Tag Archives: ernst & young

Faster Turnarounds for Insurance IT Projects

In the not-so-distant past, before the insurance industry began to wake to the realities of the digital revolution, the decision-making process and implementation of new IT initiatives took years. In today’s insurance industry, with changes coming at rocket speed and business executives trying to stay in step (or even ahead) of the market, those years are being collapsed into months – or even weeks. Speed to market can make the difference between winning the race and being left at the starting gate.

A new approach to IT implementation supports all facets of projects that have complex architectures and detailed documentation requirements. It helps deliver results fast, uncovering issues quickly and early in the process by organizing work into smaller functional segments. Cost savings and higher-quality results come from testing at intervals throughout the project – typical of an iterative approach – instead of at the end, as with a conventional waterfall structure.

This is particularly important on the software side. According to an Accenture report on iterative approaches to software testing published earlier this year, “The insurance industry is undergoing rapid and disruptive change. By shifting to the left, insurers have an opportunity to accelerate projects that modernize, rationalize and consolidate their systems. Gone are the days of 24- to 36-month projects. Insurers need to act now and act fast to deliver new products across multiple distribution channels to mobile- and digital-savvy consumers.”

See also: Insurtech’s Act 2: About to Start  

As with the industry’s focus on customer-centric solutions, speed to market drives this shifting landscape. Insurance solutions today need to move as fast as the market moves, and that means implementations measured in weeks and months, not months and years.

An Ernst & Young report, The Digital Opportunity in Insurance, puts this issue into focus: “Fueled by FinTech investments and InsurTech startups, insurance has become a hotbed of digital innovation. In response, insurers must embrace change and rethink business models to move toward a compliant, secure and digitally enabled operating model to enhance customer, employee, partner, and other stakeholder experiences.” The report goes on to show that those who fully embrace digital transformation will be the ones that can successfully meet tomorrow’s customer needs and respond to changing marketplace expectations. “To succeed, insurers must understand what’s possible and take decisive action to deliver value now and ignite long-term growth.”

And the next wave of insurtech is already starting to take shape: a rapid migration toward solutions that are customer-centric, as opposed to the traditional carrier- and broker-centric models. At InsurIQ, we’re aiming to be at the vanguard of this movement with the development of solutions for the web-based purchase of insurance products in a shopping cart environment and end-to-end solutions from proposal generation through renewals, including underwriting workflows, policy administration, document fulfillment, premium accounting and producer management.

Whatever new-generation approach an insurer decides to implement, a solid consultative relationship with a third-party solutions provider is key.

See also: 3 Insurtech Firms Take a Star Turn  

The pace of change in the insurance industry, and other businesses, as well, will keep accelerating in the short term and beyond. Carriers that do not emphasize speed to market as a primary objective of their IT initiatives will be left in the dust as other, forward-thinking companies sprint past them, picking up new clients as well as enhanced industry visibility.

The Future of the Agency Channel

In today’s insurance marketplace, agencies face heavy competition from digital insurance channels and direct marketers like GEICO and Progressive. So what does the future look like for the thousands of carrier and independent agents — proponents of human engagement — who realize that all the digital insurance channels in the world can’t replace the human connection?

Independent and carrier agents can enhance and build on their own strengths to compete head-on with the impending rise of the competitive insurance channels. Agents who give personalized advice and advocacy when needed represent the great upside and the future of the agency channel.

Insurance is a security blanket. People want to know that they will be covered appropriately in their time of need, and that an advocate will be there to support them when things don’t go quite as planned. Certainly people want to know a live human being can be there when their basement floods, but being a trusted adviser relies on really knowing the policy holder – being in the life of that person with quality, frequency and continuity.

The challenge for the agency channel is building a velocity of contact with current and prospective policy holders in the insurance industry, which undeniably has the highest-touch and highest-volume requirement for interactions by its sales professionals.

When we accomplish the role of trusted adviser, it results in higher retention, cross-sell and referral business. This is being evidenced by proponents of the agency model who study the insurance industry.

See also: Reinventing Sales: Shifting Channels  

Bain & Co.’s research shows that agency/agent connection is unique to earn customer loyalty, and that a loyal insurance customer – measured by Bain’s Net Promoter Score – delivers a whopping seven times the lifetime value of a low loyalty customer and three times the value of a neutral customer. And loyal customers reward their agents by buying 25% more insurance at higher prices, staying with and consolidating their insurance with one provider and even referring friends and family.

