In the Pocket

When we think of pockets, we think of three things:

The first is dentition. Perhaps you’ve been to the dentist for an oral exam. And perhaps in the course of the exam, the hygienist has asked another person to come into the room. That other person is carrying a scorecard and a pen. As the other person tracks your score, the hygienist pokes your gums with some kind of probe and reads off number as she does, “1. 1. 2. 3. 2. 2. 3. 1. 2. And so on.”

When she lets you up for a rinse, you ask, is this like golf? Low score wins?”

The answer is yes. The numbers the hygienist is citing are the depths of the pockets around your teeth in millimeters:

  • 0-3mm without bleeding means you’re good for another 10,000 miles and can continue to eat peanut brittle at will.
  • 1-3mm with bleeding indicates you should probably stand closer to your toothbrush and floss more than once a season.
  • 3-5mm without bleeding means you may have gum disease and may require more frequent dental visits and remedial care.
  • 5-7mm with bleeding means you may have some tissue damage, some bone loss, and may be in need of some care that likely won’t be pretty or painless.
  • 7-10mm … well … we really don’t want to talk about it.

The second is music. If a drummer is relaxed and laying down a seemingly effortless backbeat, he’s said to be playing in the pocket. Likewise, when musicians are responding to the music they’re performing sympathetically — leaving room for each other’s contribution and letting the music breathe — they’re said to be playing in the pocket.

Yeah. But We’re a Software Company

Right. But we score our support team and the way we handle support tickets like golf and the same way dentists handle gum-pocket depths: low score wins. We also take into consideration the numbers of tickets submitted (low score wins) and the amount of time it takes to resolve each one (low score wins). When our team is working in synch — when the members are collaborating smoothly, when tickets are getting resolved quickly, and when our customers are consistently happy — we say the support team is playing in the pocket.

High scores count in football, basketball, baseball, hockey, and IQ tests. We’re not in a hurry to flaunt our IQs. But we’re happy and proud to keep our ticket-resolution scores low.

And we’ll always aim to play in the pocket.

Trouble Brewing?

An old corporate adage goes like this: “There’s never time to do it right, but there’s always time to do it over.” Needless to say, that applies to systems implementations, among other things. And it’s pretty funny if:

  1. You’re laboring in the belly of the beast, and the money isn’t coming out of your pocket.
  2. You have all the time (and money) in the world.
  3. You’re not accountable to shareholders and policyholders.
  4. You have ironclad plausible deniability if anything goes sideways.

If you don’t have any of the conditions in 1 through 4, not getting it right the first time is a clear sign of trouble brewing.

Don’t Take Chances

If you want to make sure you do your system implementation right — and won’t have to do it over and over and … — here are a few simple suggestions:

  • Keep one eye on your time, one eye on your budget, and another on your vendor. (If you don’t have three eyes, ask for help.)
  • Gather your requirements, document them thoroughly, and define your specifications precisely.
  • Don’t underestimate the reach, the complexity, or the duration of the project. (Murphy’s Law exists for a reason.)
  • Make sure all of your internal and external systems and data sources are fully integrated with the new core system. (Data is king.)
  • Make sure the data from the system you’re replacing is verified, cleansed, standardized, and normalized according to the new system’s specifications. And make sure you have a plan to manage anomalies.
  • Examine all of your existing processes before automating them in the new system. A bad process automated is still a bad process.
Keep an Open Mind

Modern systems incorporate workflows derived from evolved and continually refined practices. Those practices will make your organization more efficient from the start; although, they may require some alteration of your present practices. They can, of course, be customized. But be careful. Customization can lead to scope creep, which means elongated timelines and higher costs. Beyond that, deviations from standard configurations can make upgrades more complicated, given the need for more testing, and recycling. Toolsets can help, but they’re not cure-alls for high degrees of customization. The cost, effort, and resources required to implement or upgrade highly customized systems can be unjustifiable. So, most important, be willing to hear what you need to hear, not what you want to hear.

If you find yourself looking at extensive customizations, it’s likely because your business processes are out-of-date, perhaps because you’ve had to keep them to accommodate the limitations of legacy systems. The bottom line is your bottom line will benefit from accepting more standard configurations and/or from your being willing and able to manage some degree of the desired process changes.

Every system implementation contains traps. Vendors are susceptible to them, too. But if your vendor has a verifiable track record of implementation success, it’s likely that experience will help you and the vendor avoid traps. Granted, no one is clairvoyant. But experience is, indeed, the best teacher. And the best-taught vendors are an asset in ensuring time, budgets, resources, and the implementation project will be well managed.

