If there was one overriding theme to CES2017, it was that emerging technology progress seems to be accelerating, with new products and uses spreading across every conceivable human endeavor. My observations from an intense four days in Las Vegas include highlights on the hot trends, examples of some very cool new products, and what it all means for the insurance industry. There were many important and interesting new products announced, although there was the usual assortment of head-scratching items such as a smart hair brush (pun intended), levitating speakers and a smart bikini.

Hot Trends

There are always many articles in the popular press about the hot trends coming out of CES each year. My perspective on the trends has some different twists than the usual.

• Moving from smart to intelligent: More smart objects are now adding AI components to automate recommendations and activate decisions.
• Emerging tech convergence: In many cases, there are two or more emerging technologies that have been leveraged to create a new value proposition.
• French tech rising: French entrepreneurs were at the CES in force. There seems to be a new wave of emerging tech startups and activity in France, and companies now expanding into North America.
• No segment missed: Devices and solutions are available for babies, kids, the elderly, the disabled, athletes, and every other imaginable segment.
• The robots are coming: 2017 is poised to become the year of the personal robot. Robots for household chores, elder care/companions, and other applications continue to advance.

See also: Top 10 Insurtech Trends for 2017   Cool Stuff

There was no shortage of creative, cool new products at CES2017. A few select examples illustrate the range of technologies and use cases for emerging technologies.

• Wearable Airbag: A jacket designed for use by individuals and professionals at higher risk of accidents and injuries, such as skiers, motorcyclists, or construction workers. A fall triggers airbag inflation which reduces injuries. (by inEmotion)
• Personal safety wearable: A small device with cameras and sensors to protect individuals in areas or situations that may be unsafe. (by Occly).
• Equine wearables: Devices to be worn by horses that monitor their location, health, and training progress. (by Equisense)
• Smart Devices for Helmets: Helmet attachments for existing helmets for communication (by Analogue Plus) or brake lights (by Cosmo Connected).
• AI driven chess board: The Square Off board enables chess players to play a virtual match with anyone across the globe and has AI components for training at different levels (InfiVention Technologies).

See also: 4 Technology Trends to Watch for   Insurance Implications

There is no doubt that solutions based on emerging technologies are available for an increasingly wide range of situations. It is essential that insurers keep a finger on the pulse of emerging technologies and the new products and solutions that continue to hit the market. Insurance customers across all lines of business will increasingly be adopting these types of smart, tech-enabled products. There are many opportunities for insurers to partner with or invest in startups, create new value propositions for their customers, help customers reduce their risks, and find new ways to communicate with customers. It is a fast-moving space, and it may be difficult to determine which companies and products will be successful. But innovative insurers must experiment and participate as they reshape the insurance industry.

