In a previous article, we discussed how there has been a rapidly accelerated emphasis on insurance technology, data and distribution. But are we as an industry spinning our wheels? The answer is a big “yes.” Why? Because we haven’t asked the right questions and aren't trying to solve the right problem. Here’s how distribution breaks down: A Painful Process Our customers have many issues around running and growing their businesses. Insurance empowers customer to do just that — hire employees, comply with regulations, etc. — but the way we go about it is asking endless questions (multiple times over). We focus on what we think doesn’t work instead of what DOES work about their businesses. We are the Negative Nellies. We turn little things into big things, over-analyze them and then use them as reasons to charge higher rates. An evolved distribution would:

• On the back end:
  • Draw on information in data bases and simply ask the customer to validate that nothing has changed.
  • Handle everything electronically ONCE. (And, no, email doesn't qualify!)
  • Use publicly available information to fill in the blanks.
  • Leverage class and big data to price and only use underwriting to manage exceptions.
• On the customer-facing side:
  • Stop sending apps we have to print out, fill in and fax back or, even worse, writable PDFs that don’t save (we have to fill it out over and over until we get it completed on one run through) and then come back and tell us we need to fill out yet another app for another market. It’s like Groundhog's Day, and we don’t have time for it.
  • If we DO have to fill something out, let us know what information we will need ahead of time so we can have it ready. Right now, we have to stop and start as we have to go look for stuff — and, frankly, we just don’t have time for it.
  • Let us know what the cost is ahead of time. We know you don’t want us to shop our policies — we don’t want to either — so do us a favor and don’t make us. We don’t like being painted into a corner, and we'll continue to look for a partner who respects that.

See also: 3 Skills Needed for Customer Insight Pain About the Purchase Have you ever bought a house and thought about the real estate agent collecting a fat check? Have you gotten a knot in your stomach because you know you paid to fund that? What about the finance guy at a car dealership? You sign on the dotted line because you need to, but you know he's pulling down a check for that signature, and it bothers you. Insurance buyers feel the same way. Even though we will tell you we are their “trusted advisers,” the reality is that customers more often than not (and no matter how much they like their agent) can’t answer the question, “What do I pay my agent for?” That’s a problem. Distribution should look at ways to be more transparent, to help customers clearly understand what they are paying for and what they can expect to receive and when. More importantly, customers should feel like we appreciate their purchase. Often, they ask us to bind, and the next thing they see is a bill (even before a binder). How about a “Welcome to our company,” “Thank you for your trust” or, even more importantly, “Tell us about your experience.” Allow customers to benchmark costs and give them a level of comfort that what they are paying is in line with others — and, if not, why. It’s a simple question that deserves a simple answer. For us to have the vast data stores that we have and not be able to answer a simple benchmarking question is nothing short of unforgivable. Just a Promise to Pay? Customers want more than just a promise to pay, and distribution could provide meaningful value to the customer beyond the policy placement. Does the customer have conditions that are raising their price or limiting their ability to get coverage? Educate them, provide tools, help them become a better business and, by extension, a better risk. In that way, we drive value to them instead of wasting valuable time. Look for ways your products could help them sell more and gain a competitive advantage. Take risk out of growth and provide overall out-of-the-box solutions. Provide them with tangibles, even if it is as simple as a portal where they can manage what they have, manage their exposures and communicate with their account team. See also: How to Redesign Customer Experience Conclusion It’s clear that customer experience is the key to success. By giving your customers some control over the process, you can remove the typical painful buying experience and make your customers feel good about their purchase.

What do most businesses do when competitors steal their customers? Copy them. That’s the natural, logical tendency. If competitors have a new killer feature, we copy it. If they have a new killer marketing message, we copy it. If they have new killer sales system, we copy it. Sooner or later, we all start looking the same. (And, yes, consumers can hardly be blamed when they think this insurance is a commodity. Looks like one…acts like one…well, quack!) And that – the copycat strategy – is among the most dangerous, destructive things we can do. In fact, the massive amount of copying witnessed in the retail insurance industry just might be the early ringing of the death knell. “But if we don’t copy what is successful for others, then what should we do?” Of course, agents and brokers read the reports on market share erosion. They see the billion-dollar barrage of advertising from alternative distribution systems. They read the forecasts and predictions about innovators, disruptors and new, well-financed outsiders poised for the kill. They know consumer behavior is changing rapidly and question whether they can keep up. There is -- naturally -- a deep, underlying anxiety about the future of this system. These current and impending attacks on what has so long been our safe harbor frighten agents and brokers. They need a strategy. And, far, far too many have simply chosen the wrong strategy. They see, hear and read (daily!) GEICO’s message about “price, price, price,” and they see that train only picking up speed. Naturally, what do they do? Copy it. They advertise on price. They give “quotes” and hope the price is attractive enough to win the business. If it’s working for the opposition, it should work for us, right? Wrong. See also: Integrating Strategy, Risk and Performance   Three reasons never, ever to copy Business coaches tell us that “success leaves footprints,” so, what’s wrong with following those footprints and copying a successful strategy? At least three things: 1. We copy what we see. We don’t copy the important behind-the-scenes business processes and systems we don’t see. Staring at “footprints,” we very rarely see the whole story. We see the surface. Beneath the surface, there is an entire alignment of complex business processes and systems that make that surface shine the way it does. You think you can see Starbucks' strategy for being the most successful coffee house on the planet, right? It’s right there in the open. But, behind charging more and delivering a reliable, delightful customer experience are billions of dollars invested in sourcing, roasting, shipping, presenting, training and other systems that we never see. Following part of a recipe is a sure way to end up with a plateful of garbage. 2. Generally, following is in itself a bad strategy. The best you’ll do is a weak second place. Unless your strategy offers something different and something that matters, those you are following have the advantage of leadership. They own that niche in the mind of the customer. Of course, if you have massive resources, you may be able to leapfrog your leading competitor. With GEICO alone investing a cool billion a year on advertising, that will not and cannot happen. Those resources simply do not exist in the agent-broker channel. 3. Copying strategy means that you’re skipping the hard work of strategy: clear-eyed analysis of what’s happening in the real world and how you can unleash your best assets to win there. As every serious student of strategy knows, good strategy is based on an unflinching analysis of internal and external forces, and disciplined choices about where to play and where not to play. And here, we get to the serious flaw in the most common copycat strategy performed by agencies and brokerages. We see the consumer being “brainwashed” with the incessant pounding of “price, price, price,” and we witness the loss of market share in our channel, and what do we do? Copy that strategy...and try to sell on price. And, herein, lies the most dangerous part of trying to copy your way to success. A good strategy for one company or one distribution system is almost always a bad strategy for everyone else. How can we win against our well funded competitors? Small armies beat big armies. In fact, very, very small armies beat very, very big armies. You would expect a military that is 10 times the size of its adversary to demolish a small opponent. But no, military historian Ivan Arreguin-Toft has shown us that the 10X behemoth loses 30% of the time. That’s right. 30% of the time, an army that is 10% the size of the opponent wins. How does the smaller army win? By fighting a “different war.” (In fact, since 1950, smaller armies have won 55% of the time.) The same is true in business. We can only win by fighting a different war. We cannot copy strategy. What's wrong with selling on price? Isn't that what the consumer wants? Here are four reasons why independent agents and brokers should never sell insurance on price. 1. Our channel is more expensive. So selling on price is just plain dumb. Sure, you'll find exceptions. Even the slowest lion picks off the slowest gazelle. But in the long run, put your resources where they have the best chance of winning. The price-shopping insurance customer -- and, yes, there are millions of them out there -- will seek and find a home. And billions in advertising dollars are helping them navigate their way. I recently analyzed four years of AM Best industry data and, not to my surprise, discovered that the independent channel was an average 2.3% more expensive to operate. And, with the direct channel's massive commitment to advertising, a lot of the expense gets consumed there, and proportionately less in other expenses. Moral of the story: when you're more expensive, don't compete on price. 2. Selling on value wins more than selling on price. Researchers from Deloitte, led by Michael E. Raynor and Mumtaz Ahmed, analyzed data on more than 25,000 companies covering 45 years of activity. Their five-year study began with a statistical analysis to identify which companies have truly exceptional performance, 344 in all. They discovered that the most successful companies -- based on a thorough examination of return-on-asset performance -- followed three strategic rules:

