Tag Archives: tipping point

Embedded Insurance Reaches Tipping Point

As coronavirus infection rates rise again, businesses around the world are asking themselves an uncomfortable question: Will consumers buy?

Since the outbreak of the pandemic, consumer behavior and business engagement with their customers has gone into uncharted territory. Consumers, influenced by COVID-related restrictions, experienced changes in needs for goods (increased consumption of food eaten at home), services (demand for high speed broadband bandwidth) and experiences ( an increase in outdoor leisure events). Businesses had to deal with volatility of their inventory, changing consumer demand patterns, the need for a complete move to online ordering and changes in their product mix (restaurants, for instance, have changed menus to accommodate a better pickup/delivery experience).

What we can now say for a fact after dealing with 1.5 years of COVID is this:

  • All consumers, including previous nay-sayers, have become more comfortable shopping online.
  • Using e-commerce platforms such as Shopify, every business can spin up a virtual store in no time.
  • Consumers want relevant offers to be made where they shop. 
  • There is consumer resistance to generic ad-tech offers. 
  • Consumers expect higher levels of service. They look for higher certainty and flexibility from the businesses they buy from. 

Reality for every person is now changing much faster. One moment you may be planning to leave for Hawaii for a few weeks, and the next you are quarantined at home because your kid has a runny nose. 

There’s an old Yiddish saying, “Mann Tracht, Un Gott Lacht” — Man makes plans, and God laughs. 

See also: Achieving Digital Balance in an Agency

Business in uncertain times

How can businesses succeed in an environment where everything is possible but nothing is certain? Many businesses have found the answer is to give consumers enough certainty that they reach a conviction that allows them to purchase — create a sense of security around their ability to make changes, to cancel or to return the goods. 

Into this gap comes embedded insurance. When done right, it allows insurance products to meet consumers when and where it makes the most sense for them and to deliver highly sensible protections that they really want.

What makes embedded insurance so exciting is that it changes an insurance model that is centuries old.

If you are thinking to yourself, how does this all relate to changing consumer behavior and to the need to increase consumer conviction, consider this: A family is researching the option to go on a vacation via an online travel agent. They are interested in a beach resort in the Maldives. They will not book until they have strong conviction that there’s little or no risk to their travel plan or their experience. Risk means different things to different people at different times. In normal, non-pandemic times, a family like that might care mostly that the weather is nice, that the water is free of jellyfish or that there are no air quality issues. Nowadays, they may care more about having medical coverage, getting infection rates and screening procedure updates or simply having the flexibility to cancel if something goes wrong or doesn’t feel right.

Embedding insurance to create trust

Undoubtedly, a merchant selling goods is the one who knows his or her consumers and their purchasing behavior the best in the world. This kind of business oversees the customer journey and can recognize demand, conversions and trending concerns. The challenge the business has in these uncertain times is that consumers hesitate due to perceived risks. Embedded Insurance can be inserted into the online buyer path to create reassurance around the associated risk. Using AI, embedded insurance can allow for additional value-added protections to be customized and tailored to the needs of each consumer. This is a seamless experience as the consumers have already supplied all of their relevant details to the supplier. To complete a positive online experience, bundling, pricing and drafting of the policy needs to be done in near real time. 

See also: 7 ‘Laws of Zero’ Will Shape Future

In a sea of protection and service providers, insurance companies, technology platform providers and more, how would a business go about selecting the best insurance solution for its customers? In my mind, a business selling embedded insurance needs an insurance partner that:

  • Understands the complexities of how businesses sell to their customers, 
  • Is up to date on what consumers expect, 
  • Has a wide portfolio of protections and coverages either in-house or from third-party providers, 
  • Bases decisions on data, 
  • Can seamlessly integrate with the merchant
  • Can offer insurance streamlined into the core product or service sale.

Including an embedded insurance or service offering in the product offering can boost customer engagement and overall customer lifetime value. These protection policies can be auto-renewed or set as a subscription service to ensure customers keep coming back. Embedded insurance is the way forward for many online businesses to offer confidence to consumers, so they buy products and services in what are undoubtedly uncertain times.

