Parametrics, alternate risk for outbreaks, and a Heartbeat in the Fog

It’s not often that a nexus of insurance/finance, and tech factors rises in prominence and promise, but seems the time is now.  Blockchain- parametric- captives- business interruption – AI/ML- coverage gaps- ILS- front and center!  Supply chain disruption due to collapse of integral parts of the pre-existing arrangements has rippled strongly through the global economy, and clever, innovative risk management and financing programs are now available for application, however from a previously under-utilized area of insurance.  
Patrick Kelahan is a CX, engineering & insurance consultant, working with Insurers, Attorneys & Owners in his …

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Dominoes fall- business disruption and risk management in the COVID 19 environment

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It’s clear there is much of which to be concerned regarding novel Coronavirus 2019 (aka COVID 19), including  the direct impact of illness and death among those who have contracted the disease, and the indirect effect of closure of travel, quarantine, closures of schools, businesses, and frontiers. 

Who is considering the effect of the virus on local, regional, and global business?  Whether you believe in the extent of virility of the virus or not, one thing is certain- businesses across the globe are showing symptoms from COVID 19.  Is this an insurance disaster or unexpected new market?

Patrick Kelahan is a CX, engineering & insurance consultant, working with Insurers, Attorneys & Owners in his day job. He also serves the insurance and Fintech world as the ‘Insurance Elephant’.

Much of the production and retail business world lives with the two-edged sword of global interaction; on one edge a manufacturer in Barcelona can economically design and digitally source machine parts from a ten person shop located in Hubei Province in China, on the other edge is the disruption that may occur to the Spanish manufacturer if the machine shop is inactive or unable to produce a custom part.  Potential tech problems certainly predated the current viral outbreak, e.g., connectivity, ISP issues, in-house tech issues, etc., but having 59 million inhabitants of this province alone in question being exposed to and managed for contagion is a disruptive analog force that may affect business activity for weeks if not months, with figurative ripples being felt around the globe.

If one considers COVID 19’s global reach as of this writing ( WHO situation rep, 2/26/20220 ):

COVID

And the exposed population, cases and deaths in China alone:

COVID population

The magnitude and effect of the outbreak on just that 1.4 billion population becomes graphically clear.

Unless your business was affected by the SARS outbreak in 2004, affected by the more localized (but terrifying) Ebola virus, or mosquito borne diseases like Dengue or Zika, the business effects of outbreaks are typically small- unless you are immersed in the outbreak.  Businesses in Hubei Province in China certainly understand the effects, as millions of SMEs are shuttered due to the quarantine actions currently in place.  But, were you aware that Brazil reported 2.2 million cases of dengue in 2019 alone, with more than 700 deaths due to the outbreak?  Dengue does not have the quarantine requirement of COVID 19 so life goes on, but life is still disrupted as are businesses.  (full disclosure- the author contracted dengue while posted in a tropical environment- not a fun experience, but also not a disease where death is commonplace.)  The point- by degrees disease outbreaks can have far-reaching effects, and businesses must be aware and have risk management plans.  And you who have service industries and consider yourself immune to these issues- it’s a complex business ecosystem where all are affected.

For this article a deep dive into what’s covered by insurance and what’s not will not be taken- that would be too lengthy an effort for a Daily Fintech reader who needs an overview.  I can say that Business Insurance and Marsh and McLennan have a good summary document here, “Liability policies may respond to coronavirus” .  Travel insurers typically do not afford coverage if a traveler simply decides not to travel due to perceived risk (some policies have the ‘cancel for any reason’ option but it’s an exception placement.)  Suffice it to say that effects of outbreaks do no not fit well into insurance cover.

So what’s the point for this article?

Awareness and consideration of how outbreak ‘dominoes’ can affect your business, and are there insurance options that might provide financial protection?

Consider these quotations from the 2/25/2020 Economist:

“IF China is the world’s factory, Yiwu International Trade City is the factory’s showroom. It is the world’s biggest wholesale market, spacious enough to fit 770 football pitches, with stalls selling everything from leather purses to motorcycle mufflers.  Its reopening was delayed by two weeks because of the COVID-19 virus, the crowd was sparse and the dragon dancers, like everyone else, donned white face-masks for protection. “

And,

“The muted restart of the Yiwu market resembles that of the broader Chinese economy. The government has decided that the epidemic is under control to the point that much of the country can go back to work. That is far from simple. More than 100m migrant workers, the people who make the economy tick, are still in their hometowns, and officials are trying hard to transport them to the factories and shops that need them.”

An outlook from a visiting business person:

“Yiwu is testimony to some of the ways in which people far and wide will feel its economic effects. Agnes Taiwo, a businesswoman from Lagos, arrived in China just as it started to implement its strict controls to stop the outbreak. She had hoped to book a large shipment of children’s shoes and get back to Nigeria by early February. But nearly one month on, snarled by all the closures and delays, she has not yet been able to complete her order. And her return to Nigeria has been complicated because EgyptAir, the airline she took on the way over, has cancelled all flights to China. “This is serious,” she says. It is a sentiment that many others around the world are starting to share.”

The Economist states the case for China business concerns well; what of the cascading effects of supply chain disruption?

Let’s consider the potentials for risk management working backwards from end businesses:

  • Most business interruption covers are based on an occurrence of direct physical loss, either on premises or within a supply chain. Unfortunately, disease outbreaks are seldom considered direct losses, and in most cases are excluded causes of loss.

Continuing, how about:

  • Worker’s compensation?
  • Liability from infection from customers being on premises?
  • Directors and Officers cover if business results flag due to alleged poor planning?
  • Supply chain risk- all along the supply and transportation chain? Has just in time become a liability?
  • Loss of suppliers due to failures of businesses in the worst outbreak areas?
  • Actions of governments? Legal ramifications of non-compliance?
  • Employee actions due to extended periods of no work?
  • Loss of key staff due to inability to maintain salaries?
  • Loss or reduction of digital connectivity due to vendor issues caused by the outbreak?
  • Effects of civil unrest?
  • Interest rate risk from speculation?
  • Capital valuation changes due to stock market responses?
  • Inability to travel to affected areas where management oversight is critical?
  • Increase of cyber risk due to reduced attention to risk?
  • Reduced productivity due to requirements for and inefficiencies of virtual work?
  • Consider the effect that reduced business will have on governments and taxing authorities- will there be significant collateral effects for your business’ taxes, or services received from the government?
  • In the case of a significant outbreak in your area, what government services may be curtailed or cut, and how will that affect your key operations?