• Better before cheaper. They rarely compete on price.
• Revenue before cost. They drive profits through price and volume, not thrift.
• There are no other rules. Everything else is up for grabs, and they are willing to change anything to remain true to the first two rules.

Of course, selling on value can't just be another empty advertising jingle. Agents and brokers have to deliver value. They have to add value as the product passes through their hands to the consumer. That may be a new demand for many agents and brokers today. Perhaps in generations past, selling the product was sufficient. But, as today's consumer is offered a growing array of choices, this is no longer an option. Especially as the consumer progressively sees more and more of insurance products as a replaceable commodity, value must be added at the retail level. The inherent and unique strengths of the independent channel -- the benefits of relationship -- must be leveraged to the consumer's advantage. Modern communication technology makes this much, much easier. And i's costs are fractional compared with additional payroll. 3. Selling on price is the ultimate race to the bottom. First of all, selling value costs more. You must do something extra, something more. And that usually costs money. When you're selling on price, you're killing your profits. From what bucket do you draw to create that extra value? If, let's say, you have a 20% profit margin, and you backed everyone's premium down by a mere 10 points, that's half your profit. Price selling results in a self-inflicted spiral down the drain. First, you sell for less. In response, you invest less in your support staff and systems. Then, your customers feel less satisfied… on and on it goes. Price selling may result in short-term wins. You'll sell a few policies that you wouldn't have otherwise. It’s much, much easier than investing in the blood, sweat and tears work of creating new value. Training staff. Monitoring behavior. Managing new systems. And so forth. Moral of this story: The industry has matured far beyond the "lifestyle" stage where the retail sector merely acted as "sales reps" for manufacturers. They absolutely must add value. That is what grown-up businesses do. 4. Surprise…consumers don't care about price nearly as much as you think they do. Price never completely goes away as part of the overall value proposition. But according to  astute research by Bain & Company, consumers are largely compelled to make their insurance buying because of one of these two values: price or peace of mind.

• The price-driven customer is perfectly suited to the direct channel. The peace-of-mind-driven customer is perfectly suited to the agency/broker channel. As industry-wide analysis will show you, the price-driven customer is expensive to get and easy to lose.
• The efficiencies of the direct channel are well suited and well designed to generate value from that demographic. The opportunities for depth of relationship and value-added communications make the peace-of-mind customer perfectly suited for the agency broker channel.

See also: Capturing Hearts and Minds   But doesn't price still matter? Yes, of course, but perhaps not nearly as much as you may think it does. My friend Brady Polansky from EzyLinx, shared what many may consider to be shocking statistics based on a massive study of consumer behavior. 57% of consumers who call independent agencies do not take the lowest quote provided. Rather, they choose insurance that costs between 19% and 53% more than the lowest quote provided. (Imagine what that could do to your top-line revenue!) Moral of this story: It's a naive assumption to think that all consumers are the same. They're not. Pursue the ones who best fit this channel: the people who actually care what insurance does. Remember when we took pride in saying that "insurance is a relationship business?" The top 5% or 10% of your customers probably feel that relationship. But recent research from Deloitte makes one thing very clear: The majority of an agent's customers don't feel that relationship. Agencies have simply outgrown the old-school methodologies of getting and keeping relationships. It's too expensive. Besides, that's not how customers relate to business anymore. Consumers expect a well-crafted digital communication strategy with their vendors. And agents and brokers can use today's digital channels to deliver value. Using modern technology, they can nurture their customers. They can help protect them. They can make them smarter insurance consumers. They can help prepare them for disasters. They can help prevent accidents, injuries and casualties. They can offer useful products. And they can follow each customer, one-at-a-time, and guide their customer journey, from the "I want a quote" to "I love my broker." Price marketing is fine…for the direct channel. Don't copy them. A winning strategy for their channel is a losing strategy for ours. But, if relationship and value are the pillars of our promise, deliver on it. Today's tools let you deliver on that old school promise…with new school technology. The Ultimate Solution for Maximum Growth  Is this an impossible situation for the leader of a modern insurance agency or brokerage? If we don’t have "price" in our quiver, just how do we make a difference in the lives of our customers? See also: Checklist for Improving Consumer Experience   If, in fact, they value relationship – that sense that they have an advisor and advocate in their corner – how do we deliver that? The days of glad-handing our clients around town are over.

