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In Age of Disruption, What Is Insurance?

“Somehow we have created a monster, and it’s time to turn it on its head for our customers and think about providing some certainty of protection.” – Inga Beale, CEO, Lloyds of London

In an early-morning plenary session at this year’s InsureTech Connect in Las Vegas, Rick Chavez, partner and head of digital strategy acceleration at Oliver Wyman, described the disruption landscape in insurance succinctly: while the first phase of disruption was about digitization, the next phase will be about people. In his words, “digitization has shifted the balance of power to people,” forcing the insurance industry to radically reorient itself away from solving its own problems toward solving the problems of its customer. It’s about time.

For the 6,000-plus attendees at InsureTech Connect 2018, disruption in insurance has long been described in terms of technology. Chavez rightly urged the audience to expand its definition of disruption and instead conceive of disruption not just as a shift in technology but as a “collision of megatrends”–technological, behavioral and societal–that is reordering the world in which we live, work and operate as businesses. In this new world order, businesses and whole industries are being refashioned in ways that look entirely unfamiliar, insurance included.

This kind of disruption requires that insurance undergo far more than modernization, but a true metamorphosis, not simply shedding its skin of bureaucracy, paper applications and legacy systems but being reborn as an entirely new animal, focused on customers and digitally enabled by continuing technological transformation.

In the new age of disruption …

1. Insurance is data

“Soon each one of us will be generating millions of data sets every day – insurance can be the biggest beneficiary of that” – Vishal Gondal, GOQUii

While Amazon disrupted the way we shop, and Netflix disrupted the way we watch movies, at the end of the day (as Andy G. Simpson pointed out in his Insurance Journal recap of the conference) movies are still movies, and the dish soap, vinyl records and dog food we buy maintain their inherent properties, whether we buy them on Amazon or elsewhere. Insurance, not simply as an industry but as a product, on the other hand is being fundamentally altered by big data.

At its core, “insurance is about using statistics to price risk, which is why data, properly collected and used, can transform the core of the product,” said Daniel Schreiber, CEO of Lemonade, during his plenary session on day 2 of the conference. As copious amounts of data about each and every one of us become ever more available, insurance at the product level– at the dish soap/dog food level–is changing.

While the auto insurance industry has been ahead of the curve in its use of IoT-generated data to underwrite auto policies, some of the most exciting change happening today is in life insurance, as life products are being reconceived by a boon of health data generated by FitBits, genetic testing data, epigenetics, health gamification and other fitness apps. In a panel discussion titled “On the Bleeding Edge: At the Intersection of Life & Health,” JJ Carroll of Swiss RE discussed the imperative of figuring out how to integrate new data sources into underwriting and how doing so will lead to a paradigm shift in how life insurance is bought and sold. “Right now, we underwrite at a single point in time and treat everyone equally going forward,” she explained. With new data sources influencing underwriting, life insurance has the potential to become a dynamic product that uses health and behavior data to adjust premiums over time, personalize products and service offerings and expand coverage to traditionally riskier populations.

Vishal Gandal of GOQuii, a “personalized wellness engine” that is partnering with Max Bupa Insurance and Swiss Re to offer health coaching and health-management tools to customers, believes that integrating data like that generated by GOQuii will “open up new risk pools and provide products to people who couldn’t be covered before.” While some express concern that access to more data, especially epigenetic and genetic data, may exclude people from coverage, Carroll remains confident that it is not insurers who will benefit the most from data sharing, but customers themselves.

See also: Is Insurance Really Ripe for Disruption?  

2. Insurance is in the background

“In the future, insurance will buy itself automatically” – Jay Bergman

Some of the most standout sessions of this year’s InsureTech Connect were not from insurance companies at all, but from businesses either partnering with insurance companies or using insurance-related data to educate their customers about or sell insurance to their customers as a means of delivering more value.

Before unveiling a new car insurance portal that allows customers to monitor their car-related records and access a quote with little to no data entry, Credit Karma CEO Ken Lin began his talk with a conversation around how Credit Karma is “more than just free credit scores,” elucidating all of the additional services they have layered on top of their core product to deliver more value to their customers. Beyond simply announcing a product launch, Lin’s talk was gospel to insurance carriers, demonstrating how a company with a fairly basic core offering (free credit scores) can build a service layer on top to deepen engagement with customers. It’s a concept that touches on what was surely one of the most profound themes of the conference–that, like free credit scores, insurance only need be a small piece of a company’s larger offering. This may mean embedding insurance into the purchase of other products or services (i.e., how travel insurance is often sold) or it may mean doing what Credit Karma has done and layering on a service offering to deepen engagement with customers and make products stickier.

