Digital Insurance: Partnering For The Game Of Life

Kai Görlich and Christian Jaerschke

Digitalization is a threat – and an opportunity – for one of our oldest industries. As the insurance industry faces upstart competitors and challenging economics, they must reinvent their businesses to survive.

Life is inherently risky. It’s only natural that human beings invented insurance to help mitigate some of the disastrous losses that we were bound to encounter. The earliest insurance contracts were marine policies written in Genoa, Italy, in 1347. The first known company that sold insurance to the public was Hamburger Feuerkasse (still in business today), which was established in 1676 to provide fire insurance. The insurance industry grew right along with the industrialization of the world. Today, we can insure the most important areas of our lives: health, wealth, employment, and property to name just a few.

Insurance companies have taken steps to eliminate risks over the years. Some were instrumental in demanding innovations such as fire hydrants and building sprinkler systems and, in many cases, require them before underwriting a given risk. However, the focus for the last several centuries has still been on responding to loss rather than preventing it.

But the insurance industry is on the verge of a fundamental shift – driven by increased digitization, more advanced analytics capabilities, and disruptive threats from new entrants and business models. Insurance companies are not only facing rising costs, intense competition, a challenging regulatory environment, and increasing customer expectations. But they also have the opportunity to harness technology and data in novel ways to create entirely new business models that proactively manage – and even eliminate – risks for customers.

From threat to opportunity

The insurance industry is under pressure, but it also has access to a number of technologies that could enable better customer service and expand their businesses beyond traditional offerings. Advancements in computing are helping companies in all industries transform Big Data into actionable insights. And the universe of available data is expanding every day thanks to increasingly cost-effective sensors, wearable computing options, and other technologies capable of providing a stream of ambient intelligence about the world.

The number of Internet-connected devices and sensors (14.8 billion as of February) will grow to 50 billion by 2020, according to Cisco. And Intel predicts that there will be 200 billion Internet-connected things in 2030. But that is not all that will impact the industry over the coming years:

  • The speed of analytics will intensify thirty-fold by 2030, with 95% of queries answered in mere milliseconds, according to SAP estimates.
  • By 2020, the digital data universe will grow to 44 zettabytes, and brings the potential to be analyzed and used to generate insight will grow from 22% to 37%, according to EMC and IDC.

The industry can harness these technologies not only to improve internal operations and productivity, but also expand their revenue-generating opportunities and improve the customer experience. While insurers are already harnessing automation to improve efficiency and experimenting with new business models in the areas of product development (micro-insurance) distribution (Web and mobile) and pricing (micro-segmentation), more dramatic shifts are ahead. According to Prof. Professor Dr. Fred Wagner from the Institut für Versicherungslehre in Leipzig, Germany, the future of insurance is not just insurance but has to be expanded beyond risk and investments.

Lessons from the outside

Insurance companies must disrupt themselves before they are disrupted  – embracing innovation in the areas of customer experience, product and service development, and risk management. And some promising new entrants are already beginning to shake up the industry.

  • New York-based Lemonade, with investors including Aleph and Sequoia Capital, wants to become the world’s first peer-to-peer property and casualty insurance provider. The company recently hired a chief behavioral officer who previously worked with Intuit to motivate people to save more and Intel on worker productivity.
  • Sure, launched in 2014, is a so-called episodic insurance company that will offer on-demand accident, life, property, casualty, and warranty policies. Its first product is flight insurance that travelers can purchase up to the time they take off that ends when they land. The company’s app also features analytics called Robo-Broker, which uses information about customer behavior to recommend products.
  • Trov, another mobile on-demand insurance platform that offers insurance for specific products (a new racing bike or digital camera) for a specific amount of time, is currently available in Australia with plans to launch in the U.S. in 2017.
  • Canopy Health Insurance says it offers consumers simpler, cheaper healthcare coverage by featuring just five individual plans and a smaller network of core providers.
  • Zoom+, which began as a chain of retail healthcare clinics in the Pacific Northwest, recently expanded into an integrated healthcare delivery system with on-demand insurance options aimed at tech- and health-savvy consumers. Its digital platform offers online scheduling, paying, and access to results for X-ray, ultrasound, and CT scans and its newest primary care clinics aimed at optimizing human performance using food, movement, and relationship as medicine. It also offers in-person assessments and labs with a board-certified naturopathic physician and ongoing medical coaching through video and e-mail.

