The insurance sector has entered a phase of profound transformation. Numerous insurtech startups—around 1,000, according to Venture Scanner map—have popped up to challenge the traditional model. I believe that we will see a completely changed insurance sector in the medium term. But I’m convinced that insurance companies will still be relevant in the future, or will become even more relevant than they are now, but these companies will have to be insurtechs, or players who use technology as the main enablers for reaching their own strategic objectives. The reach of this digital transformation goes way beyond the elimination of “the middle man” from a distribution point of view. The direct digital channel dominates very few markets and deals only with compulsory insurance. In the vast majority of markets, a multichannel-oriented customer continues—with variations from country to country—to choose at least at some point of the customer journey to interact with an intermediary. But the digital transformation happening in the insurance industry is widespread and encompasses all of the phases of the insurance value chain, from underwriting to claims. See also: Insurtech Has Found Right Question to Ask Every insurance sector player—whether it’s a reinsurer, a carrier or an intermediary—ought to pose this question: How should the insurance value chain be reshaped by using the new technologies at hand? There are numerous relevant technologies that come to mind, including: the cloud, the Internet of Things (IoT), big data and advanced analytics, quantum computing, artificial intelligence, autonomous agents, drones, blockchain, virtual reality and self-driving cars. To take full advantage of these technologies, there has to be a structured approach that begins with identifying use cases that can have an actual contribution to reaching strategic business goals, then maximizes their effects inside the insurance value chain of each player. Finally, the approach should look at the software/hardware selection or the “make vs. buy” choices. The essential idea is that “one size does not fit all. Each player needs to create customized use cases based on their individual strategy and characteristics. To date, there are several types of approaches to mapping insurtech initiatives. I have developed my own classification framework based on six macro areas (awareness, choice, purchase, usage, IoT and peer-to-peer (P2P)). Insurance IoT, also known as connected insurance, represents one of the most relevant and mature insurtech trends. Connected Insurance represents a new paradigm for the insurance business, an approach that fits with the mainstream Gen C, where “C” means connectivity. This novel insurance approach is based on the use of sensors that collect and send data related to the status of an insured risk and on data usage along the insurance value chain. Auto telematics represents the most mature insurtech use case, as it has already passed the test and experimentation phase within the innovation unit. It is currently being used in daily work within motor insurance business units. In this domain, Italy is an international best practice example: According to the SSI’s survey for the Connected Insurance Observatory, more than 70% of Italians show a positive attitude toward motor telematics insurance solutions. According to the Istituto per la Vigilanza sulle Assicurazioni (IVASS), about 26 different insurance companies present in Italy are selling the product, with a 16% penetration rate out of all privately owned insured automobiles in the second quarter of 2016. Based on information presented by the Connected Insurance Observatory—a think tank I created in partnership with Ania that brings together more than 30 European insurer and re-insurer groups—the Italian market will surpass 6 million telematics policies by the end of the year. See also: Insurtech: One More Sign of Renaissance   Based on this data, we can identified three main benefits connected insurance provides to the insurance sector:

1. Frequency of interaction, enhancing proximity and interaction frequency with the customer while creating new customer experiences and offering additional services
2. Bolstering the bottom line, improving insurance profit and loss through specialization,
3. Knowledge creation and consolidating knowledge about the risks and the customer base

The insurance companies that are part of the Observatory are adopting this new connected insurance paradigm for other insurance personal lines. The sum of insurance approaches based on IoT represents an extraordinary opportunity for getting the insurance sector to connect with its clients and their risks. The insurers can gradually assume a new and active role when dealing with their clients—from liquidation to prevention. It’s possible to envision an adoption track of this innovation by the other business lines that are very similar to that of auto telematics, which would include:

• An initial incubation phase when the first pilots are being put into action to identify use cases that fit with business goals;
• A second exploratory phase that will see the first rollout by the pioneering insurance companies alongside a progressive expansion of the testing, to include other players with a “me, too” approach;
• A learning phase in which the approach is adopted by many insurers (with low volumes) but some players start to fully achieve the potential by using a customized approach and pushing the product commercially (increasing volumes);
• Finally, the growth phase, where the solution is already diffused and all players give it a major commercial push.

