Tag Archives: innovator

Why 5G Will Rock the Insurance World

The first time I logged in to the internet, I had a dial-up modem and a large desktop computer with tower, a separate keyboard and giant speakers. After the dial tone, there were  squeaks and honks as the computer took its time logging in. Then the words flashed across the screen: “You’ve Got Mail.” It was an iconic moment for me and one that millions of people around the world would experience in their own time.

Then there were cellphones. You could literally talk to anyone anywhere, as long as there was a signal and you had saved some serious money. Later, smartphones were developed and once again changed the playing field. I found myself able to download apps that I didn’t know I needed, check my bank account or the status of my Amazon package and update my status from my phone – reaching all my friends no matter their or my location.

Long gone were the days of dial-up and slow connection speeds. Now, I find myself refreshing when my phone doesn’t access the site I want after 15 seconds.

All these developments in technology and society provided the finance and insurance industry with tremendous challenges. While other industries built new revenue streams on top of the internet and digital infrastructure, a lot of insurance companies are struggling with providing the most basic digital services to their customers.

And it’s about to get worse. 5G – a new form of mobile internet – is going to accelerate things. A lot.

5G means high-speed mobile internet

There are a lot of questions surrounding 5G services: What does 5G mean? How fast is it? When will it launch? Probably the biggest question surrounding 5G services is: How will we and our customers use it? One of the most important things to know about 5G services is that it will most likely bolster economies worldwide. The website Innovator cited a report by IHS Markit and Research Group that predicts “by 2035 5G will create 22 million jobs globally, generate $3.5 trillion in direct economic activity and fuel sustainable long-term growth to global real GDP.” 5G is a game changer, just like the internet, computers, motor vehicles, and the wheel. It will change the world as we know it.

What does 5G mean? How fast is it? When will it launch? Techopedia says: “Fifth-generation wireless (5G) is a wireless networking architecture built on the 802.11ac IEEE wireless networking standard, which aims to increase data communication speeds by up to three times compared with its predecessor, 4G.” Reports vary as to how much faster 5G will be; some reports say 10x faster, and other reports indicate that it could be 20x faster or more. Much of the improvement will have to do with locations and service providers, but it’s going to be a large jump. We may have to wait a little, but this train has left the station – and it’s not coming back. While 5G operators are beginning to roll out their systems this year, most markets won’t be up and running until 2019, and more likely 2020.

See also: What Will Operations Look Like in 2028?  

For retail, that sounds far away. For the insurance industry, with long planning cycles and gigantic project portfolios, that means “tomorrow.”

How will we use 5G? Many are questioning what the purpose is of faster service, especially those who are content with 4G services. 5G goes beyond the mobile phone user. While users may see a boost in service (especially in downloads and streaming), 5G technology is going to improve how the world operates. Users will have increased connectivity. Apps for which heavy computers are now necessary could transfer tremendous amounts of data quickly, probably providing digital services we can’t imagine today.

With a smart 5G strategy, the insurance companies could expand

One special case for the insurance industry: 5G technologies are going to streamline the Internet of Things (IoT), especially for consumer usage. So, after mobile internet, smart phones and 4G changed the way customers consumed, 5G is about to change everything again. Right now, our smartphones can talk to individual devices, but with 5G technology speeds we can further streamline these smart devices and achieve breakthroughs where they speak to each other instead. Imagine if your refrigerator could tell your oven when your steak had finished defrosting, and the oven automatically started pre-heating! Imagine that an oven could warn the customer that crucial parts are overheating, and a fire is likely. Imagine that an insurer informs the customer and that he can act on the information. Imagine how the customer would fall in love with his carrier or agent after he saves the customer’s house?

In addition to general consumer usage, 5G is going to make a huge impact in industry and commercial insurance. With 5G technology, we will be able to track shipments in real time, upload information from doctors’ offices instantly and watch videos everywhere, without having to consider the bandwidth. Autonomous cars may become a broad reality, as they can generate real time data with which to operate. Drones will be able to provide better feedback and travel farther. Industry and manufacturing automation can improve with smart factories and the use of artificial intelligence. Currently, there are some factories using artificial intelligence to trouble shoot designs, and IoT technology to determine when machinery needs servicing. With 5G technology, these types of programs can be adopted by more companies and expanded to further suit the manufacturing needs. All of this has tremendous impact on calculating risk and preventing claims – the core of our industry.

