Driverless commercial trucks are evolving much like their private-passenger counterparts. There are basically two paths. Vehicle manufacturers are either moving to near-autonomous vehicles practically whole cloth or are evolving trucks and cars piece by piece. Both approaches make sense for different markets.

The innovators expect the insurance industry to get on board. Insurers, however, are not exactly excited about covering unknown risks. My Leader’s Edge article, Coming to a Highway Near You, explores the intersection of commercial automated vehicles and the business of insuring them.

As the article explains, brokering insurance depends on which path the driverless vehicle is developing. Conventional trucks with some automation — whether fresh off the assembly line or installed aftermarket add ons — are covered by traditional commercial auto policies. The more advanced the technology, the fewer insurance company options are available.

Manufacturers and owners of more advanced autonomous trucks, some of which are practically driverless, are obtaining coverage through technology brokers. This represents a significant shift, where trucks are viewed through the lens of software more than grease and gears.

Another huge challenge is finding insurance companies willing to cover unchartered technology with their eyes half shut.

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Another huge challenge is finding insurance companies
willing to cover unchartered technology with their eyes half shut.
_______________

Some insurance industry professionals raise concerns that if the insurance industry does not start covering semi or more fully commercial autonomous trucks, manufacturers will, in effect, self-insure. It is already happening. And it is not just Tesla offering coverage to their California drivers. Commercial trucking manufacturers are doing so as well. Then there is also the question of what insurance will look like as automation puts the burden of liability more on the manufacturer than the driver.

On a personal note, I believe automated commercial trucks and vehicles will continue appearing on American roads at a faster clip than private passenger vehicles. Unless there is a tax break or other financial incentive — or the United States economy rebounds rapidly — most Americans will find semi-autonomous vehicles difficult unaffordable in the near term. I discuss this in my well-received piece, ADAS Go For a Ride.

My article explores these issues in more detail. Hopefully, it will inspire more dialogue between manufacturers and the insurance industry.

P.S. For more information, check out my award-winning piece, Driverless Utopia.

Commercial Auto rates have been rising for more than a decade. What gives? In my recent Leader’s Edge article, Where Are We Going? I dig deeper to find the answer.

As you would expect, there are several reasons. The greatest one, in my opinion, is distracted driving.

Yes, you have heard that before. However, I did not fully believe until I spoke to an actuary who looked into the data. The fact that commercial auto premium began to climb in 2011 was no accident. Around the time, smartphones were rapidly replacing flip phones, giving Americans something else to do when they were supposed to be doing a different something else.

Another explanation is higher litigation costs. There is no doubt that commercial auto insurers, especially those that cover trucks, get hit with paying some crazy-huge settlements. If you check out my Actuarial Review article, Tipping the Scales: Measuring the Impact of Social Inflation, you’ll see that the actual losses from litigation are difficult to measure as a whole.

In my opinion, the insurance industry needs to pony up for a study that proves how much litigation impacts overall severity and, in turn, rate increases.

The reality is, semi-autonomous vehicles, including trucks, can improve safety for many scenarios (for more on that, please read Moving Parts: ADAS Go For a Ride in Actuarial Review). Cameras can also track an accident to show true fault, but many truck drivers feel they interfere with individual privacy. Most accidents, a trucking expert told me, are not caused by professionally trained truck drivers. Often the fault rests with the other party.

Just how safe semi-autonomous vehicles are and how much autonomous vehicles will be is a matter of debate. I cover that in another article to be published soon. When it comes out, I’ll let you know.

Commercial property insurance was already struggling before COVID-19 hit the scene. Double-digit rate increases were bad enough but hit the highest in 35 years. 

As I cover in Actuarial Review’s article, Perilous Times: COVID 19 & Vexing Variables, there were several things going on. Consider:

• Catastrophic weather-related losses have been exceptionally high – at least for the years 2017 and 2018.
• Thanks to the response to the COVID-19 pandemic, commercial space has been at low capacity for seven months. 
• Declining investment income due to lower returns on mortgage-backed securities.
• Riots similar to the late 1960s have made a comeback – big time.

I wrote the commercial property insurance article before a multitude of hurricanes hit the United States, especially in the Gulf states. While the article focuses on commercial property insurance, it should also interest homeowners’ insurance policyholders as well.  