Have you seen the Geico ad with the talking parrot? A 19th-century ship is boarded, the captain surrounded by pirates. The leader shouts, “Let’s feed him to the sharks,” (pirates cheer and swords are held high) “and take all his gold” (more cheers). The parrot repeats these lines, and adds, “and hide it from the crew. They’re all morons anyway.” Voice-activated IoT devices (which, for this piece, includes smartphones and televisions) are always there, just like that pirate’s parrot. You know the services: Siri, Google Assistant, Cortana and Amazon’s Alexa. Mostly, these fine-featured friends are waiting for their activation command—listening, not recording. When activated, they gather the particulars of your life and beam them into a cloud server where your day-to-day existence is, at least in some basic ways, made better, the improvement generally taking the form of convenience or efficiency. The voiceover at the end of the Geico ad explains, “If you’re a parrot, you repeat things. That’s what you do.” If you’re a voice-activated Internet of Things (IoT) device, you don’t repeat things, but you may transmit them. See also: How Internet of Things Puts Industry at Risk   Is the cost worth the benefit? But all the value of having a digital assistant comes at a personal price that many privacy advocates—including me—worry may come at a cost much higher than the price of, say, the device you need to access the service. The price is your privacy. Unfortunately, it is a murder case in Bentonville, Arkansas, that most forcefully highlights one of the more complex privacy issues connected to digital assistant IoT technology these days. In November 2015, a former Georgia police officer named Victor Collins was found floating face down in a hot tub owned by Bentonville resident James Andrew Bates. There were traces of blood at the scene, and a coroner later determined that Collins had died of strangulation and partial drowning. The smart water meter installed at Bates’ house indicated that 140 gallons of water—much more than usual—had been used on the night of Collins’ death. That pointed to post-murder cleaning. There was physical evidence at the scene, but the prosecutor wanted to know if there was more information hiding on the Amazon Echo that had been streaming music when Collins died. There was the possibility that the device had stored 60 seconds, which is what it is equipped to do, and that it might still be on the physical device. Amazon declined to help with the investigation. (Amazon did not immediately respond to Credit.com’s request for comment.) Why this raises questions It should be said that the producers of digital assistants aren’t trying to create a better pirate parrot. They aren’t in the business of mindless repetition. They are in the business of learning more about you so they can sell you things, or helping others do that, or selling what they know about you to a third party that can use it to make money. There is so much information potentially. Consumers use digital assistants to help with travel, email and messages; they listen to music, check out sports scores and the weather. They can keep a calendar in order, post to social media, translate documents and search the internet. (When it comes to criminals, these devices could be seen as the digital equivalent of a stupid accomplice.) Murder isn’t the best backdrop for discussions about privacy, but unfortunately the protections guaranteed by our courts is nowhere in evidence at the consumer level, so it is often the mise-en-scéne for this kind of article. How much privacy can be expected? If you’re a parrot, you repeat things. If you’re an Amazon Echo at a murder scene, you give rise to serious questions about the expectation of privacy in a consumer landscape that has turned personal preference into a commodity. Increasingly geared toward the conveniences of radical personalization, a digital assistant knows how you like things in your home, but given the inevitability of hacking and data compromises, that means that at least potentially all that information could be used against you—and not just in your personal battle to resist temptation in the marketplace and save money. Without a doubt, it would be easier to talk about the cost of convenience when it comes to digital assistance were we dealing with a case revolving around hacked information used to burglarize a home, or the purloined daily schedule of a popular celebrity who was (supply your own verb) as a result of leaked data. For that matter, it would be easier to talk about plug-and-play cameras that can’t be made secure no matter what you do. But until there’s a body, it seems, no one pays attention, and so these outlier situations often are how privacy becomes a topic for discussion. See also: Why Buy Cyber and Privacy Liability. . .   The digital assistant as a privacy issue may not be a problem for you—some people feel they have nothing to hide—but it is for sure something consumers need to think about before transmitting their lives to the cloud where it may be only a matter of time, or bad luck, before a hacker streams it for laughs or loot. Full disclosure: CyberScout.com sponsors ThirdCertainty. This story originated as an Op/Ed contribution to Credit.com and does not necessarily represent the views of the company or its partners.

Artificial Intelligence (AI) is revolutionizing every industry, and insurance will be affected as well. As already stated in previous posts, AI today is perceived in three different ways: It is something that might answer all your questions, with an increasing degree of accuracy (“the Oracle”); it could do anything it is commanded to do (“the Genie”), or it might act autonomously to pursue a certain long-term goal (“the Sovereign”). My personal definition is the following one:

An artificial intelligence is a system that can learn how to learn, or in other words a series of instructions (an algorithm) that allows computers to write their own algorithms without being explicitly programmed for.

An artificial engine can also be classified in three ways: a narrow AI, which is nothing more than a specific domain application or task that gets better by ingesting further data and “learns” how to reduce the output error. An example here is DeepBlue for the chess game, but more generally this group includes all the functional technologies that serve a specific purpose. These systems are usually quite controllable because they are limited to specific tasks.

See also: 2017 Priorities for Innovation, Automation  

When a program is instead not programmed for completing a specific task, but it could eventually learn from an application and apply the same bucket of knowledge to different environments, we face an Artificial General Intelligence (AGI). This is not technology-as-a-service as in the narrow case, but rather technology-as-a-product. The best example for this subgroup is Google DeepMind, although it is not a real AGI in all respects.

The final stage is instead called Superintelligent AI (ASI): this intelligence exceeds largely the human one, and it is able of scientific and creative thinking; it is characterized by general common wisdom; it has social skills and maybe an emotional intelligence.

Regardless of the current stage of AI development, the insurance industry will be disrupted from several perspectives: first of all, every process that is done manually today will be automatized in a smart way (e.g., claims processing and management) to reduce costs and improve the UX. This would turn into a better fraud detection as well as more efficient loss prevention. The second block is obviously telematics and Internet of Things applications because innovative devices collect new data that can widen the horizon of insurable risks as well as refine the customized pricing. More generally, underwritings and more granular pricing will be better defined using machine learning techniques that spot out unknown meaningful correlations. Finally, customer acquisition and experience in a sector which is historically reserved for human agents will become completely digital: chatbots, more effective customer classification and targeting, and personalized contents and policies are the main immediate benefits from investments in AI technologies.

See also: Why 2017 Is the Year of the Bot  

Historically, insurance is sold, not bought. But AI is coming, and it will undermine this principle. Is the insurance industry ready for such a change?

This article was originally published on Medium.com.