Attention, planning, and expectation for a worst-case scenarios are prudent courses as Mother Nature has ways to prove governments wrong.  Re-engaging 100 million workers is a huge undertaking for China, but so may be getting your staff back into routine after a week or two of preventive closures by authorities.

  • Dust off the business continuity plans prepared for natural disasters. Don’t look for the disease outbreak section, it probably doesn’t exist.
  • Contact your insurance broker, have the hard discussion and ask for a frank assessment of your business’s insurance. Ask for the specifics on supply chain, outbreaks, indirect losses, liability, D&O, etc.  What you will learn will be better than not learning at all.
  • Be upfront and inclusive with staff. They are smart, and know things you don’t.
  • Trade war activity over the past year has caused you to find alternative sources for products- contact those sources and solidify your position with them.

Going forward there are learnings for the risk management industry, and for any business that might be affected by issues related to outbreaks.  The availability of parametric insurance may become more commonplace, and the practicality of its inclusion in insurance plans will increase.

Consider the example provided by Parametrix, an Israel-based insurer recently awarded the UK Zurich Innovation Challenge (thanks to Mark Budd and Nicola Cannings who have kept me apprised of the contest’s outcome.)

While not an exact match for supply chain issue parametric cover, the company founded by Neta Rozy “creates parametric (claim-free) insurance for SaaS, PaaS and IaaS downtime such as cloud outages, network crashes, and platform failures. Their products help close a protection gap in business interruption insurance, tailored to the tech-reliant SMEs.”

Carry the parametric principle to supply chain interactions, or any business interaction where a disruptive trigger, or index can be identified, and a risk amount can be applied.  Business disruption due to a specific government command, for example, or supplier closure due to a WHO declared outbreak.  There may be many reasons why indemnity covers are unable to be written, but parametric options must be considered as an alternative.

While SMEs are the typical customer for Parametrix, there is basis for larger, more dispersed firms to consider alternate risk methods, almost as cat bonds might provide for natural disasters.  If an outbreak can affect global GDP to an amount of $1 trillion in lost growth, a globally established firm might suffer effects that are similarly material to its P&L and hedging the risk is prudent.

The key is that global outbreaks do occur,  perhaps not as potentially costly as COVID 19, but significant none the less.

Global reach, fragility of supply chain interactions, and business continuity demand different approaches, and provide the insurance industry new opportunities for risk products.

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Flood insurance- where the rising tide has NOT raised all ships

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The problem is known, the data lakes related to the problem are deep, there are huge costs associated with it and plenty of human suffering.   Whole sectors of predictive data businesses have grown to better understand what is behind it, options abound in an attempt to mitigate its effects.  Governments around the globe spend billions in preparation for and response to the events.

So why isn’t flooding, flood damage mitigation, flood damage repair costs/financing, and flood insurance availability less of a global problem?

Patrick Kelahan is a CX, engineering & insurance consultant, working with Insurers, Attorneys & Owners in his day job. He also serves the insurance and Fintech world as the ‘Insurance Elephant’.

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The breadth of the problem

Aon indicates global economic losses due to flooding between 2011-19 exceeded $600 billion US, with only $111 billion insured, an amount that surely does not include all infrastructure and productivity losses, or loss of life.  A $500 billion cumulative coverage gap; surely things have improved during the nine-year period, yes?  No.  The latest three-year period indicates a coverage gap of 84% of flood losses, worse than the cumulative 81% during the decade.

Innovation’s Data Analysis Effects

Much has changed in flood risk prediction since the early 1970’s when public flood programs were introduced (e.g., National Flood Insurance Program in the US).  At that time and until recently efforts expended in determining flood risk for a subject area were through elevation mapping devised from physical surveys of respective areas.  These elevation determinations in conjunction with hydrologic data were the default tool.  Problem was that there were few if any insurance carriers that would write flood cover without subsidy from an area’s federal government. In fact, in some jurisdictions (like the US) flood cover could only be written within a government program.  Too much risk of a regional Probable Maximum Loss event, actuarial premiums would have been prohibitive, adverse selection would be the driver of the coverage chase, etc.  As such government programs were the default option, and even at that participation was low.  In the US an overall participation rate in flood insurance even as late as 2017 was less than 15% of properties.

There have been remarkable advances in mining and analyzing data to identify a property’s relative flood risk, and the probability of a significant flood event, some examples being:

  • FloodIQ.com, a product of tech innovator First Street Foundation allows the user to input an address within the US and obtain an idea of rising water’s effects
  • Previsico , not only has developed tech do assess probability of flooding in the UK, but includes live modeling during flood events and includes warning capabilities
  • FloodMapp , before, during, and after services- modeling, dynamic prediction and flood damage quantification for claims
  • Hazard Hub , has risk modeling data that in addition to NFIP flood maps model surge and even tsunami risk by property address
  • https://floodscores.com/ – provider of property specific flood risk info (thanks Sam Green)
  • https://www.floodinsuranceguru.com/- included this resource due to the firm’s unique approach to mastering flood tech methodology and applying that knowledge to risk assessment through flood maps.
  • Leveraging social media for warnings- Sri Lanka has had success notifying more remote villages of impending storms/flood potential. Penetration of smart devices provides a warning platform.  Other chronic flood regions like Bangladesh are beginning to see the need of tech warnings due to recent flood events.

Funding risk management

The extensive flood protection gap suggests that private funding of flood risk has been just a small part of overall flood insurance.  The US market has primarily had NFIP response (or ex post government/emergency funds to account for the coverage gap)- a US government flood insurance market that has continuously functioned as a deficit program due to subsidized rates, significant adverse selection/moral hazard issues, being seen more as a constituent response vehicle than an insurance scheme by congress, being administratively under-funded, and not being a mandatory participation plan so the volume of participants is too low to be self-sustaining.

Properties in flood-prone areas within the UK market of late have benefited from the Flood Re program where UK insurance carriers contribute to the flood insurance plan (as do property owners).  Without belaboring the functioning of the plan (take a look at the website) one can say it’s as much an effective hybrid industry/government/property owner plan as found anywhere.  Its plan is to function as is for a few decades then convert to a fully private plan.

In most countries the largest volume of response is in the form of government emergency finds, particularly for cleanup, infrastructure repairs, and immediate populace support.  While significant, these government responses are inefficient at best and typically delayed by legislative inaction. 

