Artificial intelligence (AI) is disrupting the traditional insurance value chain according to IBM. Artificial intelligence is showing up in marketing/product development, policyholder acquisition, underwriting, policy administration/asset management and claims. Seventy-five percent of insurance executives surveyed in an Accenture study believe AI will alter or transform the insurance industry in the next few years.

MetLife, Allianz, Transamerica, QBE Insurance Group, XL Catlin, and Aetna have explored applications of artificial intelligence. This yielded some interesting results. MetLife reported that Shift Technology, an AI startup based in France, helped a European coalition of insurers analyze 13 million claims. The technology identified 3,000 new cases of potential fraud, including a large, organized crime scheme that impacted nearly all the coalition’s members. The scam siphoned millions of euros from members over the years.

If this doesn’t get your attention, maybe the use of AI by insurance startup Lemonade will. The company set a world record when it handled a claim solely by AI (no human involvement) from triage to fraud mitigation to the actual payment by wire. Lemonade’s AI approved the claim and wired payment in three seconds.

Organizing Data

Examples continue to surface for how intelligent machines are used to address critical areas of the insurance industry. All of them rest on a single foundation—data.

Data drives the insurance industry. The way data is leveraged has an incredible impact on the bottom line and customer satisfaction. Despite technological advancements available to the industry, institutions have not fully harnessed the potential of AI. In a recent Medici article, Elena Mesropyan explains the complexities of organizing data to feed intelligent machines is the main reason.

Most of data representing the digital universe is unstructured. Although unstructured documents are widely used as key inputs for core business activities, organizations face significant challenges when it comes to this form of data. These include managing the flood of unstructured data, processing it and extracting value from it as quickly as possible.

Furthermore, unstructured data is vulnerable to cyberthreats. Because organizations struggle to understand where crucial unstructured data is, how it is used and who has access to it, it can represent a big risk to the enterprise. The level of risk varies by case, but one thing is clear for unstructured data—it is difficult to apply a standard, organization-wide measure to protect it.

Predictive analytics based on organized data are essentials for insurance companies. Structured, organized data enables accurate adjustment of products and services to changing consumer habits and behaviors.

Some organizations have figured out how to address the data-structure issue and leverage it to their benefit. Structured data is the competitive advantage for 40 percent of the global systemically important financial institutions in the U.S. who use a single solution. They use a machine learning platform by Pendo Systems that transforms unstructured data into AI-ready data sets. This allows businesses to explore, discover and analyze unstructured data accumulated across wide variety of sources.

Like a number of industries, the insurance sector is in the early stage of AI application. Insurance executives see its potential. Seventy-nine percent of those surveyed by Accenture believe that AI will revolutionize the way insurers gain information from and interact with their customers. Better methods to organize and structure data will accelerate the value the industry gains from this technology.

Related article:

Insurtech Drives Insurance Innovation

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Ryan Lahti is the managing principal of OrgLeader and author of The Finesse Factor. Stay up to date on Ryan’s STEM organization tweets here: @ryanlahti

(Photo: Artificial Intelligence, Pixabay)

Most of us have a plastic “chip and pin” card from a traditional credit card company we use to complete transactions. Is this method of payment still going to be the most popular form? I wouldn’t bet on it. Competing forms will likely alter how we pay with or without cards.

As a starting point, consider contactless credit cards which use short-range proximity technology to securely complete payments via a contactless-enabled checkout terminal. An A.T. Kearney study highlights the value of contactless cards at the point of sale (POS):

• Strong US consumer adoption of contactless cards could translate into a reduction in retail cash payment volume of about $190 billion through 2022.
• Merchant infrastructure for accepting contactless payments is already in place in the US, with 70 percent of POS terminals having the necessary hardware.
• US banks could see incremental card-related earnings of more than $2 billion between now and 2022 as a result of issuing contactless cards.

