There is little in the world of insurtech happening today that insurers couldn’t arguably choose to do for themselves if they were motivated to do it. They have the capital to invest. They have resources and could hire to fill gaps in any new capabilities required. They understand the market and know how to move with the trends. And yet insurers readily engage with the startup community to do the things that arguably they could do for themselves.  Why is that? In Making the Most of the Innovation Ecosystem, Mike Fitzgerald observes the main cultural differences between insurers and the startups they court. These differences give us a strong clue as to why insurers engage with startups, even though on paper they do not and should not need them. Alongside these deep cultural differences, I believe that there is another angle worth exploring to help answer the question. That’s the market’s maturity stage and, with it, the strategies required to succeed. One model that helps explain this relates to the work of Abernathy and Utterback on dynamic innovation and the concept of the "dominant design." To accept the argument, you first need to believe that we’re on the cusp of a shift from an old world view of the industry based on a well-understood and stable design toward one where substantial parts of the insurance proposition and value network are up for grabs. You also need to believe that, for a period at least, these two (or more) worlds will co-exist. See also: Insurtech Has Found Right Question to Ask   So, here’s a quick overview of the model (in case you’re not familiar with it)… Settling on a 'dominant design' First introduced way back in the mid-1970s and based on empirical research (famously using conformance toward the QWERTY keyboard as an example), Abernathy and Utterback observed that when a market (or specifically a technology within a market) is new, there first exists a period of fluidity where creativity and product innovation flourishes. During this period, huge variation in approaches and product designs can co-exist as different players in the market experiment with what works and what does not. In this early, "fluid" stage, a market is typically small, and dominated by enthusiasts and early adopters. Over time, a dominant design begins to emerge as concepts become better understood and demand for a certain style of product proves to be more successful than others. Here, within an insurance context, you'd expect to see high levels of change and a preference for self-built IT systems to control and lower the cost of experimentation. Once the dominant design has been established, competition increases and market activity switches from product innovation to process innovation – as each firm scrambles to find higher-quality and more efficient ways to scale to capture a greater market share. This is the "transitionary" stage. Finally, in the "specific" stage, competitive rivalry intensifies, spurred on by new entrants emulating the dominant design; incremental innovation takes hold; and a successful growth (or survival) strategy switches to one that either follows a niche or low-cost commodity path. Within an insurance context, outsourcing and standardization on enterprise systems are likely to dominate discussions. Applying the ‘dominant design’ concept to the world of insurance and insurtech Building on the co-existence assumption made earlier, within the world of insurtech today there are broadly (and crudely) two types of firms: (1) those focused on a complete proposition rethink (such as Trov, Slice and Lemonade); and (2) those focused on B2B enablement (such as Everledger, Quantemplate and RightIndem). The former reside in the "fluid" stage (where the new dominant design for the industry has not yet been set and still may fail) and the latter in the "transitionary" stage (where the dominant design is known, but there are just better ways to do it).

Historically, many insurance companies spent so little time thinking of customers as flesh-and-blood people and were so limited by their information systems that they referred to customers as policy numbers. But insurers are developing much fuller pictures of their customers for two reasons: because they have to, and because they can. The change will provide major benefits. The “have to” part of the equation comes because customers’ perceptions are changing and their demands on companies are increasing. Amazon lets whole families track all their purchases in one place and makes smart recommendations for possible purchases, based on purchase histories. Why shouldn’t insurers? Facebook knows so much about users that it can guess when you’re thinking of buying something and put a link to, say, a couch in front of you when you move into a new place and somehow indicate you’re in the market for furniture. Why can’t insurers be that smart and sensitive? In general, the group known as GAFA – for Google, Amazon, Facebook and Apple – has provided such a good customer experience and has so shaped our daily activities that every other company is increasingly held to their standards. That’s true even for insurers, which have always felt they were just being compared against each other and which have had to change little about their basic approach since Edward Lloyd set up his coffee shop near the wharves of London in 1688 and began facilitating the writing of insurance contracts for ocean voyages. The “because they can” part of the change comes through a concept known as Customer 360 that is taking hold in the industry. The approach relies on advancements in technology that knit together existing systems, which have traditionally been managed as independent silos. As part of the change, companies like Saama pull together all kinds of data – both structured and unstructured – and cover all aspects of the customer and of the customer experience. See also: How to Bottle Great Customer Experience Customer 360 provides so much fuller a view of customers that it produces four clear benefits:

1. Rates for customer acquisition increase because analytics allow for more targeting and personalization. At the same time, customer acquisition costs decline.
2. The customer experience improves, which both reduces customer churn and creates opportunities with potential new customers as Net Promote Scores climb.
3. Opportunities to cross-sell and up-sell arise. As a result, key metrics improve, including share of wallet, policy premium revenue and multiline penetration.
4. Insights about the competition and the market increase, because you know more about what rivals are doing and how customers are responding.