Where there is much optimism for funding is in the capital markets- catastrophe bonds and insurance linked securities (ILS).  Per the data found at artemis.bm, ILS and funds held for flood risk are a small portion of the more than $40 billion US held in the reinsurance/ILS market.  There is plenty of capital in the market, however, and the appetite for returns over those of typical financial market vehicles is building interest in ILS.  The complexity of reinsurance/ILS deals is increasing, as is the level of apportioning tranches of risk across hedging deals.  The key is that as private flood insurance becomes more available the need and interest in alternate risk financing will grow.  An 80+% coverage gap for a peril that is becoming increasingly more frequent, in combination with the trillions of dollars of property at flood risk will find ways to attract capital markets’ involvement, and as data availability and granularity increases the pricing of the vehicles will become even more sophisticated. 

Flood insurance going forward

A problem not considered often in the flood peril aftermath is that flooding affects not only individual property owners, but everyone within a flooded region.  Even the elevated property that is not flooded is affected; its residents are prevented from venturing out, cannot not shop at a flooded store, are unable to get municipal services due to closures, etc. And- the cost of government responses in the absence of insurance are borne by all within a community.  The other factor that is often overlooked?  Insurance proceeds ‘jump start’ recoveries with funds for local businesses; lack of widespread flood insurance cover leads to much less money on the street after an event.

Consider flood insurance penetration within the US- less than 15% of all property owners hold flood cover, and most who do keep it due to mortgagee requirements.  A recent article shared by RJ Lehman of the R Street Institute about the Mississippi flooding occurring as this article is written reinforces that most property owners will be left without a financial backstop for flood recovery (by the way- in the US an article like that is written after every flood or hurricane, the only copy that seems to change is the name of the city/town and the number of policies in force.)  The recovery will come without insurance- slowly, funded piecemeal until finally government funding will be made available.

Is it time for regional parametric programs funded by taxes and made available immediately after a trigger event?  Seems a really good idea since no matter what in the flood peril world the government is the funder of last resort, why not make it the quick response at no more cost than we are used to source? FloodFlash has proven event-based parametric flood cover to be effective option for property owners in the UK, and per Artemis’ reporting SJNK (Japan) is rolling out similar cover for property owners there.

Is it time to make flood insurance a requirement of all homeowners insurance holders?  Flood Re seems a reasonable model to follow, and even with disparate regulatory bodies action can be taken to have an entire region/state/country participating.  Flood perils are growing, so are costs, so is the exposure to critical economic areas.  Smarter approaches to private flood insurance that is based on knowledge of not only insurance but on the factors behind flooding and risk as is used by Chris Greene at FloodInsuranceGuru are needed.  Partnerships such as experienced with Previsico and Loughborough University need to be supported.  Subsidized premiums are OK, but much greater breadth of participation is required to make programs even remotely viable.  The underwriting, mapping, and response tech is there, the political and economic will must be also.

 

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Pulling back the curtain to shine light on ‘scary’ insurance phrases

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Reinsurance/ILS, Blockchain, and insurance financials.  Not quite lions, tigers, and bears, but for many who follow insurance the three concepts are as daunting and pose discomfort in understanding. Why then the mention?  Because in an earlier social media post I noted that the three words do not generate a lot of media content traffic, and if there is a related posting, not much response.  A wise connection dropped the key hint to that puzzle- the words need to be discussed in context that makes sense to the reader.  A cool idea, Modern Accelerator .

Patrick Kelahan is a CX, engineering & insurance consultant, working with Insurers, Attorneys & Owners in his day job. He also serves the insurance and Fintech world as the ‘Insurance Elephant’.  Image

Let’s dive into the three concepts with a full recognition that this blog will serve merely as an overview and whetter of appetites causing the readers to want to consume more. Fair warning- even keeping the topics brief- TL:DR may apply.  That’s OK.

Insurance Financials

There is plenty of government oversight for accounting that dovetails with plenty of regulation, we can’t touch on all the respective countries’ agencies and regulators but in essence they all serve the key roles of making uniform 1) how insurers account financially for their business, and 2) how insurers account for how solid they are in being able to serve their policyholders relative to the agreed scope and cost of risk.

It’s an alphabet soup of government orgs or standards: GAAP, FASB, SAP, IRDAI, NYDFS, SEC, IFRS, FCA, FSDC, SUSEP, NAICOM, ICLG, ASIC, APRA, etc. (almost) ad infinitum.

Fundamentally there are three accounting principles (of the many) with which insurers must comply, just in a slightly different manner from most business organizations :

  • Revenue Recognition Principle
  • Matching Principle
  • Historical Cost Principle

Without complicating things too much, insurance companies have financial stability burden to prove continuously- a carrier’s ability to fund the risk costs that it has agreed to.  All those policyholders have an expectation of indemnity or payment if a loss or occurrence to which their policy agrees to cover /pay comes to fruition.

The three principles noted above are part of the key differences between insurance companies and others, primarily because what insureds receive for premiums is a risk agreement that elapses over time.  Receive $1000 for an insurance contract today for twelve months’ cover.  Money in the bank for a promise over time.  So in respect to compliance with the Matching Principle, premiums are deemed  ‘written’ only until an increment of the policy’s time is expired, wherein the portion of the premium that matches the period is booked as ‘earned’.  One month’s policy duration allows 8 ½% of the written premium to become earned, six months’ earns 50%, and so on.

So you can see how a carrier with a ton of cash on hand might not be as liquid as one thinks if there are an according ton of policies on the books whose expiration extends over twelve months or more.  Written and earned- key concepts.

Here’s an example of a P&L statement showing the written and earned premiums, from German insurer, DFV_AG or Deutsche Familienversichurung:

DFV Inc

The sharp eye will note in addition to written and earned premiums there are lines showing the ‘Share of reinsurers’; that will be touched on in the Reinsurance portion of our discussion.

Traditionally the written and earned difference followed a solid calendar pattern due to typical annual expiration of polices.  But what of on demand or ‘gig’ policies?  The covered period may be a few hours or days, so there is little lag between written and earned status.  Knowing a carrier’s business model has become more important than ever since a heavily funded entrant’s cash may be more restricted if it’s a traditional style insurer in comparison with an on-demand player.

Carrying the discussion to the Matching Principle (matching costs to the period in which the costs were incurred) suggests a few important financial factors:

  • Costs of policy acquisition is matched to immediate written policy premiums, e.g., agency/brokerage commissions, marketing, admin office costs, digital format costs, etc., but
  • Costs of policy administration, e.g., adjusting expense, loss costs paid, etc., may be charged to earned premiums in a different incurred cost period.

