The IoT continued its toddler-like growth and stumbles in 2016. Here are five trends to look for in 2017 as the IoT enters its adolescence and how to benefit from them. 1. Ecosystems begin to determine winners and losers Previously these were nice in-the-future concerns; now they will really count. Filling out a whole product value proposition through partnerships has repeatedly proven its importance across B2B and enterprise software sectors. In the IoT, they will be even more critical. As an example, the Industrial Internet Consortium (IIC) is driving the definition of platforms and test beds and should show results in 2017. In the meantime, expect some IoT companies to fail when they can’t gain traction. If you’re developing IoT infrastructure or platforms, it’s time to get real, regarding building great partnerships, developer programs, tools, incentives and joint marketing programs. Without them, your platform may appear like an empty shopping mall. If you're a device manufacturer or application developer, it's time to place your platform bets so you can focus your resources. If you’re implementing IoT-based systems, you’ve been through this before. Welcome to the next round of the industry’s favorite game, “choose your platform.” Make sure you also evaluate vendors based on their financial health, business models and customer service — not just technology. Learn more in Monetizing IoT: Show me the Money in the section “Ecosystems as the driver of value.” See also: Insurance and the Internet of Things 2. Vendors get serious about experimenting with business models and monetization This was a big theme at Gemalto’s recent LicensingLive conference and was further driven home by solution partners like Aria Systems. Tech won’t sell if it’s not packaged so that buyers want to buy. Look for innovation in business models and pricing, including subscription models, pay per use, recurring revenue, subsidization or replacement of hardware device revenues with service revenues, monetizing customer data and even pay-per-API call models. If you’re marketing whole solutions, be sure to avoid the “partial solution trap” as described in my article, The Internet of Things: Challenges and Opportunities. 3. Big Data gets “cloudier” (pun intended) No doubt there will be a lot more data with billions of new connected devices. Not just text and numbers but also images, video and voice can all add significant monetization opportunities to different participants in the value chain. More devices mean more data, more potential uses and more cooks in the kitchen. This is a complex cluster of issues: Do not expect a resolution of ownership, privacy or value in 2017. Instead, approach this by building a clear vision of what you want and don’t want with respect to data rights as you enter these discussions. And try to anticipate the genuine needs of your partners. Device manufacturers will likely have a going-in desire to own data produced by their devices; and apps developers, the data they handle; others may be okay with aggregated info. Buyers should make sure they understand what’s happening with their potentially sensitive data. We have already started to see partnerships and deals stall out over intense discussion on data ownership and rights. 4. You’ll need to prove your security, with privacy not far behind 2017 IoT systems are going to need to up their game. No one is going to stand for hacked doorlocks, video cameras or Mirai botnet/DDoS attacks via connected devices much longer. Similar events will come with very high price tags. So far, the IoT has dodged any major incidents with large losses suffered directly by end users. We could see growth flatten if a major hack of thousands of end users occurs in 2017, especially if hardware devices are ruined or people get hurt. At that point, users will need to receive greater guarantees of security, privacy and integrity. This risk needs to be mitigated if the industry wants to avoid an “IoT winter.” Vendors will need to invest more in security development and testing before deployment and offer assurances, possibly including insurance. Installers and integrators will need to ensure ecosystem integrity, and buyers will look for these guarantees. Just one flaw could be very expensive: Gartner believes that by 2018 20% of smart buildings will suffer digital vandalism through their HVAC, thermostats and even smart toilets. 5. Voice-powered, AI virtual assistants drive a next round of platform wars Voice will become increasingly important to control IoT systems and computing infrastructure. Google Assistant, Apple Siri, Amazon Alexa, Microsoft Cortana and Samsung’s Viv Labs acquisition underscore the importance of these new AI-assisted voice interfaces. They’ll be used across multiple devices like phones, PCs, tablets, cars, home appliances and other machinery. By 2020, Gartner believes smart agents will facilitate 40% of mobile interactions. This is the beginning of a new round of platform battles that you need to recognize, internalize and prepare for. See also: How the ‘Internet of Things’ Affects Strategic Planning What do you think? Email me with your predictions, comments or war stories. You can find the original article here.

We are at an inflection point. The internet is going from controlling information to controlling physical things, which has profound implications for both the global economy and the future of insurance. In this post, I will provide seven predictions for how the Internet of Things (IoT) will change the insurance industry, although ultimately these predictions only scratch the surface as there are few lines of insurance that won’t be affected by cyber risk in the next five to 10 years.

Background on Internet of Things (IoT)

It is estimated that there will be as many as 200 billion everyday objects connected to the internet by 2020. Applications for the IoT are as diverse as consumer devices, manufacturing sensors, health monitoring, connected vehicles, office automation and all the way to fully "smart cities." The emergence of IoT technologies is a tremendous development that spans all aspects of human existence and could unlock as much as $11 trillion per year in value to the global economy by 2025, according to the McKinsey Global Institute.

See also: Insurance and the Internet of Things  

What these numbers don’t show, however, is the tremendous physical and financial risks associated with the emergence of having everyday objects connected to the internet. According to the 2016 Symantec Internet Security Threat Report (ISTR), hundreds of millions of internet-connected TVs are vulnerable to click fraud, botnets, data theft and even ransomware, and these numbers are growing rapidly. Cyber attacks on internet-connected devices create systemic risks and the potential for hundreds of billions of dollars in losses. When physical devices can be hacked (and potentially hacked en masse), the potential for major business interruption, physical damage and even loss of life becomes very real.

This isn’t to say we should not pursue IoT technologies. In fact, in many ways, IoT will make society safer, as well as more efficient and convenient. Every year, 1.2 million people die in automobile accidents, and around 90% of those accidents are attributable to driver error, which will decline as more internet-connected vehicles incorporate advanced safety features. However, as internet-connected devices become pervasive in all aspects of our lives, the nature of risks facing consumers and businesses will be fundamentally different.

While the future is uncertain, especially as it pertains to technology, here are seven predictions on how IoT could affect insurers.

1. Continued Growth of Affirmative Cyber Insurance Policies: According to Lloyd's of London, cyber attacks cost businesses $400 billion in losses per year, and, by some estimates, cyber crime costs the global economy trillions of dollars per year. The current cyber insurance market, which is focused on data protection, is around $2.7 billion globally. The market has doubled over the past 24 to 36 months, and growth shows no signs of abating. Growth of affirmative cyber insurance data and liability policies, primarily covering costs associated with data breaches, is just a tip of the "IoT iceberg," as cyber becomes an even more important insurable risk.
2. Some Core Insurance Lines Will Decline: IoT will change the nature of the risks that consumers and businesses face. For example, according to AT Kearney, features such as advanced driver-assisted systems (ADAS), semi-autonomous vehicles and tracking of stolen vehicles will be deployed in half of the cars on the road by 2025. By some estimates, the global auto insurance market will shrink by 60% or more, where there is a reduction in driver error and a resulting decline in the insurance needed for this risk. As key insurable losses become preventable by IoT, core insurance lines will decline.
3. IoT Aggregation Risk Starts Pervading a Diverse Set of Insurance Lines: IoT can turn large-scale hacks into global cyber catastrophes. Already, there have been successful hacks on industrial control systems that have led to major physical damage in heavy industries. Fortunately, these incidents have been isolated to "one-off" occurrences, but with key industrial control systems, logistics tracking systems and building automation systems crossing tens of thousands of businesses, the potential for major cross-cutting cyber events is increasing. IoT aggregation risk occurs in insurance lines where it wasn’t previously observed, accounted for or priced into the cost of an insurance policy.
4. Cyber Peril Exclusions Grow in Commercial Policies: In the years to come, we will see highly public "forcing events" related to cyber attacks on IoT devices. Unfortunately, it is not a matter of if but when we see major IoT cyber hacks. When these events happen, insurers will likely respond by writing in more explicit exclusions for cyber perils in insurance lines such as product liability, property, E&O and other policies. In many cases, insurers are focused on the aggregation risks that exist within their affirmative cyber data and liability policies, when the reality is there is tremendous silent coverage in the rest of an insurer’s portfolio today.
5. "Cyber Gap" Insurance Policies Emerge: There will be an expanding list of critical cyber perils that won’t be covered under a standard insurance policy. Specialty cyber insurance policies and endorsements will surface to fill in the need for IoT cyber risk coverage. McKinsey estimates that as much as $3.7 trillion in value could be unlocked in factories alone from IoT. Too much value is at stake for clients not to seek coverage from insurers, and the market demand is too large for insurers not to provide this cover, although it will take deep cyber expertise to understand these novel risks.
6. New Cyber Risk Capital Market Offerings Emerge: Currently, the global insurance market has $4 billion to $5 billion in capacity for nuclear risks and $100 billiion for natural catastrophes. Fixing the Y2K bug alone is estimated to have cost $100 billion, and the costs associated with remediating IoT security deficiencies could be very high, particularly when IoT components do not always have a means for remote firmware updates. Given that cyber events represent hundreds of billions of dollars (or more) of potential liability, which have low correlation with other events, there is a role for capital markets providers to step in to help transfer risk. Given initial explorations already happening today, London could emerge as a major market for insurance-linked securities tied back to cyber risk.
7. Insurers Will Help Drive IoT Security: Consumers aren’t necessarily buying technology products with IoT risk in mind; regulators are struggling to keep up; and in a race to get new products to market, technology companies are often launching products without adequate cyber security in mind. Symantec’s research has shown that 19% of mobile apps used to control IoT devices don’t use SSL connections to the cloud and more than 50% didn’t provide a mechanism for firmware updates, or, if they did, those updates were not encrypted. Given that insurers are taking on the financial risk associated with IoT going wrong, insurers have an important role to play in making sure that the basics are done right for the risks they underwrite.

The emergence of IoT is a tremendous technological development that will create wide-ranging benefits for governments, businesses and consumers. However, it will also propel cyber risk into the limelight as the most important risk of the 21st Century.

See also: Prospects for Insurers as a Global Industry  

As an industry that transfers and mutualizes risk, insurers face far-reaching implications, and there will be both winners and losers. Those that win will have a deep understanding of the evolving nature of cyber risk, leveraging cyber data, intelligence and expertise. Companies like Symantec will have an important role to play in helping to understand evolving threats, which is why we have set up a dedicated Cyber Insurance Group to support our insurer partners.

It is hard to predict the future of technology and the risks that new technology will create with any degree of certainty. What is certain is that where there is risk, there is an opportunity for insurers to provide risk-transfer solutions through insurance products. Just as there is innovation in technology, there will be innovation in insurance as both industries come together to unlock the potential of the Internet of Things.

As digital capabilities expand, so do compliance risks—especially those related to privacy and cyber risk. Enhanced analytics and visualization tools are providing insurers with new and better ways to identify, manage and report risks. But along with the availability of more sophisticated technology comes increasing compliance risks related to privacy, cyber risk and the use of digital channels.

At a time when the compliance function us manage risk with constrained resources, it must demonstrate and provide value to the organization—and insurers must support compliance’s seat at the table.

For our Accenture 2016 Compliance Risk Study, we surveyed more than 150 compliance officers at financial institutions across the Americas, Europe and Asia-Pacific. Of concern is that many respondents reported that their data and technology architecture does not meet their needs for managing the increasing compliance risks. See also: Compliance Challenge in Communications   Other issues facing compliance officers include:

• Slowing investments in compliance.
• Shifts in reporting lines to executives.

There are difficult choices in how to make the best use of resources. In this Insurance Insight of the Week video, I outline what compliance officers see as being their top priorities over the next 12 months to three years. As the pace of change continues to intensify, insurers and their compliance functions must identify a path forward that enables them to meet emerging risks and changing stakeholder expectations, and successfully measure their progress along the journey. See also: Minority-Contracting Compliance — Three Risks For the other videos in this four-part series, visit the Accenture Insurance Blog.

I love movies; usually really bad ones, I'm told! While watching movies, I often find myself thinking about insurance. Over the years, I have noticed how things from TV and film have made it off the silver screen and into real life. This has a very real impact and relation to insurance. See also: Movies That Make You Wish You Had Insurance   Let me give you some examples:

• Minority Report (2002): For many, this is one, great movie that showed off lots of very cool technology and futuristic concepts, including the ideas of "Pre-Crime" (preventing something before it happens). The movie also features retina recognition, where, as you walk past shops, computers system recognize you and serve up fully personalized content. This is a great example of mass personalization. Could this lead to risk personalization and prevention-based insurance? 

• Judge Dredd (1995):  This movie features cryogenics. It is not quite insurtech, but I recall a recent article on a teenager who was granted permission to be frozen so he could be cured in years to come. Does this bring a whole new category of health insurance?

• Die Hard 4.0 (2007): We see the "Fire Sale," where hackers take over the entire country – from power stations to water supply to traffic lights. It is the mother of all cyber attacks. Maybe something like this isn't impossible?

• IT (2016): The movie features connected home, connected car and hacking. While this is a terrible movie (even with Pierce Brosnan), it does highlight that the connected home is wildly open to cyber attacks. And, with the recent increase in the numbers of these offerings, what does this mean for homeowners? Could this lead to personal cyber policies?

• Knight Rider (1982): This is where it all started for me as a kid. I loved seeing the ability to talk to your watch and self-driving cars in action. Could this be the future of technology and cars?

There is definitely a theme with these movies, specifically about cyber technology, autonomous cars and connected homes. Maybe it's just the movies I watch,  but I think these movies could signal a trend for the future. See also: What Do A Drive In Movie Theater And Intellectual Property Have In Common?   So, is this our warning shot?  The next time you settle down to watch a movie, think what impact it may have on the future of insurance. Add your movie examples in the comments below! I'll keep adding mine. Look forward to seeing them!

I was very fortunate to host a roundtable during the FERMA risk seminar in Malta. I am very thankful for the opportunity, because the experience of brainstorming for 45 minutes with the representatives from various small and medium enterprises (SMEs) really highlighted some major problems with modern-day risk management and risk managers. Here are three things that I think all of us could learn from managing risk at SMEs: SMEs simply can't afford to waste time or other resources on an activity that does not generate direct value For SMEs, time is pressure, management teams are small, margins are limited and, as a result, management is very pragmatic about any new, sexy activities and initiatives. Risk management is no different. It has been around for years, yet few SMEs have properly adopted it. Something's not right... So can risk management make companies money? Of course it can. Do modern-day risk managers in non-financial companies in fact make money for their companies? Very few. Most of the modern-day approaches used by risk managers are so academic and superficial that management has a tough job buying it. Here is a short video on showing value from risk management, and it's not what most risk managers are doing. See also: Can Risk Management Even Be Effective?   I think it's about time we had an honest look at some of the activities risk managers do:

• Do risk assessments really change the way business processes work, change the manufacturing process and change the way products are sold?
• Do risk managers bring something of value to the table when any important business decision is made?
• Do risk assessments change the way executives make decisions, and is risk analysis available on time to support every significant decision?
• Are risk registers looked at by the CEO before making an important decision?
• Do risk owners check their risk mitigation actions regularly?
• Do risk appetite statements in non-financial companies change the way the company operates and the way decisions are made?
• Do employees regularly read risk management framework documents?
• Do managers call the risk manager before making a decision when faced with uncertainty?

I suspect the answer to most of those questions is “not quite.” This could mean one of two things: Either the risk manager is not doing his job properly, or he is properly doing his completely wrong. My bet is on the second option. There is simply a better way than risk profiles, risk registers, risk frameworks, risk owners — and so on. Here is a short video about what the future holds for risk management. SMEs don't do risk management to mitigate risks; they do it to make better decisions This I found bizarre: We seem to have created a myth that risk management is about managing risks. Not so. Risk management is not an objective in itself. It's just another management tool to help make better decisions and achieve objectives. This realization is a big difference between SMEs and large corporations. SMEs do risk analysis when a decision needs to be made, using whatever risk analysis methodology is appropriate for that particular type of decision. Large corporations do risk management when it's time to do risk management, be it annually, quarterly or some other regular internal. Nothing could be further from the truth. Unless your methodologies, approaches and tools allow risks to be analyzed at any moment during the day — when an important decision is being made or at every milestone within the core business processes — you are probably doing something wrong. If there is one thing I learned over the years it is that no one in the company, and I mean NO ONE, expects the risk manager to care about risks. Well, maybe some about-to-retire audit committee member would, but most executives wouldn't have the courage to deal with the real risks if you showed the risks to them. The rest of the company cares about making money, meeting objectives with the least amount of effort and getting nice bonuses as a result. You can assign risk ownership to top executives as much as you like — no one cares. SMEs learned the hard way that unless an activity directly contributes to achieving objectives, it's not going to be done. Risk management is no different. I find it ridiculous when risk managers talks about high risks and the need to mitigate them when, instead, they could be saying things like, “the probability of meeting this objective is 10% — unless we change things,” “there is an 85% chance your business unit will not get bonuses this year based on our risk analysis” and so on. Anyone can be a risk manager, but it's not natural Despite what we within the risk management community have been telling each other for years, managers are not really managing risks every day. Thinking about risks is not natural for humans. The way System 1 and System 2 thinking operate in our brain make it literally impossible to see most of the risks associated with making decisions, let alone analyze them or manage them. Since the 1970s, many scientists, including two Nobel Prize winners (Kahnemann and Tversky), have discovered more than 200 cognitive biases that prevent managers from seeing, understanding and dealing with risks. See also: 4 Ways Risk Managers Can Engage on Cyber   This basically means risk surveys, most risk workshops and any kind of qualitative risk assessments are very unlikely to produce truthful results. But then what should risk managers use? There are plenty of alternatives, much better alternatives. So how was the rest of the FERMA seminar? My feedback to the organizers stays the same as my last post on the FERMA forum in Venice last year. In short, it's impossible to grow if the people you talk to at conferences are people just like you: risk and insurance professionals. Someone needs to play the devil's advocate. It would be good to hear from a CFO who says he doesn't care about any of the work risk managers do and budgets based on his own methodology with no input from the risk manager. But, then again, Europe is probably way too politically correct for that :)

The 2016 HITLAB Innovators Summit and World Cup was held once again at Columbia University in New York. There were 74 technology companies that entered the competition, and five finalists were selected. All of these startups that entered the competition and others that help sponsor this annual event have the potential to help improve the way healthcare is delivered now and in the future through innovative technologies. Near Infrared Imaging (NII), based in Wrentham, MA, has developed a technology for the enhanced visualization of veins. This technology, called the Vein-Eye, is a hands-free, non-invasive hospital cart that provides real-time imaging of the veins below the surface of the skin. Michael Feeney, president of Near Infrared Imaging, said, “Vein punctures can be very painful, especially for difficult patients who may be obese, very young, very old and/or have dark skin.” Multiple attempts to puncture a vein result in a very negative experience for both the patient and the provider. The first specific successful application of the Vein-Eye is varicose vein treatment. The Vein-Eye is also targeting patients receiving dialysis, patients with severe burns, patients with Thalassemia Major Disorder and patients undergoing FLAP surgery, which is a technique involving lifting a tissue from a donor site to a recipient site. Roughly 25% of all patients, regardless of healthcare setting or illness, have delayed care due to the inability of a healthcare provider to establish an IV access to the patient’s vein. NII is also working to develop a patented technology that will detect real-time bleeding in the brain at the scene of the injury. MedLogiq, based in Hazlet, NJ is bringing technology originally developed and used by the automotive and aviation industries to testing and monitoring product quality and performance in the medical device marketplace. This proven technology comes at a time of increased concerns about product defects in a wide range of medical-devices, resulting in serious injuries to patients and massive product liability lawsuits. The FDA has expressed serious concerns with these adverse events and has significantly increased actions against medical device manufacturers. See also: 5 Apps That May Transform Healthcare   Bill Acevedo, the CEO of MedLogiq, said: “Our solution provides value from proof of concept through end of life for medical device manufacturers and any other stakeholder.” Acevedo went on to say; “Medical device manufacturers don’t know what they don’t know.” There are many key questions that need to be asked and independently verified about medical devices. Is there a design defect? Was it built correctly? Is there a potential for patient harm or product liability? What data points are needed for continued monitoring of quality outcomes? Jim Zerka, CFO, said: “Our main objective is to improve patient care and outcomes by reducing adverse events.” Acevedo closed his presentation by stating that this quality control technology was used by Ford to ensure manufacturing quality of every car coming off their assembly lines worldwide. MedLogiq, along with their technology partner MAHLE Test Systems, has been granted access to the intellectual property for the generic infusion pump (GIP) from the PRECISE Center at the University of Pennsylvania to integrate their solution as the “maintenance processor” to accurately measure and report device performance. The GIP was built by the PRECISE Center to the FDA specifications to enhance safety monitoring, performance testing and event data recording capabilities for infusion pumps designed to administer fluids and medications to patients in a precise manner. Green Sun Medical, based in Fort Collins, CO is revolutionizing the treatment of adolescent idiopathic scoliosis (AIS). AIS is a condition resulting from a curvature and rotational deformity of the spine. This condition develops in 3% of children under the age of 16. This results in the incorrect rotation of the spine and creates a prominent rib hump in these children. Most patients are diagnosed because of this rib hump, and when it progresses past 30 degrees they are prescribed a traditional brace. Current braces involve a 40-year-old technology, which is a rigid brace that the child must wear as much as 23 hours a day. Needless to say, these traditional braces are terribly uncomfortable and can create pressure sores, also known as bedsores or pressure ulcers, that can result in severe infections and must be worn until the child becomes skeletally mature. If the condition progresses past 50 degrees, surgical intervention is required, with the average cost exceeding $150,000. In addition, surgical intervention results in a 50% complication rate over the patients' lifetimes. This new solution is transforming spinal bracing technology and treatment options for spinal deformities through the use of a comfortable dynamic brace with built-in sensors linked to an iPad that provides physicians and family members comprehensive brace pressure information and compliance data in real time through a “report card.” This report card allows for corrections and adjustments to the brace. This technology will prevent children from the pain and suffering of antiquated braces and prevent needless surgeries. In addition, Green Sun Medical has created a new dynamic brace to help both adults and children with Kyphosis. Kyphosis is a forward rounding of the back and can result in a much exaggerated and very painful rounding. This can occur to anyone at any age but is most common in elderly women. Green Sun Medical won the award at the Wilson Sonsini Goodrich & Rosati Medical Device Conference in June 2016 as the #1 new medical device in the U.S. EarID, based in Cambridge, MA, screens and diagnoses ear infections with higher sensitivity and specificity than existing clinical methods by using new 3D imaging and data analytics on a cloud-based platform. EarID assists in ear infections monitoring and management by minimizing unnecessary antibiotic prescriptions and time lost from work by parents and from school by children. Ear infections are the #3 reason for absence from school by children and most likely cause a parent to also miss work. See also: AI: The Next Stage in Healthcare   Anshuman Das, a post-doctoral associate at the MIT Media Lab and MIT Tata Center for Technology+ Design, noted that the primary screening tools for ear infections has not changed since the 1800s, and his research has found that accurate diagnosis of ear infections is not currently met in pediatric care. The current diagnosis of ear infections relies on visual inspection of the eardrum, which is performed by a device called the otoscope, which gives very little quantitative information about the actual health of the ear. EarID overcomes these challenges by integrating the conventional otoscope with a structured illumination system that greatly enhances optical and anatomical information about a patient's ear drum. In addition, the technology with enhanced diagnostic capabilities helps address the overprescribing of antibiotics, which is a well-known public health crisis. (https://tatacenter.mit.edu/portfolio/earid-smart-ear-imaging/) UE LIfeSciences, based in Philadelphia, PA, is on a mission to make effective breast cancer screening accessible in the developing world and was the winner of the 2016 World Cup. Matthew Campisi, CTO and co-founder, noted that 50% of the breast cancer diagnosed today is in the developing world, with 70% in the Pacific Rim/Southeast Asia, where two-thirds of cases are first diagnosed in stage 3. The company's technology is currently being used in India, where the death rate from breast cancer is twice that of the U.S. This technology provides a battery-powered handheld wireless device that can store and send data and is accessible anywhere in the world. It is painless and radiation-free and allows for early detection of breast cancer. UE Life Sciences' first product, NoTouch BreastScan, is an FDA-cleared device and in a recent clinical trial detected early stage breast cancer with 87% accuracy. The second product, iBreastExam, is a handheld breast scanner that uses a smart phone as its monitor. The development of this technology was funded by the PA Department of Health to address the fact that 90% of the developing world and millions of women do not have access to breast cancer early detection. Exhibitors at the HITLAB Summit included several other healthcare technology companies such as AdhereTech, based in New York, which has invented a smart wireless pill bottle. AdhereTech was the winner of the first HITLAB World Cup in 2013. Its “smart” pill bottles are being used by patients in pharmaceutical and research engagements and can collect and send data in real time. This system automatically analyzes information, and, if the patient misses a required dose, he receives customized alerts and targeted interventions by cell phone, text messages, etc. This amazing technology requires zero patient setup and recharges just like a cell phone and lasts as long as 5 years. Josh Stein, the CEO, told me the entire purpose is “to see that patients are taking the correct medication at the right time. This is particularly critical for patients diagnosed with cancer.” (www.adheretech.com) Citus Health, also based in New York, has created a solution named “Call Bell” to help revolutionize how home infusion companies connect with patients. Melissa Kozak, CEO, told me she invented this technology after spending seven years as an on-call nurse for a home infusion company “to help keep my patients out of the hospital.” Kozak experienced firsthand how home infusion patients often needlessly face tremendous anxiety along with many potential adverse events such as delays in receiving antibiotics, chemotherapy, nutrition etc. when patients’ home infusion care process breaks down. The current system typically involves after-hours call centers that are inefficient and typically provide an answering service, not a certified nursing expert. Call Bell allows patients to get answers quickly in real time to address IV support questions and troubleshooting along with answers to questions like, when will my nurse arrive, or when is my next delivery? In addition, this technology provides home infusion companies with accurate patient home infusion supply counts with vastly improved patient support and communications. Call Bell was designed to address the Holy Grail of healthcare, better patient care and better outcomes at a reduced cost. See also: Consumer-Friendly Healthcare Model   It was a real pleasure once again to meet so many amazing people developing state-of-the art solutions for an array of global public health issues through new technology. I wish them all continued success and look forward to the 2017 HITLAB Innovators Summit, Nov. 28 -30, 2017 held once again at Columbia University.

By my definition, culture is the house rules. An edgier definition comes from David Balestracci: “Quite simply, culture is created by what is tolerated….Your current processes are perfectly designed to get the results they are already getting." In any case, culture is the most powerful force in your organization. It can bring greatness, or cause your failure as you move away from yesterday, through today, to tomorrow. As more and more organizations need to move to the transformational change that is tomorrow, their culture (if it is an addiction to the status quo) becomes the greatest challenge they face. I’ve been speaking on this subject for many years. Slowly but surely, I’m moving from theory to reality. Early on in my consulting career, I’d proudly state, “we’re going to change the culture.” After having my rear end handed to me after each unsuccessful attempt at cultural change, I retreated to a more realistic but no more possible approach, suggesting that to “change the culture” you must “change the people (educate, rehab, motivate, etc. each individual) or change the people (start anew – with new folks). See also: Does Your Culture Embrace Innovation?   In late 2015 and early 2016, I enjoyed an aha moment. Working to rehab a very troubled organization (its culture), filled with good and talented people who had become divided and moved to their lowest common denominator, I realized the best hope was to agree on a purpose (why), shared values and a unifying vision. With this as the starting point, progress continued as each team member individually committed to grow her skills (abilities) and as all members of the group chose collaboration (improved communication/relationships) on common goals and tasks. In the April 2016 edition of the Harvard Business Review, the cover story reinforced my theory by stating, “You can’t fix culture, just focus on your business and the rest will follow.” I now say, “Amen! Vindication!” (HBR will never quote me, but I am delighted to be able to quote them.) In 2012, a graphic artist created a cultural continuum slide that I could use to demonstrate the evolution of organizational culture. The slide was formatted on Maslow’s Hierarchy of Needs Pyramid. From the base of the pyramid, the five levels (steps) are: physiological (survival) needs, safety (security) needs, belonging (acceptance) needs, esteem (achievement) needs and, finally, at the pinnacle of the pyramid, self (actualization) fulfillment need. To facilitate the “story of culture,” I chose an individual or couple who best personified each step on the pyramid. I also added one action word that supported the culture created by the personality styles of the individuals or culture. What follows is the rest of the story:

1. Survival – Fred Flintstone – React. Fred was a simple leader right for a simple time. His goal was survival for himself and his family. Planning wasn’t important. Being able to react was. When he came face to face with a sabertooth tiger, his ability to react was all important. His family followed his lead.
2. Security – Jim Anderson, an insurance agent (played by Robert Young on Father Knows Best) – Do. Jim was the personification of the OWG (old white guy in charge) in the post-WWII business place and community. The Greatest Generation fought for our security and came home to work hard to create the economic security we all so desired. If you worked for Jim and did as you were told, you would be secure (taken care of). You could work 40 years and get a gold watch.
3. Acceptance – Archie Bunker – Think. Remember, this show came at the beginning of the social revolution where baby boomers fought the status quo -- as a group and as individuals. Remember the Vietnam war protests, Woodstock, civil rights, demands for both race and gender equality, assassinations (MLK, JFK, RFK, etc.) and the chants of “Hell no, we won’t go!” and “If it feels good do it.” Archie in the stereotype was the next generation of Jim Anderson. He wanted to be the “boss” (to think for his family). Unfortunately for Archie, his followers changed. Dingbat, Meathead and Little Girl were not compliant (they wanted to think on their own). Archie’s clan demanded freedom at the risk of security. Archie’s frustration and anger (I believe) resulted from the fact that he did not enjoy the resources nor respect that was given to Jim Anderson.
4. Achievement -- Cliff and Clair Huxtable -- Create. This was the feel-good story post the social revolution of Archie’s day. Cliff and Clair represented the hope and change of a more diverse world. Their drive was to ensure their children had every opportunity to be all that they could be regardless of place, color or gender. They were the hope that remains on the horizon of our country and world. They were creating a new social order: new culture, new possibilities. Creativity provides much greater possibilities than does discipline/compliance. A hundred years from now, people will know that Bill Gates understood technology and created computer operating systems that made him and Melinda Gates the richest and most generous people in the world.
5. Self-Fulfillment – Jane and George Jetson – Imagine. George and Jane lived in a future that we are only now starting to imagine, hoping that what their life was can be real. George and Jane, their daughter Judy, son Elroy, Rosie (their robot maid) and Astro their dog lived large in the universe they occupied. Theirs was a “futuristic utopia.” George worked two days a week about one hour a day. Travel and technology were their world. If it could be imagined, it could be done. Understand that in a century people will reminisce about Steve Jobs, who imagined the possibilities in technology and artificial intelligence and forever changed the world!

Know that your organizational culture can be the most powerful force available to you in the competitive marketplace and the world as it is going to be. If you can leverage your culture for good and change, you will enjoy great success. If you are unable to break the stranglehold that some organizational cultures exercise over their own status quo, your future will be lost in a world of transformational change. See also: How ‘Cascades’ Can Build Work Culture   The lesson, in my opinion, to be learned here – is that your culture is defined by its performance and its people. Be certain that both are the best that they can be. As a leader, one of your most important responsibilities is to keep toxins out of the environment in which you live and operate. Don’t ignore reality just because things are going well. Culture can make you or break you! Keep your finger on your organization’s pulse! When something doesn’t look or “feel right” discover the truth. Address problems. Don’t ignore the painful. Your brand and your culture can be your most valuable assets.

Encryption is a two-edged sword. Over the past few years, the tech sector—led by Google, Facebook and Twitter—has implemented a form of encryption to help secure virtually all of our online searches, social media banter and mobile apps. When you search for something or use social media online, a robust form of encryption protects your data from being intercepted. It is called HTTPS, for Hypertext Transfer Protocol, with an "S" added to indicate security. HTTPS has been used since 1994, primarily to protect online financial transactions. But now the tech giants are highly motivated to keep consumers’ trust level high in the murky internet. So they are leading the charge to spread HTTPS usage far and wide. And, generally speaking, that’s a very good thing. Many government, healthcare and media websites have now jumped on the HTTPS bandwagon, in no small part due to the post-Edward Snowden-era demand for privacy. There’s still a long way to go. But even wider business use of HTTPS to protect sensitive data is inevitable. But here is where the sword cuts the other way: Hackers have discovered that HTTPS is a perfect mechanism for helping them dodge detection. See also: When Hackers Take the Wheel   A recent report from A10 Networks and the Ponemon Institute shows that perhaps as many as half of the cyber attacks aimed at businesses in the past 12 months used malware hidden in encrypted traffic. Backdoor for criminals Because firewalls, antimalware suites and intrusion detection systems have not been tuned to this trick, the effect is that criminals are using HTTPS to subvert powerful technology that has taken decades for the good guys to disperse widely. Most advanced sandboxing technologies and behavior analytics tools are not currently configured to detect and neutralize HTTPS-cloaked malicious traffic. Thus, technology that companies have spent billions to install is being subverted by cyber criminals’ use of HTTPS. “Sadly, enterprise spending on sexy security systems is completely ineffective to detect this kind of malicious activity,” says Kevin Bocek, security strategist at Venafi, a supplier of encryption-related technologies. “A cyber criminal using encrypted traffic is given a free pass by a wide range of sophisticated, state-of-the-art security controls.” The A10/Ponemon report outlines how criminals are using HTTPS to go undetected as they carry out phishing and ransomware campaigns, take control of network servers and exfiltrate data. Of the more than 1,000 IT and IT security practitioners surveyed, some 80 percent acknowledged that their organizations had sustained a cyber attack in the past year, and nearly half said their attackers had used encryption to evade detection. Reading the contents of web traffic The good news is that there is technology already on the market that can look one level deeper into network traffic to spot malicious, or suspicious, HTTPS content. The technique is called HTTPS deep-packet inspection. “This is relatively new technology that has been out for about four or five years now,” says Corey Nachreiner, chief technology officer at WatchGuard Technologies. “There are many organizations that don’t have this HTTPS inspection capability yet, so they’re missing around half the attacks out there.” This is just one more example of why businesses of all sizes need to stay abreast of how cyber criminals innovate to stay one step ahead. Businesses must set up defense Small and midsize businesses should begin looking into adding HTTPS protection. This can be done directly on premises or via a managed security services provider. For SMBs, there are many credible security vendors out there worthy of review. But you have to commit to doing the due diligence. Large enterprises face a bigger challenge. HTTPS uses Transport Layer Security (TLS) and its predecessor Secure Sockets Layer (SSL) to encrypt traffic. This revolves around the issuing and managing of encryption keys and digital certificates at a scale that can stir confusion in big companies. See also: 6 Tricks and Tools for Securing Your Data   “The challenge of gaining a comprehensive picture of how encryption is being used across the enterprise and then gathering the keys and certificates that turn on HTTPS is daunting for even the most sophisticated organizations,” Venafi’s Bocek says. “Insufficient resources and automated controls are creating a nearly insane situation.” Again, the good news is that technology to efficiently address this emerging exposure is available. First comes awareness of the problem, followed by continual due diligence by company decision-makers to defend their organization’s digital assets.

In 1997, the CEO of a Silicon Valley company told me I should give up on being an insurance broker and look for a new job because I was about to be disintermediated. Technology would let carriers and clients connect directly, and nothing I did could stop the movement of history. Well, I ignored his advice, and the brokerage part of the insurance supply chain has grown by a factor of 25 in the past two decades. But many people are now warning again of disintermediation. Was my friend just too early in his prediction? Will the doomsayers be right this time? In a word, no. First of all, disintermediation rarely happens as rapidly or completely as the technologists tend to think, with their binary, one-zero, on-off approach to the world. There are actually many more bank tellers today than there were when ATMs were introduced decades ago and were supposed to put tellers out of business. Remember when realtors were going to disappear, as buyers and sellers connected directly? Realtors are thriving. Even travel agents are still around despite the spread of sites like Expedia. There are only about 40% as many as there were two decades ago, but they deliver more value now, because they handle more complex problems or have developed specialties, such as exotic fly-fishing vacations that few have the expertise or confidence to plan on their own. See also: Why Aren’t Brokers Vanishing?   Insurance is even less likely to face disintermediation than bank tellers, realtors and travel agents because, if you think finding a fishing guide in Alaska is hard, try explaining how a workers' compensation “experience modification” is factored or how the Affordable Care Act will affect the buying public if the new administration has its way. Even though the rise of comparison sites suggests that policies are easily comparable, they are not. It takes sophistication, based on lengthy experience, to help a client evaluate his or her needs and to sort through all the carriers and policy options to find the right fit. Product, price and relationship all have to fall into the right place at the right time. Besides, as the founder and chairman of Insurance Thought Leadership, I have a ringside seat on the startups that are providing tools that will make the broker’s role even more important than it is now. In addition to the main site, where nearly 800 thought leaders have published more than 2,500 meaty articles on innovative ideas, we recently launched the Innovator’s Edge, which is tracking the more than 725 insurtech startups. I can say with confidence that the role of the broker will broaden for the foreseeable future. Here are just some of the companies that will help ensure that all of us brokers have a Happy New Year – and many more to come: –RiskGenius – This startup, run by Chris Cheatham, uses artificial intelligence to instantly compare and contrast policy coverage and produce a report in layman’s terms. That helps clients see what's going on. It also helps brokers keep track of changes in policies, making back offices much more efficient -- serving clients better, at lower cost. The RiskGenius solution plays into a trend that seems to be generally missed but that will be profound, in insurance and elsewhere. While some entire jobs will be automated -- look at what robots are doing to many manufacturing jobs -- the broader effect is that pieces of jobs will be automated. It used to be that every senior executive had a secretary, but as typing, some answering of phones, some scheduling and so forth have disappeared from assistant jobs, the span has become one assistant for every two, four or even larger numbers of executives. The same sort of winnowing of functions will happen with brokers, because of solutions like RiskGenius'. Brokers and brokerages will take on more strategic work as they let go of the more mundane tasks that can be taken on by technology. –Refer.com, run by Thomas Gay, likewise makes brokers more efficient as we prospect for business. While social marketing and social selling have attracted so much attention, but haven't panned out, Refer.com scours the internet 24/7 to find topics of interest to prospects and puts them in an email format. The system prompts the broker about the optimal pace at which to send the emails, providing a high-tech, high-touch approach that can build the sort of referral network that brokers crave. –Agency Revolution, whose CEO is Michael Jans, offers complementary capabilities by automating marketing campaigns -- for instance, sending out emails on clients' birthdays, as policy renewals near, etc. –Pypestream, which has the good fortune to have ITL advisory board member Donna Peeples as its chief customer officer, can greatly improve customer service for larger brokers. Pypestream's chatbots mean that customers can text queries to brokers -- a means of communication that so many prefer these days -- rather than call and wait on hold, negotiate a phone tree or face some other indignity. The chatbots filter through the texts, query any and all back-office systems that have anything to contribute and answer routine questions so fast that Pypestream sometimes has to slow the response so the client isn't tipped off that it's really dealing with a computer. Clients are happier, and brokers offload routine questions so they can handle more substantive issues. –GAPro, where Chet Gladkowski is chief marketing officer and chief information officer, also can make brokers much more efficient by providing what it calls verification as a service. GAPro addresses the huge time sink that is certificates of insurance. These are important, because they let parties to a deal know that other parties are carrying the requisite insurance -- but they're only as good as the paper they're printed on (or the PDFS that contain them). Just because someone can show he had insurance a month ago doesn't mean that certificate is still in force today, when the deal is finally coming together. Brokers spend an inordinate amount of time verifying these certificates -- but GAPro automates all that, so it's possible for everyone to know in real time the insurance status of all relevant parties. Again, this means faster and better service for clients. –GroundSpeed automates loss runs and the processing of claims data, simplifying a complex, painful process and letting clients and brokers see on a dashboard all the claims they've made under an insurance policy. –Risk Advisor, whose founder is Peter Blackmore, helps brokers extend risk management services to small businesses. These services had previously been practical only for larger businesses, because of the expense of the work involving in identifying and mitigating an individual business' risks. But Risk Advisor has automated the process so much that far smaller companies can enjoy the sort of attention and expertise that big clients have traditionally received. That change pushes brokers in the direction that both they and clients would like to move: The brokers will increasingly help prevent losses rather than coordinate payment after losses occur. –WeGoLook, whose founder and CEO is Robin Smith, provides arms and legs (and brains) to brokers for any sort of service. Her 30,000 "Lookers" across the U.S. are currently handling tasks such as taking photos and gathering other information after car accidents, but their work is really limited only by our imaginations, because they give us the sort of inexpensive, free-lance workforce that Uber has brought to transportation. How valuable is the sort of service that WeGoLook can provide? Well, Crawford just announced that it was buying 85% of WeGoLook in a deal that puts a $42 million valuation on this young startup. See also: Calling all insurtech companies – Innovator’s Edge delivers marketing muscle and social connections This list of seven companies is just the start, as a visit to the Innovator's Edge will show you. So, my bet is that if my Silicon Valley friend and I reconvene in 20 years, we'll see that the role of the broker has become even more strategic and has moved by leaps and bounds beyond where it is today.

Even though Metromile was groundbreaking with its pay-per-mile insurance, it certainly wasn’t the first to provide usage-based cover. In fact, the earliest documented paper insurance policy, a commercial policy, was a pay-per-use policy and was dated Feb. 13, 1343. It covered 10 bales of linen on their trip from Pisa to Sicily on the Santa Catalina —right in the midst of the Italian Renaissance. Fast forward 673 years, and we are entering an era where usage-based insurance and pay-as-you-go (drive-live-travel-ship-and more) coverage is coming into vogue. The big difference with this Renaissance, however, is that technology and insurance coverage is unlikely to trend back toward aggregates and is highly likely to trend permanently toward individualized, contextualized, point-in-time-based, data and analytics based pricing and use. There’s no going back … only forward. If the sharing economy with collaborative consumption expands, the on-demand model continues to grow and the pay-as-you-use model continues to create innovative options, then there are long-term, dramatic insurance implications — and almost all of them are positive when looked at in the light of insurtech advancements. So, let’s briefly consider what usage-based insurance means to consumers, what it will do for insurers and how insurers need to prepare their enterprises to take advantage of it. The Consumer and the Economics of Pay-As-You-Use Pay-as-you-use is a common economic principle, couched in today’s technology solutions. The only way it becomes profitable is for the consumer to see the benefit of variable use, the ease of use and variable expense. When Metromile introduced pay-per-mile coverage for drivers, it naturally appealed most to low-mileage drivers, who felt that they could now be treated fairly. They benefited from less-wasted premium dollars, and they were rewarded with a personalized experience that made them feel known. (Metromile even goes so far as to warn individual San Francisco drivers about potential parking tickets during street cleaning days.) See also: Insurtech: One More Sign of Renaissance   Today’s consumers have constructed, through their preferences, a digitally savvy, relationship-valuing, on-demand, sharing economy. AirBnB, Zipcar and Snapgoods are turning wasted downtime into productive uptime and revenue. These companies and others have transformed the mobile device into a powerful marketplace of options with stellar and simplified ease of use, standardized quality of service and transparency of price. These same trends will drive some consumers to only do business with those who can provide usage-based coverage. The Insurer and the Economics of Pay-as-You-Grow Insurers may lament that they are losing premium when the need for insurance is not in use, but that isn’t actually the case. In most cases they are just lowering premium at times when there is very little or no risk … the basic fundamentals of insurance. Insurtech startups are providing ideas to help insurers turn the sharing economy into new market opportunities, revenue and profits. Digital connectivity, relevant data streams and new product models will continually allow insurers to prove their pricing and help their customers lower their risk. The irony of the insurer discomfort is this: Many insurers are taking advantage of the same pay-as-you-use principles as consumers themselves. They are sharing system solutions with cloud-based technology. They are paying as they grow, with agreements that allow them to pay per policy or pay based on premiums. They are using data on demand relationships for everything from medical evidence to geographic data and credit scoring. They use technology partners and consultants in an effort to not waste downtime, capital, resources and budgets. They are rapidly moving to a pay-as-they-use world, building pay-as-they-need insurance enterprises. This is especially true for greenfields and startups, where a large part of the economic equation is an elegant, pay-as-you-grow technology framework. They can turn that framework into a safe testing ground for innovative concepts without the fear of tremendous loss, while having the ability to grow if the concepts are wildly successful. The Window of Opportunity It’s open again. The window of opportunity is open to insurers that wish to prepare their business models, products, processes and systems to embrace the Pay-As-You-Go culture. In a recent Majesco Thought Leadership report on insurance consumers, we found that consumers are far more interested in receiving a fair price than they are in gaining the lowest price. We also found that across all generational groups, auto insurance based on miles driven showed that 30%-50% of the surveyed respondents were willing to look at Pay-Per-Mile auto insurance and a similar percentage were interested in on-demand insurance for a specific event, item or time of day across all generational groups and led by Millennials. Each of these jumped to 60-80% when the “swing group (those that could shift) were added.  (See The Rise of the New Insurance Customerfor more information.) The statistics are stunning, considering that those respondents are all current insurance customers — willing to stay or switch based upon their feelings of fairness, service, value, and need.  Insurers that aren’t already preparing, need to prepare now … and quickly.  There is no question that the convergence of consumer opinion and the innovative business models and capabilities of InsureTech will either steer consumers toward an insurer or away from it based on the insurer’s ability to accept non-traditional, tech-enabled products.  Just look at the high interest and investment by reinsurers and venture capital firms in companies like Lemonade, Slide, Root and TROV … and the buzz and excitement their brands are generating in the marketplace. Preparing isn’t terribly difficult, but it requires a look at long-held insurance assumptions … business model, products, processes, and systems that may be outmoded and built for a previous era and generation. How does a quoting engine handle a sporadic driver? How does a policy administration solution handle coverage that may turn on and off with a switch, or coverage that may only have a duration of two hours? Is an insurer’s data warehouse prepared to handle the data deluge of millions of telematic devices? For some insurers, these questions may seem like tall hurdles to jump over, but the answers are well worth the time and investment. See also: 6 Charts on Startups, Greenfields, Incubators InsureTech is proving its potential by fueling innovation and disruption to the insurance industry, through new technology startups … and insurance and MGA startups.  S&P even noted in a recent report that InsureTech has a complementary place in the traditional insurance world, despite remaining uncertainty in the industry about how it will function on a wide scale.  If you prepare for new insurance models, such as Pay-On-Demand, Pay-As-You-Use, or Pay-As-You-Need, you will be moving your organization toward the place where consumer needs, expectations and demands are heading — particularly with the new generation of Millennials and Gen Zs that are embracing digitally superb, on-demand, sharing economy options in all parts of their lives. It is the dawn of the insurance renaissance. Digitally-connected, innovative and analytically-informed insurers will thrive there. Those who are determined to focus on the customer will grow there. Preparing your business and the underlying systems keeps the windows of opportunity open and the breeze of market potential flowing into a healthy organization.