The analytics involved in Customer 360 may also let you push the data and produce additional uses and insights. If a hurricane is approaching Louisiana or a tornado appears in Texas, you can advise clients on how to prepare and then how to get quick service if they need to file a claim — the claims process becomes faster for customers, in any case, because once you have a few claims filed about a storm you no longer need to gather the basic information about it. Customer 360 works by understanding a full household, rather than treating each member as an individual. The approach then pulls together data in six areas that historically have been hard to coordinate:

1. Products, whether personal lines such as auto, homeowners and life or whether commercial lines.
2. Preference management. Does the customer want to be contacted by phone or email? Do those preferences vary based on where the customer is in the process (billing, claims, etc.)
3. Interaction management. Have you contacted someone with marketing materials, phone, etc.? Have you detected some activity on social media? Has something changed about a customer’s credit?
4. Life events and decision management. Does government data tell you something new about a customer? Does a change in age suggest a new course with a prospect?
5. Extended data. What can you learn from Lexis-Nexis, from the census, from other third parties?
6. Performance management. How can you keep improving your understanding of the customer and grow your relationship?

Right now, most insurance companies aren’t actually sure who the customer is. The company knows who the agent is and works with the agent to make sure the customer gets the kind of customer he wants, but most of the data they have is on the agent. With Customer 360, if someone’s history suggests she is looking into baby names or includes an Instagram post about being pregnant, you know it’s time to offer them life insurance policy options. Someone starts looking at houses? Time to offer new house insurance. And so on. With Customer 360, insurers have a dashboard on the customer that looks like this: All policies are grouped together, even if they are in different names in a household or at different addresses – no more trying to sell a policy to a husband that the family already has one in the wife’s name, for instance. Preferences are there to be seen, meaning an agent won’t do something that annoys a customer. All interactions are logged in one place. And analytics generate insights that suggest opportunities for up-selling or cross-selling. See also: Want to Enhance Your Customer Experience?   While the sort of integration required for Customer 360 used to take as long as five years, many of these projects can now be tackled in seven or eight months. The speed comes partly because we begin with 70% of the components for Customer 360 pre-built; the client builds its competitive advantage with the final 30%. Recently, for instance, Saama helped integrate more than 15 legacy systems, automated data ingestion, integration and integrity checks and added a role-based, secure dashboard with new key performance indicators (KPIs) and self-service capability for end users. In all, more than 20 years of data was loaded into the model. Many insurance companies have talked about Customer 360-type integration for a while, yet they’re still missing out on the opportunity. With this approach, it’s possible for companies to have a broader view of their customers than ever before. And that only means good things both for customer satisfaction and for a company’s bottom line.

Mutual companies, which are operated for the benefit of their member-owners and are not controlled by outside investors, have been experiencing a moderate period of growth following the recent financial crisis as policyholders have retreated from stock-owned institutions. Mutuals’ share of the world insurance market increased from about 24% in 2007 to a little more than 26% in 2014. Their share was much higher in the late 1980s and early 1990s, before a surge of de-mutualizations in a number of developed countries took place. One of the challenges facing mutuals is new, risk-based regulatory capital standards and the introduction of tougher corporate governance arrangements that are designed to boost the resilience of individual insurers and curb excessive risk-taking. The requirements could put some mutuals at a competitive disadvantage. However, the biggest challenge to mutuals comes from digital technology, which is profoundly changing the competitive environment for all insurers. Existing mutual insurers recognize the need to innovate, and some are on the front lines of change, promoting digitalization in all areas of operations. Some smaller, more traditional mutuals, however, still remain slow to adapt. The growing development of peer-to-peer (P2P) insurance platforms, which enable individuals to share risks among themselves in much the same way that affinity-based mutual insurers do, has also had an impact. Find the full report here.

