Witch’s Glitches: Halloween Edition

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Today is Halloween. Most of us expect to be scared today in some form or fashion by someone or other. Ghosts, gremlins, and goblins lurk about, waiting to yell BOO! when we least expect it.

If you have anything to do with software, you know ghosts, gremlins, goblins, and glitches have to be contended with every day. But if you think you have it bad, check this out, as reported by UTOR, a software-testing firm in Ukraine:

An extraordinary case happened in 2003 in a hospital in Grand Rapids, Michigan. A software bug in the patient database declared 8,500 people dead. All of them were safe and sound, but it was detected only after the investigation by insurance companies. The thing is, after a patient dies and a corresponding record appears in the hospital’s database, an insurance company receives a notification with the requirement to cover the treatment costs and pay compensation for the family.

We’d imagine, along with health insurance treatment claims, some insurance company also gets a claim for the death benefit on a life insurance policy for person who hasn’t yet bought the proverbial farm. Halloween or not, that’s pretty scary.

Frightening Numbers

If you’re tempted to wonder at the cost of software glitches, that information — along with almost anything else you might want to know these days — is surprisingly available. Here’s just one example: Raygun, a New Zealand firm dedicated to detecting software errors, reported:

According to the Consortium for Information and Software Quality, poor software quality cost US companies $2.08 trillion in 2020. These losses span all business sectors and include costs from operational failures, unsuccessful projects, and software errors in legacy systems.

Compared to losing more than $2 trillion to glitches, the prospect of facing ghosts, gremlins, and goblins one night a year doesn’t seem quite so daunting.

The remedy, of course, is arcanely known as The Two Ts — Trust and Test. If you trust your vendor and test the software to verify it’s free of bugs (along with ghosts, gremlins, goblins, and glitches), you’ll increase your chances of positive outcomes precipitously.

No tricks. All treats.

Happy Halloween.

A Call to Arms

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We don’t consider the insurance industry or insurance technology to be particularly militant. But we suppose it’s possible for martial metaphors to sneak in almost anywhere. At least that’s what we thought when we saw this headline in Carrier Management: “Tech Arms Race Favors Giant Commercial Carriers“.

In an interview cited in the article, Mo Tooker, head of Middle Market and Large Commercial business at The Hartford said this:

You get to a place of scale that really allows [larger insurers] to outperform—to take advantage of data and data science and help your underwriters and claims adjusters in a way that changes the game altogether in the future. This is a place where we will feel a bifurcation in the marketplace. There are only a handful of carriers that can make the investments that we’re describing here … There aren’t many that can keep up that level of investment year after year after year—and that creates a gap that grows larger year after year after year … a “nuclear arms race” in the industry.

Call us sensitive, but that seems like an alarmist characterization in any context. And in the context of escalating geopolitical conflict, it’s some combination of inappropriate and overkill. Most important, it’s inaccurate.

Let’s Take a Deep Breath

Yes. Insurance companies can spend millions of dollars on technology. Yes. They can throw good money after bad in efforts to remediate failing implementations. Yes. The larger the company, the more expenses — foreseen and unforeseen — they can absorb without going out of business. But that doesn’t mean they have to.

The fact is technology is one of the few things that gets less expensive as it gets better. Modern core-processing technology is much less expensive — and much more sophisticatedly capable — than it was 20, 10, or even five years ago. And with numerous well-funded insurtechs entering the market, smaller carriers with modern systems will have the option to choose the proven winners without risking large capital expenditures.

Are we biased? Sure, we are. But we’ve earned the right to be. We’ve demonstrated the truth of our convictions with more than 30 insurance companies of varying sizes.

Large insurance companies don’t need to be in an arms race.

And they don’t have to shoot themselves in the foot.

The Certainty of Uncertainty

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Because we work in the insurance industry, we do our best to … well … keep up with the insurance industry. Nevertheless, something PwC published earlier in the year — “Next in insurance: Top insurance industry issues in 2022” — managed to get by us, until now.

We were really grabbed by this headline: “The insurance industry is no longer predictable”. As we read on, we found this:

The business of insurance, which once was stable and predictable, isn’t that way anymore … climate change is irrevocably impacting certain risk profiles, distribution needs have become truly omnichannel and customers expect products tailored just for them … industry executives now have to make an array of deliberate and aggressive strategic choices to succeed … Compounding the difficulty of addressing these challenges is how the COVID-19 pandemic accelerated them.

No longer predictable? Was it ever?

How’s This Grab You?

If you consider the variables that have aways existed — market conditions, economic climates, consumer demand (or lack thereof), disasters (natural and unnatural), global conflicts, and myriad other things — that doesn’t feel much like stability or predictability, does it? And since we’re now in the 21st century, there are a few other things to consider. Here’s the short list.

  • The internet of things (IoT)
  • Telematics
  • Mobile technology
  • Data analytics
  • Machine learning
  • Artificial intelligence
  • [Fill in your favorites here.]

Those things may not necessarily result in instability. But they definitely interject elements of unpredictability because they’re new and they’re different. New and different are the ways of the world. As long as we have new and different, we’ll have instability and unpredictability. Just make sure you’re prepared to take advantage of them as they became proven.

That’s Life

As hard as we try to avoid it, ignore it, control it, or change it, uncertainty is a fact of life. One could even argue that, without it, there’d be no need for an insurance industry. We’d all be healthy, live forever, and have no accidents. Actually, if everything were predictable and certain (or certainly predictable), there wouldn’t be any accidents. Then we’d all be healthy, live forever, and be bored to tears.

The only thing in life — and in the insurance industry — that’s certain is uncertainty. So, let’s just accept it and make the most of it.

Oh … and pay your premiums.