The Cryptocurrency Threat

In a recent Forbes article, Arran Stewart, co-owner and CVO of Job.com, explains how bitcoin could substitute for credit cards. Credit cards could be replaced with simple wallet verification that could be confirmed “with something as simple as a fingerprint. We are already used to doing the same and similar behavior with Apple Pay.  This is far more secure and efficient as it would allow retailers to receive payment for goods and services much faster. The only roadblock to this becoming reality is the stability of the crypto market, which will come in time and as transaction volumes continue to increase.”

This is concerning for companies like Visa and MasterCard, which dominate the credit card payment industry, and for the banks that issue these cards and take their own cut.

On the other hand, it is good news for bitcoin investors, because it will raise the adoption rates for day to day transactions and boost its price.

While bitcoin poses a threat, enthusiasts should temper their enthusiasm. Merchants would be happy to replace credit cards with bitcoin, but shoppers are not likely to give up their credit cards for an obvious reason. Credit cards alter the trade-off between the pleasures of acquiring something versus the pain of paying for it. We get the pleasure now and defer the pain until later.

“Paying with a card fundamentally changes the way we spend money, altering the calculus of our financial decisions,” explains Jonah Lehrer, author of How We Decide. “When you buy something with cash, the purchase involves an actual loss — your wallet is literally lighter. Credit cards, however, make the transaction abstract, so that you don’t really feel the downside of spending money.”

Nontraditional Stakeholders

Companies outside of the credit industry are stepping into the arena. This changes some of the stakeholders and potentially how we view credit cards. Apple announced the Apple Card is expected to launch later this summer.

According to Fast Company, Apple worked on the card in conjunction with Goldman Sachs, but the card and its services itself are very much designed by Apple. More specifically, no one needs a physical Apple Card. When you sign up and are approved for one, the Apple Card will become instantly available on your iPhone. It will live in the Wallet app where users will use it via Apple Pay. The Apple Card also has other unique benefits, such as daily cash back and a number of software-based features that make managing the card much more convenient than traditional credit cards.

While we still may have a traditional credit card in our wallets, chances are that we will use it less and less in the coming months. Even if you don’t think cryptocurrency will entice you, maybe the Apple Card or contactless cards will.

Related article:

Mobile Payments “Growing” with American Consumers

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Ryan Lahti is the managing principal of OrgLeader and author of The Finesse Factor: How to Build Exceptional Leaders in STEM Organizations. Stay up to date on Ryan’s STEM organization tweets here: @ryanlahti

(Photo: Credit Card, Pixabay)

What is the current relationship like between banks and Bitcoin? It continues to ebb and flow.

In March, Reuters reported one of the biggest Bitcoin exchanges struck a rare deal to allow it to open a bank account with Britain’s Barclays. This was intended to make it easier for UK customers of the exchange to buy and sell cryptocurrencies.

Specifically, San Francisco-based Coinbase said its UK subsidiary was the first to be granted an e-money license by the UK’s financial watchdog, a precursor to getting the banking relationship with Barclays. The UK is the largest market for Coinbase in Europe, and the exchange said its customer base in the region was growing at twice the rate of elsewhere.

Laundering and Unpaid Debt

Large global banks have been reluctant to do business with companies that handle Bitcoin and other digital currencies. They are concerned that criminals use these currencies to launder money and that regulators will soon crack down on them.

Some big lenders have limited their customers’ ability to buy digital currencies, fearing a plunge in their value will leave customers unable to repay debts. In February, British banks Lloyds and Virgin Money said they would ban credit card customers from buying such currencies, following the lead of JP Morgan and Citigroup.

Just prior to this, Germany’s central bank weighed in on the how Bitcoin and other digital currencies should be handled. A director at the central bank indicated any attempt to regulate cryptocurrencies such as Bitcoin must be on a global scale as national or regional rules would be hard to enforce on a virtual, borderless community.

