Today, the insurance industry is healthy and strong, with high levels of organic revenue growth and rising profit margins across the independent agency and brokerage channel. According to Swiss Re, mergers and acquisitions (M&A) activity continues to trend upward in terms of both the number of acquisitions and the average price paid per agency. As we start a new year, it’s important to keep in mind how much the insurance industry has evolved since it first began. From the first policy to protect shipments at sea, to coverages for new risks like cyber security that were unimaginable in years past, insurance has always been a critical component in human progress. It has allowed people to follow their dreams and take risks. No one would purchase a house or build a new industrial complex with the underlying belief they could lose it all. What’s Ahead We’ve seen how insurance has adapted over the years, but what’s next? With organic growth and acquisitions higher than ever, now is the time for your agency or brokerage to fully embrace digital technology to take advantage of every business opportunity in a market primed for profitability. Why go digital?

1. Your clients expect it Today’s insurance consumer is fundamentally changing business and customer service models. Consumers are more mobile than ever. Media and news are now consumed on the go, and personal and business transactions via mobile apps are part of everyday life. The demand for 24/7 access to information is requiring nearly every industry to reevaluate how it operates to meet these new customer expectations – and the insurance industry is not immune. In fact, in a recent survey conducted at this year’s Applied Net conference, agents and brokers ranked changing customer demand as the main catalyst to increasing their technology investments.

Agencies and brokerages should also consider that the next generation of tech-savvy insurance consumers will also be the next wave of insurance employees. They bring a new set of expectations to the workplace as insurance professionals from the baby boomer generation begin to retire. Delivering a digital customer experience has become table stakes for the next-generation trusted adviser. The insurance experience of yesterday is no longer sufficient with today's demands and tomorrow's expectations.

2. Your business requires it The increased pace of business to keep up with consumer demand can make staff feel like there are not enough hours in the day. Digital technology simplifies processes and eliminates manual tasks. In the Applied Net 2015 survey, when asked which technology most improves productivity, respondents strongly indicated that standardized workflows and agency-insurer interface are seen as the greatest source of efficiency gains.

Advanced software, such as Applied Epic, delivers pre-built, best-practice workflows to streamline processes and reduce time spent on duplicate tasks. Additionally, end-to-end transactions between a business and insurers need to happen within the management system for optimal productivity and efficient business operations. For agents using IVANS Download, employees save an average of two hours per employee per day. The Makings of a Digital Agency or Brokerage Digital transformation reflects the transition of taking manual, paper-filled processes to digitally automated workflows powered by software and the Internet. A "digital agency" is one that has undergone a digital transformation to drive growth and profitability across its lines of business. It experiences many digital, paperless interactions and transactions per day with insurers and insureds and among staff. A digital agency is built on 5 pillars:

1. A single agency or brokerage management system to serve as the operational foundation. Your system should be able to manage every type of business from personal lines, commercial lines, benefits and risk management, and it should connect all of your staff within your agency or brokerage including CSRS, producers, accountants and principals. Consider this: 50% of the insurance industry’s workforce will retire in the next decade. Can new staff be efficiently trained on your agency management system?
2. Big data evaluates ways to mine and analyze the rich transactional data in management systems. There is an abundant amount of data in your management system, but do you have the technology to quickly gain insights? Data analytics uses advanced technologies to analyze vast amounts of data and produce analytic insights in visual representations much more rapidly than traditional tabular reports. Consider this: Companies that use data analytics are five times more likely to make faster decisions than their peers.
3. Insurer connectivity creates a digital connection between your management system and your chosen insurer partners. It’s important that agencies and brokerages have access to the best products and the best insurers to meet the risk needs of each client, and connectivity allows just that. Consider this: 69% of survey respondents found the availability of automated insurer interface to be very important when selecting insurers to do business with.
4. Mobility gives agents and brokerages the ability to interact with prospects, clients and employees in the field via insurance-specific mobile apps and client portals. It becomes much easier to obtain information when you have your smartphone or tablet in a time of need. Consider this: 76% of Millennial survey respondents believe access to information via a mobile app is important.
5. The Cloud allows your staff access anytime, anywhere, as well as full security and data backup. Hosting your software in the cloud leads to increased flexibility, security and business agility. Consider this: Today, 77% of organizations cite agility as the primary reason of moving to the cloud. Whether you are scaling up via organic growth or M&A or scaling down to be sold, the cloud allows your business that flexibility.