Tipping Point for Claims Automation

This year, we have witnessed explosive growth in technology adoption. Zoom video conferencing has risen 574%, Instacart grocery delivery has jumped 450% and Google Classroom usage has increased 580%—all due to COVID-19. The pandemic has truly altered how we think about and use technology. For businesses, it has introduced opportunities for digital transformation. Case in point: the automotive insurance industry.

While some may say insurers are slower to embrace change, the sector has moved at lightning speed to maintain business continuity since the start of COVID-19. The first step was what seemed like an overnight transition to a fully remote workforce. After setting up the required technology to support their employees, carriers then shifted focus to refining the digital solutions that would allow them to better manage the claims process and serve their customers virtually.

Automotive insurers have long relied on staff appraisers and collision repairers to assess vehicle damage after an accident. While virtual estimating—or using photos in place of a physical inspection—is not new, the pandemic has made it the preferred method of inspection.  

Prior to COVID-19, use of virtual estimating was limited and focused almost exclusively on low-severity claims. This was due, in part, to concerns about the ability to produce an accurate estimate. In fact, when compared with other methods of inspection, virtual estimating accounted for just 2% of all estimates written in the United States and Canada just a year ago. 

However, with an increase in our need to socially distance and a decrease in miles driven, the conditions were right for widespread adoption of claims virtualization. In just the first two months of the pandemic, virtual estimating usage jumped to 13%—all while growth in other methods of inspection has decreased or remained stagnant. In addition, some carriers announced early in the outbreak that they were moving almost all of their claims handling to a virtual model, and dozens more reached out to Mitchell to get started. Collision repair shops have also followed suit, providing customers with new tools for collecting and submitting damage photos.

See also: Future of Claims: Automation, Empathy

For insurers, the benefits of virtual estimating include increased efficiency and customer satisfaction. Field appraisers typically complete three to four estimates a day when factoring in administrative tasks and drive time. However, with virtual estimating, that number increases to 15 to 20. By eliminating travel and tasks like appointment setting, employees can focus their efforts on the actual appraisal. Consumers, on the other hand, benefit from the speed, ease and convenience that comes from a digital self-service solution—at a time when technology adoption has never been higher. 

So what impact does this have on claims automation? The first step toward automating the claims workflow was increasing insurers’ comfort level with using photos, instead of a physical inspection, to assess vehicle damage. With COVID-19 accelerating their adoption of virtual or photo-based estimating, we have now reached a tipping point. Insurers have validated the feasibility of using photos in the estimating process. They have seen virtual estimating used successfully for both low- and high-severity claims. And they can no longer dispute the efficiency gains and consumer benefits it provides. These factors combined may make them willing, and ready, to begin automating the complex, labor-intensive claims process. 

The natural next step is to use artificial intelligence (AI) to further streamline and improve estimating. With the photos—and eventually videos—submitted digitally, insurers can rely on an AI engine to identify component-level vehicle damage. From there, the data can be combined with other inputs to return a recommendation of either repair or replace. If repairable, the computer can then populate individual estimate lines with recommended parts and labor costs. Once the data is submitted, carriers can even incorporate automation in the auditing process. Instead of reviewing just a handful of estimates each day, auditors can let the computer review all of the estimates submitted. This will allow them to focus their energy on the claims that need attention. It will also give them the opportunity to rapidly uncover and address any issues.

Leveraging automation in the claims process has many benefits, as noted by McKinsey. First, it improves accuracy. Next, it increases efficiency, reducing expenses by 25% to 30%. Finally, it raises customer satisfaction by as much as 20%.

See also: Keys to ‘Intelligent Automation’

Over the last three months, insurers have taken an incremental step—or leap—closer to claims automation. However, the transition from virtual estimating to touchless claims will not happen overnight. It is an evolution that will require us to re-think how and where we use technology versus how and where humans apply their expertise. In the end, though, automating more of the claims process will allow us to better serve consumers and support the proper, safe repair of their vehicles.

6 Technologies That Will Define 2016

Please join me for “Path to Transformation,” an event I am putting on May 10 and 11 at the Plug and Play accelerator in Silicon Valley in conjunction with Insurance Thought Leadership. The event will not only explore the sorts of technological breakthroughs I describe in this article but will explain how companies can test and absorb the technologies, in ways that then lead to startling (and highly profitable) innovation. My son and I have been teaching these events around the world, and I hope to see you in May. You can sign up here.

