Silicon Valley exports technology and imports the world’s best talent. That is how it has helped grow America’s economy and boosted its competitive advantage. President Trump’s executive order banning immigrants from some Muslim countries sent shock waves through the tech industry over the weekend because it was a loud and clear message to the world that America’s doors are now closed, and that xenophobia and bigotry are the new rules of law. It is no wonder that executives at almost every major technology company, including Alphabet, Facebook and Apple, have made statements defending immigrants and distancing their companies from the president. These companies are worried about their survival and the future of the country. Let there be no doubt that immigrants are essential to our economic present and future. These newcomers start a disproportionate number of U.S. businesses, particularly in advanced technologies. Immigrants and foreign-passport holders occupy a growing majority of places in graduate education programs in computer science, mathematics, physics and other hard sciences. They play an outsize role in U.S. research and innovation. See also: An Open Letter to the Trump Administration   A 2012 research paper I co-wrote, “America’s New Immigrant Entrepreneurs: Then and Now,” documented that 24% of U.S. engineering and technology startup companies and 44% of those based in Silicon Valley were founded by immigrants. My research also determined that immigrants contributed to more than 60% of the patent filings at innovative companies such as Qualcomm, Merck, General Electric and Cisco Systems. And surprisingly, more than 40% of the international patent applications filed by the U.S. government had foreign-national authors. Study after study has found that immigrants are more likely to start job-creating businesses, not only in tech but across the economy. In 2014, 20% of the Inc. 500 companies had immigrant founders. That’s despite immigrants accounting for less than 15% of the U.S. population. According to research by economist Robert Fairlie for the Small Business Administration, immigrants are more than twice as likely to found businesses as non-immigrants, and 7.1% of immigrant-founded businesses export their products outside the U.S. as compared with only 4.4% of non-immigrant-founded businesses. Clearly, blocking the path of immigrants into the U.S. cuts off the exact economic growth serum that has made America great. Creating an atmosphere where immigrants are fearful and uncertain about their future will reduce their incentives to open businesses here and stay. This is becoming even more so as other countries increasingly court educated immigrants and entrepreneurs. Those who support the president’s executive order say that the intent is to block people from countries where terrorism is sourced. But it’s not so simple. By blocking entrance based on passport or country of birth rather than objective criteria, the executive order paints all immigrants from those affected countries and possibly dual passport holders with the same scarlet letter. What if the next Mark Zuckerberg happens to be Iranian? Or if an Einstein happened to be born in Libya? Let’s not forget that Steve Jobs’s father was Syrian — and he would have been banned from entering the U.S. under Trump’s dictate. Yes, it is true that the affected countries are not the largest sources of immigrant entrepreneurs. But setting a precedent like this can mean that a politician can use this weapon against other countries that have become critical in supplying talent to fuel U.S. innovation. What if a frustrated president elected to block immigrants with Mexican, Chinese or Indian passports? The scenario, totally unthinkable a few months ago, is today entirely plausible. In my 2012 book, “The Immigrant Exodus: Why America Is Losing the Global Race to Capture Entrepreneurial Talent,” I documented the stories of numerous immigrant entrepreneurs who were forced to leave the country because of shortages of skilled immigrant visas, called green cards. It wasn’t that we didn’t want these people here; American politics was caught in a political quagmire on skilled immigration. As a result, the country began suffering a brain drain, with highly skilled foreign-born doctors, engineers and scientists returning home. With this executive order, Trump has made it clear that immigrants will have to worry about being singled out even after they have become lawful permanent residents; that their religion and place of birth may be the deciding factor in whether they are allowed to reenter the U.S. after going abroad. This will no doubt turn the trickle of skilled workers permanently leaving the country into a flood. Entrepreneurs who had wanted to come here will have now second thoughts. See also: What Will Trump Mean for State Regulation?   Whether or not the courts uphold the legality of the executive order, the damage has been done. Already, the number of billion-dollar technology startups, commonly called “unicorns,” that are located outside the U.. has been increasing dramatically. Fifteen years ago, almost all were in the U.S., while today 86 of the 191 unicorns are in countries such as China and India. We can expect this trend to accelerate because the Trump administration has just added fuel to the fire of innovation abroad and handicapped our own technology industry.