In 2014, I collaborated with EY to develop Russia's first risk management business game. It was great fun, and as a result we created a pretty sophisticated business simulation. Participants were split into teams of 10, each person receiving a game card that describes a role (CEO, CFO, risk manager, internal auditor, etc.). At the start of the game, teams must choose one of four industry sectors (telecom, oil and gas, energy or retail) and name their company. The game consists of four rounds, in each of which teams must make risk based decisions. Each decision has a cost associated with it and a number of possible outcomes. Teams must analyze and document the risks inherent in each decision they make. The riskier the decision, the higher the probability of adverse outcome. At the end of each round, a computer simulation model chooses a scenario, and the outcome is announced to each team. The aim of the game is to increase the company valuation by properly weighing risks and making balanced business decisions. The winning team is the one that increased its company's value the most after four rounds. This game was successfully played by participants at two risk management conferences as well as postgraduate students at the Moscow Institute of Physics and Technology. See also: Can Risk Management Even Be Effective?   More information about first game is available here. Let me know if your company is interested in sponsoring the translation and running the game in English. Risk management business game 2015 In 2015, I started working with Palisade to develop something a little different. Just like in the previous version of the game, the participants were split up into teams of 10. However, the game mechanics have changed substantially. Each player still receives a card describing a role, but this time the card provides a complete history of the character's role within the company and assigns each player a unique secret mission. The aim of the game is to successfully complete a merger between a large holding company and an innovative startup. The game, as before, consists of four rounds. The first round involves performing a risk assessment of the target company. Each team must identify 10 significant risks using only the information provided on the cards. The second, third and fourth rounds are dedicated to the management of these risks. Each identified risk has between 5 and 10 possible mitigation strategies that can be selected by the team. Each team has a limited budget dedicated to risk mitigation, and each mitigation action has a cost. The effects of each mitigation action selected by the teams was modeled using Palisade@Risk to determine whether it increases or decreases the value of the target company. The winning team is the one that increases the value of the target company more than the others and is then able to complete the merger. More information is available here. Let me know if your company is interested in sponsoring the translation and running the game in English. Risk management business game 2015 (online version) With the help of eNano, we went even further and produced an interactive risk management business game (only available in Russian). This game combined an e-learning course and an interactive business simulator. Each participant takes on the role of general manager of one of three innovative companies. They then receive tasks that need to be completed throughout the e-learning course:

• First, each participant needs to conduct interviews with all colleagues to identify and document risks;
• Then he needs to evaluate risks using the information presented. Note that, just like in real world, most of the information presented is biased;
• Then he needs make difficult decisions relating to risk mitigation given a limited budget;
• During the last step, participants need to develop an action plan designed to improve risk culture.

All of these steps increase or decrease the company valuation. You can find out more about this course here. Risk management game 2016 This game is the result of collaboration among Risk-academy, Palisade, Institute for Strategic Risk Analysis (ISAR) and Deloitte. Together we have created an amazing business game to teach non-financial management and staff how to perform risk modeling on day-to-day management decisions. Participants will have to play a role of an aircraft engine manufacturing company. Each team has prepared a business case for a multimillion-dollar plant modernization. Unfortunately, the project plan have just been rejected by the board, so teams only have a couple of hours to conduct in-depth risk analysis and present an updated business case to the board. See also: Risk Management, in Plain English   The game is focused on risk modeling, requiring participants to identify and validate management assumptions, identify relevant risks, establish ranges and select possible distributions for each assumption, perform Monte Carlo simulation using Palisade@Risk and present the final results. All this has to be performed in limited time and with incomplete information... just like in real life. And just to add a little bit of drama, like in real life participants have to deal with unexpected "black swans" during the game. The aim of the game is to prepare risk analysis for a multimillion-plant modernization investment project. The team with the highest risk-adjusted rate of return wins. This game has also become one of the modules in the risk management training ran by ISAR; more information is available here. Due to lots of positive comments, the latest risk modeling game is now available in English here. What's next? The latest game was both hard and entertaining, so we began talks with our partners to turn it into an online risk quantification championship. The games will require online registration, have downloadable content and require proper risk modeling. Championships will run once a quarter, and winners will receive wonderful prizes.