After having passed through all the previous steps in a period spanning almost 15 years, the Italian auto telematics market is currently entering this growth phase. The telematics experience teaches us three key lessons regarding the insurance sector:

• Transformation does not happen overnight. Telematics—before becoming a relevant and pervasive phenomenon within the strategy of some of the big Italian companies—needed years of experimentation, followed by a “me, too” approach from competitors and several different use cases to reach the current status of adoption growth.
• The companies can be protagonists of this transformation. By adding services based on black box data, telematics has allowed for improvements in the insurance value chain. Recent international studies show how this trend of insurance policies integrated with service platforms is being requested by clients. It also shows that companies, thanks to their trustworthy images, are considered credible in the eyes of the clients and, thus, valid to players who can provide these services.
• If insurance companies do not take advantage of this opportunity, some other player will. For example, Metromile is an insurtech startup and a digital distributor that has created a telematics auto insurance policy with an insurance company that played the role of underwriter. After having gathered nearly $200 million in funding, Metromile is now buying Mosaic Insurance and is officially the first insurtech startup to buy a traditional insurance company. This supports the forecast about how “software is eating the world”— even in the insurance sector.

Insurance is regulated by states, and the states’ laws are implemented and administered by state insurance commissioners. This was affirmed in 1945 by the McCarran-Ferguson Act. Under that act, states regulate the business of insurance unless the U.S. Congress decides otherwise. In the past six years, the federal government has with regularity encroached on areas previously controlled solely by state insurance commissioners, such as through the following federal actions:

• The creation by the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank) of the Federal Insurance Office (FIO)
• Dodd-Frank’s creation of the Financial Stability Oversight Council (FSOC)
• The Affordable Care Act (ACA)
• The Department of Labor (DOL) fiduciary rule issued April 8, 2016

These federal encroachments have led to regulatory confusion. Although state insurance commissioners are the predominant regulator of licensed insurance carriers and producers, insurance companies that are deemed systemically important non-bank financial institutions are supervised both by the Federal Reserve and by their domestic state insurance regulators. This creates significant duplication and regulatory burden; the cost of that burden – as well as some of the confusion -- is ultimately passed on to consumers. Under the ACA, for instance, state insurance regulators routinely must react to hundreds of pages of regulations that are published by the Centers for Medicare and Medicaid Services. Licensed insurance producers and carriers must overhaul their operations and distribution to comply with the 1,023-page DOL fiduciary rule. See also: What Trump Means for Business   As I see it, state legislatures have given state insurance regulators dual mandates: (1) to protect consumers from the moment of purchase through filing a claim and ultimately the payment or denial of that claim; and (2) to ensure companies are solvent and can meet their financial obligations to consumers. While insurance regulators at the state level can always improve, I do believe that collectively we do a commendable job. Insurance company failures are rare, and most states respond to consumer complaints in a very timely fashion. Under a President Trump, I believe the role of state insurance regulators will grow as some federal regulations are eliminated. If Dodd-Frank is reviewed, the role of the FIO and even the FSOC could change. State regulators have argued tirelessly that the FIO is not a regulator and needs to stay in its lane as authorized under Dodd-Frank. State regulators are debating with the FIO the need for a covered agreement on reinsurance collateral and are worried about state law being preempted. I think that, under a Trump administration, state regulators may be listened to much more in this debate. State commissioners and the FSOC representatives with insurance experience have also worked to ensure that the FSOC recognize that insurance is not banking and that traditional insurance is not systemic to the global financial system. A Trump administration may agree with state insurance regulators on these issues and many more. Only time will tell, of course. State insurance commissioners need to demonstrate through the execution of states’ dual mandates that we deserve the responsibility of supervising the insurance markets in our respective states and that we do it better than it could be done from the federal level. I believe the time for state insurance commissioners to shine is now, and I hope we all continue to deliver results as our roles as the regulators of insurance carriers and producers and as the protectors of consumers become increasingly important. See also: What Trump Means for Workplace Wellness  