In the face of growing commoditization, carriers increasingly focus on innovation as they describe their development plans and go-to-market strategies. Recently, we spoke to 10 carriers from the Novarica Research Council spanning both the P&C and L&A segments. The insights and perspectives we gained provide a fascinating view of an industry facing significant changes in its markets, customer demographics and persistently low interest rates, which make outside-the-box thinking a necessity. Innovation is the father of disruption in the insurance industry, and that disruption is now coming from multiple directions simultaneously, so CIOs have their heads on a swivel. CIOS view the most significant source of innovation and disruption as coming from outside the industry—specifically, banking and financial services firms, which tend to require more rapid adoption of advancing technology. Within the industry, insurtech startups are the main sources of innovation, bringing ideas, technologies and processes from other verticals into insurance. See also: How to Master the ABCs of Innovation   When it comes to leveraging these perspectives for innovation, the P&C industry is further along than L&A. Many P&C CIOs have put together a combination of insurtech startups, customer experience designers from outside the industry and traditional management consultants to build capabilities. L&A CIOs are still largely looking for that sweet spot of combining outside and inside industry expertise to start getting their arms around what innovation means to them and their companies. Once a carrier has decided to incorporate innovation, CIOs have to make the move from conceptual to concrete by sponsoring formal activities that encourage creative thinking. While P&C carriers are, by and large, further along the innovation curve, L&A carriers appear to be making greater use of tools like hackathons and ideathons to foster a culture of innovation. Appointing an internal “innovation champion,” whether a person or a team, has become commonplace in L&A carriers. Innovation champions serve notice that innovation is a priority and that resources will be allocated accordingly. CIOs also have to consider a range of new technologies to support, and even to drive, their innovation efforts. Right now, AI-themed solutions like robo-advice apps are top of mind for CIOs. Wearable devices are more important for life insurers, while semi-autonomous vehicles and telematics are more important to P&C insurers. Drone-based technologies and data collection will continue to be important to both P&C and L&A insurers. Supporting innovation efforts can also mean recognizing the need to reach outside their own spheres of experience for help. A common approach is to create a venture capital entity separate from the core insurance business. Another approach is pursuing strategic alliances directly with insurtech startups or others, who might have the intellectual know-how, but not the resources and structure, to move ideas from concept to reality. Finally, some insurers are using “flanker” brands, which serve as alternatives to the traditional parent brand, as an entry into the innovation world. These can do things that the parent brand may not allow for. Like any other initiative, those focused on innovation need funding. L&A insurers favor the traditional budgeting route, and some have levied a corporate “tax” on other business units as a way to aggregate budge monies for innovation. The short-term risk here is that such an approach could cause political or cultural issues inside an insurer. P&C insurers, perhaps due to their having had more time in the innovation space, have found other ways to fund innovation initiatives. Some have gone so far as to carve out a whole separate innovation budget and create “innovation centers,” responsible for coming up with as many ideas as possible and turning the most promising ones around into prototypes quickly, without bureaucratic interference. In terms of investing in innovation, both P&C and L&A CIOs have discovered the power of investing in cultural change and adaptation, looking both inside and outside their organizations for inspiration and new ideas. Many have created innovation centers or loosely coupled investment funds to engage with startups, universities and think tanks. That trend is likely to accelerate as more insurers get serious about innovation. Understandably, insurers want to see that innovation is leading to new products, more effective and efficient processes, better customer service and, of course, higher profits. Along with that comes a desire to measure and quantify the effectiveness of innovation initiatives (measuring is simply what insurers do, after all). The industry, though, has yet to land on a quantitative and qualitative set of metrics to accurately gauge how successful an innovation project has been. Both P&C and L&A CIOs are for the most part still coming around to the idea that some innovation efforts can pay dividends without those dividends being directly measurable. See also: Where Will Real Innovation Start?   Innovation is becoming increasingly important to insurers in 2017, and it requires support from senior leadership to succeed. Insurance is an industry that is generally very conservative, and innovation is all too often looked at with skepticism, or even hostility. Innovation can be hard work that requires a dedication of resources and a willingness to take new risks. It can also require new organizational structures and an acceptance that an asset (e.g., a traditional brand) can also be a liability. Carriers simply cannot double down on the strategies from the past. Innovation is frequently about breaking things and a willingness to walk away from traditional approaches to products, distribution models and operations.

U.S. pollsters got quite a surprise in the early morning hours of Nov. 9, 2016. That’s when it became apparent that their sophisticated voter research had completely failed to predict the outcome of the U.S. presidential election.  Longtime Republican political strategist Mike Murphy went so far as to assert that “data died” that night. Yes, the 2016 U.S. presidential election was a highly visible casualty for data-driven research, but far from the only one. In 1985, Coca-Cola announced the rollout of “New Coke,” an updated formulation of the venerable soft drink, designed to appeal to changing consumer tastes. In launching the new formula, the company cited research indicating that taste was the primary driver behind the brand’s market share slide. The firm also pointed to blind taste tests that indicated that a majority of consumers favored New Coke over its predecessor (and over Pepsi). As it turns out, the research pointed Coca-Cola in the wrong direction. Three months after rolling the revised formulation out, the company acknowledged widespread public discontent and returned the original Coke to store shelves. New Coke was killed in 2002. See also: 5 Key Customer Experience Trends   What went wrong? One thing that Coca-Cola failed to account for was the emotional dimension of consumer buying behavior. Even if people said they preferred New Coke in taste tests, many had an emotional attachment to the original formula that – outside of the research bubble – superseded their rational judgment on taste. This is why an overreliance on traditional research methods (i.e., asking customers what they want or like) can lead a company astray. Surveys and questionnaires do a poor job of accounting for the emotional considerations that drive customer behavior. As behavioral science has clearly demonstrated, it’s those emotional considerations that often exert the strongest influence on individual decision-making. (As renowned psychologist Daniel Kahneman has described it, “the emotional tail wags the rational dog.”) Post-mortems on the 2016 election polling have also referred to the emotional “blind spot” of traditional research methods. Evans Witt, president of the National Council on Public Polls, highlighted this issue to NPR, noting that “polls do a poor job with emotion/enthusiasm/commitment”; that may have been an important behavioral influence on what was a very polarized electorate. There’s another reason, though, why traditional question-based customer research can mislead, and it comes down to this simple truth: There’s a big difference between what customers say and what customers do. Wal-Mart found this out the hard way in 2009 when it launched a store redesign effort dubbed Project Impact. The company had conducted customer surveys, which indicated that shoppers didn’t like Wal-Mart’s cluttered, dimly lit stores. They wanted cleaner, more streamlined layouts. Project Impact sought to deliver on this apparent customer preference by de-cluttering the store – removing endcaps, widening aisles and improving navigability. Even the store’s famed “Action Alley,” the main corridor separating departments, wasn’t immune to the changes. Traditionally dotted with palettes piled high with fast-selling items, Action Alley was cleared out by Project Impact, opening up sight lines across the entire store. It all sounded like a good idea… until same-store sales started to plummet. The reason? To streamline the store layout, Wal-Mart had to eliminate, by some estimates, 15% of its store inventory. When customers could no longer find their favorite brand at Wal-Mart, they went elsewhere to pick it up – and shifted their shopping to competing stores that offered a wider product selection. In addition, it turns out that Action Alley – while perhaps contributing to store clutter – also triggered a lot of impulse buys among Wal-Mart shoppers. When Action Alley disappeared, so did a lot of sales. Since its founding by Sam Walton in the 1960s, Wal-Mart’s strategy had always centered on offering low prices and a wide selection (“Stack ‘em high, watch ‘em fly,” as Sam liked to say). Sam apparently knew his customers better than the company’s modern researchers, because it turns out people shop at Wal-Mart for – you guessed it – value and selection. Shoppers might have said they wanted a clutter-free store – but in reality, the clutter was part of the appeal for them, feeding into their hunt for great deals and impulse purchases. What could Wal-Mart have done differently? Instead of just asking customers what they wanted, they should have observed them in action, navigating the store and making purchases. They should have spoken to shoppers one-on-one, to better understand what shaped their purchase behavior once they stepped foot into a Wal-Mart. It’s precisely this type of context and nuance that traditional customer research methods miss – because what customers say they want is sometimes quite different from what they actually value. Indeed, that which the customer values the most may also be the thing that’s hardest for them to articulate. Hence the mismatch between what people say and what people do. See also: Are You Ready for the New Customer?   Traditional customer research has merit, but its precision is often oversold. To steer your business in the right direction, don’t just look at the data, look at your customers. Immerse yourself in their experience and observe them in their natural habitat – because that’s where you’ll find the priceless insights about how to better serve them. This article first ran on WaterRemarks, the official blog of Watermark Consulting.