Video footage from dashcams or from cell phones that use driver assistance apps are becoming standard today. Some insurance companies are accepting dashcam footage as part of the claims process or are offering incentives (such as reduced premiums) to those who agree to install a black box or share their video feed.  According to the British Insurers Brokers’ Association (BIBA), there is already a fivefold increase in the involvement of vehicle black box technology during in-vehicle insurance policies. If we judge by the increase in software companies offering video-based products specifically for the insurance industry, it is safe to say video is proliferating in the customer service and property evaluation aspects of insurance, too. We anticipate this trend to grow even more in the years to come. This growth will almost certainly culminate in video becoming a standard for the insurance industry. The introduction of video opens a door to some amazing and innovative technological advancements. Video is not only the best channel for conducting communication with millennials, it is also a rich source of critical benchmarking information for unlocking opportunities, innovative customer service and practical applications. We can use video to build efficient workflows and back claims processes with accurate and factual evidence to increase response time and improve performance. See also: FinTech: Epicenter of Disruption (Part 1)   Vehicle insurance is a great example of the impact video can have on the insurance industry. Just a superficial look shows there is an infinite amount of information regarding your vehicle that is out there — be it from your own dashcam or cell phone, other call phones, CCTV, traffic cameras or home security cameras. Video is everywhere, and that is not all. There are some really interesting technologies that can analyze driver video footage when combined with real-time data retrieved from the vehicle’s own board computer (such as available via standard OBD2 connectors). These tools can show the average speed the driver is going and profile driving habits, such as keeping a safe distance, observing the speed limit, the times of day the driver is more (or less) active — and more. All this information can be compiled to provide an accurate and personalized analysis of driving and behavior patterns. By centrally collecting all your video-based information, you gain the ability to combine several technologies that augment video input and provide a better all-around picture. Let’s face it: With the volume of business the insurance industry has, the way you manage your video must be able to perform and grow at the same capacity — while also complying with privacy laws and managing complex content access control policies. Once video is collected, we also gain the video’s metadata consisting of additional information such as date and time. With this information, we can start augmenting our understanding of the video. We can use GPS to cross reference the driver’s location. Include weather tracking software to assess the impact of external driving conditions and combine this information to calculate the effect these conditions have on the driver’s ability to drive safely. We can use social media to understand specific road conditions for specific times and places, such as using GEO tracing for Twitter to monitor real-time complaints from drivers in a specific location at any given time. With all this information integrated and overlaid on top of video (either recorded or in real-time from the field), insurers are able to significantly increase incident processing accuracy and, over time, construct personalized profiles that can result in reduced policy costs and more efficient claim processing. For example, insurers can initiate a probation process for new drivers where a certified mobile app is installed on their phones to be mounted on top of the vehicle’s dashboard. The app will record the drivers' behavior overlaid with car data (such as taken from OBD2 or calculated from the video) and, after a set period of time, calculate insurance plan premiums based on personalized driving habits and issue feedback to the drivers. It would be interesting to see this kind of methodology implemented as a standard for all drivers and use the conclusions collected from all video and other complementary information to create a number-based score for drivers that indicates their objective risk. See also: Connected Vehicles Can Improve Claims   Apart from establishing driver ranking, there is so much more out there that can be funneled to help evaluate drivers, driving techniques, road conditions, vehicle performance and incidents. We are already starting to see sprouts of innovation making use of video that can ultimately improve insurance and the driving safety all around, from startups like DrivingBuddy and Nexar that aim to improve driver safety with real-time video feed analysis of driver activity to government and police initiatives aiming to crowd source driving and parking violation reports.

The rule is straightforward: “If a party requests that a defendant provide a computer printout of benefits paid, within twenty (20) days, the defendant shall provide the requesting party with a current computer printout of benefits paid. The printout shall include the date and amount of each payment of temporary disability indemnity, permanent disability indemnity and vocational rehabilitation maintenance allowance, and the period covered by each payment, and the date, payee, and amount of each payment for medical treatment.... A defendant that has paid benefits shall have a current computer printout of benefits paid available for inspection at every mandatory settlement conference.” — California Code of Regulations Title 8 §10607. The benefits printout is the foundation of every workers' comp claim evaluation. Yet, workers' comp professionals often ignore the basic exercise of examining claim expenditures. Attorneys sometimes come to mediation with a rolling cart holding boxes of documents. But when asked for the printout, they have to contact their office or the adjuster. Stranger still are the answers I sometimes get to the question, "How did you get to that number?” When I ask participants how they formulated their demand or offer, their answers may have no relation to actual claim exposure. See also: How Should Workers’ Compensation Evolve?   Showing up at a mediation or mandatory settlement conference without having scrutinized the printout numbers is inefficient and maybe even sloppy. Better practice is to obtain the printout in advance and create projections to support your claim evaluation. Workers' comp professionals should review past medical expenses to project future expenses. Of course, parties may disagree about what expenses are reasonable and the likelihood and duration of future care. A medical recommendation for a new treatment (which may be disputed) can skew the numbers. For example, resolution of one mediated case hinged on a medical recommendation for a newly available prosthetic device. The printout is also critical to resolving retro and overpayment disputes. When parties disagree about whether payments in a given period should have been paid at the permanent disability (PD) or temporary disability (TD) rate, the printout is the best evidence of what was actually paid. See also: 25 Axioms Of Medical Care In The Workers Compensation System   When both sides look at the printout together, they can often resolve their disagreements with a little help from a mediator.

