Let’s have a moment of silence for the "sold, not bought" paradigm. Before anyone gets panicky, we’re not laying agents to rest, but rather recognizing that sold, not bought is about a mindset that served our industry in the past and that holding on to it for too long is now hurting us. It’s not about favoring a particular distribution method. Agents can live without this paradigm — and likely be better off for it. Learning from other paradigms If people in your company are still having arguments internally about this, let’s first look at what we can learn from other arguments that have died over time. These include:

• “the Earth is flat;”
• “the four-minute mile is impossible;”
• “HIV is a death sentence;” and
• “Pluto is a planet.”

What’s common about all these arguments? New capability. Somewhere along the line, a scientific breakthrough, a person with new knowledge or a separate discovery caused us to see the argument in a new way. Then we eventually agree on the new truth. It’s time to do the same for the sold, not bought paradigm. What’s changed? There is new capability in the hands of consumers that did not exist when the paradigm was created. The modern consumer has so much new capability that the term “prosumer” was invented by Alvin Toffler in his 1980 book “The Third Wave.” A prosumer is a very active consumer who blurs the lines between professional and amateur and controls information flow, the experience and, even, the sale. Modern companies like Amazon, Apple and Google have done a great job, both leaning into this trend and shaping it. See also: Paradigm Shift on Cyber Security As an industry, we have convinced ourselves that nobody wakes up in the morning and wants to buy insurance unless someone makes her do it. This drove the sold, not bought paradigm. It had truth to it in the days when consumers did not have access to information like they do today. However, the prosumer found this concept disrespectful and, perhaps, even arrogant. Hanging onto this notion has caused the industry to lose focus on the end consumer and shift the focus to the agent as customer. We then end up with:

• Complex products that please a few key sellers but damage the customer experience;
• A heavy push in marketing strategies that result in expensive incentives and margin pressures; and
• Compensation models that provide incentives for the wrong behavior and lead to onerous regulations, such as the DOL fiduciary rule.

Opportunity to relearn There’s a lesson here, but we need to revisit the nature of demand. Economics lessons tell us that there are several nuanced styles of demand, dictated by the nature of a product. It’s the manufacturer’s job to cultivate demand, manage demand or both. Historically, creating demand was in the hands of the agent and was fused with the sales process. Because of the prosumer’s new capability, the role of demand creation and the sale are now decoupled. See also: Taking the ‘I’ Out of Insurance Distribution   For those who think nobody wants life insurance, think again. While it isn't as highly sought after as beer or shoes, the 2014 study by LIMRA and Maddock Douglas indicated there are almost 19 million “stuck shoppers” (people who intend to buy but the current experience causes them to get stuck along the way) for life insurance. In addition, if you talk to some of the new startups/disruptors in the insurance space, they believe insurance is a bought product, and it is simply their job to cultivate more demand and create a superior experience. So if we replace the paradigm of “sold, not bought” with “bought, not sought,” we can put the responsibility back into the manufacturer’s hands to cultivate demand, deliver better on the experience and, most importantly, ask ourselves what role advice plays in the new world. Many are pointing to robots as the answer. But can an industry so deeply rooted in social purpose really operate without humans helping humans? If not, we have an opportunity to reinvent the agent role in a profound way.

So you've developed a great rapport with a potential customer. She's happy with the risk management solutions you've proposed. A sale seems imminent. Then you get to the price. Suddenly, your relationship-building efforts dissolve into a negotiation that might seem more about dollars than sense. Don't get discouraged. Cost is a sticking point for almost all customers and a common reason why deals of all kinds fail. But before you let price jeopardize your next sale, arm yourself with strategies to help customers understand that the bottom line shouldn't always be the last word when they're considering your proposals. Consider these four simple approaches: 1. Listen Listening to the specifics of the potential customer's objections is the first step in figuring out a strategy to overcome them. Two areas to which you should pay the closest attention are specifics about why the prospective customer is resisting your price and how he determined the competition's prices. This will help you empathize with potential clients. It also allows you to introduce considerations besides price, such as the value of the peace of mind that comes from a stress-free claims process, the risk management resources your agency can offer, etc. 2. Do the Math for Customers Prospective customers may not realize how producers and underwriters arrive at the price for a specific policy. That's why it's vital for you to explain it fully with concrete examples and — even more importantly — offer ways to potentially reduce costs down the road. Assure the potential customer you've personally checked for all potential discounts, keeping the fight for the sale alive while providing additional value and insight. See also: Answer to a Better Customer Experience?   3. Justify the Price Lots of sales pros will tell you to never apologize for price. It's sound advice. Your message should be that the price matches the value of what you're offering and that you assume the potential buyer will agree. For example, you can tout the benefits of your claims department and how the producer and adjusting teams will support the customer at every step of the process; give a specific example of a time when a current or past client benefited from your agency's superior value and service; or emphasize that an insurance policy is a key part of protecting and preserving life's most important purchases. 4. Stand Your Ground (or Walk Away) Everyone's idea of negotiation is a little different. In some cases, the right approach to a potential client balking at a price you've quoted is to stand your ground once you've demonstrated you believe in the value of your coverage and service. It just might be the tactic that gets the customer ready to buy. See also: Payoff From Great Customer Experience? Other times, a potential buyer will force you to really stand behind the value of your products... by giving up the sale. Some buyers have a maximum they're willing or able to spend, while others will go with the cheapest option no matter how many different ways you spell out why that might be a bad idea. One of the key elements of being a successful seller is knowing when to give up on a prospect and move on to more lucrative opportunities. Have you had success with potential customers who are only focused on price? Share your solutions in the comments section below.

