Internet of Things — NBA edition

Internet of Things — NBA edition

It is not often that I get to reference an article from ESPN for a blog post, but as March Madness is complete and we’re coming close to the NBA playoffs, this topic resonated with me.

The article, entitled Why the NBA slapped the wrist of Matthew Dellavedova, focuses on the use of wearable technology by NBA players. Not exactly an insurance topic, but it brings up many topics that do apply to our industry. It is also a fun read.

In a nutshell, a company has created a super-wearable for use by athletes called the Whoop (pronounced without the W). It is unique in that it not only captures current information, but more importantly trends in information. It focuses on my more than just activity during the game, but includes other areas such as sleep monitoring, including the impact of late evening caffeine.

The reason Matthew Dellavedova was slapped on the proverbial wrist was wearing a Whoop on that wrist during a game.

Now there are some obvious reasons why that might be a bad idea, particularly if that wrist came in contact with another player in the eye, or other sensitive area.

But the interest from the insurance perspective is narrower (although that could be a pretty big claim).

The challenge is the use of wearables isn’t covered in the current contract, which was negotiated well before wearables became a thing. So the issues include:

  • Marketing rights – what happens if the wearable in use is different than the ‘official wearable of this sports league?
  • Ownership of data – This is the big one for our industry. Does the player own their data? If so, that data may have value and they may need to be reimbursed for the data.
  • Use of the data – this is another big issue. If the data could potentially predict an injury, or the likelihood of an injury, this could affect the value of the player, lowering their total contract.
  • Security of the data – This one isn’t mentioned in the article, but what if a competitive team hacked your data. Worse a dishonesty bookie or bettor hacked your data. It would be interesting to know that LeBron was having breathing difficulties the afternoon before a game, wouldn’t it?

These are just some examples, but we can see how they could come across to insurance. If an insurance company wants my health data or my driving data, there better be a significant quid pro quo. Some auto insureres address this with a signing bonus when you enroll in their telematics program, essentially buying your data. Other programs offer you discounts for this information, if you do what you’re supposed to do (drive safely, exercise more). This gets more complicated as wearables evolve. The use of this data in underwriting could dramatically affect your premiums, but if you own the data and refuse to provide it, what happens? What are the legal ramifications of a declined life insurance policy because of wearable data?

For the average consumer, the security of the data really isn’t an issue and I’ve said this before. If a hacker really wants to know that I didn’t walk my expected 10,000 steps today (after all, I work from home, there are only so many steps I can take), than they are welcome to that data. I feel the same about a lot of health data. My cholesterol level isn’t something that could be used to steal my identity.

Just as driverless cars have ethical and legal issues to resolve, so do the expanded use of the Internet of Things in our industry.

Insurers are investing in data scientists

Insurers are investing in data scientists
A few weeks ago I described a few results of a survey we have launched during the last quarter of last year around the role and importance of data in insurance. My blog post can be found here. Since then we have published a report summarizing the findings of this survey that our members can find here. An interesting trend we identified based on this survey was the need for insurers to hire more data scientists with advanced degrees and strong background in data and computer science. Indeed we think technology is not enough nowadays and insurers need to also invest in people with deep skills in this domain. I recently came across the following article from INN: Sentry Insurance Gifts $4 Million to Grow Data Science. It seems to validate our findings and I expect to see more of these kinds of initiatives going forward.

Social media intelligence and insurance – don’t listen to everything if you want to hear something

Social media intelligence and insurance – don’t listen to everything if you want to hear something
In a 2011 report titled Using Social Data in Claims and Underwriting: Creating a Social Risk Profile, Celent looked at how insurers could leverage social networks to do a better job in claims and underwriting. Since then, we have been looking at vendors who can complement insurers internal data with external data sources including social media data and this in the frame of different applications that go beyond underwriting and claims. We notably have profiled and will continue to profile vendors active in the predictive analytics space and for which data sources are as important if not more important than pure features and functions they offer as part of their system. Using social media data in insurance has become more important over the past few years and what can be called now social media intelligence goes beyond a simple technology that taps in all sorts of social network data sources. Indeed for many people social media intelligence or what people also call social media listening purely consists in screening social networks to get data that can complement internal data to make a better business decision. Actually this definition is too succinct and does not include all key phases a proper social media intelligence strategy should include: ScreenHunter_496 Feb. 29 10.29 So we define social media intelligence as the strategy consisting in:
  1. Defining strategic objectives that are dependent not only on internal but external data,
  2. Defining a referential or a group of topics, relevant social media platforms as well as a geographic and language scope to be considered for the analysis,
  3. Filtering and analyzing social media data regularly (real time, daily, monthly but it is generally a continuous process)
  4. Implementing an action plan leveraging findings derived from the data analysis to achieve the strategic objectives initially defined.
We think insurers can learn from project and use cases other industries have gone for in the Social Media Intelligence space and we are interested to better understand how these examples can generate fruitful ideas for insurers. Stay tuned as Celent will be covering this topic in more detail in the near future.