When you Google Jeopardy! and insurance, you get 855,000 hits, including a range of Jeopardy! games developed to help educate people about insurance. At Majesco’s recent customer conference, Convergence 2016, we developed a Jeopardy! session with insurance industry analysts Karlyn Carnahan of Celent, Martina Conlon of Novarica and Karen Furtado of Strategy Meets Action around the concept of the insurance renaissance and the top predictions for 2017. The focus was to discuss what we see unfolding in 2017 regarding competition, technology, innovation, new products and services, as well as what will emerge as the hot areas of focus for insurance in 2017. It was an engaging, provocative and intriguing set of topics that underscore the pace and level of change and disruption within the industry…as a new renaissance in insurance. There were six areas of focus with four topics. Here are the highlights that you, as industry leaders should be assessing or even acting on. Core Systems Core systems are table stakes in today’s changing marketplace. There will be continued investment, and a major shift to cloud with agile, quick, ready-to-launch platforms is gaining momentum. In addition, some insurers are starting with a new company, new business rather than legacy replacement to rapidly enter new markets or introduce new products … breaking from the traditional path over the last 10 years of legacy transformation. See also: Insurtech: One More Sign of Renaissance   As a part of the shift, core systems must support new products and capabilities such as collaborative services where agents and customers have more transactional transparency and control from quoting and payments to claims. Products will move from indemnification-only to include embedded services and behavior-based to eliminate or reduce risk and claims. Two key predictions about what could shake the market: There may be an introduction of an entirely block-chain-based policy based on multiple simple block chain conditions; and there could be a “zero-day” cyber security exploit, where a hacker spots a flaw before it can be patched and puts insurers on notice that cyber-liability is a potential catastrophic exposure. Digital and Customer Experience Increased investment will continue in portals, but a shift in focus will gain momentum in 2017. Digital transformation will rapidly move beyond point portal solutions to multi-channel/omni-channel experiences with expanded use of alternative channels, mobile and more. At the core of this shift is transforming the customer experience to drive engagement and not just transactional capabilities. This will require a shift from data entry (with a nice user interface, or UX) to high-value engagement platforms that do much more than transactions. This will, in turn, lead to a micro-segmentation focus for customer experience. Increasingly, customers and agents will lose patience with outdated, bad UX and will shift to those who have superior UX. A look at the UX for Lemonade, Haven Life and Slice will give insurers a sense of a modern, intuitive and engaging experience. These companies and other similar organizations are much more than slick portals. They are adept at leveraging micro segmentation, new sources of data, behavioral science, gamification and much more to create an engagement experience instead of a slick transaction experience. Data Data and analytics will become more operationalized and embedded in the underwriting and claims business processes. We will see the expansion of data-driven insurance pricing and automated underwriting into more commercial lines — with a further blurring of processes for personal and small commercial. “Real time” will become full time. Expanded use of third-party data such as live weather data, IoT data, live stream video, drone video, social media and more will be used to make real-time decisions from underwriting through claims. Real time comes to life! See also: A Renaissance, or Just Upheaval?   Machine learning and cognitive technologies are beginning to emerge and gain momentum. This is driven by an array of new insurtech startups, as well as established companies like IBM that are rapidly operationalizing this technology into specific business use cases that add tremendous value…from customer engagement to organizational knowledge. Distribution The landscape of distribution will shift and expand. Significant insurtech investment is currently around distribution, and we will see the impact of technology, integration and connectivity with new channels, the rise of MGAs and the emergence of hybrid distribution models that will continue to disrupt and displace traditional distribution models. The rise of MGAs is of significant note in that they will piece together partners and technology to identify new market segments and new products to meet emerging needs rapidly…with analytics and cloud powering their rise. Google is also ready to get back into the insurance game, having learned from its past efforts. This time, Google will embed predicted premiums into search results, like it does for hotel room costs today. The insurance industry will “freak out” again, but Google's efforts will help drive business. Disruption and Emerging Tech One of the key factors disrupting insurance is the rapid inception and maturation of emerging technologies that have caught many in the industry (insurers, agents and solution providers) off guard. Just look at cloud — now a major deployment choice for core systems. Other technologies are rapidly accelerating in adoption. Telematics will accelerate in adoption across a wider spectrum of insurers for both personal auto and commercial fleets, due to both embedded capabilities within new vehicles and new solutions that offer the same capabilities inexpensively. Telematics data will grow beyond auto telematics to IoT/sensor data for homes, commercial buildings, worksites and more. This will exponentially accelerate and provide “real” proof points on the value and impact for insurance. In addition, we will see the expanded use of live stream video from phones and drones, gamification, autonomous vehicles and more. All of this will drive insurers to begin investing and partnering with services-oriented organizations and startups that can provide risk avoidance or mitigation, whether it is offering safety advice, services that detect potential risk like water heater malfunctions, car engine checkups, worksite safety and more. The industry will start pivoting toward risk management services that will avoid or mitigate high claims and provide an opportunity for new products, revenues and most importantly customer engagement and value. Insurtech Insurtech as a movement will remain sizzling hot! Significant capital will continue to enter the market for insurance startups — from insurers and MGAs to technology providers. While insurtech has the feeling of the “dot com” era…this time it has substance with real business plans, real markets and real solutions. The insurtech movement is sending a clear message to the insurance industry that we have rapidly entered a new era that is more profound than in the past…a renaissance. And insurtech has signaled that, from here forward, insurance must be innovating. But many insurers will struggle with how to innovate, what to innovate, where to start and how to engage the insurtech movement. It will require a leap of faith to begin somewhere with innovation and to determine how to deal with technology startups and work through the “noise.” It requires a shift in insurers' participation…from their partners to venture funds, accelerators and more. For some, having a strategic partner that can bring those opportunities to the table might be the best option. For others, direct involvement will make more sense. See also: The Insurance Renaissance, Part 5   And yes, many of the hot, highly funded insurtech startups might “flame out,” but they will teach the industry a thing or two about meeting customer expectations and needs. Sitting back and thinking “this too will pass” is not an option, because it will not pass. It will just morph as it rapidly disrupts, deconstructs and redefines the industry. Yes, 2017 will likely be an interesting year for the insurance industry. The definition of jeopardy is “exposure to or imminence of death, loss, or injury.” Those who do not keep track of the changing landscape of people, technology and market boundaries are in jeopardy. They will expose their companies to potential loss, injury…and in some cases the death of a business. We at Majesco see it as an exciting time for the industry…a time of great change, challenges and opportunities. While insurers have different strategies and paths to their future, we are convinced that the predictions for 2017 will be a big part of that future.