Overview By 2045, as many as 6 billion people are expected to inhabit urban areas, an increase of 150% on today. With such rapid and vast growth, there are a number of key areas where the strain is most likely to be felt. Take London as an example. By 2050, demand for public transport in London is set to increase by 50% and demand for energy by 20%. Demand for water will already exceed supply by 10% by 2025, according to the office of the mayor of London. Meanwhile, half a million new homes will need to be built every year to house the rising population — but current planning restrictions mean the city is running out of space to build. If these rising challenges are not met, there is a growing danger that some cities may cease to function, which could have serious implications for the global economy. Overloaded transport systems will lead to gridlock. Energy shortages could lead to blackouts. Lack of water could lead to disease. McKinsey estimates that just 600 urban centers generate 60% of global GDP, while rising urban areas in the developing world have been driving 35% of global growth. If these economic powerhouses are hit by shortages in key areas, the world could be plunged into one of the worst recessions it has ever seen. This is not a distant challenge — many of the problems are already being felt today with overloaded public transport systems, rising urban rents and water shortages in cities across the world. With the complexity and cost of urban infrastructure projects, governments and businesses need to plan for and act on these emerging risks today to meet the needs of tomorrow. Below, we run through some of the challenges and proposals in some of the key areas where urban areas are set to feel the strain. But this is far from an exhaustive list. In-Depth Transport Without effective ways to move people and goods through urban areas, transport systems become effective blocks to, rather than facilitators of, commerce. But transport infrastructure projects are among the most complex, expensive and lengthy to undertake. In urban areas, such projects become even more difficult. Adding new (or expanding old) routes may involve buying/demolishing existing properties and serious disruption to existing infrastructure during the construction work. The London Transport network (not including private journeys by car or bike) hosts around 24 million journeys a day. Projected to increase rail capacity by 10%, the city’s Crossrail project is expected to be fully operational in 2019. Yet, by 2030, the city is expected to have a population of 10 million — an increase of 16%. Despite being Europe’s single largest construction project, costing more than $22.5 billion and taking more than a decade to complete, Crossrail still won’t be enough to meet the city’s needs. Simply building more railways and roads may not be enough to keep our cities moving. To reduce congestion, some cities, like Oslo, are thinking of banning private cars from their roadways. Through a one-day trial in September 2015, Paris found alternative types of transportation such as biking could reduce air pollution. Would the reduction in traffic lead to sufficient benefits for the population as a whole, or would it simply make cities more inconvenient for individuals? This sort of reduction may work in small, compact urban areas — but it’s by no means a solution for everyone. This is why some cities (like Sao Paolo and Athens) have also introduced systems to prevent the use of some cars on certain days. But, as cities sprawl and populations rise, limiting cars on roadways might not be a simple answer to the needs and complexity of the transportation systems of the future. Utility and Food Supply, Waste Disposal Growing enough food for a global population expected to hit 10 billion by 2050 is tough. Add in the need to get this food to the people who need it, in urban areas often far away from the food’s place of production, and the challenge is compounded. Reducing road traffic in cities by banning private cars may increase the ability of commercial trucks to deliver food to shops, but getting the food to those cities in the first place remains a serious challenge. Many major urban airports are nearing capacity, while skies are more congested than ever — despite flight path efficiency and coordination improvements such as those driven by the European Union’s Single Sky project. Larger cities will need more airports, more shipping and more (or more efficient) transport links from airports and seaports to those cities. To provide water for drinking and industry, new and bigger reservoirs and expanded networks of pipes will need to be constructed — assuming there is rainfall to fill them, which is far from certain. And it’s not just about getting material to cities; the volume of waste products will also vastly increase. Packaging will need to be collected and taken away for recycling, incineration or alternative disposal. (The increased volumes of human waste will require more sewers and more sewage treatment plants.) Some solutions aim to tackle two problems at once, turning household waste and even human waste into electricity. Meanwhile, many cities, including London, are investigating recycling water, feeding used water back into the system after treatment. Increased electricity needs could be met by efficiency improvements in energy generation or by building more power stations (projects that can take years). But some are proposing a radical rethink: moving away from the concept of urban energy grids into more localized power generation. Emerging technologies like solar roadways and solar cells that double as windows — or even maximizing the energy of waste heat from machinery and electronics, combined with improvements in battery storage — could bring energy generation to the point of use and reduce the need for nation- or citywide power networks. While many offices and factories already have back-up generators for emergencies, some hope the right combination of alternative electricity sources, including from on-site waste, could enable them to become off-grid and self-sufficient permanently. The End of the City? With cities growing at such a rapid rate, is there a simpler solution to the challenge? Moving away from the city? This could solve the added problem of the increasing lack of housing in urban areas, while creating jobs in areas that traditionally have lower costs of living. With the prevalence of ecommerce and increasingly robust home delivery options, there is no longer a reliance on the “city” for commerce as there was in times passed. This could also help meet the rising demand for better work-life balance and flexible working. As telecommuting options are embraced by more employers and workers, justifying a traditional “office” environment becomes harder. Combine this with the increasing strains on urban infrastructure and rising costs of maintaining office buildings and perhaps a shift to home offices could solve three problems at once: reduce the pressure on urban areas, improve workers’ quality of life and cut costs for businesses. There are no easy solutions. But as businesses seek to maintain their competitiveness and attract the workers they need to adapt and evolve, it is becoming increasingly essential to consider not just what your organization does, but where — and how — it should be doing it. Do you have plans in place to cope with the emerging challenges of urban living and working? Talking Points “By 2050, the world will have grown by 2.5 billion additional urban dwellers, with almost all of this growth occurring in cities in the developing world.… The world will need to invest about $50 trillion in infrastructure every year for 15 years to keep up with demand.” – Aniruddha Dasgupta, global director, World Resources Institute Ross Center for Sustainable Cities “The question of how to enhance mobility while at the same time reducing congestion, accidents and pollution is a common challenge to all major cities in Europe. Congestion in the E.U. is often located in and around urban areas and costs nearly EUR 100 billion, or 1% of the EU’s GDP, annually.” – European Commission “This is not a third-world problem alone. Nice icons of sustainability, like Portland… have combined sewer outlets. They do get floods on their streets, and sometimes they are made up of sewage as well as rainfall. It’s an under-the-rug kind of issue that people in charge don’t talk about. We’re here to say that everything is not OK.… We need to find a way to build a new approach to an old problem.” – Mikhail Chester, assistant professor, Arizona State University School of Sustainable Engineering and the Built Environment Further Reading