Market Impact

The cryptocurrency market has been stung by U.S. Securities and Exchange Commission decisions on exchange-traded funds (ETF). Early this month, the SEC delayed a decision on a proposed Bitcoin ETF submitted by money management firm VanEck and crypto startup SolidX.

Securities and Exchange Commission decisions and recent market indicators may also affect bank interest in digital currencies. This month the total market capitalization for cryptocurrencies tumbled to $191.4 billion, the lowest since early November last year, coinmarketcap.com data showed.

Despite the sell-off in the cryptocurrency market, analysts said Bitcoin has held up pretty well. As a percentage of market capitalization, Bitcoin’s share rose to 54.5 percent, suggesting that investors were willing to hold the more widely held and well-capitalized digital currencies.

Taking a step back, it looks like bank interest in cryptocurrencies is still a bit of a roller coaster. Bitcoin seems to be the ride some are more willing to get on at the present time.

Related article:

Dominant Digital Currency

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Ryan Lahti is the managing principal of OrgLeader and author of The Finesse Factor: How to Build Exceptional Leaders in STEM Organizations being published in early 2019. Stay up to date on Ryan’s STEM organization tweets here: @ryanlahti

(Photo: Bitcoin Currency, Pexels)

Few of us freeze our credit files at the three major credit bureaus (Equifax, TransUnion and Experian), even after massive data breaches like the one at Equifax. This breach compromised the private data of as many as 145 million Americans.

Gartner Research analyst Avivah Litan estimated about 2 percent to 3 percent of U.S. consumers currently have freezes on their credit. She thinks the Equifax breach disclosed on September 7 might push that to 5 percent. Meanwhile, Credit Karma saw a tenfold increase in the number of consumers freezing at least one credit report the week after the breach was announced. After increasing every day starting September 8, activity dropped off on September 15. A Credit Sesame analysis of 4.5 million TransUnion credit profiles showed as of September 25, just 0.44 percent of them had a freeze on their TransUnion report. This was an 0.8 percent increase from June.

The Reasons Why

Why don’t consumers freeze their credit files? Some may be confused about what a credit freeze does or how to put one in place. While 47 percent of Credit Sesame members surveyed said they were “extremely concerned” about their data security, 25 percent didn’t know the definition of a freeze. Others may have tried and given up when heavy traffic caused glitches at credit bureau websites after the breach.

Another disincentive may be the fee to freeze, which ranges from $3 to $10. According to advocacy group U.S. PIRG, consumers as a whole will have to shell out $4.1 billion to freeze their credit files and prevent fraudsters from using personal information possibly exposed in the Equifax breach. To ease this burden, Equifax is waiving its freeze fees until the end of January. Then it will offer a new service that will let consumers lock and unlock—an easier way to place and remove a freeze—for free and for life. Hopefully, TransUnion and Experian will follow suit.

When you freeze your credit report, you essentially stop fraudsters from opening a credit card, a mortgage or any other kind of credit account in your name. Unfortunately, you must do this one by one at the three major credit bureaus. Once this is done, a lender trying to check your creditworthiness will find the data unavailable. If it’s really you applying for credit, you’ll use a PIN to temporarily lift the freeze for the lender. In some states that’s free, but in many cases you’ll pay from $2 to $10 for the lift.

How effective is a freeze? Gartner’s Litan estimated that it will protect you from fewer than 5 percent of financial crimes to which you are vulnerable. Still, it’s better than nothing.

Perhaps another reason we don’t freeze our credit is that we are just uncomfortable without our wallet-sized enablers. Three out of four people surveyed in a CreditCards.com consumer poll said they had made an impulse purchase at some point. Of that group, 16 percent had spent $500 or more, and 10 percent had spent $1,000 or more. Keep this in mind as you begin your holiday shopping and navigate enticing sales.

