a recently published white paper, insurance carriers can best deal with natural disasters by leveraging an on-demand model that gives them immediate access to an affordable and scalable workforce. By using workers in the field only when they need them, carriers can control costs while quickly and effectively meeting the needs of policyholders. Natural Disasters Are Getting Stronger and More Frequent ClimateWise, a coalition of the world’s largest insurance carriers, has reported that since the 1950s the frequency of weather-related catastrophes has increased six-fold. Not only have more than 20 storms causing a billion dollars or more in damage taken place since 2010, seven have hit since 2016. All of these storms have kept carriers busy assessing damage and processing claims. Days after Hurricane Irma made landfall in 2017, more than 335,000 claims had been submitted in Florida totaling $1.9 million. That’s according to Florida’s Office of Insurance Regulation. However, the storm is predicted to eventually cost close to $100 billion. See also: Do Natural Disasters Matter To Me As An Insurance Buyer?   Nearly 88% of these initial claims were made by residential property owners. And, more than 10,000 business owners have reported damages from the storm. If the predictions are accurate, the damage from the 2017 hurricane season would more than double the costliest season on record in 2005. That was when Katrina and three other storms caused more than $143 billion in damage. And it’s not just hurricanes that are keeping carriers busy. During the first half of 2017, 49 weather-related disasters hit a wide range of locations across the U.S., including ferocious tornadoes and damaging hailstorms. And, most recently, devastating wildfire outbreaks in Northern California destroyed thousands of structures and caused more than a billion dollars in damage to the world-famous wine region. Carriers Face Workforce Challenges One of the major challenges that carriers face during times of catastrophe is how to deploy enough workers to the field to assess damage associated with claims that arise. Traditionally, carriers have understood the value of inspecting assets in-person in the field. However, maintaining an infrastructure capable of quickly completing these inspections in any location across the country has become cost prohibitive for most carriers. It’s not that carriers are understaffed. It’s just that carriers’ workforces are spread too thin in times of crisis. As we saw in Florida during and after Hurricane Irma, many of the state’s adjusters were on the front line still working on claims made after Hurricane Harvey hit Texas. A Scalable Workforce is Accessible Carriers are operating in a cost-sensitive and hyper-responsive market. Even the most sophisticated and progressive carriers often find themselves struggling to effectively deal with scalability issues relating to managing a local, regional, or national adjuster workforce. Thankfully, natural disasters don’t occur every day. So, how do carriers manage their workforce to handle the surging need for workers after a disaster strikes as well as the lulls that follow? If they hire more full-time or part-time workers, carriers are in the position of laying them off when the disaster is over. This hiring and layoff cycle represents a huge challenge to HR departments. That’s because there is a significant administrative cost associated with recruiting, hiring, and onboarding new employees. See also: Harvey: First Big Test for Insurtech   What carriers need is a geographically-scalable workforce that is adaptable to regional nuances. This scalable workforce is made up of gig workers, also called on-demand workers. Final Thoughts A variety of breakthrough technologies and workforce alternatives are inspiring a fundamental transformation of the insurance industry. How well carriers interact with policyholders and gather information in the field will depend on how effectively the industry begins to take full advantage of the on-demand workforce to increase efficiency while lowering costs. The key to responding to natural disasters – and keeping policyholders happy – is to rely upon an on-demand model. This model is capable of supplying an affordable workforce that can be scaled up or scaled down at a moment’s notice.

