First, a definition. Distributed ledger/blockchain technology, increasingly abbreviated as "DLT," transfers value in a decentralized, consensus-based and immutable manner using cryptographic tools and is different from technology today because it offers transactions occurring between unknown counterparties that are mathematically trusted in real time. DLT is at once a network and a database that can host applications like Smart Contracts, with the potential to be interoperable across trade ecosystems. This technology seems tailor-made to help administer the claims end of insurance. Let’s talk about claims. It is well known that insurance claims are the storefront of an insurance business. Claims processing and resolution provide touchpoints for extended customer engagement, and a bad experience can poison an insurer in a customer's mind, which can affect policy renewal. The claims experience should be seamless and easy to manage for all. Imagine if you could smooth out your claims process so that it is more accurate, frictionless and cost-efficient and can even provide easy access to data for benchmarking and analysis to improve your customer's digital experience. See also: What Blockchain Means for Insurance   I had my "aha" moment when I first learned about DLT technology. I was struck with an immediate vision of how things could be made better within the insurance industry. As a prior general counsel of an insurer, and now a consultant specializing in the strategic use of this technology, I understand how it can be implemented (once fully developed) and can envision how it can change and improve business from end to end. Practically speaking, on the claims side, at the very least, the industry would never again have to suffer "the dog ate my homework" excuse for lost documents, duplicate or other document mishaps and related lawsuits. Claims provenance could be automatically established and adjudicated by so-called “smart contracts” (in the most general sense, they are protocols that have deterministic outcomes) in real time with an easily auditable and immutable trail. Identity proof would be less onerous. Those developments alone go a long way to reducing fraud and risk and their associated costs. While modernizing claims processes is not a "sexy" thought, it is one that directly affects all insurers and their bottom lines by reducing risk. A small shift in the actuarial calculation based on a risk reduction goes a long way. There is not a business person on earth who does not want to increase revenue. While there is a lot of hype, I believe we are only seeing the beginning of its potential. Education is needed. Imagination is needed. And innovation and execution are needed. The financial services industry has looked at this technology over the past year and is engaging with it, and some practical applications are expected to go into production in 2017. Insurers/asset managers should take notice. For instance, Delaware will begin using blockchain technology for UCC filings powered by Symbiont. Financial industry regulators, both domestically and internationally, are evaluating this technology and are listening and learning. In part, we owe the financial services sector a debt of gratitude for creating awareness overall. Generally speaking, insurers have been slow to the table to learn about this technology, but it is imperative that they engage as early as possible because DLT has the potential to be very valuable for them. Some reinsurers already understand this and are experimenting. The diamond industry understands this and is experimenting with digital representation of hard assets on a blockchain for asset management and insurance purposes through Everledger. Other insurers have made some attempts to test similar concepts. Indeed, the insurance industry can benefit on more than just the claims side. We all know customer acquisition is the most uncertain and expensive part of the process in any business. Well-designed digital processes can prove invaluable in customer acquisition and retention. On the front end of the insurance industry, smart contracts can aid in creating easy-to-manage customer policies, which can be fed into databases and tailored and segmented in any way that makes business sense. Data management and security can be enhanced using blockchain technology. In fact, the Estonian company Guardtime has embraced the cyber security end of this technology and evolved a keyless signature infrastructure (KSI) that DARPA is verifying. See also: Blockchain: What Role in Insurance?   Blockchain/DLT technology is not a panacea for all. But it is worth exploring as the technology evolves. We are at an inflection point in the development of this technology—a point in time where insurers and others can have a say in how it evolves. Once standards emerge and practical applications are in production, it may be too late. Time to get on board, insurers, and weigh in! All you need do is participate to make sure your interests are heard and accounted for. To the insurance industry, I ask you: How do you see this technology affecting insurance?

Dear Insurtech, It was nice getting to know you in 2016. You served your purpose, but now it's time for RiskGenius to move on. It’s time for me to move on. There were a series of events that helped me realize that you, insurtech, and me, well, we can’t really be friends anymore. I can’t be conference guy  Recently, I was in San Francisco meeting with some insurance professionals who are plugged into the insurtech scene. One of them brought up a recent insurtech conference and commented, “You are everywhere, Chris!” I shuddered. I have never wanted to be “conference guy,” but I got sucked into being just that this year, and there are way too many insurtech conferences. Little comes out of insurtech events  I often attended insurtech events this year and wondered at the end, “What will come out of that?” And very little developed. As the year progressed, it started to dawn on me what was going on. And then, finally, everything crystalized after one phone call on Dec. 13. A wonderful insurance professional called to let me know he was leaving his firm at the end of the year because he was frustrated by the lack of engagement by his firm with insurtech companies. See also: The Future of Insurance Is Insurtech    It hit me: Insurance companies are simply trying to understand what the heck it is we insurtech companies are doing. Often, there are no real plans for insurance companies to actually engage with insurtech companies. I need to focus on the doing, not the talking  This year, we have found a tremendous partner in an insurance carrier that I hope to tell you about soon. There are also pockets of people focused on insurance technology innovation -- but I need to find these people because they often aren’t at the conferences, or aren't on Twitter or LinkedIn. Some of the best events I attended were intimate gatherings. Insurance Thought Leadership invited me to a cyber insurance conference I loved. Marsh invited me to an executive retreat that was incredibly insightful. And an insurance carrier allowed us to participate in an innovation challenge with internal employees that changed the trajectory of our company. But none of these three events focused solely on “insurtech.” RiskGenius is ready As I look toward 2017, I am going to remove both myself and RiskGenius from the insurtech scene. Instead, we are going to be actively seeking out those partners that can use our software right now. It’s no longer about tinkering and building algorithms; RiskGenius is weaponized and ready to go. Two areas have emerged where RiskGenius fits perfectly. First, RiskGenius is primed for policy automation. We can take an entire library of policies, show you similarities and differences and then serve up the correct policy based on what the user needs. See also: 4 Marketing Lessons for Insurtechs   Second, RiskGenius analytics has people really excited. We are now able to take an insurance policy that a user provides us and compare it with all the policies we have previously collected and stored. Soon, I will write about how we have evaluated more than 400 cyber insurance policies. This is awkward, insurtech. But we can’t be a “thing” anymore. I’m sorry — it’s not you, it’s me (and RiskGenius). We want more for our future. Thanks for the memories, Chris Cheatham CEO, RiskGenius