Step into the Digital Age With today’s customers expecting more and increased competition redefining the insurance industry, digital technology simplifies and amplifies current processes. It expands communication channels – to clients and insurer partners. It mobilizes your staff from their desk to the field. Digital technology elevates your role as a trusted adviser, making you present at all moments of opportunity – any time, anywhere. As each year goes by, we strive to be better and do more for our customers. Business as usual is no longer enough. The strategy? Your foundation has to be more advanced, your communication channels need to be open and your business must be mobilized. Growth-minded agencies and brokerages have a great opportunity ahead.

In today’s American healthcare system, employers can’t order Lipitor directly from Pfizer fortheir employees. Instead, employers and employees are forced to buy drugs through a middleman, the pharmacy benefits manager (PBM). Fingers have long been pointed in both directions to blame the other for the high cost of prescription drugs. The PBMs blame the drug manufacturers, and the drug manufacturers blame the PBMs, not unlike two children arguing on the playground. Eli Lilly, one of the world’s largest drug manufacturers, recently claimed that the average price increase on Humalog, its injectable insulin used to treat diabetes, has only been a modest 1% to 2% annually over the last five years. Tim Walbert, the CEO of small drug manufacturer Horizon Pharmaceuticals, said in a recent interview, that he expects the company's actual price increases to be 4% or less over the next year. PBMs, on the other hand, portray the drug manufacturers as greedy price gougers that fail to keep prescriptions costs under control. Anthem, one of the nation’s largest health insurers, works hard to convince its employer clients to leverage the buying process by joining Anthem's negotiated PBM program with Express Scripts Inc. (ESI) instead of negotiating a direct deal with a PBM. This month, however, Anthem came out swinging, accusing its partner ESI of more than $3 billion in overcharges – all of which were passed along and paid by clients. Who should the employers believe is at fault? Employers are aware of their prescription benefit bills. They clearly see that costs are escalating at an unprecedented rate. What can they do about the problem? How can they succeed if a buyer as large as Anthem failed for its thousands of employer clients? Today’s healthcare market only permits employers to buy the employee drugs from two different platforms. They can choose to buy through a PBM partnership (Anthem partnered with ESI) or a large benefits broker’s partnership with a PBM. Secondly, they can choose to work with a consultant for high-level advice and contract directly with a PBM. Regardless, the employer always gambles that it knows more about the PBM’s 120-page contract, pricing calculations and methodology than Anthem apparently did. It is a monumental sign of the times that Anthem publicly blamed ESI for its failure to contract effectively with the company, leading to overcharges for its clients. Our healthcare system today is broken by design – not necessity – and virtually everyone in the chain lacks the incentive to fix it. In fact, people are financially motivated to maintain the status quo. Until drugs can be purchased directly from the manufacturers for a direct discounted price, employers are trapped in our national prescription benefit system.

