Do you know one of the large drivers of your insurance costs may be something you will never see listed as a line item by your agent or insurer? This is not a hidden fee the industry masks. It is not one you could ever find or have disclosed. It is the cost we all share for insurance fraud, which is the second largest financial crime in America (behind tax evasion).

In Iowa, the crime of insurance fraud happens when a person or business provides false information to an insurance company in a claim for benefits or in an application for insurance, with the intent to defraud the insurance company. Federal laws also contain provisions related to insurance fraud.

Before being appointed insurance commissioner, I do not recall thinking about insurance fraud much. Because of my experience in the insurance industry, I certainly knew that there was insurance fraud.  I recall stories I heard second- and third-hand of people who filed claims on boats that became ruined and then were insured after the fact, or of healthcare providers that billed health plans for procedures that never occurred. But I admittedly did not think about insurance fraud much.

People often think of these types of acts as victimless crimes, because no one is hurt except big insurance companies. However, we are all victims of these acts because fraud affects how much we pay for our insurance.

Insurance regulators see all types of fraud and know the cost is great. According to the Coalition Against Insurance Fraud, nearly $80 billion in fraudulent claims are made annually in the U.S. This figure encompasses all lines of insurance. The Federal Bureau of Investigation estimates that fraud costs each insurance consumer in the U.S. between $400 and $700 annually in increased premiums. These are calculable costs, which probably are far less than the total cost we all pay as insurance consumers, because a lot of fraud is not reported.

In Iowa, we would like to think that there is no insurance fraud. However, the statistics demonstrate a much different picture. On average, the Iowa Insurance Division receives 1.97 referrals each day of potential insurance fraud. From Jan. 1 to Sept. 17, 2015, my team processed 532 referrals with a reported financial impact of $3.7 million. However, only about one quarter of the 532 referrals reported what the financial impact was. Therefore, the $3.7 million is far less than the total financial impact.

Fraud prevention and elimination is a major effort for insurance regulators and insurance companies. It is an area where regulators and companies collaborate. In 42 states and the District of Columbia, fraud bureaus receive and review potentially fraudulent insurance claims. States have robust laws in place to protect consumers and the insurance marketplace from insurance fraud. Companies are required by state statutes to report insurance fraud.

Although these reporting requirements and laws help protect our markets and mitigate the cost of insurance fraud, it is far from eliminated. The need to mitigate or eliminate fraud presents huge opportunities for insurance companies and entrepreneurs to develop innovative tools to combat insurance fraud.

As we all now recognize, insurance companies are big data companies. They possess vast data on their policyholders. This puts insurance carriers in an evolving position to better help deter and eliminate fraud. With advancing data analytics, predictive modeling and simply more data, catching and possibly preventing fraud should become easier.

State insurance departments operate within tight budget constraints. In Iowa, we see innovation and technological developments as very helpful in aggregating data and identifying trends and issues. We are looking to these developments to help us increase efficiency in our investigations so we can combat insurance fraud and protect our consumers.

However, I have no false hope that all fraud will be eliminated. I have every belief that those who want to continue to do damage by committing insurance fraud will also be innovative and adapt to change. In other words, while technology and innovation will help find fraud, the scammers will soon figure out how to get around the new detection methods, too.

Fraud is a fact in every industry, and insurance is no different. However, I believe in the insurance industry there is more opportunity and incentive to commit fraud because of the value of the items insured and the amount of money in play. In addition, because insurance fraud is seen as a victimless crime, it may even be viewed as justifiable. Insurance regulators and companies are improving the capabilities to combat fraud using more technological tools. Credit card companies made tremendous strides in cutting down fraud, and insurance is working toward that goal, too. Innovators and companies that figure out how to succeed in this area will have lower prices and increased market share, and in the end that rewards consumers.

Distribution channels may be the most tangible part of most consumers' experiences with insurance. While the details of the product are obviously important, once the policy is purchased, most people file it away and forget about it. Many consumers couldn't find their policies if you asked them. And how many consumers do you think have actually read their policy?

In today's digital world, an insurer's success depends more on how customers interact with insurance than on the product itself. Increasingly, consumers' expectations are being set by the Amazons, Apples and Googles of the world than by similar insurers. Insurance has the unfortunate distinction of dealing in a product that most consumers only own because they have to, not because they want to. So, insurers start perceptively behind on the product side compared with Apple, Google and Amazon. People use/shop/buy from these places because they LOVE to, not because they must. The experiences that insurers deliver through their channels are no match for digital retail giants. At least, not yet.

