The Changing Nature of Risk

By on Sep 22, 2016

“The greatest challenge for successful companies is focusing on customers’ current preferences while preparing for their future preferences.”

—Clay Christensen, The Innovator’s Dilemma

It seems like every insurance magazine, newsletter or online publication is talking about the disruptions coming to the insurance industry. Some react by pointing out that the insurance industry is more than 300 years old and has survived many doomsayers. Others say it is time for the industry to innovate and respond to the times.

It is true: change is coming at the industry faster than ever. Changing expectations of the digital consumer are requiring the industry to think differently about what customer service even means today. New types of insurance exposures have exploded with new ways of doing business.

That’s why the Agents Council for Technology (ACT) has responded with a brand-new work group — the Changing Nature of Risk — that will dig into and report on these changes and provide recommended actions you can take to stay ahead (or catch up if necessary).

I co-chair this group with Jerry Fox.

For many years, ACT has been helping insurance agents and brokers better understand emerging technology and how to use it effectively to enhance productivity and create a better customer experience. This new workgroup is our latest endeavor to provide you with actionable information and guidance.

Changing Nature of Risk

Initial Topics

During our initial discussions, we realized we needed to address different constituencies within the industry. Each segment has different perspectives and requirements. The four we have identified are:

  1. Agents/Brokers
  2. Insurance companies
  3. Clients/Consumers
  4. Hardware and software vendors

Maturing Now

We have labeled our first set of topics as “Maturing Now.” These topics are not coming; they are here now, and we believe the industry needs to focus on them immediately. These topics include:

  • Mobile revolution, what can/should we offer
  • Drones
  • Sharing economy (Uber/Lyft, Airbnb, others)
  • Mass customization (personalization, targeted marketing, and product creation)
  • Social marketing
  • IT consumerization
  • Peer-to-Peer (P2P) insurance
  • Telematics
  • Artificial intelligence, machine learning, chat bots, guided conversations (early phases)
  • Connected homes

Other Disruptive Channels

We have labeled the next group of identified topics as “Other Disruptive Channels.” These include:

  • Internet of Things
  • Smart homes and buildings
  • Advanced analytics
  • Collision avoidance vehicle systems (Level 1 and 2)
  • Speech/visual translation
  • 3D printing
  • Work from home and virtual employee base
  • Bitcoin/alternative payment systems
  • Cyber liability
  • Software-defined security
  • On-demand product ordering/shipping
  • Cloud computing
  • Open-source software

Advisory Publication

The goal of the workgroup is to produce an advisory document for each topic identified above. The advisory will be action oriented. The industry does not need more analysis; it needs to formulate a plan and take the first steps. The advisory will be a maximum of two pages and will include (at least initially) the following sections:

  • What the issue is, with an explanation of the topic.
  • Broad implications for individuals, businesses, the economy, etc.
  • Insurance industry implications.
  • Advisory/recommendations: what actions/steps the reader should take.
  • Examples and resources, such as links, websites, articles, for further information.

The first Risk Advisories have been published and are now available for viewing.

The first topics we tackled are:

  • Telematics
  • Machine Learning
  • Peer to Peer (P2P)
  • Smart Homes and Buildings
  • Drones
  • The Sharing Economy

Notice that, in addition to an overview and explanation of the technology, specific action steps are included to help direct the four groups to make progress.

Like the topics it will examine, the Changing Nature of Risk Work Group will be flexible and fluid. New technology issues will continually be examined to determine if they need to be included.

“It isn’t that entrepreneurs are smarter than companies, it’s that they are trying more crazy ideas, taking more shots on goal.”

—Peter Diamandis, founder of the XPRIZE

Now it’s your turn.

Take a look at the advisories that have been published. What has the work group missed? What additional information should be included? What are topics not in the lists above that should be examined? Is there a better format than the advisory to report our findings? We seek your input.

Send your ideas for topics, improvements or resources to me at or by leaving a comment below.

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