2015 was a year in which cyber criminals continued to innovate and expand their activities. As 2016 commences, look for insider threats to take center stage and for leading companies to respond. Meanwhile, cybersecurity and privacy issues will continue to reverberate globally. Here are a few predictions for the coming year: Cyber threats and elections– Threat actors targeted the websites and emails of presidential candidates in 2008 and 2012. Campaign websites continue to be used to raise money, making them targets for hacktivists and cyber criminals alike. Expect to see U.S. primary frontrunners and eventual nominees successfully targeted and to see at least one campaign undermined by a data breach. IoT spurs new rules– This will be the year consumers awaken to security and privacy concerns attendant to the Internet of Things. A major physical disruption — through the breach of a connected car or medical device or weak security in a connected toy — will spur regulators and consumers to demand action. Expect companies to spend untold amounts on testing and retrofitting IoT devices to meet hastily approved “privacy and security by design” rules. Insider threats get addressed– Insider threats — current or ex-employees with knowledge of, and access to, the corporate network — will take center stage in 2016. This will push human resources leaders onto cross-functional cybersecurity teams in many organizations. Expect leading-edge companies to invest in technologies that identify and, in some cases, prevent insider threats before they cause material damage. International data flows narrow– Uncertainty arising from the demise of the EU-U.S. Safe Harbor pact will disrupt international data flows. Expanding European nationalism, distrust of U.S. surveillance and subpoena power, the prospect of triggering huge fines for transborder transfers and political disputes over alternatives will drive some U.S. companies to avoid doing business with Europe altogether. Meanwhile, other multinationals will opt to segregate business functions geographically by building local cloud services and data centers that protect them from penalties. Boardroom shuffle– With concern mounting over cyber risks, organizations will evaluate fresh approaches to ensure boards are well-informed and comfortable making strategic decisions. Expect the appointment of specialist, non-executive cyber directors and the formation of dedicated cyber-risk committees (similar to audit committees) with independent advisers. Regulators may also pursue the concept of “cyber competent” people as a requirement for boards. Cyber insurance spike– Demand for cyber liability coverage will continue to rise. Expect premiums to also rise because of constantly evolving threats, immature risk models and an underdeveloped reinsurance market. This will affect retailers, healthcare providers, banks and others that are considered high risk. Uncertainty about the concentration of exposure will lead regulators to impose cyber incident “stress testing.” This is a way to model the impact of multiple, simultaneous incidents on cyber insurance carriers — and potentially stop those that fail these tests from writing new policies.