Assaf Wand, CEO of the home insurance company Hippo, spoke to both of these models in his discussion with David Weschler of Comcast about how their two companies are partnering to make insurance smarter and smart homes safer. When asked about what the future of insurance looks like, Wand put it plainly when he said: “Home insurance won’t be sold as insurance. It will be an embedded feature of the smart home.” Jillian Slyfield, who heads the digital economy practice at Aon, a company that is already partnering with companies like Uber and Clutch to insure the next generation of drivers, agrees: “We are embedding insurance into these products today.”

Until this vision is fully realized, companies like Hippo are doing their part to make their insurance products fade into the background as the companies offer additional services for homeowners, “Can I bring you value that you really care about?” Wand asked, “Wintering your home, raking leaves, these are the kinds of things that matter to homeowners.”

3. Insurance is first and foremost a customer experience

“The insurance industry has to redefine our processes… go in reverse, starting with the customer and re-streamlining our processes around them” – Koichi Nagasaki, Sompo

To many outside the insurance industry, the idea of good customer experience may seem unremarkable, but for an industry that has for so long been enamored by the ever-increasing complexity of its own products, redefining processes around customers is like learning a foreign language as a middle-aged adult. It’s hard, and it takes a long time, and a lot of people aren’t up to the task.

The insurance industry has been talking about the need for customer-centricity for a while now, but many companies continue to drag their feet. But customer-centricity is and remains more than a differentiator. It’s now table stakes. How this plays out for the industry will look different for different companies. Some will turn to partnerships with insurtechs and other startups to embed their products into what are already customer-centric experiences and companies. Chavez of Oliver Wyman would rather see the industry “disrupt itself,” as he believes it’s critical that companies maintain the customer relationship. In his plenary sessions, he cited the German energy company Enercity as a company that disrupted itself. Operating in a similarly regulated industry, rather than becoming just a supplier of energy, the company invested heavily in its own digital strategy to become a thought leader in the energy space, to be a trusted adviser to its customer and to deliver an exceptional digital experience that, among other things, leverages blockchain technology to accept bitcoin payments from customers. For Chavez, insurtech is already a bubble, and, “If you want to succeed and thrive in a bubble, make yourself indispensable.” The only way to do this, he believes, is to maintain ownership over the customer experience, because, in today’s digital economy, the customer experience is the product.

But to own the customer experience and succeed will require insurance companies to completely reorient their business practices and processes – to start with the customer and the experience and work backward toward capabilities. In the words of Han Wang of Paladin Cyber, who spoke on a panel about moving from selling products to selling services, “It’s always a questions of what does the customer want? How do they define the problem? And what is the solution?”

4. Insurance is trust

“The world runs on trust. When we live in a society where we have lots of trust, everyone benefits. When this trust goes away, everyone loses.” – Dan Ariely, Lemonade

During a faceoff between incumbents and insurtechs during one conference session, Dylan Bourguignon, CEO of so-sure cinched the debate with a single comment, calling out large insurance carriers: “You want to engage with customers, yet you don’t have their trust. And it’s not like you haven’t had time to earn it.” This, Bourguignon believes, is ultimately why insurtechs will beat the incumbents.

Indeed, the insurtech Lemonade spent a fair amount of stage time preaching the gospel of trust. Dan Ariely, behavioral economist and chief behavior officer at Lemonade, delivered a plenary session entirely devoted to the topic of trust. He spoke about trust from a behavioral standpoint, explaining how trust creates equilibrium in society and how, when trust is violated, the equilibrium is thrown off. Case in point: insurance.

Insurance, he explained, has violated consumer trust and has thrown off the equilibrium–the industry doesn’t trust consumers, and consumers don’t trust the industry, a vulnerability that has left the insurance industry open to the kind of disruption a company like Lemonade poses. As an industry, insurance has incentives not to do the thing it has promised to do, which is to pay out your claims. And while trust is scarcely more important in any industry as it is in insurance, save in an industry like healthcare, the insurance industry is notoriously plagued by two-way distrust.

What makes Lemonade stand out is that it has devised a system that removes the conflict of interest germane to most insurance companies – as a company, it has no incentives to not pay out customer claims. In theory, profits are entirely derived by taking a percentage of the premium; anything left over that does not go to pay out a claim is then donated to charity. The result: If customers are cheating, they aren’t cheating a company, they are cheating a charity. Ariely described several instances where customer even tried to return their claims payments after finding misplaced items they thought had been stolen. “How often does this happen in your companies?” he asked the audience. Silence.