• Investing in Infrastructure for a Growing Economy – European Investment Bank, Oct. 9, 2015
• Water Resilient Cities: How Is Business Building Them? – The Guardian, Oct. 27, 2015
• Amid Historic Drought, Conservation and Water Innovation Investments, Patents on Rise – MarketWatch, Nov. 5, 2015
• ‘Urgent Response’ Needed for Urban Waste – Resource magazine, Sept. 9, 2015
• Urban Waste Could Supply Millions of African Families With Much-Needed Electricity, New Study Shows – Nature World News, Oct. 15, 2015
• I’ve Seen the Future City – and It’s Electric! – U.K. Government Office for Science Blog, Oct. 28, 2015
• Where Cars Fit in the Future – Information Week, Sept. 28, 2015
• 6 Big European Cities With Plans to Go Car-Free – The Atlantic City Lab, Oct. 20, 2015
• The Future of Making Cities – The Economist Intelligence Unit, Aug. 13, 2015
• Aon Infrastructure Solutions – overview

The insurance industry has been abuzz with the announcement by Allstate CEO Tom Wilson that he has created a stand-alone business unit with the express purpose of monetizing telematics data that the firm has been collecting for at least the last six years. The new company, called Arity, will provide data and analytics products to the insurer’s brands, as well as to third parties. This is not a surprising move for Allstate. I have been watching Allstate for the last couple of years. They have had an active research and development department. You can be assured other insurance companies are exploring similar options that will help them increase revenue in arenas beyond insurance policies.. Allstate has provided hints of its intentions for the last couple of years. In the 2015 SEC 10-K filing, the insurance company -- for the first time -- identified how changing technology is increasing the risk of its ability to continue to generate revenue from insurance products. Specifically, the company said:

“We are also investing in telematics and broadening the value proposition for the connected consumer. If we are not effective in anticipating the impact on our business of changing technology, including automotive technology, our ability to successfully operate may be impaired. Also, telematics devices used have been identified as a potential means for an unauthorized person to connect with a vehicle’s computer system resulting in theft or damage, which could affect our ability to successfully use these technologies. Other potential technological changes, such as driverless cars or technologies that facilitate ride or home sharing, could disrupt the demand for our products from current customers, create coverage issues or [affect] the frequency or severity of losses, and we may not be able to respond effectively.”

