IRL Preview – January 2019

IRL Preview – January 2019

To learn more about subscribing to the Insurance Research Letter email us. Every issue has topical articles written by industry experts that you won’t read anywhere else. In addition, you will stay current with major developments around the world with Global Briefs; a monthly Synopsis of insurer and broker news; and our acclaimed Back Page with all sorts of non-insurance fun and interesting subjects.

IRL January 2019 Highlights

What DARPA Technologies can offer the Insurance Industry – In the last decade, many of the giant humming brains of technology have migrated to government projects for the Defense Advanced Research Projects Agency (DARPA) because the work there has been super fun – their instructions were simply “build whatever massive tool you want to, and then turn it over to our analysts to use or not use as they choose.” Page 10

2018 – A CrisisRisk™ Year in Review – In reviewing 2018 critical incidents, critical events, disasters, and crises, it is clear that the ability to identify and control those events before escalation into a crisis is essential. Understanding each event’s CrisisRisk™ potential, the preparation required, and the responses needed, empowers leadership. Page 10

Globalization has not reached its peak – An interview with Coface CEO Xavier Durand who speaks about the impact of sanctions and trade wars on credit insurers on page 13

Read about the Consequences of Brexit Deal Rejection for U.K. Insurance Market on page 13

IRL Preview – December 2018

IRL Preview – December 2018

Subscribe to the Insurance Research Letter here. Every issue has topical articles written by industry experts that you won’t read anywhere else. In addition, you will stay current with major developments around the world with Global Briefs; a monthly Synopsis of insurer and broker news; and our acclaimed Back Page with all sorts of non-insurance fun and interesting subjects.

December Highlights

I Still Hope

It seems that hate has been with us since men first marked a few signs on clay tablets, thousands of years ago, to commemorate kings, business deals, and wars. Should we fight hate? Definitely yes, to protect our offspring, neighbors and ourselves, and also those who disagree with us. Page 12

US Tax Reforms – Impact on Bermuda Update

Bermuda has long been an attractive jurisdiction for financial services. The obvious reason for this is a beneficial tax regime, but that is not the only reason why organisations establish or do business on the island. Page 13

Making an M&A Match

Learn Why Company Culture is Key to Success – Mergers and acquisitions offer a strategic opportunity for a business to thrive. The right deal can enhance an already strong brand, open new markets, and bring together leaders who can multiply each other’s growth. It can give talented individuals the chance to succeed in a larger environment and maximize their expertise in innovative ways. Page 14

Crisis Stress: Part 4 – Concentration, Memory and Focus

In the first three parts of this short four-part essay series, I briefly summarized some of the ways in which a crisis affects people in terms of physiological reactions including the Acute Stress Response (ASR) and some (but not all) of the various psychological and cognitive effects of such stress on crisis mangers and their performance. In this fourth and final essay in this series, I will cover some of the recent research on diminished memory and recall abilities rising from acute stress factors during crises. Page 14

Customer/Prospect Data Warehouses – Buy, Borrow or Build?

We are now in the rosy afterglow of InsureTech, and Insurance technology themes have surfaced. AI data warehousing to more closely understand their current clientele appears to be an industry-wide initiative. We love data warehouses and the customer insights that can be generated from querying the data. No question. Page 16

Are You Prepared For An Active Shooter Event At Your School?

We have not had a child die in America in a school fire in over 50 years. Unfortunately we cannot say the same for violence. What should schools do to increase security and safety? Every individual in any organization must be trained and know what decisions to make, and when. Page 16

The Future of Insurance, and How Insurance of the Past Has Failed Us

For most of us, our home is our largest purchase and shelters our prized possessions. But a home is more than that. It’s our safe place, where we can be ourselves; the feeling of comfort when you come home from a long trip; the sound of children’s feet running to meet us at the door when we get home. Page 17

IRL Preview – November 2018

IRL Preview – November 2018

Subscribe to the Insurance Research Letter here. Every issue has topical articles written by industry experts that you won’t read anywhere else. In addition, you will stay current with major developments around the world with Global Briefs; a monthly Synopsis of insurer and broker news; and our acclaimed Back Page with all sorts of non-insurance fun and interesting subjects.