Over the past century, the price and performance of computing has been on an exponential curve. And, as futurist Ray Kurzweil observed, once any technology becomes an information technology, its development follows the same curve. So, we are seeing exponential advances in technologies such as sensors, networks, artificial intelligence and robotics. The convergence of these technologies is making amazing things possible.

Last year was the tipping point in the global adoption of the Internet, digital medical devices, blockchain, gene editing, drones and solar energy. This year will be the beginning of an even bigger revolution, one that will change the way we live, let us visit new worlds and lead us into a jobless future. However, with every good thing, there comes a bad; wonderful things will become possible, but with them we will create new problems for mankind.

Here are six of the technologies that will make the change happen.

1. Artificial intelligence

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There is merit to the criticism of AI—even though computers have beaten chess masters and Jeopardy players and have learned to talk to us and drive cars. AI such as Siri and Cortana is still imperfect and infuriating. Yes, those two systems crack jokes and tell us the weather, but they are nothing like the seductive digital assistant we saw in the movie “Her.” In the artificial-intelligence community, there is a common saying: “AI is whatever hasn’t been done yet.” People call this the “AI effect.” Skeptics discount the behavior of an artificial intelligence program by arguing that, rather than being real intelligence, it is just brute force computing and algorithms.

But this is about to change, to the point even the skeptics will say that AI has arrived. There have been major advances in “deep learning” neural networks, which learn by ingesting large amounts of data. IBM has taught its AI system, Watson, everything from cooking, to finance, to medicine and to Facebook. Google and Microsoft have made great strides in face recognition and human-like speech systems. AI-based face recognition, for example, has almost reached human capability. And IBM Watson can diagnose certain cancers better than any human doctor can.

With IBM Watson being made available to developers, Google open-sourcing its deep-learning AI software and Facebook releasing the designs of its specialized AI hardware, we can expect to see a broad variety of AI applications emerging because entrepreneurs all over the world are taking up the baton. AI will be wherever computers are, and it will seem human-like.

Fortunately, we don’t need to worry about superhuman AI yet; that is still a decade or two away.

2. Robots

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The 2015 DARPA Robotics Challenge required robots to navigate over an eight-task course that simulated a disaster zone. It was almost comical to see them moving at the speed of molasses, freezing up and falling over. Forget folding laundry and serving humans; these robots could hardly walk. While we heard some three years ago that Foxconn would replace a million workers with robots in its Chinese factories, it never did so.

Breakthroughs may, however, be at hand. To begin with, a new generation of robots is being introduced by companies—such as Switzerland’s ABB, Denmark’s Universal Robots, and Boston’s Rethink Robotics—robots dextrous enough to thread a needle and sensitive enough to work alongside humans. They can assemble circuits and pack boxes. We are at the cusp of the industrial-robot revolution.

Household robots are another matter. Household tasks may seem mundane, but they are incredibly difficult for machines to perform. Cleaning a room and folding laundry necessitate software algorithms that are more complex than those required to land a man on the moon. But there have been many breakthroughs of late, largely driven by AI, enabling robots to learn certain tasks by themselves and by teaching each other what they have learned. And with the open source robotic operating system (ROS), thousands of developers worldwide are getting close to perfecting the algorithms.

Don’t be surprised when robots start showing up in supermarkets and malls—and in our homes. Remember Rosie, the robotic housekeeper from the TV series “The Jetsons”?  I am expecting version No. 1 to begin shipping in the early 2020s.

3. Self-driving cars

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Once considered to be in the realm of science fiction, autonomous cars made big news in 2015. Google crossed the million-mile mark with its prototypes; Tesla began releasing functionality in its cars; and major car manufacturers announced their plans for robocars. These cars are coming, whether or not we are ready. And, just as the robots will, they will learn from each other—about the landscape of our roads and the bad habits of humans.