I don’t envy the job of an insurance executive in 2017. The traditional insurers are being challenged like never before. Web-focused insurtech startups threaten the conventional brokerage model the industry has utilized for decades. New MGAs are unlocking fresh sources of data that compel incumbent underwriters to innovate or risk obsolescence. Even the established geopolitical order is being upended by systemic shocks on both sides of the Atlantic, exacerbating risk. Not least of all, an insurance executive in 2017 enjoys no easy choices in deciding where to direct excess capital. On one hand, historically low interest rates prevent insurers from earning their required rates of return through investment of their cash balances. Even if central banks continue to pursue policies that preemptively rein in inflation, it is unlikely that incremental rate increases will enable insurers to reach their target yields. On the other hand, an increasingly competitive underwriting environment is squeezing profits as insurers vie for the same customers. There is a riff on a trendy insurance theme that suits this challenge: “when the market gives you lemons, make lemonade.” In the absence of yield and premium growth, traditional insurance firms need to be open to capturing new market opportunities as they arise. See also: 5 Cs of Transformation in Insurance   One vast and largely untapped opportunity for premium growth is the global solar energy market - specifically insuring the energy production risk of solar power assets. The solar market has grown exponentially over the last decade. Propelled by a virtuous cycle that resembles Moore’s Law – in which cost reductions drive demand and new demand growth further reduces cost – solar power equipment has never been cheaper. This dynamic, coupled with innovative business models that have opened the doors to new customers, transformed solar from a niche industry to a half trillion-dollar market in a little over ten years. In 2020, there will be over a trillion dollars of solar assets in operation. Insuring the energy production of these assets represents a similarly gargantuan market opportunity for new premiums estimated at $50 billion. Why has such a large market opportunity for insurance not been pursued previously? The solar market is not completely new to the insurance industry. Solar power asset owners have had a range of risk transfer options. A solar asset owner might have a policy insuring sunny weather or construction quality, in addition to standard manufacturer warranties on the solar equipment. The problem with these narrowly-tailored options has been two-fold. First, relying on manufacturer warranties for equipment has been a dubious risk transfer strategy for solar asset owners. The global solar manufacturing business is highly competitive with thin margins spread across hundreds of equipment brands. It makes sense – this intense competition has driven the cost declines that have helped facilitate the market’s growth. But it also means that many manufacturers are forced to exit the market altogether, leaving the validity of their warranties in question. Second, and most importantly, holding so many different policies creates burdensome claim processing, decreasing the value of insurance for asset owners. If a solar power asset does not produce as expected, the various insurers holding risk have been prone to attribute these impediments to factors not covered by their policies. Weather insurers will blame construction practices, the construction claims adjuster attributes problems to equipment failure, and so on. This “passing of the buck” on liability diminishes the value of these policies, consequently suppressing the market opportunity for insurers. A complete production insurance offering, wrapping all of these risk factors into a single policy, would solve this challenge. In solar project finance, loans are supported by revenue from electricity sales contracts. Lenders, therefore, chiefly care about one question: will an asset produce the power it is expected to generate in order to yield cash for loan installments? As cautious institutions facing a novel risk, lenders typically issue loans that are up to 50 percent smaller than the size that solar asset owners want. This is far from ideal. Every dollar of project capital not financed by loans requires a dollar in equity, which invariably has a higher cost of capital. By transferring the lender’s energy production risk to an insurance balance sheet, asset owners are able to swap debt in place of equity in project capital stacks. But, of course, how should an insurer get comfortable with this new risk? How can insurers be confident they can underwrite this risk? As clear as this new opportunity is, insurers still face hurdles when determining the best approach to entering the solar market. The barrier for insurers is how to have a clear understanding of the new risk pool they would be assuming. See also: Shaping the Future of Insurance The missing bridge between the solar market and insurers has been the availability of historical asset performance data. Would-be MGAs assessing the solar market quickly discover that they lack the actuarial data necessary to offer competitive policies that fit the solar market need. Instead, MGAs seeking to enter this market would be forced to rely on proxies for data, such as theoretical models. The subjective nature of these proxies ultimately undercuts the value created for solar asset owners and reduces the opportunity for new premiums. Big Data analytics can fill this gap by aggregating the performance of tens of thousands of solar energy assets across dozens of variables, including equipment brand, climate, weather, construction company, and more. Such aggregation and statistical modeling would resolve the knowledge gap currently preventing insurers from reaching this market. In my conversations with the various stakeholders in this market opportunity– insurers, potential policyholders, and lenders – I’ve discovered that there is strong appetite for this kind of policy offering in solar project financings. Solar energy production insurance adds value for all of these parties. By allowing more debt in the project capital stack facilitated by data-informed insurance underwriting, asset owners can access a lower cost of capital. Lenders can be confident that their exposure to power production risk is limited. And insurers, faced with challenging macro conditions, will have found a natural growth market to boost premium revenue, profitably. Lemonade indeed.