My thoughts on “Civil Unrest”

As an aside, I found it distressing that last summer, some people said it was OK to destroy buildings because that is not harming people. It depends on how someone perceives harm. Small business people who lose their companies and their employees who lose jobs feel harm. So do the neighbors. People have been physically harmed or even killed. Businesses that hang on despite the damage still have to pay deductibles for their commercial property insurance. Their premium can also go up.

By the way, if civil unrest sounds like rioting, then you need to get current. The Associated Press Style manual recently instructed journalists to avoid using “riot” as a term. “A riot is a wild or violent disturbance of the peace involving a group of people. The term riot suggests uncontrolled chaos and pandemonium,” according to the AP Stylebook’s twitter feed. Apparently, the act of going into someone else’s neighborhood, stealing property and destroying buildings could be stigmatized like the protests of the 1960s. “Unrest is a vaguer, milder and less emotional term for a condition of angry discontent and protest verging on revolt,” tweets the AP Stylebook. 

Whatever it is called, I wish the Golden Rule would make a comeback. Treating people the way we want to be treated with kindness, dignity and respect would go a long way. Sounds like Martin Luther King doesn’t? 

Generation Z, which presumably embraces digital everything, also likes the human touch when dealing with insurance companies.

Generation Z wants more than digital interaction with insurers.

Born from about 1996 to 2015, the oldest of the digital native generation is beginning to buy their own personal lines insurance. And they have been around the digital block. As my recent Actuarial Review article, Coming of Age: How will Gen Z Impact Personal Lines Coverage? explains, constant exposure to social media, digital marketing, clickbait and fake news has created a deep hunger for authenticity and transparency. 

For many, finding trust and credibility means doing business with insurance professionals. At least half of Gen Zers purchasing auto, renters or homeowners insurance, surveys show, seek out insurance agents or customer service representatives for help. This is especially true for complex insurance transactions, such as purchasing coverage or filing a claim. 

The article also specifies why Gen Z is different from previous generations. It explains how generational differences have vast implications on insurance product development, pricing, marketing and communication. While researching for the article, I found that Gen Z does expect insurers to offer multichannel, 24-7 access. 

However, surveys and interviews hint that the digital natives might not be as quick to purchase simplified insurance through icons and a few clicks as much as insurtech investors hope. Rather, Gen Z seeks insurance for security. Digitally jaded to some exent, they want to build trust with people who represent brands.   

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Gen Z seeks insurance for security.
_______________

Retailers are also finding that Gen Z does not necessarily embrace online shopping. Gen Z will start the process online to collect information. But ultimately, they prefer to shop at brick-and-mortar stores, according to the National Retail Foundation. 

This reminds me of a hilarious Bad, Bath and Beyond online commercial that introduces the concept of offline shopping. “It’s like online shopping but in real life.” 

Reaching Generation Z

Smart insurers will find the right balance of reaching Gen Z by offering both digital and human interaction. Online, they will blend both traditional and simple iconic elements with language that educates consumers without compromising meaning. 

Progressive’s website is a great example. It presents a traditional navigational look with little scrolling and clickable headlines while offering straight-forward clickable insurtech-inspired icons. Explanations provide enough information to help viewers.

Successful insurers educate their Gen Z customers by straightforwardly presenting information. They hire communicators who get insurance and can explain it simply without marketing flash or dumbing down critical information. 

Finally, I like Gen Zers. As a stay-at-home mom who watched Gen Z grow up, I like that they are smart, pragmatic and refreshingly honest.

Thanks to Actuarial Review

On another note, I was deeply touched and humbled by what Actuarial Review Editor Elizabeth Smith wrote about me in the publication’s current issue. It says:

Thanks to our award-winning author and cover story writer, Annmarie Geddes Baribeau. “She knows insurance, and she also knows actuaries and what they’d like to read.”

Thank you for the opportunity. Actuaries are great fun!

Annmarie Geddes Baribeau was recognized June 25 for her thought-provoking editorial content published in Actuarial Review. Her article, Driverless Utopia, won an Excel Award by Association Media & Publishing (AM&P).

There’s no proof that driverless cars will be safer than mere human beings.

Entered in competition by the Casualty Actuarial Society (CAS), the article was the cover story for the May-June 2018 issue of Actuarial Review. It was also the most viewed issue of the year on the publication’s website.  