Today, most people are driving in semi-autonomous cars, or semi-self-driving vehicles, whether you realize it or not. So you may have nice specs, alloy rims and some cool new tricks: contactless keys, dynamic cruise control, parking assist, self-correcting lanes, a bunch of other mini-innovations that improve the driving experience for you personally and anyone driving with you or around you. These “minivations “ are just the start. We know that roughly 93% of all vehicle accidents are caused by human error. Almost $1 trillion a year is spent on auto repair. Sit back and question that for a second, and that’s when you realize that all of this money – nearly $1 trillion! – is being dropped right into the pockets of the auto repair companies and the physical parts manufacturers. Traditional original equipment manufacturers (OEMs) are showing a glaring absence of innovation when it comes to preventing deaths. There are roughly 30,000 deaths per year due to auto accidents in the U.S. alone. To repair the auto industry and its surrounding ecosystem, the loss of lives must be addressed. How? Through autonomy. If you can take the 93% of human error caused by accidents down to 20%, 10%, 5% and ultimately under 3% with a (level 2, 3, 4 and 5 autonomy) vehicle, what will happen? First, you save lives (and the costs of healthcare). Second, you collapse an entire business model. You effectively shine light on the inefficiencies and economic costs absorbed by individuals. See also: Which to Choose: Innovation, Disruption?   This is where our favorite subject enters: insurance. Traditional insurance. The intangibles and untouchables: The Benjamin Buttons of Innovation! Enter simple math. Look at the premiums you as an individual pay relative to the cash outlay that the insurance companies must make due to accidents. Do you see it now? To say that the business models of the incumbents in auto insurance will shift dramatically is an understatement. This concept – a company without a tangible product that makes money off the liabilities they have on their balance sheet by means of your deposits – is going to pay for stagnation by means of obsolescence. Now a reversal occurs – individual empowerment amid institutional disempowerment. The next generation of insurance companies (insurance-as-a-service, insurtech, ethical autonomy, you name it) will naturally, inevitably and ultimately rise to the top of the pack and take share away. It is only sensible, therefore, to presume that the future of auto insurance is fascinating in a world where the metadata becomes statistically significant as it intersects with the data of connected vehicles. Why? Because now I can just pay as I drive. A true service (finally!). A pay-as-you-go business model that is as exact as it is precise. So, I – as an individual, an owner, leaser or driver turned rider – am no longer an “average" anymore. This is the concept of hyper-personalization, hyper-humanization and hyper-empowerment. There is an excellent example of hyper-personalization where I know precisely how many miles I actually drive, and the only premium I pay for insurance is for those miles. Furthermore, what if I as the user can actually obtain insights into my driving behavior (i.e. hard brakes, speeding, etc…),further influencing coverage premium and empowering me to drive behavioral change (no pun intended) with analytical insights and recommendations. In fact, the business model has already been created in form and substance. It exists today – there are insurance companies offering that solution as we speak, and I suspect it will increasingly become the standard. It will be interesting to see which insurance companies become print newspapers, which ones become blogs and which ones have left ancient history to trade perhaps one fiscal year for the opportunity to pioneer the next frontier. But before we embark across the Rubicon, let’s take a brief step back. By 2020, we will live in a world with 50 billion connected products. The enormity is surpassed only perhaps by the complexity. So if you are at a company right now that is just starting to feel pretty good about your position along the intelligence of things continuum, really good about your digital marketing team’s evolution, your grasp on social media/SEM/SEO, your grasp on building a multi-channel experience, your grasp of what your customer wants, enjoy the feeling --you’re about to be disrupted. Amazon ring any bells? See also: How to Respond to Industry Disruption   And you’re going to get disrupted in a way that’s staggering in its infinite nature, with infinitely more data points, infinitely greater opportunities and, as a result, infinitely more options amid a sea of competition, which makes you feel infinitesimally small. Suddenly. This competitive force has built such a commanding, unexpected lead. Yes, a good, old KO before you even heard the bell go off. You will likely default, and it will be too late to pivot. For the lucky, the ability to slip into obsolescence and appreciate the nostalgia of the past will do. (Of course, not the positive vibe-nostalgia, the punch-drunk love of sentimental warmth. Nope, as you become a relic of history, the nostalgia will be more like the Greek word root for nostalgia, which translates to pain, or more specifically the debilitating and often fatal medical condition expressing extreme homesickness). Why will you get disrupted? Because we’re going to fast forward parabolically toward predictability and optimization. And that is precisely when machine learning takes place -- that is when the machines become smart. As machines become more intelligent, they start to recognize patterns. Then they start to actually give you advice, input. Next, they start to predict what the outcomes could be, output. I/O. That, well, leads to artificial intelligence. To be continued….