Change is hard work. Those who don’t think organizational change is risky and problematic should stop and put themselves in the shoes of those being affected by the change.  Considering multiple viewpoints is important to successfully managing change. In reality, the only way you can know just how difficult change is to the organization is to solicit honest feedback from all of the people involved during the period of change. In my last blog, Leading the Change, we discussed how personal change can be — even if it is corporate transformational change. For most people, it still boils down to the individual consideration of “what’s in it for me?” In this blog, we’ll discuss change competency. How well are we, as leaders, prepared to lead change? Is there anything we can do to lead and direct transformation better in ways that acknowledge the risks and rewards of change? For this conversation, it may be best to start with a frank assessment of our own skills and experience with transformational change. Skills and Experience Even confident leaders aren’t necessarily convinced that they have the competency to accomplish change. Almost 60% of managers say they don’t have the right experience to guide them. This isn’t a negative statistic from the standpoint of self-knowledge, think about it, how many managers or leaders have been apart or even lead a change initiative Those who recognize their lack of experience are probably better equipped to take measured steps toward approaching change.  Self-awareness of one’s capabilities enables you to compensate and take action. This includes education and partnering with people with change experience. Effective change managers should listen to their front line people and identify the change enablers. As we mentioned in our last blog, this may not mean simply listening to those who are one rung down on the organization chart, but identifying who their change leaders are by shepherding changes outside the organizational lines and leading in the white space. The real key is listening, and then responding to comments and perceptions so that concerns goes unanswered. Effective change managers will also become champions of good ideas, no matter whose ideas they are. Periods of transformation are excellent times for setting aside internal politics in order to model responsiveness to innovative ideas. This will go a long way toward building loyalty within transformative projects. See also: How to Lead Change in an Organization   Part of a manager’s effectiveness during transformation will be measured in his or her ability to gain the trust and alignment needed to implement the change. So, loyalty and clear communication (“straight shooting”) work hand in hand. The effective change manager needs to have one other trait that is vital — perseverance. As many as 70% of change management projects don’t make their way to completion. They falter on one of a dozen different hurdles. When changes seem too difficult or some aspect of transformation becomes daunting, OR, when some other outside fire or project seems to beg for priority, it is easy for a transformation program to lose steam and die. To be effective, managers must keep their eyes on the end goal and clearly recognize when other elements are threatening to impede. Change Management Competency The best way to stay on course and keep everyone focused on the end goals is to treat change management as an imperative from the standpoint of organizational commitment. Once it becomes an official project, it has to clearly succeed or fail. It won’t live in the nebulous void of possibility. Individuals and teams will be assigned. People will be responsible for its evaluation, design and deployment. A timeline will be made and adhered to. Organizational Change Management will benefit from a team approach, with representation from the lines of business as well as administrative managers and supervisors. It must have senior level ownership, so that it can’t be prioritized out of existence. And, it should use a structured approach with the all of the processes, skills, leadership, project framework and structure of any other major initiative.  However, structure is not enough. Informal communications and leadership is the secret ingredient for success. The one major difference, however, is that the change management process will likely contain process change. It takes a bit of change management to deploy change management. So, it shouldn’t be a surprise if change management teams do things differently. They may end up testing ideas that are employed later as a part of the new organizational framework. For example, most IT projects don’t take individuals into account. There is a goal. Everyone contributes to meeting the goal. In organizational change management, much more attention will be paid to communicating and mapping roles, looking at strengths, knowledge centers, and how these will be utilized more effectively under a new framework. Time will be allotted to simply understanding and communicating the changes. A driving success factor (and a good ongoing mantra) is “People are important.” Understand the Change For organizational change to be effective, people need to understand it. A communication plan will need to be part of the change management project plan. We’ll discuss more about communications in our next blog. For now, however, we can look at why deep understanding is so crucial to success. Too often, companies communicate that change will be happening, but they don’t dole out enough information about the end result, transitional phases or even next steps. This method, or lack of method, breeds fear. Clarity regarding the high level vision all the way down to individual impact will dispel many fears and lead to efficient and effective work throughout the enterprise. The change management team will need to first clearly identify the Target Operating Model. From there, they will be able to understand changes that will occur along the way. This will include levels of change, such as how they might bring change excitement to the current corporate culture. It will include discussions regarding strategy and how multiple strategies may work, but there are reasons for employing the ones they end up choosing. Opening up conversations to why particular strategies are being employed will help keep naysayers from shooting holes in the plan — keeping conversations positive and helping stakeholders stay “on board” throughout the process. Then, employing individual communication plans will further help people to understand the change and reduce fears. Will my next role have more work with fewer payoffs? Will I be gaining a new role, only to decrease in the level of satisfaction I get from what I do? Do I keep my power? Is someone going to be looking over my shoulder more? Hopefully, the answers to most of these questions will be positive. In most cases, the rewards for change, individually, are well worth the efforts involved. Those rewards should be communicated along with any potential risks and drawbacks. In some cases, associates may see that they are possibly going to lose their jobs. These are real fears to conquer and insurers are wise to address those quickly, clearly, truthfully and often — even when the truthful answer is, “We aren’t sure yet,” or “Yes you will.” Open, honest communications enable the organization to put clear plans and incentives in place to treat people as they would want to be treated. See also: The 4 Secrets to Managing Change   Change isn’t easy. Wise organizations will adopt the philosophy that, “We need to give these changes an adequate amount of time, thought and effort.” Majesco helps clients create a vision for the Target Operating Model by looking at how an insurer’s people, technology and process will shift in positive ways. We look at outcomes, such as modernization/rationalization, what business information will look like using company dashboards and improved data tools. We help insurers envision what a no touch/low touch business process will be like. We also assist insurers in creating a positive framework for Organizational Change Management. In my next blog, we’ll look at some of the practical aspects of change, including adapting the change program over time, the methods of communication that should be employed, and managing risk throughout the process.

