The college labor market is looking better than ever. It is important to make sure you are staying competitive when it come to recruiting college grads. They are an important group for employers to target when hiring new employees. In this infographic, we will answer some key questions for recruiting college grads such as, where do college grads look for jobs, and what actions can you take to recruit top grads.  Follow the trends and time-tested methods listed here to find the newest top talent for your company.

Although ride sharing and home sharing are the mainstays of the sharing economy, a new field is rapidly presenting challenges and opportunities. This is the rise of car sharing. Car sharing refers to an online marketplace where travelers can connect with a community of local car owners and rent any car they want, wherever they want it. Two Types of Car Sharing 1. Fleet car sharing This is where businesses such as car2go or communauto purchase and insure a large fleet of vehicles. These may be based in one location or free-floating. There are even companies that specialize in car sharing at airports. 2. Peer-to-peer (P2P) car sharing The second type of car sharing is where individual car owners rent their personal vehicles to private individuals. They do this using a peer-to-peer company that acts as a broker and insurer. Currently, two of the largest players in the peer-to-peer car sharing industry are Turo and GetAround. See also: What to Learn From Sharing Economy   How does it work? Once car owners have registered their cars with Turo (for instance), they can use an app on their smartphone to notify potential clients that their vehicle is available for hire at a set location and for a set period. For example, the owners can drive to work in the morning and park their cars; while they are at work, a renter can pick up a car to run a few errands and then return it before the end of the workday. Turo Offers Significant Benefits Based on U.S. statistics in 2015, Turo anticipates that Canadian drivers can expect to earn approximately CAN$500 per month. Of course, individual earnings will vary depending on the value of the vehicle and how often it is available. In the U.S., one authority claims that car sharers can earn anywhere between $600 and $1000 a month, depending on the type of car. Might not get much for this: But this: Oh, baby! Turo also offers insurance packages for its participants. According to its website, Turo provides “protection against physical damage up to its actual cash value, for collision and most 'comprehensive' causes, including theft.” Turo also promises that participants will be covered by $1 million in liability insurance. The Love-Love-Love Relationship of Car Sharing Car Owners Love It This marketplace allows car owners to earn extra money to help offset the cost of owning a vehicle. And because technology has made it possible to connect people with little or no advance notice, we are seeing a growing number of car owners capitalizing on the trend and using their vehicles to generate extra income. Consumers Love It Consumers without cars also love car sharing. Whether they live locally or are traveling for business or pleasure, car-sharing is an attractive option because it’s a great alternative to typical rental companies. In some cases, it even allows people to forgo car ownership altogether because they can simply rent a vehicle whenever they need it. Pete Moraga, the spokesperson for the Insurance Information Network of California, says, “You’re seeing it primarily in college cities because it works very well for a college campus where students just need cars to do errands and not for the full day." Further, recent research found that car sharing services are now available in more than 33 countries and account for almost 5 million users. Not bad... and the growth continues. See also: The Sharing Economy and Accountability Environmentalists Love It Those who care deeply about our environment love car sharing because it means fewer vehicles on the road, less money invested in non-renewable resources and a reduction in the carbon footprint on the environment. Unique Challenges for Insurers So what does this mean for the insurance industry? A lot. Not surprisingly, car insurance companies haven’t quite fallen in love with this new world of car sharing as they are finding that it poses some interesting challenges. Here are several problems that could affect basic coverage for clients:

1. LIVERY - Will clients' personal policies cover their cars if they rent out their vehicles? Most P2P companies understand the need for commercial auto insurance, but it’s always best to confirm that the coverage is adequate.
2. WHO IS DRIVING? Vehicles that are involved in car sharing are exposed to a greater risk of accidents because they are being driven by drivers who are unfamiliar with the vehicles. Add bad weather and heavy traffic, and owners are putting their vehicles at serious risk. The concern for insurers is whether the client’s premiums are accurately reflecting the increased risk involved.
3. LIABILITY – This is one of the most significant issues for personal auto insurers. Who pays if the car is involved in an accident while participating in car-sharing? Some car-sharing companies are facing this challenge by offering primary coverage in the event of an accident; some are offering comprehensive and collision coverage; and some are even offering third-party liability coverage.
4. TRANSITION – Who is going to pay for damages if there is a dispute about when an accident happened? Did it happen when the owner was using it, or when the renter was? To help alleviate the confusion, some P2P companies are developing data recorders and phone apps to track mileage, time and who is driving the vehicle.
5. DEPRECIATION – Who will cover the cost of depreciation if a car-sharing driver wrecks a vehicle? Will it be the P2P company’s insurance plan or the car owner’s?
6. EXCLUSIONS – Most insurance policies contain exclusions that will deny coverage if a person has an accident while driving a lent or rented vehicle.

