theinterpreter STARTING UP AND STILL GOING: INSIDE Entrepreneurship has Deep Roots in Insurance PAGE 8 IASA S 2017 POST-CONFERENCE REPORT 19

Transcription

1 A Publication of the Insurance Accounting & Systems Association SUMMER 2017 Vol. LXXXVIII Issue II theinterpreter STARTING UP AND STILL GOING: Entrepreneurship has Deep Roots in Insurance PAGE 8 INSIDE IASA S 2017 POST-CONFERENCE REPORT 19 Binding Profit into the Insurance Value Chains 12 Today s Reality: Better Underwriting 14 EXECUTIVE CORNER: American Equity Investment Life Insurance Company 16

2 The Industry s Most Trusted Source of Insurance Education for 90 Years... than anywhere else in the insurance industry. EDU CATIONAL EVENTS PRODUCTS & SERVICES About IASA TEXTBOOKS EXECUTIVE EDUCATION PROGRAM EVENTS Chief Information/Technology Officer Roundtable SOLUTION PROVIDER EDUCATION PROGRAM Solution Provider Summit IASA & RR DONNELLY INSURANCE ACCOUNTING SEMINARS Key Elements of P&C Accounting Seminars LOCAL IASA CHAPTER EVENTS Check the IASA web site and 26 local chapters PUBLICATIONS The Interpreter The einterpreter Newsletter FINANCIAL REPORTING PROD UCTS State Filing Express State Checklist Manager E-LEARNING & ONLINE RESOURCES Targeted Web Seminars Industry Pulse ADDITIONAL BENEFITS CPE Credits and one of the insurance industry s largest, and most well-represented includes insurance companies of all types (Property & Casualty, Life, Health, Fraternal, HMO and others) as members, as well as companies serving the insurance industry, regulators industry, including banks and investment GET INVOLVED AS A MEMBER AND START RECEIVING BENEFITS TODAY! Contact Sheila White-Smith, Manager of Member Services for IASA at x 206

3 Download the Conference IASAAnnualConference IASAInc contents SUMMER 2017 x Vol. LXXXVII x Issue II PUBLISHED BY INSURANCE ACCOUNTING & SYSTEMS ASSOCIATION, INC. (IASA) 3511 Shannon Road, Suite 160 P.O. Box Durham, NC Phone: (919) Fax: (919) info@iasa.org VICE PRESIDENT OF PUBLICATIONS Scott McEntee Farmers Mutual Hail Insurance Company of Iowa scottm@fmh.com CHAIR OF PUBLICATIONS Beth Bartlick Oceanwide BethB@oceanwide.com MARKETING ASSOCIATE/ SUBSCRIPTION INFORMATION Kaitlyn Salguero IASA International Office KSalguero@IASA.org ARTICLE SOURCING/EDITING LEADS Pat Speer Speer Content Strategy & Development LLC pspeer@speerconsulting.net ART DIRECTOR Michael Molanphy Varadero Communications, LLC michaelmolanphy@mac.com PUBLICATION INFORMATION IASA s Interpreter is published three times a year, and is available at the general subscription rate of $35.00 per year for members and $45.00 per year for non-members. REPRINT INFORMATION No part of this publication may be reproduced without written permission of the publisher. Reprints of Interpreter articles are available from the publisher and may be coordinated through the editor of this publication. Copyright 2017 by IASA. All right reserved. Note: The news expressed in Interpreter articles and columns reflect the opinions of individual authors and should not be construed as carrying the endorsement of the Insurance Accounting & Systems Association (IASA) or its staff. Additionally, use of this publication, the name IASA, or the name Insurance Accounting & Systems Association, for personal promotion or recruiting purposes is strictly forbidden. Violations will be prosecuted or reported to the National Association of Personnel Consultants and appropriate licensing authorities as deemed warranted by IASA. Violations will be published for the information of our member companies. A publication of cover story p.8 STARTING UP AND STILL GOING: Entrepreneurship Has Deep Roots in Insurance By Regis Coccia features 12 Binding Profit Into the Insurance Value Chain columns 6 President s Message IASA 2018: Power Up! 7 IASA Welcomes Rod Travers to a New Role departments 44 SOCIAL MEDIA: Staying Social After the IASA Conference 45 TAX CORNER: ljump Start: What You Need to Know to Prepare for IFRS TECH CORNER: What is Blockchain? 49 ASSOCIATION NEWS Volunteers Recognized as a Key Part of IASA Success 14 Today s Reality: Better Underwriting 2017 post-conference report 20 Scott Kelly Kicks Off IASA 2017 with Inspiring Keynote 22 Mike Rowe Keynote: Reconnect with Your Work 24 ARF Super Session: The Risks of the Status Quo 25 CSD Super Session: Customer Service Magic 26 TECH Super Session: Embracing the Future 27 TECH Tank: Innovation Exposed 28 A Recap of the 2016 Roundtables 36 Getting to Know You: IASA 2017 First-Time Exhibitors IASA S 89 TH ANNUAL EDUCATIONAL CONFERENCE & BUSINESS SHOW POST-CONFERENCE REPORT #IASA Executive Corner: An Interview with Bruce Cheek American Equity Investment Life Insurance Company 42 Analyst Insight: InsureTech and Innovation Poll Results: Insurance Issues & Priorities Committee Spotlight: Education Member Company Spotlight: A Conversation with IFIC s Scott Bowen Chapter News: Revitalization of the IASA Florida Chapters Summer

4 IASA VOLUNTEER MANAGEMENT TEAM PRESIDENT: Celeska Fredianelli, Aegis Security Insurance Company PRESIDENT-ELECT Beech Turner, Assurant, Inc. CHIEF FINANCIAL OFFICER Carlos A. Correa, Liberty International Underwriters (LIU) CHIEF INFORMATION OFFICER Anil Chacko, Ernst & Young VICE PRESIDENT BUSINESS SHOW Miguel Edwards, Allstate Insurance Company VICE PRESIDENT CHAPTERS Ann Wiesler, Cardinal Investment Advisors, LLC VICE PRESIDENT e-learning Jessica Lasher, National Life Group VICE PRESIDENT EDUCATION Doug Ramsey, Travelers VICE PRESIDENT EXECUTIVE EDUCATION Laurie Macklosky, Travelers VICE PRESIDENT MARKETING & COMMUNICATIONS Darin Reffitt, SPLICE Software VICE PRESIDENT MEMBERSHIP & INDUSTRY RELATIONS Karyn Spaude, Michigan Automobile Insurance Placement Facility VICE PRESIDENT PUBLICATIONS Scott McEntee, Farmers Mutual Hail Insurance Company Of Iowa VICE PRESIDENT VOLUNTEER DEVELOPMENT Jason Nickles, Western & Southern Financial Group IASA GOVERNING BOARD BOARD CHAIR Tim Morgan, The Republic Group PRESIDENT Celeska Fredianelli, Aegis Security Insurance Company PRESIDENT-ELECT Beech Turner, Assurant, Inc. CHIEF FINANCIAL OFFICER Carlos A. Correa, Liberty International Underwriters (LIU) CHIEF INFORMATION OFFICER Anil Chacko, Ernst & Young AT-LARGE BOARD MEMBERS Annette Devine, WoodmenLife Ray Hazel, London Life Margaret Horn, Everest Re Darby O Neill, Princeton Insurance ASSOCIATION STAFF EXECUTIVE DIRECTOR Joseph P. Pomilia EXECUTIVE VICE PRESIDENT Rod Travers VICE PRESIDENT CONFERENCES & EVENTS Margaret M. McKeon VICE PRESIDENT BUSINESS DEVELOPMENT Chuck Gunkel DIRECTOR OF EXHIBITS Kim Morris AVP MEMBERSHIP & MARKETING Tricia Stillman AVP OPERATIONS & ADMINISTRATION Gina H. Jolly MANAGER, MEMBER SERVICES Sheila White-Smith CHAPTER SERVICES COORDINATOR Angie Gurganus MARKETING ASSOCIATE Kaitlyn Salguero Where Will Entrepreneurship Take the Industry? by SCOTT MCENTEE That is a great question, to which I would offer: anywhere it wants to go! Entrepreneurship, whether external or internal, will only take the industry as far as the companies within the industry want it to go or can imagine it going. First, however, there are a set of challenges to overcome. Insurance companies are not designed to be entrepreneurial or innovative and insurance professionals are not designed to fail. How insurance companies manage that paradigm shift will have a profound impact on entrepreneurship in the industry. Why is it so difficult for companies to embrace something that is beneficial? Above, I said insurance companies are not built to be entrepreneurial, so what do I mean? When was the last time someone in your organization proposed a project that had a very good chance of failing? When was the last time you approached management and said the ROI on this project will be either 200% or 0%, but most likely 0%? When was the last time you asked for $40,000 to develop an idea that had no sure outcome, or one that risked the company s resources? You probably haven t because insurance companies don t support this type of environment. However, the companies that embrace and solve for these questions will have a front-row seat at the entrepreneurship table. Even when companies provide a safe environment, where it s okay to experiment and fail, they have to rewire the thinking of their employee base. How many times have you heard an emerging leader in your company say, Here s my idea- -I m not sure if it will succeed and if it kills my career here at company X that s okay. Employees are not wired to fail. I would argue most would never put themselves in a position to fail, but that is what entrepreneurism is all about taking risks. Unfortunately, we are not all independently wealthy and most of us need our day jobs. So, where will entreprenueurship take the industry? For those who answer the difficult questions above, it will be limited only by the input of those who contribute to it. New and value-add products that will innovate ways to attract and retain agents and customers have already started to appear throughout the industry. Companies have started co-sponsoring products that will take care of social media needs of any insurance agency in their distribution channel and provide online educational content for those who prefer to shop and research online. Value-add tools that will eliminate millions in loss adjustment expense (LAE) are being developed jointly by companies and accelerators. There are many more exciting innovations happening across all areas of insurance including underwriting and the area of employee engagement and experience which is one of the most exciting to me. So where will entrepreneurship take the industry? I believe the answer will be to the point where you won t recognize it in 5-10 years. n Scott McEntee is the Vice President of Accounting for Farmers Mutual Hail and serves as the IASA Vice President of Publications. He can be reached for further comment via at scottm@fmh.com. 4 Summer 2017 theinterpreter x

5 Members Only Benefits IASA members enjoy many exclusive benefits. To find out if your company is a member, or to start using your benefits, visit IASA provides a wide array of products, services and education events primarily geared toward our core knowledge areas of accounting/finance and systems/technology. While some IASA products are available only to members, other products may be purchased by nonmembers. IASA members receive discounts on products, services and event registrations which are typically 20 percent to 50 percent less than the non-member price. Here are some of the key benefits available to member insurance companies, associate member companies and the professionals within these organizations: Discounted admission to one of the best educational events in the industry the IASA Annual Educational Conference & Business Show. Complimentary or steeply discounted registration for web-based seminars jointly sponsored by IASA and industry partners on timely topics of interest to our members. Access to the industry s leading source of information and guidance on statutory accounting issues the IASA Property & Casualty and Life & Health Accounting Textbooks at a 20 percent discount. Up to six free subscriptions to IASA s Interpreter magazine, which includes industry news, information and important details about association activities. Reduced admission costs for the Insurance Accounting Seminars offered by IASA, in affiliation with RR Donnelley, at the IASA Annual Conference. Quality financial products such as the State Checklist Manager, the State Filing Express, and the Annual Statement Database, which assist in the tracking and completion of state supplemental filings at a member-discounted price of 20 percent off the non-member price. Plus, great networking opportunities with peers and colleagues in the insurance industry IASA MANAGEMENT TEAM BECOME A MEMBER TODAY IASA company membership is established on an annual, calendaryear basis at a rate of $600 per company per year. Licensed insurance companies are classified as regular IASA members, and all other organizations (including solution providers, associations and regulatory bodies) are classified as associate IASA members. Membership for licensed insurance companies may be purchased at the holding company level for the main/parent organization and all affiliated entities at a rate of $1,800 per year. Organizations with affiliated entities or regional offices that do not opt for a holding company membership can purchase an individual membership on a company and/or location basis. Once a membership is established there is no limit to the number of individuals that may be involved with IASA from each member company, and we encourage all professionals that might benefit from our products and services to participate. To find out more about IASA, or to apply for membership, visit or contact: Tricia Stillman, AVP Membership & Marketing tstillman@iasa.org (919) x202 About IASA The Insurance Accounting & Systems Association, Inc. (IASA) is a non-profit, education association that strives to enhance the knowledge of insurance industry professionals, and participants from similar organizations closely allied with the insurance industry by facilitating the exchange of ideas and information. IASA is one of the insurance industry s largest and most well represented trade associations. IASA membership includes insurance companies of all types (Property & Casualty, Life, Health, Fraternal, HMO and others) as members, as well as companies serving the insurance industry, regulators and also organizations more broadly representative of the financial services industry, including banks and investment brokerage firms. Learn more about the IASA by visiting our website at or by calling (919) theinterpreter x Summer

6 PRESIDENT S MESSAGE IASA 2018: Power Up! by CELESKA FREDIANELLI Summer is here and with it, a new conference year for IASA. As we pack up for our family vacations and head out to enjoy the sunshine, we at IASA are also gearing up for a great year. We are looking forward to finding fresh inspiration and building on our successes to provide our members and associate members another year of incomparable educational offerings, networking opportunities, and overall advancement of personal and team growth. At the 2017 IASA Annual Conference and Business Show in Orlando, we unveiled the theme for the year, one that is both a motivation and challenge of its own. This year we want everyone to Power Up! Together, our challenge is to work towards the goal of powering up and empowering ourselves and those we work with to create a happier, more effective work environment for everyone involved. We want to encourage everyone to have a voice and to contribute, thereby setting our teams up for success as a whole. Our goal is to provide all of our team members, both at IASA and in our daily workplace, the tools and motivation to Power Up our skills, our leadership, our people, and our overall team dynamics. When speaking of finding fresh inspiration, we generally look to our peers, our legacy colleagues, and to pioneers in our industry and we tend to overlook the newer generation of professionals. In the coming year, we hope to build a more reciprocal relationship between the established and incoming industry professionals, bringing a modern approach to our workplace and industry and move toward success together. In building on that inspiration, we re very excited to continue to expand and improve our virtual initiatives and amplify our distance learning opportunities. The e-learning program has enjoyed immense growth and success over the past few years, and is set to continue on that trend. We have recently hosted a number of well-received webinars, ranging in subject from social media marketing to regular NAIC updates. Our e-learning committee and producers are hard at work to provide more highquality education in a format that is open Celeska Fredianelli is the Audit Manager for Aegis Security Insurance Company and the current IASA President. She can be reached for further comment via at cfredianelli@aegisfirst.com EDUCATIONAL CONFERENCE & BUSINESS SHOW Our challenge is to work towards the goal of powering up and empowering ourselves and those we work with to create a happier, more effective work environment for everyone. to all members from the convenience of their desks. We also recently premiered our Virtual Business Show (VBS), and we anticipate it will become an invaluable tool for connecting member companies and solution providers. We encourage everyone to visit the VBS website and explore what our team has created. These are just a sampling of the things we at IASA will be working on for your benefit in the year. We re very excited and energized looking at the next year and hope you are too. Every successful endeavor, be it at work or as part of IASA, requires dedication and new ideas and we are looking forward to growing with all of you in the coming year! n 6 Summer 2017 theinterpreter x

7 FROM THE EXECUTIVE DIRECTOR IASA Welcomes Rod Travers as Executive Vice President, Future Executive Director In July, the IASA Board of Directors was pleased to announce that Rod Travers has joined the staff of IASA as Executive Vice President. In the coming year, Rod will work closely with IASA Executive Director, Joe Pomilia, on key initiatives including program development, strategic planning, and member relations. In July 2018, Rod will succeed Joe Pomilia as Executive Director in anticipation of Joe s planned retirement in September Since joining IASA in 2000 as Executive Director, Joe helped guide IASA to new heights in providing new and innovative educational experiences and building financial strength. Rod s leadership will help IASA build on its position as the premier insurance education and networking organization, said Pomilia. Rod is passionate about IASA and its mission, its volunteers, and its members. I am excited to join the IASA team and help chart the course for the future of the association. Our industry is evolving rapidly, and IASA is committed to bringing impactful content and experiences to help our members capitalize on that evolution, Travers stated. I ve worked in the insurance industry for more than 30 years, and it s the people the dedicated professionals who make it special and who are taking our industry in new directions. IASA brings those people together, and I am really pleased to be a part of that. I m excited about the future of our industry. Tim Morgan, IASA Board Chair, said, The Board was unanimous in affirming Rod to take on this important role. We had the benefit of knowing Rod s long-term track record with IASA. Rod has been an IASA volunteer for more than 15 years. He has held many volunteer positions including serving on the Board of Directors and on the Management Team as Vice President of Seminars, Vice President of Marketing, Director of Executive Education, and as President in If you attended the 2017 IASA Conference in Orlando, then I am excited to join the IASA team and help chart the course for the future of the Association. you know Rod is serious about delivering high-quality programs for IASA members. And you may also know Rod is funloving. We all work hard, and we can t forget to relax and have fun once in a while, Travers said. A Dirty Jobs tribute video featuring Pomilia and Travers was presented during the Conference, and it was anything but glamorous. People are still talking about it. We had so much fun making fun of ourselves! said Travers. Rod comes to IASA after 32 years with Nolan Consulting, a firm specializing in strategy, operations and technology for the insurance, healthcare, and banking industries. At Nolan, Rod most recently served as Executive Vice President where he led all operational, administrative, and marketing functions. He has authored many articles for Nolan over the years, including most recently, The InsurTech Effect. As IASA Immediate Past President, Rod would ordinarily become the Board Chair. However, with Rod joining the IASA staff, the IASA Board of Directors elected Tim Morgan, Divisional Controller with the AmTrust Republic Group, to continue to serve as Board Chair for the year. Please join us in welcoming the newest member of the IASA staff. Rod Travers can be reached via at rtravers@iasa.org. n theinterpreter x Summer