Getting Credit Protection

If you want to protect your credit files, go to the websites for Equifax, TransUnion and Experian. You could also get additional information at the Federal Trade Commission’s site. If you prefer telephone, here are the numbers for the three credit bureaus:

Equifax: (800) 349-9960

Experian: (888) 397-3742

TransUnion: (888) 909-8872

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Ryan Lahti is the founder and managing principal of OrgLeader. Stay up to date on Ryan’s STEM organization tweets here: @ryanlahti

(Photo: Credit Report by Nick Youngson)

How often do you pay with Bitcoin? What about Ether? Up until recently, Bitcoin has been the dominant digital currency. Ether may change that.

Unlike traditional currencies, Bitcoin and Ether are tracked and maintained by a network of computers. Specifically, a separate, global computer network of volunteers hosts and maintains each currency (e.g., Ethereum is the network for Ether). These volunteers are rewarded for their participation with the new digital tokens that are released onto their network each day. No government or company is in charge. So, the prices of both Bitcoin and Ether are established on private exchanges, where people can sell the tokens they own at the going market price.

If you, like many people, are skeptical of these digital currencies, their market value may get your attention. As of June, the combined value of all Ether and Bitcoin is worth more than the market value of PayPal and is approaching the size of Goldman Sachs. According to the New York Times, Ether’s value alone has risen 4500 percent since the beginning of 2017.

User Interest at the Corporate Level

These currencies are not just found in occasional transactions by early adopters and technophiles. Bitcoin has worked its way into mainstream commerce. Companies like Overstock.com and Expedia accept Bitcoin for purchases. Currently, there are fewer real-world uses for Ether, but it was designed to do much more than serve as digital currency. The network of computers hooked into Ethereum can be harnessed to do computational work which makes it possible to run computer programs on the network. Furthermore, the appetite for using Ethereum continues to grow. Over 100 companies (including Toyota, Merck and Samsung) have joined the nonprofit Enterprise Ethereum Alliance to build tools that will make Ethereum useful in corporate settings.

Key players in the financial sector are taking digital currencies like Bitcoin and Ether more seriously. For example, Fidelity Investments will allow its clients to see their holdings of Bitcoin and other digital currencies on its website. At a recent blockchain conference in New York City, Fidelity chief executive Abigail Johnson shared, “I love this stuff – Bitcoin, Ethereum, blockchain technology – and what the future holds.” Blockchain, a shared online ledger of transactions which first emerged as Bitcoin’s underlying technology, has been attracting growing investments by established financial institutions which hope it can help them save money and time.

More than 90 banks worldwide, including HSBC and Deutsche Bank, are exploring the potential of blockchain. Santander InnoVentures, a venture capital fund, estimates that this new technology could save banks up to $20 billion a year by 2022, by making transactions and bookkeeping faster and more streamlined.

For those who wish to purchase digital currency but find the idea of the transaction difficult to grasp without physical proof, it might be helpful to have a bridge. This bridge already exists thanks to Zug, Switzerland. This town of 30,000 people 20 miles south of Zurich has become known as Crypto Valley in the financial world due to the digital currency entrepreneurs it attracts. It is here that Bitcoin Suisse created the bridge in the form of a Bitcoin ATM.

The ATM isn’t really necessary, because Bitcoin is made up of lines of computer code instead of a physical form. Nonetheless, Bitcoin Suisse has installed 10 of these ATMs across Switzerland. The ATM accepts Swiss francs and euros in exchange for a slip of paper with a code that represents the equivalent amount in Bitcoin. Scan the code with your smartphone, and the currency is yours.

Maybe you don’t deal with digital currency on a consistent basis like those in Zug. Given the increasing interest and activity of investors, businesses and entrepreneurs, there is a pretty good chance that some form of digital currency (whether it is Bitcoin, Ether or something else) will soon become a regular part of your transactions.

