Blog Home All Blogs
While our industry tends to adapt slowly, new technologies can improve productivity, enhance customer experience and provide valuable marketing tools and insights. Here you'll find articles to help you understand and choose the technologies that are the right fit for your agency. For an overview of all PIAK posts, visit our "Blog Post Library List" at "All Blogs"


Search all posts for:   


Top tags: insurance  technology  trends  agency  agent  Amazon  automation  chatbots  CRM  customer  customer service  cyber  desk  digital  email  insurtech  kentucky  leads  portal  productivity  reputation  risk  sales  Siri  social  social media  tech  text  time management  website 

How to Get Personal With Technology

Posted By Ike Kavas, Tuesday, August 13, 2019


We live in a world of disconnected connection. Our personal devices provide constant access to a boundless trove of information and communications. Our perspectives have become increasingly global in scope. Yet, we find ourselves longing for the same basic sense of community that once united our cave-dwelling ancestors. Leading organizations in insurance, finance, healthcare and technology know this new reality quite well. They ask how they can cut through the noise and provide a great customer experience that ties their brand to basic human emotions.

A Harvard Business Review report concluded that emotionally connected customers are more than twice as valuable as highly satisfied customers. “Companies deploying emotional-connection-based strategies and metrics to design, prioritize and measure the customer experience,” the report said, “find that increasing customers’ emotional connection drives significant improvements in financial outcomes.” Advertisers and marketers are no strangers to courting the human psyche. In these professions, there is little else besides the customer experience. But now the customer experience must become a mandate in all business departments, including engineering and IT. 

So, the grand plan to overcome the omnipresence of technology is…more technology? Let’s go through the rationale to why this is the case. While the abundance of technology and data is seemingly at odds with our desire for human connection, technology has also fundamentally changed human nature. Consumers and businesses — and not just millennials — want products and services quickly, if not immediately. On top of that, we still desire a connection to other people.

To this end, innovation departments, data scientists, IT departments and line of business leaders are exploring automation technology from robots (digital workers) to make business processes, workflows, customer support teams, engineering and other departments work smarter and faster. 

Their work to automate and improve these processes has already come to fruition in a few key areas. In the insurance industry, the claims processing department deals with a high volume of documents, forms, packets and images. Some of the largest insurance companies wanting faster response times are employing intelligent technology that uses AI and machine learning. They have done away with manual processes that slow them down, particularly those involving physical paper and electronic documents, such as emails and PDFs that are not in a structured format. Their tools automatically capture the data from claim files, recognize and categorize different types of forms and export that data into another intelligent system, such as an automated workflow or claims processing software.

We work with insurance companies around the world undertaking digital transformation projects and incorporating these types of automation processes. Insurance customers using automation tell us that they are processing claims about 87% faster than through legacy processes, ingesting seven times as many documents and claims per year. These organizations are also decreasing document preparation efforts by 50% and indexing by 75%, reducing fraud and cutting improper payments by about 2%, and driving positive ROI within six months.

The automation frees these insurance companies from mundane, time-consuming tasks, allowing them to respond — and make connections — to claimants or billing-related questions quicker. This ultimately yields an improved customer experience. The customers don’t see the technology powering that experience, but they reap the benefits and remain loyal to the company. From that seed, we can grow the emotional connection that all customers want. 

We know that emotionally connected customers are the most valuable customers. This seems to be especially true in the insurance industry. Bain & Co. surveyed close to 30,000 P&C customers and found that highly loyal insurance clients: retain at 97%, buy 25% more insurance, consolidate almost 90% of their insurance with one provider and refer 250% more than neutral clients. Bain found that loyal clients deliver 300% more lifetime value than neutral clients and 700% more value than low-loyalty clients.

Therefore, it’s both strategic and advantageous to connect with your customers in their own technological worlds and provide great experiences. What isn’t so obvious (but should be now) is that technology and a better handling of business data is the key to unlocking these great customer experiences.

This post has not been tagged.

Share |
PermalinkComments (0)

Combating Robocall Spammers

Posted By Tara Kelly, Tuesday, August 13, 2019

Reclaiming Automated Calls


Email spam first became a serious problem about 20 years ago, and junk mail had been an annoyance for years before that. Now, unscrupulous operators have hijacked yet another platform, this time flooding mobile phone networks with billions of robocalls that make people reluctant to answer their phones.