Allstate identified the new risk it faced. In response, the company has been aggressively researching, developing and testing new ideas for how to use the data collected to create new types of insurance policy coverages and rating models. See also: 6 Key Ways to Drive Innovation   Innovation Encouraged The company was granted 28 patents in 2015. So far in 2016, it has been awarded 15 patents. The company has also submitted 16 patent applications. Following is a small sampling of the patents: Insurance System Related to a Vehicle to Vehicle Communication System(#9,390,451) - System and methods are disclosed for determining, through vehicle-to-vehicle communication, whether vehicles are involved in autonomous droning. Vehicle driving data and other information may be used to calculate a autonomous droning reward amount. In addition, vehicle involved in a drafting relationship in addition to, or apart from, an autonomous droning relationship may be financially rewarded. Moreover, aspects of the disclosure related to determining ruminative rewards and/or aspects of vehicle insurance procurement/underwriting. Motor Vehicle Operating Data Collection and Analysis (#9,189,895) -- A method and apparatus for collecting and evaluating powered vehicle operation utilizing on-board diagnostic components and location determining components or systems. The invention creates one or more databases whereby identifiable behavior or evaluative characteristics can be analyzed or categorized. The evaluation can include predicting likely future events. The database can be correlated or evaluated with other databases for a wide variety of uses. Route Risk Mitigation (Utility Patent Application (A1)) - A method is disclosed for mitigating the risks associated with driving by assigning risk values to road segments and using those risk values to select less risky travel routes. Various approaches to helping users mitigate risk are presented. A computing device is configured to generate a database of risk values. That device may receive accident information, geographic information, vehicle information, and other information from one or more data sources and calculate a risk value for the associated road segment. Subsequently, the computing device may provide the associated risk value to other devices. Furthermore, a personal navigation device may receive travel route information and use that information to retrieve risk values for the road segments in the travel route. An insurance company may use this information to determine whether to adjust a quote or premium of an insurance policy. This and other aspects relating to using geographically encoded information to promote and reward risk mitigation are disclosed. Data is king Allstate has been granted about 43 patents in the last 18 months. A high percentage are related to data, telematics and how to use the data collected to more effectively understand driving behavior. Data and more specifically data analytics is rapidly becoming the key to unlocking new revenue sources. Data is king. Allstate CEO Wilson was quoted in the Chicago Daily Herald saying that Arity can “incorporate new data sources and enhance analytical capabilities in ways that we weren’t able to do when it was embedded in the insurance company. It’s a big enough platform today with the Allstate customers in it, and that will continue to grow, but we’d like it to grow even faster with a broader set of customers.” See also: Data Science: Methods Matter (Part 4)   One option for bringing innovation to a conservative company is to spin off the innovations into a separate company. It appears that the telematics business unit just simply couldn’t operate effectively within the confines of a highly regulated and conservative company.

“The biggest risk is not taking any risk... In a world that is changing really quickly, the only strategy that is guaranteed to fail is not taking risks.” ― Mark Zuckerberg

Lessons to be Learned? So what are the lessons to be learned?

• Invest in research and development - finding new ways to enhance the customer experience and at the same time generate additional revenue will be key to being prepared for the uncertainty ahead.
• Define “successful failures” -- you can be assured that not everything the Allstate staff tried worked. The key to innovation is being able to learn from your failures. This is particularly challenging in a larger company where risk-taking is punished.
• Embrace the changing nature of risk – Risk management departments are told to reduce a company’s exposure to all types of risk. To be able to respond to the rapidly changing nature of risk, you will need to increase your exposure to risk.
• Embrace the risk dilemma -  How do you encourage innovation (taking risks) without putting the company in jeopardy? Every type of organization faces this dilemma.

What do you think? What other lessons can be learned? Is this a smart move by Allstate, or risky adventure? Leave a comment below. This article was originally published on LinkedIn. It is reprinted with permission of Steve Anderson.

Virtual reality seems like one of those emerging technologies with limited applicability in insurance. But as I’ve tested a few VR headsets over the past few months I have come to realize there is opportunity for insurance — though you wouldn’t know it from the typical demos. I’ve now driven a Le Mans race car (until I crashed), flown over Manhattan (until I crashed) and fired a gun in a first-person shooter game (until I was killed). In all these situations, I found that the speed and movement made me dizzy — I am not really cut out for this type of VR. I also recently tested Google Cardboard with a series of apps. Admittedly, Cardboard apps are entry-level VR, designed to give a person an idea of the capabilities of VR. Mercifully (for me), many of the apps I tried were much slower, allowing me to absorb, learn and be entertained. This more “normal speed” approach is what I think is likely to be the basis of business-use cases for the insurance industry. A few of the potential VR uses in the insurance industry include:

• Adjuster Training: Today, large P&C insurers build houses and other structures solely for adjuster training. Imagine being able to create a wider variety of situations and enable adjusters to learn and experience them through VR.
• Underwriter Education: P&C underwriters must learn a great deal about the vehicles or property they will be evaluating, and life underwriters must be educated on medical and health conditions. VR environments that show different types of roofing techniques or vehicle construction would be very useful, as would interactive 3D illustrations of the human body.
• Injury Rehab: Treatment programs for injured workers or individuals hurt in car crashes are often complex. VR might be used to demonstrate physical therapy exercises and show how to use medical devices and assist in managing stress or depression.
• Loss Control: Training for loss control engineers or even providing safety training for commercial clients would be possible with VR.

I understand the fast-moving, visually stunning VR environments are where the action is today (pun intended). And there will certainly be a big market for gaming and entertainment VR apps. But, in the long run, there may be many more apps for individuals and businesses (including insurance) that allow users to experience a virtual environment by moving slowly and making conscious choices about how to navigate. VR will have to take some advice from Simon and Garfunkel’s “The 59^th Street Bridge Song”: “Slow down, you move too fast.” If so, insurers that implement VR really could be “feelin’ groovy.” See also: Is Insurance Ready for Virtual Reality?   What is your opinion about virtual reality and insurance? Take the new SMA survey on emerging technologies in insurance, where VR is addressed — along with blockchain, AI, drones, driverless vehicles, etc.

In June, the Property Casualty Insurers Association of America (PCI) published a report titled “Cost Shifting from Workers' Comp Opt-Out Systems: Lessons from Texas and Oklahoma.” It claims to show how employers in those states are avoiding costs that should be covered by workers' comp and that are instead paid by workers, their families, private payers and taxpayers. The report is part of a year-long, anti-competitive campaign that has been orchestrated with claimant attorneys who profit under workers' comp and resist any move away from the traditional approach. The report shows little regard for the facts, applicable law or actual data on performance of alternatives to traditional workers' compensation. Here are five of the most significant bits of misinformation and misrepresentation: 1. No relevant data. The PCI cost shifting report boasts of using “verifiable and relevant data” and speaks to “the behavior of opt-out employers.” But the report fails to actually include any Texas or Oklahoma Option claims data, and the truth is that there is no evidence that PCI has even attempted to obtain such claims data. 2. No apples-to-apples comparison. PCI fails to consider the benefit plan payments, supplemental plan payments and negligence liability settlements and awards under Texas Option programs that are not available under workers' compensation. See also: 2016 Outlook for Property-Casualty 3. No mention that the majority of Texas workers are covered. PCI fails to acknowledge that the Texas Department of Insurance has determined that more than 95% of Texas’ workers are covered by either workers' compensation or an injury benefit plan. Instead of criticizing responsible Texas and Oklahoma employers who provide injury benefit coverage for their workers, PCI should instead focus on the approximately 14 million — and growing — American workers across all states who have no work injury protection whatsoever. 4. No mention that proposed programs in other states have mandated benefits. PCI extrapolates from Texas to posit a false model for Tennessee and South Carolina. Option programs proposed in those states — unlike Texas — have mandated benefits. No bill has been introduced in either of those states to allow employers to “go bare.” 5. No acknowledgement of option program compliance with Medicare reporting and MSA requirements. Option programs normally pay full benefits before Medicare pays anything. The programs comply with Medicare quarterly, electronic reporting rules on open medical claims and liability settlements. The programs protect Medicare's primary interest before settling claims with Medicare beneficiaries by setting aside a portion of the settlement funds to pay for future treatment. Instead of using option programs as a scapegoat and pursuing the fatalistic view that savings by employers equate to cost shifting, perhaps the PCI should expend more energy on how to achieve better medical outcomes for injured workers through communication, employee advocacy, accountability and competition. Option Program Success in Delivering Better Outcomes Is the Real Story We will continue to advocate for a more positive discussion on how to achieve better medical outcomes. That should include a sincere discussion of the PCI board's criteria for an acceptable alternative to workers’ compensation, which was approved in July 2015 and publicly introduced eight months later at the 2016 annual conference of the Workers’ Compensation Research Institute. See also: Healthcare Reform’s Effects on Workers’ Compensation   Workers’ comp options in Texas and Oklahoma have disrupted the industry with much-needed innovation and positive change. This has understandably created some dissonance and has rightly generated calls for proof. We welcome a review of real option program data, which amply demonstrates how highly respected industry players and employers are improving the lives of injured workers and reducing costs. Who could be against that?

I live in the future. I drive a Tesla electric vehicle, which controls the steering wheel on highways. My house in Menlo Park, CA, is a “passive” home that expends minimal energy on heating or cooling. With the solar panels on my roof, my energy bills are close to zero — and that includes charging the car. My iPhone is encased in a cradle laced with electronic sensors that I can place against my chest to generate a detailed electrocardiogram. Because I have a history of heart trouble, including a life-threatening heart attack, knowing I can communicate with my doctors in seconds is a comfort. I spend much of my time talking to entrepreneurs and researchers about breakthrough technologies, such as artificial intelligence and robotics. These entrepreneurs are building a better future, often at a breakneck pace. One team built in three weeks a surgical-glove prototype that delivers tactile guidance to doctors during examinations. Another built visualization software that tells farmers about the health of their crops using images taken by off-the-shelf video cameras flown on drones. That technology took four weeks to develop. You get the idea. I do, in fact, live in the future as it is forming. It is forming far faster than most people realize, and far faster than the human mind can comfortably perceive. See also: AI’s Promise Is Finally Upon Us   In short, the distant future is no longer distant.  The pace of technological change is rapidly accelerating, and those changes are coming to you very soon, whether you like it or not. Of course, such rapid, ubiquitous change has a dark side. Many jobs as we know them will disappear. Our privacy will be further compromised. Future generations may never drive a car or ride in one driven by a human being. We have to worry about biological terrorism and killer drones. Someone you know — maybe you — will have his or her DNA sequence and fingerprints stolen. Man and machine will begin to merge into a single entity. You will have as much food as you can possibly eat, for better or for worse. The ugly state of politics in the U.S. and the U.K. illustrates the impact of income inequality and the widening technological divide. More and more people are being left behind by innovation, and they are protesting in every way they can. Technologies such as social media are being used to fan the flames and to exploit ignorance and bias. The situation will get only worse — unless we find ways to share the prosperity we are creating. We have a choice: build an amazing future, such as we saw on the TV series “Star Trek” or head into the dystopia of “Mad Max.” It really is up to us; we must tell our policymakers what choices we want them to make. The key is to ensure the technologies we are building have the potential to benefit everyone equally; balance the risks and the rewards; and minimize the dependence that technologies create. But first, we must learn about these advances ourselves and be part of the future they are creating. That future cannot be ignored. You could say that I live in a “technobubble,” a world that is not representative of the lives of the majority of the people in the U.S. or in the world. That’s true. I live a comfortable life in Silicon Valley, and I am fortunate to sit near the top of the technology and innovation food chain. As a result, I see the future sooner than most people. The noted science fiction writer William Gibson, a favorite of hackers and techies, once wrote: “The future is here. It’s just not evenly distributed yet.” But from my vantage point at its apex, I am watching that distribution curve flatten — and quickly. Simply put, the future is happening faster and faster, and it is happening everywhere. Technology is the great leveler, the great unifier, the great creator of new and destroyer of old. See also: Technology and the Economic Divide   We are only just commencing the greatest shift society has seen since the dawn of humankind. And as in all other manifest shifts — from the use of fire for shelter and for cooking to the rise of agriculture and the development of sailing vessels, internal-combustion engines and computing — this one will arise from breathtaking advances in technology. This shift, however, is both broader and deeper, and it is happening far more quickly than the previous tectonic shift. This column is based on Wadhwa’s coming book, “Driver in the Driverless Car: How Our Technology Choices Will Create the Future,” which will be released this winter.

Personal auto insurers have traditionally been more reactive than proactive in a slowly changing industry. However, that approach may no longer be adequate as vehicle technology accelerates at a pace the insurance industry is unaccustomed to embracing. To date, the focus of personal auto insurers has been on the underwriting impact of driver-assisted technologies that can self-park, maintain their lane and even force the vehicle to stop to avoid collisions. Insurers are continually fine-tuning their underwriting algorithms to align with such decreasing risks. However, insurers need to broaden their scope and move beyond tweaking rates. Let’s face the truth: Automobile claim processing relies on antiquated theories and techniques that are costly and inefficient and can produce faulty outcomes. See also: Telematics: Because Accidents Happen   Up until the 1980s, adjusters actually went out to the accident location to canvass the scene, interview witnesses, measure skid marks and look for obstructions to vision — all for the purpose of making a sound and well-researched liability decision. To cut costs, insurers eliminated scene investigations and relied almost solely on driver statements and physical damage to determine liability. The process works fine in a clear liability situation like when a stopped vehicle is rear-ended. But it doesn’t work so well in a multiple-car pile-up or an accident at an intersection. How often do we hear from the driver statements like, “He came out of nowhere,” or, “I thought I had the green light,” or, simply, “I don’t remember”? These same individuals have a vested interest in being found free of fault, in fear of adding points to their driving record and seeing increased rates. How do we expect desk-bound adjusters to make the right decision with facts and circumstances such as these? Liability adjusters futilely spend an inordinate amount of time searching for clues, hoping to uncover the truth when faced with conflicting stories or facts. Today, there are cameras everywhere and telematics available on almost every vehicle. The University of Michigan’s MCity is testing vehicle-to-vehicle (V2V) and vehicle-to-infrastructure (V2I) communications that will soon be prevalent in our environment. Just as autonomous vehicles are using these cameras and sensors to alter the vehicle’s behavior, the V2V/V2I images and data can record the facts associated with the accident. This data can be consolidated to confirm and recreate the scene leading up to an accident. Information that adjusters rely upon will suddenly become objective, rather than subjective or tainted by guesstimates. For example, in an accident where a pedestrian darts out from between parked cars and is hit by a moving vehicle, the data will answer many questions. (How fast were you traveling? At what point did you apply the brakes? Did you try to swerve to avoid him? Were any vehicles or vegetation blocking your vision?) Without a witness, this type of accident is difficult to assess today, and the task is even harder to assess when the pedestrian is a child. Utilizing V2V and V2I data to validate the accident facts can make the process much less painful and much more equitable for all involved, especially for anguished parents who may not have seen their child dart into the street. See also: Predictive Analytics, Text Mining, And Drug-Impaired Driving In Automobile Accidents   While not everyone wants to share their day-to-day driving data with their insurers, insurers could offer customer discounts or deductible waivers for sharing the last several minutes of data leading up to the impact. This may be more palatable to many conscientious consumers, who see this option as effectively protecting them from the potential of being falsely accused of liability. Data is ubiquitous, waiting to be harvested and used to improve liability decision making. It’s time for insurers to initiate interactions with auto manufacturers and transportation infrastructure suppliers to create industry standards for sharing V2V, V2I and telematics data that can result in dramatic, positive changes in how claims are handled and negligence is determined. Insurers all want to make accurate liability decisions and consumers deserve a fair outcome. We finally have the tools available to ensure just that.

As customers increasingly demand a better experience when they interact with companies, including insurers, help is coming from a counterintuitive source. It turns out that one of the best ways to be more personal is through… robots. More precisely, the answer is turning out to be chat robots, or “chatbots.” People don’t like having to phone call centers and wade through that phone tree — “Para continuar en espanol, oprima uno… For billing, press 2; for….” Many, especially younger people, just want to be able to text a question and get it answered. That’s how they handle everything else. So, many companies are realizing they need to have customer service reps that respond to texts, and they’re seeing an opening to use chatbots. Using so-called natural language processing to understand a text message and then drawing on artificial intelligence to both find the answer and generate a reply, chatbots can handle perhaps 70% to 80% of queries. They can hand a conversation off to a human when necessary and can take the conversation over again, without the customer’s ever realizing that a bot has been involved or that a handoff occurred. In fact, the bots can wind up sounding a lot less robotic than the standard call center rep who is only allowed to read off a script. The bots are so efficient about finding answers that they actually have to be slowed down, so the customer doesn’t think, “No one could type that fast,” and wonder if a computer is involved. (A certain percentage of typos can also be programmed to appear, as can emojis or lots of exclamation points, to make the bots seem more human. You can actually program the bots to have different personalities.) See also: Want to Enhance Your Customer Experience? With so many mundane tasks handled by bots, the call-center reps get to deal with more interesting issues and can spend more time with customers, giving everyone a better experience. Although they haven’t shown up widely in insurance yet, they are in use in numerous other industries, with great success. Why now? Chatbots have been around for more than 20 years. Why should companies pay attention to chatbots now? For starters, these days just about everyone is carrying a super-computer around in her pocket. In 1991, 1GB of flash memory would have cost around $45,000. Now, most phones have at least 32GB of memory. Processors are more than 1,000 times as fast as they were in 1991. So, the technology for chatbots is lightyears ahead of where it was. Companies have also placed an increased focus on messaging, including with bots. Facebook Messenger uses more than 11,000 chatbots to respond to messages. The chat app Kik recently said that more than 20,000 bots have been made specifically for its platform. Perhaps even more importantly, the pendulum in the customer-business relationship has swung heavily in favor of the customer. Companies no longer control the message/brand; it’s all out there in the ether, and companies need to guard their reputations by caring for customers. Some companies, such as Zappos, have pretty much built their businesses on the customer experience, while others, including cable companies (Comcast, most notoriously), are vilified. Insurance companies can see what’s happening in other industries and see what they need to do. Net Promoter Scores (NPS) are the insurance industry’s most consistent measurement of customer loyalty, and, despite some pockets of brilliance by individuals, most of the time the insurance industry stinks. Chatbots can help. Chatbots create a conversational web and conversational commerce. They can even be programmed to wish the customer a happy birthday or happy anniversary or make some comment about how long the customer had been with the company. Chatbots make a company’s behavior more consistent across the board, especially in terms of elegance and simplicity. On top of that, it’s easy to keep the bots on-message, and they only need to be trained once. See also: ‘Age of the Customer’ Demands Change In 2013, it was estimated that it takes five screens to get a user to where he wants to go. In 2015, that number has increased to seven. Bots get the information almost instantly, even if that means going to a deep link in an app or on a site or in a corporate data center. Bots aren’t “one size fits all.” They’re “one size fits one.” So work has to go into customizing them for a company. But simple bots such as for frequently asked questions can go live in a day, and an ecosystem of bots can be developed over time. Once a bot exceeds its ability to answer a question, it might initially pass the question to a human, but, in time, the handoff could go to another bot that has been developed. Bots will also be able to take on more tasks, including outreach to customers. Bots could automatically alert customers of an impending hurricane and begin a dialogue with them about what steps to take to prepare, who to call if they need immediate assistance, how to file claims, etc. In insurance, there’s nothing like the Domino’s pizza tracker, which allows a customer to follow along with an order every step of the way, from the order to the oven to the front door. But there will be, and imagine how helpful that will be with claims. Many customer calls are about where their claims are in the process, so streamlining it and providing a bot with the capabilities to respond to the customer would make the process easier, eliminate a lot of calls — and make the customer much happier. Of course, an insurance bot isn’t going to answer “what is the meaning of life?” or “how much wood could a woodchuck chuck if a woodchuck could chuck wood?” like Apple’s Siri can. But a bot can be tailored and trained to answer many questions, filling a gaping hole in the insurance world.