In the next year or two, we will see fully functional robocars being tested on our highways, and then they will take over our roads. Just as the horseless carriage threw horses off the roads, these cars will displace us humans. Because they won’t crash into each other as we humans do, the robocars won’t need the bumper bars or steel cages, so they will be more comfortable and lighter. Most will be electric. We also won’t have to worry about parking spots, because they will be able to drop us where we want to go to and pick us up when we are ready. We won’t even need to own our own cars, because transportation will be available on demand through our smartphones. Best of all, we won’t need speed limits, so distance will be less of a barrier—enabling us to leave the cities and suburbs.

4. Virtual reality and holodecks

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In March, Facebook announced the availability of its much-anticipated virtual reality headset, Oculus Rift. And Microsoft, Magic Leap and dozens of startups aren’t far behind with their new technologies. The early versions of these products will surely be expensive and clumsy and cause dizziness and other adverse reactions, but prices will fall, capabilities will increase and footprints will shrink as is the case with all exponential technologies. 2016 will mark the beginning of the virtual reality revolution.

Virtual reality will change how we learn and how we entertain ourselves. Our children’s education will become experiential, because they will be able to visit ancient Greece and journey within the human body. We will spend our lunchtimes touring far-off destinations and our evenings playing laser tag with friends who are thousands of miles away. And, rather than watching movies at IMAX theaters, we will be able to be part of the action, virtually in the back seat of every big-screen car chase.

5. Internet of Things

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Mark Zuckerberg recently announced plans to create his own artificially intelligent, voice-controlled butler to help run his life at home and at work. For this, he will need appliances that can talk to his digital butler: a connected home, office and car. These are all coming, as CES, the big consumer electronics tradeshow in Las Vegas, demonstrated. From showerheads that track how much water we’ve used, to toothbrushes that watch out for cavities, to refrigerators that order food that is running out, all these items are on their way.

Starting in 2016, everything will be be connected, including our homes and appliances, our cars, street lights and medical instruments. These will be sharing information with each other (perhaps even gossiping about us) and will introduce massive security risks as well as many efficiencies. We won’t have much choice because they will be standard features—just as are the cameras on our smart TVs that stare at us and the smartphones that listen to everything we say.

6. Space

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Rockets, satellites and spaceships were things that governments built. That is, until Elon Musk stepped into the ring in 2002 with his startup SpaceX. A decade later, he demonstrated the ability to dock a spacecraft with the International Space Station and return with cargo. A year later, he launched a commercial geostationary satellite. And then, in 2015, out of the blue, came another billionaire, Jeff Bezos, whose space company Blue Origin launched a rocket 100 kilometers into space and landed its booster within five feet of its launch pad. SpaceX achieved the feat a month later.

It took a space race in the 1960s between the U.S. and the USSR to even get man to the moon. For decades after this, little more happened, because there was no one for the U.S. to compete with. Now, thanks to technology costs falling so far that space exploration can be done for millions—rather than billions—of dollars and the raging egos of two billionaires, we will see the breakthroughs in space travel that we have been waiting for. Maybe there’ll be nothing beyond some rocket launches and a few competitive tweets between Musk and Bezos in 2016, but we will be closer to having colonies on Mars.

This surely is the most innovative period in human history, an era that will be remembered as the inflection point in exponential technologies that made the impossible possible.

Insurance Disrupted: Silicon Valley’s Map

With $5 trillion in premiums, an incredibly low level of customer satisfaction, aging infrastructures, an analytically based, high-volume business model and a “wait until we have to” approach to innovation, insurance is now fully in the sights of the most disruptively innovative engine on the planet, Silicon Valley. The tipping point for insurance is here.

More than 75 digitally born companies in Silicon Valley, including Google and Apple, are redefining the rules and the infrastructure of the insurance industry.

Inside the Insurance Tipping Point – Silicon Valley | 2016

It’s one thing to listen to all of the analysts talk about the digitization of insurance and the disruptive changes it will bring. It’s quite another to immerse yourself in the amazing array of companies, technologies and trends driving those changes. This post is the first of a series that will give you an inside look at the visions, culture and disruptive innovation accelerating the digital tipping point for insurance and the opportunities that creates for companies bold enough to become part of it. (Join us at #insdisrupt.)