What can insurers do?

As insurers, we can copy pages from the Google playbook and get better at using data and analytics to improve our distribution channels - the experiences we deliver and their effectiveness. Majesco's recent research report, A Path to Insurance Distribution Leadership: New Channels and New Data for Innovative Outcomes, provides some insights, drawing on the first-hand experiences of CIOs who shared their thoughts at a roundtable discussion this past June.

On the consumer side...

Insurers can use data and analytics to segment customers and develop the right products for their needs and, crucially, offer these products through the channels that best meet the preferences and needs of each segment. Predictive models can be used to further the precision with which to target prospects and customers for new purchases, cross-selling or increasing the stickiness of relationships. By tracking customers' paths across channels and collecting the data they've provided and consumed, insurers can ensure that consumers have a seamless, connected experience, no matter what path they take.

On the insurer side...

Insurers have a wealth of data! They just need to use it like Google! Insurers have details on sales, retention, costs and profitability that they can track down to the channel and individual producer level. While most companies have always used this data to track performance, they can go even further and get additional insights on their producers by applying the same techniques we just discussed for customer data - namely segmentation and predictive modeling. Segmentation allows insurers to more efficiently apply training/development resources and match producers to markets/customer segments that best fit their potential. Predictive models can be used throughout the producer lifecycle to forecast performance and future success of individual producers as well as to anticipate future commission and incentive costs. Analytics can also be used to steer prospects and customers to the sales and service channels that optimize business outcomes like new business, retention or lifetime value.

While the benefits of using data and analytics in insurance distribution are obvious and compelling, it is easier said than done. There are at least three components that must be solidly in place for any effort to have a chance to succeed. Companies should first identify their top priorities and opportunity areas and use these to define an overall data and analytics strategy. After the strategy is secured, the focus can turn to the acquisition of internal and external data that will be needed to fuel the analytics and modeling identified in the strategy. A distribution management system can be a key enabler here, by providing rich, granular data on channel and producer performance. At the same time, a sound data governance strategy must be put in place to ensure the quality, integrity and comprehensiveness of the data.

A final important consideration is how the analytics will be operationalized. Again, a distribution management system can play a key role here by being configured to gather and track the needed data and execute business rules created through analytics and models built by using the data.

The insurance industry may currently lag behind the Apples, Googles and Amazons of the world in both product engagement and distribution experience and effectiveness. Insurance, however, has an enviable amount of data, talent and technology at its disposal. Leading companies in our industry are leveraging these assets and may very likely be the next ones pointed to with admiration by consumers and other industries for their excellence in distribution.

What is common between Uber, Amazon, EE, Vodafone, Netflix and Progressive? All these companies have recently faced issues because of fraud.

In insurance, ghost brokers often target young drivers who want to cut the cost of their car insurance. Even though it is the ghost brokers who commit the fraud, the customers lose their cash and also risk a criminal record. And fraudulent claims from customers is a much bigger concern for insurers.

How big is insurance fraud?

The Coalition Against Insurance Fraud, America's anti-fraud watchdog, estimates that nearly $80 billion in fraudulent claims are made in the U.S. annually. Fraud increases insurance premiums, raises the cost of goods and services and boosts spending on investigation and fraud-prevention programs by insurers.

Fraud is one among the many business challenges that insurance industry is facing, as I have outlined in my previous blog. IDC estimates that insurers spend approximately $100 billion on IT, of which $3.3 billion is spent on information security and to counter financial crimes. Four of the five biggest property & casualty (P&C) insurers have formal anti-fraud programs.

Analytics to detect insurance fraud

Though application fraud, underwriting fraud and premium fraud are also significant threats for insurance business, claims fraud has been the industry's main focus. Major insurers started deploying new platforms to transform their claims management and minimize fraud. There is a spectrum of vendors from big IT players to niche analytics players that is providing claims fraud detection solutions. Zurich's UK general insurance business recently deployed end-to-end claims management transformation in association with a major insurance vendor, which minimizes losses associated with fraud.

Manual detection of fraud is next to impossible in the insurance industry, as it is costly and the sheer volume of claims is too high to handle for any insurance company. Also, the velocity, the variety and the veracity of data generated in the claims handling process made the use of statistical models based on sampling methods obsolete.