“Written by frequent contributor Annmarie Geddes Baribeau, the article combines engaging graphic elements with thought-provoking editorial content to examine a world caught between available technology and public perception,” according to a CAS announcement.

Although the bronze-awarded article was published about a year ago, its relevance endures amid the push of driverless cars. The piece questions the all-too-common assumption that some 90% of accidents are caused by people. Baribeau’s article also demonstrates that driverless cars are not proven to be safer and autonomous vehicles introduce new risks on the road. Her blog, Driverless Cars Not Proven To Be Safer, offers a personal take on driverless cars.

“I thank the editor of Actuarial Review, Elizabeth Smith, and the Casualty Actuarial Society,” Baribeau says. “It has been an honor to write the publication’s cover stories.” She is also grateful to the Association Media & Publishing, which serves the needs of association and nonprofit publishing teams. To read her latest articles about marijuana, commercial auto, climate change, cyber risk and security and more, please click here. To see other articles and marketing samples, please contact annmarie@insurancecommunicators.com.  

Emerging risks are a mixture of perception and reality. If you asked executives in 1999 to name one of their top

The experts weigh in on emerging risks.

concerns, many would have answered Y2K. It turned out Y2K caused a lot of hysteria and a lot of computer consultants made a ton in the process.

Then there are the risks that people don’t perceive but insurers do. Auto insurers know most accidents take place within a five-mile radius of the home. Drivers do not think about that when getting on the road.

Insurers, actuaries, risk managers and world leaders see emerging risks from the broader perspective. Insurers have to think ahead to figure out which emerging risks they can cover and the cost.

My most recent Actuarial Review article considers three recent surveys to break down five emerging risks from the insurance and business perspective. Consumers can benefit from the article as well.

Climate change bypassed cyber risk as the largest emerging risk of concern. One source said off the record that this is largely due to news coverage on climate change that showcases the evidence of rising sea levels. (Yeah, I covered that too.)

The insurance industry has to anticipate what is possible to make contingencies. Unfortunately, fear-mongering politicians are muddying the public climate change conversation. I am thinking of two in particular. They warn of doom in 12 years if we do not act now. Thankfully, the Associated Press fact-checked the 12-year claim and wrote, “There is no scientific consensus, much less unanimity, that the planet only has 12 years to fix the problem.”

All nations should be doing their part to take care of the planet. But my largest concern relates to cyber risk and unintended consequences of emerging technologies. Insurance executives do as well, ranking cyber risk second among emerging risks. (Covered cyber too.)

An Emerging Risk for Consumers

From a consumer standpoint, I see one big risk: data privacy. We unwittingly gave away a lot of personal information by participating in social media, “trusted” websites, DNA testing…the list goes on. Suppose personal data lands in the “wrong hands.” Just look back at history, assume it repeats itself, add in personal data and play it forward. 

I am hopeful about the California version of Europe’s General Data Protection Regulation, which is to go into effect next year. However, if the Silicon Valley companies (I won’t say who they are I will just point) can successfully lobby lawmakers, it might lose some teeth. 

Which emerging risks concern you and why?

Legalizing marijuana introduces greater risk.

Legalizing marijuana expands its use. And that widens the risk potential of on-the-road and on-the-job accidents.

Just how much is legalizing marijuana affecting auto and workers’ compensation coverage? I try to answer that in my latest Actuarial Review article, “Reefer Madness.” (Non-insurance folks should read the article as well.) 

Using all the information I could find – including direct queries to state workers’ comp funds – my article offers insight into what I see as an emerging risk.

Since more states are liberalizing their marijuana laws, we can expect greater use of the drug. Studies are already showing this to be true. And unfortunately, too many of those using the THC-high-inducing part of the plant are not staying home. Rather, they are taking to the roads and going to work cognitively impaired, even those in dangerous occupations.

To make matters worse, too many Americans believe that driving while high is less dangerous than driving while under the influence of alcohol. Some research is showing that marijuana-related auto accidents are going up while alcohol-related incidents are declining.

That’s not exactly progress when any impairment is bad news. Legalizing marijuana a growing public hazard to be sure. The insurance industry, however, is in the unique position to monitor the impact from a public safety perspective. Insurers can also reveal pot’s impact on accident frequency and costs. 