Venture firms are catalysts for much of Silicon Valley’s innovation, and insurance has their attention. Frank Chen of Andreessen Horowitz sees software as rewriting the insurance industry, AXA insurance has established an investment and innovation presence here. Others, including Lightspeed VenturesRibbit Capital and AutoTech Ventures, are investing in data and analytics, new insurance distribution plays and other technologies that will change the shape of insurance.

New business models: MetromileZenefitsStride HealthCollective HealthClimate Corp., Trov and Sureify, are using technologies to redefine and personalize insurance and the experience customers have with it.

Rise of the Digital Ecosystem – Expanding the Boundaries of Insurance

Digital ecosystems are innovation catalysts and accelerators with power to reshape industry value chains and the world economy. They dramatically expand the boundaries within which insurance can create value for customers and increase the corners from which new competitors can emerge.

Silicon Valley is home to companies acutely aware of how to establish themselves as a dominant and disruptive platform within digital ecosystems. That includes Google, which is investing heavily in the automobile space with Google Compare and self-driving vehicles and has acquired Nest as an anchor in the P&C/smart homes market. Fitbit is already establishing health insurance partnerships. And let’s not forget Apple. The Apple Watch already has insurance-related partners. Apple has clear plans for the smart home market and has recently launched AutoPlay, its anchor entry into the auto market. There are rumors that Apple plans to develop an iCar. And that’s just what we know about.

There are a host of other companies placing digital ecosystem bets in Silicon Valley, as well: GE, which is driving the Industrial Internet of Things; Parstream, with an analytic platform built for IoT; the IoT consortiumJawboneEvidation HealthMisfit Wearablesicontrol NetworkGM and its advanced technology labcarvi; and DriveFactor, now part of CCC Information Services.

Then there are the robotics companies, including 3D robotics, the RoboBrain project at Stanford University and Silicon Valley Robotics, an association of makers.

Customer Engagement and Experience – New Digital Rules, New Digital Playbook.

When your customer satisfaction and trust is one of the lowest in the world and companies like Apple and Google enter your market place, it’s really time to pay attention. There is a customer value-creation and design led innovation culture in the valley unrivaled in the world, and the technology to back it up. Companies like Genesys, and Vlocity are working on perfecting the omni channel expereince. Hearsaysocial and, declara, are working on next gen social media to help customers and the insurance industry create better relationships. Many of the next generation of insurance products will be context aware, opening the door to new ways of reaching and supporting customers. Companies like mCube and Ejenta, are working to provide sensor based insight and the analytics to act on it. TrunomiBeyond the Ark, and DataSkill via cognitive intelligence are developing new innovative ways to use data & analytics to better understand and engage customers. Lifestyle based insurance models are being launched like Adventure Adovcates and Givesurance, And some of digital marketing automation’s most innovative new players like Marketo, and even Oracle’s Eloqua are rewriting and enabling a new digital generation of marketing best practices.

Big Data and Analytics – Integrated Strategies for the New “Digital” Insurance Company

The techno buzz says big data and analytics are going to affect every business and every business operation. When you are a data- and analytics-driven industry like insurance that deals with massive amounts of policies and transactions, that buzz isn’t hype, it’s a promise.

The thing about big data and analytics is that when they are used in operational silos, they provide a tactical advantage. But when a common interoperable vision and roadmap are established, analytics create a huge strategic advantage. That knowledge and the capability to act on it is built into the DNA of “born digital” entries into the insurance market like Google.

The number of companies working on big data and analytics within the valley is staggering. We have already discussed a few in the Customer Engagement section above. Here are a few more, In the area of risk: RMS is building its stable of talent in the big data spaceActian is delivering lightning-fast Hadoop analytics; Metabiota is providing epidemic disease threat assessments; and Orbital Insights is providing geo-based image analysis. In the areas of claims and fraud, PalantirScoreDataTyche and SAS are adding powerful capabilities for insurance. Improved operational effectiveness is being delivered by Saama Technology, with an integrated insurance analytics suite; by Prevedere, with data-driven predictive analytics; by Volumetrix, with people analytics; and by Sparkling Logic, which helps drive faster and more effective decision making.

Insurance Digitized | Next Generation Core Systems

With insurance boundaries expanding, integration with digital ecosystems, increasing reliance on analytics and the demand for personalized and contextualized outcome- and services-based insurance models, core systems will have huge new sets of requirements placed on them. The requirement for interoperability between systems and data and analytics will grow dramatically.