Highlights November Issue

Crisis Stress: Part 3 – How and Why A Crisis Affects People
In this four-part essay Dr. Chandler summarized some of the ways in which people, including the crisis manager, are affected by a crisis in terms of physiological reactions, touching upon the Acute Stress Response (ASR). In this part 3 essay, he will cover some (but not all) of the various psychological and cognitive effects of such stress. Page 12

Training for Bomb Threats and Suspicious Package Detection
Many organizations consider this type of threat as extreme but may not fully appreciate the danger because they believe it won’t happen. However, consider that between September and October of this year there have been 31 events which involved an IED and 87 events that were either suspicious in nature, threat call or a hoax (faux IED device). Page 14

Brown & Brown Enters Into Agreement to Acquire Hays Companies
Brown & Brown Insurance has been aggressive in its growth this year (19 deals with total annualized revenue topping $95M). Now the company is making history with its latest move. On October 22, 2018 Brown & Brown announced it had reached an agreement to acquire Hays Companies insurance operations. Page 13

5 Ways to Survive an Active Shooter Event
Read this Q&A with Former Secret Service Agent Jason Russell on page 15

Brexit …. bah!
When Theresa May said, “Brexit means Brexit” more than a year ago she did not know what she was talking about and she still doesn’t. Britain stands to lose more than it gains. Closed borders and trade barriers with 27 former friends vs. tangled financial cooperation and on-going frustration with international bureaucrats. Page 17

IRL Preview – October 2018

IRL Preview – October 2018

If you like what you read below, we invite you to subscribe to the Insurance Research Letter here. Each issue has topical articles written by industry experts that you won’t read anywhere else. In addition, you will stay current with major developments around the world with our Global Briefs; a monthly Synopsis of insurer and broker news; and our acclaimed Back Page with all sorts of non-insurance fun and interesting subjects.

Robotic Automation – How Many Humans Can We Realistically Replace?
By Marci De Vries-Todtz

I am writing this article from InsureTech in Las Vegas, where the newest and brightest technology companies launch their solutions. The top question posed this year is: “Are humans replaceable in insurance.”

To answer that question, the industry needs to examine the scope and course of most of their employees’ responsibilities. To make it easier, I’ve divided work into two categories, “Monkey work” and “Thought work” Monkey work is defined as any part of a job where, given enough training, a monkey could perform the task. (No offense to monkeys intended, of course). Thought work involves analyzation of inputs, and decision making. Thought jobs benefit from experience, education and expertise, while Monkey jobs do not.

Monkey jobs include data entry, opening software, printing and emailing reports, combining data from one database with data from another database, sending vendor assignments, and so on. These jobs have been and continue to be automated using technology with huge success, allowing the jobs to be performed faster, more consistently, and 24/7. Moreover, Monkey jobs are often cited as a major factor in employee turnover and dissatisfaction.

The biggest examples of successful Monkey work replacement include Facebook and Google, where the draconian tasks of looking up information at the library (Google) and calling/writing letters to your friends (Facebook) was replaced with technology with well-documented benefits to users.

Technologists are now trying to tackle Thought jobs with technology, wherein artificial intelligence calculates inputs, “learns” how to do jobs and then performs decision making with only minimal human input, with the goal of replacing the human input. While I don’t doubt that this is possible eventually, I do have my concerns today. The current methods by which data is recorded and processed in insurance is inconsistent and could lead to wrong conclusions when automated.

The path to full integration is first to automate all of the Monkey work, thereby guaranteeing a consistent data set. When data is consistent, a machine learning tool can be much more effective and perhaps someday achieve the goal of replacing thinking humans.