According to the FCC, almost half of the calls Americans receive on cell phones this year will be unwanted robocalls.

Not only are robocalls annoying. When done right, automated calls are welcomed by consumers and can achieve listener-ship rates exceeding 90%. But automated calls are getting a bad rap due to robocalls. That’s why it’s time for businesses, including insurance companies and agencies, to reclaim automated calls from spammers.

Robocalls aren’t going to go away on their own. Combating them will likely take regulatory action and businesses standing up to reclaim the medium. Without intervention, the problem will get worse. Robocall-blocking software firm predicts the number of robocalls made this year will exceed the nearly 48 billion made last year — by a whopping 57%, according to CNN.

Consumers are subject to increasingly sophisticated ploys to lure them into answering spam robocalls — including “neighbor spoofing.”

It’s also bad news for insurance businesses that want to engage customers via automated calls for legitimate purposes.

But there’s a huge difference between automated calls and robocalls. Here are a few ways insurers use automated calling:

  • Appointment reminders: A reminder of an upcoming appointment with an insurance adjuster or agent can be a welcome service for busy people, who can use a touch-tone option to either confirm the appointment or connect to reschedule the visit. Automated reminder calls work well for businesses too because it’s less expensive than no-shows or assigning live calls to staff.
  • Policy and claim status updates: Obtaining a policy or getting an insurance claim paid often involves third parties, and when things go wrong, it can damage the company’s relationship with the policyholder. An automated call can keep customers in the loop, informing them along the way and managing expectations at each step of the journey, from policy confirmation to claim payment.
  • Emergency alerts: When dangers like a weather event threaten, emergency alerts can give customers a heads-up, protecting the customer and the insurer’s financial interests. Messages can include tips on preparing for a storm, reminders about documentation or claim submission processes and more. Alerts also signal that the company is looking out for customers.

These are just a few examples — automated calls can be used for good in a number of other ways, like conducting customer satisfaction surveys, enabling continuous service improvement or improving retention by alerting delinquent policyholders of a pending lapse date and warning them of the impact a lapsed policy could have on future insurance rates. Automated calls can help insurers reach customers in a timely, affordable way with messaging that is consistent and on-brand. The problem isn’t automated calls — it’s unwelcome robocalls.

So, how can companies fight back? It’s simple: Respect customer preferences and provide valuable information. The examples above are just a few ways insurers can provide information customers want or need, and when businesses consistently deliver valuable messages in a highly personalized and emotionally relevant manner, they can achieve listener-ship rates that average 93%. Even better, regular communication from a company’s main number increases the likelihood of being added to a customer’s address book, ensuring you’re differentiated from unwelcome calls moving forward.

Like email spam and junk mail before them, robocalls are a scourge. They use an indispensable communication platform to harass consumers with unwanted contact. But it’s important to keep in mind that automated calls can be a helpful and welcome customer communication tool. That’s why it’s time to reclaim automated calling from unscrupulous robocall spammers. Let’s make a medium that works for everyone.

This post has not been tagged.

Share |
PermalinkComments (0)

InsurTechs Drawing Investors' Attention

Posted By Mark Hollmer, Tuesday, June 25, 2019


Below, we’ve gathered highlights of 10 noteworthy InsurTech financings from January 2019 through mid-May. They offer a curious read in combination with each other.

For one thing, the list gives a good idea about what kinds of startups are drawing investor attention.

Also, most of the investments are relatively small, reflecting venture commitment to concepts that haven’t quite proven themselves yet in the marketplace. Then there’s CoverHound, the online insurance comparison shopping platform, which pulled in $58 million earlier this year, bringing its total fundraising haul to $112 million in order to fuel a global expansion.

Another company – the upstart carrier Lemonade – raised a whopping $300 million in late-stage venture cash, more than 10 times the average InsurTech financing in the last few years. It has pulled in nearly $500 million total since its launch just a few years ago. Some observers predict Lemonade will reach the big leagues in the coming months, either through an IPO or sale to an old-school carrier seeking a cost-effective way to modernize. You can read about that here, in a recent Carrier Management analysis.

The question is, which InsurTech startup will be the next one to raise a large investment, with an eye toward public company status or selling itself to an interested buyer? It could be one of the companies listed below.


