Tag Archives: business models

COVID-19’s Once-in-a-Lifetime Opportunity

My article on the longer-term business model implications of Covid-19 asked whether COVID-19 creates an opening for new, or updated, products and services that insurers should be offering to the market. This article is an attempt to answer that question, focusing on P&C/general insurance.

Personal Lines

Given its scale, let’s start with auto/motor. So far, we’ve seen major reductions in vehicle usage, and many insurers returning premium to policyholders. But what will happen next? Two potential scenarios are:

  1. People wonder why they’re paying for vehicles they’re not using, and sell (or end finance arrangements on) one or more vehicles, taking up any slack by using rideshare companies or (cheaper) public transport. The auto insurance market shrinks.
  2. People reconsider the risks to their health of using public or shared transport, so reduce their usage and buy a car instead. The auto insurance market expands.

Either scenario is believable, and I suspect both will be true, each applying to different cohorts of customers. Someone living in an area with no public transport and minimal rideshare coverage may well make a different decision from someone in the opposite position.

If this is correct, insurers need to be thinking about the potentially changing needs of different customer cohorts and adapting their sales and marketing efforts accordingly.

There’s scope for product changes, too.

Concerns about paying premiums for unused vehicles could certainly lead to increased take-up of existing usage-based, or pay-as-you-go, insurance.

But insurers could also offer some innovative “in between” options. For example, where mileage driven is a material rating factor, perhaps the customer could have the option to submit monthly odometer readings and have the premium adjusted automatically — just as many energy companies do. Thanks, Charles Bryan, for that idea.

Turning to homeowners and renters insurance, there are product development opportunities here, too. If I’m spending much more time at home, I’m far less likely to be subjected to theft or burglary. I may have a slightly increased risk of fire breaking out (increasing claim frequency), but I’m also far more likely to notice this early, reducing claim severity. Damage through escape of water is also likely to be noticed much earlier than if the home is empty all day. So – why am I paying the same premium on days that I’m a lower risk than I pay in normal circumstances? Wouldn’t I be attracted to a usage-based or pay-as-you-go proposition for my homeowners or renters insurance if one was offered?

But also, if I’m doing my day job from home, won’t I need additional covers? What if I somehow mess up while working from home, in a way that wouldn’t happen if I was at my employer’s premises? Maybe there’s a computer virus lurking on my home network, just itching to break into my work laptop via that free conferencing app I just found. Does my existing liability or umbrella cover protect me? Or is this another opportunity for insurers to provide further covers for those feeling nervous about working from home?

See also: Pulse of Insurance Shopping During Crisis  

What about pet insurance? Am I less likely to have to make a claim on such a policy if I’m spending more time at home with my pet, and exercising him or her more often? Should my insurer take that into account in its pricing? And how might my insurer take account of the fact that the pandemic closed many veterinarians’ offices?

How about travel insurance? (Thanks, Julie Culligan.) Clearly, there’s been a downturn in this product’s attractiveness over the last couple of months. I’ve certainly not renewed my own annual travel policy this time around. But what happens when people can travel again? Perhaps potential customers in a post-pandemic world will now be more aware of the risk they’re taking if they book vacations uninsured. Does this provide new opportunities for insurers? If so, do covers need to be adjusted to provide comfort to customers that the events they’ve seen in the COVID-19 pandemic will definitely be covered next time around? Will customers be prepared to pay more?

Is there any scope for developing new products or new covers altogether? Here are some initial thoughts:

Many people have now realized that their home broadband connection is more critical than they thought. Without a working connection, children can’t attend video lessons, parents can’t work remotely and the family’s entertainment options in their downtime are much more limited. Is there scope for an internet interruption product? Or even something more sophisticated that underwrites a certain level of internet bandwidth or internet speed, given multiple concurrent users?