8 COVER STORY STARTING UP AND STILL GOING ENTREPRENEURSHIP HAS DEEP ROOTS IN INSURANCE by REGIS COCCIA If there is a persistent misperception about entrepreneurship in insurance, it is that entrepreneurial thinking is a relatively new phenomenon. In fact, entrepreneurs have been involved in the insurance industry since its beginning. As early as 4000 B.C., Babylonian merchants used bottomry, an early form of risk transfer that has evolved into what we know today as insurance, to protect their ships. Bottomry provided capital up front to repair ships during their voyages, acting somewhat like catastrophe bonds. In the late 17th century, two instances of entrepreneurship led to lasting contributions to the insurance industry. Edward Lloyd operated a coffee house in London that not only launched the Lloyd s of London marketplace in 1688 and coined the term underwriter, but also created Lloyd s List as a trusted source of shipping news. Three hundred years later, Lloyd s List is regarded as a key provider of maritime intelligence and is still publishing, albeit digitally. Benjamin Franklin, less than a century later, filled a need for fire insurance in Philadelphia by founding The Philadelphia Contributionship. Cornelius Vander Starr, a U.S. expatriate acting as an insurance agent in early 20th century Shanghai, realized that Today s insurance entrepreneurs are in technology already, many of them are in the insurance industry already and they re seeing missing elements where they can fill and drive out inefficiencies. the companies he represented were missing opportunities to serve more international customers. In 1919, C.V. Starr launched the company that would become American International Group, one of the world s largest insurers. What today s insurance entrepreneurs and the visionaries of yesterday have in common is a knack for spotting ways to improve existing processes, fill gaps and improve the customer s experience. A big difference between then and now is the speed and scale at which innovation is occurring, helped in large part by technology. Technology is a cornerstone of many innovative start-ups, which has contributed to the lexicon of insurance a word that s ubiquitous: insurtech. There s a misunderstanding of what an insurtech entrepreneur is, said Dave Dias, founder and chairman of Insurance Thought Leadership. ITL recently launched Innovators Edge, an online platform for connecting insurtech companies and other insurance industry service providers. Innovators Edge tracks more than, 1,300 start-ups in more than 50 countries. From what we re seeing, an insurtech entrepreneur is not some 19-year-old kid in Levi s, Dias said. 8 Summer 2017 theinterpreter x

9 COVER STORY Dave Dias, Chairman, Insurance Thought Leadership; Tim Attia, CEO, Slice Labs; and Tom Hutton, managing partner, XL Innovate Today s insurance entrepreneurs are in technology already, many of them are in the insurance industry already and they re seeing missing elements where they can fill and drive out inefficiencies. Re-imagining Insurance To understand the impact of insurtech on the industry, and how it s influencing the investments of traditional companies, consider the story of Slice. Launched in 2015, Slice specializes in underwriting limitedduration policies for the on-demand economy homesharing, such as Airbnb, and ridesharing, a la Uber. Tim Attia, chief executive officer and co-founder of Slice Labs, cofounded Slice with two friends. All three had backgrounds in the insurance industry as engineers building the back-end systems that carriers use for policy administration, claims and billing. At the time, we didn t know if it was a vision or a hallucination, Attia said. We got funded and we didn t even have a website. In October 2015, the word insurtech hadn t even been invented. Capital providers realized there was an opportunity in insurance. That was the key turning point. The idea behind insurance for homeshare businesses was just a hypothesis, Attia said. We didn t know if we could sell a homeowners policy and issue $2 million in liability limits and $750,000 in property limits. We asked ourselves, Can we design a brand-new policy form? We were going to create a brand-new digital system that took a commercial property policy and put it beside a personal policy. The answer turned out to be yes, and the concept quickly drew the attention of two of the world s largest commercial lines organizations. Among Slice s backers are XL Innovate, a subsidiary of XL Group that provides funding and resources to new and emerging insurtech companies, Munich Reinsurance Company and Horizons Ventures. Slice began by looking at the risks of new and fast-growing businesses, and realized that traditional insurance wasn t accommodating those needs. When you use your personal property in a business, such as Airbnb, you re squarely in the middle of personal and commercial insurance. And it s the same with your car, if you re an Uber driver, Attia pointed out. We re-imagined the process. In traditional insurance, the process goes from quote to bind, to re-underwrite, to renew. We got to remove a lot of that, he explained. When we sold our first policy in October 2016, that s when we knew we weren t dreaming. continued on page 10 theinterpreter x Summer

10 COVER STORY Starting Up continued from page 9 Attia and his co-founders looked at where they might fill an unmet need and said to each other, Let s re-imagine if you had control over everything and could build from a blank sheet of paper. We wanted to do that in an open space, where there was a gap in coverage. The on-demand economy was interesting. Slice uses data from sources such as Google Maps rather than requiring homeowners to fill out an application. We re not sure that (a traditional coverage application) is even relevant, Attia said. For example, we don t expect people to know when their hot water heater was installed. Instead, we are collecting a data point every day rather than every year, he added. We want to simplify it. Insurance is difficult and hard to understand. People need to be nudged to get appropriate coverage. If you offer the lowest limits at the lowest price, people will take it, but that doesn t mean they re covered, Attia noted. Slice is designing products specifically for the risk and making it easier for people to afford the coverage they need, he said. One example: our customers can buy coverage during the period they re earning income, which allows them to spend more on coverage. Fourteen of our coverages are specific to homesharing exposures, such as income replacement, infestation and municipal fines, he said. Similarly, on the claims side, we re trying to build a platform for fairness that can influence behaviors. We have people sign at the beginning of each claim that they re providing truthful information. We use behavioral economics and algorithms to support claims, but the worst thing for customers is finding out they weren t covered, Attia said. We re still running the experiment. With policies that are limited in duration, exposure changes over time are interesting. For example, there may be more people in the car or more people in the house. We re changing the exposure and not asking any questions, but we re gathering all the data in the background to underwrite the house. Tom Hutton, managing partner of XL Innovate and a board member of Slice Labs, related how Slice fit the criteria that XL Innovate looks for in investments. We look for opportunities that are compelling, and compelling describes both the venture and the entrepreneur. The vision has to be a venture that s going to be scalable and add value, Hutton said. Tim (Attia) is a compelling entrepreneur because he is able to establish partnerships with large, incumbent carriers. While the sharing economy is an intriguing idea, Slice may in fact go beyond the sharing economy. Slice is enabling the insurance industry to address a set of risks that it wasn t structured to address, Hutton added. XL Innovate is providing more than capital. Tim came from deep experience in insurance technology, but not in providing products to the market. Slice doesn t need to create a presence in Brazil, for example. They can work with partners in Brazil. It s very scalable. We could see Slice offering products in China, implementing the solution through a partner there, he said. Another insurtech company, Lemonade, offers personal lines coverages and claims services through an app. A unique feature of Lemonade s peer-to-peer model, which is somewhat like a mutual, is an annual giveback of surplus premium to charities of policyholders choice. Lemonade touts fast and fair claims payment by reserving the majority of premiums for claims, minus a fixed monthly fee for reinsurance and administrative expenses. Although Lemonade is currently writing risks in California, Illinois and New York, it is planning to scale to other states. Underwriting and claims are not the only areas experiencing insurtech innovation, however. Technology is altering insurance distribution, too. Embroker is a start-up online insurance broker placing commercial property, casualty and employee benefit coverages. Its goal is to make finding insurance simpler and easier for midsize businesses. Among the reasons new distribution models are attractive is that carriers are exploring multi-channel distribution and buyer segmentation strategies, said Dias. Another reason is emerging buyers, such as smart Millennials who are thinking, As long as I get the services I need, the traditional relationship with To improve the customer experience, the industry has to put more emphasis on the buyer and put the right systems in front of them. an agent or broker isn t that important to me. That said, on more sophisticated accounts, there is always going to be a need for a sophisticated broker and more of a traditional, face-to-face relationship, he said. Agents and brokers are the most defining entrepreneurs in the entire chain, Dias asserted. The placement of the policy is the easiest part. The challenge is fitting all the parts together, such as legal, tax, accounting, etc. To improve the customer experience, the industry has to put more emphasis on the buyer and put the right systems in front of them. Facilitating Innovation Two macro trends in insurance technology in the past two decades have facilitated today s emergence of start-up ventures. One is the emergence of data and analytics, 10 Summer 2017 theinterpreter x

11 COVER STORY which have become a primary focus not only for underwriters but also claims administrators, consultants and intermediaries. The other trend is the evolution of platforms and computing models, which have made it easier to build systems. Tom Hutton recalled the evolution in technology platforms inside the insurance industry, especially for carriers. I have worked in the P&C industry since 1989, and systems have played a large role, from mergers and acquisitions to the ability of new insurers to flourish. In 1990, most of the big companies were still clients of IBM and Computer Sciences Corporation, with machines running COBOL, he said. When you combined these companies in M&A, you had hugely challenging system issues. It provided leverage for companies that were good at technology integration, and was a hindrance for those that weren t. Moving into the 1990s and 2000s, insurance companies transitioned toward the Accentures and SAPs of the world, Hutton said. Now we have Duck Creek and Guidewire, with tools that allow companies to upgrade functionality across policy administration, claims, billing and more without replacing system infrastructure. Lemonade and Slice built their own systems. This could be part of their long-term impact on the industry, as they scale and do that with their own systems, he said. It could be the future of system work in the industry. It has been broken down enough that you can build your own. Partnering for the Future With entrepreneurs continuing to build new solutions and engineer process improvements, the future of the insurance industry appears to be a merging of traditional approaches with innovative ones. According to industry observers, partnerships between established companies and start-ups will define the path forward. Millennials... are thinking, As long as I get the services I need, the traditional relationship with an agent or broker isn t that important to me. Innovation has been in the DNA of insurance from the beginning, Slice s Attia said. Big insurance companies are machines. They have scale and reach. At Slice, we have a challenge when it comes to scale, footprint and capacity. Cooperation is required between innovators and traditional companies, Attia said. Incumbents will have a challenge in coming up with all the innovations on their own. We have a fundamental advantage to innovate, and they have a fundamental advantage in scale and footprint, Attia Regis Coccia is the President of Wordsmith Strategic Communications LLC, a consulting company that develops content and communication strategies for organizations in industries including insurance, financial services and technology. said. If we fast-forward, we envision that Slice is in 100 countries, but we can t get there on our own. To be available globally in the next 18 months, it s going to take cooperation. Dave Dias agreed that insurtech startups are going to change insurance but not usurp its importance. This industry is not going to be disrupted; it s going to be transformed. I believe there will be more change in this industry in the next five to 10 years than since Edward Lloyd started his coffee house near London s wharves. n theinterpreter x Summer

12 FEATURE Binding Profit into the Insurance Value Chain by MARK ANQUILLARE In a landmark study of how businesses create value, Michael E. Porter, an economist and professor at Harvard Business School, theorized about a series of distinct actions that help create value in products and services. In Porter s language, the process is called a value chain. To create an automobile, for example, the chain begins with raw steel, glass, and rubber and ends with a shining product ready for the road. Materials are transformed and assembled during a series of steps into something progressively more valuable, with an end product greater than the sum of its parts. Just as in the rest of the business world, the fundamental elements of insurance also link together and are known collectively as the insurance value chain. In this series of links, retention of policyholders, precise segmentation, and efficient payment of claims all play contributing parts toward achieving growth and greater profitability. What s at Risk? The uneasiness in recent times about underwriting losses, more insured catastrophes, competitive market conditions, and slowing premiums and the perennial quest for growth illustrate why insurers want to better understand the links of the insurance value chain. They re seeking insight into what they write, where they should be writing, and how best to approach an emerging market. The initial product development is followed by pricing and underwriting. Farther along the chain come policy processing and claims management. By the final link, the insurance value chain s performance has been stress-tested for strength and effectiveness by two broad questions: How does an underwriter choose a risk? And how can risk be better understood? The answers are rarely obvious, but everdeeper pools of data are introducing a golden opportunity for growth and profit. For instance, in the homeowners market, the relatively recent adoption of rating by peril has allowed insurers to reduce loss ratios, increase market share, and better define and price risks. Insurers are now able to set ratings for distinct risks from wildfires and terrorism to floods and hurricanes. This is an example of the power of advanced analytics coming to bear on enormous datasets, to yield pathbreaking insights about levels of risk. Insurers use catastrophe models the fruit of advanced analytics in pricing, risk selection and underwriting, loss mitigation, reinsurance decision making, and portfolio management. Model output provides information about the potential for large losses before they occur, so both insurers and policyholders can prepare for, and potentially control, the financial consequences. If used early enough in the cycle, insights derived from these models can lead to greater profitability. Navigating Seas of Data Similar advantages can come when handling claims. Given the estimated $21.6 billion in catastrophe claims alone paid in 2016 and the rising number of annual catastrophes over the last few years, the benefits of a more efficient insurance value chain become apparent. Insurers want to speed payment of meritorious claims and take a closer look at claims that seem questionable. The challenge comes in deciding how to navigate to the best outcomes across choppy seas of data. Once again, innovations may be possible through advanced analytics. In the age of analytics, tools have become available that can help detect and prevent fraud before an insurer even writes a policy. These models can pick up rating errors that often result in lost premium and can flag applications that carry a high probability of future claims fraud. It s then possible to reduce the quoting process from minutes to seconds, allowing insurers to prepare new business estimates with greater speed and accuracy. In responding to property claims, what s the quickest way to assess damages? With geospatial technology that has recently come online, insurers can visually inspect a property without dispatching an inspector to the claims site. Analytics are bringing fresh perspectives about risks relative to hazards. This view is valuable both for claims and for identifying vulnerabilities before a loss 12 Summer 2017 theinterpreter x

13 FEATURE occurs. And aerial images are changing the way claims are adjudicated and risks are underwritten in the United States. Questions About Commercial Property In terms of commercial property, companies holding policies have long wondered about how improvements might affect their premiums. Tools are becoming available that enable owners to pose what if questions that could lead to a safer facility and lower loss costs, as well as significant reductions in premiums. What if a factory s sprinkler system were updated? Cutting-edge advances in analytics are providing quick and accurate responses to these what if lines of commercial questions. Among the benefits will be greater and finer resolution for commercial and personal lines as the power of data and analytics progresses to the point of sale. Even in terms of an individual auto or homeowners policy, consumers will be able to secure a quote with greater speed and less hassle than in past transactions. So, there s promise for the consumer in the form of a better shopping experience and a more accurate price for insurance. Some insurers identify and price risk more effectively than their competitors and, because of that, often achieve better financial and risk management results. One fundamental tenet of risk management is that accurate rating information sits at the center of the underwriting process. Misreported information tends to lead to severely adverse consequences when actuaries use incorrect data to develop their rating plans. The inevitable result is weak differentiation of risks and potentially costly risk management failures. Clearly, inaccurate data tends to result in bad pricing decisions. That, in turn, can lead to inadequate risk differentiation, poor risk management, and an unnecessary decline in profitability. A Long-term Strategy For companies to achieve superior financial performance, they need to adopt a risk management strategy that looks at the connections among all aspects of their business. Key requirements are recognition of risk factors and accurate data collection in more accurate pricing by individual through an ongoing rating integrity risk and overall. Predictive analytics has process. Accurate data results in better made the actuary s job a little easier actuarial and risk analysis, better risk in that analytics can help an actuary differentiation, better pricing, and better evaluate extremely large volumes of data retention and risk management strategies. more quickly (and perhaps incorporate elements that previously weren t Short-term strategies that look only available or considered relevant in the at the immediate problem whether a assessment of loss cost). As departments focus on retention to the exclusion of of insurance become more familiar with other fundamentals or saving money predictive analytics, these tools could by cutting costs on programs that help streamline the approval process. manage data integrity tend to be just All told, advancements in predictive that, short-sighted. Especially with the analytics could mean instantly leveling escalating emphasis on enterprise risk the playing field simply by adopting an management, insurers should consider a off-the-shelf analytic solution. longer-term horizon. Recently, insurers have begun to look That s easier said than done, given the into price optimization over a multiyear typical compensation structures that time horizon. Critical to the success exist today. Many insurance companies of this technique will be the validation provide their executives with incentives of actual realized results versus that emphasize certain ratios over others. expectations. That information can For example, companies may narrow then be used to further refine the price their focus to the underwriting expense optimization model. So where could the ratio or retention ratio and lose sight of industry push the frontier? overall profitability. With the advanced analytic and underwriting tools available The next big thing in pricing probably today, it s possible for any insurer to will be the complete risk assessment manage appropriate retention and strong of an individual. In the same vein, there underwriting goals and potentially would be a policy applied across various improve financial performance. insurance products both personal and commercial lines. Auto-related In the insurance value chain, premium information about a policyholder might growth likely remains the biggest challenge. be predictive for homeowners insurance Finding an analytic solution that makes or the reverse case. With the rise of the premiums better reflect the risk in a Internet of Things (IoT), potential sources company s current book is just the first of information that may help further step. Insurers also need to be able to price refine risk are becoming myriad. market segments they re not currently reaching geography and classes of risk to To reach this level of sophistication, an achieve competitive rates and maintain rate insurer will need to merge data for auto, adequacy. The biggest obstacle is the lack homeowners, and other lines of business. of credible internal data in these segments. The insurer will then have to prepare and Therefore, insurers need an analytic solution run predictive models to determine a that supplements their lack of credible data complete risk assessment for either an or the lack of data entirely. individual or a policy across all lines. This idea is still in its infancy but will surely Analytics in the Value Chain bring powerful change to the industry Analytics have added precision to when perfected and further strengthen actuarial work, which in turn has resulted the insurance value chain. n Mark Anquillare is chief operating officer of Verisk Analytics. He can be reached for more information or further comment at ContactMe@Verisk.com. theinterpreter x Summer