Some of these questions have simple answers, but many will not. Ron Burns, vice president at Guarantee Company of North America, said this concerning this issue, “Unless we have some changes in the actual policy wordings, there are going to be a lot of insurers who stand up and say we won’t pay for that loss.” Intact Offers Insurance to Car Sharers In response to these concerns, Turo has partnered with Intact to offer commercial auto insurance specifically for car owners who are participating in car sharing. How does it work? While the vehicle is being delivered to the renter and during the rental period, the vehicle is covered by Turo’s commercial insurance. When the vehicle is not being delivered or rented, the owner is protected as usual under her Intact personal auto insurance policy. All car owners who are planning to participate in peer-to-peer car rental through a company such as Turo MUST inform their insurance broker to ensure that their coverage is sufficient and accurate. Does Turo Insurance Replace Personal Auto Insurance? No. Car owners need to make sure that they have personal auto insurance, as well. In fact, to even list their car on the Turo marketplace, they need to investigate insurance plans with any of the following carriers:

• Intact Insurance
• Belairdirect
• Capitale General Insurance

Do Car Sharers Need Separate Insurance Plans? Yes. The Turo insurance card does not satisfy state or provincial "financial responsibility" requirements and cannot be used to register a personal vehicle. Do Insurance Providers Need to Change Their Strategy? Yes. With more car sharing startups entering the marketplace, and the relative ease with which savvy car owners can use their assets to generate income, it is clear that the sharing economy is poised for significant growth. See also: Sharing Economy: The Concept of Trust   Insurance carriers need to ask themselves some honest questions as they boldly face this new customer climate:

• How can we adequately face the new challenges in this sharing economy?
• Should we create a unique policy just for car sharers?
• Should we offer them a commercial policy, an excess policy or a base limit?
• How can we stay innovative and capture the changing marketplace?

At a minimum, insurance carriers have a responsibility to engage with and educate policy-holders on many of the issues associated with car sharing. Car sharing may not be the biggest concern in the minds of insurance carriers, but it should at least be on their radar.

In the late 1990s, in the run up to Jan. 1, 2000, insurers deployed Y2K or “electronic date recognition” exclusions into a multitude of insurance policies. The logic made sense: The Y2K date change was a known risk and something that firms should have worked to eliminate, and, if Armageddon did materialize, well, that’s not something that the insurance industry wanted to cover anyway. Sixteen years later, one would expect to find Y2K exclusions only in the Lloyds of London “Policy Wording Hall of Fame.” But no so fast. Electronic date recognition exclusions are still frequently included in a variety of insurance contracts, even though it’s doubtful that many folks have given them more than a passing glance while chuckling about the good old days. And now is the time to take a closer look. Last month, various cybersecurity response firms discovered that a new variant of the Shamoon malware was used to attack a number of firms in the Middle East. In 2012, the original version was used to successfully attack Saudi Aramco and resulted in its needing to replace tens of thousands of desktop computers. Shamoon was used shortly thereafter to attack RasGas, and, most notoriously, the malware was used against Sony Pictures in late 2014. Shamoon has caused hundreds of millions of dollars of damages. The new version, Shamoon v2, changes the target computer’s system clock to a random date in August 2012 -- according to research from FireEye, the change may be designed to make sure that a piece of software subverted for the attack hasn't had its license expire. This change raises issues under existing electronic date recognition exclusions because many are not specifically limited to Jan. 1, 2000; they instead feature an “any other date” catch all. For example, one of the standard versions reads, in part: “This Policy does not cover any loss, damage, cost, claim or expense, whether preventative, remedial or otherwise, directly or indirectly arising out of or relating to any change, alteration, or modification involving the date change to the year 2000, or any other date change, including leap year calculations, to any such computer system, hardware, program or software and/or any microchip, integrated circuit or similar device in computer equipment or non-computer equipment, whether the property of the Insured or not.” See also: Insurance Is NOT a Commodity!   By our estimation, this exclusion is written broadly enough to exclude any losses resulting from a Shamoon v2 attack, if indeed the malware’s success is predicated on the change in system dates to 2012. Given that the types of losses that Sony and Saudi Aramco suffered can be insured, firms shouldn’t be caught off guard. We advise a twofold approach: Work with your insurance broker to either modify language or consider alternative solutions; and ensure that your cybersecurity leaders are monitoring your systems for indicators of compromise, including subtle measures like clock changes.