“It is better to ask forgiveness than permission.” If there is one phrase that should be permanently deleted from the lexicon of the business world, this is the one. The statement is categorically false, both conceptually and legally. The pervasive nature of this attitude, engrained into the psyche of far too many business leaders by the pressures of the competitive world and investor expectations, is a tumor that, try as they might, policymakers and regulators have been unable to excise from the body of commerce for decades. In a March 9, 2016, updated article in the Wall Street Journal, that publication noted that banks have paid $110 billion in penalties relating to the housing crisis since 2010. That is slightly less than the 2016 GDP of Kuwait and more than the GDP of Puerto Rico. That’s right, there are many nations in the world whose total annual gross domestic product is less than the fines paid by banks to federal and state governments and other remedial payments imposed by federal and state enforcement agencies. While an expenditure of such magnitude would plunge many countries into default, these financial institutions continue to do business, continue to make loans and continue, at least in some instances, to engage in illegal and fraudulent activities. This compliance thing isn’t working so well, is it? As we move to a new administration in Washington, there is talk about how to unwind various provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”). Some of the recommendations that would particularly benefit smaller financial institutions should be seriously considered. But the discussion in Congress needs to encompass the scope of issues raised by financial oversight laws over the past two decades – and that includes Sarbanes-Oxley. The various compliance mandates included in that law have not produced the desired results. To be sure, companies have Codes of Ethics and Business Conduct, various training programs to comply with state mandates, anonymous reporting hotlines, and “tone at the top” structures that pass audit standards. From what we have seen over the past several years, however, the auditability of compliance should no longer be synonymous with the effectiveness of compliance. See also: Building a Strong Insurance Risk Culture   As enterprise risk management (ERM) structures become more sophisticated, regulated businesses are at risk of reducing the “ethics” part of compliance. As a law professor once said to me, law schools don’t teach people how to be ethical; they teach people the ethical expectations of the profession. This is referred to as the “tone at the top” in most compliance documents. And yet, per PwC’s State of Compliance Study 2016, while 98 percent of PwC’s survey respondents stated their firms “have senior leadership that is committed to compliance and ethics,” 55 percent stated, “senior leadership provides only ad hoc program oversight or delegates most compliance and ethics oversight activities” and only a meager 36 percent of compliance officers stated they are “inherently integrated” or “play a key role” in strategic planning. A similar observation can be made by reviewing Accenture’s 2016 Compliance Risk Study, Compliance at a Crossroads: One Step Forward, Two Steps Back? Among its observations was, “…only 31% of Compliance functions represented by our 2016 Compliance Risk Study respondents now report to the CEO, representing a 9 point fall over the 2014 level.” Accenture also notes, "The demands on Compliance have potentially resulted in the function struggling to clearly articulate its role within the organization and how it can benefit the Chief Executive Officer (CEO).” As for “tone at the top,” consider the finding in Deloitte/Compliance Week’s In Focus: 2015 Compliance Trends Survey: “Despite the role culture plays in creating an effective compliance program, culture assessment ranked dead last among the responsibilities CCOs have.” These results point to a continuing dilemma. Sarbanes-Oxley (SOX) and Federal Sentencing Guidelines have been around for decades. ERM is relatively a newer regulatory/audit structure, as is the Own Risk Solvency Assessment (ORSA) for insurers, while corporate governance initiatives are the most recent. Each, however, depends on the other. Thus, while it would seem axiomatic that legal and regulatory compliance and business ethics are risk elements and should be fully integrated with all other business processes, clearly, they are not. This ambiguous status is further exemplified by the recent trend of outsourcing compliance, a trend that causes the Securities and Exchange Commission (SEC) some angst. [See: Risk Alert, Examinations of Advisers and Funds That Outsource Their Chief Compliance Officers (November 19, 2016), Securities and Exchange Commission Office of Compliance Inspections and Examinations (OCIE)] As noted in its 2016 publication, Risk in Review - Going the Distance, PwC found that 78 percent of survey respondents said that senior management, “wants a more forward-looking view when it comes to compliance”. Yet, only 27 percent said they had adequate resources to protect the company from compliance risks. We expect businesses to comply with laws and regulations, and we expect executives to behave ethically. But in the evolving metric-driven environment in which ERM and corporate governance exist, we are straining to peg a value to compliance and ethics. SOX, Dodd-Frank, ERM, and other corporate governance initiatives have as their objective driving businesses to make better and more transparent decisions and in so doing protect investors and consumers. But compliance and ethics also require an environment that encourages everyone in the enterprise to say, “Wait a minute…”. See also: Does Your Culture Embrace Innovation?   On Wednesday, January 11, 2017, Volkswagen AG and affiliated Defendants entered a Third Partial Consent Decree and Plea Agreement over criminal violations arising from its diesel automobile program. Part of the Consent Decree requires the appointment of a third-party Compliance Monitor. The Plea Agreement states that the qualifications to be the Compliance Monitor include, “experience designing and/or reviewing corporate ethics and compliance programs, including anti-fraud policies, procedures, and internal controls”. That same day, Forbes Magazine headlined its article on the settlement, “Volkswagen Shares Jump As It Nears U.S. Dieselgate Settlement.” The contributor tweeted, “Volkswagen’s emission scandal is a rare example where failure eventually results in success.” No mention was made of the Compliance Monitor.