14 FEATURE Today s Reality: Better Underwriting by BRUCE F. BROUSSARD, JR As labeled by Celent in a recent report, underwriting is the secret sauce of the insurance industry. Selecting and pricing risk are essential to the profitability of an insurer, and the deep expertise necessary for this skill set makes underwriters some of the most valuable players for any insurer. Traditionally, insurers have relied on the individual judgment of their experienced underwriters with guidelines documented for the next generation. New sources of data arise at a rapid pace, allowing underwriters to gain access to more powerful insights in realtime. Applying predictive analytics and leveraging an insurer s existing data core, in combination with complementary new data sources, enables data-driven decision making. This allows underwriters to consistently make decisions and assess risk based on evidence instead of human judgment. Today s insureds and agents have everincreasing expectations from their insurers. Companies such as Google and Amazon have made leaps and bounds to remove friction from the customer experience, from more intuitive designs to one-click purchasing. Initiatives like Google Home and Alexa are just the tip of what is now expected as consumers no longer differentiate their expectations across industries. Beyond underwriting the risk appropriately, insurers are now also under pressure to do it faster and deliver the results with greater ease for customers. In addition to harnessing the power of data, insurers are also replacing core policy administration systems and improving the automation of their underwriting processes. The combination of new technology and more data allows insurers to personalize their products more precisely to target specific market segments. With new data, insurers can develop much more sophisticated and specific pictures of risk, resulting in a combination of both more competitive prices and improved profitability. Data, Data and More Data More than ever before, insurers are flooded with data. There is internal data in their core systems and spreadsheets. There is additional data available externally on a daily basis from new sources from sensors in construction materials to telematics to drones. Devices and solutions for smart homes are expanding rapidly and the application of machine learning is increasing in many areas of insurance operations. Drones, IoT, blockchain, and other new technology tools or platforms can be leveraged to improve insurance processes and products, including underwriting. In a 2017 report, SMA states that the Internet of Things (IoT) and connected world devices create opportunities to gather real-time data for everything covered by commercial lines insurers, including property, vehicles, workers, machines, and other things. Many insurtech companies are building new solutions to analyze this data and provide new insights for underwriters 1. Examples include Loveland Innovation, which provides a management platform for drone use in insurance including report generation; Nexar s internet-connected dash cam that records crucial driving data and incidents for underwriting and claims; and Aerobotics who is using drones to get data on the agricultural, logistical and mining industries to establish risk levels and risk increase. Another report from Novarica mentions how drones, IoT, blockchain, and other new technology tools or platforms can be leveraged to improve insurance processes and products, including underwriting. The same report asserts that 10-20% of insurers report using machine learning to improve rating algorithms 2. Examples include AXA, which uses machine learning in a POC to optimize pricing by predicting largeloss traffic accidents with great accuracy; Captricity, which developed machine learning algorithms that can extract and transform data from handwritten and typed forms at +99.9% accuracy; and Meshify, which helps with the industrial IoT and was recently acquired by Hartford Steam Boiler/Munich RE research from SMA found that there is an increased reliance on varied and external data such as geospatial models, catastrophe models, telematics and other sources to support underwriting decision making, and it is helping increase profitability by eliminating risks that may currently be indiscernible in the underwriting process. 3 Historically, underwriters have developed prices based on a limited set of data focused primarily on the magnitude of the potential loss such as a car s make, model and manufacturer s suggested retail price for personal auto. This equated to pricing based upon the likely volume of losses across their full portfolio of insureds based upon statistical norms at a macro level. Today, insurers can leverage additional data to more accurately assess the likelihood of a specific loss, such as telematics, individual driver history, and environmental information. This results in more accurate pricing of individual policies, improving the macro level portfolio management by assessing each individual risk more accurately. A great example is Allstate, which leverages technologies such as Hadoop to evaluate customer information more comprehensively, 14 Summer 2017 theinterpreter x

15 FEATURE including quotes, policies, and claims. By noting patterns and generating competitive premiums, Allstate can win new customers while identifying and appropriately pricing higher risk opportunities.. Harnessing Internal Data and Complementing It with External Sources Almost everything an insurer does starts with data. Effectively leveraging data opens up an endless series of opportunities, improving underwriting, customer experience, and ultimately financial results. Optimizing data requires finding the right balance between the use of internal and external data sources. Internal data sources, such as policy and claims applications, provide the context of what is unique to an insurer. When complemented with external data, it can provide insight into market performance and competitive advantages that are otherwise extremely difficult to obtain. One of the challenges insurers face is how to take advantage of external data given the wide variety of ever-growing sources that are available. Many insurers fail to recognize the value and importance of harnessing the power of their internal data to direct their external data strategy. By gaining control of their internal data, insurers can identify gaps and tactical opportunities to complement it with specific external data sources to create a value proposition that is unique for their business. Insurers must have a comprehensive data strategy in place to ensure they can leverage all data to its fullest potential. Predict the Future When insurers combine their data with predictive analytics, they can make data-driven decisions more consistently across their underwriting staff, and use evidenced-based decision making rather than relying solely on the vagaries of human judgment to assess risk on a book of business or a single policy. rating factors such as vehicle type, weights, and driving radius only go so far in helping insurers price and select the best risks for their portfolio. It s imperative to know more about individual driver behavior to gain a holistic view of a commercial auto risk. BOP is a challenging line of business to write because bureau BOP rating structures do not enable insurer pricing differentiation/segmentation and the competition s coverage and pricing are anything but consistent. Making the right tradeoffs by BOP coverage and the overall account are critical to achieve profitable underwriting performance. 1 INSURTECH AND COMMERCIAL LINES: A Surge of Activity and New Implications, Strategy Meets Action, May Insurance and Technology in 2017 and Beyond, Novarica, April 2017 When incorporated into a P/C business, predictive data analytics that leverage both internal and external data sources can have a profound impact, allowing insurers to better align risks to premiums and increasing profitability. Predictive data analytics deliver wideranging benefits and insurers can reap these benefits and gain a competitive advantage. Insurers that fail to effectively manage their data and take advantage of expanded data technologies will find it increasingly difficult to meet the increasing expectations of their customers. n Areas where predictive analytics can help include: Underwriting commercial auto is challenging for insurers. Traditional Bruce F. Broussard, Jr. is the SVP & General Manager, Data Solutions Division, for Insurity. He can be reached for further comment via at bruce.broussard@insurity.com. theinterpreter x Summer

16 EXECUTIVE CORNER AN INTERVIEW WITH BRUCE CHEEK Executive Vice President & Chief Operating Officer American Equity Investment Life Insurance Company by DENNIS SULLIVAN and ROD TRAVERS Following is the 41st in a series of interviews conducted for The Interpreter by Dennis Sullivan, Chairman Nolan Consulting, which specializes in the insurance industry. Joining Dennis is Rod Travers, Executive Vice President of IASA. DENNIS SULLIVAN: Bruce, thanks for taking the time to share the American Equity story with our readers. To start off, tell us about American Equity and how it all began. BRUCE CHEEK: I love to tell this story. It all starts with Dave Noble. Dave was the President, CEO and Chairman of the Board of Statesman Group. Statesman Group sold to Conseco in Dave stayed there about a year after the sale, decided he didn t like having a boss much, and decided to leave. He retired for three days, then got out a yellow legal pad and started writing down names and the fundamentals he was going to use to build an annuity company. He wrote people, service, future on the notepad. Indexed annuities were just starting to come on, and we were doing some of them at Statesman Group under American Life and Casualty. I was part of the company as well. I was there for a little over 12 years. About a year-and-a-half after Dave started American Equity, Conseco decided to move Statesman Group to Carmel, Indiana. Everybody at American Life then was kind of available for Dave to help grow his new company. A lot of the people from The Statesman Group moved over, but I didn t move over at that time. I came onboard here in 2003, just before the company went public. We marketed fixed index annuities through independent agents and broker/ dealers. A fixed index annuity is a retirement product. It s designed so that you never lose any of your principal, but your gains can be tied to the stock market. Dave coined this term sleep insurance. As a retiree, the worst thing that can happen to you is that you lose your money. We create that foundation out of the savings that you re not going to lose, and there may be some growth in that as well. The products also offer options for lifetime income that you can never outlive. The company started out I think with 20 employees, and we re now up at more than 525. DENNIS SULLIVAN: Beyond Mr. Noble s foresight, what are other characteristics you would attribute to the company s success? Obviously, there s the product, but there must be more than that. BRUCE CHEEK: You re absolutely right. Dave said and he would use choice words here We re going to have the best service in the industry. That s what we hang our hat on. One of our other sayings is that we answer the phones. Our typical customer is 60, 65, 70 years of age. They don t want to deal with complicated phone prompts. We try to answer the phone within 120 seconds with a live person. In meetings, our president, Ron Grensteiner, has been known to take somebody s cell phone out of the audience, call into the company, and prove that we re not kidding. Ron is another former Statesman Group, American Life person. So is our CEO, John Matovina. DENNIS SULLIVAN: Mr. Noble had a good core of people to build his new company with. BRUCE CHEEK: I think they re the best in the business, frankly. Regarding customer service, the agent is our customer as much as the client is our customer. We re selling the agent because that client relationship is really first with that independent producer. The client might be buying their car insurance through that agent, they might have other life insurance or other products. That relationship is really between that advisor and that client. Our big relationship is with the agent. They can sell anybody s product, so, we have to prove to them that we re better in some way. One of the other tenets we have beyond customer service is that we want simple products. We want to be transparent, and we want to be simple. I think that s helped us over the years with our agents and to avoid some of the litigation some of our competitors have had to deal with. DENNIS SULLIVAN: Obviously, with all the regulation going on now, especially with financial products and being transparent on commissions, there is a lot more scrutiny on it. BRUCE CHEEK: Absolutely. We get confused with variable annuities quite often. A variable annuity is actually investing in a stock or a bond or some sort of a security. The risk inside that annuity of your investment dropping is real. There are guarantees built into it as an annuity, but people really can lose money. 16 Summer 2017 theinterpreter x

17 EXECUTIVE CORNER Our products are different in that we don t actually invest in the index, so to speak. We buy one-year options on the Standard & Poor 500 usually or the Dow. We don t actually buy an index fund or stock. DENNIS SULLIVAN: A number of the financial planners today are seeing annuities today more as a piece of the retirement strategy. BRUCE CHEEK: Yes, they are realizing that a fixed annuity can be very complimentary to bonds and equities in your retirement plan. You can design it so that as you get older, you can minimize risk of principal by adding to the annuity and taking down your equities. DENNIS SULLIVAN: Could you talk a little about the affinity program you have? I know you have something with the National Guard. BRUCE CHEEK: We re very proud of the program which is a small but important piece of our business. When we do our big agent meeting or things like that, we start it out with the Pledge of Allegiance, and we usually end it with some patriotic song with everybody standing. It is quite moving to see everybody in the room stand up, and usually we ve already recognized the veterans that are in the room. It s just part of our core. We do something called Red Shirt Friday. We hand out red shirts to all the employees that say Support our Troops. Most everyone still wears them on Fridays. We ve been doing it for 10 or 11 years. We also host client appreciation luncheons. Our president, Ron Grensteiner, along with about 10 employees attend, and we ll have 200 to 300 clients in the room along with their agents. It s a way of saying thank you. We re not selling them anything. We just say thank you, talk about the company, and give out a few prizes, and tell them thank you for putting your retirement nest egg with us. It s a moving experience to see those people, shake their hand, and to hear them say, Thank you so much for taking care of my money. I know I ll be able to sleep at night. It is neat. That s why I say when we talk about people and When we talk about people and relationships, we don t just talk about it, we do things about it. relationships, we don t just talk about it, we do things about it. ROD TRAVERS: That is really special. Bruce, maybe you could talk a little bit about things in the industry that you ve been confronted with: regulation, product, distribution, changes in the industry that you ve had to respond to and how you ve dealt with those things. BRUCE CHEEK: Sure, well regulatory headwinds take up so many resources. Going back to 1985, we ve always been hit with the threat of removing the taxexempt status of annuities. Our latest issue now is that the DOL wants to make all the independent agents and anybody who sells an annuity a fiduciary. This current fiduciary rule by the Department of Labor has been all consuming for many of our people. We re starting to see a little bit of relief with President Trump having that mindset of deregulation, and the rule now has been delayed. But this kind of thing takes a lot of resources away from building better products, working on customer service things, and freeing up the financial resources that we would use to do things to improve the customer relationship and the company. Regulatory issues are definitely a challenge. Suitability standards from the NAIC created a lot of concern in the industry at first, but they were a good thing. They ultimately helped improve the independent agent force. Suitability really helped the company focus on what the Bruce Cheek snapshot of a person s financial health was and their financial capacity to put money up for a 10-year period or so. In fact, we built an artificial intelligence engine that goes through and scores a client s financial data for suitability. Suitability was a big thing and remains today. Our biggest challenge right now is the low interest rate environment. For the last 10 years we ve been saying interest rates can t do anything but go up, and they ve continued to go down. For our business, we d like those rates to be a little higher so that we can return part of that investment to our clients, pay our agents and still make enough for all of us to eat around here, plus take care of our shareholders. ROD TRAVERS: Tell us a little bit about your own leadership style and approach. How has it changed over the years? BRUCE CHEEK: When I started working, the leadership style was, do this or you re going to get fired. That was what you expected. You were happy to do your work to stay employed, and that s just what you did. I have to say I was that kind of a manager for a long time. That became ineffective because people weren t just happy to have a job any more. They went and got another job if they didn t like it, or they didn t come to work for you in the first place if that s what they heard about your culture. We transitioned to be much more pat on the back. People want to feel that they continued on page 18 theinterpreter x Summer

18 EXECUTIVE CORNER Bruce Cheek Interview continued from page 17 belong and are part of a family. We were always kind of a family-oriented company, but we were definitely more aggressive in some of our management style. I made a conscious choice to change and I even worked with a coach to become a better leader. What I do is hire good people, share a vision with them, and let them go their own way. I consult along the way and then review at the end. I m much happier frankly. DENNIS SULLIVAN: Are there things that you do as an organization that support that style? On our way in we saw a wall of recognition for employees who have done some special things. style. They just grew up differently. They re used to technology that s upto-date, immediate, in their hands. Their approach to the workday can be different. How has that affected your culture and your management practices? BRUCE CHEEK: There was this gradual evolution of how expectations are set for employees. We re still evolving. Being an insurance company and having executives who ve been in the business for 30 or 40 years, you wear a suit and tie. Now of course it s business casual, and it s even a little more casual than that. That was driven by the culture change that youth has brought into the workplace. ROD TRAVERS: You said high-touch service is really important and that phone plays a major part in that. How has the internet and mobile connectivity changed your service model? BRUCE CHEEK: In several different ways, I think. I used to say we have the best cyber security program in the world because we didn t put any data on the web. But we had agents asking us when we were going to make information available via the web. We recognized that self-service is something that some people who are computer savvy see as customer service. They want to be able to do it BRUCE CHEEK: That s in our service department, the annuity service area. We call that the featured faces. They have a group called the Pretty Witty subcommittee that works on employee engagement. We do a lunch with the people who are the featured faces every month. The senior VP and I attend, and it s a great way to get to know people better. We put groups together to study ideas that might help the company. We call them action teams. One action team came up with an idea to fund programs that departments want to try. Now we allocate X dollars per month per employee, and the departments get to decide how they want to spend that. We have groups going out for team events, such as an escape chamber experience. Or they ll do a wine and painting team exercise together. We re very supportive of that employee engagement, and it s showing now. In recruiting we now have commercials with actual employees who talk about what it s like here. We get a lot more employee referrals when it comes to recruiting. If you consider the number of people that we have added over the last few years, you need an edge in recruiting. That s one of the big pain points of growing - getting the right people in here. ROD TRAVERS: Along those lines, the workforce is evolving. Millennials, digital natives they have a different working I think [the GIA] helped put us in a position where we thought more forwardly about innovation and about some of the things that technology could bring to American Equity. Today, when you talk about mobile devices, we just recently changed our policy in terms of those devices in the workplace. Things come up during the day if the baby-sitter calls, you take the call. If something comes up that you need to deal with, deal with it. We trust our people to know what the right thing to do is in those kinds of situations. DENNIS SULLIVAN: Do you have people who telecommute? Is that something that s coming into your workforce? BRUCE CHEEK: We ve been cautious about the telecommute thing. We really love the advantage of having everybody in one location. The fact that you don t have to somebody or set up a conference call; rather, you can walk over to their office or cube and say, Hey, let s talk about this and get it done. From a labor standpoint, we ve got people who drive an hour or more to work every day. We recognize that telecommuting has some real value, and we don t want to lose our culture. We re really just starting a program now. themselves anytime of the day. We built the infrastructure, we set up separate cyber security, and hired people just to concentrate on that. We also introduced an online application so that agents can sign and submit everything electronically. We now get about 25% of our apps that way, and we hope to grow that. The agent can submit the application, it is scored for suitability, and if it goes green, it goes directly to issue as soon as the markets close and we get the index value. The policy is produced the next day without anybody ever touching it. We re proud of that. In the years to come, it s going to grow even more. I challenged my staff with this: I want an agent to write an app, shake the client s hand as they walk out the door, look at his bank account, see the commission s been paid, and when the client gets home, they ve got an with a secure copy of their policy. Someday I want to be able to say, Alexa, send me $10,000 from my American Equity annuity. You chuckle about that continued on page Summer 2017 theinterpreter x