On the job, anecdotal evidence of the impact of marijuana impairment still drives conventional wisdom. The workers’ compensation insurance industry needs to start researching the impact of marijuana on workplace safety and to realize the effects on return to work. Groups like the Workers’ Compensation Research Institute helped sound the alarm of the impact of opioids on injured workers long before it became public knowledge. The same can happen for marijuana.

I know. It’s illegal and therefore cannot be researched. But there has to be something that can be done.

Legalizing Marijuana Complexities

Legalizing marijuana is only possible because the once-well-believed downsides of the drug are being drowned by those extolling its untold benefits. What was once conventional wisdom is now debatable. Thought pot was addictive? Marijuana, advocates say, is not addictive — at least not physically — and it can help break opioid addiction. I would argue psychological addiction can be pretty tough to tackle. It is tough to know what to believe.

The marijuana conversation has become too hazy, allowing legalization to proceed at a faster pace. It’s interesting that a reporter for the New Yorker, after looking at some of the same evidence as I did, also expresses caution for different reasons.

The marijuana conversation is muddied for another reason. Legalizing marijuana means different things to different people. While some insist that its medicinal qualities make the drug worthwhile, others think medical marijuana was a mere entry point for recreational use.

It appears that way. States begin with legalizing marijuana for medical purposes even though medical efficacy is yet to be proven. This is largely due to federal restrictions on pot, which make it virtually impossible to give it the clinical gold standard research that builds the drug’s credibility. As one source says, medical marijuana is not yet offering a remedy unavailable from other drugs. And once pot transitions from medical to recreational use, people don’t care much about getting doctor’s orders.

______________
…there is precious little we know for sure about cannabis.

_______________

By the way, the FEDs do make a compelling case for it. According to the U.S. Health and Human Services’ review on marijuana, pot’s potential benefits do not outweigh the risks. Legalizing marijuana should reveal whether the downsides of marijuana will be worth the upsides. That may or may not change public attitudes. Americans are more open to marijuana than ever. Friends tell me “it is just pot” though it is much more potent than 30 years ago.

While open-minded to pot’s positive outcomes, I cannot escape the realities before me. My Godson’s life is being destroyed right now because he believed the online messages that marijuana was harmless. Once he got high, was busted and removed from the drugs and his friends, he started trying other drugs and alcohol. His high school career has been disrupted. His immediate future is uncertain. 

Another Look at Legalizing Marijuana

My exploration of marijuana and insurance is not over. Currently, I am working on a piece for another publication that covers the impressive growth of the cannabis industry and the developing marijuana-related commercial insurance market. Stay tuned.

Meanwhile, thanks to my extensive web activity into the subject of marijuana, yours truly is being subjected to cannabis product ads and videos on her Facebook news feed. An occupational hazard? Could be. It’s kind of creepy when online searching leads directly to my inbox. The marketing emails about CBD oil and pot gummies are very misleading. Thanks to my article, I am better informed. 

I hope you’ll check out my Actuarial Review article. Let me know what you think!

Cyber risk and insurance continue to gain momentum. More companies realize they need it. And insurers are expanding coverage – and enjoying profitability. That said, cyber insurance continues to be an especially risky insurance line.

This is part of what I discuss in my recently published article, “Expansive Variance.” Published in Actuarial Review, I titled the article very deliberately. The variance of risk expands in new ways every time I investigate cyber risk and insurance.

And frankly, the more I learn about cyber risk, the more concerned I become.

Cyber risk and insurance are expanding.

My article digs into the reasons behind the growing risk and new tools for actuaries and underwriters. Two particular trends stick out. First, Internet of Things technologies continue to introduce vulnerability to cyber attacks and personal privacy. Perhaps the best example of hacking through via app is last year’s Facebook data breach. 

Meanwhile, the bad guys, who have the creativity to walk the gauntlet of cyber protections, are quite innovative. Last year’s Equifax breach, the largest in United States history, is a case in point. Despite tight cybersecurity, the breach pulled the personal data of more than 145 million Americans in a seven-week period. Another attack, less widely known to consumers, turned off factories and interfered with commerce all over the world.