It’s been an interesting few days/weeks in U.S. politics, especially when viewed from London. In the words of James Bond, some of us have been “shaken, not stirred.” Bond was, of course, referring to his dry martini. Perhaps it has been the occasional martini that has carried us through rough times in London. Recently, the U.K. has had to come to terms with the vote to leave the European Union, and as Europe looks forward to 2017 there could be equivalent turmoil in both French and German politics as the global mood seems to lurch toward nationalism rather than globalization. Plenty of press fodder with lots of ammunition for column inches. But what does this have to do with insurance? The insurance market does not operate in isolation, and it’s essential that insurers understand their role in a volatile and perhaps uncertain world. See also: Thoughts on Insurance After Brexit   While government and policy makers are central to determining the world’s future, it has also become clear that public opinion still has a major part to play in determining their response to risk. The Chartered Insurance report series “Future Risk: Insuring for a Stronger World” carried out 2,678 interviews in five countries (Australia, the U.S., India, Great Britain and Brazil — roughly 500 citizens in each) to rank their perceptions of risk. At a global level, income inequality, overpopulation and global warming were viewed as high-risk, high-impact. Cyber attack, obesity and pandemics were viewed as low-risk, low-probability. If you split these out by country, income inequality remains consistently important as being high-risk, high-impact. Perhaps the recent U.S. elections have simply reflected the zeitgeist of our decade. (“Zeitgeist” is from the German word “zeit,” meaning “ghost,” and “geist” meaning “time.” In other words, the “spirit of the age.” ) So what does this mean for us as insurance professionals? At the very least, we need to understand what’s going on and think of all these political changes in the context of our industry. If income equality is one of the key issues, won’t it also be one of the key drivers of industry change? While the insurance industry cannot solve inequality, can’t it accelerate the creation and distribution of microinsurance products? What will be the impact on the connected financial marketplace? Despite the promise to look inward, isn’t the U.S. too big not to have an impact on global affairs, and won’t that also extend to the insurance industry? See also: What Trump Means for Business   If the new policy is to invest in the U.S., won’t this lead to some element of inflation and corresponding interest-rate rise that will affect non-U.S. markets? Financials have surged back to a level that existed before the collapse of Lehman, and the markets (including the insurance market) are hoping for lighter regulation. Perhaps all this is a perfect counterpoint to the onerous Solvency II requirements in Europe? What then will be the impact on wealth management and life and pension products?

OK, guys, London’s black cabs are officially an endangered species. Not just yet, but, considering that Uber is gaining ground every day, this is going to happen at some point. And it's not just Uber that's making traditional service industries nervous. Airbnb has surpassed the largest hotel chain in the world in terms of total rooms available. But, hey, why the sad face? This is hardly a bad thing. Much like traditional insurance carriers are embracing insurtech innovations, traditional industries should be doing the same with the sharing economy. I emphasize “should.” The sharing economy is already part and parcel of our lives, so much so that we’re not even questioning it anymore. It seems like a simple concept: leveraging underutilized assets for profit. But this is much more than a simple consumption shift. It's also a shift in how we are accountable — and how we regulate commerce. As you know, the sharing economy is mostly unregulated by governments. This lack of regulation fosters a massive debate that won't subside for years to come. See also: Sharing Economy: The Concept of Trust  The question is: How does this new industry create accountability? How on earth do you get random strangers to trust that you won’t drive your car straight into a tree when they’re riding shotgun? How can you, as a client, distinguish between a legit host on Airbnb and a scam? Haven’t You Heard of Reviews? When it comes to the sharing economy, you can’t rely on the government to test out every service provider for you and then give you the “all clear.” Two-way review systems are critical to many sharing economy platforms and provide the foundation of trust upon which this new industry is built. Sellers and buyers can rate each other following a transaction. This creates two-way accountability that has allowed the sharing economy, so far, to thrive. It all sounds pretty great in theory, but, in practice, things are not that easy because you can never really know for sure that the person behind a review — be it a stellar one or a nasty one — is telling the truth. We always try to paint the most positive picture of ourselves. It's human nature. Some people have internal biases, and Airbnb and Uber are witnessing firsthand how racial prejudices affect their platforms. This is terrible and is an existential threat that needs addressing. The challenge going forward for sharing-economy platforms is not after-the-fact, two-way ratings but how sellers react before engaging in an economic exchange with sharing-economy buyers. Stay tuned on this one. Smile, You're Being Rated! At first, this may seem like a crazy idea, but it works. Studies have shown that even the illusion of being watched makes people behave in more socially acceptable ways. Ready for a quick super-scientific experiment? Get out the beaker! Imagine you're traveling for business and one night you stay at a Hilton, the other with Airbnb. Now, think of all the times you've left a hotel room. Then consider how you'd leave someone's residence if you stayed in an Airbnb. You also know this host will leave a public review of you as a guest. You probably would not leave the home like this...: ...but more like this: Most of us undoubtedly would leave the Airbnb in better shape than we would a hotel room. And that's the point of accountability in the sharing economy: It makes people behave better! Accountability Through Reputation Capital Rachel Botsman, one of my favorite sharing economy thinkers, has paved the way for how we understand accountability in the sharing economy through her concept of “reputation capital.” In an age of mobile technology and sharing economy innovation, reputation is a tangible asset that can be managed and built. Although we are at the early stages of this, we will likely soon be able to carry our reputation with us across online platforms. Some have even argued that online reputation will be the new currency in the 21st century. The point is that every sharing economy platform has some sort of feedback process. As a seller, your earning potential depends entirely on the management of your reputation. See also: 9 Impressive Facts on Sharing Economy   As the sharing economy and its accountability foundation continue to grow and enter different aspects of our lives — I am thinking of healthcare and social causes — it's important to understand the complex concept of accountability, especially in a digital age where everything is recorded, stored in the cloud and then commented on a hundred times. That's all for now, folks. Next time, we will talk about the implications of another sharing innovation that affects the insurance industry: home-sharing.