With smart vehicles being so much more efficient, and safe, we can expect to see insurance rates drop, according to an article on Innovator. We can also expect to see faster transactions and approvals. With a wealth of information at our fingertips, it may only be a matter of time before purchasing a home goes from a months-long ordeal, to something that takes place in a weekend (or faster) or even maybe without a bank at all.

“5G will impact every industry – autos, healthcare, manufacturing and distribution, emergency services, just to name a few. And 5G is purposely designed so that these industries can take advantage of cellular connectivity in ways that wouldn’t have been possible before, and to scale upward as use of 5G expands” — Don Rosenberg shared this thought as part of the World Economic Forum.

Rosenberg also said 4G led to innovations like Uber and Spotify. How will 5G affect, say, Facebook’s business model? What other changes have yet to be imagined?

See also: How Digital Platform Smooths Operations  

The world is constantly changing, though some “groundbreaking” innovations do little to change it. Then something like 5G services come along and completely change the foundation of how our world operates. 5G will change us, on a worldwide level.

What to do? Don’t love your products – love your customer.

Instead of fearing the next challenge after the landline-based and mobile internet, why should we not use this as an opportunity to expand our value chain? Why shouldn’t we put ourselves between the customer and product and service providers instead of leaving this interface to the customer to the old and emerging tech giants from California and China? Why shouldn’t we provide our customers digital products and services that relieve them of friction and pain in their daily lives? Why should not we use 5G as an opportunity to get ahead and become a trusted companion in the daily life of our customers? It’s still our choice.

A Lesson From a Serial Innovator

Disruptive innovation is not about technology

Systems that are innovative at one time can become the “good enough” systems we need to overcome as they age and calcify. While it’s inspiring to see new systems render old ones obsolete, this prescription of change creates a future where decisions about our collective future will be commercial engineering decisions and not social ones.

Disruptive innovation comes at you fast. It is not about creating the best products and protecting profits. For example, with the launch of ApplePay, the whole world can do something Kenyans have done every day for more than 10 years. M-PESA, the mobile payment system offered by Safaricom, has been used by most adult Kenyans and is the model for hundreds of digital payment startups around the world today.

See also: What Is the Right Innovation Process?  

Kenyans don’t have bank accounts, making paper checks useless for all but the largest transactions. M-PESA was an appealing alternative to the status quo for transferring money from one city to another. Before you could transfer money through an SMS, it was common to give money to a taxi driver heading in that direction and ask him to deliver your payment for you. Safaricom, a leading mobile network provider in Kenya, captured consumers out of mainstream banking institutions and built customers — not the best technology.

Disruptive innovation refers to the strategy that employs technology; the technology itself isn’t disruptive, but rather the application of the technology can be disruptive or not. This depends on whether the technology is positioned with a disruptive strategy.

You Are No Longer an Insurance Agent

News flash! You are not an insurance agent.

Yes, you sell insurance products and services for commissions, but that’s not why your clients buy from you. Every successful insurance agent today understands that they do much more than transfer risk for their clients. Today’s successful insurance agents understand that they are first and foremost marketers, publishers, creators, innovators, speakers and value providers.

This may seem like a foreign concept, but it’s true.

No insurance producer can help clients financially if she can’t first paint an emotional picture through words and ideas. Marketing is not about manipulation, tricks or tactics. Today’s insurance buyers are too educated and untrusting to fall for inauthenticity. Today’s marketing is about great content.

Content is not limited to a website, emails or product and service descriptions. Everything a customer or prospective customer comes into contact with about you or your agency is content. Content is any medium through which you communicate with the people who may use your products or services. It could be the words on your webpage, the email sent to a client, a headline on your brochure or the words used during an appointment with a prospective client.