And it’s not just new business models that will remedy the trust issues plaguing insurance. It’s new technology, too. In a panel titled “Blockchain: Building Trust in Insurance,” executives from IBM, Salesforce, Marsh and AAIS discussed how blockchain technology has the capacity to deepen trust across the industry, among customers, carriers, solutions providers and underwriters by providing what Jeff To of Salesforce calls an “immutable source of truth that is trusted among all parties.” Being able to easily access and trust data will have a trickle down effect that will affect everyone, including customers, employees and the larger business as a whole–reducing inefficiencies, increasing application and quote-to-bind speed, eliminating all the hours and money that go into data reconciliation and ultimately making it easier for carriers to deliver a quality customer experience to their customers.

See also: Disruption of Rate-Modeling Process  

While the progress in blockchain has been incremental, the conference panel demoed some promising use cases in which blockchain is already delivering results for customers, one example being acquiring proof of insurance for small businesses or contractors through Marsh’s platform. With blockchain, a process that used to span several days has been reduced to less than a minute. Experiences like these–simple, seamless and instantaneous – are laying the groundwork for carriers to begin the long road to earning back customer trust. Blockchain will likely play an integral role this process.

5. Insurance is a social good

“We need insurance. It is one of the most important products for financial security.” – Dan Ariely, Lemonade

For all of the the naysaying regarding state of the industry that took place at InsureTech Connect, there were plenty of opportunities for the industry to remind itself that it’s not all bad, and its core insurance is something that is incredibly important to the stability of people across the globe. Lemonade’s Schreiber called it a social good, while Ariely told his audience, “We need insurance. It is one of the most important products for financial security.” Similar sentiments were expressed across stages throughout the conference.

In fact, in today’s society, income disparity is at one of the highest points in recent history, stagnating wages are plaguing and diminishing the middle class, more people in the U.S. are living in poverty now than at any point since the Great Depression, the social safety net is shrinking by the minute and more than 40% of Americans don’t have enough money in savings to cover a $400 emergency, so insurance is more important than ever.

For Inga Beale, CEO of Lloyds of London, insurance has a critical role to play in society, “It goes beyond insurance–it’s about giving people money and financial independence,” she said during a fireside chat. She went on to describe findings from recent research conducted by Lloyds, which determined that, by the end of their lives, men in the U.K. are six times better off financially than women. When designed as a tool to provide financial independence and equality for everyone, insurance can play an important role in addressing this disparity. While this has been a focus in emerging markets, financial stability and independence is often assumed in more developed markets, like the U.S. and Europe. In reality, it is a problem facing all markets, and increasingly so. Ace Callwood, CEO of Painless1099, a bank account for freelancers that helps them save money for taxes, agrees that insurance has an important role to play. “It’s our job to get people to a place where they can afford to buy the products we are trying to sell,” he said.

You can find the article originally published here.

Why Are We Still Just Talking Diversity?

These remarks were delivered in London on Sept. 27, at the start of the three-day Dive In Festival, an initiative designed to enable diversity and inclusion in the insurance industry. 

Thank you, Inga.

I appreciate that you feel I might be able to add something meaningful to today’s conversation. But I have to admit that as I put together my remarks, I felt a growing frustration.

I’ve been talking about aspects of diversity and inclusion for awhile now.

When I was at Marsh, the subject was one of the main focuses of a retreat I had with my senior management. At the time, Marsh had a lot of issues, and how to build a more diverse leadership was one of them.

A couple of years ago, I gave a speech at a captive conference in Bermuda called Where Are the Women?

I quoted chapter and verse from all the studies that have been done that prove having women in senior positions and at the board table contributes to an improved bottom line.

In the last year or so, I’ve talked about how diverse the millennial generation is, and how they expect their workplaces to respect and reflect that diversity.

See also: Is the Data Talking, or Your Biases?

Those talks also quoted chapter and verse showing that diverse teams produce innovative solutions that translate to better business results.

And last year, I spoke at the annual meeting of the Insurance Industry Charitable Foundation. That speech was called Where Are the Women – One Year Later. The answer wasn’t a satisfactory one.

Over the years, not much has changed. Just more talk and more research.

I’m at the point where I want to say – enough!

We’ve talked enough. We’ve researched enough.

We have proof that diverse teams are more creative.

We have proof that when employees feel included, you get superior results.

We have proof that we need to do a much better job of attracting millennials to the industry.