How about personal technology and cybersecurity products? There’s a good chance that, once people’s incomes have returned, they’ll be upgrading their home tech to provide larger screens, more stable video-conferencing, and better Wi-Fi – all in case there’s a second spike. Does that provide a one-off opportunity for smart insurers to alert existing or potential customers to technology risks more generally? And should insurers consider providing cybersecurity audits to personal lines customers in the same way as some do for businesses?

Those are my initial thoughts. Are there any other personal lines product or service opportunities that insurers should be thinking about?

Commercial Lines

Some of the themes explored under personal lines are equally applicable for commercial lines insurers. 

For example, many businesses, as well as individuals, will have vehicles sitting unused. And they, too, may be considering making changes to their fleet when they can. The ideas discussed above, in the context of personal lines, apply to commercial auto, as well.

Commercial property considerations, on the other hand, work in reverse from personal lines. Instead of being unexpectedly occupied, many commercial premises are now unexpectedly empty – increasing the risk of major theft, fire and water claims. Did the rating of these businesses’ polices anticipate this possibility? If not, is some element of flexible, usage-based insurance needed for commercial property, so as not to undercharge for these risks again? 

Turning to more specific commercial lines products, much has already been written about business interruption insurance. In some jurisdictions, commercial lines policyholders have been very surprised to discover that their business interruption cover doesn’t cover this particular business interruption. Legal action and, in some jurisdictions, legislation is on its way to resolve the issue this time around. But what about next time? What is the opportunity available for the insurer that states, unequivocally, that the temporary closure of a company’s business by government edict will be covered by insurance?

And how about a business disruption that doesn’t go as far as a full interruption? As I wrote in my earlier article, many companies that could otherwise have stayed open found that their supply chains were no longer supplying – either because of the suppliers’ own business problems, or because the country in which the supplier was resident had banned the export of their supplies. Is this type of business disruption already covered by a typical business interruption policy? If not, does that create another opportunity for insurers to innovate? Especially as a “mere” epidemic in the supplier’s country might have the same impact in fthe uture as the current pandemic.

Turning to workers’ compensation, are employees covered by a business’s standard policy even when they are working from home? Even if their working from home was never expected, and therefore never considered, or priced, by the insurer? Unless the answer to both those questions is yes, then these products will also need to be re-written, or have optional covers added, to account for similar occurrences in the future.

And how about cybersecurity cover? We looked at that, above, as a potential new opportunity for personal lines. But should the experience of the pandemic drive changes to the product in a commercial lines context? I know of a case where an IT employee, who had never previously worked from home, was forced to do so because of COVID-19. When making an update to the company’s core systems, he used his home PC — to which he would not normally have access when at work — and triggered a company-wide ransomware attack. Whether that completely unexpected act is covered by the company’s cybersecurity insurance, the key question for me is whether it should be covered in the future, at least as an option, given what the insurer now knows about that particular risk. Either way, the chances are that the product needs to be redesigned.

See also: Parametric Insurance: Is It the Future?

Again, those are just my initial thoughts for commercial lines in the wake of the coronavirus. But are there any other commercial lines product or service opportunities that insurers should be thinking about?

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One final thought, which applies to both personal lines and commercial lines, and therefore to the P&C/general insurance industry in general:

If there is one positive for insurers arising from COVID-19, it’s that most people in the world, whether currently insured or not, are now much more aware of the massive impact that an apparently small risk can have on both them and their business.

If insurers take steps to tailor their products and services, and to innovate based on what they have learned, there is a once-in-a-lifetime opportunity to educate potential buyers on the value of insurance — and hence expand the market.

COVID-19: Implications for Business Models

Back in mid-March, I wrote a piece titled COVID-19: Implications for Insurers. Two of the questions with longer-term implications that I suggested senior executives should consider were:

  • Do we need to reduce our reliance on people being co-located, by re-considering office infrastructure strategies and the degree of remote working as standard?
  • Do we need to reduce our reliance on people altogether, by increasing automation?

In the weeks since, I’ve realized that these questions are merely a subset of a much broader set of questions that senior executives should be considering – all of which focus on the longer-term business model implications that could arise from COVID-19.