Best-selling Author Og Mandino once said:  "Always seek out the seed of triumph in every adversity." It appears that a small, yet growing number of America's front line health providers are doing just that. Instead taking on increased risk, greater healthcare bureaucracy and more administration headaches, these medical mavericks have drawn a philosophical line in the sand. I'm speaking of direct primary care (DPC). For the uninitiated, DPC is an emerging model where general practitioners elect to disassociate from, and no longer bill services to, health payers, including Medicare. DPC practices average between 600 and 800 total patients (vs. the national 2,300-patient average for traditional primary care provider (PCP) patient panels). This return to front-line doctoring -- "sans insurance" -- translates into a cost-reduction of as much as 40% in staffing and reduced administrative complexity. Electronic health records (EHR) software finds itself replaced with lighter applications to track, schedule and bill patients. Practices may also choose to use mhealth/telehealth technology to monitor/connect with patients. Patients in these practices are often those with low to middle incomes, with high-deductible health plans (HDHPs). For this reason, DPC doctors develop network relationships with other local medical specialists and services. The result is patients gaining access to discounted medications, imaging and labs, plus lower service fees from local specialists -- all on a cash basis. And presto! We have a true two-party care relationship, where doctors focus purely on patients, instead of blending in payers as their second healthcare customer. The median monthly DPC fee for an adult is about $70; and fees for kids are priced between $10 and $20 per child. Many DPC practices also cap monthly family fees. Pricing is independent of pre-existing conditions and current health status and allows for more face-to-face time, as often as needed. These practices report reducing urgent care and ER visits, plus hospital admits and re-admits. Quality and outcome data has apparently started reaching malpractice insurers, now quoting lower rates for direct vs. traditional primary care practices. Here is where it gets sticky. DPC is rightly considered a "health service," both by the Affordable Care Act (ACA) and by 16 states. However, under section 223(c) of the U.S. tax code, the I.R.S. wrongly considers DPC a "gap," or secondary, health plan. Therefore, DPC is not a qualified medical expense -- and fees paid by patients are not reimbursable by health savings accounts (HSAs). Changes are in the works, per the introduction of Senate Bill 1989 - The Primary Care Enhancement Act of 2015, which would make DPC fees a part of HSAs. The bill, with strong support from the American Academy of Family Physicians, also seeks to require the Center for Medicare and Medicaid Innovation (CMMI) to create a new payment pathway for DPC as an alternative payment model (APM) in Medicare and with dual eligibles. The plan is for DPC to show Medicare its mettle -- and eventually receive a modest flat fee payment for primary care services offered by a DPC medical home. The legislation includes allowing qualified physicians who have opted out of Medicare to participate in the program. It also serves as a partnering catalyst with Medicare Advantage, in an affordable care organization (ACO)-like structure. DPC is a disruptive "hot knife" model, whose entry is well-timed to cut through the cold stick of butter called high health costs. Today, PCP co-pays have gone up to $45, and deductibles are sky high. Many consumers have no idea that at or around the same per-visit patient fee, DPC exists as an option. Employers are just beginning, on a larger scale, to integrate DPC with other options such as HDHPs and self-insured health coverage. Using this new model with self-insured companies makes sense, to hedge risk, lower health costs, improve outcomes and improve quality of care. One county in North Carolina, which employed a DPC option, saved nearly $1.5 million on yearly medical expenses -- on just 800 covered lives! It may surprise you that, apart from HSA standing, there are already early employer adopters who have chosen to pay the monthly DPC fees for employees themselves. A British Medical Journal study showed patients of Washington state DPC provider Qliance coming in with 35% fewer hospitalizations, 65% fewer emergency department visits, 66% fewer specialist visits and 82% fewer surgeries. DPC benefits appear to not only reduce primary care costs, but lessen the healthcare costs and utilization outside of their practices. Payer transparency is a significantly important strategy to the future growth and integration of DPC. We talk about the importance of transparency in hospital pricing to patients, and for drug companies to reveal their true R&D costs. But have you ever stopped to consider the importance of transparency in how payers calculate and price plan premiums for each covered member? Just how much of the premium payment can be carved out as estimated primary care services to be received? More than ever, healthcare consumer groups and fully insured employers should push health payers for transparency. Because I'll bet what payers have estimated for per-person primary care usage and costs, adding in the associated patient responsibility portions (co-pays, and any applicable deductible or co-insurance fees) will be much more than an $840 yearly DPC payment. But wait...there's more. Don't forget to have payers deduct an additional...let's be conservative...1/3 of the Qliance savings percentages for the estimated care cost savings relating to carved-out estimated care outside of primary services. Next, look at Medicare and do the same thing. But…instead of the wallets of health plan members, think federal budgets, taxpayers, subsidies, growing liabilities and the potential to hold off future tax increases. Then look at Medicaid for the same reasons, remembering that DPC would certainly create a greater improvement of care quality than Medicaid care providers and facilities. Remember the "triple aim" -- cost, outcomes and quality -- and that doctors are happier. DPC injects disruption and greater consumerism into healthcare. Something interesting happened along the way to transforming our healthcare system. The ACA fell far short of its goals, and America's care delivery and coverage became even less affordable for millions of employers and individual consumers. We should know by now that improving quality and pricing for all will not come from laws -- specifically, from those who force people into lower-quality Medicaid coverage, and insurance plan exchange options with punishing deductibles; in essence, giving people a broken Christmas toy with a pretty bow on it and pretending they will enjoy it.   No matter how you dress it up, and much money you throw at it: Healthcare coverage is not the same as affordable healthcare. In the heart of even the toughest situations, there are innately driven people who make bold, fresh choices and take stands -- efforts that emphasize principles we know to be just and right, rather than gaining financially on the backs of others' misery. My hope resides in what Lincoln called "the better angels of our nature." DPC offers a free-market "injection" into healthcare's regulated pricing model. If Senate Bill 1989 or a similar law passes, it will provide individuals and companies a better chance to gain better quality, more affordable care. Unlike some DPC purists, I see a future inflow of Medicare dollars to non-enrolled DPC qualified providers as stimulating a transformation where coordinated care begins from outside of the umbrella of big medicine ownership. Like the plunging penguins who emulate the courageous actions of others, I believe many primary care physicians are looking for the right time to enter a DPC model. Whether that happens individually, through groups, or by strategic partnerships, is up to industry forces. It's the beauty of filling consumer demand. Making healthcare services, drugs and coverage affordable to consumers appears completely disconnected from the industry's mission to improve care quality and outcomes, and lowering health "costs." Free market forces are what bring down consumer prices in most every market. Their introduction into U.S. healthcare will likely cause short-term fallout and financial pain within healthcare industries, but it would leave us, and future generations, with a more sustainable, stronger system. We’ve gotten to the point where healthcare bloat and unaffordability will require sacrifice from all involved. By allowing consumer-friendly models like DPC to enter the regulated world of healthcare, perhaps slowly through the back door, we will see transformation come from within. History has repeatedly shown us that better models fueled by consumer desire rise to the top.