Companies like GuidewireISCS and SAP are building a new generation of cloud-based systems. Scoredata and Pokitdoc are bringing new capabilities to claims. SplunkSymantec and FireEye are addressing emergent cyber risks. And companies like Automation EverywhereOcculus RiffSuitable Technologies and Humanyze are enabling the digitally blended and augmented workforce.

The latest investment wave includes artificial intelligence, deep learning and machine learning, which core systems will need to incorporate.

Surviving the Tipping Point – Becoming One of the Disruptive Leaders

This is a small sampling of the technologies, trends and companies just within Silicon Valley that are shaping the digital future of insurance. The changes these will drive are massive, and they are only the tip of the iceberg.

An Insurance Tech meetup group open to all the insurance-related companies within Silicon Valley was just announced by Guillaume Cabrere, CEO of AXA Labs, and already has 64 members. For established companies to survive the tipping point and thrive on the other side of it requires more than handing “digital transformation” off to the CIO or marketing team. Success requires a C-Suite that has become an integral part of the community and culture building the digital generation of insurance companies.

For technology companies and next-generation insurance companies, success requires building partnerships with established and emerging players.

This blog series is designed to inform and accelerate that dialog and partnering formation. It will include a series of interviews with disruptive leaders from industry and Silicon Valley. If you or your company would like to be a part of that series, please let me know.

Join us for the next Insurance Disrupted Conference – March 22-23, 2016 l Silicon Valley

svia

ITL readers receive a 15% discount when registering here.

‘Interactive Finance’: Meshing with Google

The insurance industry is poised to enhance its power, burnish its prestige and increase its income in the 21st century by developing interactive finance to mesh with Internet enterprises. By interactive finance, I mean rewarding institutions and individuals with financial or strategic advantage for revealing information that details risk.

Insurance industry success requires recognizing information as this century’s distinct commodity, analogous to steam in the 19th and oil in the 20th. Information also needs to be seen as an indispensable element in fresh, emerging digital currencies.

Information technologies are adequately mature, and mobile and broadband communications networks sufficiently widespread, that digital currencies like Bitcoin are beginning to emerge. Cognitive computing, big data, parallelization, search, capture, curation, storage, sharing, transfer, analysis and visualization are commonplace; three-quarters of American households enjoy broadband access; and nine in 10 Americans carry mobile telephones. User-generated information now is everywhere.

Insurance industry leaders would be wise to cultivate interactive finance. It could be used to manage institutional investments with less risk and more liquidity. Interactive finance could also be used with retail consumers to create experiences, incentives and products to help manage what promises to be massive, new wealth.

A key part of interactive finance — navigating crowds and matching parties — is up and running. For instance, with Airbnb and accommodation or Uber and ride sharing, individuals reveal information voluntarily to enable counter party matching. Both are emerging as phenomenally successful simply by using information in new ways to create efficient markets.

The glimmerings of these potential gold mines are now eliciting insightful commentaries about how insurers might aggregate and parse information gathered through “crowd-sourcing.” Sharing portions of the reward with institutions and individuals through protected communications channels — also known as interactive finance — will provide the broad avenues and fastest expressways to 21st century wealth among insurers.

In two, insightful articles published here on ITL, Denise Garth discerns the key value of information. “Consider the explosion of new data that will be available and valuable in understanding the customers better so as to personalize their experience, provide insights, uncover new needs and identify new products and services that they may be unaware of,” she observes of the strategic alliance betweenFacebook and AXA. “For insurers, the coming years promise unparalleled opportunity to increase their value to their customers. Those that are best able to capitalize on the key technology influencers will reap the most in rewards,” Garth notes in an earlier article on Google.

Indeed, Facebook is poised to offer a money-transfer service in Europe. Pending regulatory approval in Ireland, Facebook would be permitted to employ user deposits in fiat currencies to become a payment services powerhouse with what seems tantalizingly close to a virtual currency. “Authorization from the central bank to become an ‘e-money’ institution would allow Facebook to issue units of stored monetary value that represent a claim against the company,” the Irish Times reported.