The first part of this series can be found here. The digital insurer uses fusion to leverage the power of data — i.e. content. So what is fusion? It is a platform, with a new architecture from the ground up, designed for molecular binding of transactional, analytical and engagement capabilities. This is not a retrofit architecture but a complete redesign with fusion at its core. The fusion of transactions, analytics and engagement capabilities is only possible with an architecture designed with common capabilities across processing, insights and engagement needs with a strong “find and bind” integration architecture to tap into an ecosystem of innovative services. It is open to non-native components, supports rapid change to adapt to shifting industry needs and allows for continuous innovation. It can generate analytics and calibrate the customer-centric solution without losing speed or increasing total cost of ownership. Content is one of the most underutilized assets in insurance but is quickly becoming a strategic asset in the digital era, so it is helpful for us to understand all of the types of content that reside within the content chamber of the digital fusion reactor. Here is a non-exhaustive list:

• Regulatory data (rates, rules, forms)
• Internal data compiled over time — such as customer, transactional and actuarial data
• Localized data (region or country-specific)
• External data related to risks and underwriting (MVRs, MIB, Rx, usage patterns, GIS, climate information and more)
• Social media data, social preferences, customer sentiments, buying behaviors, satellite images, etc.

Content is no longer defined as that which is stored within the enterprise but as all data that is accessible to the enterprise. At this point, it is not only about having all these data streams available but also having the ability to bring diverse data sets together with a context for building insights to realize their competitive advantage. So a practical definition of content is: all the specific data about a person or business that allows you to rapidly set up a product and assess the risk specific to the customer based on their unique situation, region and risk profile. The better an insurer is at using applying fusion to their content, the more value their data will produce. Traditionally, content has been indigenous to individual apps — transaction-systems data was not easily accessible by engagement systems without building expensive wiring. Insights generated from analytics systems are often not actionable at the point of sale or service. The content platform helps liberate the data from apps to centralize data access and storage. In short, apps without content is like a body without a soul. A true digital platform architecture must support these to enhance the benefits of apps with internal and external content. And, most importantly, it must exist within a content framework that automatically updates itself when the situation, regulation and information changes. Content should reflect current reality. See also: Finding Success in Core Systems   In my next post, we’ll shift the discussion to “Chamber 3: The Customer Journey.” How does this fusion of apps work toward keeping customers engaged? Will it truly improve the customer experience and our knowledge of customers? I hope you’ll join me as we work toward becoming digital insurers who are focused on transformation that will yield real growth. This article was written by Manish Shah and originally appeared on Majesco.com.

Following our last post, Insurance Nexus Global Trend Map #1: Industry Challenges, it is now time to address the elephant in the room. Speak to any insurance industry pundit, and he or she will talk about an impending shake-up — a sudden obsolescence of traditional carriers in the face of leaner, nimbler competitors and disruptors under the banner of insurtech. It is interesting to step back and examine the material impacts currently being felt by today's insurers. So, is disruption all it's cracked up to be? As part of our Trend Map, we conducted an extensive international survey (with more than 1,000 responses) and consulted 50-plus industry thought leaders; you can find a breakdown of our survey respondents, details of our methodology and bios of our contributors by downloading the full Trend Map here. Along the way, we asked our insurer respondents whether they were losing market share to new entrants (giving us a disruption score). See also: Global Trend Map No. 1: Industry Challenges   In total, 29% indicated losses. While the majority still appear unaffected, this still represents a significant material impact. Different markets mature at different rates, and our disruption score fell to 23% in Europe and 25% in North America but rose to 47% in Asia-Pacific. The impact of new entrants is therefore greatest — or, at least, is perceived to be greatest — in the East. This is not a wholly surprising result given that the overall market in this area is expanding so fast because of the rapidly emerging middle class (especially in places like China and India), as well as large uninsured populations coming into focus at the lower end of the market. An expanding market creates more opportunities for new companies, and existing companies must grow at a high rate just to maintain their existing share. In addition, there may be a psychological factor driving the percentage of respondents, indicating market-share loss in Asia-Pacific. People may perceive the threat from new entrants more keenly here than elsewhere, even if they are not currently losing real market share. In saturated markets, the risk of total disruption is less because traditional insurance is established as the solution to a certain set of problems. In under-penetrated Asia-Pacific, however, many people have never had insurance and, therefore, do not owe any kind of allegiance to established insurance forms. This means that traditional insurance models appear particularly ripe for circumvention by non-traditional players.