But we are not out of the woods yet! Ernst & Young Global Customer Survey found that 86% of insurance consumers are “not very” satisfied with communications from their provider. A whopping 44% report remembering zero communications from their insurance provider in the last 18 months.

So what does all this mean for agents? The most important task for the agency channel is to focus on what they do best, offering peace-of-mind to their customers even over the values of price and convenience , which are offered by direct carriers and other emerging digital channels of the world.

To earn customer loyalty, drive growth and attract new customers, agents are adopting and mastering newer technology that can provide continuous engagement — connecting to people on email, text, phone and social media — which are the new ways consumers shop for insurance today.

In this way agents are partnering with technology to manage leads and organize marketing programs to guide consumers through an elevated, sequential customer journey geared at building relationships that are very highly valued by future insurance policy holders.

Again, research is ahead of this curve. Top insurance executives in a recent Accenture poll on the “Future Insurance Workforce” survey found that artificial intelligence is here to stay and will create workplace opportunities that will help agents work more efficiently to help drive growth and attract new customers.

In fact, the only economically feasible way to scale agency-policy holder relationship-building today is through connecting technologies that consumers now use and expect of their vendors.

Savvy agents know their customers’ values well – and are in a strong position to deliver original content through technology that best expresses the value of the agency in ways that are most meaningful to each customer. Contemporary insurance marketing automation solutions – integrated with agency management systems that maintain volume and feature sequential and automated practices – will make insurance agents more valuable in today’s market.

See also: Global Trend Map No. 9: Distribution  

Technology Tips to Compete Head-on With Digital Channels and Engage Customers

When it comes to marketing insurance, the agency connections coming from trusted advisers remain invaluable to policy holders who must choose between this and a faceless organization that relies on advertising. An agency equipped with appropriate technologies elevates the message to a much higher level! It grabs consumers and keeps them coming back for years to come.

  • Use marketing acceleration programs that induce a repeatable pattern of activity garnered from artificial intelligence and machine learning. This will inform workflows that enable agents to have smarter marketing and more personalized and predictive customer experiences that will lead to better sales outcomes.
  • Use technology tools to help meet the Telephone Consumer Protection Act, (TCPA) guidelines where everyone will need to be internationally compliant or face stiff fines for wrongfully filling out forms and other violations.
  • Use technology tools to help cope with all applicable laws and regulations of the new General Data Protection Regulation, (GDPR) that took effect in Europe and promises to take on more importance in the U.S. in light of recent Facebook privacy issues.

Why Do We Still Use So Much Paper?

Customer experience (CX) has become the lifeblood of nearly every industry in the world. Carriers that once sidelined it in favor of other internal aspects of their business have come to realize that positive and expedient customer interaction is integral to maintaining customer relationships and building new ones. While there are a myriad of ways to accomplish this, a simple yet often underrated way to overhaul CX is to move from paper forms to electronic smart forms. Not simply a cosmetic improvement, it is extremely effective at both reducing internal inefficiencies and improving relationships with policyholders.

See also: Why Customer Experience Is Key  

Consumers — especially millennials — have become accustomed to real-time, above-and-beyond customer service from companies like Amazon and Apple. They prefer to do business with organizations that provide a comparable or superior experience, and insurance is no exception. New entrants like Lemonade attract a millennial consumer base because of their transparency and straightforward communication. A significant part of that is standardizing and digitizing forms so that they don’t become a burden on either the carrier or the consumer, especially with regard to claims.

What are the biggest benefits to moving from legacy forms to new templates or web-based smart forms? We break them down here:

Smart Forms Eliminate Costly Errors: Insurers face a major problem in that most mistakes are human errors. Handwriting can be hard to read from both colleagues and policyholders. This leads to misinformation that could have severe implications months, or even years, down the line if a claim happens. Another issue is missing information and supplemental forms that are required based on previous responses that never get filled out. Additionally, errors frequently occur on physical forms because consumers aren’t pointed to their mistakes until the forms are already submitted. Insurance forms are often complex and confusing and are difficult to fill out correctly without proper guidance. Oftentimes, there are certain non-obvious questions that only apply to specific applicants.