The company will use its acquisition of WhatsApp for access and traffic and will build on its 30% participation in revenue with Candy Crush Saga and Farmville games. Facebook will also take advantage of “‘passporting,’ which allows digital payments to be used across EU member states without having to gain regulatory approval from each one,” according to a news report.

Should Facebook succeed, AXA’s partnership with Facebook would put it well ahead of its competition in employing mobile markets to acquire and retain clients.

In an article on ITL on how Amazon could get into insurance, Sathyanarayanan Sethuraman enumerates “the convenience of on-demand buying. . . personalization of product and service delivery.” Crucially, he notes the importance of “building trust through transparency in pricing,” which provides impelling “reasons for insurers and Amazon to create a distribution model to match ever-evolving customer demands.”

Brian Cohen indicates in a thoughtful commentary on ITL that companies can collect customer feedback that is volunteered on social media and can also use new channels to provide new types of information. For instance, he says that, when inclement weather approaches, agents can caution readers to secure objects that may cause damage to their property, as a means toward generating webpage traffic and strengthening client relationships.

Joseph Sebbag cautions that technological mismatches can threaten insurance industry value. “Insurers’ numerous intricate reinsurance contracts and special pool arrangements, countless policies and arrays of transactions create a massive risk of having unintended exposure,” he notes in an intriguing essay evaluating information technology and reinsurance.

Focusing on a company with which I am very familiar, former Comptroller General David Walker says Marketcore has transformative IP in interactive finance that could provide pathways to phenomenal growth for the insurance industry and, in general, finance. The mechanism is incentives for “truth, transparency and transformation” that will make risk vehicles and markets perform more efficiently and reliably. (Walker is honorary chairman of Marketcore; I am an adviser.)

Marketcore generates liquidity by rewarding individuals and institutions for sharing information, such as the history of individual loans being bundled into residential mortgage-backed securities. The reward could be a financial advantage, say a discount on the next interval of a policy for individuals purchasing retail products. The reward could also be a strategic advantage, say foreknowledge of risk exposure for institutions dealing in structured risks like residential mortgage-backed securities or bonds, contracts, insurance policies, lines of credit, loans or securities.

Through interactive finance, Marketcore creates efficient markets for insurers and reinsurers. All do well as each does good. Risk determination permits insureds, brokers and carriers to update risks through “a transparency index. . . based. . . on the quality and quantity of the risk data records.” Component analysis of pooled securities facilitates drilling down in structured risk vehicles so insurers and reinsurers can address complex reinsurance contracts and special pool arrangements with foreknowledge of risk. Real time revaluation of contracts clarifies “the risk factors and valuation of [an] instrument” and, in so doing, “increases liquidity and tracks risks’ associated values even as derivative instruments are created.”

These interactive finance capabilities are at tipping points for insurers and reinsurers, as outlined so thoughtfully by Garth, Sethuraman and Cohen.

As those thought leaders say, large Internet enterprises like Google, Amazon and Facebook are striving for market reach and domination. Because of distributed wire line and wireless networks and the Internet, experts project that global trade will grow to $45 trillion from $6.5 trillion in less than 10 years. Global mobile transactions are projected to show more than 33% average annual growth, with 450 million users in a $720 billion market by 2017.

Only if Amazon, Facebook and Google offer new services can they exert market power in global electronic commerce analogous to late 19th century railroads, energy and steel industries. Each of them needs services like insurance no less than railroads required passengers and freight; than coal and oil required factories, homes, offices and motor vehicles; than steel required cities, railroads, trollies and cars. These Internet enterprises must have insurance, among other services associated with their brands, to remain dominant. All seek to create voluntary, de facto, walled gardens for their brands, and what better way to do so than to get users to rely on their brands to manage risks and pay bills?

None of these Internet search-and-connect giants can recoup its investments in mobile applications, drones and data centers unless it has voluminous, recurrent transactions and traffic engaging its mobile capabilities. For instance, Derek Thompson reports that the iPhone drives 60% of Apple revenue and that mobile advertising accounts for 60% of Facebook advertising revenue. John Greathousespells out the implications for advertising in a thoughtful essay on conversion rates and mobile formats. A service like insurance brings in users and encourages stickiness. In this way, insurance is the correlative to apps, drones and data centers. All these Internet giants are less without it.

