Suicide breaks all the rules. Consider the vigilant life-long efforts people make to grow and flourish. Remember the countless reminders received from parents, educators, medical professionals, and other caretakers to remain safe and healthy. Measure the perpetual efforts made to build toward a successful life. Remember the desperation when presented by a threat to life and the efforts made to escape it. Relive the grief at the loss of a loved one. Breath by breath, second by second we focus upon Life. Is it any wonder that people are shocked when someone willfully chooses to abandon this shared quest by completing suicide? Death by suicide powerfully jars our concept of the way life is supposed to be and challenges core foundations such as, “What can I really trust?” When death by suicide strikes the workplace, employees immediately look to its leadership for direction. How those leaders respond when all eyes are upon them offers both tremendous opportunity and serious risk for the subsequent outcomes. At risk is trust. Some will react more strongly than others. (Some co-workers may now be at increased risk for their own self-harm.) But when exposed to this event the primary question regresses to, “How would leadership respond if it was me? How valued am I?” See also: Blueprint for Suicide Prevention   Effective crisis leadership after suicide demonstrates trustworthiness at three levels: Competence, Character and Compassion. These elements are not mutually exclusive and must be in evidence simultaneously. Competence:

• Especially when shaken, people need to experience leadership that has a plan and demonstrates expertise. Acknowledge your own pain but let people see you move forward confidently. People must witness someone who is also affected and fully acknowledges that impact but is strong enough to move forward while sad. There is tremendous power in strong, calm presence. Calm is just as contagious as fear.
• Communicate sensitive but confident belief in others’ competence. Express a firm expectation of recovery and return to a New Normal. Guide people to efficacy through sensitive resumption of familiar tasks and schedules. They need to know you believe in them and will support their success.
• Demonstrate competence by bringing expert resources into play such as the EAP to provide support and guidance.

Character:

• Those led must witness leadership that keeps promises, operates by the rules and “does the right thing.” Suicide breaks rules. Sometimes, suicide feels like a lie. Leadership must cherish shared life-giving values, especially at this time.
• Suspicion and distrust need not be logical to be powerful. Communicate, communicate, communicate. Minus current information, people tend to develop their own, and that misinformation can be very damaging.

Compassion:

• Demonstrate caring. Death by suicide is a very human crisis. Care for the family of the deceased as well as others who are particularly affected. People will equate that caring with the value you hold for them.
• Build community by being visible to groups of affected co-workers and emphasizing the strength available through community. Remind work teams to support each other both emotionally and functionally while they may not be at their best.

See also: How to Communicate Following a Suicide   Do the right thing, and it’s good for business. Crisis leadership aims to mitigate the human, financial, productivity, reputational and morale costs of tragedy. When death by suicide affects an organization, it produces a day people will never forget. Those you lead will not forget. Neither will you. Lead them well. Insurance Thought Leadership’s continuing series of articles focused on suicide prevention is written by the Workplace Task Force of the National Action Alliance for Suicide Prevention, the public-private partnership championing suicide prevention as a national priority.

For many people, the arrival of the New Year heralds the promise of achieving bigger and better things, reaching new heights and perhaps accomplishing things that weren’t done in the prior year. 2017 is going to mark a pivotal year for agents and brokers as insurtech distributors really hit the marketplace with new ways of fulfilling customer sales and service expectations. Agency-carrier connections are a critical issue. Depending on which path a distributor chooses, it can either be a Happy New Year – or it can be a very un-Happy Year. See also: 10 Predictions for Insurtech in 2017 Unfortunately, SMA survey results show that many distributors have a long, arduous path ahead. Sixty-three percent of responders indicated they were mainstream investors in connectivity technology, not investing for differentiation or not investing at all. This lack of investment needs to be reversed, or those distributors will likely face a very sad New Year’s Day in 2018. Small agents with less than $1 million in premiums are in the most defensive position, with 67% believing the No. 1 business driver for investing in connectivity technology was customer retention; 58% of agents with more than $1 million in premium said retention was their main motivation. Being the owner or principal of an insurance agency is not an easy job. There are many factors that contribute to success, but there are also many barriers. Agency survey responders indicated the top barrier to improving connectivity is workflow challenges. It is very important for agency owners and principals to assess why this is the case. If the challenge is internal culture, it is imperative that agency management work to change attitudes as quickly as possible. The other potential cause of workflow challenges is how insurers execute connectivity. Agency management needs to work with insurers on how they connect with the agency. If an insurer cannot change how they deal with connectivity issues, agency owners and principals should assess just how much value that insurer brings to the agency, and if the inefficiencies are worth it. SMA has looked at the connectivity issue from the perspective of commercial lines insurers and personal lines insurers, and now from the agent and broker point of view. There were similar responses to many of the questions asked. For example, conflicting priorities were the No. 1 inhibitor to investment for all groups. There were also some clear differences: For instance, the majority of agents and brokers indicated they weren't satisfied with their connections with insurers, while more than 50% of personal lines insurers believed that needs are being met. Clearly, there is work to be done. While some consumers want a completely automated insurance and sales process, a good number of others want the help of a knowledgeable insurance professional, and they want a personalized experience. There is much opportunity for agents and brokers to deliver on those expectations, but change is needed. See also: 4 Mandates for Agents in Sharing Economy   On New Year’s Day 2017, agents and brokers should make a resolution to adopt technology that will facilitate seamless, straight-through processing to support customer requirements. This is not a resolution that can be broken. Customers are demanding service transparency and real-time execution. There are some emerging insurtech distributors who will be very happy to fulfill the needs of customers with all the bells and whistles customers have come to expect. New Year’s Day 2018 could be a sad day for the agents left behind with a deteriorating customer base.

