Tag Archives: singapore

How to Create an Emotional Connection

As insurers, we are no strangers to running into price sensitivity, then copying the competition and buying business. When we still fail, we blame the economy. But the truth is that the complexity of our products, the lack of differentiation in our services and the distance we’ve kept from our consumers is what results in price sensitivity. This, in turn, results in our need to buy business by encouraging intermediaries and discounting premiums — which then results in copying each other for validation of our assumptions, even when we take calculated risks because we care about our commitment to the market and our responsibility to consumers.

What a vicious circle we’ve created for ourselves.

Being a student of this industry, my observation is that we are running out of ways to get ourselves out of this mess. Trying new ideas means having to deal with channel conflict and spending time and energy appeasing intermediaries to ensure our promise to pay.

So I decided we should create niches and build new experiences for these niches that will challenge established norms with very little disruption to business as usual. Having pets all my life before moving to Singapore as an expat, I found it strange that the number of pets in Singapore was on the rise but that there was no insurance for pets (other than the meager endorsement to home and contents policies for third-party liability mandated by the Agri-Food & Veterinary Authority of Singapore (AVA) for dog licenses). The fact is that some insurers tried writing pet insurance many years ago but made losses and took the product off their shelves. Singapore is a financial capital, mind you, that commands the presence of all the major global insurers and banks.

See also: Industry Trends for 2017  

I was determined to make a difference and continued to persuade the head of personal insurance (a passionate leader who has earned my respect and appreciation) to consider pet insurance. Our propensity to act created momentum for others and engaged talent at all levels — soon, we had every pet lover and pet owner in the organization offering to help and test ideas. Thus, PetCare, Singapore’s first comprehensive pet insurance coverage, was born. This caught the attention of the media and pet forums; suddenly everyone was talking about us. We started with insurance for dogs, taking every aspect of their life into account. We had to minimize our exposure to begin with and had to learn from our experience in the market. But, soon enough, cat owners wanted the same treatment. So we included cats and increased our benefit offering in a year’s time. Two years into the market, we became the experts and had other insurers copying us in a rapid frenzy and fear of missing out. The time had come to brand and market PetCare at scale. I wanted to create the Apple of insurance and the Uber of service.

Then, I came across this video. Check it out…

MasterFoods asked Aussie families one simple question: “If you could have dinner with anyone, living or dead, who would you choose?” What they uncovered surprised everyone.

We humans know when we are being sold to, and we recognize the passion and care of brands that are trying to do things for the greater good. At PetCare, we now had a business that was close to our hearts and those of our consumers, and we were on a journey to build a strong emotional connection with them through compelling experiences.

In our efforts, we have not only created a business but found a much more powerful way to connect —one that differentiates us from the competition and makes us market leaders in our own right.

Liberty Insurance: Pet Care from Michael Hanson on Vimeo.

Who Is Leading in Driverless Cars?

Imagine if you could pick between Uber drivers based on their driving experience. Would you hire an experienced driver who has logged hundreds of thousands of road miles or one who has driven just a few hundred miles? I’ll bet you’d go with the experienced driver.

Now apply the same question to driverless cars. How would you pick? The same logic applies: Go with experience.

By the miles-driven heuristic, recent reports released by the California Department of Motor Vehicles show that Waymo (the new Alphabet spinout previously known as Google’s Self-Driving Car program) is running laps around its competitors. As with human drivers, experience matters for driverless capabilities. That’s because the deep learning AI techniques used to train driverless cars depend on data—especially data that illuminates rare and dangerous “edge cases.” The more training data, the more confidence you can have in the results.

See also: How to Picture the Future of Driverless  

In 2016, Waymo logged more than 635,000 miles while testing its autonomous vehicles on California’s public roads compared to just over 20,000 for all its competitors combined.

As the W. Edwards Deming principle that is popular in Silicon Valley goes, “In God we trust, all others bring data.” The data shows that Waymo is not only 615,000 miles ahead of its competitors but that those competitors are still neophytes when it comes to proving their technology on real roads and interacting with unpredictable elements such as infrastructure, traffic and human drivers.

Now, there are lots of ways to cut the data and therefore a lot of provisos to the simple test-miles-driven heuristic.

Waymo also leads the others in terms of fewer “disengagements,” which refers to when human test drivers have to retake control from the driverless software. Waymo’s test drivers had to disengage 124 times, or about once very 5,000 miles.