Insurance companies face significant indirect competition as well. Customer expectations are influenced by their experiences in other areas and with companies in other industries such as Amazon, Facebook, and Apple. They want frictionless, personalized, and relevant experiences.

However, insurers can adopt best practices from other industries. Take the automotive industry, for example. Customers can configure the cars they choose to buy, making it easy for the prospect to purchase a complex, customized product. Insurers also have the opportunity to do the same with products to manage new and complex risks. They can take a page from retailers’ approaches to omnichannel management. Like companies in the travel and hospitality industries, insurers can explore compelling offerings and pricing as well as loyalty program management. They can apply banking approach to personal finance management and offer insurance customers personal risk management services. According to Prof. Wagner, insurers should follow the innovation strategies from other industries and build their own innovation frameworks with partners from different industries to create new ideas and business models outside the classical insurance business.

Smart insurance: building richer customer relationships

Moreover, insurance companies can expand beyond traditional products and interactions and become a more involved – and more positive – presence in their customers’ lives and, in the process, redefine their business models.

In the traditional insurance paradigm, insurers interact with their customers less than 1% of the time – when the product is purchased and a claim is submitted. These companies are missing opportunities to build better relationships with customers during the other 99% of the time and to sell them value-added products and services. By increasing the customer touch points, they can also shift the focus from paying for a loss, which is a process that can often be complex and frustrating for customers, to helping customers live better lives.

Using more detailed data, insurance companies can remind customers on their smartphones that it’s time, for example, to service their vehicle or suggest ski insurance for a customer who often hits the slopes. Companies can offer digitally enabled premium services such as financial coaching or retirement planning. They can partner with other companies to offer discounted products and services, including all-weather tires or fitness trackers, that will ultimately improve their customers risk profiles. They can use data and analytics to improve their core insurance offerings to deliver context-based offers that are relevant to customers, simpler insurance products, and smarter pricing. The emerging sensor ecosystem opens up opportunities for new “pay-as-you-drive” (usage-based) or “pay-how-you-live” (outcome-based) pricing strategies that consumers demand. Insurers can also explore entirely new insurance product categories, such as peer-to-peer insurance.

Progressive was an early leader in the usage-based auto insurance space offering the opportunity to receive discounts based on their driving habits by delivering data through a telematics device installed in a consumer’s car. Late last year, the company announced it was developing a mobile app to automatically monitor and measure drivers’ data – such as time of day, mileage, and hard braking – to earn discounts without the connected device. At the end of each trip, the mobile app will give drivers personalized information, including a star-based rating, a data summary, a map of their drive, and tailored driving tips, to help improve their score. There is growing interest in the use of dashboard cameras to gather accident data and encourage safer driving.

State Farm Insurance has partnered with ADT offers homeowners discounts on smart home security and monitoring systems that help measure in-home risk. Aviva Ventures, the venture capital arm of the UK insurer, invested in Cocoon, maker of an internet-connected home security device. AXA is partnering with Samsung on the development of a secured connected car ecosystem that will encourage safer driving and help consumers get access to better insurance rates.

American International Group Inc. (AIG) announced it is investing in an early stage startup developing advanced analytics and wearable devices to improve worker safety. The $58 billion insurance company invested in a startup called Human Condition Safety, which is using artificial intelligence and data modeling to help workers, their managers, and worksite owners prevent injuries in some of the highest risk settings such as manufacturing, energy, warehousing and distribution, and construction. The system correlates data from a worksite environment with historical data on workplace incidents and determines how best to prevent injuries before they happen. Workplace accidents kill one person and injure 153 others every 15 seconds. Instead of simply providing benefits to clients after these tragedies occur, AIG is looking to cognitive computing to partner with its customer to reduce those risks as well.

FItsense is a Singapore-based startup building a data analytics platform aimed at helping data insurance companies personalize life and health insurance for customers with wearables. By taking the data from a user’s wearable (like Fitbit or Jawbone), insurance providers can make more accurate risk perditions based on actual data and reward users who live healthier lifestyles with lower insurances costs and premiums.

Your new life coach

Successful insurance providers will move beyond underwriting and loss management to become life partners for their consumers – using data, technology, and strategic partnerships to provide simple, friendly, personal, relevant, and holistic products and services.

Using real-time analytics and risk assessment, companies could provide fully customized insurance based on individual use charged by the hour and activity and click. Insurance products might include service add-ons from partners aimed at reducing risk. The financial and claims management aspects of the business will be largely automated or outsourced, taking a back-seat to value-added, customer-facing interactions. The future will be focused less on paying for loss than preventing it, which will result in closer and potentially more valuable customer relationships.