It's time to reflect on the passing year, mark my predictions from last year and throw some light on what I see 2017 holding in store. In my post from this time last year, I made a number of predictions, so, now, I wanted to look at how I did. Feel free to jump in and see how close to the mark I was and share your perspectives. Reviewing 2016 — How did I do? 1. Fintech and insurtech.  In last year's piece, I said that 2015 was the year of the zone, loft, garage and accelerator and that this would continue in 2016 with more focus. Regarding fintech and insurtech, I was right. We have seen some heavyweight investment (more so in the U.S. and Asia) and no major failures, to my knowledge. Trending up. Points: 1.  2. Evolution of IoT. In 2015, I wrote, “2016 will be the year we all realize (IoT) is just another data/automated question set.” Evolution here is continuing, but not at the pace I expected. New firms such as Concirrus (and many others) have come up with some great examples of managing and leveraging the ecosystem. Points 2. 3. Digital and data. At the end of last year, I said 2016 would continue to be a big area of growth for both. There's been progress, yes, and pace and traction ahead of what's expected. Points 3. 4. M&A will continue but will slow. I think this has slowed this year, with two of the three major regions in the latter half of the year focused on Brexit and the U.S. election. Now, folks are trying to work out where that leaves fintech/insurtech. Points 4. 5. Will the CDO Survive? I said I thought we'd see a move back to the chief customer officer. Well, no sign of my chief customer officers yet! (Although, after writing this, I came across three chief customer officers, so it's a start). Have you ever asked an insurance company or people inside the company “who owns the customer?” To me, we're still product-centric rather than customer-centric. Points 4. 6. New business models. I said last year that we'd need to be clear on what the new business model will be — and what it needs to be. This year, there's been lots of talk in this area, including here at Deloitte in our Turbulence Ahead report. We identified four business models for the future: 1) Individualization of insurance, 2) Off-the-shelf insurance, 3) Insurance as utilities and, finally, 4) Insurance as portfolio. It may take longer for this to materialize, but, without doubt, these models are coming. See my colleague Emma Logan describe these here. Points 5. 7. What we buy and sell. I believed that, last year, we'd move away from a product mindset to become more relevant and convenient. But we're still in talking mode, although the ideas here are evolving rapidly. Expect an all-risks policy in Q2 2017. Points 5. 8. Cyber is the new digital. There has been an increase in the number of products and players, but there still hasn't been any personal cyber policy. I expect that to come in 2017 still. Points 6. 9. Partnerships and bundling. In 2015, I thought we'd see a big rise in the partnerships between insurers and third parties. That's happened. Points: 7. So I'm marking my 2015 predictions as 7/9 (or 78% ) — a good effort, but I may have been a bit too ambitious. See also: 4 Marketing Lessons for Insurtechs   Moving into 2017 Re-reading the above, I still feel all my predictions are valid, be it the end of the CDO, the birth of personal cyber or an all-risks policy. I've been involved in enough conversations over the last 12 months to say these are all very real, although some are closer to seeing the light of day than others. Moving into 2017, here are my top 10 trends to watch:

1. Speed. Almost all conversations about insurance start with a statement that we're not moving quickly enough — from transforming and modernizing the legacy estates to quite simply getting products to market quicker. We can no longer wait six months to launch new or updated products. Look at those who managed to capitalize on Pokemon Go insurance cover. In insurance, we'll move from fast walking to jogging and sprinting. But take caution: This is still a marathon, and there's still a long way to go. In fact, as Rick Huckstep wrote recently, the sheer speed at which the insurance market has grown in the last 21 months is part of the challenge and attraction.
2. AI, cognitive learning and machine learning. AI has been long bandied around as a material disruptor. On the back of collecting/orchestrating the data, it's critical to drive material insight and intelligence from this and allow organizations, brokers and consumers to make subsequent decisions. In 2017, AI will come of age with some impressive examples, including voice. In 2016, we saw Amazon's Echo and Google Home product launches, as well as some insurers — like Liberty Mutual — giving voice a try. Imagine asking freely, “Am I covered for...?” or, “What's the status of my claim?” Adding this skill to the mix will likely be table stakes. In addition, AI will augment other solutions to drive value, e.g. robotic process automation, which I wrote about here. All this boils down to getting a better grip on the amazing data we have already while leveraging the vast open data sets available to us.
3. Line of business focus shift. The insurtech world will make a definitive shift from all the wonderful personal line examples to SME (the next obvious candidate) and to more specialty and complex commercial examples. Will Thorne of the Channel Syndicate wrote a great piece on this in November. While the challenges are harder and more complex, I believe the benefits are greater once we get to them.
4. Believers. The market has polarized somewhat between those who believe in major innovation and are pushing hard, and those who don't (or have a different focus and near-term objectives). The range is from those who worry about the next 90 days/half-year results to those who are actively looking to cannibalize their business and investing to find the most efficient way to do this. Here, there's no right or wrong, with hundreds of organizations strewn across the path. I still believe more will move to the cannibalization route as the first carriers start to unlock material value in 2017, including continued startup acquisition. Oliver Bate (Allianz) had an interesting and positive perspective on this during his company's investor day in November.
5. Scale and profitability. Over the last 12 to 18 months, I've seen some great startup organizations; internal innovation and disruption teams; VCs; and more. Now is the time to work out how we industrialize and scale these. This is the very same challenge the banking and fintech communities are going through. If you're an insurance company with 30 million or 80 million global customers, should you be worried about Startup X that has 10,000 or 100,000 customers? If they do manage to scale, can they do so profitability? This reminds me of a recent article about how unprofitable Uber is, but, with millions of engaged customers, they have our attention now. Profitability will become front and center. In fact, Andrew Rear over at Munich Re Digital Partners put together a good post on what the company looks for and why he and the team chose the six they did.
6. Orchestration. With all of these startups in insurtech, we'll need to quickly understand what role they play. Are they a platform play, end product play, point disruptor or something else? Regardless, given the volume and velocity of data generation, the importance of both API connectivity and the ability to orchestrate it will increase dramatically. For me, these are table stakes.
7. External disruptors. In the Turbulence Ahead - The Future of General Insurance report released earlier this year, we identified six key external disruptors that are happening regardless of the insurance industry. These are 1) the sharing economy, 2) self-driving cars and ADAS, 3) the Internet of Things, 4) social and big data, 5) machine learning and predictive analytics, and 6) distributed ledger technology. The key for me within insurance is to identify what role we'll play. I believe we'll continue to firmly be the partner of choice for many given our societal and necessary position in the global economy.
8. Micro insurance. Here, I specifically mean the growth of micro policies, covering specific risks for specific times. Whereas we typically annually see 1.1 policies per customer, we'll see eight to 10 micro policies covering a shorter period (episodic or usage-based insurance) as per our business models described in the Turbulence Report. This will be true for all lines of business. We've already seen some great launches in this space — including Trov, which partnered with Munich Re in the U.S., AXA in the U.K. and SunCorp in Australia. There's been global access through partnering with established players that has created a new way to market to the next generation. While we switch this on manually by swiping left and right (given some of the external disruptors and location based services), this will very much be automatic going forward. Insurers will need to find new ways to orchestrate, partner and find value to bring in clients. It won't be just one policy, it will be many that they orchestrate to deliver clients everything they need.
9. Blockchain and DLT. I almost didn't include blockchain here, but two factors have led me to include this for the first time: 1) the number of requests we're now seeing in the market for both specific solutions and more education/use cases and 2) the fact that nine of the 18 startups in the FCA's new Sandbox are blockchain-related. In 2016, we saw lots of PoC examples, trials and the first live insurance product on the blockchain (see: FlightDelay). Some use cases are more developed than others, and some markets are more suitable than others (I'm still looking for good examples in personal lines), so I believe this will evolve in 2017 but that there won't be scale breakthroughs. However, along with the World Economic Forum, I firmly believe that “The most imminent effects of disruption will be felt in the banking sector; however, the greatest impact of disruption is likely to be felt in the insurance sector.” We still must ask, “why blockchain?” Just because you can use it? It needs to be the right solution for the right business problem. Horizontal use cases such as digital identity or payments offer compelling use cases that can easily be applied within insurance. In many ways, blockchain, for me, feels much more like an infrastructure play in the same way we would do core systems transformation (policy, claims, billing, finance, etc.)
10. Business as usual — for now! Partly related to No. 4, we still need to run our business. How we do this and how we set up for the future will be another challenge — not just from a technology perspective but from a people and organization design perspective. (How we work, collaborate and more.) What are the transition states from our current models to a new world in 12, 24 or 36 months. Forward-thinking organization are putting plans in place now for their organizations in the years to come. This will become more important as we embed, partner and acquire startups and move toward new ways of engaging and working with customers.

Interestingly, there are now also so many accelerators, garages, hubs, etc. that startups all now have a lot of choices regarding where to incubate and grow. This presents a whole new challenge on the rush to insurance disruption. See also: Asia Will Be Focus of Insurtech in 2017   Finally, there are two other observations I wanted to share:

1. China. While I don't spend any time in China, it's hard not to be in awe of what is going on — specifically, the speed and scale at which things are happening. China's first online insurer, Zhong An, did an interview with Bloomberg regarding what the company is doing with technology (including blockchain) and, more importantly, its scale ($8 billion market cap in two years, 1.6 billion policies sold) — and the only concern from the COO, Wayne Xu, is that the company isn't moving quickly enough! Step away from this and look further to what's happening with disruption in general with Alipay and others from the BAT (China's equivalent of GAFA — Baidu, Alibaba and Tencent) is simply amazing. There's a good FT article on Tencent, the killer-app factory, and the sheer speed and scale of disruption.
2. Community. The global insurtech (and fintech) community is an amazing group of people from around the world who have come together across borders and time zones to further challenge and develop the market. Each geography has its own unique features, mature players, startups, labs, accelerators, regulators and, of course, independent challenges. We don't always see eye to eye, which makes it all that more rewarding because you're challenged by industry veterans and outside-thinking entrepreneurs. This year's InsureTech Connect in Las Vegas with more than 1,600 people was truly amazing to see. Things have clearly moved far beyond a small isolated hive of activity with varying levels of maturity to a globally recognized movement. It was great to meet and to see so many carriers, startups, VCs, regulators and partners looking to further the conversation and debate around insurance and insurtech. This community will, no doubt, continue to grow at a fast pace as we look for insurtech successes, and I look forward to seeing how the 2017 discussion, debate and collaboration will continue.

As always, I look forward to your feedback! What I have I missed? Here's to an exciting 2017!

The final draft version of the King IV Report on Corporate Governance in South Africa 2016 places a different focus on the governance and management of risk. It now states that: “The governing body should assume responsibility for the governance of risk by setting the direction for how risk should be approached and addressed in the organization. Risk governance should encompass both:

• the opportunities and associated risks to be considered when developing strategy; and
• the potential positive and negative effects of the same risk on the achievement of organizational objectives.”

