What does “Insuretech” mean to you?
The buzzword has been around for years in conversations about the industry’s need for digitization and modernization, but it’s still difficult to parse through the noise to find practical solutions actually making a difference in the way carriers, brokers and customers do business.
Innovations such as artificial intelligence and blockchain have potential to shake up traditional modes of underwriting and policy management, but use on a broad scale will take time. Rather, the tools impacting the industry in a more tangible way right now are not those that seek to disrupt the value chain, but rather augment services offered by carriers and brokers.
No matter your role in the insurance industry, these are the Insuretech tools to pay attention to now:
One school of thought posits that the rise of Big Data-enabled automated underwriting and more streamlined customer service will push out brokers in favor of direct-to-consumer sales. While that may hold true for some personal lines, the complexity of risk taken on by businesses demands the guidance of an experienced broker.
“Insurance brokers will continue to be an integral part of the buying and selling process for a while to come,” said Manish Agarwal, General Partner, AXA Venture Partners. “Technologies are being developed specifically to make brokers more effective and efficient because companies recognize that they aren’t going anywhere.”
Some of these solutions include technologies that allow brokers to quote new coverage in real time. Employee benefits coverage, for example, is a common thorn in brokers’ sides because it requires gathering a client company’s employee census data and taking it to prospective insurers to obtain quotes, which can take weeks.
“The process, unfortunately, is very labor intensive,” Agarwal said.
Companies like Limelight Health, an employee benefits and technology firm and an AXA Venture portfolio company, make it easy for brokers to quote and bind coverage by collecting and integrating data from carriers to generate and customize insurance quotes on the spot.
“This makes it easier for brokers to sell because you won’t have as much drop-off of clients in the time it takes to get an accurate quote,” Agarwal said.
Other technologies support brokers in helping their clients assess risk. SecurityScorecard, for example, ranks a company’s cyber risk — a perennially difficult exposure to identify and quantify. With this tool in hand, brokers can help clients obtain more customized cyber insurance solutions that address specific vulnerabilities.
“Rather than offering a blanket recommendation to purchase cyber coverage, brokers can say to clients, ‘I’ve done real work, I know your individual risk profile, and this is how much insurance you should buy’,” Agarwal said.
Traditional buyers of commercial policies will benefit from brokers’ ability to access data and quote coverage more quickly, but new solutions are also emerging that address the unique insurance needs of the growing gig economy.
Take, for example, freelance photographers and videographers using drones to take aerial shots. Drones come with liability for property damage and injury to third parties, and are subject to regulations set by the FAA. Operators or their clients need insurance to cover these risks, but may not want to pay premiums for a policy they only use for an hour here or there over the course of a week.
“Some Insuretech companies have specialized in providing on-demand insurance direct to consumers that can be tailored to be turned ‘on’ or ‘off’ whenever the covered activity is taking place,” Agarwal said.
Verifly — another of AXA Venture Partner’s investments — is one example of a firm providing these custom, short-term policies directly though mobile apps. These solutions can also help carriers reach a range of independent contractors — like plumbers, electricians, designers, etc. — who may be inclined to forgo liability coverage through traditional channels altogether because of higher premiums and more up-front legwork.
“Simple, direct, custom solutions to get these entities covered offer value to both the insureds and insurers,” Agarwal said.
The direct-to-consumer model may not apply to large corporations, but carriers have been able to leverage claims-specific Insuretech platforms to deliver more efficient claims management and better customer service. And drawing on seemingly infinite sources of data can support more precise and accurate underwriting and risk pricing — though regulators are hesitant fully to embrace that approach.
But carriers are also utilizing solutions not specific to insurance to improve their value proposition to clients.
Wellth, for example, tracks users’ health behaviors via a mobile app, monitoring factors like medication adherence, smoking cessation, daily exercise or testing blood glucose levels.
The company partners with insurers, Accountable Care Organizations, and self-insured employers to offer financial incentives to help consumers change their behavior, reducing their risk profile and lowering health costs.