Does wellness save money? I say no. The wellness industry — specifically its trade association, the Health Industry Research Organization (HERO) — says yes. We both can’t be right. The difference is that I am backing up my conclusion with a $2 million reward, up from last year’s paltry $1 million offer, for showing that wellness works. See also: What Trump Means for Workplace Wellness   Beyond that $2 million, I would also send a $1 million donation to the Boise School District to atone for the highly unfavorable coverage it has received about its program, coverage apparently so biased that the CEO of Boise’s vendor, Steve Aldana, called the award-winning STATNews journalist who wrote it a “lier.” To win the $2 million reward for yourself and the $1 million for the school district, you just need to prove (using the more-likely-than-not civil standard of proof), the following (to bend over backward to be fair, I will start out by offering to use only materials prepared by your side):

1. During this millennium, the wellness industry has reduced hospitalizations by enough to break even, using the government’s Healthcare Cost and Utilization Project database. For this one, I will concede in advance that the wellness-sensitive medical event methodology (“potentially preventable hospitalizations”) as described on pages 22-23 of the HERO Outcomes Guidebook is the one to use. (HERO and I agree that non-hospitalization expenses increase.)
2. The vendor anointed in 2016 as the “best” vendor, Wellsteps, indeed did reduce the costs of the Boise School District by about a third (as the company claimed), specifically by making the employees sufficiently healthier to support that savings (as the company claimed). For this one, I will concede in advance that the raw data collected by Wellsteps is accurate. In other words, we are both working off Wellsteps’ own published reports.

Here are the rules. This is a binding legal offer, as any attorney will tell you. Panel, Venue and Judges We each pick two panelists from Peter Grant’s “A-List” of the leading 260 health economists and policy experts (this is an invitation-only email group where health policy and health economics concerns are addressed and debated) that are unaffiliated with either the wellness industry or with my company, Quizzify, and together they pick a fifth. The parties will convene in Boston for a 2.5-hour finalist presentation, featuring:

• 10-minute opening statements, in which as many as 15 slides are allowed;
• 30-minute cross-examinations with follow-up questions and no limitations on subject matter;
• 60 minutes in which panelists control the agenda and may ask questions of either party based on either the oral or the written submissions;
• Five-minute closing statements.