So how close are we to automating enough for machine learning? Based on my observations, it looks like there is too much “Monkey Business” (Get it? It’s funny) still happening, where lower level employees are still entering and manipulating data the same way over and over, like a typing pool but with computer terminals. In order to reach the goal, more intentional automation efforts need to be explored. The good news is that tools exist today to fully automate ALL of these repetitive processes without creating novel technology. It’s just a matter of who putting all of these technologies together in the right way.

Data is power, and the ability to provide insights across millions of files is a direct path to greater profitability for the Insurance industry. To reach this goal, we need to take steps today to make sure the insights are based on correct, consistent data today.

IRL Preview – September 2018

IRL Preview – September 2018

If you like what you read below, we invite you to subscribe to the Insurance Research Letter here. Each issue has topical articles written by industry experts that you won’t read anywhere else. In addition, you will stay current with major developments around the world with our Global Briefs; a monthly Synopsis of insurer and broker news; and our acclaimed Back Page with all sorts of non-insurance fun and interesting subjects.

Crisis Stress: Part 1 – How and Why A Crisis Affects People
By Dr. Robert C. Chandler, Visiting Professor of Communication Lipscomb University

During disasters and emergencies people are affected by the stresses and challenges of these events. These stresses can sometimes be quite traumatic. We should be attentive to the ways in which such events affect and change those who are working, living, enduring, and surviving during a high-stress crisis. In addition to recognizing and adapting to the dynamics of those with whom we work or manage who are under tremendous pressures during crises, we ourselves as crisis managers are likewise affected by the stresses of these events.

Even emergency responders and crisis managers who (usually) are well-trained professionals (with specialized technical and professional knowledge appropriate to deal with a wide range of emergencies, dangers and disasters) can be significantly impacted by crisis events and high-pressure situations. Research and after-action reviews show that crisis mangers are, in general, a physically and psychologically resilient group of professionals, especially when compared with the general population. These professionals typically understand the challenges of their work and effectively manage the demands and stresses they face. However, even among such generally resilient individuals the demands of crises do affect managers in several significant ways.

Crises are stressful events for everyone who is touched by them, sometimes even when the connection is indirect or at great distances. There are performance challenges, time pressures, high stakes risks, dangers to health, safety and well-being, and exposure to horrific circumstances – all of which result in dramatic responses in the body, brain and mind of those of us who are experiencing them. Further, while we all are affected by such stresses, we are each individually different in how such stress affects us including to the nature, persistence and degree to which we are affected. Thus, a general tendency is inherently manifest in idiosyncratic ways.

Categories of Stress
In broad terms, such stresses can be classified into several practical categories. First off, there is chronic lower order stress. Lower order stress is stressful but falls into a category that most of us would classify as the “normal” background stresses of daily life and the work day. This includes meeting deadlines, traffic problems, dealing with difficult people, spilt milk, flat tires and the routine “headaches” of home life and work life. We all carry differing degrees of chronic lower order background stress. This can range from the relatively minor stresses of daily living (e.g., a lost set of car keys) to more significant personal life events such as financial or relationship issues. Most of us (but not everyone) tolerate such stresses and manage to perform within normative ranges despite such stress. In cases where such stress is not managed well, there may be a need for intervention. The are many useful guidelines to help individuals more effectively manage chronic lower order stress (these typically include nutrition, rest, exercise, or mental relaxation solutions). However, in most cases, the major implication of such chronic lower order stress comes from the fact that the effects of stress are cumulative. Which may be an important variable for some people when it comes to the impacts of acute stress.