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, Challenge No. 2 here, Challenge No. 3 here, and Challenge No. 4 here. In this article, we will look at Challenge No. 5. Challenge No. 5: Tuning the economics to achieve profits will require time and capital We expect that the time to profitability will be 10 to 15 years. And many startups will never reach that point as there are two competing challenges: growing revenue and generating profits. Furthermore, flaws in the underlying economic models cannot be pivoted away from as easily as with other digital startups. After all, there is no such thing as a beta insurance policy, and it is more difficult to find additional or new revenue streams in insurance. See also: Shark Tank Secrets for Startup Success   Insurance is, at the end of the day, a high-volume business with challenging economics. Margins are small, especially on new sales. Typically, customer prices and broker commissions have been falling, with the advent of online insurance. And, with a raft of competitive startups, the long-term trend can only continue. In addition, maintaining a healthy underwriting margin is challenging, with premiums changing due to claims rates and industry competition and capacity. Startups must deal with dynamic pricing and claims forecasting, coupled with upfront acquisition costs that are paid back over a long time and with a complex operational structure, given the need for multiple partners and service providers. Insurance is such that claims because of unforeseen events, fraud and mispricing can potentially have a major detrimental impact, especially with fast scaling of customers and growing revenue. Companies require robust systems and experience and large insurance portfolios to manage and the capital and time to get right. Insurance is different than many industries, where you can achieve a positive gross margin with increased sales and expect that to continue because of improvements in production and scale economies.  The cost of acquiring an insurance customer is relatively high given that insurance is a low-turnover product. After all, you don’t buy more insurance than you need just because you see a good advertising campaign or you are targeted on social media. This means that the relationship between marketing and sales is different than in other consumer products, and it can result in a longer conversion funnel. Typically, the time between when a person first gets attention and the purchase could be three to 12 months or longer. In addition, retaining a customer is crucial for the profitability of the business, and digital solutions make it easier to switch. Regulations may constrain pricing options and in some cases raise hurdles to dynamic pricing. Regulatory and consumer legislation can also affect the scope for upselling of ancillary products and cross selling of other insurance and products. Traditional retail car insurance targeted a 60% to 80% claim ratio (as proportion of premiums) and 40% to 25% operating and acquisition cost levels, compensating with additional investment income to target an overall profit of 8% to 15%. The insurers were helped in improving profitability by a large and static pool of customers who rarely switched carriers and required minimal administration support. With the emergence of direct telephone insurers in the 1980s and 1990s and online insurers in the 2000s, premiums fell 15% to 30%. The new models could bring operating and acquisition costs down to 15% to 20%, with loss ratios still in the 60% to 90% range. The challenge was that initial acquisition costs for new customers could be at least 20% to 30% of premiums, and the rate at which existing customers switched to new carriers each year rose from the historic rate of 5% to 10% to a churn rate of 20% to 40%. Can new digital startups create as much as 30% savings for consumers, which normally is considered sufficient to encourage switching? And will savings on claims be sufficient to support this sort of cost cut? Can the startups build an efficient operating platform to reduce costs to around 5% to 10% of the premiums and still improve services? Takeout Working on building the team, data analytics, pricing engines, processes and systems to ensure in-depth control on not only revenue generation but profitability will be critical. Just as a low-cost airline has to have in-house expertise in capacity utilization and pricing, this ability to both generate revenue and profit must eventually be a core function of most digital insurance startups. This will be an important differentiator for successful startups. Providing new services and rewards for certain behaviors will be critical to avoid competition on price only. See also: Should Incumbents Ally With Startups?   In addition, further reducing claims frequency and costs by enhanced data analysis and focus on prevention will be one of the success factors. Customer service and retention will become even more important to recoup upfront acquisition costs. Best that this focus is embedded in the business model! Having a low-maintenance cost platform covering the complete value chain is an important factor. The platform needs to be robust and agile enough to provide the relevant information and easily adjustable for dynamic pricing, marketing and services. Although there are many off-the-shelf solutions, will these be sufficient? We are curious about your perspective.

Can you imagine a world where everyone was inspired to go to work? Do you inspire your team to greatness as a leader, or are you one of those leaders who are quite comfortable with your staff coming to work every day without any sense of purpose? The No. 1 problem facing many organizations today is leadership. A Simon Sinek YouTube video titled “Why Good Leaders Make You Feel Safe” tells the story of a group of Marines that came under heavy fire from three sides in an ambush in Afghanistan, when one Capt. William D. Swenson repeatedly ran into the line of fire to bring injured men to safety and saved at least a dozen lives. A GoPro on one of the medics captured Swenson and a comrade carrying a wounded Marine to a helicopter for evacuation. After putting the man down, Swenson gave him a kiss on the forehead and then ran back into the kill zone. I said to myself, wow, if a man is willing to give his life for me, I will follow him to the ends of the earth. (Swenson received the Medal of Honor.) While a business environment is obviously not a war zone, even though we sometimes use war as an analogy, the sort of deep-seated love that Swenson showed needs to be present in a workplace, and it is missing in many organization today. People don’t feel safe, and they do not believe their leaders will have their backs when they are in the line of fire. The greats of leadership have a persuasion style that allows them to sell their ideas and inspire people to follow their vision. One of the most critical skills in the repertoire of any leader is the power to inspire and influence people by their words and actions rather than coercion. See also: How High-Performing Salespeople Persuade   In a fascinating book, The Art of Woo, Using