The focus is now firstly on “opportunities” and the “potential positive effects” and only thereafter on “negative effects.” The major change in focus, however, is the requirement in paragraph A, where it is stated that opportunities (firstly) and risks should be considered when developing strategy. It is implied that the opportunities referred to are the opportunities brought about by the development of the organization’s strategy. These opportunities can be viewed as “stand-alone” opportunities, or opportunities that were identified without first identifying the risk. This requirement is different from the requirement in the next paragraph, where the positive and negative effects of the same risk should be dealt with. See also: Easier Approach to Risk Profiling   The difference in accent is more apparent when the definition of risk contained in King IV is examined. It states that, “Risk is about the uncertainty of events; including their likelihood of occurring and their effect, both positive and negative, on the achievement of the organization’s objectives. Risk includes uncertainties with a potential positive effect on the organization (i.e. opportunities) not being captured or not materializing.” This definition of risk clearly highlights “uncertainties with a potential positive effect.” Although all commonly used risk definitions, from COSO 2004 to ISO 31000/2009, as well as King III, referred to opportunity or the upside of risk, the concept of risk was generally viewed as something negative, or as the potential downside of a future occurrence. What has exacerbated this misconception was the view that risk and opportunity were opposites. Many documents, including King II, stated that “enterprise is the undertaking of risk for reward,” implying that the greater the risk, the greater the reward. In other words, if everything went well, you had great reward, but if things went badly, you had great risk. This led to the mistaken belief that opportunity is merely the “upside of a downside risk.” This belief assumed that risk and opportunity are inextricably linked. It is now apparent that this notion is not true. It is entirely possible to reduce risk while improving returns. In fact, to survive in today’s world, it is not only possible but essential. Traditionally, risks were classified and managed in three broad categories, namely hazard risks (so-called pure risks like fires, natural catastrophes, violent attacks, etc.); financial risks (bad debt, currency, interest rates, etc.); and operating risks (IT system failures, supplier interruptions, etc.). The opportunities attached to these risks can be described as reducing the impacts of the downsides, also known as the “silver-lining” opportunities. In other words, every dark cloud (risk) has a silver lining (opportunity) attached to it. Often the opportunities are the exact opposite of the downside risk, viewed as the two sides of the same coin. A good example may be a rise in interest rates, which may be a risk to some people, while being an opportunity to others. However, when one looks at the King IV definition of risk it is apparent that the achievement of the organization’s objectives is the key element. The key objective of any organization can never only be the avoidance of loss or harm, but must be the optimization of its strategic objectives. This is confirmed by the adage that “a risk is not only a bad thing happening, it is also a good thing not happening.” Any future uncertainty, which can be opportunity, risk or both, can be classified into four broad categories, namely:

• Future possible event (Stochastic Uncertainty).
  • This refers to an event that has not happened, and it may not happen at all. However, if it does, it will have an impact on the organization. Most identified risks are like this and include events like new developments, a supplier going out of business, law changes, disasters and the like.
• Variability (Aleatoric Uncertainty).
  • Some aspect of a task or project is uncertain and may include timing uncertainties, budget variability and the like.
• Ambiguity (Epistemic Uncertainty)
  • This uncertainty stems from lack of knowledge or understanding of a situation, condition or event. This may include matters like market conditions, competitor capability and the like.
• Blind Spots (Ontological Uncertainty).
  • This uncertainty exists outside of normal knowledge and experience frameworks and is therefore not seen or expected – the so-called “black swans,” emergent or emerging risks and blind spots.

The traditional method of identification of opportunities as part of the risk assessment process, where the upside of a downside risk is identified, can be viewed as “passive opportunity identification.” These identified opportunities are mostly the direct opposites of the identified risks and fit in well with the view that higher reward requires higher risk – the “two different sides of the same coin” principle. It must be stressed, however, that this method of opportunity identification remains a key component of risk and opportunity management and that it remains important to have it done. Examples of these kinds of opportunities are items such as interest rate movements, exchange rate fluctuations, margin squeeze and the like. In short, it can be described as “risk including opportunity.” King IV, on the other hand, now requires the governing bodies of organizations to ensure that “active opportunity identification” is conducted. These are the stand-alone opportunities that are not necessarily aligned with any downside risk. These would be the opportunities that the organization needs to pursue to enable it to achieve its strategic objectives. Custodians of this process would normally be the office of the CEO, the strategy director or the research and development department. The opportunity identification and assessment process would be distinctly different, and separate, from the risk assessment process that organizations are currently conducting in terms of King III. Reporting of the opportunities that are the result of the identification process would be different as well. These reports would not fit the mold of the typical risk report, with likelihood and impact indications, as these metrics are mostly irrelevant to opportunities. The target audience of the report would be different, as the information surrounding potential opportunities are by their very nature confidential and not for wider consumption. See also: Building a Risk Culture Is Simple–Really   The key aspect in the risk assessment process that needs careful consideration when conducting opportunity management is that of “appetite and tolerance." When downside risks are considered in isolation, determining and calculating risk appetite and risk tolerance levels are foundational in the process. These levels do not only refer to financial metrics (gearing, debt levels, cash, etc.) but also to non-financial metrics (level of injuries, negative press, etc.) and are mostly absolute downside risk limits beyond which the organization is not willing or able to venture. These risk limits do not reference opportunity, and the only upside apparent in appetite and tolerance levels would be when those limits are not reached or breached. When dealing with stand-alone opportunities, the organization would determine or calculate what downside limit it is prepared or able to endure to achieve a particular opportunity. Although the identification and management of opportunities may not be the responsibility of an organization’s risk department, the latter has a role to play and can add significant value to the process. As a result of the methodologies and techniques at its disposal, and as a result of the knowledge and experience of its personnel, the risk department may be able to assist in the process to identify opportunities, may be able to assist in the documenting and evidencing of the results of this process and may be able to assist in the monitoring of the results.

In a meticulously planned operation, we filed for a license in 47 states simultaneously. We’ll be revealing the first states in which Lemonade will become available in a couple of months. One thing’s for certain, 2017 is going to be an interesting ride! Stay up to date with news about our progress here…

Now that I got this off my chest, I can add some color to why we’re doing this.

Many tech startups go through the famous Local vs. Global debate as they start to plan a market penetration strategy. This dilemma was born with the arrival of modern internet commerce and became even more prevalent with the emergence of SaaS companies that provide global coverage right out of the box.