Everywhere you look, marketers and companies are promoting the merits of “social marketing” and “social selling” for insurance producers, and there is certainly value to be derived from content marketing and from increasing brand awareness. But social marketing and social selling don’t lend themselves to insurance. There are four myths about social media that an insurance producer has to account for to reach his ideal target client and reach his sales goals. Myth #1. Social media marketing is useful in and of itself. Yes, it’s inarguable that you need to have a quality LinkedIn and Facebook presence, but that is only a “backstop activity” that allows someone to check you out after meeting you … by some other means. As one blogger recently wrote, LinkedIn is a place for “hunters and the hunted.” Most people don’t go out to a place like LinkedIn (or Facebook) to find or to shop for an insurance provider. All the carriers and brands are on those sites, shouting positioning messages and trying to get noticed, but more than 75% of LinkedIn users go to that site just once a month, or even less often. So, don’t expect that people will find you on social media and that you’ll be distinguishable. See also: 4 Marketing Lessons for Insurtechs   Myth #2. Content is king. Publishing good content makes a lot of sense as it can add authority and credibility about who you are. But throwing content alone into your social stream is like casting a big net onto the waters hoping to catch someone swimming by. When you push content out broadly to your networks and your contacts, you’re expanding your reach but are still just hoping that someone will swim into that net and want to have a further “discovery” conversation. How’s that working for you now? Myth #3. I can get noticed by being active in the social marketing stream. Don’t fool yourself. Ask the question: Who is my ideal target client, and how noisy is that person’s world? With all of the messaging coming at us all every single day, how can you expect to get enough mindshare to stimulate a response from whomever you’re targeting? We’re all inundated and have created barriers so that only those people we already trust are let in to our worlds. The walls are only going to get higher, and social marketing will become even less effective. Myth #4. Mass promotion using social marketing tactics fits my audience and will fill my sales funnel. Wait! Just stop and ask yourself: Why do people now choose you as their insurance professional? Then ask: How many leads do I get now from my social media sites? At the top of the list as to why people choose you will be reasons like trust, relationship and your proven competence. But how can a prospective new client get to learn about you and your character and competence without you focusing on building a highly engaged relationship? If I glance at your social media pages, I can do it quickly and privately. You won’t even know, and then I’ll be gone. You can’t build trust with these drive-by lookers. You need to focus first on building connections that really make the walls come down or the doors open, and no amount of mass or social marketing can make up for your investing a part of yourself into the personal relationship. You’re in a market where people and relationships matter the most, so this is where your focus should be. Mass “social” tools are actually un-social and are a poor substitute for building a true one-to-one connection. The Right Approach In my firm, Refer.com, we know how valuable a focused, personalized, relationship-marketing approach can be for insurance producers. We have seen how, in less than six weeks, a producer can gain eight to 10 new clients and can generate referred sales opportunities each and every month thereafter. We urge our clients to build their quality LinkedIn and Facebook pages and gather their great content to provide to the connections that they’re making but to focus on building highly engaged, one-on-one relationships with a small group of people. This includes clients, other professionals, connectors and influencers in your marketplace. Then, initiating a continuing, “high-touch,” personal connecting plan enabled by a sophisticated app will turn those key people into focused sources of introductions and new-client referrals. See also: How to Capture Data Using Social Media   You’ll quickly set yourself apart from others in your area who are undisciplined and unfocused while you’ve built a team of committed partners working together to help you grow. My next article will present the reasons why this approach is guaranteed to change the direction of your business and fill your prospect pipeline with high-quality opportunities. And then we’ll show you, step by step, exactly how you can easily make this work for you.