There is no hiding from content. It will make or break you.

However, most agents don’t seize this opportunity. In fact, most agents don’t even know the opportunity exists.

Ann Handley, author of “Everybody Writes,” says it best: “Ours is a world where technology and social idea have given us access and power: Every one one of us has the awesome opportunity to own our own online publishing platforms—websites, blogs, email newsletters, Facebook pages, Twitter streams and so on.

“I don’t use the phrase ‘awesome opportunity’ lightly. The opportunity to change how we communicate with people we are trying to reach—and what we communicate—is tremendous, yet we aren’t taking full advantage of it.”

With this great opportunity, why are the vast majority of insurance agents still standing on the sidelines, simply watching and waiting?

Some think they lack time, others say they lack of knowledge or skill, and others still believe that there is no need to change.

I contend you don’t really have a choice.

  • Your prospective clients have more options than ever before.
  • Your prospective clients have more resources than ever before.
  • Your prospective clients expect more from their agent than ever before.

Those agents who deliver on these expectations will stand out and earn business from their ideal clients. Those who don’t will continue to fight and scrape for what’s left.

So, I ask you a basic question: Are you a marketer or an insurance agent?

Trick question. You have to be both.

One is expected, the other will make you successful.

You are expected to understand policy terms, definitions, exclusions, coverage gaps, underwriting, endorsements and what all those strange acronyms mean.

You get paid for providing a positive experience through your content. Providing that is not easy, and that’s why most agents are struggling. It requires that you are much more than just smart, friendly and able to ask if you can provide a quote.

  • You have to help your customers achieve something that’s important to them.
  • You have to provide a unique viewpoint.
  • You have to put 100% focus on your customer and view the world through his eyes.

All three listed above take hard work, hustle, training, continual personal development and a passion that burns deep inside you.

This passion doesn’t come from outside sources. It starts and ends with you.

  • How badly do you want to make an impact?
  • How badly do you want to help others?
  • How badly do you want to become the industry leader?

To succeed, you must decide you will not settle for being just another insurance agent. You are a professional who earns trust through consistent and valuable content, offline and online, to your clients and prospective clients.

To be a successful insurance agent today, you must first be a marketer … and a good one.

Unlocking the Gate to Open Innovation

Many of the innovations fueling economies in our information age did not require new technologies or scientific feats, but rather depended on arranging and manipulating in a novel manner existing technologies, as well as devising new business methods or applying established ones with an ingenious twist.

These sorts of innovations are in most cases extremely efficient. They are less expensive to benefit from, and the duration between awareness and implementation is relatively short.

Coming up with such innovative ideas and detailed product descriptions relating to the Internet and mobile market does not require any special training or education, and most of the information that is needed for a potential innovator is available in plain sight for all of us.

That doesn’t mean it’s easy to achieve such innovations and creative insights. But It does suggest that the chances of being enlightened with the same innovative concept are similar for both a bright Google employee and a bright and curious Indian or Chinese teenager or an adult with a smartphone.

Of course, when comparing the chances of being enlightened with a true and disruptive innovation on a specific issue, the group of 60,000 Googlers has slim chances of getting there ahead of the billions of teenagers and adults in the world.

You would think that applying open innovation, which gets 3.3 million search results on Google, would direct companies to take advantage of those billions of potential innovators out there. That’s definitely not the case, and I’m guessing that for most companies open innovation involves mainly following and cooperating with external companies and start-ups as well as with relevant academic institutions and individuals.

In fact, most companies discourage potential innovators in the general population from sending anything valuable to them. Have a look at Apple’s policy. The company covers all (contradicting) bases, starting with:

“Apple or any of its employees do not accept or consider unsolicited ideas”

And ending with:

“your submissions will automatically become the property of Apple, without any compensation to you. Apple may use or redistribute the submissions and their contents for any purpose and in any way”

Google appears to be more polite and logical, and so does Amazon, but the bottom line is the same: There are no incentives and only risks for potential innovators from the public to send anything valuable to such companies.