“Incentives can improve adherence to prescribed protocols by 80 to 90 percent,” Agarwal said. “These small rewards go a long way in managing chronic conditions and keeping costs in check.”
Human resource technologies also help carriers find efficiencies in the recruitment and hiring process. Phenom People, a talent marketing platform, turns career websites into more interactive experiences for visitors, connecting them with the jobs that best match their qualifications, offering chat bots to answer questions, and streamlining the application process.
“Given the talent gap plaguing the industry, this could help insurers catch the eye of younger applicants and keep them interested,” Agarwal said.
Even as these tech solutions are adopted by various industry stakeholders, the Insuretech landscape continues to evolve. Since AXA Venture Partners was established three years ago, it has chosen its portfolio companies with one eye on the present and one toward the future.
“Certainly, we invest in companies that will offer good return on investment over the long term, and we hope AXA can incorporate some of them to improve business practices,” Agarwal said. “But we’re also looking at more disruptive technologies still in their early stages – such as AI and blockchain — to keep a pulse of what’s developing in this space.
“These are early days for insurance technology companies, and there will be a lot more innovation and disruption down the road. It’s an interesting area — one that lots of brokers, lots of consumers and certainly lots of insurance companies should pay attention to.”
To learn more, visit https://www.axavp.com/.
This article was produced by the R&I Brand Studio, a unit of the advertising department of Risk & Insurance, in collaboration with AXA Insurance Company. The editorial staff of Risk & Insurance had no role in its preparation.
To minimize the financial and reputational damage from a cyber attack, it is absolutely critical that businesses have a cyber incident response plan.
“Sadly, not all yet do,” said David Legassick, head of life sciences, tech and cyber, CNA Hardy.
In the event of a breach, a company must be able to quickly identify and contain the problem, assess the level of impact, communicate internally and externally, recover where possible any lost data or functionality needed to resume business operations and act quickly to manage potential reputational risk.
This can only be achieved with help from the right external experts and the design and practice of a well-honed internal response.
The first step a company must take, said Legassick, is to understand its cyber exposures through asset identification, classification, risk assessment and protection measures, both technological and human.
According to Raf Sanchez, international breach response manager, Beazley, cyber-response plans should be flexible and applicable to a wide range of incidents, “not just a list of consecutive steps.”
They also should bring together key stakeholders and specify end goals.
With bad actors becoming increasingly sophisticated and often acting in groups, attack vectors can hit companies from multiple angles simultaneously, meaning a holistic approach is essential, agreed Jason J. Hogg, CEO, Aon Cyber Solutions.
“Collaboration is key — you have to take silos down and work in a cross-functional manner.”
This means assembling a response team including individuals from IT, legal, operations, risk management, HR, finance and the board — each of whom must be well drilled in their responsibilities in the event of a breach.
“You can’t pick your players on the day of the game,” said Hogg. “Response times are critical, so speed and timing are of the essence. You should also have a very clear communication plan to keep the CEO and board of directors informed of recommended courses of action and timing expectations.”
People on the incident response team must have sufficient technical skills and access to critical third parties to be able to make decisions and move to contain incidents fast. Knowledge of the company’s data and network topology is also key, said Legassick.
“Perhaps most important of all,” he added, “is to capture in detail how, when, where and why an incident occurred so there is a feedback loop that ensures each threat makes the cyber defense stronger.”
Cyber insurance can play a key role by providing a range of experts such as forensic analysts to help manage a cyber breach quickly and effectively (as well as PR and legal help). However, the learning process should begin before a breach occurs.
“Any incident response plan is only as strong as the practice that goes into it,” explained Mike Peters, vice president, IT, RIMS — who also conducts stress testing through his firm Sentinel Cyber Defense Advisors.
Unless companies have an ethical hacker or certified information security officer on board who can conduct sophisticated simulated attacks, Peters recommended they hire third-party experts to test their networks for weaknesses, remediate these issues and retest again for vulnerabilities that haven’t been patched or have newly appeared.