Entry Fee and Award I give you a lien on $2 million as soon as you put $200,000 in escrow to cover the costs of the program, for panelist honoraria, venue, etc., as well as for wasting my time with your quixotry. If I win, I will make a $100,000 in-kind donation to the Boise School District to help compensate them for the fees the district wasted on its wellness program. Length and content of Submissions Each side submits up to 2,000 words and five graphs, supported by as many as 20 links; the material linked must pre-date the award application to discourage either side from creating linked material specifically for this contest. Publicly available materials from the lay media or blogs may be used, as well as from any of the 10 academic journals with the highest “impact factors,” such as Health Affairs, published within the last five years. Each party may separately cite previous invalidating mistakes made by the other party that might speak to the credibility of the other party. Either side may cite an unlimited number of “declarations against interest” made within the last five years — meaning comments made by the other party so prejudicial to their own position that the other party would have said them only if they believed these statements to be true. Example: If I said, “Wellness definitely saves money” (except when I said that as an April Fool’s gag a few years back), you could cite that. There is no word limit on these. See also: There May Be a Cure for Wellness   Each party can then rebut the other party in writing with up to 2,000 words and five graphs as well as 20 links. Additionally, we both take a lie detector test. Each side will present the polygraph operator with five questions, and all 10 questions will be asked of both parties. Results are then sent to the panelists. What if you want to claim the award? Send $1,000 via Paypal to alewis@dismgmt.com to hold your spot. I will set up an escrow account at Bank of America. Once we both sign the escrow papers, you send the $200,000 to that account, and I'll give you first lien on $2 million of asset

These days, consumers have the control — they’re empowered by new technology and spoiled for choice. There are new rules of engagement for businesses and providers in every sector. We can no longer live inside the safety of our own industry verticals, comparing ourselves with those we think of as the competition. All companies now live on a horizontal where customers compare us with their last best or worst experience. It’s no surprise, then, that businesses are scrambling to produce new products and provide new services to meet the demands of today’s consumer. The sleek interfaces and one-click payment processing available in products and services in the banking and retail industries have left an indelible mark. People now expect that same user experience elsewhere. Unfortunately, the insurance industry is still playing catch-up with the demand. See also: Can Insurance Innovate?   Consumers today expect intuitive technology that knows and remembers them from one interaction to the next. Many companies are adding features without improving the core experience for their customers. For the record, automating a broken or deficient process does not constitute an improvement. Instead, we must thoughtfully and deliberately design an end-to-end architecture that is easy, effective and memorable for the customer yet is consistent and scalable for the business. With that in mind, let’s analyze the basic elements of the customer experience where insurance companies can improve: 1. Communication flow: In any large enterprise, the communication flow is always going to be both an internal and external issue. The more departments and business units a company features, the harder it is for customers to get the information they need in a timely fashion. That’s why we’re starting to see so much interest from insurance companies in new transactional communications platforms. At Pypestream, it’s a problem we’re trying to solve using a secure, chatbot-powered mobile messaging platform. The customer experience has to be is about breaking down the barriers to information, streamlining the communication flow and getting a resolution. With everything available at the swipe of a finger or at the end of a text message, people don’t want to have to navigate from department to department, through various channels. Companies need to focus on bridging the silos that exist. Communication should be easy and free-flowing — almost as if you’re interacting with a friend. 2. Access to customer service: Customer service can be a competitive differentiator for companies — for better or for worse. Some do a fantastic job of providing experiences that people love, while others are seriously lacking. A lot of this has to do with the processes and technology in place. For example, there are many repetitive customer issues that only require scripted responses and simply don’t need live agents. Instead, these routine issues flood the call queues and slow the process for everyone. The solution here is using conversational chatbots to provide a front layer of support, managing the majority of repetitive inquiries while saving the live agents for more complex and higher-touch issues. The best thing is, this technology exists and is becoming increasingly popular. There are tens of thousands of chatbots out there across various messaging channels, and businesses are exploring new chatbot use cases every day. 3. Simplified processes: There are few people I know who actually enjoy processing an insurance claim or dealing with call centers to check on the status of a claim. The process is broken and frustrating. To fix this annoyance, a mobile-first approach is paramount. Consumers are gravitating toward mobile messaging to communicate in a 1:1 format with brands and businesses because they want service to be personal. In addition, they want to be understood — without having to repeat themselves over and over or follow an antiquated process that takes precious time out of their day. With all the capability that smartphones offer today, there’s no reason why processing insurance claims can’t be simplified to improve the customer experience. 4. Reinventing the call center: In the financial sector, the insurance industry is the most heavily reliant on call centers as the primary mode of customer interaction, with 78% of insurance industry clients contacting their company via a call-center. This comes as little surprise; there are no other options available for people to chat and transact directly with customer service. This distinct lag in the insurance industry reflects a broader reluctance to adopt new technologies. Some of the hesitancy can be attributed to traditional biases that anchor thinking and affect behavior in incumbents. Insurers have also been underserved by technology solutions that address their regulatory constraints. See also: InsurTech: Golden Opportunity to Innovate   If we consider how quickly people are flocking to messaging (it’s the most used data service in the world, with more than 6 billion messages sent every day), maybe it’s time the call centers undergo a revamp. Americans alone message twice as much as they call, according to Nielsen, and messaging is fast becoming the most preferred communication method. With this in mind, it only makes sense to incorporate a text-based channel to contact centers and customer service outlets. It’s always easy to prescribe improvements for industries from afar, and I understand if some readers approach this article with an easier-said-than-done attitude. But, in reality, decision makers know where the industry is lacking. These gaps are opportunities to deepen customer engagement and loyalty. The solutions are simple when you consider what everyday customers are seeking from their providers. Now it’s about dedicating the relevant resources and time to ensuring the innovation happens so the industry can catch up to the innovators in other industries and future market disrupters.