The bad actors are also discovering ways to deploy artificial intelligence to mask coding to reach directly into personal computers. And for the less innovative, the old-fashioned and tried-and-true attack methods, such as email phishing, remain effective. Many companies still need to get religion on cybersecurity. Hackers are sometimes getting away with their dirty deeds because companies do not keep up with security patches.

These breaches serve as warnings of what could come. Everyone who knows about cyber risk and insurance fear “big one” — that cataclysmic breach that could put the world on its knees. Insurers are also very concerned about it, spreading risk across individual industries to reduce exposure.

Cyber Risk and Insurance

 The article also describes the unique challenges insurers are facing beyond cyber risk itself. Currently, cyber insurance is generally profitable. The market is so competitive that it is sometimes underpriced. Executives of non-cyber insurance lines are also concerned that their coverages are picking up cyber loss.

Insurers have very different philosophies on covering cyber risk. For Warren Buffett, chairman of Berkshire Hathaway, Inc., cyber risk and insurance just too risky. He believes that each year carries a 2% chance of a super catastrophe costing $400 billion or more in insured losses. Not surprisingly, his insurance group is mostly staying away from covering cyber risk.

But there’s plenty of insurers – about 170 depending on classification – which are happy to offer cyber insurance. AIG and Chubb are two examples. Insurers also have more insurance scores for cyber risk than ever before. Depending on the product, such cyber scores can evaluate risk potential by company and can watch how the risk changes.

Privacy Regulations and Laws

Consumers have little remedy when personal data breaches occur. Cyber insurance covers cybersecurity protections for a limited amount of time, say two years or so. However, there is nothing that can be done to get the information back. The bad guys have it forever. Thankfully, cyber insurance for individuals is just starting to become available.  

Last week I attended a seminar on protecting personal privacy sponsored by the Atlantic magazine and Salesforce. 

Speakers discussed a social contract, which presumes entities collecting our data will protect it. However, this social contract has little law to support it. One privacy attorney says that the Facebook breach, while unethical, is not illegal. 

_______________

The bad guys,
who have the creativity to walk
the gauntlet of cyber protections,
are quite innovative.

______________

Americans assume the government is making sure our data is respected and kept private. But in truth, our public policymakers are behind the curve. As someone at the seminar joked, “Europeans regulate what Americans innovate.” Legislative remedies are being considered by Congress. During the seminar, Senator Mark Warner (D-VA) mentioned a recent hearing where the nation’s largest search engine’s representatives were notably absent. The company, however, is showing up to help China with their internet although its employees are protesting and some have quit. This is the country that is following every move of their citizens to determine their “trustfulness” and is also blamed for particular cyber breaches.

My article describes new regulations from the European Union that affect American companies. California also passed an aggressive law to protect consumers. It goes into effect January 1, 2020. Not surprisingly, technology companies are fighting the restrictions the new law will impose. After all, they need personal data to sell ads. The European and California laws have potential ramifications for cyber insurers, but those details are yet to come.

Note: My last article about cyber insurance discusses particular challenges for actuaries. To see more of my cyber articles, just enter “cyber” in the search bar below.

Successful actuarial consulting depends on effective communication.

At some point, most actuaries consider a career in actuarial consulting.

It’s easy to see why. Generally, the variety of projects are interesting and the pay is better. But as my recently published article, “More Flexible” explains, actuarial consulting is not for everyone. Success requires a variety of additional skills beyond impressive mathematical and statistical chops.

You can find the article in Contingencies’ Actuarial Job Seeker supplement, which is published by the American Academy of Actuaries. My goal was to write the most comprehensive and useful article on the subject. I believe it is a must-read for actuaries who want to take the plunge into actuarial consulting.

As the article says, excellent communication skills are necessary for actuaries who want to climb up the consulting ladder. In this blog, I share my observations based on nearly 30 years of experience working with actuaries as a marketing and communications consultant as well as a reporter.

Actuarial Consulting and Communication Challenges

Granted, how much actuarial consulting work involves communications and marketing skill depends on the position and the firm’s size. That said, sooner or later, most actuaries are called out of their comfort zones to engage in marketing and sales.

I find that actuarial consulting firms miss opportunities to reach their intended audiences due to ineffective communication on multiple fronts. A client once paid me to interview buyers of actuarial services. They told me what kind of content they seek from marketing materials to reach a decision. The client resisted, and the great marketing plan never happened.