With mutual efforts on the part of you and your vendor, there won’t be any trouble brewing.

That’s Shocking

The classic model of technology adopters outlined in Geoffrey A. Moore’s book, Crossing the Chasm, comprises the psychographic categories innovators, early adopters, early majority, late majority, and laggards. Based on an article in the July edition of Best’s Review — Fires, Hacking Are Just 2 Hazards at Electric Vehicle Charging Stations” — perhaps two other psychographic categories should be added for drivers of EVs: pyromaniacs and masochists.

According to the article, the insurance risks — which include general liability, workers comp, and property (to say nothing of bodily injury) — may be the least of the risks potentially attributable to EV charging stations:

Electric vehicle charging station manufacturers will have a significant exposure. Charging station users could be injured by electrical shocks or by tripping over long cables; although highly unlikely, fires could erupt due to a malfunctioning charger. Fires could damage the charging vehicles and nearby property or injure bystanders. Chargers installed inside garages can ignite a home, and there is a possibility of liability if the fire spreads. Vehicles can be damaged by improper charging, possibly by consumers who fail to follow instructions or vehicle manufacturer recommendations.

None of us here has purchased an EV yet. But when we get them, we’re going to stock up on hot dogs and S’Mores, just in case.

Kidding Aside

Insurers are obviously in uncharted waters here. But some liabilities are evident at first blush:

  1. Electric shocks. At home or public charging stations, high voltages (110 to 240 volts) create vulnerabilities when plugging, unplugging, and handling cables. Beyond that, damage to cables and charging equipment from usage, cable wear, and weather increase the risk of shock. And public charging stations are vulnerable to theft of copper and other metals and minerals, along with exposed wiring.
  2. High-voltage fires related from lithium-ion batteries. Subject to damage from overheating, the flammable electrolyte liquid in lithium-ion batteries can cause high-voltage fireballs that burn at extremely high temperatures, release toxic gases, and are difficult to extinguish.
  3. Tripping on charging cables. This risk is self-evident and compounded by the numbers of users who may be trying to get in and out of public charging stations, especially at night.
  4. Cyber attacks. This risk might be the least expected. But since EVs rely on data, software, and sensors — including AI-assisted operating systems — cybersecurity becomes crucial to attacks from hackers and other bad actors, as well as data compromises and system outages. And if you’re using a public charging station, you’re upping the ante. You could be at bodily risk if hackers turn off lights, tamper with braking systems, or override steering capabilities.
The Good Old Days

Man has mounted science, and is now run away with. (Henry Brooks Adams, 1838-1918)

We’re not necessarily in a hurry to return to horses and buggies. But we have to admit, those were certainly more simple times with more obvious risks and fewer technologies to master. On the other hand, more of us live better lives than ever before. And wars notwithstanding, we’ve managed to come this far relatively unscathed.

We imagine requiring insurance to keep up is a small price to pay to pay for progress.

Mastering the Approach Shot

The March/April edition of Claims Magazine included an article entitled, “The Top 10 Risks for P&C Insurers in 2023“. If our golf game were better, we might think about it more. But it isn’t. So, we don’t. Nevertheless, key risk factor #1 was digital exhaustion. That made us think about why our golf game isn’t better than it is. The answer, like answer to digital exhaustion, is the approach shot.

Let’s start with the article, which says this about digital exhaustion:

Digital transformation in the industry has been underway for many years. The pandemic and changing customer expectations have further elevated the journey to the digital enterprise. Most in the industry have graduated from thinking that digital is only about customers to recognizing it spans the whole internal and external ecosystem. In practice, this results in dozens or even hundreds of projects to address the process, technology, data and organizational aspects of transformation … Managing the transformation has become a challenge at best and a nightmare at worst. Recent roles such as chief transformation officer, chief digital officer and others are providing strategy, governance, and senior-level accountability for digital initiatives. However, there is a sense of exhaustion among many at the pace of change and implementation challenges.

That’s what led us to wonder: What if insurers had made better approach shots to digital transformation?

Let’s Hit the Links

Simply put, the approach shot in golf is any shot intended to put the ball on the green, typically from a distance of at least 100 yards, and ideally in a position from which you can putt the ball into the hole. Unless you’re Bryson DeChambeau — or you have a Howitzer in your bag — that definition of approach shot typically excludes tee shots on par 4 or par 5 holes. In other words, if you’re expecting to get from the tee into the cup on anything other than a par 3 hole, you’re setting yourself up for disappointment and failure.