A seed stage investor with a 20-year track record of success recently told me, “There are 100 things a founder must get right for his company to succeed, and if he only gets 99 of them right he is likely to fail.” I have heard the pitches of several hundred founders seeking seed funding over the last couple of years, observed more closely the progress of several dozen, and have the privilege of working relationships with several remarkable ones. While the number of “must do” items may be up for debate, it’s tough to get a new company off the ground and put it on a path to sustainable growth. The statistics speak for themselves. Many startups fail. By the way, the “must do’s” are relevant for business builders inside existing enterprises, even including the Fortune behemoths. Here is a short list curated based on direct observation. Your take on which ones to scratch, revise or expand is valuable. So, please share ideas and feedback. 1. They do not solve a real problem. The founder, inspired by a problem he has encountered in his own life, superimposes his use case on the rest of the world. He fails to understand whether the problem exists at sufficient scale among a group of users, with the same intensity and under conditions similar enough to his own to become a business. 2. They lack empathy for users. The founder does not understand what is going on in users’ lives, so he loses out on the context that shapes choices and decisions. He does not connect his own business choices – technology, product and design, for starters, with the emotional needs and desires that weigh heavily on user beliefs and decisions. He assumes people make rational choices. He (and his investors) take misplaced comfort in “hard data” and spreadsheets, and discount the new ROE – Return on Empathy. He loses sight of the fact that all selling is “P2P” – people to people – whether the audience is an individual who is buying on her own behalf, or she is buying on behalf of a business. He does not tune in to the mash-up of demographic, behavioral, and attitudinal dimensions that end up affecting financial results. 3. Their product has no meaningful point of difference. Different for the sake of difference does not matter. Having extra features, however special they seem, can drive up costs with no offsetting benefits. Recently I met a founder, who for two years, along with his product partner has been hard at work turning their concept into a product. He walked me through a presentation. I asked him at the end what the point of difference was, as it was not clear to me. His response could have been headlined in the sales pitches of any of his competitors. Rule of thumb: if users do not see the product as at least 10X better than alternatives, they won’t engage. See also: Dear Founders: Are You Listening?   4. They are not actively listening to the market. Founders almost always, at some level, will ask for and respond to feedback. This behavior reflects a basic kind of listening that is necessary -- but insufficient. Active listeners connect with the world around them. They explore, observe and uncover new insights to discover opportunities and improvements for the business. They are able to translate newly discovered insights into implications and then action steps, and make those action steps happen. They are able to set aside orthodoxies about the sector in which they believe they are operating, and not get trapped in unhelpful assumptions. 5. They affiliate with the wrong people. Resource scarcity is a fact of life at the seed stage. Founders must make the right hires, bring on the right advisors, engage with the right mentors, and build and sustain a network where they are seen as givers and not just takers. Success is a function of emotional intelligence. Can the founder create a culture which supports the passion to fulfill the startup’s purpose is supported? Great talent is scarce. And, however difficult it is to hire the best, it is even harder to fire when things don’t work out. Hiring for “fit” is not about liking a candidate. It is about understanding role accountabilities, skills and leadership profile, the goals to deliver, problems to solve, skills required, and whether the candidate will strengthen the culture and contribute to the team’s success. 6. They do not articulate and operationalize the business model. The founder has identified a real problem, but does not understand how to get from concept to implementation that can lead to sustainable and viable economics at scale. Where are the market gaps? Which scale segments are not well served? What are the economic underpinnings of the solution? Are there, at a minimum, well-founded hypotheses that make sense? Can the founder translate the concept into front to back implementation whose mechanisms are able to deliver on the economics and other assumptions that were sold to investors? And can he pivot away from even the most dearly held beliefs that stimulated the product to form? 7. They are product focused, not user focused. The drive for “product-market fit” applied too zealously and literally can derail a founder. Of course the product has to do what it is supposed to do, do so with quality, and meet the users’ expectations behind the decision to buy, use and recommend. As in any case of “too much of a good thing,” the founder who focuses on the product with blinders on, and does not account for user perceptions, priorities and new or changing needs can end up with an amazing technical achievement that is disconnected from people’s needs. Product focus combined with low empathy is a toxic mix. 8. They cannot sell. A VC friend describing how he qualifies founders pitching for funding recently said, “If the founder cannot sell, run in another direction.” Particularly in the early stages, the founder is the chief revenue officer. Or, if he is the product head, he had better pair himself with a talented sales executive, one who shares the passion for the business’ purpose. See also: Don’t Forget Your Best Strategic Weapon   9. They don’t think they have competition. The founder whose definition of competition is the entities whose products have similar features is missing the point: competition includes any other option the user may choose instead of yours. This includes doing nothing, or sticking with whatever it is they are doing now, however inferior. Inertia can be the biggest competitor. Behavioral economic theory indicates that people weigh the risk of downside twice as heavily as the potential for upside. And of course, with new entrants enabled by ubiquitous access to technology, manufacturing and raw materials, the founder who is not actively listening or is heads-down into his product will miss the warning signals of another upstart ready to overtake him. 10. They cannot sustain the stamina demanded for momentum. While the lingo of the startup world focuses on implementing through “sprints,” getting to a sustainable, viable and growing business with as few stumbles as possible comes from a tight linkage of many sprints into a marathon. If the founder doesn’t have it in him to run back and forth over hot coals for years, with a firewalker’s mental and physical fortitude, it is unlikely he will be able to go that distance.