Because analytics integrates data from diversified channels and combines internal data with third-party data, effective fraud detection can be made possible. Many insurers have started using analytics techniques such as reporting, descriptive analytics, predictive analytics and prescriptive analytics to detect fraud. For example, CNA, the 8th-largest commercial P&C insurer, implemented analytics and predictive modeling to identify claims fraud. In two years of implementation, CNA reportedly saved $6.4 million, attributed to recovered or prevented fraudulent claims.

In this post, we will see how insurers have started adopting innovative technologies along with analytics to detect insurance fraud, beyond traditional analytics techniques.

Social network analysis

A recent AM Best survey found that more than half of the companies surveyed use social media. Life insurance companies appear to be most likely to use social media (65%). Company size is also a driving factor for social media. The larger the company, the more likely it is to use social media. Insurers have also started using social media data of policyholders to investigate and detect claims fraud. For example, if a non-smoker applicant lights up even occasionally and if his social pages has the traces of that information, it can be detected via social network analysis (SNA) tools. SNA tools scan large amounts of data from business rules, statistical methods, pattern analysis and network linkage analyses to uncover possibilities for fraud.

Drones

Insuring drones and wearables is going to be difficult for insurers, as there are a multitude of insurance liability and coverage issues. However, insurers have started using drones for their benefit by adopting them in claims adjusting. USAA appointed its first drone pilot for claims handling. With drones in place for claims handling, insurers would no longer need to climb dangerous chimney or to visit catastrophe sites. Also, the data analysis from drones is used to detect insurance fraud. A British company, Air & Space Evidence, detected a fraud case after Hurricane Katrina with the help of drones. A couple who claimed that their home in New Orleans was severely damaged by wind and water was found to be committing fraud when aerial photos showed that the house was intact.

Wearables

One third of the insurers surveyed are already using wearables for customer engagement, according to Accenture's 2015 technology vision report. We all know that disruptive technologies such as telematics and wearables (Oscar's Misfit, Fitbit and the Apple Watch) have also begun to be used for calculating customized premiums. What's new is, in Canada, data from a Fitbit wristband was used by a personal injury lawyer to support his client's case. Soon, these technologies will also be used to detect insurance fraud as the data collected from these devices will become fodder for criminal and civil litigation. Insurers now have many reasons to turn to innovative technologies and analytics to protect themselves against fraud.

Please share your thoughts on how you have seen innovative technologies and analytics helping insurers to combat fraud and transforming the insurance industry. In the next few blogs, I will try to explore analytics' role in the insurance industry in further detail.

It has been fascinating watching the progression of the forecasted path for Hurricane Joaquin -- what a perfect example this is of the importance of a modern data and analytics platform!

The big news is that the hurricane is not expected to make landfall on the East Coast of the U.S., but the new forecast depends as much on analytics and big data as it does on actual changes in the storm's path. The spotlight is now on the European Center for Medium-Range Weather Forecasts (the European model) vs. the Global Forecast System (GFS) run by the National Weather Service. The New York Times has a great article discussing the reasons for the changing forecast and, crucially, the differences between the two models.

This is an excellent lesson for insurers to see the power of modern data and analytics in action and what happens to models when they are not using the advanced capabilities available today. Fortunately, investment in analytics continues to rise, as detailed in SMA's recent report, Maturing Technologies in Insurance. Almost three in four insurers are increasing their investment in analytics over the next three years. 48% of P&C insurers, in fact, are planning to increase their analytics investments by more than 10% annually during that time.

In recent conversation with key CAT modelers, we have learned that they are working to use their weather data and insights at a more granular level than ever before in coming releases. The advance of these CAT model tools creates opportunities for insurers in search of better predictive capabilities on weather events. An upgrade to the GFS model has been planned by the end of the year, taking advantage of soon-to-be-available computing capacity. Once it is up and running, it will be interesting to see how the upgraded GFS model compares with the current European model, especially when applied to future CAT events.

Insurers can take the continuing story of Hurricane Joaquin as a wake-up call -- not only is analytics a critical area for investment, but the quality of the information and the computing capacity available have a major impact on how useful predictive modeling can be.

Unless you've been frozen in carbonite for the past 15 years, you're probably aware that the insurance industry is facing two imminent HR crises:

1. A Brain Drain- Twenty-five percent of the industry workforce is expected to retire by 2018, according to Insurance Business America. But wait! It gets better. In addition to filling vacancies caused by attrition, companies will have to recruit workers to staff the 200,000 new jobs the Bureau of Labor Statistics expects the industry to create by 2022.