As for the Historical Cost Principle, regulators want to know concretely what amount a carrier assigns to portfolio assets.  Insurers need to be liquid in their asset portfolio so assets can easily be converted to cash if loss payment volume so demands.  For example, bonds might fluctuate in value over time due to variances in interest rates, but carriers need to maintain a historic cost to keep regulators content for solvency calculations.

Quite a rabbit hole are financials, so the conversation will conclude with THE common comparative measures for P&C carriers-  loss ratio, expense ratio, and combined ratio.  These measures will give the reader a clear idea if earned premiums (revenue) exceed or are exceeded by expenses and loss cost.

So,

loss ratio = claim payments + adjustment expense/earned premiums, expressed as a %

expense ratio = expenses other than adjustment expenses/earned premium. Expressed as a %

combined ratio is a sum of the LR and CR.

Ideally CR is < 100%, meaning earned premiums exceed costs and underwriting activity is profitable.

What must be remembered as carriers are compared- the maturity of a carrier in terms of time in business, how aggressive is growth relative to existing book, the nature of the carrier’s business and how that affects reserves (immediate draw on profits.)  Entrants may have LR that are in the hundreds of %; consider trends or peer comparisons before your lose your mind.

Reinsurance

Reinsurance is insurance for insurance companies.  There, that was easy.

Rei was once an easier financial concept to grab- carriers would sign treaties with reinsurance companies to help protect the primary insurer from loss outcomes that exceeded typical loss expectations.  Primary carriers do not plan (or price) for an entire region to be affected at the same time, but sometimes things happen that require excess over planned loss payments, e.g., wind storms, wildfires, tornadoes, earthquakes, etc.  Primary carriers will purchase reinsurance that for a specific period, and in an amount that is triggered once a carrier’s loss payments for the treaty peril or perils is incurred.  Pretty direct and expected by regulators, and part of claim solvency calculations.

What has occurred over years is that reinsurers have evolved into other types of excess risk partners, covering more than just catastrophe losses, and becoming excess risk options.  If you again review DFV_AG’s income statement and consider the premium and loss cost portion of the carrier’s P&L shared with reinsurers, you’ll understand the firm has ceded premium and costs to backers to help smooth growth and provide backstop to the firm’s ability to pay claims and serve its customers.  This has become a common methodology for startups and existing carriers, allows more product variety for reinsurers and spread of risk.

Another evolution over the past years beyond reinsurance is the advent of Insurance Linked Securities (ILS), capital vehicles that are designed solely as alternative risk financing.  Insurance-linked securities (ILS) are derivative or securities instruments linked to insurance risks; ILS value is influenced by an insured loss event underlying the security.  What’s that?  ILS are capital vehicles that simply are designed to pay on an outcome of a risk, e.g., hurricane, earthquake, etc., sold to investors looking for diversified returns in the capital markets.  A hedge against a risk for insurers, an option for better than normal market returns for the holders.  Often referred to as Cat bonds, these bonds serve an important role in the risk markets, and are an opportunity for holders for income.  Often ILS are sliced and diced into tranches of varying risk bonds to smooth the outcome of a linked event.  Don’t be surprised if ILS become a more accepted means of financing more common, less severity risk within the industry, or in use in unique new risk applications, an example being pursued by Rahul Mathur and colleagues.

Blockchain

So much promise, so much confusion, overreach and failure to launch.  Or maybe Blockchain’s connection with the perceived wild west of value transfer, crypto currency, has colored the insurance world’s relative arm’s length view of the concept.

A quick search of definitions produces many references to bitcoin and other crypto currency (I’ll leave those to my knowledgeable Daily Fintech colleagues), but we simply want a definition that maybe doesn’t sound simple (Wikipedia):

“By design, a blockchain is resistant to modification of the data. It is “an open, distributed ledger that can record transactions between two parties efficiently and in a verifiable and permanent way”. For use as a distributed ledger, a blockchain is typically managed by a peer-to-peer network collectively adhering to a protocol for inter-node communication and validating new blocks. Once recorded, the data in any given block cannot be altered retroactively without alteration of all subsequent blocks, which requires consensus of the network majority. Although blockchain records are not unalterable, blockchains may be considered secure by design and exemplify a distributed computing system with high Byzantine fault tolerance. “

Open. Distributed. Peer-to-peer. Decentralized. Immutable. Cool for generating crypto, but not so much for the wild data sharing needs of insurance.

So why is Blockchain not taking hold for insurance?  The use case is tough for carriers- unstructured data (of which carriers have a ton) do not play well in a Blockchain (Blkcn) environment, many changing players in an insurance claim, and so on.  Blkcn holds data securely, but doesn’t guarantee cyber security outside the ledger. Blkcn can be more cumbersome for data retrieval across consortia-based ledgers.  Multiple writers to the ledger, multiple efficiency issues to overcome.

But what of uses for reading data once placed in the ledger? Can be very cool. Anthem is a US health insurance provider serving millions of subscribers nationally, the company recently initiated a Blkcn pilot wherein the company is making ledger access an option for the test participants, with patient records stored in the ledger, and individual subscribers given the option to give providers access to health records via use of a QR code that has an expiration date.  Subscribers have the power over their records and access is given for read only permission.  There are many potential benefits to health insurance Blkcn but the options must dovetail with data security.

Another positive scenario for Blkcn application- crop insurance in previously under-served markets.  OKO Insurance provides micro crop insurance policies in Africa, backing by reinsurance but administered in part by distributed ledger, each farmer’s information residing in the ledger, and access provided to underwriting and reinsurance.  And- if payment is made a partnership with digital payment systems to facilitate settlement.  An active Blockchain as a service company, BanQu, is expert at facilitating these frameworks and has a portfolio of projects around the globe where ‘first mile’ and ‘last mile’ data are administered within a ledger for the respective customer and its affiliates/suppliers.  Permissioned but not written by multiple players, QR codes to allow involved sources access to a supply chain.  And the sponsor of the ledger has a clear data record of each step in a supply or value chain.  Speaking with the firm’s business development executive, Brady Bizal, we discussed how a Blkcn ledger such as BanQu provides could serve as an ecosystem initiative for regions, including the details of insurance for a farmer, payment records, link to in country digital payment systems, risk mitigation firms, and as warranted, the transaction/finance data can be accessed by permissioned bankers at the customer’s choice- the magic of QR codes.  It’s an entrée to a trust system that may otherwise not exist.  Opportunity.  Maybe not the original thinking for Blkcn and insurance, but sit for a few minutes and you will think of many similar possibilities for blockchain use in health insurance alone.