Other companies were all over the map in terms of their disengagements. BMW had one disengagement during 638 total miles of testing. Tesla had 182 disengagements in 550 miles. Mercedes-Benz had 336 disengagements over 673 miles. Fewer miles might mean fewer edge cases were encountered, or it might mean that those companies tested particularly difficult scenarios. But, low total miles driven casts doubt on the readiness of any system for operating on public roads. Until other contenders ramp up their total miles by a factor or 1,000 or more, their disengagement statistics are not statistically relevant.

Tesla fans could rightly point to the more than two hundred million miles that Tesla owners have logged under Tesla’s Autopilot feature. Those miles are not considered here. (Autopilot is not defined as autonomous under California law, so Tesla is not required to report disengagements to the California DMV.) But, no doubt, all those miles means that Tesla’s Autopilot software is probably very well trained for highway driving.

What do those highway miles tell us about Tesla’s ability to handle city streets, which are more complex for driverless cars? Not much, but the 550 miles that Tesla did spend on public road autonomous testing speaks volumes about its dearth of experiential learning on city streets. (Ed Niedermeyer, an industry analyst, recently argued that most of Tesla’s 550 miles were probably logged while filming one marketing video.)

See also: Novel Solution for Driverless Risk  

It should also be noted that the reported data applies only to California; it does not account for testing in other active driverless hubs—such as Waymo’s test cars in Austin, TX, Uber’s driverless pilots in Pittsburgh or nuTonomy’s testing in Singapore (just to name a few). It is safe to guess, however, that a significant percentage of all autonomous testing has been logged in California.

Notably missing from the reports to the California DMV are all other Big Auto makers and suppliers—and other players cited or rumored as driverless contenders, like Apple and Baidu. They might well be learning to drive on private test tracks or outside of California. But, until they bring data about their performance after significant miles on public roads, don’t trust the press releases or rumors about their capabilities.

Waymo’s deep experience in California does not guarantee its victory. Can it stay ahead as others accelerate? That remains to be seen, but it is clear from the California DMV reports that Waymo is way ahead on the driverless learning curve.

How to Make Insurance Fun

The insurance industry has had it tough. We are in the business of protection, but in truth a big portion of our time is spent dealing with fear, anguish, death, destruction and tragedy. You hear from your consumers once when they pay for insurance, and the next time you hear from them is when something bad happens. But does it have to be all doom and gloom? That is a question that I’m constantly asking myself. How do we take an industry that is built off pain and turn it into pleasure? In other words, how do we get people wanting to buy and not having to sell?

On my last major project — in fact, no, two months before I created this project — I was sitting in a cafe and looking for the next cool app to download, thinking to myself: Apple has done a fabulous job of taking a boring piece of machinery and flipping it into a sexy, useful piece of technology that is a vital part of my day-to-day life. It is my calendar, map, photography, diary, communicator, financial planner and a lot more. I can’t even walk the dog without my iPhone. How did they do that? Every new item, accessory, upgrade, model and news blurb, I’m watching and wanting the next new thing. It’s the wanting that baffles me.

See also: A Closer Look at the Future of Insurance  

I believe that the insurance industry has an opportunity like no other to make a difference in every aspect of our lives and at the same time the challenge to do so successfully. I was looking for a breakthrough that could get insurance into the day-to-day life of our consumers. I knew it had to be a combination of social behavior and technology that was economically viable but also a call to adventure that people could not ignore; most of all, it had to be fun and create a wanting. So I began my research and decided the breakthrough had to be an app. But what sort of an app? There are so many silly, gimmicky apps out there that get lost on my phone and never get used.

Through my research and connections I found a startup led by data scientists who were initially monitoring potholes on Boston roads and had built an app that could monitor driving behavior. Perfect! This is what I was looking for; people drive everyday, and they are emotionally connected with their cars.

Now the question was: How do we get people to want to download the app and be monitored for driving? I mean, who would do that? What’s the incentive? How will we generate revenue?

This led to several hours of brainstorming and strategy discussions, but the main question was: How do we create the wanting without having to sell? It struck me: What if we create a competition that was built off recognition and rewards good behavior? We were really onto something here. This could be huge; safe-driving campaigns could be turned into beautiful marketing messages that people would be proud to be a part of. The intel and data we collected was so rich that it could change the way we did business.

My vision was that the app would bring people together around the dinner table, engaging in friendly banter. It had to be a competition that was fun. Voila! Singapore’s Best Driver Challenge was born. For the very first time in my career, I saw light at the end of the tunnel. This is a small breakthrough in the grand scheme of things, but it challenges the industry to step up and pay attention to innovation as the cornerstone of change for the better.

The moral of the story is that an industry that is dominated by negative energy and very little contact with its consumers can be flipped into something fun, interesting and meaningful.