The announcement of a change to the U.K. law that doubles the number of penalty points from three to six and fines from £100 to £200 for using a handheld phone while driving is a positive move to driving safety. But are we doing enough, or are are we still being too soft? Watching BBC Breakfast and seeing first-hand accounts of people who have lost loved ones to distracted drivers got me thinking that insurtech has a massive opportunity here. One man had eight previous citations for distracted driving (yes, eight!). He is now serving a prison sentence because he couldn't wait to send a text about taking his dog for a walk, and plowed into a cyclist at 65 mph. How should we police this problem, with an already stretched police force and so many other competing priorities for time and funding? See also: Of Robots, Self-Driving Cars and Insurance   A quick quote from confused.com with just this one rating factor changed (adding a hypothetical six points to my record) meant a £128, or 36%, increase on policy cost to me, with a further 31% increase on my excess. The provider also changed in this example below. However, a £200 fine doesn't seem steep enough, does it? Make people feel it, make it £500 or £1,000. Maybe give people an automatic seven- or 14-day ban and make them think twice. Perhaps we also need dedicated "pull over and use your phone here" areas along the road, to reduce temptation. Confession: I have been guilty of checking my phone at traffic lights or when stopped. I have always had hands-free kits so have never held the phone for a conversation, but arguably even with hands free this is still distracted driving. Where is your attention when you are deep in a conversation? My seven-year-old is my best educator. If I go to look at the phone, I get a large loud "daaaadddddyy" from the back seat. Sadly, the driver awareness courses that are given out (instead of points) are only available if you have committed the offense. Shouldn't education be ahead of the game? Prevention is a better cure. Let's get it into our schools and from a very young age. History shows we can make progress. Seat belts have become compulsory (1983 for those in the front of the car, 1991 for all passengers). Drunk driving has gone from being somewhat expected to now being taboo. Enter insurtech. Technology has a huge opportunity here, but there must be a stronger collaboration between motor manufacturers, device makers and policy makers. Why not have your steering wheel do a quick test on your alcohol levels from your hands and, should alcohol be detected, apply Uber-style surge pricing? "Nigel, your price for this journey is 1.8x as your blood alcohol level is above the normal.  Please drive safely. Alternatively, an Uber can be here in six minutes if you would like a ride home." See also: Cars: What’s Driving Disruption and Change   Lets not stop there. We could go one stage further and disable the car from even starting if you are over the limit. Some Ignition Interlock systems are already available to do a breath test before you can start the car. As for distracted driving, when your mobile connects to the car, most of the functions should be disabled, unless you are stationary. You can not watch a movie or change the sat nav on many cars already for the very same reason. Waze users will be familiar with the following screen. Distracted driving is, of course, more than just phones and apps; it's arguably eating, drinking, smoking, crying children in the back seats, but this is today's problem we are solving. Like many who will read this, I am a son, brother, husband, dad and friend. I could not even fathom my life to be profoundly changed for the sake of answering an email, text or checking something else that simply could have waited. One of the most simple campaigns over the years is the #REDTHUMBREMINDER, What do you think? Something insurtech can and should address?