I won’t bore you by citing the studies that make the business case for diversity.

And quite frankly, I don’t care about the business case.

Because this is the right thing to do. Exclusion has no place in any industry, not just insurance.

We all know this is true. And yet changes we’ve made over the years have been incremental, not fundamental.

We’ve made some progress with race and gender parity, but truly diverse bench strength just hasn’t materialized.


One reason is that it’s difficult to break up the status quo, and old habits die hard.

Look at Lloyd’s. Here’s a venerable institution, with a culture and tradition all its own, and a way of doing business that’s been forged over the centuries.

Lloyd’s is to be celebrated for its resilience and endurance, and for the iconic global brand that it’s established.

But for the most part, the market has been built by males – mainly white – who are used to working together.

This shouldn’t be taken as criticism. Lloyd’s is not the only place that’s diversity-challenged.

And the fact is – a homogenous group develops its own shorthand and leans on its shared experiences. It’s a comfortable and familiar way to do business.

Nothing particularly wrong with that – except that in today’s world, a group like that is an anachronism.

Look at the world in the 21st century. Fifty percent of the population is under the age of 30. That’s billions of people with a profoundly different perspective than the generation now running the insurance industry.

In the U.S., racial minorities will be the majority in less than 20 years.

In the U.K., there’s a similar trend although not as pronounced. If our industry is going to remain relevant, our workforces must mirror the world we live in.

If we’re going to undertake partnerships like Blue Marble, the microinsurance venture that relies on technology to address the massive protection gap in the developing world, we need digital natives in our offices, not digital immigrants like me.

Everyone here today knows this. I’m preaching to the choir.

So what’s the reason we haven’t made more progress?

Legislation that prohibits discrimination in recruitment and employment practices has been in place in our major markets for years.

Every leader I know in the industry is committed to this issue.

And yet – even though more than three quarters of insurance CEOs surveyed recently have a strategy for diversity and inclusion, the same survey warns that underrepresented groups feel this is mere lip service.

Eighty percent of the women surveyed feel that, while their leaders may SAY they’re committed to diversity, career opportunities aren’t equal and promotion is biased toward men. The same goes for people of color.

See also: How Diversity Can Stoke Innovation  

What’s really at play here?

In Bermuda, the first event in our Dive In Festival is a workshop on unconscious bias. Kathleen and her team chose the subject because they feel it’s a significant factor in how we create a diverse and inclusive industry.

Inga touched on it last year when she launched Dive In.

She warned that unconscious bias “makes managers hire in their own image, missing out on the perspectives and insights that come from people with different backgrounds, gender, cultures, sexuality and physical impairments.”

And there’s the rub.

For all the intellectual support we give diversity and inclusion, we still haven’t found a way to confront the biases each one of us has.

Unconscious bias is another area where there’s been a lot of research. Some statistics here might be helpful in understanding how this works.

Our brain processes about 11 million pieces of information a second. To manage this constant influx of data, we develop mental shortcuts to handle what we’ve learned so we’re not overloaded by what we’re learning.

These shortcuts are influenced by our environment, our upbringing and our experiences. And depending on what those influences are, we end up holding stereotypes we’re often not aware of.

That’s the gist of unconscious bias.

Implicit or unconscious bias prompts our brains to make snap judgments without even thinking about them. It’s easy to see how this can affect hiring and promotion decisions.

I’d like to pause here, because I know that some people balk at this explanation for why we’ve made so little progress with diversity and inclusion.

To anyone who’s been on the receiving end of what feels like a discriminatory decision, this sounds much too convenient.

In other words: Don’t hide behind the excuse that your preconditioned brain made an unfair hiring decision.

This is a fair comment. I’m not saying that our industry’s management is so evolved and self-aware that conscious decisions to discriminate have been eliminated from the workplace.

We know that’s not the case.

However, if we accept that unconscious bias does affect our ability to make meaningful progress, what do we do about it?

How do we recognize our biases and learn how to compensate, so that the diversity and inclusion balance tips in the right direction?

Events like Dive In help. For the next three days, thousands of people working in our industry will be thinking and talking about diversity and inclusion. That’s a great start.

I’m involved in another initiative called the Insurance Careers Movement. This is a campaign to compel millennials to choose insurance as a career. One of its key messages is there’s a place for everyone in our industry. I’m grateful to Inga for joining me in this effort.

Both Dive In and the Insurance Careers Movement keep issues of diversity and inclusion at the forefront. They raise our collective awareness.

Ultimately, it’s people like me who have to commit to making a difference, because the buck stops with us.