19 IASA S 89 TH ANNUAL EDUCATIONAL CONFERENCE & BUSINESS SHOW POST-CONFERENCE REPORT Download the Conference App! IASAAnnualConference IASAInc

20 IASA 2017 ALL SYSTEMS GO! DOING THE HARD THINGS : Scott Kelly Kicks Off IASA 2017 with Inspiring Keynote by DARIN REFFITT The Monday morning keynote at IASA 2017 could not have been more appropriate for a conference with the theme of All Systems Go. Retired Naval Captain, Scott Kelly, who set a new record for total number of days in space by a U.S. astronaut in October, 2015 at 520 kicked off the first full day of the conference with rousing address that touched on several facets of leadership from his learnings before, during, and after his year-long mission to the International Space Station (ISS). Sponsored by Majesco and introduced by Edward Ossie, the firm s Chief Operating Officer, Kelly began his speech in an unusual way talking about his lackluster performance as a student in West Orange, NJ and later as a college student at the State University of New York. It wasn t until he picked up and devoured a copy of The Right Stuff, by Tom Wolfe and read about the heroes of the first 15 years of the space program, and more specifically Project Mercury, that he decided what he wanted to do with his life. His first lesson came from that experience, where he found his passion and applied himself, and inspired by his mother, who was one of the first female police officers in New Jersey learned the value of having a goal and a plan, and then breaking that goal into smaller pieces. If I m going to fail at something, I want to aim high, Kelly said, talking about tackling the hard things instead of taking the easy route, and how that led to his impulsive decision to apply for the US astronaut program, where he was selected along with his twin brother, Mark. Additional stories Kelly shared focused on the importance of continually evaluating the situation and making positive corrections en route; preparing for unlikely situations that could nevertheless have disastrous consequences (the ultimate cause of both the Columbia and Challenger Shuttle disasters), and the importance of Situational-Dependent Leadership, the idea that sometimes leading means stepping back and letting the expert take point during a crisis. Perhaps the best anecdote Kelly shared was about the value of focusing on the things you can control. As the International Space Station was heading 20 POST-CONFERENCE REPORT 2017

21 IASA 2017 ALL SYSTEMS GO! KEYNOTE toward a near-collision with a piece of an old Russian weather satellite in July, 2015, Kelly was diligently closing hatches to seal off parts of ISS in case just part of the station was taken out by the impact. Knowing that the bodies were traveling toward each other at 44,000 miles an hour, and that the odds weren t If I m going to fail at something, I want to aim high. in favor of survival in any case, he went to the Russian side of the space station to find the Russian cosmonauts having lunch. Either it hits us and we die, or it doesn t hit us and we live, either way it s time for lunch. they told him. While they did eventually move into the Russian Soyuz capsule in case of an impact that avoided that area, Kelly nevertheless joined them for lunch, agreeing they d done all they could do to prepare. Kelly kept the audience laughing and engaged, and it s difficult to imagine a more inspiring first day keynote. While his record for number of days in space has since been broken by astronaut Jeff Williams, his accomplishments, his speech, and especially his closing words reinforced the importance of why we were all in attendance at the conference; to learn, grow and network in order to expand our careers and strengthen our companies: If we can dream it, we can do it. n Darin Reffitt is VP of Marketing for SPLICE Software and serves as the current VP-Marketing for IASA and as Board Member at Large of IASA s Mid-Atlantic Chapter. He can be reached for further comment via at darin.reffitt@splicesoftware.com. POST-CONFERENCE REPORT

22 IASA 2017 ALL SYSTEMS GO! Reconnect with Your Work By CARRIE BURNS Sometimes it takes something big or a peripeteia, as TV host, writer, narrator, producer, actor and spokesman Mike Rowe would say, to reconnect with your work. Sponsored by Insurity, Rowe took the stage at the IASA 2017 Educational Conference and Business Show in Orlando June 4-7. He shared his personal experience of finding his peripeteia, which led to him hosting one of the most watched cable television shows, Dirty Jobs. It happened in 2001, when Rowe was impersonating a reporter in San Francisco as a host for Evening Magazine. He received a call from his mother telling him it would be nice for his ailing grandfather to see an episode where Rowe was doing something that looks like work. Wanting to do this for his grandfather, who was a skilled and licensed electrician and extremely handy, Rowe proposed hosting an episode from a San Francisco sewer. So, there he went, into the sewers of San Francisco. To sum up his experience down there all smells are particulate. After being sprayed in the face with, well, what goes into the sewer, investigated by roaches and accosted by a sewer rat, Rowe and his camera man came away with nothing he thought they could use for the show. Then, after a few showers, Rowe watched the footage and realized it was pretty funny and real. But, what made it a transformational moment for him while watching the footage was listening to the words of Gene, the sewer inspector who guided him around. Gene wasn t always a sewer inspector; he chose to do this, Rowe said. He was an engineer before that. He was very much like my grandfather, and I was struck by what I was watching. Rowe called it his peripeteia, a turning point. Everything I d done for the last 16 years was kind of nonsense. Rowe said. I want to figure out a way to work in television where experts interact with me, and I don t have to pretend to know stuff that I don t. Rowe ended up cutting and editing the footage into a 10-minute weird and funny segment and submitted it. It ran, and Rowe was fired. However, the public s positive response to the segment energized Rowe. He took the footage to Discovery, and that s how Dirty Jobs began. Rowe likened the IASA crowd to Gene, a group working in the trenches, behind the scenes. And, every now and then, everyone needs to do something to reconnect with work, whatever work that may be. He ended his presentation with advice to the crowd: Look for the peripeteias in your own life. Look for them in the lives of the people you re working with. Be open to the possibility that everything you think you know might be wrong. And, most of all, never forget that all smells are particulate. n 22 POST-CONFERENCE REPORT 2017

23 IASA 2017 ALL SYSTEMS GO! KEYNOTE Be open to the possibility that everything you think you know might be wrong. Carrie Burns is the marketing communications manager at Guidewire Software. She can be reached for more information or comment at POST-CONFERENCE REPORT

24 IASA 2017 ALL SYSTEMS GO! ARF SUPER SESSION The Risks of Status Quo: Emerging Technologies and Their Impact by JOSH STEINBAUM Attendees who attended this year s IASA Accounting, Risk and Finance (ARF) Supersession, were treated to the insights of two highly influential leaders in the emerging technologies field of the insurance industry: Charlie Kingdollar, Emerging Issues Specialist and Vice President in Gen Re s Global Property & Casualty Emerging Exposures Unit and Matt Moore, Senior Vice President of the Highway Loss Data Institute (HLDI). Kingdollar spoke passionately about his positions on new technologies in the insurance industry and the impacts that the implementations of these technologies could have. His first major focus was on autonomous vehicles. He challenged the audience with five questions for consideration: argument. Without adequate research 1. When will the technology become a on physical health impacts, insurers realistic option? asserted that asbestos was a miracle fire 2. How can accident frequency be impacted? suppressant and willingly wrote policies for fire retardant manufacturers.. As we 3. Will ownership of personal cars decrease? know today, the premiums collected 4. How will premium be impacted as risk related to insuring asbestos manufacturing is reduced? did not accurately reflect the risk. Kingdollar cited examples in today s 5. Will liability premiums become nonexistent? market where insurers may be writing policies that are not accurately priced Kingdollar asserted that these are based on the risk. Kingdollar s examples the types of questions insurers need included: nano technologies, e-cigarettes, to consider while managing the risks marijuana, and drones. associated with the rapid development of Next, Matt Moore provided insightful autonomous vehicle technologies. evidence on the slow but realistic growth of Kingdollar then focused on the potential onboard technologies employed by global impacts of insuring new technologies, automakers. Moore demonstrated artificial making the link of asbestos to intelligence s ( AI ) impact on modern mesothelioma aprimary platform for his automobiles through statistical data Josh Steinbaum is a Manager of Claims Finance for Farmers Insurance Group. He can be reached for further comment via Josh.Steinbaum@Farmersinsurance.com. collected in the field and on the grounds of his Virginia test facility.. Based on the data that Moore and his team collected, it was not clear that AI was beneficial to the driver of the vehicle in all instances. For example, Moore showed how lane departure warnings on modern vehicles increased the likelihood of an accident because not all drivers acted rationally when receiving warnings from the automated systems. Moore indicated that road construction continues to be an area for concern and a barrier to entry in the development of autonomous technologies. Moore remains optimistic that AI technology will continue to improve at a rapid pace, but indicated that he and his company believe it will be at least 40 years until a 95% adoption rate of autonomous technologies in vehicles can be reached. The key takeaway from the speakers of this IASA supersession is that the biggest risk faced by insurers today is holding steady at the status quo. We must continue to research and understand the risks we write to remain relevant in our ever-evolving industry. n 24 POST-CONFERENCE REPORT 2017

25 IASA 2017 ALL SYSTEMS GO! CSD SUPER SESSION Customer Service Magic by CINDY POWELL Do you believe in Magic? Magic is a power that allows people to do amazing things. When organizations incorporate magical thinking into their service practices, a wow factor can be added to its customers experiences. Who better to teach us about magic than Dennis Snow, a former member of Disney s management team, who spent twenty years of his career working for the Mouse? Snow entertained and educated a group of more than 100 IASA attendees during the Career Skills Development Super Session on the closing day of the 2017 Annual Conference in Orlando. In addition to having written two widely praised, Amazon-rated five star books on the subject, Dennis tours the country speaking to approximately 100 different organizations each year, sharing the lessons learned during his tenure at Disney. These lessons are delivered with wit, enthusiasm, and wonderfully simple practical advice. Dennis was not always an executive; having started his Disney career in the park as a cast member dressed in costume, interacting with guests. As he learned first-hand, Disney customers have very high expectations for their vacation experience- -that it be nothing short of magical. By implementing processes that keep the customer s point of view central to Services Environment and Services Delivery, Disney manages to meet those expectations year after year. During the CSD Super Session, we learned some lessons on how similar success can be achieved when facing our own challenges in creating wow factor customer experiences. When thinking of improved customer experiences, we should consider our Service Behaviors in context of our customers expectations. Customers expect accuracy and availability for whatever products and services we provide. By delivering on these basic expectations we can avoid dissatisfied touches impacts the experience. Finding customers, but we are not necessarily opportunities to wow can be found in going to be gaining extra brownie points every customer interaction if we keep the if that is our entire focus. To move idea of magic in mind. Just like Disney, our to a higher level of achieving highly organizations work hard behind the scenes satisfied customers, we need to also to make our products more valuable. Also nurture partnerships with our clients, like Disney, we should be continuously an endeavor to be a trusted source of mindful of our public presence where the advice. By thinking of ourselves as customer experiences occur. partners and advisors, we will have The Career Skills Committee was pleased created an environment that opens more and honored to have Dennis Snow join us as opportunities to wow. this year s Super Session keynote. Those Wow experiences do not always have of us who were fortunate enough to stay in to be as impactful as the thrilling Magic Orlando through the final conference day Kingdom fireworks displays. As Snow were both entertained and educated by his explained, Every detail of the service thoughtful insights and hilarious antidotes experience is saying something about about how things are done by Disney, an your organization. Everything the organization known throughout the world, customer sees, hears, smells, tastes or for their customer service magic. n Cindy Powell is the President of Bespoke Management and Technology Services LLC. She can be reached for further comment via at cindypowell@bmts.biz. POST-CONFERENCE REPORT

26 IASA 2017 ALL SYSTEMS GO! TECH SUPER SESSION Embracing the Future by DOUG RAMSEY This year s ALL SYSTEMS GO conference theme served as encouragement for attendees to understand and participate in the revolutionary things going on within our insurance industry. Through Majesco s sponsorship and collaboration in this year s Technology Super Session, Chunka Mui s Embracing the Future presentation contributed directly toward this encouragement, providing the audience of more than 250 industry professionals lessons for seizing the opportunity of ongoing change. Over the course of 90-minutes, Mui summarized his extensive research on innovation, technology, and the opportunity for companies, large and small, to achieve continued success in the wave of change. Embrace the Gap As Mui noted, companies typically focus on incremental change, in contrast to the exponential change that is going on around them. It can be too easy to evaluate the ongoing change going on around you and immediately determine how your company can incrementally apply this change to an existing business model. Instead, innovators see a new market and gap that needs to be filled as a result of exponential change. Technologies such as social media, mobile, cloud, analytics, artificial intelligence and Internet of Things are horizontal trends that are needed to fill the gaps within the verticals industries, such as insurance. Think Big, Start Small, and Learn Fast The one thing that remains constant within technology and our industry is change. Mui encouraged the audience to not only be aware of change, but think outside typical boundaries for what that change could mean. A company s thinking should not be limited, but Mui realizes that investment is limited. Mui advised to invest in change that begins with a small idea, but ladders up to thinking big. The emphasis on change is not as much being first-to-market or being a fastfollower; rather, successfully adapting to exponential change is all about being a fast-learner. A company s ability to think of grand possibilities, incrementally building upon those ideas over time, and learning and adapting along the way is where continued success is born. Thinking big moves beyond the faster, better, cheaper mode of business, and extends into the audacity of starting with a clean sheet of paper for the way companies conduct business. Mui used the auto industry as an example for this view point. The auto industry has been dominated by the same large companies over several decade years, representing a massive portion of the world economy, and directly impacts the daily lives of our customer experience. Doug Ramsey is a Vice President within Travelers - Personal Insurance. He can be reached for further comment via at dtramsey@travelers.com. Thinking big moves beyond the faster, better, cheaper mode of business, and extends into the audacity of starting with a clean sheet of paper. Given the advancements in technology, autonomous driving, mobile, social, cloud computing, among other innovations, the auto industry is positioned for continual disruption. It will be important for the established automakers to think big, start small, and learn fast, in order to keep up with the innovation taking place at companies such as Tesla, which just recently emerged into the auto industry. Cultivate Patient Urgency Innovation by definition isn t on a particular or pre-determined timeline. Mui s final lesson was to advise companies to remain patiently urgent when it comes to embracing exponential change. It s important to balance the patience of working on big ideas, with the agility to respond as change continues, along with the precision to go-to market and seize the opportunity at the right time. Mui cited the Dyson vacuum as one such example, in which the vacuum s recent popularity first started with thousands of lesser known, often unnoticed, iterations before becoming the easy-to-identify product it is today. Overall, Mui s parting thought ended where the audience began, encouraging the audience to reimagine products, business models and the customer experience, by leveraging the continued change on innovation and technology within our industry and beyond. n 26 POST-CONFERENCE REPORT 2017

