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Lemonade Really Does Have a Big Heart

Twelve months ago, Lemonade opened for business. For me, it marked the start of a new chapter in the history of the insurance industry. To coincide with their launch, I posted this article after speaking with CEO and co-founder Daniel Schreiber. The headline was “insurance will never be the same again!”

Of course, it was easy for me to make such a grand pronouncement 12 months ago, on the day that Lemonade hit the street. At that time, they had no customers, had not written any insurance and had certainly never paid a claim.

One year on, and Lemonade is up and running. Was I right to say insurance would never be the same again? I caught up with Daniel again to find out!

Disruptive Innovation

First things first, let me set some context. A question I get asked a lot by insurers and industry folk is, “why should we be interested in what Lemonade are doing?” It’s a great question and exactly what they should be asking. (I also point out that they need to be really interested in what ZhongAn is doing, as well).

To massively over-simplify and paraphrase Clayton Christensen, Lemonade has brought simplicity, convenience and affordability to a marketplace where the existing offering is complicated, expensive and inaccessible.

This is why the incumbent insurers need to take note when Lemonade pays a claim in three seconds. Otherwise, they could end up like DEC. Once the market leaders in minicomputers, DEC dismissed the rise of PCs, only to watch helplessly as IBM and Apple ate their lunch with personal computers.

Or Kodak, the inventor of digital photography. The company was too wedded to an outdated business model that relied on people printing their photos. That was until it was too late, and Kodak went from being the world’s fourth largest brand to bankrupt in less than two decades!

Now, it might have taken about 15 years for the demise of Kodak and about 10 for DEC to wake up and smell the coffee. The point being that disruptive innovations don’t take hold overnight; they need time to gain traction and build momentum.

But in this digital age, this speed of change is increasing. This is the key characteristic in the World Economic Forum’s definition of the 4th Industrial Revolution. It took Google just five years to hit a $1 billion in revenues. And Amazon only four!

Just think about this for a second. A decade ago, we didn’t have the iPhone, the iPad, Kindle, Uber, AirBnB, Android, Spotify, Instagram, WhatsApp, 4G. Could you imagine life without these now? Could you conceive that insurance is going to change and for the better?

You trust me, and I will trust you

There is another reason why incumbent insurers should be watching Lemonade very closely. It has addressed the fundamental issue with insurance and customer perception, which is trust, behavior and the conflict of interest.

There’s a ton of research and data that shows customers don’t trust insurers. And for good reason.

Insurers make the product complicated by using fancy jargon that Joe and Josephine Bloggs can’t understand. Insurers get paid up front and then create hurdles and barriers when the customer rightfully asks the insurer to do what they’ve already paid them to do.

And worse, the customer has to prove they are not a liar to the insurer’s satisfaction before a penny is paid out.

“Insurance fraud has become a self-fulfilling prophecy for incumbent insurers,” Daniel said. “They don’t trust customers to be fair and honest. This drives their behavior toward customers. And guess what, customers respond accordingly. Which justifies the insurer’s behavior in the first place. It’s a vicious circle that neither side can break.”

See also: Lemonade’s New Push: Zero Everything  

Lemonade’s virtuous circle

This conflict of interest doesn’t exist in the Lemonade business model. By operating as a tech platform that is also an insurance carrier, Lemonade has separated cost of operations from the pool of risk capital. It has also raised the bar when it comes to total cost of operations at 20% GWP.

Lemonade don’t profit from non-payment of a claim (in the way an incumbent insurer does). The company starts by trusting customers to make honest claims. Which is why Lemonade pays out straight away, with around a third of claim payouts fully automated. No human intervention at all.

Lemonade accepts that there are a few bad apples but works on the premise that most of us are fundamentally decent people.

It is usually at this point that the diehards and old laggards of the insurance industry start throwing fraud and loss data at me. Citing decades of data that proves Lemonade will eventually crash and burn under the weight of inflated and illegal claims.

My response is always the same “hands up everyone who is a bad person.” Of course, no hands go up because the vast majority of us are decent, respectful, honest people.

Which is why Lemonade has now had six, yes ,SIX, customers who have handed claims payouts back.

Just think about this for a moment.

A customer makes a claim (in seconds), gets paid (immediately), finds the situation has changed (later), realizes he got paid too much (oops!), then gives the payment back (you kidding me?).

Could the customer’s behavior be directly related to Lemonade’s behavior?

Yes, certainly! You only have to look at customer behavior at Grameen Bank in Bangladesh to see that trust can be relied  upon. Here, unsecured personal loans are repaid on time without the need for credit scores and debt collection agencies.