The American prescription crisis is no longer coming. It’s here. And we need to focus on how to address it. According to a study published in the Journal of the American Medical Association in August, for each person in the U.S., $858 is spent annually on prescription drugs, compared with an average of $400 per person across 19 other industrialized nations. Prescription medications now compose an estimated 17% of overall healthcare expenses. How did we get here and who is to blame: the manufacturer of the drugs or the American drug distribution channel? Both parties are pointing their fingers at one another, with the flames being fanned by the media and government. Who should the consumer believe? Unless you are living in a cave, you have heard or read about the EpiPen pricing scandal. The manufacturers’ CEO, Heather Bresch, claims that more than half of the new $608 list price is absorbed by the distribution channel. She says the huge price increases are not her company's fault and attempts to justify the increased price. Is she right, or is she trying to pin the blame elsewhere for her pricing decisions? See also: EpiPen Pricing: It’s the System, Stupid   Drug manufacturers, in general, complain that their net incomes continue to remain flat or even decline. They show their financials as evidence and complain about the ratio of the list price of their drugs vs. the realized price, a figure known as “gross-to-net.” When rebates paid by the manufacturer outpace the price increases by the same manufacturer, it is easy to understand why the figure remains flat or even declines. The pharmacy benefits manager (PBM) serves as the largest component of the manufacturers' distribution channel, charging a margin/fee as well as collecting a rebate for their services. Somehow, they have redefined the laws of nature by figuring out how to consistently convince their clients that they are saving money, while showing Wall Street steady revenue growth. The crisis is here, and as an employer you should be up at night wondering how this crisis of prescription costs affects you. The numbers don’t add up, and you are paying for the deficit.

Many P&C carriers are realizing the value of smart glasses for claims management, underwriting and training but are struggling to successfully implement the technology. Smart glasses enable features like hands-free video and streamlined documentation that improve an adjuster’s efficiency when responding to a complex claim. But, even though 81% of CIOs believe wearables will eventually enter the workplace, integrating the technology past the “science experiment” stage is a challenge for many carriers. An organizational commitment to robust connectivity and security fundamentals are sometimes daunting prerequisites to a successful wearables program, but the biggest obstacle isn’t technology-related; it’s change management. This guide provides implementation best practices built from successful deployments. These strategies illustrate a “validation-to- production” road map to scale smart glasses technology within your systems. See also: Wearable Technology: Benefits for Insurers   You will also learn which technology features provide immediate out-of-the-box value and which to defer until you’re fully scaled. Whether you are already running a validation program or doing research for future implementations, this guide covers how to overcome pitfalls, identify essential members of a project implementation team and generate return on investment (ROI) faster. Common Obstacles Surveys of carriers exploring smart glasses revealed that nearly every unsuccessful implementation came down to three factors:

• Scope Creep: People are often blinded by the “cool” factor of emerging technologies. They stop thinking in practical terms and instead specify outside-the-box features that are unrealistic or cost-prohibitive for a pilot.
• Slow Decisions: Carriers that succeed with smart glasses are the ones that test, measure, interate and move fast. You should evaluate challenges and test solutions as soon as possible rather than agonizing over options.
• Team Alignment: Successful implementation requires continuing collaboration among project management, the executive team, IT and end users, as well as any external stakeholders, such as customers, who may be affected.

The Vuzix M100, pictured above, is one of the many smart glasses capable of delivering value from day one. Visit our smart glasses comparison for more details on wearable devices from Google, Epson, Vuzix and ODG. Features Your Pilot Should Include for Rapid Value Risk-control skills are in high demand, and senior risk auditors dislike heavy travel requirements. The features listed below help major carriers use remote collaboration to reduce travel for senior risk controllers while simultaneously training new adjusters and risk control auditors.

• Video Collaboration: Simultaneous two-way video and audio allows experts to remotely assist front-line workers any time, anywhere, on-demand. Workers can broadcast live video feeds to allow the expert to “see what I see” for troubleshooting, training, supervising, inspections and more. Enterprises have paid for their wearables validation program in a single day from travel savings alone.
• Annotation: Field teams can capture images and send them to back-office experts for review. The back-office experts can then mark directly on the images, make notes and upload those annotations directly to the field teams’ smart glasses in real time.
• Documentation: Insurers in the field can save valuable time per job by using smart glasses to upload captured audio, video and images to the cloud.

