Recently, I've read more and more articles asserting that millennials are one of the most difficult consumer segments to nail down and serve. It's a complicated equation with moving and changing variables, and every company is scrambling to find out which social media platform, which YouTube video and which new mobile app will give it the sustainable competitive advantage it needs to corner the market for millennials. I'd actually argue it's a simple equation. The classic formula is well understood: Sales = Speed + Price + Service But, just as Leonhard Euler’s clarification of Descartes formula will forever be known as “Euler's Formula For Polyhedra” (F-E+V=2) and James Clerk Maxwell’s improvements on Michael Faraday’s pioneering work is still known as “Maxwell’s Equations” 170 years henceforth, I submit for your critique “McMyler’s Equations of Millennial Mathematics.” First Postulate:  Technology = (Greater Speed + Better Pricing + Superior Service) or  Technology = Sales^x The emergence of technology in our everyday lives has changed the way this generation perceives the world and, in turn, its expectations from it. Technology has enabled us to do everything we used to do ... faster, cheaper and, arguably, with better service. Millennials know this and prefer companies that embrace it. But, at the end of the day, it’s the same basic calculus: It’s not because you have a hip YouTube video or a Facebook page, and it’s not because you have cool apps or tens of thousands of “likes.” It’s because you are able to do the basics … faster, cheaper and with better service. Since even Einstein acknowledged that his famed E=MC^2 would be met with skepticism and therefore immediately set out to defend it, I feel I should do no less. And, so, for your consideration: This past February I moved to a new apartment. As a skilled professional procrastinator, I waited eight weeks until the end of March to remember to purchase renter’s insurance.  I remembered this because it was Friday night. And it wasn't just any Friday night, it was the Friday night before my Tuesday 4 a.m. sojourn to the airport for a restful vacation far from home.  This unfortunate, yet real, situation demonstrated the morbid time limitations of the classic model or, essentially, the equation for getting quotes and purchasing insurance coverage.  I hopped online to try and get some quotes. I called a mutual insurer who, in addition to having a solid insurance product, possessed the advanced technology platform that would allow me to get coverage in a timely manner … er, I mean …  test my mathematical hypothesis. If the classic calculation describes time as measured by the activity of purchasing insurance, The McMyler’s Equations of Millennial Mathematics demonstrated how the time element of purchasing insurance in all its components could be shifted, bent and even stopped.  I called the customer service number and was connected to the sales department. I asked a ton of coverage questions, all of which the woman was able to answer. When we were done, she emailed me my quote. Like a good little insurance geek, I thoroughly read through the entire policy (no lie, policy review is actually my favorite part of getting insurance) and emailed my supplemental list of questions. Within the hour, her electronic response almost magically appeared in my inbox. Along with the quote, I received a link to an eSign service to initial and sign the documents. Great, we were moving along!  While that should be sufficient proof of the integrity of the McMyler’s Equations of Millennial Mathematics, I am willing to provide further proof. As the Princess of Procrastination, it wasn't until 6 a.m. at the airport – well, to be more specific, on the tarmac waiting to take off – that I remembered I forgot to sign those documents. So, I confidently pulled out my smartphone, accessed the email that would link me to the eSign URL, signed the documents, reviewed the confirmation and went on to have a (fabulous) vacation free of any worries about my apartment or insurance coverage.  (I did, however, continue to wonder if I locked the door and shut off the lights.) The insurers definitively proved the McMyler’s Equations of Millennial Mathematics: it was faster than expected, at the right price, with flawless customer service provided through effective use of technology. But, more than just my business, the insurers earned my loyalty. The mathematical probability of my leaving them approaches zero. Of course, because of the mathematician Zeno’s 2,500-year-old work, known as Zeno’s Paradox of the Tortoise and Achilles, it can approach but never achieve absolute zero. But I digress just long enough to complete my second postulate (also known as McMyler's Constant): Sales Mass = Circle of Influence  where Technology  ≥ the Customer’s Expectations. In the great tradition of mathematicians, I seek thoughtful peer review.