27 IASA 2017 ALL SYSTEMS GO! TECH TANK Innovation Exposed: Tech Tank Session Brings InsurTech Entrepreneurs to the IASA Stage by JENNIFER OVERHULSE Most insurance company professionals do not have roles which regularly offer opportunities for exposure to innovative new ideas and technologies. Through a partnership with the Global Insurance Accelerator (GIA), this year s IASA Annual Educational Conference & Business Show brought InsurTech entrepreneurs to the stage for a fast-paced session loosely based on the popular Shark Tank TV show format. Scott McEntee, vice president for Farmers Mutual Hail of Iowa, vice president of membership for IASA and also a member of the GIA board, introduced the IASA Tech Tank to a packed room with nearly double the attendees originally registered for the session. After McEntee s initial comments, Brian Hemesath, managing director of the GIA, took the stage to talk through the mission of the Des Moinesbased organization, explaining for those not already familiar that the GIA is focused on promoting insurance industry innovation through a 100-day, mentor-driven program which provides startups with guidance on strategy, concept and industry feasibility. Larissa Tosch of Glatfelter Insurance Group and Phil Augur of Aspen Re America, heard pitches and asked tough questions of presenters from both the judging panel perspective and submitted by attendees via Twitter. Presenters pitching innovations were all current or former graduates of the GIA program, and included Aristo Mohit-Coker of Fluttrbox, Nabil Aidoud of InsuranceMenu, David Beall of Insurance Social.Media, Lex Tan of MotionsCloud, Gautham Peddibhotla of RE-Sure and Jay Kramer of ViewSpection. Via a real-time text voting mechanism, attendees were given the ability to provide real-world feedback on each pitch in the form of investment of $1 million in virtual dollars. Virtual investments could be made in any combination or increment, and with 81 percent of the audience selecting to invest all $1 million, interest in the pitches and active participation during this session was high. More than 100 questions were submitted by the audience during the session, and at the end of the day, 122 audience members invested more than $110 million. After the votes were tallied, the top three InsurTech pitches were ViewSpection, who raised $29,750,000 from 91 audience investors, Fluttrbox, who raised $24,250,000 from 79 audience investors, and MotionsCloud, who raised $15,900,00 from 62 audience investors. At the end of the session, with ViewSpection taking the virtual win, audience members were invited to engage with the GIA s InsurTech entrepreneurs during a short networking session. As a follow-up to this successful session, IASA and the GIA will partner to produce a webinar in July focusing on How to Act Like an Entrepreneur in a Traditional Insurance Company Environment. And, another Tech Tank session is tentatively being discussed for the 2018 IASA Annual Educational Conference & Business Show to be held in Nashville. More information about the upcoming IASA webinar can be found at and more information about the GIA can be found at n During this session, an expert judging panel of IASA sharks, including IASA President Rod Travers of the Nolan Company, IASA President Celeska Fredianelli of Aegis Security Insurance, Jennifer Overhulse is the principal owner of St. Nick Media Services. She can be reached for further comment or information via at jen@stnickmedia.com. POST-CONFERENCE REPORT

28 IASA 2017 ALL SYSTEMS GO! 14th Annual CFO Roundtable The Changing Role of the CFO by TIM MORGAN CFO ROUNDTABLE REVIEW The Tuesday morning keynote address by Mike Rowe at IASA s 89th Annual Educational Conference and Business Show provided insight to some of America s dirty jobs and other thought provoking aspects of the work world. While the job of chief financial officer (CFO) might not fit the profile of Mr. Rowe s dirty jobs, it is a role that continues to evolve and roundtable participants heard from a number of industry leaders about changes in the traditional roles, communications, diversity in the workplace, succession planning and using data to drive results. The roundtable opened with a panel discussion moderated by Ryan Brassey of Clearwater Analytics, Claire Burke, vice president (VP) of Finance and Compliance at Dearborn National and Terry Eleftheriou, transformational leader and consultant, shared their thoughts about the migration of the CFO role from scorekeeper to strategist. Scorekeeping tends to focus on immediate results whereas strategic planning may not produce desired results for some time. Most organizations have no shortage of strategic ideas, but may have a shortage in leadership to execute on strategic plans. Strategic thinking should focus on outcomes and lead to transformational change vs. incremental change. CFO s are uniquely positioned to help drive change and encourage organizational engagement so that strategic plans become embedded in a company s culture. Another panel discussion followed the first, led by Naveed Anwar, chief risk officer (CRO) of MGA Mutual Insurance. Participating with Naveed in a discussion Diversity is not just good business, but a business imperative. FRED COLON about effective C-Suite communication and collaboration were John Boggs, president and CEO of Builders Mutual, Terry Groban, executive vice-president (EVP) and CFO of Funeral Directors Life and Keith Kennedy, senior vice president (SVP) of IT with Erie Insurance. The panel, which included representatives from the executive, finance and IT disciplines, stressed effective communication during the decision-making process involving new strategies, projects and systems. They emphasized the importance of having buy-in from executive management and building trust within the team. As with the first session, the CFO is uniquely positioned to help assure that projects and decisions coming from the C-Suite are consistent with the strategic plan. Following a wonderful networking lunch, roundtable participants were treated to a special guest in Fred Colon, chief diversity officer (CDO) at Travelers. Travelers is a company that believes diversity is not just good business, but a business imperative. Fred described some of Travelers initiatives in addressing diversity to assure that such efforts are not superficial, but lead to courageous conversations Tim Morgan is divisional vice president and controller at The Republic Group. Tim can be reached for more information or further comment at tim.morgan@amtrustgroup.com. and better understanding of the issues surrounding diversity in the workplace. The fourth session of the day focused on the CFO s role in his or her succession planning. Shawn Grotte, partner with BKD, moderated a discussion with Greg Klaus, CFO of Bar Plan Mutual, and Paul Taliaferro, CFO at Farmers Alliance. All of the panelists agreed that the CFO of the future will likely look quite different from the CFO of today. CFO s will always be scorekeepers of sorts, but will spend increasingly less time doing so with the advent of new technologies, availability of more data and the need to analyze data in relation to strategic needs. The millennial generation increasingly wants to be a part of the team and be engaged in the success of their company, but won t necessarily be content to follow the same path of most incumbent CFO s. The final session involved a discussion the CFO s role in managing, interpreting and using the increasing volume of data available to businesses these days. Steve Korducki, president of BMS Re US, led a panel including Shari Harmon, applications architect at Columbia Insurance, Tim Stroble, VP at Centauri Insurance and Leslie DiMaggio, VP, Operations and IT, at Atlas Financial Holdings, in discussing how big data can help lead to better informed business decisions. Data is much more available and can be obtained and stored at a much lower cost than year s past. CFO s should be a part of the process that determines how to use the myriad of data available and demonstrate to people how data analysis can make their lives better. Roundtable attendees enjoyed fellowship and networking throughout the day and during a reception with other roundtable attendees at the end of the day. The 2017 CFO Roundtable was another outstanding example of IASA s high quality Executive Education Program, which is volunteer driven. n 28 POST-CONFERENCE REPORT 2017

29 IASA 2017 ALL SYSTEMS GO! CINVO ROUNDTABLE REVIEW Paying Attention to Headwinds by FORREST MILLS For the past two years I have had the pleasure of both attending, and providing this summary article about the Chief Investment Officer. Last year my article concluded with the following statement: Based on what we heard, we may be in for a prolonged period of economic uncertainty. Was this statement a precursor to this year s roundtable? The day began with an excellent panel of our peers with Moderator Nico Sanitini, senior client strategist and Vincent DeLucia, chief investment officer (CIO), both with New England Asset Management, and John Pintozzi, senior vice president (SVP) and chief financial officer (CFO) with Allstate Investments. The macro themes espoused had familiar tones including slower global growth (3% GDP may be a challenge) and lower than normal interest rates for longer. Factors mentioned that continue to hinder economic acceleration were rising global debt, in the United States and abroad, domestic entitlements reaching 65% of the annual budget, an uncompetitive tax structure and the burden of too much regulation. In order to augment these headwinds, companies are moving to alternative or high yield investments. These investments come with warnings from the panel to consider being selective, staying shorter than longer and buying up in the structure where possible. The second session focused on evaluating your asset manager and included the following panelists: Courtney Clarke, director with Miles Capital, Karen Mashinski, CFO with Harford Mutual Insurance, Steve Pick, CFO with Homesteaders Life Company and Chris Quallen, head of US Portfolio Management with Reinsurance Group of America. Michael Hanniford of Miles Capital was the moderator for the session. Key highlights from the panel included the need to have relevant benchmarking criteria to evaluate the investment manager s performance and some sort of scorecard to provide a grade that can be shared on a regular basis. The importance of investment managers having insurance specific experience that understanding the related regulations and limitations of our industry along with the need to have effective communications and dialogue around investment policy and performance expectations. Fees were a topic of discussion with most acknowledging a sliding scale was utilized and higher fees are expected with alternative investments and boutique firms and/or niche investments. The next topic, evaluating the risk of invested assets, was explored by Tom Klem, portfolio manager and Frank Conde, chief investment strategist, both with Prime Advisors, Inc. and Anthony McSwieney, senior financial analyst with A.M. Best. The group reviewed the various kinds of risk-impacting assets including the usual suspects of market, liquidity, credit and others along with today s additional risks, such as political and geographical. Factors to minimize risk continue to be stressed Headwinds that discouraged business activity at various points over that past ten years... include the cost of the Affordable Care Act, the fiscal cliff, the Greek debt ordeal, Euro and Euro bank weakness and Brexit. DENNIS LOCKHART including a rigorous set of investment guidelines and compliance criteria and appropriate diversification of assets. Observations for the group included a warning of a general malaise regarding credit as we have been in a strong cycle for a prolonged period. McSwieney further commented that A.M. Best continues to have a concern on the low interest rate environments impact on insurers along with the general growth in BA assets and a trend toward acquisitions in the lower rungs of investment grade assets. The roundtable concluded with an outstanding keynote by Dennis Lockhart, former CEO and president of the Federal Reserve Bank of Atlanta. After being introduced by James Ramenda, SVP of Enterprise Risk with SS&C Technologies, Mr. Lockhart reinforced the state of the US macro environment with the question, What is the potential growth rate of the US economy? Lockhart described the past 10 years in his world as crisis, recession and recovery. While our recovery has been continued on page 30 POST-CONFERENCE REPORT

30 IASA 2017 ALL SYSTEMS GO! CINVO ROUNDTABLE REVIEW CINVO continued from page 29 cyclical, the US economy has averaged 2% growth per annum thereby minimizing the feel of the recovery. However, real output is at 112% of that in 2007 ahead of the financial crisis. Post crisis, unemployment has been reduced from 10% to less than 4.5%, a level that is considered to be full employment. The unemployment rate is in a good place with two secular trends of lower participation and weaker production remaining. Lockhart outlined the many temporary situations or headwinds that discouraged business activity at various points over that past ten years. Those headwinds include the cost of the Affordable Care Act, the fiscal cliff, the Greek debt ordeal, Euro and Euro bank weakness and Brexit. Based on a review by his staff, they identified similar headwinds in 25 of the past 30 quarters that caused uncertainty impacting business investment. The former Federal Open Market Committee (FOMC) member, reflecting that he still has a feel for the pulse of the committee, provided his thoughts on the future expectations of the FOMC. Mr. Lockhart expects a long term fed funds rate of 3%, down from 4%, coupled with economic growth that is moderate. While he does not expect growth to reach 3%, he does not see a recession on the horizon. Lockhart correctly predicted an increase in the fed funds rate on June 14th and expects another increase later in the year, which would be the third increase in Overall, the Fed feels the US is close to full employment and inflation in excess of 2% will be hard to come by. Lockhart said the Fed is working on a plan to reduce its balance sheet in a gradual and predictable manner, which was also announced at the June 14th FOMC meeting. He feels this balance sheet normalization plan will be well communicated, and while the level of the go-forward balance sheet will be less than today s $4.2 trillion, it will be higher than the pre-crisis level of less than $1 trillion, and he expected it to stabilize around $2.0 to $2.5 trillion. Forrest Mills is the chief financial officer and treasurer at Guarantee Income Life Insurance Company. You can reach Forrest for more information or comment at forrest@gilico.com Will we continue to have headwinds in the coming quarters or will business activity increase? I look forward to learning more at next year s investment roundtable. n IT S TIME YOU GOT ALL THE CREDIT YOU DESERVE. IASA s e-learning Webinar Series Now Offers CPE Credits Conveniently at Your Desk. BEST OF ALL, IT S FREE FOR IASA MEMBER COMPANIES AND THEIR EMPLOYEES, WITH NO LIMIT TO THE NUMBER OF PEOPLE THAT CAN ATTEND AND RECEIVE CPE CREDIT. The IASA Webinar Series has been expanded into a robust suite of online educational programming that covers NAIC, Financial, Technology, Career Skills and other insurance-related topics. FREE CPE credit available for all member company employees on live webinars Archive of past webinars is available On Demand (CPE credits are not available for archived webinars) Enhanced Interactive Experience: Resource widget for downloadable presentations, videos and accessing websites mentioned on the presentation console Q&A Widget to get answers to technical or content questions Social media access Collaboration widgets for attendee engagement are coming soon Easy registration plus a calendar icon for your desktop 30 GO TO IASA.ORG/E-LEARNING AND REGISTER FOR THE NEXT WEBINAR AND GET THE CREDIT YOU DESERVE. POST-CONFERENCE REPORT 2017

31 IASA 2017 ALL SYSTEMS GO! ROUNDTABLE REVIEW CITO Roundtable by MARY ELLEN FREYERMUTH and PAT SPEER The phrase the end of business as usual pretty much wraps up the educational take-aways from this year s IASA Chief Information/ Technology Officer Roundtable, which was held on Tuesday, June 6 during the 2017 IASA Educational Conference & Business Show. The one-day event s sessions and keynote focused on the state of the insurance innovation from what it s like to be an incumbent trying to keep pace and anticipate the ever-changing technology landscape to an end-of-day keynote delivered by Brian Solis on how leadership can survive digital Darwinism. Martin Welch, CEO of Hawaii Employers Mutual Insurance Co., led the days agenda with a discussion on The Road Ahead. A 20-plus-year veteran as a corporate officer, Welch described himself as a serial technological progressive, telling the audience that as technology leaders, CIOs are vital to an insurance organization s relevance. We re no longer merely machinists, he said. Rather, we are key strategists at the CEO s table. Besides dealing with emerging technologies, we also need to possess the ability to deal with data and analytics, recruiting top technology talent and a myriad of other talents. Welch reminded attendees that besides keeping the lights on and ensuring regulatory compliance and information security, the typical insurance CIO is charged with advancing the business from a technology standpoint. It s about business results, competitive advantage and perpetuating that success, he said. Failure to execute could destroy the business. Insurers that fail, fail from the inside, not from something coming at them from the outside, Welch said. From his position as CEO, Welch advised CIOs to: Be an intentional leader an equal voice at the CEO s table; Cultivate a strong relationship with the CEO engage the CEO; Be contrarian look to differentiate insurance: connected home, machine your company and leap ahead of learning and blockchain. competitors; The final keynote speaker, Brian Solis, Be the technology leader that your CEO expounded on the phrase the end of wants and values. business as usual by challenging attendees Following Welch, a panel moderated by to think differently about innovation. Brian Hemesath, managing director of the Innovation can t be driven by technology Global Insurance Accelerator, discussed it starts with a shift in perspective. It comes Accelerating innovation for Incumbent from leadership that starts not from the top, Insurers and insurtech Entrepreneurs. but rather from the middle, he said. Panelists Adam Cassady, founder and CEO An award-winning author, speaker and of Tyche, Mick Lovel, CIO of EMC insurance principal analyst at Altimeter Group, and Lana Miller, CEO of ClinicNote, Solis hammered home the top business discussed some of the lessons they ve mandates for today s insurance CIOs: learned as they have explored insurtech Improving business processes opportunities, and what the benefits are of participating in insurance-specific Digital capabilities accelerators in order to explore new Talent in analytics technologies/processes. Understanding the customer experience Following a networking lunch, attendees Innovation is the only way to win for chose from three technology showcase both the customer experience and the tracks deemed to be changing employee experience, Solis said. n Mary Ellen Freyermuth is director of IT at Catholic Mutual Group and chair of the IASA Marketing & Communications Committee. She can be reached for more information or further comment at Mfreyermuth@catholicmutual.org. Pat Speer is principal at Speer Content Strategy & Development LLC, and chair of the Interpreter Subcommittee. She can be reached at pspeer@speerconsulting.net. POST-CONFERENCE REPORT

32 IASA 2017 ALL SYSTEMS GO! COO ROUNDTABLE REVIEW COOs Treated to Real World Challenges, Solution Steps by LOUISE ZIEMANN and JOHN GROVES Against the Odds: A Vision to Empowerment The Customer Experience Opportunity Panel and Audience Workshop Leading Change through Applied Systems Thinking Attendees were presented with three different topics, three different presentation styles, and multiple takeaways. This year s chief operating officer (COO) roundtable focused on (a) one life insurer s strategic vision and execution of a plan to reduce expenses and increase sales and productivity; (b) a variety of customer experiences, both good and bad, and how insurers may want to adapt their interactions with their customers in a rapidly-changing business environment; and (c) a keynote presentation on applied systems thinking and how flexible leadership can help meet the business challenges our organizations are facing. Jackie Morales, senior vice president (SVP) and COO, Legal and General America, Inc., shared her organization s challenge to reduce expenses and increase productivity by Her leadership staff embraced the challenge, engaged with the affected employees, and developed an innovative approach to address the desired changes comprehensively. Her team developed a vision for leading change, ran a contest among employees to design a suitable logo for the then-upcoming campaign, and even included videos intended to update employees as to the progress of their efforts. Along the way, the management team dealt with the skepticism of some and developed a discipline that included discarding projects and activities that did not support the goals established. A fourcolumn model, adopted after extensive discussion, defined the organization s goals. Among the themes adopted, the operating teams identified having a noble purpose, achieving personal satisfaction, establishing proactive interactions with customers; and having realistic opportunities to make a difference in the lives of their customers. Intriguingly, the organization abandoned keeping track of the time spent on customer calls and focused instead on the substantive results of their calls. At most, there were only slight increases in the call times experienced. Above all, there was the requirement for ongoing communications, particularly with the employees. Among the mantras animating the organization s efforts were the following: What gets done gets measured; and what gets measured gets better. In the end, internal surveys demonstrated increases in customer, agent, and employee satisfaction; budget goals being met, and overall gains in productivity. Focused training required that all employees had to learn at least one new skill. Perhaps, not too surprising, employee participation in the creation of the videos used in the campaign and the anticipation over what would be included drove a great deal of the employees interest and ownership in the success of the effort. Miguel Edwards, vice president (VP), Strategy and Operations, Allstate Insurance, led a panel focused on the changing customer expectations being driven by our shifting demographics. Panelists included Mara Bain, chief experience officer, Western National Insurance Group; Richard Stamets, VP, Starr Indemnity & Liability; Cam Maio, marketing director, NJM Insurance Group, and Milind Shah, strategic innovation executive, Salesforce. As Miguel noted, customers increasingly are focused on speed of execution and the availability of smart apps on mobile devices. 32 POST-CONFERENCE REPORT 2017