Trust is an abstract concept that gets thrown around a lot these days. But trust is increasingly factoring into our lives, particularly in the world of online marketplaces, which are everywhere these days. These peer-to-peer exchanges, often referred to overall as the sharing economy, are great for consumers. These sharing platforms are how people and businesses leverage underutilized assets, whether cars in the case of Uber, homes through Airbnb, knowledge through Udemy or labor through WeGoLook. See also: What to Learn From Sharing Economy   There is one thing upon without which these marketplaces could not operate: Trust. In our new world of online marketplaces, traditional intermediaries are gone. Trust is how consumers protect themselves. Trust is how we choose to sell or buy from one another, and it's the foundation of a massive transformation in online business that is unfolding before our very eyes. The Concept of Trust The concept of trust is by no means new, but it has never played such an integral role in the world of economics as it does now. In the online world, how do strangers convince each other to engage in what the always amazing Rachel Botsman describes as a trust leap? Before the advent of the sharing economy, trust was easily established through big brand intermediaries. You trusted that Amazon would not rip you off because, well,  it's Amazon! When buying online through Wal-Mart, trust was established because...you guessed it... you're buying from Wal-Mart. This trust model is easy to understand, but more recently, trust has been decentralized to new P2P markets. How do you know that Joe, who is renting a room to you through Airbnb, isn't a complete weirdo and isn't going to leave you out in the cold? I'm glad you asked. The Sharing Economy Democratizes Trust The sharing economy achieves trust in three vital ways: 1. Ratings/Reviews The first step to establish a higher level of trust is rating and review systems. It’s human nature to want reassurance that the hard-earned money you’re about to spend isn’t going to be wasted on a crummy product or service. The benefit of allowing a buyer to rate his experience should be obvious, especially as more reviews of a product or service pile up. Whether someone is booking a home, driver, tutor, graphic designer or inspector, ratings are the basis upon which users of the sharing economy make their purchasing decisions. Without ratings, the sharing economy would be the wild West! 2. Two-Way System Platforms such as Uber and Airbnb are the pioneers of the two-way rating system, whereby users and sellers both rate each other. This not only helps buyers decide who to engage with but gives sellers an idea of who they're about to share their asset with. Many have critiqued this two-way rating system, believing that it will give rise to retaliatory rating battles. You gave me a bad rating? I'll give you one! But these critics are wrong. Most, if not all, sharing economy platforms that employ a two-way rating system will not display ratings until both the buyer and seller have submitted their rating. Problem solved! See also: Why to Embrace the Sharing Economy   So, to bring traditional review and rating system to the next level, Amazon should allow authors to rate their readers. Just kidding, but you get the point. When it comes to service providers in the sharing economy, a two-way system makes complete sense. 3. Be Less Anonymous, and More You! Finally, one of the most critical components that fosters trust in the sharing economy is the encouragement to prove your identity. Most platforms encourage, and enforce, social proof on your profile. This includes the uploading of IDs, connecting social media accounts or inputting contact information. People are more apt to buy from someone they know, like and trust. Showing who you are, telling your story and providing proof of who you are will increase earnings for sellers in the sharing economy. So it's no wonder that most sellers embrace less anonymity! Trust can be elusive, especially in an era where most economic exchanges occur digitally. But the sharing economy has proved to us that trust can be established between two complete strangers. Now it's your turn; please share your thoughts on the role of trust in the new digital economy, and if there are other ways online platforms are fostering this important concept.