While most of us were buying supplies for partying on New Year's Eve (in my case, I was in charge of bringing broccoli and Boggle), the federal court in the Western District of Wisconsin quietly handed down an earth-shattering decision in the Flambeau case, which went pretty much unnoticed due to the timing. You may recall this was the case where employees refusing wellness lost all insurance benefits. The case looked like it would be a layup win for the Equal Employment Opportunity Commission (EEOC).  After all, the Affordable Care Act (ACA) clearly states that penalties for non-smokers are capped at 30%, and this penalty was 100%. But, here’s the rub: Flambeau conditioned the entire insurance benefit on participation in its “pry, poke and prod” program.  The company knew most employees hate “pry, poke and prod” programs to begin with, so they created a program so onerous that some number of employees would prefer to forego insurance altogether rather than participate in wellness.  And, indeed, that’s what happened at Flambeau. This decision means the company is getting away with it, saving thousands of dollars for each employee who refused to submit. Make sure you catch that distinction between the 30% penalties and the 100% penalties: (1) It is not OK to penalize an employee more than 30% for refusing to submit to a “pry, poke and prod” program if they already have insurance, or they can get insurance through the employer without this requirement. (2) However, it is OK to say: “There is no incentive or penalty for wellness once you have insurance, but you can’t have insurance at all unless you submit.” If that seems like an artificial distinction, well, that’s because it is.  All an employer has to do is require pry-poke-and-prod before you get insurance. Assuming other federal courts follow this district’s lead (as they usually do), employers create a 100% de facto non-participation penalty: If you don’t participate, you don’t get insurance, period. The implications of this case: (1) It will allow some vendors, such as Bravo, to double down on bragging about the “savings” from wellness by creating programs employees don’t like; (2) Because the decision only applies to participatory programs and not outcomes-based programs, many companies will either not switch to outcomes-based programs or else maybe switch back. The court's decision also puts pressure on the EEOC to put the kibosh on this end-run around the Affordable Care Act’s wellness provision. The decision can, and should, be appealed. Otherwise, it is a de facto repeal of a big chunk of the Affordable Care Act. The bottom line is that there is now universal agreement (albeit inadvertently in the case of HERO, which apparently didn’t mean to tell the truth, but failed to proofread their own document) that wellness loses money. Any pretense of “pry, poke and prod” being about the employee is gone. Obviously, forced wellness isn’t about trying to save the $0.99 PMPM (before program fees!) that HERO says can be saved with healthier employees. It’s about gutting the key ACA requirement that employers provide insurance. And, unless the EEOC steps up in its final regulations or prevails on appeal of Flambeau, the opponents of ACA will have succeeded.