“Successful innovations must be closely coordinated with the company's strategy. They require an innovation process and involvement from all areas of the company. On the one hand, it is important to constantly improve existing products and services. On the other hand, it is essential to think outside of the box: Artificial intelligence, augmented-reality applications and buying a fintech company are examples that fall into this category.” —Monika Schulze, global head of marketing at Zurich Insurance

Just because the European and North American markets produced lower disruption scores does not mean the waters are clear; we need look no further than the fact that more than half of 2016’s insurtech deals took place in the U.S. to see that the situation is much more complex. We should bear in mind the psychological factor and the hype cycle, whereby technology impacts are often overestimated at first. The wave is always biggest when it breaks but may leave little behind it other than foam. Later, in our regional profiles, we loosely applied this wave model to our three key regions, drawing on stats from our key themes section and input from local commentators. In North America, the disruption wave is still rising; in Asia-Pacific, it is breaking; and in Europe; it has broken. Download your complimentary copy of the full Trend Map here! In this sense, these scores are perhaps more revealing as indicators of each market’s maturity than of the overall extent of disruption. While newcomers will continue to take on market share for the foreseeable future, carriers’ assessment of this threat may, paradoxically, adjust down as they take on a new normal.

“The common denominator that’s sweeping the industry right now is this whole wave of insurtech. It applies to anybody and anywhere in the world.” —Hilario Itriago, CEO at Bullfrog Ventures

This new normal will, by no means, be totally inimical to today’s insurers. While some insurtechs have incumbents in their cross-hairs, many new startups will simply end up replacing the more tired parts of insurers’ stacks with something better. And once the gloss has worn off, many insurtechs’ currently belligerent stance may well soften into something more cooperative — particularly given the mutual benefits that could come from newcomers and incumbents working together, in a marriage of scale and innovation. We further explore insurer-insurtech collaborative models in our regional profiles, which you can access by downloading the full Trend Map here. Disruption is not just an issue for carriers; it affects every player in the insurance ecosystem and every category of insurance work. The balance of industry chatter suggests that brokers and agencies will be the first part of the insurance value chain to feel the pinch —for example, through disintermediation by new direct plays and robo-advice. Interestingly, the rest of the industry (everyone apart from carriers) achieves a disruption score of 20%, lower than the 29% we registered for carriers, and this trend is consistent across our three key regions (see above). Again, this may reveal more about sector maturity than material realities. The fact that indirect channels have, for a while, been an obvious target — not just for insurtechs but for incumbents’ own direct offerings — could mean agents and brokers have come to perceive the threat more realistically than carriers, which may currently be in peak panic mode. Before we move on to our next post, on insurer priorities, let’s quickly review the state of insurtech at present. According to data from CB Insights, total insurtech investment in 2016 totaled $1.7 billion, around double what it had been in 2014. This compares with the $17.4 billion invested in fintech overall in 2016 (according to data from PitchBook). Insurtech has been slightly longer coming than tech disruption in other branches of financial services, but its role in insurance — a data industry par excellence — could be even more transformative. See also: Prospects for Insurers as a Global Industry According to a recent report from Accenture (“The Rise of Insurtech”), approximately half of insurtech investment money is being funneled toward artificial intelligence (AI) and IoT. Currently, personal lines are generating more activity than commercial lines, and life is the quietest of the major branches; this picture is broadly borne out by our more general stats across the Trend Map. This may be a case of people going after the lowest-hanging fruit first rather than anything inherent in these lines — there remain a multitude of untapped opportunities here, from realizing backroom efficiencies, to innovation out in the field (especially anything IoT-related for commercial insurance). We will be returning to the topic of insurtech — and, in particular, where it fits among the mega-trends at work in the industry — across the remainder of this content series, so stay tuned. If, however, you want to get your fix right away, you can download the full Trend Map for free whenever you like. In our next installment, we will see where carriers are focusing their time, money and human resources.