To extend the analogy, if you approach digital transformation recognizing you won’t be able to get from Point A to Point Z in one shot, the incremental steps comprising Points B through Step Y will be easier, far less frustrating, and much more likely to succeed. That’s why it makes sense to start with a suite that’s already fully digitized, from which you can then digitalize everything from your distribution channels to your customer experiences.

Bruce Crampton, a PGA Tour pro from 1961 to 1975, once said, “Golf is a compromise between what your ego wants you to do, what experience tells you to do, and what your nerves let you do.” The same can be said for digital transformation in insurance.

If you balance your ego and your nerves, we’ll bring the experience and help you master the approach shot.

Chatting with GPT

If you ever want to see a room full of people go crazy, run in, yell — “ChatGPT!” — and run out. And if you ever want to see a roomful of insurance people go deathly quiet, walk in, sit down, and ask — “ChatGPT?” — as a sincere question, and listen for pins dropping.

The excitement and trepidation about ChatGPT are equally understandable and justifiable. And there are likely as many opinions about ChatGPT’s usefulness in the insurance industry as there are people to hold those opinions. A quick internet search will prove that point. But here are just two of the differing opinions we found.


The brokerage firm, Newfront, published this — “ChatGPT Can Superpower the Insurance-Buying Experience” — which offers this hearty endorsement:

By translating complicated compliance rules into plain English and by freeing humans to do higher-level, mission-critical work … AI will be a valuable tool for insurance buyers and sellers.

Well … yes, but. ChatGPT depends on AI. But not all AI is ChatGPT. GPT stands for Generative, Pre-trained Transformer. It can use whatever information to which it has access — whatever information it’s programmed to aggregate and amalgamate — to render things in plain English, leaving some wiggle room for a definition of plain. The value of AI is more accurately represented in another post, even though that post is more skeptical than the Newfront post about the broad applicability of ChatGPT.

Not So Much

InsuranceBUSINESS published this post — “Will ChatGPT disrupt insurance? Insurtechs weigh in” — which offers this more skeptical and accurate take on ChatGPT and AI:

ChatGPT itself has a significant list of pitfalls: it can’t grasp context or nuance in human communication, such as sarcasm; it’s limited in its ability to handle multiple tasks; and it doesn’t have enough expertise to draft complex or technical documents, such as policy wordings. It can also hold biases or prejudices, based on the data that it’s trained on, which opens a Pandora’s box of ethical issues for insurance companies. The value in generative AI lies in its potential to automate non-core but essential tasks.

Here’s the money sentence: The value in generative AI lies in its potential to automate non-core but essential tasks. We’d argue it’s significantly more regurgitative than it is generative (nothing in, nothing out). The ability of AI to automate core and essential tasks isn’t far off. But ChatGPT won’t capture nuance or subtlety, at least not yet.

In writing the promises constituted by insurance policies, nuance and subtlety can be everything.

Roots and Wings

The man depicted here was born 200 years ago. What’s that? You don’t know him? If not, don’t worry. It’s not terribly surprising. And it’s okay. History can tend to obscure such people after a while.

His name was James Goodwin Batterson. He was born in 1823 in either Bloomfield or Windsor, Connecticut. The accounts vary. After working for a time at a print shop in Ithaca, New York, Batterson returned to Connecticut, at age 23, to found New England Granite Works. Though the business began as a cemetery monument business in Hartford. But Batterson soon established himself as a stone dealer and a building contractor. He introduced mechanical granite polishing when he created a lathe that produced round, polished stone columns.

Batterson was an artist, a historian, a scientist, and a lover of languages, becoming proficient in Greek and Latin. He spent several years in Egypt, becoming honorary secretary of the Egyptian Exploration Fund. He spent time in Europe, studying art and writing poetry. He was among the founders of the Hartford Arts Union and a trustee of the Wadsworth Atheneum for 40 years. In addition, he served as a member of the committee that created Hartford’s Bushnell Park.

During the Civil War, Batterson was chairman of the Connecticut State War Committee, serving as a construction consultant for the Union. As a result, President Lincoln appointed him building contractor for the Library of Congress building in Washington D.C. He also constructed the Masonic Temple in New York City, the Connecticut State Capitol in Hartford, the Connecticut Mutual Life Insurance Building in Hartford, the Mutual Life Insurance Building in New York, the Equitable Life Insurance Building in New York, and William K. Vanderbilt home, Marble House, in Newport, Rhode Island.


So, What?