This post has not been tagged.

Share |
PermalinkComments (0)

As InsurTech Takes Over, Insurers Must Train the Humans that Remain

Posted By Jim Sams, Tuesday, June 25, 2019


As technology eliminates claims jobs through automation, insurers will need to build new skill sets for the employees who remain, speakers said during the second and final day of the Insurance Nexus Connected Claims Conference.

Eric Brandt, managing director and chief customer advocate for Esurance, said menial, repetitive tasks are being eliminated through technological advances such as chatbots to field routine calls and virtual appraisals to estimate repair costs. That means the humans who are still around will have to be highly skilled.

“What’s left is really, really hard,” Brandt said.

Claims adjusters of the future will be superheroes, he said, and they will need superhuman managers. He said as they employ new technologies, insurers also need to update the way they manage employees.

He suggested that managers use video to communicate instead of telephones because its harder to be distracted when looking at somebody face-to-face.

“Don’t have meetings,” Brandt said. “Establish a routine where you stay in touch with the people who report to you everyday.”

Kiara Graham, a learning strategy consultant for Desire2Learn, said “digital disruption is the new normal for the financial services industry.” To keep pace, insurers must be ready to “upscale and rescale” their employees’ skills. She urged that they be mindful of how they teach in an age of instant information.

“If I want to learn how to do something, I don’t enroll in a course, I watch a YouTube video,” she said.

Insurers also need to find sensible metrics so they can measure progress as they build a “more resilient claims workforce,” Graham said.

“What does good look like?” she said. “You use that to build out a rubric that can be used for feedback and gauging outcomes.”

During a panel discussion, a member of the audience asked whether insurers are having trouble finding good employees because of the widespread knowledge that insurance jobs are being eliminated through technology. Andi Dominguez, global insurance and healthcare product marketing manager for Quadient, said she’s not personally worried about it.

“We’ve been hearing that for years and we are still talking about it and we’re still here,” she said.

Brandt said at Esurance all of the employees receive ongoing training. “It’s never as scary as it seems,” he said. He added that Esurance hasn’t eliminated any jobs, but it also hasn’t been hiring new claims adjusters as it grows market share.

Implementation of technology often requires a cultural change within an organization, said Ian Thompson, group global chief of claims for Zurich Insurance. Thompson said he directed his claims shop to embrace technology because he feared his own job might be eliminated if the carrier did not adapt to rapidly changing customer expectations.

To illustrate his point, Thompson displayed a photo of a man using his cell phone to scan a display of grocery items at a commuter rail station in South Korea. Thompson said customers are able to use their phones to choose items to be delivered to their homes.

Thompson said insurance customers have become accustomed to speed and convenience and insurers have no choice but adapt or perish. The first step toward change is a transformation of the organizational culture, he said.

Thompson quoted author and management consultant Peter Drucker: “Culture eats strategy for breakfast.” He titled his presentation, “Does Claims Culture Eat Digital Strategy for Breakfast?”

Zurich started its digital journey in Ireland. Thompson said the carrier is using a photo appraisal tool developed by Snapsheet to speed up the auto damage estimates. He said Ireland was chosen because the claims shop was the optimal size for a pilot project and the management there was anxious to implement technological solutions.

He said Zurich plans to build on the success of the pilot project.

“Peer to peer selling has more impact than presentations from management,” he said.

This post has not been tagged.

Share |
PermalinkComments (0)

InsurTech Predictions for 2019

Posted By Nathan Pacer and Dong Liu, Tuesday, June 25, 2019


The insurance technology, or InsurTech sector has seen much technological and investment development over the past few years. Traditional insurance business lines such as health, auto, and commercial are being revolutionized by new digital-centric startups. New technologies such as AI (Artificial Intelligence) and IoT (Internet of Things) are re-architecting insurance data, the underpinning of the insurance industry. New business models, such as P2P and on-demand insurance, are disrupting the entire ecosystem on all fronts.

This blog post aims to examine how the rest of 2019 can shape up for the insurance technology industry. After conducting a thorough analysis of the sector, we have arrived at three predictions for 2019:

Prediction 1: 2019 Will See The Highest InsurTech Funding On Record

The graph below shows the total VC funding into InsurTech startups by year.