Our previous blogpost introduced the Top 10 insurtech trends for 2017. We received a lot of requests to share more of our view with regard to the last trend we mentioned: symbiotic relationships with insurtechs. Banks and insurers are looking for ways to learn much more from the fintechs and insurtechs they are investing in and partnering with. This is indeed a critical issue to accelerate innovation in banking and insurance. In our new book "Reinventing Customer Engagement: The next level of digital transformation for banks and insurers," we actually included seven best practices -- seven examples of banks and insurers that created very different ways of working with fintechs and insurtechs. (The book will be available Feb. 23, but you can already pre-order at Amazon). Corporate Venturing Virtually every bank and insurer is organizing competitions and hackathons or supports one or more accelerator programs. Some have started their own corporate venture arm. Obviously, corporate venturing should not be the main way for financial institutions to reinvent themselves. It is a means but not an end in itself. The challenge of the digital transformation is essentially a cultural one that involves the whole company, not just the technology. Working with fintechs and insurtechs offers the opportunity to rethink and accelerate innovation. Innovation is not about asking customers in focus groups what they want. It is about understanding new technologies and how they will interact with consumer behavior. And that is one of the things fintechs and insurtechs are much better at than incumbents. Therefore, financial institutions need to really immerse in the fintech community to stay on pace or maybe even a step ahead in a rapidly changing technology environment, or, better still, to shake up the status quo and accelerate change in the stagnant financial industry. [caption id="attachment_23815" align="alignnone" width="413"] Minh Q. Tran (AXA Strategic Ventures). Key note address at DIA Barcelona in 2016[/caption] Banks and insurers are looking for ways to learn much more from the fintechs and insurtechs they are investing in and partnering with -- whether it is about specific capabilities or concrete instruments they can use in the incumbent organization, or whether it is about the culture and the way of working. (At last year’s edition of our Digital Insurance Agenda, Minh Q. Tran, general partner at AXA Strategic Partners, and Moshe Tamir, global head of digital transformation at Generali, shared their view. Check here for the interview with Tamir. Obviously, expect more such keynotes addressing this critical issue at DIA Amsterdam, which will take place May 10-11, 2017.) We have come across quite a few different models in which relationships between financial institutions and fintechs/insurtechs seem to flourish. In this blogpost, we included seven examples. This is not meant to be exhaustive. New kinds of symbiotic relationships evolve every day, and of course they can be combined. 1. DBS Bank: Fintech Injections Neal Cross, chief innovation officer at DBS Bank, involves fintechs in his own distinctive way: “I don’t do innovation, I do sales. I sell programs that solve business problems inside the bank. We always start with their problems, around business model innovation or around KPIs. The start-up community plays a key role in our programs. I often tell our business units: 'Give us 20 of your staff, we will split them into teams and pair them with startups.' By embedding our staff in this agile, lean mean way of working, everyone benefits. We make sure our teams work within structured processes that include research, experimentation and prototyping, followed by implementation. Everything we do is focused, and we get senior sponsorship before embarking on a project, so we don’t have problems with innovations that end up not being implemented.” [caption id="attachment_23817" align="alignnone" width="372"] Neal Cross[/caption] 2. Aviva: Icons This is the best practice that we included in our previous blogpost. Andrew Brem, chief digital officer at Aviva: 'In our view, ‘icons’ are needed to spearhead the digital transformation process. Our digital garages in London and Singapore are such icons. They are a very concrete and visual manifestation of our digital journey - for everyone across Aviva. The garages are not just idea labs to house ‘skunk works’ teams. They are real places, where we make and break things. We run digital businesses from the Garages, and we design and build our digital ecosystems such as MyAviva. Anyone from Aviva is welcome to come and hold workshops and meetings there, to see and feel our digital capabilities at first hand. The garages also help us engage with insurtechs and inject their culture into our organization; by launching startups ourselves, but also by partnering, mentoring and investing. Aviva Ventures, with a fund of £100 million, is also housed in the garage, and so are some of the startups they invest in, such as the IoT home security startup Cocoon.” [caption id="attachment_23818" align="alignnone" width="418"] Aviva Garage, Shoreditch, London[/caption] 3. Deutsche Bank: Digital Factory In the summer of 2016, Deutsche Bank started its “digital factory.” More than 400 IT specialists and banking experts from the private, wealth and commercial clients division are working on a specific site in Frankfurt to develop new digital products and services for the bank's customers. In addition, there are 50 places for external partners from the fintech community. The digital factory is obviously also connected with the Deutsche Bank’s innovation labs in Berlin, London and Palo Alto CA. 4. Munich Re: Interfaces Andrew Rear, CEO of Munich Re Digital Partners: “To avoid a culture clash, we have set up a separate Digital Partners unit in 2016. To make the interface between the two worlds work, two things are vital: The first is speed. Startups move fast and don't accept the limitations of a corporate diary: 'Time is money' is literally true for them. We therefore need to move with the same sense of pace. The second is decision-making: Start-ups make decisions; they don’t arrange committees. Therefore, we don’t do that, either. All the key decisions from Munich Re’s side are in our hands. In our model we do the things startups don’t need to control, to make their proposition live. That can include policy administration, compliance, reporting and product pricing; the ‘boring insurance’ stuff. We have stakes in our start-up partners but we don’t interfere in the way they engage their customers. The