More often than not, a large property and business interruption insurance claim turns into an “us vs. them” scenario, creating a rough process for all involved. Not unlike a football game, someone is always trying to win and is willing to do so at any cost. As a forensic accountant for more than 20 years specializing in quantifying business interruption losses and documenting property claims for policyholders, I’ve seen the good, the bad and the ugly. The problem is that the process is designed to focus on disagreements. We’ve heard the concerns from our clients and the insurers, and we can understand both perspectives. Policyholders accuse the adjuster of being unreasonable, trying to stick it to the policyholder at every turn. Insurers accuse policyholders of trying to take advantage of the claim in an attempt to get more than they deserve. The battles can become very heated, even on a personal level. Once, during a claim meeting on a large loss, the discussion between the parties intensified until an executive from the insured side of the disagreement ordered the adjustment team to “get out of my building!” Disagreement in the course of a property insurance claim is an anticipated part of the process, but there are ways to keep it civilized and productive. It is possible to come to a fair representation of the loss without all the aggravation. The fix is really quite simple, but it will require the insured and insurer to take responsibility for their contribution to both the problem and the solution. Here are some ways insurers can improve the claim process: Take time to understand the insured’s business  Too often the adjuster wants to appear to know it all. It is better to listen first and try to understand the insured's position. Understanding your customer is common business sense. Adjusters should have superlative people skills A big part of an adjuster’s role is to coordinate with experts needed for a given situation. These are management and organizational skills. In other words, the adjuster does not need to know all the technical aspects of every loss and would be better served knowing more about how to manage people and deal with customers. Whether it’s from retiring baby boomers or cost cutting, there is a lack of well-trained and experienced adjusters. Give the adjuster more control  Even the best adjusters are impaired by the current claim process; Adjusters seem to have limited authority to make decisions. Policyholders find it pointless to explain their issues in great detail when the real decision maker is somewhere in the background. When pressed to make a decision, policyholders just throw their hands up. It’s difficult to make any progress when the adjuster has to get every little decision approved by superiors. To the insured, it just seems like a delay tactic to put off payment and only adds to feeding mistrust. Here are some ways policyholders can improve the claims process: Give the process a chance  While there are many times you will experience some of the problems mentioned above, the process can work with the right people involved. Communicate with the adjuster and his or her team. Be responsive to all requests that are reasonable and appropriate and ask for clarification and address your concerns right away. Maintain good relations with realistic expectations Set realistic expectations for what you want, such as advance payments and resolution of differences. Though insurers are not obligated to finance a rebuild project, they should be willing to advance money to stay ahead of the cash expenditure. By maintaining good relations with the adjuster, insurers will be more open to working with – rather than against – you. The best defense is a good offense  On your end, be prepared and organized so you can require the same of the insurance company. You cannot withhold information until the last minute and then demand resolution and payment. The faster you answer questions and requests, the faster the insurance company can review them. Often times, it takes them longer to review the support you provide because they review the information in a vacuum. Don’t assume they understand what to ask for or what has been presented. Promote frequent meetings and discussion to make sure misunderstandings are not made part of their reports to underwriters. Once it is on the record, it is harder to change. Escalate when needed If issues start to arise that cannot be resolved, rather than letting it fester, escalate it to the markets involved. It is no different than speaking to a manager at a restaurant. It’s better to deal with decision-makers when action is needed. However, this should only be used as a last resort to avoid litigation. The insurance claim process has its flaws. I don’t think it’s intentional but rather a result of how it has evolved. The best approach to improving the process is by recognizing the challenges with an “us vs. them” mentality and finding a way to work cooperatively through the claim. Both sides need to help to fix it so that more claims get resolved as they should.

The excitement around technology’s potential to transform the insurance industry has grown to a fever pitch, as 2015 saw investors deploy more than $2.6 billion globally to insurance tech startups. I compiled six trends to look out for in 2016 in the insurance tech space.

The continued rise of insurance corporate venture arms

2015 saw the launch of corporate venture arms by insurers including AXA, MunichRe/Hartford Steam Boiler, Aviva and Transamerica. Aviva, for example, said it intends to commit nearly £20 million per year over the next five years to private tech investments. Not only do we expect the current crop of corporate VCs in the insurance industry to become more active, we also expect to see new active corporate VCs in the space as more insurance firms move from smaller-scale efforts — such as innovation labs, hackathons and accelerator partnerships — to formal venture investing arms.

Majority of insurance tech dealflow in U.S. moves beyond health coverage

Insurance tech funding soared in 2015 on the back of Q2'15 mega-rounds to online benefits software and health insurance brokerage Zenefits as well as online P&C insurance seller Zhong An. More importantly, year-over-year deal activity in the growing insurance tech space increased 45% and hit a multi-year quarterly high in Q4’15, which saw an average of 11 insurance tech startup financings per month. In each of the past three years, more than half of all U.S.-based deal activity in the insurance tech space has gone to health insurance start-ups. However, 2015 saw non-health insurance tech start-ups nearly reach parity in terms of U.S. deal activity (49% to 51%). As early-stage U.S. investments move beyond health coverage to other lines including commercial, P&C and life (recent deals here include Lemonade, PolicyGenius, Ladder and Embroker), 2016 could see an about-face in U.S. deal share, with health deals in the minority.

