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‘Innovation in Action’ Award Winners

SMA has announced the winners of the 2015 SMA Innovation in Action Awards, recognizing three insurers for truly ground-breaking projects and initiatives with demonstrable real-world impact. In conjunction with the announcement of the winners, SMA published a collection of case studies on all the insurer award submissions this year, showcasing the remarkable innovation taking place in the industry today.

The submissions for the SMA Innovation in Action Award ranged from the introduction of business models to the invention of creative distribution models, along with an array of technology projects that focus on the adoption of maturing and emerging technologies that position insurers to differentiate and win in the industry.

Last year, a chief characteristic of the winners was that they were using maturing technologies like telematics and cloud in unexpected ways to really differentiate their projects and solutions. That pattern shifted among the 2015 winners, who focused on initiatives using several emerging technologies in combination with each other or in combination with maturing technologies. Not long ago, the rate of adoption of emerging technologies that we saw this year would have been unthinkable. Now, insurers are clearly realizing the advantage of implementing emerging technologies in tandem with maturing technologies, as seen in this year’s insurer winners:

Haven Life Insurance Agency

Offers the first solution for purchasing medically underwritten term life insurance online. Haven Life users can calculate their needs, then apply for and start coverage on the Haven Term policy in about 20 minutes. Its sophisticated underwriting algorithms leverage external data sources to render an instant decision on applications. By reinventing the traditional, four- to six-week process of buying life insurance into an entirely online, 20-minute process, Haven Life has successfully streamlined how life insurance policies are sold, underwritten and administered.

The John Hancock Vitality Program

Offers a new approach to life insurance that rewards policyholders for the steps they take to promote their health and wellbeing. The program fosters a revolutionary bond between policyholder and life insurer using interactive emerging technologies like wearables and “gamification.” Activities, including exercise and annual health screenings, can be tracked via a mobile app, a dedicated website or a free Fitbit to earn Vitality Points that determine a member’s status for a broad range of rewards and premium savings.


Is a pioneer in the use of drones in the insurance industry, particularly in P&C claims following natural disasters. In collaboration with the nonprofit Roboticists Without Borders, USAA deployed drones after the Oso, WA, mudslides in 2014 to provide data and imagery to county officials to assist in rebuilding. USAA was also the first insurer to file a request with the FAA for permission to utilize fixed-wing drones for research and development.

These insurers are springboarding into the future with forward-thinking applications that use a wide range of different technologies to differentiate their offerings, the customer experience and company capabilities. Their winning initiatives demonstrate commendable examples of innovation in action.

Is Your Organization Open to New Ideas?

Recently, I wrote about innovation and changing the way we acknowledge, nurture and incorporate it into our organizational culture. There are many areas where our industry desperately needs transformation and innovation. Our very survival depends on new ideas.

We at SMA are witnessing remarkable progress — innovation is on a bullet train! — but we have some observations about the opportunities and the obstacles for new ideas. There are high hopes for a boatload of great ideas — creative product offerings, process improvements, better ways to engage the customer, more effective service modes, new approaches to capitalize on maturing and emerging technologies, etc. But the reality is that in many organizations, the innovation path is lined with obstacles that leave potentially success-producing concepts off the table and out of the picture. In many cases, these roadblocks are not intentional — in fact, they are not even apparent to the very leaders who are working hard to stimulate innovation.

Some insurers are open to any and all new ideas — every single one! Any and all innovation ideas are nurtured. In contrast, other insurers have targeted their innovation efforts by assigning teams to look at specific process areas or business lines. A project approach makes it easier to manage and measure but can limit the scope of the vision. Other insurers designate the responsibility for innovation to a department head, frequently IT or a line of business. With this approach, responsibility is assigned, typically with accompanying funding, but it too can be limiting because of unintended gatekeepers and biased priorities.

Innovation requires a nurturing environment, one that encourages people to submit ideas with the confidence that this is a place to explore and experiment – to assess the state of readiness, address potential obstacles, find probable pitfalls and measure the potential for success with the assurance that failure is acceptable. Once an idea is explored, there needs to be a place for it to mature and flourish or a graceful way to table it until timing is right, and in some cases a gentle way to kill it. The ideal is an environment with no gating criteria, no judgment, no politics.

Embracing true transformation and innovation requires a thorough and straightforward examination of the current role innovation is allowed to play within your organization. To discover the roadblocks, begin by asking these five questions:

  • Is there a genuine acceptance that valuable ideas can come from any level within our organization?
  • Are employees empowered to offer suggestions without the fear of embarrassment or possible reprimand?
  • Is there authentic encouragement for an exchange of opinions?
  • Does a pathway for fresh ideas exist?
  • Have we demonstrated administrative as well as executive support for innovation in general?