These errors can result in wasted time and resources for carriers who need to decipher illegible handwriting, correct errors or request missing information before submitting the form. One carrier we spoke with said that errors are so common that it takes two to three weeks to get through a process that requires 30 minutes once automated. This delay can be deadly when it comes to new business acquisition, as consumers do not want to wait that long. A digital form can alleviate the problem immediately by guiding the customer through the completion process, such as indicating where information needs to be entered, prompting for additional information based on previous responses or catching unsigned documents.

For example, GroupHEALTH Benefits Solutions, a health benefits solution provider, saw a significant improvement when it switched from paper to smart forms. Their original paper-based method was error-prone, and employees had to take considerable time to research and resolve missing or conflicting information. The provider realized it could improve enrollee experiences and save money by implementing digital transformation techniques such as automation and intelligence through smart forms. Once the implementation took place, there was a near-immediate ROI. The new online enrollment process ended up reducing errors, which in turn helped the company focus on providing excellent CX.

Confusing Forms Can Lead to Customer Drop-Off: While errors on paper forms can waste significant time and resources for a carrier, the forms can also leave customers angry, frustrated and willing to give their business to a competitor. According to Ernst & Young’s Global Insurance Consumer Survey of 24,000 people in 30 countries, 40% of customers left an insurer in the past 18 months. The most interesting finding was that respondents in North America placed “ease of doing business with an insurer” (60%) as more important even than “value for money” (53%) – especially in P&C insurance. Respondents said that, because there were often not many opportunities for carriers to interact with their customers, each touch point became critical to their view of the company.

Consider then, the importance of forms, which are the primary source of collecting data between carriers and policyholders. Smart forms create a system that allows only the correct information to display once a question is answered, whittling information down to only what that specific customer needs to know and fill out. At GroupHEALTH, as an example, enrollees would mistakenly assume their company plans included coverage not offered by their employers. This confusion led to customers filling out unnecessary forms and back-and-forth that ate up time and resources and increased frustration levels. After the switch to smart forms, however, the system would automatically prompt enrollees to supply missing information, noticed inconsistencies and flagged missing information. It was a runaway success, with GroupHEALTH estimating that, in just the first two months, it reduced the cost to manage enrollments by 20% to 25% — just from switching to an online-based method.

See also: Key to Digitizing Customer Experience  

Digital Forms Help Employees, Too: When there are fewer errors, customers are happier (of course), but so are employees. For every mistake on a manual form, an employee must take time to correct it, send it back and re-process it. This cuts time from providing an excellent customer experience, replacing it with tedious correction work. When an online-based forms procedure is implemented, employees are able to spend more time on sales and customer service, rather than dealing with the mundane tasks associated with keeping track of forms and fixing incorrect ones. Online forms offer real-time customer access to policy details, billing, claims and beneficiary information. All of these are as important to the employees as to the customers because they create an environment of efficiency and transparency.

Making changes at the ground level with digital documents may seem like a small step toward providing exceptional customer service in a sea of emerging technologies, but it’s also necessary to the health of a carrier’s bottom line.

Insurance in the Age of the 12th Man

Brian Duperreault, chairman and CEO of Hamilton Insurance Group, told attendees at A.M. Best’s 23rd annual conference in Scottsdale, AZ, that the insurance industry has been an analog laggard rather than a digital leader, and that the clock is ticking on responding to the needs of a digital world. The address follows:

Thank you, Matt, and thanks for that wise review of the forces that have shaped the industry over the years.

Hearing that history line makes me feel pretty old. I lived through a lot of those highlights.

You’ve heard where we’ve been as an industry, and I’ve been asked to give you some thoughts on where we’re going.

The title I’m using is Insurance in the Age of the 12th Man. I’m sure most of you know what I’m referring to by the 12th man – any Seahawks fans with us today? – but in case you don’t:

The reference to a 12th man was first used more than 100 years ago to describe a really dedicated football fan.

It gained some significant traction at Texas A&M, and the Aggies still claim it’s theirs – in spite of what the Seahawks say.

The point is this: Fans can be so fanatically loyal to their team, it’s like having a 12th man on the field. Fans can shape the game and often affect a win or loss.

I’ve heard they can even make the earth move.

Last month, fans at a soccer game in the U.K. celebrated a last-minute goal so “enthusiastically” that it was recorded as a minor earthquake.

Why am I referring to the 12th man in a talk about the future of insurance?