positive effects on our ‘regular’ organization are noticeable. For example, people in compliance and risk management were not used to these new speeds but are already adapting and finding new ways to fulfill their responsibilities in a way that is manageable for the start-up." Example of an interface between Munich Re and startups at regional level is Mundi Lab. Mundi Lab is an accelerator partnership between Munich Re Iberia & Latin America and Alma Mundi Ventures. Augusto Diaz-Leante, senior vice president of Munich Re Life, Spain, Portugal and Latin America, explains how the cross-fertilization with startups works: “We select startups from all over the world, such as RiskApp from Italy and Netbee from Brazil. Twenty Munich Re executives mentor these startups one-on-one. The best-performing companies with the highest potential to disrupt the insurance industry have the opportunity to work on a pilot program in one of the Munich Re Iberia or Latin America markets. In this way, the sharing of knowledge, experience and expertise is made very concrete.” [caption id="attachment_23820" align="alignnone" width="406"] The Munich Re Mundi Lab team[/caption] 5. Zurich: Open Innovation Zurich created a platform to bring together the innovation initiatives and projects in the group. Xavier Tuduri, CEO of ServiZurich Technology Delivery Center: “In the Zurich Innovation Lab, we generate disruptive ideas and strategic R&D projects for the global Zurich group. We believe in open innovation, a collaborative model that means combining the internal knowledge, for example regarding markets with external talent and disruptive technologies. In this way we are always at the forefront of the latest disruptive fintech and insurtech developments, while being able to quickly develop tangible prototypes that fit and inspire our businesses. These are prototypes, without risky high investments, for example regarding using drones for risk assessment. Each prototype project is led by an employee of ServiZurich who works together in a team with several start-ups, universities and institutions. In this way, our people and organization get injected with new ways of working and thinking.” 6. Chebanica!: Co-Opetition If a financial institution wants to behave like a fintech, it needs to open up, think of what the ecosystem could look like, be at the forefront to see what is happening and partner with fintechs to accelerate innovation, to learn or to advance the sector as a whole. Roberto Ferrari (CheBanca!) is a protagonist of this mindset: “We believe in a ‘co-opetition’ model. There will be things in which we will be competing with fintechs and other banks, and areas where we will be cooperating with the same parties. Therefore, we try to make the Italian fintech community grow. Building a larger cake will be for the good of the whole financial ecosystem, innovation is key and startups will always be the lifeblood of any sector. We among others launched the Italian fintech awards and the Smartmoney blog, which is now the most important vertical innovation in banking blogs in Italy. We now have a very strong presence in the Italian fintech community, and we are close to all developments and connections. I and other C-level executives at our bank speak to at least five to six fintechs each week, and we have already launched two new services – award-winning Mobile Wallet and Robo Adviser -- thanks to our partnership with some specialized Italian fintech startups. We help them by partnering, but also we want to help them to go abroad as scale is key to succeed.” [caption id="attachment_23821" align="alignnone" width="376"] Roberto Ferrari (right) with Matteo Rizzi (left, one of the most influential fintech experts)[/caption] 7. Metlife: Capability Building Lee Ng, vice president and COO of LumenLab, MetLife's innovation center in Singapore: “LumenLab and our new businesses are distinct from MetLife’s core business. Our mission is to create a growth engine that launches disruptive new revenue-generating businesses for MetLife, targeting the needs of Asian consumers across health, aging and wealth. But we do work with in-country experts to develop plans for testing the new business ideas and assess market potential. In our first year we, for instance, launched BerryQ, a quiz app that rewards users for their health knowledge; Rememory Stories, a platform to capture intergenerational stories; and developed CONVRSE, virtual reality experiences around service and sales for financial services. We notice a real mindset shift within MetLife because of this cooperation. The people we work with develop skills about new ways of testing new ideas, new toolkits and new ways of thinking. Our core insurance business thus improves their performance, through adopting new behaviors like curiosity, velocity, experimentalism and bravery. In others words, we are lighting a path for innovation at MetLife.” [caption id="attachment_23822" align="alignnone" width="560"] MetLife’s LumenLab, Singapore[/caption] We believe that it will be increasingly important to adopt a culture of constant innovation, to stay in sync with all that is going on out there. Rather than trying to change their DNA, which is quite impossible, banks and insurers should think that constant innovation is the only way to adapt the DNA to the change that is taking place. You can, for example, buy great algorithms, but if you are not able to transform your culture, the implementation of these algorithms will fail. A banker shared with us: “I see working with fintechs like vaccinations in biology: these injections in our cytoplasm help us prepare ourselves for new attacks and adapt to changing environments. If you acquire new fintech companies, you could destroy them if you don't adapt to them as an organization. You have to adapt the mindset of your own people. It is like playing a piano. Some people sit down on their piano chair and move their chair to the piano. Other people don't want to change their position and try to pull the piano to their chair. We should therefore teach people to move their chair after sitting down. How to move the chair will depend upon the situation, but should always deliver value to our customers.” Working With Fintechs and Insurtechs at DIA Amsterdam Maximizing the results from working with insurtechs is an essential subject on the Digital Insurance Agenda. So definitely expect us to pay ample attention to this at DIA Amsterdam: our two-day conference connecting insurance executives with insurtech leaders. Check out www.digitalinsuranceagenda.com for more information.

