text: I recently led a workshop at the BRITE Conference at Columbia University on how to connect to customers and was honored to be among speakers including Shelly Lazarus, Ogilvy’s chairman emeritus; Vikram Somaya, ESPN’s global CDO; Linda Boff, CMO of GE; and Columbia Professor and innovation thought leader Rita McGrath. Organized by faculty members David Rogers, Matt Quint and Bernd Schmitt, and now in its ninth year, BRITE promotes dialogue on top brand, innovation and technology trends across business and academia.
  I’ve condensed about half the workshop into a self-directed exercise, so you can try it.
  The workshop started with three premises:
  People-based offerings are the basis for market relevance. Product pushing cannot endure. We are doing business in an “I want” world where companies like Amazon and Apple have set an “anything is possible” standard. The standouts will be companies that know how to walk in the shoes of the people they aspire to serve. These successful brands will follow the customer’s journey through life with authenticity — not just fixated on how to push product selection and purchase.
  Customers wear different hats – they may be users, buyers or payers for your offering. People see different brand benefits based on their role. Building brand/customer connections requires you to parse these roles and tune into the relevant benefits. The benefits may not be the same — this matters when it comes to product, communications and experience decisions.
  Network thinking overrides linear thinking and action. Building a business through binary relationships with suppliers on the one hand and customers on the other hand has been supplanted by businesses driven by value networks, or “value constellations.” Once you have a clear picture of the user, buyer and payer roles, you have in hand raw material to begin to assemble the members of your constellation. More on this topic in a future post.
  Growth and Transformation: The Holy Grail
  There’s not a conversation I’ve had with a senior executive in the past few years – irrespective of business size or sector – that didn’t share two linked priorities: growth and transformation. Technological possibilities, customer expectations and the need for speed demand a departure from historically beneficial but now outmoded strategies.
  To Solve A Big Problem, You Have to Chunk It Down
  To paraphrase a favorite colleague of mine from my days at American Express, “you just have to chunk” the big, hairy problems to make progress toward solving them.
  Traditional business strategy starts with questions like: “What business are we in?” and “What core competencies can we use to compete?” These are inside-out questions whose answers assume “sustainable competitive advantage” is something you can achieve and own.
  Set these assumptions aside. Our economy demands you define your strategy from the “outside” — where the customer is. Twentieth-century notions of strategy revolved around your position relative to competition. Twenty-first century strategy revolves around the customer.
  This means the first chunk to work at is “Who is our customer?” And next, “Can we engender a transformational relationship with our customer, starting with focusing on needs, and then align all of our activities and decisions to deliver?”
  A Simple, DIY Tool to See Your Customers as People, Not Data Points
  Here’s a tool you can use to deepen your brand’s connection to customer needs and begin to conceptualize new business models for enablement.
  Whether you complete it in your head or around the table at a team meeting, this simple template can nudge even stubborn traditionalists to ask new questions about how customer insight translates into business results.
  Milton Rokeach: The Hierarchy of Needs and the User/Buyer/Payer Model
  Rokeach, a 20th-century social psychologist, conducted research resulting in an inventory of desired end states for human existence. These end states, or values, are summarized below:
  How Does This Theory Apply to Brands and Innovation?
  Brand managers tend to enumerate product features to explain value to customers. Better brand strategists get to the benefits, too. But almost always, brands stop short of the much richer territory – connecting the brand to the values people strive toward in life.
  By pushing a little harder to understand which values your brand satisfies (i.e., back to Rokeach’s inventory) you can find new growth levers, and pragmatic transformation priorities can emerge.
  What Does Soup Have To Do With It?
  So, in the simple example of a can of soup purchased for my family, the benefits may be a tasty, quick, low-cost meal that satisfies my daughter’s hunger and provides some nutrition. But as a mom, my values are things like fulfilling my sense of duty to family, maintaining family harmony at the dinner table, keeping my life under control and getting time back in my day. Brands that demonstrate connection to these sorts of deeper values will win my perpetual loyalty. Features and benefits are temporal. Values endure.
  Next, by delineating what is sought by users vs. buyers vs. payers (and understanding what the implications are when these roles are played by different people), you will establish a new angle on segmentation and shine a light on otherwise hidden innovation opportunities.
  So back to the can of soup, note the differences below between the benefits that matter to the user, the buyer and the payer. These may be one, two or more people. But even when one person plays all three roles, the benefits that one person sees through each lens are different.
  So what about features?
  Features may provide reasons to believe in the brand benefits, or even ladder up to the brand values. But by themselves, they will almost never endear customers to you. And, in fact, they may burden people with detail that distracts from a quick determination of whether the brand represents a good choice. At a minimum, features must be shared for the sake of ingredient transparency – the latter representing a brand value that has gained in importance especially for millennial buyers.