The other entries in this series can be found here. As we’ve seen in previous parts, the Insurer of the Future will have far fewer employees in pricing and underwriting, in claims, in product development and in the back office. Overall, therefore, the Insurer of the Future will have far fewer employees per million of premium than its predecessors. Many tasks previously performed by humans will now be delivered by software. See also: The Key to Digital Innovation Success   But that means that the remaining humans, fulfilling key strategic and risk management roles, are far more important than they were. They will have to be the very best professionals available. Their recruitment, training, development and motivation will have to be top-notch. They’ll need the very best of support to help them be successful. They’ll have self-help tools at their fingertips, expert systems support, world-class knowledge management capabilities and collaboration tools to ensure they can deliver to their full potential. They’ll be part of a culture that is dynamic and exciting, in an environment of constant change – and they will relish every minute of it. Chances are that, on average, they’ll also be significantly better paid. See also: Where Are All Our Thought Leaders?  

It’s been a hectic four months since our last Transparency Chronicle, during which we launched major products and geographies and took a stand on gun violence. With Thanksgiving just ‘round the corner, I want to reflect on how these milestones have been received, and share five things that we, Team Lemonade, are thankful for. 1. The Exponential Power of Technology Our Live Policy rolled out in August, allowing members to change or update their policy coverage instantly, and with zero hassle. Its impact? Well, nearly a quarter of Lemonaders have already used it to update their policy! That’s many thousands of people who bypassed the insurance maze simply by tapping on their app. The Lemonade Live Policy highlights one thing we’re thankful for: the power of technology to lower costs while raising the bar. It’s amazing what you can do when you replace brokers with bots... 2. Controlling Our Destiny Zero Everything launched in September, and we think it’s a game-changer. When your $1,000 laptop is stolen, you expect your insurance to cough up $1,000. But that’s not what happens. First, they knock off $500 for the deductible, then they hike your rates, and then the paperwork begins. It drives people crazy. It’s not malicious, mind you. Big insurers hate ‘nuisance claims’ (their term for your filched laptop) for good reason: it can cost them more in paperwork than the amount you’re claiming! Given how their bureaucracy functions, deductibles and rate hikes are perfectly ‘rational.’ That’s where A.I. Jim, our claims bot, changes the game. A.I. Jim loves small claims. He can settle them on the spot, with zero hassle and at no extra cost. So if you opt for Zero Everything, you get 1 dollar for every 1 dollar lost: full replacement value, zero deductible, and no rate hikes. Customers seem to really appreciate Zero Everything: Interestingly, the adoption of Zero Everything in Texas was twice as high as in California, which was 50% higher than Illinois! Curious. Zero Everything highlights the second thing we’re thankful for: controlling our own destiny. We have ambitious plans for changing the underlying insurance product, and we couldn’t do that if we were just a broker. Innovations like Zero Everything require breakthrough tech, sure, but they’d be impossible without also controlling our own underwriting, claims, and regulatory relations. To truly remake insurance you need to be a full stack insurance company, and a technology company. Neither one, on its own, will cut it. See also: Lemonade Really Does Have a Big Heart   Building everything from scratch was the ‘long short way,’ but we’re thankful we took it! 3. Our Tech Community The Lemonade API launched in October on Product Hunt, and opened Lemonade to the world. There’s this magical alignment of interests that happens when you open up to the community: new revenue potential for the host platform, and a quicker and cheaper way to launch new products to market. Plus, it just makes sense when you’re a tech company. The reception? Over 400 businesses applied for early access to our API in the first 24 hours! Here’s a breakdown of who registered: APIs create a common language among tech-enabled companies across diverse industries. It means our bots can replicate endlessly and appear concurrently through a gazillion websites and apps. We think that’s something to be thankful for! 4. Values-Based Mission In October we took a stand on guns, and it was truly meaningful for us. We decided to limit the coverage on guns, and announced we would work to exclude coverage for assault weapons, and condition coverage on owners storing and using their firearm responsibly. Before publishing the post, Shai and I discussed the topic at length, and solicited feedback from our team and investors (a group with diverse political affiliations and views on gun rights). No one knew whether taking a stand would be a smart business move - but everyone thought it was the right thing to do. So we did it. Lemonade is a B-Corp, and trying to do the ‘right thing’ is an important part of our culture. We sincerely believe insurance can regain its stature as a force for social good. We also believe in being bold and transparent - even at the risk of backlash.