Sorry, there is so much that could be written about the three concepts and I’m hopeful the article answered some questions about finances, blockchain and reinsurance/ILS.  It’s certain readers and experts will advise me of missing sections, and that will be the foundation for a next article on the subjects.

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Speaking of Blockchain, what of its place in insurance?

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I’ve felt as an orphan child within the Daily Fintech family, at the end of the common table but the uncomfortable ‘outsider’ because the content I produced for publication was not Fintech or Blockchain oriented.  The Insurtech content has always been embraced as an integral part of the blog, but like the student who does not quite know how to affix the sash on the uniform I have been feeling a little insecure.

Patrick Kelahan is a CX, engineering & insurance consultant, working with Insurers, Attorneys & Owners in his day job. He also serves the insurance and Fintech world as the ‘Insurance Elephant’.

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Hard to believe that lede?  Should be, and is.  My DF colleagues are experts in what they write of- finance, crypto, and by extension, Blockchain, and collegially embrace the InsurTech discussions.  So not under any pressure to do so but having an intellectual and industry curiosity I figure it’s time to discuss insurance and Blockchain- unmixed oil and water, or tasty salad dressing?  Blind dates or maybe life partners?

I am privileged to have insurance connections/colleagues who understand Blockchain and are willing to share perspectives, so I reached out to several for background and explanation.  See, while I am no expert at Blockchain (BKCN), crypto, distributed ledgers, etc., I do understand the basics, and have yet to find a ‘tipping point’ application of the principle for insurance.  One might figure if there was, a 5 trillion USD industry would have integrated the idea already.  Instead, there are rumblings of the benefits of BCKCN but few projects at scale.

Consider some projects with traction (thanks, Walid al Saqqaf, Insureblocks founder; readers can find these ideas and many others at his podcast, https://www.insureblocks.com/):

  • Addenda, an insurance subrogation solution founded by CEO Walid Daniel Dib, and located in the U.A.E. Addenda has developed a BKCN alternative to what has always been a manual process fraught with delays and errors, subrogation of claim payments.  The decentralized, trusted nature of BKCN lifts much of the existing barriers to efficient subrogation settlement through placement of immutable records of the loss that the parties can mutually access.  With sufficient subscription by companies, is it possible the volume of liability arbitration would be reduced in other markets?
  • B3i– a Property Catastrophe Excess of Loss Reinsurance application, with John Carolin at the helm as CEO. B3i is a vanguard of what might be commonplace for the insurance BKCN future- a Distributed Ledger Technology (DLT) that is owned by 18 insurance market participants, with active involvement by 40 insurance companies, shareholders, etc.  As such the question of who supports the ledger financially is answered, who has participation rights, and how is the common ‘language’ or protocol of data insertion determined.  As John states, placing reinsurance has traditionally been a very analog process, with the height of innovations being email communication of terms and bids.  BKCN through B3i ‘democratizes’ the data, and access to the players, and encourages use of smart contracts with their basis being the set terms within the ledger.  Can this democratization and sharing of costs be expanded to include other types of insurance, and a far broader community of permitted companies?
  • Blockclaim, a BKCN innovator founded by Niels Thonéthat has an aim of clarifying what is now fifty shades of gray (not that one!) that are generated by the many participants involved with insurance claims, and the volume of data that claims generate. Changing a cumbersome multi-lateral, manual/digital approach of claim handling to a permissioned ledger allows concurrent access to immutable claim facts for all involved parties, leading to less cumbersome (read as more prompt) claim handling.  Can this principle also be broadened to include underwriting characteristics for insured property?  One might think so with sufficient mutual ledger support across a spectrum of companies.
  • Ryskex, a “blockchain based ecosystem for alternative risk transfers”, championed by CEO and co-founder, Dr. Marcus Schmalbach. Ryskex stands for ‘risk exchange’, focusing on new forms of identified risk, and/or previously non-insurable risk in a B2B environment.  The firm’s principle- if these unique risks are typically outside an indemnity risk prediction form, applying parametric principles to these risks, in conjunction with AI methods for determining indices and with trigger forms/indices stored within a ledger for transparency and ease of payment, BKCN can facilitate risk vehicles in less insurance traditional forms that capital markets are more apt to adopt.  Can insurance evolve into a capital risk model and less of a peril/indemnity model?  Dr. Marcus makes a case for it.  In parallel with the risk model changes Marcus is supporting a soon to be released book with John Donald, “Heartbeat in the fog – Parametric Insurance for Intangible Assets”.  While this second book of John’s has a focus on newer risks, e.g., cyber, its principles lend well to parametric and BKCN.  And who am I to question its utility, as Dr. Marcus cites John as the “master mind” and “one of the smartest guys I ever met.”   We won’t let Dr. Marcus kid us about being a smart person in the room; his upcoming journal publication that focuses on insurance of 2030 has a fascinating excerpt speaking of an insurer of the future:

if you have sufficient capital at your disposal, you can be an insurer.  Capitalism meets Anarchism- an ecosystem based on transparency and security of blockchain technology…because of a risk trading ecosystem instead of industrial insurance.”

An additional recent insurance blockchain success deserves mention- insurance startup Etherisc’s quasi-parametric project conducted with partner firms Aon and Oxfam- micro-policies for crop failures for Sri Lankan farmers.  Not a direct parametric solution but a transparent form where the policy data and payment expectations resided within a blockchain ledger, and automatically triggered.  Progress.

And are there firms working in the background to facilitate organizations’ migration to blockchain environments?  Yes, of course.  Global consulting firms are actively pursuing blockchain programs as are startups and independents.  A US-based firm, Fluree, is actively developing data platforms for what they refer to as the ‘Fourth Industrial Revolution.’  In discussion with Kevin Doubleday, Marketing Communications Lead at the firm, Fluree (as do many companies) recognizes the traditional database structure of data, middleware, and now APIs is being overwhelmed by the volume and form of data and business processes driven by same.  Many suggest that blockchain is not the ideal option for use in insurance claims processes due to the varied forms of and demands on data (thanks, Mica Cooper and Chris Frankland for that discussion), but as Kevin and I discussed perhaps considering eating the elephant one bite at a time by choosing insurance processes that would have narrow but meaningful applications, e.g., subrogation (as noted above), transparency and immutability that would facilitate anti-fraud efforts, or deed and title data repositories.  Fluree is also focused on having a universal access format that will accommodate all users.  Current users of Fluree’s services includes life insurance solution startup, Benekiva, whose co-founder and all-around smart tech person, Bobbie Shrivastav  introduced me to Fluree.  Quite a bilateral endorsement.