The New Cyberthreat You Face at Work

The latest greatest swindlers in the cybercrime racket know you’re onto their digital three-card monte, and they’ve made a few adjustments, putting yet another wrinkle in the corporate-hacking game by targeting top-level employees for major profits.

These hackers appear to be based in North America or Western Europe, and they know a great deal about the companies and industries they’ve been cracking. They could be “white-collar hackers” or just good studies of character. It really doesn’t matter. Here’s what counts: They are hatching cyberthreats so nuanced you may not see the hack that takes out your company ’til the smoke clears.

These hackers may have worked for your company, or one like it. They are going to know how your teams communicate. They’ll use the lingo and shorthand that you see every day. Emails may be super simple, like, “I need another pair of eyes on this spreadsheet about [term of art only people in your business would know].” They may know what you are likely to be talking about after certain kinds of industry news releases, and they’ll have a good idea of what times of day get busy for you so that you are more distracted and less likely to think before you click.

“The attacks are becoming much more sophisticated than anything we’ve seen before,” says Jen Weedon, a threat intelligence officer at the Silicon Valley-based cybersecurity firm FireEye.

The New York Times reported about one such group of hackers targeting senior executives at biotech companies with a goal of garnering insider information to game the stock market.

FireEye has been tracking the group, which the company calls Fin4, for a year and a half. (The “Fin” designation is assigned by the company to indicate groups where the main goal is to monetize proprietary information.)

“Fin4 has reached a threshold of capability that sets them apart,” Weedon told me during a phone conversation. “They are very thoughtful about who they target. They go after specific companies and are a lot more scoped in their approach.”

Attacks of this kind may start with the studied e-impersonation of trusted colleagues, business associates or anyone from a constellation of contacts—compliance officers, regulators, legal or financial advisers—with the single purpose of getting someone in a senior position to personally, unwittingly hand over the keys to the castle. Once Fin 4 is in, sensitive—potentially lucrative—information can be accessed and put to use.

“They will send a very convincing phishing email,” Weedon said. “It may prompt a link that looks just like Outlook.” The target enters her credentials to see the attachment, not realizing that she was not in Outlook at all. There may even be a legitimate document on the other side of that fake login page, but it’s a trap. Once the hacker gets into a key person’s inbox, Outlook settings have been reset to send any messages containing the words “hacked” or “malware” directly to the user’s trash folder, thereby giving the cyber-ninja more time in the system to collect information about mergers and acquisitions, compliance issues, press releases, non-public market-moving information—anything that can be used to make a smarter stock market trade.

According to Weedon, the group has been able to infiltrate email accounts at the CEO level.

Once they’ve gained access, the hackers may simply collect everything in the CEO’s inbox or take an attachment found there and plant malware that then spreads throughout the company, thereby exposing still more information. The difference here is that the hack relies on legitimate credentials to gain access, so it’s a much lighter touch with potentially much more information being compromised. If the hackers forgo malware, there aren’t necessarily any traces at all of the compromise.

The “old” way these breaches worked—one still very much practiced by Chinese and Russian groups—involved the use of general information, kinda-sorta knowledge of the target’s business and hit-or-miss English. Because there is often less specificity and more variables in these kinds of softer attacks, the dodge is easier to spot. It’s more likely to find a lower-level employee falling for it. In most cases, these targets don’t have the kind of access to information that can cause major damage. Having gained whatever access is possible through their mark, old-school hackers move laterally into the organization’s environment, whether by recording keystrokes to exploit privileged employee credentials or blasting a hole in the company firewall. They might as well be Bonnie and Clyde robbing a bank. The goal is to siphon off information that can be turned into an easy profit, but the process leaves traces.

What’s so worrisome about Fin4 is that the hackers can come and go—gaining access to everything and anything pertaining to your company—and you may never know it. For the numerous healthcare and biotech companies that they targeted, the only real-life consequence could be an advantageous trade that somehow anticipated the announcement of a new drug, or shorted a stock associated with a failed drug trial.

If you are the target of choice, you will have to be exceptionally well trained by a cutting-edge information security professional and completely tuned in to the subtleties of your workflow to avoid getting got. These fraudsters will have at their fingertips the kinds of information that only an insider should know, and the bait they dangle in front of you will be convincing.

While the art is very different, the basic mechanism is the same. Company-killing compromises require human error. While more common hacks rely on a weakest link that can be exploited, the more hackers evolve, the more we all must evolve with them.

Rethinking Underwriting for Commercial Lines

It is time to step up automation in commercial lines, and you can do just that with a powerfully rich combination of enhanced technology capabilities in the key areas of underwriting and policy administration – a combination that lowers cost, simplifies doing business, makes it easier to enter new markets and significantly improves underwriting outcomes.