Investments to just-in-time insurance start-ups grow

The on-demand economy has connected mobile users to services including food delivery, roadside assistance, laundry and house calls with the click of a button. While not new, the unbundling of an insurance policy into financial protection for specific risks, just-in-time delivery of coverage or micro-duration insurance has already attracted venture investments to mobile-first start-ups including Sure, Trov and Cuvva. Whether or not consumers ultimately want the engagement or interfaces these apps offer, the host of start-ups working in just-in-time insurance means one area is primed for investment growth in the insurance tech space.

Will insurers get serious about blockchain investments?

Thus far, insurance firms have largely pursued exploratory investments in blockchain and bitcoin startups. New York Life and Transamerica Ventures participated in a strategic investment with Digital Currency Group, gaining the ability to monitor the space through DCG’s portfolio of blockchain investments. More recently, Allianz France accepted Everledger, which uses blockchain as a diamond verification registry, into its latest accelerator class. As more insurers test blockchain technologies for possible applications, it will be interesting to monitor whether more insurance firms join the growing list of financial services giants investing in blockchain startups.

Fintech start-ups adding insurance applications

In an interview with Business Insider, SoFi CEO Mike Cagney said he believes there’s a lot more room for its origination platform to grow, adding,

“We’re looking at the entire landscape of financial services, like life insurance, for example.”

A day later, an article on European neobank Number26, which is backed by Peter Thiel’s Valar Ventures, mentioned the company would like to act as a fintech hub integrating other financial products, including insurance, into its app. We should expect to see more existing fintech start-ups in non-insurance verticals not only talk publicly but also execute strategic moves into insurance.

More cross-border blurring of insurance tech start-ups

Knip, a Swiss-based mobile insurance app backed by U.S. investors including QED and Route66, is currently hiring for U.S. expansion. Meanwhile, U.S. start-ups such as Trov are partnering and launching with insurers abroad. We can expect more start-ups in the U.S. to look abroad both for strategic investment and partnerships, and for insurance tech start-ups with traction internationally to expand to the U.S.

Common wisdom suggests that major workers’ compensation legislative activity won’t take place during an election year. For 2016, that would seem to hold true. That is not to say, however, that various interested parties will be sitting idly by, waiting for the clock to turn to 2017. CENTERS FOR DISEASE CONTROL ADD TO THE LIST OF CHRONIC PAIN GUIDELINES On Jan. 13, the Centers for Disease Control and Prevention (CDC) closed the public comment period for its proposed Guideline for Prescribing Opioids for Chronic Pain. According to the CDC, the guideline is being proposed to offer “... clarity on recommendations based on the most recent scientific evidence, informed by expert opinion, with stakeholder and constituent input considered.” The guideline goes to great lengths to address two important issues. The first is that current guidelines in many states – both public and private – are based on dated information. The second, which is critical, adds to the growing number of voices to say that best practices for providers include accessing physician drug monitoring programs (PDMP) to reduce the risk of doctor shopping and toxic – and sometimes fatal – mixtures of prescription drugs when the patient provides incomplete histories or none at all of their drug use (both prescription and illicit). This need to access a PDMP before, and during, treatment with opioids is echoed by the Medical Board of California (MBC) and the DWC. Their comments also underscore a considerable problem facing California policymakers when trying to create incentives for providers to use the Controlled Substance Utilization Review and Evaluation System (CURES) without directly mandating access. This dilemma is best summed up by the analysis of Senate Bill 482 by Sen. Ricardo Lara (D – Bell Gardens) that is at the Assembly Desk pending referral to committee. The bill, which would mandate participation in the CURES system as well as other measures to curb the abuse of opioids, has garnered opposition from medical associations and one medical malpractice insurer. The opposition, according to analyses by legislative staff, is based on two issues – the first being whether the CURES system is capable of handling the volume of inquiries a mandate would engender, and the second being concern that requiring CURES access will become a standard of care that could subject providers to malpractice liability. As to the former, this issue arose during the campaign waged against the 2014 ballot measure Proposition 46. According to the non-partisan Legislative Analyst’s Office (LAO), “Currently, CURES does not have sufficient capacity to handle the higher level of use that is expected to occur when providers are required to register beginning in 2016.” This raises an important question – does the CURES system now have the capability to meet the demand that a mandate would create? If it doesn’t, then the legislature needs to understand why. As to the second issue, it is difficult to comprehend the level of distrust that is subsumed in the position that opposing a mandatory review of possible prescription drug abuse by a patient would establish more potential malpractice liability than knowing that the CURES database exists and not checking it. In time, perhaps, it will be the appellate courts that resolve that issue. There is no shortage of guidelines that address the appropriate use and cessation of use of opioids for non-cancer chronic pain. The DWC is finalizing its latest iteration on this issue as part of the MTUS. It will differ from both the CDC and the MBC guidelines to some degree, but the overall treatment of this issue is very similar. In addition, the division will be implementing a prescription drug formulary as required by Assembly Bill 1124 by former Assembly member Henry Perea (D – Fresno). That, too, will likely provide opportunities to address the proper use of opioids in the workers’ compensation context, preferably after the chronic pain guidelines are completed. As noted by the CDC and the MBC, and implicit in the DWC’s guidelines, this is not just a question of UR. If all the work by the division is simply viewed as a more effective way of saying “no” regardless of the circumstances, then the public health issues associated with the abuses of opioids will continue. Workers' Compensation Insights is a bi-monthly publication of Prop 23 Advisors. Subscribers will receive in-depth analyses of pending California legislation and regulations, review of important WCAB and appellate court decisions and commentary on trends within the system in California and nationally. To read the rest of this newsletter, click here.