• The old methods – one-on-one marketing and nurturing – are over. Those methods are dreadfully expensive.
• Most agents and brokers of today have a book of business that’s much larger than the average firm of a generation ago. It’s folly to think we have a traditional relationship with them. (How many times have you passed a customer in the vegetable aisle and they didn’t know you…and you didn’t know them.)
• Besides, the last thing today’s consumer wants is a random telephone interruption from their insurance agent. (They want you there…when they want you there. Not when they’re at work. Not when they’re having dinner.)
• The answer is simple. Our competing channels – the direct channel and the emerging digital channel – uses technology against us. But, today, agents and brokers can fight back. Using their own technology. Technology that delivers meaningful communications. Technology that treats everyone like an individual. Technology that strengthens your brand. Technology that deepens relationships. Technology that connects the data in your agency management system to a marketing system that fulfills the inherent promise in the agent-broker channel: that we’ll be there…that we’ll protect…that we care.To learn about how marketing automation can transform the way you communicate to your clients – and make your clients love your agency – download a copy of Buyer’s Guide: Marketing Automation For Independent Agents & Brokers. Readers may get a free copy here.

We are in the midst of a global public health crisis. The prevalence, growth and wide-scale complications as a result of diabetes have been called the defining moment in the field of public health. Unless a widespread education and intervention campaign takes place, we are looking at a disaster. Currently, 30 million Americans, or roughly 10% of the U.S. population, have diabetes. It gets worse; more than 8 million of these people don't even know they have it. In 2012, another 86 million Americans had what is referred to as "pre-diabetes," up from 79 million in 2010. Without a major education and intervention effort, 33% of all Americans will have full-blown diabetes by 2030. In the year 2000, the World Health Organization (WHO) estimated that 2.8% of the world population in all age groups would have diabetes — that was 171 million people. By 2030, WHO projects that 4.4% of the world population, or 366 million people, will have diabetes. What is also scary is that these estimates are most likely conservative because they assume that the obesity rate of the world population will remain constant. Excuse the pun, but fat chance of that. Obesity is a growing problem both in the U.S and worldwide, including third-world countries, and is a major risk factor for diabetes. Jeff Dachis, CEO of One Drop, a diabetes self-care and technology company based in New York, recently stated at a HITLAB seminar held at Columbia University/Mailman School of Public Health, "Diabetes is hard, but it doesn't have to be." Although diabetes is a very serious health condition with a wide array of potential life threatening complications, Dachis says, "there is no reason a diabetic can't live a perfectly normal, healthy life with proper diagnosis, treatment and enlightened self-care. Diabetes can be completely diagnosed and managed. " He ought to know; he was diagnosed with Type 1, or juvenile, diabetes a few years ago in his late 40s but now is "really good at keeping my blood sugar within normal range 24/7."That is the basic problem: A person with diabetes has too much glucose, or blood sugar. See also: EEOC Caves on Wellness Programs Diabetes is a group of diseases that affects how your body uses glucose, or blood sugar. Type 1 diabetes occurs when your immune system attacks and destroys insulin-producing cells in your pancreas. As a result, glucose builds up in the blood stream instead of being transported for energy to cells that make up muscles and tissues. Type 1 patients must rely on regular insulin shots to survive and avoid long-term complications. Insulin is vital to cell growth and lowers the amount of glucose needed by helping cells use it for energy. The exact cause is still unknown, but diabetes is thought to be a genetic susceptibility to unknown environmental factors. Type 1 can occur at any age but typically occurs in children and adolescents under age 19. Type 2 occurs when your cells become resistant to the action of insulin and the body doesn't use it well. The pancreas itself is not under attack, but it can't make enough insulin to overcome the cells' resistance. With Type 1 or 2, the result is the same: Glucose builds up in the blood stream. Type 1 tends to have more severe symptoms and acts more quickly. Gestational diabetes occurs when pregnant women who never had diabetes end up with high glucose levels due to insulin resistance that develops during late pregnancy. If untreated, or poorly controlled, it can affect the health of the mother and the baby. In these cases, the baby is getting too much glucose and energy and can become what is known as a "fat" baby. This can cause health problems for the baby and a higher risk for obesity and Type 2 diabetes developing later in life. The CDC estimated in 2014 that 9.2% of all pregnancies in the U.S. involved gestational diabetes. The direct health dangers of patients with diabetes include hyperglycemia (high blood sugar), diabetic ketoacidosis (when cells starving for energy break down fat in the body and cause significant weight loss) and hypoglycemia (or low blood sugar). Severe hypoglycemia can be fatal and is often referred to as "diabetic shock." Extreme hyperglycemia can also occur with sky-high glucose levels, when the blood actually turns thick and syrupy -- it is also extremely life-threatening. These cases are typically preceded by an illness of a patient with Type 2 diabetes. Someone dies every six seconds in the world because of diabetes, and it is by far the most expensive disease to treat due to the enormous complications that may result. The American Diabetes Association (ADA) estimated that, in 2012 alone, $176 billion was spent on direct medical care and another $69 billion was spent on reduced workplace productivity, for an annual total of nearly $250 billion. The complications and co-morbidities because of the increased risk of health problems that result  can add another $500 billion per year to the U.S. healthcare system and lost productivity. The increased risk of gradual long-term health complications because of diabetes is profound. There is an increased risk for cardiovascular disease (1.7x higher), heart attack (1.8x higher), stroke (1.5x higher), nerve damage or neuropathy to the lower limbs, serious foot infections that lead to amputations, kidney damage, eye damage from diabetic retinopathy (damage to blood vessels in the retina), cataracts and glaucoma (increased eye pressure) that may lead to blindness, various skin conditions and infections and erectile dysfunction in men. Overall, a person with diabetes (adjusted for age) has a 2.3x higher annual healthcare cost than someone without diabetes. See also: Is Transparency the Answer in Healthcare? Here are other alarming statistics from the 2014 National Diabetes Statistical Report prepared jointly by the ADA and CDC:

• Diabetes was listed as the primary cause of kidney failure in 44% of all new cases in 2011.
• 80% of patients who have diabetes for 20 years or more develop diabetic neuropathy.
• 71% of patients with diabetes over age 18 have high blood pressure or are taking high BP medication.
• 65% of patients over age 18 with diabetes have high cholesterol.
• 60% of the 73,000 non-traumatic lower limb amputations in 2010 were patients with diabetes.
• 29% of all patients with diabetes over age 40 develop diabetic retinopathy.
• 26% of senior citizens 65 years or older have diabetes or 12 million people (both diagnosed and undiagnosed).
• There are 1.3 million children, adolescents and adults in the U.S. with Type 1 diabetes.
• Diabetes is the 7th leading cause of death (*underestimated because of co-morbidities caused by diabetes listed as cause of death. The ADA reports that only 35% to 40% of people who died with diabetes have it reported as the cause of death.)
• 1.4 million new cases occur every year in U.S.
• 282,000 ER visits for people 18 and over occurred in 2012 because of hypoglycemia.
• In 2011, more than 228,000 people with kidney failure because of diabetes were living with kidney dialysis or a kidney transplant.