Strategic Persuasion to Sell Your Ideas, by G. Richard Shell and Mario Moussa, the authors discuss five different leadership personality approaches to persuasion: Driver, Commander, Promoter, Chess Player and Advocate. Some people are comfortable using three or four of these styles, while others prefer to play only one or two. This book draws from many other brilliant authors and expertly highlights the value of authenticity and self-awareness in your ability to persuade and influence. The book says you need to make two basic choices: Are you other-oriented or self-oriented? (In other words, are you going to tailor your messages for your audience, or are you going to make unmodified announcements rather than spin them for each audience?) And, will you be loud or quiet? The book then goes through five styles; one of the keys to great leadership is understanding your unique persuasion style. While you are reading, consider your present environment, your employees, values, etc. and ascertain which communication approach is best aligned to your natural persuasive leadership personality. Driver (Higher Volume and Self-Oriented Perspective) According to Shell and Moussa, when individuals are high-volume and prefer to announce their perspective without a lot of adjustment for their audience, other people are likely to experience them as demanding. They can be overly one-dimensional and prefer to persuade people by saying things like "Do this my way, the right way or you can hit the highway." I remember working as a plumber’s assistant in my younger days, and all the employees called the founder of the company Frank Sinatra -- because he liked everything his way. But if drivers are dedicated to the organization mission, they can be effective persuaders. The book mentions former Intel CEO Andy Groves, who personified a high-volume, self-oriented CEO and was hugely successful. Grove kept a wooden bat near his chair. One day, just after a meeting had gotten started, several executives slipped into their seats. Grove fell silent at their arrival, then grabbed the bat, slammed it onto the table, and shouted, "I don't ever, ever want to be in a meeting with this group that doesn't start and end when it is scheduled!" Intel was subsequently famous for on-time meetings. See also: Should You Use a Coach/Mentor?   Grove wasn't a nut; he was very aware about his communication style and the culture he wanted to create at Intel. Commander (Low Volume and Self-Oriented) A commander speaks from a position of quiet confidence and authority, using expertise combined with finesse to make a point in an understated way. The book highlighted J.P. Morgan as someone who conducted himself from a position of quiet confidence and credibility. You don't have to be an aggressive Driver when you want people to know exactly what you think. Indeed, a quiet, understated demeanor can often be much more efficient. People listen. The Commander keeps his counsel and puts a premium on maintaining as much control over decisions as possible. In a financial panic in 1895, Morgan played the Commander with finesse, saving both America and his financial empire from a fiscal catastrophe. The Promoter (Higher Volume and Other-Oriented Perspective) Promoters are outgoing, optimistic and assertive. They are friendly. When played well, this role features a gift for gaining and maintaining a wide circle of relationships. The CEO of SAP, Bill McDermott, immediately comes to mind. During his 17 years at Xerox, where he became the youngest divisional president, he was assigned to turn around the Puerto Rican unit, which was ranked 64th out of 64 divisions in the world. The following year, that same division was No. 1 in the world. When asked about the spectacular turnaround, Bill McDermott said that he listened to the people, because they know why things aren’t working. McDermott said people told him two things:

1. They wanted a vision, so they could be inspired when they came to work.
2. The staff wanted their holiday party back.

When the division went from 64th to 1st in the world, they got their holiday party back, at the Old San Juan Hotel. The Chess Player (Lower Volume and Other-Oriented Perspective) The Chess Player style involved plotting a set of moves that brings about the desired outcome. Leaders with this type of personality prefer to operate in more intimate settings, quietly managing strategic encounters behind the scenes. A Chess Player is an effective strategist who is less extroverted than the Promoter but shares with the Promoter a keen interest in what makes other people tick. Shell and Moussa point to John D. Rockefeller. In 1865, Rockefeller wanted to end a partnership with four men, but the firm could be dissolved only if all the partners consented. Rockefeller went to work behind the scenes, lining up support from some banks. When he got the support required, Rockefeller provoked a quarrel over an oil industry investment and quietly extracted himself from the unsavory business partnership. If Rockefeller was more prone to a driver personality, he may have engaged his partners in a shouting match or threatened litigation, demanding they release him so he could follow his dreams. However, Rockefeller took the path of the Chess Player by carefully plotting a set of moves behind the scenes. The Advocate - Moderate Volume and a Balance Between Self-Oriented and Other-Oriented Perspectives. The Advocate uses a full range of tools to get her points across. The Advocate strives for balance -- persistence without shouting, being mindful of the audience without losing perspective. A classic example used in the book is the founder of Wal-Mart, Sam Walton. Walton visited one of his stores and noticed someone at the front greeting customers. Walton was fascinated with the idea and told his team that all the stores should have greeters. Now, Walton could have simply ordered people to do what he wanted. But he was seldom the Driver that Andy Grove was and instead relied on a more moderate combination of vision, persistence, relationships and reason to get people to see things his way. There was a lot of conflict over this new initiative, and Walton went to lengths to explain why this greeters program would be good for the company. He let the debate go on in an attempt to fully explore all the ideas. After 18 months of discussion and experiment, Wal-Mart finally adopted the practice company-wide. Walton did not dictate or say things to his executives such as “Don't you trust my judgment?" or "Don't you think I know a thing or two about what is good for Wal-Mart?" Instead, Walton sold his vision, and his team eventually brought into the concept. As a leader, you need to be aware of your strengths and weaknesses in persuasion. You need to understand your preferred communication channels, and likewise, you must take into consideration the dynamics of your environment, your organizational values, culture, people, etc. Some companies are fierce guardians of their business values, and if there is a misalignment it can cause havoc within the company. For example, you cannot be an Andy Grove in a culture that promotes family values, teamwork, collaboration, etc. The culture is completely different. See also: Systematic Approach to Digital Strategy   Woo-based persuasion is all about aligning interest, values and relationship as people find it easier to say yes rather than no. Regardless of your personality, when your team trusts you, when you figure out which channels of communication your counterparts are best attuned to, your will gain tremendous credibility within your company. My personal persuasion style is more of a Chess Player. I prefer to quietly managing strategic encounters behind the scene. What is your personal persuasion style?