Similarly, consumers and institutions are keen to participate in the value that they create with their participation in information technology and communications networks. Citizens and consumers, while resenting unremitting spying, shrug off the constant sale of metrics about their data to advertisers as inescapable and would love to turn tables on all these massive, intrusive public- and private-sector forces. People would willingly patronize a firm rewarding them for revealing risk information that they are comfortable sharing.

By rewarding institutions and individuals with financial or strategic advantage for voluntarily revealing risk-detailing information, interactive finance expressly rewards users for what they forego voluntarily with daily Internet use.

At this stage, the Internet firms have first-mover advantage when it comes to gathering and using people’s information. When I recently watched streaming video of Masterpiece Theatre’s “Mr. Selfridge,” there was the anomalous propinquity of an advertisement for an Internet tire seller in the bottom right portion of my display – within a day or so of my searching Google for motor vehicle tires. Clearly, Google, Internet ad placers and, in my case, the tire vendor are selling and purchasing access to user experiences. The sole party excluded from the value chain is the person who creates value in the information.

Earlier loyalty programs prefigure some of the notions of interactive finance. In mid-20th century America, supermarkets, gasoline stations and retailers often rewarded customer loyalty with S&H Green Stamps. Airlines, grocery chains and hotels employ loyalty programs and provide reward cards to provide incentives for recurrent patronage. In keeping with the times, Bellycard supports customer retention with a scannable card and mobile application. Each time I buy Italian bread and scan the card at the local bakery, I earn points toward a pastry.

What of insurance brokers, who reward consumers with incentives on forthcoming purchases for revealing risk information that they are comfortable sharing? Or insurer carriers, which protect asset values and boost shareholder confidence through enhanced capacities for risk detection and real-time valuation of risk exposures?

From here on out, the emphasis needs to be on rewarding customers and institutions by enabling them to create wealth with the information they are willing to reveal and by commanding information as a commodity and as the cornerstone component of emerging digital currencies. Insurers that can tap Internet industry demands for users, provide rewards for information and equip themselves to manage their risks more effectively can position themselves to dominate their sector well into the second quarter of the 21st century.

“Insurance is above all a relationship,” remarks Elise Manzi, account manager with Biddle & Company Insurance Brokers, based in Newtown Square, Pennsylvania. “We’re devoted to continuing to provide our clients with the exceptional services they have come to expect of us through these new communications capabilities. Interactive finance sounds like a great relationship builder.”

Ernest Tedesco, head of Philadelphia-based Webesco, says, “For brokers, web services support client retention and communication. For large retail carriers like Progressive and Geico, web services enable them to reach consumers directly with service and product offerings. Anything kludgy on one of these sites will send customers scurrying to competitors.” He adds that if Google and other Internet giants get into the retail insurance space, current industry leaders need to be ready to respond aggressively with technology or will be disintermediated. “Back-office executives managing trillions in risk will find themselves at competitive disadvantage without real-time and near-real-time risk detection, which web services visualize.”

By meshing with Internet industry firms on interactive finance terms, the insurance industry will have all the strength of the Internet yet sustain more discretion to manage institutional and customer experiences on terms much more favorable than those that musicians and publishers experience with Apple.

As Erik Brynjolffson and Andrew McAfee point out in The Second Machine Age, digitization both spawns vast new bounty and stimulates an increasingly drastic spread between the small fraction of winners and everyone else.

How better to build crowds and grow volumes than to provide incentives to customers by rewarding them for sharing information they are willing to reveal and to serve institutional clients with foreknowledge of oncoming risks to sustain competitive advantage and protect liquidity.

It is as straightforward as that.

For my part, I am optimistic about Marketcore because its IP enables insurance industry adopters to organize, channel and reward rich, diverse crowds of capital accumulation through interactive finance. Large, incumbent Internet firms like Amazon, Facebook and Google may still prosper from first-mover advantages based, in part, on recognition that information is the distinct commodity of the 21stcentury. But each and all now must offer more to maximize return on investments in capital-intensive operations. And that’s where any insurers, deploying Marketcore IP as sword and shield, stand most to gain for themselves and the people and institutions whose trust they hold.