Why should we know, let alone care, about James G. Batterson? While traveling in England, Batterson became impressed with the record and the success of the Railway Passenger Assurance Company. As a result, he determined to found a similar business in the United States. The Travelers Insurance company received its charter from the State of Connecticut on June 17, 1863. And Batterson is credited for introducing casualty insurance to the United States. As legend has it, on March 1, 1864, a local banker, James Bolter, jokingly asked Batterson how much it would cost to insure him up to $5,000 against accidental death for Bolter’s journey from the post office to his home. Batterson replied, “Two cents.” Bolter paid what amounted to The Travelers Insurance Company’s first insurance premium. Those coins have been kept by the company ever since. Batterson headed The Travelers until his death in 1901 at the age of 78. He he was posthumously inducted into the Insurance Hall of Fame in 1965.

Given achievements, it’s definitely arguable that James G. Batterson planted the roots of what’s become the property/casualty insurance industry in the United States. Consequently, he’s given the rest of us who fly in and around the industry the wings to do so.

He’s also given us an example of a very full life, very well-lived.

The Forecast Calls for Change

The first single from Robert Cray’s 1990 album, Midnight Stroll, was “The Forecast Calls for Pain“. We couldn’t help thinking of that song when we read a couple of recent forecasts about the insurance industry for 2023.

In its report, Property and Casualty-Insurance Top Trends 2023, Capgemini wrote this, in part:

Personalized value-added services can meet new and evolving customer preferences. Yet to monetize the latest offerings, insurers must innovate and develop products beyond their current portfolio.

Similarly, Deloitte, in its 2023 insurance outlook, offered this:

The goal for 2023 and beyond should be to more fully realize the benefits of technology infrastructure investments to make insurers increasingly agile, innovative, and customer-centric.  Carriers have frequently taken a piecemeal approach to technology modernization, transforming system by system, function by function, and app by app. Investment decisions have been mainly driven by shorter-term budget and feasibility considerations rather than achieving longer-term competitiveness through improved customer experience.

What do those things mean in practical, operational terms? Here’s our perspective.

Don’t Leave Change to Chance

The two things insurance companies will need most in 2023 are flexibility and adaptability. Since digital transformation remains one of the most popular buzz-phrases in every industry, that means two related things:

  1. Insurers must be flexible enough to adopt the insurtechs that best suit their businesses and will help them achieve the operational improvements they need most.
  2. Insurers must be using modern flexible core systems that will optimize their abilities to adapt to new technologies and to operationalize new capabilities.

And since Capgemini mentioned the need to innovate, we have some thoughts on that, too:

Innovation isn’t about random change. It isn’t about leaving change to chance. It isn’t about finding things that work. It’s about creating them. It’s about encouraging people to contribute ideas for new products and services. And it’s about having the technical capabilities to design them, to configure them, to test them, to approve the ones that work and bring them to market, to reject the ones that don’t, and to sustain those processes with purpose and discipline.

If you know the forecast calls for change, prepare for it. Embrace it. Experiment with it. Create it. Master it.

If you do, the forecast won’t have to call for pain.

The Digital Promise: Part Two

Matteo Carbone, an insurance industry strategist with a specialization in innovation, wrote a post for Insurance Thought Leadership called, “Lemonade: No Sign of Disruption Yet“. In the post, Carbone pointed this out:

Lemonade has written almost $370 million in premiums (showing 42% growth from 2020) … with a combined ratio (gross of reinsurance) above a 150% combined ratio in 2021. This means that, for each dollar of premium paid by the client, the companies’ risk transfer approaches a cost of more than $1.50. Almost the same has happened over the past three years. For each dollar of premium, claims cost 90 cents, including the loss-adjustment expenses … To acquire this (underpriced?) business, Lemonade invested almost 60 cents in marketing for each dollar of premium. All other costs add almost 40 cents. It doesn’t seem that behavioral economics, charity and storytelling have made any dent in the insured risks.

We’re not judging Lemonade, but this is what happens when insurtechs put the tech knowledge before the insurance knowledge.

It Sounds Good on Paper

According to Investopedia:

Insurtech refers to the use of technology innovations designed to find cost savings and efficiency from the current insurance industry model:

  • Insurtech is the use of technology innovations designed to make the current insurance model more efficient.

  • By using technology such as data analysis, IoT, and AI, insurtech allows products to be priced more competitively.

  • Insurtech is used to more effectively process claims, evaluate risk, process contracts, or underwrite policies.

Theoretically, that all sounds pretty good. Bring in some new technology to innovate and disrupt a stodgy old industry. But as Albert Einstein said, “In theory, theory and practice are the same. In practice, they’re different.”

The fact is most carriers can’t afford to purchase premium at such high rates. Instead, they need to employ technologies that will work for them and for their particular business models. The good news is we have time, and time will tell whether the Lemonade business model will work. While we’re watching, though, focus on strategies, business models, and technologies that work for you now.