Combining the resources of one of the world's largest TPA firms with one of the world's largest sharing economy platforms will result in true innovation within the insurance industry during a time when most carriers continue to operate in a legacy manner. - Forbes, December 8, 2016 The writer was describing the announcement last week that Crawford will acquire 85% of the equity in my company, WeGoLook, which I believe will be the precursor both for other mergers and for other types of deals that will drive innovation through a merger of the gig economy and the insurance industry. Let me explain. Traditional Supply Chain Disruption Simply put, the traditional supply chain is being disrupted. Hugely. Digital technology and innovation have altered the traditional supply landscape in a number of ways. Technology has decentralized and democratized the supply chain, removing the need for traditional intermediaries. This digitization has resulted in the rise of gig economy platforms, which can use mobile technology to organize cost-efficient labor in a connected supply chain ecosystem. For a long time, insurance carriers have tacitly acknowledged the need to adjust business models and consumer delivery processes. The time has come. The WeGoLook-Crawford partnership is only the beginning. Customer Experience Is Changing Forbes contributor Steve Olenski noted that "the [WeGoLook-Crawford] merger is making the customer experience even better than before by adding key benefits for insurance company customers." These advantages include a more streamlined claims process, the addition of flexible workers to supplement field staff and powerful mobile technology. See also: The Sharing Economy and Accountability   It goes without saying that the younger generations love mobile. When it comes to business-to-consumer interactions, mobile is becoming even more important than traditional communication pipelines. Simply put, the customer experience is now one of on-demand. WeGoLook, and other gig economy platforms, are premised on on-demand asset delivery through mobile technology. The Workforce Is Changing The world is becoming more freelance. By 2020, one study predicts that 50% of the U.S. workforce will be independent contractors. This has significant implications that move beyond the insurance industry itself. WeGoLook and the gig economy are using technology to redesign work process flows for enterprise clients. This, combined with the ability to dispatch on-demand workers who possess the proper skill-sets, helps to augment and supplement existing, full-time workforces. This augmentation can be indefinite, or during times of peak demand. Perhaps even more importantly, gig workers can easily act as field personnel for platforms that don't yet have a nationwide footprint. For insurance carriers, this results in a much faster and cost-effective way of providing inspections, or performing low-complexity tasks. Gig companies including WeGoLook are more than just vendors; we easily become part of traditional business processes through partnerships and acquisitions. What happened last week, was a perfect example of this integration in its infancy. Expediting Claims Processes The Crawford-WeGoLook acquisition solves one of the most persistent challenges in the insurance industry: how to get claims processed faster. Today, insurance inspections may take anywhere from a few hours to a few weeks to schedule and execute. With the acquisition of WeGoLook, Crawford is fast-tracking the entire process and streamlining the claim process workflow by leveraging “gig economy” workers, already in the field"

• Crawford will be able to send out claim requests in real-time, tapping into WeGoLook’s workforce of 30,000 Lookers, and growing.
• Crawford will be able to assign experienced agents to high-priority tasks, allowing Lookers to handle simple inspection requests for a fraction of the cost.
• Crawford will experience extensive data capture efficiencies. All inspections sent through WeGoLook will be funneled through a secure, mobile platform. No more paper trails, and no confusion over what an inspection does or does not entail.
• Crawford can leverage WeGoLook’s custom inspections capabilities. For special requests, such as needing an agent who is proficient in a specific language, Crawford can simply include the request in the order to WeGoLook’s workforce.
• Crawford can quickly scale its workforce up or down to match demand for inspections.

Indeed, according to Crawford's press release, this strategic acquisition will enable "Crawford to revolutionize, automate and expedite the claim handling process by utilizing a large mobile workforce for automotive and property inspections." See also: A Mental Framework for InsurTech   These are exciting times for the insurance industry, with innovative technology ingraining itself in this centuries-old industry. The above thoughts are simply my observations, and time will certainly tell the full story. But I can assure you, the marriage between the insurance industry and gig economy will be a lengthy and prosperous one.

Dr. David Dantes, a retired ER doctor in his 70s, still manages to work six hours a day starting at 6:30 am and sees about 20 patients per day. His lifetime of medical experience would be ending if he hadn’t joined a telemedicine platform earlier this year. Meanwhile, after a long day of flu-season patients, Dr. Linda Anegawa also uses a telemedicine system to talk to three more patients who couldn’t meet in person. As a doctor on a virtual platform, she’s been able to build amazing trust with many patients who keep coming back for her. Both Dr. Dantes and Dr. Anegawa are Stanford-trained physicians who believe in providing quality care and convenience to patients. Primary care is often not accessible for seniors and busy patients, and a visit to the ER can be traumatic and expensive. Telemedicine can solve these pain points by bringing care to patients wherever they are and whenever they need it, while smoothing out the logistics of scheduling and traveling, so doctors can focus on their top priority of delivering care. Similarly, health AI holds the promise of increasing efficiency in the care process for improved care outcomes and better time management. Telemedicine – Bringing Top Quality Care to Patients Conveniently and Efficiently Telemedicine is not new. There are a large number of companies including Teledoc and other well-funded private companies such as American Well, MDLive and Doctor on Demand that offer telemedicine solutions. Many of the hurdles facing these companies are related to lack of focus on physician quality and low utilization due to patient education, and rolling out services through employer insurance programs doesn’t help. Multiple research and studies have shown that only two out of every five consumers have heard of telemedicine. Utilization rate is even lower at less than 5% across the industry and less than 2% in many companies. If telemedicine truly delivers on the promise of bringing quality care and convenience to patients, why are adoption rates so low? This past summer, I conducted a survey with 561 participants across the U.S. and found that although 95% of respondents have never used telemedicine, 57% are interested in trying if key concerns could be addressed. Topping the concerns is the quality of physicians, which suggests that telemedicine providers with high-quality physician networks are much better positioned to have high adoption and utilization rates. PlushCare (GGV portfolio company), the telemedicine platform where both Dr. Dantes and Dr. Anegawa operate, has addressed this issue by building a physician network that only includes doctors from the top 50 medical schools in the U.S. This patient-centric approach with an emphasis on physician quality is seeing a dramatic uptick in both adoption and repeat visits. See also: Telemedicine: Fulfilling the Promise   Now that we’ve outlined the needs and primary adoption barrier of consumers, let’s look at what motivates doctors to use telemedicine, because ultimately doctors are the key to the quality of the service. Beyond the scheduling flexibility, companies like PlushCare also offer a suite of tools to help doctors operate more efficiently -- from handling the back-end administrative work to streamlining the front-end patient visits -- so doctors can focus on what they do best and enjoy doing the most, delivering care to patients. That’s why we see physicians like Dr. Dantes bringing his years of experience back to practice through telemedicine, and others like Dr. Anegawa taking online patient visits beyond her practice. A common misperception about telemedicine is that the primary target audience is either those who live in rural/underserved areas, or millennials who seem to do everything online. In reality, telemedicine has much broader applications for consumers beyond these groups. Most telemedicine users fall in the age of 35 to 45, with busy work and travel schedules and families with multiple kids. Telemedicine can provide a hassle-free way of seeing a doctor with a lot of flexibility in time and location. The use cases can even be extended to schools, which are often understaffed with onsite medical