The most obvious way for industry leaders to tackle unconscious bias – and perhaps the easiest – is to challenge our management to build diversity metrics into recruitment, hiring and promotion policies.

This doesn’t imply that qualifications, education and experience don’t matter or should be discounted. But it formalizes and embeds a focus on diversity, and that’s important.

We can make sure our work spaces are inclusive. Can a person with a physical impairment work there comfortably? For example, are our offices wheelchair accessible?

Do our corporate policies accommodate neurodiversity? There are companies who recognize that the pool from which they draw talent can include employees on the autism spectrum. They’ve created a working environment that makes these employees feel welcome and valued.

Do we offer our management opportunities to take workshops and seminars on what a diverse and inclusive company looks like?

There are lots of concrete examples of how unconscious bias can be offset by a corporate culture that enables diversity and inclusion.


With all that, I keep coming back to one essential truth:

Creating a diverse and inclusive industry is the right thing to do. It’s always been the right thing to do.

It’s never been the easy thing to do. As I said earlier, it’s much easier to stay with the same than choose the different.

To greater and lesser degrees, we all know what that feels like. Think of a time when something about you was held against you – often something completely beyond your control.

It could be your social status.

Or the color of your skin.

Or your religion.

Or who you love.

See also: Language and Mental Health (Part 3)  

At one time or another, each of us has felt that we were being judged unfairly and that opportunities for which we were qualified were withheld for all the wrong reasons.

I include myself in those comments. I was raised by a single mom who, as a separated but devout Catholic, was judged by her church and her community as “less than.”

Those are difficult memories for me.

But as difficult as they are, they gave me a compassion and an empathy for what it feels like to be excluded.

As we work to improve our corporate practices, and offer training, and host events like Dive In, I’d like to challenge all of us to remember what it feels like to be on the outside looking in. If we can hold onto the compassion and empathy those memories generate, I believe we can begin to overcome the unconscious bias that’s inhibiting our progress toward a diverse and inclusive industry.

We know it’s the right thing to do, so let’s do it.

Thank you.

InsurTech Need Not Be a Zero-Sum Game

This summer, I have attended a number of disruption/innovation insurance industry conferences in London that often, to varying degrees, come down to a debate regarding the extent to which InsurTech startups will be able to come and eat the lunch of industry incumbents. There is little argument that, should the insurance industry fail to better engage with its customers and continue to poorly communicate its social value in protecting people, communities and assets somewhere else will transform what today for many is a “grudge transaction” into a delightful relationship.

However, I believe InsurTech does not have to be a zero sum game. I am a proud member of the International Insurance Society (www.internationalinsurance.org) led by Michael Morrissey. In Singapore at the IIS annual conference, a keynote presentation was delivered on the recently formed Insurance Development Forum (IDF). The IDF was formally launched in April and is a collaboration between the insurance industry, the World Bank, the UN and various other institutions. The IDF is chaired by Stephen Catlin, with Rowan Douglas leading the Implementation Committee that includes industry heavyweights such as Dan Glaser, Nikolaus von Bomhard, Greg Case and Inga Beale. Its mission is to incorporate the insurance industry’s risk management expertise into governmental disaster risk reduction and to give insurance a larger role in providing resilience to communities all over the world.

In a speech at the conference, IDF Chairman Stephen Catlin noted, “We talk about innovation and new products. The reality is we are not even selling well the product we know and love dearly.” I believe the less insular InsurTech community — with its diverse skills sets (often from outside of the insurance industry) — can help insurers start to address the obvious misunderstanding consumers, governments and regulators share of the social value of the insurance product. Sam Maimbo of the World Bank, who sits between deep technical insurance teams and the public sector, noted he spends 70% of his time explaining what the industry has to offer. Addressing this communication gap has parallels to what many InsurTech companies are trying to do in providing better engagement with consumers than is currently provided.

There is real opportunity for InsurTech to work with the insurance industry in addressing blockages in the system that, if unlocked, would drive increased demand and grow the overall insurance pie. We are seeing a bit of this in microinsurance with companies like MicroEnsure and Bima providing low-cost insurance solutions to customers that, before recent technological advances, were just not possible. For instance, we need to see more examples of smart contracts founded on blockchain technology. In Africa, it is now possible to buy crop insurance through a mobile device that pays out based on a parametric weather-related trigger through a blockchain-validated third party source that almost eliminates the cost of handling a claim.

I am confident we are at the start of this kind of innovation and look forward to seeing more InsurTech companies look to grow the overall industry pie for the benefit of themselves and society as a whole.