Blockchain, blockchain, blockchain! What does that mean for insurance? No one knows yet, but that doesn’t stop blockchain from being one of the hottest topics in the insurance industry right now. This week, I take a look at the direction this puck is heading. Hype or reality? Last September, the World Economic Forum published a report titled, Deep Shift – Technology Tipping Points and Societal Impact. The report is based on surveys with more than 800 executives and experts about new technologies and innovations. The point of the report is to identify deep shifts in society that result from new technologies. These include areas such as 3D printing, driverless cars, wearables and artificial intelligence. I was drawn to shift No. 16, simply called “Bitcoin and the blockchain.” By 2025, 58% of these experts and executives believed we would hit the tipping point for Bitcoin and blockchain. This was defined as: “10% of global gross domestic product will be stored on blockchain technology.” To put that into context, the total worth of Bitcoin today in the blockchain is about 0.025% of today’s $80 trillion global GDP. Also of interest, especially given that it looks like Tunisia will be the first country to issue a digital currency on a blockchain, shift No. 18 was called “Governments and the blockchain.” Here, almost three out of four in the survey group expected that “governments would collect tax via a blockchain by 2023." It’s a reality then! It’s certainly looks that way. And $500 million of venture capital money in 2015 can’t be wrong, can it? The prospect of a seismic shift on a par with the impact of the Internet is compelling. That explains all the attention, predictions and excitement about blockchain. But, if we use the evolution of the Internet as a benchmark, the development of blockchain today for commercial use is equivalent to the Internet in, say, the mid-1990s, at best. The debates on Bitcoin, on whether private or public blockchains will be used, on Sybase vs Oracle (oops, wrong century) are yet to play out. The ability of the Bitcoin blockchain to scale to handle massive volumes at lightning speed remains unproven. Now, just as it was in 1995, blockchain technology is at an embryonic stage. Still finding its way, it has yet to prove it is a viable, industrial-strength, large-scale technology capable of solving world hunger. That is why I am going to focus on the use case for insurance rather than the technology itself. (For one explanation of how blockchain works, go to Wired.) The smart insurance contract This is getting the most attention right now. The notion of automating the insurance policy once it is written into a smart contract is compelling. The idea that it will pay out against the insurable event without the policyholder having to a make a claim or the insurer having to administer the claim has significant attractions. First, the cost of claims processing simply goes away. Second, the opportunity for fraud largely goes away, too. (I hesitate here simply because it is theoretical and not yet proven.) Third, customer satisfaction must go up! One example being used to illustrate how these might work came from the London Fintech Week Blockchain Hackathon last September. Here, a team called InsurETH built a flight insurance product over a weekend on the Ethereum platform. The use case is simple. In the 12 months leading up to May 2015, there were 558,000 passengers who did not file claims for delayed or canceled flights in and out of the UK. In fact, fewer than 40% of passengers claimed money from their insurance policy. InsurETH built a smart contract where the policy conditions were held on blockchain. Using the Oraclize service to connect the blockchain with the Internet, publicly available data is used to trigger the insurance policy. In this case, a delayed flight is a matter of fact and public record. It does not rely on anyone’s judgement or individual assessment. It is what it is. If a delayed flight occurs, the smart contract gets triggered, and the payout is made, automatically and immediately, with no claims processing costs for the insurer and to the satisfaction of the customer. Building on this example and applying it to motor, smart contracts offer a solution for insurers to control claims costs after an accident. A trigger that there has been an accident would come to the blockchain via the Internet from a smartphone app or a connected car. Insurers are always frustrated when customers go a more expensive route for repairs, recovery and car hire. So, with a smart contract, insurers could code the policy conditions to only pay out to the designated third parties (see related article by Sia Partners). So long as the policy conditions are clear and unambiguous and the conditions for paying are objective, insurance can be written in a smart contract. When the conditions are undeniably reached, the smart contract pays. As blockchain startup SmartContract put it, “Any data feed trusted by a counterparty to release payment or simply complete an agreement can power a smart contract.” To understand this better, I asked Joshua Davis, the technical architect and co-founder at blockchain p2p InsurTech Dynamis, to explain. He said: “You need well-qualified oracle(s) to establish what 'conditions' exist in the real world and when they have been 'undeniably reached.'  An oracle is a bridge between the blockchain and the current state of places, people and things in the real world.  Without qualified oracles, there can be no insurance that has any relation to the world that we live in. “As far as oracles go, you can use either a single trusted oracle, who puts up a large escrow that is lost if they feed you misinformation, or many different oracles who don’t rely on the same POV [point of view] or data sources to verify that events occurred. “In the future, social networks will be the cheapest and most used decentralized data feeds for various different insurance applications.  Our social networks will validate and verify our statements as lies or facts.  We need to be able to reliably contact a large enough segment of a claimant’s social network to obtain the truth.  If the insurance policy can monitor the publishing or notification of our current status to these participants and their responses accurately confirm it, then social networks will make for the cheapest, most reliable oracles for all types of future claims validation efforts.” Is this simply too good to be true? Personally, I don’t think it is. Of course, a smart contract doesn’t have to be on the blockchain to deliver this use case. However, what the blockchain offers is trust. And it offers provenance. The blockchain provides an immutable record and audit trail of an agreement. The policyholder does not have to rely on the insurer’s decision to pay damages because the insurer has broken its promise to keep the client safe from harm. As the WEF report states, this is an “unbreakable escrow.” The insurer will pay before it even knows what happened. There’s another reason for going with the blockchain: cybersecurity! With the blockchain sitting outside the corporate firewall and being managed by many different and unconnected parties, the cyber criminal no longer has a single target to attack. As far as I’m aware, blockchain is immune to all of the conventional cyber threats that corporations are scared of. What happens when you put blockchain and P2P insurance together? In December, I published a two-part article on Peer 2 Peer Insurance (here are Part 1 and Part 2). When you put the P2P model together with the blockchain, this creates the potential for a near-autonomous, self-regulated insurance business model for managing policy and claims. Last year, Joshua Davis wrote an interesting white paper called “Peer to Peer Insurance on the Ethereum Blockchain." He presents the theory behind blockchain and the creation of decentralized autonomous organizations (DAO). These are corporate entities with no human employees. The DAOs would be created for groups of policyholders, similar to the P2P group model with the likes of Guevara and Friendsurance. No single body or organization would control the DAO; it would be equally “controlled” by policyholders within each group. All premiums paid would create a pool of capital to pay claims. And because this is a self-governing group with little or no overhead, any float at the end of the year would be distributed back among the policyholders. Arguably, this makes the DAO a non-profit organization and materially increases the capital reserve for claims costs. The big question mark for this model is regulation. There still is no answer to who will maintain the blockchain code within each DAO when regulations change. But, what does seem a dead certainty is that someone, somewhere is figuring out how to solve this. Blockchain offers the potential for new products and services in a P2P insurance model. It should also open insurance to new markets, especially those on or near the poverty line. For now, we must watch to see what comes from the likes of Dynamis, which is using smart contracts to provide supplementary employment insurance cover on Ethereum. Innovation will come from new players It has been my belief for some time that, in the main, incumbent insurance firms will not be able to materially innovate from within. As with Fintech, the innovation that will radically change this industry will come from new entrants and start-up players, such as: Dynamis SmartContract Rootstock Everledger (see previous article on Daily Fintech) Tradle Ethereum Frontier Codius (Ripple Labs) (update: Codius discontinued) This is particularly true with blockchain in insurance. These new age pioneers are unencumbered by corporate process, finance committees, bureaucracy and organizational resistance to change. Besides, the incumbent insurance CIOs have heard this all before. For decades, software vendors have promised nirvana with new policy administration, claims and product engines. So, why should they listen to the claims that blockchain is the panacea for their legacy IT issues? But,  that is a subject for another post … watch this space!