“You need to plan for every type of threat that’s out there,” he added.
Hogg agreed that bringing third parties in to conduct tests brings “fresh thinking, best practice and cross-pollination of learnings from testing plans across a multitude of industries and enterprises.”
“Collaboration is key — you have to take silos down and work in a cross-functional manner.” — Jason J. Hogg, CEO, Aon Cyber Solutions
Legassick added that companies should test their plans at least annually, updating procedures whenever there is a significant change in business activity, technology or location.
“As companies expand, cyber security is not always front of mind, but new operations and territories all expose a company to new risks.”
For smaller companies that might not have the resources or the expertise to develop an internal cyber response plan from whole cloth, some carriers offer their own cyber risk resources online.
Evan Fenaroli, an underwriting product manager with the Philadelphia Insurance Companies (PHLY), said his company hosts an eRiskHub, which gives PHLY clients a place to start looking for cyber event response answers.
That includes access to a pool of attorneys who can guide company executives in creating a plan.
“It’s something at the highest level that needs to be a priority,” Fenaroli said. For those just getting started, Fenaroli provided a checklist for consideration:
“When all of these things fall into place, the outcome is far better in that there isn’t a panic,” said Fenaroli, who, like others, recommends the plan be tested at least annually.
With the digital and physical worlds converging due to the rise of the Internet of Things, Hogg reminded companies: “You can’t just test in the virtual world — testing physical end-point security is critical too.”
How that testing is communicated to underwriters should also be a key focus, said Rich DePiero, head of cyber, North America, Swiss Re Corporate Solutions.
Don’t just report on what went well; it’s far more believable for an underwriter to hear what didn’t go well, he said.
“If I hear a client say it is perfect and then I look at some of the results of the responses to breaches last year, there is a disconnect. Help us understand what you learned and what you worked out. You want things to fail during these incident response tests, because that is how we learn,” he explained.
“Bringing in these outside firms, detailing what they learned and defining roles and responsibilities in the event of an incident is really the best practice, and we are seeing more and more companies do that.”
Good cyber protection is built around a combination of process, technology, learning and people. While not every cyber incident needs to be reported to the boardroom, senior management has a key role in creating a culture of planning and risk awareness.
“Cyber is a boardroom risk. If it is not taken seriously at boardroom level, you are more than likely to suffer a network breach,” Legassick said.
However, getting board buy-in or buy-in from the C-suite is not always easy.
“C-suite executives often put off testing crisis plans as they get in the way of the day job. The irony here is obvious given how disruptive an incident can be,” said Sanchez.
“The C-suite must demonstrate its support for incident response planning and that it expects staff at all levels of the organization to play their part in recovering from serious incidents.”
“What these people need from the board is support,” said Jill Salmon, New York-based vice president, head of cyber/tech/MPL, Berkshire Hathaway Specialty Insurance.
“I don’t know that the information security folks are looking for direction from the board as much as they are looking for support from a resources standpoint and a visibility standpoint.
“They’ve got to be aware of what they need and they need to have the money to be able to build it up to that level,” she said.
Without that support, according to Legassick, failure to empower and encourage the IT team to manage cyber threats holistically through integration with the rest of the organization, particularly risk managers, becomes a common mistake.
He also warned that “blame culture” can prevent staff from escalating problems to management in a timely manner.
Given that cyber incident response truly is a team effort, it is therefore essential that a culture of collaboration, preparation and practice is embedded from the top down.
One of the biggest tripping points for companies — and an area that has done the most damage from a reputational perspective — is in how quickly and effectively the company communicates to the public in the aftermath of a cyber event.
Salmon said of all the cyber incident response plans she has seen, the companies that have impressed her most are those that have written mock press releases and rehearsed how they are going to respond to the media in the aftermath of an event.
“We have seen so many companies trip up in that regard,” she said. “There have been examples of companies taking too long and then not explaining why it took them so long. It’s like any other crisis — the way that you are communicating it to the public is really important.” &