When you’re selling a digital product, going global may seem like small overhead. Reality is a bit different, though, and, more often than not, small startups that take a bigger bite than they can swallow get into trouble.

When feasible, startups should consider aiming their launch beams at a single city or even a town with population that represents their typical customer.

Here’s why:

1. Know thy users, and design for them

It always amazes me how often startups overlook usability testing during the initial design phase. Having videos of random people playing with your (barely working) mockup is priceless. We learned more in a couple of days of testing than we did in months working in our office.

The cool thing is that you only need about five testers to get value out of a session like that, so there’s really no excuse to not doing it. The smaller the area you launch in, the better the chance of getting valuable data in a user testing session.

We spent hours in WeWork and Starbucks with our early stage, smoke-and-mirrors version of the Lemonade app. We would show it to people, ask for their feedback, ask them some questions and record the entire session. We would then sit in the office and analyze the videos to figure out what worked and what didn’t.

Our early Starbucks user testing sessions allowed us to launch a relatively mature product into the market and achieve faster adoption by our New York customers.

See also: Let’s Make Lemons Out of Lemonade   2. Budget

Product launches require spending some money. To improve the chances of success, it is recommended to fuel the organic interest generated by social noise and PR efforts with some paid channels. Got a story in TechCrunch? Bloomberg? It will probably die down quicker than you think.

A nice trick is to use content recommendation tools like Outbrain and Taboola to promote content to users who may be interested in it. Google Ads are another obvious choice. Choosing the right outlets is one thing, but there’s a huge difference in costs between a global campaign and a local one.

This becomes much more dramatic when your company requires additional resources to operate in each region like Groupon and Uber. Lemonade recently closed its third round of financing ($60 million in one year of operation) from top VCs such as Google Ventures, General Catalyst, Thrive, Sequoia, Aleph and XL Innovate. We’re going to use this money to drive our expansion throughout the country and activate specific markets the way we did in New York.

3. Surgical use of media coverage

Getting great media coverage takes a lot of attention and time. Whether you can afford an agency or not, you’ll have to choose your battles well. Launching in a specific city allows you to focus on the outlets that are most relevant and will simplify your pitch to journalists.

If you’re creating something exclusive for a certain region, reporters who cover that region usually have a hunger for tech stuff that is happening, or launching in their hometown before everywhere else. BTW, there’s a case for launching in unexpected places like Portland or Philadelphia, which usually don’t get much attention from the tech and consumer industry for new products. There’s a good chance that media reach (which expands far beyond just the place you’re starting from) will be much stronger.

We chose New York for Lemonade’s home. We see NY’ers as an ideal representation of our target demographic and personality. So we invested our efforts in a select few outlets that are read by our first wave of early adopters of the city’s financial workers and young professionals — NY Post, Bloomberg and Wall Street Journal.

4 . Brand and messaging

Building a great brand involves a lot of consumer psychology. You spend weeks trying to figure out the best tagline, the perfect ad and the right illustrator to do your art. If you get this right, you have a real chance at grabbing your customers’ attention.

The first few months of brand activation are critical. Limiting yourself to a select region or demographic allows you to be laser-focused on framing and positioning.

Lemonade Local

Building an insurance company from scratch, in New York, one of the toughest regulatory environments in the country, is a huge undertaking. The sheer complexity and investment required to get to the starting point includes raising a lot of capital and hiring the right people to be able to get licensed by the state’s Department of Financial Services.

This is the life of a company that operates in a highly regulated industry, and it’s unlike anything I’ve ever seen in the tech space. For Daniel and me, the decision to start in one state was simple. There’s no other way. Insurance carriers have to choose a state. Just one. And then maybe, if you play nice, regulators will let you go for more.

We wanted to launch Lemonade in one state — NY, and even more so when we realized we had no choice :)

See also: Lemonade: A Whole New Paradigm  

In the last three months since our New York launch, we’ve had overwhelming demand coming in from all over the country to open up for business in more states. This was very encouraging because it showed us hints of initial demand and product market fit to people and age groups that we never thought would be our early adopters.

But what surprised us most was the excitement coming from unexpected places, such as government offices and regulators. Having a favorable regulatory environment is a great opportunity to bring an honest, affordable, transparent and fun insurance experience to everyone in the U.S.!

Be the first to know how we’re making progress with our nationwide expansion.

Here’s the list of states where we will gradually launch in the coming year or so:

Alabama, Alaska, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, District of Columbia, Florida, Georgia, Hawaii, Idaho, Illinois Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Missouri, Montana Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah, Vermont, Virginia, West Virginia, Wisconsin

* States in bold represent the ones most requests to launch came from

This article originally appeared here, and you can find more about Lemonade here.