33 IASA 2017 ALL SYSTEMS GO! COO ROUNDTABLE REVIEW Never underestimate the power of telling the customer s experience. Embrace technology. Develop ease of access to your company s products and services. MIGUEL EDWARDS Coming in for plaudits during the session were the marketing and customer support efforts of disparate companies such as Tiffany s and Delta Airlines. Attention focused on customers and their needs continues to dictate how insurers should respond to the changing marketplace. Among the key observations were the following: Never underestimate the power of telling the customer s experience. Embrace technology. Develop ease of access to your company s products and services. Be strategic in what you decide to do. Flexibility is valuable. Be aware that often we do not use what we already know. David Stroh, founder and principal of Bridgeway Partners, served as our keynote speaker. Building on the Sufi story of the blind man learning what an elephant is, he noted that we are hampered by not knowing what is going in different sections of our organizations. Fundamental to systems thinking is the realization that each functional area has to complex issues, it is important to only limited data with which to face the identify basic shared priorities and the operating environment in its totality. anticipated impact of any proposed There is great value in aggregating decisions. Ultimately, strategic systems experiences and perspectives in dealing thinking, whether developed by with the challenges our organizations management gurus like Peter Senge or face. Open communication becomes others, leads us to be more intentional critical to these endeavors. Often, and strategic in how we arrive at our we let the expediency of short-term business decisions. solutions supplant strategic long-term IASA is greatly indebted to the planners, solutions. In fact, quick fixes can lead speakers, sponsors, and attendees of to addictive behavior which becomes the C roundtables. Their contributions, counterproductive in the long run. participation, and ongoing support enable David demonstrated, by means of an members and attendees to draw from the informal exercise, how teams might knowledge and experience of experts all shift their thinking and come to terms the better to serve their constituencies. with the implications of their proposed Kudos to the planning teams responsible decisions on others. In finding resolution for this year s sessions. n Louise Ziemann, Retired Finance Manager State Farm Insurance Cos. She can be reached for further comment via louiseziemann@cox.net. John R Groves, Retired Counsel State Farm Insurance Cos. He can be reached for further comment via johnrgroves@cox.net. POST-CONFERENCE REPORT

34 IASA 2017 ALL SYSTEMS GO! 34 POST-CONFERENCE REPORT 2017

35 IASA 2017 ALL SYSTEMS GO! POST-CONFERENCE REPORT

36 IASA 2017 ALL SYSTEMS GO! GETTING TO KNOW YOU: IASA 2017 First-Time Exhibitors Input 1 About Your Company: Since 1984, Input 1 LLC has been a leading provider of software and services to the insurance industry. Our focus is on the billing of property and casualty insurance premiums. We provide comprehensive outsourcing solutions and customizable, automated receivable management tools for insurance carriers, general agents, and banks which can be integrated into virtually any system. Our intuitive, client-facing services such as multi-policy single bill, online bill presentment, online payments, and payment reminders via and text, make us a reliable resource for business solutions. More than one million agents, brokers, and policyholders experience our services every day. With over 25 years of consistent growth, and a knowledgeable group of professionals devoted to the success of our customers, Input 1 provides stability and sustainability for the long run a true partner for accelerated growth. We realize that our products and services represent a significant customer touchpoint for your brand; we take this responsibility very seriously. Your company culture shines through every piece of technology and service we build together! Age of Company: 33 Years What s Your Focus on the Insurance Industry? Our primary focus is to build dynamic, configurable, and engaging billing and mobile technology that propels insurance carriers into the future of this industry by simplifying complex business processes and exceeding the demands of their most techsavvy customers. Website: SimCorp About Your Company: SimCorp provides integrated, best-in-class investment management solutions to the world s leading asset managers, fund managers, asset servicers, pension and insurance funds, wealth managers and sovereign wealth funds. Whether deployed on premise or as an ASP solution, its core system, SimCorp Dimension, supports the entire investment value chain and range of instruments, all based on a market-leading IBOR. SimCorp invests more than 20% of its annual revenue in R&D, helping clients develop their business and stay ahead of everchanging industry demands. Listed on NASDAQ Copenhagen, SimCorp is a global company, regionally covering all of Europe, North America, and Asia Pacific. Age of Company: 46 Years What s Your Focus on the Insurance Industry? SimCorp s comprehensive investment management solution supports insurers with a single, seamless system to cost effectively manage all aspects of your investment management function. SimCorp has helped some of the world s leading insurers and asset managers consolidate disparate systems across their investment operations. Our clients therefore spend less time reconciling data and more time on providing value to the investment process. Website: Lexmark International Deluxe Corporation About Your Company: Lexmark About Your Company: For over 100 creates innovative imaging solutions years, Deluxe Corporation has been and technologies that help customers providing best-in-class payment worldwide print, secure and manage solutions to both businesses and information with ease, efficiency and consumers. In a fast-paced world that unmatched value. Founded in our deep demands faster payment methods, industry expertise, Lexmark solutions we ve created Deluxe echecks, a simplify the complex intersection true digital payment solution that of digital and printed information, lets you send remittance data and/ transforming your processes to or documents simultaneously with an strengthen customer interactions and echeck payment, all via , all from improve your bottom line. your computer or mobile device. With no need to collect sensitive banking Age of Company: 25 years information from your claimants or What s your Focus on the Insurance vendors, Deluxe echecks are a safe Industry? Specific to the insurance alternative to paper checks as well industry, Lexmark leverages our as a less expensive, faster payment innovative features and functionality method. Let Deluxe help you evolve to solve document management and your claims payment process today. imaging challenges associated with all Age of Company: 100+ years aspects of the insurance policy life cycle. Our solutions can help insurers, agencies What s Your Focus on the Insurance and brokers capture, print, secure and Industry? Removing the paper check manage information while providing a from the claims payment and vendor superior level of security around printed, payment processes. scanned, copied or faxed documents Website: that pass through our devices. Website: 36 POST-CONFERENCE REPORT 2017

37 IASA 2017 ALL SYSTEMS GO! ISO About Your Company: Since 1971, ISO has been a leading source of information about property/casualty insurance risk. ISO provides statistical, actuarial, underwriting, and claims information and analytics; compliance and fraud identification tools; policy language; information about specific locations; and technical services. ISO serves insurers, reinsurers, agents and brokers, insurance regulators, and risk managers. Age of Company: 46 Years What s Your Focus on the Insurance Industry? Property/casualty insurance risk Website: Cloverleaf Analytics, Inc. About Your Company: Cloverleaf Analytics end-to-end insurance analytics and business intelligence solutions improve an insurance company s profitability and reduces risk by consolidating data across the enterprise for real-time analytics and cutting edge visualizations. Our customers jump start their analytics and realize an immediate ROI using our intuitive interface to access upto-the-minute trend analysis, 100+ pre-built reports, dashboards, alerts and much more. The Cloverleaf Analytics team, who have prided themselves in architecting some of the best business intelligence solutions in the insurance industry, have ensured that their decades of experience and best practices are built in into our solution and provide immediate value to our customers. Age of Company: 2 Years What s Your Focus on the Insurance Industry? We focus on analytics, machine learning and business intelligence specifically for the insurance industry. Website: Long Group Consultants, Inc. About Your Company: Long Group was born out of a belief that quality should be first and foremost while providing expert, hassle-free service. With this as our focus, we began providing Unitstatist, policy issuance (WCPOLS) and Financial Call reporting services to Workers Compensation Carriers and responsible reporting parties in November/2016. We approach these services with the goal of becoming an integrated part of our partners operations. We aim to become so integrated that the normal vendorclient issues could be eliminated; even to the point that we do not use the term client. We use the term partner to reinforce that we share the same goals and will work towards the same successes. Over time, our slogan has become, You Have Employees Here because we train our team members to interact with their partner contacts as if they work in the same office with them and to consider the challenges they may be facing as their own. To date, we have experienced remarkable success and forged relationships with multiple carriers and service providers that we consider vital partners to our success. Age of Company: 8 months What s Your Focus on the Insurance Industry? Our focus is on Workers Compensation Compliance and transforming the process on behalf of our partners with a focus on quality and efficiency. Specifically, we provide full service to report unitstat, WCPOLS and financial call data on behalf of Workers Compensation carriers and responsible reporting entities. Website: LongGroupInc.com CapVisor Associates, LLC About Your Company: CapVisor Associates, LLC, an SEC registered investment advisor, specializes in providing highly customized investment management services to the insurance industry. We bring more than 40 years of insurance asset management experience to correlate the insurer s investment strategy with their business objectives. Our Services include: 1) Investment Advisory/Consulting- In this relationship, CapVisor acts much like a Rent-a-CIO, helping clients to design an optimal investment program unique to their situation; 2) Investment Advisory/Manager Search- finding a new, complementary or replacement investment manager(s) suited specifically to meet the insurer s requirements; Project Work- Strategic Asset Allocation optimizations, Peer group analysis, etc. Our approach begins with a rigorous evaluation of the client s situation. We work collaboratively to align the investment strategy with the insurer s liabilities (ALM), liquidity requirements, risk budget, regulatory, accounting and tax situation. Our services include design/revision of investment policy and guidelines, customized benchmark(s), and optimized strategic and tactical asset allocations. Assisting clients to implement their plan through a network of best-in-class asset managers, measuring and reporting results and monitoring managers assures unbiased and precise execution of the investment program. Age of Company: 9 Years What s your focus on the insurance industry? SEC Registered Investment Advisory Firm Website: continued on page 38 POST-CONFERENCE REPORT

38 IASA 2017 ALL SYSTEMS GO! Getting To Know You continued from page 37 Octo Telematics North America About Your Company: Octo is the number 1 global provider of telematics and data analytics solutions for the auto insurance industry. Founded in 2002, Octo is one of the pioneers of the insurance telematics industry. Today, Octo is the largest and most experienced insurance telematics company in the world, transforming auto insurance through behavioral, contextual and driving analytics for more than 60 insurance partners. Octo has more than 5 million connected users (as of May 2017) and the largest global database of telematics data, with over 155 billion miles of driving data collected and 397,000 crashes and insurance events analyzed (as of 31 March 2017). Octo applies proprietary algorithms to this market-leading database to deliver powerful new insights into driver risk, informing solutions that benefit both auto insurance companies and policyholders. The company is headquartered in London, with offices in Boston, Rome, Stuttgart, Madrid, and Sao Paulo. For more information, visit octousa.com and follow us on and Facebook: Octo North America Age of Company: 15 Years Optymyze About Your Company: Optymyze is revolutionizing the performance of salespeople with data science, process automation, enterprise planning, and advanced analytics. We do this by motivating people to achieve sales goals, efficiently managing sales operations, predicting the performance of each sales person, and forecasting sales results and the cost of sales. By enabling clients to rapidly and efficiently adapt to change, Optymyze turns sales operations into a strategic advantage. Our success has been recognized by Gartner as a Leader in sales performance management, by Ventana Research for innovations in sales operations management, and by Brandon Hall Group for advances in sales enablement. Age of Company: 4 Years What s Your Focus on the Insurance Industry? Incentive compensation management, sales performance management, etc. Website: What s Your Focus on the Insurance Industry? Octo delivers telematics solutions and proprietary analytics that give insurers of all sizes the insight to reduce costs while better servicing both personal and commercial auto line policyholders. Octo s tailored offerings provide insurers a right-fit solution that meets their individual needs and budget. Website: 38 POST-CONFERENCE REPORT 2017

39 WOULD LIKE TO THANK OUR 2017 SPONSORS [ 2017 CONFERENCE SPONSORS ] [ EXECUTIVE EDUCATION ROUNDTABLE SERIES SPONSORS ] JOHNSON LAMBERT

40 EXECUTIVE CORNER Bruce Cheek interview continued from page 18 and my team did too, but that s where it s going to go. ROD TRAVERS: No doubt about it. While we re talking about innovation and technology, could you tell us about American Equity s involvement in the Global Insurance Accelerator (GIA)? What led you to that, and what impact has it had on your organization? BRUCE CHEEK: We were approached by the Greater Des Moines Partnership which is basically a conglomeration of chambers of commerce. Our CEO, John Matovina, and I talked about it and decided this is a good way to be part of what s going on in the Insuretech world. I was lucky enough to be the one who knew enough about technology to be selected to be our board representative, which I really appreciated. In the startup community, the speed at which everything goes is amazing. I m getting s at 4:00 A.M. because some of these entrepreneurs are working 24-hours a day. Everything just moves bang, bang, bang. If this isn t working, boom, they throw it out, and they start all over. Drive Spotter is a great example. They started out as a hardware company. Then they pivoted to more of an analytics company, and then they figured out what s really valuable here is data. Anybody can make the sensors and all those things; but that data you collect, that s valuable. That straight-through processing scenario that I talked about was one of those things that I thought was cool but would never happen in my lifetime. But a guy in one of my roundtables said, why not? I think our involvement with the startups has added innovation to our lexicon at American Equity. We took the solutions group, and we said you re just working on our innovation projects. That s essentially how the straight-through processing got done. They didn t have to deal with all the noise of product changes and regulation changes and all those things that your systems have to absorb as well. Mr. Matovina and Mr. Grensteiner were very supportive of hiring more and they re expensive technology people to get that done. We expanded every facet of technology from the analysts to the programmers or developers to the testers to get all that done. Would we have done that without the GIA? Maybe. Would we have done it as quickly without the GIA? I don t know. I think it helped put us in a position where we thought more forwardly about innovation and about some of the things that technology could bring to American Equity DENNIS SULLIVAN: I think when you align yourself with a group like the GIA, it becomes an extension of your organization. You put the money in, invest in it, and you reap some of the benefits. BRUCE CHEEK: I ll tell you American Equity has probably just started to tap some of that. Some of the other partners in the GIA will do innovation days and they ll bring 50 or 60 of their employees in and do innovation exercises; things that they ve learned with the GIA. We ve just scratched the surface. We can take it to another level, and we plan to continue. ROD TRAVERS: I am glad to see this phenomenon taking hold in the industry. I ve witnessed some of the positive impacts for insurers, such as the cultural impacts you touched on, and it is really encouraging. BRUCE CHEEK: It is. Another term we ve adopted from the startups is fail fast. One example was the artificial engine that we used to do the suitability scoring. We thought it might also be able to replace our workflow system. We started going down that path and working on it, but things weren t coming together. I talked to the project manager and she said, I don t think it s going to work. So I said, Then let s quit doing it and cut our losses. DENNIS SULLIVAN: Our firm does a lot of work helping insurance companies innovate operations and technology making things function better, faster, less expensively. One of the things we rely on is decision gates. Better to acknowledge early if something isn t going to work. Course correction is part of the innovation process. Culture has a lot to do with making that approach successful. 40 Summer 2017 theinterpreter x

41 EXECUTIVE CORNER I would be interested in your thoughts on the independent agency. They re constantly under attack. We have heard for years, Everything s going direct. How does American Equity look at that distribution channel? BRUCE CHEEK: That s a great question, Dennis. It reminds me of 30 years ago when I was a programmer, reading about how it s going to be a paperless society in 20 years. Well now it s 30 years later, and the prediction was clearly aggressive. I think the independent agent is going to be similar. There are still so many customers out there and new ones every day, especially in retirement age, who need the help of these people. Will that experience be passed down? Will those relationships be passed down? One of the startups, Find Bob, is meant to help agents with a book of clients pass those on. I think it s going to take longer for the independent agent to disappear than people are saying. I think they re still going to be a significant part of our sales force in the next five or so years. As banks and the broker/dealer channel accept our product and it s fit into the overall portfolio of a customer, more of the distribution is going to gravitate there. The product will be distributed under more of a full-service model as opposed to a single independent agent. I wonder if the independent agents will evolve to be that advisor. DENNIS SULLIVAN: That s the trusted advisor role. That face-to-face is important. There s an opportunity there for the next generation. BRUCE CHEEK: Somebody s going to tap into that. I am thinking of one independent marketing organization (IMO) that s run by a bunch of younger people. I just know they re going to figure out a way to grow the business. They re going to need independent producers to do that. DENNIS SULLIVAN: What keeps you up at night looking out ahead to the next three to five years? BRUCE CHEEK: Well, I have to go back to low interest rates. We need a normalized interest rate environment and investment environment. That s going to continue to be a challenge to us. I think there s a lot of sovereign debt out there. If long-term rates go up by 50 basis points, it s going to mean that some countries are going to be in trouble. So how does that affect the market? I don t know. That s going to be a huge challenge. I think we are making good headway with the reputation of the product. Some of the organizations, like the IALC and NAFA, are getting the message out about what an indexed annuity is and what it isn t. That s helping, but that s going to continue to be a headwind for us; that there will be people out there who want to badmouth us. Then we have competitors out there who are trying to make it look like there are more than 100 pennies in a dollar, with some strange features that look really good in a marketing brochure. Some competitors are going to go out a little further on the risk curve looking for yield. If something bad happens like 2008, it s going to give the whole industry a black eye, even though it s only a few companies involved. DENNIS SULLIVAN: That does hurt the industry. I think the idea of some of the financial planners seeing a fixed annuity as a component of a retirement plan is a real positive thing. You don t get the highest return, but it s solid. It s the foundational piece. BRUCE CHEEK: That s exactly what we want to happen. DENNIS SULLIVAN: Bruce, thank you so much for taking the time to share the American Equity story with our readers. n DENNIS SULLIVAN is Chairman at Nolan Consulting which specializes in the insurance industry. He can be reached for further comment via at dennis_sullivan@renolan.com. Nolan helps insurers grow and improve profitability by focusing on key opportunities including the customer experience, digital transformation, analytics effectiveness, operations renewal, and core systems value capture. ROD TRAVERS is the Executive Vice President for IASA. He can be reached for further comment via at rtravers@iasa.org. theinterpreter x Summer