Here’s my current list of key questions to consider, grouped under five headings:

  1. Products and Services
  2. Channels
  3. Workforce
  4. Supply Chains
  5. Internal Priorities

Products and Services

  • In the early weeks of the COVID-19 economic downturn, companies with pre-paid revenues, recurring income streams or subscription revenue models (such as insurers and Netflix) proved more resilient than others. What can we do to move more of our revenue to pre-paid, recurring or subscription models?
  • Does COVID-19 create an opening for new, or updated, products and services we should be offering to the market?


  • With huge numbers of people in lockdown, traditional distribution channels (particularly those involving bricks and mortar) often became useless. Do we need to change our existing distribution channel mix or even add channels (such as new digital channels)?
  • The same issues applied to post-sale servicing. For example, many contact centers were quickly overwhelmed by their customers. Do we need to change, or add to, our mix of servicing channels? What can we do to make them more responsive to demand or migrate demand to other channels? And if we currently need to service customers on-site (for example insurers’ claim inspections) what can we do to add remote options?

See also: Business Continuity During COVID-19  


  • As my earlier article suggested, the COVID-19 lockdowns have proved that remote/mobile working is far more feasible than many senior executives had previously imagined. What is our opportunity to reduce our real estate footprint by making remote/mobile working the norm for certain employees? Conversely, how are we going to respond to any employees who, having started remote/mobile working, now demand to continue working that way?
  • As the downturn hit, many companies struggled to deal with unneeded labor that they still had to pay. Meantime, companies such as Amazon and Instacart suddenly found themselves with far fewer workers than they now needed. What can our business do to make our own workforce more flexible in the future?
  • Teamwork and collaboration usually drive significant benefits. And we’ve now discovered collaboration tools that can work successfully across vast geographies. So do we have more scope for beneficial internal collaboration than we previously realized?
  • COVID-19 has shown the susceptibility of carbon-based workers (humans!) to disease. What’s the scope for replacing more of them with less vulnerable, silicon-based workers such as robots, process automation bots and artificial intelligence?

Supply Chains

  • Given the disruptions we’ve seen to supply chains, do we need to carry higher levels of inventory?
  • Given that many countries imposed blanket bans on certain exports, in some cases even from a subsidiary to a parent company, do we need to replace some of our overseas suppliers and overseas subsidiaries with in-country alternatives?
  • Do we need to remove reliance on certain supply partners altogether, by manufacturing that component in-house (where possible)?

Internal Priorities

In addition to business structures, a company also has a tacit understanding of its relative priorities. Do some of these also need to change?

  • Do we need to invest (even) more into IT, especially in hygiene factors such as resilience (use of cloud, for example) and cyber-security?
  • Should we be allocating an increased share of our budgets to risk management and business continuity planning?
  • In common with individuals, many businesses found that their rainy day funds just weren’t big enough when faced with COVID-19. Even once things return to “normal,” should we be reducing the levels of cash we pay out in bonuses and dividends so that we’re better-placed when the next black swan event comes along?

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So that’s my current list of potential business model implications that senior executives should now be thinking about.

Have I missed any? Do any other business model questions or implications spring to mind?

Digital Darwinism: Time to Move Faster

We are in the midst of a bionic revolution in all industries and especially insurance. Organizations are competing with a new mix of people and machines doing both cognitive and physical work, and those companies that become bionic fastest are winning because of superior customer experience and economics. This has led to a new Digital Darwinism — the evolution of businesses and business models that not only occurs across generations as it does in the natural world, but rapidly and many times within the lifetime of a single organization.

The speed of evolution creates imbalances — and in the insurance industry we see a sophisticated sales/distribution experience with an old-style issuance, service and claims experience. Until very recently, insurtech has been a story of front-end evolution. It is only now that enterprise investments in insurtech have matched the front-end.