2016 was definitely the year of cyber insurance emergence. As large-scale attacks and disclosures of massive data-breaches were recurring, we realized once again that allocating tremendous efforts and resources to your cybersecurity defense does not provide any guarantee you won’t experience an incident. Executives and security professionals are gradually accepting that it is not a matter of if but a matter of when their organization will be hit by a cyber-attack. With this understanding, many businesses acknowledge cyber insurance as an important tool in the multilayer cybersecurity defense approach and declare it is an essential part of their risk mitigation strategy. See also: 10 Cyber Security Predictions for 2017   Here are some of my personal predictions for the cyber insurance market this year:

1. An increasing number of security vendors will provide insurance guarantees. 2016 signaled a new path in the cybersecurity industry as few emerging startups started to offer a cyber insurance coverage of as much as $1 million per organization that will be fully covered with their defense solutions (e.g. SentinelOne and Cymmetria). I expect this trend to intensify through 2017, and well-established vendors will gradually follow to offer a bundle of protection plus insurance.
2. We will see an increase in the number of insurance companies that will start to offer cybersecurity services. As cyber insurance is emerging and as many new insurance companies are entering the market (currently, approximately 70 insurers offer stand-alone cyber insurance products), there is a race for the best cybersecurity talent to assess the risks and provide pre- and post-breach services as monitoring, incident response, forensics, etc. In this atmosphere, insurers will acknowledge the revenues they can make from cyber insurance and adjacent security services to their clients, and will (and already do) expand their teams with the cybersecurity professionals and tools through aggressive hiring and M&As.
3. Cyber extortion coverage will take the lead as the most demanded cyber insurance product. Ransomware is exploding across geographies, industries and all sizes of businesses. Following the massive distributed denial of service (DDoS) attacks on Krebs on Security and Dyn, the IoT world is open to a new world of DDoS attacks that no load balancer can mitigate. I expect that cyber extortion will become the biggest problem for organizations and individuals and that it will surpass data breaches as the main threat.
4. Adoption of advanced tools for risk assessment will increase. There is a high demand for tools that will give insurers an accurate, scalable and affordable risk assessment that will streamline the entire (mainly manual) questionnaire-based risk quantification methodology that is the common practice today.
5. New regulations will be introduced and will support the expansion of the cyber insurance market. There are high chances that more U.S. states will introduce regulations that support internal risk assessments on a regular basis of third party vendors and enforce security policies on organizations as suggested by the new NY proposal for the big financial institutes that was released last September.
6. The penetration rate of cyber insurance among SMBs will be the driving force in the industry. As awareness of cyber-attacks increases among small- and medium-sized business, they'll realize that cyber insurance is an essential security tool, particularly because of their limited cybersecurity resources. I expect to witness higher percentages of the SMB segment that will purchase cyber insurance coverage, leading to an increase in total market size, as current estimates rely on low adoption rates in these segments.
7. Insurers will introduce personal cyber insurance coverage. As ransomware becomes a threat to any operating system and any device, it is forecasted that it will gradually become a serious problem for individuals, as well, and will lead cyber insurance companies to offer personal cyber insurance coverage.

Cyber insurance is here to stay, and insurers, brokers, business and individuals will benefit as this market continues to evolve. Growth will be sustained mainly in the U.S. market and is highly likely to expand worldwide, especially in the EU as GDPR starts to be effective. See also: Understand the Nuts and Bolts of Cyber No matter which part of the IT security eco-system you fit into, you should explore the benefits cyber insurance can bring to you — revenues, financial hedge and cyber peace of mind.

Dentistry was painless, And bicycles were chainless, Carriages were horseless And many laws enforceless. Then, cooking was fireless, Radio was wireless, Cigars were nicotineless, And coffee caffeineless. Soon, oranges were seedless, The putting green was weedless, Men were going hatless, The proper diet fatless. New paved roads are dustless, The latest steel is rustless, Our tennis courts are sodless, And new religions godless. Marketing is feckless -- Everything is "pay less" -- Payment is money-less; Is the value worth less? Internet access is endless, Display screens are CRT-less. Online storage is diskless, And tech support is faceless Insurance policies are paperless, Policy exclusions are defenseless, Underwriting is relentless -- Has insurance become humanless?

According to a report published by Edelman Berland, an independent research firm that conducted a study on behalf of the Freelancers Union and Upwork, the number of on-demand workers (who earn a living by performing tasks on an ad hoc basis) continues to grow year after year. Some of the most interesting findings in the report are:

• The percent of the U.S. workforce considered on-demand or freelancer is 34%;
• The number of on-demand workers increased by 700,000 from 2014-15;
• The majority of workers who switched from traditional employment to on-demand employment earned more money within their first-year freelancing;
• More than 51% of on-demand workers find project work online, up from 42% from the prior year; and
• More than half of on-demand workers report they prefer freelance work and would not consider traditional employment regardless of the compensation.

So we have a growing army of happy freelancers who have sworn off traditional employment. If that's not disruption, I'm not quite sure what is. See also: How to Embrace Workforce Flexibility   The Outlook For The On-Demand Workforce According to the key findings reported in the Edelman Berland survey, the outlook for freelancing is continued growth because of the satisfaction perceived by the members of the on-demand workforce. In fact, more than 80% of freelancers believe there are better days ahead, and three in four would recommend freelancing to their family and friends. It’s even more interesting to learn that three in four traditional employees are open to doing additional work as a freelancer if the opportunity is available to them. And opportunities to "gig" are growing exponentially with the advent of innovative platforms. Consider that in 2012, WeGoLook had 7,400 gig workers on our platform. As of January 2016, we now have considerably more than 30,000. The On-Demand Workforce by Category Although common terms like “1099 worker” or “freelancer” are used when describing the on-demand worker, the category consists of five distinct classifications:

1. Independent Contractors: This category consists of “traditional” freelancers who typically do freelance, temporary or supplemental work on a per-project basis, rather than traditional employment.
2. Moonlighters: These are professionals who have a primary job but also moonlight from time to time to earn extra income. For example, a copywriter who works full time for a traditional firm, but also works on projects for others in the evening.
3. Temporary Workers: Although temporary workers are considered employees by their staffing agency, they work on a temporary basis and have the liberty of choosing the type and scope of work being offered.
4. Freelance Business Owners: This is typically a freelance business that contracts with other freelancers who are paid by the freelance business rather than the client. For example, a freelance web designer who has more business than he or she can handle contracts with other freelancers who are paid by the freelance business rather than the client.
5. Diversified Workers: This category consists of workers who have multiple sources of income from a mix of employers and freelance work. (For example: a part-time employee at a hospital who supplements her income as an on-demand worker at WeGoLook.)