Over the past decade, the Global Risks Report has expanded its scope from analyzing the connected and rapidly evolving nature of global risks to also putting forward solutions and calling for public-private collaboration in strengthening resilience. Now in its 11th edition, the report describes a world in which risks are becoming more imminent and have wide-ranging impact: Tensions between countries affect businesses; unresolved, protracted crises have resulted in the largest number of refugees globally since World War II; terrorist attacks take an increasing toll on human lives and stifle economies; droughts occur in California, and floods happen in South Asia; and rapid advances in technologies are coupled with ever-growing cyber fragilities and persistent unemployment and underemployment. Implications of sweeping digitization (also termed the “Fourth Industrial Revolution”) – ranging from transformations that are the result of rising cyber connectivity to the potential effects of innovations on socioeconomic equality and global security – remain far from fully understood. At the same time, climate change is unequivocally happening, and there is no turning back time. The increasing volatility, complexity and ambiguity of the world not only heightens uncertainty around the “which,” “when,” “where” and “who” of addressing global risks but also clouds the solutions space. We need clear thinking about new levers that will enable a wide range of stakeholders to jointly address global risks, which cannot be dealt with in a centralized way. Taken together, the situation calls for a resilience imperative – an urgent necessity to find new avenues and more opportunities to mitigate, adapt to and build resilience against global risks and threats through collaboration among different stakeholders. By putting the resilience imperative at its core, this year’s Global Risks Report combines four parts to present an analysis of different aspects of global risks – across both global risks and stakeholders – focused as much on the search for solutions as on the analysis of the risks themselves. To download the report, click here.

Take a look at the financials of the insurance industry and industry projections, and it may seem like business as usual. But peek just under the surface at many insurers, and you’ll find a great deal of activity aimed at transformation. Typically, this activity takes the form of strategic initiatives—enterprise-wide programs that require sustained commitment and investment.

Our research reveals that the top strategic initiatives remain virtually the same as 2015: customer experience, analytics, new products and core replacement. This is an indication that the commitment to transformation aligned with these four initiatives is rock solid. However, the manner in which these initiatives are being funded is changing, with more funding coming from new sources outside the IT budget. In 2015, about a third of the funding for strategic initiatives came exclusively from capital investments. In 2016, funding from new sources will increase to more than 40%.

These are the questions to explore: Why change? Why all the investment and resources devoted to rethinking and reshaping the company? The answers are straightforward. Many recognize that we are entering a new digital era, one with technology rapidly advancing and increasingly in the hands of customers and competitors. Emerging trends such as the sharing economy and the rapid adoption of technologies such as cloud and mobile are creating opportunities (and risks) for insurers. In fact, SMA predicts that the introduction of new products, business models and business optimization will accelerate as insurers leverage maturing technologies and capitalize on emerging technologies such as wearables, the Internet of Things and drones. Technology really is driving a lot of the conversation and action at the senior levels these days.