How do you increase the clock-speed of your evolution? Our lens at Snapsheet is to collectively reimagine the operating model, operational capabilities and customer experience with five bionic design principles in mind. A design principle is a practical concept that helps executives imbue the organization with the right way to think about critical tradeoffs and solutions. For example, Steve Jobs hated styluses, so the iPhone created a user interface that did not need any type of stylus. This simple concept drove many actions in Apple.

Bionic Design Principle 1: Change the way you work, and change the way the work is managed: Reapportion cognition among people and machines.

The fundamental activity of the industrial revolution has been to take thinking and labor tasks “out” of people and put them “into” machines. It’s a one-way street optimized around one process, one answer, one method. In contrast, in the bionic age, everything has the potential to be smart. Processes can be agile; claims can be alive and know their own path and what data they need to complete their task. Claims can even be patient, knowing how long information requests should take and when it’s time to “ask again” for missing information. A claim can even route itself to the optimal process and resources using its understanding of its complexity, service level status, skills needed and available, licensing requirements or other attributes; for example, a claim can know if it’s a total loss auto claim and therefore has a shorter, faster process path.

This dynamic allocation of cognitive responsibilities is the most important design principle because its application allows for the entire claims ecosystem (or any ecosystem) to be better without having to be in full control of every step. For example, to implement our smart claim approach in auto, we do not require customers to choose the way they engaged with us or others. Rather, we allow the customer to choose and change the interaction mechanisms, and the claim learns how the specific customer or repair shop interacts and how long responses take. The claim acts accordingly. The process is not industrial and stringent, but bionic and adaptive.

When cognition is reapportioned, no time is lost, and actions are optimized against capacity—and as the system gets smarter it can evolve the process and support higher and higher level tasks. The design itself does not have to be all-knowing right out of the gate. It masters a specific challenge and evolves over time because it’s a living system, not a mechanistic one.

See also: Darwinian Shift to Digital Insurance 2.0  

Advanced weapons systems in fighter aircraft have shared thinking responsibilities with pilots for many years. Sometimes the pilot is flying the plane, and the weapons system is protecting the plane; other times, the plane is flying itself, and the pilot is focusing on the weapons systems. This dynamic allocation of cognition means that the most capable thinker—person or machine—will be in charge based on context and competence, not rigid process. Think of claims as thinking for themselves: Each claim also knows when to “ask for help” and push the activity to a human when the claim lacks enough data, structure and rules to proceed. This adaptability enables productive integration of the complex, digitally enabled ecosystems that all insurers face. Put another way, it’s not just machine learning, it’s a learning machine.

Bionic Design Principle 2: Change the way you engage with the customer and change the way you work with others: Remove friction from the ecosystem—not just the customer.

Customers no longer tolerate friction. They want service anywhere, anytime, any way — and expect to have instantaneous status about every step of the process. In claims, the old way was to send out a person to look at the vehicle or visit the home. But if you’re creative, you can change the flow. We began Snapsheet by inverting the process—enabling customers to use their smartphones to send in photos of their accident so they could poll repair shops to deliver virtual estimates, instead of having a person visit the scene of the accident—thus removing a friction point and saving time. But as we implemented this innovation, we saw that we needed to do more. Some customers were not confident in their ability to take the right photos or did not want to use an “app”—so we had to enable omnichannel capture, allowing the customer to begin the process in any way the customer found faster or easier.

We’ve been chasing friction removal for seven years, and we expect to continue chasing it. It’s easy to say that “it’s not just about the technology,” but turning that observation into less friction for the customer takes a willingness to learn, adjust, reintegrate and sometimes reinvent major functions across the ecosystem.

Our ability to field smart claims that are aware of their context enables us to see how to close the gap between the desire and realization that happens in many places in the claims ecosystem. By looking at the whole ecosystem, not just the individual task, you can see entire areas of opportunity open up.

For example, we found that making payments—more than 75% of them still transacted by paper check—was an area we could redesign. Now we have the ability to provide payment and treasury functions instantaneously for all parties involved as soon as a step in the process—such as repair—is verified as complete. We asked participants in the ecosystem, “Do you want to get paid fast or slow?” No surprise, most customers say, “Fast!”

Another significant delay often comes from processing a total loss situation, which is often slowed by the complexity of issues having to do with identifying the lien holder of the asset and the title procurement process in a specific geography. This complexity requires a carrier to change the way it engages with other suppliers. In this case, working with other industry partners, Snapsheet is enabling faster exchange of information across multiple parties, initiating insurance and salvage workflows simultaneously and integrating new capabilities to remove that friction. In doing so, it’s possible to remove days, and even weeks from the process. This accelerates the time to sell the vehicle for the insurer and time to settlement for the customer.

Bionic Design Principle 3: Change the way you change: Innovate, don’t renovate—don’t start from scratch.

The most critical part of digital evolution is to change how you change. The idea of continuous improvement has been with us for many years—at least since the 1950s when Edward Deming led the quality movement. Most insurance companies have done an analysis of what it takes to redo the entire technology stack—and it is often an absurd number with millions and millions of dollars at risk for an uncertain payoff.

Fortunately, there are many new tools to help enable integration of legacy and emerging systems. The suites of robotic process automation tools help to provide what we call value-driven integration. When companies use these products or other integration/automation tools, they can often integrate multiple legacy systems with a secure container that can interface with multiple systems and then present the results on any device—providing new results, without the need for complete system overhauls or upgrades. This creates productive modules—of process, task and technology—together, which enables improvement with zero down time while delivering continuous enhancements.

With new API architectures, one can partition the work and make it more object-oriented, which enables more flexible task and process flow design within the organization and outside to suppliers. Properly used, this creates a much more agile and adaptable learning environment.

This can take time out of customer service, sales or other interactions by collapsing many dozens of steps and multiple screens over hours, to one screen and minutes, while kicking out a clean stream of audited data for machine learning to drive future improvement. This capture of cognitive capital drives near-term labor productivity and superior customer experience while providing a data asset for further improvement. Especially in the middle and back office, there are often greater opportunities to drive customer experience and superior economics.

See also: A Self-Destructive Cycle in Insurance  

Again, in the bionic age, the right way to think of it is as smart, evolving, alive systems. The most important design decisions are about the application program interfaces (APIs) and the modularity of the system. For example, Jeff Bezos declared that Amazon would use common APIs back in the early 2000s, which meant that the company could add or subtract functionality without interfering with the existing process and code base of the organization. This means the company can handle complexity at a much lower unit cost because complexity is contained within the modules. This is not true of many of his competitors, and you only need to go into Macy’s and try to find your order history with the store, to show the lack of APIs in that organization.

The innovate-not-renovate point of view relies on modular thinking. This may seem incremental to some, but some of the most important innovations in human history have been integration technologies that enable established ecosystems to interact productively. The international currency markets are such an innovation; so is the internet, whose very name states its “inter-networking” mission. In the bionic world the biggest bang for the buck is usually in innovating and integrating existing ecosystems, not starting from scratch.

Bionic Design Principle 4: Change the speed and efficacy of every decision: Use AI to pick up the trash and explore the stars

Evolution is often a process of simple and complex improvement. The fourth design principle is to use AI both for the low and the high end.

On the low end, AI helps to automate faster because it can gather new information and structure it faster. There are many mundane tasks that AI can help to improve. Proper analysis of photographs is a great example, and we have developed more and more capability to make sure we have the right angle and proper picture needed to move the claim forward in the process. Even simple uses of AI such as this can add up to vast improvements in speed and productivity.

On the high end, we are developing complex models that can continue to automate and refine estimates for more and more severe accidents. This other use of AI is like a telescope for the mind—allowing new insights into vast data sets and complex problems that would not be possible without it. We analyze millions and millions of accident pictures that feed a super-smart estimating engine and leverage our estimator talent eight to one compared with non-assisted, experienced estimators. We are also finding interesting patterns in repair shops, types of accidents, customer behavior etc. If we did not have the massive and growing scale of transactions, we would not have seen and been able to share these insights.

Bionic Design Principle 5: Change your economics: Take advantage of bionic economics— speed, scale & capital

Perhaps the most powerful force of Digital Darwinism is the speed of change in core economics. This is why our final key design principle is to use the business system with the best total economics, driven by speed, scale and new forms of capital. There is no question that this new mix of people and machines can make decisions faster. We’ve found that our staff are as much as five times as productive, but they are not super humans; they are simply people supported by great cognitive technology and training. The more data and transactions that any learning machine can ingest, the better its speed and accuracy.

Google Translate is so good because it was fed with billions of books and all the proceedings of the E.U., which publishes in about three dozen languages. This vast wealth of data made it learn faster. So, too, with claims. This speed not only decreases labor, it also allows us to provide answers faster and get through the entire process in less time. In claims, like many things in life, time only makes things worse— with impatient claimants creating additional service demands and the organization incurring added costs such as rental and storage.

In terms of scale, larger networks of computer power usually have superior economics. The cloud not only enables organizations to make their costs more variable, (e.g., if you need more capacity, simply contract for more without the need to buy new hardware and software) but also provides the ability to take advantage of the economics that support that network—such as the formidable buying power of the cloud provider, power efficiency, customized operating systems and software that creates other efficiencies. There are many end points on the network—another scale effect. Why do people usually go to Google? Because its network of links is larger and better than the competition. Why go to the second-best network? Likewise, cloud providers of critical business functions can create a world-scale network that is larger and better than all but the largest individual competitors.

Lastly, the bionic competitors gather and grow three types of capital: behavioral, cognitive and network.

Behavioral capital is the ability to track, analyze and model the behavior of any customer, device or service provider in the ecosystem. United Rental has over 70% of its assets—going to 100%—linked so the company can see the location, behavior and maintenance status of all assets. This is behavioral capital.

Cognitive capital is the store of AI, algorithms and other automated knowledge that can be used, improved and reused again and again. The better the store of cognitive capital, the more organizations can leverage existing labor and assets.

Network capital is how well a company is tied into the relevant networks for customer and supplier access. For example, no consumer products company can afford to not have a strategy for Amazon and Alibaba because they have some of the most extensive network capital in the world for consumer products. In bionic competition, organizations need to strategically use cloud providers that can bring these new forms of capital to bear to create superior economics.

There you have it. Five design principles that you can add to your strategy to move beyond siloed activities and on the way to deep transformation— speeding up your evolutionary process to meet the needs of a new Digital Darwinism and updating your customer’s experience along the way.

8 Start-ups Aiming to Revive Life Insurance

In my last post, I described the state of the life insurance industry, including the pain points where InsurTech entrants are poised for impact.

The life insurance industry is suffering from a dying (literally) distribution model, complex products and a flawed purchase funnel.

New entrants can transform the industry by bringing a clean-sheet approach to:

  • Putting the client at the center of the business
  • Prioritizing the direct-to-client experience, including simpler products and path-to-purchase
  • Launching businesses on a back-end that enables low-cost, fast issuance and personalized underwriting and offers
  • Creating business models that align carrier and client interests and flex beyond protection-after-the-fact to providing value through prevention services
  • Supporting multi-channel servicing and claims management that satisfy clients
  • Using data responsibly to be proactive, personalized, timely, cost-effective and relevant
  • Treating life insurance as part of the client’s broader financial plan, including the connection to anticipating one’s healthcare requirements and managing the drivers, to the extent these are controllable, of health problems
  • Aligning with the demographic trends (the boomer handoff to the millennial generation and the emergence of the new majority in the U.S.) and the technology trends (mobile as the main screen; the role of social media in the client experience; and the application of big data to change the experience and business model)
  • Disproving orthodoxies that have become barriers to innovation for the sector, i.e., “insurance is sold not bought,” “the agent is the customer,” et al.

As much as start-ups are emerging and being funded aiming at health, home and auto, much less attention is being paid to either life insurance or its sibling, long-term care.

One founder/CEO with whom I spoke this week had two possible explanations: (1) Life insurance is the stepchild of the sector, and (2) the “sold not bought” orthodoxy is embedded, even among start-ups, which are typically seen as better not only at casting aside such self-imposed obstacles but seizing upon them as open doors for disruption. These factors may be deflecting entrepreneurial energy and attention in other directions.

See Also: InsurTech Can Help Fix Drop in Life Insurance

Long-term care has been a challenging product for traditional carriers, with players either abandoning the product or re-pricing and reconfiguring their products as flaws in earlier underwriting have become clear. According to Consumer Reports, between 2007 and 2012, 10 of the 20 top long-term-care providers stopped selling the product, and those in the business began raising rates, some reportedly as much as 90%, to address high claims projections.

That said, there are new ventures worth watching, and the good news about the relatively low level of attention being paid to life insurance, for those who see ignored space as white space, is that there could be more opportunity to succeed for those who engage.

Here are a few start-ups focused on the valuable white spaces:

In stealth mode are three companies worth keeping an eye on:

  • Sureify Labs is focused on “bridging the gap between insurers and their current and future policyholders” through a B2B offering aimed at helping traditional carriers move into the new world. The company’s site states that the platform “starts with consumer web and mobile applications that drive engagement through device-integrated wellness, savings and rewards programs tied to a policy. Behind the scenes, we give you as the carrier all the tools necessary to engage, communicate and up-sell your policyholders through digital mediums.” This sounds as though it would be a dream come true for carriers that are serious about building client-centric businesses.
  • Ladder, formed just a year ago (see: CB Insights report) is reportedly starting with a mobile value proposition built around easier and faster access to term life insurance, using available, permissible data sources to improve the underwriting process. If, as the name suggests, the company is building a value proposition that redefines the traditional notion of an insurance ladder – a construct that lets you plan for extra coverage when you’ll need it the most and taper off coverage at other times – I would expect them to develop more dynamic, effective relationships with clients than those propagated by the traditional one-and-almost-always-done insurance sales model.
  • Human Condition Safety (HCS’ site is under construction) is an example of a start-up focused on expanding the value a life insurance carrier can provide by offering prevention services in addition to protection. AIG became a strategic investor in the company earlier this year. HCS is said to be “developing wearable devices, analytics and systems to improve worker safety.”

A number of start-ups are building capabilities to solve carrier problems improving on the traditional distribution and product models. An investor might ask if these are businesses or features:

  • Force Diagnostics is focused on “combining science and a customer-centric streamlined process” to transform health and wellness screening. The expense (to the carrier), hassle (to the applicant) and elapsed time (a burden to all) associated with today’s underwriting requirements for blood and urine samples are ripe for reinvention.
  • Insurance Social Media, part of Serious Social Media, is offering a “set it and forget it” capability to improve agent effectiveness on social media. Given the demographic profile of the average agent (57 years old, and accustomed to pushing product), kick-starting their social media presence and providing relevant content solve pain points for today’s distributors. Of course, two questions regarding any start-up aiming to mass-produce content are: first, can such content come across as authentic, and second, how does this model scale?
  • Insquik offers agents a white label solution to create their own online stores. The focus is on term life automatic issuance up to $350,000 face value, and, according to the company’s site, aims specifically to serve the sub-segment of agents who “have access to large populations of consumers i.e., focused on Worksite Employee Benefits, Affinity Groups, Unions, Groups and Associations.”
  • Fitsense is a start-up coming out of StartupBootcamp that is building a data analytics platform focused on enabling insurance companies to reduce premiums “for anyone with a smartphone or wearable device.”
  • Sure provides a digital front-end and a more real-time experience for an old idea – a micro-duration life insurance policy that provides coverage during air travel. (In the pre-digital era, this was simply called “per trip coverage”.) American Express is one company that for more than 30 years offered air flight life insurance policies at varying face amounts, as part of a portfolio of travel-related protection benefits.

The opportunity for Insurtech to expand efforts in the life insurance category is not simply the commercial potential of disrupting a model that has proven its limitations. It is also the prospect of addressing a societal need that has been neglected for decades. These are two compelling reasons to encourage more participation by investors and entrepreneurs, stimulating a bigger pipeline of entrants to take on the reinvention of the category.

Uber Should Be a Friend, Not a Foe

As I read the considerable amount of press Uber is attracting, the level of negativity from the insurance industry is striking. Uber is free-loading. Uber is undermining consumer protections. Uber encourages drivers to engage in what amounts to insurance fraud. And on and on.

Reality is, Uber, Lyft and the many other start-up companies of their ilk are meeting a new set of needs reflected by the burgeoning sharing economy — needs that traditional businesses with traditional business models and traditional approaches to connecting with customers are not satisfying. Functionally, these new entrants supply high-quality goods — whether it’s an immediately available taxi ride in midtown Manhattan or a cozy apartment via Airbnb in Milan. Emotionally, they deliver good value for the money, competent service and a pleasant experience. These offerings also meet higher-order emotional needs that people have, e.g., for control, security, freedom, even independence. This ability to connect not only functionally but also emotionally suggests that the sharing economy sector is here to stay. These companies are firing on all of the cylinders that make for enduring offerings.

That said, the entrepreneurs behind these offerings are riding on the back of the long-established risk-management practices — policies, pricing, product — of the insurance industry while avoiding the burden of full, dedicated insurance coverage.

The reaction of the insurance industry has been to cry foul, call out the regulators and point to the consumer protections provided by traditional insurance.

Is this reaction ultimately productive?

Technology is pulling the rug out from under business models that looked quite durable even a decade ago. Customer habits and desires for discovering, investigating, shopping for, purchasing and servicing insurance bear less and less resemblance to those upon which the industry relied for the first two centuries of its existence.

As an alternative, I propose the insurance industry look at Uber, Lyft and their peers as a force for positive change and as inspiration to evolve the insurance sector toward continuing strength and relevance in the new economy. This approach can be a path to growth, profits and stability.

One way to achieve this vision is for leaders in the industry to foster cocreation platforms. Cocreation, simply put, is bringing together constituents from inside and outside your company to innovate and problem-solve around big opportunities and issues. Cocreation is a way to engage the instigators of the sharing economy in helping the industry figure out how to transform its risk-management practices to work in new sectors of the economy.

What does cocreation look like?

Imagine diverting the industry’s focus from what’s wrong with sharing economy companies, to seeing their emergence as the opportunity to create forms of insurance supporting new business models.

Next, imagine identifying all the constituents who might contribute creatively and with impact to figuring out how to realize the opportunity in a way that is sustainable. These might include experts on current insurance practices, but importantly would include heavy representation of “outsiders”; i.e., people who work for sharing-economy companies, users of their services, regulators, distributors and big data, digital, brand and customer experience experts.  Constituents would include people with no connection to the insurance industry who bring totally different perspectives that can be applied to insurance — for example, airlines (shared transportation), retail (mass market franchises and distribution), “experience” companies (innovators that elevate an offering beyond product features and price). What’s important is to include people for whom there is something to be gained by participating.

Now imagine giving these constituents a private forum — possibly a 24 x 7 Facebook-type site — where they can engage in dialog on topics relevant to the challenge, or on opportunities to come together for a facilitated meeting in a physical space where they might prototype solutions to the challenge.

Finally, imagine that you as the insurance carrier can listen effectively and glean insights about possible new offerings and use these findings to define alternative approaches that can be validated through an iterative process of test and learn.

Cocreation is another way to think about solving the “problem” of the Ubers of the world, harnessing the immense creativity that spawned the sharing economy to be a force for enabling new sources of value from which we can all benefit.