Second, there is acute stress. We recognize that there are varying degrees of acute stress. To simplify an inherently complicated range of stress levels, we can divide them into three (broadly defined) levels of acute stress: High, Hyper, and Traumatic. It is not the purpose of this short essay to categorically and mutually exclusively define these three levels of acute stress. These acute stressors are tied to specific events, situations or contexts (compared with chronic lower order stress). An emergency, critical incident, disaster, or any situation that would be regarded as a crisis would create the necessary conditions for acute stress. The exposure to the aspects of the event, the responsibilities for managing or ensuring the safety and well-being of others along with the accountability and scrutiny of their performance. High stress would be situationally or psychologically induced responses to non-routine contexts that has measurable effects on normal physiological and psychological processes and functions. This might be delayed reaction times, longer information processing temporal brackets, or changes in heart rate or respiratory patterns). High stress certainly affects us but usually not pushing us outside of our normal “range” of measurable performance. Sustained or long periods of high stress can be detrimental to our physical and psychological well-being. Highly stress resilient individuals may be able to continue to perform within their normative range even when experiencing high stress events. However, when they reach their threshold point and the stress triggers detrimental breakdowns that stress is regarded as hyper stress.

Hyper stress is more stressful than high stress in that it reaches peak points of measurable effects that dysfunctional diminishment on individuals (e. g. dysfunctional behavioral changes, cognitive diminishment sufficient to disrupt decision making, short and long-term memory omissions or distortions, etc.). The difference between high stress and hyper stress is defined by its effect on the person (not an inherent aspect of the stressor). Hyper stress is experienced when a there is a statistically significant dysfunctional diminishment in my ability to think, perform or behave. An example might be a change in measured reaction time that is greater than a statistically significant (standard deviation) from my normal reaction time range. What is “high stress” for one person may be “hyper stress” for another.

Once stress has induced a psychological adjustment disorder (which includes subtypes of anxiety, depression and disturbance of conduct and/or combinations of these symptoms) is classified as traumatic stress. Traumatic stress is stress that has a significant and lingering longer-term effect on psychological processes with changes in sleep patterns, feelings of dread, overwhelming emotional reactions, depression, etc. In fact, these effects can continue to manifest long after an acute stress situation has ended – which is the disorder classified as post-traumatic stress syndrome. Traumatic stress arising from events that are similar or less threatening and persistently distressing than the significant events that can lead to post-traumatic stress disorder.

Acute Stress Resilience
Acute stress (high, hyper and even traumatic) experienced during crises is natural and normal. One cannot avoid acute crisis stress, nor do you necessarily want to do so. In fact, acute crisis stress is not always (at least initially at the lower end of the severity spectrum) a bad thing to experience. Research suggests that the acute stress, for many, stimulates boosts in performance This alerting and orienting stress response, physiological and psychological changes (the ancient “fight or flight” or Acute Stress Response [ASR] at work). Initially and in the short run, the Acute Stress Response enables us to focus, concentrate on the core task and physically excel (that is the fighting or running aspect of the ancient response). The heightened focus and perceptual narrowing can be advantageous for some circumstances. However, beyond certain optimal threshold levels too much or too prolonged stress of emergency contexts can create dysfunctional physical and mental impacts.

However, stress resilience is a developed characteristic which can enhance one’s stress tolerance and stress management capacity. It can also extend the range within which one can successfully cope with high stress without shifting to hyper stress. Stress resilience is the ability to successfully cope with a crisis and to return to pre-crisis status quickly. Resilience exist when a person uses physical and mental techniques, processes and behaviors to protect them from the potential negative effects of acute crisis stressors. In simpler terms, stress resilience exists in people who develop psychological and behavioral capabilities that allow them to remain calm. These capabilities allow the person to function within a normal performance range during crises/chaos without significant dysfunctional diminishment. They can then subsequently move on from the incident without long-term negative psychological or physiological stress related consequences.

Although not everyone reacts to specific stressors in the same way, nor to the same degree, and not at the precise same trigger levels, the most common progression of effects of stress are usually similar in most people. In the next essay (part 2 of this essay series) I will cover some of the physiological reactions to crises including more about the Acute Stress Response (ASR) pattern.