So, Blockchain and insurance, dating but not yet in a committed relationship.  Seems we might be wise to plan a formal ceremony a few years from now when the relationship ‘learnings’ have been resolved.

And, perhaps now I can have a seat at the big blockchain table at DF.  😀

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Blueprint One- a building plan for a Lloyd’s digital/culture change decade, or pie in the culture change sky?

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It’s really a tour de force, the 146 page Blueprint One recently released by leadership at Lloyd’s, a detailed road map for the staff and approximate ninety syndicate players that comprise the firm, its reinsurers, customers, associated MGAs, vendors, brokers and agents.  Plans, flow charts and implementation strategy that are planned for the next two years, with all the new moving parts in synch by close of 2022.  Oh, and did I mention the £35 billion in annual premiums that the organization generates through its stakeholders?  Bold plans for a three-hundred-year tenure organization.  And there is the unmentioned tension- an entrenched business model planning to evolve into an agile, cutting edge tech leader.

Patrick Kelahan is a CX, engineering & insurance consultant, working with Insurers, Attorneys & Owners in his day job. He also serves the insurance and Fintech world as the ‘Insurance Elephant’.

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Lloyd’s is the industry standard bearer for specialty risk management, AKA ‘the stuff an underwriter can’t thumb to in his/her U/W manual’.  Its technique and mystique have evolved during the more than three centuries since a few gents sat in front of some pints and pondered financial hedges against loss of shipping cargos.  Why then, does the firm think that several months of research, interviews, participant interviews, technology vendor schemes, and resulting blueprint from Lime St are the best answers to changing the course of the culture and operations of a complex global insurer?

Consider this voice from the street (location to remain unmentioned):

“Sadly, it seems that Lloyds underwriters have developed a degree of contempt for the XXXX market, over the last year I’ve seen the worst performance from certain Lloyds underwriters I’ve ever experienced in the last 20 years or so. In particular, not having renewal terms ready in time when renewal submissions have gone in well on time. It’s definitely a hard market from where I’m standing, and it isn’t particularly civilised either!”

Well, hard markets currently abound for many reasons across the globe, and anecdotal responses are a little unfair.  But the basis of the speaker’s concerns may not be- Lloyd’s is a huge, multi-variate, multi-cultural, global organization that cannot be changed under dictate, singular plan, or silo-driven flow chart.  Underwriters remain subject to the performance matrix of the day, and grand plans from on high take a rear seat when quotas aren’t met, or loss ratios are trending north.  Additionally, the firm remains entangled in aftereffects of sexual harassment accusations, mitigating the perceived impact of an over-arching office culture of suits and club decorum (although well past the days of PFLs), and recent years’ declining profitability.  Can Blueprint One be communicated, integrated and adapted uniformly in the face of these challenges? And can the evolution avoid the strong effects of the “Quarterlies?”

Culture and process changes aren’t new with the advent of Insurtech, innovation, globalization or change of leadership.  Much of what the blueprint discusses has its foundation in technology and transparency across the organization’s depth and breadth.  At its core we are talking insurance, so the topic may be busy, but it’s not rocket science.  Identify risk, understand risk, price risk, hedge risk, service occurrences that confirm risk (claims), and pay less than is taken in.  The firm is smart, therefore, to look to leverage technology for easy inclusion of participants across many regions and many forms of access, easier aggregation of business, more effective application of information, collection of data, and so on.

Consider the Blueprint’s ‘what it is’:

  • The firm’s strategic intent, description of vision.
  • Current thinking on each of six identified solutions-
    • Complex Risk platform
    • Lloyd’s Risk Exchange
    • Claims Solution
    • Capital Solution
    • Syndicate in a Box
    • Services Hub
  • Details of the initial phase of each solution
  • Invoking cooperation from Lloyd’s market players in the firm’s future
  • How and why success will be gained.

That’s on page 7 of the 146 page blueprint; it is an ambitious, wide scale road map.

It’s clear the more complex a plan is the greater the chance of incomplete implementation; the more incomplete or disuniformity of implementation the greater the chance of not achieving success.  The firm has its plan, its foundation for success, if the plan can be implemented.

Skipping forward to “Why we will succeed,” on page 11 , and I chime in with some observations that the principles suggest from other large org’s culture/ops changes:

  1. Capitalize on prior market investments (that’s funds spent previously on innovation).
    • This the “not throwing the baby out with the bathwater” approach. How to include the capital investments of the past few years in how we move forward.  A small anchor on innovative thought?
  2. Learn from the past
    • There are plenty of reorg carcasses along the wayside, let’s figure ways to have innovation not die at birthing. Of course putting the words, “Our collaborative approach to building the Future at Lloyd’s will ensure the solutions are designed for the benefit of Lloyd’s and the wider London market,” are contradictory right out of the box.  Perhaps solutions designed by and for Lloyd’s global staff and customers might sound more collaborative.
  3. Communicate regularly
    • Cascade those ideas from Lime St. to the world.
  4. Ensure the corporation and the market has (sic) the right skills to deliver the plan
    • Collaborators- prepare to invest time and money in change management plans that will be as successful as any change management programs. Can’t buy success.
  5. Deliver value to the market quickly
    • The rollout cannot interrupt business. There are those darn quarterly reports.
  6. Deliver the technology in parts
    • Deliver solutions in parts- of course each discipline needs different starting points; the law of unintended consequences will prevail.
  7. Retain control and operational responsibility (for tech)
    • Autonomy is resolving rollout issues will be suppressed to ensure uniformity. There will be scapegoats.
  8. Ensure the appropriate governance is in place
    • Central control of the collaborative integration. Decision making is the firm’s.

Rather than ramble on I am going to shamelessly borrow some innovation/org change concepts from a Property Casualty 360 article penned by Ira Sopic, Global Project Director at Insurance Nexus that has an apt perspective- “Agility is the key to technology innovation for insurers.”  But let’s build a contrast from Lloyd’s presentation.

Agile?  Can a global, £35 billion insurance giant be agile?  Do Lloyd’s customers demand innovation, or will they benefit materially from innovation?  We can see what the author and Lee Ng, VP of Innovation at Travelers Insurance say.