For every object you can think of that we use in our daily lives, there is probably a smart version of it already available or in the process of development: That is one of my conclusions from CES2017. This blog will be a bit different in that it will simply provide a list and summary of some of the mention-worthy smart things I saw at the CES – things that go beyond the typical smart home and connected car solutions that most of us are familiar with. This is but a small sampling of the thousands of products announced, and I will refrain from judging the merit and market for each one. (That would go way beyond the scope of this blog).

Without further ado, here are 20 examples of smart products, some of which are still in beta stages or not available in North America yet. In each case, a company is listed in parentheses, but there are sometimes others offering similar products.

• Portable concussion detection machine that provides 30-second trials of neurocognitive and psychomotor performance (Reflexion Interactive Technologies)
• Smart home anti-hacking device to block cyber-attacks and intrusions based on smart devices in the home (Bitdefender)
• Vehicle windshield display with augmented reality projection via smartphone connection aimed at reducing distracted driving (Navdy)
• Low-cost vision screening via a smartphone attachment and app at $29, perfect for disadvantaged areas (EyeQue)
• Vacuum cleaner shoes with soles that have a suction device to clean carpets while someone walks through the house (Denso)
• Smart radon detector to monitor radon gas, temperature and humidity and provide alerts and history (Airthings)
• Thermal camera for home safety to detect excess heat or flooding and alert the homeowner (Fotric)
• Document security via RFID by embedding a chip in the paper for sensitive paper documents (Yes it is)
• Worker safety via wearables that identify and send alerts of dangerous conditions such as toxic gas or worker falls (Ten Degrees)
• Wearable airbag in the form of a jacket for motorcyclists, horse riders, the elderly and others at risk of falling (inEmotion)
• Smart medication tracking in a pill dispenser to monitor and encourage compliance with treatment plans (PillDrill)
• Smart bikini to ostensibly prevent sunburn (Spinali Design)
• Fitness wearable that zaps bad behavior, a wrist wearable with the typical biometrics, teamed with gamification and a reward/punishment system that provides an electric shock for bad behavior (Pavlok)
• Smart learning tools for kids via augmented reality, smartphone apps and physical props such as cards or a globe (NeoBear)
• Personal safety wearables for individuals in unsafe areas to alert family or police, emit siren noise and record/send video of an incident (Occly)
• Smart patio umbrella, which is solar-powered, has home security features and is connected to the smart home (ShadeCraft)
• Smart desk lamp driven by AI and voice commands to change lighting conditions or take a picture of what is on the desktop (Cerevo)
• Red-light and speeding ticket blocker attached to the vehicle license plate: It creates a flash of light when a red light or speeding camera is detected so the license plate cannot be read (Voxx noPhoto)
• Smart glasses for the visually impaired uses a camera to read documents, recognize faces or identify money for individuals with visual disabilities (OrCam)
• Smart, gamified toothbrush aimed at young children: The toothbrush uses gamification and augmented reality to encourage brushing and monitor usage (Grush)

This list could go on and on, documenting numerous robots, smart home devices, safety devices, drones and new products leveraging all manner of emerging technologies.

See also: Wearable Technology: Benefits for Insurers  

It would be fair to ask what all this has to do with insurance. While some of the smart things will have minimal impact on the industry, there are others that certainly have implications. A few things that insurers should be considering as we move headlong into the connected world include the impact on the customer experience and opportunities related to risk transfer, loss mitigation, goods replacement and behavior modification. Look for more on those topics from SMA in coming research and blogs.

Innovation is an imperative. Fortune 500 CEOs cited dealing with the rapid pace of technological change as their “single biggest challenge." Another global survey of board members and senior executives identified the speed of disruptive innovation as one of the highest risks facing their organizations. Innovation is also the source of great opportunity. More than half of CEOs in a PWC global survey ranked R&D and innovation as generating the greatest return.

Yet, the intense attention on innovation often misses a key element. Many companies are paying attention to immediate challenges and opportunities, including six technological disruptions that might make or break many companies. In my experience, however, too few are being innovative in how they innovate. This is the difference between buying fish and learning how to fish.