The IoT continued its toddler-like growth and stumbles in 2016. Here are five trends to look for in 2017 as the IoT enters its adolescence and how to benefit from them. 1. Ecosystems begin to determine winners and losers Previously these were nice in-the-future concerns; now they will really count. Filling out a whole product value proposition through partnerships has repeatedly proven its importance across B2B and enterprise software sectors. In the IoT, they will be even more critical. As an example, the Industrial Internet Consortium (IIC) is driving the definition of platforms and test beds and should show results in 2017. In the meantime, expect some IoT companies to fail when they can’t gain traction. If you’re developing IoT infrastructure or platforms, it’s time to get real, regarding building great partnerships, developer programs, tools, incentives and joint marketing programs. Without them, your platform may appear like an empty shopping mall. If you're a device manufacturer or application developer, it's time to place your platform bets so you can focus your resources. If you’re implementing IoT-based systems, you’ve been through this before. Welcome to the next round of the industry’s favorite game, “choose your platform.” Make sure you also evaluate vendors based on their financial health, business models and customer service — not just technology. Learn more in Monetizing IoT: Show me the Money in the section “Ecosystems as the driver of value.” See also: Insurance and the Internet of Things 2. Vendors get serious about experimenting with business models and monetization This was a big theme at Gemalto’s recent LicensingLive conference and was further driven home by solution partners like Aria Systems. Tech won’t sell if it’s not packaged so that buyers want to buy. Look for innovation in business models and pricing, including subscription models, pay per use, recurring revenue, subsidization or replacement of hardware device revenues with service revenues, monetizing customer data and even pay-per-API call models. If you’re marketing whole solutions, be sure to avoid the “partial solution trap” as described in my article, The Internet of Things: Challenges and Opportunities. 3. Big Data gets “cloudier” (pun intended) No doubt there will be a lot more data with billions of new connected devices. Not just text and numbers but also images, video and voice can all add significant monetization opportunities to different participants in the value chain. More devices mean more data, more potential uses and more cooks in the kitchen. This is a complex cluster of issues: Do not expect a resolution of ownership, privacy or value in 2017. Instead, approach this by building a clear vision of what you want and don’t want with respect to data rights as you enter these discussions. And try to anticipate the genuine needs of your partners. Device manufacturers will likely have a going-in desire to own data produced by their devices; and apps developers, the data they handle; others may be okay with aggregated info. Buyers should make sure they understand what’s happening with their potentially sensitive data. We have already started to see partnerships and deals stall out over intense discussion on data ownership and rights. 4. You’ll need to prove your security, with privacy not far behind 2017 IoT systems are going to need to up their game. No one is going to stand for hacked doorlocks, video cameras or Mirai botnet/DDoS attacks via connected devices much longer. Similar events will come with very high price tags. So far, the IoT has dodged any major incidents with large losses suffered directly by end users. We could see growth flatten if a major hack of thousands of end users occurs in 2017, especially if hardware devices are ruined or people get hurt. At that point, users will need to receive greater guarantees of security, privacy and integrity. This risk needs to be mitigated if the industry wants to avoid an “IoT winter.” Vendors will need to invest more in security development and testing before deployment and offer assurances, possibly including insurance. Installers and integrators will need to ensure ecosystem integrity, and buyers will look for these guarantees. Just one flaw could be very expensive: Gartner believes that by 2018 20% of smart buildings will suffer digital vandalism through their HVAC, thermostats and even smart toilets. 5. Voice-powered, AI virtual assistants drive a next round of platform wars Voice will become increasingly important to control IoT systems and computing infrastructure. Google Assistant, Apple Siri, Amazon Alexa, Microsoft Cortana and Samsung’s Viv Labs acquisition underscore the importance of these new AI-assisted voice interfaces. They’ll be used across multiple devices like phones, PCs, tablets, cars, home appliances and other machinery. By 2020, Gartner believes smart agents will facilitate 40% of mobile interactions. This is the beginning of a new round of platform battles that you need to recognize, internalize and prepare for. See also: How the ‘Internet of Things’ Affects Strategic Planning What do you think? Email me with your predictions, comments or war stories. You can find the original article here.

We are at an inflection point. The internet is going from controlling information to controlling physical things, which has profound implications for both the global economy and the future of insurance. In this post, I will provide seven predictions for how the Internet of Things (IoT) will change the insurance industry, although ultimately these predictions only scratch the surface as there are few lines of insurance that won’t be affected by cyber risk in the next five to 10 years.

Background on Internet of Things (IoT)

It is estimated that there will be as many as 200 billion everyday objects connected to the internet by 2020. Applications for the IoT are as diverse as consumer devices, manufacturing sensors, health monitoring, connected vehicles, office automation and all the way to fully "smart cities." The emergence of IoT technologies is a tremendous development that spans all aspects of human existence and could unlock as much as $11 trillion per year in value to the global economy by 2025, according to the McKinsey Global Institute.

See also: Insurance and the Internet of Things  

What these numbers don’t show, however, is the tremendous physical and financial risks associated with the emergence of having everyday objects connected to the internet. According to the 2016 Symantec Internet Security Threat Report (ISTR), hundreds of millions of internet-connected TVs are vulnerable to click fraud, botnets, data theft and even ransomware, and these numbers are growing rapidly. Cyber attacks on internet-connected devices create systemic risks and the potential for hundreds of billions of dollars in losses. When physical devices can be hacked (and potentially hacked en masse), the potential for major business interruption, physical damage and even loss of life becomes very real.

This isn’t to say we should not pursue IoT technologies. In fact, in many ways, IoT will make society safer, as well as more efficient and convenient. Every year, 1.2 million people die in automobile accidents, and around 90% of those accidents are attributable to driver error, which will decline as more internet-connected vehicles incorporate advanced safety features. However, as internet-connected devices become pervasive in all aspects of our lives, the nature of risks facing consumers and businesses will be fundamentally different.

While the future is uncertain, especially as it pertains to technology, here are seven predictions on how IoT could affect insurers.