2. An Enthusiasm Gap- Even today, the industry is struggling to attract young talent. According to a 2012 study by the Griffith Insurance Education Foundation, only 5% of Millennial students describe themselves as "very interested" in working in the insurance industry. When it comes to considering a career as a claims adjuster, the "Y" in Generation Y stands for "yawn."

Two Problems, One Solution

I believe new and emerging information technologies will play a critical role in overcoming both the Brain Drain and Enthusiasm Gap.

Many young people would rather view an endless loop of piano-playing cat videos on YouTube than work as a claims adjuster. Or so they think...

With the imminent arrival of usage-based insurance, there is a lot of excitement developing in the underwriting sector, and I believe the same level of enthusiasm will also attach to technologies such as cognitive analytic computing. These new technologies are innovative. They're challenging. They're fun.

More important: Technologies like cognitive computing will change the very nature of the claims adjuster's job - from one that requires a fair amount of dull administrative tasks to one that places much more emphasis on analysis, creative problem-solving and people skills.

Skills Will Trump Experience

In the future, we'll see fewer claims adjusters in the workforce, but this smaller pool of talent will be trained in a different ways and in different skillsets than previous generations. Tomorrow's adjuster will not possess - and will not need - the wealth of experience, knowledge and (to some extent) skills as today's adjuster. Instead, new technologies will provide them with the tools to instantaneously obtain that knowledge, experience and skill.

The future adjuster won't be trained in many of the manual and repetitive tasks his predecessor had to learn. Tasks with little or no value will be automated. Rather, the adjuster will have to be tech-savvy. She will have to know how to analyze information because, even with the help of cognitive computing, she'll still need to analyze reams of information - data related to vehicles, collision-avoidance technology and event data recorders.

She will also have to be familiar with product liability issues. When self-driving cars become commonplace, adjusters may not be dealing with losses involving driver fault. Instead, they may encounter instances in which the vehicles malfunctioned - product-liability claims - and will have to know how to process claims with vehicle manufacturers and the suppliers of advanced collision-avoidance systems. Future adjusters will need to tap skills and knowledge that their forbears never dreamed of.

Tech-Savvy and People-Savvy

Future adjusters will have to be much more tech-savvy, even though they'll be responsible for performing fewer tasks. At the same time, they'll need superior people skills to ensure that customer service isn't lost amid increasingly automated processes. Although the industry will automate many tasks, and many customers will be pleased with this development, customers are already demanding higher levels of customer service. The "personal touch" isn't just a side benefit: It's often the main driver behind a consumer's decision to choose one carrier over another.

So adjusters of the future will be people who are very customer-oriented, very tech-savvy, very intelligent and very skilled at interpreting mountains of data. They won't have to perform a lot of clerical and administrative tasks. Automation will virtually eliminate that work. But they will have to know how to optimize new technologies to deliver superior customer service and the best possible outcome to every claim.

We in the claims industry have to find ways to inspire, energize and interest young people in careers as claims adjusters. Currently, this isn't a vocation many Millennials seek. With the help of new and emerging technologies, however, we can be seen as a fun, innovative and inventive sector that adds value to the lives of ordinary people. After all, getting into accidents causes a great deal of stress for most vehicle owners. For that reason, our industry needs adjusters who are adept at a wide variety of claims-processing and customer-service challenges.

There is a silent epidemic taking a toll on the American workforce. This illness affects 9.5% of the adult population and is to blame for 200 million lost workdays each year. Those lost workdays cost employers an estimated $17 billion to $44 billion. Despite these staggering statistics, only one-third of those affected by this common illness will ever seek professional help. What is this cause of disability, absenteeism and productivity loss? Depression.

There are many reasons an employee may keep concerns about his mental health private. Stigma, fear of losing his job and lack of awareness can prevent an individual from seeking help. Despite these hurdles, there are strategies employers can implement to not only connect their employees with the help they need but to also improve productivity. Employers that address mental health issues have happier, healthier employees and see increased productivity and profits.

Confidential online depression screenings are a proven way to reach those in need and help direct them to appropriate assistance. For more than a decade, the WorkplaceResponse program has worked with organizations to address mental health issues in the workplace. Developed by the nonprofit Screening for Mental Health, WorkplaceResponse is a mental health education and screening program that easily integrates into existing employee assistance programs or enhances existing wellness initiatives hosted by human resource departments or employee assistance programs.