You don’t have to take my word for it, either. Hot out of the oven is this video of Lemonade customers in New York.

So, what’s the story, one year on?

Lemonade has been true to its word on the subject of transparency.

Throughout the year, the company has published its numbers, warts and all, for everyone to see. Building and maintaining trust is fundamental to Lemonade’s business model, and this starts with being open and honest.

Daniel has shared with me the latest numbers, and they are very impressive. I won’t repeat them here, because I know the team will be posting them all shortly in the latest Transparency Chronicles. They’re proud of the numbers, and rightly so.

See also: Lemonade: World’s First Live Policy  

All I will say is that Daniel and the team have steered a considered and thoughtful course in their first year. They could have chased the numbers, as many first year startups would do, only to regret the quality of business they end up with.

But Lemonade’s team has stuck to their knitting, have impressive growth numbers, a quality customer base completely aligned to the brand and are now licensed in 18 states (with more to follow).

Our job has only just started,” Daniel said. “Over the next year, we will continue to make insurance easier and better for our customers. One area we’ve started to look at now is the underlying insurance language and the products that form the heart of all insurance.”

Are you surprised?

You shouldn’t be! Lemonade is a highly professional startup and will no doubt become the definitive case study for exactly how “it” should be done.

But has this surprised Daniel?

“There are two things that have surprised us this year,” Daniel told me. “First, the extent of the warm reception we’ve received across the industry and from customers. We hoped customers would like us, but we never took for it granted.

“After all, you can’t beta test a new insurance company. The MVP (minimally viable product) approach simply doesn’t apply to insurance. It’s regulated and has to be the real deal from the get-go, right first time. So, for us, having customers put their faith in Lemonade from Day One has been very satisfying.

“The second is that our faith in humanity and behavioral economics has been affirmed. There will always be people who want to game the system, but on the whole, all our expectations about customer behavior have been exceeded.

“Who would have thought we would have six customers who gave their claim payouts back. That is very gratifying and also humbling for us. And gives us encouragement to continue doing what we are doing.”

Lemonade is live; insurance will never be the same again!

For me, I’m convinced. Historians will look back to Sept. 21, 2016, the day that Lemonade opened for business, as a watershed for the insurance industry.

Which means, of course, that the key question now is, who among the incumbent insurers will provide the Kodak moment? The one who simply missed that the world had changed until it was too late.

Huge Cyber Blind Spot for Many Firms

There is a large blind spot most organizations fail to recognize and protect—the mobile network.

Today, employees use their mobile devices to access business-related information more than ever. According to recent Business Wire research, 72% of organizations have adopted Bring Your Own Device (BYOD) policies to some extent, and an additional 9% plan to do so in the coming year.

Mobile devices have practically become additional endpoints in organizations’ networks, allowing access to the same resources and making the risk of a mobile breach as severe as any other. While the risk from mobile devices grows, in most cases the administrators have only partial control over them, and slim protection.

Related infographic: Convenience of mobile computing engenders risk

The main solutions most organizations implement to manage their mobile network are MDMs (Mobile Device Management systems) and EMMs (Enterprise Mobility Management systems). Both solutions strive to provide organizations with a clear and comprehensive view of their mobile network, as well as enforce security policies. The main difference between the two systems is additional application management features incorporated in EMMs.

MDMs and EMMs provide crucial value for organizations, because, unlike computers, which are usually chosen and provided by the company and thus easy to manage and control, mobile devices vary greatly in many ways, such as manufacturer, model, carrier and even operating system and security patch date. Providing a consolidated view of the network is the first step toward protecting it. In this mission, however, MDMs and EMMs fall short.

MDMs and EMMs can be compared to computer firewalls—providing a holistic view of the network and allowing basic application control, but by no means sufficient to protect any organization in today’s threat landscape.

Mobile malware also is on the rise, both in Android and iOS ecosystems. We have witnessed it grow in spread, variety and sophistication, following the steps of PC malware in many areas. Mobile malware can even overcome and break into secure containers by rooting the devices. Just like in the PC world, to defend against the emerging cyber threats in the mobile world requires advanced protections such as sandboxes and endpoint protections.

See also: How to Keep Malware in Check  

While regular endpoint solutions can’t protect mobile devices, there are dedicated solutions that can. The new generation of mobile security solutions can identify and block threats not only by using signature-based detection, but also by applying advanced dynamic-threat-prevention techniques, which can detect both known and unknown malware. Because mobile threats are real and continue to evolve, organizations must do the same to protect their networks.