On June 1, there was a high-level conference organized by the alumni of the three most prestigious business schools in France, HEC, ESSEC and ESCP Europe, whose title was “How to run an insurance company in the context of digital, societal and regulatory transformation?” The most burning issues were addressed with depth and perspective, including issues relating to the impact of digital revolution, the clash of generations and the new playground imposed by Solvency 2 on insurance. The three major French insurers, AXA, Allianz and Generali, compete to operate as quickly as possible while the digital transformation of their business lines and organizations face an environment of increased uncertainty and threats from the emergence of new competitors—GAFA (Google, Apple, Facebook and Amazon) or startups—which have mastered the art of customer relationship. Should we fear Google or an insurtech? According to many insurers, GAFA may be strong competitors for insurance companies. Indeed, they have undeniably strong assets: a market capitalization among the highest, expertise not only in customer experience but also in algorithms and data and a very high level of agility. What would be similar to Google – the first advertising agency of the Internet – in a rich yet complex industry like insurance, which is highly regulated and whose confidence is only acquired after many years and millions of dollars of investment? See also: 8 Exemplars of Insurtech Innovation   The insurtech? Besides Oscar and Lemonade, which are true insurers, the vast majority of insurtechs are brokers that cannot work without an insurer’s support. And even if some startups succeeded, it would take time, and they would not be independent for quite some time. Where is the real threat? In 2035, we might see a world with little risk As we know, the heart of the insurer’s business is risk management. However, technological innovations will likely reduce risk levels significantly. According to a KPMG report on autonomous cars, there could be as much as an 80% reduction in car accident frequency by 2040 if auto and safety trends continue. Another example suggests a scenario where the personal auto insurance sector could shrink to 40% of its current size. According to Ray Kurzweil, director of engineering at Google and futurist, we will reach a point around 2029 when medical technologies will add a year to people’s life expectancies. Some believe that the adoption of these innovations will be hindered by people’s refusal to allow invasion of privacy. However, another could argue that, who would hesitate to provide more personal data, such as DNA, if that person was guaranteed, in exchange, an additional 20 years of life? Connected homes that are bristling with sensors inside and out and that also populate smart cities of tomorrow, could contribute to a decline in claims by 43% by the year 2025, according to McKinsey. Whether for life or P&C, over the next 20 years the risk level will significantly decrease, which will result in a drastic reduction in the value of the insurance market. The twilight of insurers? Can we therefore announce the end of the insurance industry? Certainly not. However, the share of insurance and the income of insurers could drop significantly. To maintain the same level of business will require finding new sources of profit. From insurers to “preventers” Indeed, the insurer of tomorrow will be one that will transform its business model around prevention and become a prevention specialist. The decrease in risk will become a major challenge that will require considerable investments in people, infrastructure and technology. New prevention services charged on a subscription basis will likely be the new source of margin for insurers. One can imagine that the new standard of performance for the new model of “Prevention as a Service” will be the ratio of prevention fees to insurance premiums. Then, we will see the complete reversal of the traditional business model. See also: Insurtech: One More Sign of Renaissance The question that then arises is: Should a manager of an insurance company not make the leap and skip the step of digital processing in an insurance context to strive for refocusing its business model around prevention?