Because we’re doing business in an age that’s profoundly different from anything we’ve ever experienced, and I believe it’s driven by what I’m going to call the 12th man phenomenon.

Virtually every industry has been redefined by an increasingly demanding customer, and it’s doing the same to ours. It’s the fan base – the collective 12th man – that’s driving how we develop, market and distribute our product.

And for many companies, there’s not much time left to figure out how to stay in the game.

PwC just released its annual CEO report and noted that access to digital technologies means that we’re more connected, better-informed and, in PwC’s words, “increasingly empowered and emboldened.”

This isn’t just a shift in market forces. The market has always been changing, and we’re used to that. This is something entirely different.

Given the digital world we’re living in and the impact of real-time communication through social media, the market’s voice is much more crystallized. There’s an immediacy, an intimacy that we’ve never had to deal with before. This is a voice that’s loud, clear and specific.

One of the best examples of the effect of the 12th man is Uber.

You probably know Uber’s story.

Its founders were so fed up with how hard it was to get a cab when they wanted one that they developed an app that puts a taxi at your fingertips. They didn’t just enhance the taxi industry; they blew the existing model apart.

They didn’t care what the regulations were. They just made it work – and it continues to work, because Uber gave customers what they wanted. AirBnB did the same thing to the hotel industry.

  • If you’re used to downloading apps to watch a movie, do your banking or order your groceries;
  • If you customize how, when and where you listen to the radio or watch TV;
  • And if this uncluttered, efficient, highly personalized way of living is what you’ve been used to since you could walk, then

There’s no reason that you’re going to expect anything less when you’re buying insurance.

Maybe this sounds like background noise to those of us who’ve been in the business for a while. After all, our industry has been resilient over the centuries. It’s been a safe bet for decent returns on investment.

But people my age see the world through an analog prism. This is our Achilles heel – because there’s a generation of 80 million Americans who see the world through a digital lens.

This is the workforce that Matt referred to earlier.

They’re going to be the buyers and sellers of our products. They’re going to run our companies. As the largest voting bloc in the U.S., they’re going to elect our governments.

They’re going to be a noisy and demanding 12th man. They already are.

This expectation for a streamlined and efficient buying experience is one of the main drivers behind my company, Hamilton Insurance Group. We believe that insurance has been an analog laggard, not a digital leader. We think we can do something about that.

As I give you thoughts on what will shape our industry over the next decade, I’m going to keep coming back to the 12th man.

I’ve seen lots of lists of future industry trends – some of them are mine – but I think it comes down to:

  • How to build a sustainable company
  • How to be smart about data and
  • How to strip waste out of our industry.

Let’s look at sustainability.

Traditionally, creating shareholder value in an insurance company has had two main components: investments and underwriting.

Right now, we’re between a rock and a hard place on both counts.

We’re in a prolonged zero-lower-bound period where interest rates dip in and out of negative territory.

In a traditional insurance company, there is no money to be made on the fixed instruments that most companies are required to invest in.

Having low-yield assets on a balance sheet for regulatory purposes virtually ensures little investment income.

What’s a CEO or CFO to do?

Well, you can shift your investment philosophy and invest in equities or alternative instruments with a higher yield. But you have to prove you can handle the additional risks that come with a different mix of asset allocations.

You also need an expert asset manager who’s well-versed in current regulations, as well as the commitment of your executives and board, to move to a riskier investment strategy.

You can bank on profitable underwriting – but in a market like this, that’s a grueling experience. Terms and conditions are tough, and margins on most lines of business are razor thin. You have to stay disciplined and resist the siren call to write discounted business. And it seems the days of large reserve takedowns are over.

You can look for M&A opportunities, which in many cases may delay the inevitable and add the stress and cost of effectively integrating what are likely to be legacy systems and cultures.

And while you’re grappling with investments, underwriting and M&A, you have to keep an eye on the rapidly changing digital world, which could render your company obsolete.

So what’s a sustainable business model look like in the age of the 12th man?

I think part of the answer lies in a flexible regulatory environment.

If you’re a company in Bermuda, where your regulator is the Bermuda Monetary Authority, you can establish an alternative investment strategy, as my company has done, in return for putting up additional capital, and work with a data-driven investment manager like Two Sigma, which manages Hamilton’s investments.