Innovation Won’t Work Without This

To sell an idea to stakeholders, buyers and users, we not only have to change what they think but how they think. Without the right mental model, they won’t see the problem, understand the benefits or choose to change. Mental models are like sorting hats; they are how our minds make sense of the world around us, the vast amount of information we process and intuitive perception of our actions and their consequences. They filter the signal from the noise.

For example, consider the mental model: “Life is like chess.” If you believe this mental model, you’ll see life as a strategic game with winners and losers following set rules, and you may set the goal of winning. But if your mental model is that “life’s a beach,” then you may see life as more fun, with no winners and losers and no rules. You may expect that forces beyond your control like the waves of the ocean can influence you but that you can use them to have fun.

See also: Innovation Happens at the Edge  

Often dubbed as the “Monaco of the East,” Singapore the red dot has beaten a path to steady economic progress and prosperity since the 1970s. Much of the success can be attributed to the vision of one man, Lee Kuan Yew, Singapore’s first prime minister, who reigned for more than 30 years, making him the world’s longest serving prime minister. He was unafraid of challenging popular ideologies. Right up to the end of his life, Lee believed in constantly adapting to the changing realities of the world and refreshing his mental map. He sought the views of experts in industry, academia, politics and journalism. But having processed their arguments, he did not let himself be swayed if he absolutely believed something else was in the best long-term interest of Singapore. I was drawn to his vision and chose to move to Singapore to experience the economic miracle. I have seen first-hand how one man has changed how people think and as a result transformed Singapore from the “third world to the first world in a single generation.”



See also: How to Master the ABCs of Innovation 

Innovations that change the world need to be explained before they can be accepted. Brands that successfully sell their innovations have been able to change how we think, feel and connect with not only their products but ourselves and the world around us.

Global Insurance CRO Survey 2016

Risk functions have evolved from “check-the-box” compliance to being a key enabler for business decision-making. This change has provided chief risk officers (CROs) with a seat at the table in the highest levels of the organization.

2016 has been a year of black swans, characterized by prolonged low interest rates, political uncertainty in key markets and increasing competitive forces challenging insurers’ business models. Together with the rise of risk-based capital regimes across the globe, these factors are tending to align the CRO and CFO agendas, establishing a tighter link between risk, capital and value.

The CRO role will always have a strong regulatory-driven rationale. But as the role evolves, we see an opportunity in ERM to take stock of teams, toolkits and processes — and use them to achieve greater effectiveness.

See also: The Myth About Contractors and Risk  

This shift is occurring at different rates in different regions, but the direction is clear. Our survey explores five key themes around the risk function and CRO role:

1. There has been a high degree of operationalization in prudential regulation around the globe:

  • In Europe, in response to Solvency II demands
  • In the U.S., as a consequence of the NAIC’s ORSA requirement and for the larger insurers, SIFI demands from the Federal Reserve Board
  • In Asia-Pacific, with the implementation of risk-based capital regimes (e.g. C-ROSS in China, LAGIC in Australia, ORSA requirements in Singapore and ICAAP in Malaysia)

2. We are seeing a sharper focus on consumer-conduct regulation:

  • The U.S. Department of Labor is shaking up focus on the advice model.
  • The European Parliament is debating significant advances in policyholder communications, and various European home regulators are demanding redress for past failings in sales process, transparency of charges and continuing product suitability.
  • Depending on the region, it is more or less common for CROs to have compliance report through to them.

3. Governance models are now largely converging to reflect the three lines of defense principles.

Although differences exist across geographies, CROs are consistently seeking to strengthen risk accountability and understanding across the workforce. In particular, while we are seeing an increased awareness that risk ownership starts with the first line, there still are opportunities to strengthen risk accountability and improve communication to help everyone understand risk appetite and consequences.

4. Risk functions are becoming more involved in producing and monitoring risk metrics.

Larger insurers subject to Solvency II and now required to obtain approval of their internal economic capital models are partly behind this shift in risk functions.

Beyond Europe, other jurisdictions have a variety of approaches. For example, U.S. insurers subject to Federal Reserve regulation are required to use more extensive stress and scenario testing in their internal capital management processes (with the eventual requirement to publicly disclose the results).

See also: Minority-Contracting Compliance — Three Risks  

In general, even where there is no regulatory mandate, CROs and their risk teams are increasingly involved with stress testing and more advanced financial models to quantify risk.

5. CROs are aware of the potential for improvement in operational risk management.

While businesses generally understand the “known knowns,” risk plays an important role in emphasizing the need for a systematic approach to the full spectrum of exposures. Cyber risk in particular is one of the biggest areas of concern for most CROs, who consider it a key focus area of operational risk.

Download the full North American report here.

Download the full EMEIA report here.