How do you eat an elephant? One bite at a time. What an old joke with a great premise. No matter how big the task, taking things one bite at a time makes any daunting task seem easier to swallow. Take the big data challenge. By and large, insurance companies and traditional businesses are used to relying on paper files, mailrooms, fax machines and call centers as incoming data streams. Designed to handle internal data collected from limited sources, the systems showed their first hint of trouble with an inability to incorporate emails and SMS text messages into policyholder and claim files. Inefficiently integrated best-of-breed IT environments further complicated the issue by putting data in silos and restricting access to users. Today, integration of systems has improved, and the move toward suites has enabled additional collaboration and data sharing benefits. However, big data, marked by its volume, velocity and variety, still has insurers stymied. And the move toward omni-channel distribution, the Internet of Things (IoT) and the connected world has amplified the need for insurers to incorporate even more data streams (both internal and external) into the risk assessment process. Cue the analytics software and reporting solutions, neither of which alone will make a legacy system more able to digest information from new data sources for rating and underwriting purposes. Meanwhile, the big data behemoth is growing into the proverbial elephant in the room. The problem is no longer just Incorporating this data; analyzing it and acting on it are equally incomprehensible. Buying data from traditional data sources –including motor vehicle reports (MVRs), historical flood data and credit reports on the property and casualty (P&C) side or health and medical records or test results on the life and health side is expensive. Furthermore, traditional data sources don’t allow insurers to pick and choose what may be most useful based on line of business, let alone product or policy type, geographic area or purchasing preferences. Alternative data sources such as social data exist, but the unstructured nature of the information makes it especially difficult for insurers to internalize. Consider that today’s consumers, who are both existing and potential new policyholders, are creating mountains of data that could contribute to better risk decision making, but right now that data doesn't make it to the underwriter’s desk. Social data is a silver bullet that can provide a predictive enhancement layer for traditional data sources, leading to more accurate underwriting and making insurers better able to select the best risks. By breaking the traditional data collection and utilization mold as it relates to risk assessment, insurers can integrate social data with core administration systems, making unstructured social data both accessible and actionable across all industry segments and lines of business. By capitalizing on the explosion of social data as a resource for better insurance risk assessment, insurers can improve underwriting, streamline the claims investigation process, decrease loss costs and potentially make insurance relevant to a whole new generation of insurance consumer. The scope of the big data problem is just dawning on insurers. In an effort to not bite off more than can be chewed at one time, insurers can start to consume and absorb big data by incorporating social data into rating and underwriting. But keep in mind that social data is just the first bite of a very important meal.