42 ANALYST INSIGHTS InsureTech and Innovation by MATTHEW JOSEFOWICZ InsureTech is the buzzword of the moment, with billions of dollars of investment flowing into start-ups focusing on the sector. From the point of view of investors, anything that has to do with using technology in the insurance industry can be labeled InsureTech. Unfortunately, this broad term is not useful for incumbent insurers understanding of the many start-ups focused on the sector. Novarica has proposed an ABCs of InsureTech framework to help insurers differentiate between Analytics Arms Dealers, Beneficial Bots, Creative Carriers, and Digital Distributors. The first two categories, which are focused on helping insurers transform and compete, are likely to have a greater impact on incumbent insurers in the short-term than the direct competitors to existing carriers and distributors. But the latter two categories will offer useful examples of how to operate a digital insurer that will be copied by successful incumbents as they transform themselves. Analytics Arms Dealers The dramatic growth in the accessibility and volume of third-party data, combined with the increased power of analytical tools and big data technologies, is changing the way insurers operate. Predictive modeling combined with straight-through processing is making the business of insurance more effective and efficient across pricing, underwriting, claims, and other areas. While most insurers turn to established aggregators like ISO/Verisk, LexisNexis, and CoreLogic for data and to industryfocused consultants or software vendors for modeling help, there are a small number of InsureTech start-ups focused specially on selling data and analytical capabilities to insurers to help them compete more effectively. Novarica calls these companies Analytics Arms Dealers they are not participating in the marketplace directly, but they re selling tools to those who do. Analytics Arms Dealers represent both an opportunity and a threat to incumbent insurers an opportunity if an insurer is able to leverage new capabilities effectively before their peers, and a threat if they are not able to. Beneficial Bots Emerging technologies like drones, the Internet of Things, blockchain, and others have the potential to disrupt many industries, or at least transform operations within them. Costs and capabilities may be changed dramatically, forcing re-evaluation of business models and opening new potentials. Novarica uses the generic term Beneficial Bots to cover all of these new technologies, and the companies that are bringing them to the insurance industry. Like Analytics Arms Dealers, Beneficial Bot providers are primarily selling tools to incumbent insurers rather than competing with them directly. The opportunities and threats are the same as well insurers need to understand the potential value of these new capabilities 42 Summer 2017 theinterpreter x

43 ANALYST INSIGHTS better and leverage them faster and more effectively than their competitors. Note that Beneficial Bots aren t generally focused exclusively on insurance, but many have insurer investors or partners who see insurance as one of their primary applications. Creative Carriers New technologies create the opportunity for new thinking. With the combination of massive amounts of third-party data, powerful analytics, and digital communications, many of the challenges of running and insurance carrier can be addressed in new and innovative ways. Creative Carriers are start-ups that believe they have a new way to create and sell insurance products based on leveraging these new capabilities. In many cases, they are taking an Outside In approach by starting with the desired customer experience and building their operations backwards from there. They may be offering innovative products, like Trov s single-item insurance program or Slice Lab s on-demand commercial insurance for individuals in the gig economy, or they may be like Lemonade, selling a traditional product through a more customer-centric sales and service experience. Creative Carriers are unlikely to pose a direct threat to most incumbent insurers. Few will have the resources to scale effectively, and many will discover that the business of insurance is more complicated than they imagine. But as in banking, lending, and trading, these innovative and customer-focused companies will serve as useful examples for incumbents to follow. The ones that show promise will likely be acquired by incumbents (as Simple, a mobile-first bank, was acquired by BBVA), but even some of the unsuccessful ones will teach the industry how to serve customers more effectively with new capabilities. Insurers should carefully monitor these Creative Carriers and learn as much as they can from their methods. Large insurers with extensive resources may even want to invest in or incubate a Creative Carrier as a learning opportunity. Digital Distributors Digital distributors are either agencies, brokerages, or aggregators, with a good user interface and a digital-focused customer experience model. They get the most press and a disproportionate amount of investment, because they are the easiest to understand. From the incumbent insurer point of view, digital distributors are hardly disruptive at all. They, like any other intermediary, are selling insurance underwritten by carriers. They may compete with existing channels, and they may require insurers to streamline operations in order to access the markets they ve aggregated, but working with a digital distributor isn t all that different from working with a traditional distributor. Over time, the lessons learned from Digital Distributors, especially those about customer convenience and digital marketing and service, will reshape the way that most distributors operate, the same way that the lessons of the pioneer online banks like Security First and Wingspan have affected the way nearly all banks operate online today. While a few Digital Distributors may reach critical mass and thrive as independent concerns, most will either be acquired by traditional players or fail. Incumbent insurers may want to consider engaging with Digital Distributors as channels for their products, or simply monitoring them to learn from their customer-centric business practices, and copy whatever is applicable to the insurer s current business. The hype over InsureTech can make it difficult for most insurers to make an informed decision about the benefits of engaging with start-ups. Digital Distributors mostly offer distractions and Creative Carriers mostly confuse the market, but Analytics Arms Dealers can advance pricing, underwriting, and claims and Beneficial Bots bring new possibilities. Insurers seeking to thrive in the future should consider what engaging with the right kind of start-ups can do for them. Driven partially by the example of InsureTechs, insurers are expanding their own formal innovation programs. These may take the form of a small group of educators and evangelists within the company, a dedicated R&D organization with a fully equipped lab and a protected budget, or direct investing in startups. The hype over InsureTech can make it difficult for most insurers to make an informed decision about the benefits of engaging with start-ups. Whatever innovation path insurers take, the primary determinants of success are the commitment of the CEO and business unit leaders to operationalizing innovations and their tolerance for the risk of failure. Without these two ingredients, insurers may perform innovation theater, but they are unlikely to benefit from any discoveries. Of course, engaging with start-ups is a risky business. Most start-ups eventually fail. But insurers may want to consider applying an underwriting mindset to engaging with this world, and realize that a small number of hits may pay for any losses. But in any case, the opportunity to learn is great, and the risk of remaining ignorant of new approaches and capabilities may be even greater. n Matthew Josefowicz is president/ceo of Novarica, a research and advisory firm that advises more than 90 insurers on technology strategy. He can be reached for more information or for comment at mj@novarica.com. theinterpreter x Summer

44 SOCIAL MEDIA Staying Social After the IASA Conference by HEATHER DUNN Attending the IASA Annual Educational Conference and Business Show is one of my company s largest tradeshow presences of the year. It takes a lot of planning, preparation, and execution for exhibitors, but the hard work always pays off--and this year was no exception, as the 2017 conference was one of the largest IASA shows to date. Social media is a big part of the IASA Conference and is a great way to connect with other attendees, exhibitors, get updates on sessions and speakers, and keep up with what s going on at the show. As an exhibitor, and as a member of the IASA social media committee, we often see a big decline in engagement after the show ends. It s unfortunate because there is great content shared and conversations to be had throughout the entire year, not just during the conference. Here are 4 reasons to stay social after the conference: 1. Real time news and updates. I will be the first to admit that as B2B marketers, we weren t always at the cutting edge of social strategies and execution compared to our insurer counterparts in the B2C realm. But times have changed and solution providers, as well as the IASA organization, are providing real time news, updates, and industry interest stories. Using social media is a great way to quickly get updates about what is going on within the organizations you care about and the industry as a whole. If you re like me, you don t have time to read a magazine cover to cover--you skim to see the stories that interest you and read those in completion. Social is the perfect way to get teasers about everything going on, then click to read more upon interest. 2. Social isn t there to sell. While solution providers in the past may have been talking products and services, that mentality is long gone. Social is there to answer any questions you have, share thought leadership pieces, and provide company updates. If you are following a company that is just pushing their products go ahead and unfollow them! This isn t the B2C world. No one in our industry is going to make a purchase based on a good tweet or funny video shared on Facebook. The sales cycle is far more complex and solution providers know that you are not on social to be sold to. 3. Get to know us! I like to see when organizations are doing good things for their community, their employees have fun and enjoy what they do, and they care about their customers. In this industry relationships matter. Making a purchase with a solution provider means you are building a long-term Heather is the Marketing & Communications Manager for Insuresoft. She can be reached for further comment via at hdunn@insuresoft.com. partnership. Don t you want to know that an organization takes good care of their employees and their customers? Social is the perfect way to see what s going on within the organization, you can read reviews on the company, and get a feel for the organization s culture. Working with an organization that is like-minded to your own produces the best results and the most successful partnerships. 4. Speak up! If you have a question or comment, don t hesitate to use social to engage with an organization. Odds are that other people have the same question. Responses on social may be one of the quickest and easiest ways to get the information you re looking for. If you are only active on social during conferences, I say make 2017 the year that you change your engagement level. Using social to get your industry news and updates just makes sense. And why not, it s all right there in which ever platform you prefer. Let s build on our relationships and engagement with other organizations, because after all we are one community; one big family within IASA. n 44 Summer 2017 theinterpreter x

45 TAX CORNER Jump Start: What You Need to Know to Prepare for IFRS 17 by BRENDAN MACKINNON In May, the IASB published the IFRS 17 Insurance Contracts. A long time in the making efforts began in 1997 the standard has a clear objective: to improve comparability of financial statements and enable users to get a sharper picture of an insurer s true financial strength and performance. Implementing IFRS 17 will result in fundamental changes that go well beyond insurers finance and actuarial departments. Companies will need to assess internal systems and processes to ensure data can be aggregated and analyzed properly based on newly formed contract portfolios, and to assess potential impacts on income taxes, insurance products, and key internal metrics. Given the significance of the changes, the IASB set an effective date of Jan. 1, To help get you started, here s an overview of key areas and requirements. Aggregation, Measurement of Insurance Contracts Under the new standard, companies must identify portfolios of insurance contracts subject to similar risks. At a minimum, the contracts must be separated based on those that are deemed onerous, which occurs when the overall cash flows arising from the contact are a net outflow, from those that are not onerous and do not have a significant possibility of subsequently becoming onerous. Since insurance contracts typically combine features of financial instruments and service contracts that are interrelated, IFRS 17 requires companies to account for both the financial and service components without unbundling them unless the investment component of the contract is distinct. Continued on page 46 theinterpreter x Summer

46 TAX CORNER IFRS 2017 continued from page 45 Measurement at current value is consistent with the requirements for comparable financial instruments. Recognizing profit at the same time services are provided is consistent with IFRS 15. Therefore, IFRS 17 requires an entity to measure insurance contracts using both fulfillment cash flows and contractual service margins. Fulfilment Cash Flows The underlying objective of the IASB s approach to measurement of fulfilment cash flows is to achieve consistency with current market information. Current value of the fulfilment cash flows allocated to a group of insurance contracts includes: A current, unbiased estimate of future cash flows expected to fulfill the insurance contracts An adjustment for the time value of money and financial risks associated with future cash flows, to the extent the financial risks aren t included in the future cash flow estimate An adjustment for the effects of nonfinancial risk, defined as the compensation the entity requires for bearing uncertainty about the amount and timing of cash flows that arise from nonfinancial risk Contractual Service Margin On initial recognition, the contractual service margin depicts the profit the entity expects to earn by providing the services promised under the contracts in the group over the duration of coverage. The new standard requires an insurer to recognize the gain as To achieve the objectives of IFRS 17, companies must meet several disclosure requirements which allow users to assess the effects insurance contacts have on financial position, performance and cash flows. it satisfies its obligation to provide services over the coverage period, rather than upon initial recognition unless a group of contracts is onerous on initial recognition, in which case a loss is recognized immediately. Subsequent Measurement After initial recognition, IFRS 17 requires measurement of fulfilment cash flows to reflect estimates based on current assumptions. It also requires entities to recognize specified changes in the contractual service margin for a group of insurance contracts. These changes depict changes in the future profit to be earned from providing services under the contracts, and include items such as changes in fulfillment cash flow estimates and the effect of the time value of money and foreign currency exchange rate changes. Although service and financial components of insurance contracts aren t separated for measurement on initial recognition, the IASB decided that changes in the carrying amount of the insurance contract may have different information value. As a result of the combined treatment of the changes in the fulfilment cash flows and the changes in the contractual service margin, IFRS 17 spells out how to handle different types of changes in estimates and defines the total carrying amount of a group of insurance contracts. Companies may simplify measurement of the liability, for short duration contracts, which have coverage periods of one year or less, if a reasonable estimation of the general model can be made. Disclosures To achieve the objectives of IFRS 17, companies must meet several disclosure requirements which allow users to assess the effects insurance contacts have on financial position, performance and cash flows. Required disclosures include qualitative and quantitative information about the amounts recognized in its financial statements for contracts within the scope of IFRS 17, significant judgements, and the nature and extent of the risks from contracts within the scope of IFRS 17. With its aim of improving clarity around assessing insurers financial health and performance, IFRS 17 demands organization-wide changes. Don t wait to begin your implementation efforts. n Brendan MacKinnon, CPA, is a Senior Manager at Plante Moran, PLLC. He can be reached for more information or comment at Brendan.MacKinnon@plantemoran.com. 46 Summer 2017 theinterpreter x

47 TECH CORNER WHAT IS BLOCKCHAIN? by ANIL CHACKO & MARY ELLEN FREYERMUTH Blockchain, the underlying technology for the digital currency bitcoin, could be one of the most disruptive innovations since the internet; it will change how we do business. Bitcoin and blockchain are not the same, Blockchain provides the means to record and store bitcoin transactions. In addition, there are many other uses for blockchain beyond bitcoin. Recently, blockchain technology has acquired a new identity in the enterprise. Blockchain is a ledger of records that are arranged in batches called blocks; cryptographic validation is used to link these blocks together. Each block in the chain references and identifies the previous block by a hashing function that forms an unbroken chain. This ledger is not stored on one centralized computer, instead it utilizes a distributed ledger system that exists on multiple computers, called nodes, at the same time. Blockchain can be thought of as an independent, transparent and permanent database that coexists in multiple locations at the same time. The term Blockchain was derived based on the way transactions are stored, in blocks that are linked to each other to form a chain of blocks. The blockchain grows as the number of transactions grow. Each block contains a hash, which is a digital fingerprint that uniquely identifies that block, time-stamped batches of recent transactions, and the hash of the previous block. The previous block has links that keeps the blocks together and prevents a block from being altered or a new block from being inserted between two existing blocks. This makes the blockchain tamper proof and makes it immutable or unchangeable. There are 4 key concepts to blockchain Distributed Shared Ledger, Permissions, Consensus, and Smart Contracts: Distributed Shared Ledger In a shared ledger, transactions are recorded once; this eliminates the duplication of effort that is so common in the traditional network. A shared leger has certain characteristics; it records all transactions across the business network and the shared ledger is the system of record, one single source of truth. It is shared among all participants in the network Continued on page 48 theinterpreter x Summer

48 TECH CORNER Blockchain continued from page 47 through replication; each participant has a duplicate copy of the ledger. It is permissioned so participants can see only those transactions they are authorized to view. Permissions Blockchain can be permissioned where each participant has his or her unique identity; this provides the ability to restrict access to transactions when needed. Some participants can be limited to view only certain transactions, while others, such as an auditor, can be given access to a detailed view of the transaction. This is accomplished via advanced encryption, which establishes privacy on the network, prevents unauthorized access to transactions details, and prevents fraudulent activities. Consensus Consensus ensures that all transactions in a block are validated before being appended to the blockchain. This requires that a majority of the network nodes agree to the validity of a given transaction. Smart Contracts A smart contract is an agreement or set of rules that govern a transaction. It is stored as part of the blockchain and is executed automatically as part of a transaction. A smart contract can be the business logic that is assigned to a transaction on the blockchain or it can hold conditions under which specific actions must be performed. A smart contract can define contractual conditions, an example would be fees paid to a physician for providing a particular service. There are several use cases for blockchain in the insurance industry. As a first example, carriers can make their claims process more efficient. Claims processing can be automated by writing the conditions of a policy in a smart contract that is stored in a blockchain; when an event occurs and the incident is reported to a trusted source, the policy is triggered automatically and the claim is processed according to what is specified in the smart contract and the amount that the customer is paid. Blockchain can provide many benefits to the insurance industry; it will reduce the cost of processing insurance claims to a fraction of what it costs now. It also promises to reduce insurance fraud and improve customer satisfaction. Another example would be a Blockchain that can hold complete the medical history of patients, providing a secure and efficient way to share information with multiple parties such as the doctor, hospitals, and insurers. This will allow a secure means to store medical history, expedite claims processing and allow doctors access to a patient s complete medical history for a faster and accurate diagnosis and precise treatment recommendation. Blockchain can help the insurance sector by not only improving business processes; it will reduce cost, increase efficiency while providing improved integrity and security. n Anil Chacko has volunteered with IASA for the past several years, both nationally and at the chapter level, serving on the Board of Directors and most recently chairing the Technology Program Committee. He can be reached for further comment via at anil.chacko@outlook.com. Mary Ellen Freyermuth has also served as an IASA volunteer, sitting on both the Board and Management Team, most recently serving as the Vice President of Marketing & Communications. 48 Summer 2017 theinterpreter x