All these alarming facts and statistics can be mitigated with proper diagnosis, treatment, medications, correct use of insulin and self-care, such as diet and exercise. For example, it is estimated that 90% of all the blindness caused by diabetes could be prevented by proper self-care. But this is also the crux of the problem. Jeff Dachis and others in the field of public health are outspoken critics of the current state of diabetes disease management and our healthcare system in general, which is based on treating chronic conditions on a fee-for-service basis and not preventing them in the first place. "Chronic care is expensive, fragmented and inefficient; we need to transform the model to outcomes driven self- care," Dachis stated at the HITLAB seminar series. An alarming observation by Dachis is that "most diabetics are over-dosing on insulin." The dangers of an insulin overdose are real and may be the result of misreading syringes or vials, taking the wrong type of insulin (rapid-acting, short-acting or long-term-acting) and taking insulin without eating -- all of which can lead to lowering blood sugar to dangerous levels. In a follow-up interview, I pressed Dachis for the root cause of so many problems in diabetes treatment today. What I learned is that the "one-size-fits-all" approach not only doesn't work, it can be very dangerous. Dachis stated that the standard treatment is for the treating physician to prescribe a fixed dose of insulin, typically twice a day (morning and evening) to the patient and give her an "I will see you in three months. This approach is dumb, since patients should be checking their glucose levels every three hours and not every three months, and can result in a dangerous insulin overdose." Each diabetic must manage his own blood glucose levels 24/7 through use of emerging technologies developed by new entrepreneurs in the field, such as One Drop. One Drop provides a whole package of self-care tools and real-time coaching to patients to transform diabetes care. When daily insulin injections are set with a standard dose, it does not reflect the needs of that patient at any given time. See also: Healthcare Quality: How to Define It The dose and type of insulin taken should be directly related to what the person just ate, her current glucose levels, how much exercise she did that day, medications she is taking, etc. This way, the patient is maintaining a safe level of blood glucose at all times to prevent both hyperglycemia (too much glucose), which results in gradual long-term chronic conditions, and hypoglycemia (too little glucose), which can be immediately life-threatening. An injection of too much insulin, based on a daily fixed amount, can send a person into a state of hypoglycemia and result in many diabetes patients overdosing on insulin. The One Drop diabetes self-care disease management model includes a free app for the patient (http://apple.co/1lWTvGk), a glucose testing kit, unlimited test strips, an adjustable daily carb ratio to insulin dose capability and customized individual coaching by certified diabetes counselors in a 24/7 chat room. This is part of the revolution that is taking place in healthcare in regard to self-care-utilizing emerging technologies, the internet and mobile apps. Patients can learn how to best control their glucose levels from their own data and from 40 million data points, to learn what others with similar conditions are doing successfully. The One Drop App is free to use. The entire kit and self-care program with 24/7 coaching comes with a monthly subscription fee that can be paid by the health insurer, the employer or the individual patient. The entire goal is to provide these technologies and self-care model at no cost to the patient. One major health insurer has now enrolled and is co-branding the One Drop self-care program. The insurer has put its own medical nurse case managers on the system as part of the diabetes disease management program. For more information, contact One Drop at http://onedrop.today. It is all about the math. People with diabetes "must count the carbs." Glucose levels need to be monitored in real time, 24/7. Dachis noted that people with diabetes should "think of themselves as a regulator, just like setting the thermostat at 70 at home year-round."  Insulin is a deadly drug. It can kill you. It can't be taken orally because the stomach's enzymes would interfere, so it must be injected with a fine needle or insulin pump. That is why we need to empower people to use the internet, mobile apps and technologies, as well as use a preventive self-care model and steer them away from "the sick system" of chronic care. For people with diabetes who don't think they have the time to monitor their glucose levels, think again. Waiting for the complications is a very bad idea. For the eight million people with clinical diabetes who don't know it, it is time to get diagnosed and treated now. For the 86-plus million Americans with pre-diabetes who are a high risk of Type 2 diabetes, you need to get tested and learn how to prevent the onset of the disease. People at high risk of diabetes include those with a family history, who are overweight, who have sedentary lifestyles, who have high cholesterol and who have high blood pressure or cardiovascular disease. The good news is that diabetes can be diagnosed, treated and controlled with proper diet, exercise and medications. People with diabetes can live normal, healthy, long lives with a proper self-care regiment. The bad news is that this global public health crisis is going to get a lot worse, affecting tens of millions of people in the U.S and around the world before it gets better, unless an extensive call to action takes place. A revolution is coming -- just like after the Boston Tea party -- in the form of day-to-day acknowledgment and empowering people to use apps, wear sensors and receive real-time telemetrics as part of a power shift from doctor to patient. One Drop is in the process of conducting clinical outcomes studies and hopes to have its study published later this year. This article is dedicated to my dear friend Scott Sandor, who we lost to a diabetic coma at the tragic young age of 40.