Workers’ comp insurers are applauding wearable tech initiatives as a potential way to monitor and reduce workplace accidents and injuries. But some observers are asking at what cost to privacy. AIG recently announced its strategic investment in tech startup Human Condition Safety (HCS). The start-up, a spin-out of Human Condition Labs, develops wearable technology that incorporates artificial intelligence, building information modeling and cloud computing to try to prevent workplace injuries. The company is targeting industries that hold the highest risk for workers, including heavy manufacturing, energy, warehousing and distribution, mining, transportation and construction. Because state laws require businesses to provide medical coverage, rehabilitation services and lost wages to injured employees through workers’ compensation programs, coverage in this area is one of the insurance industry’s largest product lines. By decreasing employee injuries and deaths through wearables, the industry believes it may be able to lower costs and increase profits for itself and its clients. Employers have many incentives to test these products in their work environments. But before concussion-detecting sensors in hard hats or fatigue-monitoring wristbands become widespread for workers, the tipping point may be that issue of privacy. Experts in workers’ comp say companies must first investigate employment legalities and may need to negotiate with labor unions. As a result, insurance defense law firms that defend workers' comp claims will want to pay close attention to emerging technology trends such as wearable tech and other similar innovations for the following reasons:

• Any safety initiatives that may reduce the number and severity of claims will reduce the number of claims that need to be litigated.

• There will be privacy implications for both employees and employers. When it comes to granting access to individuals’ behavior and health information, law firms need to familiarize themselves with the type and purpose of data being collected, as well as the protection of that data.

• Insurance carriers will continue to evaluate how new technologies might eliminate claims and reduce claims costs.

Wearable tech is still in its infancy because employees need to be convinced that the information collected for the safety of the greater good is worth it. Pilot programs underway may take a year or more before they are actually put into practice in workers’ compensation insurance programs, but insurance defense law firms will want to demonstrate an understanding of these technology trends to better serve the needs of insurers and their insureds. Read more news about the insurance defense market at www.insurancedefensemarketing.com.

In an increasingly digital world, the modern day update to the old real estate refrain of "location, location, location" may be "communication, communication, communication." It may also be true that companies are only as good in the customers' mind as the quality of their last transaction. That is particularly true when there are infrequent transaction, thus limited opportunities to make up for mistakes. In financial services, banks may have daily transactions with their customers, but insurance companies have far fewer transactions, many of which are associated with unfortunate events. Finding a way to make the most of these interactions can be important in retaining customers for the long term, in a world of low switching costs and lots of transparency. I was reminded of this when I got an email alert from my personal lines property and casualty carrier. Like much of the East Coast, we found ourselves dealing with a winter wonderland over the weekend, which included icy roads, snowy hillsides and falling trees. Many people lost power. In any event, the email alert reminded me that our carrier was aware of the potential implications coming from the storm and was ready to help. The message included various forms of contact info and was an opportunity to remind me of the benefits I can gain from the relationship. As my thumb moved to delete the message, I was reminded of the value of the coverage, and I realized this was one of the few messages I've gotten that didn't convey a billing increase or some other "bad" information. I had been thinking that the renewal would be coming in four months and that I probably needed to begin shopping for coverage to see what the market looks like, in anticipation of another premium increase. Getting the email reminded me that insurance is not just about rate but also about what happens when the world goes sideways. This realization leads back to a challenge – which is to say an opportunity – for carriers to start thinking differently about the form and frequency of interaction with customers. Different demographic cohorts may have preferences for different communication channels, but one likely universal truth is that individuals want to know that they have the opportunity to do the same thing that other "smart people" like them are doing. Amazon, of course, does a remarkable job with this. The retail brokerage investment company I deal with is nearly as good, and, as a consequence, there is little chance I will ever look to move assets. Conversely, the life insurance company I have had a relationship with for three decades only has a dialogue with me when sending documents required by regulation. In fact, when I have chosen to initiate dialogue with the carrier, it has proven to be both painful and incredibly time-intensive to get things done. The recent example with my homeowners insurance was a pleasant surprise. It might even cause me to slow the shopping process or be more accommodating of the rate increase, which is no doubt coming. All of this has potentially significant implications for the marketing and technology organizations for insurance carriers. Increasingly, the competition is not against other, similar companies. The issue really becomes how well carriers operate against a customer service standard that is being framed by retailers and financial institutions that are more transactionally intensive. As the lines between traditional industries and products families become blurred through the use of better technology, carriers will need to up their games considerably to maintain relevance.  Checking in on customers after an unfortunate event is a step in the right direction.