  Try to complete the user/buyer/template model as a team exercise or on your own. See how it can get you thinking about improving customer focus and engagement by connecting to the higher-order needs of whatever marketplace you serve.
  amazonamerican expressamy radinapplebrandingBRITE Conferencebusinesscustomercustomer connectioncustomer expectationESPNgeinnovationLinda BoffmillennialOgilvyproduct selectionradinShelly LazarustechnologyVikram Somayaworkshop
  Brokers & Agents, Innovation & Technology
  How to Choose the Right CRM Package
  March 4, 2016 Michael de Waal	Leave a comment
  Perhaps the most important thing an insurer can do to keep clients and brokers happy is to implement the right kind of customer relationship management system and process. CRM lets the insurer anticipate needs and communicate effectively. The most obvious benefits of a good CRM system are:
  Accessible client information, with the ability to view it in multiple dimensions
  An automated tool for reminders
  The ability to document prospect and broker files
  But those are just the baseline benefits. With a more comprehensive system, you get usability that exceeds these minimal expectations. It can bring an insurer to a whole new technological landscape that improves retention levels and increases efficiency.
  Choosing the Right CRM
  Before selecting CRM software, determine who’s considered a customer, because that will dictate the features the CRM software must have. Prospects and policyholders are certainly customers, but many insurers miss out when they neglect to recognize that brokers are customers, too. The CRM software chosen needs to serve them, as well.
  For maximum efficiency, choose a CRM that has certain integration functions. It should connect with other sales technology systems that you and your brokers use often, because service is the key differentiator.
  To take sales and service to the next level, the CRM system should allow for data to be entered once and then pushed out to other systems, including quoting and underwriting. Distribution channel and prospect information can then be populated into a sales and underwriting system. Not only is this a more streamlined way to conduct business, it also helps the process feel more personal and customized for each user. Every sales representative can have all her information immediately. It also provides for more effective self-service on the web.
  One-time entry also makes selling much easier for brokers and sales offices of the insurance company, which will always have access to updated information. This, in turn, makes your products more accessible and appealing. An advanced CRM system will also make reporting and reviewing analytics easier, allowing insurers to identify issues more easily and respond to them more quickly.
  Activity tracking is also an important feature. Having an accurate record of changes and updates is important in both relationship management and regulatory compliance. Regulators increasingly demand insurers be able to document compliance.
  Finally, you want to make sure your CRM software has configuration options that will maximize its utility for your company and brokers. Every company is unique, and CRM software that forces you into its box isn’t useful. You should be able to tailor a CRM system to make it work more efficiently for you, not have to work around it.
  CRM software isn’t just about tracking and storing information—it’s about creating a collaborative environment among product managers, brokers, carriers and clients. Let the data flow—in a well-organized, transparent way that treats every person as a distinct individual with her own needs and expectations.
  benefitscrmcustomer expectationcustomer relation managementcustomer relationshipde Waaldistribution channelinnovationinsuranceinsurance agentinsurance brokerinsurance companyinsurance industryinsuredinsurerleadershipMichael de Waalpolicyholdersoftwaretechnologyunderwriterusability
  Innovation & Technology
  What Is Right Balance for Regulators?
  February 18, 2016 Nick Gerhart	Leave a comment
  As Iowa’s insurance commissioner, I meet with many innovators whose work affects the insurance industry. A major topic we discuss is the continual debate of innovation vs. regulatory oversight. This debate will be front and center during the Global Insurance Symposium in Des Moines when federal regulators, state regulators, industry leaders and leading innovators come together for discussions on the “right” way to bring innovation into the insurance industry.
  I see three schools of thought in the debate:
  Those who want nothing changed because insurance regulation has worked for more than 150 years
  Those who suggest oversight by insurance regulators isn’t needed because innovations and market forces don’t require the same type of scrutiny that regulators have performed in the past
  Those who feel that regulations and oversight are needed but that regulators should move quickly to keep up with emerging technological developments
  Innovation is happening, and regulators realize it. No one, including regulators, can stop technological advances. Luckily, I have found that my colleagues who regulate the insurance industry desire to see innovation succeed because it will, generally, enhance the consumer experience. The focus of regulators is to enforce the laws in our states and to protect our consumers. It is that constant focus that ensures a healthy and robust market. And it is that focus that allows the market to work during an insolvency of a carrier, as Iowa witnessed recently during the liquidation of CoOportunity Health.