Implication for Insurers The consequences for insurers are twofold. No. 1 is that the insurers can access this workforce to scale back on the insurer’s cost of employment. And, No. 2, this workforce will need various insurance products just like any other small business. Let's dig a little deeper with several key points here. Communications There are several important communications tasks that need not be assigned to full-time workers who possess communication skills. These tasks are performed based on temporary projects and to reach specific outcomes. Using a skilled on-demand worker who can be available at a moment’s notice and for a short period makes more financial sense than using a higher-paid full-time employee who has fewer incentives to please consumers or agents that they communicate with. Large insurers with a national agent distribution network can also use skilled freelancers to communicate with the many agencies across the country that represent them. Claims Because an insurer’s claims department is not a profit-generating department, strategies to reduce operations cost are legitimate. Although most insurers employ a staff of claim managers, many assign the adjusting portion of the claim to independent contractors. Now, insurers can find experienced claim adjusters to work on a per-project basis and reduce their staffing accordingly. This will be especially useful when the claimant is in a rural area and miles from the nearest claim facility or office. Why employ a disparate network of full-time field agents when you can tap into an on-demand workforce at a moment's notice? Marketing All insurers — large or small — will have some amount of dedicated marketing staff members to communicate their message to prospects and clients. By accessing the on-demand workforce on an as-needed basis, insurers can reduce their workforce and cut employee expenses for ad-hoc and last minute projects. Because of the size of the gig workforce, competition will not only drive costs down but will give you access to the most talented professionals who fit your hiring criteria. Underwriting As the demand for insurance products ebbs and flows during the year (and during natural disasters), having a flexible underwriting staff can benefit an insurer’s relationship with agents and customers. This flexibility can be accomplished by contracting with skilled freelancers who have come out of the insurance industry and prefer to work as a freelancer rather than as a traditional employee. Having skilled underwriters on the payroll drives up the administrative costs of insurance products and can be greatly reduced by accessing the on-demand marketplace whenever possible. New Business Fortunately for insurers, on-demand workers need to purchase insurance just like any typical small business. Although they work from home and typically do not require workers’ compensation insurance, workers will need to protect their business and themselves with professional liability, health insurance and life insurance. In fact, insurers who are willing to offer a business owners policy to home-based businesses can expect an increase in sales that is directly related to the significant growth of the on-demand economy. See also: 3 Questions About On-Demand Economy   Final Thoughts Insurers who understand the continual growth of the on-demand workforce and embrace the implications for adapting this segment into their traditional workforce are likely to find significant savings in payroll and employee insurance costs. On-demand employees are typically experienced workers who are doing what they know best and are passionate about. But they are happier because they are working for themselves and are masters of their own destiny. Insurers and agencies that wish to reduce the costs of distribution, marketing, communications and claims should look to this flexible workforce to streamline processes that affect consumer satisfaction. Based on personal experience, I can attest that integrating the gig economy into your supply chain and business processes is a win-win.

Social media is embedded in our lives—Facebook alone had 1.79 billion daily users as of September 2016—which means cyber criminals are not far behind. As companies increasingly rely on this digital channel for marketing, recruiting, customer service and other business functions, social media also has become a highly effective vehicle for cyber attacks. Outside of the corporate network perimeter and an organization’s control, it throws traditional security approaches out the window. A growing category of digital risk monitoring vendors, identified by Forrester Research Inc. in a recent quarterly Wave report, are catering to this problem. According to the report, digital channels—social, mobile, web and dark web—“are now ground zero for cyber, brand and even physical attacks.” The ways in which cyber criminals weaponize these channels are limited only by their imagination. Hackers can create fake corporate accounts for harvesting customer credentials, impersonate company executives, damage the brand’s reputation and post legitimate-looking links that contain malware. See also: Hacking the Human: Social Engineering   According to Cisco’s 2016 annual security report, Facebook, for example, was the top mechanism last year for delivering malware, through social engineering, in order to gain access to organizational networks. “(Social media) is a business technology platform, and because it’s been adopted at all levels of business … organizations have to figure out how to protect it,” says Evan Blair, co-founder and chief business officer at ZeroFOX, a digital-risk monitoring (DRM) vendor launched in 2013. “And it’s a gold mine for intelligence on individuals,” he adds. Social media—the ideal weapon The sheer volume of traffic on social networks is a magnet not only for businesses but also for the criminal element. According to the Pew Research Center, 79% of internet users are on Facebook, the most popular social network. About a third of internet users are on Instagram, and a quarter are on Twitter. Better click-through rates and lower advertising costs, among other things, are compelling companies to throw more money at social media advertising (Hootsuite estimates social media budgets have nearly doubled, from $16 billion in 2014 to $31 billion in 2016). But it’s not just the growing numbers of users and increased brand presence that creates an attractive playground for bad actors. It’s easy to create accounts and instantly attract followers—which means it’s easier than email for reaching a massive number of people with a phishing attack. Adding to the problem is that social media can be highly automated because it was built on an open API (application programming interface) that allows developers access to proprietary applications.“It’s a frictionless environment that allows you to communicate immediately,” says Devin Redmond, general manager and vice president of digital risk and compliance solutions for Proofpoint, another DRM vendor. Blair says: “Social media was built with automation in mind. You can create an account that interacts completely autonomously.” Even though email remains the medium of choice, according to various security companies, email phishing is on the decline. Social media phishing, on the other hand, is growing. Why organizations are at risk Eric Olson, vice president of intelligence operations at LookingGlass, says what makes digital risk a high priority is that it’s a business risk that touches multiple facets of an organization. It not just about cybersecurity—it also involves compliance, human resources and legal, among others. He says it’s important for security practitioners to focus on the how — e.g. phishing — rather than the channel it came from. “You have to be able to keep eyes in all the dark corners,” Olson says. A new technique Proofpoint identified in 2016 is angler phishing. Bad actors create a fake social media account on, say, Twitter, using stolen branding. They watch for customer service requests addressed to the legitimate account for a bank or a service like PayPal. They then tweet a reply with a link to a lookalike fake website where the customer is asked to enter login credentials. Despite this growing threat, however, many security practitioners are not aligned with social media, Redmond says. “The pace of adoption of social by enterprises and the pace of the risks that are evolving around that are growing much faster than people are addressing those risks,” he says. An emerging space The offerings of the vendors in this space vary. For example, ZeroFOX focuses largely on social media. Proofpoint covers social, mobile, web and email. LookingGlass integrates machine readable/open source feeds, analyst services, threat intelligence tools and appliances. Whatever approach they take, more security companies are likely to join in because the market is still growing. But even savvy companies are struggling to secure these channels. The hacking of Microsoft’s Skype for Business Twitter account in 2014 is proof—the Syrian Electronic Army wasted no time tweeting negative messages after taking over the account. They got some 8,000 retweets. See also: Social Media And The Insurance Implications   “Social media is the best attack platform for a nation-state actor and sophisticated cyber criminals, not just because it’s the easiest one to leverage for compromise, but it’s also completely anonymous,” Blair says. Redmond expects mobile to be another rising digital frontier, as more bad actors use fraudulent apps to do things like harvesting credentials. “If you look at it through the lens of bad actors, they’ve figured out all these are effective vehicles,” he says. They don’t have to break in any more — they just have to pretend they’re someone else. He adds, “They can do that more rapidly, at a greater scale, with less chance of detection.” This post was written by Rodika Tollefson and first appeared on ThirdCertainty.