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Ryan Lahti is the founder and managing principal of OrgLeader, LLC. Stay up to date on Ryan’s STEM organization tweets here: @ryanlahti

(Photo: Bitcoin, Pixabay)

How is insurtech being viewed in today’s market? Pretty well if investment is an indicator. Insurtech is the form of financial technology (fintech) receiving the most investment according to Insurance Day. Investors in 2016 poured more than $1.7 billion into insurtech startups worldwide. The KPMG/CB Insights joint report, “The Pulse of Fintech,” defines insurtech as “companies creating new underwriting, claims, distribution and brokerage platforms, enhanced customer experience offerings, and software as a service to help insurers deal with legacy IT issues.” This report shows that 60 percent of VC-backed insurtech deals occurred in the U.S. during the second quarter of 2016, but the U.K. is also an important leader in the insurance space for health, auto insurance, comparison websites and data management.

If this is not enough to convince you, Accenture found that insurtech investment in the U.K. has surged three-fold in just a year. The company’s latest data revealed Britain’s insurtech investment has rocketed to more than $20.3 million as of August 31. Evidently, years of nervous inaction and indecision have been washed away by a wave of innovation and the growing knowledge that external forces will disrupt the insurance sector if the sector doesn’t take the initiative to get more current.

Founded by a combination of ex-insurance professionals frustrated by a slow-moving industry and tech-specialists with an eye for an opportunity, insurtech is tackling the industry’s most difficult issues. Peer-to-peer insurer Lemonade is making the process of buying insurance and filing claims more transparent, promising to pay claims almost immediately. A mobile app by Verifly lets you purchase drone insurance. Companies such as Trov and Back Me Up are offering greater personalization, allowing customers to just insure certain belongings rather than paying for a broad policy.

Other organizations such as Brolly are using data and artificial intelligence to improve customer service and more accurately calculate premiums. Long term contracts are also on the way out. Cuvva is providing car insurance by the hour, and Digital Risks offers subscription business insurance designed for the needs of fast-growth tech and media companies.

This dramatic growth in insurtech looks like it will continue in 2017. Entrepreneurs, investors, insurers and other players in the insurance industry will intensify their efforts to bring innovation and modernization to the sector. These developments will affect every part of the insurance industry – especially personal lines – from sales and marketing through underwriting to claims administration.

Along with this growth, there are hurdles to overcome. In the U.S., state laws and regulations will require a rethink to avoid stifling innovation. Many these laws and regulations were formulated to address the sale and administration of insurance in ways that will cease to be relevant. In the long run, insurtech developments might even create pressure for greater federalization of insurance regulation. Because the new technologies will have a greater nationwide reach, state-level regulation of insurance in the U.S. may become increasingly difficult to administer.

Hurdles are also being surmounted in Singapore, where one very significant development is taking place. Regulation that has proven to be a brake on insurtech development is set to change in 2017, with the Monetary Authority of Singapore’s introduction of its fintech regulatory sandbox. This will enable financial institutions, including insurers, as well as technology companies, to experiment with innovative financial products or services in the marketplace. This experimentation will be allowed within a well-defined space and subject to appropriate safeguards to ensure potential negative consequences are contained.

If you are one of the many customers who has been frustrated by the snail-like pace of innovation in the insurance industry over the years, the emergence of insurtech provides welcome relief. While there will be some growing pains to endure with this component of fintech, the possibilities it presents far outweigh pains encountered to realize them.

For more information, take a look at:

The Pulse of Fintech

Insurtech Is Taking Off – But Is the UK Ready to Fly?

Is Insurance Ready for Millennials?

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Ryan Lahti is the founder and managing principal of OrgLeader, LLC. Stay up to date on Ryan’s STEM-based organization tweets here: @ryanlahti

(Photo: Insurance, Pixabay)

High-profile names in retail banking like Barclays and HSBC have already adopted biometric authentication in some form. So, how comfortable are you with banks using biometrics to confirm your identity? In Great Britain, they seem pretty comfortable. According to research from Visa, British consumers are nearly twice as likely to trust banks (60 percent) to store and keep their biometric information safe than they are to trust government agencies (33 percent).