I read an interesting story recently on the front page of Yahoo.com titled "ESPN's NFL player poll about marijuana had some surprising results." I then read the source article on ESPN.com, "Survey: Two-thirds of NFL players say legal pot equals fewer painkillers." The title is fairly self-explanatory. First, just to ensure we're on the same page: This is a workers' compensation issue. The NFL is an employer. The players are employees. The gridiron is a workplace. Pain and injury are realities for the vast majority if not all players/employees at some point in their careers. See also: 4 Goals for the NFL’s Medical Officer   The survey was of 226 players, 11% of the total number of players on active rosters and practice squads. So I would consider it a statistically significant sample, and, depending on how the 226 were selected, likely reflective of the full population. Following are the highlights as tweeted out by @ESPNNFL:

• Nearly three-quarters of NFL players surveyed (71%) say marijuana should be legal in all states.
• About one-in-five (22%) say they've known a teammate to use marijuana before a game.
• Two-thirds (67%) say the NFL's testing system for recreational drugs is not hard to beat.
• When asked which was better for recovery and pain control -- marijuana or painkillers -- 41% say marijuana, compared with 32% for painkillers.
• More than half (61%) say that, if marijuana were an allowed substance, fewer players would take painkillers.

Do these results scare you? Probably depends on the personal opinion you held before you read them. Do these results surprise you? They shouldn't. According to the Associated Press-NORC Center for Public Affairs Research survey of 1,042 adults in February 2016:

• 61% said marijuana should be legal, and of those ...
• 33% with no restrictions
• 43% with restrictions on purchase amounts
• 24% only with medical prescription

Add to those figures the five states (Arizona's Proposition 205, California's Proposition 64, Maine's Question 1, Massachusetts' Question 4, Nevada's Question 2) that voted last Tuesday whether to legalize recreational marijuana. (Legalization was approved in California, Massachusetts, Nevada and Maine -- though by such a close vote in Maine that a recount is being requested. The pro-legalization side appears to have lost in Arizona, but the vote is still being counted.) Add to that four other states (Arkansas, Florida, Montana, North Dakota) that will vote on medical marijuana legalization. (Legalization was approved in all four states.) All of that means the landscape looks very different than it did a week ago. So if you are a private or public employer, an insurance company, a work comp stakeholder, a clinician, a politician or state regulator ... How different do you think your specific constituency is from the numbers listed above? My educated guess is that both surveys are fairly representative of the U.S. (the only other country that I've been following is Canada, which appears to be along the same trajectory in public opinion). Which means the numbers above are likely to guide coming public policy. See also: How Literature and the NFL Shed Light on Innovation So what does this all mean for the workplace? Of paramount importance is to have a jurisdiction-specific (because all states are different) drug policy (pre-employment, post-accident, return-to-work) that explicitly addresses marijuana (because presence does note equal impairment, a characteristic unique to marijuana among intoxicants). And ... keep your seatbelts handy.