US patents in 2015 – who are the leaders?

US patents in 2015 – who are the leaders?
I thought this chart from the firm Statista was interesting and topical given my post from last week. What particularly caught my eye was their observation that IBM is number one for the 23rd straight year. In addition, over 2,000 of their patents focus on cloud computing and cognitive computing, both areas of particular interest to insurance and the broader financial services industry. And for those that wonder (like me), Apple was in 11th place, just 18 patents short of 10th.   Infographic: Top 10 U.S. Patent Recipients | Statista You will find more statistics at Statista

Insurance companies are embracing technology — for investment

Insurance companies are embracing technology — for investment
Celent frequently observes that many insurers, particularly in the Life space, are running aging, if not antique, software systems. They rely heavily on mainframe systems, often in languages such as COBOL that are becoming more difficult to support. The positive news is that our research shows continued growth, if modest, in IT budgets with modernization and innovation a frequent focus. With this as the foundation, it is interesting to see continued growth in insurance company’s venture capital arms in financial services oriented technology, or Fintech. Industry research shows an incredible growth path in Fintech start-ups, from a modest 400 or so in 2010 to over 12,000 in 2014. While the numbers are not yet in, we expect the 2015 numbers to continue this dramatic growth path. The insurers with venture capital arms are too numerous to list, but are a who’s who in the industry. Examples include AXA Strategic Ventures, MassMutual Ventures, American Family Ventures, and Transamerica Ventures. While many of the examples are US-based, it is a global phenomenon. A great example is Ping An Ventures, a subsidiary of the Chinese insurance company Ping An. Celent tracks many of the insurance related investments and we see several focus areas. One is in financial management and modeling, such as Roboadvisors, across both Life and Health. Good examples include Northwestern Mutual’s acquisition of Learnvest and AXA Strategic Ventures and MassMutual Venture’s investment in Limelight Health. MassMutual is also the parent company of Haven Life, a fully online sales organization dedicated to Life insurance. Other hot areas, not surprisingly, include analytics and the ever popular Internet of Things. The most recent investment, announced just yesterday, is AXA Strategic Ventures’ investment in Neura. Neura’s tagline is “Enrich your products with personalized insights from the lives of people who use them”. While a little heavy on the buzzwords, the basic view is that Neura analyzes data about you and recommends personalizations based on that information. The basic premises appears to link the Internet of Things, such as your Fitbit, to your social media presence, to your calendar and more. There are, of course, other companies overlapping this space (with 12,000 new companies, you would expect competition), such as Vitality and Life.io. The competition is encouraging, as it fosters continuous innovation. As the Millennials now outnumber Baby boomers (at least in the US), new technologies to engage them in insurance can be game changers. I am particularly intrigued with the technology companies, like these, that are focusing on changing the entire approach to Life insurance. The life insurance sale has always been focused on a negative experience – death of a love one. No one wants to talk about dying, and everyone wants to believe they will live many more years. When I talk to people that are just reaching an age where they really need life insurance, I get push back, and a lot of it, about everything else more important in their lives. My response that they need to protect their family often falls on deaf ears. By changing the discussion from “you are going to die”, to “how can we help you live longer”, we are opening up a much more comfortable discussion. In addition, this is a generation that will share everything on social media, to the point of embarrassment, so asking for more information to make their experience more intimate should be fairly easy. The investments and technology are exciting. It is wonderful to see insurance organizations finally catching the technology wave, after lagging for so long. Whether it be the Internet of Things, Usage based insurance, Micro insurance, behavioral underwriting or more, the staid insurance industry is breaking out. Some technologies are even a bit fun, such as the expanded usage of drones. Now before I get you too excited about the reinvention of insurance, I suggest you read a counterpoint to this post, from my colleague Donald Light, entitled A long time ago in a galaxy far far away, I went to a two hour meeting to reinvent insurance. He makes some very valid points about the managing our excitement. Another colleague, Craig Beattie, shares a similar bit of skepticism in his post What if… the insurance industry didn’t innovate? I guess I am forever the optimist and want to believe the excitement and change is real.