Just as the first insurance carriers transformed the risks of the shipping industry or wood homes into viable marine and fire insurance businesses centuries ago, insurance companies today have the power to turn disruption risk into an opportunity for more expansive, profitable, and customer-centric business models. With this approach, the can work closely with partners and technology innovators to help their customers better manage life’s complexities.

Download the executive brief A New Paradigm for the Insurance Industry.


To learn more about how exponential technology will affect business and life, see Digital Futures in the Digitalist Magazine.


Data Analysts And Scientists More Important Than Ever For The Enterprise

Daniel Newman

The business world is now firmly in the age of data. Not that data wasn’t relevant before; it was just nowhere close to the speed and volume that’s available to us today. Businesses are buckling under the deluge of petabytes, exabytes, and zettabytes. Within these bytes lie valuable information on customer behavior, key business insights, and revenue generation. However, all that data is practically useless for businesses without the ability to identify the right data. Plus, if they don’t have the talent and resources to capture the right data, organize it, dissect it, draw actionable insights from it and, finally, deliver those insights in a meaningful way, their data initiatives will fail.

Rise of the CDO

Companies of all sizes can easily find themselves drowning in data generated from websites, landing pages, social streams, emails, text messages, and many other sources. Additionally, there is data in their own repositories. With so much data at their disposal, companies are under mounting pressure to utilize it to generate insights. These insights are critical because they can (and should) drive the overall business strategy and help companies make better business decisions. To leverage the power of data analytics, businesses need more “top-management muscle” specialized in the field of data science. This specialized field has lead to the creation of roles like Chief Data Officer (CDO).

In addition, with more companies undertaking digital transformations, there’s greater impetus for the C-suite to make data-driven decisions. The CDO helps make data-driven decisions and also develops a digital business strategy around those decisions. As data grows at an unstoppable rate, becoming an inseparable part of key business functions, we will see the CDO act as a bridge between other C-suite execs.

Data skills an emerging business necessity

So far, only large enterprises with bigger data mining and management needs maintain in-house solutions. These in-house teams and technologies handle the growing sets of diverse and dispersed data. Others work with third-party service providers to develop and execute their big data strategies.

As the amount of data grows, the need to mine it for insights becomes a key business requirement. For both large and small businesses, data-centric roles will experience endless upward mobility. These roles include data anlysts and scientists. There is going to be a huge opportunity for critical thinkers to turn their analytical skills into rapidly growing roles in the field of data science. In fact, data skills are now a prized qualification for titles like IT project managers and computer systems analysts.

Forbes cited the McKinsey Global Institute’s prediction that by 2018 there could be a massive shortage of data-skilled professionals. This indicates a disruption at the demand-supply level with the needs for data skills at an all-time high. With an increasing number of companies adopting big data strategies, salaries for data jobs are going through the roof. This is turning the position into a highly coveted one.

According to Harvard Professor Gary King, “There is a big data revolution. The big data revolution is that now we can do something with the data.” The big problem is that most enterprises don’t know what to do with data. Data professionals are helping businesses figure that out. So if you’re casting about for where to apply your skills and want to take advantage of one of the best career paths in the job market today, focus on data science.

I’m compensated by University of Phoenix for this blog. As always, all thoughts and opinions are my own.

For more insight on our increasingly connected future, see The $19 Trillion Question: Are You Undervaluing The Internet Of Things?

The post Data Analysts and Scientists More Important Than Ever For the Enterprise appeared first on Millennial CEO.


About Daniel Newman

Daniel Newman serves as the Co-Founder and CEO of EC3, a quickly growing hosted IT and Communication service provider. Prior to this role Daniel has held several prominent leadership roles including serving as CEO of United Visual. Parent company to United Visual Systems, United Visual Productions, and United GlobalComm; a family of companies focused on Visual Communications and Audio Visual Technologies. Daniel is also widely published and active in the Social Media Community. He is the Author of Amazon Best Selling Business Book "The Millennial CEO." Daniel also Co-Founded the Global online Community 12 Most and was recognized by the Huffington Post as one of the 100 Business and Leadership Accounts to Follow on Twitter. Newman is an Adjunct Professor of Management at North Central College. He attained his undergraduate degree in Marketing at Northern Illinois University and an Executive MBA from North Central College in Naperville, IL. Newman currently resides in Aurora, Illinois with his wife (Lisa) and his two daughters (Hailey 9, Avery 5). A Chicago native all of his life, Newman is an avid golfer, a fitness fan, and a classically trained pianist

When Good Is Good Enough: Guiding Business Users On BI Practices

Ina Felsheim

Image_part2-300x200In Part One of this blog series, I talked about changing your IT culture to better support self-service BI and data discovery. Absolutely essential. However, your work is not done!