When you think of the word “negotiation,” it's easy to envision a bunch of argumentative attorneys sitting around a large conference table, engaged in a heated exchange. But the reality is that many business professionals must engage in negotiations, especially in industries such as the real estate field, the mortgage and lending industry and insurance industry. When negotiating an insurance settlement (or any other settlement, for that matter), the process can get very heated because money is involved. But negotiation doesn't necessarily need to be a stressful and adversarial process. Many focus on the element of conflict – the fact that each side has its own interests. But negotiation doesn't necessarily need to involve a “winner” and a “loser.” It's possible for both parties to walk away a winner. Understand the Potential Negotiation Pitfalls Negotiation can be associated with lots of different pitfalls and obstacles. When you're aware of these pitfalls, you can make a concerted effort to avoid them. When negotiating a settlement or anything else, for that matter, you must understand the most common snares, which include:

• allowing emotional, knee-jerk reactions to interfere with or guide the negotiations;
• a failure to listen to the other party and his arguments;
• a failure to really understand the other party's goals and hopes for the negotiation process;
• a refusal to give and take during the negotiations; and
• working against the other party instead of working with the other party.

Maintain a Cooperative Focus on Working Toward a Solution According to Accredited Income Property Investment Specialist (AIPIS), maintaining a focus on problem-solving is key to successful negotiations, and, “as long as that is the focus, there's no reason it should get ugly....Keep in mind that everything hinges on quid pro quo, which means that, to get something, you have to give something.” See also: The Rest Of The Story: In Defense Of Liens And Good Faith Negotiation   Instead of focusing on the conflict, it can be more beneficial to focus on the more cooperative aspects of negotiation. Instead of viewing the other party as an adversary, you can choose to view the other party as a partner who is also seeking a mutually agreeable resolution. When you take this approach to negotiation, you may find that the process is far more productive. Daniel Shapiro, Ph.D., author of the book Negotiating the Nonnegotiable: How to Resolve Your Most Emotionally Charged Conflicts, says that you must maintain a non-threatening environment during the negotiations. "The moment you feel threatened in a conflict, a whole set of emotional forces turn your conflict into an adversarial battle: It becomes you vs. them. Suddenly the problem feels nonnegotiable because you can't imagine working things out with the other side," he told Forbes.com. Work to Listen, Learn and Understand the Other Side's Needs and Desires AIPIS says that understanding the other side is the “primary factor in being able to solve a problem.... If you don’t know what they want (or need), what exactly are you doing except trying to force your will on someone else?” So take the time to understand the others who are involved in the negotiations and be sure to clearly articulate your own needs and desires. In fact, a successful settlement negotiation session may begin with both sides indicating their position and their needs or desires for the process. Never assume to know the other party's objectives or hopes for the negotiations. This also dovetails nicely with one of the most valuable skills that you'll see in the skill set of a professional negotiator, such as a hostage negotiator: listening. “Everyone wants to feel heard, understood and appreciated,” Shapiro explained, adding, “As you listen, you gain the power of information and affiliation. The other side starts to trust you, and you start to understand what is motivating the other side to act.” Shapiro also underscores the importance of learning, which is an integral part of a cooperative negotiation process. The opposite is true for conflict, where each side outlines their position and shuts out the other side's perspective. “In other words, there is no learning. But this approach to negotiation inevitably provokes a battle between sides – and to the loss of the potential value of working together. Learning is essential to collaboration,” Shapiro indicated. Remain Willing to Compromise and Negotiate A surprising number of people enter into insurance settlement negotiations with plans to convince the others that their demands are fair. With this attitude, you're destined for failure from the get-go because you're not actually willing to compromise, give and negotiate. Negotiation is, by definition, a process of give and take. If you enter the process with a state of mind that is resistant to any sort of compromise or “give,” then you dramatically reduce your chances of arriving at an agreement. In fact, even when you negotiate a solution, you risk emerging as a “loser.” See also: Bad-Faith Claims: 4 Ways to Avoid Them   AIPIS offered a word of caution to this end, indicating that “forcing someone to come around to your point of view only results in resentment and retaliation. You might not pay the price today or next week or next year even, but negotiating with hardball tactics will almost certainly result in damage to your side at some point.” So when it comes time to negotiate an insurance settlement or anything else in your career, be sure that you're truly ready, willing and able to negotiate!