California DMV flashes yellow light for driverless cars

California DMV flashes yellow light for driverless cars
As a long time resident of the Golden State, let me say that the words “fair,” “judicious,” “California,” and “DMV” just don’t appear together in the same sentence. But, I’ll break precedent and say that the  California DMV’s new draft regulations for driverless cars are (overall) fair and judicious. The regs begin to address the knotty social and legal issues of safety and liability. Manufacturers and a third party tester must certify the ability of a driverless car to meet specified safety and performance requirements. Operators (who used to be called drivers, back in the day) must be able to take control of the car and will be responsible for all traffic violations. It looks like the larger issue for insurers and trial lawyers of “who gets sued” is not directly addressed by the draft regs. Additional parts of the regulations include:
  • Special licensing for driver/operators
  • Obtaining driver/operator consent for collecting information “not necessary for the safe operation of the car” (hello interior-facing dashboard cams)
  • Ongoing reporting requirements by the manufacturers on the vehicles’ performance and safety
  • And, sign of the times, the vehicles must be able to detect and respond to cyber attacks
Some manufacturers may be (privately) impatient. But the reality is that these regs provide a path for broader deployment into a litigious and worried society of technologies still in the R&D stages.

Why the insurance industry needs more data scientists

Why the insurance industry needs more data scientists
Celent will soon be publishing an update to our 2013 report Perceptions and Misconceptions of Big Data in Insurance. In this report we looked at various elements in relation to the role and perception of data in insurance to understand where the industry was in terms of adoption of data-related technologies and more particularly Big Data. To do so we used what we call our Big Data Maturity Model. This model uses seven dimensions to categorize the industry in terms of their maturity level when it comes to adopting Big Data: Figure 1 big data   We came across an interesting article recently in the Insurance Journal that said insurers needed to hire more Big Data professionals. While we agree with this statement, we have already noticed in the early results of our 2015 survey (still in progress) that insurers have now more data scientist experts as shown in the following figure: Figure 2 data tools Technology is not enough and insurers have understood that if they want to make the most of data-related technologies they need to hire highly skilled people with solid knowledge of machine learning, statistics and predictive analytics. This is an interesting early finding and we look forward to provide our members with more on our seven model dimensions soon. Stay tuned!

The world’s most connected human

The world’s most connected human
I recently read about Chris Dancy, Chief Digital Officer and Senior Vice President of Healthways, Inc. and “The world’s most connected human.” In my line of business and as an avid NPR listener, I really should have heard of him earlier than now. If you haven’t heard of him and you are reading this blog, you should know about him, too. Chris utilizes up to 700 sensors, devices, applications, and services to track, analyze, and optimize his very existence every minute of every day. I listened to a few of his interviews (I am a curious person!) and found that he has been doing this self-tracking for nearly six years. You can really say he was on the cutting edge of this idea of a quantified self before most people even heard of the FitBit. According to Chris, this quantification enables him to see the connections of otherwise invisible data. As a result, he has experienced dramatic upgrades to his health, productivity, and quality of life. So what does he track? In a NPR interview while wearing five sensors (FitBit, Nike Field band, BodyMedia sensor, Wahoo TICKR, and his phone) Chris talked about how he has become ‘one with the data’ because he has seen the benefits of understanding his moods, heart rate, and overall health. He admitted that it’s not for everyone, but being a data junkie he said this behavior fit right into his interests. He expanded what he measured because he was interested in the data for which companies are willing to give discounts. If a company was willing to give him a $600 discount for seeing a doctor, going to the gym, and eating better, he wanted to know what data were they considering and what benefits he would derive as a result of knowing what the data said. He also said something very key: “If you can measure it, someone will and that someone should be you.” So why has he intrigued me so much? Because he said in 2013 that he believed the idea of a quantified self would be ubiquitous in five years. And it would expand beyond the fitness worlds and health care implications to the physical workplace and other industries. He saw sensors as being omnipresent in giving people feedback while they work. Examples could be environmental sensors that let someone change the lighting in their office to reflect a mood one had while on vacation or track ambient sound so that the sensor notifies you to reflect on the tone of voice used in a conversation. The goal, of course, is to have a more productive work environment. Chris Dancy’s rationale for wanting to know more about the data companies use to give discounts intrigues me the most. Many health insurance companies give discounts for proving that you lead an active lifestyle and for years now, consumers have been able to send driving data to auto insurance firms who offer reduced rates for good driving via a dongle that is plugged into their car’s onboard diagnostics port. Recently this practice moved into the realm of life insurance. John Hancock has become the first life insurer to offer ratepayers a discount when they use Fitbit wristbands that enable exercise tracking. John Hancock policyholders who wear a Fitbit and connect it to the internet can get discounts of up to 15% on their life insurance policy as part of Hancock’s partnership with Vitality, a service provider that integrates wellness benefits with life insurance. I already consider myself a quantified being because I track my fitness daily through my FitBit, and use that data to push myself to walk more and be more active. I am not sure I believe that my work environment needs sensors to make me more productive at work, but maybe they would. I don’t share my FitBit data with anyone yet, but I would be willing in the right circumstances. My insurers are not asking for my data which to me means that many insurers are not ready to accept the data. As mentioned above, John Hancock is the first life insurer; maybe others are soon to follow.  Will it happen in the next three years?  My gut instinct says no but I hope to be proven wrong. IBM’s Watson Health Cloud suggests that the medical industry is looking more deeply into how to capture, analyze, and use the multitude of medical data that is created every year, some of which is from fitness trackers and other sensors.  Maybe Watson’s analysis and cloud availability of data will yield better methods of underwriting for insurance. Yet, going back to Chris Dancy . . . during one of the NPR broadcasts Robert Wachter, author of the Digital Doctor, said that today very little of the extraordinary amount of data Chris was capturing is truly useful to doctors or insurers. I guess if that changes, Chris will be ready.