Are there qualities or attributes that enable the best salespeople to be persuasive? I have only been able to identify one. When a prospect or client looks into a great salesperson's eyes, they see their own greatness reflected. High-performing salespeople see the best in people. Dr. Wendell Johnson devoted 35 years of his professional life to serving people in Northern Canada. As he was about to board a plane and retire to Winnipeg, an aging Inuit woman approached him. In a halting voice, she expressed her appreciation by saying, "I like me best when I am with you." The first principle in selling is: Focus on the other person. See also: Dear Sales Leader: Read. Digest. Apply.   High-performing salespeople are genuinely interested in the people whom they meet. Intuitively, they know that other people appreciate someone who expresses a genuine interest in them. In his book, Give and Take: Why Helping Others Drives Our Success, Dr. Adam Grant, shares empirical research and anecdotes that demonstrate that the most productive salespeople are givers. Because they also see the best in other people, they become enablers in drawing out the potential of others, who see their own greatness magnified in the eyes of the salesperson. Let me give you an example. My friend and mentor, David Cowper, was a high-performing insurance adviser and a great salesperson. David learned that a successful entrepreneur who sold his company at age 60 was buying it back at 65. The company had his name on the door and was being run into the ground by the conglomerate that acquired it. The trouble was breaking the entrepreneur's heart. He was in the process of arranging a leveraged buyout, and David knew he would need life insurance. He called the entrepreneur, who told him he already had proposals from four leading insurance advisers. David said: "Then, why not a fifth. It will take me less than 15 minutes to show you how I can save or earn you money. I understand that you get to your office at 6:45. I will meet you at that time on any morning you choose. I will bring coffee and muffins. If I cannot demonstrate value in 10 to 15 minutes, I will gladly leave. Does that seem fair?" The entrepreneur laughed and suggested they meet the following morning. When David met the entrepreneur, he asked: "How much life insurance are you contemplating? The entrepreneur responded: "$50 million." "How did you arrive at that amount?" "That is the value of the business." "Are you buying the business for today's value or tomorrow's?" "What do you mean?" "Are you buying it for today's value or for the value you will create over the next few years?" "Obviously, for the value we will create." "What do you think that value will be in three to five years?" "If it is not worth at least $100 million in five years, I will be very disappointed." David was the only one to propose $100 million of life insurance and made the sale. The second principle in selling is: Let the other person set the pace. High-performing salespeople earn the right to be trusted. Their prospects and clients feel as if they are setting the agenda. These top salespeople have internalized the adage: "People hate to be sold, and love to buy." See also: 6 Tips to Augment Sales and Prospecting One of the most effective ways to let others set the pace is to ask questions and listen well. Another adage is: "People are most comfortable with their conclusions, not ours." David's questions drew out the entrepreneur's aspirations. To create a $100 million business, he needed time. The life insurance guaranteed that, if he did not have the time, his goal would still be achieved. High-performing salespeople not only bring out the potential in others but also show them how to realize their goals. That is the singular quality that makes them so persuasive.

In a perfect world, insurance buyers would understand their products just as well their insurance agents. This would save a few headaches for everyone involved, and it would probably streamline the process on all ends. However, the reality is that most business owners don’t understand the extent of the insurance products they purchase. Then again, no one should expect them to. Insurance products are highly complex vehicles. Few business owners have the time to invest in becoming experts in the field or in the products they purchase. Even the best insurance agents spend years learning about the products they sell, many of which change frequently as the economy changes. That being said, no business owner should simply buy a product without understanding the most important aspects regarding what it does and does not cover. In truth, a highly skilled insurance agent should never let them, either. Here’s where there can be a gap between how much insurance a business purchases and how much it actually needs, showing why educating business owners on the extent of their insurance really matters. False Perceptions of General Liability Are Common Many customers tend to believe their insurance covers more than it actually does. This situation could probably be applied to any insurance product, but general liability policies are often the most frequently misunderstood by buyers. See also: What to Expect on Management Liability   To put it simply, far too many businesses are purchasing less insurance coverage than they should. In a sense, many are taking a huge gamble, believing their risk exposure is less than what it actually is or that their preventative measures, such as employee training, can shield them from those risks. While risk prevention definitely helps, it’s ultimately far from the bulletproof shield many companies think it is. Most companies do it to help themselves get a better rate on their insurance, while maintaining the false perception that their general liability coverage protects them against a multitude of risks not actually defined in the policy. As a company scales in size, so, too, does its likelihood of experiencing losses related to cyber liability, employee fraud, fiduciary liability, directors and officers (D&O) or workplace violence. Yet many companies seem not to realize their exposure. This would, of course, be less troubling if companies were purchasing policies that actually covered those kind of risks. Overwhelmingly, they’re choosing to avoid those insurance products altogether. According to Chubb’s survey on private company risk, non-purchasers believed their general liability policy covered:

• Directors and Officers Liability (65%)
• Employment Practices Liability (60%)
• Errors & Omissions Liability (52%)
• Fiduciary Liability (51%)
• Cyber Liability (39%)

Businesses aren't failing to purchase enough liability coverage because they’re unnecessary risk takers. Most, it seems, simply have false perceptions about what their general liability will and won’t do. A small business may think its general liability policy covers a server hack. Yet, lo and behold, when a server gets hacked and the ensuing liability claims start pouring in, that small business may quickly find itself underwater. In fact, the U.S National Cyber Security Alliance found that the 60% of small companies went out of business within six months of a cyber attack. This seems extreme, but the average cost for a small business to clean up after a hack is $690,000, according to the Ponemon Institute. How many small- or medium-sized businesses can easily absorb that kind of cost without insurance coverage? Not many. Similarly, mid-sized companies may believe their general liability policy covers directors and officers, leaving the company with unnecessary risk exposures should an incident occur. If, for example, a company begins operating internationally and fails to effectively meet one of the federal regulations governing its industry, a general liability policy won't help protect the company from impending lawsuits. Any directors held personally responsible may find their own personal assets at risk. Given what we learned from the Chubb survey, it’s quite likely that most directors may think they’re fine with the minimal coverage they receive from a general liability policy. A costly mistake, to be sure. Who’s to Blame? We’ll leave the finger pointing aside for now and settle on this: The customer is always right, but he’s not always well-informed. As every insurance agent knows, the amount of time it takes to fully understand an insurance product can be extensive. Business owners, in general, lack the time to invest in fully understanding the products they purchase. It should come as no surprise, then, that misunderstandings arise over what general liability policies actually cover and what risks they simply won’t mitigate. See also: ISO Form Changes Commercial General Liability   Insurance agents have a responsibility to use their knowledge to help business owners better understand and sift through those misconceptions. More needs to be done to help decision-makers understand what they are and are not getting from their insurance. Helping businesses better understand the ins and outs of their general liability policy is a win-win all around.

Surveys suggest that less than 25% of small business has any form of risk management plan beyond the purchase of insurance. A considerable percentage of business risks aren’t insured, and, even for those that are, lack of appropriate cover and underinsurance remain a perennial issue. Most small businesses have shallow pockets, meaning the cost of a loss can often be business-ending, especially where there isn't enough insurance or risk contingency planning in place. Cost and complexity are cited as primary reasons for businesses not developing a risk management plan. This is hardly surprising given the range of risks an average business can be exposed to, not to mention the myriad of other operational activities necessary to run a successful business. The problem for businesses is made even more complex as some risk areas, particularly emerging risks such as cyber, may or may not be covered by a variety of different insurance policies. See also: Risk Management, in Plain English   Insurance carriers have vast amounts of business risk management expertise, but typically this is targeted at the larger or more complex risks that an insurer covers. But this risk management expertise can be mobilized to customers in a cost-effective and efficient way through digital risk profiling, enhancing both the ability of a business to manage risk and of insurers to recognize active risk management in their pricing. Until now, most of the technology supporting risk has been designed, and priced, to only appeal to larger organisations. RiskAdvisor has built a platform to enable insurers to cost-effectively mobilize their risk expertise to both enhance business best practice and form deeper relationships between a business, its intermediary and its insurer to reduce the cost of risk and boost the resilience of organizations. Specific benefits to insurers include:

• Risk assessment – ability to analyze business- and industry-specific risks, producing a risk profile to support better decision making.
• Optimal insurance coverage – enabling the more intelligent matching of risk and insurance to reduce the risk of being underinsured.
• Much greater resilience for insureds to recover from loss events.
• Improved governance and compliance outcomes.
• Confidence to key stakeholders such as financiers and equity providers.
• Collaboration with intermediaries to help them become trusted risk advisers, building strong relationships with their customers and providing value-added services.
• Ability for business partners to enrich partnerships with key stakeholders such as customers, suppliers and financial institutions.

See also: Key Misunderstanding on Risk Management   To see how RiskAdvisor works, you can find a video here. Here is a sample of industry- and risk-area-specific exposure and control checklist from RiskAdvisor system: