Tag Archives: consumer reports

Is Driverless Moving Too Fast?

An excellent article by Levi Tillemann and Colin McCormick at The New Yorker lays out the advantages that Tesla has in the race towards driverless cars. Some, however, think that Tesla is driving recklessly toward that goal. Is Tesla racing toward victory or calamity? The answer hinges on a key issue in human/robot interaction.

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Don Norman, Director, Design Lab, University of California San Diego (Source: JND.org)

Don Norman, the director of the Design Lab at University of California, San Diego, argues that the most dangerous model of driving automation is the “mostly-but-not-quite-fully-automated” kind. Why?

“Because the more reliable the automation, the less likely the driver will be to respond in time for corrective action. Studies of airline pilots who routinely fly completely automated airplanes show this (as do numerous studies over the past six decades by experimental psychologists). When there is little to do, attention wanders.” [Source: San Diego Union-Tribune]

Norman contends that car autopilots are more dangerous than airplane autopilots. Airplanes are high in the sky and widely distributed. Pilots are well-trained and have several minutes to respond. Drivers are not nearly as well-trained and may have only seconds to respond.

Yet, Tesla’s “Autopilot” follows exactly the “mostly-but-not-quite-fully-automated” model about which Norman warns.

I asked Norman about Tesla’s approach. His response:

“Tesla is being reckless. From what I can tell, Tesla has no understanding of how real drivers operate, and they do not understand the need for careful testing. So they release, and then they have to pull back.”

As examples, Norman pointed to Tesla’s highway passing, automatic parking and summon features.

Norman considers Tesla’s highway passing feature dangerous because its cars do not have sufficient backward-looking sensors. Mercedes and Nissan, he noted, have far better back-looking sensors.

Consumer Reports found serious issues with Tesla’s automatic parking and summon features. Tesla’s sensors had high and low blind spots, causing the car to fail to stop before hitting objects like duffel bags and bicycles. There were also issues with the user interface design. The parking control buttons on the car key fob were not marked. The car continued to move when the iPhone app was closed. Consumer Reports told its readers, “It is critical to be vigilant when using this feature, especially if you have children or pets.” Tesla fixed these problems once Consumer Reports raised its safety concerns.

Here’s Don Norman’s observation about Tesla’s quick response:

“Good for Tesla, but it shows how uninformed they are about real-world situations.”

“Tesla thinks that a 1 in a million chance of a problem is good enough. No. Not when there are 190 million drivers who drive 2.5 trillion miles.”

If Norman is right, Tesla owners will grow less attentive—rather than more vigilant—as Tesla’s autopilot software gets better. Situations where their intervention is needed will become rarer but also more time-sensitive and dangerous.

Indeed, customer experience with Tesla’s early autopilot software produced a number of reports and videos of silly antics and near-calamitous cases. Here are just a few:

Jump to time mark 2:45 for the near accident:

Be sure to read the background comments from Joey Jay, the uploader of the video:

Jump to time mark 4:00 for a particularly “fun and scary” segment:

If Norman is wrong, Tesla does have a huge advantage, as Tilleman and McCormick note.

Other companies pursuing a semi-autonomous approach, like GM and Audi, have been slower to deploy new models with comparable capabilities.

Google, which advocates a fully driverless approach for the reasons that Norman cites, is mired in a state and national struggle to remove the regulatory limits to its approach. Even if Google gets the green light, its pace is constrained by its relatively small fleet of prototypes and test vehicles.

Tesla, on the other hand, has a powerful software platform that allows it to roll out semi-autonomous capability now, as it deems appropriate. And, it is doing so aggressively. Autopilot is already on more than 35,000 Tesla models on the road—and Tesla just announced a promotion offering one-month free trials to all Model S and X owners.

Soon, it will be preinstalled on all of the more affordable Model 3, of which more than 300,000 have been preordered.

That’s a critical advantage. The quality of autonomous driving software depends in large part on the test cases that feed each developer’s deep learning AI engines. More miles enable more learning, and could help Tesla’s software outdistance its competitors.

The challenge, however, is that Tesla is relying on its customers to discover the problems. As noted in Fortune, Elon Musk has described Tesla drivers as essentially “expert trainers for how the autopilot should work.”

Tom Mutchler wrote in Consumer Reports that “Autopilot is one of the reasons we paid $127,820 for this Tesla.” But, he also noted, “One of the most surprising things about Autopilot is that Tesla owners are willingly taking part in the research and development of a highly advanced system that takes over steering, the most essential function of the car.”

Telsa’s early-adopter customers are willing, even enthusiastic, about Autopilot. But, should untrained, non-professional drivers be relied upon to be ready when Tesla’s autopilot needs to return control to the human driver? Can they anticipate problems and intervene to retake control without being asked? Will they follow safety guidelines and use the autopilot only under recommended conditions, or will they push the limits as their confidence grows?

Imagine the consequences if a new slew of Tesla owner videos ended with a catastrophic failure rather than a nervous chuckle? It would be tragic for the victims and Tesla. It might also dampen the enthusiasm for driverless cars in general and derail the many benefits that the technology could deliver.

While the mantra in Silicon Valley is “move fast and break things,” Elon Musk needs to reconsider how much that principle should apply to Tesla’s cars and customers.

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.

Mini Meds For Maxi Greed

Within a certain part of Italy that mints its own coins and has a standing army outfitted in designer togs from Michelangelo, when one makes a mistake, the correct and only exclamation is Mea Culpa. Well actually it’s more like Mea Culpa, Mea Culpa, Mea Maxima Culpa — but even Italians are known to abbreviate their Latin for the sake of expediency. That’s my mantra this week after last week’s post on Medical Gluttony. In that article we highlighted a new book by Dr. Otis Webb Brawley — How We Do Harm: A Doctor Breaks Ranks About Being Sick in America
— in which he characterized portions of our healthcare delivery system as gluttonous. In all fairness, doctors and providers are most definitely not alone in their greed. I never said they were — but I tend to err on the Italian side of life when it comes to my public Mea Culpa’s.

This week it’s time to turn our attention to another form of healthcare malfeasance — a form of Payer Gluttony. By the time we’re done with our mini series on gluttony, we’ll likely get to include Pharma Gluttony, Political Gluttony and possibly some other gluttonies as yet to be uncovered. It’s no wonder our system is $3 trillion per year and represents 18% of GDP. In their landmark study from 2008 — The Price of Excess — PWC estimated that roughly half of our healthcare spending is completely wasted. The real question remains — is it truly wasted — or is this just the biggest trough America has ever built?

Like most of healthcare’s really sad tales, this one isn’t new — and it’s certainly not the most egregious payer offense — but it is among the most blatant. Simply put, it’s a form of healthcare insurance that really isn’t. Earlier this year, Consumer Reports revisited the issue of an entire range of products with names like Mini-Meds, Discount Health Cards and Fixed Benefit Indemnity plans. In theory, the idea has always been to provide some healthcare coverage, however limited, to those who couldn’t afford either a high-deductible health plan — or catastrophic only coverage. In reality, the practice includes some of the biggest names in the Health Insurance business — including Cigna, Aetna and Allstate. There is also an entire roster of late night TV ads pushing products like “A Real Healthcare Plan Starting As Little As 25 Cents a Day” from a company called HealthcareOne. It was estimated that HealthcareOne was taking in about $500,000 to $600,000 per month — before regulators finally shut it down.

Sample — Fixed Benefit Indemnity Plan
In most cases, especially the discount health cards, the benefits were either a small fraction of anything that could be considered useful — or simply non-existent. One lady signed up in order to get a “free flu shot.” Eighteen months later — after $1,717 in payments, the only activity on her account was a single denied claim — for the flu shot. In fact, fixed benefit indemnity plans aren’t even considered an insurance product — so they are not subject to the healthcare reform legislation. Most of these products are being peddled to temp or service sector workers — and it’s often highlighted as an employee “benefit” by large retailers and food service employers at some of the nations largest chains &mdash including McDonalds. The current estimate is that about 3.9 million people are enrolled under these various plans. Consumer Reports went as far as to call the entire group of products “junk” and recommends avoiding them altogether. Their first suggestion on how to avoid them? “Don’t shop from a search engine.”

From the Consumer Reports article — here is a list of the four companies with the largest number of enrolled members — and their response as to why they provide these plans:

Largest Mini-Med Sellers

  • Cigna Starbridge 265,000 enrollees. “Policies are offered to … workers who typically are not eligible for any other employer sponsored-group health coverage.”
  • Aetna SRC 209,423 enrollees. “It’s still some coverage for people who may not have any other options.”
  • BCS Insurance 115,000 enrollees, including McDonald’s hourly employees. “It’s a matter of affordability. These are largely part-time and hourly workers.”
  • American Heritage Life Insurance Company (Allstate) 69,945 enrollees. “Employers … wanted to provide a more affordable voluntary benefit option to their … lower-wage employees.”

The Patient Protection and Affordable Care Act of 2010 — the “sweeping” healthcare reform legislation that was enacted in 2010 specifically banned these products outright, but of course at this trough the word “ban” is unacceptable so waivers were quickly requested and just as quickly granted (effective until 2014). As of last month, there were 1,231 waivers issued, and there are 50 companies alone that offer mini-med products.

Unfortunately, healthcare news doesn’t always have to be breaking to warrant coverage. In this case — it certainly doesn’t qualify as breaking — but it absolutely warrants the added coverage.