The program offers screenings for common mental health concerns, including depression, bipolar disorder, generalized anxiety disorder, post-traumatic stress disorder, eating disorders and alcohol use disorders. Screenings are anonymous and engage employees in becoming active participants in their own well-being. Upon completion of a screening, employees are provided with immediate results and linked back to employee assistance program (EAP), local or company resources.

Health promotion programs can also have positive effects in the workplace. These programs serve as excellent tools to increase mental health awareness and educate workers on the signs and symptoms of depression. Managers and employees who can identify these symptoms can assist at-risk individuals with receiving the help they need.

National Depression Screening Day (NDSD), held annually on the Thursday of the first full week in October, is dedicated to raising awareness and screening people for depression and related mood and anxiety disorders. NDSD is the nation's oldest voluntary, community-based screening program that gives access to validated screening questionnaires and provides referral information for treatment.

Oct. 8 marks the 25th year of the revolutionary campaign. This milestone allows for opportunities to begin the conversation about mental health in the workplace. Identifying workplace risk factors, taking action to reduce employee stress and initiating organizational wellness programs can be productive first steps.

Employers can make a difference by encouraging employees to take a quick, anonymous mental health assessment at http://helpyourselfhelpothers.org/ or by launching a 25-day wellness challenge. To encourage employees to take care of their mental health, a 25-day wellness challenge provides ideas and actions individuals can take to relieve stress, boost mindfulness and foster healthy behaviors. Examples include walking, cooking with family and taking a break from technology. Simple methods like the challenge can help increase awareness in the workplace.

It is time to address workplace depression. Effective screening tools are available, and treatment works. The early detection and prevention of mental health conditions can improve the lives of individual employees as well as the health of an organization.

These remarks were delivered at the United Nations Sustainable Development Summit on Friday, Sept. 25, 2015.

Good afternoon, excellencies, ministers, ladies and gentlemen. My name is Mike Morrissey, and I'm president and CEO of the International Insurance Society. We are a nonprofit research and idea exchange organization representing life and non-life insurers, as well as regulators and risk management scholars, from nearly 100 countries.

Professor Shawn Cole of Harvard, a world-leading expert in development economics, has said, "Risk is one of the greatest challenges faced by poor people around the world."

This can be seen as the risk of flood, earthquake, hurricane or cyclone. It can also be experienced as crop failure, livestock mortality, illness or death of a family member or in food or water security. The ability to manage and finance risk is therefore a key element in the development of societies, and thus in alleviating poverty and hunger.

The insurance industry has played a key role in this effort by expanding access to risk protection and risk management advice, for centuries in the developed world, and now very broadly in Sub Saharan Africa, South Asia, Latin America and in other less-developed areas. With nearly one billion people living on about one U.S. dollar a day, this form of social protection is vital, since the poor are often those most exposed, just one loss event away from calamity for themselves, their families and their possessions.

At the UN Insurance Sector Summit, which took place at the ECOSOC Chamber here last June, I sat next to Secretary General Ban Ki-moon as he complimented the insurance industry for its vital role in mitigating and reducing risk and thereby raising living standards where help is needed most. But he also called for the industry to do more in the future, and so the industry continues to innovate in ways that offer more protection for more people, and makes a major contribution to reducing poverty and hunger.

A few examples are worthwhile to make the insurance industry's role clear.

German Insurer Allianz is a world leader in microinsurance, the protection of low-income people. Allianz provides crop, livestock and other coverage for 125 million farmers in India and China, and participates in the Africa Risk Capacity pool to insure governments against natural catastrophes. Peruvian insurer La Positiva has tailored agricultural coverage for rural farmers who have limited access to communications and healthcare. A new Bermuda-based venture called Blue Marble Microinsurance has developed savings and protection products, among them some linked to poor women's key life-cycle triggers.

These efforts, and many more like them, link the worlds of finance and development, expanding access to protection from the unique set of risks faced by the world's poor. Through our industry's efforts, and through public private partnerships with governments and international institutions to capitalize on both the risk assessment and long-term investing capabilities of insurance organizations, the sustainable development goals of ending extreme poverty and hunger can and will be achieved.

Step back and consider how simple workers' comp should be.