Almost a decade ago, the BMA embraced the Solvency II framework and then fought to get Solvency II Equivalency for Bermuda. Their persistence will be rewarded when official recognition of Bermuda’s equivalency takes legal effect on March 24.

I don’t think it’s a coincidence that virtually the day after Bermuda’s Solvency II Equivalency was announced, XL Catlin announced it was moving its company registration to Bermuda. I think others will follow.

Bermuda has reacted well — better than most — in recognizing that flexibility is key to staying solvent.

In the States, things are more complicated. Deloitte released a report last month that said one of the biggest challenges for today’s insurance companies is trying to comply with new capital regulations that were originally designed for banks and don’t provide much flexibility in modifying an investment strategy.

It’s an accepted tenet that regulation works best when it addresses market failures and protects insurance buyers. But regulation can over-correct: In some cases, states have been too slow to rewrite laws, some of which have been in place for almost 100 years.

Today’s regulator has to confront the effect that the digital dynamic is having on both the insurer and the insured. This creates the need for a delicate balancing act: defining the right regulatory regime in a market that’s morphing in front of our eyes.

A word about rating agencies – sometimes referred to as de facto regulators:

Some agencies, like A.M. Best, have been forward-thinking in broadening the factors they consider when assigning ratings. I applaud Best’s for undertaking the survey on predictive analytics that Matt discussed. This is a meaningful contribution to the dialogue. We need more of that from our regulators and rating agencies.

Best’s has also done the work to understand alternative assets. For example, at Hamilton, Best’s spent time onsite with our investment manager, recognizing that these complex strategies require some effort to understand.

Having said that, I’d like to urge rating agencies to put more weight on the 12th man’s voice. How you’re accepted by the market matters. The quality of the relationships you establish, the panels you’re on, the submissions you receive – that all matters.

I said investments and underwriting were traditional aspects of building sustainability. M&A can play a role, and technology definitely does.

However, in this second decade of the 21st century, there’s so much more to running an insurance company.

In addition to a vocal, demanding 12th man, we’re living in a world of extreme political polarization, exchange-rate volatility and social instability.

And against that fragmented, disrupted backdrop, there’s the expectation that a company’s commitment to purpose should be as important as its commitment to profit.

Almost half of the 1,400 CEOs surveyed by PwC feel that, in five years, customers will put a premium on the way companies conduct themselves in global society.

Building a sustainable company is one of most complex issues we’re going to face over the next decade.

Now let’s look at data.

A few years ago, we were all talking about Big Data. It was THE buzz word.

Looking back, I think it’s safe to say that most of us didn’t know what we were talking about.

But living with the effect of disruptive technology, we’ve been on a steep learning curve. We’ve begun to wrap our heads around what we can do with the massive streams of data available to us.

EY just released a study on sensor data. It’s worth a read if you haven’t seen it.

As lead director at Tyco, I have to declare my interest in the subject. We’re spending a lot of time looking at how streaming data can help us develop better products.

We’re taking a holistic, data-driven look at behavior across multiple channels to give our clients the insight that helps them optimize their performance.

EY says top-performing insurance companies are already innovating with telematics, wearable technology and sensor data. EY lists the competitive advantages of being smart about data this way:

  • You can assess risk more precisely
  • You can design products faster
  • You can connect with customers more directly
  • You can revolutionize claims handling
  • And – you can maximize profitability because of better targeting

The implications for what sensor data can do for our industry are remarkable.

We’re talking about sensors on people, on cars, on ships and planes, in offices and homes, on GIS systems that provide data about climate – pretty much anything on the earth, or in the sea and sky.

Understanding this voluminous amount of data, finding correlations and eliminating bias can help us develop policies that are better-written, more comprehensive and more relevant.

Being smart about data also helps us come to grips with emerging risks, particularly a risk like cyber.

At Hamilton, we’re taking a cautious position on cyber. We’re not writing it as a class until we’ve identified an approach that gives us comfort. We haven’t found one yet, mainly because there’s been a tendency to underestimate the interconnectedness of cyber risk.

Too often, discussion about cyber revolves around hacking. But if you put any credence in what I just said about the impact of sensor data, you have to believe that there’s data-based risk in everything we do nowadays. If that’s true, what are the implications for cyber?

Getting back to sensor data –

Access to this type of intelligence has some significant implications for our distribution partners. The role of the broker and agent has been evolving for years, but data analytics is one of the greatest threats – or opportunities – for the partners who help us develop and distribute our products.