professionals, or nursing homes when the seniors have acute symptoms. Instead of sending the patients to ER or waiting for a family member, telemedicine can address many of the problems within 10 to 20 minutes and involve family in the discussion in a three-way call. Most importantly, the convenience doesn’t need to come at the cost of quality. AI – Doctor’s Silver Bullet to Boost Productivity and Improve Outcome While telemedicine drives the much needed efficiency to healthcare by simplifying logistics around the care process, health AI targets the care process directly to increase productivity. At the current stage, health AI may not be able to displace doctors and originate treatment plans independently, but it’s more than ready to help doctors allocate time more efficiently depending on individual patient needs, and keep tabs on patients post-visit to improve outcomes and lower readmission rates. For example, start-up company Lemonaid Health provides a “traffic light” system using an AI model developed by physicians to do the first round of screening on patient cases. Cases are categorized into three pipelines upon screening: “Green,” or straightforward, cases account for 80%; “yellow,” or complex, cases account for 15%; and “red,” or extreme, cases account for the remaining 5%. This categorization allows doctors to spend less time on straightforward cases and focus on patients with more complex situations. Another example is Carbon Health, which leverages AI to examine and triage patient cases pre-visit through a chatbot interface. Based on the complexity of the cases, Carbon’s AI assistant books an appropriate amount of time for the visit and shares the pre-visit synopsis with the doctor so he or she can dive right into the problem during the visit. The AI assistant also follows up with patients post-visit to keep track of key indicators and resurface cases to the doctor when anomalies are detected. See also: It’s Time to Embrace Telemedicine   I am excited to see consumer-centric digital health companies that are providing broader access and better quality of care, and bringing efficiency to the process. Consumers are increasingly engaged in issues about their health and are expecting healthcare tech improvements. Meanwhile, tech innovators are continuously disrupting the status quo. I believe consumers are at the forefront of these changes, and innovators behind consumer-centric digital health companies can win big in this market. If you are a healthcare founder making solutions to transform consumer experience, I’d love to talk to you.

Imagine an insurance industry without paperwork, a system where some claims are verified and handled almost instantly and applications/renewals are approved nearly as fast. Imagine being able to minimize fraudulent claims or loss adjustment expenses with a massive, decentralized database that leverages real-time data sources of almost unimaginable size. Imagine the cost savings to your company of improving efficiency across the insurance value chain (from product management, to underwriting, to claims, to customer service), all while potentially increasing the security of your policyholders' data. Now imagine that the technology to do this already exists. It does. The hot name right now is “blockchain technology.” It’s no secret the world is changing faster than ever before, with the “Internet of Things” promising to connect billions of people and technologies to the Internet in the next few years. As more and more people (and more and more things) are connected to the Internet, it’s important to focus on the risks but also important to focus on the opportunities. Emerging risks such as cyber liability, and more traditional risks such as catastrophic natural disasters, are affecting people in ways never seen before, simply because of their connections to the world. The insurance industry as a whole needs to take the lead on global risk management, and to do so the industry needs to leverage data. Lots of data. Big data. As of 2012, 2.5 exabytes of data was being created daily (that's 2.5 billion gigabytes), and that figure has certainly increased since then. Blockchain technology is one of the tools being used to manage these massive, real-time data sets, pledging enhanced security, increased innovation, automation of key functions, more utilization of peer-to-peer insurance, easier identification and prevention of fraud and many more opportunities that may not have even been conceived yet. Emerging risks lead to emerging opportunities, and blockchain technology is a key component in helping the industry take advantage of these opportunities. See also: Blockchain: What Role in Insurance?   But first, a step back. When the world is changing as fast as it is, it’s very easy to be sucked in by buzzwords and overwhelmed by the vocabulary. Let’s go back, gain a basic understanding of what this technology is and how it may revolutionize the insurance industry in the years to come, and determine if it is more than just the latest industry buzzword. Put very simply, blockchain is the platform on which bitcoin (the world’s most popular digital asset and payment system) operates. It is a distributed database that maintains a continuously growing list of data records secured from tampering and revision. For bitcoin, the technology ensures that financial transactions remain secure and "pseudo-anonymous." While originally developed for bitcoin, blockchain technology has been in use as an open source code since 2009. Recently, other industries are working to adapt this technology for their needs. Secure and pseudo-anonymous data sets sure seem like something the insurance industry could get behind, right? The basics of the blockchain At its core, the blockchain is a ledger of transactions and data that is stored on multiple machines. The key component of this technology is that the data is validated and confirmed in multiple “nodes.” Each computer (node) that stores the data runs an algorithm to confirm that a transaction is either valid or invalid before appending it onto the previous chain of data. This use of multiple nodes storing the data is known as a “distributed network,” which can take many forms. A network can include every computer connected to the internet, in the case of a public ledger, or a network of private computers that limit the access to the blockchain, in the case of a private ledger. The construction of the chain is made by “miners” who run algorithms to validate and store the latest ledger of data, the blockchain. The basic principles of the chain imply that, once a transaction is validated, it is “glued” on to the existing chain that includes all past valid transactions. As the data is stored on multiple machines, it cannot be changed. The “valid” blockchain is the longest chain of transactions that the majority of the nodes agree is valid. With the addition of time-stamps for the transactions and cryptology applied to the information, this makes hacking in and changing the blockchain incredibly difficult. A hacker would have to break into a majority of the nodes to create a fraudulent transaction. This major security innovation of the blockchain sounds like common sense when you talk about it but has only been made possible with technological advances in the last few years. For decades, an organization's data has been stored in a centralized data repository. With these systems, a hacker only has to infiltrate the firewall and protocols of a single entity to change the information and defraud the data. If you’re running an insurance company, would you rather a hacker need to break into one system to ruin your firm or thousands? Another positive aspect of the blockchain is pseudo-anonymity. Data is encrypted at the transaction level to preserve anonymity. This is only pseudo-anonymous because theoretically you can gain the knowledge of the past transactions of an individual, and, as such, may be able to identify that person's blockchain. In reality, identification is extremely impractical because a hacker would have to break through the cryptographic protocols of the entire transaction history. Anonymity in transaction data is desirable to guard against data breaches that lead to fraud or identity theft. Enhanced security? Blockchain technology comes with many inherent benefits. The main purported benefit of the blockchain is a direct result of the security: the ability to provide a stream of data that can be “trusted” for accuracy. Users will be able to quickly identify the movement of assets from one party to another. Let’s visit a somewhat common transaction, buying a house, in a blockchain environment. A mortgage lender needs to verify that the owner of a property for sale has the right to sell it and that the buyer has the right to purchase it. Currently, this process can take a day for a “clean” title and possibly weeks for a title that has had prior liens on it. With the blockchain technology, this process can be done in a few seconds and save considerable cost because all of the property data can be stored in a blockchain. The data stored in a blockchain can readily identify whether the seller still owns the property and has not already sold it, and it can identify any liens on the property. The blockchain technology does the work of the “middlemen” in the transactions. However, this doesn’t mean that the blockchain is bulletproof. As with any emerging technology, a parallel effort to undermine and manipulate the system has emerged alongside it. In August 2016, 120,000 units of the bitcoin digital currency, valued at $72 million, were stolen from a bitcoin exchange in Hong Kong. Vitlay Kamulk, a researcher at Kaspersky Lab (an international software security group), stresses that we need to understand the vulnerabilities before widespread acceptance. While Kamulk’s comments were focused on bitcoins, his is an important lesson to keep in mind for all new technologies, including the blockchain. It is important to remember that no system should be considered “invulnerable,” and to continue researching advancements in security, even in something as locked down as the blockchain. Just as an insurance company must perform due diligence when entering a new market or changing its claims philosophy, companies must consider the potential risks from adoption of blockchain versus the potential efficiency gains. Insurance industry blockchain benefits Security vulnerabilities aside, it doesn’t take much imagination to see how this new technology could completely change the way insurance companies work. With this technology, claims costs can be lowered through the use of “smart contracts.” These are contracts that automatically enforce terms when certain conditions arise. As a very basic example, consider a smart insurance contract for trip insurance. After the airline posts a cancellation of a covered flight, it can automatically trigger payment to those who have purchased insurance without the need to use a claims department to verify the loss. This has the potential to save the insured the hassle of filing a claim and waiting through the claims process for payment. It saves the insurer the hassle of verifying the claim. This cost savings would be passed to the policyholder in lower rates. Another insurance example is crop insurance. When insured crops are damaged by weather, a smart contract built on blockchain technology can use meteorological data to pay claims automatically. Wind speed data, precipitation levels, hail size and frequency and other weather-related data can be used to identify areas that are affected and trigger the payment of claims without the need of a claims adjuster. This would drastically reduce the loss adjustment expense that is related to these types of claims. Blockchain technology also has the potential to limit fraudulent claims. False billings and tampered documents are less likely to “fall through the cracks” if the data is decentralized and immutable, which will reduce the amount of erroneous claims payments. Using this technology will enable insurers to lower their loss-adjustment expenses and pass on that savings to consumers. Furthermore, if this technology becomes widely used, it can help mitigate identity theft and other cyber liability losses. Identity theft is the fraudulent acquisition and use of a person’s private identifying information. Usually this is done to realize a financial gain. Because the data is encrypted at the financial transaction level, the technology minimizes the amount of identifying information available in the blockchain, thus minimizing the risk of identity theft. The encryption protocol used by the blockchain technology has the capability to limit cyber liability, as well. Cyber liability is the risk that personally identifiable information will be compromised by a third party storing an individual’s data. Current practice is to store this data in a central location with software to protect against hacking. Blockchain technology enables data to be run and stored based on the current blockchain without unencrypting the underlying data because the chain itself can be independently verified through separate nodes. Though this technology may not revolutionize the manner in which insurance operates, it has the potential to introduce new models of business and increase the capacity of insurance. This technology could change the way insureds interact with their insurers. Limitations of the blockchain As with any emerging technology, these potential benefits do not come about without a few potential limitations, in addition to the security concerns. The most problematic of the limitations is scalability. For the insurance industry to use blockchain technology would take a remarkable amount of infrastructure. Currently, blockchain technology is limited by the amount of computing power available. For data to be decentralized, each node must be able to process the requisite data for each transaction for a growing number of participants. While smaller blockchains are currently successful with a limited number of participants, the insurance industry has a much larger population of participants that will need to have their data validated in a timely manner. This will mean not only more storage space but also enough computing power to quickly be able to validate each new transaction or data point. Another stumbling block that needs to be overcome is the expertise. The expertise and experience needed to create the blockchains and implement the necessary systems to use this technology are still in their infancy. A few digital currencies use this technology, but it is not widespread enough to support the needs of scaling the technology to a point that can be used by most industries, especially insurance. The speed and stability of this technology will require a substantial investment of capital. There may be further concerns with regard to data privacy. The most prevalent user of this technology is the bitcoin system, which operates a publicly available blockchain with open source code. Implementing this type of network into a “permissioned” or semiprivate network to protect personal information might pose significant roadblocks. This will include the implementation of standardization in the protocols used to verify each and every transaction, which is a crucial component of creating the blockchains. The total metamorphosis of the way that data is verified and stored will not come without a considerable cost. See also: How Will Blockchain Affect Insurance?   The most problematic challenge that may delay this technology being implemented in the insurance industry is regulation. Insurance needs to be a highly regulated industry to protect policyholders and the integrity of the companies that provide coverage. The use of blockchains to offer new insurance services, such as peer-to-peer insurance, will leave questions regarding who the regulatory authority is, as the transactions will be conducted over a widely diversified geographic space. Which regulatory body will ensure that policyholders will be protected in the case where a peer-to-peer contract holder does not have sufficient funds to pay a claim? Currently, regulation in the U.S. is on a state-by-state basis, which does not lend a great deal of flexibility when dealing with new products that may be funded by those overseas using this technology. The issue of regulatory governance seems to be the largest hurdle that the insurance industry will face if it embraces this technology. The first industry adoption efforts It’s not difficult to see the potential efficiencies that blockchain technology can introduce into the insurance industry in broad terms. However, this sort of technology really can’t shine unless it’s implemented in a consistent and compatible way, based on minimum standards to exchange data and transactions. To that end, a number of insurers and reinsurers have launched the “Blockchain Insurance Industry Initiative” or B3i, to “explore the potential of distributed ledger technologies to better serve clients.” The member companies tout the speed and efficiencies that blockchain may bring to the insurance industry and are exploring using the technology for inter-group retrocessions. The ultimate goal of B3i is to “explore whether Blockchain technology can be used to develop standards and processes for industry-wide usage and to catalyze efficiency gains in the insurance industry.” With major players in the insurance market exploring the use of the blockchain, it’s important for all insurers to monitor the situation. The B3i is the first major effort to implement the technology into solutions across the insurance value chain rather than isolated use in individual companies. It’s a big development, and insurers should keep their eyes on it. Closing Blockchain technology has many benefits that can aid the insurance industry, but they come with some large question marks. The structure of the blockchain can help to save claims costs and even open up new avenues of marketing insurance as well as the potential for offering new products in a timely manner. The insurance industry has usually lagged behind other industries when it comes to implementation of emerging technologies, and this will most likely continue with regard to blockchain technology. Insurers will likely wait until a larger-scale version is “tried-and-true” for other industries before embracing it themselves. Download the full PDF here.