To our thinking, we don’t deserve to be a standout company if we’re not willing to stand out.

More than 85,000 people have read the post so far, and my LinkedIn page and Lemonade’s Facebook page became lightning rods for some of the more extreme comments: Many surmised I don’t know the first thing about guns (for better, or worse, I do). Others decided I’m a communist, or a pacifist, or a jerk, or that I don’t understand the need for US citizens to protect themselves by force from their tyrannical government (I’ll cop to that one). But for every one negative comment, the post received 5 likes; and many, many members of our community took a stand with us. Here are some emails we received: Interestingly, Facebook and LinkedIn comments skewed negative, while Twitter and replies to our email were overwhelmingly positive. Reddit attracted the most dynamic debate, and was our biggest source of traffic that day. An intriguing metric from the first 24 hours after posting: there was an almost 8% increase in male traffic, but a 4% drop in purchases by men, while the numbers for women were the mirror image of that: And the business impact? We had 20 customers cancel their policy in protest (less than 0.05%), and we didn’t see a slow in sales. We’re really thankful for that! Which brings me to #5... 5. Our Lemonade Community In November, we launched in Nevada, bringing the number of states we’re live in to seven (we’re now licensed in 22, so more coming soon!). In fact, we’ve sold 70,000 policies so far this year. A quarter of them in the past 30 days alone: But this isn’t just a numbers game: our members are an incredible bunch of people. They’re young (75% under 35), new to insurance (90%), and trustworthy. We went out to meet some of them, and came back convinced that we’re attracting the next generation of amazing customers. See for yourself: People feel and express gratitude in multiple ways, looking at the past, present, and future. Looking back at the past few months, we’re thankful to the tens of thousands who comprise our community. You’re the most supportive customers we could ask for, the best brand ambassadors, and the people who make it all worthwhile. We’re thankful for the present: our team, hustling to release new features, pay claims, and provide our members with the stellar customer experience. See also: Lemonade: Interview With CEO   And we look to the future with gratitude: we love technology, we love social impact, and we love what we do. We’re thankful for all these. Thank you, Lemonaders, and Happy Thanksgiving!