Organizations need consistent coverage of cybersecurity policies across their infrastructure and end-user devices, including smartphones and tablets. Even more so, organizations ought to implement advanced, up-to-date solutions to fend off the ever-growing stream of sophisticated mobile malware. Why spend millions of dollars defining policies and implementing controls on other systems and devices but leave the primary end-user device that contains the same kind of sensitive information unprotected from threats?

This article originally appeared on ThirdCertainty. It was written by Michael Shaulov.

Ransomware Threat Growing for Phones

There’s been a scary increase in successful ransomware attacks against large organizations this year. Specifically, hospitals have found themselves at the mercy of hackers who demand ransom payments to unlock critical system files. Recently, there have been signs that these criminals have moved on to universities, too. The University of Calgary admitted to Canadian media last month that it paid a $20,000 ransom “to address system issues.”

But individuals have something new to worry about. A new report from Kaspersky Lab says its detection rate for mobile ransomware—malicious software targeting smartphones and demanding ransoms—quadrupled in one year.

It’s easy to see why phone ransomware would work. Consumers fly into a panic when their phone battery dies; imagine what it’s like to see a message saying your phone is locked, and a $100 payment is required to unlock it.

See also: Ransomware: Your Money or Your Data!  

Kaspersky says some ransomware criminals simply require that mobile victims type in an iTunes gift card number to free the device. I’ve written recently about the increasing use of Apple card payments for fraud.

A combination of easy, anonymous payments and off-the-shelf copycat software tools makes mobile ransomware a new and potentially dangerous threat, both to consumers and to the companies that employ them.

The numbers tell the story: From April 2014 to March 2015, Kaspersky Lab security solutions for Android protected 35,413 users from mobile ransomware. A year later the number had increased almost fourfold to 136,532 users.

It’s unclear from the report how users encounter mobile ransomware in the first place, though at least some get it when visiting porn sites and are tricked into downloading and installing malicious software.

“The extortion model is here to stay,” Kaspersky says in its report. “Mobile ransomware emerged as a follow-up to PC ransomware, and it is likely that it will be followed up with malware targeting devices that are very different from a PC or a smartphone. These could be connected devices: like smart watches, smart TVs, and other smart products including home and in-car entertainment systems. There are a few proof-of-concepts for some of these devices, and the appearance of actual malware targeting smart devices is only a question of time.”

See also: Ransomware: Growing Threat for SMBs  

Kaspersky offers these tips to consumers:

  • Back-up is a must. If you ever thought that one day you finally would download and install that strange boring back-up software, today is the day. The sooner back-up becomes yet another rule in your day-to-day PC activity, the sooner you will become invulnerable to any kind of ransomware.
  • Use a reliable security solution. And when using it, do not turn off the advanced security features, which it most certainly has. Usually these are features that enable the detection of new ransomware based on its behavior.
  • Keep the software on your PC up-to-date. Most widely used programs (Flash, Java, Chrome, Firefox, Internet Explorer, Microsoft Windows and Office) have an automatic update feature. Keep it turned on, and don’t ignore requests from these applications for the installation of updates.
  • Keep an eye on files you download from the internet, especially from untrusted sources. In other words, if what is supposed to be an mp3 file has an .exe extension, it is definitely not a musical track but malware. The best way to be sure that everything is fine with the downloaded content is to make sure it has the right extension and has successfully passed the checks run by the protection solution on your PC.
  • Keep yourself informed of the new approaches cyber crooks use to lure their victims into installing malware.

More stories related to ransomware:
Understanding ransomware helps organizations devise solutions
Cyber criminals use ransomware to hook big fish
With rise of ransomware, keeping intruders out of network is crucial

This article originally appeared on ThirdCertainty. It was written by Bob Sullivan.

Phishers’ New Ruse: Trusted Tech Brands

Most of us don’t think twice about opening and maintaining multiple free email accounts where we live out our digital lives. And we’re getting more and more comfortable by the day at downloading and using mobile apps.

Yet those behaviors can harm us. ThirdCertainty sat down with David Duncan, chief marketing officer for threat intelligence and security company Webroot, to discuss how cyber criminals are hustling to take advantage of our love of free Web mail services and nifty mobile apps.

Infographic: Where malicious phishers lurk

3C: Phishing attacks leveraging our love of Google, Apple, Yahoo, Facebook and Dropbox are skyrocketing. How come?