1. Continued Growth of Affirmative Cyber Insurance Policies: According to Lloyd's of London, cyber attacks cost businesses $400 billion in losses per year, and, by some estimates, cyber crime costs the global economy trillions of dollars per year. The current cyber insurance market, which is focused on data protection, is around $2.7 billion globally. The market has doubled over the past 24 to 36 months, and growth shows no signs of abating. Growth of affirmative cyber insurance data and liability policies, primarily covering costs associated with data breaches, is just a tip of the "IoT iceberg," as cyber becomes an even more important insurable risk.
2. Some Core Insurance Lines Will Decline: IoT will change the nature of the risks that consumers and businesses face. For example, according to AT Kearney, features such as advanced driver-assisted systems (ADAS), semi-autonomous vehicles and tracking of stolen vehicles will be deployed in half of the cars on the road by 2025. By some estimates, the global auto insurance market will shrink by 60% or more, where there is a reduction in driver error and a resulting decline in the insurance needed for this risk. As key insurable losses become preventable by IoT, core insurance lines will decline.
3. IoT Aggregation Risk Starts Pervading a Diverse Set of Insurance Lines: IoT can turn large-scale hacks into global cyber catastrophes. Already, there have been successful hacks on industrial control systems that have led to major physical damage in heavy industries. Fortunately, these incidents have been isolated to "one-off" occurrences, but with key industrial control systems, logistics tracking systems and building automation systems crossing tens of thousands of businesses, the potential for major cross-cutting cyber events is increasing. IoT aggregation risk occurs in insurance lines where it wasn’t previously observed, accounted for or priced into the cost of an insurance policy.
4. Cyber Peril Exclusions Grow in Commercial Policies: In the years to come, we will see highly public "forcing events" related to cyber attacks on IoT devices. Unfortunately, it is not a matter of if but when we see major IoT cyber hacks. When these events happen, insurers will likely respond by writing in more explicit exclusions for cyber perils in insurance lines such as product liability, property, E&O and other policies. In many cases, insurers are focused on the aggregation risks that exist within their affirmative cyber data and liability policies, when the reality is there is tremendous silent coverage in the rest of an insurer’s portfolio today.
5. "Cyber Gap" Insurance Policies Emerge: There will be an expanding list of critical cyber perils that won’t be covered under a standard insurance policy. Specialty cyber insurance policies and endorsements will surface to fill in the need for IoT cyber risk coverage. McKinsey estimates that as much as $3.7 trillion in value could be unlocked in factories alone from IoT. Too much value is at stake for clients not to seek coverage from insurers, and the market demand is too large for insurers not to provide this cover, although it will take deep cyber expertise to understand these novel risks.
6. New Cyber Risk Capital Market Offerings Emerge: Currently, the global insurance market has $4 billion to $5 billion in capacity for nuclear risks and $100 billiion for natural catastrophes. Fixing the Y2K bug alone is estimated to have cost $100 billion, and the costs associated with remediating IoT security deficiencies could be very high, particularly when IoT components do not always have a means for remote firmware updates. Given that cyber events represent hundreds of billions of dollars (or more) of potential liability, which have low correlation with other events, there is a role for capital markets providers to step in to help transfer risk. Given initial explorations already happening today, London could emerge as a major market for insurance-linked securities tied back to cyber risk.
7. Insurers Will Help Drive IoT Security: Consumers aren’t necessarily buying technology products with IoT risk in mind; regulators are struggling to keep up; and in a race to get new products to market, technology companies are often launching products without adequate cyber security in mind. Symantec’s research has shown that 19% of mobile apps used to control IoT devices don’t use SSL connections to the cloud and more than 50% didn’t provide a mechanism for firmware updates, or, if they did, those updates were not encrypted. Given that insurers are taking on the financial risk associated with IoT going wrong, insurers have an important role to play in making sure that the basics are done right for the risks they underwrite.

The emergence of IoT is a tremendous technological development that will create wide-ranging benefits for governments, businesses and consumers. However, it will also propel cyber risk into the limelight as the most important risk of the 21st Century.

See also: Prospects for Insurers as a Global Industry  

As an industry that transfers and mutualizes risk, insurers face far-reaching implications, and there will be both winners and losers. Those that win will have a deep understanding of the evolving nature of cyber risk, leveraging cyber data, intelligence and expertise. Companies like Symantec will have an important role to play in helping to understand evolving threats, which is why we have set up a dedicated Cyber Insurance Group to support our insurer partners.

It is hard to predict the future of technology and the risks that new technology will create with any degree of certainty. What is certain is that where there is risk, there is an opportunity for insurers to provide risk-transfer solutions through insurance products. Just as there is innovation in technology, there will be innovation in insurance as both industries come together to unlock the potential of the Internet of Things.

As digital capabilities expand, so do compliance risks—especially those related to privacy and cyber risk. Enhanced analytics and visualization tools are providing insurers with new and better ways to identify, manage and report risks. But along with the availability of more sophisticated technology comes increasing compliance risks related to privacy, cyber risk and the use of digital channels.

At a time when the compliance function us manage risk with constrained resources, it must demonstrate and provide value to the organization—and insurers must support compliance’s seat at the table.

For our Accenture 2016 Compliance Risk Study, we surveyed more than 150 compliance officers at financial institutions across the Americas, Europe and Asia-Pacific. Of concern is that many respondents reported that their data and technology architecture does not meet their needs for managing the increasing compliance risks. See also: Compliance Challenge in Communications   Other issues facing compliance officers include:

• Slowing investments in compliance.
• Shifts in reporting lines to executives.

There are difficult choices in how to make the best use of resources. In this Insurance Insight of the Week video, I outline what compliance officers see as being their top priorities over the next 12 months to three years. As the pace of change continues to intensify, insurers and their compliance functions must identify a path forward that enables them to meet emerging risks and changing stakeholder expectations, and successfully measure their progress along the journey. See also: Minority-Contracting Compliance — Three Risks For the other videos in this four-part series, visit the Accenture Insurance Blog.

I love movies; usually really bad ones, I'm told! While watching movies, I often find myself thinking about insurance. Over the years, I have noticed how things from TV and film have made it off the silver screen and into real life. This has a very real impact and relation to insurance. See also: Movies That Make You Wish You Had Insurance   Let me give you some examples:

• Minority Report (2002): For many, this is one, great movie that showed off lots of very cool technology and futuristic concepts, including the ideas of "Pre-Crime" (preventing something before it happens). The movie also features retina recognition, where, as you walk past shops, computers system recognize you and serve up fully personalized content. This is a great example of mass personalization. Could this lead to risk personalization and prevention-based insurance? 