  But wanting to work with innovators doesn’t mean insurance regulators are going to turn a blind eye to how innovations and new technologies within the industry are affecting consumers. I do not believe the fundamentals of the insurance business need to be disrupted. Innovations within an industry that is highly regulated, complex and vital to our economy and nation need to occur within the confines of our regulatory structure. Innovators who are attempting to disrupt the insurance industry outside the bounds of our regulatory structure and who are not following state regulations will likely face significant problems.
  So, just as Goldilocks finally found the perfect fit at the home of the three bears, insurance regulators are working diligently to find the perfect fit of the proper regulation to protect consumers for innovations and the technology affecting the insurance industry. Regulators want the insurance business to continue to innovate and adapt to meet customer needs and expectations. Improving the customer experience through technology, quicker underwriting and increasing efficiency adds to the value of insurance for consumers. I know many smart people are working on creative projects to do these types of things and much more.
  The insurance business is arguably becoming less complex because technology simplifies and evens out that complexity. Many existing insurance companies will face challenges as data continues to be harvested and as digital opportunities become more obvious. The continuous innovation in the industry is both positive and exciting.
  However, insurance carriers face incredible issues, and, therefore, the regulators who supervise these firms must clearly understand the complexity of the industry and the external factors that weigh upon the industry.
  A few issues industry participants must deal with:
  Perpetual low interest rates that make it difficult for insurers’ investment yields to match up with liabilities;
  Catastrophic storms that may wipe out an entire year’s underwriting profit in a matter of hours;
  Increasing technological demands within numerous legacy systems;
  International regulators working toward capital standards that may not align with the business of insurance in the U.S.
  I believe regulators, insurance carriers and innovators can work together to harmonize and streamline regulations in an effort to keep up with market demands. However, the heart of insurance regulation beats to protect consumers. Compromising on financial oversight and strong consumer protections is not up for negotiation. Ensuring companies are properly licensed and producers are trained and licensed is critical, and ensuring companies maintain a strong financial position is equally critical.
  Innovators who wish to bear risk for a fee or distribute products to consumers will need to comply with insurance law. Additionally, innovators looking to launch a vertical play into the industry through a creative service, model or underwriting tool need to make sure they do not run afoul of legal rules and provisions that deal with discriminatory pricing and use of data. It is a lot to absorb for an entrepreneur, but it is not impossible, and the upside may very well be worth it.
  I absolutely encourage companies looking to innovate in the insurance industry to proceed, but I urge them to do so both with the understanding of insurance law and the role of the regulator and with strong internal compliance and controls. Innovators and entrepreneurs who proceed down the right path are the most likely to have regulators excited to see them succeed.
  Insurance is still a complex industry. Can and should it be made simpler? Yes. I believe that, through innovation and continued digital evolution, it will. Should the industry focus on how to continue to enhance consumer experience and put the consumer in the center of everything? Yes, and I know that is occurring within many new ideas and businesses that are beginning and evolving.
  Insurance, at its core, is a business of promises. It is an industry that has passed the test of time, and I believe, through innovation and continual improvement, it will remain strong and vibrant for the next 100 years.
  If you are an innovator or entrepreneur and are looking for a program to learn about how to address insurance regulatory issues within your business as well as the role of a state insurance regulator, I would again encourage you to attend our 3rd Global Insurance Symposium in Des Moines, Iowa. This is the first conference where innovation and regulatory issues truly converge. This is your opportunity to learn from state insurance regulators, the Federal Reserve, the U.S. Department of Commerce, seasoned insurance executives, start-up entrepreneurs (the second class of the Global Insurance Accelerator will have a demo day for the 2016 class), venture capital investors and leading innovative thought leaders. No other meeting has assembled a group like this.
  Everyone will benefit from the unique learning experiences, and, more importantly, relationships will emerge. Register here today!
  consumerCoOportunity Healthcustomercustomer expectationfederal reserveGerhartGlobal Insurance AcceleratorGlobal Insurance Symposiuminnovationinsuranceinsurance industryinsurance lawinsurance regulationinsurance regulatorinsuredinsurerinterest ratelow interest rateMarketNick GerharttechnologyU.S. Department of Educationundewrwriter
  Brokers & Agents, Innovation & Technology
  Waves of Change in Digital Expectations
  February 4, 2016 Denise Garth	Leave a comment
  In the first of this three-part blog series, titled “Bringing Insurance Distribution Back Into Sync Part 1: What Happened to Insurance Distribution?”, we talked about the seismic shifts that have rocked traditional insurance distribution and about how insurance companies need to adopt a 2D strategy to thrive in this new environment.