49 ASSOCIATION NEWS Volunteers Recognized as a Key Part of IASA Success by PAT SPEER The National IASA organization is supported by more than 180 volunteers from across the insurance industry. In addition to balancing their normal work and life schedules, these volunteers contribute innumerable hours of their time to support the many and varied key initiatives related to valuable year-round education and the organization s annual conference. At this year s conference, Jason Nickles, Western And Southern Life Insurance Co. and the IASA Vice President of Volunteer Development, recognized the nominees as well as the honorees for both Volunteer of the Year and New Volunteer of the Year. From the stage, Jason quoted author Simon Sinek: Working hard for something that we don t care about is called stress; working hard for something we love is called passion. With that philosophy as the backdrop, Jason recognized Ann Wiesler, Cardinal Investment Advisors, as this year s New Volunteer of the Year. The New Volunteer of the Year Award is presented to a volunteer with less than two years of experience who has made a significant contribution to the association. Rod Travers, Jason Nickles, Ann Wiesler, and Joe Pomilia Ann has been involved at both the Chapter and National Levels. Within a year of joining the National IASA organization, Ann participated as a leader of the Chief Investment Officer Roundtable, which is part of IASA Executive Education program, and also took on a leadership role as Vice President of the Chapter Advisory Committee, Jason said. Next Jason recognized Kristine Weber, BMS Intermediaries, as Volunteer of the Year. This award is presented to a volunteer who individually made a significant and notable contribution during the past year to the IASA. I might be biased, but I believe that her long-lasting contributions to several critical Volunteer Development Committee initiatives has really made Kristine shine, Jason said. As a track leader in the ARF Education Committee, Kristine has taken our reinsurance education to the next level. She has actively partnered with reinsurance professionals to bring in great content and engaging speaker. Jason also recognized Kristine s work in establishing an ongoing Leadership Development Program to support volunteer experience and succession planning. The IASA also recognized Chapter Volunteer Excellence Award Winner Kara Thome, OneAmerica Financial Partners, from the Indiana Chapter, and those members present from the IASA Top 30 Under 30 program, which recognizes excellence among up-and-coming members. Rod Travers, Jason Nickles, Kristine Weber, and Joe Pomilia Our volunteers are passionate passionate for their organizations, passionate for the industry, and passionate for one another. Each volunteer has regularly stepped up to support each other and our organization. I sincerely thank everyone for their efforts that help make IASA a success. n Pat Speer is principal at Speer Content Strategy & Development LLC. She can be reached for more information or for comment at pspeer@speerconsulting.net. theinterpreter x Summer

50 ASSOCIATION NEWS 2017 POLL RESULTS: Insurance : Issues & Priorities EXECUTIVE SUMMARY The 2017 IASA Issues & Priorities poll is a recurring poll that focuses on the priorities for carriers in 4 strategic areas: Technology, Finance, Operations and Investments. There are a few notable items that show an increased priority in WHAT ARE THE MOST IMPORTANT TECHNOLOGY RELATED ISSUES FACING YOUR COMPANY IN THE NEXT 12 MONTHS? Participants were asked to mark all options that applied. Core System Replacement Keeping Pace of Change/Marketplace Demands Impact of Cybersecurity on Day to Day Operations Managing Cost Talent Acquisition Managing Big Data Performance Improvement Mobile Apps Cloud Computing Vendor Management Outsourcing: Systems Development and Maintenance Capitalizing on InsureTech 0% 10% 20% 30% 40% 50% 60% TECHNOLOGY Core System Replacement remains a top priority for 3 years in a row, while keeping pace with marketplace demands grew by 14%. Managing big data also grew from 18% to 37%. WHAT ARE THE MOST IMPORTANT FINANCE-RELATED ISSUES FACING YOUR COMPANY IN THE NEXT 12 MONTHS? Participants were asked to mark all options that applied. Underwriting Profitability Managing Costs Creating a Realistic Budget/Forecast Implementation of Regulatory Requirements Economy Catastrophies Surplus Management/Maintaining Capital Rations Optimization of Reinsurance Benefit Costs Underwriting Leverage Other 0% 10% 20% 30% 40% 50% 60% 70% FINANCE Underwriting profitability grew from 48% in 2016 to 62% in Catastrophes jumped by a 10% increase from previous year s input. 50 Summer 2017 theinterpreter x

51 ASSOCIATION NEWS WHAT ARE THE MOST IMPORTANT OPERATIONAL ISSUES FACING YOUR COMPANY IN THE NEXT 12 MONTHS? Participants were asked to mark all options that applied. Regulatory, Legal & Compliance Issues Customer Service Retaining/Recruiting Talent Competitive Differentiation Implementing/Applying Analytics Enterprise Risk Management Merger/Acquisition Integration Operations Impact from Social Networking Apps Other 0% 10% 20% 30% 40% 50% OPERATIONS Compliance and Retaining/Recruiting Talent remain high priority items. Customer service took a significant jump from 29% in 2016 (4th highest) to 45% in 2017 (2nd highest). WHAT ARE THE MOST IMPORTANT INVESTMENT ISSUES FACING YOUR COMPANY IN THE NEXT 12 MONTHS? Participants were asked to mark all options that applied. Investment Yields Overall Economic Uncertainty Regulatory & Rating Agency Updates Reinvesting Coupons & Maturing Assets Quakity Concern og Higher Yielding Assets Impairments ESG (Environmental, Social & Governance) Investments 0% 20% 40% 60% 80% 100% INVESTMENTS Investment yields remain the top priority, growing from 76% to 89% year over year. 82% No CX Officer or Manager CUSTOMER EXPERIENCE MANAGEMENT 82% of respondents indicated that they did not or did not plan to have a Customer Experience (CX) officer/manager. Customer experience is defined as the product of an interaction between an organization and a customer over the duration of their relationship. We find this interesting due to the fact that Customer Service as a priority grew 16% over last year s responses. theinterpreter x Summer

52 ASSOCIATION NEWS COMMITTEE SPOTLIGHT IASA s Education Committee Responds to Industry s Evolution by KEITH GUARD Education was one of the fundamental objectives in the original founding of IASA. As IASA grew over the years, and as the organization evolved through member input, it became apparent that a direct focus was needed on managing all of the educational areas across a diverse base of member companies and interests. It s not clear when the Education Committee was initially formed. However, it was well-established around 12 years ago when the Education Committee was primarily focused on ARF and Technology. Today s Education Committee is responsible for developing all of the educational content and delivery of education programs to IASA members and customers within the insurance industry. The materials and courses developed by this committee are applicable across Financial, Technology, and Operations roles. It s an enormous job, and it is central to IASA s purpose. Over the past year, this group was led by Laurie Macklosky. This leadership role is transitioning to Doug Ramsey for 2017 and As IASA has evolved, the goals and objectives of the Education Committee have evolved as well. When members fully recognized the career benefits of IASA participation, the Education Committee saw increased interest in a separate educational track focused specifically on Career Development. This year, as part of that evolution, the Education Committee decided to alter its approach with its Career Development Our biggest challenge is trying to keep up with a constantly changing industry, and to find a way to provide our attendees with the most current, innovative topicsof the day Laurie Macklosky is 2nd Vice President and Executive Lead for Business Insurance at Travelers. Laurie also serves as the VP of Executive Education for IASA. She can be reached for further comment via at lmacklos@travelers.com. track. We tried a something different for our Careers Skills grid this year by reaching out to some new speakers from the industry, Macklosky explained. They were fabulous, and they provided the attendees with their real -life experiences on topics such as diversity and emotional intelligence. Macklosky has learned that providing education in an ever-changing environment has unique challenges. Our biggest challenge is trying to keep up with a constantly changing industry, and to find a way to provide our attendees with the most current, innovative topics of the day, she said. Currently, the volunteers on the Education Committee are grouped by Keith Guard is an IASA National Volunteer with over 20 years of experience working with technology at insurance companies. He can be reached for further information or comment via at keith.guard@gmail.com. educational track. There are leaders for each of the major IASA tracks ARF, Technology, and Career Development. As the educational needs of IASA members expand and grow, the structure of the committee continues to develop. Doug [Ramsey] led the Technology Program this year, and we rolled out our IASA Tech Tank for the first time it received great reviews and participation, explained Macklosky. We expect this initiative to evolve and grow next year, as Doug takes over as the IASA Education Committee chair. It s clear that Macklosky is very proud of what the Education Committee accomplished this year, and is looking forward to what the next year brings under Doug Ramsay s leadership. This committee is the heart of the conference. I enjoyed working with the wonderful IASA volunteers and staff, finding new and innovative topics to cover and most of all, finding new ways to bring expertise onto the grid. n 52 Summer 2017 theinterpreter x

53 ASSOCIATION NEWS MEMBER COMPANY SPOTLIGHT A Conversation with IFIC s Controller, Scott Bowen BY SONIA CLIFFEL Founded in 1904 by the Singer Sewing Company, International Fidelity Insurance Company (IFIC) once provided captive fidelity coverage for its international subsidiaries. Now, in 2017, the company, headquartered in Newark, NJ, has evolved to become one of the most diversified surety operations in the business. With 20 regional offices nationwide, IFIC is the largest independent, privately owned surety company in the industry. IFIC recently received an A.M. Best A+ risk rating with a stable outlook. Scott Bowen has been with IFIC for two years, in the Controller position. Prior to joining IFIC, Scott volunteered with IASA at the national level. Before accepting his position, Scott ensured that IFIC would support him in his role as a national volunteer and so began IFIC s association with the IASA. In 2016, IFIC became a new member of IASA and sent six people to the Annual Conference in San Antonio, three representatives from finance and three from IT. According to Scott, his colleagues were blown away that there was a conference out there, from an accounting and an IT perspective that offered such a wide variety of educational materials, all in one place. Scott s volunteering efforts at IASA National expose him to knowledge areas and experience outside of his current role. He has held volunteer positions on committees such as e-learning, Volunteer Development, and Membership. In e-learning, Scott was the 2016 lead producer for the entire webinar program and connected IFIC s head of IT to be a pilot tester for an IASA webinar that they are using to further the CPE accreditation process. His mission is to get others involved with volunteering as he views volunteering as the best place for networking. The company s staff has also participated in the NY/NJ Metro region s educational sessions. IFIC Staff enjoying the Tuesday evening event at IASA 2017 in Orlando Before Scott s employment with IFIC, his manager had never attended the IASA Annual Conference as she was unaware of the educational event. Because of this, Scott wanted to bring one of his staff members to the annual conference to broaden her experience and networking. According to the staff member, she was extremely impressed and was able to develop and expand her networking opportunities. She saw a broader scope on what other insurance companies are doing, the way they think, and how they operate on the finance side. On the IT side, IFIC s CIO and two programmers also attended and were awestruck by the business show. Sonia Cliffel is Vice President for First American Equipment Finance, as well as a member of the IASA Membership Committee. She can be reached for further comment via at sonia.cliffel@faef.com. According to them, they never knew there were so many vendors. They were able to visit a wide variety of vendors, all in one place, and walked away with a large amount of information. At this year s conference in Orlando, the head of IT and programmers attended, but this time with a game plan to make their second IASA experience more strategic and worthwhile. The team pinpointed specific vendors, signed up for vendor connect tours as well as sought out solutions in AR and Claims. One primary goal was to be on the lookout for how to migrate their business strategy to something more current and stable. As an IASA Annual Conference attendee himself, Scott finds that the biggest draws are the networking and educational opportunities. When asked how the IASA compares to other industry associations for educational purposes, Scott stated, In my mind, there is no comparison. IASA outshines all other organizations. Most conferences we go to are one day conferences with two to three topics; the IASA is a multi-day conference which makes it unique. Having IASA memberships also allows the ease of keeping up with current CPE requirements. He explains, Our company s membership with IASA provides valuable webinars, CPE credits, and continual learning year-around! IASA is proud to have IFIC as a member and appreciates the opportunity to support the company s staff through continuing education and networking endeavors. n theinterpreter x Summer

54 ASSOCIATION NEWS CHAPTER NEWS IASA Florida Chapters Fall Regional Conference The Sunshine, Tampa Bay, and South Florida Chapters of IASA are pleased to announce that they are planning an exciting one-day regional conference to bring together the three Florida chapters. The event will take place at the Gaylord Palms Resort in Kissimmee, Florida on Monday, October 16, Educational sessions at the event will include assignment of benefits information, cybersecurity, reinsurance, and NAIC updates. There will also be golfing and other networking events on Sunday, October 15 to kick off the conference! The event was born out of a workshop in March where members of each chapter were invited to help brainstorm ideas on ways to bring the chapters together. The group came up with the idea of a regional conference in central Florida allowing easy access for all chapters. Event planning is well underway for this exciting new event. For more information, visit org/chapter or contact Angie Gurganus, IASA, via at AGurganus@IASA.org. Plan now to join the IASA Florida chapters at the 2017 Fall Florida Regional Conference in Kissimmee, Florida held at the beautiful Gaylord Palms Resort! Visit for more information. n 54 Summer 2017 theinterpreter x

55 NEW! L/A/H NOW AVAILABLE IN BOTH PRINT & ebook FORMATS! NEW! LIFE & ACCIDENT & HEALTH INSURANCE ACCOUNTING TEXTBOOK: 5TH EDITION Also available in ebook format As a tax professional, I am constantly in need of refreshers on non-tax technical topics and the text provides a comprehensive guide to the accounting issues of a propertycasualty insurance company. I would recommend the textbook to not only professionals starting out in the insurance industry, but also to those senior folks looking to stay up to date on all things insurance accounting. -Al DiGiacomo, Tax Senior Manager, Crowe Horwath LLP London Life has been an IASA Member Company since 1998 and purchased the Life and A&H insurance accounting textbook back in 2001 and the 2003 update. Over the years, I have used the textbook as a training tool for new staff accountants new to the insurance industry. -Ray Hazel, CFO, London Life Reinsurance Company Used by leading industry organizations, the IASA Property & Casualty, and Life & Accident & Health Insurance Accounting Textbooks are THE industry standard for statutory accounting information. Written by practicing professionals in the industry, IASA s insurance accounting textbooks provide a wealth of information for industry professionals looking to stay ahead of the curve. The 5th Edition of IASA s comprehensive Life & Accident & Health Insurance Accounting Textbook includes 28 chapters of pertinent information on every aspect of life, accident, and health insurance accounting, as well as many other related topics, including important guidance on: Evolution of Insurance Asset/Liability Management Treasury Department Management Strategic Planning, Internal Controls, & Budgeting PROPERTY & CASUALTY INSURANCE ACCOUNTING TEXTBOOK: 9TH EDITION Also available in ebook format This edition of IASA's popular Property & Casualty Insurance Accounting Textbook includes 21 chapters, with expanded information on investments and a new chapter on Risk-Based Capital. The chapters include statutory accounting pronouncements through 12/31/2014, as well as a historical overview of property and casualty insurance accounting. Topics include: Reinsurance Developments in the US and Internationally Federal Income Tax Guidelines as well as Accounting for Income Taxes Overview of GAAP Accounting Regulatory Corporate Governance GET YOUR COPY OF IASA S INDUSTRY-RECOGNIZED INSURANCE ACCOUNTING TEXTBOOKS TODAY! Not only do the books cover insurance specific topics, but information needed for business in general, such as budgeting, internal controls and strategic planning, is also furnished with an emphasis on insurance industry application. The electronic books are fully searchable allowing for easy location of subject matter. This should be the go to book on insurance accounting and reporting in everyone s resource center. -Connie Jasper Woodroof, StoneRiver, Inc. VISIT IASA.ORG FOR MORE INFORMATION

56 SAVE THE DATE JUNE 3 6, 2018 NASHVILLE, TN 2018 EDUCATIONAL CONFERENCE & BUSINESS SHOW JUNE 3 6, 2018 GAYLORD OPRYLAND NASHVILLE, TN The insurance industry s most prominent conference offers educational, industry relations and career development opportunities for new and experienced professionals across all lines of business and critical functional areas, including: accounting, finance, investments, operations, risk, and systems/technology. More than 80 educational sessions 200+ product and service exhibitors Three discipline-specific super sessions Exclusive executive roundtable events Inclusive networking opportunities GO TO IASA.ORG FOR MORE INFORMATION!