This is a David and Goliath story about how the seemingly insignificant NPI code can fight medical fraud and have a positive impact on workers’ comp medical management. Many in the industry consider the NPI irrelevant. Yet it is a powerful factor in medical management and medical fraud detection. The NPI is the National Provider Identifier assigned by CMS (Centers for Medicare and Medicaid Services) to individual medical providers and organizations that deliver medical services. It is required on bills for Medicare and Medicaid. Individual medical providers and medical groups must include their NPI on all bills submitted. If the NPI is required for Medicare and Medicaid reimbursement, it follows that probably all medical doctors have an NPI number from CMS that uniquely identifies them. The problem is that many workers’ compensation payers do not ask for the NPI, do not require it and, even when the NPI is available, do not record it or transfer it to the next level. Some, but not all, states require the NPI on workers’ comp bills. However, even if it is added to the bill, the use often goes no further. The value of the NPI is that it uniquely identifies individual medical doctors. It carves out individual treating physicians in groups, organizations and facilities. Without the NPI associated with individuals, all those in a group are lumped together under the organization’s NPI or, worse, the entity’s tax ID. This matters. The assumption is that all members of the group practice in exactly the same way. But they do not. The ability to parse individuals from groups in the data is essential to fair performance analysis. Individual differences seen in the data can be distinguished, even when associated with a group with individual NPIs. This is essential to creating quality preferred provider networks and directories. It is also indispensable for leveraging the data to create a teaching platform for improving provider performance in workers’ comp. See also: Easy Way to Spot Workers’ Comp Fraud   Physicians should be given the opportunity to see themselves portrayed in graphic reports comparing their performance to others like them. By nature, they are high achievers, and they want to show well. The graphic presentations are targets or guides for improvement. Simply paying attention to a treating doctor in this objective manner will result in behavior change! Using the comparative data is invaluable, but success depends on accurately identifying individuals in the data using the individual NPI. Another valuable use of the NPI is to assign medical specialties to individuals. Professional specialties can be obtained electronically from CMS databases using the NPI. Specialty is yet another data element missing in much of the bill review and claim system data. If the NPI number is available, specialties can be derived. Specialties are important so that treating doctors are grouped with other doctors who are similarly prepared and licensed. The argument from doctors that they only treat the more difficult cases is nullified when they are compared only with others in their specialty. The best example is pain management specialists, who really do treat the more difficult cases. Their performance should always be compared with other pain specialists. Unfortunately, there are those who twist the positive aspects of the NPI for fraudulent purposes. Close examination of the data reveals that less reputable medical doctors and other providers obtain multiple NPI numbers, using them in different locations or situations to deliberately obfuscate the data. When multiple NPI numbers are fraudulently used, the door is open to undetectable duplicate billing. Systems cannot recognize overall performance for the individual because their performance is fragmented across multiple NPIs. To accurately analyze performance for an individual, all treatment incidences should be combined for one practitioner, thereby creating a critical mass of data for that individual. While some will think the focus on NPI is much ado about nothing, it is not. Individual NPI numbers on all medical bills is essential; payers should insist on it. In fact, reimbursement should be withheld until the correct information is included on the bill as is done in Medicare. See also: States of Confusion: Workers Comp Extraterritorial Issues  Treating doctors not only drive direct medical costs but also indemnity costs, return to work and disability ratings at the end of the claim. They can also influence legal involvement. Consequently, finding the best doctors and avoiding the bad ones is crucial. The way to determine who should be included in quality medical provider networks is to analyze past performance based on the data. The only way to accurately analyze performance is to identify individual treating doctors in the data and evaluate their performance across multiple claims based on the relevant performance factors. Correct NPI numbers included on medical bills are essential. Workers’ comp payers must require correct individual NPI numbers on all medical bills. This is not an outrageous demand and does not add to costs. However, it does require attention to the matter. The benefits are too great to miss this simple yet powerful opportunity. The simple little NPI is a powerful element in workers’ compensation medical management. It is the David that can effectively and affordably fight the medical fraud Goliath.

As common as insurance is, most people do not understand this complex financial instrument. According to the Bureau of Labor Statistics Consumer Expenditure Survey (2014), insurance is a consumer’s fifth highest monthly expenditure behind housing, transport, food and pensions. For many Americans, if you add up all types of insurance (auto, health, etc.), monthly total premiums can surpass housing costs. But the insurance industry has its fair share of participants (companies, agents, wholesalers) who thrive on complexity and make sales that do not fit the client's need. There has been a tendency — especially with annuities, life insurance and long-term-care insurance — to introduce insurance products with more options. And each time an option is added, it becomes more challenging to understand that product. Often, this complexity is not a matter of intent; it is simply that even those within the industry or those who participate in the insurance procurement and review process (third party advisers such as financial planners, CPAs, etc.) do not understand insurance. The majority of people and companies do a good job, but there is a significant gap in insurance literacy in this country. See also: Best Insurance? A Leadership Pipeline The Insurance Consumer Bill of Rights was created to provide simple, easy-to-understand guidelines for everyone involved in the insurance ecosystem, including consumers, insurance agents, wholesaler, insurance companies and financial advisers. The Insurance Consumer Bill of Rights is based on the simple premise that insurance agents, wholesalers and companies should place the consumer’s interests first, to the best of their abilities. The Insurance Consumer Bill of Rights provides simple, clear and reasonable guidelines to accomplish this goal. It is a standard of excellence for all in the insurance industry. The importance of this movement is that, for many years, insurance has been a black box, something people know they need, although they have no real, unbiased information about it. And most people do not have the right coverage to fit their needs. In my 30-year career, starting as an agent before making the transition to a fee-based insurance consultant/litigation consultant/author/consumer advocate, I have seen that the situation behind the scenes is often not pretty. However, the majority of these situations could be avoided if all members of the insurance industry followed the Insurance Consumer Bill of Rights. Insurance consumers should have the right to receive any information that they request in a timely fashion. They should also be provided with all relevant information needed to make a decision in an easy-to-understand fashion. The goal is to not flood the consumer with something like a mutual fund prospectus; rather, it is to provide them with useful information. It is always a win-win situation when all parties come out ahead and are on the same side of the table. Truth always has a way of coming out, and, to get ahead in this digital world where there are fewer secrets and more information and choices, those who strive to provide the highest-quality service and information will thrive. See also: Fast and Slow: the Changing Landscape For many years, consumers have ended up with insurance they don’t need, with premiums they either cannot afford or really see no value in paying. It is time to change the conversation so that consumers end up with coverage that fits their needs, with premiums they can afford into the future. The Insurance Consumer Bill of Rights is a playbook for consumers, agents and companies to follow that puts everyone on the same page. Monitoring an insurance policy and making adjustments to an insurance portfolio is something that is almost always overlooked. Insurance needs change. Sometimes, the change is as simple as getting a new car, while other times it can be more complex and overlooked, like having a new child who is not added as a beneficiary to an existing life insurance policy. This is where the Insurance Consumer Bill of Rights matters. Making these adjustments, just like having regular maintenance done on your car, is what will ensure that a consumer has the right coverage in place at the time of making a claim. If the right coverage is not in place at claim time, what is the point of having insurance? While it is not a panacea, and there still would be bad actors and inappropriate sales, the Insurance Consumer Bill of Rights is a call to action and gives guidance to consumers on what to look for, what to expect and what they have the right to. Knowledge is power, and the power should be in the hands of the customer. Having and knowing your rights will protect and benefit consumers, along with calling the insurance community to task when needed and helping consumers and agents optimize insurance coverage and minimize premiums. Join the Insurance Consumer Bill of Rights movement! The Insurance Consumer Bill of Rights movement is gathering momentum, and I want to thank all of its supporters. Recently, the Insurance Consumer Bill of Rights has received numerous mentions in the press:

• Featured Article: It's Time for An Insurance Consumer Bill of Rights — a reflection on how the Department of Labor Fiduciary Rule is a pre-cursor to the Insurance Consumer Bill of Rights.
• As part of a joint effort with Chris Huntley's Whole Life Rebellion that called for signing the petition, Forbes.com's Barbara Marquand stated: “Sign the ‘Insurance Bill of Rights,’ a petition created by Tony Steuer from InsuranceLiteracy.org. Among other things, the bill says agents should act in consumers' best interest and recommend affordable and appropriate coverage. (Click here to view the article.)
• In an article on PTmoney.com titled “The Truth About Whole Life Insurance — Ethical Obligations and the Insurance Consumer Bill of Rights), it states, “Doctors take the Hippocratic oath and financial advisers the fiduciary oath. These are ethical codes professionals swear to live by in the execution of their duties. As of today, the life insurance industry has no such code, which is a travesty. Tony Steuer (InsuranceLiteracy.org) has created the Insurance Consumer Bill of Rights on Change.org, which seeks to implement a similar code of conduct in the insurance industry requiring all agents to act in the consumers' best interest. The desired result would be agents targeting consumers' specific needs to provide them with the most affordable and appropriate life insurance for their unique circumstances. Insurance agents should be held accountable for the advice they offer.” (Click here to read the article.)

And that is just some of the talk. So, what's the next step? Please continue to share the campaign via email and on social media. And you can now contribute to the Insurance Consumer Bill of Rights movement through the petition page on Change.org, or you can support the Insurance Consumer Bill of Rights movement on Indiegogo.

When you add it all up, the insurance industry has many characteristics that make it an attractive target for aggressive investments in innovation. First, it is enormous; it is estimated to be a global market of premiums written of more than $4.7 trillion. Second, it faces multiple challenges that offer opportunities for exploitation by nimble, efficient and innovative competitors, including:

• Low-interest-rate environment: Together, forcing a focus on the core business of insurance, creating enhanced customer experiences and value and rethinking operations to manage expenses are driving the innovation of business models underpinned by an efficient, flexible and variable-cost-based infrastructure.
• New customer attitudes and behaviors: From a move toward owning to renting, looking for niche solutions such as short-term, on-demand insurance or seeking solutions that help to manage risk, there is a growing need for new products and services that may be offered through new business models.
• Changing customer expectations: Fueled by digital technology, data and experiences from other digital companies (Amazon, Google, Facebook, etc.), expectations are radically shifting and driving increased dissatisfaction levels with how insurers engage and interact with customers.
• Traditional insurance is stale and complex: Insurance is seen as an intangible, low-engagement product that customers do not enjoy buying. They are seeking alternatives that make the process simple, quick and painless, with engagement that meets their needs.

Yet insurance is still needed by individuals and businesses to protect them and help them manage an increasingly changing risk environment. As a result, there is a gap between what traditional insurers are providing and what is needed in today’s rapidly changing marketplace. Enter the greenfields, start-ups and incubators that are aiming to innovate insurance. They are seeking to define new business models and processes that create a better way to “do insurance,” capture new market opportunities, create products and services and be at the forefront of the changing market. The nature of this new pressure is characterized by technology, data and very active investment activity as reflected in the new term, InsurTech. The research firm CB Insights is tracking more than 130 start-ups and private companies in the InsurTech space that have raised more than $3.5 billion in aggregate funding. Many insurance companies recognize the importance of not standing idly by while others are reinventing insurance and creating new models, products, services and value propositions. Indeed, a survey conducted by Celent among its insurance panel found that 86% felt that innovating over the next three to five years was critically important (InsureTech Has Arrived: A Primer, May 2016). And, as highlighted in Majesco’s recent thought leadership report, Greenfields, Start-ups and Incubators … Innovation in Insurance Products, Channels, Services and Business Models, a small but growing number of companies are becoming active in this space by establishing venture capital units/divisions; creating start-ups and greenfields; and incubating new products, services or channels. See also: How to Plant in the Greenfields Still, most insurance companies have been hampered by the prospect of needing to do multiple monumental tasks simultaneously: First, continuing to run the current business with existing (and in many cases) outdated legacy systems; second, modernizing those systems to bring the current business into the modern era; and third, innovating/re-inventing the business in the race with InsurTech competitors to respond to the rapidly changing needs, expectations and risk profiles of the customer. Three Boxes This dilemma is not new.  The tension between the current state and the vision of the future state is always there; it is just more pronounced today, given the pace and complexity of change. The companies that are exemplars at innovation are the ones that embrace these tensions and manage them strategically. Consultant and Dartmouth professor Vijay Govindarajan adapted an ancient Hindu philosophy to characterize the required components of this capability in his new book, A Three-Box Solution to Managing Innovation (Harvard Business Review Press, April 26, 2016).

• Box 1 (with Hindu god Vishnu, the preserver, as the metaphor) is about managing the present and keeping the current success of the company going.
• Box 2 (based on Shiva, the destroyer) is about selectively forgetting about and letting go of the past. This includes some of the things that led to the company’s current success, which may not be relevant in the future; they are today’s strengths but may very well be tomorrow’s weaknesses.
• Box 3 (based on Brahma, the creator) is about inventing the future — the game-changing innovations that are going to transform the business for tomorrow.

