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.

It just makes sense. When an injured worker has an underlying medical condition, recovery is compromised in one way or another. The case will be more complex, and it is likely to have a longer duration, higher severity scores and cost more. A recent article published by Denise Johnson in Claims Journal describes how identifying comorbidities early can help control workers’ comp claim costs. Johnson identifies common comorbidities to watch for, including obesity, diabetes, hypertension and depression. There are many more, too. For instance, a pregnant injured worker will require careful medical management. Pregnancy should be considered a comorbidity and followed closely. Other examples include HIV, hepatitis C, cardiac disease and chronic pulmonary disease. The important thing is to identify the comorbid conditions in claims so they are monitored carefully and referred to nurse case management early. See also: 25 Axioms Of Medical Care In The Workers Compensation System   Comorbid diagnoses can be found in the data—usually. Treating doctors can include the comorbid diagnosis in the list of diagnoses on the bill, but sometimes they do not. They might consider a general health problem irrelevant to a workers’ comp claim, while it might be critical. Reviewing diagnoses in a claim by the date they were added can be revealing. A diagnosis of diabetes or obesity can appear weeks after the injury date and well into the treatment process. Moreover, when in the course of treatment a diagnosis appears can be enlightening and deserves attention. Some comorbid diagnoses appear late in the data because they are newly discovered or the treating doctor becomes aware of them later. An example is discovering a diagnosis for a mental disorder in the data long after the actual injury. A mental disorder diagnosis might result from delayed or unsuccessful recovery as the patient acts out in frustration. Or the late diagnosis might imply previously unrecognized psycho-social factors. Nevertheless, the data should be monitored continually to tag any diagnosis that creeps into the claim picture at any point. When comorbid or any apparently unrelated diagnoses appear later in a claim, it could be a pre-emptive signal of poor response to treatment or even impending litigation. Monitoring the data continually to uncover new diagnoses is essential to avoid missing subtle issues. Data can be made smarter by the form and mechanism in which it is presented to those managing the claim. The manner in which diagnostic data is portrayed for claims reps and medical managers can be not only informative, but actionable. An example is portraying all diagnoses by the date they were added to the claim in bills. Such views can disclose subtleties about what is occurring in the treatment process and inform those managing a claim of ensuing problems. See also: Even More Tips For Building A Workers Compensation Medical Provider "A" Team   Identifying comorbidities and other troublesome conditions in claims using predictive analytics and continuous data monitoring leads to early intervention and best results. For additional perspectives on this topic, please see, “Analytics-Informed Early Intervention Drives Best Outcomes.”

Recent actions by the U.S. Department of Labor (DOL) are causing insurance and other financial services brokers to rethink their business models and how they communicate with their customers. That's because the DOL recently finalized a controversial new standard broadening the definition of who constitutes a "fiduciary" under the Employee Retirement Income Security Act (ERISA). Essentially, the rule, with an applicability date of April 10, 2017, heightens the duty of financial advisers for 401(k) plans and IRAs who are considered "brokers," defined as registered representatives of a broker dealer paid commissions by the investments they recommend. Before the new rule, brokers were held to a standard of suitability, which meant that, when a broker recommended that a client buy or sell a particular security, the broker must have a reasonable basis for believing that the recommendation is suitable for that client. That standard allowed brokers to recommend an investment product that paid them a higher commission as long as it was suitable for the client, even though it may not be the best choice. Under the new fiduciary standard, brokers must put their clients' interests ahead of their own in recommending investments. See also: Do Brokers, Agents Owe Fiduciary Duty?   The new standard for brokers puts them on par with investment advisers registered with the Securities and Exchange Commission or individual states, who were already required to meet the fiduciary standard. The change presents a challenge to the business model of brokers, who typically get paid from commissions, unlike registered investment advisers, who are paid a percentage fee based on the amount of plan assets under management. New challenges for broker customer communications The challenges the new rule poses for brokers don't end with compensation. The new duty will directly affect any information brokers provide to customers in print or digital form that might be deemed a "recommendation" under the rule. A fact sheet provided by the DOL describes a "recommendation" as follows: “A ‘recommendation’ is a communication that, based on its content, context and presentation, would reasonably be viewed as a suggestion that the advice recipient engage in or refrain from taking a particular course of action. The more individually tailored the communication is to a specific advice recipient or recipients, the more likely the communication will be viewed as a recommendation.” A holistic view of the customer communications ecosystem In short, every broker customer communication will now need to be audited to determine whether it constitutes a recommendation and modified if it would violate the new standard. This could be an onerous task. Customer communications management (CCM) processes will be essential for complying with this new rule. Adding personalization to communications is a huge advantage to the adviser, but it is now critical to have a process for reviewing these personalized communications to confirm that they conform to the new legal reality. CCM becomes even more critical considering the efficiency and control that can be gained by centrally managing this content. Scattered, decentralized communications processes will make it far more likely that an adviser will send noncompliant content to a customer, exposing the company and the adviser to considerable risk. Many insurance agencies and other brokers use legacy systems to generate their customer communications, which makes it costly and time-intensive to modify them to ensure compliance with the new rule. IT departments have the skills to make the needed changes, but not the time or full expertise to review and audit the updated customer communications. Insurance organizations should give careful consideration to the following to identify potential obstacles to compliance:

• Determine where customer information is stored. If it resides in multiple departmental systems, there is greater risk that advisers will send noncompliant communications to customers unless these systems are coordinated.
• Consider whether existing CCM processes and systems are flexible enough to incorporate compliance review for today's wide range of communications channels, including mobile, email, web pages and social media.
• Analyze how customer activities are supported by different channels in the organization. Channel communications may be intertwined from a customer's perspective, but managed separately within the organization. Achieving compliance will require understanding how communications appear to the customer.
• Ensure that compliance officers and other regulatory personnel are engaged early in communications creation and automate approval processes to speed time-to-market and create audit trails.

With the new DOL rule, brokers want to know what constitutes a recommendation, and they want to know how to effectively communicate with customers in a compliant way. Ideally, insurance organizations will find strategies that allow brokers the freedom to personalize their customer communications so that they can differentiate from the competition, while at the same time receive the timely guidance they need to avoid making an unintentional recommendation. See also: Fiduciary Liability Insurance in the Nonprofit Sector – What You Need to Know   Accomplishing this will require a careful look at the current customer communications ecosystem and taking the necessary steps to ensure that compliance review is integrated into workflows in the most effective, yet least intrusive, way.

For insurers and technology partners, this is a fun question to ponder: How smart can insurance get? Perhaps an even broader question might be: “What is smart insurance?” What does it look like to apply analytics-based decisions to the process — from underwriting through claims? More importantly, what does it look like to apply penetrating data knowledge to individual people and individual risks? I think these answers may lie in a closer look at our human relationships, and how they closely parallel what insurers are trying to do with a wide and growing array of risks. As the insurance industry shifts its concerns, adds digital connectivity and mature data analytics to its portfolio, it may come to look, sound and act much more like your mother. After you’re done thinking about that picture, let’s consider it a moment. Insurance technology is striving to become cognitive and connected. The cognitive part will be forecasting problematic issues and preventing claims events. It will be asking who your friends are and wondering where you hang out. It will seem like it cares about you, and in some ways it will. The connected part will be deriving relevant insights from everywhere. See also: 4 Steps to Ease Data Migration   “Smart insurance” will be insurance that knows its insureds well, and the insurers that survive and thrive will be INCREDIBLY smart, powerful and successful. The only way insurance will become smart, however, is through data. Data is the gatekeeper to future insurer success. The long-term competitive advantages to be found in data will be found by those who are collecting data across long periods. Data is like calculus or learning a foreign language. It is a building-block science that requires hands-on learning and manipulation to grow its usefulness. Insurers that are dealing with data well today, are going to have a long-term advantage. To illustrate my point, I’d like to look at three aspects of data that we will probably be thinking about for however long insurance is in existence. These three are: patterns, volume and experience. All three play into an insurer’s data capabilities. Analytics is all about patterns or lack of patterns — finding the signal in the noise. In one of my previous blogs, I discussed my affinity for Pandora. Just as my Mom could tell you my first word, Pandora can tell me the first song that I ever listened to on its service. With every song I listen to, it learns more about me. We’ve grown close. It knows what I like and what I don’t, so it is able to identify the signal data and tune out the noise data. How does it do this? It takes my personal data and cross-references it with its 100 million other users to find patterns. As amazing as that is, pattern analysis in insurance has far greater implications and far more exciting applications. With it, we’ll be able to home in on signal indicators within the data and tune out the noise, identifying what’s unnecessary. This will result in an insurer’s ability to make “on the fly” decisions based on patterns that have been learned through cognitive systems, such as IBM’s Watson. Recently, IBM and Majesco announced a partnership (you can read the press release here) to bring cognitive capabilities to cloud insurance offerings and insurance capabilities into the cognitive sphere. Data gives a cognitive learning system the food it needs to accomplish well-rounded learning and growth. The more relevant data it can consume, the better it can find patterns and separate good risks from bad. Data volume is a crucial aspect of the long-term data advantage. While some companies worry that they have too much data to structure, organize and store effectively, many simply don’t have enough. They are either letting data streams sift through their fingers like sand, or they are not seeking the relevant data streams that will empower their risk selections. When they are thinking of data, they may be thinking about the three or four traditional data sources that normally point to good risks or bad. In underwriting, for example, a common point for data scoring, insurers may only pull from a few common sources for information on applicant history. Yet, the future of data decisions may look more like Mom than we know — weighing the big picture and all of the little details. There may come a point where insurance companies shy away from questionable risks on a sort of “data-formulated hunch,” based not on any one large factor but on a hundred tiny hints. Applicants with previous similar profiles turned out to be bad risks for no apparent reason. Maybe we’ll call it insurance intuition. But insurance intuition will only be possible with large volumes of long-term histories, combined with relevant real-time data streams. The difference between insurance decisions yesterday and those of the future will look like the difference between a handwritten description and a hologram. Insurers are beginning to crave the transparency that data can provide. To prepare, insurers need a well-planned and well-structured data organization. They need definitive data knowledge across the enterprise, knowing where they are generating data and which data streams are currently being used. How is the data structured for usability? How is the organization archiving the data for later use? Then insurers need an understanding of what new data streams may exist outside the organization that will add value to their analytics. All of these considerations require insurers to continuously build their volume of usable data. Experience unlocks data’s long-term value. Insurance is about experiences. The more experiences that insurers can record and analyze, the better they will be positioned to accept risks. But the future of experiences and modeling likely outcomes is so much more than that. For an excellent example, let’s look at Google’s work with autonomous vehicles. Google can’t just place a car on the road and let it drive. It needs the system to learn about hazards, driver behavior, traffic patterns and sensing the unexpected. It needs millions of hours of experiential data — far more data than it can acquire with daily driving. What Google has done, is to use real data as the seed for simulations. These simulations model thousands of possible outcomes to any given situation, “teaching” and rewriting the software to adapt without road time. In this way, the Google car is gaining experiences without experience. See also: 3 Types of Data for Personalization   Think of what insurers could do with similar simulations. Using experiences to build new experiences and model thousands of different outcomes to the same event will make insurers better equipped to predict, prevent and protect their policyholders over the long term. As insureds approach a likely claims scenario, data’s cognitive déjà vu will kick in and avert a claims event. For insurance to grow smarter, it needs to reframe what it means to model scenarios based on experience. Experience of a different kind is also a key factor in data’s long-term value. Insurers simply need time to grow their data mastery. Analytics requires testing and validation. Experience, as well as tools, approach and data sources, is what will allow insurers to mine the best analytics from the data they own. There is no time like now. Now is related to the future. It’s the future’s history. If you would like to build an effective data organization or plan your company’s vital data strategy, there is no time like now.

Everywhere you look, companies are using video as a major part of their marketing strategies. And while it is true that many videos are uploaded simply for entertainment purposes, the momentum around video is simply incredible, and top marketers have taken notice. There’s no denying video’s effectiveness in attracting and informing viewers. In fact, according to Brainshark, 52% of marketing professionals worldwide name video as the type of content with the best ROI. That’s why, for agency owners, it’s critical that you pay attention to this medium as a way for you to attract, engage and retain clients. But without a plan, your video content may not hit the mark. This list will provide four great ideas for implementing video in your marketing strategy. Create a “Why Work With Our Agency” video, or staff introduction videos These videos, when produced effectively, can provide an excellent primer for both your current and prospective clients alike. This is your chance to boast, whether it’s your work for local charities or church groups, or your 40 years of providing local service or anything else you may think is noteworthy. Our advice is to keep these videos short and sweet (we recommend 90 seconds or shorter), and answer the question: “What is my unique selling proposition?” Here are a few examples:

• CCW Insurance - Top 10 Reasons to Choose CCW
• Mark Anthony Group - Why Choose an Independent Insurance Agent
• Klinger Insurance - Introduction to Klinger Insurance

See also: Why Video Will Pervade Insurance   Use video to create customer testimonials Hearing your current customers speak about their experience with your agency will provide assurance to prospective customers. Try to have the topics and benefits presented between the testimonials, so any prospective buyer can see all the ways you’ve helped your clients. Again, be sure to keep these videos short and sweet (aim for under one minute!), and make sure there is some specificity -- vague statements like “they’re the best” don’t offer much insight to prospective clients. Here are a few examples:

• Sampson Insurance Testimonial
• W.J. Wheeler Insurance Testimonial

Birthday and Holiday Videos Remember, you are in a relationship business. Everyone loves to be celebrated on their special day, and birthday and holiday videos are a simple and cost-effective way to do just that. Be sure to express your personality, and make it fun. Singing is not a requirement, as long as your tone otherwise is upbeat. Tip: Most email service providers (and even some agency management systems) enable you to set up “birthday campaigns” that will send your birthday videos automatically. Here are a few examples:

• Happy Birthday from Paradiso Insurance!
• Happy Birthday from AltaVista Insurance Agency!
• Happy Birthday from the Stromsoe Insurance Agency! (disclaimer: this video is from MyInsuranceVideos.com)

Create videos that answer FAQs and explain coverages If you’re feeling ambitious, you can flex your insurance expertise with a video that answers frequently asked questions and explains coverages. How many times have you been asked how an umbrella policy works, or whether a flood insurance policy would be a good investment? With video, you’re able to leverage the power of storytelling to better communicate the value of insurance. A good video can also help you sell more, as an informed client is more likely to make a purchase decision. Once you’ve made the video, it can be used again and again -- when quoting, on your website, in your email newsletter and even on social media (a smart way to work!). Tip: Keep these videos to two to three minutes in length. Consider using visuals to help reinforce your message. Here is an example:

• Spivey Insurance (North Carolina): How Much Homeowners Insurance Do You Need?
• Neckerman Insurance Services: Liability for Fitness Centers & Personal Trainers
• The Dickinson Agency: Renter’s Insurance
• Benefits of Umbrella Insurance (disclaimer: this video is from MyInsuranceVideos.com)

See also: Do You Really Have a Digital Strategy?   Those are just a few tips to help you integrate video into your marketing strategy. Video is a powerful and growing medium that cannot be ignored. Whether you’re attracting clients with Facebook, LinkedIn or YouTube videos that establish credibility and trust, engaging them while quoting and cross-selling with videos that show your polish or retaining them with periodic video touches for birthdays and holidays, video is a versatile tool that can be used at any stage of the customer lifecycle. According to Brainshark, 74% of all internet traffic in 2017 will be video, so there’s no better time than now to get started.

Call me old-fashioned, but I believe we have forgotten that technology is not a “what,” it's a “how.” Technology is intoxicating, because it comes complete with millennial attraction, new vernacular, hip-looking office space and sometimes a lot of money. However, keep in mind that the cool new app, acronym or buzz phrase is only as valuable as your vision. Innovation has so rapidly become the most urgent skill set to develop that many new innovation leaders are skipping over the basics and are thrust straight into the "tech" side of their industry. They are left thirsting for and examining every new technology and looking for a place to apply it. In fintech and insurtech, particularly, this list of technologies is long, as many startups jump on the bandwagon of opportunity. For the untrained eye, this can result in a lot of time and money spent on the wrong things. Let's get back to the how versus the what. "What" means the offering and experience you want to deliver. "How" enables that experience. When you are crystal clear about the what, it is much easier to find the technologies you need, and, more importantly, deploy them effectively. See also: Do You Really Have a Digital Strategy?   Becoming crystal clear on the “what” takes careful examination of the current offering, consumer feedback and trends shaping the future. These insights can be quantified so that you know which ones are the most important to focus on. In insurance, for example, some might be focused on price comparison as the consumer need. While this was a strong need years ago, the market is now flooded with comparison sites. This is the reason why even the great and mighty Google couldn’t scale its first attempt. Less obvious — but emerging — in our industry are the ways to make insurance more transparent. This can include everything from the decision process to approve an insurance application, all the way to rate-making and even company profitability. Insurance startup Lemonade has interesting approaches to satisfy this need, and the area of transparency is rich with opportunity. After all, it is the flip side of trust, and we know that the insurance industry is not trusted. However, just because others are going in a specific direction does not mean it's right for your company. It's important to spend time thinking about your own true core competencies and then match them to unmet needs and emerging trends. After six years working in innovation, I have seen that more companies need to spend time choosing the strongest insights that are a match for their power. Then they should hunt for startups and partners based on those insights. While on the surface this approach may appear to narrow the field of choice, it actually widens it because it will help to uncover the non-obvious companies that don’t list themselves as serving a particular industry, and are more clearly just about the “how” that you are looking for. So, back to digital as a “how.” Yes, digital experience, digital interface, digital platform, digital communication, but no, not just plain digital. If you need to kick that habit, imagine yourself managing dinosaurs in Fred Flintstone’s town of Bedrock. What would you do? You wouldn't just focus on how cool dinosaurs are; you would  find the right dinosaurs that could work very hard behind the scenes to create the “what” that the customer expects. See also: 5 Accelerating Trends in Digital Marketing   Watching that show as a kid, I remember some small dinosaurs fit nicely under Wilma’s sink, eating scraps like a garbage disposal. Others were large, and used their mouths to haul rocks like a crane. Some flew with chairs tied to their backs to get people from place to place. We just need to replace those dinosaurs with the modern digital technology, or whatever is next after that, keeping in mind what the consumer demands now and, more importantly, what they will be demanding in the future.