As you can see, InsurTech funding is on a general upward trend with a 5-year CAGR of 19 percent.

What’s most noteworthy on the chart is Q1 2019 funding coming in at $1.7B, a whopping 2.5 times higher than Q1 2018 and the best yearly start to date. A straight line projection would put the full 2019 funding at $6.7B, which would represent a 70 percent year-over-year growth and the highest annual funding on record. The largest InsurTech funding events in Q1 2019 include a $500M round into Clover Health, a $129M round into FRIDAY, and a $125M round into the Wefox Group.

The dramatic funding growth and our 2019 projection demonstrate investor confidence in technology startups fundamentally advancing the insurance industry.

Prediction 2: Health Insurance Technology Will Continue To Dominate The Industry

Venture Scanner classifies chaotic startup landscapes into understandable groupings. These groupings are organized by functional categories, which are intended to get at the core offering of the startups categorized therein. For InsurTech, we have broken the sector down into 14 functional categories. Analyzing them reveals a clearly dominant function: health insurance technology.

Health insurance technology startups lead the InsurTech sector in overall funding at $8B. This category accounts for 33 percent of all InsurTech funding and has almost twice the funding of the second highest category–life, home, P&C insurance. In addition, health insurance technology startups raised the most funding this past quarter (Q1 2019) at $650M. Some of the largest funding rounds into health insurance in Q1 2019 include a $500M Series E into Clover Health, a $74M Series B into Shuidihuzhu, and a $45M Series B into Alan.

Health insurance technology startups focus on producing innovative business models and technology products. A notable example in the space is Oscar Health. They provide customized health insurance plans for individuals and businesses. Their website and mobile app enable you to manage all your health information and access doctors 24/7. The Oscar Health mobile app also incentivizes healthy behavior. For example, it tracks your daily steps and if you meet your daily step goal, you earn money for gift cards.

Prediction 3: InsurTech Startups Will Scale Up In 2019

Our third prediction is that InsurTech funding events will shift to later-stage financings as a result of InsurTech startups experiencing increased market traction. Over the past 5 years, seed-stage funding events made up roughly 50 percent of all funding events into InsurTech. In Q1 2019, seed-stage events dropped to 20 percent, while mid and later-stage funding events grew to represent a much larger portion of total funding events.

By the same token, the average funding per deal in InsurTech has been growing steadily. Specifically, over the last 5 years, average funding has grown from $9M to $39M per deal.

The movement towards later-stage funding events and an increase in average deal sizes lead to the natural prediction that InsurTech startups will continue to gain traction in the coming years. Realizing that their returns are directly tied to the scale of their bets, VCs are not hesitating to double down on their investment sizes to gamble for greater payoffs. These follow-on bets in the form of later-stage investments will help InsurTech startups scale their operations and amplify their market share.

Conclusion: 2019 Will See Unprecedented Innovation In InsurTech

In conclusion, the observations and analyses above lead us to predict that InsurTech startups are primed for explosive growth, scaling, and maturation. We predict that 2019 will be the highest funded year on record, that health insurance technology startups will continue to dominate the industry, and that InsurTech funding events will increase in maturity and size over time.

This post has not been tagged.

Share |
PermalinkComments (0)

How to Partner With Insurtechs

Posted By Mike Fitzgerald, Tuesday, June 25, 2019


Incumbent insurers face both challenges and opportunities from concurrent forces. Dramatically changing customer expectations and low investment returns threaten both property and casualty and life insurers. Declining participation rates and indifference from millennial consumers restrict growth in life companies. Technologies such as driverless cars and sensors (Internet of Things) promise to shrink revenue in P&C.

To evolve their business and technology models, insurers are diversifying their approach to automation. Historically, in most insurance technology initiatives, the projects were fairly well-understood and had likely been implemented before. Policy, claims, and billing administration replacement efforts were typical of these automation investments.

In contrast, emerging digital approaches are uncertain and require new service models, products and capabilities. The continued rise in insurance-related technology startup funding reflects the changes that are underway in insurance IT. Insurers need advanced skills in emerging technologies. Technology startups need industry and regulatory compliance knowledge. The result has been an increasing number of partnerships between insurers and startups that go beyond a supplier-buyer relationship.

