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Thursday, June 23, 2016

What is InsurTech and How Can You Harness its Disruptive Powers?

By Guy Weismantel, Vice President of Marketing at Vertafore

Despite a $2.6 billion global investment in InsurTech startups in 2015, many insurance industry professionals are still unaware of what what InsurTech is and how it is shaping their future.

What is InsurTech?
In an over-simplified world, many see InsurTech as being the technology behind insurance. In the real world, however, InsurTech is a term applied to the many segments of new technology that are disrupting the insurance space: smartphone apps, consumer activity wearables, claim acceleration tools, individual consumer risk development systems, online policy handling, automated compliance processing, and more. The below Startup Bootcamp infographic illustrates a number of the different segments of the booming InsurTech space.

Read more about the InsureTech space.

Is InsurTech a Threat to the Insurance Industry?
These numerous technological innovations that make up InsurTech have been primarily spurred by smaller, more entrepreneurial firms. Traditional insurance firms have been slower to adopt new methods, due in large part to the potential switching costs as they migrate to new systems or new processes. That said, spurred by increased demand for self-service and technological inputs from consumers, as well as increased competition from the smaller and more nimble firms, large insurance firms are more actively embracing new technology and seeking to be change agents within the InsurTech space. Read more.

InsurTech's Past, Present and Future
InsurTech came late to the game, mostly due to government regulation and the size and historical switching costs that insurance companies have had to bear to keep up with technology. The ever-increasing size of the insurable market provided additional incentive for entrepreneurs to begin to create innovative insurance products for the health insurance industry. Other industries began to follow suit. Most of the InsurTech roots gained traction in 2011. In 2011 there were 45 investors that made a total of $131 million in growth capital investments. Today, InsurTech is a $2.6 billion sub-industry that stands to either disrupt or empower the incumbents of the insurance industry. In 2016 we are poised to see increased investment in the space, as well as some dramatic changes. Read more about the future of InsurTech.

How to Harness the Disruptive Nature of InsurTech
In addition to the obvious instruction that you should be "embracing technology," there are several items that you need to act on in order to harness the benefits from InsurTech's disruptive nature. Evaluate and simplify processes. Evaluate the four Ws: who, what, when and where:
  • Who is involved in carrying out a process? Make a list of who is involved in different processes.
  • What is happening in the process? Brainstorm a list of these process points.
  • When are customers connecting with you? Introduce a 24/7 self-help approach.
  • Where are customers able to access your services? Add a video conferencing option.

Read more about how to harness InsurTech.

No matter the way that you leverage InsurTech to your advantage, it's important to remember that you need to be flexible and open to change. Your openness will ensure that you are not left behind as InsurTech surges forward.

Learn more about the role data will play in the future of insurance in Vertafore's new Digital Disruption ebook.

Vertafore delivers cloud-based insurance software and services that transform the business of insurance. With the largest customer-base in the industry, more than 20,000 agencies and carriers leverage Vertafore’s insurance solutions that are built on today’s most advanced cloud, mobile, and information technology platforms. Learn more and contact Vertafore.

Tuesday, June 21, 2016

Insurance Impacts from the DoD MAPR Rule

By ABIA Outside Counsel, McIntyre & Lemon, LLC

In July 2015, the Department of Defense (DoD) amended its regulation governing consumer credit extended to military service members and their dependents. The regulation limits the APR on affected credit to 36 percent (called the Military APR, or MAPR). The revised regulation will affect some ABIA members, because, in calculating the MAPR, a creditor is required to include premiums for credit insurance and any fee for a debt cancellation contract or a debt suspension agreement — even if the product is offered on a voluntary basis. (Under Regulation Z, credit insurance premiums and fees for debt protection products need not be included in the calculation of the finance charge if certain conditions are satisfied, namely, that the purchase of the product is voluntary.) The compliance date for the amended rule is October 3, 2016.

The regulation obligates the creditor to determine whether a credit applicant is a covered borrower (a member of the military or a dependent), and it provides two “safe harbors” for a creditor to assess the borrower’s status: (1) by directly accessing the Military Lending Act Database, which is maintained by the DoD Defense Manpower Data Center; or (2) by using information obtained fom a major credit reporting agency, which will also have direct access to the Database. DoD is working with large lenders, such as the major banks, and the credit reporting agencies to enable them to search the MLA Database directly, including for a batch of names. Smaller lenders likely will use a credit reporting agency to identify the borrower’s status, instead of accessing the Database directly, because they will not be able to search the Database using a batch process.

Over the last several months, industry has been working with DoD to ensure the Database is technically able to satisfy search requests from the major lenders and the credit reporting agencies by the October 3 date, and ABIA has been involved in weekly calls with a coalition of lenders for updates from DoD on progress in implementing the Database. There remains some concern that the Database may not be able to fully satisfy demand for information when the compliance date arrives, but DoD has yet to delay the compliance date.

Additionally, DoD has stopped the weekly update calls while contracts with the credit reporting agencies are pending. Once the calls resume, ABIA will continue to participate.

Wednesday, June 15, 2016

Representative Royce Offers Amendment to H.R. 5143, the "Transparent Insurance Standards Act of 2016"

Yesterday, U.S. Representative Ed Royce (R-CA) offered an amendment to Rep. Luetkemeyer's H.R. 5143, the "Transparent Insurance Standards Act of 2016".

The amendment defines “State insurance commissioner” as already included in U.S. Code [(15 U.S.C. 6754(c)(4))] as “a person who serves in the position in State government, or on the board, commission, or other body that is the primary insurance regulatory authority for the State.” This language was included in NARAB as part of the Terrorism Risk Insurance Act reauthorization that passed the House at the start of this Congress.

While this definition would prohibit someone other than an insurance commissioner from acting as a commissioner during required consultation and negotiations with the Chairman of the Federal Reserve, the Secretary of Treasury and the USTR, it does not prevent outside organizations and individuals from providing technical assistance during international discussions.

Rep. Neugebauer Introduces Bill to Repeal Durbin Amendment

Rep. Randy Neugebauer (R-Texas) yesterday introduced H.R. 5465 , a bill that would repeal Dodd-Frank’s Durbin Amendment, which institutes a cap on debit interchange fees charged by institutions with $10 billion or more in assets. Neugebauer noted that as a result of the Durbin Amendment, some banks reduced their free checking account offerings, increased account fees and instituted higher minimum balance requirements.

“What the Durbin Amerndment did… was artificially shift over $30 billion in revenue from one industry to another,” Neugebauer said. “Instead of promoting free market principals and technological advancement, such as enhanced data security capabilities, the Durbin Amendment was nothing more than a government action to manipulate the marketplace. This legislation will restore competition in the marketplace, remove arbitrary government price caps, and ensure consumers have affordable access to basic banking services.”

ABA expressed strong support for the bill. “When the government picks winners and losers in the marketplace, consumers lose. The Durbin Amendment has distorted the market to the detriment of small businesses, consumers and banks of all sizes,” said ABA President and CEO Rob Nichols. “Retailers would rightfully oppose laws setting the price of milk or paintbrushes in their stores. After a half decade of trial and failure, we hope Congress will allow this divisive and outdated retailer giveaway to fade into the rearview mirror.”

Read ABA's statement.

Tuesday, June 14, 2016

ABA Releases Cyber Insurance Buying Guide

Last week, the American Bankers Association released its 2016 Cyber Insurance Buying Guide. The Guide, created in partnership with the FSSCC, is an educational document that provides resources to organizations - particularly small and medium-sized enterprises - that are considering the purchase of cyber insurance.

Download the guide.