Modern policy administration systems for commercial lines have matured and expanded. Many now offer automation assistance to a few aspects of the underwriting process, and a handful even address select parts of the quoting transaction process. But the news is that exciting, next-generation underwriting technologies and solutions are delivering automation directly to the desk of the underwriter and assisting in the management of the entire underwriting process.

These capabilities are enabling more insightful and timely service to the agent: a significantly streamlined process and workflow; rapid, if not immediate, turnaround of quotations; precision pricing; better risk selection – all in a user-friendly, collaborative environment. While all commercial lines insurers are able to benefit from some level of increased underwriting automation, this enriched level of underwriting finesse is particularly important to insurers that are writing mid- to large market risks and even highly specialized and complex risks, especially those that require negotiation and collaboration with the agent or broker. Insurers that are not paying close attention to what is being implemented by some of the market leaders are likely to be burdened with higher underwriting expense and saddled with less effective underwriting outcomes. If this automation plays out as projected, it might become a continual struggle to match the level of service that leaders are providing to agents and brokers – a struggle that could leave some insurance companies in the dust.

So why haven’t all commercial insurers installed these next-generation underwriting technologies and solutions – the very approaches that would put them in a leadership position or at least enable them to keep up with the mainstreamers of tomorrow? The answer boils down to a disconnect in linking desired business capabilities to the available technology capabilities and, perhaps of more importance, two major misconceptions. First, there is a misunderstanding relative to what a modern policy administration system can do for commercial lines underwriting. Some mistakenly believe that a modern policy administration system can and will provide next-generation underwriting automation for the underwriter. Second, there are misperceptions about the complexity involved in managing any overlaps or duplications that exist between the policy systems and underwriting solutions. The reality is that advanced underwriting solutions and technologies coupled with a modern policy administration system create a powerful combination that delivers a tangible competitive advantage.

It is indeed possible to transform the commercial lines underwriting process. This is a maturing area for solutions with new entries in the marketplace. These solutions now offer a rich and complete set of capabilities specifically designed for commercial lines underwriting – solutions that align well with the changing needs of the business and also capitalize on developing opportunities. These solutions really step it up for commercial lines insurers by applying the right level of automation to properly balance the science and the art of underwriting, to deliver real competitive advantage today and place desirable business that stands the test of time on the books.

Insurers seeking new capabilities need to look closely at these new offerings. Yes, the overlaps with what a modern policy administration system does are real, but this can be managed without great difficulty. Any perception of extreme complexity is typically misguided. The value an insurer can achieve from the powerful combination of a modern policy system and a complete suite of advanced underwriting solutions will far outweigh any effort involved.

I have been conducting research on, tracking, and reporting on both underwriting and policy administration capabilities in commercial lines for more than 13 years. These are exciting times for the industry. Real opportunities for stepping up to the challenges of the increasingly complex world of commercial insurance are here. The smart insurers will capitalize and become intelligently nimble – realizing their reward in profitability and market share. The rest will follow, struggling to catch up and stay in the game.

11 Reasons to Start CPCU Today

  1. You will gain the knowledge you need to truly understand the overall property/casualty insurance industry at a high level.
  2. You will get access to membership in the CPCU Society both locally and nationally, which will open up amazing networking opportunities with the leaders of our industry.
  3. Only 4% of our industry has achieved the CPCU, so it immediately puts you in the top echelon of the industry when it comes to education.
  4. CPCU opens the door to promotions and new positions. Getting the interview for better positions becomes much easier with the highly respected CPCU letters next to your name.
  5. The average CPCU is 54 years old. With so many retirements happening in our industry, young CPCUs are in very high demand.
  6. Many of the local CPCU Society chapters are looking for young talent for their boards, giving you lots of opportunity to gain experience in a leadership role.
  7. At around $4,000 for the whole program, it’s much less costly than an MBA.
  8. Chances are your company will pay 100% of the cost of the program and pay for the trip to the annual meeting, and some even give bonuses for each test passed and for completing the program.
  9. It shows a real commitment to the industry, which makes companies much more likely to take a risk on you and offer you a stretch assignment.
  10. The average CPCU makes 29% more than non-CPCUs with the same job title.
  11. If you start today, you have just enough time to finish in time for Hawaii 2016!!!!

Share this article with those at your company who would benefit from getting their CPCU! If this article inspires you to get going on CPCU, let me know in the comments, and I will personally call you to answer any questions you might have about the CPCU program! 😀

Already have your CPCU? Tell us: How has earning your CPCU improved your career? How did you decide to start pursuing it? Comment below.