However, there are significant barriers to success on both the insurer and the startup sides of this equation. Insurers must address risk-averse behaviors and increase decision speed. Startups need to scale (gain customers), understand the regulatory environment and navigate opaque insurance products. Left unmanaged, partnerships do not work as well as expected.

The report titled Insurer-Startup Partnerships: Key Success Factors presents the feedback of 89 insurers and 78 insurance-focused startups from online surveys regarding best practices in partnership management. The major finding is that the two groups are generally aligned in terms of the importance of insurance innovation, but that there are key challenges related to initiative definition and accommodation of different cultural norms that must be addressed.

It will take time to work out the best ways to accomplish this new partnership model, but the barriers faced by both sides will force each to adjust. An analysis of survey results indicates that success will be improved by recognizing the following:

  • Cultural alignment and a shared vision are key.
  • Startups perceive that they are being more disruptive than they actually are.
  • Leaders of innovation initiatives must seek and implement bridging activities that join the two worlds.

Success will come to those insurers and startups that can make the necessary adjustments to their own preferences, cultures and working models to create meaningful partnerships.

This post has not been tagged.

Share |
PermalinkComments (0)

14 Ways to Beat InsurTechs

Posted By Jeff Arnold, Tuesday, June 25, 2019


Insurance technology is a hyped topic that dominates every industry journal and event. Experts say it’s the future of insurance. If you’re a traditional retail agency, where does that leave you?

It’s all a matter of perspective. The term “InsurTech” simply describes the process of leveraging technology to conduct business in new, more efficient ways.

The good news is that InsurTech is an equal-opportunity pursuit, and brick and mortar insurance agencies are not excluded. If you run a traditional retail agency, the future still belongs to you, but only if you believe in it and prepare for it.

Here are 14 simple ways your independent insurance agency can beat InsurTech competitors at their own game:

1: Morning Kickoff. You may have Alexa at home, but are your deploying her power at work? Consider programming Alexa to report on sales volume and upcoming appointments and events at the morning kickoff each day.

2: Go mobile. You don't need a traditional phone at every desk anymore. Team members can work from their smartphones while logged into a central communications app. When they dial out, it shows the company name. When calls come in, the caller selects the reason for the call, and the call is routed tot he most appropriate and available team member. 

3. Embrace online sales. Nobody likes to leave a voicemail. Through InsurTech, we have eliminated the need for it. Phones can be staffed during high-volume business hours. After hours, callers can be directed to a website for service.

4 Enable quotes and renewals. Proprietary, Artificial Intelligence (AI) driven systems can shop insurance from up to 42 carriers and present the client with customized opportunities. Staff still manages the quote, bind and issue process online from start to finish. In the months leading up to renewal, the agency system can email or text customers asking if they'd like their coverage shopped. Shop for them before they shop elsewhere.

5. Use text messaging. Team members can work from smartphones if they can send and receive work-related texts using a centralized communication app. In turns out that most customers love getting insurance information via text. 

6. Implement electronic signing.

7. Electronic policy delivery

8. Eliminate paper. Services like IVANS Exchange, Team Up and Carrier Downloads you can completely eradicate paper and make data stored in the cloud instantly accessible.

9. Smarter scheduling. Agents can use an online scheduling app to allow clients to schedule phone appointments.

10. Streamline the office. If you use the tools, very few customers have a need to visit your brick and mortar office.

11. Employ chatbots. 

12. Use more digital tools. Equip every team member's smartphone with a mobile dashboard, to access sales, web visitors and conversions for the company, as well as the policy-level info required to serve customers.

13. Recruit internationally.

14. Housekeeping help. Program iRobots to vacuum and mop the floors every night while you're out. Unfortunately, they don't clean toilets....yet!

Agencies that implement even half of these technologies may be more “tech” than the InsurTechs they’re competing against.

Other tough battles
Traditional agencies need to win over two audiences: Customers and team members. Customers are easy. They already have smartphones and like convenience. If you guide them through the process of going mobile with insurance, they’re generally willing to follow you. Many like to support their local agent. If you offer them a tech-friendly way to stay with you, they’ll choose you over a national InsurTech option.

In contrast, some team members won’t be so easy. They may prefer to do things the same old way and stay within their comfort zones. This is where agency owners and managers really have to get strategic and persistent about change. The agency will need to transition to a tech culture with buy-in and participation from everyone.