Govindarajan explains that many companies stay stuck in Box 1 and are afraid of Box 2. In an interview with the Huffington Post, he noted, “Once companies become large and successful, the tendency is to preserve success. The tendency is to focus on Box 1. Box 1 is about managing the present, Box 2 is about selectively forgetting the past and Box 3 is about creating the future. For large companies, success becomes a trap because they tend to focus on Box 1/present.” Successful companies balance activity and focus across all three boxes. For example, a healthy Box 1 is critical to fund the activities in Boxes 2 and 3, which will determine the future of the company. As he said, “Just as the three Hindu gods work in concert to keep the universe humming, a company manager must keep the present business strong and at the same time get rid of outdated enterprises and develop new lines.” Three Steps A Three-Box framework is helpful for structuring strategy for innovation and reinvention, but putting it into action isn’t necessarily easy. In our experience working with numerous carriers on their transformation journeys, we have found the following three tools to be helpful in moving from thinking to action. First, develop a target operating model that defines how to efficiently and effectively operationalize your company’s vision and business strategy for both the existing business and the future business model. The right combination of business processes (process strategy), organizational structure and staffing (people strategy) and technology and data assets (technology strategy) will likely be different for the existing and future models, so ask these key questions: What is your minimum viable product? New operational model? New business model? What areas of the existing business are most critical to keep it funded today and the future? A target operating model can help you define your existing and future business so that you rapidly get results and value. See also: How to Turn ‘Inno-va-SHUN’ Into Innovation Second, create and execute a well-documented, detailed business transformation plan that makes it explicitly clear how the transition from current to future state will occur. The plan should include details on your current state to help drive new efficiencies — including all of the connections, data flows and work flows — and the inevitable bottlenecks and inefficiencies that are costing you money and reducing quality. It should also include details that define your new business model and what you need for the future business, which is likely very different from your current model. To create confidence in how and when you will arrive at the future state defined by your target operating model, the plan must identify and document an appropriate number of transition states that define what the process, people and technology components will look like — and for how long. Third, leverage cloud platforms and partner ecosystems across all boxes to eliminate the need for new infrastructure and reduce the uncertainty around the veracity of future state business model ideas through “fail fast” experimentation and rapid scalability. These three steps combined with the Three-Box framework create the 3 X 3 approach for ensuring your company’s current and future success. 3 X 3 Approach to Reinvent Your Business Reinvention and Transformation: The New Normal The wave of change to a digitally and data-empowered world driven by ever-increasing customer demands is inevitable. And it is a given that there will be constant pressure from both start-ups and established companies to outdo each other in the race to better meet those needs and capture more share of the enormous value presented by the insurance market. For insurance companies, the need to reinvent and transform the business is no longer a matter of if, but when. Together, the Three-Box framework and three-step approach provide a formula to use to develop your reinvention and transformation strategy. But the bigger challenge insurance leaders face is the pace of transformation — because the pace of change is not slowing down. Insurance leaders should ask themselves: Do we have a strategy that considers both transforming the legacy business and creating a new business for the future? Who are our future customers and what will they demand? Who are our emerging new competitors?  Where are we focusing our resources… on the business or on the infrastructure? What can we do to demonstrate to all employees that we must be — and that we are — committed to working in balance across all three boxes?

An omni-channel experience leverages customer behaviors across all relevant sales and distribution channels and provides the basis for a consistent, personalized transaction interaction. Where there is a multi-step transactional experience (completed over time), each relevant channel should recognize the customer’s current process point in the overall transaction fulfillment process, such that customers are able to progress along the transaction process in a transparent fashion. Also implied — but not often mentioned — is the need to gather predictive data so relevant customer-specific marketing initiatives are delivered digitally to the customer’s preferred device (or in hard copy form to their home). The Rationale That Is Driving Omni-Channel Demand From the time a customer logs on to his or her mobile or PC-based site, the customer should find a consistent presentation framework, with personalized offerings based on buying preferences, as well as new content that fits a customer’s purchase propensity profile. In addition, the selection and purchasing experience should be the same throughout a customer’s multi-channel purchasing and associated fulfillment process. With the growth demand for omni-channel distribution, this process paradigm is emerging as a differentiation that often helps a customer decide who to buy from. See also: How to Captivate Customers (Part 4) Omni-Channel Internal Readiness Assessment Based on the broad context and scope required to fully enable omni-channel distribution, key assessment components include: – A broad-based customer purchase and predictive data history that enables predictive and behavioral data modeling; – The ability to standardize processes across all distribution channels; – The capability to store customer transactions that are in-process; – Specific process steps to be fulfilled when the customer reengages in one or many transaction based processes; and – The ability to include bio-metric authentication. Challenges Legacy systems are the norm in most companies, and most have never been set up for this type of customer experience paradigm. Therefore, the magnitude of legacy system changes are often material. Additionally, most companies find they do not currently collect the breadth of data required and do not have the analytical capabilities required for predictive and behavioral data analytics. To the extent the factors above require material software modification, the project delivery cost could be significant — and the delivery time-frame protracted. Regardless, due diligence requires project sizing, costing and delivery time-frame analysis. If the internal project assessment reflects material cost and long project duration, then a package software solution may be appropriate. Purpose-built software for omni-channel distribution often proves to be significantly less expensive and results in a materially reduced delivery timeline. See also: Keen Insights on Customer Experience   Summary Omni-channel distribution is becoming a competitive necessity for many companieThus, primarily consumer interactive companies need to consider the impact of this new process paradigm, and prioritize omni-channel distribution accordingly to maintain their competitive standing.

By now, senior directors at most organizations probably are cognizant of the proliferation of network breaches and fully grasp the notion that risk mitigation must be brought to bear. However, cybersecurity practitioners can be notoriously poor communicators. Many lack the jargon-free communication skills to present a clear picture of rising cyber exposures, one that can be measured and acted on. That is the fundamental problem that start-up FourV Systems seeks to address—by defining and consistently measuring what Derek Gabbard, president and co-founder, refers to as the “vital signs” of cyber risk. See also: Cyber Risk: The Expanding Threat   “The communication gap that exists between the security teams and the leadership teams and the boards of enterprises is a pretty substantial one,” Gabbard says. “And we think we can help them get on the same page.” FourV’s cyber risk intelligence platform, GreySpark Cyber, takes the raw data from various systems like the security information event manager (SIEM), analyzes it and scores it into six indices that include defense effectiveness and surface area. “It gives security practitioners a taxonomy for explaining what they’re doing and the board of directors a way to understanding it,” Vice President Casey Corcoran says. Making risk understandable While GreySpark helps the organization’s leadership visualize security risk, it also gives the security team a simplified dashboard for tracking security events. They can drill down on specific threat indicators to see what caused a decrease in the score and track the threat to affected systems and all the way down to the endpoints in order to remediate it. “We normalize the data so one sensor type—like a firewall—doesn’t overshadow another,” Corcoran says. “So when you see the defense effectiveness score, you can see that there’s probably a layer missing, because a certain area is missing a defense.” Several companies are trying to solve the same problem of showing risk in easy-to-understand format, but Corcoran says they typically only look at outside indicators. “What we’re doing is taking the same approach (as some others) and asking, ‘how risky is what’s going on inside the organization?’ ” he says. See also: Better Way to Assess Cyber Risks? He uses the analogy of a fort to illustrate how this works. When the barbarians are attacking, he says, other companies can tell you whether the moat has water or alligators, whether the bridge is up or down and whether there’s enough oil to throw on the barbarians climbing the wall. “But they don’t tell you what the barbarians inside the fort are doing, how bad it is—and that’s what we’re measuring, “ he says. FourV Systems, which officially launched in June 2015, is a spinoff and subsidiary of SRC Inc., a government research and development and services company that employs 1,000 people and originated out of Syracuse University. SRC, an independent nonprofit founded in 1957, works in the areas of environment, defense and intelligence agencies, with customers such as the U.S. military, Department of Homeland Security and Environmental Protection Agency. Big need for big data analytics Gabbard, who was a cyber manager at SRC, saw potential in commercializing some of the intellectual property. He homed in on the big-data analytics aspect, created a business plan and secured start-up funding from the parent company. The GreySpark reasoning engine was developed by SRC over seven or more years of work on “solutions for critical national security problems,” according to FourV. Starting out with just that engine, as well as the system’s chief architect, Gabbard grew the start-up to 10 current U.S. employees. The support services staff will be scaled as the company grows in the next couple of years. See also: Analytics and Survival in the Data Age The first version of GreySpark, which was released at the end of March following several months of beta testing, is focused on IT operations risk through the “vital signs” indices. Currently, three more major releases are planned. The next release will include a personnel risk assessment, followed by infrastructure maturity risk. The final component will be risk management, looking at the security return on investment. Corcoran says the goal is to have two releases per year, with maintenance updates in between. “We’re trying to sort of lift the fog that I think the leadership teams and the boards of many enterprises feel in dealing with security,” Gabbard says, “and give them standard metrics that they can understand and look at on a daily, weekly, monthly and annual basis.” This post first appeared on ThirdCertainty. It was written by Rodika Tollefson.