Fundamentally, the article notes org agility means looking at how decisions are made across an org and making significant changes.  That’s ambiguous until the addition of, “you can’t prove innovation before it happens.”  Uncertainty of innovation’s results can be overdone with analysis.  ‘Agile’ is the opposite of ‘waterfall’, an approach where plans and decisions are made at the top and cascaded down through the org as steps in a process are encountered.  Rolling out comprehensive plans by their nature inhibit iteration- big plans have milestones, have successive designs, benchmarks and schedules.  Agile has ideas, iterative maps, acceptance of failures.  Lloyd’s has established a grand approach to the former method- I kid you not, here’s an exemplar flow chart of planned core technology:

Core tech

Many participants influencing and accessing the tech core of the firm, and those magical skeleton keys to open the doors- APIs and interfaces.

Continuing, agile can be successfully piecemeal- protect the primary ROI factors of the biz, experiment with agile ways of working with collateral functions, build the innovative environment without whacking the quarterlies.  The inherent problem with piecemeal approaches?  They are hard to measure for success, and hard to program into project management software.

Another agile tack to take? “Done is better than perfect’.  Resist the urge to over plan, over measure, and to set expectations that the first attempt is a go or no go for the entire org.  A popular innovation concept applies- try, and fail fast.  Then try again.  There are many vendors who are experts in narrow parts of an org’s innovation path- it’s OK to rely on them.  Investment in a POC or two is as good as implementation.

Perhaps another day will allow discussion of the plans for the six Solutions, particularly Claims and Risk Exchange (the nexus of provision of service and of customers’ expectations from the firm.)  In spite of a skeptical take on the Blueprint I certainly want Lloyd’s to remain the bastion of risk management in a increasing risky world, but the concern is the firm is approaching this insurance elephant as a full take away meal, instead of as tapas.

In closing consider this- if there are five levels of Blueprint implementation and each effort has a 98% probability of success, after the five levels there is an aggregate probability of integration success of 90%.  That’s not bad, unless the interplay of five operational areas serving clients is considered with 90% effectiveness at play- aggregate 59% average Blueprint compliance outcome.

Consider those little bites, Lloyd’s.  The industry is pulling for you.

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Can industry changes soften a hard property insurance market in California?

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There are suggestions of hardening markets for US property insurance participants, and there is no better example of this than what is occurring in California.  Non-renewals in wildfire prone areas, premium increases, reductions in coverage and the seeming ultimate reaction- regulatory prohibition of policy non-renewals.

How did the state get to this point, and is there a lesson to be gained for any area that is exposed to regional maximum losses?  Is the hardening multi-trillion dollar California homeowners market a bellwether for others?

 

Patrick Kelahan is a CX, engineering & insurance consultant, working with Insurers, Attorneys & Owners. He also serves the insurance and Fintech world as the ‘Insurance Elephant’.

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Hard Market — in the insurance industry, the upswing in a market cycle, when premiums increase and capacity for most types of insurance decreases. Can be caused by a number of factors, including falling investment returns for insurers, increases in frequency or severity of losses, and regulatory intervention deemed to be against the interests of insurers.[1]

 

An on point definition of a hard market for the California property insurance market prompted in great part by successive years of severe wildfires throughout the state, a circumstance that recently culminated in the state’s insurance commissioner to enact temporary regulations that prohibit non-renewal of homeowners’ policies for one million insured properties located within wildfire-prone areas. The commissioner’s action came as a result of insurance premiums in affected areas rising to seemingly unaffordable levels, in carriers refusing to underwrite properties, and in delayed recovery in wildfire areas due to limited availability of hazard insurance.

[1] https://www.irmi.com/term/insurance-definitions/hard-market

How did a bad fire situation get worse? Two years of homeowners’ lines’ loss ratios averaging in the 190 range, or $1.90 being paid out for every dollar of earned premium.  Who expects carriers to absorb that extent of loss without an according rise in premiums?  Let’s take a look at how the state got there (we’ll set aside the climate risk and fire damage negligence/liability discussion), and how things aren’t as simple as one might think.

Loss History

The state’s homeowners’ carriers were essentially the same in 2017-2018 as they were in the ten years preceding the heavy wildfire years.  Why does that matter?  Consider this chart of data for HO line earned premium, losses, and loss ratios for the ten years prior:[2]

CA Premiums Losses

[2] http://www.insurance.ca.gov/01-consumers/120-company/04-mrktshare/2018/upload/MktShrSummary2018wa_RevisedAug1519.pdf

$37.4 billion surplus of earned premiums over losses incurred during that ten-year span. That is not bad.

 

If one looks at the 2017 and 2018 results, the numbers flip:

Earned premiums–           $15.6 billion

Losses incurred–               $29 billion, or a $13.4 billion deficit. That gets companies’ attention.

A significant compounding concern for carriers for the 2017-18 period is that the losses were compressed into repetitive geographic areas, reflect concentration of maximum losses within same, and the factors behind the peril have not materially changed. So even though there was a $37 billion surplus noted for the ten years prior, carriers (being forward looking for revenues) reacted not only to raise premiums, but to restrict available coverage and restrict the scope of coverage, classic hard market characteristics.

Premiums and pricing

If the discussion continues to market factors regarding historic pricing, more evidence of the roots of a hard market come to the surface. Average homeowners’ policy premiums for the state relative to median property values are significantly skewed in comparison with other states with higher population and exposure to concentrated risk:[3]

States Premium

[3] data from https://www.policygenius.com/homeowners-insurance/how-much-does-homeowners-insurance-cost/#average-homeowners-insurance-cost-by-state

So the case builds for how a hard market builds- premium levels that seemingly fail to consider the potential effects of regional peril occurrences.  California having premium values one quarter of those in Florida?  There is also significant evidence that- on average- properties have been under-insured for value in that post-disaster rebuilding costs are exceeding coverage limits. The market (through pricing history) inadvertently set its own table for hardening.  And it’s not just carriers- homeowners and financing institutions are partners in the issue.

Coverage

Homeowners do have options when persons have are unable to obtain voluntary insurance due to circumstances beyond their control- the state’s default insurer, the FAIR (Fair Access to Insurance Requirements) plan.  The state’s FAIR plan provides limited coverage for primary perils but its use requires property owners to have separate wrap around policies in order to have cover that reasonably matches the benefits of voluntary cover.  The FAIR plan is a syndicate pool supported by the state’s property insurance carriers, so think of it as analogous to auto/motor risk pool insurance.

Increasing the number of persons accessing the insurance of last resort is one thing, but considering a recent order by the state insurance commissioner to require FAIR to provide broadened coverage limits[4] (to $3 million) and broadened peril coverage (to mirror an ISO HO-3 policy form) seems (per FAIR leadership) to exceed the commissioner’s authority.  Right or wrong, the change in the FAIR plan does not alleviate the issues with concentration of risk, actuarially supported rates, or the fundamental fact that risk factors need to be mitigated.