Ultimately, many insurers have a vision of building a company that is agile and able to respond rapidly to market opportunities and threats. The common threads running through the strategic initiatives are the need to be digital and the key role of innovation. Although not the end games in and of themselves, digital and innovation are the enablers that form the foundation for future success. SMA has created the Next-Gen Insurer Model to describe what the future insurance company and what any future success will look like. The 12 initiatives that many insurers are pursuing are the mechanisms that insurers are using to become Next-Gen Insurers. There may be choppy waters under the visible tip of the iceberg, but the activity is very focused and taking individual companies and the industry as a whole in a new direction. In the not-too-distant future— within five years. by our estimate—the visible part of that iceberg will change, as well, and a new industry will emerge.

SMA has just released a new research report identifying strategic initiatives, “Insurers’ 2016 Strategic Initiatives: Advancing Industry Transformation.” The report covers the priorities of these initiatives, sources of funding and their role in helping insurers attain the future as a Next-Gen insurer. 

The insurance industry has been talking a lot about disruption over the past couple of years. But, as with many things, insurance is a late arriver to the disruption party. Clayton Christensen helped kick off an earnest discussion of the topic back in 1997 with his first book, The Innovator’s Dilemma: When New Technologies Cause Great Firms to Fail. In his 2003 book, The Innovator’s Solution: Creating and Sustaining Successful Growth, he proposed this question as part of a litmus test for the disruptive potential of ideas: “Is there a large population of people who historically have not had the money, equipment or skill to do this thing for themselves, and as a result have gone without it altogether or have needed to pay someone with more expertise to do it for them?” While Christensen has recently gotten some flak for being too dogmatic in his criteria for what constitutes a truly “disruptive innovation” (perhaps succumbing to his own definition of disruption?), the question actually describes very well how insurance has historically operated. It is a complex, mysterious product that has forced consumers to rely on the expertise of an agent or company rep to buy, understand and use it. The increasing transparency and empowerment afforded by data, the Internet and digital technologies have helped level the playing field. Yet the majority of insurance buyers still rely on a live person, usually an agent, to make sure they’ve made the right decisions and to close the sale. The ever-growing field of companies and investors eyeing the insurance industry sees this issue as one of the greatest opportunities for disrupting the industry’s incumbents. Some companies still take comfort in the fact that the insurance industry has difficult and unique barriers to entry, chiefly its complex regulatory environment and huge capital requirements to cover losses. But the size of the opportunity — $1.1 trillion in net written premiums in the U.S. in 2014, according to SNL Financial – is an incentive that is spurring a lot of creativity, innovation and investment that will help overcome these barriers.  It’s a question of when, not if. But it’s also still a question of how. How will the insurance business model change to at least meet the litmus test described by Christensen? It's clear that changes are unfolding because of ambitious outsiders as well as creative and forward-thinking industry insiders. So what should insurers do? How should they respond? Majesco’s newly released research report (based on a survey conducted in late 2015 with its customers), 2016 Strategic Priorities: Impactful Pace of Change, reveals that many insurers are monitoring potentially disruptive technology and business trends, but, unfortunately, few are actively preparing for the changes coming. Four overall themes emerged from the survey responses:

• First, there is a clear recognition of the shift to the customer being in control and the importance of being customer-driven.
• Second, there are significant barriers and limitations on current business capabilities that must be overcome to survive — let alone to grow and compete — starting with transformation of legacy systems that were built around products rather than customers.
• Third, there are potential blind spots around customer expectations, technology and competition that are lurking around the corner of the not-too-distant future, creating forceful disruption.
• Fourth, the pace and impact of change have intensified the need for agility, innovation and speed.