  There are four fundamental drivers of the seismic changes:
  New expectations are being set by other industries—the “Amazon effect”;
  New products are needed to meet new needs, and risks are distributed in new channels;
  Channel options are expanding;
  Lines are blurring between insurance and other industries.
  In this blog post, we’ll discuss how the final three fundamental drivers have contributed to an environment of challenges and great opportunities. Those who adopt a 2D strategy will be better-prepared to seize the opportunities:
  First, by optimizing the front end with a digital platform that orchestrates customer engagement across multiple channels
  Second, by creating an optimized back end that effectively manages the growing array and complexity of multiple distribution channels beyond the traditional agent channel
  New Products
  Customer expectations, behaviors and risk profiles are evolving thanks to technology, social trends and other changes happening around us. These are driving the need for new insurance solutions and, consequently, new distribution methods, such as:
  We all know about autonomous cars and increasing car safety technology. Autonomous cars have created questions about where liability lies in the event of an accident involving one of these vehicles. Volvo has laid down a challenge to the auto and insurance industries with its recent announcement that it will assume liability for crashes of its Intellisafe Autopilot cars.
  The sharing economy—whether it’s for transportation, lodging, labor or “stuff”—has created a multitude of questions regarding coverages. People have realized they don’t need to buy and own cars or pay for hotel rooms when they can use someone else’s stuff for a cheaper price. People who own these items can monetize them when they’re not being used.
  Cyber risk has been around for a long time, but numerous high-profile hacks have made it a hot topic again.
  And, finally, the Internet of Things: Connected cars, homes and personal fitness trackers are generating lots of data with tremendous potential to improve pricing and create products and services, while at the same time reducing or eliminating risk.
  The seismic impact has resulted in companies developing and offering new products to meet the changing needs, preferences and risks being driven by consumers. There are several relatively new peer-to-peer companies that have entered the market, such as Friendsurance, insPeer, Bought by Many and the recently announced start-up Lemonade. Metromile addresses the sharing economy trend with its product for Uber drivers, and addresses the niche market of low-mileage drivers.
  Google Compare, with its focus of “being there when the customer wants it,” has rapidly expanded from credit cards (2013) to auto insurance (early 2015) and now to mortgages (December 2015), all the while expanding to new states and adding product providers to its platform with a new model that leverages customer feedback.
  John Hancock is using Fitbits as part of the company’s Vitality program, which started in South Africa and which uses gamification to increase customer engagement and lead to potential discounts. Tokio Marine Nichido is using mobile (in an alliance with NTT Docomo) to distribute “one-time insurance” for auto, travel, golf and sports and leisure. HCC, which was recently acquired by Tokio Marine, has a new online portal for its agents to write artisan ontractors coverage for small artisan contractor customers.
  The overarching theme in all these examples is that each company is pioneering ways of distribution, not just new products or coverages. Many companies are direct e-commerce because they are low premium, quick turnaround/short duration and potentially high volume; they are not well-suited for agent distribution.
  Expanding Channel Options
  Channel options and capabilities for accessing insurance are expanding rapidly. New brands are entering the market, giving customers new ways to shop for, compare and buy insurance.
  Comparison sites, online agencies and brokers—such as Bolt Insurance Agency, Insureon, PolicyGenius, CoverHound, Compare.com and the Zebra—are relatively new to the market and are gaining significant market interest and penetration. There are also new brands in the U.S. selling life and commercial direct online, like Haven Life, Assurestart and Hiscox. Berkshire Hathaway will jump into the direct-to-business small commercial market in 2016, a potential game-changing move for the industry.
  Finally, there are some intriguing new players that are focusing on specific parts of the insurance value chain.
  Social Intelligence uses data from social media to develop risk scores that can be used for pricing and underwriting.
  TROV is a “digital locker” with plans to use the detailed valuation data it collects to create more precise coverage and pricing for personal property.
  Snapsheet is the technology platform behind many carriers’ mobile claims apps, including USAA, MetLife, National General and Country Financial.
  Blurring Lines
  The insurance industry is so valuable that outside companies are trying to capture a share. This has created a blurring of industry lines. Companies like Google, Costco and Wal-Mart are familiar brands that have not traditionally been associated with insurance, but they have offered insurance to their customers. The first time most people heard about these companies’ expansions into insurance, it probably struck them as unusual, but now the idea of cross-industry insurance penetration has become normal.
  In addition, insurance products are blurring and blending into other products. For example, Zenefits and Intuit are considering bundling workers’ compensation with payroll offerings.
  So, what does all of this mean? There are two key implications from all of this for insurance companies.