On Dec. 31, I will close out nearly three decades with the Big “I” at both the state and national levels, which followed a 19-year career with ISO and its predecessors. To paraphrase the Farmers commercial, I know a thing or two because I’ve seen a thing or two over nearly 50 years. I’m so old I can remember when there were underwriting cycles and when investment income was as critical in driving those cycles as underwriting results. When I started to look back over a long career, I was initially inclined to write about all the great things I’ve experienced—there have been many. But I decided to take an approach that I hope won’t be perceived as negative. The good things don’t need fixing. So rather than focus on the best of 47 years, I’d like to address six issues I think are bad for the industry that have evolved at an accelerated rate in recent years. Here’s my roundup of the six worst things that have happened to the insurance industry in the last 47 years. See also: How to Reimagine Insurance With IoT   The ‘insurance is a commodity’ myth. Anyone who pays attention to TV’s incessant insurance advertising knows the focus of the most prevalent ads is almost exclusively price. The public has been duped into believing that there is no real difference between insurance policies or insurers, and that the agent serves no useful purpose except to cost you an extra 15%. At some point, even with the miracle of today’s technology in the form of automation, data analytics and more, insurers will be operating about as efficiently as they possibly can. If competition still focuses on price alone, how can insurers continue to compete? Considering two-thirds or more of the premium dollar goes to  losses and loss adjustment expenses, you have to reduce that expense. The easiest way to do that is reducing what the policy covers. The vanishing premise that the purpose of insurance is to insure. Perhaps due in large part to price-based competition, after the coverage broadening that began in the 1970s, insurance policies are increasingly stripped down to the point of sometimes becoming illusory. In various seminars and webinars, I recount a story about my experience with a tree removal service whose excess and surplus commercial general liability policy excluded both in-progress and completed operations. While this trend is particularly apparent in personal lines and the E&S marketplace, it is spreading to standard markets, as well. The problem is exacerbated by regulators who no longer review insurer form filings for coverage reductions, focusing their resources almost exclusively on keeping prices low—even if the reason they’re low is lack of coverage that endangers the public. Is it time for minimum coverage specs, just as we have minimum auto liability limits? The obsession with data vs. people. Among underwriters and actuaries, today’s buzzwords are “data analytics” and “predictive modeling.” There is nothing inherently wrong with either—as long as they’re used properly as a tool. My son is a data scientist in another industry, and the potential applications of the data many organizations collect are remarkable. But for us, it’s just an evolution from the pure actuarial analysis the industry has practiced for many decades. The industry can’t exist without the ability to predict losses. The movement today, though, is not about predictability in the aggregate, but whether an individual risk or very small subgroup of insureds is likely to have a loss. At issue here is the accuracy and relevancy of these models, as well as their impact on affordability and availability for those individual risks that the algorithms say don’t measure up. As Ben Franklin said, “All things in moderation.” Self-serving firms selling analytical services use the media to tout analytics as the be-all, end-all solution for all that ails the industry. Consider this anecdote: Several decades ago, an agent negligently failed to insure a barn that subsequently suffered a total fire loss. The branch manager of the insurer contacted the four other branch managers of farm insurers the agent represented. They each agreed to pay one-fifth of the loss “so their agent wouldn’t be embarrassed in his small community.” How likely is this to occur today? Industry disrupters and the resurrection of the "death of the insurance agent" prediction. Insurance industry media is loaded with stories about tech disrupters that are going to revolutionize the industry and put insurance agents out of business. Been there, done that. How these startups are getting millions from venture capitalists is puzzling when you consider some of their business premises, including a recent one involving “micro-insurance.” The premise here is that a consumer purchases a policy with a phone app that only covers a particular item—snow skis, for example—and only while they’re in use. How can insurers possibly price such a risk affordably, and who wants 40 separate micro-policies? The reality is that the foundation of the industry rests on an often complex legal contract. It’s not like buying a pair of socks or K-cups on the internet. Not every transaction can be reduced to a smart phone app or Amazon-like “one-click” purchase, nor should it. The certificate of insurance frenzy and the "additional insured" illusion. Everybody wants to be covered by everybody else’s insurance. There’s nothing wrong with requiring business partners to carry insurance; it’s a good thing, because with the exception of auto financial responsibility laws and loan requirements, there’s not much pressure to ensure that individuals and businesses carry insurance to protect the public. But I’m convinced that this situation has gotten out of control. Companies are spending billions of dollars on control and monitoring, while the actual coverages they provide are becoming increasingly illusory. What is gained here? And what are the ethics behind a large firm effectively forcing smaller businesses to cover them under the little guy’s policy, even if the big guy is 99% at fault? The dumbing down of the industry. From agents to underwriters to adjusters, far too many industry professionals do not read the policy forms they sell and service. Many others review them at some point, but fail to understand what they’re looking at. Still others read them and think they understand them, but can’t apply them to real-life loss situations. The problem is compounded by the increasingly rapid societal changes and exposures we witness daily. Insurance executives—including the people involved in the latest wave of industry “disrupters”—appear to lack both a historical perspective of the industry and a fundamental understanding that the overriding purpose of the industry is to protect individuals, families and organizations from financial ruin. See also: Why Are Insurance Websites So Bad?   The insurance knowledge gap is growing, as is the apparent disdain for quality insurance and risk management education. I think mandatory, bean-counting continuing education programs carry some of the blame—by and large, they’ve almost completely failed to accomplish what they set out to accomplish. Despite the negative tone of this article, we work in a great and indispensable industry. Civilization and commerce as we know it couldn’t exist without insurance—but there’s always room for improvement. I have no career regrets. It has been a great ride and a privilege serving all of you over the years. In closing, I’d like to point out that I’m not disappearing from the industry—just moving to a new chapter in my twilight years. I will be unveiling a website next month, where I will be blogging about these and other industry issues for (I hope) many years to come. I hope to see you there.