Agency consultant Chris Burand wrote an interesting article published in Insurance Journal. The article discusses the declining role of the agent as an underwriter and the increasing use of data analytics and predictive modeling. It also cites a recent J.D. Powers survey that identifies a correlation between advertising by direct sales carriers and growth and profitability. For example: “Another nail was driven into the coffin of agency upfront underwriting with a J.D. Powers study reported in the June 19, 2017 Insurance Journal. The study, specific to private passenger auto (PPA), shows a strong correlation between advertising and underwriting profitability. Several companies that spend the most on advertising, and do not have agents, have the best underwriting profits. Furthermore, they have some of the highest growth rates. If then, underwriting profit is high, and growth is higher, with more advertising and less agents, at least in PPA, why should companies focus on agents?” I remember seeing this study and questioning two things. First, “correlation” is not cause and effect. Second, are there possible reasons for this alleged superior performance other than advertising and the use of direct, rather than agent-driven, sales? See also: Why More Don’t Go Direct-to-Consumer   I suspect there was a “correlation” (vs. cause-and-effect) between advertising and direct sales (vs. agents) because that’s all J.D. Powers really considered. I’m pretty sure there are other correlations that can be identified, correlations that quite possibly have far more cause and effect. Advertising no doubt measurably impacts growth, but does direct sales vs. agent sales really improve profitability or is something else at work? The most notable alternative correlation could be that carriers who heavily advertise and sell direct sell an inferior product and/or “more stringently” adjust claims. Given that the loss side of the combined ratio is the larger component of premium and profitability, that’s where the biggest payoff comes from. Perhaps J.D. Powers didn’t consider this in their “study” because the authors know nothing about the substantial differences among carriers in product quality and claims practices. As a coverage wonk, for years I’ve seen increasing numbers of coverage-deficient policies being allowed by regulators into the marketplace and I have literally thousands of anecdotal examples of coverage denials on clearly covered claims. Sometimes I can just about predict the carrier(s) involved in such denials. Whether you’re using direct sales, phone apps, data analytics or whatever to reduce costs, at some point you are probably going to be operating as efficiently and predictively as possible. If you sell on price, as these direct sales carriers almost always do, what do you do then? The only way (and probably most effective way) to continue that downward pricing spiral is to reduce how much you pay on claims. You do that by reducing coverage and/or “tightening up” adjusting. See also: Where Can You Find Growth (Part 2)?   Developing and selling inferior products and adopting more stringent claims practices is potentially a far more cost-effective way of increasing profits than using agents or investing billions in sophisticated predictive models, especially if your sales strategy consists largely of using technology to churn customers by the tens of thousands. As long as regulators allow the sale and service of shoddy merchandise, this is likely to be an increasingly popular path to growth and profitability for some carriers. As legendary salesman Morty Seinfeld said, “Cheap fabric and dim lighting…that’s how you move merchandise.”

We are awash in data, and as modern life becomes increasingly connected it is going to quickly turn into an avalanche. Analysis of driving behavior is already challenging the fundamentals of insurance pricing, and that is just the tip of the proverbial iceberg. The questions that the industry needs to answer today are both simple and complicated:

• How do we take full advantage of all the data and related insights?
• Why haven’t we reached the scale in market that has been predicted?
• What have been the challenges?

See also: Cybersecurity Holes in Connected Cars   In my view, there are five fundamental steps that need to be studied and addressed for an organization to take full advantage of the myriad opportunities that have been created by this era of connectivity.

1. Capture and store individual driving data: Of course, it all starts with the capture of data -- that's fundamental. While data makes up less than 20% of the entire effort, if you begin with high-quality components, the opportunity for success is limitless. Well-sourced data provides a foundation to better understand your customers and how you can help. Using that level of meaningful data, you can better price your products, deepen engagement with consumers and improve both your economics and your customers’ overall satisfaction with the claims process. In today’s ecosystem, there is both high-quality, granular data as well as the ability to tap into the many data sources that exist.
2. Predict individual driver risk and future losses: We are in the business of insurance. We are responsible for both understanding and predicting the behaviors that cause accidents as well as the expected costs of loss that are incurred. This is no small task. It requires models that leverage telematics data and loss data. This kind of meaningful data must be sourced from the same time period, so our models can identify the driving behaviors that are causing those accidents, as well as the costs of each incident.
3. Streamline rating and program operations: Your rating and program operations need to be refined, streamlined and optimized for a different environment -- this is a new era. You must know when and why there are issues with your customers and address them appropriately and quickly. These programs must be properly managed. You need to clearly and consistently communicate with your agents, stakeholders and partners, as well as your consumers, especially as your program grows.
4. Optimize driver safety and improve driving experiences: The feedback from long-term, trusted partners as well as from your customers can offer early indications that provide the guidance needed to create or expand a successful new service. To make each driver safer, while improving the driving experience, you must learn and respond to what the consumer data is telling you, specifically the trends of value that provide real insight. Dig in and leverage consumer research, listen to the customer -- specifically what they like and don’t like – and, above all, pay attention to the user interface. Whether that’s the expansion of a new offering or deep-sixing a new product capability, you need to be willing to change and adapt your vision to the qualitative and quantitative feedback.
5. Uncover deeper insights: This isn’t just about pricing; as an industry we are barely scratching the surface of this massive opportunity. It’s important to look for opportunities that will move this effort beyond pricing. Analyze the data itself, as well as the feedback from your customers, to anticipate what the customer is going to want in the future and how the data can optimize your business. Use the data to transform your claims process, provide incentives for better driver behavior and identify fraud before it happens. This kind of approach will lead to more of your customers appreciating and valuing your brand approach.