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David Duncan, Webroot chief marketing officer

Duncan: There are 10 times more phishing attacks based on emulating tech companies than financial firms. You’d think it would be the other way around, but it’s not. The focus is on stealing information from your various email accounts because it’s easier to spoof people into acting on something that appears to come from Google or Apple than from Bank of America or Citibank.

Free resource: Stay informed with a free subscription to SPWNR

3C: Because we’re less suspicious of Google and Apple than big banks?

Duncan: Yes. Phishers prey on the fact that we see those brands as trustworthy brands.

3C: What ruses should folks watch out for?

Duncan: It’s the typical ones. You’ll get something advising you of the need to change your password or share your contacts. They’ll send you a link to click. A certain percentage of gullible users will click on the link and follow instructions to give up their credentials.

I can’t say I know of any specific new strategies other than the fact that the focus is on impersonating big domains like Google and Yahoo because people don’t think too much about something that appears to be coming from those trusted sources.

3C: Is there really a one-in-three chance the average person will fall for a phishing scam?

Duncan: Yes, there is a 30% chance of Internet users falling for a zero-day phishing attack over the course of the year. It used to be about one out of every seven phishing emails actually got through. But we’re human beings, which means we’re gullible.

3C: What about mobile apps? What’s the risk there?

Duncan: A year ago, we tracked about 8 million mobile apps, and around 75% were trustworthy and 10% were benign. So 15% were malicious or suspicious. Now we’re classifying 15 million mobile apps, and we’re finding 35% to 40% are suspicious or malicious in character.

3C: That’s a pretty significant change.

Duncan: People don’t think of installing an app on their mobile device as installing a potentially unwanted application that’s being delivered from an untrustworthy app store.

3C: So is this mostly an Android exposure?

Duncan: Probably 90% is Android, maybe 10% is iOS. Apple has a more secured kind of walled guard for verifying and authenticating the source of applications. But it also depends on what users are accustomed to. If you go over to certain geographies in the world, people may not necessarily always go to the iTunes store. There are a lot of third-party websites where even iOS apps are cheaper or they’re free.

8 Steps to Beat All 8 CPCU Exams

Now that we got you excited based on earlier articles such as this one, and you’re ready to start CPCU today, here’s some guidance on how to actually get it done and survive the tests. This article is lovingly dedicated to “those poor souls studying for the CPCU designation,”

Please keep in mind that doing CPCU is very much like trying to eat an elephant; there’s only one way to do it, one bite at a time.

I asked my friend and all-around Wonder Woman, Carly Burnham, to share the strategies she used in completing the designation. I met Carly in 2011 when she was at a turning point in her career. She felt stuck in her position as a call center sales agent and wasn’t sure of the next step. She wasn’t even sure whether insurance was an industry she could make a career in. She had an interest in underwriting but had no idea how to get there. We met through the Gen Y Associate Resource Group at Nationwide Insurance.

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I could clearly see she was bright and hard-working and was looking for a challenge, so I asked her if she had heard about the CPCU. Over coffee, I told her all about why CPCU is awesome and convinced her to go for it. To make things even more interesting, I challenged her to do it in a year, while working full time and finishing a part-time MBA program. To my surprise, she took me up on it. Even more impressively, she met the goal and finished all eight tests in just short of 12 months.

When I talked to Carly about this article, she shared the following thought with me, “The CPCU is usually done as a self-study program, and if you haven’t tackled online courses or some other self study program, it can be challenging to know where to start. I was lucky to have your mentorship, and, looking back, I’d say these eight strategies were really what helped me meet the audacious goal that we set.”

  1. Set Your Own Timetable

Decide up front when you are going to finish your CPCU. If you don’t choose an end date, you could stretch the entire process out for YEARS. On average, people take at least two years to finish, but many insurance professionals have been working on their CPCU for longer than that. Decide when you want to be done and commit to the deadline. If you are trying to finish to advance your career, focus on finishing before you begin to apply for new roles. If you want to finish in time to attend the annual meeting in a certain city, set your end date as the last month that you can qualify for that meeting. Having an end date and an understanding of your motivation will help you push through challenges along the way.

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  1. Find an Accountability Partner

Your accountability partner may be a current CPCU or someone who is also pursuing the designation. He or she should be someone with whom you can share the reason for your pursuit of the CPCU. If he or she understands your motivation, it will be easier to push you to stay the course and finish by your goal date.