Successful businesses continuously draw on their strengths – and their people – for growth. How do you describe the strengths of your business now? How would you describe the strengths that you’ll likely need in a year? In a few years? And how do these strengths translate into the skills your people will need in the future? For most companies, the answers to these questions are always evolving, as disruption increases and the pace of business picks up. We’ve seen the recent evolution of companies’ capabilities -- like fast-food chains rolling out deluxe coffee-shop menus, or utilities delving into smart home appliances. A lot of organizations have solid processes for evolving their business strategies. But as sound as the development and approval process is, it often leaves out an important aspect: Can your people evolve, too? Most CEOs aren’t certain that theirs can. In our latest CEO survey, nearly 80% of U.S. business leaders say they’re concerned that a lack of key skills threatens their organizations’ growth prospects. This stat raises the question: Are some of these organizations taking their growth strategies too far afield, beyond their core strengths, in a desperate search for faster growth? In Strategy+Business Magazine, we recently wrote about how companies that deliver sustainable growth remain true to what they do best and take advantage of their strongest capabilities—what we call a capabilities-driven strategy. It takes a substantial effort. As we say in the story, “If you respond to disruption by changing your business model and capabilities system, you can’t dabble. You have to commit fully.” That level of commitment is only possible, of course, with the right people to step up and deliver on your company’s greatest strengths. Think of the potential talent issues at hand for so many businesses: How does a legacy technology company avoid disruption and commoditization? How can a fast-food chain turn up its café side of the business without trained baristas on hand? How can a utility amp up the tech-savvy talent needed to design Internet-and-data-fueled thermostats and security devices? They’ll all need to align their talent strategy with their business strategy. In our advisory work with clients, we are in frequent talks with companies that need to make these moves. And talent is at the top of the priority list. Before preparing to grow your strengths, think about the capabilities in your current ecosystem of people and where gaps might pop up:  People strategy, leadership and culture: Does our people strategy support our growth initiatives (and, more importantly, is there a strategy)? Is the right leadership development system in place, including a robust global mobility program? Will our culture support the execution that’s required?

1. Reward: Does our compensation and benefits strategy still fit? Is pay competitive? Are there areas to be restructured that could free capital for re-investment?
2. Talent acquisition: Do we need to pull in brand-new talent by strategically hiring from the outside or by making strategic acquisitions?
3. Organization design and operating model: Have we designed an organizational structure and operating model that have clear links between all our capabilities?
4. Change management and communications: Do we have the right program management structure and strategic change methods for execution? Do we know who the real information brokers are in the organization who will informally drive the change?
5. Technology: Do we have the right technology to support the kind of employee experience our people need? Are we leveraging workforce analytics to retain our top-performing people, and are we conducting frequent employee surveys to understand the pulse of the organization?

These are just a few of the talent areas that are important to understand. Odds are you won’t need to revamp all of them. But a carefully designed and innovative talent strategy underlies the successful evolution to get growing.  To read more details on the strategic changes you may need to make to stretch your growth, read the full article, “Grow from your strengths” in strategy+business magazine.