See also: Why Connected Cars Are So Vulnerable   We have spent a tremendous amount of time and resources trying to anticipate exactly how much this industry will really be disrupted. We can no longer rely on our old-school approaches or the reliable case studies we were taught in business school. I urge everyone to not just consider how this industry might change at the macro level. This isn’t black and white – this requires a nuanced quantitative and qualitative approach. I believe that almost all our processes will be disrupted, fueled by greater connectivity and changes in consumer mobility. It is time to get to work.

Most insurance agencies are relatively new to online marketing. In the past, they competed with the agent down the street, so competition was simple and straightforward. Thanks to the internet, competition has expanded to any company and carrier licensed to sell in a jurisdiction. Many insurance agents are trying to compete online only to become frustrated because it doesn’t seem to be working. Here are eight mistakes agents make with their online marketing campaigns. 1. They Put the Focus on Themselves Today’s consumer doesn’t want to be sold to; they want information. If your marketing consists solely of trying to prove how great you are or how your rates are the lowest, you’ll find that nobody’s paying attention. Instead, focus on your customers by providing information they want to know. 2. They Fail to Answer Questions One way to bring positive attention to your company is by answering questions people ask when shopping for insurance. If the content you provide doesn’t solve a problem or answer a question, it doesn’t have relevance to consumers. Consequently, they will search for another company that meets this need. See also: How to Make Sense of Marketing Tech   3. Poor Call to Action While you don’t want to sell to your customers at every turn online, you do need to end your content with a call to action. It needs to be specific and strong. Instead of just saying “Call us,” say, “Learn how to save money on your car insurance.” Let them know why they should contact you and what they’ll get out of it. 4. Not Validating Leads Sure, you can have a lot of people click on a link, but how many of them follow up with a call or email? How many of the people who take the next step become customers? If you don’t know the number of leads generated from a campaign, you don’t know the value of that campaign. By successfully monitoring your leads (through web metric tools), you can tell which campaigns are yielding the best results. 5. No Website A common trend for many small insurance agents today is to use Facebook to create an online presence instead of putting in the work to have a website. While social media has a big impact and is essential for insurance agencies, they also need a website. If people want to do more research on your company, they need a place to go. 6. They Don’t Keep Up with the Competition It’s not enough to have an online presence for your insurance agency. You must also know what your competitors are doing. Look at their website and check out their Facebook or Twitter pages. See what they’re posting, and figure out how you can be better than them. Only when you compare yourself with the competition will you know how well you’re doing. 7. They Don’t Position Themselves as Unique Insurance agencies are typically competing against several other agents and carriers locally. You must find a way to make your company unique. Otherwise, why would a customer choose you? While offering low rates is one obvious way to compete, not everyone is going to have the lowest rates. Instead, you may need to find some other way to appeal to your audience. It may be as the small-town agent or the one who treats you like family. You may be the company that makes filing claims quick and easy. Look for a way to stand out from the crowd and then promote it. See also: 6 Ethical Challenges for Marketing   8. They Try to Do the Marketing Themselves You’re an expert at insurance. However, you’re not such an expert at online marketing. Many agents make the mistake of thinking they can handle their online marketing when they don’t have the time to do it right. Some agents may post on Facebook every day for a week and then get busy and not post for the next month. If you hire a marketing company, it can set up regular activity to keep you active online when you’re at your busiest. It also knows the most effective methods of marketing to help you get a better ROI. If your core competency is selling insurance; every moment you spend not selling insurance is lost revenue and opportunities. Avoid these eight mistakes in online marketing, and you’ll see your insurance company grow with new customers and a stronger online presence.