Who Should Be Involved? We often joke that every major carrier has a pair of Google Glass sitting on a shelf somewhere. Someone from IT typically procured those smart glasses with the best of intentions, but simply ordering hardware without an implementation plan or assigned project roles will not generate value. Implementing a disruptive, innovative technology requires overcoming people’s inherent resistance to change. A project management team, which includes consistent and visible involvement from senior leaders and a communications plan, are the first steps to successful change management. See also: The Case for Connected Wearables   Decisions should not be made in a bubble or based on a bare minimum of heavily filtered information delivered to senior leaders via status reports. The executive team should have a keen understanding of project deadlines to provide guidance and remove roadblocks for the project management team. In our experience, a successful implementation team includes: a project manager, a technical expert, an executive leader, an end-user manager to champion the project and a customer success manager provided by the technology vendor. Rarely is technology the roadblock between idea and value. Instead, the difference between success and failure is a keen attention to a rigorous experimentation process. Having the right team in place and making sure the team understands the desired outcomes of the experiment will improve your ability to generate faster value and adoption. Wearables are not right for every company. Better to experiment with a validation program today to explore the viability of wearables before you are playing catch-up with competitors that have been using this technology for years. You can download the full white paper for free here.

Insurance is mostly sold on the basis of ignorance, not information. Innovative insurers have an opportunity to change that dynamic. Recently, I bought a small television for my bedroom. At $229 for a modest luxury, the purchase was not a life-changing event, and though I’m not entirely happy (the sound is a little tinny) the consequences of the disappointment are minor. I was able to make a wiser buying decision about that TV than about my homeowners insurance, which cost much more and for which the consequences of a bad decision could be catastrophic, if I had a major loss and bought the wrong coverage from an unreliable company. My lack of knowledge about my homeowners insurance is because insurers market ignorance -- presenting a major opportunity for innovative insurers to devise systems that enable consumers to make better buying decisions. Three factors entered into my TV buying decision: product features, price and quality. 32-inch or 40-inch screen? 1080p or 720p? Smart TV or traditional? For each of those features, how much would I have to pay? And how reliable was the TV likely to be: Samsung vs. Sony vs. LG? Online and brick-and-mortar retailers gave me all the relevant information about product and price, and Consumer Reports and other review sites told me a lot about quality. See also: Innovation — or Just Innovative Thinking?   Now think about buying homeowners insurance. Few if any legacy insurers provide a sample policy -- the full description of product features -- prior to purchase. Some will provide a summary, but the summaries tend to be sketchy at best and don’t provide an adequate basis for comparing policies between insurers. Information about company quality is mostly provided by the warm and fuzzy feeling generated by television commercials; what empirical data exist -- Consumer Reports again and state insurance department consumer complaint data -- is of limited value. There are many reasons why insurers don’t provide adequate product or quality information, but the important questions are whether insurers, particularly innovative insurers, will change this situation and, if they don’t, what else can be done in response? Some innovative insurers and intermediaries are making inroads. Lemonade, for example, promises a summary of coverage and sample policy after a customer applies but before he or she pays, and it gives some information on loss ratios, though, as a start-up, of course it has no claims history so far. Getmargo.com offers an insurance advocate to explain policy terms, something good agents always have done but something that has declined with disintermediation. If those efforts demonstrate a market for information, other companies may follow suit. But those efforts just scratch the surface. As long as personal lines insurance markets are dominated by ignorance rather than information, there needs to be another type of response that does not depend on the market: better regulation. That’s one part of the Essential Protections for Policyholders, a project of the Rutgers Center for Risk and Responsibility in cooperation with United Policyholders. For example, the Affordable Care Act requires a summary of benefits and coverage answering questions such as “What is the overall deductible?” and “Do I need a referral to see a specialist?” The same kind of form could be required for homeowners insurance and published on state insurance department websites. At the other end of the process, most states collect claims data -- the proportion of claims closed without payment, the median time to payment of a claim, and so on. Those figures also could be made publicly available as a tool for comparing the reliability of different companies. See also: The Future of Insurance Is Insurtech   Insurance is a market commodity, but there are significant failures in the market for insurance information. Innovative insurers have an opportunity here, but until they act, better non-market solutions through regulation are needed.