If every professional from all corners of our industry took time away from their narrow daily focus and considered the big picture in general terms, we might all experience a collective re-setting of the communal respect we should carry for the essence of workers' comp's intent.

One evening in 2005, my daughter, then six years old, was "helping" me do work in my office. (As my good clients know, on any given day Risk Acuity might run a robust second or third shift!) I was reconciling a monthly pile of client first-reports, and she was making sure my finished stack was in date-order. At one point, she decided to create a report of her own on a blank paper, mimicking the lines, boxes and random numbers.

When she showed me her finished product, I was puzzled. In one area, she wrote "Jhon Elbort." Near the top, she wrote "Broke hes legs." Every other line was either blank or filled with a scribble. I asked if she wanted to know the kinds of information she could make up for other boxes (like the date, doctor's name, birthday, address, etc.). She replied, "If he broke his legs, why do you need to know anything else?"

If only every aspect of our industry had such simple respect for this essence. In a perfect world of integrity, we would all uphold our ends of the bargain. Imagine employers, claim providers, doctors and employees making honest efforts to support what the system should be and make reasonable expectations about the limits of what the system owes. This would obviate most of the other tactical, legal and profit-driven "busy work" we all do that has no direct impact on an injured person's recovery.

We should never forget that WC is all about the employee experience.

Needless to say, Jhon Elbort's first report remains framed on my wall.

The black box used for telematics makes it possible for insurers to enrich their auto insurance value proposition by adding services built upon data. These services represent a way of de-commoditizing the car insurance policy and are also a source of income. In the medium/long term, such services will become more and more important as the risks covered by car insurance decrease because of technological progress on security and connected cars. These services also increase the number of interactions with the client, creating a richer connection and improving customer satisfaction. This is true both for Italy and at an international level.

There are three macro categories when it comes to services:

1. Informational services related to the UBI (usage-based insurance) policy, typically delivered through a smartphone app or a dedicated area on a website. These services concern: quantification of pricing adjustment at the moment of the contract renewal based on previous driving behavior; coaching and advice regarding the style of driving; advice on how to save more while behind the wheel; "gamification" that allows a comparison of one's own driving style with that of friends. A Canada-based company called Intact and Discovery, which is based in South Africa, can be considered among the most advanced examples that currently use this type of approach. According to recent data made available by a telematics service provider, four out of five clients owning a telematics insurance policy check put their driver score at least once a month. Furthermore, there is evidence that remote coaching programs can lead to concrete results in modifying driving behavior.
2. Product offers related to the client's automobile -- like Discovery has done in South Africa with the Tires or like Allstate Rewards -- or insurance policies sold "on the go" using data collected from the boxes installed on cars (a process known as reverse geocoding). Tokio Marine (Japan-based) and telephone operator NTT Docomo have shown that impulse "cross-selling" of low-value insurance coverage is a valid approach.
3. Services related to the customer journey in a connected car.

There is a vast array of services that can be developed within the connected car ecosystem, and the technology is moving fast. There are start-ups and innovative business models popping up everywhere around the world. To cite just a recent Italian example, there is WoW -- a digital wallet created by CheBanca! -- which has integrated a parking payment service called Smarticket.it.

Services could be observed on three stages of the customer journey:

• While behind the wheel. Services include bad weather alert, speeding alert, dedicated concierge and even an alert that is activated if the car leaves a pre-defined "safe area" (family "control" options for young or old members of the family). Discovery's approach in this field is highly relevant and includes an anti-theft service that signals to the client if the driver has a different driving style compared with the usual one;

• In case of an incident. Here the Italian market is considered to be an international best practice because of how it has perfected the usage of telematics data to manage services. Many companies here have invested in creating a valuable customer experience by involving partners specialized in assistance. The solutions provided in case of an incident start with contacting the client and -- depending on the gravity of the event -- continue with sending help directly and taking care of all the logistic and case management problems that can arise. Innovation is now focusing more on simplifying the FNOL (first notice of loss) procedure. One such example is Ania, Italian Association of Insurers, which has announced for 2016 the launch of an app for FNOL.

• While the car is parked. Beyond locating and recovering the car in case of theft, the blackbox can send alerts when the vehicle is moved or damaged in any way. This also allows a driver to locate a parked vehicle. There are three Italian companies - TUA, Cattolica and Cargeas - that have recently launched innovative value propositions for parked cars. One of the best practices is the street sweeping alert by Metromile.

