Digital Is Not Enough; Nor Is Paperless

The service of risk management within insurance companies needs to innovate. Today, a small fraction of commercial customers take advantage of risk management services provided by insurance agencies. And insurance companies are fine with this, as they have limited supply -- or people -- that can provide risk management services. But what if the same high level of risk management services could be offered to all customers of an insurance company? How would an insurance company go about offering widespread, and high-quality, risk management services? The Solution to Better Risk Management Is Your People (Plus Technology) Insurance agencies currently engaged in risk management services have a distinct advantage: the accumulated knowledge of its people that provide contract reviews for customers. I had this epiphany as I was reading through a slidedeck titled "Innovation is almost impossible for older companies," which states: "People have acquired skills that, at moments, have given significant advantages to companies in order to prosper." Insurance agencies now must figure out how to harness the risk management skills of its people in new ways. The alternative is scary for my insurance professional friends, because someone else -- someone with new technology and a new supply of risk management knowledge -- will figure it out instead. Insurance companies could quickly be out-innovated, as occurred to the taxi industry. For some time, the taxi industry had skills that allowed it to prosper. Taxi companies used technology and money to set up phone numbers that could be called to request a ride; these companies also stockpiled just enough cars and drivers to meet the minimum level of demand. But then Uber came along and created a better technology that connected riders to a different (and bigger) pool of drivers. The taxi industry got out-innovated. Insurance agencies are composed of people who have acquired risk management skills. My friends in the industry can review contracts with the best of them. But each of them has a limited capacity to complete contract reviews based on hours in the day. So not all customers get risk management services (either because they don't know about them or don't want to pay for them). A technology will come along that will expand the supply of risk management services. One insurance consultant thinks that technology will be a computer avatar that analyzes and predicts risks independently. I think the idea of an independently functioning risk management avatar is misguided. I am reminded of a quote from Zero to One, written by the founder of Paypal, Peter Thiel: "Better technology in law, medicine and education won't replace professionals; it will allow them to do even more." Better Technology Will Allow Insurance Professionals to Do More I continue to be drawn to the word "collaboration" as I envision the future of insurance technology. Recently, I spent time evaluating software solutions in the insurance industry. All of the solutions I reviewed are focused on step one, what I call "Make it Digital." Only within the last five to 10 years have insurance carriers and agencies gone paperless, and the insurance software companies are filling this need. Digital is not enough. Paperless is not enough. Insurance technology must connect people and the knowledge that they create. Don't think about just connecting to your customers. Think about connecting your team. Imagine if your entire risk management team could work as a living, breathing entity to assess and evaluate risk. When Agent Jim in Kansas City has a question about liquidated damages in Texas, he should be able to quickly identify work completed by Agent Bob in Dallas dealing with this exact issue. He can then evaluate the work and bring Bob in on any follow-up questions. I have yet to find an insurance carrier or agency that has figured this out. This is where the opportunity lies in insurance technology: collaboration.