While the number of usage-based insurance (UBI) policies reached 14 million at the end of September 2016, most insurance companies are still overwhelmed by the challenge of using collected data to rate their customers’ driving habits. This conclusion is based on analyzing the world’s 27 largest UBI programs, including those of Admiral, Allianz, Allstate, AXA, Generali, Desjardins, Direct Line, State Farm, the Hartford, Unipol, Uniqa and Zurich. See also: Why Exactly Does Big Data Matter?   Progressive, the No. 1 telematics insurer globally, still uses a temporary device and does not collect GPS data. Unipol, the No. 2 player, still only collects mileage data from its customers. We believe, however, that the prehistoric age of connected insurance analytics is ending. The era was based on the premise that all policyholders are reluctant to be “tracked." But with most of us giving daily credit card, fingerprint, driving speed or location details to companies such as Apple, BMW or Vodafone, how to make sense of the self-censorship that insurers apply to their programs? The truth is that more data benefits insurance companies… and the careful drivers! At the center of this change is advanced data analytics – the ability to extract insights from real-time data sources and discover risk-predictive patterns. Our analysis, detailed in the Connected Insurance Analytics report, shows that the glaciation period’s ice is melting and that all the key insurers are now moving. See also: Data Science: Methods Matter (Part 3)   Progressive started a vast recruitment plan to attract data scientists. Generali also made a strong move by acquiring MyDrive, an analytics provider with early footsteps in smartphone UBI. Allstate just created Arity, which will collect data on drivers and sell analytics products to third parties. Simultaneously, Unipol created Alpha, a self-standing analytics and telematics operation. The bulk of insurance companies is yet to act. To help them adapt to this new climate, Ptolemus published the Connected Insurance Analytics (CIA) report as a step-by-step guide to advanced analytics. It describes, analyzes and illustrates the process by which advanced analytics companies take raw driving data and transform it into real-time, individual risk profiles. The investigation shows that acceleration, braking and mileage are the most used -- unsurprisingly -- but also that the range of factors is much wider and illustrates the complexity involved in selecting the correct criteria. To offer a predictive driving score, the report demonstrates that insurers must gain a deep understanding of driving conditions. Adding contextual data, such as road type or relative speed, is a necessary step to price customers fairly. The full article from which this is extracted is available here.

The insurance industry is a $4.6 trillion market worldwide that lags when it comes to digitization and providing consumers with a great experience and service. We are looking at the five main challenges that startups face. We have covered Challenge No. 1 here and Challenge No. 2 here. In this article, we will look at Challenge No. 3. Challenge No. 3: How do you create an insurance structure that supports disruption, dynamic operations, high-quality service and the relationship with (re)insurers. Most startups will begin as a broker or, more likely, a managing general agent (MGA), acting like an insurer without having a fully licensed underwriting insurance vehicle. MGAs are the fastest way to start, but they can quickly become constraining. See also: 5 Challenges Facing Startups (Part 1)   Some of the issues that may arise and, therefore, need to be managed as an MGA include:

• Cultural challenges: Insurers that are established organizations are used to working on different timelines than startups, and this could slow the innovation. In addition, having an outside partner may restrict the flexibility to innovate or differentiate over time.
• Challenges of product innovation: Startups need to get to market as soon as possible and test their value proposition and customer engagement. Starting as a MGA means they will rely on third-party insurers or reinsurers for support in the product development process. This, by definition, will be time-consuming (how time-consuming will depend on the in-house expertise of the startup.) This approach may ultimately result in limited differentiation because products or variations will need to be available to multiple startups.
• Restrictions in the speed to learn and adjust: Most critically for innovation, scaling, operating flexibility and profitability are the people capacity and IT systems. It is very important to be able to adjust the product, pricing and marketing from actual operational experience and performance in a dynamic way. This is more challenging when the startup does not control the complete value chain and decision-making and when expertise is external to the organization.
• Challenges of meeting service standards: With key elements of the insured service resting with outsourced parties (including traditional insurers), the challenge of ensuring timely, fully automated and friendly service will be great. For example, buying or changing an insurance policy with a startup provider is one thing, but receiving a poor claims experience from a third party partner could hurt the brand and reputation of the startup.

The alternative to an MGA is creating a fully licensed insurance carrier, which is cumbersome. This involves regulatory approval, up-front committed capital from investors, assurance that the processes are in place for compliance (e.g Solvency II), that there are funds to absorb initial startup losses and that there is a detailed business plan. In addition, while becoming a fully licensed insurer gives more options and flexibility to address the issues for MGAs, it does not remove the problems entirely. The greater danger is that this process will distract from the startups' focus on customer testing and on providing a compelling minimum viable product. Takeout Getting to market and focusing on customer testing is key — and an MGA allows this. An MGA setup ensures speed to market at minimal regulatory hurdles and low capital needs. Reinsurers and large insurers are increasingly open to offering products and underwriting capacity directly to startup MGAs, as well as policy administration, renewals and claims services and access to a network of claims partners. Do not forget to talk also to small insurance companies. There are some players that could be very helpful in product development and when it comes time to market. See also: Startups: How to Find the Right Partner   Long-term scaling and profitability require a company to set up its own insurer — plus build a full-stack platform and service capability. We believe that, to be a really successful startup, you will quickly need to employ specialists in pricing, claims and marketing as well as have a full-stack technology platform. In addition, you will need to assess whether the MGA or licensed insurer route gives you the right structure over time to achieve your goals. The benefits of being a fully fledged insurer are full control of product manufacturing and operational flexibility, as well as greater access to reinsurance capital and protection. We are curious about your perspective.