Who owns the data? Who interprets it? Does the insurer or the insured need anyone to do that any more?

Then there’s the duality of the role that brokers and agents play. They represent the insurer’s interest as well as the insured or reinsurer. Serving two masters is never easy. How well can you do that in an age of colliding data sets?

I think the answer to whether there’s still value in an intermediary is a qualified yes – IF the broker or agent brings a level of expertise and counsel that far surpasses what the carrier offers or the client can determine by himself. This means setting the gold standard for manipulating and interpreting data.

A last comment on data –

One of my own learnings over the last year or so is that if a company is going to embrace data and technology, it has to be a company-wide initiative. It can’t be done in silos.

I don’t think it works to have an incubation or innovation lab where a dedicated team is exploring a new risk management frontier and the rest of the organization is conducting business as usual. You’ll have constant dissonance between the analog and the digital.

At Hamilton, one of the advantages of being a start-up is that we’ve been able to make technology a focus of our strategic plan from the beginning.

Last year, we bought a Lloyd’s syndicate that we’ve completely rebuilt. The benefit of not having any legacy has allowed us to create an end-to-end, integrated system with all reports coming from one centralized data warehouse.

We’ve already demonstrated the value of this model. When Lloyd’s moved to require its syndicates to report pricing data for gross rather than net performance, a lot of managing agencies struggled. We didn’t.

Finally, I’ll look at the last issue I listed in my opening comments – getting rid of the waste in our industry.

By waste, I mean the massive cost of doing business. I’ve been beating this drum since Hamilton was established a couple of years ago, and I’ll keep at it because, if anything puts our industry at risk, it’s the inefficient way we acquire business.

Thirty to 40% of every premium dollar goes to acquisition and managing the business. At Lloyd’s, it’s even higher, largely because analog data-gathering weighs on the market like an albatross.

The quest to make buying insurance easier and more efficient through data analytics is the DNA of our U.S. operations, where our focus is small commercial business.

We want to remove the pain of the rate/quote/bind experience and sharpen the underwriting. We’re blessed with employees who believe in our mission and who have moved mountains to make it real.

They’ve spent the last year stripping unnecessary questions from the forms used in the acquisition process. We know a lot of that data suffers from human bias or error, and much of it is available from public sources that are more reliable.  We use data that comes from dozens of different sources as part of our risk scoring and underwriting process.

Our long-term goal at Hamilton USA is to get the questions that an agent or broker asks an insured down to two: name and address. Smart data analytics, as well as more informed underwriting, will do the rest.

We’ve also created streamlined portals for quotes and are just weeks away from launching mobile-based technology that rates, quotes and binds business owners policies.

The small commercial segment that we’re working in has an average policy size of under $25,000. This is business with small margins and high transactions. Efficiency is critical if you want to make any money.

And there’s ample room for doing just that. In the U.S., this is a $60 billion market. It’s almost $90 billion when specialty risks are included.

You can see why speed to market can make a huge difference in profitability.

Speed to market doesn’t mean we’re cutting out the middleman.

There’s plenty of room at the table for brokers, agents and MGAs – as long as they want to align their systems and practices with our cutting-edge analytics.

We’re working with partners who are as excited as we are about the potential that data analytics represents. We’re being approached by many others who are interested in taking this journey together with Hamilton.

And there’s a generational component to all of this. Some older clients want to do business with a broker or an agent. It’s a relationship they recognize and feel comfortable with.

But remember that 12th man. There are 80 million of them for whom a middleman just gets in the way.

In closing –

I know that Matt was a keynote speaker at a conference earlier this month organized by Valen Analytics. I understand there was lots of good discussion and some fascinating stats underscoring the imperative to embrace data analytics.

Apparently, 82% of companies surveyed last year by Valen say that underwriters are resisting analytics. 30% worry about a loss of jobs. 30% don’t trust the data.

77% of underwriters and actuaries argue about pricing. The No. 1 reason? Underwriters dismiss data in favor of their own judgment.

While we continue to resist change, venture capital companies are looking at our industry and seeing dollar signs.

In 2015, VCs invested $2.65 billion in start-up insurance companies like Oscar, Gusto and PolicyGenius. Ten years ago, that figure was $85 million.