  First, multiple channels are now available to and are expected by customers. There are many ways for customers to research, shop, buy, pay for and use insurance (as well as almost all other types of products and services). Most customers demand and use multiple channels depending on what they want or need at the time. They are more ends-driven than means-driven and will pick the best channel for the task at hand.
  Second, multiple channel options give customers the freedom to interact with companies anywhere, anytime, in just about any way. But this only works if these channels are aligned and integrated. An organization can’t just add channels as new silos; they must be aligned, or they will do more harm than good.
  So, while distribution transformation and digital capabilities promise an easier, better experience for customers, they actually result in increased complexity for insurers. Orchestrating all these channel options is hard work and can’t be done with legacy thinking, processes or systems. This expansion of channels requires insurers to optimize both the front end and the back end of the channel ecosystem. In my next blog post, we’ll discuss these in more detail.
  amazonauto insuranceautonomous carcar safetychannelconnected carcustomer expectationcustomer feedbackcyber riskdenise garthdigital platformdistribution channeleconomyfitbitFriendsurancegamificationgarthgooglegoogle compareHCCinsuranceinsurance agentinsurance brokerinsurance industryinsurance solutioninsuredinsurerinternet of thingsJohn HancockLemonademetromilemortgagesocial trendstechnologyTokio MarineuberVitalityvolvo
  Innovation & Technology
  New Themes Emerging on Role of IoT
  December 9, 2015 Mark Breading	Leave a comment
  The IoT in Insurance event just concluded in Miami with an impressive lineup of 32 speakers over two days (including yours truly). Above all, the event demonstrated that the IoT is alive and well in insurance. Insurers are exploring, strategizing, investing, piloting and putting real value propositions into the marketplace. Most, if not all, of the participants believe that the industry is paddling into a huge wave – those companies that are aggressive will catch the wave and enjoy a great ride. The rest will get swept under. The industry is in for major disruption and transformation over the next three to five years … and the IoT will play a big role. Although the potential opportunities and threats are vast and varied, a number of important themes emerged at the conference.
  Customer Experience Is Key: Customer expectations are a driving force of change. The IoT creates many opportunities to transform interaction with customers: Real-time data enables more active advice and communications, and there is big potential to shift from a few touchpoints a year to daily interactions. Insurers that are already leveraging IoT devices in policyholders’ homes, vehicles and businesses are learning how to offer new value.
  It’s All About the Services, Not the Things: So much cool stuff is happening out there! There are so many new IoT-based companies, devices and services that it is almost impossible to keep up. Insurers need to search out the “things” that make sense and create services around them that are valuable to customers. The Ring doorbell, the Roost smoke alarm battery, the Google/Nest thermostat, the leakSMART water detection device and many others are interesting as separate devices but provide even more value when integrated with an insurance offering.
  Behavioral Science Is Increasingly Important: Since the dawn of the industry, insurers have relied on actuarial science to develop and price products and plan for losses. Loss experience has always been king in terms of understanding and evaluating risk. The IoT now provides the opportunity to leverage real-time data and interactions to shape behavior and change the risk equation, with the goal of improving safety and helping individuals live longer, healthier lives.
  Ecosystem Participation Is Essential: Insurers are not going to be at the center of the universe in the connected world. In fact, the whole notion of the connected world leads to a blurring and overlapping of traditional industries. Networks of partnerships – ecosystems – are being built around the connected car, connected home, connected agriculture and many other domains in the connected world. Each ecosystem is loosely defined and rapidly evolving – and insurers must determine how they participate and contribute to a particular domain.
  Data, Platforms and Standards Form the Foundation: One thing is certain. The IoT generates mountains of data – both structured and unstructured – orders of magnitude more than insurers and others are used to capturing, routing, storing, analyzing and leveraging. Insurers must create standard platforms and new standards for data exchange to avoid yet another set of operational silos.
  Innovation Is Mandatory: The possibilities are virtually endless. Many insurance professionals see the possibilities and are dreaming up offerings and services. In the end, the winners will be those that can create a culture of innovation, with a continuing commitment to reimagine the business, and the willpower, brainpower and resources to bring ideas to fruition – quickly.
  One last observation: Many are excited about the opportunities for the industry but fearful that insurers will not move fast enough. Innovative start-ups, as well as the global behemoths of the digital age (i.e. Google, Amazon, Facebook), go from idea to implementation in days or weeks. There is the potential that insurers will be relegated to back office administration while others own the customer experience. Despite that fear, it is heartening to see so many insurers making aggressive moves, so many Millennials being given the latitude to innovate and so many partnerships established that would have been unthinkable even five years ago.
  The industry is not going to go away, but there will clearly be winners and losers in this era – and probably many surprises along the way.
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