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  1. Create a Spreadsheet on Google Drive to Share With Your Accountability Partner

On this spreadsheet, you will want to map out the dates that you will take each exam to achieve your goal date. Once you have mapped out exam dates, you can work backward using the chapter summaries at theinstitutes.org to identify when you will read each chapter of the text for the exam and when you will take your practice exams.

  1. Devote Certain Hours of Your Day to Studying

When studying, consistency is key. If you focus best at the beginning of the day, set aside an hour or two in the morning and commit to showing up the same place each day to read the chapters that you laid out in your spreadsheet for this day. Choose the time that works best for you, but aim to make it a routine, so that you don’t have to decide every day that you are going to stay at the office an extra hour or go to the coffee shop before work starts. If it’s part of your daily rituals, you won’t have to use willpower to get your studying done.

  1. Read the Entire Book

First, read The Institutes’ guide to preparing for their exams. As they mentioned, there is no single way to prepare. But I found that reading the entire book first helped me establish a base level of knowledge. Next, I would take a practice exam, as a sort of pre-test. The practice exam would let me know which chapters I was weak on. With this information, I could pinpoint the best way to spend my time. If I needed to, I could re-read chapters and test on those individual chapters until I felt comfortable moving on to the next chapter.

  1. Use the Mobile App

The Institutes have created a mobile app called Smart QuizMe for Apple and Android phones. Using this in any spare time you have will also help you feel confident with the information and the style of questions on the practice exams. You can set the app to run through certain chapters or the whole book depending on what you want to focus on. Because it’s on your phone, you can use it even if you only have five or 10 free minutes. The questions on the app tend to be clustered, so question 100, 101, 102 and 103 might be the same question with only one word changed. This really teaches you how changing a small part of a question can result in a different answer. The app is particularly helpful for the most detail-oriented tests, especially 520. One word of warning: Don’t depend entirely on the app without doing the online practice exams; you could easily fool yourself into thinking you’re ready when there are significant parts you haven’t yet mastered.

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  1. Pass the Practice Exams a Few Times

Leave at least at least four and preferably a full seven days before the real test to take the online practice exams. Passing the exams will give you the confidence you need to take the exam without feeling rushed or unsure of your answers. The practice exams are very similar and sometimes harder than the actual exams. You will also have the opportunity to research any questions you missed and make sure you understand the concept before test day. Nothing beats going into the real test feeling confident, and nothing gets you more confident that the online practice exams. The practice exams are the key to the kingdom!

  1. Get the Proper Support

Make sure your family, close friends and other support systems fully understand that the CPCU is a BIG DEAL and that you will require lots of support while you get through it. Make sure they know this isn’t just another license or minor designation but a serious commitment that only 4% of people in our industry have gotten through.

To help my family understand, I explained that I was pursuing something akin to a master’s degree in insurance, and I was doing it in a year, while working 40 hours a week — most people outside the industry will need the designation explained in a similar way to fully understand the commitment you’ve made. Also, join the CPCU Candidates Facebook Group; they’ll provide you with tons of encouragement and answer your questions. Most importantly, you won’t feel like you’re the only person in the world putting yourself through the challenge of CPCU.

One Bonus Tip:

Know ahead of time that 540 – Finance and Accounting for Insurance Professionals is a special beast of a test (see artist’s rendering below). To ensure proper preparation for this one, allow yourself 50% more time than usual; so if you have given yourself two months for 500, 520 and 530, give yourself three months for 540. Buy a financial calculator (preferably the Texas Instruments BA-II Plus) and learn how to use it. The book won’t teach you how to use it, so you have to get help from someone who knows how to use it – if you have a hard time finding someone, there are decent tutorials on YouTube or at Atomic Learning. Use the calculator for all the practice tests, and then don’t forget to bring it on exam day!

I am passionate about spreading the word about the CPCU, and I was glad to have met Carly at that turning point in her career. Her commitment has paid off, and she has recently became a commercial lines underwriter at Erie Insurance; she’s loving the new job, and she’s fully committed to the industry. She credits her designation with helping her get the interview but says it goes even further than that: “The knowledge that I gained in earning my CPCU gave me the confidence to pursue a true career in the industry, and I now use the knowledge every day in my role as an underwriter. This designation gives you a broad understanding of the industry, but it also gives you practical, technical information that is essential to being a successful insurance professional.”

If you’ve had similar experiences, share them in the comments. If you have questions about the pursuit of your CPCU, message me. There are really no excuses left. Let’s get going and get your CPCU. You will never regret it.

Good job making it to the end of our longest post yet; as a reward, here is another image for the awesome metaphor of eating an elephant one bite at a time.

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