So the clock is ticking. There’s not a lot of time left to figure out how to build sustainable companies, be smart about data and be more efficient.

Above all else, we need to get over our inherent resistance to change. If insurance as we’ve known it was an ecosystem, large sections of it would be on the endangered species list.

But I’m an eternal optimist. I know we have bold people working in insurance and reinsurance. I know a lot of us get what needs to be done.

So let’s just do it – before that 12th man comes down from the bleachers and does it for us.

Thought Leader in Action: At U. of C.

An organization the size of the University of California system—10 campuses, five medical centers, a student body of 239,000 and nearly 200,000 faculty, staff and other employees—requires the close attention of individuals who help assess and manage risk and insurance. Kevin Confetti, the UC deputy chief risk officer in the Office of the President, is one of those people who keeps the University of California operating and its employees satisfied.

Born and raised in Pittsburg, CA, Confetti grew up in a hardworking blue-collar family with parents who worked at DuPont and at U.S. Steel. While in high school, he aspired to be a teacher and football coach, and he attended UC Davis, where he played on the varsity football team and graduated with a B.A. in rhetoric and communication. After graduation, he hung up his cleats and got his first real job working in claims adjusting for Cal Comp, where he found he really liked the variety of work. That experience led him to promotional opportunities at Fireman’s Fund, Ernst & Young and Octagon Risk Services. Serving for five years as a claim unit manager at Octagon—the UC system’s third-party administrator (TPA) at the time—Confetti was hired by the UC system in 2006. Now, he’s in the process of achieving his ARM (Associate Risk Management) designation.

Kevin Confetti

Within the UC system, Confetti reports to the chief risk officer, Cheryl Lloyd, and he provides overall management of self-insured workers’ comp (aka “human capital risk”), employment practices, general and auto liability, medical malpractice, construction risks and $50 billion of property risks. Confetti said the UC system’s various campuses and medical and research facilities are actually quite autonomous, while the Office of the President strives to manage the overall risks without using too many mandates. It’s a program that responds to needs as it sees fit, and it helps set up system-wide policies.

To do his job well, he said he needs to be a good communicator, a good listener and someone who facilitates collaboration and cooperation among his various facility risk management teams. He described the job as, essentially, convincing his campus teams that something is the right thing to do.  He loves the variety of what he manages, and his passion is to save the UC system money, whether it’s $1 or $1 million, so those savings can go to the UC system’s mission. Confetti said, “Leadership requires the ability to convince others in the UC system of the value of our propositions and decisions.”

With an in-house risk management staff of 10 to 12, Confetti serves each campus risk management department (ranging from about two to three at UC Merced to 12 at UCLA) as clients. The UC system uses Sedgwick as its TPA for its self-insured programs, which provides in-depth metrics, data mining and monthly and ad hoc reports. Sedgwick also provides assigned analysts in virtually every UC risk area.

Confetti also manages the UC Risk Management Leadership Council, which meets monthly on various campuses. In addition, his office hosts a Risk Summit conference once each year for every campus and facility risk management team. These teams come together to discuss trend statistics and emerging issues that are key risk factors for each unit as well as the overall UC system. While each campus team does things a little differently, they all operate with a similar mindset that fits within the UC system’s overall objectives.

At the moment, Confetti’s biggest area of concern is cyber security; cyber issues can be difficult to identify and prevent and can be one of the most destructive risks, threatening things such as power grids and other infrastructure. The UC system employs several different IT structures, and, because most insurance coverage excludes cyber risk, the risk is extremely dangerous from a risk manager’s perspective—especially given the size and nature of electronic data managed by the UC system.

A second issue Confetti is currently concerned with is the risk to students and faculty from active shooters or other terrorist-minded groups.

A third risk he’s focusing on is the use of drones; Confetti said the federal government, businesses and institutions haven’t been able to effectively manage the growing number of drones operating freely in the U.S.

Confetti said he would tell newcomers to risk management that technology continues to propagate new risks. He advised, “Be willing to take on risks, but learn from your mistakes and know that you don’t have all of the answers. You have to take risks to move forward, but negative experiences should provide the knowledge and skills to mitigate risk more effectively. … Be flexible and open to new ideas. … Avoid reliance on statistics. Data will give you a trail of facts like breadcrumbs to show you what trail you need to follow. But get out of the office and make the rounds to see and hear what’s going on.”