[4] https://www.insurancejournal.com/news/west/2019/11/14/548537.htm

What to do?

Property insurance is a keystone to any economy- borrowing, recovery, risk sharing, and risk management, etc. Absent a thriving insurance industry, a jurisdiction simply will flag in comparison with other areas. A hardening market is a wake-up call that the inherent cycle of insurance is at an attention point- carriers see challenges in the near future and are retracting access to insurance and placing a premium on price, even if company capital levels are currently higher than average.  Soft markets certainly reflect the reverse, but who complains when underwriting is easier and rate taking is de-emphasized? The surpluses in premiums gained during 2007-2016 are long forgotten.

Ideally the market would:

  • Set premiums at a level anticipating significant regional events
  • Price wildfire risk into all policies in the state (everyone gets affected when these events occur)
  • Leverage the available capital surplus and interest from reinsurers
  • Partner with private risk vehicles (ILS, Cat bonds) for broader backstopping of risk
  • Consider wildfire cover that is similar to earthquake or wind covers, with more substantial deductibles for that peril
  • Adopt complementary parametric plans that trigger when wildfires occur, providing immediate recovery funding to affected property owners rather than wait for government programs alone (that may take years to administer)
  • Refrain from using FAIR plan changes to circumvent needed changes in voluntary policies/underwriting/pricing
  • Tread very cautiously before having regulators take anecdotal actions ex post to occurrences
  • Implement immediate subsidies for areas that suffered direct and as yet unrecovered damage- not taking action affects all

With these efforts being in conjunction with all efforts being made to mitigate risk factors, encouraging behavior changes, and encouraging policies more in keeping with risk management- climate, economic, and functional.

Why this?

The state has other, potentially bigger concerns with risk- earthquakes.  Wildfire risk has had terrible effects, multi-billion dollar effects, most often in more remote or less densely populated areas than urban Los Angeles, San Francisco, and Oakland, heavily populated and developed high-risk earthquake areas.  EQ insurance penetration (approximately 11% of property owners) suggests uninsured losses will far eclipse wildfire losses if a significant quake occurs, and there is not enough resources (currently) for the state to back-fill an EQ disaster recovery.  The entire country will be affected.

And what of the balance of the world’s economies?  A recent Swiss Re Institute assessment of insurance protection globally denotes an estimated $222 billion natural disaster gap[5], a number that again would be overshadowed by temblor damage in developed regions.  What of the wildfires in Australia, where the affected areas are more than six times greater than the 2018 California wildfires affected?

 

Hardening of insurance markets- that’s a challenge for insurance customers, but for markets like California’s homeowners’ lines it’s a precursor for what may be coming elsewhere.

[5] https://www.spglobal.com/marketintelligence/en/news-insights/latest-news-headlines/56236161

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The InsurTechs were nestled all snug in their beds, with visions of 2020 dancing in their heads

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It’s the end of 2019, an auspicious year for insurance and InsurTech, and it’s the end of the year with expectations in the business world for business results and (hopeful) bonuses.  And of course there is the wondrous shadow of December holidays over all, with visions of sugarplums dancing in heads.

Not everyone celebrates a Christmas holiday, Chanukah, or Eid, but one cannot avoid the end of year holiday gifting and hopes.

In keeping with that spirit this final InsurTech column for 2019 wishes all well for the season and bright things for 2020.

Patrick Kelahan is a CX, engineering & insurance professional, working with Insurers, Attorneys & Owners. He also serves the insurance and Fintech world as the ‘Insurance Elephant’.

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There are some friends and businesses for whom its hoped that Santa/Father Christmas/whoever finds holiday gifts.  All deserving, all have been good this year.

  • Parametric insurance– better understanding within the industry of its opportunities for cover and dramatic growth
  • John Bachmann, Social Survey– more vowels so his customer experience video series can carry on into 2020
  • Zurich Insurance- Mark Budd and Nicola Cannings– full subscription for its innovation contest
  • Erika Kriszan– recognition as the founder of the quietest best InsurTech conference- MOI Vienna
  • IRDAI– prudence in choosing the twenty participants in the Indian insurance sandbox
  • Coverager– all the respect they deserve for keeping the insurance industry informed

Holidays – any holiday – are such a great opportunity to focus on bringing the family together.  Lidia Bastianich

  • Paolo Sironi– a platform to expose his finance and economics ‘chops’ to a broader audience
  • The Daily Fintech– continued recognition as a best-in-class Fintech/InsurTech/blockchain/crypto resource, and being seen as the best value within the respective blogs’ world
  • Michael Porpora– a project for 2020 that outdoes his 2019 365 days of connections
  • Robin Kiera– a championship for the Hamburg football team
  • Nomaan Bashir– 2% insurance cover penetration within the Pakistani market
  • Lloyd’s of London– a balance beam to help the venerable institution integrate business and org change into its 300-year-old club
  • Insurance Nerds– continued traction advocating for insurance and continuity of the many of are privileged to work in insurance jobs

The holiday season is a perfect time to reflect on our blessings and seek out ways to make life better for those around us. Terri Marshall 

  • Benekiva– beneficiary first in every life insurance company’s stocking
  • Ukrainian InsurTechs– realization that there are great things happening in the industry there that have nothing to do with global politics
  • Intellect SEEC– more storage capacity to hold all those data
  • The California Dept of Insurance– an understanding that best intentions can produce unintended consequences
  • Lemonade Insurance– markers of many colors to try as an alternative to magenta
  • Rahul Mather– rest.
  • Road Warriors– time at home

Merry Merry and Happy New Year.

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Is Lack of Trust a First Order Function in Narrowing the Insurance Protection Gap?

image The Geneva Association released an ambitious discussion of trust and its effect on insurance transactions, particularly in the perspective of well-known ‘protection gaps’ that are pervasive across many lines of insurance within mature economies.  Is, as Jad Ariss, Association Managing Director notes in the publication’s foreword, a “lack of trust fundamentally impeding insurance demand,” […]

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Innovate from the customer backwards- but caveat innovator!

image The insurance industry is in large part past the hysteria of disruption, innovation and entrants solving the issues of the insurance world, and is moving into the stage of implementation, collaboration and iteration. Startups that have gained traction are now broadening their markets, and in some cases, their offerings. And, the industry is recognizing […]

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