When asked whom they would trust to offer biometrics authentication as a service to confirm identity, the largest percentage selected banks (85 percent) and payment networks (81 percent) ahead of global online brands (70 percent), and smartphone companies (64 percent). This level of trust has grown significantly in the past two years, up by 20 percent since 2014, when the Visa Biometric Payments study was first conducted.

Fingerprint authentication is viewed by survey respondents as the most secure form of payment (88 percent), ranking higher than other biometric authentication options such as iris-scanning (83 percent) and facial recognition (65 percent). The growth in fingerprint authentication for mobile payments is bringing to life the benefits of biometric authentication. This is why 80 percent of the people surveyed said they were the most comfortable with fingerprint recognition.

Since many banks and lenders are now using the latest biometric technology to give customers a more convenient way to check their account balance or make payments, how safe is it? A cyber security expert from consultancy NCC recently provided a demonstration to the Financial Times for how simple it is to hack into a smartphone’s biometric authentication software. Matt Lewis, NCC research director, showed how to make a copy of his own fingerprint using wood glue, candle wax and a printed circuit board that allowed a Financial Times correspondent to hack into his smartphone. Mr. Lewis also tricked voice-recognition software by playing back recordings of his own voice and produced a 3D-printed mask of his face based on photos of himself, which was then worn by the Financial Times correspondent to hack into his phone.

While you cannot forget your voice or face — making them a simpler way to verify your identity — they are also much harder to change than your password if they are ever stolen by cybercriminals. This means that if biometrics become the dominant form of authentication it is likely to be much more damaging if the systems are hacked.

“Unlike passwords, physical biometrics can’t be changed. It’s the lasting and permanent nature of physical biometric data that may have more negative impacts than passwords since, as in the OPM [Office of Personnel Management] Breach, once these have been released into the wild, they pose a risk for the lifetime of the victim who can do nothing to change this core data,” cautioned Robert Capps of NuData Security in an interview with The Register.

Ultimately, making mobile banking truly convenient while reassuringly secure is likely to rely on even more sophisticated systems that use hundreds of different data points — from how fast we type to where we are — to build up a unique profile that can be used to recognize us automatically whenever we use our phone. These behavioral biometric systems are already being piloted by several banks and have the advantage of being much harder to fake while also not being usable across multiple accounts of the same person. Consequently, identity authentication used by banks in the next several years is likely to go well beyond fingerprint-based biometrics. Given what’s at stake, it should.

Related posts:

Selfie Pay Augments Credit Card Biometrics

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Ryan Lahti is the founder and managing principal of OrgLeader, LLC. Stay up to date on Ryan’s STEM-based organization tweets here: @ryanlahti

(Photo: Binary Digital, PublicDomainPictures.net)

When mobile payment technology first became available, some experts referred to it as a solution in need of a problem. The EMV chip card switch provided it with a very real problem that it can fix. Most of the new chip card readers (including Square) can handle the near field communication (NFC) technology used by mobile payment services such as Apple Pay and Android Pay, according to Wired magazine. As you may recall, the idea of using NFC phones to pay at the checkout counter received a big boost in the fall of 2014 when Apple unveiled Apple Pay with the cooperation of a trio of big-name credit card companies. This meant not only that Apple Pay would be available on the newest iPhones, but that Apple would put its considerable corporate weight behind the service. So, how are mobile payments doing at this time in the United States?

In the most recent study of mobile banking and payments by First Annapolis Consulting, the share of Americans who have made at least one mobile payment in the past 12 months is now 74 percent, up from 58 percent just six months ago and 40 percent in May 2015. This leaves 26 percent of respondents who have yet to try mobile payments, whether it’s using their phone to make an in-app purchase, pay a bill, receive loyalty points on an in-store purchase, or make any number of other mobile money transfer transactions.

When asked what’s holding them back from mobile payments, the most common response from almost two-thirds of the nonusers (64 percent) was concern about security. This response was similar across all age groups.