Connected insurance represents a new paradigm for the insurance business. This new insurance approach is based on the use of sensors for collecting and transmitting data on the status of an insured risk and the deployment of big data capabilities that transform raw information into actionable knowledge along the insurance value chain. The insurance sector, which is considered to be fairly traditional and resistant to change, is currently being overtaken by this transformative paradigm. Connected insurance represents one of the most relevant trends, considering its potential impact on the profitability of the insurance business, the productivity of each carrier, proximity to clients and portfolio persistency. Analysis by the Connected Insurance Observatory—a think tank created by Bain & Company and Italy’s National Association of Insurance Companies (ANIA)—shows how this new approach is starting to pay off. The auto insurance sector is being transformed by auto telematics, a technology undergoing experimentation in business-insurance lines, specifically the Internet of Things (IoT). See also: The Future of Insurance Is Insurtech   Let's look at the Italian market’s experience and the key elements of the business opportunities presented by connecting an insurer with its customers and their risks. The experiences on the Italian market Italy is recognized as the most advanced auto insurance market at the global level for telematics. Leveraging the experience of the auto business, the country is affirming its position as a laboratory for the adoption of this new paradigm by other business lines. The fact that the Italian insurance market represents the state of the art for connected insurance gave rise to the idea of creating the Connected Insurance Observatory as a think tank to help generate and promote innovation in the insurance sector, offer a strategic vision and stimulate debate. More than 70% of Italians show a positive attitude to auto telematics insurance solutions, and 26 different insurance carriers in the Italian market are currently offering this product. Telematics-based insurance contracts represented 16% of the personal cars insured in Italy in the first quarter of 2015, according to data from IVASS. This relevance of telematics was highlighted by insurer members of the Observatory responding to a question about the maturity level: 65% affirmed the “the way to manage day by day the auto insurance business was already impacted by the telematics.” This kind of telematics adoption is a complex process requiring many years, due to the cross-functional impacts and the involvement of multiple parties (tech vendors, insurers, distributors, clients). It is important to consider the evolution path shown by the Italian market:

1. Incubation phase: It began in the early 2000s, when first-mover players were studying the feasibility of combining the insurance product with the technology. The main question among carriers was, “Does the approach make sense?”
2. Exploration phase: This commenced in the late 2000s, when pioneers started to achieve volumes from the solution rolled out on the market. In this phase, the average level of awareness in the markets was low, and other players started with pilots based on a “me-too approach”; their main question was, “What is the ROI of this program?” At the end of this phase, in 2012, the Italian market accounted for about 1.3 million black boxes.
3. Learning phase: A few players started to move from focusing on “quick wins” to a more holistic approach. They were able to exploit the potential of the solution and were thus in a position to start pushing the selling phase. Some differentiation began to appear; the approaches became more articulated: Carriers also introduced insurance covers based on self-installed devices— moving away from the myth of the Italian telematics business case only being linked to anti-theft and anti-fraud—and this new approach represented around half of the telematics market’s growth through those years. The key question on the market was, “What is the best way to do it for my company?” Telematics have become mainstream, and this phase was completed by the Italian market in 2015.
4. Growing phase: Currently, the Italian auto insurance sector has reached the point where telematics solutions have traction in the market. Each player will develop its own approach and experiment with further upgrades, introducing multiple segmented products with its offer. The 4.8 million insurance contracts with a black box fitted in the car—a statistic gathered by ANIA in December 2015—is expected to grow to almost 14 million by 2020, based on the Connected Insurance Observatory’s projections.