There are certainly legal risks in soliciting detailed concepts and product designs from the public, so I don’t blame companies for being cautious. I do think they can be creative in seriously mitigating those risks.

What can be done?

To start with, companies need to realize they are far less innovative in many areas of their business than they could be. And even hiring thousands of additional geniuses and cooperating with established third parties can’t do much to improve their improbable odds against a competitor that solicits innovation from the general population.

One way to go forward would be to engage trusted third-party professionals (maybe a new company consisting of former executives and employees) that would act as an “innovation firewall” between the public and the company itself (the “trustee”). The rules should be simple. All detailed product description and innovation concepts would be transferred only to the trustee, which would have an obligation of confidentiality both to the claimed innovator and to the company (regarding information the trustee possesses or receives from the company itself).

The trustee would have the hard job of screening the input received from the public, finding the innovation jewels and then verifying as best he can that such innovation does not already exist within the company. Once a true innovation is found, the trustee would make the direct connection between the innovator and the company. A standard nondisclosure agreement would then be executed.

The public should also be educated on how to present concepts, replacing the innovation-suffocating legal text existing in the links provided above.

The Real Root of Innovation? Insurance

Humanity’s innate urge for creativity coupled, perhaps, with the promise of fame and riches have been important drivers of innovation throughout history. But what has served as the foundation for innovation? What has helped individuals make the leap from coming up with a great idea to executing it?

In one way, the answer is insurance. Insurance and risk transfer are key historical inventions that contributed to the rise of innovation around the Industrial Revolution. Legal and financial advancements, such as modern insurance policies, have been just as significant to innovation as technological breakthroughs. They have allowed humanity to view risky situations as opportunities to progress.

Before the Industrial Revolution, creative risks were, well, a lot riskier. In the days of hunter-gatherers and early agriculture, individuals or small family groups bore total responsibility for any consequences should a new crop be unsuccessful or sickness spread because an unproven concept failed. (Starvation and death are steep prices to pay.) As time progressed, hierarchical systems ensured the ruling classes quickly claimed and controlled any innovation devised by those low on the totem pole. Historically, oppression has rarely served to spark advancement at all, let alone at a decent pace.

When formalized insurance came along, in addition to stocks, bonds, patents and other financial tools, it allowed people to share the risks and rewards of their personal creativity. Because the downside of failure was no longer as excessive, people were empowered to take bigger leaps. Insurance and its associated analytics removed many of the unknowns from taking a chance on a risk.

Insurance and risk management are now so ingrained in the innovation process that we take it for granted as just another step on the way to progress. When you hear about modern space travel, for example, you don’t hear about the insurance policies that make it possible for entrepreneurs to launch ambitious new projects. Unfortunately, the only time we make the connection between insurance and innovative efforts is when something goes wrong. Case in point: It was only when an unmanned commercial rocket exploded last fall that many articles rushed to note it was insured for about $200 million.

Today, insurance is stepping in to lower innovators’ risks in other creative ways. One example is a firm that created insurance protection from “patent trolls.” While patents are supposed to protect inventors, some people have found ways to exploit the patent system to enrich themselves instead, while also limiting actual innovation. The high litigation price of defending a patent has caused many start-ups to stall out. Patent trolls have forced even established companies like Apple, Google and Samsung to spend massive quantities of capital addressing seemingly gratuitous patent claims. The new solution steps in to help organizations keep creating.

Recently, some insurance companies have begun to offer protection for the bitcoin business. The virtual currency has had its fair share of troubles in the last year or so, with cyber attacks and technical snafus costing investors millions upon millions of dollars. With the advent of protections similar to those offered by the long-established Federal Deposit Insurance Corporation, these organizations are making it possible for the bitcoin industry to mature, potentially ushering in a new, all-digital era for commerce.

The New York Times Magazine recently dedicated an entire issue to the subject of innovation. It cited prominent M.I.T. economist Daron Acemoglu directly linking the advancement of society to the necessity of insurance and risk management.

In other words, the better we manage risk, the more risks we take and the better off we may all be.

This article was originally published on IAmagazine.com.