Self-service BI and data discovery will drive the number of users using the BI solutions to rapidly expand. Yet all of these more casual users will not be well versed in BI and visualization best practices.

When your user base rapidly expands to more casual users, you need to help educate them on what is important. For example, one IT manager told me that his casual BI users were making visualizations with very difficult-to-read charts and customizing color palettes to incredible degrees.

I had a similar experience when I was a technical writer. One of our lead writers was so concerned with readability of every sentence that he was going through the 300+ page manuals (yes, they were printed then) and manually adjusting all of the line breaks and page breaks. (!) Yes, readability was incrementally improved. But now any number of changes–technical capabilities, edits, inserting larger graphics—required re-adjusting all of those manual “optimizations.” The time it took just to do the additional optimization was incredible, much less the maintenance of these optimizations! Meanwhile, the technical writing team was falling behind on new deliverables.

The same scenario applies to your new casual BI users. This new group needs guidance to help them focus on the highest value practices:

  • Customization of color and appearance of visualizations: When is this customization necessary for a management deliverable, versus indulging an OCD tendency? I too have to stop myself from obsessing about the font, line spacing, and that a certain blue is just a bit different than another shade of blue. Yes, these options do matter. But help these casual users determine when that time is well spent.
  • Proper visualizations: When is a spinning 3D pie chart necessary to grab someone’s attention? BI professionals would firmly say “NEVER!” But these casual users do not have a lot of depth on BI best practices. Give them a few simple guidelines as to when “flash” needs to subsume understanding. Consider offering a monthly one-hour Lunch and Learn that shows them how to create impactful, polished visuals. Understanding if their visualizations are going to be viewed casually on the way to a meeting, or dissected at a laptop, also helps determine how much time to spend optimizing a visualization. No, you can’t just mandate that they all read Tufte.
  • Predictive: Provide advanced analytics capabilities like forecasting and regression directly in their casual BI tools. Using these capabilities will really help them wow their audience with substance instead of flash.
  • Feature requests: Make sure you understand the motivation and business value behind some of the casual users’ requests. These casual users are less likely to understand the implications of supporting specific requests across an enterprise, so make sure you are collaborating on use cases and priorities for substantive requests.

By working with your casual BI users on the above points, you will be able to collectively understand when the absolute exact request is critical (and supports good visualization practices), and when it is an “optimization” that may impact productivity. In many cases, “good” is good enough for the fast turnaround of data discovery.

Next week, I’ll wrap this series up with hints on getting your casual users to embrace the “we” not “me” mentality.

Read Part One of this series: Changing The IT Culture For Self-Service BI Success.

Follow me on Twitter: @InaSAP


The Future of Cybersecurity: Trust as Competitive Advantage

Justin Somaini and Dan Wellers


The cost of data breaches will reach US$2.1 trillion globally by 2019—nearly four times the cost in 2015.

Cyberattacks could cost up to $90 trillion in net global economic benefits by 2030 if cybersecurity doesn’t keep pace with growing threat levels.

Cyber insurance premiums could increase tenfold to $20 billion annually by 2025.

Cyberattacks are one of the top 10 global risks of highest concern for the next decade.

Companies are collaborating with a wider network of partners, embracing distributed systems, and meeting new demands for 24/7 operations.

But the bad guys are sharing intelligence, harnessing emerging technologies, and working round the clock as well—and companies are giving them plenty of weaknesses to exploit.

  • 33% of companies today are prepared to prevent a worst-case attack.
  • 25% treat cyber risk as a significant corporate risk.
  • 80% fail to assess their customers and suppliers for cyber risk.

The ROI of Zero Trust

Perimeter security will not be enough. As interconnectivity increases so will the adoption of zero-trust networks, which place controls around data assets and increases visibility into how they are used across the digital ecosystem.