This is the second of two parts. The first was, "The InsurTech Boom Is Reshaping the Market." What is your strategy to respond to Insurtech? Yes, InsurTech start-ups may be rivals and disruptors….but savvy insurers are starting to recognize that InsurTech start-ups can also be partners. The benefits of InsurTech collaboration are substantial. While some carriers view the rise of insurance technology start-ups with trepidation, others have been quick to seize on the InsurTech trend as an opportunity. Major insurers are some of the biggest investors in fledgling InsurIech firms. Far from seeing these new companies as rivals, they’re embracing them as partners. The venture investment funds of prominent insurers such as AXA, Aviva, Allianz, American Family, MassMutual, TransAmerica and Ping An, have made significant investments in insurtech start-ups. Recipients include PolicyGenius, NextCapital, CoverHound and Limelight Health. Funding of emerging technology firms by big insurers looks set to climb this year. CB Insights reports that insurers completed 20 investment deals in the first quarter of this year. The same group of insurers concluded only eight deals in the first three months of 2015. See also: A Mental Framework for InsurTech The shift to collaborate, rather than compete, with technology start-ups is gathering pace throughout the financial services industry. Investment in start-ups aiming to collaborate with established financial services providers jumped 138% last year. It accounted for 44% of the total funding for financial services technology, FinTech, in 2015 – up from 29% in 2014. Start-ups looking to compete with financial services companies still attract the bulk of investment. However, there’s growing enthusiasm for cooperation among investors and start-ups. The extent of this support varies across geographic markets. In New York, investment in collaborative start-ups accounted for 83% of total FinTech funding, while in London and the rest of the U.K., where the regulatory environment is more conducive to new competitors, the proportion was only 10%. The illustration below shows the growing interest in cooperation across the financial services industry. Investors are increasingly supporting firms that can help established service providers reduce costs and risk and capitalize on new markets. This trend is only beginning to affect the insurance industry. But as the InsurTech sector grows it will become much stronger. Increasing cooperation between insurers and new technology firms is a sure sign of the growing maturity of the InsurTech sector. Many major carriers no longer worry that InsurTech firms might erode their business. Instead, they’re eager to benefit from the new insights, attitudes and technology they bring to the industry. See also: Blockchain Technology and Insurance   The benefits of collaborating with InsurTech firms can be compelling and include:

• Insurers can get early access, first mover advantage on disruptive technologies.
• Big insurers' decisions to use new technologies often decide whether a new company will be successful….so combining use of a new InsurTech with an investment is a double win.
• Insurers will get the ability to influence the strategy of the new start-up.

In my next blog post, I’ll discuss the shift in FinTech funding to developing economies and explain why this is good for insurers. This article originally appeared on Accenture.  

Core in the cloud is a hot topic that has garnered a lot of interest and an equal amount of debate as insurers confront the challenges that the digital world brings to our industry, and, certainly, insurers’ use of cloud has increased. Even though there has been a lot of discussion on this topic, the exact momentum of core in the cloud has been difficult to pinpoint. SMA’s latest research, published in Insurers’ Core Systems Buying Trends, reveals that cloud deployment has reached a clear tipping point in insurance: 36% of all core systems purchased in 2015 are being deployed in the cloud, especially policy and claims. In fact, this is the first year that SMA has found that a majority of new core systems will not be deployed on-premise: 58% of insurers made the critical decision to outsource the hosting, maintenance, and upgrades. The challenges of both security and resources are major drivers for insurers turning to the cloud. Although insurers of all sizes are choosing cloud, those with DWP under $250 million (Tier 4) are the most likely to be using core in the cloud, especially suites. Tier 4 insurers must home in on market differentiators that keep them abreast of evolving technologies and energize their customer base. By taking advantage of core in the cloud, these smaller insurers offload a large portion of the work that has consumed their IT staff, allowing them to refocus their energies on the kind of competitive differentiation that cloud deployment makes possible. See also: Lost In The Cloud: Five Strategies For Risk Managers Facing The Challenges Of Cloud Computing Core in the cloud also gives insurers access to much more advanced cyber security than they could easily foster in-house. Small insurers who have taken to the cloud have realized that their limited resources must not compromise their policyholders’ data and that cyber security is an area where the cloud provider is likely to have much greater expertise than the insurers themselves. SMA’s research has established that cloud is also strongly correlated with broader functionality in core systems, including extended core-adjacent functionality like portals and data and analytics tools. This robust capability, which is often pre-integrated within cloud solutions, saves the insurer time and implementation costs. For example, a customer portal that smaller insurers develop for thousands of customers will still be compared with portals put out by insurers with DWP of more than $5 billion (Tier 1), whose portals serve millions of their own customers. With core in the cloud, these smaller insurers have access to much more advanced capability, which strengthens their ability to differentiate themselves in the market regardless of the more extensive resources available to their largest competitors. See also: 7 Imperatives for Moving Into the Cloud   Expertise, security and resources also play a role in the other major cloud consumers: self-insureds, municipalities, state workers’ compensation funds, etc. These organizations are eagerly taking to the cloud for their core system investments, which are usually stand-alone policy or claims systems. Cloud-based core systems are a perfect solution for these companies’ needs, because they can get advanced policy and claims capabilities with the flexibility they need, benefiting from the best practices already in place for other cloud customers. Flexibility is the key to core in the cloud’s appeal, and as new digital ecosystems create new demands on insurers (and non-insurers that write insurance), that flexibility becomes ever more attractive. We expect that buying patterns in 2016 will show even more insurers shifting to core in the cloud to take advantage of its many benefits.