While business transformation progress is being made, significant work is necessary to compete in a customer-driven age. At the same time, the world is changing rapidly, and new expectations, risks, technologies, competitors and innovations threaten to significantly disrupt the insurance business landscape. For those unprepared, the change could be devastating. The insurance industry is recognizing more and more that it is a target for potential disruption, because consumers are demanding – and getting – more transparency and responsiveness from company after company. Changes are being driven from both inside and outside the insurance industry along several different dimensions like technology, products, new players and partnerships. There are formidable hurdles for new entrants, but the incentive is huge for those who can remove the complexity of insurance and increase the value proposition for customers. Insurance companies need to move beyond monitoring these developments to actively determining how the future will look. To prepare and respond, insurance companies must adroitly do two things simultaneously: modernize and optimize the current business while reinventing it for the future. It’s like changing the tire on a car while you’re driving at full speed down the freeway. Those companies that can do this will transcend merely surviving in an increasingly competitive industry and become the new leaders of a re-imagined insurance business. Read more about how companies view these and other strategic priorities in Majesco’s research report, 2016 Strategic Priorities: Impactful Pace of Change.

When we started PolicyGenius, an independent digital insurance broker, last summer, we braced ourselves for a high-speed education on the finer points of the consumer insurance market--and boy did we get it. We previously consulted for the industry, but even that doesn’t prepare you for all the work that happens on the ground, like filing for licenses on a state-by-state basis, or spending a holiday manually preparing and sending out illustrations because of a last-minute surge in quote requests. (Or dealing with fax machines.) But learning all the nuances, even the bewildering ones, has been an amazing experience. It’s exciting to be involved in an industry right at the start of its transformation into the next phase of doing business. We hung out our digital shingle in July 2014, and thanks to our smart shopping and decision-making tools, as well as some extremely positive exposure from the national media, we’ve enjoyed 30% month-over-month growth in our user base. In the process, we’ve had 12 months to learn a lot about the modern digital insurance customer. Here are six takeaways that agents and carriers can benefit from. 1. Babies are still the No. 1 trigger for buying life insurance--which means there’s still plenty of opportunity to educate consumers about other equally important life events. It’s no surprise that having a baby motivates a person to buy life insurance. Our own data shows that among customers who take our Insurance Checkup (our online insurance advice tool), the number of those who already have life insurance jumps by 20% if the customer has a child. In a survey we commissioned last year, we found that consumers place insurance fourth in line behind saving for retirement, paying off debt and following a budget. Life insurance should be a key part of any long-term financial strategy, but a lot of people still don’t realize that. The survey also suggests people don’t recognize the financial challenges that accompany other big life events like marrying, buying a home, starting a business or becoming a caretaker for aging parents. Our takeaway: Buying life insurance for your baby is a given. Now we need to focus on bringing these other invisible triggers to our customers’ attention. 2. Couples do it together. A State Farm survey a few years ago found that 74% of people rarely talk about life insurance, in part because it’s an uncomfortable subject to bring up with one’s spouse. But we’ve repeatedly seen one half of a couple begin a life insurance application with us, and then shortly thereafter we get an application for the other half. In fact, around 20% of our life insurance applications have a partner application associated with them. Our takeaway: Once an applicant sees how easy we’ve made it to shop for a policy, she decides to take care of her partner’s policy while she’s at it. It saves time, and it prevents couples from having to talk about the subject too much or revisit it again any time in the near future. 3. Digital insurance consumers are thoughtful shoppers who appreciate honest advice. Our average customer spends 9 1/2 minutes exploring her PolicyGenius Insurance Checkup report. According to Adobe’s Best of the Best Benchmark report from 2013, the average time spent on a site in the financial services category is just more than six minutes! Our takeaway: If you give the customer intuitive educational tools and advice tailored to her financial needs, and you don’t ask for anything intrusive in return (like a phone number), she’ll become more engaged. We’ve seen this later in the shopping cycle, too, when customers look into the reputations of prospective insurance companies. But more on that below. 4. Digital insurance consumers are happy to do most of the work on their own. If you’ve been a part of the insurance industry long enough, you’ve probably heard the saying, “Insurance is not bought; it’s sold.” In other words, industry veterans believe that you have to sell (and often pressure) consumers, who wouldn’t otherwise purchase on their own. We founded our company on the theory that this isn’t true, and now we know that there are people out there who independently come to the conclusion that they need life insurance. We’ve found that customers who come to our site want to go all the way through the application process on their own, with no agent intervention. They self-navigate through decisions about coverage and carrier selection on our site, using the jargon-free content and tools we’ve built to make the path easy. It may not be as easy and fast as buying a pair of shoes from Zappos, but we’ve worked hard to make the process reliable and trustworthy. But not every self-serve life insurance experience is smooth, which is why it’s important to have human help when needed. One client told us in a follow-up thank you that it was “comforting to have someone on my side in evaluating different insurance carriers and working to get me approved when the first insurer turned me down.” Our takeaway: If you make insurance easy to shop for, you don’t have to focus so much on the hard sell. 5. Digital insurance consumers are not just Millennials. Everyone likes to talk about the Millennial consumer these days, but we’ve discovered that the digital insurance consumer isn't defined by any one generation. It’s true that Millennials (< 35) make up about 50% of our user base; however, Baby Boomers (50+) make up 20% of our user base, and Generation X (35-50)--who spend more online than Boomers do, according to a recent BI Intelligence study--fill out the rest. Our takeaway: To reach such a wide range of online consumers, we have to focus on values that have universal consumer appeal--honesty, speed and self-service that’s backed by amazing customer support. 6. Insurer financial strength and reputation are important. When you’re shopping online, you’re used to seeing reviews and ratings. It’s one of the ways online consumers compare products or services that they can’t see face to face. Customers frequently ask us for insurance company ratings and customer reviews. And they ask for help choosing a carrier when all the ones they’re considering have approximately the same rating, or if customer reviews are inconclusive. We’ve been asked, “Who is the largest insurer or has been around the longest? I don’t want anyone that will go out of business.” They take financial strength ratings, brand strength and reviews seriously, and factor them in when deciding which policy to buy. It’s so important that we’ve added one-page “report cards” into our life insurance quoting process to help answer these questions. Our takeaway: Insurance companies don’t have to worry about digital platforms like ours commoditizing their policies and encouraging consumers to shop only on price. While price is important, it’s not the only factor that consumers consider when buying a life insurance policy. As an industry, we still have a lot to learn about selling insurance to the digital consumer. And as an online broker, we’re still learning valuable customer insights from fellow brokers and agents throughout the industry. It’s true that everything we’ve learned in the past year has helped us confirm many of our initial propositions, but it’s also helped us better understand how to win over today’s insurance shopper. We can’t wait to see what the next 12 months brings.