One last thought
To compete with InsurTechs, insurance agencies don’t necessarily have to offer something new. They  can offer something old in a new way.

This post has not been tagged.

Share |
PermalinkComments (0)

Kentucky Creates InsurTech "Sandbox"

Posted By Administration, Tuesday, June 25, 2019


Kentucky Governor Matt Bevin signed into law legislation which will permit and encourage insurance innovation in the Commonwealth. House Bill 386 creates a “sandbox” that will allow for the development of creative risk management solutions. This legislation positions Kentucky as a leader in considering and embracing innovation across the insurance industry.

“Implementation of the regulatory sandbox will establish the Commonwealth of Kentucky as a safe space for entrepreneurs to test and launch insurance-related innovations and programs not yet contemplated by the Insurance Code,” said Secretary Gail Russell of the Public Protection Cabinet. “Insurance innovation can lead to cost savings on all types of insurance for Kentucky businesses and consumers.”

The regulatory sandbox, which will be administered by the Department of Insurance (DOI), allows for private-sector flexibility while preserving necessary consumer protections.

“We look forward to promoting Kentucky as a place for insurance innovation,” said Commissioner Nancy Atkins. “Insurance products and distribution are rapidly evolving with our ever-changing economy. This legislation establishes a framework to allow Kentucky to encourage product development for the future of risk management.”

Companies wishing to participate in the sandbox must apply to DOI for admission. An applicant must explain their product’s innovation, value to customers and demonstrate financial stability.

All sandbox participants will be required to report key data to DOI for ongoing evaluation and oversight. Sandbox products and processes that prove to be successful and provide benefits to Kentuckians will serve as powerful evidence for reforming the Insurance Code. DOI will provide updates to legislators to ensure adequate monitoring of this unique framework.

“Kentucky has taken the lead in North America in the ‘HOW’ of insurance with the first safe harbor to play in the ‘insurtech’ sandbox. Entrepreneurs will no longer have to wait lengthy periods of time and lobby for changes in law or go abroad to be creative. This is perhaps the single biggest change in insurance since the Internet,” said Mica Cooper, CEO and president of InsureCrypt, an insurtech startup company.

The law is effective as of June 27, 2019.

Tags:  insurtech  kentucky 

Share |
PermalinkComments (0)

Chatbots Up Anxiety in Fraught Situations

Posted By Marlene Satter, Tuesday, May 14, 2019


People experience anxiety around money issues, such as financial services and health insurance. And while they look for advice from others in such situations, says a paper from the Harvard Business School, being responded to by a chatbot instead of a human can drive their anxiety even higher.

Yet if given the choice of talking to a human or a chatbot, most opt for the bot — despite the fact that their very anxiety surrounding the situation in which they find themselves (the situation that is prompting their quest for advice) has a negative effect on customer choice satisfaction, firm trust and long-term engagement.

Interestingly, just knowing they can have access to a human if they want it can improve those attitudes, but that doesn’t mean that by choosing the bot they’re opting for the best choice.
In fact, says the paper, “customer anxiety during SST [self-service technology] encounters can ultimately exert a negative influence on service relationships that firms may not have factored into their operational design — that customers in such settings may be asked to take on more responsibility for service delivery when they feel least equipped to do so.”

The study suggests that some operational design choices “may unintentionally provoke customer anxiety; others may offset anxiety’s impact” — and reminds that just having to use technology can be an anxiety-producing experience that cuts customer satisfaction — especially in situations where the number of choices can be overwhelming.
To make it worse, it adds, “SSTs are increasingly being deployed in settings that are inherently wrought with anxiety. Prior research has shown that when people are anxious they become advice seeking” — in other words, in need of human help.

The authors write, “SSTs, which are designed to enable customers to serve themselves without the intervention of a service employee …, can leave anxious customers isolated at a moment when they may need to access human guidance.”

A post on G2Crowd suggests that an appropriate use for a chatbot might be to answer FAQs and to automatically direct tough questions — or those it can’t answer within two tries — to a human. That’s a common theme among the business professionals whose companies rely on chatbots to interact with customers, but who rely on humans to intercede when the intricacies of the issues become too nuanced.