A Layered Approach

Companies that embrace trust as a competitive advantage will build robust security on three core tenets:

  • Prevention: Evolving defensive strategies from security policies and educational approaches to access controls
  • Detection: Deploying effective systems for the timely detection and notification of intrusions
  • Reaction: Implementing incident response plans similar to those for other disaster recovery scenarios

They’ll build security into their digital ecosystems at three levels:

  1. Secure products. Security in all applications to protect data and transactions
  2. Secure operations. Hardened systems, patch management, security monitoring, end-to-end incident handling, and a comprehensive cloud-operations security framework
  3. Secure companies. A security-aware workforce, end-to-end physical security, and a thorough business continuity framework

Against Digital Armageddon

Experts warn that the worst-case scenario is a state of perpetual cybercrime and cyber warfare, vulnerable critical infrastructure, and trillions of dollars in losses. A collaborative approach will be critical to combatting this persistent global threat with implications not just for corporate and personal data but also strategy, supply chains, products, and physical operations.

Download the executive brief The Future of Cybersecurity: Trust as Competitive Advantage.



How Digital Transformation Is Rewriting Business Models

Ginger Shimp

Everybody knows someone who has a stack of 3½-inch floppies in a desk drawer “just in case we may need them someday.” While that might be amusing, the truth is that relatively few people are confident that they’re making satisfactory progress on their digital journey. The boundaries between the digital and physical worlds continue to blur — with profound implications for the way we do business. Virtually every industry and every enterprise feels the effects of this ongoing digital transformation, whether from its own initiative or due to pressure from competitors.

What is digital transformation? It’s the wholesale reimagining and reinvention of how businesses operate, enabled by today’s advanced technology. Businesses have always changed with the times, but the confluence of technologies such as mobile, cloud, social, and Big Data analytics has accelerated the pace at which today’s businesses are evolving — and the degree to which they transform the way they innovate, operate, and serve customers.

The process of digital transformation began decades ago. Think back to how word processing fundamentally changed the way we write, or how email transformed the way we communicate. However, the scale of transformation currently underway is drastically more significant, with dramatically higher stakes. For some businesses, digital transformation is a disruptive force that leaves them playing catch-up. For others, it opens to door to unparalleled opportunities.

Upending traditional business models

To understand how the businesses that embrace digital transformation can ultimately benefit, it helps to look at the changes in business models currently in process.

Some of the more prominent examples include:

  • A focus on outcome-based models — Open the door to business value to customers as determined by the outcome or impact on the customer’s business.
  • Expansion into new industries and markets — Extend the business’ reach virtually anywhere — beyond strictly defined customer demographics, physical locations, and traditional market segments.
  • Pervasive digitization of products and services — Accelerate the way products and services are conceived, designed, and delivered with no barriers between customers and the businesses that serve them.
  • Ecosystem competition — Create a more compelling value proposition in new markets through connections with other companies to enhance the value available to the customer.
  • Access a shared economy — Realize more value from underutilized sources by extending access to other business entities and customers — with the ability to access the resources of others.
  • Realize value from digital platforms — Monetize the inherent, previously untapped value of customer relationships to improve customer experiences, collaborate more effectively with partners, and drive ongoing innovation in products and services,

In other words, the time-tested assumptions about how to identify customers, develop and market products and services, and manage organizations may no longer apply. Every aspect of business operations — from forecasting demand to sourcing materials to recruiting and training staff to balancing the books — is subject to this wave of reinvention.

The question is not if, but when

These new models aren’t predictions of what could happen. They’re already realities for innovative, fast-moving companies across the globe. In this environment, playing the role of late adopter can put a business at a serious disadvantage. Ready or not, digital transformation is coming — and it’s coming fast.

Is your company ready for this sea of change in business models? At SAP, we’ve helped thousands of organizations embrace digital transformation — and turn the threat of disruption into new opportunities for innovation and growth. We’d relish the opportunity to do the same for you. Our Digital Readiness Assessment can help you see where you are in the journey and map out the next steps you’ll need to take.

Up next I’ll discuss the impact of digital transformation on processes and work. Until then, you can read more on how digital transformation is impacting your industry.


About Ginger Shimp

With more than 20 years’ experience in marketing, Ginger Shimp has been with SAP since 2004. She has won numerous awards and honors at SAP, including being designated “Top Talent” for two consecutive years. Not only is she a Professional Certified Marketer with the American Marketing Association, but she's also earned her Connoisseur's Certificate in California Reds from the Chicago Wine School. She holds a bachelor's degree in journalism from the University of San Francisco, and an MBA in marketing and managerial economics from the Kellogg Graduate School of Management at Northwestern University. Personally, Ginger is the proud mother of a precocious son and happy wife of one of YouTube's 10 EDU Gurus, Ed Shimp.