Figure 1 below highlights the current level of telematics maturity by country and the current leadership of the Italian market: At the end of 2015, 4.8 million Italian contracts accounted for more than 45% of all the insurance contracts active globally, with sensors sending data to an insurer. This sequence of stages seems to be the necessary evolution path for the offering of connected insurance in a new business line. Connected insurance applied to other business-insurance lines have been a hot topic in the last 12 months. Insurance applied on personal lines like home and health is currently on top of the innovation agenda of many insurance carriers. In recent years, five pioneers in the Italian market have introduced house-insurance coverage with sensors and a gateway that sends data to the carriers. More than 75% of the insurer members of the Observatory consider connected insurance to be the most relevant innovation expected in home insurance in the next year. This potential is confirmed by the consumers’ voice: Connected home insurance use cases appear to be able to double the penetration of home insurance in Italy. See also: Not Your Father’s Insurance Industry   The connected home insurance sector is currently moving from the incubation to the exploration phase. The connected health sector is less mature. Some carriers are currently running pilots, and only a couple are already selling a connected health product. Around 40% of the insurer members of the Observatory consider connected insurance to be the most relevant innovation expected in the health insurance industry over the next year. What's in it for the carrier? The connected insurance paradigm opened incredible opportunities in the insurance sector, which underwent a tremendous digital transformation. Insurers can play a new, active role in their relationships with their customers. In a world where analysts project 10 connected things per person by 2020—a figure projected to grow to 200 by 2030–2040, we can calculate the house-insurance value proposition:

• An active prevention service for all the risks that could occur in the house, based on the data coming from the sensors;
• Actions to limit the damages and fix them, when the prevention was not enough; and
• The guarantee of monetary reimbursement limited to the cases of “service failure,” meaning when the two services above were not working as expected.

The three business opportunities The key business opportunities for the insurance carriers are:

1. Achieve a direct impact on the insurance profit and loss;
2. Enlarge the proximity and increase the interaction with clients by delivering a vastly superior customer experience, a proven way to achieve enlarged loyalty; and
3. Create and consolidate knowledge about the risks and the customer base.

The value generation on the insurance P&L was the area more exploited in these years, and one of the key lessons learned was: There is no “one-size-fits-all” approach. Each carrier needs to design its own connected insurance journey based on its own strategy and specific characteristics. See also: Key to Understanding InsurTech   The five value-generation levers The value-generation levers each player must combine to deploy its own approach are:

• Risk selection. Telematics can be used to select risks either indirectly or directly at an underwriting stage. There is the opportunity to generate value with the sole goal of supporting the underwriting phase; without any telematics, the tariff will adjust the insurance rate base on the data gathered. This can be achieved in two ways: 1) Directly, using a set of information coming from sensors to improve the overall quality of the underwriting process; and 2) Indirectly, leveraging the ability of the value proposition to auto-select the customer base. The analyses of the ANIA actuarial department of all the Italian insurance telematics portfolios have shown a claim frequency risk-adjusted 20% lower than the non-telematics one;
• Risk-based pricing monitoring the quantity and level of risk exposure on the basis of information monitored continuously. This personalized price requires the development of new risk models based on the fusion of the traditional insurance parameter with the connected insurance information and the contextual information.
• Value-added services (VAS). It is about enriching the value proposition by adding services built upon data provided by connected insurance. The driver’s journey was already reinvented by innovative services delivered by insurers—beyond the well-known exceptional emergency response and help to the client through a critical situation—enabling many carriers to earn fees for these services. The importance of this aspect will grow exponentially with the volume of claims-reductions due to new-car safety systems in the next couple of decades. VAS could be the insurance sector’s way to stay relevant in the future age of semi-autonomous and autonomous cars.
• Loss control. This impact can be observed from two different perspectives. The first is risk-prevention. Many carriers have this target as a challenge for the next years. Instead, the second area can be one of the most relevant impacts in the short term on profit and loss for the insurers that will adapt their claims processes in a consistent way, as proven by the auto telematics experience. Crash detection and the related anticipation of the FNOL (first notification of loss), as of the stolen vehicle recovery service, have demonstrated their effectiveness in the loss mitigation. Connected insurance reinforces the entire claims-handling process: The carrier can streamline claims-management using the structured and objective information extrapolated from the sensors’ raw data.
• Loyalty and behavior-modification programs. This mechanism generates value from the insurance perspective by engaging clients and directing them toward less-risky behaviors, (mechanisms to manage client engagement and retrocession prizes other than insurance premium discounts), but also by indirectly creating a multi-year reward mechanism to reinforce customer loyalty.

For the full report from which this article is derived, "Connected and Sustainable Insurance," click here.