It also appears to be the ideal way to avoid the anxiety users experience around already-fraught issues such as finance, retirement and even health — when an individual may already be dealing with a tough diagnosis and finds the use of a chatbot just too challenging to satisfy his or her needs.

Tags:  chatbots  insurance  technology 

Share |
PermalinkComments (0)

The Rise of Reputational Risk

Posted By Jenean Meier, Wednesday, May 8, 2019


An article in the March issue of Claims Magazine noted that reputational risk is a newcomer to the list of covered risks. In 2007, The Harvard Business Review reported the framework for enterprise risk management proposed in 2004 by the Committee of Sponsoring Organizations of the Treadway Commission does not contain any reference to reputational risk, although it mentions virtually every other imaginable risk.

To understand why reputational risk has emerged as front line coverage, we need to survey how the world has changed during the intervening 15 years.

Evolving technology — In 2015, a data breach at Anthem exposed personal information of 78.8 million current and former customers. In 2016, a data breach at Uber exposed personal information of 57 million users and 600,000 drivers. In 2017, a data breach at Equifax exposed personal information of 148 million users. In each of these and many other cases, the company’s reputation was severely damaged. While the introduction of high-speed information technology has been a boon to companies, it has also exposed them to the risk of large data breaches.

Personal devices — Police departments, in particular, have experienced reputational damage because of video and photos captured on personal devices, including their own body cameras. The ubiquity of these devices has the potential to turn nearly every passerby into a citizen reporter.

The internet — There is little the internet doesn’t touch today, including reputational damage. It has long been said bad news travels fast. It now travels even faster as a result of the internet.

Social media — Social media is the village square on steroids. When villagers would gather to share gossip about someone’s misdeeds or misfortune, reputational damage was limited to the number of people filling the square. Consider that 2.25 billion active users visit Facebook on a daily basis and 500 million tweets are sent each day. Once a story is launched to social media, there is no shutting it down. It goes viral as it instantaneously circles the globe, often without regard to the veracity of the facts.

Changing standards of acceptable behavior — Of course, standards of acceptable behavior constantly evolve. Once upon a time, men working at Campbell Soup Company did not remove their suit jackets when in the office. How many men in your office today even wear a suit and tie? When was the last time you saw someone light up a cigarette in the office, on a plane or at a restaurant?

Words once freely spoken, and thoughts once freely expressed, can now blow up a person’s and a company’s reputation. Uber, Papa John’s and Tesla are just three companies for which inopportune words spoken by chief executives damaged the reputations of both the individuals and the companies.

Grievance culture — Collectively, we are far less likely to grin and bear it, turn the other cheek, let bygones be bygones, forgive and forget, and look the other way these days. For better or worse, today our fellow citizens are quick to take offense and feel empowered to report grievances. These reports can result in reputational damage.

Lower threshold for error — While I won’t say there are no second chances today, I will say there are fewer. Warren Buffett once said, “It takes 20 years to build a reputation and five minutes to ruin it.” Today it might take two-and-a-half minutes.

As insurance professionals, our number one priority is to protect our clients. While this includes helping them transfer the risk of reputational damage to insurance products, it begins with helping them to understand the potential extent of this damage.

By helping clients plan their response to reputational damage before an event occurs, we have begun to do our job. The cracks traced to reputational damage spread quickly. A plan including available resources should be in place and ready to roll out as close to the event as possible. As in all things, control of the narrative will be up for grabs. A speedy response can help your client seize control.

Managing reputational management claims can be tricky. There are photos to document damage to a home or plant. There is a physical object to inspect in the case of a wrecked car. There are physical injuries or doctor bills when a worker is imaged. Tangible documentation of reputational damage isn’t quite as easy.

It is no simple matter to determine how much a reputation is worth. When can you say a reputation has been fully restored? Can a reputation be fully restored?

For claims professionals, though, this difficulty has an unseen benefit. Advocates who develop an intuitive feel for reputational damage claims should be able to command top salaries now and in the future.

It’s time for us to get to work.

Tags:  cyber  reputation  risk  social media 

Share |
PermalinkComments (0)
Page 1 of 3
1  |  2  |  3

PIA of Kentucky
107 Consumer Lane
Frankfort, KY 40601


Phone: 502-875-3888
Fax: 502-227-0839