My most recent post generated many questions, mainly about my definition of “value” in healthcare purchasing. My definition of value is the highest quality of care provided in the most efficient manner, i.e. not too much care, not too little care, delivered in a “lean” way and paid for in a mutually satisfying way. Walmart’s Centers of Excellence Program (COE) is the closest model we have. In the COE program, Walmart has selected clinics and hospitals that do a superior job of diagnosing high-cost cases and providing the best treatment plan, not the treatment plan that generates the most profit to the provider but the one that is best for the patients sent their way. This program has been very successful for Walmart, but it has been especially so for the company's associates (employees) and their covered family members. In Walmart’s benefit plans, a small number of covered lives account for a huge share of healthcare plan expenses. The company provides incentives for our associates and their covered family members to use our COEs. Eliminating fee-for-service was a big part of my previous post. Walmart’s COEs are not paid fee-for-service. Rather, the company has negotiated global fees, one flat fee for an episode of care for all surgery, testing, anesthesiology, hospital costs, etc. This is an alternative to fee-for-service, and it is working quite well. I urge other self-insured companies to find similar ways to bypass fee-for-service payments. Again, the time to act is now. If you feel your company cannot successfully negotiate direct deals with first-class providers like the ones we use, there are aggregators who can do that for you for fairly modest fees. This piece was written with Sally Wellborn, senior vice president of benefits at Walmart.