A four year old’s employment records (or how not to handle a data breach)

A four year old’s employment records (or how not to handle a data breach)
Yesterday one of my four year old twins received a letter from a major health insurance carrier (we’ll leave them nameless, tempting as it is). The letter states that the carrier had a data breach and that his information may have been included. The list was pretty extensive, including name, address, telephone number, email address, date of birth, social security number and employment history. That’s a pretty big list and everything you need to steal an identity. They assure me that no health information was shared, but I think they have their priorities wrong. I don’t care if the thief knows I have high cholesterol, but I do care that they have my social security number. I admit I am curious about the employment history of my four year old – I think he has been holding out on me. I wondered how he had so many Legos. The challenge? We’ve never had a policy from this particular carrier. Their FAQ site (a whopping four pages of minimal information) says it could have been because they process for other carriers, but nope, none of them either. So I set out to find out more information, particularly whether others in the family were affected, since we are all on the same policy (Mom, Dad and five small kids). I started my quest at 8:45am, on the website, and then the phone center opened at 9am. What a frustrating two hours. After talking to 11 people, from 4 different companies, do I know the answer to any of the questions? Not a single one. It all started with the vendor that the problem was outsourced too. I feel for those phone clerks, as they were provided almost no information. I then found a way to the carrier (a blog post in its own right), who didn’t know any more, but managed to transfer me to two other insurance companies, neither of whom had a clue why as they didn’t have a breach and I was never their customer. My concern is that this means they don’t even know what was stolen, where it was stolen, who’s information was stolen and more. If they don’t know that about me, what about you? I honestly don’t know how you protect yourself. You can’t really go off the grid. I could do without credit cards, and go to cash, but I can’t do without utilities or health insurance. I also understand that identity theft is big business, but the protections taken by major companies feel so lax. This is the FIFTH major breach of our family in less than 18 months. My credit card, from a major bank, has been replaced three times (only one breach was their own). So to the point of the post, for those still with me: If I was responsible for data security at any of these firms, I’d fire myself. There are solid, dependable companies doing security work. If you r company has not hired one to test your security, do it. Do it today. You should be doing penetration tests, at least annually. You should have solid company policies on data access, and that access should be extremely limited. People need information to do their jobs, but they don’t need all the information. Does your company have a data governance policy? If not, start today. We all know that IT budgets are limited and that our user communities, including our customers, want more and broader access. I just caution that you move with speed, but not without safeguards. Everything can be breached. Your firewalls, your apps, your website and even, as in the case of one breach, your cash registers. More important than all of this, though, is how you handle the breach when it occurs. Even with the most amazing safeguards, some pretty smart people, and governments, are hacking into private data. When it occurs, it should not be a shock to your company. You shouldn’t mobilize a task force after it happens. You should never consider this an IT problem – it is a major problem for the most senior levels of your company, and your reputation. Your company probably has, I hope, an IT Disaster Recovery (DR) plan. Does it include a data breach? Many don’t. They worry about floods, power outages, even pandemics, but not a data breach. Even if your DR plan does include data breach, are the actions your company will take fully laid out? If you are going to use a vendor, have they been chosen and briefed and is the conduit of key information already prepped? Is the spokesman for your company prepared and ready to speak publicly immediately? In my case, the time between the public announcement of the breach and the time we received the letter was over three months. Three months! Hopefully this post will cause at least one reader to start asking questions in their company and that those questions will be well received. You don’t want to be the next company in the news, do you?