A feeling that they simply don’t need mobile payments was second at 42 percent followed by privacy concerns at 41 percent. Respondents ages 45-54 (the oldest age group delineated in the findings) were more likely than younger respondents to cite the concerns.

The First Annapolis Consulting study was conducted in June among 1,528 U.S. consumers age 18-54 who both own a smartphone and have a checking account or debit card. Like its previous editions conducted in December 2015 and May 2015, the sample demographics were generally aligned with U.S. Census distributions.

While mobile payment technology has been around for a while, it looks like momentum is slowly building with consumers. Mobile payments via Apple Pay and Android Pay are much faster than card payments. Once you link these services to your credit card account, you make payments by simply holding your phone up to a compatible reader. When security and privacy concerns are addressed and the value of mobile payments is communicated more effectively to consumers, the momentum in the U.S. is likely to increase at a faster rate.

Related posts:

U.S. EMV Chip Card Progress?

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Ryan Lahti is the founder and managing principal of OrgLeader, LLC. Stay up to date on Ryan’s STEM-based organization tweets here: @ryanlahti

(Photo: Apple Payment Square by Mybloodtypeiscoffee – Own work, CC BY 4.0)

If you drive a car, you are sharing the road with uninsured drivers. Although it is against the law in 49 states and the District of Columbia to drive without insurance, approximately one out of eight U.S. drivers do not have auto insurance according to the Insurance Research Council (IRC). In several states, more than one in five drivers do not carry coverage.

Why should you care? In 2012, the most recent year for which statistics are available, uninsured motorist claims totaled $2.6 billion, a 75 percent increase from the previous decade, according to the IRC. Those costs, largely borne by insurance companies, are passed on to insured drivers in the form of higher premiums.

States have tried a variety of ways to get motorists to buy car insurance that have produced mixed results. Some states require drivers registering their cars to show proof of insurance. In many states, uninsured drivers face stiff fines, but some of the states that have such penalties on the books often fail to enforce them. Furthermore, researchers have found that states with stiffer penalties, which can range from a maximum of $200 for a first offense in California to up to $1,500 for a first offense in New York, do not necessarily have the lowest uninsured rates.

There is no “typical” uninsured driver according to The Fiscal Times. Some don’t have car insurance because they resent the requirement—“Live Free or Die” New Hampshire is the only state that does not mandate it. Others don’t have it, because they are undocumented immigrants who lack driver’s licenses, which are needed to get insurance in many states.

Most of the uninsured, however, don’t purchase car insurance because they can’t afford it. The number of uninsured drivers peaked at 29.9 million in 2009 during the Great Recession and then dropped to 29.7 million in 2012, the last year for which data are available. Car insurance rates have risen more slowly than other expenses in recent years, but insurance ranks below necessities such as food and housing for drivers struggling to make ends meet.

Bankrate reports American drivers spend an average of $1,771 per year on full coverage car insurance, which accounts for 2.57 percent of the average person’s annual income. According to the Insurance Information Institute, a New York-based organization that tracks the insurance industry, overall expenditures for car insurance increased by 10 percent between 2010 and 2011, while food expenses increased 21 percent; housing costs increased 29 percent; public transportation costs increased 29 percent and health care costs increased 52 percent.

If you’re involved in a serious accident with an uninsured motorist, you could be at risk for substantial financial losses. For protection from losses arising from an accident with an uninsured motorist, consider purchasing uninsured motorist coverage. A handful of states require that this coverage be included in all auto insurance policies. Regardless of state requirements, you may already carry uninsured motorist coverage. So, check your policy or ask your insurance professional.

Specific options for uninsured motorist coverage vary by state and insurer. In general, there are three types of protection:

Uninsured Motorist (UM) Insurance—This is also known as Uninsured Motorist Bodily Injury (UMBI) insurance. This coverage will pay your and your passengers’ medical bills if you’re involved in an accident with an uninsured motorist who is at fault. In addition, UM insurance will reimburse you and your passengers for lost wages. UM coverage also kicks in if you are hit as a pedestrian by an uninsured driver, or if you’re the victim of a hit-and-run accident.