The insurance industry has not been historically known for innovation. Given that the industry is steeped in risk-avoidance, evolution is fine, while revolution, with rapid change and disruption, creates uncertainty and potentially increased risk. At the heart of this revolution is a shift to the digital age. Unfortunately, many insurers do not fully understand or embrace this shift, creating a gap between insurer capabilities and market expectations. Insurers sitting on the digital sideline waiting for a clear winning approach that they can copy in a “fast follower” mode are allowing the gap to grow, giving existing competitors within the industry and new competitors from insurtech and outside the industry the ability to expand within the void. The year 2016 saw the revolution in full force with the rapid rise of insurtech that is creating tremendous disruption and innovation in insurance, with digital playing a leading role. From the emergence of startups like Haven Life, on-demand insurers like Slice and TROV and peer-to-peer insurance like Lemonade that have launched as “digital first” companies and solutions, traditional insurers are being increasingly challenged from both business model and market perception perspectives by new entrants. And while some insurers can point to a few sporadic initiatives and say they’re already in the digital game, our experience is that most have done so in a piecemeal way, without an overarching digital strategy that aligns with and informs the overall business strategy. It requires business leaders to shed sacred notions and wake up to the possibilities of rebuilding on a new foundation while maintaining the old structure long enough to transition smoothly.  Meeting the digital revolution with real transformation demands an acceptance that nearly everything industry insiders have known about insurance no longer applies. This requires a true “outside-in” view. Cultivating a deep understanding of customers’ needs and desires should be the first step any insurer takes as it begins or accelerates its own digital transformation. See also: Insurtech: One More Sign of Renaissance Defining Digital What do we mean when we say “digital”? Defining this – or at least coming to some common understanding – is essential to wise decision making when it comes to digital investments. Wander the streets of any insurance enclave and ask every insurance company employee you run into what “digital” means in the insurance context, and you are going to get a lot of different answers, more than a few of them self-contradictory. Definitions can range from narrow to broad, although, in our experience, most insurance company personnel stick with a narrow, capabilities-focused view of what digital is:  “Digital means a portal” or, slightly more broadly, “Digital means a tool or tools for enhanced customer communication.” From our perspective, these are too restrictive – because digital is not just about the technology. It’s about the people, processes and technologies that allow insurers to understand and interact with stakeholders – insureds, agents, brokers, partners, internal staff, etc. – in compelling, consistent and personalized ways. Transforming From the Outside-In So how do you create those compelling, consistent and personalized experiences for customers? The first step is widening the aperture on who a “customer” is. It is not just insureds, nor even agents nor brokers, which have been the focus of portal solutions. This narrow view leaves out a range of other stakeholders across the value chain that interact with the insurer and each other and are ripe for digitalization. Digital initiatives of some kind are almost universal in the insurance industry. It is rare for a company in any industry to not have at least a simple Web page. But what insurers do not consistently consider is defining what they mean by “digital,” what they want to achieve and how all the pieces fit together holistically to get a solid return on digital investments. Many insurers take a very tactical approach to digital strategy and investments, focusing on discrete capabilities rather than taking a business-need-driven approach. To make matters worse, the capabilities are too often based on internal stakeholders’ views rather than the external “customer” – the classic “inside-out” approach (aka, “build it and they will come”). The more effective approach is to deeply understand your customers by mapping their interaction journey across the value chain. This is the “outside-in” approach that will shape the digital strategy and priorities. Creating a digital strategy includes key building blocks. Insurers must outline their objectives and map customer journeys as steps in a calculated progression of the insurer toward a continuum of integrated digital initiatives. But no matter what the strategy and priorities are, they need to be based on the customers themselves. Whether through surveys, interviews, workshops or some combination, it is essential to step outside of your company walls and view the process from the perspective of the customer. It is also important to look outside of the insurance industry for guidance. Majesco’s own research studies with consumers and small and medium businesses revealed that insurance is in last place compared with other industries when it comes to ease of researching, buying and servicing products and services – even below the cable industry! The studies show that ease of use is very tightly connected to Net Promoter Scores (NPS), and we know from industry research that NPS scores are a key indicator of growth, profitability and customer loyalty. Insurance is clearly different in many ways from those other industries, but lessons and inspiration can and should be gained from their success. Why Is it Different This Time? You may think we;re just going through another fad. But there are key reasons why digital transformation is different than previous business modernization initiatives, such as e-business. From our perspective, it comes down to two overarching reasons. First, customers are the drivers. Whether those customers are individual policyholders, small business owners, large business employees, insurance employees or distribution partners, they are people who use digital technologies every day. Their digital demands are driving this shift, often based on their digital experiences with other businesses and industries. This is often referred to as the “Amazon effect.” And second, the digital revolution is led from outside of insurance. Relevant stakeholders experience high-end customer engagement from non-insurers on a regular basis To paraphrase Paul Papas, head of IBM’s Interactive Experience, the last best digital customer experience someone has anywhere is what they now expect everywhere, even from their insurance companies. Where to Start Given the range of things to consider, it can be difficult to know where to begin. Many insurers have started with sales, marketing and distribution. These are natural starting points. A host of insurtech startups have also focused on these areas, offering tremendous innovations and best practices from which insurers may derive their own transformational lessons. But there are several other areas of the value chain that can capture needed efficiencies, value and improvement through digital transformation. Enrollment, claims, product development, policy issue and service are all great starting points for a digital transformation and can have a profound impact on customer satisfaction and efficiency. In coming blog posts, I will explore each step in the value chain and the potential impact on each from digital transformation. See also: 5 Cs of Transformation in Insurance   Final Thoughts If you’re reading this, you’ve probably already begun your digital journey, or are at least thinking about doing so. I hope so! The gap between what customers expect and what insurers are able to provide is growing daily and rapidly into a chasm that will be increasingly difficult for many insurers to traverse. And it is only going to get tougher. The pace of change is accelerating, and the gap is widening and becoming harder to bridge. Those who don’t make moves to bridge or at least slow the widening of the gap are going to be left behind. It is a time of great change in insurance. A rebirth – a renaissance – of the industry is happening with the customer at the forefront. While it can be frightening, it is also exciting. It is time to embrace the shift and begin your digital transformation! For a deeper look at this topic, please see our recently published white paper, Insurance in the Digital Age: Transforming from the Outside In.