• Judge Dredd (1995):  This movie features cryogenics. It is not quite insurtech, but I recall a recent article on a teenager who was granted permission to be frozen so he could be cured in years to come. Does this bring a whole new category of health insurance?

• Die Hard 4.0 (2007): We see the "Fire Sale," where hackers take over the entire country – from power stations to water supply to traffic lights. It is the mother of all cyber attacks. Maybe something like this isn't impossible?

• IT (2016): The movie features connected home, connected car and hacking. While this is a terrible movie (even with Pierce Brosnan), it does highlight that the connected home is wildly open to cyber attacks. And, with the recent increase in the numbers of these offerings, what does this mean for homeowners? Could this lead to personal cyber policies?

• Knight Rider (1982): This is where it all started for me as a kid. I loved seeing the ability to talk to your watch and self-driving cars in action. Could this be the future of technology and cars?

There is definitely a theme with these movies, specifically about cyber technology, autonomous cars and connected homes. Maybe it's just the movies I watch,  but I think these movies could signal a trend for the future. See also: What Do A Drive In Movie Theater And Intellectual Property Have In Common?   So, is this our warning shot?  The next time you settle down to watch a movie, think what impact it may have on the future of insurance. Add your movie examples in the comments below! I'll keep adding mine. Look forward to seeing them!

I was very fortunate to host a roundtable during the FERMA risk seminar in Malta. I am very thankful for the opportunity, because the experience of brainstorming for 45 minutes with the representatives from various small and medium enterprises (SMEs) really highlighted some major problems with modern-day risk management and risk managers. Here are three things that I think all of us could learn from managing risk at SMEs: SMEs simply can't afford to waste time or other resources on an activity that does not generate direct value For SMEs, time is pressure, management teams are small, margins are limited and, as a result, management is very pragmatic about any new, sexy activities and initiatives. Risk management is no different. It has been around for years, yet few SMEs have properly adopted it. Something's not right... So can risk management make companies money? Of course it can. Do modern-day risk managers in non-financial companies in fact make money for their companies? Very few. Most of the modern-day approaches used by risk managers are so academic and superficial that management has a tough job buying it. Here is a short video on showing value from risk management, and it's not what most risk managers are doing. See also: Can Risk Management Even Be Effective?   I think it's about time we had an honest look at some of the activities risk managers do:

• Do risk assessments really change the way business processes work, change the manufacturing process and change the way products are sold?
• Do risk managers bring something of value to the table when any important business decision is made?
• Do risk assessments change the way executives make decisions, and is risk analysis available on time to support every significant decision?
• Are risk registers looked at by the CEO before making an important decision?
• Do risk owners check their risk mitigation actions regularly?
• Do risk appetite statements in non-financial companies change the way the company operates and the way decisions are made?
• Do employees regularly read risk management framework documents?
• Do managers call the risk manager before making a decision when faced with uncertainty?

I suspect the answer to most of those questions is “not quite.” This could mean one of two things: Either the risk manager is not doing his job properly, or he is properly doing his completely wrong. My bet is on the second option. There is simply a better way than risk profiles, risk registers, risk frameworks, risk owners — and so on. Here is a short video about what the future holds for risk management. SMEs don't do risk management to mitigate risks; they do it to make better decisions This I found bizarre: We seem to have created a myth that risk management is about managing risks. Not so. Risk management is not an objective in itself. It's just another management tool to help make better decisions and achieve objectives. This realization is a big difference between SMEs and large corporations. SMEs do risk analysis when a decision needs to be made, using whatever risk analysis methodology is appropriate for that particular type of decision. Large corporations do risk management when it's time to do risk management, be it annually, quarterly or some other regular internal. Nothing could be further from the truth. Unless your methodologies, approaches and tools allow risks to be analyzed at any moment during the day — when an important decision is being made or at every milestone within the core business processes — you are probably doing something wrong. If there is one thing I learned over the years it is that no one in the company, and I mean NO ONE, expects the risk manager to care about risks. Well, maybe some about-to-retire audit committee member would, but most executives wouldn't have the courage to deal with the real risks if you showed the risks to them. The rest of the company cares about making money, meeting objectives with the least amount of effort and getting nice bonuses as a result. You can assign risk ownership to top executives as much as you like — no one cares. SMEs learned the hard way that unless an activity directly contributes to achieving objectives, it's not going to be done. Risk management is no different. I find it ridiculous when risk managers talks about high risks and the need to mitigate them when, instead, they could be saying things like, “the probability of meeting this objective is 10% — unless we change things,” “there is an 85% chance your business unit will not get bonuses this year based on our risk analysis” and so on. Anyone can be a risk manager, but it's not natural Despite what we within the risk management community have been telling each other for years, managers are not really managing risks every day. Thinking about risks is not natural for humans. The way System 1 and System 2 thinking operate in our brain make it literally impossible to see most of the risks associated with making decisions, let alone analyze them or manage them. Since the 1970s, many scientists, including two Nobel Prize winners (Kahnemann and Tversky), have discovered more than 200 cognitive biases that prevent managers from seeing, understanding and dealing with risks. See also: 4 Ways Risk Managers Can Engage on Cyber   This basically means risk surveys, most risk workshops and any kind of qualitative risk assessments are very unlikely to produce truthful results. But then what should risk managers use? There are plenty of alternatives, much better alternatives. So how was the rest of the FERMA seminar? My feedback to the organizers stays the same as my last post on the FERMA forum in Venice last year. In short, it's impossible to grow if the people you talk to at conferences are people just like you: risk and insurance professionals. Someone needs to play the devil's advocate. It would be good to hear from a CFO who says he doesn't care about any of the work risk managers do and budgets based on his own methodology with no input from the risk manager. But, then again, Europe is probably way too politically correct for that :)