Uninsured Motorist Property Damage (UMPD) Coverage—While UM insurance covers injuries, it does not extend to damage to your car or property. For this, you need UMPD coverage. Be aware that UMPD may not always cover damaged property beyond your car, and this option may not be available from your insurer—it depends on what state you live in. In addition, UMPD may not cover hit-and-run accidents.

Underinsured Motorist (UIM) Protection—In some instances, an at-fault driver may have liability insurance, but the policy’s limits do not cover the full extent of damage to your vehicle. In such cases, UIM insurance will cover the shortfall.

Given that there are a sizable number of uninsured motorists on the road with you, it is worth taking the time to consider whether you have the right insurance coverage. A few minutes spent reviewing your coverage can provide you and your family with greater peace of mind.

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Ryan Lahti is the founder and managing principal of OrgLeader, helping leaders thrive in uncertainty and better manage risk. Connect with Ryan on LinkedIn.

(Photo: Car accident, Flickr)

Who or what are you using to help make your investing decisions…a human or computer program? Mark Andress and Troy Hooper point out in Forbes that sophisticated financial advice used to be just for the wealthy. But in the last couple of years, “robo advisors” – which use computer programs to make intelligent investing decisions – have emerged, threatening to open up the market to the masses.

Until now, these robo advisors have been more of a novelty than a mainstay, with advisors of the flesh-and-blood variety overwhelmingly in command. But this year is expected to be a turning point for the rise of the robo advisor, particularly if a new Department of Labor rule comes into effect.

Under the rule change, anyone who gives out retirement investment advice and gets paid for it would now become a fiduciary, meaning they would have to put their clients’ best interests before their own profits. Robo advisors are already regarded as fiduciaries because they use computer algorithms to make investment decisions automatically.

Many robo advisors will license their platforms to the big banks and traditional wealth managers, enabling them to be compliant with the new rule. Goldman Sachs, JP Morgan, Merrill Lynch and Morgan Stanley could find value in purchasing a robo advisory service and pairing it with their network of in-the-flesh experts. Wells Fargo has also reportedly looked into buying a robo advisor.

Today, there are 22 robo advisors, but Tiburon Strategic Advisors believes that number will consolidate to 10 by 2019. Until now, they accounted for just a fraction of the overall wealth management space. But they are expected to gather $78.6 billion in assets under management in 2019, up from $7.2 billion in 2015. By 2019, robo advisors will serve 1.1. million clients, more than triple the 300,000 people served by the online-only advisors today.

While banks and wealth managers may look at robo advisors as a buying opportunity, robo advisors do have some critics. In InvestmentNews, David Zolt explains that the term “robo advisor” is not accurate, because there is no advising taking place. Robo-investing is the correct term.

David John Marotta of Marotta Wealth Management shares that automatic investing and rebalancing tools don’t provide any advising services. Even with such limited factors, there are significant problems with the help given by robo-investing that potential users may not realize. For example, the review he and his colleagues did of Schwab Intelligent Portfolios found that they were not very intelligent. They also found that Schwab’s rebalancing algorithm has more faults than virtues. Marotta and his colleagues believe that computers can do better than the current capabilities of robo-investing, and competent advisors who know their clients and use computer technology can do even better.

Marotta further argues that a program is only as good as its programmer. Therefore, robo-investing programs produced by commission-based brokerage firms will automatically make all the same mistakes the firms’ human agents do. They will not act in clients’ best interests simply because they are executing a program.

Robo advisors are going to have a presence in the coming years. The question to consider is…will you be one of the people who supports it happening?

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Ryan Lahti is the founder and managing principal of OrgLeader, LLC. Stay up to date on Ryan’s STEM-based organization tweets here: @ryanlahti

(Photo: Robot, Flickr)