When it comes to adoption of technology, simple is most often better than complex. Steve Jobs and Apple went to great lengths to make their products simple. Without user adoption, products fail. Current technology trends continue the move toward simplicity with the advent of artificial intelligence and personal assistant tools like Amazon’s Echo and the Google Home. Before you know it, these tools will enter the benefits world. The question is, who is going to be first and best? And if I am a benefits broker, how does this affect my business? While many brokers are aware of the vendors that call on them or have booths at industry conferences, I believe the benefits technology race is going to heat up, with new competition entering the market. These new competitors see the market opportunity to automate large segments of our economy, including health insurance and healthcare. You may have heard of some of these companies, like Microsoft, Google, Salesforce.com and Apple. This would be in addition to current leaders such as ADP and Paychex. The stakes of the game will change, and the price of entry, from an investment standpoint, is in the hundreds of millions of dollars. Those with the capital will quickly outpace those with less capital. Don't be surprised when you start to see major mergers and acquisitions in the HR and benefits space. Could Microsoft buy Ultimate Software? Why not? Microsoft already purchased LinkedIn and recently hinted at getting deeper into the HR space. See also: Could Alexa Testify Against You?   When I look at products like the Amazon Echo and Google Home, I see products that have very quickly grabbed market share, with high rates of adoption. My wife, who is not an early adopter of technology, quickly became a user of Google Home. Why? Because it is easy. Would she have a better understanding of her health insurance if she could simply ask Google? Absolutely! Benefits technology, on the other hand, has not had broad adoption by employees. Yes, employers have bought systems or brokers have given them away, but when you look at utilization on the employee side it is abysmal. I believe the reason for this is because there is not enough value as a stand-alone solution to generate broad adoption. Keep in mind that the majority of people hardly use their healthcare in a given year, so there is little need to access such a system. I don't know about you, but I can hardly remember the login to my computer, never mind something I may not use for six months. The next generation of technology in the HR and benefits area is going to have broader and "everyday" value, while being much easier to use. Market-leading vendors, especially those with a great deal of capital, will invest in the latest technologies to try to win the technology race and gain more customers. And before you know it, you will be saying the following: “Alexa, is Dr. John Smith from Boston in the Blue Cross network?” “Ok, Google, request Friday off from work.” “Hey, Siri, how much does the average office visit cost?” “Alexa, what is the balance of my 401k?” “Ok, Google, transfer $500 from my savings to checking.” The advancement of technology and artificial intelligence has enabled many to have more personalized user experiences. Your Amazon Echo will "get to know you." Maybe in the near future your doctor will get to know you a little better, too. Many benefits brokers have chosen some technology vendor with a mission of putting as many clients on the system as possible. This is a risky position competitively as more advanced solutions from highly capitalized companies come along. I don't know many sales people or business owners in any industry who like running around with the eighth best product. Even more so when it is not necessary. The market and your customers do not care if you have invested thousands of dollars on some technology that may quickly fall out of favor. One should take the advice of Jack Welch, ex- CEO of General Electric, who once said, “If the rate of change on the outside exceeds the rate of change on the inside, the end is near.” For those who have purchased the Amazon Echo or Google Home, you don't have to look far to see that the outside world is changing faster than the inside. The health insurance and healthcare industries often feel like they are moving at a snail’s pace. Private exchanges were lauded as change, when they really are a reincarnation of cafeteria plans from the '80s. See also: Why 2017 Is the Year of the Bot   With the Trump administration, changes in health insurance legislation may create a shift that empowers the consumer. The industry may need an army of people on the front lines to help the industry move to a whole new paradigm. The vendors will need help and the employers, and employees will need it, too. The technology is there. Alexa is ready. Are you?