The greatest challenge, however, is making actuarial information meaningful to lay people. Like researchers, they can get too wrapped up in the technicalities without showcasing the results that matter most to the lay people they need to reach. That includes everyone from insurance executives who hire actuarial firms to influencers such as reporters.

It’s also critical for those in actuarial consulting firms to keep an outsider’s perspective. To the non-actuary, actuaries and actuarial firms can appear the same. All actuaries are credentialed and adhere to the same actuarial standards of professionalism. The services appear to be the same.

_______________
…sooner or later, most actuaries are called out of their comfort zones
to engage in marketing and sales.
_______________

Therefore, actuaries must be able to explain to potential customers – whether interpersonally or through marketing materials – why their loss reserving service or predictive modeling prowess is the most desirable.

Communications and marketing professionals can be a big help if they can translate actuarial analysis, reports and studies into layperson-friendly content. However, the less the communicator understands insurance and actuarial products, the more the likelihood of missed opportunities.

When I put on my reporter hat, I can tell you that poor media relations reduce exposure from credibility-building external media. Here are examples of situations that occur too often:

• news releases lacking context that do not address why the reader should care;
• report executive summaries that fail to mention a key point deep within the content;
• information buried within charts that not covered in the text;
• the immediate handoff to the busy actuary with no time because the media person could not answer the quick question on deadline; and
• impossible websites.

Annmarie loves actuaries! Find more actuarial content by clicking here. 

The Insurtech Revolution is here.

The Insurtech revolution is here.

My most recent Actuarial Review article, “The Insurtech Revolution,” cuts through the buzz and highlights areas where insurtech is likely to transform the insurance industry.

Insurtech is like any quickly emerging development. There is a lot of activity, confusion and a dash of hype.

That’s why my first question to most sources was this: “What is the difference between technological innovation and insurtech?” They agreed it was a good question. The evolving broad definition of insurtech risks becoming too general to be useful. The article includes an important sidebar that further defines the term. I hope will encourage more informed insurtech conversations.

This is certain: insurtech is not a Reese’s Peanut Butter Cup. Insurtech does not merely stuff new technology into insurance. Rather, insurtech is a cottage industry coming into its own. At its best, insurtech challenges insurers to re-think what insurance could look like and how it should be delivered and serviced in a digital economy.

My concern is that the most cautious insurance professionals among us will be too quick to write off insurtech as a fad. Or even worse, they will choose denial or ignore it to their peril. Insurance professionals must pay attention to insurtech because it will affect their jobs.

Make no mistake: insurtech will be transformative. It is not just about technology, but new concepts that make sense in a digital world. For example, the insurtech approach means out with reactionary customer service and in with initiative-driven customer experience. (To learn the difference, click here.)

___________
“…insurtech is not a Reese’s Peanut Butter Cup
…(it) does not merely stuff new technology into insurance.”
___________

Meanwhile, its emphasis on artificial intelligence and other smart technologies will change and eliminate jobs. Insurtech companies offering insurance can, for example, prefill personal information through an Application Programming Interface (API), simplifying the application process practically down to a few digital taps.

By programming a rules engine, artificial intelligence is already performing critical functions, such as statistical calculations and ensuring accurate and meaningful customer information.

Insurtech Revolution: Annmarie’s Take

After watching technology change the insurance industry for 30 years, here are some personal observations about The Insurtech Revolution:

1) Insurtech companies risk operating under false assumptions. A technological improvement in one industry is not necessarily easily translatable to the insurance domain. The transactions, responsibilities and public accountability differ from banking, as an example.

2) Insurtech companies are in love with their beloved technology, but insurers love real results. Understand the real problems the insurance industry is facing. Offer solutions using insurance industry lingo. Save that technological deep dive for those who want to go there.

3) Insurance companies are not threatened by insurtech competitors, also known as “disruptors,” which have garnered an overabundance of media attention. Peel back the artificial intelligence, APIs and novel approaches to coverage – and you have the excitement and struggles of a new insurance company. In three years or less, Flo, the gecko and/or other insurers will be using the insurtech bells and whistles that make sense. And they will be doing it better. By that time, we’ll also know if the “disruptors” are profitable.

The Insurtech Revolution is here. Please check out my article and offer comments below.