If it sounds too good to be true, it might be … at least until it’s proven.

The Digital Promise: Part One

A recent post from Insurance Thought Leadership — “A Wake-Up Call for Insurers” — says this, in part:

Insurers have been talking about going digital for a good decade now, and seemingly everyone says the pandemic greatly accelerated the trend over the past three years by forcing us all to interact remotely. Yet ACORD says it found in a recent survey of the 200 largest insurers worldwide that “fewer than 25% have truly digitized the value chain, while more than 10% are not appreciably leveraging digital technologies within their current business processes. Further, more than half of the insurers in the study are still exploring how digitization can be applied against their business model.”

This is like saying you can build a skyscraper from the lightning rod down. No, you can’t. Likewise, you can’t take insurers to task for having failed to adopt a technological capability — digitalization — for which no foundation had been constructed. Here’s why we think that:

Let’s Go To the Replay

The working environments seeming to be promised by digital transformation would have been more fairly and constructively undertaken if:

  1. The modern core system with which attendant digital capabilities have to interact had been in place first.
  2. Carriers hadn’t attempted to put the digital cart before functional horse (see #1).
  3. Startups and insurtechs had paid more attention to the intricacies and peculiarities of insurance than they paid to the proverbial customer journey.

Instead, the industry allowed itself to fall for calls for AI preparedness that were grossly premature. So, it hired data scientists on staff to optimize AI and data strategies. It got way ahead of itself with driverless vehicles without paying due heed to how to insure them, whether to insure the the driver, the passenger, or the automaker, along with the related, litigation concerns. And it fell head over heels in infatuation with blockchain and cryptocurrency.

What’s the Price?

There are several lessons to be learned here. Chief among them is this: Choose your experts wisely. It may not be fair to say all the ostensible experts were wrong, per se. But they were misleadingly, enthusiastically premature. Had they known a bit more about the business of insurance, insurance companies could have made significantly more progress in fulfilling the digital promise. And had insurance companies chosen their experts more wisely, they likely would have saved significant amounts of time and money.

With any luck, we’ll be smarter next time.

The Great Awakening: Part Two

In our previous post, we wrote this:

The new normals are change and uncertainty. That means The Great Awakening isn’t a one-time event. It’s necessarily ongoing, evolving, and unpredictable. We can evolve with it — embrace it, roll with it, and learn to make the most of it — or not.

Since publishing that post, we read this article — “Inside Twitter as ‘mass exodus’ of staffers throws platform’s future into uncertainty” — which was intended to present a number of ostensibly unintended consequences in the wake of Elon Musk’s acquisition of Twitter. The article, intended to be a how-not-to condemnation of Musk, said this, in part:

Scores of remaining employees at the social media company on Thursday appeared to reject owner Elon Musk’s ultimatum to work “extremely hardcore,” throwing the communications platform into utter disarray and raising serious questions about how much longer it will survive … a mass resignation effectively occurred … Hundreds of staffers appear to have called it quits … A similar series of events unfolded in the Slack channel earlier this month as Musk eliminated roughly 50% of the company’s then 7,500-person workforce … “Elon is finding out that he can’t bully top senior talent. They have lots of options and won’t put up with his antics.”

Taken at face value, it appears Musk attempted a power play and it backfired. That may not, in fact, be the case since Musk had this to say, “How do you make a small fortune in social media? “Start out with a large one.”

What If …?

Maybe what Musk did was a deliberate paring tactic. Given what he said, maybe he wanted to reduce bureaucratic overhead and create a smaller, more nimble organization. We don’t know. But we do know this:

If you want to grow an organization, keep it nimble, keep its morale high, keep its people motivated to contribute, and manage its growth strategically, you have to do five simple things:

  1. Have a leader with a purpose and a vision, who’s able to articulate the purpose and the vision clearly, and who’s capable of finding capable managers who’ll subscribe to the purpose and share the vision.
  2. Turn those managers loose to cascade the vision throughout the organization and inspire people to support it every day.
  3. Let people in the organization act like owners, giving them the responsibility and the authority to make decisions, allowing small failures on occasion if the failure constitutes a valuable lesson.
  4. Let people connect with the others in the organization with whom they interact constructively, and with whom they achieve efficient productivity.
  5. Recognize and reward people for their contributions to the success of the organization.

Before we rush to judge Elon Musk, let’s manage the change and uncertainty in our own businesses. The best ways to do that are to communicate openly with people, to listen to them, to trust them, and to enable them to do their jobs and contribute, in the appropriate roles, to the best of their ability.

Let’s get to work.