In this new service ecosystem, insurers will find themselves forced to co-compete (that is collaborate and compete) with different actors that are active in the connected car sector.

Italy is at the moment one of the most advanced countries in terms of service development connected to telematics; they have become mainstream, not just a niche. At the end of 2014, telematics represented 15% of motor insurance sales and renewals in Italy, reaching 30% in some regions, as underlined by a recent analysis by IVASS.

This creates the perfect conditions for the consolidation of approaches driven by insurance companies.

Before explaining the basis for the strong statement in the headline, it's necessary to redefine what "solve" means. After all, we live in a world where the myth of impenetrability was long ago debunked, where there are no silver bullet technology solutions and where continued cyber events are as certain as the sun rising tomorrow. Anybody who knows anything about cyber is likely thinking, "It's impossible to solve cyber risk!" But what if we redefine "solve" as: "to provide security leaders and firms with an accurate picture of their cyber exposure, with the ability to effectively manage the risk and with resiliency when an event happens."

With that as the definition, why is the insurance industry best-positioned to solve cyber? It's a matter of insight and the scope of that insight. The insurance industry is the only industry that has the ability to correlate controls and protective actions (insight gained during the underwriting process) with losses resulting from the failure of such controls and protective actions (insight gained by paying claims), thus occupying a front-row seat to what is working and what is not. Most importantly, because the industry serves this function across all classes of risk, across all industry verticals and on a continuous basis, the insurance industry should be the primary source of actionable cyber risk management insight. No technology or network appliance can do that, and even the best assessment is merely a snapshot in time.

Let's drill a little deeper by considering each element of the new definition individually.

First, the ability to provide firms with an accurate picture of their risk is a critical step toward managing it. An insurance-linked approach can help firms understand the context of their cyber exposure and do it in a way that is both easily comparable and lays a foundation to capture loss and claims data. We recommend starting with four categories of loss: 1^st party financial, 3^rd party financial, 1^st party tangible and 3^rd party tangible. Then drill deeper within each category, with subcategories tied to specific types of insurance coverage and areas of un-insurability -- an incredibly helpful data point itself (meaningful areas of un-insurable cyber risk should see an overweight deployment of controls). Ultimately, this approach paints a complete picture of the cyber risk spectrum and then facilitates the easy utilization of claims data for exposure modeling and benchmarking.

Next, the ability to effectively manage cyber risk certainly trumps the other two elements based on what is most sought by the security community right now. I've often described the job of a cyber security leader as akin to putting together a puzzle in which one-third of the puzzle pieces are missing, another third don't fit together and, to make matters worse, the board changes every 30 minutes. This characterization of cyber will probably never tire -- hence the need to redefine "solve" -- but this is the very challenge that the insurance industry is best positioned to attack. Why? Because the insurance industry underwrites the cyber security programs of firms of all shapes and sizes on a daily basis and pays claims resulting from the failure of those cyber security programs on a daily basis. If information on both fronts can be appropriately harnessed and correlated in something akin to real time, the underwriting process itself should serve not as an interrogation but rather as an actionable intelligence session for firms to understand how to best evolve their cyber programs. And why stop there? Security leaders should welcome the opportunity to call their insurance companies anytime for an update on the risk climate and for guidance with strategic planning.

Finally, the ability to provide resiliency. This is where insurance coverage itself comes into play -- as it is the only type of control that can reduce, or even eliminate, the cost of an event. The ability to survive is the true measure of resiliency, so while a robust set of controls, policies and procedures wards off antigens and increases the likelihood of surviving, the financial resources to pay for an event will be most meaningful in determining the firm's and security leaders' fates.

Imagine the post-event press conference if the insurance industry solved cyber: "Ladies and gentlemen, we've experienced a cyber event. It will likely be large but nowhere near catastrophic. We've been planning accordingly; we knew what our exposure was, and we have been continually updating our defenses in accordance with best-in-class recommendations from our insurance partners. We can validate that by virtue of the fact that we have been able to maintain a comprehensive insurance program that will cover all of our costs as well any claims against us. The organization will emerge whole."

The insurance industry has answered the challenge before. Decades ago, insurers started to correlate the causes of events like fire and boiler explosions and subsequently provided invaluable risk-engineering insight to firms. Nobody can dispute the relevance of the industry for minimizing property risk. While some characteristics of cyber are definitely unique, all of the foundational pieces are in place for the insurance industry to do the same here. If the industry succeeds, cyber can be solved.