Why is this taking so long?! The challenge I hear echoed throughout the insurance industry is, “How do we speed up the claims process for customers?” Insurance companies often bear the brunt of frustrations from customers stressed out about delays. As we all know, processing claims takes time and patience to gather information, details, photographs and a myriad of other documentation. Getting the right information and accurate documentation takes even longer. Based on the volume of claims, resources and personnel can become stretched thin quickly. Despite all the efforts within organizations, it’s not uncommon to see claims departments contorting themselves like Gumby to get it all done. Insurance claims are stressful, and relying on customers to reliably and quickly provide information is a challenge -- even when it’s to their benefit. The problem becomes exacerbated following natural disasters or claims in geographic locations where companies have little to no footprint and limited resources to document and gather the information needed. In those situations, companies have to reallocate and sometimes relocate resources, which is expensive, time-consuming and a logistical nightmare. Saving time and improving data quality and accuracy are all key components to avoiding customer frustration and increasing customer satisfaction and loyalty. Traditional Challenges Meet Disruptive Solutions Recently, there’s been a lot of handwringing about the “sharing economy,” the “gig economy” and what it means for traditional lines of business and workers. Will the workplace as we know it change completely? As Tony Canas shared in his Insurance Thought Leadership piece, "What Will Be the Uber of Insurance?," the gig economy is hardly the end of the world, and the insurance industry is probably due for some disruption. What a number of traditional lines of business are beginning to discover is that the gig economy presents an opportunity to leverage the power of crowdsourcing to solve challenges, eliminate inefficiencies and even spark innovation within their organizations. Target and Instacart, GM and Lyft, are great examples of how large, traditional verticals are finding ways to integrate the gig economy into new products and services to attract and keep customers while increasing the bottom line. Now going back to one of insurance’s greatest challenges -- saving time and improving accuracy in the claims process, particularly when it comes to getting information such as photographs, records, police reports and inspections. These tasks sometimes feel like they can go on forever with a single claim as companies try to coordinate logistics with policyholders. What if there was an Uber for insurers? A service that could dispatch an objective third party with a smartphone to quickly take pictures and gather exactly the information needed in the claims process almost immediately? There is. Disruption Gets Good for Insurance Like Uber, WeGoLook is changing the way the gig economy is disrupting B2B by providing inspection and custom tasking services. Building on the strength of the gig economy and using the crowdsourcing model, WeGoLook has built a nationwide network of field agents that provides a nimbleness that is often buried alive in large enterprises. Here's how it works at one of the nation's largest auto insurance companies, where WeGoLook is incorporated into the claims-handling process:

• A claim handler places an order on a custom dashboard and chooses a service: (1) vehicle photos, (2) scene inspections, (3) salvage retrieval, (4) police record retrieval.
• A WeGoLook representative calls the onsite contact/policyholder to verify address/item information and schedule an appointment.
• The “Looker” arrives on-site and captures the data needed for the service/task.
• Data is submitted via the mobile WeGoLook app and reviewed by internal staff at WGL for quality assurance.
• The completed report is sent directly to the claim file.

Turning to the gig economy and its on-demand workforce is generating economic benefits and creating true efficiency. We’ve witnessed the process being replicated in companies both large and small and in a variety of categories. Since starting the company in 2009, I’m continually inspired by the creativity of entrepreneurs and how they’ve found new and inspirational ways to apply crowdsourcing. From crowdfunding, ridesharing, coworking and delivery services to even “pet Airbnb,” the gig economy marketplace is homing in on specific consumer and business needs and delivering.

Though the U.S. insurance industry is entering 2016 well-capitalized and profitable, too much capital capacity does not bode well for pricing as new capital flows in, seeking opportunities and driving pricing competition. Against this backdrop, insurers will be juggling priorities: modernizing their core systems, maintaining profitability within existing portfolios, accelerating their digital transformation and cultivating new products and services.

 

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