Especially since the announcement of its plans by Lemonade, there’s been an awful lot of buzz and concern about the arrival of so many new disruptive technologies and how they’re going to change the insurance marketplace. Many of these changes are welcome, bring benefits broadly and root out inefficiencies and costs in places where they should be reduced. I say, more power to them. Some people, however, fear that new selling systems will reduce or eliminate the need for producers and brokers, who are such a part of the traditional insurance buyer’s journey. That will happen to some extent but will only disrupt your business if you let it. The ancient warrior Sun Tzu said, “Swift as the wind. Quiet as the forest. Conquer like the fire. Steady as the mountain.” When the enemy is at the gates, you’d better be ready to both defend your holdings and also strike out strongly to expand your position. Here are four ways you can both hold your ground and expand your territory by using the unique advantage and value positioning that you already have today: See also: Lemonade: A Whole New Paradigm   1. Your Network is Your Net Worth. Focus on identifying a group of network partners who will become what I’ll call your “A list,” where you’ll be building deep, high-trust relationships. Network partners should be professionals in your market area, your city or county who are already serving people who look like they’d also be ideal target clients for the products/services you feature. Imagine having a group of 10 to 12 other key professionals who agree to work together as a team, a trusted team, an inner circle. Now consider they are all committed to and known for delivering the highest-quality products and services and all then actively agree to introduce each other to clients when the need for another’s products become apparent. Once this team is formed, there are myriad ways that members can nurture relationships and promote each other without being costly or over the top. You will increase the value you’re each delivering to clients, and, then, your network will grow your net worth. (Here are 17 ways to build your business by working with referral partners.) 2. Engagement. How many times have you wondered if a service provider you were working with really cared or was committed to you after the sale was made? Many times, I’ve thought, “Because I haven’t heard from XYZ in so long, maybe I should just check out what I can learn online.” Sadly, I've had that thought many times with my insurance providers, who let the gap in the relationship build and made me feel unappreciated (except maybe at renewal time). In one case, I went so many years without hearing from my provider that I switched brokers. Today, web marketers have positioned themselves to exploit your weakness if lack of engagement is your modus operandi. But know, this weakness is so easy to fix. With just a little focus here, you’ll produce huge results. A highly reliable survey conducted over many years showed that professionals who stayed in touch with their clients in various informative and personal ways every two to three weeks had extraordinary retention rates and virtually a 100% incidence of getting referrals! Lower that engagement level, or make conversations just about sales, and that referral rate fell to no higher than 7%. I found those results amazing. I still do. Building highly engaged relationships with your clients by staying in touch personally is easy and is the best offense against the wave of disrupters trying to move your clients over to their offerings. 3. Influence. Give and Give. A few years ago, Arizona State University Professor Dr. Robert Cialdini wrote a seminal book titled, Influence: The Power of Persuasion. It speaks to the amazing human force or emotion I’ll call “the law of reciprocity”: When one receives something of value from someone, there’s usually a desire ultimately to give something back. So imagine what happens with your clients, your trusted network, even your friends and family when you are building your stance as the “giver.” Getting in touch, staying in touch, giving and giving, in various ways produces huge returns as the people you give to build this desire to reciprocate. In this “economy of giving,” everyone benefits, and it is very, very hard for an outside influence to come in and dislocate this relationship. We’ve seen many insurance professionals apply this process in a systematic way to a small group of key connections and end up with as many as 40 new referred opportunities in just 90 days. Relationship “glue,” higher retention and a filled new prospect pipeline… how does that sound as a good offense to face the external market changes coming at you. 4. Do Your Job! That comes from coach Bill Belichick of the New England Patriots, and, regardless of your feelings about the Pats, his simple demand has helped produce the most consistent success among all NFL teams over the last 15 years. Yet so many of us don’t work the process in a consistent, disciplined manner. Instead, we float from idea to tactics to new idea, and the simple things that are so clear and proven fall by the wayside or slip through the cracks. Imagine what a “15 minutes a day” new habit of following the steps above might do for you and your clients, for your 2017 and for the long-term viability of your business. Imagine how your producers could move from struggles to abundant pipelines with a little more structure and focus on the basics… of simply doing the job of building deep, connected relationships with clients and influencers in your market area. Things will very quickly turn “right side up” across all areas of your business. See also: Why Can’t We All Get Along?   So if you’re concerned about the markets running away from you because of outside forces, stop and make a decision to do the things that are fundamental to every good business. Get yourself and your team aligned on the right behaviors and focused on making a daily effort on the steps that will withstand the intruders. You’ll not only have a defensible castle with a huge moat around it for your business, but you’ll be building a strong offense and growth pathway that makes your business even more valuable. You be taking Lemonade and other threats and turning them back into nice, juicy lemons. I’ll guarantee the ROI on your following these steps will produce so much more than any other marketing or social media programs you might be considering.